<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 June 30, 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 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)

3424 Peachtree Road NE, Suite 800, Atlanta, GA              30326
----------------------------------------------              -----
  (Address of principal executive offices)                (Zip Code)

                                 (404) 848-8600
                                 --------------
              (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 August 13, 1999.
                                          -------------------------------


<PAGE>   2

                             EQK REALTY INVESTORS I

                         QUARTERLY REPORT ON FORM 10-Q
                        FOR QUARTER ENDED JUNE 30, 1999

                                     INDEX

<TABLE>
<CAPTION>

                                                                        Page
                                                                        ----
<S>                                                                     <C>
PART I - FINANCIAL INFORMATION

Item 1.  Balance Sheets as of June 30, 1999
         and December 31, 1998                                           3

         Statements of Operations for the three
         and six months ended June 30, 1999 and
         June 30, 1998                                                   4

         Statements of Cash Flows for the six
         months ended June 30, 1999 and
         June 30, 1998                                                   5

         Notes to the Financial Statements                               6

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

Item 3.  Quantitative and Qualitative Disclosures
         About Market Risk                                              22

PART II - OTHER INFORMATION

Items 1 through 6.                                                      23

SIGNATURES                                                              25
</TABLE>


                                       2

<PAGE>   3

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

<TABLE>
<CAPTION>
                                                                               June 30,       December 31,
                                                                                 1999            1998
                                                                               --------       ------------
<S>                                                                            <C>            <C>
                     ASSETS


Real estate held for sale                                                      $  39,473       $  39,360

Cash and cash equivalents:
    Cash Management Agreement                                                      3,576           3,390
    Other                                                                            255             471


Accounts receivable and other assets (net of allowance of $5                       1,765           1,881
  and $67, respectively)
                                                                               ---------       ---------


TOTAL ASSETS                                                                   $  45,069       $  45,102
                                                                               =========       =========


                 LIABILITIES AND DEFICIT IN SHAREHOLDERS' EQUITY

Liabilities:

      Mortgage note payable                                                    $  43,794       $  43,794

      Term loan payable to bank                                                    1,572           1,580

      Accounts payable and other liabilities (including amounts due
         affiliates of $3,130 and $3,107, respectively)                            4,146           4,560
                                                                               ---------       ---------


                                                                                  49,512          49,934

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                                                       (140,318)       (140,707)
                                                                               ---------       ---------

                                                                                  (4,443)         (4,832)
                                                                               ---------       ---------

TOTAL LIABILITIES AND DEFICIT IN SHAREHOLDERS' EQUITY                          $  45,069       $  45,102
                                                                               =========       =========
</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 June 30,    Six months ended June 30,
                                                  ---------------------------    -------------------------
                                                       1999        1998              1999        1998
                                                       ----        ----              ----        ----
<S>                                               <C>             <C>            <C>             <C>

Revenues from rental operations                       $1,519      $ 1,337           $3,131      $ 2,890

Operating expenses, net of tenant
   reimbursements (including property
   management fees earned by an affiliate of
   $0, $72, $0 and $146, respectively)                   336          281              469          439

Depreciation and amortization                             19            0               19          547
                                                      ------      -------           ------      -------

Income from rental operations                          1,164        1,056            2,643        1,904

Interest expense                                       1,027        1,099            2,046        2,199

Other expenses, net of interest income
 (including portfolio management fees
  earned by an affiliate of $52, $55
  $103, and $118, respectively)                           95          102              208          185
                                                      ------      -------           ------      -------

Net income (loss)                                     $   42      $  (145)          $  389      $  (480)
                                                      ======      =======           ======      =======

Net income (loss) per share                           $ 0.00      ($ 0.02)          $ 0.04      ($ 0.05)
                                                      ======      =======           ======      =======
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                       4

<PAGE>   5

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


<TABLE>
<CAPTION>
                                                        Six months ended June 30,
                                                        -------------------------
                                                           1999          1998
                                                           ----          ----
<S>                                                     <C>            <C>

Cash flows from operating activities:
  Net income (loss)                                      $   389       $  (480)
  Adjustments to reconcile net income (loss) to net
    cash provided by operating activities:
      Depreciation and amortization                           19           547
      Amortization of deferred financing costs                34           176
      Changes in assets and liabilities:
      Decrease in accounts payable and
         other liabilities                                  (414)         (293)
      Decrease in accounts receivable
         and other assets                                    107           362
                                                         -------       -------
Net cash provided by operating activities                    135           312
                                                         -------       -------
Cash flows from investing activities:
  Additions to real estate investments                      (132)         (270)
                                                         -------       -------
Net cash used in investing activities                       (132)         (270)
                                                         -------       -------
Cash flows from financing activities:
   Payment of deferred financing costs                       (25)         (361)
   Scheduled repayments of debt                               (8)           (3)
                                                         -------       -------
Net cash used in financing activities                        (33)         (364)
                                                         -------       -------
Decrease in cash and cash equivalents                        (30)         (322)
Cash and cash equivalents
  beginning of period                                      3,861         3,323
                                                         -------       -------
Cash and cash equivalents
  end of period                                          $ 3,831       $ 3,001
                                                         =======       =======

Supplemental disclosure of cash flow information:
Interest paid                                            $ 2,031       $ 2,023
                                                         =======       =======
</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, a Massachusetts business trust ("EQK" or the
         "Trust"), was formed pursuant to an Amended and Restated Declaration of
         Trust dated February 27, 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. Lend Lease Portfolio Management, Inc.
         ("LLPM") serves as the "Advisor" to the Trust.

