<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                         Washington, D.C.  20549-1004


                                   FORM 10-Q


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

     For the period ended              September 30, 1995
                                  ------------------------------

                                   OR

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

     For the transition period from ------------------ to -------------------

     Commission File Number:                     0-15632
                            -------------------------------------------------
 


               First Capital Institutional Real Estate, Ltd. - 4
-----------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

     Illinois                                                       36-3441345
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

Two North Riverside Plaza, Suite 950, 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
                                       ---
Documents incorporated by reference:

The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated November 5, 1986,
included in the Partnership's Registration Statement on Form S-11, is
incorporated herein by reference in Part I of this report.

<PAGE>
 
BALANCE SHEETS
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                     September 30,
                                                         1995      December 31,
                                                      (Unaudited)      1994
-------------------------------------------------------------------------------
<S>                                                  <C>           <C>
ASSETS
Investment in commercial rental properties:
 Land                                                 $ 5,550,400  $ 5,550,400
 Buildings and improvements                            39,981,800   39,760,400
-------------------------------------------------------------------------------
                                                       45,532,200   45,310,800
Accumulated depreciation and amortization              (8,753,600)  (7,703,200)
-------------------------------------------------------------------------------
 Total investment properties, net of accumulated
  depreciation and amortization                        36,778,600   37,607,600
Cash and cash equivalents                               4,904,300    4,142,100
Restricted certificates of deposit                         62,500       62,500
Rents receivable                                          155,400      298,100
Other assets                                               59,000       65,000
-------------------------------------------------------------------------------
                                                      $41,959,800  $42,175,300
-------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Loan payable to General Partner                      $ 4,085,700  $ 3,911,700
 Accounts payable and accrued expenses                    747,000      661,700
 Due to Affiliates                                        194,400      150,800
 Security deposits                                         89,500      101,100
 Distributions payable                                    723,500      678,100
 Other liabilities                                         73,000       79,200
-------------------------------------------------------------------------------
                                                        5,913,100    5,582,600
-------------------------------------------------------------------------------
Partners' (deficit) capital:
 General Partner                                         (246,300)    (246,300)
 Limited Partners (750,000 Units authorized, 593,025
  issued and outstanding)                              36,293,000   36,839,000
-------------------------------------------------------------------------------
                                                       36,046,700   36,592,700
-------------------------------------------------------------------------------
                                                      $41,959,800  $42,175,300
-------------------------------------------------------------------------------
</TABLE>
 
STATEMENTS OF PARTNERS' CAPITAL
For the nine months ended September 30, 1995
and the year ended December 31, 1994
(Unaudited)
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                            General     Limited
                                            Partner    Partners       Total
-------------------------------------------------------------------------------
<S>                                        <C>        <C>          <C>
Partners' (deficit) capital,
 January 1, 1994                           $(240,800) $39,399,500  $39,158,700
Net income for the year ended December
 31, 1994                                    168,500    1,080,700    1,249,200
Distributions for the year ended December
 31, 1994                                   (174,000)  (3,641,200)  (3,815,200)
-------------------------------------------------------------------------------
Partners' (deficit) capital,
 December 31, 1994                          (246,300)  36,839,000   36,592,700
Net income for the nine months ended
 September 30, 1995                          130,500    1,144,100    1,274,600
Distributions for the nine months ended
 September 30, 1995                         (130,500)  (1,690,100)  (1,820,600)
-------------------------------------------------------------------------------
Partners' (deficit) capital,
 September 30, 1995                        $(246,300) $36,293,000  $36,046,700
-------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                                                               2
<PAGE>
 
