<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C. 20549-1004

                                   FORM 10-K
                                        
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
    For the fiscal year ended                    December 31, 1998
                                       ----------------------------------------
 
                                      OR
 
[_] 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                            0-12946
                                  ---------------------------------------------
 
 
               First Capital Income Properties, Ltd. - Series IX
-------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

         Florida                                           59-2255857
-----------------------------                     -----------------------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)

Two North Riverside Plaza, Suite 1000,                     
--------------------------------------
Chicago, Illinois                                          60606-2607
-----------------                                 -----------------------------
(Address of principal executive offices)                   (Zip Code)
 
Registrant's telephone number, including 
 area code                                               (312) 207-0020
                                                  -----------------------------
 
Securities registered  pursuant to Section 
 12(b) of the Act:                                             NONE
                                                  -----------------------------
 
Securities registered pursuant to Section 
 12(g) of the Act:                                  Limited Partnership Units
                                                  -----------------------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X   No                                  
                                      -----    -----


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

Documents incorporated by reference:

The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the definitive Prospectus dated May 24, 1983, included in
the Registrant's Registration Statement on Form S-11 (Registration No. 2-82357),
is incorporated herein by reference in Part IV of this report.

Exhibit Index - Page A-1
------------------------
<PAGE>
 
                                    PART I
                                        
ITEM 1.  BUSINESS
-------  --------

The registrant, First Capital Income Properties, Ltd. - Series IX (the
"Partnership") is a limited partnership organized in 1983 under the Florida
Uniform Limited Partnership Law. The Partnership sold 100,000 Limited
Partnership Units (the "Units") to the public from June 1983 to October 1983,
pursuant to a Registration Statement on Form S-11 filed with the Securities and
Exchange Commission (Registration Statement No. 2-82357). Capitalized terms used
in this report have the same meaning as those terms have in the Partnership's
Registration Statement.

The Partnership was formed to invest primarily in existing, improved, commercial
income-producing real estate, such as shopping centers, warehouses and office
buildings, and, to a lesser extent, in other types of commercial income-
producing real estate. From July 1984 to May 1986, the Partnership made four
real property investments and purchased 50% interests in four joint ventures,
which were each formed with Affiliated partnerships for the purpose of acquiring
a 100% interest in certain real property. The Partnership's joint ventures,
prior to dissolution, are operated under the common control of First Capital
Financial Corporation (the "Managing General Partner"). In January 1993, the
Partnership purchased the remaining 50% interest in one of the four joint
ventures. Through December 31, 1998, the Partnership has sold five real property
investments and dissolved two joint ventures as a result of the sale and/or
disposition of the real property investments. As of March 1999, Glendale Center
Shopping Mall ("Glendale"), the Partnership's remaining investment in real
property is under contract to be sold. For additional information, see Note 7 of
Notes to Financial Statements.

Property management services for the Partnership's real estate investment is
provided by an independent management company for fees calculated as a
percentage of gross rents received from the properties.

The real estate business is highly competitive. The results of operations of the
Partnership will depend upon the availability of suitable tenants, real estate
market conditions and general economic conditions which may impact the success
of these tenants. The property owned by the Partnership frequently competes for
tenants with similar properties owned by others.

As of March 1, 1999, there were 23 employees at the Partnership's property for
on-site property maintenance and administration.

ITEM 2.  PROPERTIES
-------  ----------

As of December 31, 1998, the Partnership owned a 50% interest in a joint
venture, which owned in fee simple, Glendale, located in Indianapolis, Indiana.
Glendale is encumbered by a first mortgage. For details of the material terms of
the mortgage, refer to Note 4 of Notes to Financial Statements. Glendale has
654,772 net leasable square feet of which 88%, 89%, 91%, 93% and 93%, were
occupied as of December 31, 1998, 1997, 1996, 1995 and 1994, respectively. The
average annual rental per square foot, as computed by dividing the property's
base revenues by its average occupied square footage, for the years ended
December 31, 1998, 1997, 1996, 1995 and 1994 was $5.61, $5.65, $5.66, $5.48 and
$5.55 respectively. As of December 31, 1998, there were 50 tenants at Glendale, 
two of which occupied greater than 10% of the leasable square footage.

For federal income tax purposes, the Partnership depreciates the portion of the
acquisition costs of Glendale allocable to real property (exclusive of land),
and all improvements thereafter over useful lives ranging from 18 years to 39
years, utilizing the Accelerated Cost Recovery System ("ACRS"). Other
depreciable assets were depreciated over their applicable recovery periods. In
the opinion of the Managing General Partner, Glendale is adequately insured and
serviced by all necessary utilities. The Partnership's share of 1998 real estate
taxes for Glendale was $336,200.

                                       2
<PAGE>
 
ITEM 2.  PROPERTIES (Continued)
-------  ----------

For additional information regarding Glendale's operating results, see Item 7--
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

The following table summarizes the principal provisions of the leases for each 
of the tenants which occupy ten percent or more of the leasable square footage 
at Glendale.

<TABLE>
<CAPTION>

                                 Partnership's Share of per                      Percentage
                                  annum Base Rents (a) for                         of Net        Renewal
                                ---------------------------                       Leasable       Options
                                               Final Twelve      Expiration        Square        (Renewal
                                                 Months of         Date of         Footage       Options/
                                   1999            Lease            Lease         Occupied        Years)
                                ---------      ------------      ----------      ----------      --------
<S>                             <C>            <C>               <C>             <C>             <C>
Glendale
--------
L.S. Ayres & Co.                                                                                  1 / 18
  (department store)            $ 194,100       $ 194,100         1/31/2001          36%          3 / 30

Lazarus                                                                                           1 / 18
  (department store)            $ 128,700       $ 128,700         1/31/2001          25%          3 / 30
</TABLE>

     (a) The Partnership's share of per annum base rents for each of the tenants
listed above for each of the years between 1999 and the final twelve months for
each of the above leases is no greater or lesser that the amounts listed in the
above table.

The amounts in the following table represent the Partnership's portion of base
rental income from leases in the year of expiration (assuming no lease renewals)
through the year ending December 31, 2008 are:

<TABLE>
<CAPTION>
              Number                      Base Rents in Year    % of Total Base
Year        of Tenants    Square Feet      Of Expiration (a)       Rents (b)
----        ----------    -----------     ------------------    ---------------
<S>         <C>           <C>             <C>                   <C> 
1999            14             49,983               $ 83,500              5.71%
2000             7             13,634               $ 76,000              5.76%
2001             6            409,195               $ 78,900              8.52%
2002             5             24,728               $118,200             14.73%
2003             4             13,400               $ 90,400             14.08%
2004             4             15,316               $ 40,900              8.90%
2005             1              4,718               $ 37,700              8.90%
2006             6             26,153               $ 38,500             19.95%
2007             2              6,934               $ 64,600             43.22%
2008             1              8,494               $ 42,500            100.00%
</TABLE>

(a) Represents the Partnership's portion of base rents to be collected on
expiring leases in calendar year of expiration.

(b) Represents the Partnership's portion of base rents to be collected each year
on expiring leases as a percentage of the Partnership's portion of the total
base rents to be collected on leases in effect as of December 31, 1998.

ITEM 3.  LEGAL PROCEEDINGS
-------  -----------------

(a & b)  The Partnership and its properties were not a party to, nor the subject
of, any material pending legal proceedings, nor were any such proceedings
terminated during the quarter ended December 31, 1998. Ordinary routine legal
matters incidental to the business which were not deemed material were pursued
during the quarter ended December 31, 1998.

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

(a,b,c & d)   None.

                                       3
<PAGE>
                                    PART II


ITEM 5.   MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS
-------   ----------------------------------------------------------------------

There has not been, nor is there expected to be, a public market for Units. 

As of March 1, 1999, there were 9,329 Holders of Units.




 

<PAGE>
 
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                       For the Years Ended December 31,
                          ------------------------------------------------------------
                             1998        1997        1996        1995         1994
--------------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>         <C>          <C>
Total revenues            $ 7,041,900 $19,285,300 $12,027,300 $11,974,000  $24,235,100
Net income (loss)         $ 2,171,000 $12,754,100 $   829,500 $(5,608,600) $19,429,400
Net income (loss)
 allocated to Limited
 Partners                 $ 2,124,400 $12,206,000 $   395,400 $(5,907,500) $19,160,300
Net income (loss)
 allocated to Limited
 Partners per Unit
 (100,000 Units
 outstanding) (a)         $     21.24 $    122.06 $      3.95 $    (59.08) $    191.60
Total assets              $25,134,000 $46,634,100 $66,389,400 $70,894,100  $78,938,800
Mortgage loan(s) payable  $ 5,570,800 $ 6,559,700 $ 7,339,500 $ 8,039,400  $ 6,650,000
Distributions to Limited
 Partners per Unit
 (100,000 Units
 outstanding) (b)         $    117.50 $    409.50 $     41.50 $     35.00  $    100.50
Return of capital to
 Limited Partners per
 Unit (100,000 Units
 outstanding) (c)         $     96.26 $    287.44 $     37.55 $     35.00         None
OTHER DATA:
Investment in commercial
 rental properties (net
 of accumulated
 depreciation and
 amortization)            $ 7,765,900 $18,705,800 $49,782,100 $54,231,400  $62,932,400
Number of real property
 interests owned at
 December 31                        1           2           4           4            4
--------------------------------------------------------------------------------------
</TABLE>
(a)  Net income allocated to Limited Partners per Unit for 1994 included an
     extraordinary gain on early extinguishment of debt.
(b)  Distributions to Limited Partners per Unit for the years ended December
     31, 1998, 1997 and 1994 included Sales Proceeds of $105.50, $378.50 and
     $80.00, respectively.
(c)  For the purposes of this table, return of capital represents either: 1)
     the amount by which distributions, if any, exceed net income for the
     respective year or 2) total distributions, if any, when the Partnership
     incurs a net loss for the respective year. Pursuant to the Partnership
     Agreement, Capital Investment is only reduced by distributions of Sale or
     Refinancing Proceeds. Accordingly, return of capital as used in the above
     table does not impact Capital Investment.
 
