UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

   
                                   FORM 10-K/A
                                (Amendment No. 1)
    

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934  [FEE REQUIRED]

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                                       OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                           Commission File No. 1-12412

                              ARBOR PROPERTY TRUST
             (Exact name of Registrant as specified in its Charter)

            Delaware                               23-2740383
----------------------------------      -----------------------------------
  (State or other jurisdiction          (I.R.S.Employer Identification No.)
of incorporation or organization)

 Suite 800, One Tower Bridge, W. Conshohocken, PA                 19428
-------------------------------------------------                --------
    (Address of principal executive offices)                    (Zip Code)

(Registrant's telephone number, including area code) (610) 941-2962

           Securities registered pursuant to Section 12(b) of the Act:

Common Shares of Beneficial Interest          New York Stock Exchange
------------------------------------  -----------------------------------------
         Title of Each Class          Name of each exchange on which registered

        Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by checkmark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                       Yes /X/           No _______

     Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

     The aggregate market value of Common Shares of Beneficial Interest held by
non-affiliates of the Registrant, based on the closing price of Common Shares of
Beneficial Interest on March 26, 1997 on the New York Stock Exchange of $6.875
per Share, is $65,456,373. As of March 26, 1997, 12,286,860 Common Shares of
Beneficial Interest were outstanding. Officers and Managing Trustees of Arbor
Property Trust, The Equitable Life Assurance Society of the United States and
its affiliated entities, and certain executive officers of Compass Retail, Inc.
(and certain of their family members) are treated as affiliates for purposes of
this computation, with no admission being made that such people or entities are
actually affiliates.

                      DOCUMENTS INCORPORATED BY REFERENCE.

     None.

   
     Items 6, 7 and 8 were amended and restated as follows:
    


<PAGE>


Item 6. SELECTED FINANCIAL DATA.

     The February 28, 1994 merger of the Partnership with and into Green Acres
Mall Corp. (which has been succeeded pursuant to a merger by Green Acres Mall,
L.L.C.), an indirect wholly-owned subsidiary of the Company, represented a
reorganization of entities under common control and, accordingly, was accounted
for in a manner similar to a pooling of interests. The financial statements of
the Company and Partnership have been combined at historical cost retroactive to
the beginning of the earliest year presented.

                                        2

<PAGE>


<TABLE>
<CAPTION>

                                                              As of and for the years ended December 31,
                                                   -----------------------------------------------------------

                                                     1996         1995         1994         1993         1992
                                                     ----         ----         ----         ----         ----
                                                             (In thousands, except per Common Share data)
<S>                                                <C>          <C>          <C>         <C>          <C>     

   
Total revenues                                     $37,640      $37,222      $35,678     $ 33,254     $ 32,484
    
Income (loss) before extraordinary
  loss                                               2,138        2,921          334        1,150         (163)
Extraordinary loss from early retirement
  of debt                                               --           --           --       (6,373)          --

Net income (loss)                                    2,138        2,921          334       (5,223)        (163)
Total assets                                       157,357      162,742      165,324      153,886      157,781
Long-term obligations:
     Collateralized floating rate notes, net
       of unamortized discount                     117,961      117,938      117,914      117,891           --

     Zero coupon mortgage note, net of
       unamortized discount                             --           --           --           --       83,739
     Obligation under capitalized lease              7,017        7,001        6,994        6,971        6,959

Per Common Share data: (a)
     Net income (loss)                               $ .18        $ .24        $ .03       $ (.51)      $ (.02)
     Distributions                                     .70          .70         1.10         1.10         1.17
</TABLE>

-------------------------

(a)  Net income for 1996, 1995 and 1994 was computed at 12,197,550, 12,142,454
     and 11,681,960 weighted average shares outstanding, respectively. Net
     income (loss) for the years 1993, and 1992 have been computed using
     10,277,469 Common Shares outstanding during the periods.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

     This discussion should be read in conjunction with the Consolidated
Financial Statements and accompanying Notes to Consolidated Financial
Statements.

                               FINANCIAL CONDITION

RECENT DEVELOPMENTS

     On February 18, 1994, the Partnership merged with and into Green Acres Mall
Corp., a wholly-owned subsidiary of the Trust in order to pursue a strategy of
enlarging and diversifying its real estate portfolio. The Trust and the
Partnership are interchangeably referred to herein as the "Company." See Item 1
and Note 1 to the Consolidated Financial Statements for a discussion of the
Company's Shares issued in connection with this Merger.

     The issuance of 10,277,469 Shares to the Unitholders and the General
Partners on account of their respective percentage interests in the Partnership
represents a reorganization of entities under common control and, accordingly,
was accounted for in a

                                        3

<PAGE>


manner similar to a pooling of interests. The financial statements of the
Partnership and the Trust have been combined at historical cost retroactive to
the beginning of the earliest year presented. The issuance of these Shares has
been reflected as of the Merger date at the amount of the Unitholders' and
General Partners' original contributions to the Partnership.

     The issuance of Shares to the Special General Partner on account of its
residual interest in the Partnership and to ERPM, the Partnership's Advisor, was
reflected in the Company's consolidated financial statements as of February 28,
1994 and March 30, 1994, respectively. The issuance of Shares to the Special
General Partner increased the Company's carrying value of land and buildings and
improvements by $3,024,000 and $13,347,000, respectively, representing the value
of the Special General Partner's residual interest in accordance with the
allocation methodology utilized by the Partnership in connection with the
Merger. Annual depreciation expense has increased by approximately $342,000 as a
result of the increased investment in the Mall. The issuance of Shares to the
Advisor was reflected as a charge to earnings during the first quarter of 1994
in the amount of $3,843,000.

     The Company's efforts to acquire shopping malls meeting the Company's
specifications were frustrated due largely to the Company's higher cost of funds
in relation to its competition. In recognition of that fact, the Board of
Trustees, on February 14, 1995, retained Goldman Sachs & Co. to assist in
connection with a possible merger of the Company into another REIT or a sale of
the Company's real estate. As discussions with merger prospects continued,
Management became aware that New York's new governor had pledged repeal of the
New York State Gains Tax (the "Gains Tax") which, at such time, would have
burdened the merger of the Company or sale of its real estate by approximately
$1.25 per share. The Company was advised that, in the near future repeal was
questionable, but there appeared to be a reasonable expectation that some relief
was a realistic prospect during the succeeding two or three years. For that
reason, the Company, on May 2, 1995, announced postponement of a merger or sale
pending resolution of the Gains Tax. Happily, in early July 1996, the Gains Tax
was repealed.

     During 1996, in order to position the Company for a possible affiliation,
Management restructured its subsidiaries. The restructuring will have no direct
impact on Shareholders except that it may facilitate a merger or sale when the
Company implements such a strategy. The Company created a limited liability
corporation (Green Acres Mall, L.L.C.) to which Green Acres Mall was transferred
pursuant to a merger with the Company's existing subsidiary which had title to
the Mall. In connection with that transfer a partnership was created between the
Company and a subsidiary of the Company.

     The Company's quarterly dividend rate for 1994 was $.275 per Share,
representing an annual dividend rate of $1.10 per Share. On March 21, 1995, the
Company announced a new quarterly dividend rate of $.175 per Share, representing
an annual dividend rate of $.70 per Common Share. The reduction in the Company's
dividend rate was primarily attributable to the sharp rise in interest on the
Company's collateralized floating rate notes (the "Floating Rate Notes");
between August 1993 and February 1995, the interest rate

                                        4

<PAGE>


rose 319 basis points, from an annual rate of 4.03% to an annual rate of 7.22%
at an interim date, with the actual annual maximum becoming 7.03% at the
Company's next reset date. In May 1995, the Company entered into an interest
rate swap agreement which fixed the annual rate at 6.87% for the period August
12, 1995 through August 12, 1996. The rate swap was not extended past August
because Management believed the risk of significant rate increases was
manageable. Indeed, the annual market-based interest rates for each of the
successive quarters were 6.31906%, 6.28% and 6.29172%, taking us to May 12,
1997, the date of the next market-determined rate fixing.

