<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q
                                   ---------

         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 No. 1-8815
                           --------------------------

                             EQK REALTY INVESTORS I
                             ----------------------
             (Exact name of Registrant as specified in its Charter)

         Massachusetts                                    23-2320360
---------------------------------          ------------------------------------
(State or other jurisdiction               (I.R.S. Employer Identification No.)
of incorporation or organization)

5775 Peachtree Dunwoody Road, Suite 200D, Atlanta, GA         30342   
-----------------------------------------------------       ----------
      (Address of principal executive offices)              (Zip Code)

                                 (404) 303-6100
                                 ---------------
              (Registrant's telephone number, including area code)


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


 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE 
                             PRECEDING FIVE YEARS:

Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ]No

                     APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of the issuer's classes of common
stock, as of the latest practicable date: 9,632,212 as of November 16, 1998.
                                          ----------------------------------

<PAGE>   2


                             EQK REALTY INVESTORS I

                         QUARTERLY REPORT ON FORM 10-Q
                      FOR QUARTER ENDED SEPTEMBER 30, 1998

                                     INDEX


<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
PART I - FINANCIAL INFORMATION

<S>      <C>                                                                 <C> 
Item 1.  Balance Sheets as of September 30, 1998
         and December 31, 1997                                                  3

         Statements of Operations for the three
         and nine months ended September 30, 1998 and
         September 30, 1997                                                     4

         Statements of Cash Flows for the
         nine months ended September 30, 1998 and
         September 30, 1997                                                     5

         Notes to the Financial Statements                                      6

Item 2.  Management's Discussion and Analysis
         of Financial Condition and Results
         of Operations                                                         13

PART II - OTHER INFORMATION

Items 1 through 6                                                              19

SIGNATURES                                                                     20
</TABLE>


                                       2
<PAGE>   3


                             EQK REALTY INVESTORS I
                                 BALANCE SHEETS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                              September 30,    December 31,
                                                                                  1998             1997
                                                                              -------------    ------------
                                     ASSETS


<S>                                                                           <C>              <C>      
Investment in Harrisburg East Mall, at cost                                      $      --       $  58,466

       Less accumulated depreciation and amortization                                   --          19,170
                                                                                 ---------       ---------

                                                                                        --          39,296

Real estate held for sale  (Notes 1 and 2)                                          39,264              --

Cash and cash equivalents:
    Cash Management Agreement                                                        2,127           2,486
    Other                                                                              612             837

Accounts receivable and other assets (net of allowance of $213
  and $214, respectively)                                                            2,262           2,448
                                                                                 ---------       ---------

TOTAL ASSETS                                                                     $  44,265       $  45,067
                                                                                 =========       =========


        LIABILITIES AND DEFICIT IN SHAREHOLDERS' EQUITY

Liabilities:

       Mortgage note payable                                                     $  43,794       $  43,794

       Term loan payable to bank                                                     1,581           1,585

       Accounts payable and other liabilities (including amounts due
           affiliates of $3,091 and $3,117, respectively)                            4,070           4,670
                                                                                 ---------       ---------

                                                                                    49,445          50,049

Commitments and Contingencies (Note 1 and 5)

Deficit in Shareholders' Equity:

       Shares of beneficial interest, without par value:  10,055,555 shares
           authorized, 9,632,212 shares issued and outstanding                     135,875         135,875

       Accumulated deficit                                                        (141,055)       (140,857)
                                                                                 ---------       ---------

                                                                                    (5,180)         (4,982)
                                                                                 ---------       ---------
TOTAL LIABILITIES AND DEFICIT IN SHAREHOLDERS' EQUITY                            $  44,265       $  45,067
                                                                                 =========       =========
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                       3
<PAGE>   4


                             EQK REALTY INVESTORS I
                            STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------

                                             Three months ended September 30,                Nine months ended September 30,
                                                   1998         1997                              1998          1997
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                          <C>              <C>                            <C>              <C>    
Revenues from rental operations                   $1,619      $ 1,545                           $ 4,509       $ 4,515

Operating expenses, net of tenant
   reimbursements (including property
   management fees earned by an affiliate of
   $82, $72, $228, and $220, respectively)           190          283                               629           642

Depreciation and amortization                         --          637                               548         1,630
-----------------------------------------------------------------------------------------------------------------------------------

Income from rental operations                      1,429          625                             3,332         2,243

Interest expense                                   1,006        1,011                             3,204         3,296

Other expenses, net of interest income
 (including portfolio management fees
  earned by an affiliate of $56, $59
  $174, and $183, respectively)                      141          179                               326           365
-----------------------------------------------------------------------------------------------------------------------------------

Net income (loss)                                 $  282       $ (565)                           $ (198)      $(1,418)
===================================================================================================================================

Net income (loss) per share                       $ 0.03       $(0.06)                           $(0.02)      $ (0.15)
===================================================================================================================================
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                       4
<PAGE>   5