The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
 
<TABLE>
<CAPTION>
                                        For the Years Ended December 31,
                         ------------------------------------------------------------------
                             1998          1997         1996         1995          1994
--------------------------------------------------------------------------------------------
<S>                      <C>           <C>           <C>          <C>          <C>
Cash Flow (as defined
 in the Partnership
 Agreement) (a)          $  1,585,500  $  5,143,800  $ 5,240,400  $ 5,345,700  $  4,869,100
Items of
 reconciliation:
 Principal payments on
  mortgage loan(s)
  payable                     988,900       779,800      699,900      460,600       359,200
 Changes in current
  assets and
  liabilities:
 Decrease (increase) in
  current assets              244,600       276,100      133,600     (112,900)      496,500
 (Decrease) in current
  liabilities                 (48,800)      (50,700)    (131,700)    (288,400)     (399,200)
--------------------------------------------------------------------------------------------
Net cash provided by
 operating activities    $  2,770,200  $  6,149,000  $ 5,942,200  $ 5,405,000  $  5,325,600
--------------------------------------------------------------------------------------------
Net cash provided by
 (used for) investing
 activities              $  2,347,700  $ 33,003,500  $  (570,500) $(2,748,500) $ 40,606,400
--------------------------------------------------------------------------------------------
Net cash (used for)
 financing activities    $(23,650,200) $(32,458,700) $(5,202,500) $(2,217,600) $(50,007,500)
--------------------------------------------------------------------------------------------
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as Partnership revenues
    earned from operations (excluding tenant deposits and proceeds from the
    sale, disposition or financing of any Partnership properties or the
    refinancing of any Partnership indebtedness), minus all expenses incurred
    (including Operating Expenses, payments of principal (other than balloon
    payments of principal out of Offering Proceeds) and interest on any
    Partnership indebtedness, and any reserves of revenues from operations
    deemed reasonably necessary by the Managing General Partner), except
    depreciation and amortization expenses and capital expenditures, lease
    acquisition expenditures made from Offering proceeds and the General
    Partners' Partnership Management Fee.
 
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-8
in this report and the supplemental schedule on pages A-9 and A-10.
 
                                                                               5
<PAGE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 
The ordinary business of the Partnership is expected to pass through three
phases: (i) Offering of Units and investment in properties; (ii) operation of
properties and (iii) sale or other disposition of properties.
 
Statements contained in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are not historical facts, may be
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.
 
The Partnership commenced the Offering of Units in June 1983 and terminated the
Offering in October 1983 upon the sale of 100,000 Units. From July 1984 through
May 1986, the Partnership made investments in eight properties, three of which
were 50% joint venture interests and one of which was a 50% joint venture
interest until January 1993, when the Partnership purchased the remaining 50%
joint venture interest from an Affiliated partnership.
 
In 1992, the Partnership, in addition to being in the operation of properties
phase, entered the disposition phase of its life cycle. During the disposition
phase of the Partnership's life cycle, comparisons of operating results are
complicated due to the timing and effect of property sales. Partnership
operating results are generally expected to decline as real property interests
are sold since the Partnership no longer receives income generated from such
real property interests. During the years ended December 31, 1998 and 1997, the
Partnership sold one and two properties, respectively. Through December 31,
1998, the Partnership has sold five real property investments and liquidated
two joint venture investments through the joint ventures' sales of their
properties.
 
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the years ended December 31, 1998, 1997 and 1996.
The discussion following the table should be read in conjunction with the
Financial Statements and Notes thereto appearing in this report.
 
<TABLE>
<CAPTION>
                          Comparative Operating Results
                         (a) For the Years Ended December
                                       31,
                -----------------------------------------
                            1998       1997       1996
---------------------------------------------------------
<S>                      <C>        <C>        <C>
GLENDALE CENTER SHOPPING MALL (50%)
Rental revenues          $3,313,400 $3,470,000 $3,572,300
---------------------------------------------------------
Property net income (b)  $  834,700 $  657,100 $  331,500
---------------------------------------------------------
Average occupancy               87%        90%        91%
---------------------------------------------------------
SOLD PROPERTIES (C)
Rental revenues          $  277,100 $5,759,700 $7,608,900
---------------------------------------------------------
Properties' net income   $  178,700 $2,304,100 $2,663,800
---------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items, which are not directly related
    to individual property operating results such as interest income and
    general and administrative expenses.
(b) Property net income excludes provisions for value impairment of $2,000,000
    and $2,700,000, respectively, on Glendale Center Shopping Mall
    ("Glendale"), which were recorded in the Statements of Income and Expenses
    during the years ended December 31, 1998 and 1996 (see Note 7 of Notes to
    the Financial Statements for additional information).
(c) Sold Properties includes the operating results of Citrus Center (sold
    August 1, 1997), Richmond Plaza Shopping Center ("Richmond") (sold December
    31, 1997) and Shoppes of West Melbourne ("Shoppes") (sold February 27,
    1998). The gains recorded on the sales of these properties are not included
    in this table.
 
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31,
1997
Net income decreased by $10,583,100 for the year ended December 31, 1998 when
compared to the year ended December 31, 1997. The decrease was primarily due to
the 1997 gains recorded on the sales of Citrus Center and Richmond, which
exceeded the 1998 gain recorded on the sale of Shoppes. The decrease was also
due to the provision for value impairment recorded in 1998 on Glendale and
absence of results from the Sold Properties. The decrease was partially offset
by improved operating results at Glendale.
 
Net income, exclusive of Sold Properties and provision for value impairment
increased by $220,400 for the year ended December 31, 1998 when compared to the
year ended December 31, 1997. The increase was primarily due to improved
operating results at Glendale. The increase was also due to an increase in
interest earned on the Partnership's short-term investments, which was due to
an increase in the average cash available for investment resulting from the
funds generated from the sales of Richmond and Shoppes prior to distribution to
Limited Partners.
 
The following comparative discussion includes the results of Glendale only.
 
Rental revenues decreased by $156,600 or 4.5% for the year ended December 31,
1998 when compared to the year ended December 31, 1997. The decrease was
primarily the result of the effects of the 1997 early termination of a tenant's
lease. This early termination resulted in additional revenues in 1997 and
reduced occupancy and revenues during 1998. The decrease was also the result of
a decrease in tenant reimbursements for common area maintenance, which was due
to an overestimate of 1997 tenant reimbursements payable in 1998. The decrease
was also due to a decrease in base rents, which is due to the decline in
average occupancy.
 
Interest expense decreased by $100,800 for the year ended December 31, 1998
when compared to the year ended December 31, 1997. The decrease was primarily
due to the effects of principal payments made during the past 24 months on
Glendale's mortgage loan.
 
Repairs and maintenance expenses decreased by $90,300 for the year ended
December 31, 1998 when compared to the year ended December 31, 1997. The
decrease was primarily due to a decrease in snow removal costs. In addition,
the decrease was due to a reduction in ordinary repairs to the interior and
exterior of the property.
 
Property operating expenses decreased by $94,000 for the year ended December
31, 1998 when compared to the year ended December 31, 1997. The decrease was
primarily due to a decrease in security, utility, advertising and promotional
costs at the property.
 
Real estate tax expense increased by $88,000 for the year ended December 31,
1998 when compared to the year ended
 
6
<PAGE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
 
December 31, 1997. The increase was primarily due to an overaccrual of 1996
taxes payable in 1997.
 
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER 31,
1996
Net income increased by $11,924,600 for the year ended December 31, 1997 when
compared to the year ended December 31, 1996. The increase was primarily due to
the gains recorded in 1997 on the sales of Citrus Center and Richmond together
with the provision for value impairment recorded in 1996 on Glendale. The
increase was also due to an increase in interest income earned on the
Partnership's short-term investments, which was primarily due to the investment
of the Citrus Center Sale Proceeds prior to distribution to Limited Partners.
Partially offsetting the increase was decreases in operating results at Citrus
Center due to its sale in 1997 and at Richmond. The decrease in operating
results at Richmond was primarily due to a 1996 receipt as consideration for
the early termination of a tenant's lease.
 
