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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1999
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OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
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Commission file number 1-12917
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WELLSFORD REAL PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)

Maryland 13-3926898
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

535 Madison Avenue, New York, NY 10022
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(Address of principal executive offices)
(Zip Code)

(212) 838-3400
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(Registrant's telephone number, including area code)

Indicate by check mark 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 |_|

Number of shares of common stock, $.01 par value per share, outstanding as of
August 16, 1999: 20,430,605.

Number of shares of Class A common stock, $.01 par value per share, outstanding
as of August 16, 1999: 339,806.
================================================================================

WELLSFORD REAL PROPERTIES, INC.
FORM 10-Q

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INDEX
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Page
Number
------

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of June 30, 1999(unaudited)
and December 31, 1998 3

Consolidated Statements of Income (unaudited) for the three
and six months ended June 30, 1999 and 1998 4

Consolidated Statements of Cash Flows (unaudited) for the six
months ended June 30, 1999 and 1998 5

Notes to Consolidated Financial Statements (unaudited) 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10

Item 3. Quantitative and Qualitative Disclosure of Market Risk

PART II. OTHER INFORMATION 16

SIGNATURES 17

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

June 30, December 31,
1999 1998
---- ----
ASSETS (Unaudited)

Real estate assets, at cost:
Land .................................................. $ 18,813,000 $ 18,813,000
Buildings and improvements ............................ 115,736,633 115,425,760
------------- -------------
134,549,633 134,238,760
Less, accumulated depreciation ..................... (4,645,182) (2,707,390)
------------- -------------
129,904,451 131,531,370
Construction in progress .............................. 26,035,831 18,791,075
------------- -------------
155,940,282 150,322,445
Real estate held for sale ................................ 7,238,329 --
Notes receivable ......................................... 86,687,010 124,706,499
Investment in joint ventures ............................. 114,726,886 80,776,338
------------- -------------
Total real estate assets ................................. 364,592,507 355,805,282

Cash and cash equivalents ................................ 16,997,291 10,122,037
Restricted cash .......................................... 8,325,147 8,007,850
Prepaid and other assets ................................. 16,127,622 11,035,489
------------- -------------
Total Assets ............................................. $ 406,042,567 $ 384,970,658
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Mortgage notes payable ................................ $ 119,736,577 $ 120,176,790
Credit facilities ..................................... 35,000,000 17,000,000
Accrued expenses and other liabilities ................ 9,414,404 12,788,324
------------- -------------
Total Liabilities ........................................ 164,150,981 149,965,114
------------- -------------
Commitments and contingencies ............................ -- --

Minority interest ........................................ 4,813,943 3,380,721

Shareholders' Equity:
Series A 8% Convertible Redeemable Preferred Stock,
$.01 par value per share, 2,000,000 shares authorized,
no shares issued and outstanding ..................... -- --
Common Stock, 197,650,000 shares authorized -
20,430,605 shares, $.01 par value per share,
issued and outstanding at June 30, 1999 .............. 204,306 204,106
Class A Common Stock, 350,000 shares authorized -
339,806 shares, $.01 par value per share,
issued and outstanding at June 30, 1999 ............. 3,398 3,398
Paid in capital in excess of par value .................. 228,612,005 228,212,205
Retained earnings ....................................... 16,434,733 11,385,274
Deferred compensation ................................... (3,036,662) (3,240,023)
Treasury stock, 509,671 shares .......................... (5,140,137) (4,940,137)
------------- -------------
Total Shareholders' Equity ............................... 237,077,643 231,624,823
------------- -------------
Total Liabilities and Shareholders' Equity ............... $ 406,042,567 $ 384,970,658
============= =============

