<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, 2000

                                       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,
               SUITE 600,
           CHICAGO, ILLINOIS                           60606-2607
    (ADDRESS OF PRINCIPAL EXECUTIVE                    (ZIP CODE)
                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 Corporation (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, 2000. Ordinary routine legal matters incidental to
the business which were not deemed material, were pursued during the quarter
ended December 31, 2000.

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, 2001, there were 11,138 Holders of Units.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                      For the Years Ended December 31,
                          ---------------------------------------------------------
                             2000       1999       1998        1997        1996
-----------------------------------------------------------------------------------
<S>                       <C>        <C>        <C>         <C>         <C>
Total revenues            $  381,000 $  405,400 $ 6,477,900 $ 6,849,100 $ 7,003,700
Net income                $  248,900 $  291,800 $ 7,098,600 $ 4,044,900 $ 3,203,200
Net income allocated to
 Limited Partners         $  246,400 $  288,900 $ 6,883,800 $ 3,663,600 $ 2,778,800
Net income allocated to
 Limited Partners per
 Unit (84,886 Units
 outstanding)             $     2.90 $     3.40 $     81.09 $     43.16 $     32.74
Total assets              $6,188,900 $5,996,300 $19,116,600 $30,019,700 $44,166,200
Declared distributions
 to Limited Partners per
 Unit (84,886 Units
 outstanding) (a)               None       None $    262.36 $    301.44 $    104.00
Return of capital to
 Limited Partners per
 Unit (84,886 Units
 outstanding) (b)               None       None $    181.27 $    258.28 $     71.26
OTHER DATA:
Investment in:
 Commercial rental
  properties (net of
  accumulated
  depreciation and
  amortization)                 None       None        None $10,111,300 $32,480,000
 Real estate joint
  venture                       None       None        None $ 5,311,400 $ 5,852,800
Number of real property
 interests owned at
 December 31                    None       None        None           3           7
-----------------------------------------------------------------------------------
</TABLE>
(a) Distributions to Limited Partners per Unit for the years ended December 31,
    1998, 1997 and 1996 included Sales Proceeds of $247.36, $274.94 and $59.00,
    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,
                        -----------------------------------------------------------------
                           2000         1999          1998          1997         1996
------------------------------------------------------------------------------------------
<S>                     <C>         <C>           <C>           <C>           <C>
Cash Flow (as defined
 in the Partnership
 Agreement) (a)         $  248,900  $    291,800  $  1,477,900  $  3,847,700  $ 4,657,000
Items of
 reconciliation:
 (Cash Flow) from joint
  venture                                             (453,100)     (719,500)    (574,700)
 Changes in current
  assets and
  liabilities:
  Decrease in current
   assets                   34,500         2,200        64,400        56,500       23,900
  (Decrease) in current
   liabilities             (56,300)      (50,900)     (133,200)     (184,400)    (164,600)
------------------------------------------------------------------------------------------
Net cash provided by
 operating activities   $  227,100  $    243,100  $    956,000  $  3,000,300  $ 3,941,600
------------------------------------------------------------------------------------------
Net cash provided by
 (used for) investing
 activities             $2,943,000  $ (2,943,000) $ 21,546,500  $ 24,877,900  $(1,960,700)
------------------------------------------------------------------------------------------
Net cash (used for)
 financing activities               $(13,361,200) $(17,868,500) $(18,007,000) $(9,675,500)
------------------------------------------------------------------------------------------
</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-11.

                                                                               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 Corporation
(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
Results of operations for the years ended December 31, 2000 and 1999 were
comprised of interest income and post property sale activities.

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.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1999 TO THE YEAR ENDED DECEMBER 31,
1998
Net income decreased by $6,806,800 for the year ended December 31, 1999 when
compared to the year ended December 31, 1998. The decrease was primarily due to
the gains recorded in 1998 on the sales of three Partnership properties. The
decrease was also due to the absence of operating results in 1999 from the
three properties sold by the Partnership during 1998. In addition, the decrease
was due to a reduction in interest earned on the Partnership's short-term
investments resulting from a decrease in the average cash available for
investment.