Net income, exclusive of gain on sales, provision for value impairment and
results from properties sold during 1997, increased by $956,200 for the year
ended December 31, 1997 when compared to the year ended December 31, 1996. The
increase was due to the increase in interest income, as previously discussed,
together with improved operating results at Glendale and Shoppes and a decrease
in general and administrative expenses due to a decrease in salaries and
accounting fees.
 
The following comparative discussion excludes the results of Citrus Center and
Richmond.
 
Rental revenues decreased by $16,700 or 0.3% for the year ended December 31,
1997 when compared to the year ended December 31, 1996. The decrease in
percentage and base rental income at Glendale, which was primarily due to
steadily declining occupancy and tenants' sales, was almost entirely offset by
an increase in tenant expense reimbursements for common area maintenance at
Shoppes which was primarily due to an underestimate of reimbursements for
calendar year 1996 which were paid in 1997.
 
Real estate taxes decreased by $209,200 for the year ended December 31, 1997
when compared to the year ended December 31, 1996. The decrease was primarily
due to a successful appeal of the taxing authority's assessed value of
Glendale. As a result of a decreased assessed value, the Partnership paid lower
taxes during 1997 for tax year 1996 than estimated.
 
Property operating expenses decreased by $113,800 for the year ended December
31, 1997 when compared to the year ended December 31, 1996. The decrease was
primarily due to a decrease in personnel, professional, security and utility
costs, partially offset by an increase in advertising and promotional costs, at
Glendale.
 
Interest expense decreased by $60,000 for the year ended December 31, 1997 when
compared to the year ended December 31, 1996. The decrease was primarily due to
the effects of principal payments made during the past 24 months on the
Glendale mortgage loan.
 
To increase the occupancy level at Glendale, the Managing General Partner,
through its asset and property management groups, continues to take the
necessary actions deemed appropriate: These actions include: 1) implementation
of marketing programs, including hiring of third-party leasing agents or
providing on-site leasing personnel, advertising, direct mail campaigns and
development of building brochures; 2) early renewal of existing tenant leases
and addressing any expansion needs these tenants may have; 3) promotion of
local broker events and networking with local brokers; 4) networking with
national level retailers; 5) cold-calling other businesses and tenants in the
market area and 6) providing rental concessions or competitively pricing rental
rates depending on market conditions.
 
The rate of inflation has remained relatively stable during the years under
comparison and has had a minimal impact on the operating results of the
Partnership. The nature of various tenant lease clauses protects the
Partnership to some extent from increases in the rate of inflation. Certain of
the lease clauses provide for: 1) rent increases based on the Consumer Price
Index or graduated rental increases; 2) percentage rentals for which the
Partnership receives as additional rent a percentage of a tenant's sales over
predetermined break-even amounts and 3) total or partial tenant reimbursement
of property operating expenses (e.g., common area maintenance, real estate
taxes, etc.).
 
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
property. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the Partnership is to provide cash
distributions to Partners from Partnership operations. Cash Flow (as defined in
the Partnership Agreement) is generally not equal to net income or cash flows
as determined by GAAP, since certain items are treated differently under the
Partnership Agreement than under GAAP. Management believes that to facilitate a
clear understanding of the Partnership's operations, an analysis of Cash Flow
(as defined in the Partnership Agreement) should be examined in conjunction
with an analysis of net income or cash flows as determined by GAAP. The second
table in Selected Financial Data includes a reconciliation of Cash Flow (as
defined in the Partnership Agreement) to cash flow provided by operating
activities as determined by GAAP and are not indicative of actual distributions
to Partners and should not necessarily be considered as an alternative to the
results disclosed in the Statements of Income and Expenses and Statements of
Cash Flow.
 
The decrease in Cash Flow (as defined in the Partnership Agreement) of
$3,558,300 for the year ended December 31, 1998 when compared to year ended
December 31, 1997 was primarily due to the absence of results from the
Partnership's Sold Properties. The decrease was also due to an increase in
principal payments on the mortgage loan collateralized by Glendale. Partially
offsetting the decrease was the increase in interest income and the improved
operating results at Glendale, exclusive of depreciation and amortization, as
previously discussed.
 
The decrease of $18,532,300 in the Partnership's cash position during the year
ended December 31, 1998 was primarily the result of the distribution of the
proceeds from the 1997 sale of Richmond and an increase in investments in debt
securities. In addition, principal payments on the Glendale mortgage loan
payable and quarterly distributions paid to Partners of cash generated by
operations exceeded net cash provided by operating activities. Liquid assets of
the
 
                                                                               7
<PAGE>
  
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
 
Partnership as of December 31, 1998 were comprised of amounts held for working
capital purposes.
 
The decrease in net cash provided by operating activities of $3,378,800 for the
year ended December 31, 1998 when compared to the year ended December 31, 1997
was primarily due to the effects on the operating results from the 1997 sales
of Citrus Center and Richmond and the 1998 sale of Shoppes.
 
Net cash provided by investing activities decreased by $30,655,800 for the year
ended December 31, 1998 when compared to the year ended December 31, 1997. The
decrease was primarily the result of the 1997 receipt of gross proceeds from
the sales of Citrus Center and Richmond exceeding the 1998 receipt of gross
proceeds from the sale of Shoppes. Also contributing to the decrease was an
increase in investments in debt securities. The increase in investment in debt
securities is the result of the extension of the maturities of certain of the
Partnership's short-term investments in an effort to maximize the return of
these amounts while they are held for working capital purposes. These
investments are of investment-grade and mature in less than one year from their
date of purchase.
 
With the exception of variable rate mortgage debt, the Partnership has no
financial instruments for which there are significant risks. Based on variable
rate debt outstanding as of December 31, 1998, for every 1% change in interest
rates, the Partnership's annual interest expense would change by $55,700. Due
to the timing of the maturities and liquid nature of the Partnership's
investments in debt securities, the Partnership does not believe that it has
material market risk.
 
The Partnership maintains working capital reserves to pay for capital
expenditures and to potentially facilitate the refinancing of the mortgage loan
collateralized by Glendale. During the year ended December 31, 1998, the
Partnership spent $700 for capital and tenant improvements.
 
On February 27, 1998, the Partnership consummated the sale of Shoppes for a
sale price of $11,000,000. Sale Proceeds, net of closing expenses, amounted to
$10,576,600. In connection with this sale, the Partnership distributed
$10,550,000 or $105.50 per Unit on August 31, 1998 to Limited Partners of
record as of February 27, 1998.
 
On May 31, 1998, the Partnership distributed $10,350,000 or $103.50 per Unit to
Limited Partners of record as of December 31, 1997. This distribution
represented the approximate net proceeds realized from the December 31, 1997
sale of Richmond.
 
The decrease in net cash used for financing activities of $8,808,500 for the
year ended December 31, 1998 when compared to the year ended December 31, 1997
was primarily due to the special distribution in 1997 of Citrus Center Sale
Proceeds exceeding the special distributions of Richmond and Shoppes Sales
Proceeds in 1998. Also contributing to the decrease was a decrease in
distributions of Cash Flow (as defined in the Partnership Agreement) paid to
Partners in line with reduced operating results following the sale of several
Partnership properties.
 
The Partnership exercised the first of two options to extend by one year the
maturity of the Glendale mortgage loan. Pursuant to the covenants of the
extension, the Partnership was required to reduce the Partnership's share of
the principal balance outstanding to an amount equal to or less than $5,625,000
by December 31, 1998. In October 1998, the Partnership paid $114,500 to comply
with that extension requirement. This loan now matures in January 2000. Subject
to fulfillment of certain covenants, the Partnership has an option to extend
the maturity date to January 2001. This loan also contains provisions that
require a portion of the cash generated by Glendale be utilized to reduce the
outstanding mortgage balance. On February 3, 1999, in compliance with this
provision, the Partnership made a principal payment of $455,200.
 
The year 2000 problem is the result of the inability of existing computer
programs to distinguish between a year beginning with "20" rather than "19".
This is the result of computer programs using two rather than four digits to
define an applicable year. If not corrected, any program having time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a variety of problems including miscalculations,
loss of data and failure of entire systems. Critical areas that could be
effected are accounts receivable and rent collections, accounts payable,
general ledger, cash management, fixed assets, investor services, computer
hardware, telecommunications systems and health, security, fire and life safety
systems.
 
The Partnership has engaged Affiliated and unaffiliated entities to perform all
of its critical functions that utilize software that may have time-sensitive
applications. All of these service providers are providing these services for
their own organizations as well as for their clients. The Managing General
Partner, on behalf of the Partnership, has been in close communication with
each of these service providers regarding steps that they are taking to assure
that there will be no serious interruption of the operations of the Partnership
resulting from Year 2000 problems. Based on the results of these inquiries, as
well as a review of the disclosures by these service providers, the Managing
General Partner believes that the Partnership will be able to continue normal
business operations and will incur no material costs related to Year 2000
issues.
 
