<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C. 20549-1004

                                   FORM 10-K
<TABLE>
<CAPTION>

[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934
<S>                                         <C>
For the fiscal year ended                            December 31, 1997
                            ------------------------------------------------------------------

                                      OR

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

    For the transition period from                            to
                                    ----------------------------------------------------------
    Commission File Number                                 0-12538
                           -------------------------------------------------------------------

                       First Capital Institutional Real Estate, Ltd. - 1
----------------------------------------------------------------------------------------------
                     (Exact name of registrant as specified in its charter)

           Florida                                                           59-2197264
-------------------------------                                      -------------------------
(State or other jurisdiction of                                           (I.R.S. Employer
incorporation or organization)                                          Identification No.)

Two North Riverside Plaza, Suite 1000, Chicago, Illinois                    60606-2607
--------------------------------------------------------             -------------------------
    (Address of principal executive offices)                                (Zip Code)

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
                                                                     -------------------------
</TABLE>
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 25, 1982, included
in the Registrant's Registration Statement on Form S-11 (Registration
No. 2-79092), 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.- 1 (the
"Partnership") is a limited partnership organized in 1982 under the Florida
Uniform Limited Partnership Law. The Partnership sold $60,000,000 in Limited
Partnership Units (the "Units") to the public from November 1982 through March
1983, pursuant to a Registration Statement on Form S-11 filed with the
Securities and Exchange Commission (Registration Statement No. 2-79092).
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 commercial real estate, such as shopping centers, warehouses,
office buildings, and, to a lesser extent, in other types of income-producing
commercial real estate. From May 1983 to January 1985, the Partnership made
three real property investments and purchased 50% interests in three joint
ventures with an Affiliated partnership. Each of these joint ventures was formed
for the purpose of acquiring a 100% interest in certain real property and were
operated under the common control of First Capital Financial Corporation (the
"Managing General Partner"). During the year ended December 31, 1997, the
Partnership has sold its remaining four real property investments.

Property management services for one of the Partnership's real estate
investments was provided by an independent real estate management company for
fees calculated as a percentage of gross rents received from the property.
Affiliates of the Managing General Partner provided property management and/or
supervisory services for fees calculated as a percentage of gross rents received
from each of the Partnership's properties.

ITEM 2.  PROPERTIES
-------  ----------

During the year ended December 31, 1997, the Partnership sold its remaining
property investments.

ITEM 3.  LEGAL PROCEEDINGS
-------  -----------------

(a & b) The Partnership and its properties were 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, 1997. Ordinary routine legal
matters incidental to the business which was not deemed material were pursued
during the quarter ended December 31, 1997.

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, 1998, there were 7,834 Holders of Units.

                                       3
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                       For the Years Ended December 31,
                          -----------------------------------------------------------
                             1997        1996        1995        1994        1993
-------------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>         <C>         <C>
Total revenues            $ 5,994,200 $ 5,074,600 $ 4,946,700 $ 4,684,100 $ 4,682,700
Net income                $ 3,850,100 $ 1,389,800 $   173,300 $   434,400 $ 1,167,800
Net income allocated to
 Limited Partners         $ 2,790,200 $ 1,478,900 $   276,900 $   532,200 $ 1,262,200
Net income allocated to
 Limited Partners per
 Unit (60,000 Units
 outstanding)             $     46.50 $     24.65 $      4.62 $      8.87 $     21.04
Total assets              $12,278,900 $28,137,300 $28,553,900 $29,792,600 $30,524,900
Distributions to Limited
 Partners per Unit
 (60,000 Units
 outstanding) (a)         $    447.93 $     28.00 $     25.68 $     23.32 $     13.32
Return of capital to
 Limited Partners per
 Unit (60,000 Units
 outstanding) (b)         $    401.43 $      3.35 $     21.06 $     14.45         N/A
OTHER DATA: Investment
 in commercial rental
 properties (net of
 accumulated
 depreciation and
 amortization)                   None $23,837,900 $24,149,000 $25,324,600 $25,990,100
Number of real property
 interests owned at
 December 31                     None           4           4           4           4
-------------------------------------------------------------------------------------
</TABLE>
(a) Distributions per Unit to Limited Partners for the year ended December 31,
    1997 included Sale Proceeds of $430.43.
(b) For 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 this 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 generally accepted accounting principles ("GAAP"):

<TABLE>
<CAPTION>
                                        For the Years Ended December 31,
                          ----------------------------------------------------------------
                              1997         1996         1995         1994         1993
-------------------------------------------------------------------------------------------
<S>                       <C>           <C>          <C>          <C>          <C>
Cash Flow (as defined in
 the Partnership
 Agreement) (a)           $  1,614,700  $ 2,533,800  $ 2,443,600  $ 2,069,000  $ 2,346,700
Items of reconciliation:
 Changes in assets and
  liabilities:
 Decrease (increase) in
  current assets                44,000       76,700       79,400       59,500      (29,000)
 (Decrease) increase in
  current liabilities         (322,500)    (162,600)      85,600       61,000        7,600
-------------------------------------------------------------------------------------------
Net cash provided by
 operating activities     $  1,336,200  $ 2,447,900  $ 2,608,600  $ 2,189,500  $ 2,325,300
-------------------------------------------------------------------------------------------
Net cash provided by
 (used for) investing
 activities               $ 25,970,300  $(1,132,900) $(1,094,700) $  (969,200) $  (713,500)
-------------------------------------------------------------------------------------------
Net cash (used for)
 financing activities     $(18,983,000) $(1,643,800) $(1,497,600) $(1,227,600) $(1,082,700)
-------------------------------------------------------------------------------------------
</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 deemed reasonably
     necessary by the Managing General Partner), except depreciation and
     amortization expenses and capital expenditures, lease acquisition
     expenditures and the General Partners' Subordinated 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-7
in this report.

