<PAGE>

================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549-1004

                               -----------------

                                   FORM 10-K

                               -----------------

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

    For the fiscal year ended December 31, 2001

                                      OR

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

    For the transition period from ____________ to ____________

    Commission File Number 0-12945


                First Capital Institutional Real Estate, Ltd.--2
             (Exact name of registrant as specified in its charter)


                          Florida                 59-2313852
              (State or other jurisdiction of  (I.R.S. Employer
              incorporation or organization)  Identification No.)


       Two North Riverside Plaza,                          60606-2607
               Suite 700,                                  (Zip Code)
           Chicago, Illinois
(Address of principal executive offices)

         Registrant's telephone number, including area code: (312) 207-0020

          Securities registered pursuant to Section 12(b) of the Act: NONE

          Securities registered pursuant to Section 12(g) of the Act:

                           Limited Partnership Units

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  [X]

Documents incorporated by reference:

The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the definitive Prospectus dated October 19, 1983,
included in the Registrant's Registration Statement on Form S-11 (Registration
No. 2-86361), is incorporated herein by reference in Part IV of this report.

Exhibit Index--Page A-1

================================================================================

<PAGE>

PART I

ITEM 1.  BUSINESS

The registrant, First Capital Institutional Real Estate, Ltd.--2 (the
"Partnership"), is a limited partnership organized in 1983 under the Florida
Uniform Limited Partnership Law. The Partnership sold 84,886 Limited
Partnership Units (the "Units") to the public from November 1983 to October
1984, pursuant to a Registration Statement on Form S-11 filed with the
Securities and Exchange Commission (Registration Statement No. 2-86361).
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement.

The business of the Partnership was to invest primarily in existing, improved,
income-producing real estate, such as shopping centers, warehouses and office
buildings, and, to a lesser extent, in other types of income-producing real
estate. From May 1984 to May 1986, the Partnership made seven real property
investments and purchased 50% interests in four joint ventures, which were each
formed with an Affiliated partnership for the purpose of acquiring a 100%
interest in certain real property. In addition, in January 1987 the Partnership
formed a joint venture with an Affiliated partnership (the "Joint Venture"), in
which they were each 50% partners. The Joint Venture was formed for the purpose
of entering into a limited partnership agreement with an unaffiliated third
party to which the Joint Venture contributed 75% of the total purchase price of
a property in order to obtain a preferred majority interest in the limited
partnership. All of the Partnership's joint ventures were operated under the
common control of First Capital Financial LLC (the "General Partner"). During
the year ended 1998, the Partnership sold all of its remaining real property
investments. The Partnership is currently addressing post sale matters,
including monitoring the remediation of an environmental matter at one of the
properties sold during 1997. Upon the successful remediation of the
environmental matter and the resolution of other post closing matters, the
Partnership will make a liquidating distribution and dissolve.

ITEM 2.  PROPERTIES

During the year ended December 31, 1998, the Partnership sold its remaining
property investments.

ITEM 3.  LEGAL PROCEEDINGS

(a & b) The Partnership was not a party to, nor the subject of, any material
pending legal proceedings, nor were any such proceedings terminated during the
quarter ended December 31, 2001. Ordinary routine legal matters incidental to
the business which were not deemed material, were pursued during the quarter
ended December 31, 2001.

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

(a, b, c & d) None.

2

<PAGE>

PART II

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

There has not been, nor is there expected to be, a public market for units.

As of March 1, 2002, there were 11,042 Holders of Units.

