GOLF TRUST OF AMERICA INC, 10-Q, 1998-05-15

GOLF TRUST OF AMERICA INC
10-Q, 1998-05-15
LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES)

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<PAGE>

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

FORM 10-Q

/x/ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1998.

/ / Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to ________.

________________________________________________________________________________

Commission File Number 000-22091

GOLF TRUST OF AMERICA, INC.
(Exact name of registrant as specified in its charter)

Maryland 33-0724736
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)

14 North Adger's Wharf, Charleston, South Carolina 29401
(Address of principal executive offices) (Zip Code)

(843)723-4653
(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 report(s) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---

On May 11, 1998 there were 7,631,694 common shares outstanding of the
registrant's only class of common stock.

<PAGE>

GOLF TRUST OF AMERCIA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1998

INDEX

PAGE
<S> <C>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997.......... 3
Consolidated Statements of Income for the Three Months Ended March 31, 1998,
the Period from February 12, 1997 (inception) through March 31, 1997, and the
Pro Forma Three Months Ended March 31, 1997..................................... 4
Consolidated Statements of Stockholders' Equity for the Period from February
12, 1997 (inception) through December 31, 1997 and for the Three Months
Ended March 31, 1998............................................................ 5
Consolidated Statements of Cash Flows for the Three Months Ended March 31,
1998 and the Period from February 12, 1997 (inception) through March 31, 1997.... 6
Notes to Consolidated Financial Statements....................................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.......................................................................... 13

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS................................................................... 19

ITEM 2. CHANGES IN SECURITIES............................................................... 19

ITEM 3. DEFAULTS UPON SENIOR SECURITIES..................................................... 20

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................. 20

ITEM 5. OTHER INFORMATION................................................................... 20

ITEM 6. EXHIBITS INDEX AND REPORT ON FORM 8-K............................................... 21

SIGNATURES.......................................................................... 23

</TABLE>

<PAGE>

GOLF TRUST OF AMERICA, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)
(UNAUDITED)

MARCH 31, DECEMBER 31,
1998 1997
--------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Property and equipment:
Land . . . . . . . . . . . . . . . . . . . $ 50,210 $ 25,796
Golf course improvements . . . . . . . . . 108,577 58,494
Buildings . . . . . . . . . . . . . . . . . 38,992 22,199
Furniture, fixtures, and equipment . . . . 19,209 8,556
-------- --------
Total property and equipment . . . . . . . . 216,988 115,045
Less accumulated depreciation . . . . . . . 15,029 14,001
-------- --------
Property and equipment, net . . . . . . . . . 201,959 101,044
-------- --------
Mortgage notes receivable . . . . . . . . . . 66,466 65,129

Cash and cash equivalents . . . . . . . . . 1,553 14,968
Receivable from affiliates (Note 7) . . . . . 1,095 1,004
Other assets . . . . . . . . . . . . . . . . 5,873 4,161
-------- --------
Total assets . . . . . . . . . . . . . . . . $276,118 $186,306
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable . . . . . . . . . . . . . . . $ 86,474 $ 4,325
Accounts payable and other liabilities . . . 2,837 3,029
-------- --------
Total liabilities . . . . . . . . . . . . . . 89,311 7,354
-------- --------
Minority interest . . . . . . . . . . . . . . 62,375 54,625
-------- --------
Commitments

Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000
shares authorized, no shares issued. . . . . - -
Common stock, $.01 par value, 90,000,000
shares authorized, 7,631,694 shares issued
and outstanding. . . . . . . . . . . . . . 76 76
Additional paid-in capital . . . . . . . . 128,095 127,488
Retained earnings . . . . . . . . . . . . . 1,726 1,774
Unamortized restricted stock compensation . (2,167) (1,713)
Note receivable from stock sale . . . . . (3,298) (3,298)
-------- --------
Stockholders' equity . . . . . . . . . . . . 124,432 124,327
-------- --------
Total liabilities and stockholders' equity. . $276,118 $186,306
-------- --------
-------- --------
</TABLE>

See accompanying notes to consolidated financial statements
3
<PAGE>

GOLF TRUST OF AMERICA, INC.

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS)
(UNAUDITED)

PERIOD FROM
FOR THE THREE FEBRUARY 12 FOR THE THREE
MONTHS ENDED THROUGH MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31,
1998 1997 1997
-------------------------------------------------
(PRO FORMA)
<S> <C> <C> <C>
REVENUES:
Rent from affiliates (Note 7)........... $3,156 $1,631 $3,031
Rent.................................... 3,638 411 754
Mortgage interest....................... 2,126 - -
-------- ------ ------
Total revenues............................ 8,920 2,042 3,785
-------- ------ ------
EXPENSES:
Depreciation and amortization........... 1,821 346 794
General and administrative.............. 1,156 313 524
-------- ------ ------
Total expenses............................ 2,977 659 1,318
-------- ------ ------
Operating income.......................... 5,943 1,383 2,467
-------- ------ ------
OTHER INCOME (EXPENSE):
Interest income......................... 72 131 131
Interest expense........................ (916) (40) (92)
------- ------ ------
Total other income (expense).............. (844) 91 39
------- ------ ------
Net income before minority interest....... 5,099 1,474 2,506
Income applicable to minority interest.... 2,018 758 1,288
------- ------ ------
Net income................................ $ 3,081 $ 716 $1,218
------- ------ ------
------- ------ ------
Basic earnings per share.................. $ .40 $ .19 $ .31
------- ------ ------
------- ------ ------
Weighted average number of shares - basic. 7,632 3,823 3,910
------- ------ ------
------- ------ ------
Diluted earnings per share................ $ .39 $ .18 $ .31
------- ------ ------
------- ------ ------
Weighted average number of shares -
diluted................................. 7,826 3,873 3,960
------- ------ ------
------- ------ ------
</TABLE>

See accompanying notes to consolidated financial statements
4
<PAGE>

GOLF TRUST OF AMERICA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS)
(UNAUDITED)

NOTE
ADDITIONAL RECEIVABLE TOTAL
PAID-IN RETAINED UNEARNED FROM STOCK STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS COMPENSATION SALE EQUITY
-------- --------- --------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, February 12, 1997....... - $ - $ - $ - $ - $ - $ -
Proceeds from Initial Public
Offering ........................ 3,910 39 82,071 - - - 82,110
Payment of underwriters discount
and initial offering costs...... - - (9,055) - - - (9,055)
Adjustment for minority
interest in operating partnership - - (33,882) - - - (33,882)
Issuance of shares in exchange
for note......................... 159 2 3,296 - - (3,298) -
Issuance of shares for
acquisition...................... 22 - 600 - - - 600
Issuance of restricted stock..... 70 1 1,827 - (1,828) - -
Proceeds from follow-on
offering......................... 3,450 34 88,372 - - - 88,406
Payment of underwriters
discount and costs............... - - (5,741) - - - (5,741)
Amortization of restricted
stock compensation............... - - - - 115 - 115
Dividends........................ - - - (4,195) - - (4,195)
Net income....................... - - - 5,969 - - 5,969
-------- --------- --------- -------- ------------ ---------- ------------
BALANCE, December 31, 1997....... 7,611 $76 $127,488 $ 1,774 $ (1,713) $ (3,298) $124,321
-------- --------- --------- -------- ------------ ---------- ------------

Issuance of restricted stock..... 21 - 607 - (607) - -
Amortization of restricted stock
compensation..................... - - - - 153 - 153
Dividends........................ - - - (3,129) - - (3,129)
Net income....................... - - - 3,081 - - 3,081
-------- --------- --------- -------- ------------ ---------- ------------
BALANCE, March 31, 1998.......... 7,632 $ 76 $128,095 $ 1,726 $(2,167) $(3,298) $124,432
-------- --------- --------- -------- ------------ ---------- ------------
-------- --------- --------- -------- ------------ ---------- ------------
</TABLE>

See accompanying notes to consolidated financial statements.
5
<PAGE>

GOLF TRUST OF AMERICA, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
PERIOD FROM
THREE MONTHS FEBRUARY 12
ENDED THROUGH
MARCH 31, MARCH 31,
1998 1997
---------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................ $ 3,081 $ 716
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 1,856 346
Loan cost amortization.......................... 130 -
Straight-line interest.......................... (332) -
Amortization of restricted stock compensation... 153 -
Income applicable to minority interest.......... 2,018 758
Increase in receivable from affiliates.......... (91) -
Increase in other assets........................ (1,857) (151)
Increase in accounts payable and other
liabilities................................... (192) 813
------- -------
Net cash provided by operating activities........... 4,766 2,482
------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Golf course acquisitions and improvements......... (81,363) (54,555)
Increase in mortgage notes receivable............. (1,005) -
------- -------
Net cash used in investing activities............... (82,368) (54,555)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit.................. 69,945 4,325
Payments on notes and line of credit.............. (723) -
Increase in minority interest..................... - (758)
Net proceeds from issuance of common stock........ - 73,055
Distributions to partners......................... (1,906) -
Dividends paid.................................... (3,129) -
------- -------
Net cash provided by financing activities........... 64,135 76,622
------- -------
Net increase in cash................................ (13,415) 24,549
Cash and cash equivalents, beginning of period...... 14,968 -
------- -------

Cash and cash equivalents, end of period............ $ 1,553 $24,549
------- -------
------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid during the period.................... $ 916 $ 40

NON-CASH INVESTING AND FINANCING TRANSACTIONS
Net assets of Legends Golf transferred to the
Company........................................... $ - $ 981
OP Units issued in golf course acquisitions......... $ 7,638 $ -
Debt acquired with acquisition (Note 4)............. $12,927 $ -

</TABLE>

See accompanying notes to consolidated financial statements.
6
<PAGE>

GOLF TRUST OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION

Golf Trust of America, Inc. (the "Company") was incorporated in Maryland
on November 8, 1996. The Company is a self-administered real estate
investment trust ("REIT") formed to capitalize upon consolidation
opportunities in the ownership of upscale golf courses in the United States.
The principal business strategy of the Company is to acquire upscale golf
courses and to lease the golf courses pursuant to long-term triple net leases
to qualified third party operators, including affiliates of the sellers.
Title to the acquired courses is held by Golf Trust of America, L.P., a
Delaware limited partnership (the "Operating Partnership") and Sandpiper-Golf
Trust LLC. Golf Trust of America, Inc., through its wholly owned
subsidiaries GTA GP, Inc. ("GTA GP") and GTA LP, Inc. ("GTA LP"), holds a
60.0% interest in the Operating Partnership. GTA GP is the sole general
partner of the Operating Partnership and owns a 0.2% interest therein. GTA
LP is a limited partner in the Operating Partnership and owns a 59.8%
interest therein. Larry D. Young, a director of the Company, along with his
affiliates owns 29.4 percent of the Operating Partnership and is a
significant lessee. The remaining interest in the Operating Partnership is
held by operators of the golf courses, their affiliates and officers of the
Company.

The accompanying unaudited financial statements have been prepared by
the management of Golf Trust of America, Inc. in accordance with generally
accepted accounting principles for interim financial statements and in
conformity with the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring adjustments) considered necessary for a
fair presentation have been included. The results of operations for the
three months ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the full year. These financial statements
should be read in conjunction with the Company's December 31, 1997 audited
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K.

