<PAGE>

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


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
                                                 -------------

                         Commission file number 0-16345

                          SHELBOURNE PROPERTIES I, INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                          04-3502384
            --------                                          ----------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                          Identification No.)


     P.O. Box 9507, 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114
     -----------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (617) 570-4600
                                 --------------
              (Registrant's telephone number, including area code)


Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                            Yes    X              No
                                 -----                -----

Indicated by check whether registrant is an accelerated filer (as identified in
Rule 12b-2 of the Exchange Act).

                            Yes                    No   X
                                 -----                -----

As of August 12, 2003, there were 839,286 shares of common stock outstanding.

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

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                             FORM 10Q-JUNE 30, 2003

INDEX

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>        <C>                                                                     <C>
Part I.    Financial Information

Item 1.    Consolidated Financial Statements:

           Consolidated Statements of Net Assets (Liquidation Basis) as of
           June 30, 2003 and December 31, 2002....................................    3

           Consolidated Statements of Operations and Changes in Net Assets
           for the Three and Six Months Ended June 30, 2003 (Liquidation
           Basis) and Consolidated Statements Operations for the Three and
           Six Months Ended June 30, 2002 (Going Concern Basis)...................    4

           Consolidated Statements of Cash Flows for the Six Months Ended
           June 30, 2003 (Liquidation Basis) and the Six Months Ended June
           30, 2002 (Going Concern Basis).........................................    5

           Notes to Consolidated Financial Statements.............................    6

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations....................................   18

Item 3.    Quantitative and Qualitative Disclosure about Market Risk..............   26

Item 4.    Controls and Procedures................................................   26


Part II.   Other Information:

Item 4.    Submission of Matters to a Vote of Security Holders ...................   27

Item 6.    Exhibits and Reports on Form 8-K.......................................   27

Signatures .......................................................................   28
</TABLE>




                                        2

<PAGE>


                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


            CONSOLIDATED STATEMENTS OF NET ASSETS (LIQUIDATION BASIS)
                    AS OF JUNE 30, 2003 AND DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                               June 30, 2003       December 31, 2002
                                                                              ---------------      -----------------
                                                                                 (Unaudited)
<S>                                                                           <C>                  <C>
ASSETS

Real estate held for sale                                                     $     9,460,610      $      30,341,402
Investments in joint ventures                                                      10,945,141             57,791,273
Cash and cash equivalents, of which $1,368,393 is
     restricted cash at June 30, 2003                                               7,007,097                550,061
Other assets                                                                          581,366                359,699
Receivables, net                                                                       22,426                166,723
                                                                              ---------------      -----------------

Total Assets                                                                       28,016,640             89,209,158
                                                                              ---------------      -----------------

LIABILITIES

Accounts payable and accrued expenses                                                 930,838                386,903
Dividend payable                                                                    2,365,528                      -
Class B unitholder distribution                                                       278,223                      -
Credit Facility                                                                             -             23,832,274
Fleet Loan                                                                          7,495,084                      -
Reserve for estimated costs during the period of liquidation                          897,611              1,300,000
Deferral of gains and incentive fee on real estate assets and joint ventures        8,352,754             52,537,883

COMMITMENTS AND CONTIGENCIES (Notes 8, 10)

CLASS B Partnership Interests                                                               -                      -

CLASS A 5% Preferred Partnership Interests, at liquidation value                            -                812,674
                                                                              ---------------      -----------------
Total Liabilities                                                                  20,320,038             78,869,734
                                                                              ---------------      -----------------
NET ASSETS IN LIQUIDATION                                                     $     7,696,602      $      10,339,424
                                                                              ===============      =================
</TABLE>







                 See notes to consolidated financial statements.

                                        3

<PAGE>


                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


         CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
    FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 (LIQUIDATION BASIS) AND
                      CONSOLIDATED STATEMENTS OF OPERATIONS
     FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 (GOING CONCERN BASIS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            For the Three Months Ended          For the Six Months Ended
                                                                      June 30,                          June 30,
                                                           ------------------------------    -------------------------------
                                                               2003              2002            2003             2002
                                                           ------------     -------------    -------------    --------------
<S>                                                        <C>              <C>              <C>              <C>
Rental revenues                                            $    336,682     $     870,132    $   1,410,582    $    2,477,679
                                                           ------------     -------------    -------------    --------------
Costs and expenses

       Operating expenses                                       120,202           435,425          368,650           815,290
       Depreciation and amortization                                  -           239,606                -           429,613
       Asset management fee                                      50,000                 -          100,000           135,805
       Transition management fees                                     -            83,300                -           124,950
       Purchase of advisory agreements                                -                 -                -        18,452,133
       Administrative expenses                                  305,597         2,292,623          564,165         3,041,288
       Property management fee                                    9,598            25,373           44,923            71,286
                                                           ------------     -------------    -------------    --------------
                                                                485,397         3,076,327        1,077,738        23,070,365
                                                           ------------     -------------    -------------    --------------

Income (loss) before equity income from joint ventures,
gain on sale of real estate, interest and other income        (148,715)       (2,206,195)          332,844      (20,592,686)

       Equity income from joint ventures                     10,258,360           888,308       37,189,615         1,808,180
       Gain on sale of real estate                                    -                 -        9,285,661                 -
       Interest expense                                       (109,934)         (239,727)        (241,755)         (342,002)
       Interest income                                           10,109            12,938           26,174            27,805
       Other income                                                 537             1,959            9,193             3,951
                                                           ------------     -------------    -------------    --------------

Net income (loss)                                            10,010,357       (1,542,717)       46,601,732      (19,094,752)
Preferred dividends                                            (10,272)          (10,272)         (20,430)          (15,351)
                                                           ------------     -------------    -------------    --------------

Net income (loss) available for common shareholders        $ 10,000,085     $ (1,552,989)       46,581,302    $ (19,110,103)
                                                           ============     =============                     ==============
Net assets at January 1, 2003                                                                   10,339,424
Class B distributions                                                                            (278,223)
Liquidating dividends - common                                                                (48,945,901)
                                                                                             -------------
Net assets in liquidation at June 30, 2003                                                   $   7,696,602
                                                                                             =============

Earnings (loss) per share - basic and diluted              $      11.92     $      (1.85)    $       55.50    $      (20.23)
                                                           ============     =============    =============    ==============

Weighted average common shares                                  839,286           839,286          839,286           944,676
                                                           ============     =============    =============    ==============
</TABLE>


                 See notes to consolidated financial statements.

                                        4

<PAGE>


                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE SIX MONTHS ENDED JUNE 30, 2003 (LIQUIDATION BASIS) AND
                       JUNE 30, 2002 (GOING CONCERN BASIS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 For the Six Months Ended
                                                                                         June 30,
                                                                              ------------------------------
                                                                                  2003              2002
                                                                              -------------    -------------
<S>                                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                                                       $  46,601,732    $(19,094,752)
      Adjustments to reconcile net income to net cash
       provided by operating activities:
             Depreciation and amortization                                                -          429,613
             Straight-line adjustment for stepped lease rentals                           -           15,550
             Change in bad debt reserve                                              25,665           50,000
             Purchase of advisory agreement                                               -       18,452,133
             Distributions in excess of earnings from joint ventures             10,664,920        5,539,620
             Gain on sale of real estate                                        (9,285,661)                -
      Change in assets and liabilities:
             Receivables                                                            118,632        (123,877)
             Other assets                                                         (221,667)      (1,174,238)
             Accounts payable and accrued expenses                                (695,468)        1,795,502
             Accrued interest                                                        24,340                -
                                                                              -------------    -------------
      Net cash provided by operating activities                                  47,232,493        5,889,551
                                                                              -------------    -------------
CASH FLOW FROM INVESTING ACTIVITIES:
             Improvements to real estate                                          (148,513)         (55,464)
             Investment in Accotel                                                (867,806)                -
             Proceeds from sale of real estate                                   23,178,855                -
                                                                              -------------    -------------
      Net cash provided by (used in) investing activities                        22,162,536         (55,464)
                                                                              -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
             Purchase of treasury stock                                                   -     (14,303,060)
             Proceeds from Fleet Loan                                            17,495,084                -
             Paydown of Fleet Loan                                             (10,000,000)                -
             Proceeds from Credit Facility                                                -       23,832,274
             Paydown of Credit Facility from sales proceeds                    (22,981,815)                -
             Payoff of Credit Facility                                            (850,459)                -
           Payoff note payable from Transaction                                           -     (17,639,459)
             Dividends paid                                                    (46,580,373)                -
             Distributions paid Class A Unitholder                                 (20,430)                -
                                                                              -------------    -------------
      Net cash used in financing activities                                    (62,937,993)      (8,110,245)
                                                                              -------------    -------------
      Increase (decrease) in cash and cash equivalents                            6,457,036      (2,276,158)
      Cash and cash equivalents, beginning of period                                550,061        6,882,749
                                                                              -------------    -------------
      Cash and cash equivalents, end of period                                $   7,007,097    $   4,606,591
                                                                              =============    =============
      Supplemental disclosure of cash flow information-
      Cash paid for interest                                                  $     217,415    $     342,002
                                                                              =============    =============
      Dividend payable                                                        $   2,365,528    $           -
                                                                              =============    =============
      Distribution payable - Class B unitholder                               $     278,223    $           -
                                                                              =============    =============
</TABLE>


                 See notes to consolidated financial statements.


                                        5

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. ORGANIZATION
   ------------

   Shelbourne Properties I, Inc., a Delaware corporation (the "Corporation"),
   was formed on April 18, 2001. The Corporation's wholly-owned operating
   partnership, Shelbourne Properties I L.P., a Delaware limited partnership
   (the "Operating Partnership", and together with the Corporation, the
   "Company"), holds directly and indirectly all of the Company's properties.
   Pursuant to a merger that was consummated on April 18, 2001, the Operating
   Partnership became the successor by merger to Integrated Resources High
   Equity Partners, Series 85, a California Limited Partnership, (the
   "Predecessor Partnership").