                              RESULTS OF OPERATIONS

COMPARISON OF 1996, 1995 AND 1994

     The Company made significant changes to its management structure in
connection with the Merger, effective March 1994. Previously its affairs had
been administered by third parties pursuant to property management and advisory
agreements. Commencing March 1, 1994, the Company became primarily self-managed.
The property management contract with Compass Retail Inc. ("Compass") was
amended to limit Compass' responsibility to accounting and financial services in
connection with operation of the Property and its compensation was reduced from
4% to 2% of net rental and service income. Included in net operating expenses
are property management fees paid to Compass, of $381,000, $389,000 and $289,000
for 1996, 1995 and 1994, respectively (plus advisory fees of $264,000 in 1994).
However, such reduction has been offset, in part, by compensation and other
expenses attributable to internal management. The contract with Compass
terminated December 31, 1996.

     The Company reported net income of $2,138,000 ($.18 per weighted average
Share), $2,921,000 ($.24 per weighted average Share) and $334,000 ($.03 per
weighted average Share) for the years 1996, 1995 and 1994, respectively.

   
     The decrease in 1996 net income as compared to 1995 is attributable largely
to the following: $480,000 is the charge-off in 1996 of previously accrued
revenue for HVAC (i.e., heating, ventilating and air conditioning); $530,000 is
the charge-off in 1996 of previously accrued average rent under terminated
long-term leases to tenants that became insolvent compared with an $18,000
charge-off in 1995; and $590,000 is the provision for doubtful accounts in 1996,
exclusive of charge-offs of accrued average rent under terminated long-term
leases, compared with $192,000 in 1995.
    

     The increase in 1995 net income as compared to 1994 is primarily
attributable to (a) an increase in 1995 interest expense of $2,182,000 primarily
related to the Floating Rate Notes and (b) the write-off in 1994 of $3,843,000
for termination of the advisory agreement and the residual interest of the
Special General Partner, less a gain of $839,000 on the sale of real estate.
Revenue from rental operations in 1995 was $721,000 higher than 1994 as a result
of the Company's remerchandising program between late 1992 and early 1995.

                                        5

<PAGE>


     Operating expense increases generally do not have a significant effect upon
the Company's income from rental operations inasmuch as substantially all
operating expenses are reimbursed by tenants in accordance with the terms of
their leases.

     The provision for doubtful accounts, exclusive of charge-offs of accrued
average rent under terminated long-term leases, was $590,000 in 1996, $192,000
in 1995 and $453,000 in 1994. Management's reserve in 1996 is predicated on a
more conservative approach of providing a more general reserve for current
non-specified receivables which might become uncollectible. In 1995, due to the
absence of significant credit losses and some recoveries of receivables
previously written-off, the Company recorded a lower provision for doubtful
accounts, reflecting the Company's success in its remerchandising.

     Interest expense was $10,694,000, $10,755,000 and $8,573,000 for 1996,
1995, and 1994, respectively.

FUNDS FROM OPERATIONS

   
     The National Association of Real Estate Investment Trusts defines "Funds
from Operations" as net income before depreciation, amortization, gains or
losses on sales of assets and significant non-recurring charges, and that
definition is used by the Company. The Company considers Funds from Operations a
supplemental measure of operating performance and along with net cash flow from
operating activities, financing activities and investing activities, it provides
investors with an indication of the Company's ability to incur and service debt,
to make capital expenditures and to fund other cash needs. Funds from
Operations, however, does not equate with net income or cash flows from
operating activities as defined by generally accepted accounting principles and
is not necessarily indicative of cash available to fund all cash flow needs.
Furthermore, Funds from Operations should not be considered as an alternative to
net income as an indicator of the Company's operating performance or to cash
flows from operating activities as a measure of liquidity. Funds from
Operations, as presented herein, may not be comparable to similarly titled
measures used by other REITs.

     The following table sets forth the Company's Funds from Operations and net
cash provided by operating activities, net cash (used in) provided by investing
activities and net cash used in financing activities for the periods indicated.
    

                                       6

<PAGE>


   
                                                 Years end December 31,
                                       ----------------------------------------
                                          1996           1995           1994
                                       ----------     ----------     ----------
Net income                             $2,138,000     $2,921,000     $  334,000
 Depreciation and amortization          4,382,000      4,403,000      4,164,000
 Gains or losses on sales of assets           --              --       (839,000)
                                       ----------     ----------     ----------
Funds from Operations                  $6,520,000     $7,324,000     $4,498,000
                                       ==========     ==========     ==========
Net Cash Provided by Operating
 Activities (See Below)                $9,797,000     $7,229,000     $7,715,000
                                       ==========     ==========     ==========
Net Cash (Used in) Provided by
 Investing Activities                  $ (428,000)    $ (863,000)    $  446,000
                                       ==========     ==========     ==========
Net Cash Used in
 Financing Activities                  $9,369,000     $6,366,000     $8,734,000
                                       ==========     ==========     ==========
    

     Distributions to security holders were $8,537,000 ($.70 per Share) in 1996,
$9,706,000 (an annual rate of $1.10 per Share for the distributions paid in
February 1995 and $.70 per Share thereafter) in 1995 and $12,723,000 ($1.10 per
Share) in 1994. The dividends on the Shares electing inclusion in the dividend
reinvestment plan were repaid to the Company for issuance of additional Shares
to the electing shareholders, resulting in receipt of proceeds of $118,000 in
1996, $740,000 in 1995 and $1,489,000 in 1994. The Company has paid out
substantially all of its net cash flow since inception.

CASH FLOWS FROM OPERATING, INVESTING, AND FINANCING ACTIVITIES

     Cash flows from operating activities for 1996 and 1995 of $9,797,000 and
$7,229,000, respectively, were each affected by several noteworthy factors which
entered into the calculation of the respective net incomes which amounted to
$2,138,000 and $2,921,000, discussed above. Secondly, cash is increased by
non-cash deductions for depreciation, amortization and additions to the
provision for doubtful accounts, less the increase in accrued average rent on
long-term leases. Finally, cash was provided in 1996 by an increase in accounts
payable and other liabilities of $1,811,000, whereas changes in working capital
components in 1995 reduced cash by $675,000 (an increase in accounts receivable
and other assets ($1,472,000) in excess of the $797,000 increase in current
liabilities).

     The cash flows from operating activities for 1995 and 1994 were $7,229,000
and $7,715,000, respectively. In addition to the items affecting the relative
incomes for 1995 and 1994, discussed above, cash generated from operating
activities was primarily due to changes in working capital components along with
adjustments related to non-cash deductions.

     Cash flows used in investing activities in 1996 were $428,000, a decrease
of $435,000 from the amount employed in 1995, resulting from a reduction in
capital expenditures that had been employed in remerchandising the Mall.

                                        7

<PAGE>


     Cash flows from investing activities were $1,309,000 less in 1995 than 1994
during which the Company realized $1,935,000 from Home Depot attributable to the
sale of approximately two acres of land. In addition, 1995 capital expenditures
were $626,000 less than in 1994.

