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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549-1004



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the period ended September 30, 2004



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission File Number 0-12538



First Capital Institutional Real Estate, Ltd.1

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-2197264                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|Two North Riverside Plaza, Suite 700, Chicago, Illinois        |  | 60606-2607                          
|(Address of principal executive offices)                       |  | (Zip Code)                          

|                                                                                  
|----------------------------------------------------------------------------------
|                                                                                  
|(312) 207-0020                                                                    
|(Registrants telephone number, including area code)                              
|                                                                                  
|Not applicable                                                                    
|(Former name, former address and former fiscal year, if changed since last report)



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



Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes   ̈        No  x



Documents incorporated by reference:



The First Amended and Restated Certificate and Agreement of Limited Partnership filed as Exhibit A to
the definitive Prospectus dated October 25, 1982, included in the Registrants Registration Statement on Form S-11 (Registration No. 2-79092), is incorporated herein by reference in Part I of this report.



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PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



BALANCE SHEETS

(All dollars rounded to nearest 00s)



|                                                            |  |                              |           |                  |   |          
|----------------------------------------------------------- |  | ---------------------------- | --------- | ---------------- | - | ---------
|                                                            |  | September 30,2004(Unaudited) |           | December 31,2003
|                                                           
|                                                            |  |                             
|ASSETS                                                      |  |                              |           |                  |   |          
|Cash and cash equivalents                                   |  | $                            | 3,990,500 |                  | $ | 4,023,300
|Other assets                                                |  |                              | 4,700     |                  |   | 3,300    
|                                                           
|                                                            |  | $                            | 3,995,200 |                  | $ | 4,026,600
|                                                           
|                                                            | 
|LIABILITIES AND PARTNERS' CAPITAL                           |  |                              |          
|Liabilities:                                                |  |                              |           |                  |   |          
|Accounts payable and accrued expenses                       |  | $                            | 62,700    |                  | $ | 39,700   
|Other liabilities                                           |  |                              | 2,200     |                  |   | 2,200    
|                                                           
|                                                            |  |                              | 64,900    |                  |   | 41,900   
|                                                           
|Commitments and contingencies for environmental remediation |  |                              |          |                  |   |         
|Partners capital:                                          |  |                              |           |                  |   |          
|General Partners                                            |  |                              | 613,400   |                  |   | 613,900  
|Limited Partners (60,000 Units issued and outstanding)      |  |                              | 3,316,900 |                  |   | 3,370,800
|                                                           
|                                                            |  |                              | 3,930,300 |                  |   | 3,984,700
|                                                           
|                                                            |  | $                            | 3,995,200 |                  | $ | 4,026,600
|                                                           

STATEMENT OF PARTNERS' CAPITAL



For the nine months ended September 30, 2004 (Unaudited)

(All
dollars rounded to nearest 00s)



|                                                        |  |                 |         |   |                 |   |           |       |  |   |           |  
|------------------------------------------------------- |  | --------------- | ------- | - | --------------- | - | --------- | ----- |  | - | --------- | -
|                                                        |  | GeneralPartners |         |   | LimitedPartners |   |           | Total | 
|                                                        | 
|Partners capital, January 1, 2004                      |  | $               | 613,900 |   |                 | $ | 3,370,800 |       |  | $ | 3,984,700 |  
|Net (loss) for the nine months ended September 30, 2004 |  |                 | (500    | ) |                 |   | (53,900   | )     |  |   | (54,400   | )
|                                                        | 
|Partners capital, September 30, 2004                   |  | $               | 613,400 |   |                 | $ | 3,316,900 |       |  | $ | 3,930,300 |  
|                                                        | 



2

The accompanying notes are
an integral part of the financial statements.