   In August 2002, the Board of Directors adopted a Plan of Liquidation (the
   "Plan of Liquidation") and directed that the Plan of Liquidation be submitted
   to the Corporation's stockholders for approval. The stockholders of the
   Corporation approved the Plan of Liquidation at a Special Meeting of
   Stockholders held on October 29, 2002. The Plan of Liquidation contemplates
   the orderly sale of all of the Corporation's assets for cash or such other
   form of consideration as may be conveniently distributed to the Corporation's
   stockholders and the payment of (or provision for) the Corporation's
   liabilities and expenses, as well as the establishment of a reserve to fund
   the Corporation's contingent liabilities. The Plan of Liquidation gives the
   Corporation's Board of Directors the power to sell any and all of the assets
   of the Corporation without further approval by the stockholders.

   The Corporation currently expects that the liquidation will be substantially
   completed not later than October 29, 2004, although there can be no assurance
   in this regard. As a result, it is currently anticipated that not later than
   October 29, 2004 any then remaining assets and liabilities will be
   transferred to a liquidating trust. With the transfer to a liquidating trust,
   the liquidation will be completed for federal and state income tax purposes,
   although one or more distributions of the remaining cash and net proceeds
   from future asset sales may occur subsequent to the establishment of a
   liquidating trust.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   ------------------------------------------

   BASIS OF PRESENTATION
   ---------------------

   As a result of the adoption of the Plan of Liquidation and its approval by
   the Corporation's stockholders, the Corporation adopted the liquidation basis
   of accounting for the period subsequent to October 29, 2002. Under the
   liquidation basis of accounting, assets are stated at their estimated net
   realizable value. Liabilities including the reserves for estimated costs
   during the period of liquidation are stated at their anticipated settlement
   amounts. The valuation of investments in joint ventures and real estate held
   for sale is based upon current contracts, estimates as determined by
   independent appraisals or other indications of sales values. The valuations
   for other assets and liabilities under the liquidation basis of accounting
   are based on management's estimates as of June 30, 2003. The actual values
   realized for assets and settlement of liabilities may differ materially from
   the amounts estimated.

   The accompanying consolidated financial statements include the accounts of
   the Corporation and its wholly owned subsidiaries, the Operating Partnership
   and Shelbourne Properties I GP LLC, the general partner of the Operating
   Partnership and a wholly-owned subsidiary of the Corporation. Intercompany
   accounts and transactions have been eliminated in consolidation.

   ADJUSTMENTS TO LIQUIDATION BASIS OF ACCOUNTING
   ----------------------------------------------

   On October 30, 2002 in accordance with the liquidation basis of accounting,
   assets were adjusted to estimated net realizable value and liabilities were
   adjusted to estimated settlement amounts, including estimated costs
   associated with carrying out the liquidation. As a result of the sale of
   Southport Shopping Center (note 4), 568 Broadway (note 5) and Century Park
   (note 5), the valuation of investments in joint ventures and real estate held
   for sale have been updated to reflect the remaining estimated costs of
   carrying out the liquidation as of June 30, 2003. Further adjustments were
   included in the June 30, 2003 Consolidated Statement of Changes in Net
   Assets. The valuation of


                                        6
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   ------------------------------------------------------

   investments in joint ventures and real estate held for sale is based on
   current contracts, estimates as determined by independent appraisals or other
   indications of sales value, net of estimated selling costs and capital
   expenditures anticipated during the liquidation period. The valuations of
   other assets and liabilities are based on management's estimates as of June
   30, 2003. During the six months ended June 30, 2003 the deferred gain was
   increased by $1,375,000 to reflect revisions to the carrying value of real
   estate and joint ventures. The actual values realized for assets and
   settlement of liabilities may differ materially from amounts estimated.

   Adjusting assets to estimated net realizable value resulted in the write-up
   in the value of certain real estate properties. The anticipated gains net of
   any incentive fees associated with the adjustment in value of these real
   estate properties have been deferred until such time as a sale occurs. During
   the six months ended June 30, 2003, the Corporation recognized actual gains
   of $9,285,661 on the sale of real estate and $36,611,052 included in equity
   income from joint ventures attributable to real estate sales, and as a result
   of those sales reduced the deferred gains by $45,560,129.

   During the three months ended June 30, 2003, the Corporation recognized
   $10,132,559 included in income from joint ventures attributable to real
   estate sales.

   RESERVE FOR ESTIMATED COSTS DURING THE PERIOD OF LIQUIDATION
   ------------------------------------------------------------

   Under liquidation accounting, the Corporation is required to estimate and
   accrue the costs associated with executing the Plan of Liquidation. These
   amounts can vary significantly due to, among other things, the timing and
   realized proceeds from property sales, the costs of retaining agents and
   trustees to oversee the liquidation, the costs of insurance, the timing and
   amounts associated with discharging known and contingent liabilities and the
   costs associated with cessation of the Company's operations. These costs are
   estimates and are expected to be paid out over the liquidation period. Such
   costs do not include costs incurred in connection with ordinary operations.

   The reserve for additional costs associated with liquidation was reduced from
   $1,300,000 at December 31, 2002 to $897,611 at June 30, 2003 as a result of
   professional costs associated with obtaining the Fleet Loan of $385,721 and
   tax planning costs of $16,668 paid to an affiliate of Presidio Capital
   Investment Company, LLC in connection with the Accotel transaction (see note
   10).

   USE OF ESTIMATES
   ----------------

   The preparation of financial statements in conformity with accounting
   principles generally accepted in the United States of America 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
   materially from those estimates.

   CASH EQUIVALENTS
   ----------------

   The Corporation considers all short-term investments that have maturities of
   three months or less from the date of acquisition to be cash equivalents.

   ACCOUNTS RECEIVABLE
   -------------------

   Accounts receivable are stated net of an allowance for doubtful accounts of
   $52,106 and $26,441 as of June 30, 2003 and December 31, 2002, respectively.

                                        7

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   ------------------------------------------------------

   REVENUE RECOGNITION
   -------------------

   Prior to the adoption of the liquidation basis of accounting, base rents were
   recognized on a straight-line basis over the terms of the related leases.
   Subsequent to the adoption of the liquidation basis of accounting, the amount
   of the previously deferred straight-line rent was grouped with real estate
   for purposes of comparing such balances to their net realizable value and, if
   such amounts when aggregated with real estate exceeded the net realizable
   value, the amount of the excess was included in the write-off of other assets
   as part of the adjustment to the liquidation basis of accounting. At October
   29, 2002, the date prior to the adoption of liquidation accounting,
   approximately $254,181 of deferred straight-line rent was included in other
   assets that was subsequently grouped with real estate with no write-off
   required.

   Percentage rents charged to retail tenants based on sales volume are
   recognized when earned. Pursuant to Staff Accounting Bulletin No 101,
   "Revenue Recognition in Financial Statements," and the Emerging Issues Task
   Force's Consensus on Issue 98-9, "Accounting for Contingent Rent in Interim
   Financial Periods," the Corporation defers recognition of contingent rental
   income (i.e., percentage/excess rent) in interim periods until the specified
   target (i.e., breakpoint) that triggers the contingent rental income is
   achieved. Recoveries from tenants for taxes, insurance and other operating
   expenses are recognized as revenue in the period the applicable costs are
   incurred.

   INVESTMENTS IN JOINT VENTURES
   -----------------------------

   Certain properties are or were owned in joint ventures with Shelbourne
   Properties II L.P. and/or Shelbourne Properties III L.P. Accordingly, the
   Corporation's consolidated balance sheet at December 31, 2002 and the
   Corporation's consolidated statements of operations commencing January 1,
   2002, reflect the equity method of accounting. Subsequent to the adoption of
   the liquidation basis of accounting, the valuations of investments in joint
   ventures were adjusted to net realizable value.

   REAL ESTATE
   -----------

   Subsequent to the adoption of the liquidation basis of accounting, real
   estate assets were adjusted to their net realizable value and classified as
   real estate held for sale. Additionally, the Corporation suspended recording
   any further depreciation expense.

   DEPRECIATION AND AMORTIZATION
   -----------------------------

   Upon the adoption of the liquidation basis of accounting, deferred loan fees
   of $700,832 were written off to reflect the balances at their net realizable
   value. Direct lease costs associated with the real estate were grouped with
   real estate for purposes of comparing carrying amounts to their net
   realizable value, and if such amounts, when aggregated with real estate,
   exceeded the net realizable value, these costs were written off.

   Prior to the Corporation adopting the liquidation basis of accounting,
   depreciation was computed using the straight-line method over the useful life
   of the property, which was estimated to be 40 years. The cost of properties
   represented the initial cost of the properties to the Company plus
   acquisition and closing costs less impairment adjustments. Tenant
   improvements, leasing costs and deferred loan fees were amortized over the
   applicable lease term.


                                        8

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   ------------------------------------------------------

   FINANCIAL INSTRUMENTS
   ---------------------

   The carrying values reflected in the consolidated statements of net assets at
   June 30, 2003 and December 31, 2002 reasonably approximate the fair values
   for cash and cash equivalents, other assets, receivables, accounts payable,
   accrued expenses and note payable. Additionally, as the Corporation currently
   expects that the liquidation will be substantially completed not later than
   October 2004, the net realizable value of notes payable approximates their
   fair value. In making such assessments, the Corporation has utilized
   discounted cash flow analyses, estimates, and quoted market prices as deemed
   appropriate.

   INCOME TAXES
   ------------

   The Corporation is operating with the intention of qualifying as a real
   estate investment trust ("REIT") under Sections 856-860 of the Internal
   Revenue Code of 1986 as amended. Under those sections, a REIT which pays at
   least 90% of its ordinary taxable income as a dividend to its stockholders
   each year and which meets certain other conditions will not be taxed on that
   portion of its taxable income which is distributed to its stockholders.

   For federal income tax purposes, the cash dividends paid to stockholders
   after October 29, 2002 have been and will be characterized as liquidating
   distributions.