     Cash flows used in financing activities were $9,369,000 and $6,366,000 for
1996 and 1995, respectively. Distributions to shareholders decreased $1,169,000
as a result of the reduction in the quarterly dividend rate to $.175 per Share
from $.275 per Share commencing with the May 15, 1995 distribution. In addition,
the proceeds from dividend reinvestment decreased from $740,000 in 1995 to
$118,000 in 1996 by reason of the expiration, after February 1995, of the
requirement that dividends on Shares issued to the former partners of the
Special General Partner (to compensate for the residual interest in the
Partnership) and to the Advisor (to compensate for termination of the Advisory
Agreement) were to be reinvested in the Company's Shares. In addition, bank
borrowing decreased $950,000 at year-end 1996, whereas borrowing increased
$2,600,000 at year-end 1995.

     Cash flows used in financing activities for 1995 and 1994 were $6,366,000
and $8,734,000, respectively. Distributions paid by the Company in 1995
decreased by $3,017,000 as a result of the reduction in the quarterly dividend
rate to $.175 per Share discussed in the preceding paragraph. Proceeds from
dividend reinvestment was $740,000 in 1995 versus $1,489,000 in 1994. After
February 1995, the dividend reinvestment requirement described in the preceding
paragraph was no longer applicable. In addition, bank borrowing at year-end 1995
increased $2,600,000, whereas at year-end 1994 bank borrowing increased
$2,500,000.

DEBT REFINANCING

     On August 19, 1993, the Company, through a wholly-owned subsidiary, issued
Floating Rate Notes in an aggregate principal amount of $118,000,000. The
Floating Rate Notes are collateralized by a first mortgage on substantially all
of the real property comprising Green Acres Mall and a first leasehold mortgage
on the Plaza. The remainder of the proceeds from the Floating Rate Notes was
used to purchase an interest rate cap (limiting the Company's maximum annual
rate to 9%) and to pay mortgage recording taxes and other costs incurred in
connection with the refinancing. The entire principal amount of the Floating
Rate Notes is due on their maturity date, August 19, 1998. The notes have a
floating interest rate equal to 78 basis points in excess of the three-month
LIBOR. The interest rate on this debt, which is subject to quarterly reset, was
6.28% and 6.87% at December 31, 1996 and 1995, respectively.

     Payments of interest expense will be funded from cash flows from operations
supplemented, if necessary, by borrowings under the revolving credit facility
described below. Amortization of the deferred financing costs, approximately
$1,200,000 per annum, results in an additional non-cash charge to interest
expense. Management anticipates that refinancing costs for the existing mortgage
will be significantly lower than in 1993.

                                        8

<PAGE>


     In May 1995, to eliminate the risk of increases in the LIBOR rate the
Company entered into a swap transaction with Goldman Sachs Capital Markets, L.P.
which fixed the interest rate on the Floating Rate Notes for the period of
August 12, 1995 through August 12, 1996 at 6.87%.

     The mortgage and indenture relating to the Floating Rate Notes limit
additional indebtedness that may be incurred by Green Acres Mall Corp. (now
Green Acres Mall, L.L.C.) but not by the Trust. Those agreements also contain
certain other covenants which, among other matters, effectively subordinate
shareholder distributions to the debt service requirements of the Floating Rate
Notes.

     On August 19, 1993, the Partnership also obtained an unsecured revolving
credit facility in the amount of $3,400,000 with interest at 1% over the
lender's prime rate. The amount available under this loan was increased to
$5,900,000 in August 1994 and to $6,900,000 in April 1995. The loan added an
optional LIBOR plus 250 basis point rate option and a maturity of December 31,
1996. In December 1996 the maturity date was extended to August 18, 1998,
subject to the lender's right to call the loan on 60 days notice commencing
December 18, 1997, with the additional availability of $600,000 for capital
expenditures. As of December 31, 1996, the balance of this loan was $5,950,000.

     The Company anticipates that it will refinance the Floating Rate Notes on
or before maturity in August 1998. Given the substantial market value of the
Company's assets, Management anticipates that it will have considerable
flexibility in obtaining such refinancing. However, Management considers it
premature to identify any specific sources of such financing.

DIVIDENDS

     The Company's quarterly dividend rate for 1994 was $.275 per Share,
representing an annual dividend rate of $1.10 per Share. On March 21, 1995, the
Company announced a new quarterly dividend rate of $.175 per Share, representing
an annual dividend rate of $.70 per Share. The reduction in the Company's
dividend rate was primarily attributable to the surprisingly sharp rise in
interest on the Company's collateralized Floating Rate Notes as discussed above.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       

                                        9

<PAGE>


       

                              Arbor Property Trust

              INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
                                    SCHEDULES

                                                                           Page
                                                                           ----
Arbor Property Trust              

   
Report of Independent Public Accountants.................................   11

Consolidated Balance Sheets as of December 31, 1996 and 1995 ............   12

Consolidated Statements of Operations for the years ended
      December 31, 1996, 1995, and 1994...................................  13

Consolidated Statements of Shareholders' Equity for the years
      ended December 31, 1996, 1995, and 1994.............................  14

Consolidated Statements of Cash Flows for the years ended
      December 31, 1996, 1995, and 1994...................................  15

Notes to Consolidated Financial Statements................................  16
    


Consolidated Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts

Schedule III - Real Estate and Accumulated Depreciation

                                       10

<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Trustees of
Arbor Property Trust:


We have audited the accompanying consolidated balance sheets of Arbor Property
Trust (a Delaware Business Trust) and Subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations, shareholders'
equity and cash flows for the years ended December 31, 1996, 1995 and 1994.
These consolidated financial statements and the schedules referred to below are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and schedules based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Arbor
Property Trust and Subsidiary as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1996, 1995 and 1994 in conformity with generally accepted
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The accompanying schedules
listed in the Index to the Financial Statements and Financial Statement
Schedules are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not a part of the basic consolidated
financial statements. The accompanying schedules have been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.


                                                            ARTHUR ANDERSEN LLP


      Philadelphia, PA
      March 13, 1997

                                       11

<PAGE>


                              ARBOR PROPERTY TRUST
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>

                                                                            December 31,
                                                                     ------------------------
                                                                       1996            1995
                                                                     --------        --------
                                     ASSETS
<S>                                                                  <C>             <C>     
Investments in Green Acres Mall, at cost:
     Land                                                            $ 30,295        $ 30,295
     Buildings and improvements                                       140,448         140,022
     Capitalized lease                                                  7,125           7,125
     Personal property                                                  1,177           1,175
                                                                     --------        --------
                                                                      179,045         178,617
     Less accumulated depreciation                                     35,159          30,890
                                                                     --------        --------
                                                                      143,886         147,727
Tenant security deposits & escrowed cash                                  599             625
Accounts receivable (net of allowances for
     doubtful accounts of $527 and $129)                                8,970           9,281
Other assets, net                                                       3,902           5,109
                                                                     --------        --------
TOTAL ASSETS                                                         $157,357        $162,742
                                                                     ========        ========
                                    


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
     Collateralized floating rate notes (net of
         unamortized discount of $39 and $62)                        $117,961        $117,938
     Distributions payable                                              2,149           2,129
     Obligation under capital lease                                     7,017           7,001
     Note payable to bank                                               5,950           6,900
     Accounts payable and other liabilities                             6,156           4,357
     Due to affiliates                                                     33              37
                                                                     --------        --------
                                                                      139,266         138,362
                                                                     --------        --------

Commitments and Contingencies:

Shareholders' Equity:
     Shares of beneficial interest, without par value:
         Authorized:  5,000,000 preferred shares,
         45,000,000 common shares, and 50,000,000
         excess shares; Issued and outstanding: 12,280,739
          and 12,164,218 common shares                                118,121         117,991
     Distributions in excess of accumulated earnings                 (100,030)        (93,611)
                                                                     --------        --------
                                                                       18,091          24,380
                                                                     --------        --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $157,357        $162,742
                                                                     ========        ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       12

<PAGE>


                              ARBOR PROPERTY TRUST
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (in thousands, except shares and per share data)