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STATEMENTS OF INCOME AND EXPENSES

For
the quarters ended September 30, 2004 and 2003

(Unaudited)

(All dollars rounded
to nearest 00s

except per Unit amounts)



|                                                                             |  |      |         |   |      |   |         |  
|---------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                             |  | 2004 |         |   | 2003 |  
|                                                                             | 
|Income:                                                                      |  |      |         |   |      |   |         |  
|Interest                                                                     |  | $    | 13,100  |   |      | $ | 9,500   |  
|                                                                             | 
|                                                                             |  |      | 13,100  |   |      |   | 9,500   |  
|                                                                             | 
|Expenses:                                                                    |  |      |         |   |      |   |         |  
|General and administrative:                                                  |  |      |         |   |      |   |         |  
|Affiliates                                                                   |  |      | 2,500   |   |      |   | 2,500   |  
|Nonaffiliates                                                                |  |      | 28,200  |   |      |   | 23,900  |  
|                                                                             | 
|                                                                             |  |      | 30,700  |   |      |   | 26,400  |  
|                                                                             | 
|Net (loss)                                                                   |  | $    | (17,600 | ) |      | $ | (16,900 | )
|                                                                             | 
|Net (loss) allocated to General Partners                                     |  | $    | (100    | ) |      | $ | (200    | )
|                                                                             | 
|Net (loss) allocated to Limited Partners                                     |  | $    | (17,500 | ) |      | $ | (16,700 | )
|                                                                             | 
|Net (loss) allocated to Limited Partners per Unit (60,000 Units outstanding) |  | $    | (0.29   | ) |      | $ | (0.28   | )
|                                                                             | 



STATEMENTS OF INCOME AND EXPENSES

For the nine months ended September 30, 2004 and 2003

(Unaudited)

(All dollars rounded to nearest 00s

except per Unit amounts)



|                                                                             |  |      |         |   |      |   |         |  
|---------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                             |  | 2004 |         |   | 2003 |  
|                                                                             | 
|Income:                                                                      |  |      |         |   |      |   |         |  
|Interest                                                                     |  | $    | 32,000  |   |      | $ | 33,500  |  
|Other                                                                        |  |      | 1,000   |   |      |   |        |  
|                                                                             | 
|                                                                             |  |      | 33,000  |   |      |   | 33,500  |  
|                                                                             | 
|Expenses:                                                                    |  |      |         |   |      |   |         |  
|General and administrative:                                                  |  |      |         |   |      |   |         |  
|Affiliates                                                                   |  |      | 7,300   |   |      |   | 7,300   |  
|Nonaffiliates                                                                |  |      | 80,100  |   |      |   | 72,500  |  
|                                                                             | 
|                                                                             |  |      | 87,400  |   |      |   | 79,800  |  
|                                                                             | 
|Net (loss)                                                                   |  | $    | (54,400 | ) |      | $ | (46,300 | )
|                                                                             | 
|Net (loss) allocated to General Partners                                     |  | $    | (500    | ) |      | $ | (500    | )
|                                                                             | 
|Net (loss) allocated to Limited Partners                                     |  | $    | (53,900 | ) |      | $ | (45,800 | )
|                                                                             | 
|Net (loss) allocated to Limited Partners per Unit (60,000 Units outstanding) |  | $    | (0.90   | ) |      | $ | (0.76   | )
|                                                                             | 



STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2004 and 2003

(Unaudited)

(All dollars rounded to nearest 00s)



|                                                                                |  |      |           |   |      |   |           |  
|------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                                                |  | 2004 |           |   | 2003 |  
|                                                                                | 
|Cash flows from operating activities:                                           |  |      |           |   |      |   |           |  
|Net (loss)                                                                      |  | $    | (54,400   | ) |      | $ | (46,300   | )
|Adjustments to reconcile net (loss) to net cash (used in) operating activities: |  |      |           |   |      |   |           |  
|Changes in assets and liabilities:                                              |  |      |           |   |      |   |           |  
|(Increase) decrease in other assets                                             |  |      | (1,400    | ) |      |   | 1,700     |  
|Increase in accounts payable and accrued expenses                               |  |      | 23,000    |   |      |   | 8,500     |  
|(Decrease) in other liabilities                                                 |  |      |          |   |      |   | (2,800    | )
|                                                                                | 
|Cash (used in) operating activities                                             |  |      | (32,800   | ) |      |   | (38,900   | )
|Cash and cash equivalents at the beginning of the period                        |  |      | 4,023,300 |   |      |   | 4,088,700 |  
|                                                                                | 
|Cash and cash equivalents at the end of the period                              |  | $    | 3,990,500 |   |      | $ | 4,049,800 |  
|                                                                                | 



