<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-K

                 Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

<TABLE>
<S>                                              <C>
For the Fiscal Year Ended                        Commission File Number
    December 31, 1996                                    2-92396
</TABLE>

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
             (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S>                                        <C>
       Louisiana                                        72-1007233
(State of Organization)                    (IRS Employer Identification Number)
</TABLE>

                        7000 Central Parkway, Suite 850
                               Atlanta, GA 30328
                    (Address of Principal Executive Office)

                                 (770) 668-1080
              (Registrant's telephone number, including area code)

          Securities Registered Pursuant to Section 12 (b) of the Act:

<TABLE>
<S>                                             <C>
                                                Name of Each Exchange
   Title of Each Class                           on Which Registered
  --------------------                          ---------------------
LIMITED PARTNERSHIP UNITS                                NONE
</TABLE>

Indicate by check 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
                                -----      -----

Aggregate market value of the voting stock held by nonaffiliates of the
Registrant is not applicable.

The number of limited partnership units outstanding as of February 27, 1997 was
22,895.

The Prospectus of the Registrant dated October 11, 1984, filed pursuant to Rule
424(b) under the Securities Act of 1933 is incorporated by reference, to the
extent indicated in Part III of this report.
<PAGE>   2

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
                             INDEX TO ANNUAL REPORT
                                  ON FORM 10-K

<TABLE>
<CAPTION>
                                                                        Page
<S>       <C>                                                             <C>
PART I

Item 1:   Business                                                         1
Item 2:   Properties                                                       3
Item 3:   Legal Proceedings                                                4
Item 4:   Submission of Matters to a Vote of Security Holders              4

PART II

Item 5:   Market for the Registrant's Common Equity and Related
          Stockholder Matters                                              4
Item 6:   Selected Financial Data                                          4
Item 7:   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                        5
Item 8:   Financial Statements and Supplementary Data                      6
Item 9:   Disagreements on Accounting and Financial Disclosure             6

PART III

Item 10:  Directors and Executive Officers of the Registrant               7
Item 11:  Executive Compensation                                           7
Item 12:  Security Ownership of Certain Beneficial Owners and
          Management                                                       7
Item 13:  Certain Relationships and Related Transactions                   8

PART IV

Item 14:  Exhibits, Financial Statement Schedules and Reports on
          Form 8-K
Signatures                                                                 8
</TABLE>                                                                  10
<PAGE>   3

                                     PART I

                                ITEM 1. BUSINESS

RWB Medical Income Properties 1 Limited Partnership (the Partnership), is a
Louisiana limited partnership organized on July 7, 1984. A Registration
Statement filed with the Securities and Exchange Commission became effective on
October 11, 1984 and the offering of $25,000,000 units of limited partnership
interests (the Units) commenced on or about that date. The offering period was
terminated on June 30, 1986, upon the sale of 22,895 Units for an aggregate
purchase price of #D$22,895,000.

The purpose of the Partnership is to invest primarily in existing, improved,
medically related, income-producing commercial properties, such as medical
office buildings and nursing homes. As of December 31, 1996, the Partnership
owned and operated two nursing home properties, Southpoint Manor in Miami Beach,
Florida, and Merry Wood Lodge in Elmore, Alabama, with a total of 354 beds. The
Partnership employed approximately 300 full time employees at December 31, 1996.
During the year ended December 31, 1995, the Partnership sold a 180 bed nursing
home. The property had been leased to another operator through April 30, 1995
when the Partnership acquired the operator's interest in a stock purchase. On
September 1, 1995 the nursing home real estate was sold. The operating results
of this facility for 1995 and 1996 are reflected in the Partnership's financial
statements as a discontinued rental operation.

Business Strategy

The Partnership owns real property investments, primarily healthcare related,
and operates the properties until such time as a sale or other disposition
appears to be advantageous to the Limited Partners. Factors such as potential
capital appreciation, industry trends, cash flow and federal income tax
consequences to the Limited Partners are considered before Partnership property
dispositions are made.

The Partnership (the "Partnership") has entered into an asset Purchase and Sale
Agreement effective as of February 3, 1997 (the "Sale Agreement"), by and among
the Partnership, RWB Management Corp., the managing general partner of the
Partnership, and Omega Healthcare Investors, Inc. ("Omega"). The Sale Agreement
calls for the sale to Omega of the Partnership's interests in its facilities,
and the personal property and intangible assets related to the operation of
these facilities.

The description of the Sale Agreement set forth herein does not purport to be
complete and is qualified in its entirely by the provisions of the Sale
Agreement, filed as an exhibit to the Company's Current Report on Form 8-K dated
February 18, 1997, and as Appendix A to the Partnership's Consent Solicitation
Statement filed March 12, 1997.

Under the Sale Agreement, the Partnership will receive total sales consideration
of $18,600,000, which will be reduced by accrued expenses of approximately
$332,795 for vacation pay, sick pay, taxes and trust fund obligations as
provided in the Sale Agreement, by approximately $4,206,082 of closing costs,
brokerage fees, third party settlements and other obligations, and by
approximately $893,333 for the payment of debt, resulting in estimated net
proceeds from the sale of approximately $13,167,790. These estimated net
proceeds will be augmented by estimated current assets in excess of current
liabilities of approximately $2,818,245 which will increase the total amount
estimated to be available for distribution to approximately $15,986,035, which
will be distributed to the Partnership's limited partners (the "Limited
Partners") in three installments as follows:

1. First Installment. The Limited Partners will receive a check in the amount of
   $515 per unit, payable within 30 business days of the closing and surrender
   of Partnership certificates (an anticipated aggregate distribution to all of
   the Limited Partners of $11,795,700);

2. Second Installment. A second distribution of approximately $158 per unit is
   anticipated to be made within one year of the closing. This distribution is
   primarily attributable to the collection of accounts receivable in the period
   subsequent to the closing less the payment of accounts payable and other
   liabilities (an anticipated aggregate distribution to all of the Limited
   Partners of $3,615,400); and

                                        1
<PAGE>   4

3. Final Installments. A final distribution of up to $25 per unit is anticipated
   to be made following the expiration of the Partnership's representations and
   warranties to Omega and any additional period required to finally resolve any
   claims for indemnification against the Partnership brought prior to the
   termination of such period (an anticipated aggregate distribution to all of
   the Limited Partners of $574,900).

The closing of the Sale Agreement is subject to a number of conditions, as
outlined in the Sale Agreement, including the approval of the Sale Agreement by
the Limited Partners and the closing of facility acquisition agreements between
Omega and three other affiliated partnerships. The approval of one of the
partnerships has already been obtained and the consents of the other
partnerships, including the Limited Partners, are being solicited.

Long Term Care Industry

The long term care industry is composed of many facilities offering services to
subacute, skilled, assisted living, and personal care residents. The facilities
are in the skilled segment of the industry, although Southpoint Manor has
subacute services, such as respiratory and ventilator programs since September
1993, and during 1996 the Merry Wood Lodge added similar services.

Historically, nursing homes have derived their revenues from Medicare, Medicaid
and private pay patients. In the past few years, the industry has seen an
increase in private insurance patients and to a greater extent, contractual
services from Health Maintenance Organizations (HMO's) and Preferred Provider
Organizations (PPO's).

The industry has always faced a challenge in staffing facilities, particularly
with regard to Registered Nurses, Licensed Practical Nurses and Certified Nurse
Aides. Depending upon the geographic area, the Partnership competes with hotels,
motels and restaurants for other employees, including dietary and housekeeping
staff. Approximately fifty percent of the Partnership's operating costs consist
of employee salaries and benefits. In 1995 a federal law was passed which
increased the minimum wage level to $4.75 per hour in 1996 and to $5.15 per hour
in 1997. Management of the Partnership has already responded to these increases,
and to the corresponding "ripple effect" for wages of employees paid above the
new minimum wage by increasing wages accordingly. To date, the State of Florida
has not agreed to increase reimbursement rates to compensate for the federally
mandated increases in the minimum wage. The State of Alabama increased its
reimbursement rates in response to the 1996 minimum wage increase, but Alabama
has not agreed to increases to compensate providers, including the Partnership,
for the 1997 minimum wage increase or for "ripple effect" wage increases made
necessary by the 1997 minimum wage increase.

The federal government has been discussing changes in Medicare and Medicaid as
it looks for ways to downsize government. The Medicaid program could be impacted
through block grants or level funding programs which would cap federal funding.
If federal funding were capped, and a state wished to retain the current level
of services, significant additional funding would be required, particularly if
the Omnibus Budget Reconciliation Act regulations were not repealed. The
Medicare program is being examined by the federal government for possible
changes, including the implementation of cost limits on ancillary services (such
as therapy programs, equipment and diagnostic services), capital cost
reductions, a continued freeze of the routine cost limits and perhaps a
prospective payment system. The potential impact of such changes, either alone
or in combination, cannot be determined at this time.

Information regarding industry segments is not applicable to the Partnership's
business.