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                    For the Years Ended December 31,
                                                        --------------------------------------------------------
                                                           2001       2000       1999       1998        1997
<S>                                                     <C>        <C>        <C>        <C>         <C>
----------------------------------------------------------------------------------------------------------------
Total revenues                                          $  251,900 $  381,000 $  405,400 $ 6,477,900 $ 6,849,100
Net income                                              $   90,100 $  248,900 $  291,800 $ 7,098,600 $ 4,044,900
Net income allocated to Limited Partners                $   89,200 $  246,400 $  288,900 $ 6,883,800 $ 3,663,600
Net income allocated to Partners per Unit (84,886 Units
  outstanding)                                          $     1.05 $     2.90 $     3.40 $     81.09 $     43.16
Total assets                                            $6,292,100 $6,188,900 $5,996,300 $19,116,600 $30,019,700
Declared distributions to Limited Partners per Unit
  (84,886 Units outstanding) (a)                              None       None       None $    262.36 $    301.44
Return of capital to Limited Partners per Unit (84,886
  Units outstanding) (b)                                      None       None       None $    181.27 $    258.28
Other data:
Investment in:
 Commercial rental properties (net of accumulated
   depreciation and amortization)                             None       None       None        None $10,111,300
 Real estate joint venture                                    None       None       None        None $ 5,311,400
Number of real property interests owned at December 31.       None       None       None        None           3
</TABLE>
--------------------------------------------------------------------------------
(a)Distributions to Limited Partners per Unit for the years ended December 31,
   1998 and 1997 included Sales Proceeds of $247.36 and $274.94 respectively.
(b)For the purposes of this table, return of capital represents either: 1) the
   amount by which distributions, if any, exceed net income for the respective
   year or 2) total distributions, if any, when the Partnership incurs a net
   loss for the respective year. Pursuant to the Partnership Agreement, Capital
   Investment is only reduced by distributions of Sale Proceeds. Accordingly,
   return of capital as used in the above table does not impact Capital
   Investment.

The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by accounting principles generally accepted in the United States
("GAAP"):

<TABLE>
<CAPTION>
                                                                    For the Years Ended December 31,
                                                     --------------------------------------------------------------
                                                       2001       2000         1999          1998          1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>       <C>         <C>           <C>           <C>
Cash Flow (as defined in the Partnership
  Agreement) (a)                                     $ 90,100  $  248,900  $    291,800  $  1,477,900  $  3,847,700
Items of reconciliation:
 (Cash Flow) from joint venture                                                              (453,100)     (719,500)
 Changes in current assets and liabilities:
   (Increase) decrease in current assets              (11,600)     34,500         2,200        64,400        56,500
   Increase (decrease) in current liabilities          13,100     (56,300)      (50,900)     (133,200)     (184,400)
--------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities            $ 91,600  $  227,100  $    243,100  $    956,000  $  3,000,300
--------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities       --  $2,943,000  $ (2,943,000) $ 21,546,500  $ 24,877,900
--------------------------------------------------------------------------------------------------------------------
Net cash (used for) financing activities                   --          --  $(13,361,200) $(17,868,500) $(18,007,000)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(a)Cash Flow is defined in the Partnership Agreement as Partnership revenues
   earned from operations (excluding tenant deposits and proceeds from the sale
   or disposition of any Partnership properties), minus all expenses incurred
   (including Operating Expenses and any reserves of revenues from operations
   deemed reasonably necessary by the General Partner), except depreciation and
   amortization expenses and capital expenditures, lease acquisition
   expenditures and the General Partner's Partnership Management Fee.

The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-6.

                                                                             3

<PAGE>

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


The ordinary business of the Partnership is expected to pass through three
phases: (i) Offering of Units and investment in properties, (ii) operation of
properties and (iii) sale or other disposition of properties.

Statements contained in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are not historical facts, may be
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.

The Partnership commenced the Offering of Units on November 10, 1983 and began
operations on December 5, 1983, after achieving the required minimum
subscription level. On October 15, 1984, the Offering was terminated upon the
sale of 84,886 Units. From May 1984 to May 1986, the Partnership made seven
real property investments and purchased 50% interests in four joint ventures,
which were each formed with an Affiliated partnership for the purpose of
acquiring a 100% interest in certain real property. In addition, in January
1987 the Partnership formed a joint venture with an Affiliated partnership (the
"Joint Venture"), in which they were each 50% partners. The Joint Venture was
formed for the purpose of entering into a partnership agreement with an
unaffiliated third party to which the Joint Venture contributed 75% of the
total purchase price of a property in order to obtain a preferred majority
interest in the limited partnership. All of the Partnership's joint ventures
were operated under the common control of First Capital Financial LLC (the
"General Partner").