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
 
<TABLE>
<CAPTION>
                                                      1995       1994
------------------------------------------------------------------------
<S>                                                <C>        <C>
Income:
 Rental                                            $1,268,500 $1,445,600
 Interest                                              72,200     60,000
------------------------------------------------------------------------
                                                    1,340,700  1,505,600
------------------------------------------------------------------------
Expenses:
 Interest on loan payable to General Partner           88,700     93,600
 Depreciation and amortization                        350,400    353,300
 Property operating:
  Affiliates                                           97,600     84,900
  Nonaffiliates                                       154,500    174,000
 Real estate taxes                                    161,800    137,200
 Insurance--Affiliate                                  14,500     16,400
 Repairs and maintenance                              128,100    120,100
 General and administrative:
  Affiliates                                           17,200      8,500
  Nonaffiliates                                        22,900     36,300
------------------------------------------------------------------------
                                                    1,035,700  1,024,300
------------------------------------------------------------------------
Net income                                         $  305,000 $  481,300
------------------------------------------------------------------------
Net income allocated to General Partner            $   43,500 $   46,800
------------------------------------------------------------------------
Net income allocated to Limited Partners           $  261,500 $  434,500
------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
 (593,025 Units issued and outstanding)            $     0.44 $     0.73
------------------------------------------------------------------------
</TABLE>
 
STATEMENTS OF INCOME AND EXPENSES
For the nine months ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
 
<TABLE>
<CAPTION>
                                                      1995       1994
------------------------------------------------------------------------
<S>                                                <C>        <C>
Income:
 Rental                                            $4,107,700 $4,501,800
 Interest                                             196,700    119,300
------------------------------------------------------------------------
                                                    4,304,400  4,621,100
------------------------------------------------------------------------
Expenses:
 Interest on loan payable to General Partner          261,000    276,700
 Depreciation and amortization                      1,051,000  1,134,200
 Property operating:
  Affiliates                                          274,800    286,100
  Nonaffiliates                                       440,300    538,900
 Real estate taxes                                    451,300    480,500
 Insurance--Affiliate                                  43,700     53,400
 Repairs and maintenance                              362,200    416,600
 General and administrative:
  Affiliates                                           33,700     27,000
  Nonaffiliates                                       111,800    106,000
 Loss on sale of property                                         48,700
------------------------------------------------------------------------
                                                    3,029,800  3,368,100
------------------------------------------------------------------------
Net income                                         $1,274,600 $1,253,000
------------------------------------------------------------------------
Net income allocated to General Partner            $  130,500 $  139,900
------------------------------------------------------------------------
Net income allocated to Limited Partners           $1,144,100 $1,113,100
------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
 (593,025 Units issued and outstanding)            $     1.93 $     1.88
------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                          1995         1994
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Cash flows from operating activities:
 Net income                                            $ 1,274,600  $ 1,253,000
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization                          1,051,000    1,134,200
  Loss on sale of property                                               48,700
  Changes in assets and liabilities:
  Decrease in rents receivable                             142,700       80,100
  Decrease in other assets                                   5,400       30,900
  Increase (decrease) in accounts payable and accrued
   expenses                                                 85,300     (110,700)
  Increase in due to Affiliates                             43,600        4,700
  (Decrease) increase in other liabilities                  (6,200)      28,700
--------------------------------------------------------------------------------
   Net cash provided by operating activities             2,596,400    2,469,600
--------------------------------------------------------------------------------
Cash flows from investing activities:
 Proceeds from the sale of property                                   2,168,500
 Payments for capital and tenant improvements             (221,400)    (289,000)
--------------------------------------------------------------------------------
   Net cash (used for) provided by investing
    activities                                            (221,400)   1,879,500
--------------------------------------------------------------------------------
Cash flows from financing activities:
 Distributions paid to Partners                         (1,775,200)  (3,272,900)
 Proceeds from (net repayment of) loan payable to
  General Partner                                          174,000      (26,200)
 (Decrease) in security deposits                           (11,600)     (18,500)
--------------------------------------------------------------------------------
   Net cash (used for) financing activities             (1,612,800)  (3,317,600)
--------------------------------------------------------------------------------
Net increase in cash and cash equivalents                  762,200    1,031,500
Cash and cash equivalents at the beginning of the
 period                                                  4,142,100    3,054,000
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period     $ 4,904,300  $ 4,085,500
--------------------------------------------------------------------------------
Supplemental information:
 Interest paid to the General Partner during the
  period                                               $   260,700  $   277,100
--------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
3
<PAGE>
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1995
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
 
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
 
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and nine months ended September 30, 1995 are not necessarily
indicative of the operating results for the year ending December 31, 1995.
 