3

The
accompanying notes are an integral part of the financial statements.



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NOTES TO FINANCIAL STATEMENTS

(Unaudited)



1. Summary of significant accounting policies:



Definition of special terms:

Capitalized terms used in this report have the same meaning as those terms in the Partnerships Registration Statement filed with the Securities and Exchange Commission on Form S-11. Definitions of these terms are
contained in Article III of the First Amended and Restated Certificate and Agreement of Limited Partnership, which is included in the Registration Statement and incorporated herein by reference.



Accounting policies:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2004. Reference is made to the Partnerships Annual Report for the year ended December 31, 2003, for a description of other accounting policies and additional details of the Partnerships financial
condition, results of operations, changes in Partners capital and changes in cash balances for the year then ended. The details provided in the notes thereto have not changed except as a result of normal transactions in the interim or as
otherwise disclosed herein.



The Partnership has disposed of its real estate properties
and upon resolution of the environmental matter disclosed in Note 3, the Partnership will make a liquidating distribution and dissolve.



The Partnership utilizes the accrual method of accounting. Under this method, revenues are recorded when earned and expenses are recorded when incurred.



Preparation of the Partnerships financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Cash equivalents are considered all highly liquid investments with a maturity of three months or less when purchased.



The Partnership has one reportable segment as the Partnership is in the disposition phase of its life cycle, wherein it is seeking to resolve
post-closing matters related to the properties sold by the Partnership.



2. Related
party transactions:



In accordance with the Partnership Agreement, subsequent to
March 31, 1983, the Termination of the Offering, the General Partners are entitled to 10% of Cash Flow (as defined by the Partnership Agreement) as their Subordinated Partnership Management Fee, provided that Limited Partners first receive specified
non-cumulative annual rates of return on their Capital Investment.

In accordance with the Partnership Agreement, Net Profits (exclusive of depreciation and Net
Profits from the sale, disposition, or provision for value impairment of Partnership properties) are allocated: first, to the General Partners, in an amount equal to the greater of the General Partners Subordinated Partnership Management Fee
or 1% of such Net Profits; second, the balance, if any, to the Limited Partners. Net Profits from the sale or disposition of a Partnership property are allocated: first, to the General Partners, in an amount equal to the aggregate amount of
depreciation previously allocated to them; second, to the General Partners and the Limited Partners with negative balances in their capital accounts pro rata in proportion to such respective negative balances, to the extent of the total of such
negative balances; third, to the General Partners, in an amount necessary to make the aggregate amount of their capital accounts equal to the greater of the Sale Proceeds to be distributed to the General Partners with respect to the sale or
disposition of such property or 1% of such Net Profits; and fourth, the balance, if any, to the Limited Partners. Net Losses (exclusive of depreciation and Net Losses from the sale, disposition, or provision for value impairment of Partnership
properties) are allocated 1% to the General Partners and 99% to the Limited Partners. All depreciation is allocated 10% to the General Partners and 90% to the Limited Partners. Net Losses from the sale, disposition, or provision for value impairment
of Partnership properties are allocated: first, to the extent that the balance in the General Partners capital accounts exceeds their Capital Investment or the balance in the capital accounts of the Limited Partners exceeds the amount of their
Capital Investment (collectively, the Excess Balances), to the General Partners and the Limited Partners pro rata in proportion to such Excess Balances until such Excess Balances are reduced to zero; second, to the General Partners and
the Limited Partners and among them (in the ratio which their respective capital account balances bear to the aggregate of all capital account balances) until the balance in their capital accounts shall be reduced to zero; third, the balance, if
any, 99% to the Limited Partners and 1% to the General Partners. In all events there shall be allocated to the General Partners not less than 1% of Net Profits and Net Losses from the sale, disposition, or provision for value impairment of a
Partnership property. The General Partners were not entitled to cash distributions for the quarters and nine months ended September 30, 2004 and 2003. For the quarter and nine months ended September 30, 2004, the General Partners were allocated Net
(Losses) of $(100) and $(500), respectively. For the quarter and nine months ended September 30, 2003, the General Partners were allocated Net (Losses) of $(200) and $(500), respectively.