The Partnership is in the disposition phase of its life cycle. During the
disposition phase of the Partnership's life cycle, comparisons of operating
results are complicated due to the timing and effect of property sales.
Partnership operating results are generally expected to decline as real
property interests are sold since the Partnership no longer receives income
generated from such real property interests. The Partnership has sold all of
its real property investments.

Operations

Comparison of the year ended December 31, 2001 to the year ended December 31,
2000
Net income decreased by $158,800 for the year ended December 31, 2001 when
compared to the year ended December 31, 2000. The decrease was primarily due to
a decrease in interest earned on the Partnership's short-term investments,
which was due to a decrease in the rates earned on those investments.

Comparison of the year ended December 31, 2000 to the year ended December 31,
1999
Net income decreased by $42,900 for the year ended December 31, 2000 when
compared to the year ended December 31, 1999. The decrease was primarily due to
an increase in general and administrative expenses which was due to a 1999
adjustment of estimated overhead expenses to actual. This adjustment resulted
in lower than expected general and administrative expenses for the year ended
December 31, 1999. The decrease was also due to the 1999 receipt of rental
income from properties previously sold by the Partnership.

Liquidity and Capital Resources
The increase in the Partnership's cash position of $91,600 for the year ended
December 31, 2001 was the result of net cash provided by operating activities.
Liquid assets (including cash and cash equivalents) of the Partnership as of
December 31, 2001 were comprised of amounts reserved for the Lakewood
environmental matter (as hereafter discussed) and Partnership liquidation
expenses.

The decrease of $135,500 in net cash provided by operating activities for the
year ended December 31, 2001 when compared to the year ended December 31, 2000
was primarily the result of the decrease in net income, as previously discussed.

Net cash provided by investing activities decreased by $2,943,000 for the year
ended December 31, 2001 when compared to the year ended December 31, 2000. The
decrease was due to the 2000 maturity of the 1999 investments in debt
securities.

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

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

4

<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is submitted as a separate section of this report.
See page A-1 "Index of Financial Statements, Schedules and Exhibits."

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

None.

                                                                             5

<PAGE>

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) & (e) DIRECTORS

The Partnership has no directors. First Capital Financial LLC ("FCFC")
(formerly known as First Capital Financial Corporation) is the General Partner.
The directors of FCFC, as of March 1, 2002, are shown in the table below.
Directors serve for one year or until their successors are elected. The next
annual meeting of FCFC will be held in June 2002.

<TABLE>
<CAPTION>
                         Name                   Office
                         ----                   ------
                         <S>                   <C>
                         Douglas Crocker II... Director
                         Donald J. Liebentritt Director
</TABLE>

Douglas Crocker II, 61, has been President and Chief Executive Officer since
December 1992 and a Director since January 1993 of the General Partner. Mr.
Crocker has been President, Chief Executive Officer and trustee of Equity
Residential Properties Trust since March 31, 1993. Mr. Crocker is a member of
the Board of Directors of Wellsford Real Properties, Inc. and Ventas Inc. Mr.
Crocker was an Executive Vice President of Equity Financial and Management
Company ("EFMC") from November 1992 until March 31, 1997.

Donald J. Liebentritt, 51, has been Vice President of the General Partner since
July 1997 and a Director since May 2000 and is President of Equity Group
Investments, LLC ("EGI"), Vice President and Assistant Secretary of Great
American Management and Investment and Inc. ("Great American") and was
Principal and Chairman of Rosenberg and Liebentritt P.C. until its dissolution
in 1999. Mr. Liebentritt has also been a director of Davel Communications, Inc.
since November 2000.

(b) & (e) EXECUTIVE OFFICERS

The Partnership does not have any executive officers. The executive officers of
the General Partner as of March 1, 2002 are shown in the table. All officers
are elected to serve for one year or until their successors are elected and
qualified.

<TABLE>
<CAPTION>
          Name                                 Office
          ----                                 ------
          <S>                   <C>
          Douglas Crocker II... President and Chief Executive Officer
          Donald J. Liebentritt Vice President
          Philip Tinkler....... Vice President-Finance and Treasurer
</TABLE>

PRESIDENT AND CEO--See Table of Directors above.

