<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, 1999
                     ----------------------------------------------------------

                                       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                        0-15632
                     ----------------------------------------------------------

                FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.--4
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                ILLINOIS                              36-3441345
      ----------------------                    -------------------------
    (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)

                                                  Identification No.)

 TWO NORTH RIVERSIDE PLAZA, SUITE 700,                60606-2607
           CHICAGO, ILLINOIS                    -------------------------
----------------------------------------              (Zip Code)
    (Address of principal executive
                offices)

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 ASSIGNEE 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 November 5, 1986,
included in the Registrant's Registration Statement on Form S-11 (Registration
No. 33-06149), 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 Institutional Real Estate, Ltd.- 4 (the
"Partnership"), is a limited partnership organized in 1986 under the Uniform
Limited Partnership Act of the State of Illinois. The Partnership sold 593,025
Limited Partnership Assignee Units (the "Units") to the public from November
1986 to May 1988, pursuant to a Registration Statement on Form S-11 filed with
the Securities and Exchange Commission (Registration Statement No. 33-06149).
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement.

The business of the Partnership is to invest primarily in existing 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 January 1987 to March 1989, the Partnership made
five real property investments including its purchases of 50% interests in
three joint ventures and a 75% interest in one joint venture each with
Affiliated partnerships. Two of the 50% joint ventures and the 75% joint
venture were each formed for the purpose of acquiring a 100% interest in
certain real property and one 50% joint venture was formed for the purpose of
participating in a mortgage loan investment, which was recognized as of July 1,
1990 as being foreclosed in-substance and was recorded as two real property
investments. All of the Partnership's joint ventures, prior to dissolution,
were operated under the common control of First Capital Financial Corporation
(the "General Partner"). Through December 31, 1999, the Partnership had sold or
disposed of all of its investments in real estate. Upon the successful
resolution of post-closing matters related to the properties sold by the
Partnership, the Partnership will make a liquidating distribution and dissolve.

ITEM 2. PROPERTIES

During the year ended December 31, 1999 the Partnership sold its remaining
property interest.

ITEM 3. LEGAL PROCEEDINGS

(a & b) The Partnership and its property 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, 1999. Ordinary routine legal
matters incidental to the business which were not deemed material were pursued
during the quarter ended December 31, 1999.

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

(a,b,c & d) None.

2
<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, 2000, there were 4,167 Holders of Units.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                       For the Years Ended December 31,
                          -----------------------------------------------------------
                             1999        1998        1997        1996        1995
--------------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>         <C>         <C>
Total revenues            $ 3,442,000 $ 2,528,900 $ 5,217,700 $ 5,467,800 $ 5,690,700
Net income (loss)         $ 2,237,400 $ 1,277,800 $ 2,177,700 $ 1,255,100 $  (784,500)
Net income (loss)
 allocated to Limited
 Partners                 $ 2,095,000 $ 1,185,000 $ 1,753,700 $ 1,101,700 $  (921,700)
Net income (loss)
 allocated to Limited
 Partners per Unit
 (593,025 Units
 outstanding)             $      3.53 $      2.00 $      2.96 $      1.86 $     (1.55)
Total assets              $19,308,200 $18,680,000 $26,914,800 $38,008,300 $39,228,800
Loan payable to General
 Partner                         None        None $ 1,569,500 $ 4,246,800 $ 4,085,700
Distributions to Limited
 Partners per Unit
 (593,025 Units
 outstanding) (a)         $     26.66 $      2.00 $     27.32 $      4.20 $      3.90
Return of capital to
 Limited Partners per
 Unit (593,025 Units
 outstanding) (b)         $     23.13        None $     24.36 $      2.34 $      3.90
Other data:
Investment in commercial
 rental properties (net
 of accumulated
 depreciation and
 amortization)                   None $13,881,300 $14,294,900 $33,446,100 $34,232,400
Number of real property
 interests owned at
 December 31                     None           1           1           4           4
--------------------------------------------------------------------------------------
</TABLE>
(a) Distributions declared to Limited Partners per Unit for the years ended
    December 31, 1999 and 1997 included Sale Proceeds of $24.66 and $25.32,
    respectively.

(b) For the purposes of this table, return of capital represents either: the
    amount by which distributions, if any, exceed net income allocated to
    Limited Partners for each respective year, or total distributions, if any,
    in years when the Limited Partners are allocated a net loss. 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,
                          ----------------------------------------------------------------
                             1999         1998          1997         1996         1995
-------------------------------------------------------------------------------------------
<S>                       <C>          <C>          <C>           <C>          <C>
Cash Flow (as defined in
 the Partnership
 Agreement) (a)           $ 1,380,800  $ 1,613,600  $  1,953,200  $ 2,393,900  $ 2,842,900
Items of reconciliation:
 General Partner
  Partnership Management
  Fee                          95,000       92,800       113,400      153,400      161,200
 Changes in current
  assets and
  liabilities:
  Decrease (increase) in
   current assets              87,500      (54,300)       59,400       55,300       83,600
  (Decrease) increase in
   current liabilities       (304,400)    (111,200)     (376,600)      13,200       40,700
-------------------------------------------------------------------------------------------
Net cash provided by
 operating activities     $ 1,258,900  $ 1,540,900  $  1,749,400  $ 2,615,800  $ 3,128,400
-------------------------------------------------------------------------------------------
Net cash (used for)
 provided by investing
 activities               $  (486,500) $(1,440,300) $ 18,980,600  $(2,209,700) $  (412,600)
-------------------------------------------------------------------------------------------
Net cash (used for)
 financing activities     $(1,304,800) $(9,401,400) $(12,894,600) $(2,488,800) $(2,202,700)
-------------------------------------------------------------------------------------------
</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 interest on advances by the General Partner
    and any reserves of revenues from operations deemed reasonably necessary by
    the General Partner), except depreciation and amortization expenses and
    capital expenditures and lease acquisition expenditures. Cash Flow (as
    defined in the Partnership Agreement) includes amounts distributed to
    Limited Partners from funds advanced to the Partnership by the General
    Partner and the General Partner's 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-7
in this report.