                                                                               4
<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.

The Partnership commenced the Offering of Units on November 16, 1982 and began
operations on January 3, 1983, after reaching the required minimum subscription
level. In March, 1983, the Offering was terminated upon the sale of 60,000
Units. During the period from 1983 to 1985, the Partnership purchased a total
of six properties, including three 50% joint venture interests.

One of the Partnership's objectives was to dispose of its properties when
market conditions allow for the achievement of the maximum possible sales
price. The Partnership, has substantially completed 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. Through December
31, 1997 the Partnership has sold all of its real property investments.

OPERATIONS

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER 31,
1996
Net income for the year ended December 31, 1997 increased by $2,460,300 when
compared to the year ended December 31, 1996. The increase was primarily the
result of $2,799,200 in net gain on sale recorded from the sales of the
Partnership's four remaining properties. Also contributing to the increase was
an increase in interest earned on the Partnership's short-term investments
which resulted from an increase in the average amount of cash available for
investment. Partially offsetting the increase was the partial absence of 1997
results due to the sale of the Partnership's four remaining properties and an
increase in general and administrative expenses resulting from state tax
expense related to the sale of Peachtree.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE YEAR ENDED DECEMBER 31,
1995
Net income increased by $1,216,500 for the year ended December 31, 1996, when
compared to the year ended December 31, 1995, which was primarily the result of
$1,100,000 of provisions for value impairment recorded in 1995. Exclusive of
the provisions, net income increased $116,500 for the year ended December 31,
1996 when compared to the year ended December 31, 1995. The increase was
primarily due to improved operating results at Peachtree Palisades East Office
Building ("Peachtree"), 12621 Featherwood Office Building ("Featherwood") and
Lakewood Square Shopping Center ("Lakewood") as well as decreased general and
administrative expenses due to reduced printing and mailing costs. Partially
offsetting the increase in net income was diminished operating results at
Foxhall Square Building ("Foxhall").

Rental revenues increased by $153,100 or 3.2% for the year ended December 31,
1996, when compared to the year ended December 31, 1995. The primary factors
which caused the increase in rental revenues for the comparable periods were:
1) increased base rental income at Peachtree as a result of increases in the
average occupancy and the revenues generated by the parking facility, partially
offset by a decrease in real estate tax escalation income; 2) increased base
rents and tenant expense reimbursements for common area maintenance at Lakewood
primarily due to an increase in occupancy; and 3) increased real estate tax
escalation income at Featherwood.

Real estate tax expense increased by $33,500 for the year ended December 31,
1996 when compared to the year ended December 31, 1995 primarily due to the
1995 receipt of refunds for 1993/1994 real estate taxes at Lakewood and for
1992 real estate taxes at Peachtree. Real estate tax expense, exclusive of the
refunds, decreased as a result of decreases in the assessed valuations of
Foxhall and Featherwood.

Property operating expenses increased by $24,300 for the year ended December
31, 1996 when compared to the year ended December 31, 1995. The increase was
primarily due to an increase in utilities at Foxhall and an increase in
security costs at Lakewood.

The rate of inflation remained relatively stable during the years under
comparison and had a minimal impact on the operating results of the
Partnership. The nature of various tenants lease clauses protected the
Partnership, to some extent, from increases in the rate of inflation. Certain
of the lease clauses provided for the following: 1) annual rent increases based
on the Consumer Price Index or graduated rental increases; 2) percentage
rentals at shopping centers, for which the Partnership receives as additional
rent a percentage of a tenant's sales over predetermined amounts and 3) total
or partial tenant reimbursement of property operating expenses (e.g., common
area maintenance, real estate taxes, etc.).

LIQUIDITY AND CAPITAL RESOURCES
A primary objective of the Partnership is to provide cash distributions to
Partners from Partnership operations. Cash Flow (as defined in the Partnership
Agreement) is generally not equal to Partnership net income or cash flow as
determined by GAAP, since certain items are treated differently under the
Partnership Agreement than under GAAP. The Managing General Partner believes
that to facilitate a clear understanding of the Partnership's operations, an
analysis of Cash Flow (as defined in the Partnership Agreement) should be
examined in conjunction with an analysis of net income or cash flow as
determined by GAAP. The second table in Selected Financial Data includes a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flow provided by operating activities as determined by GAAP. Such amounts are
not indicative of actual distributions to Partners and should not necessarily
be considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Statements of Cash Flows.

Cash Flow (as defined in the Partnership Agreement) decreased by $919,100 for
the year ended December 31, 1997 when compared to the year ended December 31,
1996. The decrease was primarily due to the absence of operating income due to
the property sales during 1997.

The increase in the Partnership's cash position of $8,323,500 for the year
ended December 31, 1997 was primarily the result of the receipt of Sale
Proceeds from Foxhall, which will be distributed in 1998. Liquid assets of the
Partnership as of December 31, 1997 were comprised of undistributed cash from
operations retained for working capital purposes and undistributed Sale
Proceeds.
5
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)


Net cash provided by operating activities for the year ended December 31, 1997
was $1,336,200, a $1,111,700 decrease when compared to the year ended December
31, 1996. This decrease was primarily due to the absence of results, together
with the liquidation of liabilities, both due to the sales of all of the
Partnership's properties during 1997.

Net cash (used for) provided by investing activities changed from $(1,132,900)
for the year ended December 31, 1996 to $25,970,300 for the year ended December
31, 1997. The change was primarily due the receipt of Sales Proceeds in 1997.