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
---- ---- ---- ----

REVENUE
Rental income .................... $ 4,474,084 $ 3,453,257 $ 8,815,538 $ 5,944,247
Interest and other income ........ 4,106,129 2,637,606 7,716,342 6,105,918
------------ ------------ ------------ ------------
Total Revenue ................. 8,580,213 6,090,863 16,531,880 12,050,165
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance 962,787 785,534 1,819,868 1,248,989
Real estate taxes ................ 392,545 323,428 814,156 570,509
Depreciation and amortization .... 1,230,442 828,809 2,393,461 1,451,463
Property management .............. 166,822 101,048 332,892 174,707
Interest ......................... 3,116,518 863,752 5,023,170 1,755,415
General and administrative ....... 1,434,842 1,241,665 2,409,749 2,424,168
------------ ------------ ------------ ------------
Total Expenses ................ 7,303,956 4,144,236 12,793,296 7,625,251
------------ ------------ ------------ ------------
Income from joint ventures .......... 1,905,519 2,268,076 2,922,313 2,533,942
------------ ------------ ------------ ------------
Income before minority interest ..... 3,181,776 4,214,703 6,660,897 6,958,856

Minority interest ................... (9,566) (16,436) (17,438) (35,300)
------------ ------------ ------------ ------------
Income before taxes ................. 3,172,210 4,198,267 6,643,459 6,923,556

Income tax expense .................. 731,000 1,984,000 1,594,000 3,232,000
------------ ------------ ------------ ------------
Net Income .......................... $ 2,441,210 $ 2,214,267 $ 5,049,459 $ 3,691,556
============ ============ ============ ============
Net income per common share, basic .. $ 0.12 $ 0.11 $ 0.24 $ 0.19
============ ============ ============ ============
Net income per common share, diluted $ 0.12 $ 0.10 $ 0.24 $ 0.18
============ ============ ============ ============
Weighted average number of common
shares outstanding ............... 20,763,378 20,349,688 20,756,930 19,368,749
============ ============ ============ ============
<FN>
See accompanying notes.
</FN>

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended
June 30,
--------
1999 1998
---- ----

Net income ........................................... $ 5,049,459 $ 3,691,556
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization ..................... 2,875,868 1,527,573
Undistributed joint venture income ................ (2,285,620) (2,533,942)
Decrease (increase) in assets
Restricted cash ................................ (317,297) (923,391)
Prepaid and other assets ....................... (3,957,967) (2,139,048)
(Decrease) increase in liabilities
Accrued expenses and other liabilities ......... (3,373,920) 3,268,292
------------ ------------
Net cash provided by (used in) operating activities (2,009,477) 2,891,040
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate assets ..................... (14,793,958) (92,148,361)
Investment in notes receivable ....................... (2,150,000) (11,243,750)
Investment in joint ventures ......................... (7,741,692) (16,003,617)
Repayments from notes receivable ..................... 16,010,594 39,313,644
Proceeds from sale of real estate assets ............. -- 63,993,737
------------ ------------
Net cash provided by (used in) investing activities (8,675,056) (16,088,347)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facilities ...................... 35,000,000 48,000,000
Repayment of credit facilities ....................... (17,000,000) (55,500,000)
Proceeds from mortgage notes payable ................. -- 16,400,000
Repayment of mortgage notes payable .................. (440,213) (224,192)
Distributions to minority interest ................... -- (482,260)
------------ ------------
Net cash provided by (used in) financing activities 17,559,787 8,193,548
------------ ------------
Net increase (decrease) in cash and cash equivalents . 6,875,254 (5,003,759)
Cash and cash equivalents, beginning of period ....... 10,122,037 29,895,21
------------ ------------
Cash and cash equivalents, end of period ............. $ 16,997,291 $ 24,891,453
============ ============

SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest ............. $ 5,442,757 $ 2,194,218
Cash paid during the period for income taxes ........ $ 3,003,658 $ 909,928

SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Shares issued in connection with acquisition of
commercial office properties and notes receivable . $ -- $(39,362,500)
Warrants issued in connection with acquisition
of joint venture investment ....................... $ -- $ (750,000)
Notes receivable contributed to joint venture ......... $(24,218,113) $ --

<FN>
See accompanying notes.
</FN>

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. GENERAL

Wellsford Real Properties, Inc. (the "Company") was formed on January 8,
1997, as a corporate subsidiary of Wellsford Residential Property Trust
(the "Trust"). On May 30, 1997, the Trust merged (the "Merger") with
Equity Residential Properties Trust ("EQR"). Immediately prior to the
Merger, the Trust contributed certain of its assets to the Company and
the Company assumed certain liabilities of the Trust. Immediately after
the contribution of assets to the Company and immediately prior to the
Merger, the Trust distributed to its common shareholders all of the
outstanding shares of the Company owned by the Trust (the "Spin-off").
On June 2, 1997, the Company sold 12,000,000 shares of its common stock
in a private placement (the "Private Placement") to a group of
institutional investors at $10.30 per share, the Company's then book
value per share.