VICE PRESIDENT--See Table of Directors above.

Philip Tinkler, 37, has been Vice President of Finance and Treasurer of the
Managing General Partner since April 2001, and has also been Vice
President/Assistant Treasurer of Great American since March 2001, and Treasurer
and Vice President of Accounting for EGI since May 2000.

(d) FAMILY RELATIONSHIPS

There are no family relationships among any of the foregoing directors and
officers.

(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

There are no involvements in certain legal proceedings among any of the
foregoing directors and officers.

ITEM 11.  EXECUTIVE COMPENSATION

(a, b, c & d) As stated in Item 10, the Partnership has no officers or
directors. Neither the General Partner, nor any director or
         officer of the General Partner, received any direct remuneration from
the Partnership during the year ended
         December 31, 2001. However, Affiliates of the General Partner do
compensate the directors and officers.

For additional information see Item 13 (a) Certain Relationships and Related
Transactions.

(e)None.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)As of March 1, 2002, no person owned of record or was known by the
   Partnership to own beneficially more than 5% of the Partnership's 84,886
   Units then outstanding.

(b)The Partnership has no directors or executive officers. As of March 1, 2002,
   the executive officers and directors of the General Partner, as a group, did
   not own any Units.

(c)None.

                                                                             6

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)Affiliates of the General Partner were entitled to compensation and
   reimbursements of $28,700 from the Partnership for investor communications
   and accounting services. Compensation for these services are on terms which
   are fair, reasonable and no less favorable to the Partnership than
   reasonably could be obtained from unaffiliated persons. As of December 31,
   2001, total fees and reimbursements of $4,400 were due to Affiliates.

   In accordance with the Partnership Agreement, subsequent to October 19,
   1984, the Termination of the Offering, the General Partner is entitled to
   10% of Cash Flow (as defined in the Partnership Agreement) as a Partnership
   Management Fee. Net Profits (exclusive of Net Profits from the sale or
   disposition of Partnership properties) are allocated: first, to the General
   Partner, in an amount equal to the greater of the General Partner's
   Partnership Management Fee or 1% of such Net Profits; second, the balance,
   if any, to the Limited Partners. Net Profits from the sale or disposition of
   a Partnership property are allocated: first, prior to giving effect to any
   distributions of Sale Proceeds from the transaction, to the General Partner
   and the Limited Partners with negative balances in their capital accounts
   pro rata in proportion to such respective negative balances, to the extent
   of the total of such negative balances; second, to the General Partner, in
   an amount necessary to make the balance in its capital account equal to the
   amount of Sale Proceeds to be distributed to the General Partner with
   respect to the sale or disposition of such property and third, the balance,
   if any, to the Limited Partners. Net Losses (exclusive of Net Losses from
   the sale, disposition or provision for value impairment of Partnership
   properties) are allocated 1% to the General Partner and 99% to the Limited
   Partners. Net Losses from the sale, disposition or provision for value
   impairment of Partnership properties are allocated: first, prior to giving
   effect to any distributions of Sale Proceeds from the transaction, to the
   extent that the balance in the General Partner's capital account exceeds its
   Capital Investment or the balance in the capital accounts of the Limited
   Partners exceeds the amount of their Capital Investment (the "Excess
   Balances"), to the General Partner and the Limited Partners pro rata in
   proportion to such Excess Balances until such Excess Balances are reduced to
   zero; second, to the General Partner and the Limited Partners and among them
   (in the ratio which balances) until the balance in their capital accounts
   shall be reduced to zero; third, the balance, if any, 99% to the Limited
   Partners and 1% to the General Partner. Notwithstanding the foregoing, in
   all events there shall be allocated to the General Partner not less than 1%
   of Net Profits and Net Losses from the sale, disposition or provision for
   value impairment of a Partnership property. For the year ended December 31,
   2001, the General Partner was not paid a Partnership Management Fee, and was
   allocated Net Profits of $900.

(b)None.

(c)No management person is indebted to the Partnership.