On May 5, 1997, the Partnership completed the sale of Peachtree. Net proceeds
generated from this sale amounted to $7,547,500. In connection with this sale,
the Partnership declared a special distribution in the amount of $7,440,000 or
$124.00 per Unit, which was distributed on August 31, 1997 to Limited Partners
of record as of May 5, 1997.

On May 16, 1997, a joint venture in which the Partnership has a 50% interest,
completed the sale of Lakewood. The Partnership's share of net proceeds from
this sale amounted to $8,660,000. In connection with this sale, the Partnership
declared a special distribution in the amount of $8,640,000 or $144.00 per
Unit, which was distributed on August 31,1997 to Limited Partners of record as
May 16, 1997.

On June 27, 1997, a joint venture in which the Partnership has a 50% interest,
completed the sale of Featherwood. The Partnership's share of net proceeds from
this sale amounted to $1,492,000. In connection with this sale, the Partnership
declared a special distribution in the amount of $1,495,800 or $24.93 per Unit,
which was distributed on November 30, 1997 to Limited Partners of record as of
June 27, 1997.

On November 10, 1997, a joint venture in which the Partnership has a 50%
interest, completed the sale of Foxhall. The Partnership's share of net
proceeds from this sale amounted to $8,283,000. In connection with this sale,
the Partnership declared a special distribution in the amount of $8,250,000 or
$137.50 per Unit, which was distributed on February 28, 1998 to Limited
Partners of record as of November 10, 1997.

The increase in net cash used for financing activities of $17,339,200 for the
year ended December 31, 1997 when compared to the year ended December 31, 1996
was due primarily to the special distributions of Sales Proceeds.

As disclosed above, the Partnership is in the disposition phase of its life
cycle. By the Year 2000, it is anticipated that the Partnership will have
either distributed all of its assets and terminated its existence or its
operating activities will be substantially reduced. The General Partner, on
behalf of the Partnership, has contracted for substantially all of its business
activities with certain principal entities for which computer programs are
utilized. Each of these companies is financially responsible and have
represented to management of the General Partner that they are taking
appropriate steps for modifications needed to their respective systems to
accommodate processing data by Year 2000. Accordingly, the Partnership
anticipates incurring no material Year 2000 costs and is currently not aware of
any material contingencies related to this matter.

Distributions of Cash Flow to Limited Partners for the quarter ended December
31, 1997 were declared in the amount of $210,000 or 3.50 per Unit. Cash
distributions are made 60 days after the last day of each fiscal quarter.

As described in Note 5 of Notes to Financial Statements, there is uncertainty
surrounding an environmental matter at Lakewood. The Managing General Partner
is in correspondence with the purchaser of Lakewood for the purpose of
monitoring their remediation efforts. 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 properties it will be necessary for
the Partnership to remain open. Following the special distribution of Foxhall
Sale Proceeds on February 28, 1998, distributions to Limited Partners will be
suspended. When the environmental matter at Lakewood is satisfactorily
remediated, Limited Partners will receive a final liquidating distribution of
the remaining cash currently held by the Partnership, less amounts reserved for
administrative expenses and any amounts deemed necessary to resolve, or provide
for, any post closing matters.

                                                                               6
<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, Schedule and Exhibits."

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

None.

                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) & (e)  DIRECTORS

     The Partnership has no directors. First Capital Financial Corporation
     ("FCFC") is the Managing General Partner. The directors of FCFC, as of
     March 31, 1998, 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 1998.


            Name                                           Office
            ----                                           ------
     Douglas Crocker II.................................  Director
     Sheli Z. Rosenberg.................................  Director


     Douglas Crocker II, 57, has been President and Chief Executive Officer
     since December 1992 and a Director since January 1993 of the Managing
     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 Horizon Group, Inc.
     and Wellsford Real Properties Inc. Mr. Crocker was an Executive Vice
     President of Equity Financial and Management Company ("EFMC") from November
     1992 until March 31, 1997

     Sheli Z. Rosenberg, 56, was President and Chief Executive Officer of the
     Managing General Partner from December 1990 to December 1992 and has been a
     Director of the Managing General Partner since September 1983; was
     Executive Vice President and General Counsel for EFMC from October 1980 to
     November 1994; has been President and Chief Executive Officer of Equity
     Group Investments, Inc. ("EGI") since November 1994; has been a Director of
     Great American Management and Investment Inc. ("Great American") since June
     1984 and is a director of various subsidiaries of Great American. She is
     also a director of Anixter International Inc., American Classic Voyages
     Co., CVS Corporation, Illinova Corporation, Illinois Power Co., Jacor
     Communications, Inc., and Manufactured Home Communities, Inc. She is also a
     trustee of Equity Residential Properties Trust, Equity Office Properties
     Trust and Capital Trust. Ms. Rosenberg was a Principal of Rosenberg &
     Liebentritt, P.C., counsel to the Partnership, the Managing General Partner
     and certain of their Affiliates from 1980 to September 1997. She had been
     Vice President of First Capital Benefit Administrators, Inc. ("Benefit
     Administrators") since July 22, 1987 until its liquidation in November
     1995. Benefit Administrators filed for protection under the Federal
     Bankruptcy laws on January 3, 1995.

                                       7

<PAGE>

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
--------  --------------------------------------------------

(b) & (e) EXECUTIVE OFFICERS
          ------------------


     The Partnership does not have any executive officers. The executive
     officers of the Managing General Partner as of March 31, 1998 are shown in
     the table. All officers are elected to serve for one year or until their
     successors are elected and qualified.

       Name                             Office
       ----                             ------
     Douglas Crocker II.................President and Chief Executive Officer
     Donald J. Liebentritt..............President
     Norman M. Field....................President - Finance and Treasurer

     PRESIDENT AND CEO- See Table of Directors above.