Certain reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have no effect on net income or Partners' capital.
 
The financial statements include the Partnership's 50% interest in two joint
ventures and a 75% interest in another joint venture with Affiliated
partnerships. These joint ventures were formed for the purpose of each
acquiring a 100% interest in certain real property and are operated under the
common control of the General Partner. In addition, the 1994 financial
statements included the Partnership's 50% interest in a joint venture with an
Affiliated partnership. This joint venture was formed for the purpose of
acquiring a 100% interest in certain real property and was operated under the
common control of the General Partner prior to its sale on June 8, 1994.
Accordingly, the Partnership's pro rata share of the ventures' revenues,
expenses, assets, liabilities and capital was included in the financial
statements.
 
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
 
Reference is made to the Partnership's annual report for the year ended
December 31, 1994 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.
 
2. RELATED PARTY TRANSACTIONS:
 
In accordance with the Partnership Agreement, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner shall
be entitled to receive subsequent to May 4, 1988, the Termination of the
Offering, a Partnership Management Fee payable annually within 60 days
following the last day of each fiscal year, which shall be an amount equal to
the lesser of (i) 0.5% of the net value of the Partnership's assets as of the
end of such fiscal year reflected on the Certificate of Value furnished to the
Holders, plus, to the extent the Partnership Management Fee paid in any prior
year was less than 0.5% of the net value of the Partnership's assets in such
prior year, the amount of such deficit, or (ii) an amount equal to the
difference between (A) 10% of the Partnership's aggregate Cash Flow (as defined
by the Partnership Agreement) for the period from the Commencement of
Operations to the end of the fiscal year for which such Partnership Management
Fee is payable, and (B) the aggregate amount previously paid to the General
Partner as a Partnership Management Fee. In addition, Sale Proceeds are
distributed: first, 75% to all Holders and 25% to the General Partner until the
earlier of (i) receipt by Holders of cumulative distributions of Sale Proceeds
in an amount equal to 100% of their Original Capital Contribution, or (ii)
receipt by the General Partner of cumulative distributions of Sale Proceeds
sufficient to repay all outstanding advances to the Partnership from the
General Partner; thereafter, to the General Partner, until all outstanding
advances, if any, to the Partnership from the General Partner have been repaid;
thereafter, to the Holders, until they have received cumulative distributions
of Sale Proceeds in an amount equal to 100% of their Original Capital
Contribution, plus an amount (including Cash Flow (as defined by the
Partnership Agreement)) equal to a cumulative return of 6% per annum simple
interest on their Capital Investment from their investment date in the
Partnership; thereafter, 85% to all Holders; and 15% to the General Partner,
provided, however, that no distribution of the General Partner's share of Sale
Proceeds shall be made until Holders have received the greater of (i) Sale
Proceeds plus Cash Flow (as defined by the Partnership Agreement) previously
received in excess of the Preferred Return equal to 125% of the Holders'
Original Capital Contribution, or (ii) Sale Proceeds plus all Cash Flow (as
defined by the Partnership Agreement) previously received equal to their
Original Capital Contribution plus a 10% per annum simple interest return on
their Capital Investment from the date of investment.
 