                             EQK REALTY INVESTORS I
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                                         Nine months ended September 30,
                                                         1998                     1997
----------------------------------------------------------------------------------------
<S>                                                    <C>                      <C>
Cash flows from operating activities:
  Net loss                                             $  (198)                 $(1,418)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Depreciation and amortization                        724                    1,893
     Changes in assets and liabilities:
      Decrease in accounts payable
         and other liabilities                            (600)                    (277)
      (Increase) decrease in accounts receivable
         and other assets                                   10                     (349)
---------------------------------------------------------------------------------------
Net cash used in operating activities                      (64)                    (151)
---------------------------------------------------------------------------------------
Cash flows from investing activities:
  Additions to real estate investment                     (516)                    (505)
---------------------------------------------------------------------------------------
Net cash used in investing activities                     (516)                    (505)
---------------------------------------------------------------------------------------
Cash flows from financing activities:
   Scheduled repayments of debt                             (4)                      --
---------------------------------------------------------------------------------------
Net cash used in financing activities                       (4)                      --
---------------------------------------------------------------------------------------
Decrease in cash and cash equivalents                     (584)                    (656)
Cash and cash equivalents
  beginning of period                                    3,323                    3,661
---------------------------------------------------------------------------------------
Cash and cash equivalents
  end of period                                        $ 2,739                  $ 3,005
=======================================================================================
Supplemental disclosure of cash flow information:
Interest paid                                          $ 3,415                  $ 3,015
=======================================================================================
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                       5
<PAGE>   6

                            EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


NOTE 1:  DESCRIPTION OF BUSINESS

         EQK Realty Investors I ("EQK I" or "the Trust"), a Massachusetts
         business trust, was formed pursuant to an Amended and Restated
         Declaration of Trust dated February 24, 1985, as amended on March 5,
         1986 to acquire certain income-producing real estate investments.
         Commencing with the period beginning April 1, 1985, the Trust
         qualified for and elected real estate investment trust ("REIT") status
         under the provisions of the Internal Revenue Code.

         At September 30, 1998, the Trust's remaining real estate investment is
         Harrisburg East Mall ("the Mall"), a regional shopping center located
         in Harrisburg, Pennsylvania.

         The Declaration of Trust currently provides that the actual disposition
         of the remaining property, Harrisburg East Mall, may occur at any time
         prior to March 1999. The Declaration of Trust further provides that
         this date may be extended by up to two years upon the recommendation of
         the Trustees and the affirmative vote of a majority of its
         shareholders. Based on the finite life provisions of the Declaration of
         Trust, Management has been pursuing the disposition of the Trust's
         remaining real estate investment and/or an alternative strategic
         transaction. Due to the impact of certain adverse market conditions
         described below, it may be necessary for the Trustees to recommend a
         formal extension of the Trust's life to facilitate the completion of
         the sale of the Mall.

         Effective December 23, 1997, the Trust entered into an Agreement and
         Plan of Merger (the "Merger Agreement"), pursuant to which an
         affiliate of American Realty Trust, Inc. ("ART") is to merge with and
         into the Trust (the "Merger"), with the Trust being the surviving
         entity. The Merger contemplates, among other things, a 20-year
         extension of the life of the Trust.

         Delays in completing the Merger as originally proposed required certain
         revisions to the Merger Agreement, the most significant of which are
         the right of Management to dispose of Harrisburg East Mall and to
         distribute the proceeds of such sale to the Trust's shareholders prior
         to completing the Merger and a corresponding reduction in the Merger
         consideration to be paid to the Trust's shareholders. Management
         commenced marketing and sales activities during the second quarter of
         1998 including the retention of an outside broker, and is currently
         proceeding towards negotiating a purchase and sale agreement, although
         no definitive agreement has been reached.

         Since the commencement of sales activities, changing conditions in the
         capital markets have had an adverse effect on the market for real
         estate, and especially on the market for regional malls. This
         unfavorable environment has been characterized by a reduction in
         available sources of financing for real estate transactions and by
         reduced purchasing interest on the part of many traditional buyers,
         including many of the public real estate investment trusts.



                                       6
<PAGE>   7
                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         Largely due to the conditions described above, it appears likely that
         completion of the sale of the Mall will occur subsequent to December
         15, 1998, the date on which the current forbearance agreement with the
         primary lender of the Trust's mortgage indebtedness terminates. At this
         time, the Trust believes it may be necessary to extend the term of the
         forebearance agreement as well as the term of the Trust's term loan.
         As a result, Management has commenced discussions with both lenders
         regarding extension for a period of six months with a termination date
         of June 15, 1999. In consideration of the extension, it is probable
         that an extension fee will be imposed. Although Management believes the
         lender will agree to the extension on reasonable economic terms, no
         assurances can be made at this time.