Seasonality

The Partnership's revenue and operating income fluctuate from quarter to quarter
and tend to be higher in the third and fourth quarter of each fiscal year. These
quarterly fluctuations are primarily due to the fact that, for the state
Medicaid programs in which the Partnership operates, rate increases tend to take
effect in such quarters. The Southpoint Manor facility also tends to experience
census declines during the summer as some Miami-area residents temporarily move
to cooler climates, leading to lower revenue and operating income during such
months.

                                        2
<PAGE>   5

SERVICES PROVIDED

Routine Services

Both facilities are licensed as skilled-care facilities by the appropriate state
regulatory agencies. Routine services provided by the facilities include
skilled-care services and assistance with daily living activities, depending
upon the needs of each resident. Subacute care, such as ventilator and
respiratory therapy, may also be provided as specified by each resident's
physician. Skilled nursing care is rendered 24 hours per day by registered or
licensed nurses and certified nurses aides.

Ancillary Services

The Partnership provides a variety of rehabilitative services at its facilities
for residents. These services include physical, speech, occupational, and
respiratory therapies. The Partnership continues to expand these services as
warranted by the needs of the residents and the requirements of third-party
payor programs. During 1996, the Partnership added subacute care capabilities to
the Merry Wood Lodge facility.

                               ITEM 2. PROPERTIES

The Partnership originally purchased five medically related commercial
properties. At December 31, 1996, two properties were owned by the Partnership.
They are:

<TABLE>
<CAPTION>
                                                                                 Average Daily Census
                                      Date of     No. of      Medical      --------------------------------
             Property               Acquisition    Beds     Real Estate    1996   1995   1994   1993   1992
             --------               -----------   ------   --------------  ----   ----   ----   ----   ----
<S>                                 <C>           <C>      <C>             <C>    <C>    <C>    <C>    <C>
Southpoint Manor                     09/03/86      230     Long-term care  219    216    217    219    223
Miami Beach, Florida                                          facility

Merry Wood Lodge                     10/01/86      124     Long-term care  121    121    121    123    122
Elmore, Alabama                                               facility
</TABLE>

The Partnership has sold the following properties:

<TABLE>
<CAPTION>
                                                 Date of       Date            Type of
                  Property                     Acquisition     Sold      Medical Real Estate
                  --------                     -----------     ----      -------------------
<S>                                            <C>           <C>       <C>
Six Columbia Place                              09/30/86     7/29/92   Medical Office Building/
  Tampa, Florida                                                           Parking Facility

Clayton Medical Center                          07/01/85     11/11/92  Medical Office Building
  Riverdale, Georgia

Lakecrest Nursing Home (1)                      12/17/85      9/1/95    180 Bed Long-term Care
  (formally Merrillville Convalescent Center)                                  Facility
  Merrillville, Indiana
</TABLE>

(1) The facility was leased to an outside organization through December 16,
1992, as indicated in Footnote 3 of the financial statements. On December 17,
1992, the lessee was declared in default and the Partnership assumed operations.
Effective January 1, 1993, the Partnership leased the Merrillville facility to
another lessee (as indicated in notes 3, 4 and 5 of the financial statements).
In May 1995, the Partnership purchased the stock of Atrium Living Centers of
Indiana, Inc. and canceled the 1993 lease. The Partnership operated the Atrium
facility as Lakecrest Nursing Home until the real estate was sold on September
1, 1995.

                                        3
<PAGE>   6

A description of the Partnership's purchase and sale of the properties is
disclosed in Notes 1(f), 3, 4, 5, 6, 10 and 14 of Notes to Financial Statements.

                           ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal actions against the Partnership. As noted in
the financial statements Note 11, however, the Partnership does have certain
contingent liabilities.

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

Not applicable.

                                    PART II

                ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP
                   UNITS AND RELATED SECURITY HOLDER MATTERS

There is no established public trading market for the Partnership Units. There
were 1,957 limited partners as of February 27, 1997. Distributions paid per
limited partner unit for each quarter in the last five years are incorporated by
reference from Item 6 below.

                        ITEM 6. SELECTED FINANCIAL DATA

Selected financial data for the period January 1, 1992 to December 31, 1996 is
shown below: (000's omitted except for per share data and distributions)

<TABLE>
<CAPTION>
                                                    1996      1995      1994      1993      1992
                                                   -------   -------   -------   -------   -------
<S>                                                <C>       <C>       <C>       <C>       <C>
Summary of Operations:
  Total Revenue..................................  $15,227    13,530    12,364    11,898    11,678
  Operating Income...............................  $   939       998       874     1,332     1,318
  Income (Loss) on Discontinued Operations.......     (308)    (1783)        0         0         0
  Net Income (Loss)..............................  $   508      (902)      843     1,179       869

Per Share Data:
  Net Income (Loss) per Limited Partner Unit.....  $ 20.64    (40.76)    34.23     47.91     34.76

Financial Condition:
  Total Assets...................................  $13,104    13,359    17,853    18,044    18,978
  Long-term Debt.................................  $   893       989     1,071     1,163       716
  Partner's Capital..............................  $ 9,992    10,327    15,306    15,940    16,935

Distributions per Limited Partner Unit:
  First Quarter..................................  $  8.56     15.00     15.00     15.00     15.00
  Second Quarter.................................  $  8.56     15.00     15.00     15.00     15.00
  Third Quarter..................................  $  8.56     15.00     15.00     15.00     15.00
  Fourth Quarter.................................  $  8.56     15.00     15.00     15.00     15.00
  Special Distribution of Sale Proceeds..........  $  0.00    113.56      0.00     30.44      0.00
</TABLE>

                                        4
<PAGE>   7

Quarterly Financial data for the period January 1, 1994 to December 31, 1996
(000's omitted):

<TABLE>
<CAPTION>
                                                                                1996
                                                              -----------------------------------------
                                                              1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
Total Revenue...............................................   $3,746     $3,720     $3,845     $3,916
Operating Income............................................      326        211        233        169
Income (loss) on Discontinued Operations....................      (24)        26        (99)      (211)
Net Income (loss)...........................................      231        213        109        (45)
</TABLE>

<TABLE>
<CAPTION>
                                                                                1995
                                                              -----------------------------------------
                                                              1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
Total Revenue...............................................   $3,299     $3,218     $3,299     $3,714
Operating Income............................................      299        146        107        446
Income (loss) on Discontinued Operations....................      (41)      (810)      (889)       (43)
Net Income (Loss)...........................................      214       (709)      (822)       415
</TABLE>

<TABLE>
<CAPTION>
                                                                                1994
                                                              -----------------------------------------
                                                              1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
Total Revenue...............................................   $3,096     $3,071     $3,237     $2,960
Operating Income(Loss)......................................      356        327        249        (58)
Net Income (Loss)...........................................      339        306        228        (30)
</TABLE>

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

Liquidity and Capital Reserves

Cash and equivalent balances for the Partnership totaled $766,621 at December
31, 1996, a decrease of $110,229 from the previous year. Cash provided from
operations decreased to $15,822 during 1996 from $99,372 during 1995. This
decrease was primarily due to lower collections on residents accounts
receivable, particularly Medicare, Medicaid and managed care. Cash paid to
suppliers and employees increased during 1996 because the Partnership entered
into certain ancillary service contracts which require payment for services
rendered prior to the Partnership's receipt of payments from Medicare and
managed care payors.

Payments for capital expenditures were $252,550 in 1996 compared to $501,500 in
1995. During 1996, the Partnership collected notes receivable of $1,045,102,
including $1,000,000 due from the sale of the Lakecrest Nursing Home.

The Partnership has a $500,000 line of credit available to it should the need
arise. As of December 31, 1996 the Partnership had adequate working capital, and
no advances had been drawn under the line of credit.

During 1996, the Partnership paid regular distributions to Limited Partners
totaling $34.24 per unit, equaling a 4% return on the initial investment of
$1,000 per unit less $144 return of capital from sale proceeds returned in prior
years. Although the Partnership expects to make distributions to its limited
partners based upon cash flow generated from Operations, after considering cash
required for debt obligations, necessary improvements to its properties and
working capital reserves, no assurances can be given that distributions will be
made in the future.

Results of Operations

Fiscal Year 1996 Compared to 1995

The Partnership's net income for the year ended December 31, 1996 was $508,160,
compared to a loss of $901,714 in the previous year. The 1996 income included a
loss of $308,413 from discontinued operations,

                                        5
<PAGE>   8

primarily the Lakecrest Nursing Home. The 1995 loss included a loss of $207,707
from discontinued operations and a loss of $1,575,134 on the disposal of rental
operations.

Net operating income for 1996 was $938,712, compared to $998,254 in 1995.
Revenue increased to $15,226,616 in 1996, an increase of $1,696,841 over 1995.
This increase of 12.5% was due to improved Medicare reimbursement rates and
higher managed care per diem rates along with higher average daily census.

Operating expenses increased $1,756,383 in 1996 over 1995 due to increased wages
paid to employees, increased contract services expense (primarily ancillary
services) and general and administrative expenses, including higher legal fees,
management fees and insurance costs.

Other income (expenses) reflects lower interest income and lower interest
expense.