         At June 30, 1999, the Trust's remaining real estate investment is
         Harrisburg East Mall (the "Mall"), a regional shopping center in
         Harrisburg, Pennsylvania, which is currently held for sale. On December
         8, 1995, the Trust sold its remaining interest in Castleton Park, an
         office park in Indianapolis, Indiana. The Trust sold office buildings
         comprising an office complex located in Atlanta, Georgia, formerly
         known as Peachtree-Dunwoody Pavilion, during 1992 and 1993. In 1991,
         the Trust completed the sale of two office buildings at Castleton.

         The Declaration of Trust provides for the Trust's existence and a
         maximum holding period for its real estate investments of 14 years. The
         Declaration of Trust further provides that this 14-year term may be
         extended by up to two years upon the recommendation of the Trustees and
         the affirmative vote of a majority of its shareholders. Recognizing
         that the disposition of the Mall would not be completed prior to the
         initial maturity date of the Trust's term (March 5, 1999), the Board of
         Trustees recommended a two-year extension of the Trust's life (through
         March 5, 2001). This recommendation was approved by the shareholders at
         a Special Meeting of Shareholders held on February 23, 1999.

         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, an extension of the life of
         the Trust through December 31, 2018.

         The Merger Agreement was amended on August 25, 1998 (as further amended
         on April 22, 1999 and on June 4, 1999, the "Revised Merger Agreement")
         to provide for, among other matters, the right of the Trust to sell the
         Mall and distribute 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.

         An Annual Meeting of Shareholders (the "Annual Meeting") convened on
         August 3, 1999 to consider and vote upon (1) the Revised Merger
         Agreement (the "Merger Proposal"), (2) an amendment and restatement of
         EQK's Amended and Restated Declaration of Trust (the "Declaration
         Amendment Proposal"), (3) the termination of EQK's advisory agreement
         with Lend Lease Portfolio Management, Inc. and the execution by EQK of
         a new advisory agreement with Basic Capital Management Inc., an
         affiliate of ART, as advisor (the "New

                                       6
<PAGE>   7
                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         Advisory Agreement Proposal"), and (4) the election of the Board of
         Trustees of EQK (the "Board of Election Proposal" and, together with
         the Merger Proposal, the Declaration Amendment Proposal, and the New
         Advisory Agreement Proposal, the "Proposals"). The Annual Meeting was
         adjourned until August 26, 1999.

         The affirmative vote of holders of 75% of the outstanding shares of EQK
         ("Requisite Shareholder Approval") is required for the approval of the
         Merger Proposal, the Declaration Amendment Proposal and the New
         Advisory Agreement Proposal (collectively, the "Merger Related
         Proposals"). None of the Merger Related Proposals will take effect
         unless all such proposals receive Requisite Shareholder Approval.

         The Merger consideration will be comprised entirely of ART Series F
         Cumulative Convertible Preferred Stock with a par value of $2.00 per
         share and a liquidation value of $10.00 per share. ("ART Preferred
         Shares"). The Merger will be effected by (i) ART's acquisition of up to
         4,376,056 shares currently held by four EQK shareholders including
         LLPM, Summit Venture LP ("Summit"), Sutter Opportunity Fund LLC
         ("Sutter"), and Maurice A. Halperin ("Halperin"), (the "Selling
         Shareholders") pursuant to the terms of separate stock purchase
         agreements (each a "Stock Purchase Agreement" and collectively, the
         "Block Purchase"), and (ii) ART's receipt of 673,976 shares newly
         issued by the Trust (the "ART Merger Consideration" which, together
         with Shares currently outstanding, constitutes "EQK Shares"), the
         combined effect of which will give ART up to an approximate 49%
         interest in EQK.

         The number of EQK Shares acquired by ART and the number of EQK Shares
         issued to ART may be adjusted if, due to certain circumstances, less
         than all of the Selling Shareholders complete their transaction with
         ART. The Selling Shareholders will receive for each EQK Share sold
         0.030 of an ART Preferred Share with a corresponding liquidation value
         of $0.30 per EQK Share sold. The remaining EQK shareholders (the
         "Public EQK Shareholders") will be entitled to retain their Shares at
         the time of the Merger, but will be compensated for the dilution in
         their percentage ownership interest through the receipt of 0.014 of an
         ART Preferred Share with a corresponding liquidation value of $0.14 per
         EQK Share held (the "EQK Merger Consideration"). In addition, ART
         currently intends (but is not legally obligated) to acquire the
         remaining EQK Shares from such other Public EQK Shareholders at some
         time after the third anniversary of the consummation of the Merger for
         not less than 0.0486 of an ART Preferred Share with a liquidation value
         of $0.486 for each EQK Share tendered.