The Company is a real estate merchant banking firm headquartered in New
York City which acquires, develops, finances and operates real
properties and organizes and invests in private and public real estate
companies. The Company has established three strategic business units
("SBUs") within which it intends to execute its business plan: an SBU
for commercial property operations which is held in its subsidiary,
Wellsford/Whitehall Properties II, L.L.C. ("Wellsford/Whitehall"), an
SBU for debt and equity activities and an SBU for property development
and land operations.

In August 1997, the Company, in a joint venture with WHWEL Real Estate
Limited Partnership ("Whitehall"), an affiliate of Goldman Sachs & Co.,
formed a private real estate operating company, Wellsford/Whitehall. The
Company had a 43.0% interest in Wellsford/Whitehall at June 30, 1999.

The accompanying consolidated financial statements include the assets
and liabilities contributed to and assumed by the Company from the
Trust, from the time such assets and liabilities were acquired or
incurred, respectively, by the Trust. Such financial statements have
been prepared using the historical basis of the assets and liabilities
and the historical results of operations related to the Company's assets
and liabilities.

The accompanying consolidated financial statements and related notes of
the Company have been prepared in accordance with generally accepted
accounting principles for interim financial reporting and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
certain information and footnote disclosures normally included in
financial statements prepared under generally accepted accounting
principles have been condensed or omitted pursuant to such rule. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the Company's financial position, results of operations
and cash flows have been included and are of a normal and recurring
nature. These financial statements should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31,
1998 (the "Current 10-K").

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)

2. INDUSTRY SEGMENTS AND RECENT ACTIVITIES

COMMERCIAL PROPERTY OPERATIONS

The Company's commercial property operations segment consists of
Wellsford/Whitehall, which is accounted for on the equity method.
Wellsford/Whitehall had net real estate assets of $526.3 million, total
assets of $549.7 million, credit facility debt of $275.2 million,
mortgage debt of $74.0 million and equity of $191.0 million at June 30,
1999. During the six months ended June 30, 1999, Wellsford/Whitehall
earned $36.3 million in total revenues, primarily rental income, and
incurred $12.8 million of operating expenses, $12.5 million of interest
expense, $5.5 million of depreciation, and $3.4 million of general and
administrative expense, and had a gain on sale of $2.5 million,
resulting in net income of $4.6 million (before preferred dividends of
$0.6 million). As of June 30, 1999, Wellsford/Whitehall owned 37
properties containing approximately 4.8 million square feet ("SF"),
including approximately 1.1 million SF under renovation, located in the
New Jersey, Boston and Washington D.C. areas.

In May 1999, Wellsford/Whitehall sold a 65,000 SF office building in
Boston, MA for $8.1 million, generating a $2.2 million gain.

In May 1999, Wellsford/Whitehall acquired a 129,000 SF office building
in Warren, NJ for $7.9 million.

In June 1999, Wellsford/Whitehall obtained a commitment from its members
for $100 million of additional capital. The Company is committed to fund
$10 million of this equity.

In June 1999, Wellsford/Whitehall acquired two office buildings,
containing 65,000 SF and 68,000 SF, in Boston, MA for $23.0 million.

DEBT AND EQUITY ACTIVITIES

At June 30, 1999, the Company had $86.7million of debt investments which
bore interest at an average yield of approximately 4.7% over LIBOR or
approximately 10% and had an average remaining term to maturity of
approximately 3.1 years.

In January 1999, the Company modified its existing $15 million
participation in a $100 million unsecured loan to extend the maturity
date from February 1999 to August 1999 and increase the interest rate
from 9.875% to 12%. A 1% loan fee was paid by the borrower upon
modification. This loan was fully repaid in July 1999.

In January 1999, the Company acquired a parcel of land in Broomfield, CO
for approximately $7.2 million pursuant to an outstanding standby
commitment issued in 1998. In connection with this transaction, the
Company collected $0.4 million of fees in 1998. In July 1999, the
Company sold this land for $7.2 million to a third party ("Buyer") and
simultaneously collected an additional $1.1 million in fees. The Company
then purchased $11.7 million of tax-exempt notes, bearing interest at
6.25% and due in December 1999. These notes were issued by a
quasi-governmental agency partially controlled by Buyer and are
guaranteed by an independent bank.