The Partnership has not formulated a contingency plan. However, the Managing
General Partner believes that based on the size of the Partnership's portfolio
and its limited number of transactions, aside from catastrophic failures of
banks, governmental agencies, etc., it could carry out substantially all of its
critical operations on a manual basis or easily convert to systems that are
Year 2000 compliant.
 
As discussed in the 1997 Annual Report to Partners, the Partnership continues
to face uncertainty as to the future performance of Glendale. Increased
competition in the regional area has resulted in a continued reduction in the
sales at the two anchor tenants as well as the specialty tenants at Glendale.
The leases of the two anchor tenants at Glendale expire in January 2001. It is
still currently uncertain whether one or both of its anchor tenants will vacate
at their lease termination dates. The loss of the anchor tenants without
suitable replacements could result in the loss of many of the specialty tenants
pursuant to contingency provisions within their respective leases. The Managing
General Partner is continuing to pursue alternative tenants as well as
exploring other possible options for Glendale. In addition to the issue related
to the future tenancy levels at Glendale, the mortgage loan secured by Glendale
matures (subject to an extension option) on January 1, 2000. The Partnership
has entered into a contract for the sale of the property. While the potential
purchaser has deposited earnest
 
8
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
 
Liquidity and Capital Resources (continued)
money funds, there can be no assurance that the transaction contemplated by the
contract will be consummated.
 
The Managing General Partner continues to take a conservative approach to
projections of future rental income in its determination of adequate levels of
cash reserves due to the uncertainties surrounding Glendale. The Managing
General Partner believes that Cash Flow (as defined in the Partnership
Agreement) is one of the best and least expensive sources of cash. As a result,
cash continues to be retained to supplement working capital reserves. For the
year ended December 31, 1998, Cash Flow (as defined in the Partnership
Agreement) retained to supplement working capital reserves amounted to
$252,200.
 
Distributions to Limited Partners for the quarter ended December 31, 1998 were
declared in the amount of $150,000, or $1.50 per Unit. Total distributions of
Cash Flow (as defined in the Partnership Agreement) declared to Limited
Partners for the year ended December 31, 1998 amounted to $1,200,000 or $12.00
per Unit. Cash distributions are made 60 days after the last day of each fiscal
quarter. The amount of future distributions to Partners will ultimately be
dependent upon the performance of Glendale as well as the Managing General
Partner's determination of the amount of cash necessary to supplement working
capital reserves to meet future liquidity requirements of the Partnership.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
With the exception of variable rate mortgage debt, the Partnership has no
financial instruments for which there are significant risks. Based on variable
rate debt outstanding as of December 31, 1998, for every 1% change in interest
rates, the Partnership's annual interest expense would change by $55,700. Due
to the timing of the maturities and liquid nature of the Partnership's
investments in debt securities, the Partnership does not believe that it has
material market risk.



                                                                               9
<PAGE>
 
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------   -------------------------------------------

The response to this item is submitted as a separate section of this report. See
page A-1 "Index of Financial Statements, Schedule and Exhibits."

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
-------   -------------------------------------------------------------- 
          FINANCIAL DISCLOSURE
          --------------------

None.


<PAGE>
 
                                   PART III
                                        


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------  --------------------------------------------------

(a) & (e)  DIRECTORS

  The Partnership has no directors. First Capital Financial Corporation ("FCFC")
  is the Managing General Partner. The directors of FCFC, as of March 31, 1999,
  are shown in the table below. Directors serve for one year or until their
  successors are elected. The next annual meeting of FCFC will be held in June
  1999.


       Name                                                Office

  Douglas Crocker II...............................        Director
  Sheli Z. Rosenberg...............................        Director


  Douglas Crocker II, 58, has been President and Chief Executive Officer since
  December 1992 and a Director since January 1993 of the Managing General
  Partner. Mr. Crocker has been President, Chief Executive Officer and trustee
  of Equity Residential Properties Trust since March 31, 1993. Mr. Crocker is a
  member of the Board of Directors of Wellsford Real Properties, Inc. and Ventas
  Inc. and was a member of the Board of Directors of Horizon Group, Inc. from
  July 1996 to June 1998. Mr. Crocker was an Executive Vice President of Equity
  Financial and Management Company ("EFMC") from November 1992 until March 1997.

  Sheli Z. Rosenberg, 57, was President and Chief Executive Officer of the
  Managing General Partner from December 1990 to December 1992 and has been a
  Director of the Managing General Partner since September 1983; was Executive
  Vice President and General Counsel for EFMC from October 1980 to November
  1994; has been President and Chief Executive Officer of Equity Group
  Investments, LLC ("EGI") since November 1994; has been a Director of Great
  American Management and Investment Inc. ("Great American") since June 1984 and
  is a director of various subsidiaries of Great American. She is also a
  director of Anixter International Inc., Capital Trust, Inc., CVS Corporation,
  Illinova Corporation, Illinois Power Co., Jacor Communications, Inc. and
  Manufactured Home Communities, Inc. She is also a trustee of Equity
  Residential Properties Trust and Equity Office Properties Trust. Ms. Rosenberg
  was a Principal of Rosenberg & Liebentritt, P.C., counsel to the Partnership,
  the Managing General Partner and certain of their Affiliates from 1980 until
  September 1997. She had been Vice President of First Capital Benefit
  Administrators, Inc. ("Benefit Administrators") since July 22, 1987 until its
  liquidation in November 1995. Benefit Administrators filed for protection
  under the Federal Bankruptcy laws on January 3, 1995.
<PAGE>

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------- --------------------------------------------------
 
(b) & (e)  EXECUTIVE OFFICERS
           ------------------

     The Partnership does not have any executive officers. The executive
     officers of the Managing General Partner as of March 31, 1999 are shown in
     the table. All officers are elected to serve for one year or until their
     successors are elected and qualified.
<TABLE>
<CAPTION>
          Name                                           Office
          ----                                           ------
<S>                                       <C>
     Douglas Crocker II...................President and Chief Executive Officer
     Donald J. Liebentritt................Vice President
     Norman M. Field......................Vice President - Finance and Treasurer
</TABLE>
     PRESIDENT AND CEO-See Table of Directors above.

     Donald J. Liebentritt, 48, has been Vice President of the Managing General
     Partner since July 1997 and is Chief Operating Officer and General Counsel
     of EGI, Vice President and Assistant Secretary of Great American and
     Principal and Chairman of the Board of Rosenberg & Liebentritt, P.C.

     Norman M. Field, 50, has been Vice President of Finance and Treasurer of
     the Managing General Partner since February 1984, and also served as Vice
     President of Great American from July 1983 until March 1995 and from July
     1997 to the present. Mr. Field had been Treasurer of Benefit Administrators
     since July 22, 1987 until its liquidation in November 1995. He was Chief
     Financial Officer of Equality Specialties, Inc. ("Equality"), a subsidiary
     of Great American, from August 1994 to April 1995.

(d)  FAMILY RELATIONSHIPS
     --------------------

     There are no family relationships among any of the foregoing directors and
     officers.

(f)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
     ----------------------------------------

     With the exception of the bankruptcy matter disclosed under Items 10 (a),
     (b) and (e), there are no involvements in certain legal proceedings among
     any of the foregoing directors and officers.
<PAGE>
 
ITEM 11.  EXECUTIVE COMPENSATION
--------  ----------------------

(a,b,c & d) As stated in Item 10, the Partnership has no officers or directors.
     Neither the Managing General Partner, nor any director or officer of the
     Managing General Partner, received any direct remuneration from the
     Partnership during the year ended December 31, 1998. However, the Managing
     General Partner and Affiliates of the Managing General Partner do
     compensate the directors and officers of the Managing General Partner.

For additional information see Item 13 (a) Certain Relationships and Related
Transactions.

(e)  None.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------  --------------------------------------------------------------

(a)  As of March 1, 1999, no person owned of record or was known by the
     Partnership to own beneficially more than 5% of the Partnership's 100,000
     Units then outstanding.

(b)  The Partnership has no directors or executive officers. As of March 1, 1999
     the executive officers and directors of First Capital Financial
     Corporation, the Managing General Partner, did not own any Units.

(c)  None.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------  ----------------------------------------------

(a)  Affiliates of the Managing General Partner, provided leasing, property
     management and supervisory services to the Partnership. Compensation for
     these property management services may not exceed the lesser of the
     compensation customarily charged in arm's-length transactions by persons
     rendering similar services or 6% of the gross receipts from the property
     being managed plus normal out-of-pocket expenses where the Managing General
     Partner or Affiliate provides leasing, re-leasing and/or leasing-related
     services, or 3% of gross receipts where the Managing General Partner or
     Affiliate does not perform leasing, re-leasing and/or leasing-related
     services for a particular property. For the year ended December 31, 1998,
     these Affiliates were entitled to leasing, supervisory and property
     management fees of $33,100. In addition, other Affiliates of the Managing
     General Partner were entitled to $82,400 as reimbursements for insurance,
     personnel and other miscellaneous services. Compensation for these services
     are on terms which are fair, reasonable and no less favorable to the
     Partnership than reasonably could be obtained from unaffiliated persons. Of
     these amounts, a total of $4,600 was due to Affiliates as of December 31,
     1998.