                                                                               3
<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 its life
cycle in three phases: (i) the Offering of Units and investment in properties;
(ii) the operation of properties and (iii) the 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 on November 5, 1986 and began
operations on December 15, 1986, after achieving the required minimum
subscription level. On May 4, 1988, the Offering was Terminated upon the sale
of 593,025 Units. From January 1987 to March 1989, the Partnership made one
real property investment and purchased 50% interests in three joint ventures
and a 75% interest in one joint venture each with Affiliated partnerships. Two
of the 50% joint ventures and the 75% joint venture were each formed for the
purpose of acquiring a 100% interest in certain real property. The remaining
50% joint venture was formed for the purpose of participating in a mortgage
loan investment, which was recognized as of July 1, 1990 as being foreclosed
in-substance and was recorded as two real property investments.

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
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 and dispositions.
Partnership operating results are generally expected to decline as real
property interests are sold or disposed of since the Partnership no longer
receives income generated from such real property interests. During the year
ended December 31, 1999 the Partnership sold its remaining real property
investments.

OPERATIONS

The table below is a recap of certain operating results of Indian Ridge and the
properties sold during 1997 by the Partnership for the years ended December 31,
1999, 1998 and 1997. 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,
                                     1999       1998        1997
-------------------------------------------------------------------
<S>                               <C>        <C>         <C>
INDIAN RIDGE SHOPPING CENTER (B)
Rental revenues                   $1,944,400 $2,137,900  $2,064,900
-------------------------------------------------------------------
Property net income               $  897,300 $1,062,500  $  967,300
-------------------------------------------------------------------
SOLD PROPERTIES (C)
Rental revenues                   $   20,100 $  (40,100) $1,653,000
-------------------------------------------------------------------
Property net income (loss)        $   19,900 $  (50,400) $  106,800
-------------------------------------------------------------------
</TABLE>

(a) Excludes certain income and expense items, which are not directly related
    to individual property operating results such as interest income, interest
    expense on the loan from the General Partner and general and administrative
    expenses.

(b) Indian Ridge Shopping Center ("Indian Ridge") was sold on December 13,
    1999. Net income for the year ended December 31, 1999 does not include the
    gain recorded on the sale of Indian Ridge.

(c) Sold Properties includes operating results from Park Plaza Professional
    Building ("Park Plaza"), 3120 Southwest Freeway Office Building ("Southwest
    Freeway") and Carrollton Crossroads Shopping Center ("Carrollton"), all of
    which were sold during 1997. The preceding excludes the net gain on sale of
    the Sold Properties.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1999 TO THE YEAR ENDED DECEMBER 31,
1998

Net income increased by $959,600 for the year ended December 31, 1999 when
compared to the year ended December 31, 1998. The increase was primarily due to
the 1999 gain recorded on the sale of Indian Ridge. Exclusive of the gain on
sale, net income decreased by $196,100 for the year ended December 31, 1999
when compared to the year ended December 31, 1998. The decrease was primarily
due to a decrease in interest earned on the Partnership's short-term
investments, which was due to a decrease in cash available for investment
resulting the 1998 Special Distribution of sales proceeds to Limited Partners.
The decrease was also due to a reduction in operating results at Indian Ridge,
which was partially due to the effects of its December 13, 1999 sale. The
decrease was partially offset reduced interest expense as a result of the May
1998 repayment of the loan payable to the General Partner.

The following comparison includes only the results of Indian Ridge.

Rental revenues decreased by $193,500 or 9% for the year ended December 31,
1999 when compared to the year ended December 31, 1998. The decrease was
primarily due to the timing of the sale of the property and a decrease in base
rents which was due to the decline in average occupancy.

Real estate taxes decreased by $11,400 for the year ended December 31, 1999
when compared to the year ended December 31, 1998, however, this decrease was
entirely due to the timing of the sale of Indian Ridge.

Property operating expenses increased by $13,700 for the year ended December
31, 1999 when compared to the year ended December 31, 1998. The increase was
due to an increase in costs associated with securing new tenants to replace
various vacancies at the property.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31,
1997

Net income decreased by $899,900 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 gains recorded on the sales of Southwest Freeway and
Carrollton. Also contributing to the decrease was the absence of operating
results from the Sold Properties during

4
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

OPERATIONS (CONTINUED)

1998. The decrease was partially offset by a decrease in interest expense on
the loan payable to the General Partner due to its repayment as part of the May
31, 1998 distributions of Park Plaza Sale Proceeds. The decrease was also
partially offset by improved operating results at Indian Ridge.

Net income, exclusive of Sold Properties, increased by $297,700 for the year
ended December 31, 1998 when compared to the year ended December 31, 1997. The
increase was primarily due to the decrease in interest expense on the loan
payable to the General Partner, as previously discussed and the improved
operating results at Indian Ridge. The increase was partially offset by a
decrease in interest income, which was the result of a decrease in the average
amount of cash available for investment due to the distribution of Sales
Proceeds to Limited Partners in 1997 and 1998.

The following comparative discussion includes only the results of Indian Ridge.

Rental revenues increased by $73,000 or 3.5% for the year ended December 31,
1998 when compared to the year ended December 31, 1997. The increase was
primarily due to an increase in base rental income, which was due to an
increase in rates charged to new and renewing tenants partially offset by a
slight decline in average occupancy.

Repair and maintenance expense decreased by $17,700 for the year ended December
31, 1998 when compared to the year ended December 31, 1997. The decrease was
primarily the result of a decrease in snow removal and landscaping costs.

Property operating expenses increased by $7,900 for the year ended December 31,
1998 when compared to the year ended December 31, 1997. The increases were
primarily due to an increase in utility costs and professional services.

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 the following: (1) annual 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
based on a tenant's sales over predetermined 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.
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. To the extent cumulative cash
distributions exceed net income, such excess distributions will be treated as a
return of capital. Cash Flow (as defined in the Partnership Agreement) is
generally not equal to net income or cash flows as determined by generally
accepted accounting principles ("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
flows provided by operating activities as determined by GAAP. Such amounts are
not indicative of actual distributions to Partners and should not 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 $232,800
for the year ended December 31, 1999 when compared to year ended December 31,
1998 was primarily due to the decrease in Partnership net income, exclusive of
gain on sale, depreciation and amortization, as previously discussed.