     Donald J. Liebentritt, 47, has been Vice President of the Managing General
     Partner since July 1997 and is Executive Vice President and General Counsel
     of EGI, Vice President and Assistant Secretary of Great American and
     Principal and Chairman of the Board of Rosenberg & Liebentritt, P.C.

     Norman M. Field, 49, has been Vice President of Finance and Treasurer of
     the Managing General Partner since February 1984, and also served as Vice
     President and Treasurer of Great American from July 1983 until March 1995.
     Mr. Field had been Treasurer of Benefit Administrators since July 22, 1987
     until its liquidation in November 1995. Benefit Administrators filed for
     protection under the Federal Bankruptcy laws on January 3, 1995. He was
     Chief Financial Officer of Equality Specialties, Inc. ("Equality"), a
     subsidiary of Great American, from August 1994 to April 1995. Equality was
     sold in April 1995.


(d)  FAMILY RELATIONSHIPS
     --------------------

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


(f)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
     ----------------------------------------

     With the exception of the bankruptcy matter disclosed under Items 10 (a),
     (b) and (e), there are no involvements in certain legal proceedings among
     any of the foregoing directors and officers.


                                       8

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION
--------  ----------------------

(a,b,c & d)  As stated in Item 10, the Partnership has no officers or directors.
Neither the Managing General Partner, nor any director or officer of the
Managing General Partner, received any direct remuneration from the Partnership
during the year ended December 31, 1997.  However, the Managing General Partner
and Affiliates of the Managing General Partner do compensate the directors and
officers of the Managing General Partner.  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, 1998 no person owned of record or was known by the
     Partnership to own beneficially more than 5% of the Partnership's 60,000
     Units then outstanding.

(b)  The Partnership has no directors or executive officers. As of March 1,
     1998, none of the executive officers and directors of First Capital
     Financial Corporation, the Managing General Partner, owned any Units.

(c)  None.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------  ----------------------------------------------

(a)  Certain Affiliates of the Managing General Partner, provided leasing,
     property management and supervisory services to the Partnership.
     Compensation for these property management services may not exceed 6% of
     the gross receipts from the property being managed where the Managing
     General Partner or Affiliates provide leasing, re-leasing, or leasing
     related services, reduced by an amount not to exceed 3% of gross receipts
     for leasing fees paid to third-parties. For the year ended December 31,
     1997, these Affiliates were entitled to supervisory and property management
     and leasing fees of approximately $145,600. In addition, other Affiliates
     of the Managing General Partner were entitled to compensation and
     reimbursements of approximately $47,000 from the Partnership for insurance,
     personnel, and other miscellaneous services. Services of Affiliates 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, 1997, total fees and reimbursements of $700 were due to Affiliates.

     Jacor Communications, Inc. ("Jacor"), a radio broadcasting company, which
     is approximate 31% owned by Affiliates of the Managing General Partner, was
     obligated to the Partnership under a lease for office space at Peachtree.
     Peachtree was sold on May 5, 1997. See Note 4 of Notes to Financial
     Statements for additional information. For the 1997 period that the
     Partnership owned Peachtree, Jacor paid approximately $74,800 in total
     rents. The rent paid by Jacor was comparable to that paid by other tenants
     at Peachtree.

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

     In accordance with the Partnership Agreement, Net Profits (exclusive of
     depreciation and Net Profits from the sale or disposition of Partnership
     properties) are allocated: first, to the General


                                       9

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Continued)
--------  ----------------------------------------------

     Partners, in an amount equal to the greater of the General Partners'
     Subordinated Partnership Management Fee or 1% of such Net Profits; and
     second, the balance, if any, to the Limited Partners. Net Profits from the
     sale or disposition of a Partnership property are allocated: first, to the
     General Partners, in an amount equal to the aggregate amount of
     depreciation previously allocated to them; second, to the General Partners
     and the Limited Partners with negative balances in their capital accounts
     pro rata in proportion to such respective negative balances, to the extent
     of the total of such negative balances; third, to the General Partners, in
     an amount necessary to make the aggregate amount of their capital accounts
     equal to the greater of the Sale Proceeds to be distributed to the General
     Partners with respect to the sale or disposition of such property or 1% of
     such Net Profits; and fourth, the balance, if any, to the Limited Partners.
     Net Losses (exclusive of depreciation and Net Losses from the sale,
     disposition or provision for value impairment of Partnership properties)
     are allocated 1% to the General Partners and 99% to the Limited Partners.
     All depreciation is allocated 10% to the General Partners and 90% to the
     Limited Partners. Net Losses from the sale, disposition or provision for
     value impairment of Partnership properties are allocated: first, to the
     extent that the balance in the General Partners' capital accounts exceeds
     their Capital Investment or the balance in the capital accounts of the
     Limited Partners exceeds the amount of their Capital Investment
     (collectively, the "Excess Balances"), to the General Partners and the
     Limited Partners pro rata in proportion to such Excess Balances until such
     Excess Balances are reduced to zero; second, to the General Partners and
     the Limited Partners and among them (in the ratio which their respective
     capital account balances bear to the aggregate of all capital account
     balances) until the balance in their capital accounts shall be reduced to
     zero; third, the balance, if any, 99% to the Limited Partners and 1% to the
     General Partners. In all events there shall be allocated to the General
     Partners not less than 1% of Net Profits and Net Losses from the sale,
     disposition or provision for value impairment of a Partnership property.
     The General Partners were not entitled to cash distributions for the year
     ended December 31, 1997. For the year ended December 31, 1997, the General
     Partners were allocated Net Profits of $1,059,900, which included a net
     gain of $1,100,100 on the sales of four properties.