   AMOUNTS PER SHARE
   -----------------

   Basic earnings (loss) per share is computed based on weighted average common
   shares outstanding during the period. There are no potentially dilutive
   securities outstanding so basic and diluted earnings per share are the same
   for all periods presented.

   DIVIDENDS PER SHARE
   -------------------

   On January 13, 2003, the Board of Directors declared a dividend of $3.50 per
   share. The dividend was paid on January 31, 2003 to stockholders of record at
   the close of business on January 23, 2003.

   On February 28, 2003, the Board of Directors declared a dividend of $52.00
   per share. The dividend was paid on March 18, 2003 to stockholders of record
   at the close of business on March 10, 2003. The dividend was funded from
   proceeds of the Fleet Loan (see note 7) and from proceeds generated by the
   sale of the New York, New York property, as well as cash reserves.

   On June 19, 2003, the Board of Directors declared a dividend of $2.82 per
   share. The dividend was paid on July 9, 2003 to the shareholders of record at
   the close of business on June 30, 2003. The stockholders' Priority Return
   (defined in note 8 below) as of July 9, 2003 was $0.94 per share, which was
   satisfied on that date. Consequently, the Class B Unitholder, which is
   entitled to receive distributions only after the satisfaction of the Priority
   Return, was paid a distribution of $278,223 on July 9, 2003. All of the Class
   B Units are held by HX Investors, L.P., an affiliate of the Corporation's
   Chief Executive Officer.

   RECENTLY ISSUED ACCOUNTING STANDARDS
   ------------------------------------

   In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
   No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
   Statement No. 13 and Technical Corrections," which updates, clarifies and
   simplifies existing accounting pronouncements which are effective for fiscal
   years beginning after May 15, 2002. This statement had no effect on the
   Corporation's consolidated financial statements.


                                        9

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   ------------------------------------------------------

   In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
   with Exit or Disposal Activities." SFAS No. 146 requires companies to
   recognize costs associated with exit or disposal activities when they are
   incurred rather than at the date of a commitment to an exit or disposal plan.
   Examples of costs covered by the standard include lease termination costs and
   certain employee severance costs that are associated with a restructuring,
   discontinued operation, plant closing or other exit or disposal activity.
   SFAS No. 146 is effective prospectively for exit and disposal activities
   initiated after December 31, 2002. This statement had no effect on the
   Corporation's financial statements.

   In November 2002, the FASB issued Interpretation No. 45, "Guarantors'
   Accounting and Disclosure Requirements for Guarantees, Including Indirect
   Guarantees of Indebtedness of Others." This Interpretation elaborates on the
   disclosures to be made by a guarantor in its financial statements about its
   obligations under certain guarantees that it has issued. It also clarifies
   that a guarantor is required to recognize, at the inception of a guarantee, a
   liability for the fair value of the obligation undertaken in issuing the
   guarantee. This Interpretation does not prescribe a specific approach for
   subsequently measuring the guarantor's recognized liability over the term of
   the related guarantee. The disclosure provisions of this Interpretation were
   effective for the Corporation's December 31, 2002 financial statements. The
   initial recognition and initial measurement provisions of this Interpretation
   are applicable on a prospective basis to guarantees issued or modified after
   December 31, 2002. This Interpretation had no effect on the Corporation's
   consolidated financial statements.

   In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
   Variable Interest Entities." This Interpretation clarifies the application of
   existing accounting pronouncements to certain entities in which equity
   investors do not have the characteristics of a controlling financial interest
   or do not have sufficient equity at risk for the entity to finance its
   activities without additional subordinated financial support from other
   parties. The provisions of the Interpretation will be immediately effective
   for all variable interest in variable interest entities created after January
   31, 2003, and the Corporation will need to apply its provisions to any
   existing variable interest in variable interest entities on July 1, 2003. The
   Corporation does not expect that this will have an impact on the
   Corporation's consolidated financial statements.

   In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No. 133 on
   Derivative Instruments and Hedging Activities." This statement amends and
   clarifies financial accounting and reporting for derivative instruments,
   including certain derivative instruments embedded in other contracts
   (collectively referred to as derivatives) and for hedging activities under
   SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
   The Corporation does not expect that this statement will have an impact on
   the Corporation's financial statements.

   During the three and six months ended June 30, 2003 and 2002, property
   management services (the "Property Management Services") and asset management
   services, investor relation services and accounting services (the "Asset
   Management Services") have been provided to the Company by affiliates of the
   Company.


                                       10

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
   -----------------------------------------------------------

   ASSET MANAGEMENT SERVICES
   -------------------------

   For the period from January 1, 2002 through February 14, 2002, Shelbourne
   Management LLC ("Shelbourne Management"), a wholly-owned subsidiary of
   Presidio Capital Investment Company, LLC ("PCIC"), provided asset management
   services to the Company pursuant to the terms of an Advisory Agreement (the
   "Advisory Agreement") between the Corporation, the Operating Partnership and
   Shelbourne Management. Pursuant to the terms of the Advisory Agreement, the
   Corporation was obligated to pay for asset management services an annual
   asset management fee, payable quarterly, equal to 1.25% of the gross asset
   value of the Corporation as of the last day of each year. In addition, the
   Corporation was obligated to (i) pay $200,000 for non-accountable expenses
   and (ii) reimburse Shelbourne Management for expenses incurred in connection
   with the performance of its services. Effective February 14, 2002, in
   connection with the Transaction (as described below), PCIC began providing
   such services for a reduced fee of $333,333 per annum (the "Transition
   Management Fee"). Both Shelbourne Management and PCIC were affiliates of the
   then management of the Corporation.

   Effective October 1, 2002, as contemplated by the Plan of Liquidation, the
   agreement with PCIC was terminated and Kestrel Management, L.P. ("Kestrel")
   began providing the asset management services for a fee of $200,000 per
   annum. Kestrel is an affiliate of the Corporation's current Chief Executive
   Officer.

   Asset management services were provided to the Corporation during the three
   months ended June 30, 2003 by Kestrel and during the three months ended June
   30, 2002 by PCIC as described above.



                                       11

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
   -----------------------------------------------------------------------

   PROPERTY MANAGEMENT SERVICES
   ----------------------------

   The Operating Partnership has contracted with affiliates to provide property
   management services pursuant to agreements that provide for a fee of up to 6%
   of property revenue. Kestrel provided Property Management Services during the
   three and six months ended June 30, 2003 and 2002.

   The following table summarizes the amounts paid to affiliates for expense
   reimbursements, asset management fee, transition management fee and property
   management fees for the three and six month periods ended June 30, 2003 and
   2002.


<TABLE>
<CAPTION>
                           THREE MONTHS ENDED JUNE 30, 2003       THREE MONTHS ENDED JUNE 30, 2002

                                Shelbourne                          Shelbourne
                                Management         Kestrel          Management        Kestrel
                                ----------         -------          ----------        -------
<S>                             <C>                <C>              <C>               <C>
Asset Management Fee            $        -         $50,000          $        -        $     -
Property Management Fee         $        -         $24,495          $        -        $76,856
Transition Management Fee       $        -         $     -          $   83,300        $     -

</TABLE>

<TABLE>
<CAPTION>
                           SIX MONTHS ENDED JUNE 30, 2003           SIX MONTHS ENDED JUNE 30, 2002

                                Shelbourne                          Shelbourne
                                Management         Kestrel          Management         Kestrel
                                ----------         -------          ----------         -------
<S>                   <C>       <C>               <C>               <C>               <C>
Expense Reimbursement (1)       $        -        $      -          $   18,750        $      -
Asset Management Fee            $        -        $100,000          $  135,805        $      -
Transition Management Fee       $        -        $      -          $  124,950        $      -
Property Management Fee         $        -        $120,467          $        -        $173,919
</TABLE>


   (1) The asset management fees were modified in connection with the
       Transaction to eliminate expense reimbursement.


                                       12

<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
   -----------------------------------------------------------------------

   ALLOCATION OF DIVIDENDS BY THE CORPORATION
   ------------------------------------------

   Dividends payable to HX Investors, L.P. ("HX Investors"), an affiliate of the
   current Chief Executive Officer of the Corporation, for the six months ended
   June 30, 2003 and 2002 on account of shares of common stock owned by HX
   Investors were $20,556,925 and $0, respectively. No dividends were paid
   during the six months ended June 30, 2002.

   In addition, stockholders' Priority Return (defined in note 8 below) as of
   the most recent dividend date, July 9, 2003, was $0.94 per share, which was
   satisfied on July 9, 2003. Consequently, the Class B Unitholder, which is
   entitled to receive distributions only after the satisfaction of the Priority
   Return, received a distribution payment of $278,223 on July 9, 2003.

   In addition, in connection with the settlement of the lawsuit brought by HX
   Investors, Shelbourne Management agreed to pay to HX Investors approximately
   42% of the amounts paid to Shelbourne Management with respect to the Class A
   units. Distributions paid to Shelbourne Management on account of its Class A
   units for the six months ended June 30, 2003 were $20,430.

   THE TRANSACTION
   ---------------

   On February 14, 2002, the Corporation, Shelbourne Properties II, Inc. and
   Shelbourne Properties III, Inc. consummated a transaction (the "Transaction")
   whereby the Corporation purchased the 423,903 shares of the Corporation's
   common stock held by subsidiaries of PCIC and the Advisory Agreement was
   contributed to the Operating Partnership. Pursuant to the Transaction, the
   Corporation paid PCIC $14,303,060 in cash and the Operating Partnership
   issued preferred partnership interests with an aggregate liquidation
   preference of $812,674 and a note in the amount of $17,639,459. This note was
   satisfied in April 2002 from the proceeds of the Credit Facility (see note
   6). The liquidation preference was eliminated on January 15, 2003 in
   connection with the Accotel Transaction (see note 10).