         On August 25, 1998 the Trust executed an Amended and Restated
         Agreement and Plan of Merger (the "Revised Merger Agreement").
         According to the terms of the Revised Merger Agreement, upon
         completion of the sale of the Mall, and subject to shareholder
         approval, the Merger would be completed. Immediately prior to the
         closing of the Merger, ART is expected to convey one of its properties
         to EQK I. ART will provide 100% of the financing for this property
         contribution via a non-recourse note.

         ART has agreed to permit EQK I to continue to solicit, or respond to,
         offers from third parties for EQK I. In the event EQK I accepts an
         offer from a party other than ART and elects not to proceed with the
         Merger, EQK I generally will be obligated to pay ART a "break-up" fee
         of $200,000 plus its share of transaction expenses (collectively the
         "Break-Up Consideration").

         The Revised Merger Agreement may be terminated by EQK I if any of the
         following conditions exist: (i) the Merger has not been accomplished by
         December 15, 1998; (ii) EQK I secures a more favorable offer from
         another party subject to the payment of the Break-Up Consideration; or
         (iii) if the Revised Merger Agreement in any way impairs or delays the
         sale of Harrisburg East Mall, or is likely to result in a material
         reduction in proceeds.

         Proceeds from the sale of Harrisburg East Mall and, if applicable, the
         completion of the Merger, will be distributed to the shareholders of
         EQK I once the Trust's liabilities have been settled (including the
         retirement of its mortgage note and term loan) and related transaction
         costs have been paid.

         The Merger is contingent upon, among other things, ART's registration
         statement relating to ART Preferred Shares to be issued pursuant to
         the Merger Agreement, as revised, being declared effective by the
         Securities Exchange Commission, and the affirmative vote of the
         holders of 75% of the outstanding shares of the Trust.

         The Trust, its trustees, and its Advisor have been named as defendants
         in a purported class action complaint filed in Massachusetts state
         court, which seeks to enjoin the Merger. The complaint also seeks other
         relief including unspecified damages. The Trust is vigorously pursuing
         its legal defenses and believes that the disposition of this matter
         will not have a material adverse effect on the financial position of
         the Trust.



                                       7
<PAGE>   8

                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         Trading in EQK I's common shares on the New York Stock Exchange
         ("NYSE") terminated on May 4, 1998, as the Trust did not meet the
         NYSE's continued listing criteria. A market for the EQK I common shares
         has been created on the OTC Bulletin Board System.

NOTE 2:  BASIS OF PRESENTATION

         The financial statements have been prepared by the Trust, without
         audit, pursuant to the rules and regulations of the Securities and
         Exchange Commission. Certain information and footnote disclosures
         normally included in the financial statements prepared in accordance
         with generally accepted accounting principles have been condensed or
         omitted pursuant to such rules and regulations, although the Trust
         believes that the disclosures are adequate to make the information
         presented not misleading. The financial statements should be read in
         conjunction with the audited financial statements and related notes
         thereto included in the Annual Report on Form 10-K for the year ended
         December 31, 1997.

         Certain amounts in the prior year have been reclassified from
         previously issued financial statements to conform with current
         presentation.

         As discussed in Note 1, Management intends to dispose of Harrisburg
         East Mall and as such, its investment in real estate is presented on
         the balance sheet as held for sale. This asset includes deferred
         leasing costs, and is carried at the lower of cost or fair value less
         cost to sell. Depreciation and amortization of the investment ceased
         beginning April 1, 1998.

         On March 19, 1998, The Prudential Insurance Company of America
         ("Prudential") exercised its warrants for 367,868 shares of the
         Trust's shares of beneficial interest at $.0001 per share. Such shares
         were issued to Prudential on May 7, 1998 thus bringing the total
         number of issued and outstanding shares of the Trust to 9,632,212. The
         net income and net loss per share, as reflected on the statements of
         operations, have been calculated using the weighted average of the
         number of shares outstanding during the periods presented.

         In the opinion of the Trust, all other adjustments are normal
         recurring adjustments necessary to present fairly its financial
         position as of September 30, 1998, its results of operations for the
         three months and nine months ended September 30, 1998 and 1997 and its
         cash flows for the nine months ended September 30, 1998 and 1997.



                                       8
<PAGE>   9

                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


NOTE 3:  CASH MANAGEMENT AGREEMENT

         In connection with the Trust's mortgage agreement (as amended and
         extended), the Trust entered into a cash management agreement with the
         mortgage lender and assigned all lease and rent receipts to the lender
         as additional collateral. Pursuant to this agreement, a third-party
         escrow agent has been appointed to receive all rental payments from
         tenants and to fund monthly operating expenses in accordance with a
         budget approved by the lender. As of September 30, 1998, a balance of
         $701,000 was held by the third-party escrow agent in accordance with
         the cash management agreement. The agreement also provides for the
         establishment of a capital reserve account, which is maintained by the
         escrow agent. Disbursements from this account, which are funded each
         month with any excess operating cash flow, are limited to capital
         expenditures approved by the lender. As of September 30, 1998 the
         balance of the capital reserve account was $1,426,000.