In accordance with the Partnership Agreement, Net Profits (exclusive of Net
Profits from the sale or disposition of Partnership properties) shall be
allocated to the General Partner in an amount equal to the greater of 1% of
such Net Profits or the Partnership Management Fee paid by the Partnership to
the General Partner during such year, and the balance, if any, to the Holders.
Net Losses (exclusive of Net Losses from the sale or disposition of Partnership
properties) are allocated 1% to the General Partner and 99% to the Holders. Net
Profits from the sale or disposition of a Partnership property are allocated:
first, prior to giving effect to any distributions of Sale Proceeds from the
transaction, to the General Partner and Holders with negative balances in their
Capital Accounts, pro rata in proportion to such respective negative balances,
to the extent of the total of such negative balances; second, to each Holder in
an amount, if any, necessary to make the positive balance in its Capital
Account equal to the Sale Proceeds to be distributed to such Holder with
respect to the sale or disposition of such property; third, to the General
Partner in an amount, if any, necessary to make the positive balance in its
Capital Account equal to the Sale Proceeds to be distributed to the General
Partner with respect to the sale or disposition of such property; and fourth,
the balance, if any, 15% to the General Partner and 85% to the Holders. Net
Losses from the sale or disposition of Partnership properties are allocated:
first, after giving effect to any distributions of Sale Proceeds from the
transaction to the General Partner and Holders with positive balances in their
Capital Accounts, pro rata in proportion to such respective positive balances,
to the extent of the total amount of such positive balances; and second, the
balance, if any, 1% to the General Partner and 99% to the Holders.
Notwithstanding anything to the contrary, there shall be allocated to the
General Partner not less than 1% of all items of Partnership income, gain,
loss, deduction and credit during the existence of the Partnership. For the
quarter and nine months ended September 30, 1995, the General Partner was
entitled to a Partnership Management Fee and, accordingly, Net Profits of
$43,500 and $130,500, respectively.
 
In accordance with the Partnership Agreement, the General Partner made advances
to the Partnership in cumulative amounts equal to the Acquisition Fees and the
Partnership Management Fees which were paid to the General Partner or its
Affiliates for distribution to the Holders on a pro rata basis to the extent
that Cash Flow (as defined by the Partnership Agreement) was less than
sufficient to distribute cash in amounts equal to the Holders' Preferred Return
(7.5% per annum noncompounding cumulative return on the Holders' Capital
Investment); provided, however, that the maximum amount which shall be advanced
to the Partnership by the General Partner for distribution to the Holders shall
be the amount of Acquisition Fees and Partnership Management Fees actually paid
to the General Partner or its Affiliates. Amounts advanced shall bear interest
at the rate of 8.5% per annum simple interest, payable monthly. Repayment of
amounts advanced shall be made only from Cash Flow (as defined by the
Partnership Agreement) if and to the extent it is more than sufficient to
distribute cash to the Holders in amounts equal to the Holders' Preferred
Return and from Sale Proceeds to the extent permitted by the Partnership
Agreement. As of September 30, 1995, the Partnership has drawn $4,085,700,
which represents the total amount of the General Partner's current commitment.
 
Fees and reimbursements paid and payable by the Partnership to the General
Partner and its Affiliates during the quarter and nine months ended September
30, 1995 were as follows:
 
<TABLE>
<CAPTION>
                                                        Paid
                                                --------------------
                                                Quarter  Nine Months Payable
-----------------------------------------------------------------------------
 <S>                                            <C>      <C>         <C>
 Interest on loan payable to General Partner    $ 88,800  $260,700   $ 29,000
 Property management and leasing fees             70,900   231,300    109,700
 Reimbursement of property insurance premiums,
  at cost                                         14,500    43,700       None
 Real estate commissions (a)                        None      None     40,200
 Reimbursement of expenses, at cost:
 (1) Accounting                                    5,000    12,700      6,700
 (2) Investor communication                        3,000     9,600      8,800
 (3) Legal                                         6,800    11,800       None
-----------------------------------------------------------------------------
                                                $189,000  $569,800   $194,400
-----------------------------------------------------------------------------
</TABLE>
(a) As of September 30, 1995, the Partnership owed $40,200 to the General
    Partner for real estate commissions earned in connection with the sales of
    Partnership properties. These commissions have been accrued but not paid.
    In accordance with the Partnership Agreement, no Affiliate of the General
    Partner may receive payment of a real estate commission upon the sale of a
    Partnership property until Holders have received cumulative distributions
    of Sale or Financing Proceeds equal to 100% of their Original Capital
    Contribution, plus a cumulative return (including all Cash Flow (as defined
    by the Partnership Agreement) which has been distributed to the Holders) of
    6% simple interest per annum on their Capital Investment from the date upon
    which their investment in the Partnership was made.
 