     As of December 31, 1998, the Partnership owed $48,500 to the Managing
     General Partner for a real estate commission earned in connection with the
     sale of a Partnership property. This commission has been accrued but not
     paid. The total of all real estate commissions incurred in connection with
     the sale of the Partnership's properties shall not exceed the lesser of the
     compensation customarily charged in arm's-length transactions or 6% of the
     sales price of the property. Under the terms of the Partnership Agreement,
     this fee will not be paid until such time as Limited Partners have received
     cumulative distributions of Sale or Refinancing Proceeds equal to 100% of
     their Original Capital Contribution, plus a cumulative return (including
     all Cash Flow which has been distributed to the Limited Partners) of 6%
     simple interest per annum on their Capital Investment.

     In accordance with the Partnership Agreement, subsequent to October 31,
     1983, the Termination of the Offering, the General Partners are entitled to
     10% of Cash Flow (as defined in the Partnership Agreement), as a
     Partnership Management Fee. In addition, Net Profits (exclusive of Net
     Profits 

<PAGE>
  
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Continued)

     from the sale or disposition of Partnership properties) are allocated:
     first, to the General Partners, in an amount equal to the greater of: (A)
     the General Partners' Partnership Management Fee for such fiscal year; or
     (B) 1% of such Net Profits; and second, the balance, if any, to the Limited
     Partners. Net Profits from the sale or disposition of a Partnership
     property are allocated: first, to the General Partners and the Limited
     Partners with negative balances in their capital accounts, pro rata in
     proportion to such respective negative balances, to the extent of the total
     of such negative balances; second, to the General Partners, in an amount
     necessary to make the aggregate amount of their capital accounts equal to
     the greater of: (A) the Sale or Refinancing Proceeds to be distributed to
     the General Partners with respect to the sale or disposition for such
     property; or (B) 1% of such Net Profits; and third, the balance, if any, to
     the Limited Partners. Net Losses (exclusive of Net Losses from the sale,
     disposition or provision for value impairment of Partnership properties)
     are allocated 1% to the General Partners and 99% to the Limited Partners.
     Net Losses from the sale, disposition or provision for value impairment of
     Partnership properties are allocated: first, to the General Partners to the
     extent of the aggregate balance in their capital accounts; second, to the
     Limited Partners and among them (in the ratio which their respective
     capital account balances bear to the aggregate of all capital account
     balances of the Limited Partners) until the balance in their capital
     accounts shall be reduced to zero; third, the balance, if any, 99% to the
     Limited Partners and 1% to the General Partners. In all events there shall
     be allocated to the General Partners not less than 1% of Net Profits and
     Net Losses from the sale, disposition or provision for value impairment of
     a Partnership property. For the year ended December 31, 1998, the General
     Partners were paid a Partnership Management Fee of $133,300, and allocated
     Net Profits of $46,600, which included a gain from the sale of property of
     19,900 and a (loss) from provision for value impairment of $(106,600).

(b)  Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
     Partnership, the Managing General Partner and certain of their Affiliates.
     Donald J. Liebentritt, Vice President is a Principal and the Chairman of
     the Board of Rosenberg. Compensation for these services are on terms which
     are fair, reasonable and no less favorable to the Partnership than
     reasonably could have been obtained from unaffiliated persons. Rosenberg
     earned legal fees of $51,500 for the year ended December 31, 1998.

(c)  No management person is indebted to the Partnership.


(d)  None.


 
<PAGE>
 
                                    PART IV
                                        
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------  ----------------------------------------------------------------

(a,c & d) (1,2 & 3) See Index of Financial Statements, Schedule and Exhibits on
page A-1 of Form 10-K.

(b)  Reports on Form 8-K:

     There were no reports filed on Form 8-K for the quarter ended December 31,
     1998.

<PAGE>
                                  SIGNATURES

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

                               
                            FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES IX

                            BY:   FIRST CAPITAL FINANCIAL CORPORATION
                                  MANAGING GENERAL PARTNER

Dated:    March 26, 1999    By:   /s/       DOUGLAS CROCKER II
          --------------          ----------------------------------------------
                                            DOUGLAS CROCKER II
                                     President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ DOUGLAS CROCKER II      March 26, 1999  President, Chief Executive Officer 
-------------------------   --------------  and Director of the Managing General
    DOUGLAS CROCKER II                      Partner


/s/ SHELI Z. ROSENBERG      March 26, 1999  Director of the Managing General  
-------------------------   --------------  Partner
    SHELI Z. ROSENBERG


/s/ DONALD J. LIEBENTRITT   March 26, 1999  Vice President
-------------------------   --------------
    DONALD J. LIEBENTRITT   


/s/ NORMAN M. FIELD          March 26, 1999  Vice President - Finance and 
-------------------------   --------------   Treasurer
    NORMAN M. FIELD   



<PAGE>
 
             INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
                                        
               FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
                                        
                                                                    Pages
                                                              ------------------
Report of Independent Auditors                                       A-2

Balance Sheets as of December 31, 1998 and 1997                      A-3

Statements of Partners' Capital for the Years Ended
December 31, 1998, 1997 and 1996                                     A-3

Statements of Income and Expenses for the Years Ended
December 31, 1998, 1997 and 1996                                     A-4

Statements of Cash Flows for the Years Ended December 31,
1998, 1997 and 1996                                                  A-4

Notes to Financial Statements                                     A-5 to A-8

SCHEDULE FILED AS PART OF THIS REPORT

III - Real Estate and Accumulated Depreciation as of
December 31, 1998                                               A-9 and A-10

All other schedules have been omitted as inapplicable, or for the reason that
the required information is shown in the financial statements or notes thereto.

EXHIBITS FILED AS PART OF THIS REPORT

EXHIBITS (3 & 4) First Amended and Restated Certificate and Agreement of Limited
Partnership as set forth on pages A-1 through A-30 of the Partnership's
definitive Prospectus dated May 24, 1983; Registration Statement No. 2-82357,
filed pursuant to Rule 424 (b), is incorporated herein by reference.

EXHIBIT (10)  Material Contracts

Real Estate Sale Agreement and Closing Documents for the sale of Citrus Center
filed as an exhibit to the Partnership's Report on Form 8-K filed on August 18,
1997 is incorporated herein by reference.

Real Estate Sale Agreement and Closing Documents for the sale of Richmond Plaza
Shopping Center filed as an exhibit to the Partnership's Report on Form 8-K
filed on January 12, 1998 is incorporated herein by reference.

Real Estate Sale Agreement and Closing Documents for the sale of Shoppes of West
Melbourne filed as an exhibit of the Partnership's Report on Form 8-K filed on
March 16, 1998 is incorporated herein by reference.

EXHIBIT (13)  Annual Report to Security Holders

The 1997 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
Commission.

EXHIBIT (27)  Financial Data Schedule


                                      A-1
<PAGE>
 
                         REPORT OF INDEPENDENT AUDITORS
                                        


Partners
First Capital Income Properties, Ltd. - Series IX
Chicago, Illinois


We have audited the accompanying balance sheets of First Capital Income
Properties, Ltd. - Series IX as of December 31, 1998 and 1997, and the related
statements of income and expenses, partners' capital and cash flows for each of
the three years in the period ended December 31, 1998. Our audit also included
the financial statement schedule listed in the accompanying index. These
financial statements and schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Capital Income
Properties, Ltd. - Series IX at December 31, 1998 and 1997, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.



                                  Ernst & Young LLP


Chicago, Illinois
February 26, 1999

                                      A-2
<PAGE>
 
BALANCE SHEETS
December 31, 1998 and 1997
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                        1998         1997
------------------------------------------------------------------------------
<S>                                                  <C>          <C>
ASSETS
Investment in commercial rental properties:
 Land                                                $ 2,887,600  $ 5,841,900
 Buildings and improvements                           11,994,400   22,451,500
------------------------------------------------------------------------------
                                                      14,882,000   28,293,400
 Accumulated depreciation and amortization            (7,116,100)  (9,587,600)
------------------------------------------------------------------------------
 Total investment properties, net of accumulated
  depreciation and amortization                        7,765,900   18,705,800
Cash and cash equivalents                              3,855,000   22,387,300
Investments in debt securities                        12,993,400    4,862,000
Rents receivable                                         259,100      499,000
Escrow deposits                                          197,200      100,400
Other assets (including loan acquisition costs, net
 of accumulated amortization of $154,900 and
 $115,500, respectively)                                  63,400       79,600
------------------------------------------------------------------------------
                                                     $25,134,000  $46,634,100
------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Mortgage loan payable                               $ 5,570,800  $ 6,559,700
 Accounts payable and accrued expenses                   566,000      598,500
 Due to Affiliates, net                                   53,100       62,600
 Security deposits                                        10,000       21,200
 Distributions payable                                   166,700   10,905,600
 Prepaid rent                                             65,000       26,500
 Other liabilities                                       281,800      327,100
------------------------------------------------------------------------------
                                                       6,713,400   18,501,200
------------------------------------------------------------------------------
Partners' capital:
 General Partners                                              0       86,700
 Limited Partners (100,000 Units issued and
  outstanding)                                        18,420,600   28,046,200
------------------------------------------------------------------------------
                                                      18,420,600   28,132,900
------------------------------------------------------------------------------
                                                     $25,134,000  $46,634,100
------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1998, 1997 and 1996
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                          General     Limited
                                         Partners     Partners       Total
-------------------------------------------------------------------------------
<S>                                      <C>        <C>           <C>
Partners' (deficit) capital, January 1,
 1996                                     $(90,000) $ 60,544,800  $ 60,454,800
Net income for the year ended
 December 31, 1996                         434,100       395,400       829,500
Distributions for the year ended
 December 31, 1996                        (461,100)   (4,150,000)   (4,611,100)
-------------------------------------------------------------------------------
Partners' (deficit) capital,
 December 31, 1996                        (117,000)   56,790,200    56,673,200
Net income for the year ended
 December 31, 1997                         548,100    12,206,000    12,754,100
Distributions for the year ended
 December 31, 1997                        (344,400)  (40,950,000)  (41,294,400)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1997        86,700    28,046,200    28,132,900
Net income for the year ended
 December 31, 1998                          46,600     2,124,400     2,171,000
Distributions for the year ended
 December 31, 1998                        (133,300)  (11,750,000)  (11,883,300)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1998     $       0  $ 18,420,600  $ 18,420,600
-------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                                                             A-3
<PAGE>
 
STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 1998, 1997 and 1996
(All dollars rounded to nearest 00s except per Unit amounts)
 
<TABLE>
<CAPTION>
                                             1998       1997        1996
----------------------------------------------------------------------------
<S>                                       <C>        <C>         <C>
Income:
 Rental                                   $3,590,400 $ 9,229,600 $11,181,100
 Interest                                  1,460,000   1,386,100     846,200
 Gain on sales of property                 1,991,500   8,669,600
----------------------------------------------------------------------------
                                           7,041,900  19,285,300  12,027,300
----------------------------------------------------------------------------
Expenses:
 Interest                                    616,500     717,300     777,300
 Depreciation and amortization               394,900   1,839,100   2,410,800
 Property operating:
  Affiliates                                  46,100     297,900     819,200
  Nonaffiliates                              860,100   1,783,800   1,848,800
 Real estate taxes                           380,900     681,600   1,027,600
 Insurance-Affiliate                          53,500      99,700     122,900
 Repairs and maintenance                     234,700     864,400   1,172,500
 General and administrative:
  Affiliates                                  35,800      30,000      54,300
  Nonaffiliates                              248,400     217,400     264,400
 Provisions for value impairment           2,000,000               2,700,000
----------------------------------------------------------------------------
                                           4,870,900   6,531,200  11,197,800
----------------------------------------------------------------------------
Net income                                $2,171,000 $12,754,100 $   829,500
----------------------------------------------------------------------------
Net income allocated to General Partners  $   46,600 $   548,100 $   434,100
----------------------------------------------------------------------------
Net income allocated to Limited Partners  $2,124,400 $12,206,000 $   395,400
----------------------------------------------------------------------------
Net income allocated to Limited Partners
 per Unit (100,000 Units outstanding)     $    21.24 $    122.06 $      3.95
----------------------------------------------------------------------------
</TABLE>
 
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1998, 1997 and 1996
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                           1998          1997         1996
-------------------------------------------------------------------------------
<S>                                    <C>           <C>           <C>
Cash flows from operating activities:
 Net income                            $  2,171,000  $ 12,754,100  $   829,500
 Adjustments to reconcile net income
  to net cash provided by operating
  activities:
  Depreciation and amortization             394,900     1,839,100    2,410,800
  Gain on sales of property              (1,991,500)   (8,669,600)
  Provisions for value impairment         2,000,000                  2,700,000
  Changes in assets and liabilities:
   Decrease in rents receivable             239,900       107,800      101,500
   Decrease in other assets                   4,700       168,300       32,100
   (Decrease) in accounts payable and
    accrued expenses                        (32,500)     (284,600)    (151,700)
   (Decrease) increase in due to
    Affiliates                               (9,500)      (61,200)     106,600
   Increase (decrease) in prepaid rent       38,500       (30,400)     (65,300)
   (Decrease) increase in other
    liabilities                             (45,300)      325,500      (21,300)
-------------------------------------------------------------------------------
    Net cash provided by operating
     activities                           2,770,200     6,149,000    5,942,200
-------------------------------------------------------------------------------
Cash flows from investing activities:
 Proceeds from sales of property         10,576,600    38,213,300
 (Increase) in investments in debt
  securities                             (8,131,400)   (4,862,000)
 Payments for capital and tenant
  improvements                                 (700)     (267,000)    (622,100)
 (Increase) decrease in escrow
  deposits                                  (96,800)      (80,800)      51,600
-------------------------------------------------------------------------------
    Net cash provided by (used for)
     investing activities                 2,347,700    33,003,500     (570,500)
-------------------------------------------------------------------------------
Cash flows from financing activities:
 Principal payments on mortgage loans
  payable                                  (988,900)     (779,800)    (699,900)
 Payment of loan acquisition costs          (27,900)
 (Decrease) in security deposits            (11,200)     (123,400)      (2,600)
 Distributions paid to Partners         (22,622,200)  (31,555,500)  (4,500,000)
-------------------------------------------------------------------------------
    Net cash (used for) financing
     activities                         (23,650,200)  (32,458,700)  (5,202,500)
-------------------------------------------------------------------------------
Net (decrease) increase in cash and
 cash equivalents                       (18,532,300)    6,693,800      169,200
Cash and cash equivalents at the
 beginning of the year                   22,387,300    15,693,500   15,524,300
-------------------------------------------------------------------------------
Cash and cash equivalents at the end
 of the year                           $  3,855,000  $ 22,387,300  $15,693,500
-------------------------------------------------------------------------------
Supplemental information:
 Interest paid during the year         $    616,500  $    717,300  $   777,300
-------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
A-4
<PAGE>
 
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
 
ORGANIZATION:
The Partnership was formed on February 2, 1983, by the filing of a Certificate
and Agreement of Limited Partnership with the Department of State of the State
of Florida, and commenced the Offering of Units on June 13, 1983. The
Certificate and Agreement, as amended and restated, authorized the sale to the
public of 75,000 Units (with the Managing General Partner's option to increase
the Offering to 100,000 Units) and not less than 1,400 Units pursuant to the
Prospectus. On June 28, 1983, the required minimum subscription level was
reached and the Partnership's operations commenced. The Managing General
Partner exercised its option to increase the Offering to 100,000 Units, which
amount was sold prior to the Termination of the Offering in October, 1983. The
Partnership was formed to invest primarily in existing, improved, income-
producing commercial real estate.
 
In 1998, the Company adopted the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which was effective for
fiscal years beginning after December 15, 1997. This statement establishes
standards for the way that public business enterprises report information about
operating segments and major customers in their annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports in the second year of application. The
Partnership has one reportable segment as the Partnership is in the disposition
phase of its life cycle, wherein it is seeking to liquidate its remaining
operating assets. Management's main focus, therefore, is to prepare its assets
for sale and find purchasers for its remaining assets when market conditions
warrant such an action. The adoption of Statement 131 did not affect the
results of operations or financial position. The Partnership has two tenants
who occupy 61% of the Partnership's rental property. These tenants occupied 36%
and 25% of the Partnership's rentable space, respectively.
 
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2014. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
 
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). The Partnership utilizes the accrual
method of accounting. Under this method, revenues are recorded when earned and
expenses are recorded when incurred. Effective July 1, 1998, the Partnership
recognizes rental income that is contingent upon tenants achieving specified
targets, only to the extent that such targets are attained.
 
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
 
The financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership. This joint venture was formed for the
purpose of acquiring a 100% interest in certain real property and is operated
under the common control of the Managing General Partner. Accordingly, the
Partnership's pro rata share of the joint venture's revenues, expenses, assets,
liabilities and Partners' capital was included in the financial statements.
 
The Partnership is not liable for federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss in their
income tax returns; therefore, no provision for federal income taxes is made in
the financial statements of the Partnership. In addition, it is not practical
for the Partnership to determine the aggregate tax bases of the Limited
Partners; therefore, the disclosure of the differences between the tax bases
and the reported assets and liabilities of the Partnership would not be
meaningful.
 
Commercial rental properties are recorded at cost, net of any provisions for
value impairment, and depreciated (exclusive of amounts allocated to land) on
the straight-line method over their estimated useful lives. Upon classifying a
commercial rental property as held for disposition, no further depreciation or
amortization of such property is provided for in the financial statements.
Lease acquisition fees are recorded at cost and amortized on the straight-line
method over the life of the respective lease. Maintenance and repairs are
expensed against operations as incurred; expenditures for improvements are
capitalized to the appropriate property accounts and depreciated on the
straight-line method over the estimated life of such improvements.
 