Fees and reimbursements paid and payable by the Partnership to Affiliates during the quarter and nine
months ended September 30, 2004 were as follows:



|                                    |  |         |       |            |   |         |  |   |     
|----------------------------------- |  | ------- | ----- | ---------- | - | ------- |  | - | ----
|                                    |  | Paid    |       |           
|                                    |  | Quarter |       | NineMonths |   | Payable
|                                    |  |         |       |            |   |         |  |   |     
|Reimbursement of expenses, at cost: |  |         |       |            |   |         |  |   |     
|Accounting                         |  | $       | 2,500 |            | $ | 7,300   |  | $ | None
|                                    |  |         |       |            |   |         |  |   |     



4



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3. Environmental matter



In 1996, the Managing General Partner became aware of the existence of hazardous substances in the
soil and groundwater under Lakewood Square Shopping Center (Lakewood). In connection with the 1997 sale of Lakewood, the purchaser assumed the obligation to remedy the hazardous substances in the manner required by law, which includes,
but is not limited to, payment of all costs in connection with the remediation work. In addition, the purchaser provided the Partnership with certain indemnification protection in relation to clean-up costs and related expenses arising from the
presence of these hazardous substances. At the present time, the Managing General Partner is unaware of any claims or other matters referred to above against the Partnership. The purchaser completed the initial stage of the Remediation Action Plan
which was approved by the Los Angeles Regional Water Quality Control Board. A successor owner continues to monitor the groundwater but is not at this time pursuing an active remediation program. There can be no assurance as to the timing of the
completion of the remediation process. The Managing General Partner continues to monitor the documentation delivered regarding activities to remedy the hazardous substances at Lakewood.



5



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Reference is
made to the Partnerships Annual Report for the year ended December 31, 2003 for a discussion of the Partnerships business.



Certain statements in the Report on Form 10-Q may constitute forward-looking statements as defined in Section 27A of the Securities Act of 1933 (the Securities
Act), Section 21E of the Securities Exchange Act of 1934 (the Exchange Act), the Private Securities Litigation Reform Act of 1995 (the PSLRA) or in releases made by the SEC, all as may be amended from time to time. Such
forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Partnership, or industry results, to differ materially from any future
results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward looking statements can be identified by, among other things, the use of
forward-looking language, such as the words plan, believe, expect, anticipate, intend, estimate, project, may, will, would,
could, should, seeks, or scheduled to, or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions.
These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the safe harbor provisions of such laws. The Partnership cautions investors that
any forward-looking statements made by the Partnership are not guarantees or indicative of future performance. Important assumptions and other important factors could cause actual results to differ materially from those forward-looking statements
with respect to the Partnership. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.



Although the Partnership believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are
reasonable, actual results could differ materially from a projection or assumption in any of its forward-looking statements. The Partnerships future financial condition and results of operations, as well as any forward-looking statements, are
made only as of the date hereof and the partnership does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by
law.



The Partnership has substantially completed the disposition phase of its life
cycle. The Partnership has sold its remaining property investments and is working toward resolution of post-closing property sale matters.