Fiscal Year 1995 Compared to 1994

The Partnership's net loss for the year ended December 31, 1995 was $901,714,
compared to a profit of $842,577 in the previous year. The loss included a loss
on disposal of the rental operation of the Lakecrest Nursing Home of $1,575,134.
Operating income for the twelve months ended December 31, 1995 was $998,254, as
compared to $874,261 for the previous year. Total revenue increased to
$13,529,775 in 1995, an increase of $1,166,000 over 1994. This increase of 9.4%
was due to improved routine services rates as well as substantially higher
ancillary services provided to residents.

Operating expenses increased $1,041,895 over 1994 due to increased wages paid to
employees, increased cost of supplies for nursing care and higher contracted
services, primarily for ancillary services.

Other income (expenses) reflects higher interest expense due to the fluctuation
of the prime rate during the year.

Fiscal Year 1994 Compared to 1993

Net income for the year ended December 31, 1994 was $842,577 as compared to
$1,179,398 for the year ended December 31, 1993. The decrease in earnings was
due to lower than expected margins in the Southpoint Manor operation caused
primarily by the increase in labor costs and ancillary service expenses. It is
expected much of this expense will benefit ongoing operations as the facility
builds its reputation to treat more acute patients.

Revenues increased $466,216 while expenses increased $924,117 between years. As
stated previously, labor costs and ancillary service expenses increased
substantially during the year. In addition, plant operation repairs and
maintenance costs increased $73,232 over 1993 due to exterior painting and
sealing of the structure. General and Administrative costs were $89,489 under
the 1993 level due to excellent results from the workers compensation program at
Southpoint Manor, partially offset by higher administrative salary costs.
Employee health and welfare costs in 1993 included vacation pay accruals which
have been allocated in 1994 to the various departments. Providers fees declined
during 1994 due to changes implemented by the state.

              ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data required by Regulation S-X are
included in this Form 10-K commencing on page F-1.

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

There were no changes of auditors for the Partnership during the fiscal year
1996 and 1995.

                                        6
<PAGE>   9

                                    PART III

          ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Partnership has no directors or executive officers. RWB Management Corp.
(RWBMC), a Louisiana corporation, is the Managing General Partner of the
Partnership. The directors and executive officers of RWBMC as of December 31,
1996 are listed below. Directors serve for one year or until the next annual
meeting of stockholders of RWBMC or until their successors are elected and
qualified. RWBMC is a wholly-owned subsidiary of QualiCorp, Inc., a Louisiana
corporation. The directors and executive officers of QualiCorp, Inc. are also
listed below. The relationship of the Managing General Partner to its Affiliates
is described under the caption "Conflicts of Interest" at pages 28 through 30 of
the Prospectus, which pages are specifically incorporated by reference herein.

The executive officers of RWBMC and QualiCorp, Inc. are as follows:

<TABLE>
<CAPTION>
             Name                Age            Positions and Recent Principal Occupations
             ----                ---            ------------------------------------------
<S>                              <C>   <C>
John M. DeBlois                  60    Chairman of the Board since 1981. Chairman of the Board of
                                       Qualicare, Inc., a hospital management company, from the mid
                                       1970's to 1983.

John H. Stoddard                 54    President and Chief Financial Officer since July 1, 1988.
                                       Senior Vice President of Safecare Health Services, Inc., a
                                       health care management company, from September 1, 1985 to
                                       March 1988. From May 1983 to August 1985, Treasurer,
                                       Continental Health Services, a health care management
                                       company. Prior to May 1983, was Vice President -- Finance
                                       with Qualicare, Inc.

Wanda J. Honea                   39    Vice President -- Investor Services from May 1990. Office
                                       relocation consultant from October 1989 through April 1990.
                                       From October 1988 to October 1990, Office Administrator for
                                       Hunton & Williams, a law firm. Prior to 1988, administrative
                                       assistant at Hansell & Post.
</TABLE>

Mr. DeBlois and Mr. Stoddard are Directors of RWBMC and Qualicorp, Inc. There
are no family relationships among any of the above officers and/or directors.

                        ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. No director or officer of the
Managing General Partner received any remuneration from the Partnership for the
three years ended December 31, 1996. The Partnership paid to Qualicorp, Inc.,
the parent of RWBMC, the Managing General Partner $175,565 in 1996 as
reimbursement for administrative expenses (primarily salaries) incurred during
the year. In addition, during 1996, the Partnership paid to Qualicorp, Inc.
$141,923 for property management fees.

               ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                             OWNERS AND MANAGEMENT

No person or group is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.

No executive officers and directors of RWBMC owned any units in the Partnership
at December 31, 1996. RWBMC held 23 units in the Partnership at December 31,
1996. QualiCorp, Inc., parent of RWBMC, the Partnership's Managing General
Partner, held 73 units in the Partnership at December 31, 1996.

                                        7
<PAGE>   10

            ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Qualicorp Inc., the parent of RWBMC, charged the following amounts for property
management fees and administrative expenses to the Partnership during the
periods shown:

<TABLE>
<CAPTION>
                        Property
                       Management   Administrative
                          Fees         Expenses
                        ---------   --------------
<S>                     <C>            <C>
1996                    141,923        175,565

1995                    121,266        166,077

1994                    132,776        179,086
</TABLE>

Under the Partnership Agreement, the General Partners are entitled to
participate in distributions of the Partnership's Cash Flow as described under
the caption "Management Compensation" at pages 24 through 26 of the Prospectus.
Cash distributions of $59,005, $103,400, and $103,397, were made to the General
Partners during 1996, 1995, and 1994, respectively. The General Partners also
share in the Partnership's net profits and net losses.

                                    PART IV

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

(a) The following documents are filed as part of this report.

     1. The Partnership's financial statements and supplementary information
     appear in a separate section of this Form 10-K commencing on pages
     referenced below:

<TABLE>
<CAPTION>
                                                              Page
                                                              ----
<S>                                                           <C>
Independent Auditor's Report                                   F-1

Financial Statements
  Balance Sheets                                               F-2
  Statements of Operations                                     F-3
  Statements of Partners' Capital                              F-4
  Statements of Cash Flow                                      F-5
  Notes to Financial Statements                                F-7

Information Accompanying the Basic Financial Statements
  Independent Auditor's Report on Information Accompanying
     the Basic Financial Statements                           F-20
  Schedule VIII -- Valuation and Qualifying Accounts and
     Reserves for Allowances for Doubtful Accounts            F-21
  Schedule X -- Consolidated Supplementary Income Statement
     Information                                              F-22
  Schedule XI -- Real Estate and Accumulated Depreciation     F-23
</TABLE>

                                        8
<PAGE>   11

2. Exhibits:

     Exhibits listed below which have been filed with the Securities and
     Exchange Commission pursuant to the Securities Act of 1933 or the
     Securities Exchange Act of 1934, and which were filed as noted below, are
     hereby incorporated by reference and made a part of this report with the
     same effect as if filed herewith.

     2.    Purchase and Sale Agreement (the "Sale Agreement") dated February 3,
           1997 (filed as an exhibit to the company's Form 8-K filed February
           18, 1997, and as an appendix to the Partnership's Consent
           Solicitation Statement dated March 12, 1997).

     3-A. The Prospectus of the Registrant dated October 11, 1984 as
          supplemented August 8, 1985, August 14, 1985, October 2, 1985 and
          November 21, 1985 and filed pursuant to Rule 424(b) under the
          Securities Act of 1933 and Preliminary Supplement and Amendment Number
          5 dated November 29, 1985 is hereby incorporated herein by reference.

     3-B. Amended and Restated Articles of Limited Partnership set forth as
          Exhibit A to the Prospectus, incorporated herein by reference.

     3-C. Consent Solicitation Statement dated March 12, 1997 and filed pursuant
          to Rule 14A, incorporated herein by reference.

(b) No reports on Form 8-K were filed during the fourth quarter of the fiscal
    year ended December 31, 1996. A report on Form 8-K was filed on February 18,
    1997 pertaining to Disposition of Partnership Assets.

                                        9
<PAGE>   12

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Atlanta,
State of Georgia.

RWB MEDICAL INCOME PROPERTIES 1
     LIMITED PARTNERSHIP

     RWB MANAGEMENT CORP.
     Managing General Partner

By: /s/ John H. Stoddard                Date: March 21, 1997
    ---------------------------
    John H. Stoddard
    President, Director, Chief
    Financial Officer and Principal
    Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                       Name                                      Position                    Date
                       ----                                      --------                    ----
<S>                                                  <C>                                <C>
/s/ John M. DeBlois                                  Chairman of the Board              March 21, 1997
---------------------------------------------------
John M. DeBlois

/s/ John H. Stoddard                                 President, Director, Chief         March 21, 1997
---------------------------------------------------  Financial Officer and Principal
John H. Stoddard                                     Accounting Officer
</TABLE>

                                       10
<PAGE>   13
                                EXHIBIT INDEX

Exhibit Number                  Description
--------------                  -----------
     27                         Financial Data Schedule (for SEC use only)

<PAGE>   14
                             SELF & MAPLES, P.A.
                                 [LETTERHEAD]



                          INDEPENDENT AUDITOR'S REPORT

To the Partners
RWB Medical Income Properties 1 Limited Partnership

We have audited the accompanying balance sheets of RWB Medical Income Properties
1 Limited Partnership as of December 31, 1996 and 1995 and the related
statements of operations, partners' capital and cash flows for each of the three
years in the three-year period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
a reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RWB Medical Income Properties 1
Limited Partnership as of December 31, 1996 and 1995 and the results of its
operations and its cash flows for each of the three years in the three-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.