4. REAL ESTATE
   -----------

   The following table is a summary of the Corporation's real estate as of:


                                            JUNE 30,            DECEMBER 31,
                                              2003                  2002
                                       LIQUIDATION BASIS      LIQUIDATION BASIS
                                       -----------------      -----------------
        Real Estate Held for Sale       $     9,460,610        $    30,341,402
                                       =================      =================

   On January 21, 2003, the Corporation sold Southport Shopping Center located
   in Ft. Lauderdale, Florida for a gross sales price of $23,430,000. The
   Corporation received proceeds of $23,178,855 after closing costs. Under the
   terms of the Credit Facility, which was in place at the time of the sale, all
   of the net proceeds from the sale were paid to reduce the amount due under
   the Credit Facility. The Corporation recognized the deferred gain and
   realized an accounting gain of $9,285,661.




                                       13
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


5. INVESTMENT IN JOINT VENTURES
   ----------------------------

   On October 30, 2002, the Corporation adopted the liquidation basis of
   accounting. Subsequent to the adoption of the liquidation basis of
   accounting, the investments in joint ventures were adjusted to their net
   realizable value based on current contracts, estimates as determined by
   independent appraisals or other indications of sales value, with the
   unrealized gain deferred until an actual sale occurs.

   At January 1, 2003 the Corporation was invested in three joint ventures, (568
   Broadway, Century Park, and Seattle Landmark). As of June 30, 2003 the
   Corporation was invested in one joint venture (Seattle Landmark). The joint
   ventures are accounted for utilizing the equity method of accounting.

   On February 28, 2003, 568 Broadway Joint Venture, a joint venture in which
   the Corporation indirectly held a 38.925% interest, sold its property located
   at 568 Broadway, New York, New York for a gross sale price of $87,500,000.
   After assumption of the debt encumbering the property ($10,000,000), closing
   adjustments and other closing costs, net proceeds were approximately
   $73,000,000, approximately $28,415,250 of which was allocated to the
   Operating Partnership. The joint venture recognized an accounting gain of
   $67,746,480 of which $26,478,493 was attributable to the Corporation and is
   reported as equity income from joint ventures.

   On April 29, 2003, Century Park I Joint Venture, a joint venture in which the
   Company held a 50% interest, sold its only property located in San Diego,
   California for a gross sales price of $29,750,000. The loan encumbering this
   property required that a payment of $20,000,000 be made to pay down the loan.
   After the required paydown, closing adjustments and other closing costs, net
   proceeds were $9,403,450 of which the Operating Partnership was allocated
   $4,701,725. The joint venture recognized an accounting gain of $20,394,138 of
   which $10,132,559 was attributable to the Corporation and is reported as
   equity income from joint ventures.

6. CREDIT FACILITY
   ---------------

   On May 1, 2002, the Operating Partnership and certain of its subsidiaries, as
   well as the operating partnership of Shelbourne Properties II, Inc. and the
   operating partnership of Shelbourne Properties III, Inc., and certain of
   their subsidiaries entered into a $75,000,000 revolving credit facility with
   Bayerische Hypo-Und Vereinsbank AG, New York Branch, as agent for itself and
   other lenders (the "Credit Facility"). The Credit Facility was subsequently
   satisfied on February 20, 2003. (See note 7).

7. FLEET LOAN
   ----------

   On February 20, 2003, in a transaction designed to provide flexibility to the
   Corporation, Shelbourne Properties II, Inc. and Shelbourne Properties III,
   Inc., (collectively, the "Companies") and their respective operating
   partnerships (the "Shelbourne OPs") in implementing their respective plans of
   liquidation and to enable them to distribute 100% of the net proceeds from
   the sale of the New York, New York property, direct and indirect subsidiaries
   (the "Borrowers") of each of the Companies entered into a Loan Agreement with
   Fleet National Bank, as agent for itself and other lenders ("Fleet") pursuant
   to which the Borrowers obtained a $55,000,000 loan (the "Loan"). The
   Companies believed that by entering into a single loan transaction instead of
   three separate loan transactions they were able to obtain a larger loan at a
   more favorable interest rate. The Loan bears interest at the election of the
   Borrowers at a rate of either LIBOR plus 2.75% (4.03125% at June 30, 2003) or
   Fleet's prime rate (but not less than 5%) plus 100 basis points. At present
   the Borrowers have elected that the Loan bear interest at LIBOR plus 2.75%.
   The Loan matures on February 19, 2006, subject to two one year extensions.
   The Loan is prepayable in whole or in part at anytime without penalty or
   premium.


                                       14
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


7. FLEET LOAN (CONTINUED)
   ----------------------

   As of June 30, 2003, the Loan was secured by mortgages on the Company's
   Towson, Maryland property, the property held by Seattle Landmark Joint
   Venture, as well as certain other properties owned indirectly by Shelbourne
   Properties II, Inc. and Shelbourne Properties III, Inc. The Borrowers are
   jointly and severally liable for the repayment of the amounts due under the
   Loan and the Operating Partnership and the Corporation (as well as the other
   operating partnerships and Companies) have guaranteed the repayment of the
   Loan. A portion of the Loan proceeds, as well as the balance of a note in the
   amount of $10,000,000 secured by the 568 Broadway property were used to
   satisfy the Credit Facility that had a balance due of $37,417,249 as of
   February 20, 2003.

   At June 30, 2003, the outstanding balance due on the Loan was $31,455,543, of
   which $7,495,084 was allocable to the Company and the interest rate at June
   30, 2003 on the Loan was 4.03125%.

   Pursuant to the terms of the Loan, each Borrower is jointly and severally
   liable for the repayment of the entire principal, interest and other amounts
   due under the Loan. Accordingly, the Borrowers, the Companies and the
   Shelbourne Operating Partnerships have entered into Indemnity, Contribution
   and Subrogation Agreements, the purpose and intent of which was to place the
   operating partnerships in the same position (as among each other) as each
   would have been had the lender made three separate loans, one to each of the
   operating partnerships. The principal benefit derived from obtaining one loan
   instead of three separate loans is that the interest rate on the Loan and the
   costs associated with the Loan are less than that which would have been
   incurred for three separate smaller loans.

8. CLASS B PARTNERSHIP INTERESTS
   -----------------------------

   Under the Plan of Liquidation which has been approved by the Corporation's
   Board of Directors and stockholders, the Class B Unitholder is entitled to
   receive an incentive payment of 15% of (i) the cash and other proceeds
   generated from operating the assets and properties of the Company, plus the
   aggregate fair value of all consideration received from the disposal of the
   assets and properties of the Company less (ii) the sum of all direct costs
   incurred in connection with such disposal (the "Incentive Fee"), after the
   payment of a priority return of approximately $59.00 per share to
   stockholders of the Corporation plus interest thereon compounded quarterly at
   6% (from August 19, 2002) per annum until the priority return is paid in full
   (the "Priority Return"). On August 19, 2002, the Board of Directors of the
   Corporation authorized the issuance by the Operating Partnership of, and the
   Operating Partnership issued, Class B Units to HX Investors L.P. ("HX
   Investors") which Class B Units provide distribution rights to HX Investors
   consistent with the intent and financial terms of the Incentive Fee. The
   Class B Units entitle the holder thereof to receive distributions equal to
   15% of gross proceeds after the Priority Return. The Priority Return as of
   the most recent dividend date, July 9, 2003, was $0.94 per share, which was
   satisfied on July 9, 2003. Consequently, HX Investors as the Class B
   Unitholder is entitled to receive distributions on account of its Class B
   Units which replaced the Incentive Fee. The distribution paid on July 9, 2003
   to the Class B Unitholder was $278,223.

9. CLASS A 5% PREFERRED PARTNERSHIP INTERESTS
   ------------------------------------------

   In connection with the Transaction, the Operating Partnership issued to
   Shelbourne Management 812.674 Class A 5% Preferred Partnership Units (the
   "Class A Units"). The Class A Units entitled the holder to a quarterly
   distribution equal to 1.25% of the aggregate liquidation preference of the
   Class A Units ($812,674). In addition, upon the liquidation of the Operating
   Partnership, each Class A Unit was entitled to a liquidation preference of
   $1,000 per unit. The Class A Units are not convertible into common units of
   the Operating Partnership or shares in the Corporation and the holders of the
   Class A Units do not have voting rights except in limited circumstances.
   Although the holders of the Class A Units do not have redemption rights,
   pursuant to the terms of the Purchase and Contribution Agreement entered into
   in connection with the Transaction, Shelbourne Management had the right to
   cause the Operating Partnership to reacquire the Class A Units upon the
   occurrence of certain events including,


                                       15
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


9.  CLASS A 5% PREFERRED PARTNERSHIP INTERESTS (CONTINUED)
    ------------------------------------------------------

    without limitation, if the aggregate assets of the Companies is below
    approximately $75 million or if the outstanding debt under which the
    Companies are obligated is less than $55 million, for a purchase price equal
    to the liquidation preference plus an amount (the "Put Premium") which was
    equal to approximately $5,286,000 at December 31, 2002 and declined each
    February 13, May 13, August 13 and November 13 until it reached zero on May
    13, 2007.

    The terms of the Class A Units were subsequently modified to eliminate the
    liquidation preference and limit the circumstances under which the holders
    of the Class A Units can cause the Operating Partnership to purchase the
    Class A Units at a premium. These circumstances include the occurrence of
    any of the following while any of the Class A Units are outstanding; (i) the
    filing of bankruptcy by a Shelbourne OP; (ii) the failure of a Shelbourne OP
    to be taxed as a partnership; (iii) the termination of the Advisory
    Agreement; (iv) the issuing of a guaranty by any of the Companies on the
    debt securing the Accor S.A. properties; or (v) the taking of any action
    with respect to the Accor S.A. properties (see below) without the consent of
    the Class A Unitholder.

    In connection with the settlement of the lawsuit brought by HX Investors,
    Shelbourne Management agreed to pay to HX Investors approximately 42% of the
    amounts paid to Shelbourne Management with respect to the Class A Units.