The unaudited Pro Forma Consolidated Statement of Income for the three
months ended March 31, 1997 is presented as if the Formation Transactions had
occurred January 1, 1997 and includes the pro forma period from January 1,
1997 to February 11, 1997 and actual results for period from February 12 to
March 31, 1997. In management's opinion, all adjustments necessary to
reflect the effects of the Formation Transaction have been made.

In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 "Earnings Per Share."
This pronouncement specifies the computation, presentation and disclosure
requirements for earnings per share. The new standard had no material impact
on the Company's financial statements as "diluted" earnings per share
disclosure required by the pronouncement were the same as earnings per share
previously reported. The only difference in "basic" and "diluted" weighted
average shares is the dilutive effect of the Company's stock options
outstanding (approximately 194,000 and 50,000 shares added to weighted shares
outstanding for the three months ended March 31, 1998 and 1997, respectively).

7
<PAGE>

GOLF TRUST OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. ACQUISITION OF GOLF COURSES

During the three months ended March 31, 1998, the Company purchased an
additional 6 golf courses for an aggregate initial investment of
approximately $79.6 million in cash, repayment of indebtedness and the
assumption of a property subject to a lien of $12.9 million and $7.6 million
in OP Units (approximately 280,000 units). The aforementioned golf courses
are leased to third party operators pursuant to long-term triple net leases.

The following is a summary of the acquisitions for 1998:

<TABLE>
<CAPTION>
INITIAL
ACQUISITION INVESTMENT
DATE COURSE NAME LOCATION (IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1/2/98 Bonaventure - East and West Courses Fort Lauderdale, FL $ 23,700
1/16/98 Mystic Creek Golf Club & Banquet Center Dearborn, MI 10,000
2/1/98 Emerald Dunes Golf Course West Palm Beach, FL 22,400
3/6/98 Sandpiper Golf Course Santa Barbara, CA 36,500
3/9/98 Persimmon Ridge Country Club Louisville, KY 7,500
--------
$100,100
--------
--------
</TABLE>

The Emerald Dunes Golf Course was acquired subject to a lien which is
explained in Note 4. In conjunction with the purchase of the Emerald Dunes
Golf Course, Raymon Finch, Sr. and Ray Finch, Jr. (collectively the Finches)
were granted 50,000 options each, of which 25,000 in the aggregate will vest
when in any calendar year the Company acquires more than $25 million in
courses as identified by the Finches. After year five, all options
immediately vest if the stock price is $10.00 over the strike price at which
the options were issued ($28) and if the Finches have otherwise undertaken to
promote and market the Company.

Concurrent with the acquisition of the Sandpiper Golf Course, the Company
formed Sandpiper-Golf Trust, LLC, of which the Operating Partnership is the
sole member, to hold title to the golf course. In, addition, the Operating
Partnership owns approximately 95% of the economic interest in a taxable
subsidiary formed to hold title to a 14 acre development site adjacent to the
Sandpiper Golf Course with the balance owned by Mr. Blair, President and Mr.
Young, a director of the Company.

8
<PAGE>

GOLF TRUST OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3. COMMITMENTS

LEASES

Typically, the Company leases its golf courses to affiliates of the prior
owners and other qualified operators under non-cancelable lease agreements
for an initial period of ten years with options to extend the term of each
lease six consecutive times for a period of 5 years. From the minimum lease
payments, the Company is generally required to make available a reserve of
2-5% of the annual gross golf revenue of each course for capital expenditure
reimbursement to the lessee subject to approval by the Company. At March 31,
1998, the amount reserved was $235,000 compared to $44,000 for the period
from February 12 to March 31, 1997.

The non-cancelable leases provide for the Company to receive the greater
of the Base Rent Escalation or an amount equal to Participating Rent plus the
Base Rent Escalation payable under each non-cancelable lease. Participating
rent will generally be paid to the Company each year in the amount, if any,
by which the sum of 33 1/3% of Gross Golf Revenue exceeds the cumulative Base
Rent Escalation since the commencement date of such Leases. Participating
rent was $365,000 for the three months ended March 31, 1998 and $38,000 for
the period from February 12 to March 31, 1997. The base rent will generally
be increased each year by the lesser of (i) 3% or (ii) 200% of the annual
percentage increase in the Consumer Price Index ("CPI"). Annual increases in
lease payments are generally limited to 5% to 7% during the first five years
of the initial lease term.

4. NOTES PAYABLE

Prior to amendment and restatement as discussed below, the Company had
available an $100 million secured revolving Credit Facility which carried a
floating interest rate of LIBOR plus 1.75%.

On February 27, 1998, a consortium of banks, co-led by NationsBank, N.A.
and Bank of America NT & SA, amended and restated the Credit Facility to
increase the amount available to $125 million on an unsecured basis and to
adjust the interest rate to LIBOR plus 1.75%. Up to 20% of the Credit
Facility may be used for working capital needs. The Credit Facility
availability is limited to the unencumbered pool calculation as defined in
the Credit Facility. Financial covenants include minimum requirement for net
worth, liquidity and cash flow. Non-financial covenants include, among
others, restrictions on loans outstanding, construction in progress, loans to
officers, changes to the Board of Directors. These covenants have been met.

In May 1998, the Company negotiated an amendment to the Credit Facility
whereby the Company now has a grid pricing arrangement which provides
incentives for the Company to maintain a low ratio of total debt to total
assets. The Company expanded the definition of eligible properties in the
unencumbered pool in a manner consistent with the Company's own underwriting
methods. The Company also negotiated to reduce the coverage ratio for the
unencumbered pool calculation to offer greater flexibility for future capital
needs.

Effective February 1, 1998, the Company purchased the Emerald Dunes
property subject to an existing lien whose principal balance was
approximately $12.9 million at the time of the purchase. This loan has fixed
monthly payments of approximately $117,000 (including interest of 8.75%) due
on the first of each month with the term expiring in November 2016.

The Company has agreed to maintain a minimum loan balance of approximately
$17.2 million for up to ten years to accommodate certain prior owners'
efforts to seed to minimize certain adverse tax consequences from their
contribution of their courses to the company.

9
<PAGE>

GOLF TRUST OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5. STOCK OPTIONS AND AWARDS

In February 1997, the Company adopted the 1997 Non-Employee Directors'
Plan (the "Directors' Plan"). Under the Directors' Plan, the Compensation
Committee is authorized to grant stock awards to purchase up to 100,000
shares of the Company's common stock at prices equal to the fair value of the
stock on the date of grant. In February 1998, 20,000 options were granted to
the Directors at the fair market value at the date of grant ($29.00). These
options vest immediately. There are 60,000 remaining options available for
future grants.

In May 1997, the Company adopted the 1997 Stock-Based Incentive Plan (the
"New 1997 Plan"). Under the New 1997 Plan, the Compensation Committee of the
Board of Directors is authorized to grant awards relating in the aggregate up
to 600,000 shares of the Company's common stock. Option grants generally
vest ratably over a period of three years from the date of grant and expire
ten years from the date of grant. Restricted stock grants vest twenty five
percent per year from the date of grant. On January 30, 1998, 50,000 options
were granted to a new employee.

On January 1, 1998 the Company issued 20,939 restricted common shares to
officers of the Company under the New 1997 Plan. These shares were issued
for $0.01 when the market price was $29.00 and vests over four years.
Compensation expense recognized for all restricted stock grants was
approximately $153,000 for the three months ended March 31, 1998. At March
31, 1998, 39,061 shares remaining available for options and restricted stock
grants under the New 1997 Plan.

During the three months ended March 31, 1998, loans of approximately
$525,000, secured by OP Units, were made to two officers for the payment of
related taxes. On April 15, 1998 additional loans of $175,000 were made to
the same officers. The loans bear interest at 6.0% and 5.7% respectively
with repayment due upon the earlier of a) 180 days of employee's termination,
b) December 31, 2002, or c) upon partial sale of shares, 50% of the net
proceeds will be used to repay the notes.

Transactions involving the plans are summarized as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTION SHARES SHARES EXERCISE PRICE
- ------------- ---------- ---------------
<S> <C> <C>
Outstanding at February 12, 1997 . - $ -
Granted . . . . . . . . . . . . . . 940,000 23.88

Exercised . . . . . . . . . . . . . - -
Expired and/or canceled . . . . . . - -
--------- ------
Outstanding at December 31, 1997 . 940,000 $23.88
--------- ------
--------- ------
Granted . . . . . . . . . . . . . . 70,000 29.00
Exercised . . . . . . . . . . . . . - -
Expired and/or canceled . . . . . . - -
--------- ------
Outstanding at March 31, 1998 . . . 1,010,000 $24.24
--------- ------
--------- ------
</TABLE>

- ----------------------------------------------- ---------------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ----------------------------------------------- ---------------------
RANGE OF REMAINING AVERAGE
EXERCISE CONTRACTUAL EXERCISE
PRICE SHARES LIFE (YEARS) PRICE SHARES PRICE
- ----------------------------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
$21 335,000 8.9 $21.00 105,000 $21.00
$24 - $26 605,000 9.1 $25.48 - -
$29 70,000 9.9 $29.00 20,000 $29.00

</TABLE>

10
<PAGE>

GOLF TRUST OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5. STOCK OPTIONS AND AWARDS (CONT'D)

EMPLOYEE STOCK PURCHASE PLAN

Effective March 1, 1998, the Company adopted an Employee Stock Purchase
Plan to provide substantially all employees an opportunity to purchase shares
of its common stock through payroll deduction, up to 10% of eligible
compensation with a $25,000 maximum deferral. Semi-annually, participant
account balances will be used to purchase shares of stock at the lesser of 85
percent of the fair market value of shares on grant date or exercise date.
The Employee Stock Purchase Plan expires on February 28, 2008. A total of
250,000 shares will be available for purchase under this plan.

6. PRO FORMA FINANCIAL INFORMATION

The pro forma financial information set forth below is presented as if the
1998 acquisitions (Note 3) had been consummated as of January 1, 1997. The
pro forma financial information is not necessarily indicative of what actual
results of operations of the Company would have been assuming the
acquisitions had been consummated as of January 1, 1997 nor does it purport
to represent the results of operations for future periods (in thousands,
except per share amounts).

For the Three For the Three
Months Ended Months Ended
March 31, March 31,
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 9,934 $ 6,252
Net income $ 3,100 $ 1,436
Basic earnings per share $ .41 $ .37
Diluted earnings per share $ .40 $ .36

</TABLE>

The pro forma financial information includes the following adjustments:
(i) an increase in depreciation and amortization expense; (ii) an increase in
general and administrative expenses to reflect a whole year of operations for
1997 only; (iii) a increase in interest expense; and (iv) an increase in
income applicable to minority interest.

11
<PAGE>

GOLF TRUST OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7. TRANSACTIONS WITH AFFILIATE AND SIGNIFICANT LESSEE

Legends Golf is a significant lessee of the golf courses in the Company's
portfolio. Legends Golf is a golf course management group consisting of
eight companies affiliated through common ownership that operates a portfolio
of golf courses owned by the Company. Legends Golf manages and operates the
golf courses as a lessee under triple net leases. Legends Golf derives
revenues from the operation of golf course principally through receipt of
green fees, membership fees, golf cart rentals, and sales of food, beverage
and merchandise.

The following table sets forth certain combined condensed financial
information for Legends Golf.