(b)  Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
     Partnership, the Managing General Partner and certain of their Affiliates.
     Donald J. Liebentritt, Vice President of the Managing General Partner is a
     Principal and Chairman of the Board of Rosenberg. Compensation for these
     services are on terms which are fair, reasonable and no less favorable to
     the Partnership than reasonably could have been obtained from unaffiliated
     persons. Total legal fees charged by Rosenberg for the year ended December
     31, 1997 were $93,900. As of December 31, 1997, total fees of $7,500 were
     due to Rosenberg.

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

(d)  None.


                                       10

<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:

     A report was filed on Form 8-K on November 24, 1997 reporting the sale of
Foxhall.

                                      11

<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. - 1


                           BY:  FIRST CAPITAL FINANCIAL CORPORATION
                                MANAGING GENERAL PARTNER


Dated:  March 31, 1998     By:  /s/          DOUGLAS CROCKER II
       ----------------        -------------------------------------------------
                                             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 31, 1998  President, Chief Executive Officer
--------------------------  --------------  and Director of the Managing General
     DOUGLAS CROCKER II                     Partner

/s/  SHELI Z. ROSENBERG     March 31, 1998  Director of the Managing General
--------------------------  --------------  Partner
     SHELI Z. ROSENBERG

/s/  DONALD J. LIEBENTRITT  March 31, 1998  Vice President
--------------------------  --------------
     DONALD J. LIEBENTRITT

/s/  NORMAN M. FIELD        March 31, 1998  Vice President - Finance and
--------------------------  --------------  Treasurer
     NORMAN M. FIELD

                                      12

<PAGE>

             INDEX OF FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS

               FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT

                                                                    Pages
                                                                 -----------
Report of Independent Auditors                                       A-2

Balance Sheets as of December 31, 1997 and 1996                      A-3

Statements of Partners' Capital for the Years Ended
 December 31, 1997, 1996 and 1995                                    A-3

Statements of Income and Expenses for the Years Ended
 December 31, 1997, 1996 and 1995                                    A-4

Statements of Cash Flows for the Years Ended December
 31, 1997, 1996 and 1995                                             A-4

Notes to Financial Statements                                     A-5 to A-7

SCHEDULE 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-29 of the Partnership's
definitive Prospectus dated October 25, 1982; Registration Statement No. 2-
79092, filed pursuant to Rule 424 (b), is incorporated herein by reference. The
Partnership Agreement as filed has subsequently been amended to reflect the
admission, withdrawal and substitution of Limited Partners, the reduction of
Limited Partners' Capital Contributions, and the withdrawal of an individual
General Partner.

EXHIBIT (10)  Material Contracts
------------

Real Estate Sale Agreements and closing documents for the sales of the
Partnership's investments in Peachtree Palisades East Office Building and
Lakewood Square Shopping Center filed as exhibits to the Partnership's Report on
form 8-K filed May 20, 1997 are incorporated herein by reference.

Real Estate Sale Agreement and closing documents for the sale of the
Partnership's investment in 12621 Featherwood Office Building filed as an
exhibit to the Partnership's Report on Form 8-K filed on July 11, 1997 is
incorporated herein by reference.

Real Estate Sale Agreement and closing documents for the sale of the
Partnership's investment in Foxhall Square Office Building filed as an exhibit
to the Partnership's Report on Form 8-K filed November 24, 1997 is incorporated
herein by reference.

An amendment to A Lease Agreement for a tenant at Peachtree as filed as an
exhibit to the Partnership's Form 10-K for the year ended December 31, 1996 is
incorporated herein by reference.

EXHIBIT (13)  Annual Report to Security Holders
------------

The 1996 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.

EXHIBIT (27)  Financial Data Schedule
------------

                                      A-1
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS



Partners
First Capital Institutional Real Estate, Ltd. - 1
Chicago, Illinois


We have audited the accompanying balance sheets of First Capital Institutional
Real Estate, Ltd. - 1 as of December 31, 1997 and 1996, 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, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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. - 1 at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.



                                  Ernst & Young LLP


Chicago, Illinois
March 9, 1998

                                      A-2
<PAGE>

BALANCE SHEETS
December 31, 1997 and 1996
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                                    1997         1996
--------------------------------------------------------------------------
<S>                                              <C>         <C>
ASSETS
Investment in commercial rental properties:
 Land                                            $           $  5,501,700
 Buildings and improvements                                    31,417,700
--------------------------------------------------------------------------
                                                               36,919,400
 Accumulated depreciation and amortization                    (13,081,500)
--------------------------------------------------------------------------
 Total investment properties, net of accumulated
  depreciation and amortization                                23,837,900
Cash and cash equivalents                         12,249,600    3,926,100
Investment in debt securities                                     300,000
Rents receivable                                      25,400       60,200
Other assets                                           3,900       13,100
--------------------------------------------------------------------------
                                                 $12,278,900 $ 28,137,300
--------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Accounts payable and accrued expenses           $    60,100 $    263,000
 Due to Affiliates                                     8,200       20,500
 Real estate commissions due to Managing General
  Partner                                                         403,000
 Security deposits                                                147,200
 Distributions payable                             8,460,000      420,000
 Other liabilities                                    10,000      117,300
--------------------------------------------------------------------------
                                                   8,538,300    1,371,000
--------------------------------------------------------------------------
Partners' capital:
 General Partners (deficit)                          611,500     (448,400)
 Limited Partners (60,000 Units issued and
  outstanding)                                     3,129,100   27,214,700
--------------------------------------------------------------------------
                                                   3,740,600   26,766,300
--------------------------------------------------------------------------
                                                 $12,278,900 $ 28,137,300
--------------------------------------------------------------------------
</TABLE>

STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1997, 1996 and 1995
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                         General      Limited
                                         Partners     Partners       Total
-------------------------------------------------------------------------------
<S>                                     <C>         <C>           <C>
Partners' (deficit) capital,
 January 1, 1995                        $ (255,700) $ 28,679,700  $ 28,424,000
Net (loss) income for the year ended
 December 31, 1995                        (103,600)      276,900       173,300
Distributions for the year ended
 December 31, 1995                                    (1,540,800)   (1,540,800)
-------------------------------------------------------------------------------
Partners' (deficit) capital, December
 31, 1995                                 (359,300)   27,415,800    27,056,500
Net (loss) income for the year ended
 December 31, 1996                         (89,100)    1,478,900     1,389,800
Distributions for the year ended
 December 31, 1996                                    (1,680,000)   (1,680,000)
-------------------------------------------------------------------------------
Partners' (deficit) capital, December
 31, 1996                                 (448,400)   27,214,700    26,766,300
Net income for the year ended December
 31, 1997                                1,059,900     2,790,200     3,850,100
Distributions for the year ended
 December 31, 1997                                   (26,875,800)  (26,875,800)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1997    $  611,500  $  3,129,100  $  3,740,600
-------------------------------------------------------------------------------
</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, 1997, 1996 and 1995
(All dollars rounded to nearest 00s except per Unit amounts)

<TABLE>
<CAPTION>
                                             1997       1996        1995
----------------------------------------------------------------------------
<S>                                       <C>        <C>         <C>
Income:
 Rental                                   $2,595,600 $4,866,600  $4,713,500
 Interest                                    599,400    208,000     233,200
 Net gain on sales of property             2,799,200
----------------------------------------------------------------------------
                                           5,994,200  5,074,600   4,946,700
----------------------------------------------------------------------------
Expenses:
 Depreciation and amortization               563,800  1,144,000   1,170,300
 Property operating:
  Affiliates                                 164,500    227,200     199,200
  Nonaffiliates                              511,700    998,900   1,002,600
 Real estate taxes                           224,100    377,500     344,000
 Insurance--Affiliate                         24,600     60,400      46,300
 Repairs and maintenance                     382,600    692,200     702,700
 General and administrative:
  Affiliates                                  23,200     37,800      47,300
  Nonaffiliates                              249,600    146,800     161,000
 Provisions for value impairment                                  1,100,000
----------------------------------------------------------------------------
                                           2,144,100  3,684,800   4,773,400
----------------------------------------------------------------------------
Net income                                $3,850,100 $1,389,800  $  173,300
----------------------------------------------------------------------------
Net income (loss) allocated to General
 Partners                                 $1,059,900 $  (89,100) $ (103,600)
----------------------------------------------------------------------------
Net income allocated to Limited Partners  $2,790,200 $1,478,900  $  276,900
----------------------------------------------------------------------------
Net income allocated to Limited Partners
 per Unit (60,000 Units outstanding)      $    46.50 $    24.65  $     4.62
----------------------------------------------------------------------------
</TABLE>

STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997, 1996 and 1995
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                             1997         1996         1995
--------------------------------------------------------------------------------
<S>                                      <C>           <C>          <C>
Cash flows from operating activities:
 Net income                              $  3,850,100  $ 1,389,800  $   173,300
 Adjustments to reconcile net income to
  net cash provided by operating
  activities:
  Net gain on sales of property            (2,799,200)
  Depreciation and amortization               563,800    1,144,000    1,170,300
  Provisions for value impairment                                     1,100,000
  Changes in assets and liabilities:
   Decrease (increase) in rents
    receivable                                 34,800       89,600      (82,500)
   Decrease (increase) in other assets          9,200      (12,900)     161,900
   (Decrease) increase in accounts
    payable and accrued expenses             (202,900)    (169,500)      69,500
   (Decrease) in due to Affiliates            (12,300)      (1,400)     (22,800)
   (Decrease) increase in other
    liabilities                              (107,300)       8,300       38,900
--------------------------------------------------------------------------------
    Net cash provided by operating
     activities                             1,336,200    2,447,900    2,608,600
--------------------------------------------------------------------------------
Cash flows from investing activities:
 Payments for capital and tenant
  improvements                               (312,200)    (832,900)  (1,094,700)
 Proceeds from the sales of property       25,982,500
 Decrease (increase) in investments in
  debt securities                             300,000     (300,000)
--------------------------------------------------------------------------------
    Net cash provided by (used for)
     investing activities                  25,970,300   (1,132,900)  (1,094,700)
--------------------------------------------------------------------------------
Cash flows from financing activities:
 Distributions paid to Partners           (18,835,800)  (1,645,200)  (1,505,400)
 (Decrease) increase in security
  deposits                                   (147,200)       1,400        7,800
--------------------------------------------------------------------------------
    Net cash (used for) financing
     activities                           (18,983,000)  (1,643,800)  (1,497,600)
--------------------------------------------------------------------------------
Net increase (decrease) in cash and
 cash equivalents                           8,323,500     (328,800)      16,300
Cash and cash equivalents at the
 beginning of the year                      3,926,100    4,254,900    4,238,600
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of
 the year                                $ 12,249,600  $ 3,926,100  $ 4,254,900
--------------------------------------------------------------------------------
</TABLE>

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

NOTES TO FINANCIAL STATEMENTS
December 31, 1997

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 June 6, 1982, 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 16, 1982. The
Certificate and Agreement, as amended and restated, authorized the sale to the
public of up to 50,000 Units (with the Managing General Partner's option to
increase to 60,000 Units) and not less than 1,300 Units. On January 3, 1983,
the required minimum subscription level was reached and the Partnership
operations commenced. The Managing General Partner exercised its option to
increase the Offering to 60,000 Units, which amount was sold prior to the
Termination of the Offering in March 1983. The Partnership was formed to invest
primarily in existing, improved, income-producing commercial real estate.