/s/ Self & Maples, P.A.

Oneonta, Alabama
January 24, 1997, except for Note 14, as to which the date is
  February 3, 1997



                                     F-1
<PAGE>   15
              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                                 BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                        1996                    1995
                                                    -----------            -------------

ASSETS
<S>                                                <C>                      <C>
Current assets
  Cash and cash equivalents                        $   766,621              $   876,850
  Patient accounts receivable, net of allowance
     for doubtful accounts of $930,869 in 1996
     and $837,727 in 1995                            3,172,977                2,614,844
  Estimated third-party payor settlements              956,362                  373,738
  Current portion of notes receivable                        -                1,045,102
  Prepaid expenses and other assets                    130,423                  127,472
                                                   -----------              -----------
     Total current assets                            5,026,383                5,038,006

Property and equipment, net of accumulated
   depreciation and amortization                     8,067,068                8,300,807
Deferred financing costs, less accumulated
   amortization of $36,093 in 1996 and
   $26,677 in 1995                                      10,985                   20,401
                                                   -----------              -----------
     Total assets                                  $13,104,436              $13,359,214
                                                   ===========              ===========

    LIABILITIES AND PARTNERS' CAPITAL

Current liabilities
  Current maturities of long-term debt                  80,000                   84,105
  Accounts payable                                     809,741                  834,703
  Accrued payroll and payroll taxes                    294,126                  235,579
  Accrued vacation                                     190,526                  146,439
  Accrued real estate taxes                                196                      193
  Accrued insurance                                      4,888                   10,977
  Accrued management fees                               55,285                   53,158
  Patient deposits and trust liabilities                66,502                   81,190
  Other accrued expenses                                23,203                   23,357
  Estimated third-party payor settlements              513,939                  417,145
                                                   -----------              -----------
     Total current liabilities                       2,038,406                1,886,846

Long-term debt, net of current maturities              813,333                  904,605
Due to affiliates                                      260,679                  240,973
                                                   -----------              -----------
     Total liabilities                               3,112,418                3,032,424
                                                   -----------              -----------
Partners' capital (deficit)
  Limited partners                                  10,290,023               10,601,361
  General partners                                    (298,005)                (274,571)
                                                   -----------              -----------
     Total partners' capital                         9,992,018               10,326,790
                                                   -----------              -----------

     Total liabilities and partners' capital       $13,104,436              $13,359,214
                                                   ===========              ===========
</TABLE>

                See accompanying notes to finanicial statements

                                      F-2
<PAGE>   16

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                      1996         1995          1994
                                                  ------------- ----------- -------------
<S>                                                <C>          <C>          <C>
Revenues
   Net patient service revenue                     $15,194,226  13,503,777   $12,336,791
   Other revenue                                        32,390      25,998        27,096
                                                   ----------- -----------   -----------
      Total revenue                                 15,226,616  13,529,775    12,363,887
                                                   ----------- -----------   -----------

Operating expenses
   Professional care of patients                     8,499,224   6,977,036     5,922,576
   Dietary                                           1,045,674   1,022,914     1,006,362
   Household and plant                               1,165,942   1,169,583     1,190,677
   General and administrative                        2,345,075   2,122,280     2,034,703
   Employee health and welfare                         736,284     733,580       674,289
   Depreciation and amortization                       495,705     506,128       661,019
                                                   ----------- -----------   -----------
      Total operating expenses                      14,287,904  12,531,521    11,489,626
                                                   ----------- -----------   -----------

      Operating income                                 938,712     998,254       874,261
                                                   ----------- -----------   -----------

Other income (expenses)
   Interest income                                     102,804     112,432       109,051
   Interest expense                                   (100,948)   (105,564)      (92,302)
   Provider fees                                      (123,995)   (123,995)     (123,995)
                                                   ----------- -----------   -----------
      Total other income (expenses)                   (122,139)   (117,127)     (107,246)
                                                   ----------- -----------   -----------

      Income before recognition
        of discontinued operations                     816,573     881,127       767,015

Discontinued operations
   Loss on disposal of rental
     operations including the
     results of operations
     during phase-out period                                 -  (1,575,134)            -
   Income (loss) from discontinued
     rental operations                                (308,413)   (207,707)       75,562
                                                   -----------  ----------   -----------
       Net income (loss)                           $   508,160 $  (901,714)  $   842,577
                                                   =========== ===========
Net income (loss) attributable to
   limited partners                                $   472,589 $  (933,103)  $   783,597
Net income (loss) attributable
   general partners                                     35,571      31,389        58,980
                                                   ----------- -----------   -----------
                                                   $   508,160 $  (901,714)  $   842,577
                                                   =========== ===========   ===========
Net income (loss) per limited partnership unit
    outstanding:
    Continuing operations                          $     33.17 $     35.79   $     31.16
    Discontinued operations                             (12.53)     (76.55)         3.07
                                                   ----------- -----------   -----------
       Net income (loss) per unit                  $     20.64 $    (40.76)  $     34.23
                                                   =========== ===========   ===========
</TABLE>

                See accompanying notes to finanicial statements

                                      F-3
<PAGE>   17

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        STATEMENTS OF PARTNERS' CAPITAL
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                        Limited Partners              General
                                                        Units         Amount          Partners      Total
                                                        ------      -----------      ----------  -----------
<S>                                                     <C>         <C>              <C>         <C>
Partners' capital (deficit)
   December 31, 1993                                    22,895      $16,098,221      $(158,143)  $15,940,078

Distributions to partners
   ($60 per limited partnership
   unit outstanding)                                         -       (1,373,698)      (103,397)   (1,477,095)

Net income                                                   -          783,597         58,980       842,577
                                                        ------       ----------       --------   -----------
Partners' capital (deficit)
   December 31, 1994                                    22,895       15,508,120       (202,560)   15,305,560
                                                        ------       ----------       --------   -----------
Distributions to partners
   ($173.56 per limited
   partnership unit outstanding)                             -       (3,973,656)      (103,400)   (4,077,056)

Net income before recognition
   of discontinued operations                                -          819,448         61,679       881,127

Loss on disposal of rental
   operations including the
   results of operations
   during phase-out period                                   -       (1,559,383)       (15,751)   (1,575,134)

Loss from discontinued
   rental operations                                                   (193,168)       (14,539)     (207,707)
                                                        ------       ----------       --------   -----------
Partners' capital (deficit)
   December 31, 1995                                    22,895       10,601,361       (274,571)   10,326,790
                                                        ------       ----------       --------   -----------
Distributions to partners
   ($34.24 per limited
   partnership unit outstanding)                             -         (783,927)       (59,005)     (842,932)

Net income before recognition
   of discontinued operations                                -          759,413         57,160       816,573

Loss from discontinued
   rental operations                                                   (286,824)       (21,589)     (308,413)
                                                        ------       ----------       --------   -----------
Partners' capital (deficit)
   December 31, 1996                                    22,895      $10,290,023      $(298,005)  $ 9,992,018
                                                        ======      ===========      =========   ===========
</TABLE>

                See accompanying notes to financial statements.

                                      F-4

<PAGE>   18

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>

                                                      1996             1995           1994
                                                   -----------      -----------    -----------
<S>                                                <C>              <C>            <C>
Cash flows from operating activities:

  Cash received from patient care                  $14,147,312      $11,607,874    $13,067,071
  Interest received                                    102,804          112,432         58,395
  Other operating receipts                              32,390           25,998         27,096
  Cash paid to suppliers and employees             (14,041,741)     (11,417,373)   (10,608,610)
  Interest paid                                       (100,948)        (105,564)       (92,302)
  Provider fees                                       (123,995)        (123,995)      (123,995)
                                                   -----------      -----------    -----------

  Net cash provided (used) by
    operating activities                                15,822           99,372      2,327,655
                                                   -----------      -----------    -----------
Cash flows from investing activities:

  Capital expenditures                                (252,550)        (501,500)       (79,293)
  Proceeds from the sale of property                         -        4,000,000              -
  Collections on notes receivable                    1,045,102           72,600        67,101
                                                   -----------      -----------    -----------
  Net cash provided (used) by
    investing activities                               792,552        3,571,100        (12,192)
                                                   -----------      -----------    -----------
Cash flows from financing activities:

  Net related party transactions                        19,706           38,127         15,887
  Principal payments on debt obligations               (95,377)         (82,006)       (92,564)
  Distributions to partners                           (842,932)      (4,077,056)    (1,477,095)
                                                   -----------      -----------    -----------
  Net cash provided (used) by
    financing activities                              (918,603)      (4,120,935)    (1,553,772)
                                                   -----------      -----------    -----------
Net increase (decrease) in cash
    and cash equivalents                              (110,229)        (450,463)       761,691

Cash and cash equivalents, beginning
 of year                                               876,850        1,327,313       565,622
                                                   -----------      -----------    -----------
Cash and cash equivalents, end of year             $   766,621      $   876,850    $ 1,327,313
                                                   ===========      ===========    ===========
</TABLE>

                See accompanying notes to financial statements.