March 31, December 31,
(IN THOUSANDS) 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 4,496 $ 2,454
Non-current assets 21,228 19,765
------- -------
Total assets $25,724 $22,218
------- -------
------- -------

Payable to Golf Trust of America, LP $ 1,095 $ 1,004
Other current liabilities 1,822 1,720
Total long-term liabilities 14,546 10,897
Total owners' equity 8,261 8,597
------- -------
Total liabilities and owners' equity $25,724 $22,218
------- -------
------- -------
</TABLE>
<TABLE>
<CAPTION>

For the three months ended March 31,
(IN THOUSANDS) 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
Total Revenues $ 5,299 $ 5,107
Operating Loss $ (1,170) $ (604)
Net Income (loss) $ 279 $ (322)

</TABLE>

Total revenues from golf course operations for Legends Golf increased by
$.2 million or 3.8 percent to $5.3 million for the three months ended March
31, 1997. The increase was primarily attributed to increased greens fees at
the Myrtle Beach area courses net of reduced cart rentals.

Operating loss increased by $.6 million to $1.2 million for the three
months ended March 31, 1998 compared to $.6 million for the corresponding
period in 1997. The increase was primarily the result of lease payments to
Golf Trust of America, L.P. for the full three months in 1998 versus only one
and one-half months in 1997 offset by the related reductions in depreciation
expense. Net income was $.3 million for the three months ended March 31,
1998 compared to a net loss of $.3 million for the three months ended March
31, 1997 primarily due to the increased lease payments to Golf Trust of
America, L.P. net of the reductions of depreciation and interest expense and
the equity in the earnings of Golf Trust of America, L.P.

8. SUBSEQUENT EVENTS

DECLARATION OF DIVIDENDS

On April 24, 1998, the Board of Directors declared a quarterly dividend
distribution of $.41 per share for the quarter ended March 31, 1998, to
stockholders of record on May 4, 1998, which will be paid on May 18, 1998.

12
<PAGE>

GOLF TRUST OF AMERICA, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW AND FORMATION

Golf Trust of America, Inc. (the "Company") conducts business through Golf
Trust of America, L.P. (the "Operating Partnership"), of which the Company owns
61.3 percent interest through its two wholly owned subsidiaries and is the
general partner. Larry D. Young, a director of the Company, along with his
affiliates owns 29.4 percent of the Operating Partnership and is a
significant lessee. The remaining interest is the Operating Partnership is
held by operators of the golf courses, their affiliates and officers of the
Company.

"Management's Discussion and Analysis of Financial Condition and Results
of Operations," and other sections of this report contain various
"forward-looking statements" which represent the Company's expectations
concerning future events including the following: statements regarding the
Company's continuing ability to target and acquire high quality golf courses;
the expected availability of the Line-of-Credit and other debt and equity
financing; the Lessees' future cash flows, results of operations and overall
financial performance; the expected tax treatment of the Company's
operations; the Company's beliefs about continued growth in the golf
industry. Because of the foregoing factors, the actual results achieved by
the Company in the future may differ materially from the expected results
described in the forward-looking statements. The following discussion should
read in conjunction with the accompanying Consolidated Financial Statements
appearing elsewhere herein.

The Company was formed to capitalize upon consolidation opportunities in
the ownership of upscale golf courses in the United States. The Company's
principal business strategy is to acquire upscale golf courses and then lease
the golf courses to qualified third party operators, including affiliates of
the sellers. The Company has the ability to issue units of limited
partnership interest ("OP Units") in the Operating Partnership. OP Units are
redeemable by their holder for cash or, at the election of the Company, for
shares of Common Stock on a one-for-one basis (their "Redemption Right").
When the Company acquires a golf course in exchange for OP Units, in most
instances the seller of the course does not recognize taxable income gain
until it exercises the Redemption Right. OP Units can thus provide an
attractive tax-deferred sale structure for golf course sellers. The Company
believes its has a distinct competitive advantage in the acquisition of
upscale golf courses, including those which might not otherwise be available
for purchases, because of (i) its utilization of a multiple independent
lessee structure (ii) management's substantial industry knowledge,
experience, and relationships within the golf community, (iii) the Company's
strategic alliances with prominent golf course operators and (iv) its ability
to issue OP Units to golf course owners on a tax-deferred basis.

GOLF COURSE ACQUISITIONS

During the first quarter of 1998, the Company has acquired interest in an
additional 6 courses for an aggregate of approximately $100 million.

On January 2, 1998, the Company acquired Bonaventure Golf Courses,
comprised of two 18-hole golf courses located in Ft. Lauderdale, Florida for
$23.7 million in cash and repayment of mortgage indebtedness including
closing costs. The Company leases the golf courses to an affiliate of
Emerald Dunes Golf Course under a Participating Lease.

On January 16, 1998, the Company acquired Mystic Creek Golf Club and
Banquet Center, an 18-hole semi-private country club located near Dearborn,
Michigan for $8.5 million in cash and OP Units valued at approximately $1.5
million.

Effective February 1, 1998, the Company acquired Emerald Dunes Golf
Course, an 18-hole daily fee golf facility located in West Palm Beach,
Florida for a total purchase price of $22.4 million, which includes $6.1
million in OP Units. The Company acquired the course subject to an existing
first lien of $12.9 million.

13
<PAGE>

GOLF TRUST OF AMERICA, INC.

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

GOLF COURSE ACQUISITIONS (CONT'D)

On March 6, 1998, the Company acquired Sandpiper Golf Course, an 18-hole
upscale daily fee golf facility near Santa Barbara, California for $32.0
million and an adjacent 14-acre development site valued at $4.5 million. The
course is leased to a joint venture consisting of one of the West Coast's
largest golf course contractors, Environmental Golf, and the owner of a
planned 400 room five star luxury hotel adjacent to the course. To comply
with certain REIT restrictions, Mr. Blair and Mr. Young hold an approximate
5% interest in the taxable subsidiary which holds the development site.

On March 9, 1998, the Company acquired Persimmon Ridge, an 18-hole upscale
private golf facility located near Louisville, Kentucky for $7.5 million.
The course is leased to an affiliate of Granite Golf Group.

REVENUE GROWTH

The Company's primary sources of revenue are Lease Payments under the
Participating Leases and mortgage payments under the Participating Mortgage.
Participating Rent is generally equal to 33-1/3% of the increase in Gross
Golf Revenues over the Gross Golf Revenues for the Golf Course for the base
year, as adjusted by the Company in determining the initial Base Rent. Base
Rent will increase each year by the Base Rent Escalator during the first five
years of the lease term, generally equal to the lesser of (i) 3% or (ii) 200%
of the change in the CPI over the prior year. Annual increases in Lease
Payments are generally limited to a maximum of 5% for the first five years of
the lease term.

Management believes the principal source of growth in Gross Golf Revenues at
the Golf Courses will be increased green fees, cart fees, and other related
fees. In order to achieve higher revenues, management believes the Lessees will
need to continue to offer golfers a high quality golf experience as it relates
to the pace of play, condition of the Golf Course and overall quality of the
facilities.

RESULTS OF OPERATIONS OF THE COMPANY

FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND THE PERIOD FROM FEBRUARY 12
(INCEPTION) TO MARCH 31, 1997

For the three months ended March 31, 1998, the Company received $8,920,000
in revenue from the Participating Leases and the Mortgage Note Receivable,
including $365,000 in Participating Rent. For the period from February 12 to
March 31, 1997, the Company received $2,042,000 in revenue from the
Participating Leases, including $38,000 in Participating Rent. The increase
in revenues is due to 1) minimum increases of approximately $95,000, 2) a
full quarter of operations for 1998 resulting in $1,743,000 in additional
rental revenue, 3) rent from new course acquisitions of $2,587,000, 4)
$2,126,000 of interest from the Mortgage Note Receivable which was issued
June 20, 1997 and 5) the increase in Participating Rent.

Expenses totaling $3,821,000 for the three months ended March 31, 1998 and
$750,000 for the period from February 12 to March 31, 1997, reflect
depreciation and amortization, general and administrative expenses and
interest expense. The increase reflects 1) a full quarter of operations
resulting in $262,000 additional rent for 1997, 2) additional interest
expense of $876,000 as a result of the approximate $100,100,000 of
acquisitions made in the first quarter of 1998, 3) additional depreciation of
$448,000 which reflects a full quarter of operations, 4) additional
depreciation of $1,027,000 for the 1997 acquisitions subsequent to the
quarter ended March 31, 1997 and 5) additional general and administrative
costs of $632,000, including additional compensation expense of $218,000,
loan amortization of $130,000 and increased administrative costs of $284,000.

For the three months ended March 31, 1998 net income was $3,081,000 compared
to the period from February 12 to March 31, 1997, net income was $716,000.

14
<PAGE>

GOLF TRUST OF AMERICA, INC.

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

RESULTS OF OPERATIONS OF THE COMPANY (CONT'D)

FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND THE PROFORMA THREE MONTHS ENDED
MARCH 31, 1997

For the three months ended March 31, 1998 and the proforma three months
ended March 31, 1997, the Company would have received $8,920,000 and
$3,785,000 in revenue from the Participating Leases and the Mortgage Note
Receivable, including $365,000 and $38,000 in Participating Rent for 1998 and
1997, respectively. The 1997 proforma results have been computed using
actual results for 1997 and projected results for the period from January 1
to February 1, 1997. The increase in revenues is due to 1) minimum increases
of approximately $95,000, 2) rent from new course acquisitions of $2,587,000,
3) $2,126,000 of interest from the Mortgage Note Receivable which was issued
June 20, 1997 and 4) the increase in Participating Rent.

Expenses would have totaled $3,821,000 and $1,357,000 for the three months
ended March 31, 1998 and the proforma three months ended March 31, 1997, and
reflect depreciation and amortization, general and administrative expenses
and interest expense. The increase reflects 1) additional interest expense
of $824,000 to reflect the approximate $100,100,000 of acquisitions made in
the first quarter of 1998, 2) additional depreciation of $234,000 for the
1997 acquisitions and 3) additional general and administrative costs of
$632,000, including additional compensation expense of $218,000, loan
amortization of $130,000 and increased administrative costs of $284,000.

Net income for the three months ended March 31, 1998 and the proforma three
months ended 1997 would have been $3,081,000 and $1,218,000.

LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY

Cash flow from operating activities for the three months ended March 31,
1998 was $4,766,000 compared to $2,482,000 for the period from February 12,
1997 to March 31, 1997. This reflects net income before minority interest,
plus noncash charges to income for depreciation, loan cost amortization and
working capital changes. Cash flows used in investing activities reflect
increases in the mortgage receivable related to the Westin Innisbrook
facility of $1,005,000 and golf course acquisitions of $81,311,000 for the
three months ended March 31, 1998. This compares to acquisitions of the ten
initial courses for $54,555,000 for the period from February 12 to March 31,
1997. Cash flows provided by financing activities, totaling $82,316,000
represents the borrowing of $69,170,000 under the Credit Facility and
assumption of property subject to an existing lien (as discussed below) less
dividends and partner distributions totaling $5,035,000 for the three months
ended March 31, 1998. This compares to initial borrowings of $4,325,000 and
loan costs of $1,448,000 and the initial offering proceeds of $73,055,000 for
the period from February 12, 1997 to March 31, 1997.