10. ACCOTEL TRANSACTION
    -------------------

    On January 15, 2003, a joint venture owned by the Operating Partnership and
    the operating partnerships of Shelbourne Properties II, Inc. and Shelbourne
    Properties III, Inc. acquired from Realty Holdings of America, LLC, an
    unaffiliated third party, a 100% interest in an entity that owns 20 motel
    properties triple net leased to an affiliate of Accor S.A. The cash purchase
    price, which was provided from working capital, was $2,668,272 of which
    $867,806, $1,079,675 and $720,791 was paid by the Corporation, Shelbourne
    Properties II, Inc., and Shelbourne Properties III, Inc., respectively. The
    properties are also subject to existing mortgage indebtedness in the current
    principal amount of approximately $74,220,000.

    The Companies formed the joint venture and acquired the interest in the new
    properties in order to facilitate the disposition of the other properties of
    the Companies and the distribution to stockholders of the sales proceeds in
    accordance with the Plan of Liquidation. Prior to the acquisition of the
    Accor S.A. properties, the holder of the Class A Units had the right to
    cause the Operating Partnerships to purchase the Class A Units at a
    substantial premium to their liquidation value (at the time of the
    acquisition, a premium of approximately $5,286,000 in the case of the
    Operating Partnership and approximately $16,265,000 for all three operating
    partnerships) unless the operating partnerships maintained at least
    approximately $54,200,000 of aggregate indebtedness ($17,600,000 in the case
    of the Operating Partnership) guaranteed by the holder of the Class A Units
    and secured by assets having an aggregate market value of at least
    approximately $74,800,000 ($24,300,000 in the case of the Operating
    Partnership). These requirements significantly impaired the ability of the
    Corporation to sell its properties and make distributions in accordance with
    the Plan of Liquidation. In lieu of these requirements, the operating
    partnerships acquired the Accor S.A. properties for the benefit of the
    holder of the Class A Units. The holder of the Class A Units does, however,
    continue to have the right, under certain limited circumstances which the
    Companies do not anticipate will occur, to cause the operating partnerships
    to purchase the Class A Units at the premium as described above. The terms
    of the Class A Units were also modified to eliminate the $2,500,000
    aggregate liquidation preferences to which the holder of the Class A Units
    was previously entitled ($812,674 in the case of the Operating Partnership).



                                       16
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


10. ACCOR S.A. PROPERTIES TRANSACTION (CONTINUED)
    ---------------------------------------------

    The holder of the Class A Units has the right to require the operating
    partnerships to acquire other properties for its benefit at an aggregate
    cash cost to the operating partnerships of $2,500,000 (approximately
    $812,000 of which would be paid by the Operating Partnership). In that event
    the Accor S.A. properties would not be held for the benefit of the holder of
    the Class A Units and would be disposed of as part of the liquidation of the
    Companies.

11. SUBSEQUENT EVENTS
    -----------------

    On July 9, 2003, the Corporation paid a dividend in the amount of $2.82 per
    share. The Priority Return as of the most recent dividend date, July 9,
    2003, was $0.94 per share. The Priority Return was satisfied on July 9,
    2003. Consequently, HX Investors, as the Class B Unitholder, is entitled to
    receive distribution on account of its Class B Units which replaced the
    Incentive Fee. The distribution paid on July 9, 2003 to the Class B
    Unitholder was $278,223.

    On August 1, 2003 the Corporation entered into a contract to sell its
    property located in Towson, Maryland. The sale, which is subject to
    purchaser's satisfactory completion of its due diligence process, is
    expected to close, if at all, in the fourth quarter of 2003.

    On August 1, 2003 the Corporation's Board of Directors declared a dividend
    of $3.00 per share. The dividend will be paid on August 21, 2003 to the
    shareholders of record at the close of business on August 11, 2003. The
    dividend is being paid from the Corporation's cash reserves.

    The Priority Return was satisfied on July 9, 2003 and consequently the Class
    B Unitholder, HX Investors, L.P., is entitled to receive a distribution of
    $444,328 on the date the distribution is paid.



                                       17
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
        OF 1995.

        Statements contained herein may constitute "forward-looking statements"
        within the meaning of Section 27A of the Securities Act of 1933, as
        amended, and Section 21E of the Securities Exchange Act of 1934, as
        amended. Any statements contained herein which are not statements of
        historical facts and that address activities, events or developments
        that Shelbourne Properties I, Inc. expects, believes or anticipates will
        or may occur in the future shall be deemed to be forward-looking
        statements. Forward-looking statements are inherently subject to risks
        and uncertainties, many of which cannot be predicted with accuracy and
        some of which might not even be anticipated. Future events, actual
        results and performance financial and otherwise, could differ materially
        from those set forth in or contemplated by the forward-looking
        statements herein. Factors that could cause actual results to differ
        materially from those in forward-looking statements include the terms of
        future property sales, investments and financings, general economic and
        business conditions and various other risk factors listed in the
        registration statement of Shelbourne Properties I, Inc. filed with the
        Securities and Exchange Commission.

        This item should be read in conjunction with the financial statements
        and other items contained elsewhere in the report.

        ORGANIZATION
        ------------

        Shelbourne Properties I, Inc., a Delaware corporation (the
        "Corporation"), was formed on April 18, 2001. The Corporation's
        wholly-owned operating partnership, Shelbourne Properties I L.P., a
        Delaware limited partnership (the "Operating Partnership", and together
        with the Corporation, the "Company"), holds directly and indirectly all
        of the Company's properties. Pursuant to a merger that was consummated
        on April 18, 2001, the Operating Partnership became the successor by
        merger to Integrated Resources High Equity Partners, Series 85, a
        California Limited Partnership, (the "Predecessor Partnership").

        In August 2002, the Board of Directors adopted a Plan of Liquidation
        (the "Plan of Liquidation") and directed that the Plan of Liquidation be
        submitted to the Corporation's stockholders for approval. The
        stockholders of the Corporation approved the Plan of Liquidation at a
        Special Meeting of Stockholders held on October 29, 2002. The Plan of
        Liquidation contemplates the orderly sale of all of the Corporation's
        assets for cash or such other form of consideration as may be
        conveniently distributed to the Corporation's stockholders and the
        payment of (or provision for) the Corporation's liabilities and
        expenses, as well as the establishment of a reserve to fund the
        Corporation's contingent liabilities. The Plan of Liquidation gives the
        Corporation's Board of Directors the power to sell any and all of the
        assets of the Corporation without further approval by the stockholders.

        Since the adoption of the Plan of Liquidation, the Company has sold
        Southport Shopping Center located in Ft. Lauderdale, Florida and its
        joint venture properties located in New York, New York and San Diego,
        California. As a result, the remaining assets of the Company are a
        shopping center located in Towson, Maryland and a 50% interest in an
        office building in Seattle, Washington. In addition, the Company holds a
        32.52% interest in a joint venture that holds 20 motel properties for
        the benefit of the Class A Unitholder. See "The Accotel Transaction"
        below.

        The Corporation currently expects that the liquidation will be
        substantially completed not later than October 29, 2004, although there
        can be no assurance in this regard. As a result, it is currently
        anticipated that not later than October 29, 2004 any then remaining
        assets and liabilities will be transferred to a liquidating trust. With
        the transfer to a liquidating trust, the liquidation will be completed
        for federal and state income tax purposes, although one or more
        distributions of the remaining cash and net proceeds from future asset
        sales may occur subsequent to the establishment of a liquidating trust.


                                       18
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


        THE TRANSACTION
        ---------------

        On February 14, 2002, the Corporation, Shelbourne Properties II, Inc.
        and Shelbourne Properties III, Inc. consummated a transaction (the
        "Transaction") whereby the Corporation purchased the 423,903 shares of
        the Corporation's common stock held by subsidiaries of Presidio Capital
        Investment Company, LLC ("PCIC") and the Advisory Agreement was
        contributed to the Operating Partnership. Pursuant to the Transaction,
        the Corporation paid PCIC $14,303,060 in cash and the Operating
        Partnership issued preferred partnership interests with an aggregate
        liquidation preference of $812,674 and a note in the amount of
        $17,639,459.

        THE ACCOTEL TRANSACTION
        -----------------------

        In connection with the Transaction, the Operating Partnership issued the
        Class A Units to Shelbourne Management. Pursuant to the terms of the
        Purchase and Contribution Agreement in which the Class A Units were
        issued, the holder of the Class A Units had the right to cause the
        Operating Partnership to purchase the Class A Units at a substantial
        premium to their liquidation value ($5,286,000 at the January 15, 2003)
        unless the Operating Partnership, together with the operating
        partnerships of Shelbourne Properties II, Inc. and Shelbourne Properties
        III, Inc. (collectively, the "Shelbourne OPs") maintained at least
        approximately $54,200,000 of aggregate indebtedness ($17,600,000 in the
        case of the Operating Partnership) guaranteed by the holder of the Class
        A Units and secured by assets having an aggregate market value of at
        least approximately $74,800,000 ($24,300,000 in the case of the
        Operating Partnership) (the "Debt and Asset Covenant"). These
        requirements significantly impaired the ability of the Corporation to
        sell its properties and pay dividends in accordance with the Plan of
        Liquidation.

        Accordingly, in a transaction (the "Accotel Transaction") designed to
        facilitate the liquidation of the Corporation and provide dividends to
        stockholders, on January 15, 2003, a joint venture owned by the
        Shelbourne OPs acquired from Realty Holdings of America, LLC, an
        unaffiliated third party, a 100% interest in an entity that owns 20
        motel properties triple net leased to an affiliate of Accor S.A. The
        cash purchase price, which was provided from working capital, was
        $2,668,272, of which $867,806, $1,079,675 and $720,791 was paid by the
        Operating Partnership, Shelbourne Properties II L.P. and Shelbourne
        Properties III L.P., respectively. The properties were also subject to
        existing mortgage indebtedness in the principal amount of approximately
        $74,220,000.