NOTE 4:  ADVISORY AND MANAGEMENT AGREEMENTS

         The Trust has entered into an agreement with Lend Lease Portfolio
         Management, Inc. (formerly known as ERE Yarmouth Portfolio Management,
         Inc.) to act as its "Advisor". The Advisor is a wholly owned
         subsidiary of Lend Lease Real Estate Investments, Inc., formerly known
         as ERE Yarmouth, Inc. The Advisor makes recommendations to the Trust
         concerning investments, administration, and day-to-day operations.

         Under the terms of the advisory agreement, as amended in December
         1989, the Advisor receives a management fee that is based upon the
         average daily per share price of the Trust's shares plus the average
         daily balance of outstanding mortgage indebtedness. Such fee is
         calculated using a factor of 42.5 basis points (0.425%) and generally
         has been payable monthly without subordination. However, given that
         the shares of the Trust are no longer traded on a market with readily
         available market values, the Trustees have agreed on a stipulated rate
         of $.75 per share to be used for purposes of calculating the
         management fee for the period subsequent to May 4, 1998.

         Commencing with the December 1995 debt extension and continuing with
         the December 1996 debt extension, the Mortgage Note lender has
         requested, and the Advisor has agreed to, a partial deferral of
         payment of its fee. Whereas the fee will continue to be computed as
         described, payments to the Advisor will be limited to $37,500 per
         quarter. Deferred fees, which amounted to $279,000 as of September 30,
         1998, will be eligible for payment upon the repayment of the Mortgage
         Note. Portfolio management fees amounted to $174,000 and $183,000 for
         the nine months ended September 30, 1998 and 1997, respectively.

         As part of the 1989 amendment to the advisory agreement, the Advisor
         forgave one-half, or $2,720,000, of the total amount of fees
         previously deferred pursuant to subordination provisions of the
         original advisory agreement. The remaining deferred fees of $2,720,000
         are to be paid upon the disposition of the Mall.



                                       9
<PAGE>   10

                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         The Trust has also entered into an agreement with ERE Yarmouth Retail,
         Inc. (the "Manager"), formerly Compass Retail, Inc., for the on-site
         management of the Mall. ERE Yarmouth Retail, Inc. is a wholly owned
         subsidiary of Lend Lease Real Estate Investments, Inc. On September 30,
         1998, Lend Lease Real Estate Investments, Inc. sold the Manager to
         LaSalle Partners Incorporated. An affiliate of LaSalle Partners
         Incorporated will continue to manage the Mall pursuant to the terms of
         the original management agreement.

         Management fees paid to the property manager are generally based upon
         a percentage of rents and certain other charges. Such fees and
         commissions are comparable to those charged by unaffiliated
         third-party management companies providing comparable services. For
         the nine months ended September 30, 1998 and 1997, management fee
         expense attributable to services rendered by ERE Yarmouth Retail, Inc.
         were $228,000 and $220,000, respectively.

NOTE 5:  DEBT MATURITIES

         The Trust's debt instruments (aggregate principal outstanding of
         $45,375,000) had scheduled maturity dates of June 15, 1998. While the
         mortgage note holder has refused to grant an extension of this
         maturity date, it has agreed to a forbearance arrangement wherein it
         will not exercise remedies for non-repayment of the outstanding
         principal due through December 15, 1998. The holder of the Trust's
         term loan has agreed to an extension of the maturity date, also
         through December 15, 1998. The forbearance and extension arrangements
         are conditioned upon, among other things, the Trust continuing to make
         timely debt service payments in monthly amounts equal to those amounts
         stipulated in the December 1996 debt extension agreements.

         On June 15, 1998 the Trust paid deferred loan fees plus interest to
         the mortgage note holder in the amount of $309,200 and deferred loan
         fees to the term loan holder in the amount of $88,100.

         As discussed in Note 1, the Trust has commenced efforts to sell the
         Mall. Management anticipates that a sale of the Mall will be completed
         subsequent to December 15, 1998, which is the date the current
         forbearance agreement with the primary lender of the Trust's mortgage
         indebtedness terminates. At this time, the Trust believes it may be
         necessary to extend the term of the forebearance agreement as well as
         the term of the Trust's loan. As a result, Management has commenced
         discussions with both lenders regarding extension for a period of six
         months with a termination date of June 15, 1999. In consideration of
         the extension, it is probable that an extension fee will be imposed.
         Although Management believes the lender will agree to the extension on
         reasonable economic terms, no assurances can be made at this time.



                                      10
<PAGE>   11

                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         Proceeds from the sale of the Mall and, if applicable, the completion
         of the Merger, will be distributed to the shareholders of EQK I once
         the Trust's liabilities have been settled (including the retirement of
         its mortgage note and term loan) and related transaction costs have
         been paid.