The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2013. 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 generally
accepted accounting principles ("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 three joint
ventures with Affiliated partnerships. These joint ventures were formed for the
purpose of each acquiring a 100% interest in certain real properties and are
operated under the common control of the Managing General Partner. Accordingly,
the Partnership's pro rata share of the ventures' revenues, expenses, assets,
liabilities and Partners' capital is included in the financial statements.

The Partnership is not liable for Federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss on their
individual tax returns; therefore, no provision for 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.

Commercial rental properties were recorded at cost, net of any provisions for
value impairment, and depreciated (exclusive of amounts allocated to land) on
the straight-line method over their estimated useful lives. Lease acquisition
fees were recorded at cost and amortized on the straight-line method over the
life of each respective lease. Maintenance and repair costs are expensed
against operations as incurred; expenditures for improvements are capitalized
to the appropriate property accounts and depreciated on the straight-line
method over the estimated life of such improvements.

Property sales are recorded when title transfers and sufficient consideration
has been received by the Partnership. Upon disposition, the related costs and
accumulated depreciation and amortization are removed from the respective
accounts. Any gain or loss 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 as of December 31, 1996 were comprised of
obligations of the United States government and were classified as held-to-
maturity. These investments were carried at their amortized cost basis in the
financial statements which approximated fair 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 all financial instruments,
including cash and cash equivalents, was not materially different from their
carrying value at December 31, 1997 and 1996.

2. RELATED PARTY TRANSACTIONS:

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

In accordance with the Partnership Agreement, Net Profits (exclusive of
depreciation and Net Profits from the sale, disposition, or provision for value
impairment of Partnership properties) are allocated: first, to the General
Partners, in an amount equal to the greater of the General Partners'
Subordinated Partnership Management Fee or 1% of such Net Profits; second, the
balance, if any, to the Limited Partners. Net Profits from the sale or
disposition of a Partnership property are allocated: first, to the General
Partners, in an amount equal to the aggregate amount of depreciation previously
allocated to them; second, to the General Partners and the Limited Partners
with negative balances in their capital accounts pro rata in proportion to such
respective negative balances, to the extent of the total of such negative
balances; third, to the General Partners, in an amount

A-5
<PAGE>

necessary to make the aggregate amount of their capital accounts equal to the
greater of the Sale Proceeds to be distributed to the General Partners with
respect to the sale or disposition of such property or 1% of such Net Profits;
and fourth, the balance, if any, to the Limited Partners. Net Losses (exclusive
of depreciation and Net Losses from the sale, disposition, or provision for
value impairment of Partnership properties) are allocated 1% to the General
Partners and 99% to the Limited Partners. All depreciation is allocated 10% to
the General Partners and 90% to the Limited Partners. Net Losses from the sale,
disposition, or provision for value impairment of Partnership properties are
allocated: first, to the extent that the balance in the General Partners'
capital accounts exceeds their Capital Investment or the balance in the capital
accounts of the Limited Partners exceeds the amount of their Capital Investment
(collectively, the "Excess Balances"), to the General Partners and the Limited
Partners pro rata in proportion to such Excess Balances until such Excess
Balances are reduced to zero; second, to the General Partners and the Limited
Partners and among them (in the ratio which their respective capital account
balances bear to the aggregate of all capital account balances) until the
balance in their capital accounts shall be reduced to zero; third, the balance,
if any, 99% to the Limited Partners and 1% to the General Partners. In all
events there shall be allocated to the General Partners not less than 1% of Net
Profits and Net Losses from the sale, disposition, or provision for value
impairment of a Partnership property. The General Partners were not entitled to
cash distributions for the years ended December 31, 1997, 1996 and 1995. During
the year ended December 31, 1997, the General Partners were allocated Net
Profits of $1,059,900 which includes a net gain on the sale of four properties
of $1,100,100. During the year ended December 31, 1996, the General Partners
were allocated a Net (Loss) of $(89,100). During the year ended December 31,
1995, the General Partners were allocated a Net (Loss) of $(103,600) which
included a (loss) from provision for value impairment of $(11,000).

Fees and reimbursements paid and payable by the Partnership to Affiliates for
the years ended December 31, 1997, 1996 and 1995 were as follows:

<TABLE>
<CAPTION>
                                  1997             1996             1995
                            ---------------- ---------------- ----------------
                              Paid   Payable   Paid   Payable   Paid   Payable
------------------------------------------------------------------------------
<S>                         <C>      <C>     <C>      <C>     <C>      <C>
Property management and
 leasing fees               $163,100   None  $194,300 $17,500 $195,400 $13,000
Reimbursement of property
 insurance premiums, at
 cost                         24,600   None    60,400    None   46,300    None
Legal                         86,400 $7,500    35,300    None   37,600    None
Reimbursement of expenses,
 at cost:
 --Accounting                 13,100    400    24,900   2,400   18,600   5,900
 --Investor communication     10,200    300    15,700     600   23,200   3,000
------------------------------------------------------------------------------
                            $297,400 $8,200  $330,600 $20,500 $321,100 $21,900
------------------------------------------------------------------------------
</TABLE>

As of December 31, 1996, the Partnership had a recorded liability in the total
amount of $403,000 payable to the Managing General Partner for real estate
commissions earned in connection with the sale of Partnership properties in
prior years. Under the terms of the Partnership Agreement, these commissions
were not to be paid until such time as Limited Partners have received
cumulative distributions of Sale or Refinancing Proceeds equal to 100% of their
Original Capital Contribution plus a cumulative return (including all Cash Flow
which has been distributed to the Limited Partners from the initial date of
investment) of 6% simple interest per annum on their Capital Investment. During
the year ended December 31, 1997, following the sale of the Partnership's last
property, it was determined that the requirement would not be fulfilled and,
accordingly, the liability was written off as a gain on sale of property.