         At this time, Halperin has not agreed to sell his EQK Shares to ART. If
         Halperin does not agree to sell such shares to ART prior to the Merger,
         and the Merger-Related Proposals receive Requisite Shareholder
         Approval, Halperin will be entitled to receive the same EQK Merger
         Consideration per share as the consideration to be paid to the other
         Public EQK Shareholders and ART will be entitled to receive the ART
         Merger Consideration without modification. Upon consummation of the
         Block Purchase (excluding Haplerin's EQK Shares)

                                       7
<PAGE>   8
                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         and the Merger, ART would own not more than 41% of the issued and
         outstanding EQK Shares and the Public EQK Shareholders (including
         Halperin) will have effectively "sold" approximately 4.15% of their EQK
         Shares to ART.

         If Summit and Sutter elect to terminate their respective Stock Purchase
         Agreements (which termination could occur subsequent to the Annual
         Meeting) and ART determines to proceed with the closing of the Merger,
         Summit and Sutter would be entitled to receive the same EQK Merger
         Consideration per share as the other Public EQK Shareholders and ART
         will be entitled to receive the same ART Merger Consideration per share
         as the other Public EQK Shareholders without modification. In such
         event, ART would own not more than 23% of the issued and outstanding
         EQK Shares and the Public EQK Shareholders (including Halperin, Summit,
         and Sutter) will have effectively "sold" approximately 5.4% of their
         EQK Shares to ART.

         Upon completion of the sale of the Mall and receipt of Requisite
         Shareholder Approval for the Merger Related Proposals, the Merger would
         be completed. Immediately prior to the closing of the Merger, ART will
         convey one of its properties to the Trust. The total consideration paid
         by the Trust to ART for this property will be a $1,250,000 non-recourse
         five-year promissory note. The Trust will also assume approximately
         $1,498,000 of existing debt.

         ART has agreed to permit the Trust to continue to solicit, or respond
         to, offers from third parties for the Trust. In the event the Trust
         accepts an offer from a party other than ART and elects not to proceed
         with the Merger, the Trust 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 is currently terminable by either ART or
         the Trust if the Merger has not been accomplished by October 29, 1999.
         The Revised Merger Agreement also may be terminated by the Trust if (i)
         the Trust secures a more favorable offer from another party subject to
         the payment of the Break-Up Consideration; or (ii) the Revised Merger
         Agreement in any way impairs or delays the sale of the Mall, or is
         likely to result in a material reduction in proceeds.

         Proceeds from the sale of the Mall and, if applicable, the completion
         of the Merger, will be distributed to the shareholders of the Trust in
         one or more payments once the Trust's liabilities have been settled
         (including retirements of its Mortgage Note and Term Loan) and related
         transaction costs have been paid.

         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

                                       8
<PAGE>   9
                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         complaint also seeks other relief including unspecified damages. The
         Management of the Trust is 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.

         As previously announced, on March 5, 1999, the Trust entered into a
         non-binding letter of intent to sell the Mall to a private real estate
         group (the "Prospective Purchaser") for $51 million. Closing was
         subject to a number of conditions, including the satisfactory
         completion of due diligence, the Prospective Purchaser's obtaining
         financing and the execution of a definitive purchase and sale
         agreement. The Letter of Intent provided for an exclusivity period,
         which expired May 15, 1999, during which time the Trust could not
         solicit, negotiate, or execute other offers for the sale of the Mall.
         There is substantial doubt that the Trust will be able to close any
         transaction with the Prospective Purchaser based upon certain terms
         that the Prospective Purchaser has proposed. As a result, the Trust has
         commenced additional marketing activities relating to the sale of the
         Mall.

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, 1998.

         Certain prior year amounts have been reclassified to conform to the
         current year presentation.

         The Trust is actively attempting to sell the Mall and, therefore, has
         classified its investment in real estate on the balance sheet as held
         for sale effective April 1, 1998. Accordingly, all real estate assets,
         including deferred leasing costs, are recorded at the lower of cost or
         estimated fair market value, less estimated costs to sell. Depreciation
         is not recorded for real estate assets held for sale. Therefore, the
         Trust discontinued recording depreciation and amortization of real
         estate assets on April 1, 1998. The depreciation recorded in the second
         quarter of 1999 represents the write off of a non-recoverable tenant
         allowance.

         In the opinion of the Trust, all adjustments, which include only normal
         recurring adjustments necessary to present fairly its financial
         position as of June 30, 1999, its results of operations for the three
         and six months ended June 30, 1999 and 1998 and its cash flows for the
         six months ended June 30, 1999 and 1998, have been included in the
         accompanying unaudited financial statements.