LIQUIDITY AND CAPITAL RESOURCES
The increase in the Partnership's cash position of $3,170,100 for the year
ended December 31, 2000 was primarily the result of the maturity of the
Partnership's investments in debt securities. Liquid assets (including cash and
cash equivalents) of the Partnership as of December 31, 2000 were comprised of
amounts reserved for the Lakewood environmental matter (as hereafter discussed)
and Partnership liquidation expenses.

The decrease of $16,000 in net cash provided by operating activities for the
year ended December 31, 2000 when compared to the year ended December 31, 1999
was primarily the result of the decrease in net income, as previously
discussed.

Net cash (used for) provided by investing activities changed from $(2,943,000)
for the year ended December 31, 1999 to $2,943,000 the year ended December 31,
2000. The change was due to the 2000 maturity of the 1999 investments in debt
securities.

Investments in debt securities are a result of the continued extension of the
maturities of certain of the Partnership's short-term investments in an effort
to maximize the Partnership's return on these investments, while they are held
as working capital reserves. These investments are of investment grade and
mature less than one year from their dates of purchase.

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

The decrease of $13,361,200 in net cash used for financing activities for the
year ended December 31, 2000 when compared to the year ended December 31, 1999
was due to the February 28, 1999 special distributions to Partners of proceeds
from the sales of Ellis Building and Holiday Office Park North and South.

As described in Note 4 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, 2001, 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 2001.

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

Douglas Crocker II, 60, 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. and
was a member of the Board of Directors of Horizon Group, Inc. from July 1996 to
June 1998. Mr. Crocker was an Executive Vice President of Equity Financial and
Management Company ("EFMC") from November 1992 until March 31, 1997.

Donald J. Liebentritt, 50, 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, 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, 2001 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
       Norman M. Field.................... Vice President--Finance and Treasurer
</TABLE>

PRESIDENT AND CEO--See Table of Directors above.

VICE PRESIDENT--See Table of Directors above.

Norman M. Field, 52, has been Vice President of Finance and Treasurer of the
General Partner since February 1984, and also served as Vice President of Great
American from July 1983 until March 1995 and from July 1997 until November
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, 2000. 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, 2001, 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,
    2001, 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 $9,400 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,
    2000, total fees and reimbursements of $1,400 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, 2000, the General Partner was not
  paid a Partnership Management Fee, and was allocated Net Profits of $2,500.

(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,
2000.

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

Dated: March 23, 2001                            /s/ DOUGLAS CROCKER II
                                        By: ____________________________________
                                                   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.

<TABLE>
<S>                                    <C>                 <C>
        /s/ DOUGLAS CROCKER II           March 23, 2001    President, Chief Executive
______________________________________                      Officer and Director of
          DOUGLAS CROCKER II                                the General Partner

      /s/ DONALD J. LIEBENTRITT          March 23, 2001    Vice President and
______________________________________                      Director of the General
        DONALD J. LIEBENTRITT                               Partner

         /s/ NORMAN M. FIELD             March 23, 2001    Vice President--Finance
______________________________________                      and Treasurer
           NORMAN M. FIELD
</TABLE>

                                                                               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, 2000 and 1999          A-3
Statements of Partners' Capital for the Years Ended
 December 31, 2000, 1999 and 1998                        A-4
Statements of Income and Expenses for the Years
 Ended December 31, 2000, 1999 and 1998                  A-5
Statements of Cash Flows for the Years Ended
 December 31, 2000, 1999 and 1998                        A-6
Notes to Financial Statements                        A-7 to A-11
----------------------------------------------------------------
</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 1999 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, 2000 and 1999, 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, 2000. 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, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