        The Accor S.A. properties were acquired for the benefit of the holder of
        the Class A Units as they provide sufficient debt to be guaranteed by
        the holder of the Class A Units. Except as indicated below, the Class A
        Unitholder will ultimately be the sole owner of the joint venture. In
        connection with the Accotel Transaction, the terms of the Class A Units
        were amended to (i) eliminate the liquidation preferences (as the cost
        of the interest in the Accor S.A. properties which was borne by the
        Shelbourne OPs satisfied the liquidation preference) and (ii) eliminate
        the Debt and Asset Covenant. The holder of the Class A Units does,
        however, continue to have the right, under certain limited circumstances
        which the Companies do not anticipate will occur, to cause the
        Shelbourne OPs to purchase their respective Class A Units at the premium
        described above. These circumstances include the occurrence of any of
        the following while any of the Class A Units are outstanding: (i) the
        filing of bankruptcy by a Shelbourne OP; (ii) the failure of a
        Shelbourne OP to be taxed as a partnership; (iii) the termination of the
        Advisory Agreement; (iv) the issuing of a guaranty by any of the
        Companies on the debt securing the Accor S.A. properties; or (v) the
        taking of any action with respect to the Accor S.A. properties without
        the consent of the Class A Unitholder.

        The holder of the Class A Units has the right, which right must be
        exercised by no later than July 28, 2004, to require that the Shelbourne
        OPs acquire other properties for the Class A Unitholder's benefit at an
        aggregate cash cost to the Shelbourne OPs of not more than $2,500,000
        (approximately $812,000 of which would be paid by the Operating
        Partnership). In that event, the Accor S.A. properties would not be held
        for the benefit of the holder of the Class A Units and the Companies
        would seek to dispose of these properties as part of the liquidation of
        the Companies. Accordingly, if the Class A Unitholder were to exercise
        this option, there is a risk that the Companies interest in the Accor
        S.A. properties could not be sold for their original purchase price.

        The foregoing description of the transaction does not purport to be
        complete, and is qualified in its entirety by reference to the Purchase
        Agreement (and all exhibits thereto) dated as of January 15, 2003, the
        Modification Agreement, dated as of January 15, 2003 and the Amended and
        Restated Partnership Unit Designation, copies of which are attached as
        exhibits to the Corporation's Current Report on Form 8-K filed on
        January 16, 2003, which are incorporated herein by reference.


                                       19
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


        THE PLAN OF LIQUIDATION - PROPERTY SALES
        ----------------------------------------

        On October 29, 2002, the Corporation's stockholders approved the Plan of
        Liquidation. Accordingly the Corporation began selling its properties.
        Since the adoption of the Plan of Liquidation, the Company has sold the
        following properties.

        Southport Shopping Center. On January 31, 2003, the Corporation
        completed the sale of Southport Shopping Center for a gross sales price
        of $23,430,000. Pursuant to the terms of the Credit Facility, which was
        in place at the time of the sale, all of the net proceeds after closing
        adjustments from the sale of $22,981,815 were required to be delivered
        to the Lender to reduce the outstanding balance on the Credit Facility.
        The Corporation recognized an accounting gain of $9,285,661.

        568 Broadway. On February 28, 2003, 568 Broadway Joint Venture, a joint
        venture in which the Corporation indirectly held a 38.925% interest,
        sold its property located at 568 Broadway, New York, New York for a
        gross sales price of $87,500,000. After assumptions of the debt
        encumbering the property, closing adjustments and other closing costs,
        net proceeds were approximately $73,000,000 of which approximately
        $28,415,250 was allocated to the Operating Partnership. The joint
        venture recognized an accounting gain of $67,746,480 of which
        $26,478,493 was attributable to the Corporation and is reported in
        equity income from joint venture.

        Century Park. On April 29, 2003, Century Park I Joint Venture, a joint
        venture in which the Corporation held a 50% interest, sold its only
        property located in San Diego, California for a gross sales price of
        $29,750,000. The loan encumbering this property required that a payment
        of $20,000,000 be made to pay down the loan. After such payment was
        made, closing adjustments and closing costs, net proceeds were
        $9,303,450 of which the Operating Partnership was allocated $4,651,725.
        The joint venture recognized an accounting gain of $20,394,138 of which
        $10,132,559 was allocated to the Corporation.

        RECENT DEVELOPMENTS
        -------------------

        On July 9, 2003, the Corporation paid a dividend in the amount of $2.82
        per share. Under the Plan of Liquidation, the Class B Unitholders are
        entitled to receive an incentive payment of 15% of (i) the cash and
        other proceeds generated from operating the assets and properties of the
        Company, plus the aggregate fair value of all consideration received
        from the disposal of the assets and properties of the Company less (ii)
        the sum of all direct costs incurred in connection with such disposal,
        after the payment of a priority return of approximately $59.00 per share
        to stockholders of the Corporation plus interest thereon compounded
        quarterly at 6% (from August 19, 2002) per annum (the "Priority
        Return"). The Priority Return as of the most recent dividend date, July
        9, 2003, was $0.94. The Priority Return was satisfied on July 9, 2003.
        Consequently, HX Investors L.P., the Class B Unitholder was paid a
        distribution of $278,223.

        On August 1, 2003 the Corporation entered into a contract to sell its
        property located in Towson, Maryland. The sale, which is subject to
        purchaser's satisfactory completion of its due diligence process, is
        expected to close, if at all, in the fourth quarter of 2003.

        On August 1, 2003 the Corporation's Board of Directors declared a
        dividend of $3.00 per share. The dividend will be paid on August 21,
        2003 to the shareholders of record at the close of business on August
        11, 2003. The dividend is being paid from the Corporation's cash
        reserves. The Priority Return was satisfied on July 9, 2003 and
        consequently the Class B Unitholder, HX Investors, L.P., is entitled to
        receive a distribution of $444,328 on the date the distribution is paid.

        LIQUIDITY AND CAPITAL RESOURCES
        -------------------------------

        The Company uses its working capital reserves and any cash from
        operations as its primary source of liquidity. In addition, on February
        20, 2003, in a transaction designed to provide flexibility to the
        Corporation, Shelbourne Properties II, Inc. and Shelbourne Properties
        III, Inc. (collectively, the "Companies") in implementing their
        respective plans of liquidation and to enable them to distribute 100% of
        the net proceeds from the sale of the New York, New York property,
        direct and indirect subsidiaries (the "Borrowers") of each of the
        Companies entered into a Loan Agreement with Fleet National Bank, as
        agent for itself and other lenders ("Fleet") pursuant to which the


                                       20
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


        LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
        -------------------------------------------

        Borrowers obtained a $55,000,000 loan (the "Loan"). The Companies
        believed that by entering into a single loan transaction instead of
        three separate loan transactions they were able to obtain a larger loan
        at a more favorable interest rate. The Loan bears interest at the
        election of the Borrowers at a rate of either LIBOR plus 2.75% or
        Fleet's prime rate (but not less than 5%) plus 1%. At present the
        Borrowers have elected that the Loan bear interest at LIBOR plus 2.75%.
        The Loan matures on February 19, 2006, subject to two one year
        extensions. The Loan is prepayable in whole or in part at anytime
        without penalty or premium.

        At June 30, 2003, the outstanding balance due on the Loan was
        $31,455,543, of which $7,495,084 was allocable to the Company and the
        interest rate on the Loan was 4.03125%.

        The Loan is secured by mortgages on the Company's Towson, Maryland
        property, the property held by Seattle Landmark I Joint Venture, as well
        as certain other properties owned indirectly by Shelbourne Properties
        II, Inc. and Shelbourne Properties III, Inc. The Borrowers are jointly
        and severally liable for the repayment of the amounts due under the Loan
        and the Operating Partnership and the Corporation (as well as the other
        operating partnerships and Companies) have guaranteed the repayment of
        the Loan. A portion of the Loan proceeds, as well as the balance of a
        note in the amount of $10,000,000 secured by the 568 Broadway property,
        were used to satisfy the Credit Facility that had a balance due of
        $37,417,249 of which the Corporation was responsible for $850,459.

        Pursuant to the terms of the Loan, each Borrower is jointly and
        severally liable for the repayment of the entire principal, interest and
        other amounts due under the Loan. Accordingly, the Borrowers, the
        Companies and the Shelbourne Operating Partnerships have entered into
        Indemnity, Contribution and Subrogation Agreements, the purpose and
        intent of which was to place the operating partnerships in the same
        position (as among each other) as each would have been had the lender
        made three separate loans, one to each of the operating partnerships.
        The principal benefit derived from obtaining one loan instead of three
        separate loans is that the interest rate on the Loan and the costs
        associated with the Loan are less than that which would have been
        incurred for three separate smaller loans.

        The Company had $7,007,097 in cash and cash equivalents at June 30, 2003
        of which $1,368,393 was classified as restricted cash. Cash and cash
        equivalents are temporarily invested in short-term instruments. The
        Company's level of liquidity based upon cash and cash equivalents
        increased by $6,457,036 during the six months ended June 30, 2003. As
        discussed further below, the increase resulted from $47,232,493 of net
        cash provided by operating activities and $22,162,536 of net cash
        provided by investing activities which was partially offset by
        $62,937,993 of net cash used in financing activities.

        In addition to the cash and cash equivalents reported at June 30, 2003,
        the Corporation's joint ventures held cash at June 30, 2003 of which the
        Corporation's allocable share was $618,559.

        Currently, the Corporation's primary sources of funds are rents
        collected from tenants, distributions from its joint venture investments
        and proceeds from property sales. Rents collected from tenants for the
        six months ended June 30, 2003 amounted to $1,474,185 as compared to
        $2,347,772 for the six months ended June 30, 2002. The decrease is due
        to the sale of Southport Shopping Center on January 21, 2003.
        Distributions in excess of earnings from joint ventures investments
        increased by $5,125,300 to $10,664,920 for the six months ended June 30,
        2003 from $5,539,620 for the six months ended June 30, 2002. The primary
        reason for this increase was the sale of properties owned by 568
        Broadway and Century Park I joint venture.

        Cash provided by investing activities was the result of the sale of
        Southport Shopping Center which generated proceeds of $23,178,855 that
        were slightly offset by the investment in the Accotel transaction of
        $867,806 and improvements to real estate at Loch Raven Plaza and
        Southport Shopping Center prior to the sale, of $140,610 and $7,903,
        respectively.