3. RESTRICTED CERTIFICATES OF DEPOSIT:
 
Restricted certificates of deposit includes $37,500 which has been pledged as
collateral for security deposits to the Houston Lighting & Power Company and
$25,000 which has been pledged as collateral for security deposits to the
Florida Lighting & Power Company.
 
4
<PAGE>
 
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, 1994, for a discussion of the Partnership's business.
 
As the Partnership progresses through the disposition phase of its life cycle,
management's discussion and analysis of financial condition and results of
operations is complicated with respect to comparisons between periods. Results
of net income and cash flows as defined by generally accepted accounting
principles ("GAAP") as well as Cash Flow (as defined by the Partnership
Agreement) are generally expected to decline as real property interests are
sold or disposed of since the Partnership no longer receives the results
generated from such real property interests. Accordingly, rental income,
depreciation and amortization expense, property operating expenses, repairs and
maintenance expenses, real estate taxes and insurance are expected to decline,
but will continue to comprise the significant components of net income and cash
flows (as defined by GAAP) as well as Cash Flow (as defined by the Partnership
Agreement) until the final property is sold. In addition, during the
disposition phase, cash and cash equivalents increase as Sale Proceeds are
received and decrease as the Partnership utilizes these proceeds for the
purposes of making distributions to Limited Partners, repayment of the loan
payable to the General Partner, making capital improvements and incurring
leasing costs at the Partnership's remaining properties or other working
capital requirements. Prior to being utilized for such purposes, these proceeds
are invested in short-term money market instruments. Sale and Refinancing
Proceeds are excluded from the determination of Cash Flow (as defined by the
Partnership Agreement).
 
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the quarters and nine months ended September 30,
1995 and 1994. The discussion following the table should be read in conjunction
with the Financial Statements and Notes thereto appearing in this report.
 
<TABLE>
<CAPTION>
                               Comparative Operating Results (a)
                            For the Quarters    For the Nine Months
                                  Ended                Ended
                            9/30/95   9/30/94   9/30/95    9/30/94
--------------------------------------------------------------------
<S>                         <C>       <C>      <C>        <C>
INDIAN RIDGE PLAZA SHOPPING CENTER
Rental revenues             $402,700  $540,500 $1,435,400 $1,591,900
--------------------------------------------------------------------
Property net income         $152,800  $280,300 $  687,200 $  818,800
--------------------------------------------------------------------
Average occupancy                96%       98%        96%        98%
--------------------------------------------------------------------
PARK PLAZA PROFESSIONAL BUILDING
--------------------------------------------------------------------
Rental revenues             $424,200  $451,600 $1,281,700 $1,346,300
--------------------------------------------------------------------
Property net income         $ 92,800  $124,700 $  326,600 $  354,600
--------------------------------------------------------------------
Average occupancy                85%       89%        87%        88%
--------------------------------------------------------------------
CARROLLTON CROSSROADS SHOPPING CENTER
Rental revenues             $270,800  $265,900 $  854,500 $  815,800
--------------------------------------------------------------------
Property net income         $135,800  $140,500 $  455,700 $  405,800
--------------------------------------------------------------------
Average occupancy                97%       99%        97%        99%
--------------------------------------------------------------------
3120 SOUTHWEST FREEWAY OFFICE BUILDING
Rental revenues             $170,900  $188,700 $  536,100 $  532,400
--------------------------------------------------------------------
Property net (loss) income  $(14,600) $ 20,400 $   10,400 $   18,900
--------------------------------------------------------------------
Average occupancy                88%       87%        92%        89%
--------------------------------------------------------------------
WELLINGTON C; WELLINGTON NORTH OFFICE COMPLEX (B)
Rental revenues                                           $  215,400
--------------------------------------------------------------------
Property net income                                       $    5,200
--------------------------------------------------------------------
Average occupancy                                             (b)
--------------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are either not directly
    related to individual property operating results such as interest income
    and general and administrative expenses or are related to properties
    previously owned by the Partnership.
(b) Wellington C of the Wellington North Office Complex ("Wellington C") was
    sold on June 8, 1994. The property net income excludes the loss on the sale
    of the property of $48,700, which is included in the Statement of Income
    and Expenses for the nine months ended September 30, 1994.
 
