<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 SEPTEMBER 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 November 12, 2003, there were 839,286 shares of common stock outstanding.

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


<PAGE>

                         SHELBOURNE PROPERTIES I, INC.
                         FORM 10Q-SEPTEMBER 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
              September 30, 2003 and December 31, 2002...........................................     3

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

              Consolidated Statements of Cash Flows for the
              Nine months Ended September 30, 2003 (Liquidation Basis) and
              the Nine months Ended September 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 - SEPTEMBER 30, 2003


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


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

   Real estate held for sale                                                  $    9,270,625        $   30,341,402
   Investments in joint ventures                                                  10,345,652            57,791,273
   Cash and cash equivalents, of which $1,326,101 is
     restricted cash at September 30, 2003                                         1,506,871               550,061
   Other assets                                                                      531,539               359,699
   Receivables, net                                                                   41,336               166,723
                                                                              ---------------       ---------------
   Total Assets                                                                   21,696,023            89,209,158
                                                                              ---------------       ---------------
   LIABILITIES
   Accounts payable and accrued expenses                                             905,221               386,903
   Credit Facility                                                                         -            23,832,274
   Fleet Loan                                                                      7,495,084                     -
   Reserve for estimated costs during the period of liquidation                      895,767             1,300,000
   Deferral of gains and incentive fee on real estate assets and joint
   ventures                                                                        7,588,403            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                                                              16,884,475            78,869,734
                                                                              ---------------       ---------------
   NET ASSETS IN LIQUIDATION                                                  $    4,811,548        $   10,339,424
                                                                              ===============       ===============
</TABLE>







                See notes to consolidated financial statements.



                                       3

<PAGE>

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


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

<TABLE>
<CAPTION>
                                                            For the Three Months Ended         For the Nine months Ended
                                                                  September 30,                      September 30,
                                                           -----------------------------     -----------------------------
                                                               2003             2002             2003            2002
                                                           ------------     ------------     ------------    -------------
<S>                                                        <C>              <C>              <C>              <C>
Rental revenues                                            $    328,098     $    914,766     $  1,738,680     $  3,392,446
                                                           ------------     ------------     ------------     ------------
Costs and expenses
       Operating expenses                                        92,090          387,474          460,740        1,201,084
       Depreciation and amortization                               --            263,082             --            697,004
       Asset management fee                                      50,000             --            150,000          135,805
       Transition management fees                                  --             83,300             --            208,250
       Purchase of advisory agreements                             --               --               --         18,452,133
       Administrative expenses                                  228,697          688,257          792,862        3,731,224
       Property management fee                                    9,024           27,412           53,947           98,699
                                                           ------------     ------------     ------------     ------------
                                                                379,811        1,449,525        1,457,549       24,524,199
                                                           ------------     ------------     ------------     ------------
Income (loss) before equity income from joint ventures,
gain on sale of real estate, interest and other income          (51,713)        (534,759)         281,131      (21,131,753)
       Equity income from joint ventures                        209,309        1,050,495       37,398,925        2,858,674
       Gain on sale of real estate                                 --               --          9,285,661             --
       Interest expense                                         (75,816)        (254,333)        (317,571)        (596,335)
       Interest income                                            6,994           11,953           33,168           39,760
       Other income                                                --              1,927            9,193            5,878
                                                           ------------     ------------     ------------     ------------
Net income (loss)                                                88,774          275,283       46,690,507      (18,823,776)
Preferred dividends                                             (10,384)         (10,384)         (30,814)         (25,735)
Class B Unitholder distributions                               (444,328)            --           (722,551)            --
                                                           ------------     ------------     ------------     ------------
Net income (loss) available for common shareholders        $   (365,938)    $    264,899       45,937,142     $(18,849,511)
                                                           ============     ============     ============     ============
Net assets at January 1, 2003                                                                  10,339,424
Liquidating dividends - common                                                                (51,465,018)
                                                                                             ------------
Net assets in liquidation at September 30, 2003                                              $  4,811,548
                                                                                             ============
Earnings (loss) per share - basic and diluted              $      (0.44)    $       0.32     $      54.73     $     (20.73)
                                                           ============     ============     ============     ============
Weighted average common shares                                  839,286          839,286          839,286          909,160
                                                           ============     ============     ============     ============
</TABLE>


                See notes to consolidated financial statements.