                                       21
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


        RESULTS OF OPERATIONS
        ---------------------

        Cash used in financing activities consisted of dividends paid to common
        stockholders ($46,580,373), distributions made to the Class A
        Unitholders ($20,430), principal payments on the Fleet Loan
        ($10,000,000), paydown of Credit Facility from sales proceeds
        ($22,981,815) and satisfaction of the Credit Facility ($850,459)
        partially offset by proceeds from the Fleet Loan ($17,495,084).

        SIX MONTHS ENDED JUNE 30, 2003 VS. JUNE 30, 2002
        ------------------------------------------------

        Net income

        The Corporation's net income available to common shareholders increased
        by $65,691,405 to $46,581,302 for the six months ended June 30, 2003
        from a net loss of $19,110,103 for the six months ended June 30, 2002.
        The increase in net income was due to an increase in equity income from
        joint ventures, gains on the sale of real estate as well as a decrease
        in costs and expenses. The Corporation's income before equity income
        from joint ventures, gain on sale of real estate, interest and other
        income was $332,884 for the six months ended June 30, 2003 as compared
        to a net loss of ($20,592,686) for the six months ended June 30, 2002.

        Rental Revenues

        Rental revenues decreased by $1,067,097, or approximately 43%, to
        $1,410,582 for the six months ended June 30, 2003 from $2,477,679 for
        the six months ended June 30, 2002 due to the January 2003 sale of
        Southport Shopping Center. Because of the sale, base rental revenue,
        excluding percentage rent, declined by $1,057,868 for the six months
        ended June 30, 2003 to $177,927 from $1,235,795 for the six months ended
        June 30, 2002. Percentage rent decreased by $21,545 for the six months
        ended June 30, 2003 as compared to the same period in 2002 as a result
        of reduced percentage rent payments by Eckerd Drugs and Publix
        Supermarkets at Southport Shopping Center. These decreases were
        partially offset by an increase in rental revenue at Loch Raven Plaza
        for the six months ended June 30, 2003 to $632,776 from $620,695 for the
        six months ended June 30, 2002.

        Costs and Expenses

        Costs and expenses for the six months ended June 30, 2003 were
        $1,077,738, representing a decrease of $21,849,569 from the same period
        in 2002. The decrease is due principally to non-recurring expenses
        incurred in 2002 of $18,452,133 associated with the purchase of the
        Advisory Agreement that was consummated on February 14, 2002. Excluding
        expenses associated with the purchase of the Advisory Agreement,
        expenses for the six months ended June 30, 2002 were $4,618,232.
        Therefore, without giving effect to the costs incurred in 2002 for the
        purchase of the Advisory Agreements, expenses decreased by $3,540,494
        for the six months ended June 30, 2003 compared with the same period in
        2002. The decrease is primarily due to reduced administrative expenses,
        the cessation of depreciation and amortization and the reduction of the
        asset management fees to $200,000 per year. The sale of Southport
        Shopping Center in January 2003 also contributed to the decrease in
        costs and expenses.

        Operating expenses decreased by $446,640 for the six months ended June
        30, 2003 as compared to the six months ended June 30, 2002, primarily
        due to the sale of Southport Shopping Center on January 21, 2003. The
        decrease was partially offset by an increase in operating expenses of
        $58,285 at Loch Raven Plaza. This increase resulted from parking lot
        maintenance due to above average snowfall.

        Pursuant to the Plan of Liquidation which was adopted on October 29,
        2002, depreciation and amortization expenses ceased as of that date.
        Therefore, the Corporation incurred no depreciation and amortization for
        the six months ended June 30, 2003 as compared to $429,613 for the same
        period in 2002. Partnership asset management and transition management
        fees decreased to $100,000 for the six months ended June 30, 2003 from
        $260,755 for the same period in 2002. In 2002, prior to the Transaction,
        the fees were based on 1.25% of gross asset value of the Corporation,
        which amounted to $135,805 during 2002, and effective February 14, 2002,
        after the Transaction, there was a fixed asset management fee of $27,778
        per month which amounted to $124,950 for the period beginning February
        15, 2002 through June 30, 2002. The total asset management fee and
        transition management fees paid for the six months ended June 30, 2002
        were $260,755.


                                       22
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


        RESULTS OF OPERATIONS (CONTINUED)
        ---------------------------------

        Effective October 1, 2002, the asset management fee payable by the
        Corporation was reduced to $50,000 per quarter.

        Administrative costs decreased to $564,165 for the six months ended June
        30, 2003 from $3,041,288 for the same period in 2002. This reduction is
        due to the costs not incurred in 2003 that were incurred in 2002 in
        connection with the Transaction and legal, professional and consulting
        fees also incurred in 2002. Property Management fees decreased to
        $44,923 from $71,286 for the six month periods ending June 30, 2003 and
        2002, respectively. The decrease is due to the sale of Southport
        Shopping Center in January 2003.

        Gain on Sale of Real Estate

        The gain on sale of $9,285,661 for the six months ended June 30, 2003
        was due to the sale of Southport Shopping Center.

        Non-Operating Income and Expenses

        Income from investments in joint ventures increased by $35,381,435 to
        $37,189,615 for the six months ended June 30, 2003 as compared to
        $1,808,180 for the six months ended June 30, 2002 due to the sale of
        properties owned by 568 Broadway Joint Venture and Century Park I Joint
        Venture, in which the Corporation indirectly held a 38.925% and 50%
        interest, respectively. 568 Broadway Joint Venture sold its property on
        February 28, 2003, and the joint venture recognized a gain on sale of
        $67,746,480 of which $26,478,493 was allocated to the Corporation.
        Century Park was sold on April 29, 2003 and the joint venture recognized
        a gain on sale of $20,394,138 of which $10,132,559 was allocated to the
        Corporation.

        Excluding the gain on sales, the Corporation experienced a decrease in
        equity income from 568 Broadway Joint Venture for the six months ended
        June 30, 2003 as compared to the six months ended June 30, 2002 of
        $1,189,041 due to the sale of the property on February 28, 2003.

        Excluding the gain on sale, the Corporation experienced a decrease in
        equity income from Century Park I Joint Venture for the six months ended
        June 30, 2003 as compared to the six months ended June 30, 2002 of
        $12,503 due to the sale of the property on April 29, 2003.

        The Corporation's remaining joint venture investment, Seattle Landmark
        Joint Venture, experienced a decrease in equity income of $28,072 for
        the six months ended June 30, 2003 as compared to the same period in
        2002. The decrease is primarily due to an increase in repairs and
        maintenance which was partially offset by the cessation of depreciation
        and amortization expenses in accordance with liquidation accounting.

        During the first six months of 2003, interest expense was $241,755,
        which consisted of $52,314 paid in connection with the Credit Facility
        and $189,441 incurred in connection with the Fleet Loan, as compared to
        $342,002 for the first six months of 2002. The interest incurred during
        2002 was comprised of $172,733 related to the notes issued to Shelbourne
        Management in connection with the purchase of the Advisory Agreements
        and interest of $169,269 incurred in connection with the Credit
        Facility.

        Interest income decreased slightly to $26,174 during the six months
        ended June 30, 2003 from $27,805 during the six months ended June 30,
        2002 due to lower cash balances invested with lower yields.

        Other income increased to $9,193 for the six months ended June 30, 2003
        from $3,951 for the six months ended June 30, 2002 due to the refund of
        utility charges due to the sale of Southport Shopping Center. These
        refunds are due to final readings being less than the estimated bills
        that were previously paid.


                                       23
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


        RESULTS OF OPERATIONS (CONTINUED)
        ---------------------------------

        THREE MONTHS ENDED JUNE 30, 2003 VS. JUNE 30, 2002
        --------------------------------------------------

        Net income

        The Corporation's net income available to common shareholders increased
        by $11,553,074 to a net income of $10,000,085 for the three months ended
        June 30, 2003 from a net loss of $1,552,989 for the three months ended
        June 30, 2002. The increase was due to a decrease in expenses, a
        decrease in interest expense and an increase in equity income from joint
        ventures all of which were partially offset by a decrease in rental
        revenue. The Corporation's loss before equity income from joint
        ventures, gain on sale of real estate, interest and other income was
        ($148,715) for the three months ended June 30, 2003 as compared to a
        loss of ($2,206,195) for the three months ended June 30, 2002.

        Rental Revenue

        Rental revenues decreased $533,450, or approximately 61%, to $336,682
        for the three months ended June 30, 2003 from $870,132 for the three
        months ended June 30, 2002 due to the January 2003 sale of Southport
        Shopping Center. The decrease was partially offset by Loch Raven Plaza's
        rental revenue increasing for the three months ended June 30, 2003 by
        $6,292 to $314,979 from $308,687 for the three months ended June 30,
        2002.

        Costs and Expenses

        Costs and expenses for the three months ended June 30, 2003 amounted to
        $485,397, representing a decrease of $2,590,930 from the same period in
        2002. The decrease is primarily due to reduced administrative expenses
        as a result of legal, professional and consulting fees incurred during
        the three months ended June 30, 2002, not incurred during the three
        months ended June 30, 2003. The cessation of depreciation and
        amortization and the reduction of the asset management fees to $200,000
        per year also contributed to the reduction of costs and expenses as well
        as the sale of Southport Shopping Center in January 2003.

        Operating expenses decreased by $315,223 for the three months ended June
        30, 2003 as compared to June 30, 2002, primarily due to the sale of
        Southport Shopping Center on January 21, 2003.

        Pursuant to the Plan of Liquidation which was adopted on October 29,
        2002, depreciation and amortization expenses ceased as of that date.
        Therefore, the Corporation incurred no depreciation and amortization for
        the three months ended June 30, 2003 as compared to $239,606 for the
        same period in 2002. Partnership asset management fees decreased to
        $50,000 for the three months ended June 30, 2003 from $83,300 for the
        same period in 2002. In 2002, after the Transaction, there was a fixed
        asset management fee of $27,778 per month which amounted to $83,300
        during the second quarter of 2002. Effective October 1, 2002, the asset
        management fee payable by the Corporation was reduced to $50,000 per
        quarter.