                                      F-5
<PAGE>   19

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                                     1996            1995            1994
                                                                                   ---------       ----------     ----------

<S>                                                                                <C>             <C>            <C>
Reconciliation of net income (loss) to net cash provided by operating
  activities:

  Net income (loss)                                                                $ 508,160       $ (901,714)    $  842,577
                                                                                   ---------       ----------     ----------
  Adjustments to reconcile net income (loss) to net cash provided by operating
  activities:

    Depreciation and amortization                                                    495,705          701,554        954,158
    Provision for losses on accounts
      receivable                                                                     133,858           57,397         34,674
    Loss on disposal of property                                                           -        1,575,134              -
    (Increase) decrease in:
      Patient accounts receivable, net                                              (691,991)      (1,736,914)      (300,000)
      Estimated third-party payor
        settlements                                                                 (582,624)        (373,738)       297,604
      Prepaid expenses and other assets                                               (2,951)          56,071        (21,208)
    Increase (decrease) in:
      Accounts payable                                                               (24,962)         406,715        207,365
      Accrued expenses                                                                98,521          171,572          6,803
      Estimated third-party payor
        settlements                                                                   96,794          157,352        259,793
      Other liabilities                                                              (14,688)         (14,057)        45,889
                                                                                   ---------       ----------     ----------
    Total adjustments                                                               (492,338)       1,001,086      1,485,078
                                                                                   ---------       ----------     ----------
  Net cash provided (used) by
    operating activities                                                           $  15,822       $   99,372     $2,327,655
                                                                                   =========       ==========     ==========
Supplemental schedule of noncash investing and financing activities:
  Note receivable taken for property sold                                          $    -          $1,000,000     $     -
                                                                                   =========       ==========     ==========
</TABLE>

                See accompanying notes to financial statements.

                                      F-6

<PAGE>   20
             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS




Note 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                 (a)      Organization

                          RWB Medical Income Properties 1 Limited Partnership
                          (the Partnership) is a Louisiana partnership formed on
                          July 7, 1984 to invest primarily in income-producing,
                          health care related properties, such as doctors'
                          office buildings and nursing homes. The Partnership
                          currently is operating and holding for investment
                          purposes income-producing nursing homes. The
                          Partnership Offering (Offering) as represented by the
                          Partnership Prospectus (Prospectus) dated October 11,
                          1984, provided for the sale of 25,000 Partnership
                          units at a price of $1,000 per unit. The Partnership's
                          first closing on the sale of units was March 20, 1985.
                          The Offering closed on June 30, 1986.

                 (b)      Allocation of Net Profits and Net Losses

                          Net profits and net losses shall be determined and
                          allocated as of December 31 of each year as follows:

                          .       Net profits (losses) (exclusive of net profits
                                  (losses) attributable to the sale or
                                  disposition of Partnership properties) are
                                  allocated 93% to the limited partners and 7%
                                  to the general partners.

                          .       Net profits attributable to the sale or
                                  disposition of a Partnership property shall be
                                  allocated as follows:

                                  .        First, prior to giving effect to any
                                           distributions of proceeds from the
                                           transaction, to the general partners
                                           and the limited partners with
                                           negative balances in their capital
                                           accounts pro rata in proportion to
                                           such respective negative balances;

                                  .        Second, to the general partners in an
                                           amount necessary to make the balances
                                           in their respective capital accounts
                                           equal to 15% of the sales proceeds
                                           remaining following allocation to the
                                           limited partners of an amount equal
                                           to their original capital
                                           contribution; and

                                  .        Third, the balance, if any, to the
                                           limited partners.

                          .       Net losses attributable to the sale or
                                  disposition of a Partnership property shall be
                                  allocated in a manner similar to above, except
                                  that limited and general partner


                                      F-7
<PAGE>   21
             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS




                                  accounts would be reduced pro rata to the
                                  amount of their respective capital
                                  investments, then, pro rata to zero, and for
                                  any remaining loss, 93% to the limited
                                  partners and 7% to the general partners. A
                                  minimum of 1% of losses shall be allocated
                                  to the general partner.

                 (c)      Principles of Consolidation

                          The financial statements for the year ended December
                          31, 1996 consolidate the accounts of the Partnership
                          and its wholly owned subsidiary, Lakecrest Nursing
                          Home, Inc. since May 1, 1995 (see Note 10). All
                          material intercompany transactions have been
                          eliminated.

                 (d)      Cash Distributions

                          Cash distributions shall be made quarterly within 45
                          days of the end of the quarter. Cash flow shall be
                          distributed 93% to the limited partners and 7% to the
                          general partners. Sale or financing proceeds shall be
                          distributed 100% to the limited partners to the extent
                          of their original capital contribution and then the
                          remainder shall be distributed 85% to the limited
                          partners and 15% to the general partners.

                 (e)      Per Unit Information

                          Limited partnership information per unit is based
                          on the number of partnership units outstanding of
                          22,895 in 1996, 1995 and 1994. Federal taxable income
                          per unit outstanding is not necessarily reflective of
                          a limited partner's actual per unit amount due to
                          different tax allocations with respect to tax-exempt
                          partners.

                 (f)      Land, Building and Related Personal Property

                          Land, building and related personal property are
                          stated at cost. Depreciation of buildings is provided
                          over their estimated useful lives ranging from twenty
                          to forty years on the straight-line method. Equipment
                          and other personal property are depreciated primarily
                          over five to seven years on the straight-line method.

                 (g)      Amortization

                          Deferred financing costs are amortized over the life
                          of the loan using the straight-line method. Deferred
                          lease commission costs were amortized over the lives
                          of the leases through the dates the properties were
                          sold (see Note 3).

                                      F-8


<PAGE>   22
             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS


                 (h)      Income Taxes

                          Income is allocated to the individual partners and,
                          therefore, no income taxes have been provided for in
                          these financial statements.

                 (i)      Patient Service Revenues

                          Patient service revenue is recorded at the nursing
                          homes' established rates with contractual adjustments
                          ($11,576,458 in 1996, $7,184,277 in 1995 and
                          $5,391,261 in 1994) and provision for uncollectible
                          accounts, bad debts ($133,858 in 1996, $57,397 in
                          1995, and $34,674 in 1994) and other discounts
                          deducted to arrive at net patient service revenue.

                          Net patient revenue includes amounts estimated by
                          management to be reimbursable by Medicare, Medicaid
                          and other third-party programs under the provisions of
                          cost and prospective payment reimbursement formulas in
                          effect. Amounts received under these programs are
                          generally less than the established billing rates of
                          the nursing homes and the difference is reported as a
                          contractual adjustment and deducted from gross
                          revenue. The nursing homes recognize estimated final
                          settlements due from or to third-party programs
                          currently. Final determination of amounts earned is
                          subject to audit by the intermediaries. Differences
                          between estimated provisions and final settlement will
                          be reflected as charges or credits to operating
                          revenues in the year the cost reports are finalized.

                 (j)      Cash Equivalents Policy

                          For purposes of the statement of cash flows, the
                          Partnership considers all highly liquid debt
                          instruments with an original maturity of three months
                          or less to be cash equivalents.

                 (k)      Uninsured Cash Balances

                          The Partnership maintains cash balances in several
                          banks. Cash accounts at banks are insured by the FDIC
                          for up to $100,000. Amounts in excess of insured
                          limits were approximately $242,789 at December 31,
                          1996 and $291,859 at December 31, 1995. A portion of
                          commingled funds discussed in Note 8., may be at risk,
                          but the amount in excess of FDIC limits related to the
                          Partnership is not determinable.

                                      F-9

<PAGE>   23
              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                         NOTES TO FINANICAL STATEMENTS



                 (l)      Uses of Estimates

                          Management uses estimates and assumptions in preparing
                          financial statements in accordance with generally
                          accepted accounting principles. Those estimates and
                          assumptions affect the reported amounts of assets and
                          liabilities, the disclosure of contingent assets and
                          liabilities, and the reported revenues and expenses.
                          Actual results could vary from the estimates that were
                          assumed in preparing the financial statements.

Note 2.  CASH AND CASH EQUIVALENTS

         Cash and cash equivalents consist of the following at December 31:

<TABLE>
<CAPTION>

                                               1996        1995
                                               ----        ----
         <S>                                 <C>        <C>
         Cash                                $  15,386  $  876,850
         Short-term securities                 751,235        -
                                             ---------  ----------
                                             $ 766,621  $  876,850
                                             =========  ==========
</TABLE>

Note 3. PROPERTY AND EQUIPMENT

        On September 3, 1986, the Partnership purchased Four Freedoms Manor
        Nursing Home, now known as Southpoint Manor, a 230 bed skilled nursing
        home in Miami Beach, Florida, for $7,350,000 plus capitalized
        acquisition costs and fees of $504,602.