Net income for the Partnership decreased $176,300 or 37%, and increased $21,600
or 2%, for the quarter and nine months ended September 30, 1995 when compared
to the quarter and nine months ended September 30, 1994, respectively. The
decrease in net income for the quarterly periods under comparison was primarily
due to a decrease in operating results at all of the Partnership's remaining
properties totaling $199,100. Partially offsetting the decrease was: 1) an
increase in interest income of $12,200 due to an increase in rates available on
the Partnership's short-term investments as well as in the funds available for
such investments; 2) a decrease in interest expense of $4,900 as a result of a
decrease in the loan payable to the General Partner and 3) a decrease in
general and administrative expenses of $4,700 primarily due to lower data
processing costs partially offset by an increase in fees for professional
services. The increase in net income for the nine-month periods under
comparison was primarily due to: 1) an increase in interest income of $77,400
due to the factors previously discussed; 2) improved operating results at
Carrollton Crossroads Shopping Center ("Carrollton"); 3) the absence in 1995 of
the loss on the sale of Wellington C on June 8, 1994; 4) a decrease in interest
expense of $15,700 as a result of a decrease in the loan payable to the General
Partner. Partially offsetting the nine-month increase was a decrease in
operating results at Indian Ridge Plaza Shopping Center ("Indian Ridge"), Park
Plaza Professional Building ("Park Plaza") and 3120 Southwest Freeway Office
Building ("Southwest Freeway") as well as an increase in general and
administrative expenses of $12,500 primarily as a result of an increase in
printing costs and fees for professional services, partially offset by lower
data processing costs.
 
For purposes of the following comparative discussion, the operating results of
Wellington C have been excluded.
 
Rental revenues for the quarter and nine months ended September 30, 1995
decreased $178,100 or 12%, and $178,700 or 4%, respectively, when compared to
the quarter and nine months ended September 30, 1994. The factors which
contributed to the decreases in rental revenues were: 1) a decrease in the base
rental rate charged to new and renewing tenants, a decrease in tenant expense
reimbursements primarily as a result of the write-off of estimates pertaining
to a major tenant which has vacated the building subsequent to filing
bankruptcy and lower average occupancy rates in 1995 at Indian Ridge; 2) lower
tenant expense reimbursements as a result of an overestimate of prior year
billings, lower parking income and average occupancy rates in 1995 and the
recognition of security deposits as income in 1994 at Park Plaza and 3) the
recovery in the third quarter of 1994 of certain tenant receivables which were
previously written off as uncollectible at Southwest Freeway. Partially
offsetting the decrease in rental revenues was an increase in percentage rents
at Carrollton.
 
Real estate tax expense increased $24,600 and $30,800 for the quarterly and
nine-month periods under comparison, respectively, primarily due to increases
at Park Plaza and Southwest Freeway as a result of projected increases in
property assessed valuations and tax rates for both periods under comparison
and at Carrollton as a result of an adjustment in the third quarter of 1994 of
the 1994 liability.
 
Property operating expenses decreased $7,900 and $57,800, respectively, for the
quarter and nine months ended September 30, 1995 when compared to the prior
year periods primarily due to: 1) lower utility costs at Park Plaza, Southwest
Freeway and Indian Ridge; 2) lower professional service fees at Southwest
Freeway and Indian Ridge and 3) lower advertising and promotional fees at
Indian Ridge.
 