(d)None.

                                                                             7

<PAGE>

PART IV

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

(a, c & d) (1, 2 & 3) See Index of Financial Statements, Schedule and Exhibits
on page A-1 of Form 10-K.

(b)Reports on Form 8-K:

There were no reports filed on Form 8-K during the quarter ended December 31,
2001.

8

<PAGE>

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.

                                          FIRST CAPITAL INSTITUTIONAL REAL
                                          ESTATE, LTD.-2

                                          By: FIRST CAPITAL FINANCIAL LLC
                                             GENERAL PARTNER

                                               /s/  DOUGLAS CROCKER II
                                          By: _______________________________
Dated:  March 22, 2002
                                                   DOUGLAS CROCKER II
                                          President and Chief Executive Officer

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

   /s/  DOUGLAS CROCKER II   March 22, 2002 President, Chief Executive Officer
  --------------------------                  and Director of the General
      DOUGLAS CROCKER II                      Partner

  /s/  DONALD J. LIEBENTRITT March 22, 2002 Vice President and Director of
  --------------------------                  the General Partner
    DONALD J. LIEBENTRITT

     /s/  PHILIP TINKLER     March 22, 2002 Vice President--Finance and
  --------------------------                  Treasurer
        PHILIP TINKLER

                                                                             9

<PAGE>

INDEX OF FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT

<TABLE>
<CAPTION>
                                                                  Pages
         --------------------------------------------------------------
         ---------------------------------------------------------------
         <S>                                                 <C>
         Report of Independent Auditors                             A-2
         Balance Sheets as of December 31, 2001 and 2000            A-3
         Statements of Partners' Capital for the Years Ended
           December 31, 2001, 2000 and 1999                         A-3
         Statements of Income and Expenses for the Years
           Ended December 31, 2001, 2000 and 1999                   A-4
         Statements of Cash Flows for the Years Ended
           December 31, 2001, 2000 and 1999                         A-4
         Notes to Financial Statements                       A-5 to A-6
         --------------------------------------------------- ----------
         --------------------------------------------------------------
</TABLE>

SCHEDULES FILED AS PART OF THIS REPORT

All schedules have been omitted as inapplicable, or for the reason that the
required information is shown in the financial statements or notes thereto.

EXHIBITS FILED AS PART OF THIS REPORT

EXHIBITS (3 & 4) First Amended and Restated Certificate and Agreement of
Limited Partnership as set forth on pages A-1 through A-31 of the Partnership's
definitive Prospectus dated October 19, 1983; Registration Statement No.
2-86361, filed pursuant to Rule 424 (b), is incorporated herein by reference.

EXHIBIT (13) Annual Report to Security Holders

The 2000 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
Commission.

                                                                            A-1

<PAGE>

REPORT OF INDEPENDENT AUDITORS

Partners
First Capital Institutional Real Estate, Ltd.--2
Chicago, Illinois

We have audited the accompanying balance sheets of First Capital Institutional
Real Estate, Ltd.--2 as of December 31, 2001 and 2000, and the related
statements of income and expenses, partners' capital and cash flows for each of
the three years in the period ended December 31, 2001. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain 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 First Capital Institutional
Real Estate, Ltd.--2 at December 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

                                          ERNST & YOUNG LLP

Chicago, Illinois
February 28, 2002

A-2

<PAGE>

BALANCE SHEETS
December 31, 2001 and 2000
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                             2001       2000
                ------------------------- ---------- ----------
                <S>                       <C>        <C>

                ASSETS
                Cash and cash equivalents $6,279,200 $6,187,600
                Other assets                  12,900      1,300
                ------------------------- ---------- ----------
                ------------------------- $6,292,100 $6,188,900
                                          ---------- ----------