        On October 1, 1986, the Partnership purchased Merry Wood Nursing Home, a
        124 bed skilled nursing home in Elmore, Alabama, for $3,643,294. Merry
        Wood was leased to Merrywood Nursing Home, Inc., under a ten year lease
        with two five year renewal options. On January 1, 1991, the Partnership
        purchased the stock of Merrywood Nursing Home, Inc. for $1. The
        transaction was accounted for as a purchase. Effective July 1, 1992
        Merrywood Nursing Home, Inc. was merged with the Partnership. The lease
        agreement with Merrywood Nursing Home, Inc., described in the preceding
        paragraph, was terminated in conjunction with the merger.

        On December 17, 1985, the Partnership purchased Merrillville
        Convalescent Center (Merrillville), a 180 bed skilled nursing home in
        Merrillville, Indiana for $5,376,348. Until December 17, 1992,
        Merrillville was leased under two twenty year leases which were
        accounted for as capital leases (see Note 5). One lease was for the
        building, equipment and related land, and the other was for land
        adjacent to the nursing home (17.9 acres). On December 17, 1992, the
        lessor was declared to be in default on the lease and the Partnership
        assumed operations of the facility. The value of the net investment in
        direct financing lease along with unamortized deferred lease commissions
        was allocated to the cost of land,



                                     F-10
<PAGE>   24

             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS


        building and equipment at the termination of this lease. No gain or loss
        was recognized related to the termination of the lease. Effective
        January 1, 1993 the Partnership leased the Merrillville facility under
        an operating lease (see Note 5). Effective September 1, 1995, the
        Partnership sold the facility (see Note 10).

        A summary of property, equipment and accumulated depreciation at
        December 31, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>

                                                              1996              1995
                                                              ----              ----
                 <S>                                      <C>              <C>
                 Land                                     $   525,000      $   525,000
                 Buildings and improvements                11,866,426       11,590,498
                 Furniture and equipment                    1,309,265        1,322,600
                 Property under capital leases                   -              16,870
                                                          -----------      -----------
                    Total                                  13,700,691       13,454,968
                 Accumulated depreciation
                   and amortization                        (5,633,623)      (5,154,161)
                                                          -----------      -----------
                 Net property and
                      equipment                           $ 8,067,068      $ 8,300,807
                                                          ===========      ===========

</TABLE>
Note 4.  NOTES RECEIVABLE

        The Articles of Limited Partnership state that no General Partner shall
        have the authority to cause the Partnership to make loans other than in
        connection with the purchase, sale or disposition of partnership
        property. The General Partner believes the following loans were
        necessary to preserve the Partnership's assets. The first loan described
        was made in order to remove the bankrupt manager of the Partnership's
        property. The second loan was made to finance needed improvements and
        operations neglected by an insolvent lessee.

        The first note is from the manager of one of the nursing homes owned by
        the Partnership. The note requires monthly payments of $6,616 through
        July of 1996 and bears interest at 8%. These moneys were loaned as part
        of an acquisition and financing agreement dated May 23, 1991, whereby
        the Partnership contracted with a replacement manager of the
        Partnership's facility located in Miami Beach, Florida (Southpoint
        Manor). As part of the agreement, the Partnership agreed to retain the
        manager of the Southpoint Manor facility for a period of no less than
        thirty-six (36) months in consideration for its agreement to manage the
        facility and in consideration for its agreement to pay certain sums to
        the former management company.

        The outstanding receivable related to this note totaled $45,102 at
        December 31, 1995. The balance was paid in full during the year ended
        December 31, 1996.

                                      F-11
<PAGE>   25

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                         NOTES TO FINANICIAL STATEMENTS

        The second note was from the lessee of the Merrillville, Indiana
        facility. The lessee agreed to continue to operate the facility and make
        the improvements necessary to meet certification requirements if the
        Partnership would provide current operating capital and suspend required
        lease payments (see Note 5 ). The loan, as amended, was a $1,500,000
        revolving credit agreement that was to accrue interest at prime plus 1%
        with payments of principal and interest deferred until July 1, 1995. The
        receivable related to this note totaled $734,346 at December 31, 1994.
        In May of 1995 the Partnership purchased the stock of the lessee
        corporation (Note 10), and forgave the note receivable.

        A third note in the amount of $1,000,000 from the purchaser of the
        Merrillville, Indiana facility was accepted by the Partnership in
        September 1995 (see Note 10). This note, made in conjunction with the
        sale of the facility, bore interest at 9%, and called for payments of
        interest only through August 31, 1996, at which time the note was paid
        in full.

Note 5.  PROPERTY LEASES

        Merrillville was accounted for as a capital lease until December 17,
        1992 as explained in Note 3. Bad debt expense related to Merrillville's
        deferred financing lease was recorded in the amount of $110,879 in 1993
        in addition to $405,784 written off in prior years.

        Effective January 1, 1993 the Partnership leased the Merrillville
        facility under an operating lease which provided for monthly rental
        payments of $55,000. The lease, however, allowed the tenant to leave the
        monthly lease payments unpaid until August 15, 1993 with no interest or
        penalties, to allow the tenant to correct the operating deficiencies of
        the prior tenant (see Note 3).

        Rental income for Merrillville's lease was $220,000 in 1995, and
        $660,000 in 1994. Interest totaling $74,628 was accrued in 1994 and
        interest of $15,837 and penalties of $6,600 were assessed related to
        this receivable in 1993. Rental receivables totaled $1,026,210 at
        December 31, 1994. Collectibility of some of this rental income and
        related penalties and interest was considered doubtful and, accordingly,
        reserves of $272,447 in 1994 and $341,218 in 1993 were charged to bad
        debt expense. Loans for operating expenses, as explained in Note 4.,
        were made to the lessee. The Partnership has other contractual
        agreements, as explained in Note 9, with entities that shared common
        ownership with the lessee of the Merrillville facility.

        Effective May 1, 1995, the Partnership purchased the stock of the lessee
        of the Merrillville facility as part of a plan to


                                      F-12


<PAGE>   26
             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS



        discontinue rental operations. In September 1995 the Partnership sold
        the Merrillville facility and terminated the lease (Note 10).

Note 6.  LONG-TERM DEBT

        Long-term debt at December 31, 1996, and 1995 is summarized as follows:
        1996 1995

<TABLE>
<CAPTION>

                                                                                           1996        1995
                                                                                           ----        ----
                 <S>                                                                  <C>          <C>
                 Prime plus 1% (9.25% at
                 December 31, 1996 and 9.5% at
                 December 31, 1995) mortgage
                 note payable in monthly principal installments of $6,667 plus
                 interest, with a final balloon principal payment
                 due March 1, 1998                                                    $   893,333  $ 980,000

                 Capitalized lease obligations
                 payable monthly with interest
                 rates from 8% to 13.46%                                                     -         8,710
                                                                                      -----------  ---------
                                                                                          893,333    988,710
                 Less amounts due in one year
                    or less                                                                80,000     84,105
                                                                                      -----------  ---------
                                                                                      $   813,333  $ 904,605
                                                                                      ===========  =========
</TABLE>

        The mortgage note is secured by the Southpoint and Merry Wood real
        estate owned by the Partnership. The General Partner has guaranteed the
        debt, as well as pledged its stock and partnership interest. The
        management companies (see Note 9) have also guaranteed the debt and
        entered into a negative pledge agreement whereby they will not pledge,
        transfer or encumber their stock while the loan is outstanding. All
        management fees are subordinate to the debt. The loan document contains
        restrictive covenants associated with ratio and earnings requirements.
        Management is not aware of any conditions that exist that would cause
        them to be in noncompliance with these requirements.

        The aggregate annual maturities of mortgage notes payable and capital
        lease obligations are as follows:

<TABLE>
                       <S>                             <C>
                       1997                            $    80,000
                       1998                                813,333
                                                        ----------
                                                       $   893,333
                                                        ==========
</TABLE>

                                      F-13
<PAGE>   27

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                         NOTES TO FINANCIAL STATEMENTS

Note 7. INCOME TAXES

        No provision for income taxes is made in the financial statements since
        taxable income is reported in the income tax returns of its partners.
        Differences between the net income as reported in the financial
        statements and Federal taxable income arise from the nature and timing
        of certain revenue and expense items. The following is a reconciliation
        of reported net income and Federal taxable income:
<TABLE>
<CAPTION>

                                                                     1996                  1995                    1994
                                                                     ----                  ----                    ----
<S>                                                              <C>                   <C>                     <C>
Net income (loss) as reported                                    $  508,160            $ (901,714)             $  842,577
Adjustments:
  Gain on sale of Merrillville                                         -                2,343,824                   -
  (Income) loss from consolidated
     C-corporation                                                  307,496              (142,073)                  -
  Depreciation differences                                          (64,124)               36,485                 181,284
  Insurance deductible                                                 -                  (48,000)                   -
  Travel and entertainment                                            8,655                 8,797                  11,488
  Bad debt reserve                                                   72,430              (582,317)                231,790
  Vacation accrual                                                   31,307                   327                  (1,880)
                                                                 ----------            ----------              ----------
    Federal taxable income                                       $  863,924            $  715,329              $1,265,259
                                                                 ==========            ==========              ==========
Federal taxable income per
   limited partnership unit
   outstanding                                                       $35.09                $29.06                  $51.40
                                                                    =======               =======                 =======
</TABLE>

Note 8. RELATED PARTY TRANSACTIONS

        QualiCorp, Inc., the parent of RWB Management Corp. (the Managing
        General Partner of the Partnership), charged the Partnership property
        management fees totaling $141,923 in 1996, $121,266 in 1995 and $132,776
        in 1994. QualiCorp charged the Partnership administrative expenses
        totaling $175,565 in 1996, $166,077 in 1995, and $179,086 in 1994.