                                       9
<PAGE>   10
                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


NOTE 3:  CASH MANAGEMENT AGREEMENT

         In connection with the Trust's Mortgage Debt agreement (as amended and
         extended), the Trust entered into a Cash Management Agreement with
         Prudential (the "Mortgage Note Lender") and assigned all lease and rent
         receipts to the Mortgage Note 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 Mortgage Note
         Lender. As of June 30, 1999, a balance of $2,110,000 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 Mortgage Note Lender. As of June 30, 1999 the balance
         of the capital reserve account was $1,466,000.

NOTE 4:  ADVISORY AND MANAGEMENT AGREEMENTS

         The Advisor is a wholly owned subsidiary of Lend Lease Real Estate
         Investments, 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 the Shares of the
         Trust are no longer traded on a market with readily available market
         values, the Trustees agreed on a stipulated rate of $0.75 per share to
         be used for purposes of calculating the management fee for the period
         May 4, 1998 through December 31, 1998 and $0.37 per share for the
         period January 1, 1999 through June 30, 1999.

         Commencing with the December 1995 extension of debt 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 continues to be computed as described
         above, payments to the Advisor are limited to $37,500 per quarter.
         Accrued but unpaid amounts will be eligible for payment upon the
         repayment of the Mortgage Note. For the six months ended June 30, 1999
         and 1998, portfolio management fees were $103,000 and $118,000,
         respectively. The balance of deferred portfolio management fees at June
         30, 1999 was $327,000.


                                       10
<PAGE>   11
                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         As of December 31, 1989, portfolio management fees of $5,440,000
         payable to the Advisor were deferred in accordance with subordination
         provisions contained in the original advisory agreement. Pursuant to
         the amended advisory agreement, the Advisor forgave one-half, or
         $2,720,000, of the deferred balance. The remaining deferred fees are to
         be paid upon the disposition of the Trust's properties. As of June 30,
         1999, the liability for deferred management fees was $2,720,000.

         Upon the sale of all or any portion of any real estate investment of
         the Trust, the Advisor will receive a disposition fee equal to 2% of
         the gross sale price (including outstanding indebtedness taken subject
         to or assumed by the buyer and any purchase money indebtedness taken
         back by the Trust). The disposition fee will be reduced by the amount
         of any brokerage commissions and legal expenses incurred by the Trust
         in connection with such sales. The Trust incurred no disposition fees
         as of June 30, 1999.

         In connection with the December 15, 1996 extension of debt, the Advisor
         earned a refinancing fee of $50,000, which will be paid upon the
         retirement of the debt.

         The Trust entered into an agreement with ERE Yarmouth Retail, Inc. (the
         "Manager"), for the on-site management of the Mall. ERE Yarmouth
         Retail, Inc. was 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
         ("LaSalle"), which is not affiliated with the Trust or the Advisor. An
         affiliate of LaSalle continues to manage the Mall pursuant to the terms
         of the original management agreement.

NOTE 5:  DEBT MATURITIES

         The Trust's debt instruments (aggregate principal outstanding of
         $45,366,000) had original maturity dates of December 15, 1995. The
         Trust's Mortgage Note Lender and Term Loan Lender have agreed to extend
         the maturity date of the loans twice, first for a period of one year
         through December 15, 1996, and second for a period of 18 months through
         June 15, 1998. Following the June 15, 1998 maturity date, the Mortgage
         Note Lender granted three six-month forbearance arrangements (most
         recently through December 15, 1999) wherein it agreed not to exercise
         remedies for non-repayment of the outstanding principal balance. The
         Term Loan Lender has granted three six-month extensions of its maturity
         date so as to coincide with such forbearance periods. These forbearance
         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.

         In consideration for the extension of the forbearance agreement
         relating to the Mortgage Note through December 15, 1999, the Trust paid
         an extension fee of $25,000. In consideration for the extension of the
         maturity date of the Term Loan through December 15, 1999, the Trust
         agreed to pay an extension fee of $15,700.


                                       11

<PAGE>   12
                             EQK REALTY INVESTORS I

                         NOTES TO FINANCIAL STATEMENTS


         As discussed above, the Trust's expiration date of its forbearance and
         extension arrangements is December 15, 1999. The potential inability of
         the Trust to refinance this debt or to generate sufficient proceeds
         from the sale of the Mall to repay the debt raises substantial doubt
         about the Trust's ability to continue as a going concern. In the event
         the Trust is unable to complete the disposition of the Mall prior to
         December 15, 1999, Management will propose to its lenders that further
         forbearance and extension arrangements be granted. However, no
         assurances can be given that the lenders will grant such relief. The
         financial statements do not include any adjustments that might result
         from the outcome of this uncertainty.

NOTE 6:  SUBSEQUENT EVENT

         On July 1, 1999 the Registration Statement relating to the ART
         Preferred Shares that would be issued upon a closing pursuant to the
         Revised Merger Agreement was declared effective by the SEC.