The Partnership evaluates its rental properties for impairment when conditions
exist which may indicate that it is probable that the sum of expected future
cash flows (undiscounted) from a property is less than its estimated carrying
basis. Upon determination that an impairment has occurred, the basis in the
rental property is reduced to its estimated fair value. Except as disclosed in
Note 7, the Managing General Partner was not aware of any indicator that would
result in a significant impairment loss during the periods reported.
 
Loan acquisition costs are amortized over the term of the mortgage loan made in
connection with the acquisition of Partnership properties or refinancing of
Partnership loans. When a property is disposed of or a loan is refinanced, the
related loan acquisition costs and accumulated amortization are removed from
the respective accounts and any unamortized balance is expensed.
 
                                                                             A-5
<PAGE>
 
Property sales are recorded when title transfers and sufficient consideration
has been received by the Partnership. Upon disposition, the related costs and
accumulated depreciation and amortization are removed from the respective
accounts. Any gain or loss on sale is recognized in accordance with GAAP.
 
Cash equivalents are considered all highly liquid investments with a maturity
of three months or less when purchased.
 
Investments in debt securities are comprised of obligations of the United
States government and are classified as held-to-maturity. These investments are
carried at their amortized cost basis in the financial statements which
approximated fair market value at December 31, 1998. Substantially all of these
securities had maturities of one year or less when purchased.
 
Certain reclassifications have been made to the 1997 and 1996 statements in
order to provide comparability with the 1998 statements. These
reclassifications have no effect on net income or Partners' Capital.
 
The Partnership's financial statements include financial instruments, including
receivables, escrow deposits, trade liabilities and mortgage debt. The
Partnership considers the disclosure of the fair value of its mortgage debt to
be impracticable due to the general illiquid nature of the real estate
financing market and an inability to obtain comparable financing on its
property due to a decline in market value. The fair value of all other
financial instruments, including cash and cash equivalents, was not materially
different from their carrying value at December 31, 1998 and 1997.
 
2. RELATED PARTY TRANSACTIONS:
 
In accordance with the Partnership Agreement, subsequent to October 31, 1983,
the Termination of the Offering, the General Partners are entitled to 10% of
Cash Flow (as defined in the Partnership Agreement), as a Partnership
Management Fee. In addition, Net Profits (exclusive of Net Profits from the
sale or disposition of Partnership properties) are allocated: first, to the
General Partners, in an amount equal to the greater of: (a) the General
Partners' Partnership Management Fee for such fiscal year; or (b) 1% of such
Net Profits; and second, the balance, if any, to the Limited Partners. Net
Profits from the sale or disposition of a Partnership property are allocated:
first, to the General Partners and the Limited Partners with negative balances
in their capital accounts, pro rata in proportion to such respective negative
balances, to the extent of the total of such negative balances; second, to the
General Partners, in an amount necessary to make the aggregate amount of their
capital accounts equal to the greater of: (a) the Sale or Refinancing Proceeds
to be distributed to the General Partners with respect to the sale or
disposition for such property; or (b) 1% of such Net Profits; and third, the
balance, if any, to the Limited Partners. Net Losses (exclusive of Net Losses
from the sale, disposition or provision for value impairment of Partnership
properties) are allocated 1% to the General Partners and 99% to the Limited
Partners. Net Losses from the sale, disposition or provision for value
impairment of Partnership properties are allocated: first, to the General
Partners to the extent of the aggregate balance in their capital accounts;
second, to the Limited Partners and among them (in the ratio which their
respective capital account balances bear to the aggregate of all capital
account balances of the Limited Partners) until the balance in their capital
accounts shall be reduced to zero; third, the balance, if any, 99% to the
Limited Partners and 1% to the General Partners. In all events there shall be
allocated to the General Partners not less than 1% of Net Profits and Net
Losses from the sale, disposition or provision for value impairment of a
Partnership property. For the year ended December 31, 1998, the General
Partners were paid a Partnership Management Fee of $133,300, and allocated Net
Profits of $46,600, which included a gain of $19,900 from the sale of a
Partnership property and a (loss) of $(106,600) from a provision for value
impairment. For the year ended December 31, 1997, the General Partners were
paid a Partnership Management Fee of $344,400, and allocated Net Profits of
$548,100, which included gains totaling $203,700 from the sale of two
properties. For the year ended December 31, 1996, the General Partners were
paid a Partnership Management Fee of $461,100, and allocated Net Profits of
$434,100, which included a (loss) from provision for value impairment of
$(27,000).
 
Fees and reimbursements paid and payable to Affiliates for the years ended
December 31, 1998, 1997 and 1996 were as follows:
 
<TABLE>
<CAPTION>
                               1998               1997                1996
                         ---------------- --------------------- -----------------
                                                     Payable
                           Paid   Payable   Paid   (Receivable)   Paid   Payable
---------------------------------------------------------------------------------
<S>                      <C>      <C>     <C>      <C>          <C>      <C>
Real estate commission
 (a)                         None $48,500     None   $48,500        None $ 48,500
Property management and
 leasing fees            $ 31,100    None $305,600    (2,000)   $650,700   71,000
Reimbursements of
 property insurance
 premiums                  53,500    None   99,700      None     122,900     None
Legal                      66,500    None   98,200    15,000      74,100     None
Reimbursements of
 expenses, at cost:
 --Accounting              16,500   3,200   18,700       900      32,700    3,200
 --Investor
  communication             8,700   1,400    7,900       200      12,300      500
 --Other                      200    None     None      None         800      600
---------------------------------------------------------------------------------
                         $176,500 $53,100 $530,100   $62,600    $893,500 $123,800
---------------------------------------------------------------------------------
</TABLE>

The variance between the amounts listed in this table and the Statement of 
Income and Expense are due to capitalized legal costs.

(a) As of December 31, 1998, the Partnership owed $48,500 to the Managing
    General Partner for a real estate commission earned in connection with the
    sale of a Partnership property. This commission has been accrued but not
    paid. Under the terms of the Partnership Agreement, this fee will not be
    paid until such time as Limited Partners have received cumulative
    distributions of Sale or Refinancing Proceeds equal to 100% of their
    Original Capital Contribution, plus a cumulative return (including all Cash
    Flow which has been distributed to the Limited Partners) of 6% simple
    interest per annum on their Capital Investment.
    
A-6
<PAGE>
 
3. FUTURE MINIMUM RENTALS:
 
The Partnership's share of future minimum rental income due on noncancelable
leases as of December 31, 1998 was as follows:
 
<TABLE>
                    <S>         <C>
                    1999        $1,461,400
                    2000         1,318,200
                    2001           926,200
                    2002           801,900
                    2003           642,000
                    Thereafter   1,268,300
                             -------------
                                $6,418,000
                             -------------
</TABLE>
 
The Partnership is subject to the usual business risks associated with the
collection of the above-scheduled rentals. In addition to the amounts scheduled
above, the Partnership expects to receive rental revenue from operating expense
and real estate tax reimbursements and percentage rents. Percentage rents
earned for the years ended December 31, 1998, 1997 and 1996 were $165,700,
$185,600 and $336,000, respectively. To provide comparability in the financial
statements, the Partnership netted the effects of real estate tax refunds from
prior periods received in 1997 and 1998 with any such amounts due to tenants
and related rental revenues.
 
4. MORTGAGE LOAN PAYABLE:
 
Mortgage loan payable at December 31, 1998 and 1997 consisted of the following
non-recourse loan:
 
<TABLE>
<CAPTION>
                          Principal balance at                                 Estimated
Property Pledged as       --------------------- Interest     Maturity Periodic  Balloon
Collateral                 12/31/98   12/31/97    Rate       Date (d) Payment   Payment
-----------------------------------------------------------------------------------------
<S>                       <C>        <C>        <C>          <C>      <C>      <C>
Glendale Center Shopping
 Mall (a)                 $5,570,800 $6,559,700  10.10% (b)  01/01/00    (c)   $4,443,100
-----------------------------------------------------------------------------------------
</TABLE>
(a) This property is owned through a joint venture. Amounts represent the
    Partnership's 50% share of the liability and are not the total amount by
    which the property is encumbered.
(b) This interest rate represents the weighted average for the year ended
    December 31, 1998. The interest rate is subject to change in accordance
    with the provisions of the loan agreement. As of December 31, 1998, the
    interest rate on this loan was 10.12%.
(c) The interest rate on this loan is variable at LIBOR plus 4.5% with interest
    payable monthly. Monthly payments of principal are made based on an 11-year
    amortization using an interest rate of 9.5%. The joint venture is required
    to pay annually additional principal equal to 50% of net cash flow
    (pursuant to the loan agreement) from the property for each prior calendar
    year. Additionally, certain debt coverage ratios (pursuant to the loan
    agreement) must be met each quarter and deficiencies in reaching benchmarks
    would require additional principal payments. The additional principal
    payment that the joint venture is required to pay for the 1998 calendar
    year is $910,400, of which the Partnership's share is $455,200. The
    additional principal payment that the joint venture was required to pay for
    the 1997 calendar year was $525,300, of which the Partnership's share was
    $262,600. The loan agreement requires the Partnership to deposit funds into
    an interest bearing account with the mortgagee to be utilized for capital
    expenditures. As of December 31, 1998, the mortgagee was holding $197,200
    on behalf of the Partnership.
(d) During the year ended December 31, 1998, the Partnership exercised an
    option to extend the maturity date to January 1, 2000. At its option, upon
    meeting certain covenants, the Partnership has one option to extend the
    maturity date to January 2001.
 