        Details of the amounts due to affiliates at December 31 are as follows:
<TABLE>
<CAPTION>

                                                         1996        1995
                                                         ----        ----
             <S>                                      <C>         <C>
             Due to affiliates of the general
               partner                                $    -      $   51,783
             Due to QualiCorp                           260,679      189,190
                                                      ---------   ----------
                                                      $ 260,679   $  240,973
                                                      =========   ==========
</TABLE>

        During the year ended December 31, 1995, the General Partners
        established a pooled investment account in which the General Partners
        and the partnerships in which they act as general partners could
        participate. This account was used by those entities to invest overnight
        cash balances, and borrow funds when an entity


                                     F-14
<PAGE>   28

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                         NOTES TO FINANCIAL STATEMENTS


        needed temporary access to funds. Each entity received its share of
        interest earned monthly, and was charged interest on any funds borrowed.

        The Articles of Limited Partnership of the partnerships involved state
        that no General Partner shall have the authority to cause those
        partnerships to make loans other than in connection with the purchase,
        sale or disposition of partnership property. The Articles of Limited
        Partnership of those partnerships also state that the partnerships'
        funds may not be commingled with any other entities' funds except as
        necessary for the operation of those partnerships.

        At December 31, 1995, the Partnership had borrowed $51,783 from the
        other entities, and had earned net interest of $14,967 from this
        arrangement.

        See Footnote 14 for sale of affiliated assets.

Note 9.  CONTRACTUAL AGREEMENTS

        On June 20, 1991, the Partnership entered into a management agreement
        whereby the Manager is required to perform certain services for the
        Southpoint facility. The agreement had an initial three-year term and
        was extended for three additional years in 1994. Fees were based on 6%
        of gross collected operating revenues not to exceed 6% of the gross
        collected operating revenues from July 1, 1990 to July 1, 1991 and
        increased by an inflation factor in 1992 and thereafter. Management fees
        charged to the Partnership were $480,119 in 1996, $461,653 in 1995, and
        $443,897 in 1994.

        On July 1, 1992, the Partnership entered into a management agreement
        whereby the Manager is required to perform certain services for the
        Merry Wood facility. The agreement had an initial five-year term with
        one additional five-year option. Fees were based on 5% of gross
        collected operating revenues, excluding revenues solely attributed to
        reimbursement for provider taxes. Management fees charged to the
        Partnership were $183,297 in 1996, $176,247 in 1995 and $172,603 in
        1994.

        The management agreements were amended on January 1, 1995. The amendment
        calls for fixed monthly management fees of $38,471 at Southpoint and
        $14,687 at Merry Wood, with a cost of living factor equal to the greater
        of 4% per annum or the increase in the Consumer Price Index or such
        other measure mutually agreeable to the parties. The agreements expire
        December 31, 1998. Both agreements contained termination on sale clauses
        that were amended to base the fee on a sum equal to the discounted
        present value of the monthly management fee as of the date of
        termination of the agreement times the number of months remaining in the
        management



                                     F-15
<PAGE>   29
             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS


        agreement discounted to the date of termination at an annual interest
        rate of ten percent (10%). In addition, the parties agreed to terminate
        the Manager's right of first refusal.

        Commencing January 1, 1996, the Management Agreement was extended for a
        period of up to a maximum of eighteen months by one month for every
        month after January 1, 1996 in which the parties are engaged in the
        process of attempting to sell the Facilities. In the event of a sale of
        the Facilities, the termination on sale fee described above would be
        discounted to the date of termination at an annual rate of ten percent
        (10%) and then further discounted by a factor of thirty-three and
        one-third percent (33 1/3%).

        The above agreements are with entities that are commonly owned. The
        property manager who owes the Partnership the first of the notes
        receivable described in Note 4 along with the lessor of the
        Merrillville, Indiana property who, prior to being purchased by the
        Partnership (Note 10), owed the Partnership the second note receivable
        described in Note 4 and the unpaid lease payments described in Note 5,
        are or were commonly owned with the above entities. Additionally, the
        seller of the equipment purchased at Merrillville as described in Note
        10, is commonly owned with the above entities.

Note 10. DISCONTINUED OPERATIONS

        Effective May 1, 1995, the Partnership purchased the stock of the
        lessee, now known as Lakecrest Nursing Home, Inc. for $500. The
        Partnership took over operations with the intent of selling the facility
        and discontinuing all rental activities. The transaction is accounted
        for as a purchase. In June 1995, the Partnership purchased various items
        of equipment that had been leased by Lakecrest Nursing Home, Inc. for
        $218,855. As explained in Note 9, the Partnership has other contractual
        agreements, with entities that shared common ownership with the lessee
        of the Merrillville facility. On September 1, 1995, the Partnership sold
        the Merrillville facility in exchange for a total of $5,000,000, payable
        with $4,000,000 in cash and note receivable of $1,000,000 (Note 4). The
        results of operations are consolidated for the period from May 1, 1995
        to December 31, 1995 and for the year ended December 31, 1996, and are
        included in the loss on disposal of rental operations. Pro forma results
        of operations for December 31, 1995 and 1994 as though the Partnership
        and Lakecrest Nursing Home, Inc. had combined at the beginning of 1994
        would have been stated as follows:



                                     F-16

<PAGE>   30
             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                                                 1995           1994
                                                                 ----           ----
                 <S>                                         <C>            <C>
                 Revenues                                    $14,897,120    $16,493,451
                                                             ===========    ===========
                 Net income (loss)                           $(1,099,390)   $   441,904
                                                             ===========    ===========
                 Net income (loss) per limited
                   partnership unit outstanding                 $ (48.79)      $  17.95
                                                                 =======        =======
</TABLE>

        Loss on disposal of rental operations at December 31, 1995 reflects the
        loss related to operations subsequent to April 30, 1995 totaling
        $336,183 on revenues of $1,414,947 and loss on sale of assets totaling
        $1,238,951.

Note 11. CONTINGENCIES

        The Partnership maintains insurance or reserves which it believes are
        adequate to meet the needs of the Partnership. While the Partnership has
        been named as a defendant in several lawsuits, nothing has come to the
        attention of the Partnership which leads it to believe that it is
        exposed to a risk of material loss not covered by insurance or reserves.

 Note 12. CONCENTRATIONS IN REVENUE SOURCES

        The Partnership provides patient care services under various third party
        agreements. The principal sources of revenue under these contracts are
        derived primarily through the Medicaid and Medicare programs, as well as
        contracts with private pay patients who do not qualify for assistance
        from the other programs. The percentage of the Joint Venture's income
        from each of these sources for the years ended December 31, 1996, 1995,
        and 1994 is as follows:
<TABLE>
<CAPTION>

                                                     1996                1995               1994
                                                     ----                ----               ----
                  <S>                              <C>                 <C>                <C>
                  Private pay patients              15.35%              17.87%             15.71%
                  Medicaid                          43.50%              50.57%             50.96%
                  Medicare                          41.15%              31.56%             33.33%
                                                   ------              ------             ------
                   Total                           100.00%             100.00%            100.00%
                                                   ======              ======             ======
</TABLE>


        The percentage attributable to private pay patients includes only
        amounts due for services where the primary payer is a private source.
        The Medicaid and Medicare percentages include amounts due from those
        programs as well as the patient's financial responsibility incurred
        under these contracts.

 Note 13. FAIR VALUE OF FINANCIAL INSTRUMENTS

        Financial Accounting Statement No. 107, Disclosures about Fair Value of
        Financial Instruments ("FAS 107") requires disclosure of fair value
        information about financial instruments, whether or not


                                      F-17
<PAGE>   31

              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                         NOTES TO FINANCIAL STATEMENTS

        recognized on the face of the balance sheet, for which it is practicable
        to estimate the value. The assumptions used in the estimation of the
        fair value of the Company's financial instruments are detailed below.
        Where quoted prices are not available, fair values are based on
        estimates using discounted cash flows and other valuation techniques.
        The use of discounted cash flows can be significantly affected by the
        assumptions used, including the discount rate and estimates of future
        cash flows. The following disclosures should not be considered a
        surrogate of the liquidation value of the Company, but rather represents
        a good-faith estimate of the increase or decrease in value of financial
        instruments held by the Company since purchase, origination or issuance.
        The following methods and assumptions were used by the Company in
        estimating the fair value of its financial instruments:

            Cash and cash equivalents: The carrying amount approximates fair
            value because of the short period to maturity of the instruments.