         The Annual Meeting convened on August 3, 1999 to consider and vote on
         the Proposals discussed in Note 1. The Meeting has been adjourned to
         Thursday August 26, 1999.

                                       12

<PAGE>   13

                             EQK REALTY INVESTORS I

                 MANAGEMENT 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

As of June 30, 1999, the Trust's remaining real estate investment is Harrisburg
East Mall (the "Mall"), a regional shopping center located in Harrisburg,
Pennsylvania. During the period 1992 to 1995, the Trust completed the
disposition of its two other real estate investments. Castleton Park, an office
park in Indianapolis, Indiana was sold in 1995, and Peachtree Dunwoody Pavilion,
an office park in Atlanta, Georgia, was sold in three separate transactions
during 1992 and 1993.

Management intends to dispose of its remaining real estate investment, the Mall,
as soon as commercially practicable. Recognizing that the disposition of the
Mall would not be completed prior to the June 15, 1999 expiration date of its
forbearance and extension agreements, Management proposed to its lenders that
further forbearance and extension arrangements be granted and the lenders
granted such relief through December 15, 1999.

The Declaration of Trust provides for the Trust's existence and a maximum
holding period for its real estate investments of 14 years. The Declaration of
Trust further provides that this 14 year term may be extended by up to two years
upon the recommendation of the Trustees and the affirmative vote of a majority
of its shareholders. Recognizing that the disposition of the Mall would not be
completed prior to the initial maturity date of the Trust's term (March 5,
1999), the Board of Trustees recommended a two-year extension of the Trust's
life (through March 5, 2001). This recommendation was approved by the
shareholders at a Special Meeting of Shareholders held on February 23, 1999.

Proposed Merger with American Realty Trust

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, an extension of the life of the Trust through December 31, 2018.


                                       13
<PAGE>   14
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


The Merger Agreement was amended on August 25, 1998 (as further amended on
April 22, 1999 and June 4, 1999, the "Revised Merger Agreement") to provide for,
among other matters, for the right of the Trust to sell the Mall and distribute
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.

An Annual Meeting of Shareholders (the "Annual Meeting") convened on August 3,
1999 to consider and vote upon (1) the Revised Merger Agreement (the "Merger
Proposal"), (2) an amendment and restatement of EQK's Amended and Restated
Declaration of Trust (the "Declaration Amendment Proposal"), (3) the termination
of EQK's advisory agreement with Lend Lease Portfolio Management, Inc. and the
execution by EQK of a new advisory agreement with Basic Capital Management Inc.,
an affiliate of ART, as advisor (the "New Advisory Agreement Proposal"), and (4)
the election of the Board of Trustees of EQK (the "Board of Election Proposal"
and, together with the Merger Proposal, the Declaration Amendment Proposal, and
the New Advisory Agreement Proposal, the "Proposals"). The Annual Meeting was
adjourned until August 26, 1999.

The affirmative vote of holders of 75% of the outstanding shares of EQK
("Requisite Shareholder Approval") is required for the approval of the Merger
Proposal, the Declaration Amendment Proposal and the New Advisory Agreement
Proposal (collectively, the "Merger Related Proposals"). None of the Merger
Related Proposals will take effect unless all such proposals receive Requisite
Shareholder Approval.

The Merger consideration will be comprised entirely of ART Series F Cumulative
Convertible Preferred Stock with a par value of $2.00 per share and a
liquidation value of $10.00 per share. ("ART Preferred Shares"). The Merger will
be effected by (i) ART's acquisition of up to 4,376,056 shares currently held by
four EQK shareholders including LLPM, Summit Venture L.P. ("Summit"), Sutter
Opportunity Fund LLC ("Sutter"), and Maurice A. Halperin ("Halperin"), (the
"Selling Shareholders") pursuant to the terms of separate stock purchase
agreements (each a "Stock Purchase Agreement" and collectively, the "Block
Purchase"), and (ii) ART's receipt of 673,976 shares newly issued by the Trust
(the "ART Merger Consideration" which, together with shares currently
outstanding, constitutes "EQK Shares"), the combined effect of which will give
ART up to an approximate 49% interest in EQK.

The number of EQK Shares acquired by ART and the number of EQK Shares issued to
ART may be adjusted if, due to certain circumstances, less than all of the
Selling Shareholders complete their transaction with ART. The Selling
Shareholders will receive for each EQK Share sold 0.030 of an ART Preferred
Share with a corresponding liquidation value of $0.30 per EQK Share sold. The
remaining shareholders (the "Public EQK Shareholders") will be entitled to
retain their Shares at the time of the Merger, but will be compensated for the
dilution in their percentage ownership interest through the receipt of 0.014 of
an ART Preferred Share with a corresponding liquidation value of $0.14 per EQK
Share held. In addition, ART currently intends (but is not legally obligated) to
acquire the remaining EQK


                                       14

<PAGE>   15
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Shares from such other Public EQK Shareholders at some time after the third
anniversary of the consummation of the Merger for not less than 0.0486 of an ART
Preferred Share with a liquidation value of $0.486 for each EQK Share tendered.