The decrease of $532,400 in the Partnership's cash position for the year ended
December 31, 1999 resulted primarily from the Partnership utilizing the
proceeds from the sale of Indian Ridge (discussed below) plus their available
cash to make investments in debt securities during 1999. Liquid assets
(including cash, cash equivalents and investments in debt securities) of the
Partnership as of December 31, 1999 were comprised of amounts held for
distribution to Partners and a reserve for potential costs associated with post
sale matters and the liquidation of the Partnership, as discussed below.

Net cash provided by operating activities decreased by $282,000 for the year
ended December 31, 1999 when compared to the year ended December 31, 1998. The
decrease was primarily due to the decrease in Partnership net income, exclusive
of gain on sale, depreciation and amortization, as previously discussed. In
addition, a credit provided to the buyer of Indian Ridge for their assumption
of trade liabilities also contributed to the decrease.

Net cash used for investing activities decreased by $953,800 for the year ended
December 31, 1999 when compared to the year ended December 31,1998. The
decrease was primarily due to the net increase in investments in debt
securities in 1998 exceeding the 1999 net increase in investments in debt
securities exclusive of amounts realized from the sale of Indian Ridge.

Investments in debt securities are a result of the continued extension of the
maturities of certain of the Partnership's short-term investments in an effort
to maximize the return on these amounts as they are held for distribution to
Partners. These investments are of investment grade and mature less than one
year from their date of purchase.

The Partnership has no financial instruments for which there significant market
risks. 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.

On December 13, 1999 the Partnership consummated the sale of Indian Ridge for a
sale price of $15,000,000. Sale Proceeds from this transaction amounted to
$14,644,600, which was net of closing expenses. The Partnership intends to
distribute

                                                                               5
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

$14,624,000 or $24.66 per Unit on May 31, 2000 to Limited Partners of record as
of December 13, 1999.

The decrease in net cash used for financing activities of $8,096,600 for the
year ended December 31, 1999 when compared to the year ended December 31, 1998
was primarily due to the 1998 special distribution to Limited Partners of Sale
Proceeds from Park Plaza. The decrease was also due to the principal repayment
of the loan payable to the General Partner in 1998.

In prior years, the Partnership discussed the nature and progress of its plans
to become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Partnership experienced no significant disruptions in mission
critical information technology and non-information technology systems and
believes that those systems successfully responded to the Year 2000 change. The
Partnership incurred minimal expenses in connection with remediating its
systems. The Partnership is not aware of any material problems resulting from
Year 2000 issues, either with its products, its internal systems, or the
products and services of third parties. The Partnership will continue to
monitor its mission critical computer applications and those of its suppliers
and vendors throughout the year 2000 to ensure that any latent Year 2000
matters that may arise are addressed promptly.

The General Partner has begun the process of wrapping-up the Partnership's
affairs. This process, which is expected to be completed during the second half
of 2000, includes resolution of all post-closing property and Partnership
matters together with the expiration of representations and warranties included
in the contract for the sale of Indian Ridge. Following the resolution of post-
closing property matters and the establishment of a reserve for contingencies
and wrap-up expenses, the General Partner will make a liquidating distribution
to Limited Partners and dissolve.

Distributions to Limited Partners for the quarter ended December 31, 1999 were
declared in the amount of $296,500, or $.50 per Unit. Cash distributions are
made 60 days after the last day of each fiscal quarter.

Based upon the current value of its assets, net of its outstanding liabilities,
together with its expected operating results, the General Partner believes that
the Partnership's cumulative distributions to its Limited Partners from
inception through the termination of the Partnership may be less than such
Limited Partners' Original Capital Contributions.

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, Schedules and Exhibits."

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

None.

6
<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 General Partner. The directors of FCFC, as of March 31, 2000, 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 2000.

<TABLE>
<CAPTION>
                    Name              Office
                    ----             --------
                    <S>              <C>
                    Douglas Crocker
                     II              Director
                    Sheli Z.
                     Rosenberg       Director
</TABLE>

Douglas Crocker II, 59, has been President and Chief Executive Officer since
December 1992 and a Director since January 1993 of the 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, 58, was President and Chief Executive Officer of the
General Partner from December 1990 to December 1992 and has been a Director of
the General Partner since September 1983; was Executive Vice President and
General Counsel of EFMC from October 1980 to November 1994; has been vice
chairman of Equity Group Investments, LLC ("EGI") since January 2000. From
November 1984 until 1999 had been President and Chief Executive Officer of EGI.
Ms. Rosenberg 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, Dynergy, Inc., Danka Business
Systems PLC 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. ("R&L") from 1980
until 1997. R&L served as counsel to the Partnership, the General Partner and
certain of their Affiliates until its dissolution in 1999.

(b) & (e) EXECUTIVE OFFICERS

The Partnership does not have any executive officers. The executive officers of
the General Partner as of March 31, 2000 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, 49, has been Vice President of the General Partner since
July 1997 and is President of EGI, Vice President and Assistant Secretary of
Great American and was Principal and Chairman of the Board of R&L.

Norman M. Field, 51, has been Vice President of Finance and Treasurer of the
General Partner since February 1984, and also served as Vice President of Great
American from July 1983 until March 1995 and July 1997 to the present.

(d) FAMILY RELATIONSHIPS

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

(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

There are no involvements in certain legal proceedings among any of the
foregoing directors and officers.

ITEM 11. EXECUTIVE COMPENSATION

(a,b,c & d) As stated in Item 10, the Partnership has no officers or directors.
Neither the General Partner, nor any director or officer of the General
Partner, received any direct remuneration from the Partnership during the year
ended December 31, 1999. However, the General Partner and its Affiliates do
compensate its directors and officers.

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, 2000, no person of record owned or was known by the
    Partnership to own beneficially more than 5% of the Partnership's 593,025
    Units then outstanding.