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)

In January 1999, a wholly owned subsidiary of the Company obtained a $35
million secured loan facility (the "Wellsford Finance Bank Facility")
from BankBoston, N.A., which can potentially be increased to $50
million. The Wellsford Finance Bank Facility bears interest at LIBOR
+2.75% and has a term of 3 years. The Company immediately drew $35
million on this line, the proceeds of which were used (a) to repay the
$17 million balance of the Company's $50 million line of credit, and (b)
for working capital purposes. The Company is obligated to pay a fee
equal to one-quarter of one percent (0.25%) per annum on the average
daily amount of the unused portion of the Wellsford Finance Bank
Facility until maturity.

In March 1999, the Company made a $24.2 million contribution to its
joint venture ("Belford Capital") with the Liberty Hampshire Company,
L.L.C. This contribution was comprised of two of the Company's debt
investments, the $17.6 million DeBartolo Loan and the $8.0 million
outstanding balance of the Safeguard Loan, net of $1.4 million of cash
received back from Belford Capital. Belford Capital also assumed the
first $25.0 million of the Company's commitment to fund the Safeguard
Loan (including amounts advanced to date), while the Company retained
the remaining $20.0 million commitment.

DEVELOPMENT AND LAND OPERATIONS

At June 30, 1999, the Company owned three multifamily properties,
totalling 1,104 units with a weighted average occupancy of 97.9%, and
had one multifamily project under development, containing 264 units.

In May 1999, the Company exercised its option to purchase the land for
the fifth and final phase of its Palomino Park development in a suburb
of Denver, CO for approximately $2.8 million. This phase will be known
as Gold Peak and has entitlements for up to 436 apartments.

OTHER

In May 1999, the Company modified its $50 million line of credit from
BankBoston, N.A. and Morgan Guaranty Trust Company (the "WRP Bank
Facility") to extend the maturity date to May 2000. The WRP Bank
Facility now bears interest at LIBOR +2.25% and the Company is obligated
to pay a fee equal to three-eighths of one percent (0.375%) per annum on
the average daily amount of the unused portion of the WRP Bank Facility
until maturity. The WRP Bank Facility is secured by the EQR Preferred
Commitment and the 277 Park Loan (as described in the Current 10-K).

In May 1999, the Company appointed Mr. Rodney F. Du Bois to the position
of Vice Chairman. Mr. Du Bois received a grant of 20,000 restricted
shares, which were issued to the Company's non-qualified deferred
compensation plan. Based upon the market price on the date of grant of
$10.00 per common share, this grant had a market value of $200,000.
These shares vest quarterly over two years. Mr. Du Bois also received
100,000 10-year options to purchase the Company's common stock at $10.06
per share. These options vest over two years. Simultaneously, Messrs.
Lynford and Lowenthal each voluntarily surrendered 50,000 10-year
options previously granted to them in March 1998 with a strike price of
$20.00 per share.
8

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)

In June 1999, one officer resigned from the Company. In July 1999, in
connection with this resignation, 79,034 unvested restricted common
shares previously granted to this officer were repurchased by the
Company for $0.01 per share. In addition, this officer's previously
granted but uninvested options were cancelled.

SELECTED FINANCIAL DATA BY INDUSTRY SEGMENT

(TABLE IN THOUSANDS)

COMMERCIAL
PROPERTY DEBT AND EQUITY DEVELOPMENT
OPERATIONS ACTIVITIES AND LAND OPERATIONS
---------- ---------- -------------------
Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
-------- -------- --------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----