At this time, Halperin has not agreed to sell his EQK Shares to ART. If Halperin
does not agree to sell such shares to ART prior to the Merger, and the
Merger-Related Proposals receive the Requisite Shareholder Approval, Halperin
will be entitled to receive the same EQK Merger Consideration per share as the
consideration to be paid to the other Public EQK Shareholders and ART will be
entitled to receive the ART Merger Consideration without modification. Upon
consummation of the Block Purchase (excluding Haplerin's EQK Shares) and the
Merger, ART would own not more than 41% of the issued and outstanding EQK Shares
and the Public EQK Shareholders (including Halperin) will have effectively
"sold" approximately 4.15% of their EQK Shares to ART.

If Summit and Sutter elect to terminate their respective Stock Purchase
Agreements (which termination could occur subsequent to the Annual Meeting) and
ART determines to proceed with the closing of the Merger, Summit and Sutter
would be entitled to receive the same EQK Merger Consideration per share as the
other Public EQK Shareholders and ART will be entitled to receive the ART Merger
Consideration per share as the other Public EQK Shareholders without
modification. In such event, ART would own not more than 23% of the issued and
outstanding EQK Shares and the Public EQK Shareholders (including Halperin,
Summit, and Sutter) will have effectively "sold" approximately 5.4% of their EQK
Shares to ART.

Upon completion of the sale of the Mall and receipt of Requisite Shareholder
Approval, for the Merger Related Proposals, the Merger would be completed.
Immediately prior to the closing of the Merger, ART will convey one of its
properties to the Trust. The total consideration paid by the Trust to ART for
this property will be a $1,250,000 non-recourse five-year promissory note. The
Trust will also assume approximately $1,498,000 of existing debt.

ART has agreed to permit the Trust to continue to solicit, or respond to, offers
from third parties for the Trust. In the event the Trust accepts an offer from a
party other than ART and elects not to proceed with the Merger, the Trust
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 is currently terminable by either ART or the Trust
if the Merger has not been accomplished by October 29, 1999. The Revised Merger
Agreement also may be terminated by the Trust if (i) the Trust secures a more
favorable offer from another party subject to the payment of the Break-Up
Consideration; or (ii) the Revised Merger Agreement in any way impairs or delays
the sale of the Mall, or is likely to result in a material reduction in
proceeds.

                                       15

<PAGE>   16
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Proceeds from the sale of the Mall and, if applicable, the completion of the
Merger, will be distributed to the shareholders of the Trust in one or more
payments once the Trust's liabilities have been settled (including retirements
of its Mortgage Note and Term Loan) and related transaction costs have been
paid.

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. Management of the Trust is 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.

Harrisburg East Mall Disposition Plan

Management commenced marketing and sales activities relating to the Mall during
the second quarter of 1998, which included the retention of an outside broker.
Since the commencement of sales activities, changing conditions in the capital
markets have had an adverse effect on the real estate market, and especially on
the market for regional shopping 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.

As previously announced, on March 5, 1999, the Trust entered into a non-binding
letter of intent to sell the Mall to a private real estate group (the
"Prospective Purchaser") for $51 million. Closing was subject to a number of
conditions, including the satisfactory completion of due diligence, the
Prospective Purchaser's obtaining financing and the execution of a definitive
purchase and sale agreement. The Letter of Intent provided for an exclusivity
period, which expired May 15, 1999, during which time the Trust could not
solicit, negotiate, or execute other offers for the sale of the Mall. There is
substantial doubt that the Trust will be able to close any transaction with the
Prospective Purchaser based upon certain terms that the Prospective Purchaser
has proposed. As a result, the Trust has commenced additional marketing
activities relating to the sale of the Mall.

The Trust understands that two of its former officers are affiliated with a
company that has entered into a relationship with the Prospective Purchaser in
connection with this transaction.

Mortgage Debt Extensions

The Trust's debt instruments (aggregate principal outstanding of $45,366,000)
had original maturity dates of December 15, 1995. The Trust's Mortgage Note
Lender and Term Loan Lender have agreed to extend the maturity date of the loans
twice, first for a period of one year through December 15, 1996, and second for
a period of 18 months through June 15, 1998. Following the June 15, 1998
maturity date, the Mortgage Note Lender granted three six-month forbearance
arrangements (most recently through


                                       16
<PAGE>   17
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


December 15, 1999) wherein it agreed not to exercise remedies for non-repayment
of the outstanding principal balance. The Term Loan Lender has granted three
six-month extensions of its maturity date so as to coincide with such
forbearance periods. These 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.