<TABLE>
<CAPTION>

                                                                                  Years Ended December 31,
                                                                            1996             1995              1994
                                                                       ----------       ----------        ----------
<S>                                                                       <C>              <C>               <C>    

   
REVENUES

  Revenues from rental operations                                         $20,397          $20,655           $20,164

  Operating expense reimbursements                                         15,293           15,289            14,269

  Other income, including interest income of $27, $21 and $23               1,950            1,278             1,245
                                                                       ----------       ----------        ----------

  Total Revenues                                                          $37,640          $37,222           $35,678
                                                                       ----------       ----------        ----------

OPERATING EXPENSES:

  Real Estate Taxes                                                       $ 8,768          $ 8,450           $ 8,147
  Utilities                                                                 1,694            1,715             1,704
  Maintenance and Operating Expenses (includes fees to
    affiliates of $381, $389 and $289)                                      6,757            6,328             6,208

  Advisory and termination fees paid to former advisor,
    discontinued March 30, 1994 (including $3,843 as a result
    of the termination of the advisory agreement in 1994)                      --               --             4,107
  Provision for doubtful accounts (including write-offs of
    accrued straight-line rents of $530, $18 and $39)                       1,120              210               492
  Depreciation and amortization                                             4,382            4,403             4,164
                                                                       ----------       ----------        ----------
  Total Operating Expenses                                                $22,721          $21,106           $24,822
                                                                       ----------       ----------        ----------

Income from rental operations                                              14,919           16,116            10,856

Interest expense (includes amortization of refinancing costs)              10,694           10,755             8,573
Unusual and nonrecurring expenses                                              --              262                --
Other expenses                                                              2,087            2,178             2,788
                                                                       ----------       ----------        ----------

Income (loss) before gain on sale of real estate                            2,138            2,921              (505)
Gain on sale of real estate                                                  --               --                 839
                                                                       ----------       ----------        ----------
Net income                                                                $ 2,138          $ 2,921           $   334
                                                                       ==========       ==========        ==========

Income (loss) per weighted average share:
Income (loss) before gain on sale of real estate                          $  0.18          $  0.24          ($  0.04)
Gain on sale of real estate                                                  --               --                0.07
                                                                       ----------       ----------        ----------
Net income                                                                $  0.18          $  0.24           $  0.03
                                                                       ==========       ==========        ==========

Weighted average number of shares outstanding                          12,197,550       12,142,454        11,681,960
                                                                       ==========       ==========        ==========
    

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       13

<PAGE>


                              ARBOR PROPERTY TRUST
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                           Distributions in
                                                               Shares of      Shares of       Excess of
                                                               Beneficial     Beneficial     Accumulated
                                                                Interest       Interest        Earnings        Total
                                                               ----------     ----------     -----------      -------
<S>                                                            <C>                <C>            <C>             <C>    
   
Balance, January 1, 1994                                       10,277,469      $ 95,500       ($ 75,134)      $20,366

Net income for the year ended December 31, 1994                                                     334           334
Distributions ($1.10 per Common Share)                                                          (13,218)      (13,218)
Shares issued in conversion to REIT                             1,316,251        16,371                        16,371
Shares issued in termination of Advisory Agreement                308,933         3,843                         3,843
Restricted Shares issued to executive officers                                        6                             6
Shares issued upon dividend reinvestment                          171,121         1,489                         1,489
                                                               ----------      --------       ---------       -------
Balance, December 31, 1994                                     12,074,774       117,209         (88,018)       29,191

Net income for the year ended December 31, 1995                                                   2,921         2,921
Distributions ($.70 per Common Share)                                                            (8,514)       (8,514)
Restricted Shares issued to executive officers                                       42                            42
Shares issued upon dividend reinvestment                           89,444           740                           740
                                                               ----------      --------       ---------       -------
Balance, December 31, 1995                                     12,164,218       117,991         (93,611)       24,380

Net income for the year ended December 31, 1996                                                   2,138         2,138
Distributions ($.70 per Common Share)                                                            (8,557)       (8,557)
Restricted Shares issued to executive officers                    100,000           737                           737
Note Receivable from executive officer for Restricted Shares                       (725)                         (725)
Shares issued upon dividend reinvestment                           16,521           118                           118
                                                               ----------      --------       ---------       -------
Balance, December 31, 1996                                     12,280,739      $118,121       ($100,030)      $18,091
                                                               ==========      ========       =========       =======
    
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       14

<PAGE>


                              ARBOR PROPERTY TRUST
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                     Years Ended December 31,
                                                                                 1996          1995          1994
                                                                               -------       -------       --------
<S>                                                                             <C>           <C>           <C>    
   
Cash flows from operating activities:
     Net income                                                                 $2,138        $2,921        $   334
     Adjustments to reconcile net income to net
         cash provided by operating activities:
            Provision for doubtful accounts, including write-offs of
                accrued straight-line rents of $530, $18 and $39                 1,120           210            492
            Depreciation and amortization                                        4,382         4,403          4,164
            Amortization of deferred financing costs                             1,237         1,245          1,212
            Amortization of collateralized floating rate note discount              23            24             23
            Amortization of deferred compensation                                   12            42           --
            Termination of advisor agreement                                      --            --            3,843
            Gain on sale of real estate                                           --            --             (839)
            Changes in assets and liabilities:
                Increase in accrued rent receivable                               (926)         (941)        (1,247)
                (Increase) decrease  in accounts receivable, tenant
                    security deposits and escrowed cash  and other assets         --          (1,472)           161
                Increase (decrease) in accounts payable and
                    other liabilities and due to affiliates                      1,811           797           (428)
                                                                               -------       -------       --------
     Net cash provided by operating activities                                   9,797         7,229          7,715
                                                                               -------       -------       --------
Cash flows from investing activities:
     Proceeds from sale of real estate, net                                       --            --            1,435
     Additions to buildings and improvements
         and personal property                                                    (428)         (863)        (1,489)
     Decrease in restricted cash                                                  --            --              500
                                                                               -------       -------       --------
     Net cash (used in) provided by investing  activities                         (428)         (863)           446
                                                                               -------       -------       --------
Cash flows from financing activities:
     Distributions paid                                                         (8,537)       (9,706)       (12,723)
     Proceeds from dividend reinvestment                                           118           740          1,489
     Borrowings under bank line of credit                                        2,210         5,700          5,500
     (Repayment of) bank line of credit                                         (3,160)       (3,100)        (3,000)
                                                                               -------       -------       --------
     Net cash used in financing  activities                                     (9,369)       (6,366)        (8,734)
                                                                               -------       -------       --------
Decrease in cash and short-term investments                                          0             0           (573)
Cash and short-term investments, beginning of year                                   0             0            573
                                                                               -------       -------       --------
Cash and short-term investments, end of year                                   $     0       $     0       $      0
                                                                               =======       =======       ========
</TABLE>
    


The accompanying notes are an integral part of these consolidated financial
statements.

                                       15

<PAGE>


                              Arbor Property Trust
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1996

NOTE 1: Merger Transaction and Basis of Presentation

Arbor Property Trust (the "Trust"), formed on September 8, 1993 as a Delaware
business trust, has an indefinite life and has elected real estate investment
trust ("REIT") status under the Internal Revenue Code of 1986, as amended, with
the filing of its Federal Income Tax Return for the year ended December 31,
1994. On February 28, 1994, EQK Green Acres, L.P. (the "Partnership") merged
with and into Green Acres Mall Corp., a wholly-owned subsidiary of the Trust
(the "Merger"). Prior to February 28, 1994, the Trust did not have significant
operations. On April 17, 1996, the Trust formed APT, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Trust ("APTI"). In addition, on
April 17,1996, APTI and the Trust formed Arbor Property, L.P. ("APLP"), a
Delaware limited partnership of which APTI is the general partner and the Trust
is the limited partner, and APTI and APLP in turn formed Green Acres Mall L.L.C.
("GAMLLC"), a Delaware limited liability company of which APTI and APLP are the
only members. On April 30, 1996, the Trust caused the merger of Green Acres Mall
Corp. with and into GAMLLC, which was the surviving entity of such merger. The
Trust and the Partnership are interchangeably referred to herein as the
"Company". The Company owns and operates Green Acres Mall (the "Property" or the
"Mall"), a 1.6 million square foot super-regional enclosed shopping mall complex
situated in southwestern Nassau County, Long Island, New York.