Amortization of scheduled mortgage loan principal payments for the remaining
term of the loan:
 
<TABLE>
                    <S>   <C>
                    1999  $1,127,700
                    2000   4,443,100
                             -------
                          $5,570,800
                             -------
</TABLE>
 
5. INCOME TAX:
 
The Partnership utilizes the accrual method of accounting for both income tax
reporting and financial statement purposes. Financial statement results will
differ from tax results due to the use of differing depreciation lives and
methods, the recognition of rents received in advance as taxable income, the
Partnership's provisions for value impairment and other factors. The net effect
of these accounting differences for the year ended December 31, 1998 was that
net income for financial statement purposes was $1,724,200 less than the net
income for income tax reporting purposes. The aggregate cost of commercial
rental property for federal income tax purposes at December 31, 1998 was
$25,882,000.
 
6. PROPERTY SALES:
 
On February 27, 1998, the Partnership consummated the sale of Shoppes of West
Melbourne, located in West Melbourne, Florida, for a sale price of $11,000,000.
Net proceeds, net of closing expenses, were $10,576,600. The Partnership
recorded a gain of $1,991,500 for the year ended December 31, 1998 and
distributed $10,550,000 or $105.50 per Unit on August 31, 1998 to Limited
Partners of record as of February 27, 1998. For income tax reporting purposes,
the Partnership reported a gain of $2,477,400 in connection with this sale for
the year ended December 31, 1998.
 
On December 31, 1997, the Partnership consummated the sale of Richmond Plaza
Shopping Center, located in Augusta, Georgia, for a sale price of $10,750,000.
Net proceeds, net of closing expenses, from this transaction were $10,433,400.
The Partnership recorded a gain of $2,441,900 for the year ended December 31,
1997 in connection with this sale and distributed $10,350,000 or $103.50 per
Unit on May 31, 1998 to Limited Partners of record as of December 31, 1997. For
income tax reporting purposes, the Partnership reported a gain of $5,330,100
for the year ended December 31, 1997 in connection with this sale.
 
                                                                             A-7
<PAGE>
 
On August 1, 1997, the Partnership consummated the sale of Citrus Center,
located in Orlando, Florida, for a sale price of $28,500,000. Net proceeds, net
of closing expenses, from this transaction were $27,770,000. The Partnership
recorded a gain of $6,227,700 for the year ended December 31, 1997 in
connection with this sale and distributed $27,500,000 or $275.00 per Unit on
November 30, 1997 to Limited Partners of record as of August 1, 1997. For
income tax reporting purposes, the Partnership reported a gain of $4,302,100 in
connection with this sale for the year ended December 31, 1997.
 
All of the above sales were all-cash transactions, with the exception of post-
closing matters, with no further involvement on the part of the Partnership.
 
7. ASSET HELD FOR DISPOSITION:
 
The mortgage loan collateralized by Glendale, matures in January 2000. While
the Partnership has the option to extend the maturity date for one year, the
exercise of such option would require the payment of a fee together with a
requirement to dedicate much of Glendale's cash flow to service the loan.
During the past two years, Glendale has experienced a reduction in its
occupancy. In addition, the leases for both of Glendale's anchor tenants,
representing approximately 61% of the net leasable square footage of the mall,
expire in January 2001. In connection with these issues, the Managing General
Partner believes that it is in the best interest of the Partnership to sell the
property. Accordingly, effective October 1, 1998, the Partnership has
classified Glendale as "Held for Disposition".
 
The Partnership, through the joint venture that owns the property, has entered
into an agreement for the sale of Glendale. The contract contains contingencies
under which the purchaser may elect not to consummate the transaction. There
can be no assurance that the transaction contemplated by this agreement will
consummate. However, failure on the purchaser's part to close the transaction,
absence seller default, would result in the forfeiture in favor of the
Partnership of earnest money in the amount of $250,000. Based on the terms of
this contract, the Partnership has recorded an additional provision for value
impairment in the amount of $2,000,000 during 1998.
 
During 1996, as a result of increased competition for retail space, together
with the uncertainty as to the retention of the two anchor tenants at Glendale,
the Partnership recognized a provision for value impairment of $2,700,000.
 
The Partnership's share of Glendale's net operating results (exclusive of
provisions for value impairment) was $834,700, $657,100 and $331,500 for the
years ended December 31, 1998, 1997 and 1996, respectively.
 
The provisions for value impairment were considered non-cash events for the
purposes of the Statements of Cash Flow and were not utilized in the
determination of Cash Flows (as defined in the Partnership Agreement).
 
A-8
<PAGE>

<TABLE>
<CAPTION>

                                         FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES IX

                                      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                      AS OF DECEMBER 31, 1998


     Column A          Column B             Column C                Column D                           Column E
-------------------  -----------    -----------------------  -------------------------  --------------------------------------
<S>                     <C>         <C>                      <C>                        <C>
                                          Initial cost           Costs capitalized                Gross amount at which
                                       to Partnership (1)    subsequent to acquisition          carried at close of period
                                    -----------------------  -------------------------  -----------------------------------------
                                                 Buildings                                               Buildings
                                                    and                                                     and
                        Encum-                    Improve-    Improve-       Carrying                     Improve-
   Description         brances         Land        ments        ments        Costs (2)     Land            ments     Total (3)(4)
-------------------  -----------    ----------  -----------  ----------      ---------  ----------      ----------   ------------
Shopping Centers:
-------------------
Glendale Center
 Shopping Mall
 (Indianapolis, IN)
 (50% Interest)      $5,570,800     $4,932,600  $18,556,900  $2,324,900       $67,600   $2,887,600 (7)  $11,994,400  $14,882,000 (8)
                     ==========     ==========  ===========  ==========       =======   ==========      ===========  ===========




                                   Column F                 Column G                Column H                 Column I
                                  -----------              -----------             ----------               ----------
                                                                                                              Life on
                                                                                                               which
                                                                                                             deprecia-
                                                                                                           tion in lat-
                                    Accumu-                                                                 est income
                                     lated                   Date of                                        statements
                                   Deprecia-                construc-                Date                     is com-
                                   tion (3)                   tion                  Acquired                   puted
                                  -----------              -----------             ---------                -----------
   Description
-------------------
Shopping Centers:
-------------------
Glendale Center
 Shopping Mall
 (Indianapolis, IN)                                                                                            35 (5)
 (50% Interest)                    $7,116,100                1958 (9)               May 1985                   3-13 (6)
                                   ==========
</TABLE>


                       See notes on the following page.
                                      A-9

<PAGE>
 
               FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES IX

                             NOTES TO SCHEDULE III

Note 1.  Amounts presented are net of rent guarantees.

Note 2.  Consists of legal fees, appraisal fees, title costs and other related 
         professional fees.

Note 3.  The following is a reconciliation of activity in columns E and F:

<TABLE>
<CAPTION>
                                                                 Year Ended
                   ------------------------------------------------------------------------------------------------------
                          December 31, 1998                   December 31, 1997                   December 31, 1996
                   ------------------------------      ------------------------------      ------------------------------
                                      Accumulated                         Accumulated                         Accumulated
                       Cost          Depreciation          Cost          Depreciation          Cost          Depreciation
                   ------------      ------------      ------------      ------------      ------------      ------------
<S>                <C>               <C>               <C>               <C>               <C>               <C>
Balance at
  beginning
  of the year      $ 28,293,400      $  9,587,600      $ 69,227,000      $ 19,444,900      $ 71,304,900      $ 17,073,500

Additions
  during the
  year:

Improvements                700                             267,000                             622,100

Provisions
  for deprec-
  iation and
  amortization                            355,500                           1,799,600                           2,371,400

Deductions
  during the
  year:

Cost of real
  estate sold
  or disposed       (11,412,100)                        (41,200,600)

Accumulated
  depreciation
  on real
  estate sold
  or disposed                          (2,827,000)                        (11,656,900)

Provisions
  for value
  impairment         (2,000,000)                                                             (2,700,000)
                   ------------      ------------      ------------      ------------      ------------      ------------

Balance
  at end of
  the year         $ 14,882,000      $  7,116,100      $ 28,293,400      $  9,587,600      $ 69,227,000      $ 19,444,900
                   ============      ============      ============      ============      ============      ============
</TABLE>
                                           
Note 4. The aggregate cost for Federal income tax purposes is $25,882,000.
Note 5. Estimated useful life for building.
Note 6. Estimated useful life for improvements.
Note 7. A parcel of land at Glendale Shopping Center was sold on October 9,
        1992. The basis of the land was approximately $59,400.
Note 8. Includes provisions for value impairment of $11,000,000.
Note 9. Renovated in 1983 and 1984.
                                           

                                     A-10