                                     Ernst & Young LLP

Chicago, Illinois
January 30, 2001

A-2
<PAGE>

BALANCE SHEETS
December 31, 2000 and 1999
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                                           2000       1999
-----------------------------------------------------------------------------
<S>                                                     <C>        <C>
ASSETS
Cash and cash equivalents                               $6,187,600 $3,017,500
Investments in debt securities                                      2,943,000
Rents receivable                                                       27,800
Other assets                                                 1,300      8,000
-----------------------------------------------------------------------------
                                                        $6,188,900 $5,996,300
-----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Accounts payable and accrued expenses                  $   86,000 $  140,500
 Due to Affiliates                                           1,400      3,200
 Other liabilities                                           1,300      1,300
-----------------------------------------------------------------------------
                                                            88,700    145,000
-----------------------------------------------------------------------------
Partners' capital:
 General Partner                                            78,700     76,200
 Limited Partners (84,886 Units issued and outstanding)  6,021,500  5,775,100
-----------------------------------------------------------------------------
                                                         6,100,200  5,851,300
-----------------------------------------------------------------------------
                                                        $6,188,900 $5,996,300
-----------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 2000, 1999 and 1998
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                       General     Limited
                                       Partner     Partners       Total
----------------------------------------------------------------------------
<S>                                   <C>        <C>           <C>
Partners' capital, January 1, 1998    $      --  $ 20,873,100  $ 20,873,100
Net income for the year ended
 December 31, 1998                      214,800     6,883,800     7,098,600
Distributions for the year ended
 December 31, 1998                     (141,500)  (22,270,700)  (22,412,200)
----------------------------------------------------------------------------
Partners' capital, December 31, 1998     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
----------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                                                             A-3
<PAGE>

STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 2000, 1999 and 1998
(All dollars rounded to nearest 00s except per Unit amounts)

<TABLE>
<CAPTION>
                                                  2000     1999       1998
-----------------------------------------------------------------------------
<S>                                             <C>      <C>       <C>
Income:
 Rental                                         $        $ 21,100  $  995,500
 Interest                                        381,000  384,300     860,900
 Net gain on sales of property                                      4,621,500
-----------------------------------------------------------------------------
                                                 381,000  405,400   6,477,900
-----------------------------------------------------------------------------
Expenses:
 Depreciation and amortization                                        199,700
 Property operating:
 Affiliates                                                   200      34,300
 Nonaffiliates                                              5,300     200,400
 Real estate taxes                                         (1,300)     48,800
 Insurance--Affiliate                                                   7,600
 Repairs and maintenance                                    1,700     161,900
 General and administrative:
 Affiliates                                        9,400   30,700      39,000
 Nonaffiliates                                   120,800   76,400     168,400
-----------------------------------------------------------------------------
                                                 130,200  113,000     860,100
-----------------------------------------------------------------------------
Net income before income from participation in
 joint venture and state income tax expense      250,800  292,400   5,617,800
Income from participation in joint venture:
 Operations                                                           295,200
 Gain on sale of property                                           1,439,100
-----------------------------------------------------------------------------
Income before state income tax expense           250,800  292,400   7,352,100
 State income tax expense                          1,900      600     253,500
-----------------------------------------------------------------------------
Net income                                      $248,900 $291,800  $7,098,600
-----------------------------------------------------------------------------
Net income allocated to General Partner         $  2,500 $  2,900  $  214,800
-----------------------------------------------------------------------------
Net income allocated to Limited Partners        $246,400 $288,900  $6,883,800
-----------------------------------------------------------------------------
Net income allocated to Limited Partners per
 Unit (84,886 Units outstanding)                $   2.90 $   3.40  $    81.09
-----------------------------------------------------------------------------
</TABLE>