On June 20, 1997, the Company entered into the Credit Facility to be used
primarily for the acquisition of additional golf courses, but a portion of
which may also be used for acquisition of expansion facilities, for capital
expenditures or for general working capital purposes. On February 27, 1998,
the Company amended and restated the Credit Facility to increase the amount
available to $125 million on an unsecured basis. The Credit Facility
availability is limited to the unencumbered pool calculation as defined in
the Credit Facility and up to 20% of the Credit Facility may be used for
working capital needs. Financial covenants include net worth, liquidity and
cash flow covenants. Non-financial covenants include restrictions on loans
outstanding, construction in progress, loans to officers and changes to Board
of Directors. At the present time, these covenants have been met. Prior to
amendment, the Company had a $100 million secured revolving Credit Facility
carried a floating interest rate of LIBOR plus 1.75%.

15
<PAGE>

GOLF TRUST OF AMERICA, INC.

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

LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY (CONT'D)

The Company has agreed to maintain a minimum loan balance of approximately
$17.2 million for up to ten years to accommodate certain prior owners'
efforts to seek to minimize certain adverse tax consequences from their
contribution of their courses to the Company.

The Company intends to invest in additional golf courses as suitable
opportunities arise, but the Company will not undertake investments unless
adequate sources of financing are available. The Company anticipates that
future acquisitions would be funded with debt financing provided by the Line
of Credit, the issuance of OP Units or with proceeds of additional equity
offerings. In the future, the Company may negotiate additional credit
facilities or issue corporate debt instruments. Any debt issued or incurred
by the Company may be secured or unsecured, long-term or short-term, fixed or
variable interest rate and may be subject to such other terms, as the Board
of Directors deems prudent. Except as described below, the Company currently
has no binding agreement to acquire any additional golf courses.

The Company's acquisition capabilities are enhanced by its existing
capital structure. The Company intends to maintain a capital structure with
consolidated indebtedness representing no more than 50% of its total market
capitalization.

COMMITMENTS

The Participating Leases generally require the Company to reserve annually
between 2.0% and 5.0% of the Gross Golf Revenues of the Golf Courses to fund
capital expenditures. The Lessees will fund any capital expenditures in
excess of such amounts.

Under certain circumstances, the Company agrees to make available to the
Lessees to fund significant capital improvements, to expand the existing golf
facilities and in limited circumstances to provide working capital. When
significant capital improvements are funded, the underlying Base Rent will be
increased. Working capital lines are evidenced by promissory notes or set
forth in the lease agreement. The Company has agreed to fund the
construction of an additional nine holes at Northgate Country Club ($3.0
million), purchase a clubhouse being constructed at The Woodlands ($750,000),
fund the construction at Lost Oaks of Innisbrook for renovations of the
clubhouse and golf course ($1.25 million), fund a working capital line at
Tiburon ($150,000), fund the renovations to the conference facilities and
construction of additional nine holes at the Westin Innisbrook Resort ($9.0
million), fund a working capital line at Bonaventure Golf Course ($750,000)
and pay for renovations at that course ($3.2 million) and pay for renovations
at the Sandpiper Golf Course ($6.0 million) and to fund a working capital
line of ($5.0 million) at the course.

16
<PAGE>

GOLF TRUST OF AMERICA, INC.

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

COMMITMENTS (CONT'D)

The Company has entered into commitments and letters of intent to acquire
golf courses and related facilities valued at in excess of $60 million. The
Company is in various stages of negotiation and due diligence review for each
of these acquisitions. Completion of these transactions is subject to
negotiation and execution of definitive documentation and certain other
customary closing conditions. No assurances can be given that the Company
will continue to pursue or complete the acquisition of any of these golf
course acquisitions.

FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION

Funds from Operations and Cash Available for Distribution are calculated as
follows:

(IN THOUSANDS)
THREE MONTHS PERIOD FROM
ENDED FEBRUARY 12, 1997 THREE MONTHS
THROUGH (INCEPTION OF OPERATIONS) ENDED
MARCH 31, 1998 THROUGH MARCH 31, 1997 MARCH 31,1997
-----------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (PRO FORMA)
<S> <C> <C> <C>
Income before minority interest.. $5,099 $1,474 $2,506
Depreciation and amortization for
real estate assets............. 1,821 346 794
------ ------ ------
Funds from Operations............ 6,920 1,820 3,300

Adjustments:
Noncash mortgage interest...... (332) - -
Capital expenditure reserve.... (235) (44) (152)
------ ------ ------
Cash Available for Distribution.. 7,477 1,776 3,148
------ ------ ------
------ ------ ------
</TABLE>

Noncash interest revenue represents the difference between interest
revenue on the Participating Mortgage reported by the Company in according
with GAAP and the actual cash payment to be received by the Company. The
Participating Leases generally require the Company to reserve annually
between 2.0% and 5.0% of the Gross Golf Revenues of the Golf Courses to fund
capital expenditures. The Lessees will fund any capital expenditures in
excess of such amounts.

In accordance with the resolution adopted by the Board of Governors of the
National Association of Real Estate Investment Trusts, Inc. ("NAREIT"), Funds
From Operations represents net income (loss) (computed in accordance with
generally accepted accounting principles ("GAAP")), excluding gains (or
losses) from debt restructuring or sales of property, plus depreciation of
real property, and after adjustments for unconsolidated partnership and joint
ventures. Funds From Operations should not be considered as an alternative
to net income or other measurements under GAAP as an indicator of operating
performance or to cash flows from operating investing or financial activities
as a measure of liquidity. Funds From Operations does not reflect working
capital changes, cash expenditures for capital improvements or principal
payments on indebtedness. The Company believes that Funds From Operations is
helpful to investors as a measure of the performance of an equity REIT,
because along with cash flows from operating activities, financing activities
and investing activities, it provides investors with an understanding of the
ability of the Company to incur and service debt and make capital
expenditures. Compliance with the NAREIT definition of Funds From Operations
is voluntary. Accordingly, the Company's calculation of Funds From
Operations in accordance with the NAREIT definition may be different than
similarly titled measures used by other REITs.

17
<PAGE>

GOLF TRUST OF AMERICA, INC.

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

RECENT ACCOUNTING PRONOUNCEMENTS

On March 19, 1998, the Emerging Issues Task Force ("EITF") of the
Financial Accounting Standards Board ("FASB") issued a ruling, EITF 97-11,
entitled "Accounting for Internal Costs Relating to Real Estate Property
Acquisitions". The ruling provides that internal costs of identifying and
acquiring operating property should be expensed as incurred. The effect of
the adoption of EITF 97-11 will not have a material impact on the financial
statements of the Company.

18
<PAGE>

GOLF TRUST OF AMERCIA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1998

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not Applicable.

ITEM 2. CHANGES IN SECURITIES

AMENDMENT OF BYLAWS

On February 16, 1998, the Board of Directors approved the following
changes in the Company's Bylaws (which had remained unchanged since their
original adoption on November 10, 1996), in order to provide greater
protection against a hostile take-over of the Company and thereby to increase
the Board's ability to maximize shareholder's long-term value per share. The
Bylaws were amended to:

i. require shareholders holding at least a majority (as opposed to "at
least 50%") of shares entitled to vote to request a special
shareholders' meeting;

ii. require shareholders to give the Company advance notice of
director nominations and new business proposals to be introduced
at any annual meeting of shareholders; and

iii. require 80% of the Board of Directors to approve amendments to
Bylaw provisions relating to calling special shareholder meetings
and advance notice of director nominations and shareholder
proposals.

The amended Bylaws are filed as an exhibit to this Quarterly Report.

RECENT SALES OF UNREGISTERED SECURITIES

On January 1, 1998, the Compensation Committee awarded to W. Bradley
Blair, II, David J. Dick and Scott D. Peters, 9,507 shares, 7,809 shares and
3,623 shares, respectively, of restricted Common Stock pursuant to the
Company's 1997 Stock-Based Incentive Plan, such shares were sold for their
aggregate par value of $209.39 and were subsequently registered with the
Securities and Exchange Commission on the Company's Form S-8 (File No.
333-46657) filed February 20, 1998. On January 16, 1998, the Operating
Partnership issued 52,724 OP Units to the Prior Owner of Mystic Creek Golf
Club for its interest in Mystic Creek Golf Club. On February 1, 1998, the
Operating Partnership issued 227,347 OP Units to the Prior Owner of Emerald
Dunes Golf Course for its interest in Emerald Dunes Golf Course, of these 9,
259 were designated Class B Partnership Units, a newly created series of OP
Units described below. OP Units may generally be redeemed by their holder
one year after issuance for cash or, at the option of the Company, shares of
Common Stock on a one-for-one basis. These issuances were effected in
reliance upon an exemption from registration under Section 4(2) of the
Securities Act as a transaction not involving a public offering.

19
<PAGE>

GOLF TRUST OF AMERCIA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1998

ITEM 2. CHANGES IN SECURITIES (CONT'D)

TERMS OF CLASS B OP UNITS

As of February 1, 1998, the Operating Partnership adopted the First
Amendment to the First Amended and Restated Agreement of Limited Partnership
of the Golf Trust of America, L.P. (the "Amendment"), which is included as an
exhibit to this Quarterly Report. Among other things, the Amendment created
Class B OP Units as follows:

"There is hereby created Class B Limited Partnership Interests in
the Partnership. The Class B Limited Partnership Interests shall have
the same redemption rights as set forth in Section 8.05 of the
Partnership Agreement. Class B Limited Partnership Units shall not be
entitled to any distributions of cash as set forth in Section 5.02 of
the Partnership Agreement. No income or losses shall be allocated to
the holders of the Class B Limited Partnership Units."

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

ITEM 5. OTHER INFORMATION

Not Applicable.

20
<PAGE>

GOLF TRUST OF AMERCIA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1998

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The following exhibits are part of this quarterly report on Form 10-Q
for the quarterly period ended March 31, 1998 (and are numbered in accordance
with Item 601 of Regulation S-K). Items marked with an asterisk (*) are
filed herewith.

Exhibit No. Description
- ----------- ----------------------------------------------------------------------
<S> <C>
3.1 Articles of Amendment and Restatement of the Company, as filed with
the State Department of Assessments and Taxation of Maryland on
January 31, 1997, (previously filed as Exhibit 3.1A to the Company's
Registration Statement on Form S-11 (Commission File No. 333-15965)
Amendment No. 2 (filed January 30, 1997) and incorporated herein by
reference).

3.2* Bylaws of the Company as amended by the Board of Directors on February
16, 1998 and as currently in effect.

10.1.2 First Amendment to the Partnership Agreement, dated as of February 1,
1998 (previously filed as Exhibit 10.1.2 to the Company's Annual
Report on Form 10-K (Commission File No. 000-22091), filed March 31,
1998, and incorporated herein by reference).

10.2.7 Lease, dated January 1, 1998, by and between Golf Trust of America,
L.P., as landlord, and Emerald Dunes - Bonaventure, Inc., as tenant
(previously filed as Exhibit 10.2.7 to the Company's Annual Report on
Form 10-K (Commission File No. 000-22091), filed March 31 1998, and
incorporated herein by reference).

10.2.8 Lease, dated January 16, 1998, by and between Golf Trust of America,
L.P., as landlord, and Mystic Creek Golf Club, Limited Partnership, as
tenant (previously filed as Exhibit 10.2.8 to the Company's Annual
Report on Form 10-K (Commission File No. 000-22091), filed March 31
1998, and incorporated herein by reference).

10.2.9 February 1, 1998, by and between Golf Trust of America, L.P., as
landlord, and Emerald Dunes - West Palm Beach, Inc., as tenant
(previously filed as Exhibit 10.2.9 to the Company's Annual Report on
Form 10-K (Commission File No. 000-22091), filed March 31 1998, and
incorporated herein by reference).

