8-K

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                                  UNITED STATES
                       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) APRIL 10, 1997


                     CALIFORNIA REAL ESTATE INVESTMENT TRUST
             (Exact name of registrant as specified in its charter)


 CALIFORNIA                        1-8063                        94-6181186
(State or other                 (Commission                (IRS Employer
jurisdiction of                  File Number)              Identification No.)
 incorporation)


             131 STEUART STREET, SUITE 200, SAN FRANCISCO, CA 94105
                    (Address of principal executive offices)


        Registrant's telephone number, including area code (415) 905-0288
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ITEM 4.  CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT

         (a) As of April 14, 1997, Coopers & Lybrand LLP was terminated as the
Company's independent accountant. The Company's new independent accountant is
Ernst & Young LLP. The decision to change independent accountants was approved
by the Board of Trustees of the Company on April 14, 1997.

                  Coopers & Lybrand LLP's report on the Company's financial
statements for each of the two most recent fiscal years did not contain an
adverse opinion or a disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope or accounting principles. During the two most recent
fiscal years preceding Coopers & Lybrand LLP's termination, there were no
disagreements with Coopers & Lybrand LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which would have caused it to make a reference to the subject matter of the
disagreement in connection with its report. Furthermore, there were no
reportable events during the two most recent fiscal years preceding Coopers &
Lybrand LLP's termination arising from Coopers & Lybrand LLP having advised the
Company (a) that the internal controls necessary for the Company to develop
reliable financial statements do not exist; (b) that information has come to its
attention that has led it to no longer be able to rely on management's
representations or that has made it unwilling to be associated with financial
statements prepared by management; (c)(1) of the need to expand significantly
the scope of its audit or that information has come to its attention that if
further investigated may either (i) materially impact the fairness or
reliability of a previously issued audit report or underlying financial
statements or the financial statements issued or to be issued covering the
fiscal period subsequent to the date of the most recent financial statements
covered by an audit report or (ii) cause it to be unwilling to rely on
management's representations or be associated with the Company's financial
statements and (2) due to Coopers & Lybrand LLP's termination, it did not so
expand the scope of its audit or conduct such further investigation; and (d)(1)
information has come to its attention that it has concluded materially impacts
the fairness or reliability of either (i) a previously issued audit report or
the underlying financial statements, or (ii) the financial statements
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issued or to be issued covering the fiscal periods subsequent to the date of the
most recent financial statements covered by an audit report (including
information that, unless resolved to its satisfaction, would prevent it from
rendering an unqualified audit report on those financial statements) and (2) due
to Coopers & Lybrand LLP's termination, the issue has not been resolved to its
satisfaction prior to its termination.

                  (b) Ernst & Young LLP has been appointed by the Board of
Trustees as the new independent accountant to the Company effective April 14,
1997. During the Company's two most recent fiscal years and the subsequent
interim period prior to Coopers & Lybrand LLP's termination, the Company did not
consult with Ernst & Young LLP regarding the application of accounting
principles to a specified transaction or the type of audit opinion that might be
rendered on the Company's financial statements.

                  (c) During the interim period from the date of the Company's
last audited financial statements to the date hereof, there were no procedures
performed by Coopers & Lybrand LLP and the company is not aware of any
disagreements with Coopers & Lybrand LLP on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure.

ITEM 5.  OTHER EVENTS

         On April 10, 1997, the Trust announced that it had filed a preliminary
proxy statement with the Securities and Exchange Commission with respect to the
annual meeting of its shareholders which is expected to be held in June. At the
annual meeting, the Trust's shareholders will be asked to vote on proposals to
(i) approve the issuance by the Trust of up to $33 million of cumulative
convertible preferred shares to Veqtor Finance Company, LLC ("Veqtor"), an
affiliate of Samuel Zell and the principals of Victor Capital Group, L.P., (ii)
approve an amended and restated declaration of trust of the Trust, (iii) elect
seven trustees to serve on the Trust's board of trustees, (iv) ratify the
appointment of Ernst & Young LLP as auditors of the Trust for the fiscal year
1997 and (v) approve a share option plan. The preliminary proxy statement also
outlines the Trust's proposed new business plan, previously approved by the
Trust's board, to become a specialty finance company focused on the commercial
real estate sector. Reference is made to the Company's press release
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dated April 10, 1997 filed as Exhibit 20 hereto and incorporated herein by this
reference.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

         (a)      Not applicable.