     The Partnership had been formed pursuant to an Agreement of Limited
Partnership dated as of June 30, 1986 (and amended and restated as of August 27,
1986) to acquire and operate the Mall. In 1991, the Partnership completed the
conversion of a leased industrial building, located adjacent to the Property,
into a convenience shopping center known as the Plaza at Green Acres (the
"Plaza").

     Pursuant to the merger, Unitholders of the Partnership received 10,172,639
Common Shares of Beneficial Interest of the Trust (the "Common Shares") on
account of their 98.98% percentage interest in the Partnership; the General
Partners of the Partnership received 104,830 Common Shares on account of their
1.02% percentage interest in the Partnership; and the Special General Partner of
the Partnership received 1,316,251 Common Shares in satisfaction of its residual
interest in the Partnership. Pursuant to the termination of the Partnership's
advisory agreement (see Note 5), the Advisor received 308,933 Common Shares on
March 30, 1994. In addition, pursuant to an agreement with the Company, all
distributions, prior to May 1995, with respect to the Common Shares issued for
the Special General Partner's residual interest in the Partnership and the
termination of the agreement with the Advisor were reinvested through a dividend
reinvestment plan in newly issued Common Shares. Distributions aggregating
$118,000, $740,000 and $1,489,000 were reinvested under this plan in 1996, 1995
and 1994, respectively.

                                       16

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     The issuance of 10,277,469 Common Shares to the Unitholders and the General
Partners on account of their respective interests in the Partnership represented
a reorganization of entities under common control and, accordingly, was
accounted for in a manner similar to a pooling of interests. The financial
statements of the Trust and the Partnership have been combined at historical
cost retroactive to January 1, 1992. The issuance of these Common Shares have
been reflected as of January 1, 1992 at an amount that equals the Unitholders'
and General Partners' original contribution to the Partnership.

     The issuances of Common Shares to the Special General Partner and the
Advisor have been reflected in the Company's financial statements as of February
28, 1994 and March 30, 1994, respectively. The issuance of such Common Shares to
the Special General Partner has increased the Trust's carrying value of land and
buildings and improvements by $3,024,000 and $13,347,000, respectively,
representing the agreed-upon value of the Special General Partner's residual
interest in the Partnership in connection with the merger. The issuance of
Common Shares to the Advisor was reflected as a charge to earnings during 1994
in the amount of $3,843,000.

NOTE 2: Summary of Significant Accounting Policies

Basis of Presentation

     The consolidated financial statements included the accounts of the Trust
and GAMLLC, which is indirectly wholly-owned by the Company, and all other
subsidiary entities of the Company. All significant intercompany transaction and
balances have been eliminated.

Use of Estimates in the Preparation of Financial Statements

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

                                       17

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue Recognition

     The Company recognizes minimum rental income from leases with scheduled
rent increases on a straight-line basis over the lease term. Accrued rent
receivable, included in accounts receivable in the accompanying balance sheets,
represents the difference between the straight-line rent and amounts currently
due. At December 31, 1996 and 1995 the accrued rent receivable was $4,580,000
and $4,184,000, respectively. Percentage rents and payments for taxes, insurance
and maintenance by tenants are estimated and accrued.

Capitalization, Depreciation and Amortization

     Depreciation of the Property is provided on a straight-line basis over the
estimated useful lives of the related assets, ranging generally from 10 to 40
years. The capitalized lease asset is amortized over its term. Deferred
financing costs, which are included in other assets in the accompanying balance
sheets, are amortized on a straight-line basis over the term of the related
debt. At December 31, 1996 and 1995, deferred financing costs were $6,063,000
and $6,063,000, net of accumulated amortization of $4,175,000 and $2,938,000,
respectively.

Deferred Leasing Costs

     Costs incurred in connection with the execution of a new lease, including
leasing commissions, costs associated with the acquisition or buy-out of
existing leases and legal fees, which are included in other assets in the
accompanying balance sheets, are deferred and amortized over the term of the new
lease. At December 31, 1996 and 1995 deferred leasing costs were $2,173,000 and
$1,984,000, net of accumulated amortization of $604,000 and $491,000,
respectively.

Income Taxes

     Effective with the filing of the Federal income tax return for the year
ended December 31, 1994, the Company elected and qualifies as a real estate
investment trust under Sections 856-860 of the Internal Revenue Code and intends
to remain so qualified. Accordingly, no provision has been made for Federal
income taxes in the accompanying financial statements.

     The Company is subject to a Federal excise tax computed on a calendar year.
The excise tax equals 4% of the excess, if any, of 85% of the Company's ordinary
income plus 95% of the Company's capital gain net income for the calendar year
over cash distributions during the calendar year, as defined. No provision for
excise tax was made in the accompanying financial statements, as no tax was due.

                                       18

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     The tax status of distributions paid to beneficiaries was composed of the
following for the calendar years ended December 31, 1996, 1995 and 1994:


                                        1996               1995         1994
                                        ----              -----        -----
Ordinary Income                         $.25              $ .24        $  --
Return of Capital                        .45                .56         1.10
                                        ----              -----        -----
                                        $.70              $ .80        $1.10

Consolidated Statements of Cash Flows

     Cash equivalents include short-term investments with an original maturity
of three months or less.

     Included in the consolidated statements of cash flows are cash payments for
interest of $9,549,000, $9,598,000 and $6,859,000 for the years ended December
31, 1996, 1995 and 1994, respectively.

     Other non-cash financing and investing activities are discussed in Note 1.

Fair Value Disclosures

     The carrying value of the Company's collateralized floating rate notes
approximates fair value since the interest rate on the notes is reset quarterly.
The interest rate cap agreement described in Note 4 entitles the Company to
receive from the counter-party (a major insurance company) the amounts, if any,
by which the Company's interest payments on $118,000,000 of collateralized
floating rate notes exceed 9%. The purchase price paid for the interest rate cap
is included in other assets in the accompanying balance sheets and is amortized
to interest expense over the term of the agreement. At December 31, 1996, the
unamortized value of the cap was $334,000. The fair value of the cap at December
31, 1996 of $27,000 was determined by reference to a quote obtained from the
counter-party.

     The carrying value of the Company's other financial instruments (cash,
receivables and payables) approximate their market value because of the
short-term maturity of those instruments.

                                       19

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reserve for Asset Impairment

   
     The Company periodically reviews its long-lived assets for impairment in
accordance with Statement of Financial Accounting Standard No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." The Statement requires that the Company review long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an individual asset may not be recoverable. In performing
this review, the Company estimates the future cash flows expected to result from
the use of the asset and its eventual disposition. If the sum of the expected
future flows (undiscounted and without interest charges) is less than the
carrying amount of the asset, an impairment loss will be recognized. The amount
of such impairment will be equal to the amount by which the carrying amount of
the asset exceeds the fair market value of the asset. At December 31, 1996, the
Company has concluded no reserve for asset impairment is required.
    

       

Reclassifications

     Certain reclassifications have been made to the prior years' consolidated
financial statements in order to conform their presentation to that used in the
current year.