                LIABILITIES AND PARTNERS' CAPITAL
                Liabilities:
                 Accounts payable and
                   accrued expenses       $   94,600 $   86,000
                 Due to Affiliates             4,400      1,400
                 Other liabilities             2,800      1,300
                ------------------------- ---------- ----------
                -------------------------    101,800     88,700
                                          ---------- ----------
                Partners' capital:
                 General Partner              79,600     78,700
                 Limited Partners (84,886
                   Units issued and
                   outstanding)            6,110,700  6,021,500
                ------------------------- ---------- ----------
                -------------------------  6,190,300  6,100,200
                                          ---------- ----------
                ------------------------- $6,292,100 $6,188,900
                                          ---------- ----------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 2001, 2000 and 1999
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                   General   Limited
                                   Partner   Partners    Total
               ------------------- -------- ---------- ----------
               <S>                 <C>      <C>        <C>
               Partners' capital,
                 January 1, 1999    $73,300 $5,486,200 $5,559,500
               Net income for the
                 year ended
                 December 31, 1999    2,900    288,900    291,800
               ------------------- -------- ---------- ----------
               Partners' capital,
                 December 31, 1999   76,200  5,775,100  5,851,300
               Net income for the
                 year ended
                 December 31, 2000    2,500    246,400    248,900
               ------------------- -------- ---------- ----------
               Partners' capital,
               December 31, 2000     78,700  6,021,500  6,100,200
               Net income for the
                 year ended
                 December 31, 2001      900     89,200     90,100
               ------------------- -------- ---------- ----------
               Partners' capital,
                 December 31, 2001  $79,600 $6,110,700 $6,190,300
               ------------------- -------- ---------- ----------
</TABLE>

                                                                            A-3
   The accompanying notes are an integral part of the financial statements.

<PAGE>

STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 2001, 2000 and 1999
(All dollars rounded to nearest 00s except per Unit amounts)

<TABLE>
<CAPTION>
                                                                               2001     2000     1999
---------------------------------------------------------------------------- -------- -------- --------
<S>                                                                          <C>      <C>      <C>
Income:
 Rental                                                                      $        $        $ 21,100
 Interest                                                                     251,900  381,000  384,300
---------------------------------------------------------------------------- -------- -------- --------
                                                                              251,900  381,000  405,400
---------------------------------------------------------------------------- -------- -------- --------
Expenses:
 Property operating:
   Affiliates                                                                                       200
   Nonaffiliates                                                                                  5,300
 Real estate taxes                                                                               (1,300)
 Repairs and maintenance                                                                          1,700
 General and administrative:
   Affiliates                                                                  28,700    9,400   30,700
   Nonaffiliates                                                              133,100  122,700   77,000
---------------------------------------------------------------------------- -------- -------- --------
                                                                              161,800  132,100  113,600
---------------------------------------------------------------------------- -------- -------- --------
Net income                                                                   $ 90,100 $248,900 $291,800
---------------------------------------------------------------------------- -------- -------- --------
Net income allocated to General Partner                                      $    900 $  2,500 $  2,900
---------------------------------------------------------------------------- -------- -------- --------
Net income allocated to Limited Partners                                     $ 89,200  246,400 $288,900
---------------------------------------------------------------------------- -------- -------- --------
Net income allocated to Limited Partners per Unit (84,886 Units outstanding) $   1.05 $   2.90 $   3.40
---------------------------------------------------------------------------- -------- -------- --------
</TABLE>