Depreciation and amortization expenses decreased for the quarterly and nine-
month periods under comparison $2,900 and $18,300, respectively, primarily as a
result of the provision for value
 
5
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
impairment recorded at Park Plaza as of December 31, 1994, partially offset by
the depreciation of additional improvements at all the Partnership's remaining
properties.
 
Repairs and maintenance expense increased $10,100 for the quarter ended
September 30, 1995 and decreased $7,800 for the nine months ended September 30,
1995 when compared to the prior year periods. The quarterly increase was due to
chiller repairs in the heating, ventilating and air conditioning system
("HVAC") as well as window repairs in 1995 at Southwest Freeway, partially
offset by decreases in personnel costs at Park Plaza and Indian Ridge. The
nine-month decrease was primarily due to decreases in personnel costs at Park
Plaza and Indian Ridge and lower repair and maintenance expenses at Carrollton
as a result of repairs and enhancements made to the exterior of the building in
1994, partially offset by the chiller and window repairs at Southwest Freeway
and HVAC repairs at Park Plaza.
 
Insurance expense decreased $2,300 and $6,800 respectively, during the quarter
and nine months ended September 30, 1995, when compared to the prior year
periods. The decreases were primarily due to lower group rates on the
Partnership's combined insurance coverage as a result of a minimal amount of
claims made over the past several years, which provided a good loss experience
relative to the Partnership's properties.
 
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated asset and property management
groups, continues to take the following actions: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
building brochures; 2) early renewal of existing tenants and addressing any
expansion needs these tenants may have; 3) promotion of local broker events and
networking with local brokers; 4) networking with national level retailers; 5)
cold-calling other businesses and tenants in the market area; and 6) providing
rental concessions or competitively pricing rental rates depending on market
conditions.
 
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
properties. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the Partnership is to provide cash
distributions to Partners from Partnership operations. To the extent cumulative
cash distributions exceed net income, such excess distributions will be treated
as a return of capital. Cash Flow (as defined in the Partnership Agreement) is
generally not equal to Partnership net income or cash flows as defined by
generally accepted accounting principles ("GAAP"), since certain items are
treated differently under the Partnership Agreement than under GAAP. Management
believes that to facilitate a clear understanding of the Partnership's
operations, an analysis of Cash Flow (as defined by the Partnership Agreement)
should be examined in conjunction with an analysis of net income or cash flows
(as defined by GAAP). The following table includes a reconciliation of Cash
Flow (as defined by the Partnership Agreement) to cash flow provided by
operating activities as determined by GAAP. Such amounts are not indicative of
actual distributions to Partners and should not neccessarily be considered as
an alternative to the results disclosed in the Statements of Income and
Expenses and Statements of Cash Flows.
 
<TABLE>
<CAPTION>
                                                       Comparative Cash Flow
                                                          Results for the
                                                         Nine Months Ended
                                                        9/30/95      9/30/94
-------------------------------------------------------------------------------
<S>                                                   <C>          <C>
Amount of Cash Flow (as defined in the Partnership
 Agreement)                                           $ 2,195,100  $ 2,295,500
Items of reconciliation:
General Partner's Partnership Management Fee              130,500      140,400
Decrease in current assets                                148,100      111,000
Increase (decrease) in current liabilities                122,700      (77,300)
-------------------------------------------------------------------------------
Net cash provided by operating activities             $ 2,596,400  $ 2,469,600
-------------------------------------------------------------------------------
Net cash (used for) provided by investing activities  $  (221,400) $ 1,879,500
-------------------------------------------------------------------------------
Net cash (used for) financing activities              $(1,612,800) $(3,317,600)
-------------------------------------------------------------------------------
</TABLE>
 
The decrease in Cash Flow (as defined by the Partnership Agreement) of $100,400
for the nine months ended September 30, 1995 when compared to nine months ended
September 30, 1994 was primarily due to the change in net income, exclusive of
depreciation and amortization expense and the 1994 loss on the sale of
Wellington C, partially offset by a decrease of $9,900 in the General Partner's
Partnership Management Fee.
 