                                       4

<PAGE>
                          SHELBOURNE PROPERTIES I, INC.
                          FORM 10Q - SEPTEMBER 30, 2003

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

<TABLE>
<CAPTION>
                                                                              For the Nine months Ended
                                                                                    September 30,
                                                                           --------------------------------
                                                                                2003               2002
                                                                           -------------       ------------
<S>                                                                       <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                                                    $ 46,690,507        $(18,823,776)
      Adjustments to reconcile net income to net cash
        provided by operating activities:
             Depreciation and amortization                                         --               697,004
             Straight-line adjustment for stepped lease rentals                    --                18,984
             Change in bad debt reserve                                          25,665              76,882
             Purchase of advisory agreement                                        --            18,452,133
             Distributions in excess of earnings from joint ventures         10,308,348           4,489,125
             Gain on sale of real estate                                     (9,285,661)               --
      Change in assets and liabilities:
             Receivables                                                        151,052            (107,205)
             Other assets                                                      (171,840)         (1,179,056)
             Accounts payable and accrued expenses                             (317,752)            326,921
             Accrued interest                                                    23,396                --
                                                                           ------------        ------------
      Net cash provided by operating activities                              47,423,715           3,951,012
                                                                           ------------        ------------
CASH FLOW FROM INVESTING ACTIVITIES:
             Improvements to real estate                                       (222,381)            (85,144)
             Investment in Accotel                                             (867,806)               --
             Proceeds from sale of real estate                               23,178,855                --
                                                                           ------------        ------------
      Net cash provided by (used in) investing activities                    22,088,668             (85,144)
                                                                           ------------        ------------
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)
             Class B Unitholder distributions                                  (722,551)               --
             Dividends paid                                                 (51,465,018)               --
             Distributions paid Class A Unitholder                              (30,814)               --
                                                                           ------------        ------------
      Net cash used in financing activities                                 (68,555,573)         (8,110,245)
                                                                           ------------        ------------
      Increase (decrease) in cash and cash equivalents                          956,810          (4,244,377)
      Cash and cash equivalents, beginning of period                            550,061           6,882,749
                                                                           ------------        ------------
      Cash and cash equivalents, end of period                             $  1,506,871        $  2,638,372
                                                                           ============        ============
      Supplemental disclosure of cash flow information-
      Cash paid for interest                                               $    294,175        $    596,335
                                                                           ============        ============
</TABLE>


                See notes to consolidated financial statements.


                                       5

<PAGE>


                          SHELBOURNE PROPERTIES I, INC.
                          FORM 10Q - SEPTEMBER 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.

     Due to the adoption by the shareholders of the Plan of Liquidation on
     October 29, 2002, the Corporation will be required to transfer any
     remaining assets on or prior to October 29, 2004 to a liquidating trust in
     order to avoid adverse tax consequences. In addition, the holder of the
     Class A Units is presently entitled to require the Operating Partnership to
     purchase the Class A Unit at a premium if a Class A Trigger Event occurs
     (as defined in Note 9) at any time prior to October 29, 2004 (which would
     occur if the assets were transferred to a liquidating trust). The
     Corporation is presently negotiating with the holder of the Class A Units
     to shorten this time frame. If the Corporation is successful in its
     negotiations, it is expected that the Corporation will transfer its
     remaining assets to a liquidating trust as early as April 2004, thereby
     eliminating the expenses associated with a public corporation. There can be
     no assurance that the Corporation will be successful in its negotiations
     with the Class A Unitholder. Finally, if the Corporation is successful in
     liquidating all of its assets prior to October 29, 2004 or such earlier
     date as may be permitted without incurring additional expense, the
     Corporation will make a final distribution and its affairs will be wound up
     without utilization of a liquidating trust.