STATEMENTS OF CASH FLOWS
For the years ended December 31, 2000, 1999 and 1998
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                          2000         1999          1998
------------------------------------------------------------------------------
<S>                                    <C>         <C>           <C>
Cash flows from operating activities:
 Net income                            $  248,900  $    291,800  $  7,098,600
 Adjustments to reconcile net income
  to net cash provided by operating
  activities:
 Depreciation and amortization                                        199,700
 Net gain on sales of property                                     (4,621,500)
 (Income) from participation in joint
  venture                                                          (1,652,000)
 Changes in assets and liabilities:
  Decrease in rents receivable             27,800                      39,500
  Decrease in other assets                  6,700         2,200        24,900
  (Decrease) increase in accounts
   payable and accrued expenses           (54,500)       25,000      (104,600)
  (Decrease) increase in state income
   tax payable                                          (75,300)       75,300
  (Decrease) increase in due to
   Affiliates                              (1,800)        1,200       (50,100)
  (Decrease) in other liabilities                        (1,800)      (53,800)
------------------------------------------------------------------------------
   Net cash provided by operating
    activities                            227,100       243,100       956,000
------------------------------------------------------------------------------
Cash flows from investing activities:
 Net proceeds from sales of property                               14,537,200
 Payments for capital and tenant
  improvements                                                         (4,100)
 Decrease (increase) in investments in
  debt securities                       2,943,000    (2,943,000)
 Decrease in restricted cash                                           50,000
 Net distributions received from joint
  venture                                                           6,963,400
------------------------------------------------------------------------------
   Net cash provided by (used for)
    investing activities                2,943,000    (2,943,000)   21,546,500
------------------------------------------------------------------------------
Cash flows from financing activities:
 Distributions paid to Partners                     (13,361,200)  (17,819,000)
 (Decrease) in security deposits                                      (49,500)
------------------------------------------------------------------------------
   Net cash (used for) financing
    activities                                      (13,361,200)  (17,868,500)
------------------------------------------------------------------------------
Net increase (decrease) in cash and
 cash equivalents                       3,170,100   (16,061,100)    4,634,000
Cash and cash equivalents at the
 beginning of the year                  3,017,500    19,078,600    14,444,600
------------------------------------------------------------------------------
Cash and cash equivalents at the end
 of the year                           $6,187,600  $  3,017,500  $ 19,078,600
------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
A-4
<PAGE>

NOTES TO FINANCIAL STATEMENTS
December 31, 2000

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 4 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 financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership. This joint venture was formed for the
purpose of acquiring a 100% interest in certain real property and until its
sale in August 1998, was operated under the common control of the General
Partner. Accordingly, the Partnership's pro rata share of the venture's
revenues, expenses, assets, liabilities and Partners' capital is included in
the financial statements.

Investment in joint venture, represented the recording of the Partnership's
interest, under the equity method of accounting, in a joint venture with an
Affiliated partnership. The joint venture acquired a preferred majority
interest in a limited partnership with the sellers of the Lansing, Michigan
property ("Holiday"). Under the equity method of accounting, the Partnership
recorded its initial investment at cost and adjusted its investment account for
its share of Holiday's income or loss and its distributions of cash flow (as
defined in the limited partnership agreement). During 1998, Holiday was sold
and the remaining assets and liabilities of the limited partnership were
distributed to the Partnership. In December 1998, the limited partnership was
dissolved.

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.

Investments in debt securities are comprised of obligations of the United
States government and are classified as held-to-maturity. These investments are
carried at their amortized cost basis in the financial statements, which
approximated fair market value. All of these securities had a maturity of less
than one year 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, 2000 and 1999.

                                                                             A-5
<PAGE>

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 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 year
ended December 31, 2000 the General Partner was not paid a Partnership
Management Fee and was allocated Net Profits of $2,500. For the year ended
December 31, 1999 the General Partner was not paid a Partnership Management Fee
and was allocated Net Profits of $2,900. For the year ended December 31, 1998,
the General Partner was paid a Partnership Management Fee of $141,500 and was
allocated Net Profits of $214,800, which includes $73,300 from the sales of
Partnership properties.