NOTE 6:  CHANGE IN ACCOUNTING PRINCIPLE

         The Trust defers recognition of percentage rent until the tenants'
         sales exceed the contractual breakpoint in accordance with the
         Financial Accounting Standards Board's Emerging Issues Task Force EITF
         98-9, "Accounting for Contingent Rent in Interim Financial Periods".
         The Trust adopted EITF 98-9 during the second quarter of 1998. The
         effect of the change in accounting principal had no material impact on
         quarterly interim financial information presented during 1998.

NOTE 7:  YEAR 2000

         The inability of computers, software and other equipment to recognize
         and properly process data fields containing a two-digit year is
         commonly referred to as the Year 2000 compliance issue ("Y2K"). As the
         year 2000 approaches, such systems may be unable to accurately process
         certain date-based information.

         Y2K exposures of the Trust and the Mall are currently being assessed.
         Potential critical exposures include reliance on third party vendors
         and building systems that are not Y2K compliant. The Trust has begun to
         communicate with its third party service vendors such as Lend Lease and
         LaSalle Partners in an effort to assess their Y2K compliance status and
         the adequacy of their Y2K efforts.

         The Mall is being assessed in an effort to identify Y2K issues. Any
         required remediation strategy will depend on the outcome of the
         assessment and therefore will not be developed until the assessment is
         complete. Management expects the assessment to be completed and
         remediation efforts to be underway by the end of the first quarter of
         1999.

         Neither the Trust nor the Mall has incurred any material costs to date
         relating to Y2K. The total assessment cost is expected to total
         approximately $10,000. These costs were not incurred and therefore not
         accrued at September 30, 1998. Remediation costs cannot be reasonably
         estimated until the assessment is complete and a remediation strategy
         is determined.

         The failure to adequately address the Year 2000 issue may result in the
         closure of the Mall. In order to reduce the potential impact on the
         operations of the Trust and the Mall, contingency plans are expected to
         be developed once Y2K exposures have been assessed.



                                      11
<PAGE>   12

         A building contingency plan is expected to be developed once the
         assessment has been completed. A contingency plan may involve but not
         be limited to the engagement of additional security services, the
         disconnect of system interfacing (that does not significantly impact
         Mall operations) and the identification and engagement of alternative
         service vendors.

         If the sale of the Mall and the Merger with ART occur as currently
         proposed, the current property manager and the Advisor will cease
         providing services to the Trust. If, subsequent to the sale of the
         Mall, the Merger is approved and the Trust continues as an operating
         entity, affiliates of ART will provide property management and
         advisory services on an ongoing basis. The Trust does not currently
         have knowledge of the status of ART's and its affiliates Y2K
         compliance. Accordingly, there can be no assurance that all business
         critical systems will be fully Y2K compliant, or that the consequences
         of any systems deficiencies will not have a material adverse effect on
         the Trust.


                                       12
<PAGE>   13


                             EQK REALTY INVESTORS I

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


This discussion should be read in conjunction with the financial statements and
notes that appear on pages 3-12.

FINANCIAL CONDITION

CAPITAL RESOURCES

Trust Background

At September 30, 1998, the Trust's remaining real estate investment is
Harrisburg East Mall ("the Mall"), a regional shopping center located in
Harrisburg, Pennsylvania. During 1995, the Trust sold its remaining interest in
Castleton Park ("Castleton") an office park located in Indianapolis, Indiana.
During 1993, the Trust sold its two remaining office buildings within its
office complex located in Atlanta, Georgia, formerly known as
Peachtree-Dunwoody Pavilion ("Peachtree"). Prior to 1993, the Trust sold two
office buildings at Castleton (1991) and five office buildings at Peachtree
(1992).

The Declaration of Trust currently provides that the actual disposition of the
remaining property, Harrisburg East Mall, may occur at any time prior to March
1999. The Declaration of Trust further provides that this date may be extended
by up to two years upon the recommendation of the Trustees and the affirmative
vote of a majority of its shareholders. Based on the finite-life provisions of
the Declaration of Trust, Management has been pursuing the disposition of the
Trust's remaining real estate investment and/or an alternative strategic
transaction. Due to the impact of certain adverse market conditions described 
below, it may be necessary for the Trustees to recommend a formal extension of 
the Trust's life to facilitate the completion of the sale of the Mall.

As discussed in Note 1 to the financial statements, effective December 23,
1997, the Trust entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which an affiliate of American Realty Trust, Inc.
("ART") is to merge with and into the Trust (the "Merger"), with the Trust
being the surviving entity. The Merger contemplates, among other things, a
20-year extension of the life of the Trust.