NOTE 3: Leasing Arrangements

The Company as Lessor

   
     The Company leases shopping center space to approximately 200 tenants,
generally under non-cancelable operating leases. The leases generally provide
for minimum rentals, plus percentage rentals based upon the retail stores' sales
volume. No single tenant accounted for greater than 10% of revenues from rental
operations during 1996, 1995 and 1994.
    

     Percentage rentals amounted to $1,803,000, $2,041,000 and $1,871,000 for
the years ended December 31, 1996, 1995 and 1994, respectively. In addition, the
tenants pay certain utility charges to the Company and, in most leases,
reimburse their proportionate share of real estate taxes and common area
expenses.

                                       20

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     The Company leases space to national, regional, and local tenants.
Diversity in the tenant mix minimizes exposure to credit risk from geographic
concentration. However, regional and local tenants may represent a higher level
of credit risk. At December 31, 1996, the Company had certain lessees operating
under Chapter 11 Bankruptcy. Minimum rentals, plus percentage rentals on these
leases represented 2.7% of rental revenues from operations in 1996. In certain
instances, the Company obtains security deposits to mitigate risk from less
creditworthy tenants.

     Future minimum rentals under existing leases at December 31, 1996 are as
follows:

   Years ending
   December 31,                                                   Amount
   ------------                                                ------------

      1997 .................................................   $ 17,211,000

      1998 .................................................     16,918,000

      1999 .................................................     16,727,000

      2000 .................................................     15,894,000

      2001 .................................................     14,498,000

      Thereafter ...........................................     82,009,000
                                                               ------------
                                                               $163,257,000
                                                               ============

As of December 31, 1996, the Company has signed sublease agreements with certain
tenants of the Plaza, which generally provide for rentals based on a percentage
of tenant sales in addition to base rental. Sublease income of $35,752,000 will
be received over the remaining terms of the respective leases. Such income is
included in the future minimum rentals table presented above. Sublease income
totaled $2,409,000, $2,398,000, and $2,394,000 for the years ended December 31,
1996, 1995 and 1994, respectively.

                                       21

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The Company as Lessee

     In 1990, the Company entered into a 30-year lease, with three, six-year
renewal options, on the Plaza, an adjacent 9-acre site on which there is
situated an industrial building that has been renovated and converted into
retail shopping space. The Plaza opened for business in September 1991. In
addition to specified rents, the Plaza lease requires the Company to pay
property taxes, insurance, operating expenses and additional rentals based on a
percentage of revenues generated by the operations of the Plaza. No such
additional rentals were paid in 1996, 1995 or 1994. In accordance with generally
accepted accounting principles, the portion of the lease related to the building
is accounted for as a capital lease while the portion related to the land is
accounted for as an operating lease.

     The following is a schedule of future minimum lease payments under the
lease as of December 31, 1996: 

                                                     Capital         Operating 
                                                      Lease            Lease
                                                    Component        Component
                                                   ------------    ------------

     1997 ........................................ $   702,000     $   788,000
     1998 ........................................     707,000         793,000
     1999 ........................................     707,000         793,000
     2000 ........................................     707,000         793,000
     2001 ........................................     707,000         793,000
     Thereafter ..................................  26,610,000      29,890,000
                                                   -----------     -----------
     Minimum Lease Payments                        $30,140,000     $33,850,000
                                                   -----------     -----------
     Less Amount Representing Interest             (23,123,000)

     Present Value of Minimum Lease Payments       $ 7,017,000
                                                   ===========


     For the years ended December 31, 1996, 1995 and 1994, total rental expense
under the operating lease portion of this lease was $724,000, $728,000, and
$731,000, respectively, all of which represented minimum lease payments.

                                       22

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


NOTE 4: Debt Financing

     On August 19, 1993, the Company completed a comprehensive refinancing by
issuing collateralized floating rate notes ("floating rate notes") in the
aggregate principal amount of $118,000,000. The proceeds from the sale of the
floating rate notes were used, in part, to pay the approximate $95,399,000
purchase price for the zero coupon first mortgage note previously outstanding
and retire a $16,500,000 term loan note at face value. The proceeds from the
issuance of the floating rate notes were also used to purchase an interest rate
cap for $1,023,000 and to pay mortgage recording taxes and other costs incurred
in connection with this refinancing. The floating rate notes were recorded net
of a $118,000 discount.

     The floating rate notes are due August 19, 1998 and are collateralized by a
first mortgage on substantially all of the real property comprising Green Acres
Mall and a first leasehold mortgage on the Plaza. The floating rate notes bear
interest at a rate equal to 78 basis points in excess of the three-month LIBOR,
which is payable on a quarterly basis which commenced on November 12, 1993. The
interest rate is subject to reset on such interest payment dates. The weighted
average interest rate for 1996, 1995 and 1994 was 6.76%, 6.89% and 5.29%,
respectively. The interest rate cap provides that the effective interest rate
applicable to the $118,000,000 face value of the notes will not exceed 9% per
annum through their maturity date. Should such debt's interest rate rise above
9%, the Company would record amounts receivable from the counter-party as a
reduction to interest expense. The Company is exposed to certain losses in the
unlikely event of non-performance by the counter-party to this agreement. In May
1995, the Company entered into a swap transaction with Goldman Sachs Capital
Markets, L.P. which fixed the interest rate on the floating rate notes for the
period of August 12, 1995 through August 12, 1996 at 6.87%. This agreement fixed
the rate for a period of one year and eliminated the risk of increases in the
LIBOR rate. The weighted average interest rate for 1996 and 1995, without the
existence of the swap, would have been 6.39% and 6.77%, respectively.

     The mortgage and indenture agreement relating to the floating rate notes
limit additional indebtedness that may be incurred by Green Acres Mall L.L.C.
Those agreements also contain certain other covenants which, among other
matters, effectively subordinate distributions from Green Acres Mall L.L.C. to
debt service requirements of the floating rate notes. Management believes it is
in compliance with all covenants under the indenture and line of credit
agreements, discussed below, at December 31, 1996.

                                       23

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     As part of its comprehensive debt restructuring, the Company also obtained
a $3,400,000 unsecured line of credit facility from a bank in 1993. The line of
credit agreement bears interest at 1% above the bank's prime rate. Effective
August 8, 1994, this line of credit was increased to $5,900,000 and its maturity
extended to April, 1995. In April, 1995, this line of credit was modified to
allow the Company to elect an interest rate of prime plus 1% or Euro-rate plus
2.5% and increase the amount available to $6,900,000 and extend the maturity to
December 31, 1995. In December, 1995 the maturity was extended to December 31,
1996. In December 1996, the maturity was extended to August 18, 1998, subject to
the bank's right to call the loan on 60 days notice commencing December 18,
1997, and provided an additional $600,000 of availability to be used for capital
expenditures. The line of credit agreement also contains certain covenants
which, among other matters, limit the amount of the Company's annual dividend to
an amount that does not exceed operating cash flow (as defined), and requires
the Company to maintain a quarterly debt service coverage ratio (as defined). At
December 31, 1996 and 1995, the Company had borrowed $5,950,000 and $6,900,000,
respectively, under this credit facility. The weighted average amounts
outstanding under short-term borrowings during 1996, 1995 and 1994 were
$6,046,000, $5,213,000 and $2,890,000, with corresponding interest rates of
8.5%, 9.9% and 8.2%. The maximum outstanding borrowings during 1996, 1995 and
1994 were $6,900,000, $6,900,000 and $5,150,000, respectively.