Rental income ...... $ -- $ -- $ 2,834 $ 1,904 $ 5,981 $ 4,040
Interest and other
income ........... 2 -- 7,144 5,804 -- --
------- ------- -------- --------- --------- --------
Total Income ....... 2 -- 9,978 7,708 5,981 4,040
------- ------- -------- --------- --------- --------
Operating expense .. -- -- 1,233 763 1,734 1,232
Depreciation and
amortization ..... 223 -- 598 258 1,499 976
Interest ........... -- -- 2,533 237 2,490 1,486
General and
administrative ... -- -- 341 184 -- --
------- ------- -------- --------- --------- --------
Total Expenses ..... 223 -- 4,705 1,442 5,723 3,694
------- ------- -------- --------- --------- --------
Income from joint
ventures ........ 1,908 2,380 1,014 154 -- --
Minority interest .. -- -- -- (27) (17) (8)
------- ------- -------- --------- --------- --------
Income (loss) before
taxes ............ $ 1,687 $ 2,380 $ 6,287 $ 6,393 $ 241 $ 338
======= ======= ======== ========= ========= ========
Total Assets ....... $78,905 $61,675 $191,935 $ 147,412 $ 120,184 $ 85,912
======= ======= ======== ========= ========= ========

OTHER CONSOLIDATED
----- ------------
Six Months Ended Six Months Ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
---- ---- ---- ----

Rental income ...... $ -- $ -- $ 8,815 $ 5,944
Interest and other
income ........... 571 302 7,717 6,106
------- ------- -------- ---------
Total Income ....... 571 302 16,532 12,050
------- ------- -------- ---------
Operating expense .. -- -- 2,967 1,995
Depreciation and
amortization ..... 74 217 2,394 1,451
Interest ........... -- 32 5,023 1,755
General and
administrative ... 2,069 2,240 2,410 2,424
------- ------- -------- ---------
Total Expenses ..... 2,143 2,489 12,794 7,625
------- ------- -------- ---------
Income from
joint ventures ... -- -- 2,922 2,534
Minority interest .. -- -- (17) (35)
------- ------- -------- ---------
Income (loss) before
taxes ............ $(1,572) $(2,187) $ 6,643 $ 6,924
======= ======= ======== =========
Total Assets ....... $15,018 $10,697 $406,042 $ 305,696
======= ======= ======== =========

3. EARNINGS PER SHARE

Basic earnings per common share are computed based upon the weighted
average number of common shares outstanding during the period, including
Class A common shares.

Diluted earnings per common share for the three and six months ended
June 30, 1999 and 1998 are based upon the increased number of common
shares that would be outstanding assuming the exercise of dilutive
common share options and warrants, under the treasury stock method as
shown below.

Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
---- ---- ---- ----
Dilutive common share options ........ 34,577 307,217 28,811 317,127
Dilutive warrants .................... -- 553,900 -- 643,533

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

1. GENERAL

The Company is a real estate merchant banking firm headquartered in New
York City which acquires, develops, finances and operates real
properties and organizes and invests in private and public real estate
companies. The Company has established three strategic business units
("SBUs") within which it intends to execute its business plan: an SBU
for commercial property operations which is held in its subsidiary,
Wellsford/Whitehall, an SBU for debt and equity activities and an SBU
for property development and land operations.

COMMERCIAL PROPERTY OPERATIONS - WELLSFORD/WHITEHALL

The Company seeks to acquire commercial properties below replacement
cost and operate and/or resell the properties after renovation,
redevelopment and/or repositioning. The Company believes that
appropriate well-located commercial properties which are currently
underperforming can be acquired on advantageous terms and repositioned
with the expectation of achieving returns which are greater than returns
which could be achieved by acquiring a stabilized property.

DEBT AND EQUITY ACTIVITIES - DBA WELLSFORD CAPITAL

The Company makes loans that constitute, or will invest in, real
estate-related senior, junior or otherwise subordinated debt
instruments, which may be unsecured or secured by liens on real estate,
interests therein or the economic benefits thereof, and which have the
potential for high yields or returns more characteristic of equity
ownership. These investments may include debt that is acquired at a
discount, mezzanine financing, commercial mortgage-backed securities
("CMBS"), secured and unsecured lines of credit, distressed loans, and
loans previously made by foreign and other financial institutions. The
Company believes that there are opportunities to acquire real estate
debt, especially in the low or below investment grade tranches, at
significant returns as a result of inefficiencies in pricing, while
utilizing management's real estate expertise to analyze the underlying
properties and thereby effectively minimizing risk.