The increase in the Partnership's cash position as of September 30, 1995 when
compared to December 31, 1994 was primarily the result of net cash provided by
operating activities exceeding distributions paid to Partners and expenditures
for capital and tenant improvements and leasing costs. Liquid assets of the
Partnership as of September 30, 1995 were comprised of undistributed cash from
operations retained for working capital purposes.
 
Net cash provided by operating activities continues to be the Partnership's
primary source of funds. Net cash provided by operating activities increased
$126,800 for the nine months ended September 30, 1995 when compared to the nine
months ended September 30, 1994. This increase was primarily due to the timing
of the payment of certain Partnership expenses, particularly real estate taxes,
and the collection of tenant's rental payments.
 
Net cash (used for) provided by investing activities changed $(2,100,900) for
the nine months ended September 30, 1995 when compared to the nine months ended
September 30, 1994. The change was primarily due to the sale proceeds received
in 1994 from the sale of Wellington C, partially offset by a decrease in
payments made in 1995 for capital and tenant improvements and leasing costs.
The Partnership maintains working capital reserves to pay for capital
expenditures such as building and tenant improvements and leasing costs. In
addition to the $221,400 spent during the nine months ended September 30, 1995,
the Partnership has budgeted to spend approximately $270,000 during the
remainder of 1995 including $90,000, $70,000, $60,000 and $50,000 at Indian
Ridge, Southwest Freeway, Park Plaza and Carrollton, respectively. The General
Partner believes these improvements and leasing costs are necessary in order to
increase and/or maintain the occupancy levels in very competitive markets,
maximize rental rates charged to new and renewing tenants and prepare the
remaining properties for eventual disposition.
 
Net cash used for financing activities changed from $3,317,600 for the nine
months ended September 30, 1994 to $1,612,800 for the nine months ended
September 30, 1995 when compared to the nine months ended September 30, 1994
primarily due to a decrease in the payment of cash distributions to Limited
Partners as a result of the distribution of Sale Proceeds from the sale of
Wellington C.
 
The General Partner continues to take a conservative approach to projections of
future rental income and to maintain higher levels of cash reserves due to the
anticipated capital and tenant improvements and incurring of leasing costs
necessary to be made at the Partnership's properties during the next several
years. As a result of this, cash continues to be retained to supplement working
capital reserves. For the nine months ended September 30, 1995, Cash Flow (as
defined by the Partnership Agreement) retained to supplement working capital
reserves was $505,000.
 
Distributions to Limited Partners for the quarter ended September 30, 1995 were
declared in the amount of $1.00 per Unit. Cash distributions are made 60 days
after the last day of each fiscal quarter. The amount of future distributions
to Partners will ultimately be dependent upon the performance of the
Partnership's investments as well as the General Partner's determination of the
amount of cash necessary to supplement working capital reserves to meet future
liquidity requirements of the Partnership. Accordingly, there can be no
assurance of the availability of cash for distribution to Partners.
 
                                                                               6
<PAGE>



                          PART II. OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K
-------   --------------------------------
          (a) Exhibits:  Financial Data Schedule

          (b) Reports on Form 8-K:

              There were no reports filed on Form 8-K during the quarter
              ended September 30, 1995.


<PAGE>
                                    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. - 4

                              BY: FIRST CAPITAL FINANCIAL CORPORATION
                                  GENERAL PARTNER


Date: November 14, 1995           By: /s/     DOUGLAS CROCKER II
      -----------------               ---------------------------------------
                                              DOUGLAS CROCKER II
                                        President and Chief Executive Officer


Date: November 14, 1995           By: /s/      NORMAN M. FIELD
      -----------------               ---------------------------------------
                                               NORMAN M. FIELD
                                        Vice President - Finance and Treasurer