STATEMENTS OF CASH FLOWS
For the years ended December 31, 2001, 2000 and 1999
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                                                                      2001        2000         1999
---------------------------------------------------------------------------------- ----------  ----------  ------------
<S>                                                                                <C>         <C>         <C>
Cash flows from operating activities:
 Net income                                                                        $   90,100  $  248,900  $    291,800
 Adjustments to reconcile net income to net cash provided by operating activities:
   Changes in assets and liabilities:
     Decrease in rents receivable                                                                  27,800
     (Increase) decrease in other assets                                              (11,600)      6,700         2,200
     Increase (decrease) in accounts payable and                                        8,600     (54,500)
       accrued expenses                                                                                          25,000
     (Decrease) in state income tax payable                                                                     (75,300)
     Increase (decrease) in due to Affiliates                                           3,000      (1,800)        1,200
     Increase (decrease) in other liabilities                                           1,500                    (1,800)
---------------------------------------------------------------------------------- ----------  ----------  ------------
       Net cash provided by operating activities                                       91,600     227,100       243,100
---------------------------------------------------------------------------------- ----------  ----------  ------------
Cash flows from investing activities:
 Decrease (increase) in investments in debt securities                                          2,943,000    (2,943,000)
---------------------------------------------------------------------------------- ----------  ----------  ------------
       Net cash provided by (used for) investing activities                                     2,943,000    (2,943,000)
---------------------------------------------------------------------------------- ----------  ----------  ------------
Cash flows from financing activities:
 Distributions paid to Partners                                                                             (13,361,200)
---------------------------------------------------------------------------------- ----------  ----------  ------------
       Net cash (used for) financing activities                                                             (13,361,200)
---------------------------------------------------------------------------------- ----------  ----------  ------------
Net increase (decrease) in cash and cash equivalents                                   91,600   3,170,100   (16,061,100)
Cash and cash equivalents at the beginning of the year                              6,187,600   3,017,500    19,078,600
---------------------------------------------------------------------------------- ----------  ----------  ------------
Cash and cash equivalents at the end of the year                                   $6,279,200  $6,187,600  $  3,017,500
---------------------------------------------------------------------------------- ----------  ----------  ------------
</TABLE>

A-4
   The accompanying notes are an integral part of the financial statements.

<PAGE>

NOTES TO FINANCIAL STATEMENTS
December 31, 2001

1. Organization and summary of significant accounting policies:

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

Organization:
The Partnership was formed on August 22, 1983, by the filing of a Certificate
and Agreement of Limited Partnership with the Department of State of the State
of Florida, and commenced the Offering of Units on November 10, 1983. The
Certificate and Agreement, as amended and restated, authorized the sale to the
public of up to 85,000 Units and not less than 1,400 Units pursuant to the
Prospectus. On December 5, 1983, the required minimum subscription level was
reached and Partnership operations commenced. A total of 84,886 Units were sold
prior to Termination of the Offering in October, 1984. The Partnership was
formed to invest primarily in existing, income-producing commercial real estate.

The Partnership has disposed of its real estate properties. Upon resolution of
the environmental matter disclosed in Note 3 and other post closing matters
related to the sales of the Partnership's properties, the Partnership will make
a liquidating distribution and dissolve.

In 1998, the Company adopted Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information". The Partnership has one reportable segment
as the Partnership is in the disposition phase of its life cycle, wherein it is
seeking to resolve post-closing matters relating to properties sold by the
Partnership. The adoption of Statement 131 did not affect the results of
operations or financial position.

The Partnership Agreement provides that the Partnership will be dissolved on or
before December 2014. The Limited Partners, by a majority vote, may dissolve
the Partnership at any time.

Accounting policies:
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States ("GAAP"). The Partnership
utilizes the accrual method of accounting. Under this method, revenues are
recorded when earned and expenses are recorded when incurred.

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

The Partnership is not liable for Federal income taxes as the Partners
recognize their proportionate share of the Partnership's income or loss on
their income tax returns; therefore, no provision for Federal income taxes is
made in the financial statements of the Partnership. It is not practicable for
the Partnership to determine the aggregate tax bases of the Limited Partners;
therefore, the disclosure of the difference between the tax bases and the
reported assets and liabilities of the Partnership would not be meaningful.

Property sales are recorded when title transfers and sufficient consideration
has been received by the Partnership. Upon disposition, the related costs and
accumulated depreciation are removed from the respective accounts. Any gain or
loss on sale is recognized in accordance with GAAP.

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

The Partnership's financial statements include financial instruments, including
receivables and trade liabilities. The fair value of financial instruments,
including cash and cash equivalents, was not materially different from their
carrying values at December 31, 2001 and 2000.