NOTE 5: Transactions with Affiliates

     Prior to the termination of its advisory agreement as discussed below,
Equitable Realty Portfolio Management, Inc., a wholly owned subsidiary of
Equitable Real Estate Investment Management, Inc. ("Equitable Real Estate"),
acted as "Advisor" to the Partnership. The Advisor made recommendations to the
Managing General Partner concerning investments, administration and day-to-day
operations. In 1994, the Advisor earned a base advisory fee of $164,000. The
Advisor also received an annual subordinated incentive advisory fee of
$1,250,000 which increased in proportion to the amount by which aggregate
distributions of operating cash flow to Unitholders exceeded a 10% return on the
Unitholders' Adjusted Capital Contributions (as defined in the Partnership
Agreement). Payment of this fee was subordinated to a minimum annual
distribution equal to a 10% return to Unitholders. Portions of the fee not paid
in any year because of such subordination were to be deferred and paid from
future

                                       24

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


operating cash flow on a subordinated basis. In 1994, the Advisor earned an 
incentive advisory fee of $100,000.

     Pursuant to the merger discussed in Note 1, upon the expiration of a 30-day
transition period agreement commenced March 1, 1994, the agreement with the
Advisor was terminated.

     The Partnership had entered into a property management agreement with
Compass Retail, Inc. ("Compass"), a subsidiary of Equitable Real Estate,
effective January 1, 1991. Pursuant to this agreement, property management fees
were based on 4% of net rental and service income collected from tenants. In
connection with the merger discussed in Note 1, the agreement with Compass was
amended to limit Compass' scope of responsibilities primarily to accounting and
financial services in connection with the operations of the Property, and the
Plaza and its compensation was reduced from 4% to 2% of net rental and service
income as of March 1, 1994. For the years ended December 31, 1996, 1995 and
1994, management fees earned by Compass were $381,000, $389,000 and $289,000,
respectively. In addition, in 1994 Compass earned a fee of $40,000 for certain
tax reporting services provided to the Company. The agreement with Compass
terminated December 31, 1996.

     In 1996, 1995 and 1994, the Company incurred $147,000, $156,000 and
$144,000, respectively, related to a lease for the executive offices, including
furniture, telephone services, and other office services and equipment, with a
partnership owned by the President of the Company and his son. Beginning January
1, 1997, the Company has a lease for $4,768 monthly through June 30, 1997.

NOTE 6: Development Activities

     In April 1993, the Company completed the acquisition of an adjacent
industrial tract (the "Bulova Parcel") through a subsidiary partnership and
entered into a lease/purchase agreement for this real estate with Home Depot.
Pursuant to the lease/purchase agreement, Home Depot paid $9,500,000 to the
Company to complete the purchase of the Bulova Parcel. As a result of the
completion in 1993 of specified environmental work, the lease/purchase agreement
obligated Home Depot to take title to the Bulova Parcel. In connection with this
lease/purchase agreement, the Company recognized a gain on sale of real estate
of $440,000 during 1993. Subsequent to December 31, 1993, the Company's
restricted cash balance of $500,000 was released from escrow.

                                       25

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     In January 1994, the Company completed the sale to Home Depot of an
approximate two acre parking lot tract adjacent to the Bulova Parcel. The
proceeds from the sale were $1,500,000, resulting in a 1994 gain on sale of real
estate of approximately $839,000.

NOTE 7: Incentive Share Plan

     On January 25, 1994, the Board of Trustees adopted an Incentive Share Plan
(the "Plan") which provides for the issuance of up to 1,500,000 Common Shares to
outside Trustees, officers and key executives of the Company through options to
purchase Common Shares, share appreciation rights, and restricted share grants.
Common Share options may be options that are intended to qualify as incentive
options under the Internal Revenue Code of 1986, as amended, or options which
are not intended to so qualify. The Plan was approved by the shareholders at the
annual meeting in November 1994. Options will be granted with an exercise price
that approximates the fair value of the Common Shares on the grant date.

   
     Concurrent with the adoption of this Plan, the Company granted options to
purchase 7,500 Common Shares to each of its four eligible Trustees and options
to purchase an aggregate of 875,000 (since reduced to 825,000) Common Shares to
certain officers. Certain officers also received in aggregate 5,950 restricted
Common Shares. All such options have an exercise price of $10 per Common Share
and vest ratably commencing one year from the grant date in equal annual
increments over three and five years for the Trustee and officer options,
respectively. The restricted shares become unrestricted in equal annual
increments over three years commencing one year from the grant date. The market
value of the restricted shares awarded of $60,000 was amortized to expense over
the three year vesting period and was $12,000 and $42,000 in 1996 and 1995,
respectively. No options were exercised during 1996 and 1995. At December 31,
1996, 489,050 Common Shares are available to be awarded under the Plan.

     The following table shows the activity and balances under the Plan:

<TABLE>
<CAPTION>

                                                      1996           1995              1994
                                                    -------         -------          --------
<S>                                                 <C>             <C>              <C>                   
Outstanding, beginning of the year                  910,950         910,950             --
Granted at:
             $10 per share                                                           910,950(a)
             $7.25 per share                        100,000(b)         --               --

Outstanding, end of year                          1,010,950         910,950          910,950
</TABLE>

(a)  Includes 30,000 options granted to Trustees, and 5,950 Restricted Common
     Shares and 875,000 options issued to certain officers.

(b)  Represents the 100,000 of Restricted Common Shares issued to Ms. Smith, 
     which is discissed below.
    

     In connection with her appointment to the position of Executive Vice
President -- Chief Operating Officer of the Company in July 1996, the Company
entered into an arrangement with Ms. Smith pursuant to which her compensation
would be increased to $150,000 per year, with an incentive bonus of 30% of such
base compensation (subject to adjustment to 15%-45% of such base compensation)
based on the level of achievement of specified goals, with a supplemental bonus
of $50,000 to be paid to Ms. Smith during each of 1996 and 1997. In addition,
the Company agreed to sell to Ms. Smith 100,000 Shares at a price of $7.25 per
share (the closing price for the Shares on the NYSE on the day preceding the
board action approving such sale being $7.125 per share), the purchase price
payable by the execution and delivery to the Company by Ms. Smith of a
promissory note in the amount of $725,000, bearing interest at 8% per annum,
payable quarterly, with the principal amount of such promissory note payable on
the earliest of (i) July 1, 1999, (ii) the sale or merger of the Company, (iii)
the

                                       26

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

sale by Ms. Smith of any of such Shares with such payment equal to $7.25 per
Share sold and (iv) termination of Ms. Smith's employment with the Company. At
December 31, 1996, the principal balance of the loan was $725,000 and is
included as a reduction in Shareholders' Equity.

   
     During 1996, the Company adopted Financial Accounting Standards Board
Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). The
Statement encourages a fair value based method of accounting for employee stock
options and similar equity instruments. The Statement also allows an entity to
continue to account for stock-based employee compensation using the intrinsic
value based method in APB Opinion No. 25. The Company intends to continue its
accounting for equity instruments using APB Opinion No. 25.

     If compensation cost from the restricted stock grants issued in 1996 had
been determined using the fair value method prescribed by SFAS 123, the 
Company's 1996 results would have been reduced to the pro-forma amounts 
indicated below:

                  Net Income                     $2,127,000
                  Net Income per share                 $.17

     The pro-forma effect on results may not be representative of the impact in
future years as the fair value method was not applied to options granted before
1995. The fair value of each restricted share was estimated using the Black-
Scholes option pricing model and the assumptions presented below:

                  Expected Life in years         3
                  Risk-free interest rate        6.423%
                  Volatility                     25.00%
                  Dividend yield                 10.00%

     The weighted average fair value of restricted common shares granted was
$.70 per share for executive officers (Ms. Smith).
    

NOTE 8: Commitments and Contingencies

     Pursuant to the terms of the Plaza lease, the Company was required to
provide, or cause a third-party lender to provide, mortgage financing of
$4,800,000 to the lessor in consideration for which the lessor pays to the
Company interest of 1% per month, 12% annually.