On site-property management for the Partnership's properties was provided by an
Affiliate of the General Partner and an independent property management group
for a fee equal to 3% of gross rents received from the property. The Affiliate
and independent property management group were entitled to leasing fees equal
to 3% of gross rents received, reduced by leasing fees, if any, paid to third
parties.

Jacor Communications, Inc. ("Jacor"), a radio broadcasting company, which is
approximately 28% owned by Affiliates of the Managing General Partner, was
obligated to the Partnership under a lease for office space at Peachtree
Palisades East Office Building ("Peachtree"). Peachtree was sold on May 5, 1997
(See Note 4 for additional information). For the period during 1997 that the
Partnership owned Peachtree, Jacor paid approximately $74,800 in total rents.
The rent paid by Jacor was comparable to that paid by other tenants at this
property.

3. INCOME TAX:

The Partnership utilizes the accrual method of accounting for both tax
reporting and financial statement purposes. Financial statement results will
differ from tax results due to the use of differing depreciation lives and
methods, the recognition of rents received in advance as taxable income, the
use of differing methods in computing the gain on sale of property and the
Partnership's provision for value impairment.

The net effect of these accounting differences for the year ended December 31,
1997 was that net income for tax reporting purposes was greater than the net
income for financial statement purposes by $5,625,400.

4. PROPERTY SALES:

On May 5, 1997, the Partnership consummated the sale of Peachtree, located in
Atlanta, Georgia, for a sale price of $7,749,200. Net proceeds from this
transaction were $7,547,500, which was net of closing expenses. The Partnership
reported a net gain of $1,204,300 for the year ended December 31, 1997 in
connection with this sale and distributed $7,440,000 or $124.00 per Unit on
August 31, 1997 to Limited Partners of record as of May 5, 1997. The
Partnership recorded a gain of $3,539,400 for income tax purposes for the year
ended December 31, 1997.

On May 16, 1997, a joint venture in which the Partnership owns a 50% interest,
consummated the sale of Lakewood Square Shopping Center ("Lakewood"), located
in Lakewood, California, for a sale price of $17,750,000, of which the
Partnership's

                                                                             A-6
<PAGE>

share was $8,875,000. The Partnership's share of net proceeds from this
transaction was $8,660,000, which was net of closing expenses. The Partnership
reported a net gain of $166,600 for the year ended December 31, 1997 in
connection with this sale and distributed $8,640,000 or $144.00 per Unit on
August 31, 1997 to Limited Partners of record as of May 16, 1997. The
Partnership recorded a gain of $3,238,700 for income tax purposes for the year
ended December 31, 1997.

On June 27, 1997, a joint venture in which the Partnership owns a 50% interest,
consummated the sale of 12621 Featherwood Office Building, located in Houston,
Texas, for a sale price of $3,146,700, of which the Partnership's share was
$1,573,350. The Partnership's share of net proceeds from this transaction was
$1,492,000, which was net of closing expenses. The Partnership reported a net
loss of $53,700 for the year ended December 31, 1997 in connection with this
sale and distributed $1,495,800 or $24.93 per Unit on November 30, 1997 to
Limited Partners of record as of June 27, 1997. The Partnership recorded a loss
of $848,000 for income tax purposes for the year ended December 31, 1997.

On November 10, 1997, a joint venture in which the Partnership owns a 50%
interest, consummated the sale of Foxhall Square Office Building, located in
Washington D.C., for a sale price of $17,125,000, of which the Partnership's
share was $8,562,500. The Partnership's share of proceeds from this transaction
was $8,283,000, which was net of actual and estimated closing expenses. The
Partnership reported a net gain for financial reporting purposes of $1,079,000
for the year ended December 31, 1997 from this sale and will distribute
$8,250,000 or $137.50 per Unit on February 28, 1998 to Limited Partners of
record as of November 10, 1997. The Partnership recorded a gain of $2,316,600
for income tax purposes for the year ended December 31, 1997.

5. ENVIRONMENTAL MATTER:

In December 1996, the Managing General Partner became aware of the existence of
hazardous substances in the ground under Lakewood. The source of the hazardous
substance emanates from one or more of the tenants operating a dry cleaning
business at 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 hazardous
substances. At the present time, the Managing General Partner is unaware of any
claims or other matters referred to above, against the Partnership. The
Managing General Partner is monitoring the documentation regarding the
remediation work being performed by the purchaser.

6. PROVISIONS FOR VALUE IMPAIRMENT:

Due to regional factors and other matters affecting the Partnership's office
properties there was uncertainty as to the Partnership's ability to recover the
net carrying basis of certain of its properties. Accordingly, it was deemed
appropriate to reduce the bases of such properties in the Partnership's
financial statements during the year ended December 31, 1995.

The provisions for value impairment were considered non-cash events for the
purposes of the Statements of Cash Flow and were not utilized in the
determination of Cash Flows (as defined in the Partnership Agreement). The
provisions for value impairment reported by the Partnership for the year ended
December 31, 1995 were:

<TABLE>
<CAPTION>
             Property
                  --------------------------
             <S>                  <C>
             12621 Featherwood    $  300,000
             Peachtree Palisades     600,000
             Foxhall Square          200,000
                  --------------------------
                                  $1,100,000
                  --------------------------
</TABLE>


                                                                             A-7