2. Related party transactions:

In accordance with the Partnership Agreement, subsequent to October 19, 1984,
the Termination of the Offering, the General Partner is entitled to 10% of Cash
Flow (as defined in the Partnership Agreement) as a Partnership Management Fee.
Net Profits (exclusive of Net Profits from the sale or disposition of
Partnership properties) are allocated: first, to the General Partner, in an
amount equal to the greater of the General Partner's Partnership Management Fee
or 1% of such Net Profits; second, the balance, if any, to the Limited
Partners. Net Profits from the sale or disposition of a Partnership property
are allocated: first, prior to giving effect to any distributions of Sale
Proceeds from the transaction, to the General Partner and the Limited Partners
with negative balances in their capital accounts pro rata in proportion to such
respective negative balances, to the extent of the total of such negative
balances; second, to the General Partner, in an amount necessary to make the
balance in its capital account equal to the amount of Sale Proceeds to be
distributed to the General Partner with respect to the sale or disposition of
such property and third, the balance, if any, to the Limited Partners. Net
Losses (exclusive of Net Losses from the sale, disposition or provision for
value impairment of Partnership properties) are allocated 1% to the General
Partner and 99% to the Limited Partners. Net Losses from the sale, disposition
or provision for value impairment of Partnership properties are allocated:
first, prior to giving effect to any distributions of Sale Proceeds from the
transaction, to the extent that the balance in the General Partner's capital
account exceeds its Capital Investment or the balance in the capital accounts
of the Limited Partners exceeds the amount of their Capital Investment (the
"Excess Balances"), to the General Partner and the Limited Partners pro rata in
proportion to such Excess Balances until such Excess Balances are reduced to
zero; second, to the General Partner and the Limited Partners and among

                                                                            A-5
   The accompanying notes are an integral part of the financial statements.

<PAGE>

them (in the ratio which balances) until the balance in their capital accounts
shall be reduced to zero; third, the balance, if any, 99% to the Limited
Partners and 1% to the General Partner. Notwithstanding the foregoing, in all
events there shall be allocated to the General Partner not less than 1% of Net
Profits and Net Losses from the sale or disposition of a Partnership property.
For the years ended December 31, 2001, 2000, and 1999 the General Partner was
not paid a Partnership Management Fee. During the years ended December 31,
2001, 2000, and 1999 the General Partner was allocated Net Profits of $900,
$2,500, and $2,900, respectively.

Fees and reimbursements paid and payable by the Partnership to Affiliates for
the years ended December 31, were as follows:

<TABLE>
<CAPTION>
                                            For the Years Ended December 31,
                                     -----------------------------------------------
                                          2001            2000            1999
                                     --------------- --------------- ---------------
                                      Paid   Payable  Paid   Payable  Paid   Payable
<S>                                  <C>     <C>     <C>     <C>     <C>     <C>
------------------------------------ ------- ------- ------- ------- ------- -------
Property management and leasing fees $  None $ None  $  None $ None  $   700 $ None
Legal                                   None   None     None   None    5,300   None
Reimbursement of expenses, at cost
 -- Accounting                         2,000   None    3,400   None   11,800  2,000
 -- Investor communication            23,700  4,400    7,800  1,400   15,000  1,200
------------------------------------ ------- ------- ------- ------- ------- -------
                                     $25,700 $4,400  $11,200 $1,400  $32,800 $3,200
------------------------------------ ------- ------- ------- ------- ------- -------
</TABLE>

3. Environmental matter:

In 1996, the General Partner became aware of the existence of hazardous
substances in the soil and groundwater under Lakewood Square Shopping Center
("Lakewood"). In connection with the 1997 sale of Lakewood, the purchaser
assumed the obligation to remedy the hazardous substances in the manner
required by law, which includes, but is not limited to, payment of all costs in
connection with the remediation work. In addition, the purchaser provided the
Partnership with certain indemnification protection in relation to clean-up
costs and related expenses arising from the presence of these hazardous
substances. At the present time, the General Partner is unaware of any claims
or other matters referred to above against the Partnership. The California
Regional Water Quality Control Board has approved the purchaser's revised
remedial action plan (the "Plan") for the site. The remediation is scheduled to
begin in 2002, provided the proper permits are obtained. There can be no
assurance as to the timing of successful completion of the Plan. The General
Partner continues to monitor the documentation delivered by the purchaser
regarding the purchaser's activities to remedy the hazardous substances at
Lakewood.

A-6