     In January, 1992, the Company arranged such financing from a third-party
lender for a term of five years at an interest rate of 10.25%. The Company is
negotiating a five-year refinancing at a rate equal to 250 basis points over the
five-year Treasury bond rate in effect two days prior to the loan closing. This
financing is secured by a mortgage on the lessor's fee interest in the Plaza,
but is non-recourse to the lessor. The Company is required to make all debt
service payments and receives interest, as aforesaid, from the lessor as an
offset against the monthly rent payment to the lessor.

NOTE 9: Selected Quarterly Financial Data (Unaudited)

     The following is a summary of selected quarterly financial data for the
years ended December 31, 1996 and 1995. Such data includes certain
reclassifications to accounts presented in quarterly reports on Form 10-Q in
order to conform their presentation to that used in the consolidated statements
of operations presented herein.

<TABLE>
<CAPTION>

                                             (in thousands except per Common Share amounts)
                                                            Quarter Ended
                                             -------------------------------------------------
                                             March 31      June 30      Sept. 30       Dec. 31
                                             --------      -------      --------       -------
<S>                                            <C>          <C>           <C>          <C>   
   
1996
----
Revenues from rental operations                $9,430       $8,286        $9,243      $10,681
Income from rental operations                   3,920        3,064         3,817        4,091
Net income (loss)                                 825         (144)          709          748
Net income (loss) per Share                      $.07        $(.01)         $.06         $.06
Weighted average number of shares
   outstanding                             12,166,430   12,168,691    12,176,460   12,278,052

1995
----
Revenues from rental operations                $8,606       $9,120        $9,365      $10,131
Income from rental operations                   3,772        4,166         4,026        4,131
Net income                                        303          938           742          938
Net income  per Share                            $.03         $.08          $.06         $.07
Weighted average number of shares
   outstanding                             12,104,846   12,145,570    12,156,942   12,161,676
</TABLE>
    

                                       27

<PAGE>


                              Arbor Property Trust
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     The decrease in revenues from rental operations in the second quarter of
1996 in comparison to the second quarter of 1995 was primarily a result of a
change in accounting estimate resulting in a decrease in utility revenue of
$850,000 ($480,000 related to the years 1992 through 1995).

     Revenues from rental operations in the third quarter of 1996 and the fourth
quarter of 1995 differ from amounts previously reported due to the
reclassification of write-offs of accrued straight-line rents of $530,000 and
$18,000, respectively, to provision for doubtful accounts. The reclassification
had no impact on income from rental operations or net income.

     The decrease in revenues from rental operations in the fourth quarter of
1995 in comparison to the fourth quarter of 1994 was primarily a result of a
reduction in the fourth quarter of the estimate of percentage rental income for
1995.

                                       28

<PAGE>


                              ARBOR PROPERTY TRUST
                                December 31, 1996
                                 (In thousands)

<TABLE>
<CAPTION>

                 Schedule II - Valuation and Qualifying Accounts

                                                                   Additions
                                                          ---------------------------
                                        Balance at        Charged to       Charged to                       Balance at
                                        Beginning         Costs and          Other         Deductions         End of
           Description                  of Period          Expenses         Accounts           (1)            Period
           -----------                  ----------        ----------       ----------      ----------       ----------
<S>                                     <C>               <C>              <C>             <C>              <C>
 Allowance for doubtful accounts:
          1996                            $129              $1,120             --             $722             $527
          1995                            $898              $  210             --             $979             $129
          1994                            $723              $  492             --             $317             $898

 (1) Write-offs of accounts receivable
</TABLE>



             Schedule III - Real Estate and Accumulated Depreciation

<TABLE>
<CAPTION>

                                                                        Cost Capitalized            Gross Amount
                                                                          Subsequent to           at which Carried
                                              Initial Cost (3)             Acquisition        at Close of Period (5) (6)
                                         --------------------------     ----------------      --------------------------
                                                            Bldg &                                             Bldg. &
Description             Encumbrance         Land           Improve.       Improvements          Land          Improve.
-----------             -----------         ----           --------       ------------          ----          --------
<S>                     <C>              <C>               <C>               <C>               <C>            <C>
Green Acres Mall        $117,961(1)      $ 27,865          $108,895          $18,206           $30,295        $140,448

Plaza at Green Acres          --          117,961(2)          6,913              212              --             7,125
                           7,017(2)
                        --------         --------          --------          -------           -------        --------
Totals                  $124,978         $ 27,865          $115,808          $18,418           $30,295        $147,573
                        ========         ========          ========          =======           =======        ========



                                                                                                          Life on which
                                                                                                         Depreciation in
                                               Accum.             Date of                Date          Latest Income Stmt.
Description                    Total           Deprec.          Construction           Acquired           is Computed
-----------                    -----           -------          ------------           --------        -------------------
Green Acres Mall              $170,743         $33,378             1955(4)             08/27/86             40 yrs.

Plaza at Green Acres             7,125             794             1991                08/13/90            40-48 yrs.
                              --------         -------             ----                --------            ----------
Totals                        $177,868         $34,172
                              ========         =======

</TABLE>
----------
(1)  Encumbrance is a floating rate note constituing a first lien on the real
     estate.

(2)  The Plaza at Green Acres is a leased asset. Encumbrances constitue a first
     leasehold mortgage collateralizing the floating rate notes ($117,961) and
     the obligation under the capitalized lease ($7,017).

(3)  Includes $10,175 representing the deemed value of units issued to
     affiliates of the former owners of Green Acres Mall and the General
     Partnership interest ($2,075 in Land, $8,100 in Buildings and
     Improvements).

(4)  Original construction was completed in 1955; mall was expanded/renovated in
     1982-83 and renovated again in 1990-91.

(5)  The aggregate tax basis of the Trust's property is $134,000,000 as of
     December 31, 1996.

(6)  Includes $3,024,000 and $13,347,000 which are included in Land and
     Building & Improvements as a result of the conversion (See Note 1 to the
     consolidated December 31, 1996 financial statements).

<TABLE>
<CAPTION>

   Reconciliation of Gross Carrying Amount of Real Estate:                          Reconciliation of Accumulated Depreciation:
--------------------------------------------------------------                 ---------------------------------------------------
<S>                                                   <C>                      <C>                                         <C>
Balance, January 1, 1994                              $159,516                 Balance, January 1, 1994                    $22,136
   Improvements and Additions, 1994                   $  1,489                    Depreciation expense, 1994                 3,886
   Sale to Home Depot                                     (594)                   Write-off of fully depreciated assets       (103)
                                                                                                                           -------
   Additions relating to conversion to REIT             16,371                 Balance, December 31, 1994                  $25,919
   Write-off of fully depreciated assets                  (103)                   Depreciation expense, 1995                 4,096
                                                      --------                                                             -------
                                                                                                                          
Balance, December 31, 1994                            $176,679                 Balance, December 31, 1995                  $30,015
   Improvements and Additions, 1995                        763                    Depreciation expense, 1996                 4,157
                                                      --------                                                             -------
Balance, December 31, 1995                            $177,442                 Balance, December 31, 1996                  $34,172
                                                                                                                           =======
   Improvements and Additions, 1996                        426
                                                      --------
Balance, December 31, 1996                            $177,868
                                                      ========
</TABLE>

                                       29
<PAGE>
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

     The following exhibits are filed as part of this Report:

     Exhibit 23          Consent of Arthur Andersen LLP
     Exhibit 27          Financial Data Schedules











                                       30

<PAGE>


                                   SIGNATURES

   
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 24th day of
October, 1997.
    

                                            Arbor Property Trust


                                            By: /s/ Myles H. Tanenbaum
                                                -------------------------------
                                                Myles H. Tanenbaum
                                                Managing Trustee and President


                                       30

<PAGE>