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

<TABLE>
<CAPTION>
                                 2000            1999             1998
                            --------------- --------------- ----------------
                             Paid   Payable  Paid   Payable   Paid   Payable
-----------------------------------------------------------------------------
<S>                         <C>     <C>     <C>     <C>     <C>      <C>
Property management and
 leasing fees               $  None $ None  $   700 $ None  $ 41,000 $(3,300)
Reimbursement of property
 insurance premiums            None   None     None   None     7,700    None
Legal                          None   None    5,300   None    59,200    None
Reimbursement of expenses,
 at cost:
 --Accounting                 3,400   None   11,800  2,000    17,100   3,300
 --Investor communication     7,800  1,400   15,000  1,200    12,700   2,000
-----------------------------------------------------------------------------
                            $11,200 $1,400  $32,800 $3,200  $137,700 $ 2,000
-----------------------------------------------------------------------------
</TABLE>

The variance between the amounts listed in the table and the Statement of
Income and Expense is due to capitalizable legal costs.

3. PROPERTY SALES:

On September 22, 1998, the joint venture in which the Partnership owned a 50%
interest, treated under the equity method, consummated the sale of its
property, Holiday Office Park North and South, located in Lansing, Michigan for
a sale price of $13,500,000. The Partnership's share of proceeds from this
transaction was $6,526,900, which was net of closing expenses. The Partnership
reported a net gain of $1,439,100 for the year ended December 31, 1998 in
connection with this sale and distributed $6,499,700 or $76.57 per Unit on
February 28, 1999 to Limited Partners of record as of September 22, 1998. For
tax reporting purposes, the Partnership reported a (loss) of $(367,300) for the
year ended December 31, 1998 in connection with this sale.

On August 21, 1998, a joint venture in which the Partnership owned a 50%
interest, consummated the sale of the Ellis Building, located in Sarasota,
Florida, for a sale price of $13,875,000. The Partnership's share of proceeds
from this transaction was $6,673,800, which was net of closing expenses. The
Partnership reported a net of gain of $2,942,000 for the year ended December
31, 1998 in connection with this sale and distributed $6,672,900 or $78.61 per
Unit on February 28, 1999 to Limited Partners of record as of August 21, 1998.
For tax reporting purposes, the Partnership reported a gain of $1,525,100 for
the year ended December 31, 1998 in connection with this sale.

On March 4, 1998, the Partnership sold Marketplace at Rivergate Shopping
Center, located in Nashville, Tennessee, for a sale price of $8,128,000.
Proceeds from this transaction were $7,823,100, which was net of closing
expenses. The Partnership reported a gain for financial reporting purposes of
$1,639,300 for the year ended December 31, 1998 from this sale and distributed
$7,824,800 or $92.18 per Unit on August 31, 1998 to Limited Partners of record
as of March 4, 1998. For tax reporting purposes, the Partnership reported a
gain of $1,013,500 for the year ended December 31, 1998 in connection with this
sale.

4. 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

A-6
<PAGE>

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 purchaser provided the California Regional Water Quality
Control Board (the "Water Board") with its corrective action plan (the "Plan")
for the clean up of the site. The Water Board's recommended modifications to
the plan have been implemented. Currently, the purchaser is monitoring to
determine the extent of the contamination of the groundwater at the site. Upon
determination of the groundwater concentrations, the purchaser will submit a
revised plan to the Water Board and request its approval. The timing of the
completion of the remediation process is contingent upon, among other things,
the Water Board's issuance of this approval. Accordingly, there can be no
assurance as to the timing of the completion of the remediation process. The
General Partner continues to monitor the documentation delivered by the
purchaser regarding the purchaser's activities to remedy the hazardous
substances at Lakewood.

5. STATE INCOME TAX EXPENSE:

State income tax expense is comprised substantially of taxes based on taxable
income imposed by the District of Columbia and the states of Michigan and
Florida.

                                                                             A-7