Delays in completing the Merger as originally proposed required certain
revisions to the Merger Agreement, the most significant of which are the right
of Management to dispose of Harrisburg East Mall and to distribute the proceeds
of such sale to the Trust's shareholders prior to completing the Merger and a
corresponding reduction in the Merger consideration to be paid to the Trust's
shareholders. Management commenced marketing and sales activities during the
second quarter of 1998 including the retention of an outside broker, and is
currently proceeding towards negotiating a sales and purchase agreement with
buyers, although no definitive agreement has been reached.



                                      13
<PAGE>   14

                             EQK REALTY INVESTORS I

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


Since the commencement of sales activities, changing conditions in the capital 
markets have had an adverse effect on the market for real estate, and 
especially on the market for regional malls. This unfavorable environment has 
been characterized by a reduction in available sources of financing for real 
estate transactions by reducing purchasing interest on the part of many 
traditional buyers, including many of the public real estate investment trusts. 

Largely due to the conditions described above, it appears likely that 
completion of the sale of the Mall will occur subsequent to December 15, 1998, 
the date on which the current forbearance agreement with the primary lender of 
the Trust's mortgage indebtedness terminates. At this time, the Trust believes
it may be necessary to extend the term of the forebearance agreement as well as
the term of the Trust's loan. As a result, Management has commenced discussions
with both lenders regarding extension for a period of six months with a 
termination date of June 15, 1999. In consideration of the extension, it is 
probable that an extension fee will be imposed. Although Management believes the
lender will agree to the extension on reasonable economic terms, no assurances
can be made at this time.

On August 25, 1998 the Trust executed an Amended and Restated Agreement and
Plan of Merger (the "Revised Merger Agreement"). According to the terms of the
Revised Merger Agreement, upon completion of the sale of the Mall, and subject
to shareholder approval, the Merger would be completed. Immediately prior to
the closing of the Merger, ART is expected to convey one of its properties to
EQK I. ART will provide 100% of the financing for this property contribution
via a non-recourse note.

ART has agreed to permit EQK I to continue to solicit, or respond to, offers
from third parties for EQK I. In the event EQK I accepts an
offer from a party other than ART and elects not to proceed with the Merger,
EQK I generally will be obligated to pay ART a "break-up" fee of $200,000 plus
its share of transaction expenses (collectively the "Break-Up Consideration").

The Revised Merger Agreement may be terminated by EQK I if any of the following
conditions exist: (i) the Merger has not been accomplished by December 15,
1998; (ii) EQK I secures a more favorable offer from another party subject to
the payment of the Break-Up Consideration; or (iii) if the Revised Merger 
Agreement in any way impairs or delays the sale of Harrisburg East Mall, or is
likely to result in a material reduction in proceeds.

Proceeds from the sale of Harrisburg East Mall and, if applicable, the
completion of the Merger, will be distributed to the shareholders of EQK I once
the Trust's liabilities have been settled (including the retirement of its
Mortgage Note and Term Loan) and related transaction costs have been paid.



                                      14
<PAGE>   15

                             EQK REALTY INVESTORS I

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


The Merger is contingent upon, among other things, ART's registration statement
relating to ART Preferred Shares to be issued pursuant to the Merger Agreement,
as revised, being declared effective by the Securities Exchange Commission, and
the affirmative vote of the holders of 75% of the outstanding shares of the
Trust.

The Trust, its trustees, and its Advisor have been named as defendants in a
purported class action complaint filed in Massachusetts state court, which
seeks to enjoin the Merger. The complaint also seeks other relief including
unspecified damages. The Trust is vigorously pursuing its legal defenses and
believes that the disposition of this matter will not have a material adverse 
affect on the financial position of the Trust.

Trading in EQK I's common shares on the New York Stock Exchange ("NYSE") 
terminated on May 4, 1998, as the Trust did not meet the NYSE's
continued listing criteria. A market for the EQK I common shares has been 
created on the OTC Bulletin Board System.


Mortgage Debt Extensions

The Trust's debt instruments (aggregate principal outstanding of $45,375,000)
had scheduled maturity dates of June 15, 1998. While the mortgage note holder
has refused to grant an extension of this maturity date, it has agreed to a
forbearance arrangement wherein it will not exercise remedies for non-repayment
of the outstanding principal due through December 15, 1998. The term loan
holder has agreed to an extension of the maturity date, also through December
15, 1998. The forbearance and extension arrangements are conditioned upon,
among other things, the Trust continuing to make timely debt service payments
in monthly amounts equal to those amounts stipulated in the December 1996 debt
extension agreements.

At this time, the Trust believes it may be necessary to extend the terms of the
mortgage indebtedness as well as the term loan. As a result, Management has
commenced discussions with both lenders regarding extension for a period of six
months with a termination date of June 15, 1999. In consideration of the
extension, it is probable that an extension fee will be imposed. Although
Management believes the lenders will agree to the extension on reasonable
economic terms, no assurances can be made at this time.