        Administrative costs decreased to $305,597 for the three months ended
        June 30, 2003 from $2,292,623 for the same period in 2002. This
        reduction is due to the legal, professional and consulting costs not
        incurred in 2003 that were incurred in 2002. Property Management fees
        decreased to $9,598 from $25,373 for the periods ending June 30, 2003
        and 2002, respectively. The decrease is due to the sale of Southport
        Shopping Center in January 2003.

        Non-Operating Income and Expenses

        Income from investments in joint ventures increased by $9,370,052 to
        $10,258,360 for the three months ended June 30, 2003 as compared to
        $888,308 for the three months ended June 30, 2002. This is primarily due
        to the sale of the property owned by Century Park I Joint Venture on
        April 29, 2003, in which the Corporation indirectly held a 50% interest.
        The joint venture recognized a gain on sale of $20,394,138 of which
        $10,132,559 was allocated to the Corporation.


                                       24
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


        RESULTS OF OPERATIONS (CONTINUED)
        ---------------------------------

        Excluding the gain on sale, the Corporation experienced a $129,281
        decrease in equity income from Century Park I Joint Venture for the
        three months ended June 30, 2003 as compared to the three months ended
        June 30, 2002 due to the sale of the property on April 29, 2003.

        The Corporation experienced a decrease in equity income from 568
        Broadway Joint Venture for the three months ended June 30, 2003 as
        compared to the three months ended June 30, 2002 of $128,538 due to the
        sale of the property on February 28, 2003.

        The Corporation's remaining joint venture investment, Seattle Landmark
        Joint Venture, experienced an increase in equity income of $74,327 for
        the three months ended June 30, 2003 as compared to the same period in
        2002. This increase is due to the cessation of depreciation and
        amortization expenses in accordance with liquidation accounting.


        During the second quarter of 2003, interest expense was $109,934. This
        interest was incurred in connection with the Fleet Loan. The interest
        expense for the second quarter 2002 was $239,727. The interest in 2002
        was comprised of $70,458 incurred on the notes issued to Shelbourne
        Management in connection with the purchase of the Advisory Agreements
        and $169,269 incurred in connection with the Credit Facility.

        Interest income decreased slightly to $10,109 during the three months
        ended June 30, 2003 from $12,938 during the three months ended June 30,
        2002 due to lower cash balances invested and lower yields.

        Other income decreased to $537 for the three months ended June 30, 2003
        from $1,959 for the three months ended June 30, 2002. This is a result
        of the sale of Southport Shopping Center in January 2003.

        Inflation

        Inflation is not expected to have a material impact on the operations or
        financial position of the Corporation.



                                       25
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The primary market risk the Corporation faces is interest rate
        sensitivity. The Corporation's long-term debt bears interest at a
        floating rate, and therefore the Corporation is exposed to the risk of
        interest rate changes. At June 30, 2003, borrowings under the
        Corporation's secured loan totaled $7,495,084 and initially bore an
        interest rate of LIBOR plus 2.75%. Based on the balance outstanding on
        the Corporation's credit facility at August 12, 2003 and the interest
        rate at that date, a 10% increase in LIBOR would increase the
        Corporation's interest expense in 2003 by approximately $9,603.
        Conversely, a 10% decrease in LIBOR would decrease the Corporation's
        interest expense in 2003 by the same amount. The gain or loss the
        Corporation ultimately realizes with respect to interest rate
        fluctuations will depend on the actual interest rates during that
        period. The Corporation does not utilize derivative financial
        instruments.

ITEM 4. CONTROLS AND PROCEDURES

        The Corporation's principal executive officer and principal financial
        officer have, within 90 days of the filing date of this quarterly
        report, evaluated the effectiveness of the Corporation's disclosure
        controls and procedures (as defined in Exchange Act Rules 13a - 14(c))
        and have determined that such disclosure controls and procedures are
        adequate. There have been no significant changes in the Corporation's
        internal controls or in other factors that could significantly affect
        such internal controls since the date of evaluation. Accordingly, no
        corrective actions have been taken with regard to significant
        deficiencies or material weaknesses.




                                       26
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


PART II - OTHER INFORMATION

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

On May 20, 2003, the Corporation held its annual meeting of the Stockholders at
which time (i) Mr. Arthur Blasberg, Jr., and Mr. Steven Zalkind were elected to
as Class II Directors of the Corporation, and (ii) Deloitte & Touche LLP was
ratified as the Company's independent auditors. The following table indicates
the votes "for" and "against" on these matters, and abstentions.

<TABLE>
<CAPTION>
Action                                         Votes For       Votes Against       Abstentions
------                                         ---------       -------------       -----------
<S>                                            <C>             <C>                <C>
Election of Directors
     Arthur Blasberg, Jr.                       625,109            4,028               ---
     Steven Zalkind                             625,158            3,969               ---

Ratification of Deloitte & Touche, LLP          621,333            1,405              6,399
</TABLE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

Exhibits required by Item 601 of Regulation S-K are filed herewith or
incorporated herein by reference and are listed in the attached Exhibit Index.


(B) REPORTS ON FORM 8-K

The following reports on Form 8-K were filed on behalf of the Registrant during
the quarter ended June 30, 2003:

(i)     Sale of San Diego, California property

Item reported: 2

Dated filed: April 30, 2003

(ii)    Issuance of Dividend.

Item reported: 5

Dated filed: June 20, 2003





                                       27
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       Shelbourne Properties I, Inc.
                                       (Registrant)


Dated: August 11, 2003                 By:    /S/ Michael L. Ashner
                                              ----------------------------------
                                              Michael L. Ashner
                                              Chief Executive Officer










                                       28
<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                              Description                                                         Page
------                              -----------                                                         ----
<S>      <C>                                                                                            <C>
2.1      Stock Purchase Agreement among HX Investors,
         Exeter Capital Corporation and the Company                                                      (4)
2.2      Amendment No. 1 to Stock Purchase Agreement                                                     (6)
2.3      Plan of Liquidation                                                                             (7)
3.1      Amended and Restated  Certificate of  Incorporation of the Company                              (1)
3.2      Amended and Restated Bylaws of the Corporation                                                  (1)
4.1      Limited Partnership of the operating partnership                                                (1)
4.2      Stockholder Rights Agreement                                                                    (1)
4.3      Amendment to Stockholder Rights Agreement                                                       (2)
4.4      Restated Partnership Unit Designation for 5% Class A Preferred                                  (9)
         Partnership Units (incorporated by reference to Exhibit E-1 of Exhibit 10.4)
4.5      Stockholder Agreement, among the Companies and                                                  (3)
4.6      HX Investors, LP and Exeter Capital Corporation,
         dated as of April 30, 2002
4.6      Amendment No. 2 to Stockholder Rights Agreement                                                 (5)
4.7      Partnership Unit Designation of the Class B Partnership Units of the Operating Partnership      (8)
10.1     Settlement Agreement and Mutual Release between
         HX Investors, the Companies and Shelbourne Management                                           (4)
10.2     Amendment No. 1 to Settlement Agreement                                                         (6)
10.3     Purchase Agreement, dated as of January 15, 2003,                                               (9)
         between the Shelbourne JV LLC and Realty Holdings of America, LLC
10.4     Agreement, dated as of January 15, 2003, among                                                  (9)
         Presidio Capital Investment Company, LLC (and certain of its subsidiaries),
         Shelbourne Management, NorthStar Capital Investment Corp., each of the
         Shelbourne REITs and its operating partnership and HX Investors, L.P.
10.5     Loan Agreement,  dated as of February 19, 2003,  among Shelbourne Properties I L.P.,            (10)
         Shelbourne Properties II L.P., Shelbourne Properties III L.P.,
         Shelbourne Richmond Company LLC, Shelbourne Matthews Company LLC,
         Shelbourne Las Vegas Company LLC, Century Park I Joint Venture, Seattle
         Landmark Joint Venture, Tri-Columbus Associates and Fleet National Bank
         and the other lending institutions which may become party thereto and
         Fleet National Bank, as agent
10.6     Form of Guaranty, dated as of February 19, 2003, from Shelbourne Properties III, Inc. and       (10)
         Shelbourne Properties III L.P.
10.7     Form of Indemnity, Contribution and Subrogation Agreement, dated as of February 19,             (10)
         2003, among the REITs and the operating partnerships

10.8     Form of Deed of Trust, Assignment of Leases and Rents, Security Agreement and                   (10)
         Fixture Filing with respect to the Collateral Properties dated as of February 19, 2003
         in favor of Fleet National Bank
10.9     Cash Management Agreement, dated February 19, 2003, among Shelbourne Properties I L.P.,         (10)
         Shelbourne Properties II L.P., Shelbourne Properties III L.P., Fleet National Bank,
         as agent for itself and the Lenders, and various subsidiaries of the Shelbourne OP's
         listed on Exhibit A thereto
31       Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                         31
32       Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                         33
</TABLE>

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(1)      incorporated by reference to the Registration Statement of the Company
         on Form S-4 filed on February 11, 2000, as amended
(2)      incorporated by reference to the Current Report of the Company on Form
         8-K filed on February 14, 2002
(3)      incorporated by reference to the Current Report of the Company on Form
         8-K filed on May 14, 2002.



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<PAGE>

                          SHELBOURNE PROPERTIES I, INC.
                            FORM 10Q - JUNE 30, 2003


(4)      incorporated by reference to the Current Report of the Company on Form
         8-K filed on July 2, 2002.
(5)      incorporated by reference to the Current Report of the Company on Form
         8-K filed on July 8, 2002
(6)      incorporated by reference to the Current Report of the Company on Form
         8-K filed on August 5, 2002
(7)      incorporated by reference to Appendix A to the Company's Definitive
         Proxy Statement on Schedule 14A filed on September 27, 2002
(8)      incorporated by reference to the Quarterly Report on Form 10-Q of the
         Company filed on November 14, 2002.
(9)      incorporated by reference to the Current Report of the Company on Form
         8-K filed on January 15, 2003.
(10)     incorporated by reference to the Current Report of the Company on Form
         8-K filed on February 24, 2003.






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