10.2.10 Lease, dated March 6, 1998, by and between Sandpiper - Golf Trust LLC,
as landlord, and Sandpiper at SBCR, LLC, as tenant (previously filed
as Exhibit 10.2.10 to the Company's Annual Report on Form 10-K
(Commission File No. 000-22091), filed March 31 1998, and incorporated
herein by reference).

10.2.11 Lease, dated March 9, 1998, by and between Golf Trust of America,
L.P., as landlord, and Granite Ridge, Inc., as tenant (previously
filed as Exhibit 10.2.11 to the Company's Annual Report on Form 10-K
(Commission File No. 000-22091), filed March 31 1998, and incorporated
herein by reference).

</TABLE>

21
<PAGE>

GOLF TRUST OF AMERCIA, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1998

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONT'D)

Exhibit No. Description
- ----------- ----------------------------------------------------------------------
<S> <C>

10.4.13 Real Property Purchase and Sale Agreement and Escrow Instructions,
dated January 9, 1998, by and between Aradon Corporation, as seller,
and Golf Trust of America, L.P., as buyer (previously filed as Exhibit
10.4.13 to the Company's Annual Report on Form 10-K (Commission File
No. 000-22091), filed March 31 1998, and incorporated herein by
reference).

10.4.14 Contribution and Leaseback Agreement, dated January 23, 1998, by and
between Okeechobee Championship Golf, Inc., as transferor, and Golf
Trust of America, L.P., as transferee (previously filed as Exhibit
10.4.14 to the Company's Annual Report on Form 10-K (Commission File
No. 000-22091), filed March 31 1998, and incorporated herein by
reference).

10.4.15 Purchase and Sale Agreement, dated February 26, 1998 by and between
Persimmon Ridge Golf Group, L.P., as seller, and Golf Trust of
America, L.P., as buyer (previously filed as Exhibit 10.4.15 to the
Company's Annual Report on Form 10-K (Commission File No. 000-22091),
filed March 31 1998, and incorporated herein by reference).

27.1* Financial Data Schedule

</TABLE>

* Filed Herewith

22
<PAGE>

SIGNATURES

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.

GOLF TRUST OF AMERICA, INC., registrant

By: /S/ W. Bradley Blair, II
------------------------------------------
W. Bradley Blair, II
President and Chief Executive Officer

/S/ W. Bradley Blair, II 5/14/98
- --------------------------------------- -----------------------
W. Bradley Blair, II Date
President, Chief Executive Officer and
Chairman of the Board of Directors

/S/ Scott D. Peters 5/14/98
- --------------------------------------- -----------------------
Scott D. Peters Date
Senior Vice President and
Chief Financial Officer

23
<PAGE>

EXHIBIT INDEX

Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit index
immediately precedes the exhibits.

The following exhibits are part of this Quarterly Report on Form 10-Q
(and are numbered in accordance with Item 601 of Regulation S-K). Items
marked with an asterisk (*) are filed herewith.

<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ----------------------------------------------------------------
<S> <C>
3.1 Articles of Amendment and Restatement of the Company, as filed with
the State Department of Assessments and Taxation of Maryland on
January 31, 1997, (previously filed as Exhibit 3.1A to the Company's
Registration Statement on Form S-11 (Commission File No. 333-15965)
Amendment No. 2 (filed January 30, 1997) and incorporated herein by
reference).

3.2* Bylaws of the Company as amended by the Board of Directors on February
16, 1998 and as currently in effect.

10.2.9 Lease, dated February 1, 1998, by and between Golf Trust of America,
L.P., as landlord, and Emerald Dunes - West Palm Beach, Inc., as
tenant (previously filed as Exhibit 10.2.9 to the Company's Annual
Report on Form 10-K (Commission File No. 000-22091), filed March 31
1998, and incorporated herein by reference).

10.4.14 Contribution and Leaseback Agreement, dated January 23, 1998, by and
between Okeechobee Championship Golf, Inc., as transferor, and Golf
Trust of America, L.P., as transferee (previously

24
<PAGE>

filed as Exhibit 10.4.14 to the Company's Annual Report on Form 10-K
(Commission File No. 000-22091), filed March 31 1998, and incorporated
herein by reference).

27.1* Financial Data Schedule

</TABLE>

* Filed Herewith

<PAGE>

THE BYLAWS

GOLF TRUST OF AMERICA, INC.

Last Amended February 16, 1998

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. PRINCIPAL OFFICE. . . . . . . . . . . . . . . . . . 1
Section 2. ADDITIONAL OFFICES. . . . . . . . . . . . . . . . . 1
Section 3. FISCAL AND TAXABLE YEARS. . . . . . . . . . . . . . 1

ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE III MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . 1
Section 1. PLACE . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. ANNUAL MEETING. . . . . . . . . . . . . . . . . . . 1
Section 3. SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . 2
Section 4. NOTICE. . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. ORGANIZATION. . . . . . . . . . . . . . . . . . . . 2
Section 6. QUORUM. . . . . . . . . . . . . . . . . . . . . . . 2
Section 7. VOTING. . . . . . . . . . . . . . . . . . . . . . . 2
Section 8. PROXIES . . . . . . . . . . . . . . . . . . . . . . 3
Section 9. VOTING OF SHARES BY CERTAIN HOLDERS . . . . . . . . 3
Section 10. INSPECTORS. . . . . . . . . . . . . . . . . . . . . 3
Section 11. DETERMINATION OF SHAREHOLDERS OF RECORD . . . . . . 3
Section 12. ACTION WITHOUT A MEETING. . . . . . . . . . . . . . 4
Section 13. VOTING BY BALLOT. . . . . . . . . . . . . . . . . . 4
Section 14. CONTROL SHARE ACQUISITION STATUTE . . . . . . . . . 4

ARTICLE IV DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. GENERAL POWERS. . . . . . . . . . . . . . . . . . . 4
Section 2. NUMBER, TENURE AND QUALIFICATIONS . . . . . . . . . 4
Section 3. CHANGES IN NUMBER VACANCIES . . . . . . . . . . . . 5
Section 4. RESIGNATIONS. . . . . . . . . . . . . . . . . . . . 5
Section 5. REMOVAL OF DIRECTORS. . . . . . . . . . . . . . . . 5
Section 6. ANNUAL AND REGULAR MEETINGS . . . . . . . . . . . . 5
Section 7. SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . 6
Section 8. NOTICE. . . . . . . . . . . . . . . . . . . . . . . 6
Section 9. QUORUM. . . . . . . . . . . . . . . . . . . . . . . 6
Section 10. VOTING. . . . . . . . . . . . . . . . . . . . . . . 6
Section 11. TELEPHONE MEETINGS. . . . . . . . . . . . . . . . . 6
Section 12. ACTION WITHOUT A MEETING. . . . . . . . . . . . . . 6
Section 13. COMPENSATION. . . . . . . . . . . . . . . . . . . . 6
Section 14. POLICIES AND RESOLUTIONS. . . . . . . . . . . . . . 7

ARTICLE V COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1. COMMITTEES OF THE BOARD . . . . . . . . . . . . . . 7
Section 2. TELEPHONE MEETINGS. . . . . . . . . . . . . . . . . 8
Section 3. ACTION BY COMMITTEES WITHOUT A MEETING. . . . . . . 8

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ARTICLE VI OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . 8
Section 2. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS . . . . 8
Section 3. REMOVAL AND RESIGNATION . . . . . . . . . . . . . . 8
Section 4. VACANCIES . . . . . . . . . . . . . . . . . . . . . 8
Section 5. GENERAL POWERS. . . . . . . . . . . . . . . . . . . 8
Section 6. CHIEF EXECUTIVE OFFICER . . . . . . . . . . . . . . 9
Section 7. CHIEF OPERATING OFFICER . . . . . . . . . . . . . . 9
Section 8. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD . . . . . . 9
Section 9. PRESIDENT . . . . . . . . . . . . . . . . . . . . . 9
Section 10. VICE PRESIDENTS . . . . . . . . . . . . . . . . . . 9
Section 11. SECRETARY . . . . . . . . . . . . . . . . . . . . . 9
Section 12. CHIEF FINANCIAL OFFICER OR TREASURER. . . . . . . . 9
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. . . 10
Section 14. SALARIES. . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE VII CONTRACTS, NOTES, CHECKS AND DEPOSITS . . . . . . . . . . 10
Section 1. CONTRACTS . . . . . . . . . . . . . . . . . . . . . 10
Section 2. CHECKS AND DRAFTS . . . . . . . . . . . . . . . . . 10
Section 3. DEPOSITS. . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE VIII CAPITAL SHARE . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. CERTIFICATES OF SHARES. . . . . . . . . . . . . . . 10
Section 2. LOST CERTIFICATE. . . . . . . . . . . . . . . . . . 11
Section 3. TRANSFER AGENTS AND REGISTRARS. . . . . . . . . . . 11
Section 4. TRANSFER OF SHARES. . . . . . . . . . . . . . . . . 11
Section 5. SHARE LEDGER. . . . . . . . . . . . . . . . . . . . 11

ARTICLE IX DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. DECLARATION . . . . . . . . . . . . . . . . . . . . 11
Section 2. CONTINGENCIES . . . . . . . . . . . . . . . . . . . 11

ARTICLE X INDEMNIFICATION AND LIMITATION OF LIABILITY . . . . . . . 12
Section 1. INDEMNIFICATION OF AGENTS . . . . . . . . . . . . . 12
Section 2. INSURANCE . . . . . . . . . . . . . . . . . . . . . 12
Section 3. INDEMNIFICATION NON-EXCLUSIVE . . . . . . . . . . . 12
Section 4. LIMITATION OF LIABILITY . . . . . . . . . . . . . . 12

ARTICLE XI SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. SEAL. . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2. AFFIXING SEAL . . . . . . . . . . . . . . . . . . . 12

ARTICLE XII WAIVER OF NOTICE. . . . . . . . . . . . . . . . . . . . . 13

ARTICLE XIII AMENDMENT OF BYLAWS . . . . . . . . . . . . . . . . . . . 13
Section 1. BY DIRECTORS. . . . . . . . . . . . . . . . . . . . 13
</TABLE>

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ARTICLE I

OFFICES

SECTION 1. PRINCIPAL OFFICE. The principal office of Golf Trust
of America, Inc. (the "Corporation") shall be located at 190 King Street,
Charleston, South Carolina 29401 or at any other place or places as the Board of
Directors may designate.

SECTION 2. ADDITIONAL OFFICES. The Corporation may have
additional offices at such places as the Board of Directors may from time to
time determine or the business of the Corporation may require.

SECTION 3. FISCAL AND TAXABLE YEARS. The fiscal and taxable years
of the Corporation shall begin on January 1 and end on December 31.

ARTICLE II

DEFINITIONS

For purposes of these Bylaws, the following words shall have the
meanings set forth below:

(a) "Affiliate" of a person shall mean (i) any person that, directly
or indirectly, controls or is controlled by or is under common control with such
person (ii) any other person that owns, beneficially, directly or indirectly,
five percent (5%) or more of the outstanding capital shares, shares or equity
interests of such person, or (iii) any officer, director, employee, partner or
trustee of such person or any person controlling, controlled by or under common
control with such person (excluding trustees and persons serving in similar
capacities who are not otherwise an Affiliate of such person). The term
"person" means and includes individuals, corporations, general and limited
partnerships, stock companies, land trusts, business trusts, or other entities
and governments and agencies and political subdivisions thereof. For the
purposes of this definition, "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with respect
to any person, shall mean the possession, directly or indirectly,of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.