PROPERTY DEVELOPMENT AND LAND OPERATIONS- DBA WELLSFORD DEVELOPMENT

The Company engages in selective development activities as opportunities
arise and when justified by expected returns. The Company believes that
by pursuing selective development activities it can achieve returns
which are greater than returns which could be achieved by acquiring
stabilized properties. Certain development activities may be conducted
in joint ventures with local developers who may bear the substantial
portion of the economic risks associated with the construction,
development and initial rent-up of properties. As part of its strategy,
the Company may seek to issue tax-exempt bond financing authorized by
local governmental authorities which generally bears interest at rates
substantially below rates available from conventional financing.

The principal asset of the property development and land operations SBU
is an 80% interest in Palomino Park, an 1,800 unit class A multifamily
development located in a suburb of Denver, Colorado. The Company
currently has a gross investment of approximately $26.0 million at

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)

June 30, 1999 in the following multifamily development project, which is
the third phase of Palomino Park, as well as related infrastructure
costs and the land for the fourth and fifth phases:

Number Estimated Estimated
Name of Units Location Total Cost Stabilization Date
----------- -------- ---------- ------------- ------------------
Silver Mesa 264 Denver, CO $40.0 million Second Qtr. 2000

This project is being developed pursuant to a fixed-price contract. The
Company is committed to purchase 100% of this project upon completion,
which is anticipated to occur in the second quarter of 2000. In
addition, the Company is obligated to fund the first 20% of the
construction costs on this project as they are incurred.

Silver Mesa is owned by Silver Mesa at Palomino Park LLC ("Phase III
LLC"), a limited liability company, the members of which are Wellsford
Park Highlands Corp. (99%), a majority owned and controlled subsidiary
of the Company, and Al Feld ("Feld") (1%). Feld is a Denver-based
developer specializing in the construction of luxury residential
properties. Feld has constructed over 3,000 units since 1984.

The construction loan on Silver Mesa is for approximately $27.7 million,
matures in June 2001 (with a 6-month extension at the option of the
Phase III LLC upon fulfillment of certain conditions), and bears
interest at LIBOR +1.50%. Feld has guaranteed repayment of this loan.

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS.

This Form 10-Q, together with other statements and information publicly
disseminated by the Company, contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company or industry results
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following, which are discussed
in greater detail in the "Risk Factors" section of the Company's
registration statement on Form S-11 (file No. 333-32445) filed with the
Securities and Exchange Commission (the "Commission") on July 30, 1997,
as may be amended, which is incorporated herein by reference: general
economic and business conditions, which will, among other things, affect
demand for commercial and residential properties, availability and
credit worthiness of prospective tenants, lease rents and the
availability and cost of financing; difficulty of locating suitable
investments; competition; risks of real estate acquisition, development,
construction and renovation; vacancies at existing commercial
properties; dependence on rental income from real property; adverse
consequences of debt financing; risks of investments in debt
instruments, including possible payment defaults and reductions in the
value of collateral; risks associated with equity investments in and
with third parties; illiquidity of real estate investments; lack of
prior operating history; and other risks listed from time to time in the
Company's reports filed with the SEC. Therefore, actual results could
differ materially from those projected in such statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)

2. RESULTS OF OPERATIONS

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1999 TO THE SIX MONTHS
ENDED JUNE 30, 1998.

Capitalized terms used herein which are not defined elsewhere in this
Quarterly Report on Form 10-Q shall have the meanings ascribed to them
in the Current 10-K.

Rental income increased by $2.9 million. This increase is primarily a
result of the acquisition of properties in connection with the VLP
Merger in February 1998 and the completion of Red Canyon (Phase II of
the Company's Palomino Park development) in November 1998.

Interest income increased by $1.6 million. This increase is primarily a
result of the acquisition of approximately $69.4 million in notes
receivable during the period from January 1998 through June 1999 offset
by the disposition of $95.2 million of notes receivable during this
period. The acquisitions took place primarily in 1998, while a
significant portion of the dispositions occurred in 1999. In addition,
1999 includes $1.1 million of fee income related to the Company's
Broomfield investment.

Property operating and maintenance expense, real estate tax expense,
depreciation and amortization, and property management expense increased
by $0.6 million, $0.2 million, $0.9 million, and $0.2 million,
respectively. These increases are a result of the factors which affected
rental income, as described above.