In consideration for the extension of the forbearance agreement relating to the
Mortgage Note through December 15, 1999, the Trust paid an extension fee of
$25,000. In consideration for the extension of the maturity date of the Term
Loan through December 15, 1999, the Trust agreed to pay an extension fee of
$15,700.

As discussed above, the Trust's expiration date of its forbearance and extension
arrangements is December 15, 1999. The potential inability of the Trust to
refinance this debt or to generate sufficient proceeds from the sale of the Mall
to repay the debt raises substantial doubt about the Trust's ability to continue
as a going concern. Given the uncertainty surrounding the timing of the
disposition of the Mall, Management will propose to its lenders that further
forbearance and extension arrangements be granted. However, no assurances can be
given that the lenders will grant such relief. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Liquidity

General

Cash flows provided by operating activities for the six month period ended June
30, 1999 and June 30, 1998 were $135,000 and $312,000, respectively,
representing a decrease of $177,000 over the prior year period. Although income
from operations increased over the prior year (as discussed in "Results of
Operations"), this increase was offset by the timing of payment of certain
recurring operating expenses. Further, the Trust received certain reimbursements
from ART in accordance with the Revised Merger Agreement during the first half
of 1998.

Cash flows used in investing activities during the six months ended June 30,
1999 ($132,000) and June 30, 1998 ($270,000) were for routine capital
expenditures at the Mall. The Trust anticipates capital expenditures of
approximately $1,623,000 for the remainder of 1999, which is primarily comprised
of forecasted tenant allowances of $1,355,000.


                                       17
<PAGE>   18
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


For the six months ended June 30, 1999 cash flows used in financing activities
were $33,000 which represents payments made for extension fees to the Mortgage
Note Lender ($25,000) and principal payments on the Trust's Term Loan ($8,000).
Cash flows used in financing activities for the six months ended June 30, 1998
represents payments made for extension fees to the Mortgage Note Lender
($273,000) and the Term Loan Lender ($88,000) as well as principal payments on
the Term Loan ($3,000). The Mortgage Note requires monthly payments of interest
only.

The Trust's liquidity requirements for the remainder of 1999 also will include
principal and interest payments of approximately $2,015,000 through December 15,
1999, pursuant to the existing loan and forbearance agreements. The forbearance
and extension agreements specify that the remaining loan balances of $45,366,000
be paid in full by December 15, 1999. In the event the sale of the Mall is not
completed by December 15, 1999, Management will propose to its lenders that
further forbearance and extensions be granted. However, no assurance can be
given that the lenders will grant such relief.

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 Mortgage
Note Lender. The Trust believes that its cash flow for 1999 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 intends to sell the Mall and, therefore, has classified its real
estate as held for sale at April 1, 1998. Accordingly, the investment in real
estate, including deferred leasing costs, is recorded at the lower of cost or
estimated fair market value, less estimated costs to sell. Depreciation is not
recorded for real estate assets held for sale. Therefore, the Trust discontinued
recording depreciation and amortization of real estate assets on April 1, 1998.
The depreciation expense recorded in the second quarter of 1999 represents the
write off of a non-recoverable tenant allowance.

The Trust has not written up the cost basis of its investment in the Mall to its
substantially higher fair value. Therefore, the Trust does not believe that its
deficit in shareholders' equity of $4,443,000 at June 30, 1999 is indicative of
its current liquidity or the net distribution that its shareholders would
receive upon liquidation.


                                       18
<PAGE>   19
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


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 continues to communicate with its third
party service vendors to assess Y2K compliance status and the adequacy of Y2K
efforts.

The Mall has been assessed in an effort to identify critical Y2K issues.
Remediation efforts are expected to be complete by September 30, 1999. The
remediation strategy has been developed based on the assessment findings.

The Trust and the Mall have incurred costs to date relating to Y2K of
approximately $18,600, which is comprised of total assessment cost of
approximately $15,200 and total cost for quality assurance for third party
engineers and consultants of approximately $3,400. Estimated remediation costs
of $30,500 are expected to be incurred to remediate and test non-compliant
building systems.

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, Trust contingency plans are expected to be completed by
September 30, 1999.

A building contingency plan has been developed. A contingency plan may involve
the engagement of additional security services, implementation of temporary
systems modifications, and the identification and engagement of alternative
service vendors. Additional contingency plans may be developed as circumstances
warrant.


                                       19

<PAGE>   20
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Results of Operations

For the six months ended June 30, 1999, the Trust reported net income of
$389,000 ($.04 per share) compared to a net loss of $480,000 ($.05 per share)
for the six months ended June 30, 1998. For the three months ended June 30,
1999, the Trust reported net income of $42,000 ($.00 per share) while the three
months ended June 30, 1998 reported a net loss of $145,000 ($.02 per share).