         (b)      Not applicable.

         (c)      Exhibit 16 -- Letter from Coopers & Lybrand LLP dated April
                  16, 1997

         (d)      Exhibit 20 -- Press release dated April 10, 1997.
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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.


                                   CALIFORNIA REAL ESTATE INVESTMENT TRUST


                                   By:   /s/ Frank A. Morrow
                                         ------------------------------------
                                   Name:  Frank A. Morrow

                                   Title:  Chairman of the Board

Date:  April 16, 1997
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                                  EXHIBIT INDEX




Exhibit           Name

16                Letter of Coopers & Lybrand LLP, dated April 16, 1997

20                Press release dated April 10, 1997

EX-16

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                                   EXHIBIT 16




                                                     April 16, 1997



Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C.  20549

Gentlemen:

We have read the statements made by California Real Estate Investment Trust
(copy attached), which we understand will be filed with the Commission, pursuant
to Item 4 of Form 8-K, as part of the Company's Form 8-K report dated April 16,
1997. We agree with the statements concerning our Firm in such Form 8-K.


                                                     Very truly yours,


                                                     Coopers & Lybrand L.L.P.

EX-20

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                                   EXHIBIT 20


                                  NEWS RELEASE

CONTACT:  Cindy McHugh                                     FOR IMMEDIATE RELEASE
          (312) 466-3779                                   APRIL 10, 1997


            CALIFORNIA REAL ESTATE INVESTMENT TRUST ANNOUNCES FILING
               OF PRELIMINARY PROXY STATEMENT SEEKING APPROVAL OF
              CONVERTIBLE PREFERRED SHARE INVESTMENT BY AFFILIATES
                     OF SAMUEL ZELL AND VICTOR CAPITAL GROUP

         SAN FRANCISCO, CA - APRIL 10, 1997 - - California Real Estate
Investment Trust (NYSE, PSE: CT) announced that it had filed a preliminary proxy
statement with the Securities and Exchange Commission with respect to the annual
meeting of its shareholders which is expected to be held in June. At the annual
meeting, the Trust's shareholders will be asked to vote on proposals to (i)
approve the issuance by the Trust of up to $33 million of cumulative convertible
preferred shares to Veqtor Finance Company, LLC ("Veqtor"), an affiliate of
Samuel Zell and the principals of Victor Capital Group, L.P., (ii) approve an
amended and restated declaration of trust of the Trust, (iii) elect seven
trustees to serve on the Trust's board of trustees, (iv) ratify the appointment
of Ernst & Young LLP as auditors of the Trust for the fiscal year 1997 and (v)
approve a share option plan. The preliminary proxy statement also outlines the
Trust's proposed new business plan, previously approved by the Trust's board, to
become a specialty finance company focused on the commercial real estate sector.

                                     -more-
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         In December 1996, an affiliate of Samuel Zell indicated to the Trust's
board of trustees that it had reached agreement with The Peregrine Real Estate
Trust, the Trust's former parent, to purchase from Peregrine a 76% common share
interest in the Trust and asked for the board's approval of the purchase. At
that time, the board approved the purchase, the business plan and the issuance
of at least $30 million of convertible preferred shares of the Trust to Veqtor
at $2.69 per share, the preferred shares to be convertible into common shares of
the Trust on a one-for-one basis.

         In reaching its decision to approve the foregoing, the board of
trustees considered a number of factors including the attractiveness of the new
business plan proposed by Veqtor, the significant real estate investment and
financing experience of the proposed new management team and the significant
amount of equity capital the Trust would obtain from the proposed preferred
share issuance. The board also considered the terms of previous alternative
offers to purchase Peregrine's interest in the Trust of which the board was
aware and the fact that the average price of the Trust's common shares during
the 60 trading days preceding the board of trustee's meeting at which the
proposed equity investment was approved was $2.38 per share.

         The issuance and sale of the preferred shares to Veqtor and related
transactions are subject to completion of definitive documentation.

                                     -more-
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         The affiliate of Samuel Zell that owns the 76% common share interest in
the Trust has advised the Trust that it intends to vote in favor of the
proposals presented in the proxy statement. Accordingly, approval of the
proposals is assured. The record and meeting dates for the annual meeting will
be announced in the near future.

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