(b) The Partnership has no directors or executive officers. As of March 1,
    2000, the executive officers and directors of the General Partner, as a
    group, did not own any Units.

(c) None.

                                                                               7
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a) Certain Affiliates of the General Partner provide asset management services
    to the Partnership. For the year ended December 31, 1999, the Partnership
    paid $13,000 to these Affiliates. In addition, other Affiliates of the
    General Partner were entitled to receive $39,800 for fees and
    reimbursements from the Partnership for insurance, personnel and other
    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. A total of $3,900 of these amounts
    was due to Affiliates as of December 31, 1999.

  The Partnership owed $40,200 to the General Partner for real estate
  commissions earned in connection with the disposition and sale of
  Partnership property. These commissions were accrued but not paid. Under
  the terms of the Partnership Agreement, these commissions will not be paid
  until such time as the Limited Partners have received cumulative
  distributions of Sale or Financing Proceeds equal to 100% of their Original
  Capital Contribution, plus a cumulative return (including all Cash Flow
  which has been distributed to Limited Partners) of 6% simple interest per
  annum on their Capital Investment from the initial date of investment.
  During the year ended December 31, 1999, following the sale of the
  Partnership's final property, it was determined that the requirement would
  not be fulfilled and, accordingly, the liability was written off and
  reported as other income.

  In accordance with the Partnership Agreement, as compensation for services
  rendered in managing the affairs of the Partnership, the General Partner
  shall be entitled to receive subsequent to May 4, 1988, the Termination of
  the Offering, a Partnership Management Fee payable annually within 60 days
  following the last day of each fiscal year, which shall be an amount equal
  to the lesser of (i) 0.5% of the net value of the Partnership's assets as
  of the end of such fiscal year reflected on the Certificate of Value
  furnished to the Limited Partners, plus, to the extent the Partnership
  Management Fee paid in any prior year was less than 0.5% of the net value
  of the Partnership's assets in such prior year, the amount of such deficit,
  or (ii) an amount equal to the difference between 10% of the Partnership's
  aggregate Cash Flow (as defined in the Partnership Agreement) for the
  period from the Commencement of Operations to the end of the fiscal year
  for which such Partnership Management Fee is payable, and the aggregate
  amount previously paid to the General Partner as a Partnership Management
  Fee. In addition, Sale Proceeds are distributed: first, 75% to all Limited
  Partners and 25% to the General Partner until the earlier of (i) receipt by
  Limited Partners of cumulative distributions of Sale Proceeds in an amount
  equal to 100% of their Original Capital Contribution, or (ii) receipt by
  the General Partner of cumulative distributions of Sale Proceeds sufficient
  to repay all outstanding advances to the Partnership from the General
  Partner; thereafter, to the General Partner, until all outstanding
  advances, if any, to the Partnership from the General Partner have been
  repaid; thereafter, to the Limited Partners, until they have received
  cumulative distributions of Sale Proceeds in an amount equal to 100% of
  their Original Capital Contribution, plus an amount (including Cash Flow
  (as defined in the Partnership Agreement)) equal to a cumulative return of
  6% per annum simple interest on their Capital Investment from their
  investment date in the Partnership; thereafter, 85% to all Limited
  Partners; and 15% to the General Partner, provided, however, that no
  distribution of the General Partner's 15% share of Sale Proceeds shall be
  made until Limited Partners have received the greater of (i) Sale Proceeds
  plus Cash Flow (as defined in the Partnership Agreement) previously
  received in excess of the Preferred Return equal to 125% of the Limited
  Partners' Original Capital Contribution, or (ii) Sale Proceeds plus all
  Cash Flow (as defined in the Partnership Agreement) previously received
  equal to their Original Capital Contribution plus a 10% per annum simple
  interest return on their Capital Investment from the date of investment.

  In accordance with the Partnership Agreement, Net Profits (exclusive of Net
  Profits from the sale or disposition of Partnership properties) shall be
  allocated to the General Partner in an amount equal to the greater of 1% of
  such Net Profits or the Partnership Management Fee paid by the Partnership
  to the General Partner during such year, and 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 Partner and 99% to the Limited Partners.
  Net Profits from the sale or disposition of a Partnership property are
  allocated: first, prior to giving effect to any distributions of Sale
  Proceeds from the transaction, to the General Partner and 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 each Limited Partner in an amount, if any,
  necessary to make the positive balance in its Capital Account equal to the
  Sale Proceeds to be distributed to such Limited Partner with respect to the
  sale or disposition of such property; third, to the General Partner in an
  amount, if any, necessary to make the positive balance in its Capital
  Account equal to the Sale Proceeds to be distributed to the General Partner
  with respect to the sale or disposition of such property; and fourth, the
  balance, if any, 15% to the General Partner and 85% to the Limited
  Partners. Net Losses from the sale, disposition or provision for value
  impairment of Partnership properties are allocated: first, after giving
  effect to any distributions of Sale Proceeds from the transaction to the
  General Partner and Limited Partners with positive balances in their
  Capital Accounts, pro rata in proportion to such respective positive
  balances, to the extent of the total amount of such positive balances; and
  second, the balance, if any, 1% to the General Partner and 99% to the
  Limited Partners. Notwithstanding anything to the contrary, there shall be
  allocated to the General Partner not less than 1% of all items of
  Partnership income, gain, loss, deduction and credit during the existence
  of the Partnership. For the year ended December 31, 1999, the General
  Partner was paid a Partnership Management Fee of $95,000 and allocated Net
  Profits of $142,400, which included a gain of $47,400 from the sale of a
  Partnership property.

  In accordance with the Partnership Agreement, the General Partner made
  advances to the Partnership in cumulative amounts equal to the Acquisition
  Fees and the Partnership Management Fees which were paid to the General
  Partner or its Affiliates for distribution to the Limited Partners on a pro
  rata basis to the extent that Cash Flow (as defined in the Partnership
  Agreement) was less than sufficient to distribute cash in amounts equal to
  the Limited Partners' Preferred Return (7.5% per annum noncompounding
  cumulative return on the Limited Partners' Capital Investment); provided,
  however, that the maximum amount which shall be advanced to the Partnership
  by the General Partner for distribution to the Limited Partners shall be
  the amount of Acquisition Fees and Partnership Management Fees actually
  paid to the General Partner or its Affiliates. Amounts advanced bore
  interest at the rate of 8.5% per annum simple interest, payable monthly.