On June 15, 1998 the Trust paid deferred loan fees to the mortgage note holder
in the amount of $309,200 and deferred loan fees to the term loan holder in the
amount of $88,100.

On March 19, 1998, The Prudential Insurance Company of America ("Prudential")
exercised its warrants for 367,868 shares of the Trust's shares of beneficial
interest at $.0001 per share. Such shares were issued to Prudential on May 7,
1998 thus bringing the total number of issued and outstanding shares of the
Trust to 9,632,212. The net loss per share as reflected on the statements of
operations has been calculated using the weighted average of the number of
shares outstanding during the periods presented.



                                      15
<PAGE>   16

                             EQK REALTY INVESTORS I

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY

Cash flows used in operating activities for the nine month period ending
September 30, 1998 and 1997 were $64,000 and $151,000, respectively. For the
nine months ended September 30, 1998, cash flows used in operating activities
primarily represent the payment of the deferred loan fees of $361,000 and
related accrued interest on the fees of $36,000. These fees were accrued and 
paid in connection with the extension of the term loan agreement through 
June 15, 1998 (see Note 5 to the financial statements). For the nine month 
period ending September 30, 1997, cash flows used in operating activities 
primarily represent the payment of real estate taxes as well as interest.

Cash flows used in investing activities for the nine months ended September 30,
1998 and 1997 were for routine capital expenditures at the Mall. The Trust
anticipates capital expenditures of approximately $700,000 for the remainder of
1998, which primarily represents tenant allowances. Certain of these
expenditures are discretionary in nature and may be deferred into future
periods.

The cash flows used in financing activities for the nine months ended September
30, 1998 are limited to principal payments on the Trust's term loan. The
mortgage note requires monthly payments of interest only.

The Trust's liquidity requirements for the remainder of 1998 also will include
principal and interest payments of approximately $1,007,000 pursuant to the
existing loan agreements. The loan agreements specify that the remaining loan
balances of $45,375,000 be paid in full by December 15, 1998.

The Trust's cash management agreement stipulates that all rental payments from
tenants are to be made directly to a third party escrow agent who also funds
monthly operating expenses in accordance with a budget approved by the lender.
The Trust believes that its cash flow for 1998 will be sufficient to fund its
various operating requirements, including budgeted capital expenditures and
monthly principal and interest payments, although its discretion with respect
to cash flow management will be limited by the terms of the cash management
agreement. Management believes that the Trust's current cash reserves, coupled
with additional cash flow projected to be generated from operations, will
permit the Trust to meet its operating, capital and monthly debt service
requirements.

The Trust has recorded its investment in real estate held for sale at the lower
of cost or fair value less cost to sell. Accordingly, the Trust has not written
up the cost basis of its investment in Harrisburg to its substantially higher
net realizable value. Therefore, Management does not believe that its deficit
in shareholders' equity of $5,180,000 at September 30, 1998 is indicative of
its current liquidity or the net distribution that its shareholders would
receive upon liquidation.



                                      16
<PAGE>   17

                             EQK REALTY INVESTORS I

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


As discussed in Note 1, the Trust has commenced efforts to sell the Mall. It
appears likely that completion of the sale of the Mall will occur subsequent to
December 15, 1998, the date on which the current forbearance agreement with the
primary lender of the Trust's mortgage indebtedness terminates. At this time,
the Trust believes it may be necessary to extend the term of the forebearance
agreement as well as the term of the Trust's loan. As a result, Management has 
commenced discussions with both lenders regarding extension for a period of six
months with a termination date of June 15, 1999. In consideration of the
extension, it is probable that an extension fee will be imposed. Although
Management believes the lender will agree to the extension on reasonable
economic terms, no assurances can be made at this time.

YEAR 2000 READINESS DISCLOSURE

The inability of computers, software and other equipment to recognize and
properly process data fields containing a two-digit year is commonly referred
to as the Year 2000 compliance issue ("Y2K"). As the year 2000 approaches, such
systems may be unable to accurately process certain date-based information.

Y2K exposures of the Trust and the Mall are currently being assessed. Potential
critical exposures include reliance on third party vendors and building systems
that are not Y2K compliant. The Trust has begun to communicate with its third
party service vendors such as Lend Lease and LaSalle Partners in an effort to
assess their Y2K compliance status and the adequacy of their Y2K efforts.

The Mall is being assessed in an effort to identify Y2K issues. Any required
remediation strategy will depend on the outcome of the assessment and therefore
will not be developed until the assessment is complete. Management expects the
assessment to be completed and remediation efforts to be underway by the end of
the first quarter of 1999.

Neither the Trust nor the Mall has incurred any material costs to date relating
to Y2K. The total assessment cost is expected to total approximately $10,000. 
These costs were not incurred and therefore not accrued at September 30, 1998.
Remediation costs cannot be reasonably estimated until the assessment is
complete and a remediation strategy is determined. To provide cost estimates at
this stage may be misleading.