Operations

Net (loss) changed from $(16,900) and $(46,300) for the quarter and nine months ended September 30, 2003 to $(17,600) and $(54,400) for the quarter and nine
months ended September 30, 2004. The change was primarily due to an increase in the costs related to investor services.



Liquidity and Capital Resources

The decrease in the Partnerships cash position of
$(32,800) for the nine months ended September 30, 2004 was the result of net cash used in operating activities. Liquid assets (including cash and cash equivalents) of the Partnership as of September 30, 2004 were comprised of amounts reserved for
the Lakewood Square Shopping Center (Lakewood) (sold in 1997) environmental matter (as hereafter discussed) and Partnership liquidation expenses.



Net cash (used in) operating activities changed from $(38,900) for the nine months ended September 30, 2003 to $(32,800) for the nine months ended September 30, 2004. The
increase was primarily due to the increase in outstanding obligations at September 30, 2004 partially offset by the increase in net (loss) as previously discussed.



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



As described in Note 3 of the Notes to Financial Statements, the Partnership is awaiting resolution of
an environmental matter at Lakewood. The Managing General Partner is continuing to monitor the documentation delivered regarding the activities to remedy the hazardous substances at Lakewood. There can be no assurance as to the actual timeframe for
the remediation or that it will be completed without cost to the Partnership. As a result of this, it will be necessary for the Partnership to remain in existence and maintain a reserve for such costs. When the environmental matter at Lakewood is
remediated to the satisfaction of the Partnership, Limited Partners will receive a final liquidating distribution of the remaining cash held by the Partnership, less amounts reserved for administrative expenses and any amounts deemed necessary to
resolve, or provide for, any post-closing matters.



6



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ITEM 4. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures

The principal executive officer of the
Managing General Partner, Donald J. Liebentritt, and the principal financial officer of the Managing General Partner, Philip Tinkler, have evaluated the effectiveness of the Partnerships disclosure controls and procedures, as required by Rule
13A-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act). Based upon the results of that evaluation, these executive officers have concluded that as of the end of the period covered by this quarterly report,
the Partnerships disclosure controls and procedures were effective in all material respects to ensure that the information required to be disclosed by the Partnership in reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SECs rules and forms.



The Partnership also maintains a system of internal control over financial reporting (as defined in Rules 13A-15(f) and 15d-15(f)) designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. During the most recent fiscal quarter, there have been no changes in internal control over financial
reporting that occurred that have materially affected or are reasonably likely to materially affect internal control over financial reporting.

The executive officers
of the Managing General Partner do not expect that the Partnerships disclosure controls and procedures or internal controls and procedure will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect that fact that there are resource constraints, and the benefits of control must be considered
relative to their costs. Because of the inherent limitation in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Partnership have been detected. These
inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, control can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitation in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



7



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PART II. OTHER INFORMATION



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) | Exhibits:
|--- | ---------



31.1:
Certification of Principal Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).



31.2: Certification of Principal Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).



32: Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).



|(b) | Reports on Form 8-K:
|--- | --------------------



There were no reports filed on Form 8-K for the quarter ended September 30, 2004.



8



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.



| |  |                                                 |  |                                                         
| |  | ----------------------------------------------- |  | --------------------------------------------------------
| |  | FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.1
| |  |                                                
| |  | By:                                             |  | FIRST CAPITAL FINANCIAL, L.L.C. MANAGING GENERAL
PARTNER

|                        |  |     |  |                                                            
|----------------------- |  | --- |  | -----------------------------------------------------------
|                        |  |    
|Date: November 12, 2004 |  | By: |  | /s/    DONALD J. LIEBENTRITT                               
|                        |  |     |  | DONALD J. LIEBENTRITT President and Chief Executive Officer

|                        |  |     |  |                                                    
|----------------------- |  | --- |  | ---------------------------------------------------
|                        |  |    
|Date: November 12, 2004 |  | By: |  | /s/    PHILIP TINKLER                              
|                        |  |     |  | PHILIP TINKLER Vice
PresidentFinance and Treasurer



9