8
<PAGE>

  Repayment of amounts advanced were made only from Cash Flow (as defined in
  the Partnership Agreement) if and to the extent it was more than sufficient
  to distribute cash to the Limited Partners in amounts equal to the Limited
  Partners' Preferred Return and from Sale Proceeds to the extent permitted
  in the Partnership Agreement. During the year ended December 31, 1998, the
  Partnership in accordance with the Partnership Agreement, repaid the
  General Partner the remaining outstanding balance on the loan of
  $1,569,500, utilizing a portion of the Sale Proceeds from the sale of Park
  Plaza Professional Building.

(b) Rosenberg & Liebentritt, P.C. ("Rosenberg"), served as legal counsel to the
    Partnership, the General Partner and certain of their Affiliates. Donald J.
    Liebentritt, Vice President of the General Partner was a Principal and
    Chairman of the Board of Rosenberg. For the year ended December 31, 1999,
    Rosenberg was entitled to $35,400 for legal fees from the Partnership.
    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.

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

(d) None.

                                                                               9
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

(b) Reports on Form 8-K:

  A report was filed on Form 8-K on December 21, 1999 reporting the sale of
  Indian Ridge Shopping Center.

10
<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 INSTITUTIONAL REAL
                                          ESTATE, LTD.--4

                                         BY: FIRST CAPITAL FINANCIAL
                                          CORPORATION
                                             GENERAL PARTNER

           March 24, 2000                       /s/ Douglas Crocker II
Dated: ______________________________    By: __________________________________
                                                  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.

<TABLE>
<S>                                  <C>                                        <C>
       /s/ Douglas Crocker II        President, Chief Executive Officer and       March 24, 2000
____________________________________  Director of the General Partner
         Douglas Crocker II

       /s/ Sheli Z. Rosenberg        Director of the General Partner              March 24, 2000
____________________________________
         Sheli Z. Rosenberg

     /s/ Donald J. Liebentritt       Vice President                               March 24, 2000
____________________________________
       Donald J. Liebentritt

        /s/ Norman M. Field          Vice President--Finance and Treasurer        March 24, 2000
____________________________________
          Norman M. Field
</TABLE>

                                                                              11
<PAGE>

             INDEX OF FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS

               FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT

<TABLE>
<CAPTION>
                                                                      Pages
------------------------------------------------------------------------------
<S>                                                                 <C>
Report of Independent Auditors                                         A-2
Balance Sheets as of December 31, 1999 and 1998                        A-3
Statements of Partners' Capital for the Years Ended December 31,
 1999, 1998, and 1997                                                  A-3
Statements of Income and Expenses for the Years Ended December 31,
 1999, 1998, and 1997                                                  A-4
Statements of Cash Flows for the Years Ended December 31, 1999,
 1998, and 1997                                                        A-4
Notes to Financial Statements                                       A-5 to A-7
</TABLE>

All 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-32 OF THE PARTNERSHIP'S
DEFINITIVE PROSPECTUS DATED NOVEMBER 5, 1986 ON FORM S-11 REGISTRATION
STATEMENT NO. 33-06149, FILED PURSUANT TO RULE 424 (B), IS INCORPORATED HEREIN
BY REFERENCE.

EXHIBIT (10) MATERIAL CONTRACTS

Real Estate Agreement and Closing Statement for the sale of Indian Ridge Plaza
Shopping Center filed as an exhibit to the Partnership's Report on Form 8-K
dated December 21, 1999, is incorporated herein by reference.

EXHIBIT (13) ANNUAL REPORT TO SECURITY HOLDERS

The 1998 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 Institutional Real Estate, Ltd.--4
Chicago, Illinois

We have audited the accompanying balance sheets of First Capital Institutional
Real Estate, Ltd.--4 as of December 31, 1999 and 1998, 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, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 Institutional
Real Estate, Ltd.--4 at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

                                     Ernst & Young LLP

Chicago, Illinois
February 15, 2000

                                      A-2
<PAGE>

               FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. -- 4
BALANCE SHEETS
December 31, 1999 and 1998
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                                  1999        1998
----------------------------------------------------------------------
<S>                                            <C>         <C>
ASSETS
Investment in commercial rental property:
 Land                                          $           $ 2,509,900
 Buildings and improvements                                 15,548,600
----------------------------------------------------------------------
                                                            18,058,500
 Accumulated depreciation and amortization                 (4,177,200)
----------------------------------------------------------------------
 Total investment property, net of accumulated
  depreciation and amortization                             13,881,300
Cash and cash equivalents                          574,700   1,107,100
Investments in debt securities                  18,628,700   3,499,300
Rents receivable                                    90,700     179,600
Other assets                                        14,100      12,700
----------------------------------------------------------------------
                                               $19,308,200 $18,680,000
----------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Accounts payable and accrued expenses         $   149,400 $   378,200
 Due to Affiliates                                   3,900      42,700
 Security deposits                                              25,900
 Distributions payable                          15,015,500     389,300
 Other liabilities                                     100      36,900
----------------------------------------------------------------------
                                                15,168,900     873,000
----------------------------------------------------------------------
Partners' capital:
 General Partner                                    87,700      40,300
 Limited Partners (593,025 Units issued and
  outstanding)                                   4,051,600  17,766,700
----------------------------------------------------------------------
                                                 4,139,300  17,807,000
----------------------------------------------------------------------
                                               $19,308,200 $18,680,000
----------------------------------------------------------------------
</TABLE>

STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1999, 1998 and 1997
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                         General      Limited
                                         Partner      Partners       Total
-------------------------------------------------------------------------------
<S>                                     <C>         <C>           <C>
Partners' (deficit) capital, January
 1, 1997                                $(270,300)  $ 32,215,500  $ 31,945,200
Net income for the year ended December
 31, 1997                                  424,000     1,753,700     2,177,700
Distributions for the year ended
 December 31, 1997                        (113,400)  (16,201,400)  (16,314,800)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1997        40,300    17,767,800    17,808,100
Net income for the year ended December
 31, 1998                                   92,800     1,185,000     1,277,800
Distributions for the year ended
 December 31, 1998                         (92,800)   (1,186,100)   (1,278,900)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1998        40,300    17,766,700    17,807,000
Net income for the year ended December
 31, 1999                                  142,400     2,095,000     2,237,400
Distributions for the year ended
 December 31, 1999                         (95,000)  (15,810,100)  (15,905,100)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1999    $   87,700  $  4,051,600  $  4,139,300
-------------------------------------------------------------------------------
</TABLE>

    The accompanying notes are an integral part of the financial statements

                                      A-3
<PAGE>

               FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 4

STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 1999, 1998 and 1997
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
                                                 1999       1998       1997
------------------------------------------------------------------------------
<S>                                           <C>        <C>        <C>
Income:
 Rental                                       $1,964,500 $2,098,000 $3,717,900
 Interest                                        281,600    430,900    459,400
 Net gain on sales of property                 1,155,700             1,040,400
 Other                                            40,200
------------------------------------------------------------------------------
                                               3,442,000  2,528,900  5,217,700
------------------------------------------------------------------------------
Expenses:
 Interest on loan payable to General Partner                 56,000    233,500
 Depreciation and amortization                   394,100    428,600    929,300
 Property operating:
  Affiliates                                      36,800      9,900    155,400
  Nonaffiliates                                  189,800    215,300    557,600
 Real estate taxes                               283,900    296,400    519,300
 Insurance--Affiliate                             18,300     17,500     37,800
 Repairs and maintenance                         123,300    124,700    460,500
 General and administrative:
  Affiliates                                      27,800     22,200     20,600
  Nonaffiliates                                  130,600     80,500    126,000
------------------------------------------------------------------------------
                                               1,204,600  1,251,100  3,040,000
------------------------------------------------------------------------------
Net income                                    $2,237,400 $1,277,800 $2,177,700
------------------------------------------------------------------------------
Net income allocated to General Partner       $  142,400 $   92,800 $  424,000
------------------------------------------------------------------------------
Net income allocated to Limited Partners      $2,095,000 $1,185,000 $1,753,700
------------------------------------------------------------------------------
Net income allocated to Limited Partners per
 Unit (593,025 Units outstanding)             $     3.53 $     2.00 $     2.96
------------------------------------------------------------------------------
</TABLE>

STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999, 1998 and 1997
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
                                           1999         1998          1997
-------------------------------------------------------------------------------
<S>                                    <C>           <C>          <C>
Cash flows from operating activities:
 Net income                            $  2,237,400  $ 1,277,800  $  2,177,700
 Adjustments to reconcile net income
  to net cash provided by operating
  activities:
  Net gain on sales of property          (1,155,700)                (1,040,400)
  Depreciation and amortization             394,100      428,600       929,300
  Changes in assets and liabilities:
   Decrease (increase) in rents
    receivable                               88,900      (83,900)      117,300
   (Increase) decrease in other assets       (1,400)      29,600       (57,900)
   (Decrease) in accounts payable and
    accrued expenses                       (228,800)     (63,600)     (333,800)
   (Decrease) in due to Affiliates          (38,800)     (30,800)      (46,000)
   (Decrease) increase in other
    liabilities                             (36,800)     (16,800)        3,200
-------------------------------------------------------------------------------
  Net cash provided by operating
   activities                             1,258,900    1,540,900     1,749,400
-------------------------------------------------------------------------------
Cash flows from investing activities:
 Proceeds from the sales of property     14,644,600                 19,447,300
 (Increase) in investments in debt
  securities, net                       (15,129,400)  (1,475,300)     (307,000)
 Decrease in restricted cash                              50,000
 Payments for capital and tenant
  improvements                               (1,700)     (15,000)     (159,700)
-------------------------------------------------------------------------------
  Net cash (used for) provided by
   investing activities                    (486,500)  (1,440,300)   18,980,600
-------------------------------------------------------------------------------
Cash flows from financing activities:
 Distributions paid to Partners          (1,278,900)  (7,822,800)  (10,157,700)
 (Decrease) in security deposits            (25,900)      (9,100)      (59,600)
 (Net repayment of) loan payable to
  General Partner                                     (1,569,500)   (2,677,300)
-------------------------------------------------------------------------------
  Cash (used for) financing activities   (1,304,800)  (9,401,400)  (12,894,600)
-------------------------------------------------------------------------------
Net (decrease) increase in cash and
 cash equivalents                          (532,400)  (9,300,800)    7,835,400
Cash and cash equivalents at the
 beginning of the year                    1,107,100   10,407,900     2,572,500
-------------------------------------------------------------------------------
Cash and cash equivalents at the end
 of the year                           $    574,700  $ 1,107,100  $ 10,407,900
-------------------------------------------------------------------------------
Supplemental information:
 Interest paid on loan payable to
  General Partner                      $             $    56,000  $    264,600
-------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                      A-4
<PAGE>

                FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.--4

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1999

1. ORGANIZATION AND 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 May 20, 1986, by the filing of a Certificate and
Agreement of Limited Partnership with the Recorder of Deeds of Cook County,
Illinois, and commenced the Offering of Units on November 5, 1986. On December
15, 1986, the required minimum subscription level was reached and Partnership
operations commenced. The Offering was Terminated on May 4, 1988 with 593,025
Units sold. The Partnership was formed to invest primarily in existing,
improved, income-producing commercial real estate.

The Partnership has disposed of its real estate properties. Upon resolution of
the various post-closing matters related to the sale of the Partnership's
properties, the Partnership will make a liquidating distribution to Partners
and dissolve.

In 1998, the Partnership adopted the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information". The Partnership has one
reportable segment as the Partnership is in the disposition phase of its life
cycle, wherein it is seeking to resolve post-closing matters related to
properties sold by the Partnership. The adoption of Statement 131 did not
affect the results of operations or financial position.