The Trust's revenue from rental operations for the three and six months ended
June 30, 1999 was $1,519,000 and $3,131,000, respectively, representing an
increase of $182,000 for the quarter and $241,000 for the six month period as
compared to the prior periods presented. The second quarter variance is
attributable to a higher reimbursement ratio for utility income, a non-recurring
billing adjustment for one of the Mall's department stores and a higher level of
percentage rental income for certain food court tenants. The remaining portion
of the second quarter variance is attributable to several other increases in
income, none of which are considered individually material. The six month
variance is a result of the quarterly variances described above as well as the
Trust recognizing income from a bankruptcy settlement and income received from
the Pennsylvania Department of Transportation for its purchase of a 0.8 acre
remote land parcel owned by the Trust.

The Trust's operating expenses for the three and six months ended June 30, 1999
were $336,000 and $469,000, respectively, representing an increase of $55,000
for the second quarter and $30,000 for the six month period as compared to the
prior year periods presented. The three month and the six month period variances
are comprised of several operating expense variances, none of which are
considered significant.

The decrease in the depreciation and amortization expense between periods is
primarily due the cessation of depreciation and amortization expense relating to
the real estate investment and deferred leasing costs. The Trust's depreciation
expense for the current year represents the write off a non-recoverable tenant
allowance.

Interest expense decreased $72,000 for the current quarter and $153,000 for the
six months ended June 30, 1999 as compared to the prior year periods presented
primarily due to recording the amortization of the extension fees associated
with the 1996 debt extension in the prior year. The majority of the 1996 debt
extension costs were fully amortized in the first half of 1998.


                                       20
<PAGE>   21
                             EQK REALTY INVESTORS I

                 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


The Trust's other expenses for the three and six months ended June 30, 1999 were
$95,000 and $208,000, respectively, representing a decrease of $7,000 for the
second quarter and an increase of $23,000 for the six month period as compared
to the same periods in 1998. The second quarter decrease in expense is comprised
of several expense variances, none of which are considered significant. The six
month period increase in expense of $23,000 is primarily due to the costs
incurred by the Trust for the administration of the Special Meeting of
Shareholders held on February 23, 1999.


                                       21
<PAGE>   22

                             EQK REALTY INVESTORS I

                    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK


A 10% change in the fixed and variable interest rate would not have a material
effect on the Trust's financial statements due to the related terms of its debt
instruments.


                                       22

<PAGE>   23

                             EQK REALTY INVESTORS I
                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         On February 3, 1998, the Trust, its trustees, and its Advisor were
         named as defendants in a purported class action complaint filed by a
         shareholder in Massachusetts State court. The complaint seeks to enjoin
         the Merger and also seeks other relief including unspecified damages.
         Management of the Trust is 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.

Item 2.  Changes in Securities
         None

Item 3.  Defaults Upon Senior Securities
         None

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

         An Annual Meeting of Shareholders (the "Meeting") convened on August 3,
         1999 to consider and vote upon (1) the Revised Merger Agreement, (2) an
         amendment and restatement of EQK's Amended and Restated Declaration of
         Trust, (3) the termination of EQK's advisory agreement with Lend Lease
         Portfolio Management, Inc. and the execution by EQK of a new advisory
         agreement with Basic Capital Management Inc., an affiliate of ART, as
         advisor, and (4) the election of the Board of Trustees of EQK. The
         Meeting has been adjourned to Thursday August 26, 1999.

Item 5.  Other Information
         None

Item 6.  Exhibits and Reports on Form 8-K
         (a)  Exhibits:
              2.  None
              4.  None
              10. Material Contracts
                  (1)      Agreement between EQK Realty Investors I and
                           Prudential Insurance Company of America dated
                           June 14, 1999
                  (2)      Fifth Amendment to Second Amended and Restated Loan
                           Agreement from PNC Bank National Association dated
                           June 15, 1999
                  (3)      Sixth Amended and Restated Note from PNC Bank
                           Association dated June 15, 1999
                  (4)      Mutual Estoppel and Modification Agreement dated June
                           15, 1999 between the Registrant and the Prudential
                           Insurance Company of America and PNC Bank National
                           Association
                  (5)      Disclosure for Confession of Judgment from PNC Bank
                           National Association dated June 15, 1999
                  (6)      EQK Realty Investors I Incumbency Certificate dated
                           June 15, 1999.
                  (7)      First Amendment to Amended and Restated Agreement and
                           Plan of Merger 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)

                                       23

<PAGE>   24

              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 (for SEC use only)

         (b)  Reports on  Form 8-K
              None

(a)      Incorporated herein by reference to exhibit filed with Registration
         Statement on July 1, 1999 on Amendment #7 to form S-4 filed by American
         Realty Trust, Inc. (Registration Statement Number 333-43777)


                                       24
<PAGE>   25

                                   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:  August 13, 1999              EQK REALTY INVESTORS I


                               By:  /s/Samuel F. Hatcher
                                    -------------------------------------------
                                    Samuel F. Hatcher
                                    President (Principal Executive Officer)
                                    and Trustee

                               By:   /s/Don Henry
                                    -------------------------------------------
                                    Don Henry
                                    Vice President (Principal Financial Officer)
                                    and Controller



                                       25