As filed with the Securities and Exchange Commission on August 24, 1998

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


         Date of Report (Date of Earliest Event Reported) August 7, 1998


                                  CAPITAL TRUST
             (Exact name of registrant as specified in its charter)


California                        1-8063                              94-6181186
- --------------------------------------------------------------------------------
(State or other                   (Commission                   (I.R.S. Employer
jurisdiction of                   File Number)               Identification No.)
incorporation)


605 Third Avenue, 26th Floor
New York, New York                                                         10016
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(Address of principal executive offices)                              (Zip Code)


                                 (212) 655-0220
- --------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


- --------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)


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ITEM 2.   Acquisition or Disposition of Assets

          On  August  7,  1998,  the  Registrant   originated  and  funded  two,
cross-collateralized and cross-defaulted junior mezzanine loans aggregating $100
million (collectively, the "Loan") to NK- CR Holdings, LLC (the "Borrower"). The
Loan  consists of a $65 million  note (the "A Note") and a $35 million note (the
"B Note").  The Loan is secured by,  among other  things,  a pledge of ownership
interests in the entity that owns certain classes of beneficial interests in the
entity  that  holds  the  subordinate   interest  in  (i)  92  second  mortgages
aggregating  approximately  $516 million  secured by 431 net leased  properties,
(ii)  reserve  accounts  aggregating  approximately  $20 million and (iii) other
notes  aggregating  approximately  $10.7  million.  The security for the Loan is
subordinate to senior classes of beneficial interests in the items of collateral
described in clauses (i) and (ii) above. The Loan is additionally secured by two
unconditional  and  irrevocable  letters of credit  aggregating  $12 million and
additional  subordinate  liens on real  property  with an  aggregate  balance of
approximately $3.4 million.  The Loan was funded by the Registrant with its cash
on hand.

          The A Note, which matures August 6, 1999, is non-amortizing  and bears
interest at a contractual rate above LIBOR. At closing,  the Borrower  purchased
an interest  rate cap from a third  party for the A Note.  Prior to May 4, 1999,
the A  Note  can  be  prepaid  upon  payment  of a  yield  maintenance  payment;
thereafter the A Note is fully prepayable with no premium or penalty.

          The B Note, which matures August 6, 2001, is non-amortizing  and bears
interest  at a fixed rate of  11.793%.  Simultaneous  with the  closing of the B
Note,  the  Registrant  entered into a swap  agreement (the "Swap") with a third
party under which it will receive a contractual rate above LIBOR on the notional
amount of the Swap in exchange for fixed payments. Upon repayment of the A Note,
prepayment  of up to $10 million of the B Note is  permitted  with no premium or
penalty; thereafter, prepayment of the B Note is prohibited until maturity.

          After repayment of the A Note, the Loan will be  additionally  secured
by (i) a several  guaranty of interest by the  principal  owners of the Borrower
and (ii) an  unconditional  and irrevocable  letter of credit with a face amount
equal to 40% of the then outstanding B Note balance. The Borrower may extend the
maturity  of the B Note for up to two years (the  "Extended  Term"),  subject to
certain terms and conditions. During any Extended Term, the interest rate on the
B Note  would  be  converted  from  a  fixed  rate  into a  floating  rate  at a
predesignated  specified rate above LIBOR and would be fully prepayable  without
premium or penalty other than LIBOR breakage costs.


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                                   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 hereunto duly authorized.


                                       CAPITAL TRUST
                                       (Registrant)


Date: August 24, 1998                  By:   /s/ Edward L. Shugrue III
                                             ----------------------------------
                                             Name:  Edward L. Shugrue III
                                             Title:    Chief Financial Officer



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