(b) "Independent Director" shall mean a Director of the Corporation
who is not an officer or employee of the Corporation or an Affiliate of (i) any
lessee of or management company operating any of the properties owned by the
Corporation or any Affiliate of the Corporation, (ii) any subsidiary of the
Corporation or (iii) any partnership which is an Affiliate of the Corporation.

ARTICLE III

MEETINGS OF SHAREHOLDERS

SECTION 1. PLACE. All meetings of shareholders shall be held at
190 King Street, Charleston, South Carolina, or at such other place within the
United States as shall be stated in the notice of the meeting.

SECTION 2. ANNUAL MEETING. The President or the Board of
Directors may fix the time of the annual meeting of the shareholders for the
election of Directors and the transaction of any business as may be properly
brought before the meeting, but if no such date and time is fixed by the
President or the Board of Directors, the meeting for any calendar year shall be
held on the fourth Thursday in May, if that day is not a legal holiday. If that
day is a legal holiday, the annual meeting shall be held on the next succeeding
business day that is not a legal holiday. Failure to hold an annual meeting
does not invalidate the Corporation's

<PAGE>

existence or affect any otherwise valid corporate acts. Any stockholder
intending to introduce a stockholder proposal or to nominate a Director to
the Board of Directors must state in writing the nature of the proposal or
the name of the Director nominee, whatever the case may be, sufficiently in
advance, and under no circumstances less than the amount of time required by
Rule 14a-8 of the Securities and Exchange Act of 1934, as amended.

SECTION 3. SPECIAL MEETINGS. The President, a majority of the
Board of Directors or a majority of the Independent Directors may call special
meetings of the shareholders. Special meetings of shareholders also shall be
called by the Secretary upon the written request of the holders of shares
entitled to cast a majority (but not less than a majority) of all the votes
entitled to be cast at such meeting. Such request shall state the purpose of
such meeting and the matters proposed to be acted on at such meeting. The
Secretary shall inform such shareholders of the reasonably estimated cost of
preparing and mailing notice of the meeting and, upon payment to the Corporation
of such costs by such shareholders, the Secretary shall give notice to each
shareholder entitled to notice of the meeting. Unless requested by shareholders
entitled to cast a majority of all the votes entitled to be cast at such
meeting, a special meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any special meeting of the
shareholders held during the preceding twelve months.

SECTION 4. NOTICE. Not less than ten (10) nor more than sixty
(60) days before each meeting of shareholders, the Secretary shall give to each
shareholder entitled to vote at such meeting and to each shareholder not
entitled to vote who is entitled to notice of the meeting, written or printed
notice stating the time and place of the meeting and, in the case of a special
meeting or as otherwise may be required by statute, the purpose for which the
meeting is called, either by mail or by presenting it to such shareholder
personally or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the shareholder at his post office address as it
appears on the records of the Corporation, with postage thereon prepaid.

SECTION 5. ORGANIZATION. At every meeting of the shareholders,
the Chairman of the Board, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the Chairman of the Board, one of the
following officers present shall conduct the meeting in the order stated: the
Vice Chairman of the Board, if there be one, the President, the Vice Presidents
in their order of rank and seniority, or a Chairman chosen by the shareholders
entitled to cast a majority of the votes which all shareholders present in
person or by proxy are entitled to cast, shall act as Chairman, and the
Secretary, or, in his absence, an assistant secretary, or in the absence of both
the Secretary and assistant secretaries, a person appointed by the Chairman
shall act as Secretary.

SECTION 6. QUORUM. At any meeting of shareholders, the presence
in person or by proxy of shareholders entitled to cast fifty percent (50%) of
all the votes entitled to be cast at such meeting shall constitute a quorum; but
this Section 6 shall not affect any requirement under any statute, the Charter
or these Bylaws for the vote necessary for the adoption of any measure. If such
quorum shall not be present at any meeting of the shareholders, the shareholders
representing a majority of the shares entitled to vote at such meeting, present
in person or by proxy, may vote to adjourn the meeting from time to time to a
date not more than 120 days after the original record date without notice other
than announcement at the meeting until such quorum shall be present. At such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.

SECTION 7. VOTING. A plurality of all the votes cast at a meeting
of shareholders duly called and at which a quorum is present shall be sufficient
to elect a director. There shall be no cumulative voting. Each common share
may be voted for as many individuals as there are Directors to be elected and
for whose election the share is entitled to be voted. A majority of the votes
cast at a meeting of shareholders duly called and at which a quorum is present
shall be sufficient to approve any other matter which may properly come before
the meeting, unless more than a majority of the votes cast is required by
statute, by the Charter or

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<PAGE>

by these Bylaws. Each shareholder of record shall have the right, at every
meeting of shareholders, to one vote for each share held, except shares which
are the subject of a redemption notice as provided in the Charter.

SECTION 8. PROXIES. A shareholder may vote the common shares
owned of record by him, either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney in fact. Such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.

SECTION 9. VOTING OF SHARES BY CERTAIN HOLDERS. Shares
registered in the name of a trust or another corporation, if entitled to be
voted, may be voted by the president, a vice president or a proxy appointed
by the president or a vice president of such trust or other corporation,
unless some other person who has been appointed to vote such shares pursuant
to a bylaw or a resolution of the board of such trust or other corporation
presents a certified copy of such bylaw or resolution, in which case such
person may vote such shares. Any fiduciary may vote shares registered in his
name as such fiduciary, either in person or by proxy.

Shares indirectly owned by the Corporation shall not be voted at any
meeting and shall not be counted in determining the total number of
outstanding shares entitled to be voted at any given time, unless they are
held by it in a fiduciary capacity, in which case they may be voted and shall
all be counted in determining the total number of outstanding shares at any
given time.

The Board of Directors may adopt by resolution a procedure by which a
shareholder may certify in writing to the Corporation that any shares
registered in the name of the shareholder are held for the account of a
specified person other than the shareholder. The resolution shall set forth
the class of shareholders who may make the certification, the purpose for
which the certification may be made, the form of certification and the
information to be contained in it; if the certification is with respect to a
record date or closing of the share transfer books, the time after the record
date or closing of the share transfer books within which the certification
must be received by the Corporation; and any other provisions with respect to
the procedure which the Board of Directors considers necessary or desirable.
On receipt of such certification, the person specified in the certification
shall be regarded as, for the purposes set forth in the certification, the
shareholder of record of the specified shares in place of the shareholder who
makes the certification.

SECTION 10. INSPECTORS. At any meeting of shareholders, the
Chairman of the meeting may, or upon the request of any shareholder shall,
appoint one or more persons as inspectors for such meeting. Such inspectors
shall ascertain and report the number of shares represented at the meeting
based upon their determination of the validity and effect of proxies, count
all votes, report the results and perform such other acts as are proper to
conduct the election and voting with impartiality and fairness to all the
shareholders.

Each report of an inspector shall be in writing and signed by him or by
a majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall
be the report of the inspectors. The report of the inspector or inspectors
on the number of shares represented at the meeting and the results of the
voting shall be PRIMA FACIE evidence thereof.

SECTION 11. DETERMINATION OF SHAREHOLDERS OF RECORD. The Board of
Directors shall fix a date, not more than sixty (60) nor less than ten (10) days
preceding the date of any meeting of shareholders, and not more than sixty (60)
days preceding the date fixed for the payment of any dividend or distribution,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of shares will be made or go into effect, as a record
date for the determination of the shareholders entitled to notice of, or to vote
at, any such meeting, or entitled to receive any such dividend or distribution
or allotment of rights, or to exercise the rights in respect to any such change,
conversion or exchange of shares.

When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section 11, such determination
shall apply to any adjournment thereof unless the meeting is

3
<PAGE>

adjourned to a date more than one hundred twenty (120) days after the date
fixed for the original meeting, in which case the Board of Directors shall
fix a new record date.

SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if a consent in writing, setting forth such action, is signed by each
shareholder entitled to vote on the matter and any other shareholder entitled to
notice of a meeting of shareholders (but not to vote thereat) has waived in
writing any right to dissent from such action, and such consent and waiver are
filed with the minutes of proceedings of the shareholders.

SECTION 13. VOTING BY BALLOT. Voting on any question or in any
election may be VIVA VOCE unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.

SECTION 14. CONTROL SHARE ACQUISITION STATUTE. Subtitle 7 of
Title 3 of the Maryland General Corporation Law does not apply to any
acquisition of shares of capital stock of the Corporation.

ARTICLE IV

DIRECTORS

SECTION 1. GENERAL POWERS. The Board of Directors shall have full
power to conduct, manage, and direct the business and affairs of the
Corporation, and all powers of the Corporation, except those specifically
reserved or granted to the shareholders by statute or by the Charter or these
Bylaws, shall be exercised by, or under the authority of, the Board of
Directors. Unless otherwise agreed between the Corporation and the Director,
each individual Director, including each Independent Director, may engage in
other business activities of the type conducted by the Corporation and is not
required to present to the Corporation any investment opportunities presented to
them even though the investment opportunities may be within the scope of the
Corporation's investment policies.

SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular
meeting or at any special meeting called for that purpose, a majority of the
entire Board of Directors may establish, increase or decrease the number of
directors, provided that the number thereof shall not be less than the minimum
number required by the General Laws of the State of Maryland now or hereafter in
force, nor more than nine (9), and further provided that the tenure of office of
a director shall not be affected by any decrease in the number of directors.
Pursuant to the Charter of the Corporation, at all times subsequent to the
closing of the Initial Public Offering of Common Shares of the Corporation, the
directors shall be divided into three (3) classes with terms of office of three
years each, with the term of office of one class expiring at the annual meeting
of stockholders in each year. Each director shall hold office for the term for
which he or she is elected and until his or her successor is duly elected and
qualified, or until his or her resignation, removal (in accordance with the
Charter and these Bylaws) or death.

At all times (except (i) during a period not to exceed sixty (60) days
following the death, resignation, incapacity or removal from office of a
Director prior to the expiration of the Director's term of office or (ii) prior
to the closing date of the Initial Public Offering (as hereinafter defined) and
the consummation of all transactions related thereto), a majority of the
Directors shall be Independent Directors.

An Independent Director shall be a person who is not: (i) an officer or
employee of the Corporation; or (ii) an Affiliate of (w) any advisor to the
Corporation under an advisory agreement; (x) any lessee or management company
operating any property of the Corporation; (y) any subsidiary of the
Corporation; (z) or any partnership which is an Affiliate of the Corporation.

For purposes of this Section 2 of the Bylaws, an "Affiliate" of a person or
entity shall mean (i) any person that, directly or indirectly, controls or is
controlled by or is under common control with such person, (ii)

4
<PAGE>

any other person that owns, beneficially, directly or indirectly, five
percent (5%) or more of the outstanding capital shares, shares or equity
interests of such person, or (iii) any officer, director, employee, partner
or trustee of such person or any person controlling, controlled by or under
common control with such person (excluding trustees and persons serving in
similar capacities who are not otherwise an Affiliate of such person). The
term "person" means and includes individuals, corporations, general and
limited partnerships, stock companies or associations, joint ventures,
associations companies, trusts, banks, trust companies, last trusts, business
trusts, or other entities and governments and agencies and political
subdivisions thereof. For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with", as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, through the
ownership of voting securities, partnership interests or other equity
interests.