The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2016. 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 accounting
principles generally accepted in the United States ("GAAP"). The Partnership
utilizes the accrual method of accounting. Under this method, revenues are
recorded when earned and expenses are recorded when incurred.

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 Partnership is not liable for federal income taxes as the Partners
recognize their proportionate share of the Partnership's income or loss on
their tax returns; therefore, no provision for federal income taxes is made in
the financial statements of the Partnership. In addition, it is not practicable
for the Partnership to determine the aggregate tax bases of the individual
Partners; therefore, the disclosure of the difference between the tax bases and
the financial statement bases of the assets and liabilities of the Partnership
would not be meaningful.

Commercial rental property is recorded at cost, net of any provisions for value
impairment, and depreciated (exclusive of amounts allocated to land) on the
straight-line method over its estimated useful life. Lease acquisition fees are
recorded at cost and amortized over the life of the lease. Repair and
maintenance costs are expensed as incurred; expenditures for improvements are
capitalized and depreciated over the estimated life of such improvements.

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 the 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 value. These securities had maturities of less than one year
when purchased.

The Partnership's financial statements include financial instruments, including
receivables, trade and other liabilities. The fair value of financial
instruments, including cash and cash equivalents, was not materially different
from their carrying value at December 31, 1999 and 1998.

2. RELATED PARTY TRANSACTIONS:

In accordance with the Partnership Agreement, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner shall
be entitled to receive subsequent to May 4, 1988, the Termination of the
Offering, a Partnership Management Fee payable annually within 60 days
following the last day of each fiscal year, which shall be an amount equal to
the lesser of (i) 0.5% of the net value of the Partnership's assets as of the
end of such fiscal year reflected on the Certificate of Value furnished to the
Limited Partners, plus, to the extent the Partnership Management Fee paid in
any prior year was less than 0.5% of the net value of the Partnership's assets
in such prior year, the amount of such deficit, or (ii) an amount equal to the
difference between 10% of the Partnership's aggregate Cash Flow (as defined in
the Partnership Agreement) for the period from the Commencement of Operations
to the end of the fiscal year for which such Partnership Management Fee is
payable, and the

                                      A-5
<PAGE>

aggregate amount previously paid to the General Partner as a Partnership
Management Fee. In addition, Sale Proceeds are distributed: first, 75% to all
Limited Partners and 25% to the General Partner until the earlier of (i)
receipt by Limited Partners of cumulative distributions of Sale Proceeds in an
amount equal to 100% of their Original Capital Contribution, or (ii) receipt by
the General Partner of cumulative distributions of Sale Proceeds sufficient to
repay all outstanding advances to the Partnership from the General Partner;
thereafter, to the General Partner, until all outstanding advances, if any, to
the Partnership from the General Partner have been repaid; thereafter, to the
Limited Partners, until they have received cumulative distributions of Sale
Proceeds in an amount equal to 100% of their Original Capital Contribution,
plus an amount (including Cash Flow (as defined in the Partnership Agreement))
equal to a cumulative return of 6% per annum simple interest on their Capital
Investment from their investment date in the Partnership; thereafter, 85% to
all Limited Partners; and 15% to the General Partner, provided, however, that
no distribution of the General Partner's 15% share of Sale Proceeds shall be
made until Limited Partners have received the greater of (i) Sale Proceeds plus
Cash Flow (as defined in the Partnership Agreement) previously received in
excess of the Preferred Return equal to 125% of the Limited Partners' Original
Capital Contribution, or (ii) Sale Proceeds plus all Cash Flow (as defined in
the Partnership Agreement) previously received equal to their Original Capital
Contribution plus a 10% per annum simple interest return on their Capital
Investment from the date of investment.

In accordance with the Partnership Agreement, Net Profits (exclusive of Net
Profits from the sale or disposition of Partnership properties) shall be
allocated to the General Partner in an amount equal to the greater of 1% of
such Net Profits or the Partnership Management Fee paid by the Partnership to
the General Partner during such year, and 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 Partner and 99% to the Limited Partners. Net Profits from the sale
or disposition of a Partnership property are allocated: first, prior to giving
effect to any distributions of Sale Proceeds from the transaction, to the
General Partner and 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 each Limited Partner
in an amount, if any, necessary to make the positive balance in its Capital
Account equal to the Sale Proceeds to be distributed to such Limited Partner
with respect to the sale or disposition of such property; third, to the General
Partner in an amount, if any, necessary to make the positive balance in its
Capital Account equal to the Sale Proceeds to be distributed to the General
Partner with respect to the sale or disposition of such property; and fourth,
the balance, if any, 15% to the General Partner and 85% to the Limited
Partners. Net Losses from the sale, disposition or provision for value
impairment of Partnership properties are allocated: first, after giving effect
to any distributions of Sale Proceeds from the transaction to the General
Partner and Limited Partners with positive balances in their Capital Accounts,
pro rata in proportion to such respective positive balances, to the extent of
the total amount of such positive balances; and second, the balance, if any, 1%
to the General Partner and 99% to the Limited Partners. Notwithstanding
anything to the contrary, there shall be allocated to the General Partner not
less than 1% of all items of Partnership income, gain, loss, deduction and
credit during the existence of the Partnership. For the year ended December 31,
1999, the General Partner was paid a Partnership Management Fee of $95,000 and
allocated Net Profits of $142,400, which included a gain of $47,400 from the
sale of a Partnership property. For the year ended December 31, 1998, the
General Partner was paid a Partnership Management Fee and allocated Net Profits
of $92,800. For the year ended December 31, 1997, the General Partner was paid
a Partnership Management Fee of $113,400 and was allocated Net Profits of
$424,000, which included $310,600 from the sales of three Partnership
properties.