Interest expense increased by $3.3 million as a result of the issuance
of substantially all of the Company's debt other than the Palomino Park
Bonds and the Blue Ridge Loan subsequent to December 31, 1997. Interest
on the Palomino Park Bonds was capitalized to the Company's Palomino
Park development.

General and administrative expense essentially remained flat. This is a
result of the increased size of the Company offset by a decline in
accrued compensation.

Income from joint ventures increased by $0.4 million. This increase is a
result of the growth of the Wellsford/Whitehall joint venture since
January 1998 (including gains from sales of properties), the Creamer
Vitale Wellsford joint venture transaction in January 1998 and the
Liberty Hampshire joint venture transaction in July 1998.

Minority interest is a result of EQR's 20% interest in the Company's
Palomino Park development, as well as certain limited partnership
interests (aggregating approximately 10%) in one of the Company's
commercial office properties acquired in the VLP Merger. These limited
partnership interests were bought out by the Company in October 1998.

The income tax provision decreased $1.6 million primarily as a result of
the effects of the utilization of the net operating loss carry forwards
acquired in the VLP Merger.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)

3. LIQUIDITY AND CAPITAL RESOURCES

The Company expects to meet its short-term liquidity requirements
generally through its working capital and cash flow provided by
operations. The Company considers its ability to generate cash to be
adequate and expects it to continue to be adequate to meet operating
requirements both in the short and long terms.

The Company expects to meet its long-term liquidity requirements such as
refinancing mortgages, financing acquisitions and development, and
financing capital improvements by long-term borrowings, through the
issuance of debt and the offering of additional debt and equity
securities.

The Company has (i) the commitment, until May 30, 2000, of an affiliate
of EQR to acquire at the Company's option up to $25 million of the
Company's Series A 8% Convertible Redeemable Preferred Stock ("Series A
Preferred"), each share of which is convertible into shares of the
Company's common stock at a price of $11.124 (the "EQR Preferred
Commitment") and (ii) a $50 million line of credit from BankBoston, N.A.
and Morgan Guaranty Trust Company of New York (the "WRP Bank Facility")
which bears interest at an annual rate equal to LIBOR +2.25% and matures
in May 2000. The EQR Preferred Commitment is pledged as security for the
WRP Bank Facility. If at May 30, 2000, the affiliate of EQR has
purchased less than $25 million of Series A Preferred, it has the right
to purchase the remainder of the $25 million not purchased prior to that
time. As of June 30, 1999, no balance was outstanding under the WRP Bank
Facility.

Wellsford/Whitehall has a $375 million loan facility (the
"Wellsford/Whitehall Bank Facility") from BankBoston, N.A. and Goldman
Sachs Mortgage Company, consisting of a senior secured credit facility
of up to $300 million and a secured mezzanine facility of up to $75
million. The senior facility bears interest at LIBOR +1.65%; the
mezzanine facility bears interest at LIBOR +3.2%. As of June 30, 1999,
approximately $275.2 million was outstanding under the
Wellsford/Whitehall Bank Facility ($206.5 million of which was under the
senior facility). Both facilities mature on December 15, 2000 and are
extendable for one year by Wellsford/Whitehall.

YEAR 2000

The Company has developed a plan to modify its information technology,
primarily its accounting software, to recognize the year 2000 ("Y2K"). A
Y2K compliant version of the accounting software has been obtained and
will be installed and tested during the next few weeks. The balance of
the project is nearing completion, with a total project cost of less
than $0.1 million which will be funded from operations, including costs
incurred to date. The Company does not expect this project to have a
significant effect on its operations. The timing and cost of this
project are being closely monitored and are based on management's best
estimates. Actual results, however, could differ from those anticipated.

The Company also has had extensive discussions with its third-party
property management companies (the "Managers") to ensure that those
parties have appropriate plans to allay any Y2K issues that may impact
the C ompany's operations. These issues would include both
accounting/management software and non-information technology ("IT")
systems such as fire safety, security and elevator systems.
Wellsford/Whitehall has completed its analysis of such

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)

systems and has determined that no material adverse consequences will
likely result from its Y2K issues. Wellsford Capital and Wellsford
Development are nearing the completion of such analysis, which is
expected to be completed in the next few weeks. So far, no material
unresolved Y2K issues have been discovered. Under the most reasonably
likely worst case scenario, wherein certain of the Managers fail to
update their software and non-IT systems, the Company has the ability to
convert its accounting and management systems to a spreadsheet-based
system on a temporary basis and to utilize its building engineers to
manually override any non-IT systems which fail.