The failure to adequately address the Year 2000 issue may result in the closure
of the Mall. In order to reduce the potential impact on the operations of the
Trust and the Mall, contingency plans are expected to be developed once Y2K 
exposures have been assessed.



                                      17
<PAGE>   18

                             EQK REALTY INVESTORS I

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

A building contingency plan will only be developed once the assessment has been
completed. A contingency plan may involve but not be limited to the engagement
of additional security services, the disconnect of system interfacing (that
does not significantly impact Mall operations) and the identification and
engagement of alternative service vendors.

If the sale of the Mall and the Merger with ART occur as currently proposed, 
the current property manager and the Advisor will cease providing services to 
the Trust. If, subsequent to the sale of the Mall, the Merger is approved and 
the Trust continues as an operating entity, affiliates of ART will provide 
property management and advisory services on an ongoing basis. The Trust does 
not currently have knowledge of the status of ART's and its affiliates Y2K 
compliance. Accordingly, there can be no assurance that all business critical 
systems will be fully Y2K compliant, or that the consequences of any systems
deficiencies will not have a material adverse effect on the Trust.

RESULTS OF OPERATIONS

For the nine months ended September 30, 1998, the Trust reported a net loss of
$198,000 ($.02 per share) compared to a net loss of $1,418,000 ($.15 per share)
for the nine months ended September 30, 1997. For the three months ended
September 30, 1998, the Trust reported net income of $282,000 compared to a net
loss of $565,000 for the three months ended September 30, 1997.

The Trust's revenues from rental operations for the three and nine months ended
September 30, 1998 were $1,619,000 and $4,509,000, respectively. The increase
for the three months ended September 30, 1998, $74,000, is due to the receipt
of a non-recurring lease cancellation fee of approximately $200,000. This
increase in income is largely offset by the sum of other income variances, none
of which are individually significant. There were no significant variances in
revenues on a year to date basis.

The Trust's operating expenses for three and nine months ended September 30,
1998 were $190,000 and $629,000, respectively, representing decreases of
$93,000 and $13,000 from the respective prior year periods. This variance is
attributable to the sum of several operating expense variances, none of which
is individually significant.

The decrease in the depreciation and amortization expense between periods is
due to the cessation of depreciation and amortization expense relating to the
real estate investment and deferred leasing costs effective as of March 31,
1998.


                                      18
<PAGE>   19


                             EQK REALTY INVESTORS I

                          PART II - OTHER INFORMATION

Item 1.      Legal Proceedings

             The Trust, its trustees, and its Advisor have been named as
             defendants in a purported class action complaint filed in
             Massachusetts state court, which seeks to enjoin the Merger. The
             complaint also seeks other relief including unspecified damages.
             The Trust believes the action to be without merit.

Item 2.      Changes in Securities

             None

Item 3.      Defaults Upon Senior Securities

             None

Item 4.      Submission of Matters to a Vote of Security Holders

             None

Item 5.      Other Information

             On August 18, 1998, certain officers of the Trust resigned from
             their positions. Phillip Stephens resigned as President of the
             Trust, but remains a member of the Board of Trustees and Linda
             Schear resigned as Secretary of the Trust. Also on this date,
             Robert Welanetz was elected President of the Trust and joined the
             Board of Trustees and Pamela Griffin was elected Secretary of the
             Trust. Subsequently, on November 2, 1998, Gregory Greenfield
             resigned from his position as Executive Vice President of the
             Trust.

Item 6.      Exhibits and Reports on Form 8-K

             (a)  Exhibits:
                    2.    None
                    4.    None
                   10.    Material Contracts

                          (1)  Amended and Restated Agreement and Plan of Merger
                               dated August 25, 1998 by and among the
                               Registrant, American Realty Trust, Inc., ART
                               Newco, LLC, Basic Capital Management, Inc., EQK
                               Realty Investors I, and Lend Lease Portfolio
                               Management, Inc. (a)

                   11.    See Note 2 to Financial Statements
                   15.    Not Applicable
                   18.    Not Applicable
                   19.    None
                   22.    None
                   23.    Not Applicable
                   24.    None
                   27.    Included in EDGAR transmission only.

             (b) Reports on Form 8-K

                   None
-----------------------
(a) Incorporated herein by reference to exhibit filed with Registration
    Statement on September 3, 1998 on Amendment #2 to form S-4 filed by American
    Realty Trust, Inc. (Registration Statement Number 333-43777)

                                       19
<PAGE>   20


                                   SIGNATURES

Pursuant to 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.

Date:  November 16, 1998                  EQK REALTY INVESTORS I


                                       By:    /s/ Robert Welanetz
                                           ------------------------------------
                                              Robert Welanetz
                                              President



                                       By:    /s/ William G. Brown Jr.
                                           ------------------------------------
                                              William G. Brown, Jr.
                                              Vice President and Controller


                                      20