            Long-term Debt: For variable rate notes, fair values are based on
            carrying values.

            The other financial instruments of the Company are short-term assets
            and liabilities whose carrying amounts reported in the balance sheet
            approximate fair value. These items include accounts receivable and
            accounts payable.

 Note 14. SUBSEQUENT EVENT

        On February 3, 1997, RWB Medical Income Properties 1 Limited Partnership
        entered into a purchase agreement with Omega HealthCare Investors, Inc.
        to sell all of the real and personal property of the nursing home
        facilities.

        The purchase price is allocated among the facilities as follows:

<TABLE>

                   <S>                                       <C>
                   Southpoint Manor (230 beds)               $12,550,000
                   Merry Wood Lodge (124 beds)                 6,050,000
                                                             -----------
                   Proceeds from sale                        $18,600,000
                                                             ===========
</TABLE>

        Proceeds from the sale will be reduced by expenses incurred as a result
        of the sale, cash offsets for liabilities assumed by the buyer and
        existing indebtedness. These payments should approximate $5,432,000.

        The closing could take place as early as March 31, 1997 and can be
        extended by the Partnership until April 30, 1997. If conditions
        precedent to either party's obligation to close are not satisfied


                                      F-18

<PAGE>   32
              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP

                         NOTES TO FINANCIAL STATEMENTS

        or waived, the closing can be extended to a date no later than July 31,
        1997. Approximately $600,000 of these proceeds will be set aside in a
        joint signature account for the purpose of securing all of the seller's
        obligations under the purchase agreement. These funds will be available
        to the Partnership in the event that these obligations do not exceed the
        funds held in escrow.

        In addition, a separate amount of proceeds of approximately $2,370,000
        will also be held in reserve by the Partnership pending final settlement
        of third-party cost reports and other contingencies.

        This agreement can be terminated by mutual consent of the parties and
        other conditions precedent.

        In conjunction with the above sale, Omega HealthCare Investors, Inc. has
        agreed to a similar purchase of assets from RWB Medical Properties
        Limited Partnership IV, of which an officer of QualiCorp, Inc. owns
        either directly or indirectly a 21.53% interest. This sale relates to a
        131 bed nursing home in Patterson, Louisiana and the purchase price for
        the assets is $5,350,000.


                                      F-19

<PAGE>   33
                        [SELF & MAPLES, P.A. LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT
                            ON ADDITIONAL INFORMATION



        To the Partners
        RWB Medical Income Properties 1 Limited Partnership

        Our report on our audits of the basic financial statements of RWB
        Medical Income Properties 1 Limited Partnership for 1996 appears on page
        1. Those audits were made for the purpose of forming an opinion on the
        basic financial statements taken as a whole. The Schedule of Valuation
        and Qualifying Accounts and Reserves for Allowances for Doubtful
        Accounts, Schedule of Consolidated Supplementary Income Statement
        Information, and Schedule of Real Estate and Accumulated Depreciation
        are presented for purposes of additional analysis and are not required
        parts of the basic financial statements. Such information has been
        subjected to the auditing procedures applied to the audits of the basic
        financial statements, and in our opinion, is fairly stated in all
        material respects in relation to the financial statements taken as a
        whole.


        /s/ Self & Maples, P.A.

        Oneonta, Alabama
        January 24, 1997, except for Note 14, as to which the date is
          February 3, 1997

                                      F-20
<PAGE>   34

             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
                                SCHEDULE VIII
                      VALUATION AND QUALIFYING ACCOUNTS
              AND RESERVES FOR ALLOWANCES FOR DOUBTFUL ACCOUNTS
             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>

                                                       1996         1997           1998
                                                  ------------  -------------  ------------
<S>                                               <C>           <C>            <C>
Balance at beginning of year                      $    837,727  $   1,233,671  $  1,001,881

Amounts charged to revenue                             (40,716)       160,323  $    (75,331)

Bad debt expense and recording
  of losses realized related to
  Merrillville's operatint lease                             -       (613,665) $    272,447

Write-offs                                             133,858         57,398        34,674
                                                  ------------  -------------  ------------
Balance at end of year                            $    930,869  $     837,727  $  1,233,671
                                                  ============  =============  ============
</TABLE>



                                     F-21


<PAGE>   35


              RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
                                 SCHEDULE X
           CONSOLIDATED SUPPLEMENTARY INCOME STATEMENT INFORMATION
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                          1994           1995          1996
                                                                       ----------     ----------    ----------
<S>                                                                    <C>            <C>           <C>
Professional care of patients
     Salaries and wages                                                $4,000,223     $3,982,347    $3,765,545
     Ancillary service expense                                          3,343,906      1,927,683     1,258,187
     Supplies & pharmaceuticals                                           700,352        625,828       545,257

General and administrative
     Salaries and wages                                                   446,017        359,481       343,421
     Accounting and auditing                                              121,760        117,375        86,617
     Insurance                                                            327,224        316,009       351,362
     Property tax                                                         134,365        133,409       108,829
     Management fees                                                      663,416        637,900       616,500
     Property management fees                                             141,924        121,265       132,776
     Cost reimbursement                                                   175,565        166,077       179,086

Dietary
    Food cost                                                             444,992        433,544       448,072

Household and plant
    Repairs and maintenance                                                63,967        107,613       139,529
    Utilities                                                             281,561        267,383       267,843

Depreciation and amortization                                          $  495,705      $ 701,554      $954,158
                                                                       ==========      =========      ========

</TABLE>

                                     F-22



<PAGE>   36
             RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
                                 SCHEDULE XI
                   REAL ESTATE AND ACCUMULATED DEPRECIATION
                     FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                             INITIAL COST       COSTS CAPITALIZED         GROSS AMOUNT AT WHICH CARRIED
                                           TO PARTNERSHIP (A)     SUBSEQUENT TO             AS OF DECEMBER 31, 1996(B)
                                                                   ACQUISITION
                                                BUILDING AND                  CARRYING          BUILDING AND
        DESCRIPTION     ENCUMBRANCES    LAND    IMPROVEMENTS    IMPROVEMENTS    COST    LAND    IMPROVEMENTS    TOTAL
----------------------- ------------ ------------------------- ---------------------- -------------------------------------
<S>                        <C>        <C>        <C>              <C>          <C>       <C>      <C>          <C>
SOUTHPOINT MANOR           $509,200   $500,000   $ 7,354,602      $1,665,802   $  -      $500,000 $ 9,O20,404  $ 9,520,404
MERRYWOOD                   384,133     25,000     3,743,335         411,952      -        25,000   4,155,287    4,180,287
                        ------------ ------------------------- ---------------------- -------------------------------------
                           $893,333   $525,000   $11,097,937      $2,077,754   $  -      $525,000 $13,175,691  $13,700,691
                        ============ ========================= ====================== =====================================

<CAPTION>
                                                                     LIFE ON WHICH
                                                                      DEPRECIATION
                                                                       IN LATEST
                                                                      STATEMENT OF
                        ACCUMULATED        DATE OF        DATE        OPERATION IS
                        DEPRECIATION    CONSTRUCTION    ACQUIRED        COMPUTED
                        ------------    --------------------------------------------
<S>                     <C>              <C>            <C>             <C>
SOUTHPOINT MANOR        $  4,157,019        1984        09/03/86        30 YEARS
MERRYWOOD                  1,506,604     1965/1975      10/01/86        30 YEARS
                        ------------
                        $  5,663,623
                        ============
</TABLE>


(A) The initial cost to the Partnership represents the original purchase price
    of the properties.
(B) The aggregate cost of real estate owned at December 31, 1996 for Federal
    Income tax purposes was approximately $13,700,691
(C) Reconciliation of real estate owned at December 31, 1996, 1995, and 1994:



<TABLE>
<CAPTION>
                                                         1996            1995            1994
                                                      -------------  --------------  --------------
<S>                                                    <C>             <C>             <C>
Balance at beginning of period                         $13,454,968     $18,884,656     $18,805,363
Additions                                                  245,723         501,500          79,293
Reductions                                                       -        (142,335)              -
Sale of Merrillville facility                                    -      (5,788,853)              -
                                                       -----------     -----------     -----------
Balance at end of period                               $13,700,691     $13,454,968     $18,884,656
                                                       ===========     ===========     ===========


(D)  Reconciliation of accumulated depreciation:



Balance at beginning of period                         $ 5,074,404     $ 5,386,058     $ 4,441,316
Depreciation expense                                       559,219         701,554         944,742
Reductions                                                       -        (142,335)              -
Sale of Merrillville facility                                    -        (870,873)              -
                                                       -----------     -----------     -----------
Balance at end of period                               $ 5,633,623     $ 5,074,404     $ 5,386,058
                                                       ===========     ===========     ===========
</TABLE>