Furthermore, the Company has contacted its key vendors, tenants, banks,
joint venture partners, creditors, and debtors and has obtained Y2K
compliance certification (either verbal or written) from the majority of
them.

While the Company believes its planning efforts are adequate to address
its Y2K concerns, there can be no guarantee that the systems of other
companies on which the Company's systems and operations rely, primarily
its banks, payroll processing company, joint venture partners,
creditors, and debtors, will be (or have been) converted on a timely
basis and will not have a material effect on the Company.

QUANTITATIVE AND QUALITATIVE
DISCLOSURE OF MARKET RISK

In January 1999, a wholly owned subsidiary of the Company obtained a $35
million secured loan facility (the "Wellsford Finance Bank Facility")
from BankBoston, N.A., which can potentially be increased to $50
million. The Wellsford Finance Bank Facility bears interest at LIBOR
+2.75% and has a term of 3 years. The Company is obligated to pay a fee
equal to one-quarter of one percent (0.25%) per annum on the average
daily amount of the unused portion of the Wellsford Finance Bank
Facility until maturity.

In May 1999, the Company modified the WRP Bank Facility to extend the
maturity date to May 2000. The WRP Bank Facility now bears interest at
LIBOR +2.25% and the Company is obligated to pay a fee equal to
three-eighths of one percent (0.375%) per annum on the average daily
amount of the unused portion of the WRP Bank Facility until maturity.

Such transactions were conducted under market conditions and fall within
the parameters of the Company's strategy for managing its market risk.

PART II.

OTHER INFORMATION

Item 1: Legal Proceedings - None.

Item 2: Changes in Securities - None.

Item 3: Defaults upon Senior Securities - None.

Item 4: Submission of Matters to a Vote of Security Holders.

On May 17, 1999, the Company held its annual meeting of
shareholders. A total of 20,356,041 common shares,
representing approximately 9.97% of the 20,410,605 common
shares outstanding and entitled to vote, and 339,806 Class
A common shares representing 100% of the Class A common
shares outstanding and entitled to vote, as of the record
date (April 1, 1999) were represented in person or by
proxy vote and constituted a quorum. The Company's common
shares and Class A common shares are hereinafter referred
to as the "Common Shares."

At the meeting, Jeffrey H. Lynford, Douglas Crocker II,
and Mark S. Germain were reelected as directors to terms
expiring at the 2002 annual meeting of shareholders. Each
of the reelected directors received the affirmative vote
of at least 16,685,459 Common Shares representing
approximately 80% of the Common Shares voted. The terms of
the five other trustees, Edward Lowenthal, Rodney F. Du
Bois, Richard S. Frary, Frank J. Hoenemeyer, and Frank J.
Sixt continued after the meeting.

The shareholders also ratified the appointment of Ernst &
Young LLP as the Company's independent public accountants
for the fiscal year ending December 31, 1999 by the
affirmative vote of 16,686,641 Common Shares. 3,208 Common
Shares voted against the proposal, 1,837 Common Shares
abstained from voting, and no Common Shares constituted
broker non-votes.

Item 5: Other Information--None.

Item 6: Exhibits and Reports on Form 8-K

(a) Exhibits filed with this Form 10-Q:
27.1 Financial Data Schedule (EDGAR Filing Only)

(b) Reports on Form 8-K filed by the
registrant during its fiscal quarter ended
June 30, 1999:

o Form 8-K, dated and filed with the
Commission on May 10, 1999, relating to
the appointment of Rodney F. Du Bois as
the Company's Vice-Chairman and Chief
Operating Officer.

Pursuant to the requirements 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.

WELLSFORD REAL PROPERTIES, INC.

By: /s/ Jeffrey H. Lynford
--------------------------------------------------
Jeffrey H. Lynford, Chairman of the Board

/s/ Rodney F. Du Bois
--------------------------------------------------
Rodney F. Du Bois, Chief Financial Officer

Dated: August 16, 1999