Notwithstanding the foregoing requirement that a majority of the
directors be Independent Directors, no action otherwise validly taken by the
Board of Directors during a period in which a majority of its members are not
Independent Directors shall be invalidated or otherwise affected by such
circumstance, nor shall such circumstance subject the directors taking any
such action to a higher standard of care or to liability other than that
which would have applied to such action had a majority of the members of the
Board of Directors been independent Directors at the time such action was
taken.

SECTION 3. CHANGES IN NUMBER VACANCIES. Except in the case of
a vacancy on the Board of Directors among the directors elected by a class of
Equity Shares other than Common Shares, any vacancy on the Board of Directors
may be filled by the affirmative vote of the remaining directors (except that
a vacancy which results from an increase in the number of directors may be
filled by a majority of the entire Board of Directors), and, in the case of a
vacancy resulting from the removal of a director, by the stockholders by the
vote of a majority of the votes entitled to be cast in the election of
directors. Any vacancy on the Board of Directors among the directors elected
by a class of Equity Shares (other than Common Shares) may be filled by a
majority of the remaining directors elected by that class or the sole
remaining director elected by that class, or by the stockholders by a
majority of the votes of that class. If the shareholders of any class or
series are entitled separately to elect one or more Directors, a majority of
the remaining Directors elected by that class or series or the sole remaining
Director elected by that class or series may fill any vacancy among the
number of Directors elected by that class or series. A Director elected by
the Board of Directors to fill a vacancy shall be elected to hold office
until the next annual meeting of shareholders or until his successor is
elected and qualified. The Board of Directors may declare unqualified a
Director who has been declared of unsound mind by an order of court who has
pled guilty or NOLO CONTENDERE to, or been convicted of, a felony involving
moral turpitude, or who has wilfully violated the Corporation's Charter or
these Bylaws. The office of a Director declared unqualified shall be
considered vacant until filled as herein provided.

SECTION 4. RESIGNATIONS. Any Director or member of a committee
may resign at any time. Such resignation shall be made in writing and shall
take effect at the time specified therein, or if no time be specified, at the
time of the receipt by the Chairman of the Board, the President or the
Secretary.

SECTION 5. REMOVAL OF DIRECTORS. Any Director may be removed,
with or without cause by the affirmative vote of the stockholders holding not
less than two-thirds (66 2/3%) of all the votes entitled to be cast for the
election of Directors; provided, however that in the case of any Director
elected by holders of a class of Equity Shares, other than Common Shares,
such Directors may be removed, with or without cause, by the affirmative vote
of all of that class of Equity Shares.

SECTION 6. ANNUAL AND REGULAR MEETINGS. An annual meeting of
the Board of Directors shall be held immediately after and at the same place
as the annual meeting of shareholders, no notice other than this bylaw being
necessary. The Board of Directors may provide, by resolution, the time and
place, either within or without the State of South Carolina, for the holding
of regular meeting of the Board of Directors without other notice than such
resolution.

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<PAGE>

SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the President, a majority of the
Board of Directors or a majority of the Independent Directors then in office.
The person or persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the State of South
Carolina, as the place for holding any special meeting of the Board of Directors
called by them.

SECTION 8. NOTICE. Notice of any special meeting of the Board
of Directors shall be given by written notice delivered personally,
telegraphed or mailed to each Director at his business or resident address.
Personally delivered or telegraphed notices shall be given at least two days
prior to the meeting. Notice by mail shall be given at least five days prior
to the meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail properly addressed, with postage thereon
prepaid. If given by telegram, such notice shall be deemed to be given when
the telegram is delivered to the telegraph company. Neither the business to
be transacted at, nor the purpose of, any annual, regular or special meeting
of the Board of Directors need be stated in the notice, unless required by
statute or these Bylaws.

SECTION 9. QUORUM. A majority of the entire Board of Directors
shall constitute a quorum for transaction of business at any meeting of the
Board of Directors, provided that, if less than a quorum is present at said
meeting, a majority of the Directors present may adjourn the meeting from time
to time without further notice.

The Directors present at a meeting which has been duly called and
convened may continue to transact business until adjournment, notwithstanding
the withdrawal of enough Directors to leave less than a majority of the entire
Board, provided, that at least one-third of the entire Board of Directors
remains present at that meeting, in which case a quorum will still be deemed
present.

SECTION 10. VOTING. (a) Except as provided in subsection (b) of
this Section 10, the action of the majority of the Directors present at a
meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by the Charter, these Bylaws, or applicable statute.

(b) Notwithstanding anything in these Bylaws to the contrary, any
action pertaining any transaction involving the Corporation with respect to the
purchase, sale, acquisition, lease or mortgage of any real estate asset in which
an officer, Director or advisor of the Corporation has any direct or indirect
interest other than solely as a result of such person's status as an officer,
director or advisor of the Corporation, must be approved by a majority of the
Directors and a majority of the disinterested Independent Directors, even if the
disinterested Independent Directors constitutes less than a quorum.

SECTION 11. TELEPHONE MEETINGS. Members of the Board of Directors
may participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.

SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a consent in writing to such action is signed by each
Director and such written consent is filed with the minutes of proceedings of
the Board of Directors.

SECTION 13. COMPENSATION. Independent Directors shall receive such
reasonable compensation for their services as Directors as the Board of
Directors may fix or determine from time to time; such compensation may include
a fixed sum, capital shares of the Corporation and Directors shall receive
reimbursement of reasonable expenses incurred in traveling to and from or
attending regular or special meetings of the Board of Directors or of any
committee thereof.

6
<PAGE>

SECTION 14. POLICIES AND RESOLUTIONS. It shall be the duty of the
Board of Directors to insure that the purchase, sale, retention and disposal of
the Corporation's assets, the investment policies and the borrowing policies of
the Corporation and the limitations thereon or amendment thereof are all times:

(a) consistent with such policies, limitations and restrictions are
contained in these Bylaws, or in the Corporation's Charter, or as described in
the Registration Statement or in the Corporation's ongoing periodic reports
filed with the SEC following the Initial Public Offering, subject to revision
from time to time at the discretion of the Board of Directors without
shareholder approval unless otherwise required by law; and

(b) in compliance with the restrictions applicable to real estate
investment trusts pursuant to the Internal Revenue Code of 1986, as amended.

ARTICLE V

COMMITTEES

SECTION 1. COMMITTEES OF THE BOARD. The Board of Directors may
appoint from among its members an executive committee and other committees
comprised of one or more Directors. The Board of Directors shall appoint an
audit committee comprised of not less than two members, a majority of whom are
Independent Directors. The Board of Directors shall appoint a compensation
committee comprised of not less than three Independent Directors. The Board of
Directors may delegate to any committee any of the powers of the Board of
Directors except the power to elect Directors, declare dividends or
distributions on shares, recommend to the shareholders any action which requires
shareholder approval, amend or repeal these Bylaws, approve any merger or share
exchange which does not require shareholder approval or issue shares. However,
if the Board of Directors has given general authorization for the issuance of
shares, a committee of the Board of Directors, in accordance with a general
formula or method specified by the Board of Directors by resolution or by
adoption of a share option plan, may fix the terms of shares, subject to
classification or reclassification, and the terms on which any shares may be
issued.

Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Directors.

One-third, but not less than two (unless the committee has less than
two members), of the members of any committee shall be present in person at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of a majority present shall be the act of
such committee. The Board of Directors may designate a chairman of any
committee, and such chairman or any two members of any committee (unless the
committee has less than two members, in which case one member of such committee)
may fix the time and place of its meetings unless the Board shall otherwise
provide. In the absence or disqualification of any member of any such
committee, the members thereof present at any meeting and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
Director to act at the meeting int he place of such absent or disqualified
members; provided, however, that in the event of the absence or disqualification
of an Independent Director, such appointee shall be an Independent Director.

Each committee shall keep minutes of its proceedings and shall report
the same to the Board of Directors at the meeting next succeeding, and any
action by the committees shall be subject to revision and alteration by the
Board of Directors, provided that no rights of third persons shall be affected
by any such revision or altercation.

Subject to the provisions hereof, the Board of Directors shall have
the power at any time to change the membership of any committee, to fill all
vacancies, to designate alternative members to replace any absent or
disqualified members or to dissolve any such committee.

7
<PAGE>

SECTION 2. TELEPHONE MEETINGS. Members of a committee of the
Board of Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation in a meeting
by these means shall constitute presence in a person at the meeting.

SECTION 3. ACTION BY COMMITTEES WITHOUT A MEETING. Any action
required or permitted to be taken at any meeting of a committee of the Board of
Directors may be taken without a meeting, if a consent in writing to such action
is signed by each members of the committee and such written consent is filed
with the minutes of proceedings of such committee.

ARTICLE VI

OFFICERS

SECTION 1. GENERAL PROVISIONS. The officers of the Corporation
may consist of a Chairman of the Board, a Vice Chairman of the Board, a
President, a Chief Executive Officer, a Chief Operating Officer, one or more
Vice Presidents, a Chief Financial Officer or Treasurer, one or more assistant
treasurers, a Secretary, and one or more assistant secretaries and such other
officers as may be elected in accordance with the provisions of Section 2 of
this Article VI. The officers of the Corporation shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as may be
convenient. Each officer shall hold office until his successor is elected and
qualifies or until his death, resignation or removal in the manner hereinafter
provided. Any two or more offices may be held by the same person. In its
discretion, the Board of Directors may leave unfilled any office except that of
President and Secretary. Election or appointment of an officer or agent shall
not of itself create contract rights between the Corporation and such officer or
agent.

SECTION 2. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS. The Board
of Directors may from time to time elect such other officers and appoint such
committees, employees, other agents as the business of the Corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these Bylaws, or as the Board of
Directors may from time to time determine. The Directors may delegate to any
officer or committee the power to elect subordinate officers and to retain or
appoint employees or other agents.

SECTION 3. REMOVAL AND RESIGNATION. Any officer or agent of the
Corporation may be removed by the Board of Directors if in its judgment the best
interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. Any
officer of the Corporation may resign at any time by giving written notice of
his resignation to the Board of Directors, the Chairman of the Board, the
President or the Secretary. Any resignation shall take effect at the time
specified therein or, if the time when it shall become effective is not
specified therein, immediately upon its receipt. The acceptance of a
resignation shall not be necessary to make it effective unless otherwise stated
in the resignation.

SECTION 4. VACANCIES. A vacancy in any office may be filled by
the Board of Directors for the balance of the term.

SECTION 5. GENERAL POWERS. All officers of the Corporation as
between themselves and the Corporation shall, respectively, have such authority
and perform such duties in the management of the property and affairs of the
Corporation as may be determined by resolution of the Board of Directors, or in
the absence of controlling provisions in a resolution of the Board of Directors,
as may be provided in these Bylaws.

8
<PAGE>

SECTION 6. CHIEF EXECUTIVE OFFICER. The Board of Directors may
designate a chief executive officer from among the elected officers. The chief
executive officer shall have responsibility for implementation of the policies
of the Corporation, as determined by the Board of Directors, and for the
administration of the business affairs of the Corporation.

SECTION 7. CHIEF OPERATING OFFICER. The Board of Directors may
designate a chief operating officer from among the elected officers. Said
officer will have the responsibility and duties as set forth by the Board of
Directors or the chief executive officer.