In accordance with the Partnership Agreement, the General Partner made advances
to the Partnership in cumulative amounts equal to the Acquisition Fees and the
Partnership Management Fees which were paid to the General Partner or its
Affiliates for distribution to the Limited Partners on a pro rata basis to the
extent that Cash Flow (as defined in the Partnership Agreement) was less than
sufficient to distribute cash in amounts equal to the Limited Partners'
Preferred Return (7.5% per annum noncompounding cumulative return on the
Limited Partners' Capital Investment); provided, however, that the maximum
amount which shall be advanced to the Partnership by the General Partner for
distribution to the Limited Partners shall be the amount of Acquisition Fees
and Partnership Management Fees actually paid to the General Partner or its
Affiliates. Amounts advanced shall bore interest at the rate of 8.5% per annum
simple interest, payable monthly. Repayment of amounts advanced were made only
from Cash Flow (as defined in the Partnership Agreement) if and to the extent
it is more than sufficient to distribute cash to the Limited Partners in
amounts equal to the Limited Partners' Preferred Return and from Sale Proceeds
to the extent permitted in the Partnership Agreement. During the year ended
December 31, 1998, the Partnership, in accordance with the Partnership
Agreement, repaid the General Partner the remaining outstanding balance on the
loan of $1,569,500, utilizing a portion of the Sale Proceeds from the sale of
Park Plaza Professional Building ("Park Plaza").

Fees and reimbursements paid and payable by the Partnership to Affiliates were
as follows:

<TABLE>
<CAPTION>
                                     FOR THE YEARS ENDED DECEMBER 31,
                             -------------------------------------------------
                                  1999             1998             1997
                             --------------- ---------------- ----------------
                              PAID   PAYABLE   PAID   PAYABLE   PAID   PAYABLE
------------------------------------------------------------------------------
<S>                          <C>     <C>     <C>      <C>     <C>      <C>
Asset and property
 management and leasing
 fees                        $13,000 $ None  $  7,900 $  None $153,200 $15,000
Real estate commissions (a)     None   None      None  40,200     None  40,200
Interest expense on loan
 payable to General Partner     None   None    56,000    None  264,600    None
Reimbursement of property
 insurance premiums           18,100   None    17,500    None   37,800    None
Legal                         35,400   None    29,500    None   41,800  17,500
Reimbursement of expenses,
 at cost:
 --Accounting                 11,200  3,000     9,500   1,400   14,900     600
 --Investor communication      9,100    900     7,400   1,100    6,600     200
------------------------------------------------------------------------------
                             $86,800 $3,900  $127,800 $42,700 $518,900 $73,500
------------------------------------------------------------------------------
</TABLE>


                                      A-6
<PAGE>

The variance between the amounts listed in this table and the Statement of
Income and Expense are due to capitalized legal costs.
  (a) The Partnership owed $40,200 to the General Partner for real estate
      commissions earned in connection with the sales of Partnership
      properties. These commissions were accrued but not paid. In accordance
      with the Partnership Agreement, the Partnership will not pay the
      General Partner or any Affiliates a real estate commission from the
      sale of a Partnership property until Limited Partners have received
      cumulative distributions of Sale or Financing Proceeds equal to 100% of
      their Original Capital Contribution, plus a cumulative return
      (including all Cash Flow (as defined in the Partnership Agreement)
      which has been distributed to the Limited Partners from the initial
      investment date) of 6% simple interest per annum on their Capital
      Investment. During the year ended December 31, 1999 following the sale
      of the Partnership's final property, it was determined that the
      requirement would not be fulfilled and, accordingly, the liability was
      written off and reported as other income.

3. 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 income tax results due to the use of differing depreciation lives
and methods, the recognition of rents received in advance as taxable income and
the Partnership's provisions for value impairment. Net income (loss) for tax
reporting purposes was $1,067,300, $1,283,300 and $(1,617,300) for the years
ended December 31, 1999, 1998 and 1997, respectively.

4. PROPERTY SALES:

On January 17, 1997, a joint venture in which the Partnership owned a 50%
interest, consummated the sale of Carrollton, located in Carrollton, Georgia,
for a sale price of $18,100,000, of which the Partnership's share was
$9,050,000. The Partnership's share of net proceeds from this transaction was
$8,846,500, which was net of closing expenses. The Partnership reported a gain
of $372,600 during the year ended December 31, 1997 in connection with this
sale. On May 31, 1997, in accordance with the Partnership Agreement, 75% of the
net proceeds were distributed to Limited Partners of record as of January 17,
1997, with the remaining 25% remitted to the General Partner to repay a portion
of the loan payable to the General Partner.

On February 18, 1997, the joint venture in which the Partnership owned a 75%
interest, consummated the sale of Southwest Freeway, located in Houston, Texas,
for a sale price of $3,425,000, of which the Partnership's share was
$2,568,800. The Partnership's share of net proceeds from this transaction was
$2,460,700, which was net of closing expenses. The Partnership reported a gain
of $729,700 during the year ended December 31, 1997 in connection with this
sale. On May 31, 1997, in accordance with the Partnership Agreement, 75% of the
net proceeds were distributed to Limited Partners of record as of February 18,
1997, with the remaining 25% remitted to the General Partner to repay a portion
of the loan payable to the General Partner.

On December 18, 1997, a joint venture in which the Partnership owned a 50%
interest, consummated the sale of Park Plaza, located in Houston, Texas, for a
sale price of $16,900,000, of which the Partnership's share was $8,450,000. The
Partnership's share of net proceeds from this transaction was $8,140,000, which
was net of closing expenses. The Partnership reported a (loss) of $(61,900)
during the year ended December 31, 1997 in connection with this sale. The
Partnership distributed $6,523,300 or $11.00 per Unit on May 31, 1998 to
Limited Partners of record as of December 18, 1997. In addition, on May 31,
1998 the Partnership paid the General Partner $1,569,500 in full satisfaction
of the remaining balance of the loan payable to the General Partner.

On December 13, 1999, the Partnership consummated the sale of Indian Ridge,
located in Mishawaka, Indiana, for a sale price of $15,000,000. Net proceeds
from this transaction were $14,644,600, which was net of closing expenses. The
Partnership reported a gain of $1,155,700 for the year ended December 31, 1999
and intends to distribute $14,624,000 or $24.66 per Unit on May 31, 2000 to
Limited Partners of record as of December 13, 1999.

                                      A-7