SECTION 8. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The Chairman
of the Board, if there be one, shall preside over the meetings of the Board of
Directors and of the shareholders at which he shall be present. In the absence
of the Chairman of the Board, the Vice Chairman of the Board, if there be one,
shall preside at such meetings at which he shall be present. The Chairman of
the Board and the Vice Chairman of the Board shall, respectively, perform such
other duties as may be assigned to him or them by the Board of Directors.

SECTION 9. PRESIDENT. The President shall in general supervise
and control all of the business and affairs of the Corporation. Unless the
President is not a member of the Board of Directors, in the absence of both the
Chairman and Vice Chairman of the Board, he shall preside at all meetings of the
Board of Directors and of the shareholders at which he shall be present. In the
absence of a designation of a chief executive officer by the Board of Directors,
the President shall be the chief executive officer and shall be EX OFFICIO a
member of all committees that may, from time to time, be constituted by the
Board of Directors. He may execute any deed, mortgage, bond, contract or other
instrument to which the Corporation is a party, except in cases where the
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the Corporation or shall be
required by law to be otherwise executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.

SECTION 10. VICE PRESIDENTS. In the absence of the President or in
the event of a vacancy in such office, the Vice President (or in the event there
be more than one Vice President, the Vice Presidents in the order designated at
the time of their election or, in the absence of any designation, then in the
order of the election) shall perform the duties of the President and when so
acting shall have all the powers of and be subject to all the restrictions upon
the President, and shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors. The Board of
Directors may designate one or more Vice Presidents as executive Vice President
or as Vice President for particular areas of responsibility.

SECTION 11. SECRETARY. The Secretary shall (a) keep the minutes of
the proceedings of the shareholders, the Board of Directors and committees of
the Board of Directors in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; (c) be custodian of the corporate records and of
the seal of the Corporation; (d) keep a register of the post office address of
each shareholder which shall be furnished to the Secretary by such shareholder;
(e) have general charge of the share transfer books of the Corporation; and (f)
in general perform such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.

SECTION 12. CHIEF FINANCIAL OFFICER OR TREASURER. The Chief
Financial Officer or Treasurer shall have the custody of the corporate funds and
securities and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors.

He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and Board of Directors, at the

9
<PAGE>

regular meetings of the Board of Directors or whenever they may require it,
an account of all his transactions as Chief Financial Officer or Treasurer
and of the financial condition of the Corporation.

If required by the Board of Directors, he shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, all books, papers, vouchers, moneys and other
property of whatever kind in his possession or under his control belonging to
the Corporation.

SECTION 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretaries and assistant treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Chief Financial
Officer Treasurer, respectively, or by the President or the Board of Directors.
The assistant treasurers shall, if required by the Board of Directors, give
bonds for the faithful performance of their duties in such sums and with such
surety or sureties as shall be satisfactory to the Board of Directors.

SECTION 14. SALARIES. The salaries of the officers shall be fixed
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a Director of
the Corporation.

ARTICLE VII

CONTRACTS, NOTES, CHECKS AND DEPOSITS

SECTION 1. CONTRACTS. The Board of Directors may authorize any
officer or agent to enter into any contract or to execute and deliver any
instrument in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances.

SECTION 2. CHECKS AND DRAFTS. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agents or
agents of the Corporation and in such manner as shall from time to time be
determined by the Board of Directors.

SECTION 3. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may designate.

ARTICLE VIII

CAPITAL SHARE

SECTION 1. CERTIFICATES OF SHARES. Each shareholder shall be
entitled to a certificate or certificates which shall represent and certify the
number of shares of each kind and class of shares held by him in the
Corporation. Each certificate shall be signed by the Chairman of the Board or
the President or a Vice President and countersigned by the Secretary or an
assistant secretary of the Treasurer or an assistant treasurer and may be sealed
with the corporate seal.

The signatures may be either manual or facsimile. Certificates shall
be consecutively numbered; and if the Corporation shall, from time to time,
issue several classes of shares, each class may have its own number series. A
certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which is restricted as to its transferability or voting powers, which is
preferred or limited as to its dividends or as to its share of the assets upon
liquidation or which is redeemable at the option of the Corporation, shall have
a statement of such restriction, limitation, preference or redemption provision,
or a summary thereof, plainly stated on the certificate. In lieu of such

10
<PAGE>

statement or summary, the Corporation may set forth upon the face or back of
the certificate a statement that the Corporation will furnish to any
shareholder, upon request and without charge, a full statement of such
information.

SECTION 2. LOST CERTIFICATE. The Board of Directors may direct
a new certificate to be issued in place of any certificate previously issued
by the Corporation alleged to have been lost, stolen or destroyed upon the
making of an affidavit of that fact by the person claiming the shares
certificate to be lost, stolen or destroyed. When authorizing the issuance
of a new certificate, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or his legal representative to advertise the
same in such manner as it shall require and/or to give bond, with sufficient
surety, to the Corporation to indemnify it against any loss or claim which
may arise as a result of the issuance of a new certificate.

SECTION 3. TRANSFER AGENTS AND REGISTRARS. At such time as the
Corporation lists its securities on a national securities exchange or qualities
for trading in the over the counter market, the Board of Directors shall appoint
one or more banks or trust companies in such city or cities as the Board of
Directors may deem advisable, from time to time, to act as transfer agents
and/or registrars of the shares of the Corporation; and, upon such appointments
being made, no certificate representing shares shall be valid until
countersigned by one of such transfer agents and registered by one of such
registrars.

SECTION 4. TRANSFER OF SHARES. No transfers of shares of the
Corporation shall be made if (i) void AB INITIO pursuant to any provision of the
Corporation's Charter or (ii) the Board of Directors, pursuant to any provision
of the Corporation's Charter, shall have refused to permit the transfer of such
shares. Permitted transfers of shares of the Corporation shall be made on the
share records of the Corporation only upon the instruction of the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary or with a transfer agent or transfer
clerk, and upon surrender of the certificate or certificates, if issued, for
such shares properly endorsed or accompanied by a duly executed share transfer
power and the payment of all taxes thereon. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, as to any transfers not prohibited by any provision of
the Corporation's Charter by action of the Board of Directors thereunder, it
shall be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.

SECTION 5. SHARE LEDGER. The Corporation shall maintain at its
principal office or at the office of its counsel, accountants or transfer agents
an original or duplicate share ledger containing the name and address of each
shareholder and the number of shares of each class held by such shareholder.

ARTICLE IX

DIVIDENDS

SECTION 1. DECLARATION. Dividends upon the shares of the
Corporation may be declared by the Board of Directors, subject to applicable
provisions of law and the Charter. Dividends may be paid in cash, property or
shares of the Corporation, subject to applicable provisions of law and the
Charter.

SECTION 2. CONTINGENCIES. Before payment of any dividends, there
may be set aside out of any funds of the Corporation available for dividends
such sum or sums as the Board of Directors may from time to time, in its
absolute discretion, think proper as a reserve fund for contingencies, for
equalizing dividends, for repairing or maintaining the property of the
Corporation, its subsidiaries or any partnership for which it serves as general
partner, or for such other purpose as the Board of Directors shall determine to
be in

11
<PAGE>

the best interest of the Corporation, and the Board of Directors may modify
or abolish any such reserve in the manner in which it was created.

ARTICLE X

INDEMNIFICATION AND LIMITATION OF LIABILITY

SECTION 1. INDEMNIFICATION OF AGENTS. The Corporation shall
indemnify, in the manner and to the fullest extent permitted by law, any person
(or the estate of any person) who is or was a party to, or is threatened to be
made a party to, any threatened, pending or completed action, suit or
proceeding, whether or not by or in the right of the Corporation, and whether
civil, criminal, administrative, investigative or otherwise, by reason of the
fact that such person is or was a director or officer of the Corporation, or
such director or officer is or was serving at the request of the Corporation as
a director, officer, agent or employee of another corporation, partnership,
joint venture, trust or other enterprise. To the fullest extent permitted by
law, the indemnification provided herein shall include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement and any such
expenses may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding. The Corporation shall indemnify other
employees and agents to such extent as shall be authorized by the Board of
Directors or these Bylaws and be permitted by law. Any repeal or modification
of this Article X by the shareholders of the Corporation shall be prospective
only, and shall not adversely affect any right to indemnification or advancement
of expenses hereunder existing at the time of such repeal or modification.

SECTION 2. INSURANCE. The Corporation may to the fullest extent
permitted by law, purchase and maintain insurance on behalf of any such person
against any liability which may be asserted against such person.

SECTION 3. INDEMNIFICATION NON-EXCLUSIVE. The indemnification
provided herein shall not be deemed to limit the right of the Corporation to
indemnify any other person for any such expenses to the fullest extent permitted
by law, nor shall it be deemed exclusive of any other rights to which any person
seeking indemnification from the Corporation may be entitled under any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in such person's official capacity and as to action in another
capacity while holding such office.

SECTION 4. LIMITATION OF LIABILITY. To the fullest extent
permitted by Maryland statutory or decisional law, as amended or interpreted
from time to time, no director or officer of the Corporation shall be personally
liable to the Corporation or its shareholders, or any of them, for money
damages. No amendment of these Bylaws or repeal of any of its provisions shall
limit or eliminate the benefits provided to directors and officers under this
provision with respect to any act or omission which occurred prior to such
amendment or repeal.

ARTICLE XI

SEAL

SECTION 1. SEAL. The Corporation may have a corporate seal, which
may be altered at will by the Board of Directors. The Board of Directors may
authorize one or more duplicate or facsimile seals and provide for the custody
thereof. Unless specifically required by law, a corporate seal is not required
for the due execution of any document.

SECTION 2. AFFIXING SEAL. Whenever the Corporation is required to
place its corporate seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a corporate seal to
place the word "(SEAL)" adjacent to the signature of the person authorized to
execute the document on behalf of the Corporation.

12
<PAGE>

ARTICLE XII

WAIVER OF NOTICE

Whenever any notice is required to be given pursuant to the Charter or
these Bylaws of the Corporation or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically
required by statute. The attendance of any person at any meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.

ARTICLE XIII

AMENDMENT OF BYLAWS

SECTION 1. BY DIRECTORS. The Board of Directors shall have the
exclusive power to adopt, alter or repeal any Bylaws of the Corporation and
to make new Bylaws; provided that any amendment to Section 2 or Section 3 of
Article III, or any amendment to Section 2, Section 3, Section 5 or Section 9
of Article IV required the affirmative vote of 80% of the entire Board of
Directors.

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GOLF TRUST
OF AMERICA, INC. FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STRENGTHS.
</LEGEND>
<CIK> 0001024126
<NAME> GOLF TRUST OF AMERICA, INC
<MULTIPLIER> 1,000

<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR OTHER 3-MOS
<FISCAL-YEAR-END> MAR-31-1998 DEC-31-1997 MAR-31-1997 MAR-31-1997
<PERIOD-START> JAN-01-1998 FEB-12-1997 FEB-12-1997 JAN-01-1997
<PERIOD-END> MAR-31-1998 DEC-31-1997 MAR-31-1997 MAR-31-1997
<CASH> 1,553 14,968 0<F4>
0<F5>
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<FN>
<F4>PERIOD FROM FEBRUARY 12, 1997 TO MARCH 31, 1997
<F5>PRO FORMA THREE MONTHS ENDED MARCH 31, 1998
<F1>AS A REAL ESTATE INVESTMENT TRUST, OUR BALANCE SHEET IS NOT CLASSIFIED BETWEEN
CURRENT AND NON-CURRENT INTEREST INCOME.
</FN>

</TABLE>