     At such time as the assets of the Company are distributed to a liquidating
     trust, which could be as early as the second quarter 2004, the interests in
     such trust will be non-transferrable. Accordingly, investors will not be
     able to sell their interests in the liquidating trust but will receive
     distributions from the liquidating trust as the remaining assets are
     liquidated.


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


                                       6

<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     BASIS OF PRESENTATION (CONTINUED)

     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 September 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. Since the sale of the
     properties located in Ft. Lauderdale, Florida (note 4), New York, New York
     (note 5) and San Diego, California (note 5), the valuation of investments
     in joint ventures and real estate held for sale have been adjusted to
     reflect the remaining estimated costs of carrying out the liquidation as of
     September 30, 2003. Further adjustments were included in the September 30,
     2003 Consolidated Statement of Changes in Net Assets. The valuation 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 September 30, 2003. During the nine months ended September
     30, 2003 the deferred gain was increased by $610,649 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 distribution payments to the Class B Unitholder associated with the
     adjustment in value of these real estate properties have been deferred
     until such time as a sale occurs. During the nine months ended September
     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. As a result of those sales, the
     Corporation reduced the deferred gains by $45,560,129.

     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 accrued 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 $895,767 at September 30, 2003 as a
     result of professional costs associated with obtaining the Fleet Loan of
     $387,565 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).




                                       7
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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 September 30, 2003 and December 31, 2002,
     respectively.

     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.




                                       8
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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.

     FINANCIAL INSTRUMENTS

     The carrying values reflected in the consolidated statements of net assets
     at September 30, 2003 and December 31, 2002 reasonably approximate the fair
     values for cash and cash equivalents, other assets, receivables, accounts
     payable, accrued expenses and notes 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



                                       9
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     DIVIDENDS PER SHARE (CONTINUED)

     (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. ("HX Investors"), an
     affiliate of the Corporation's current Chief Executive Officer.

     On August 1, 2003 the Corporation's Board of Directors declared a dividend
     of $3.00 per share. The dividend was paid on August 21, 2003 to its
     shareholders of record at the close of business on August 11, 2003. The
     dividend was paid out of the Corporation's cash reserve.

     The Class B Unitholder, HX Investors, was paid a distribution in the amount
     of $444,328 on August 21, 2003.

     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, effective for fiscal
     years beginning after May 15, 2002. This statement had no effect on the
     Corporation's consolidated financial statements.

     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 interests 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 December
     31, 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



                                       10
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED)

     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.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
     Financial Instruments with Characteristics of both Liabilities and Equity."
     The statement improves the accounting for certain financial instruments
     that under previous guidance, issuers could account for as equity. The new
     statement requires that those instruments be classified as liabilities in
     statements of financial position. SFAS No. 150 affects the issuer's
     accounting for three types of freestanding financial instruments. One type
     is mandatorily redeemable shares, which the issuing company is obligated to
     buy back in exchange for cash and other assets. A second type, which
     includes put options and forward purchase contracts, involves instruments
     that do or may require the issuer to buy back some of its shares in
     exchange for cash or other assets. The third type of instruments that are
     liabilities under this statement is obligations that can be settled with
     shares, the monetary value of which is fixed, tied solely or predominately
     to a variable such as a market index, or varies inversely with the value of
     the issuer's shares. SFAS No. 150 does not apply to features embedded in a
     financial instrument that is not a derivative in its entirety. In addition
     to its requirements for the classification and measurement of financial
     instruments in its scope, SFAS No. 150 also requires disclosures about
     alternative ways of settling the instruments and the capital structure of
     entities, all of whose shares are mandatorily redeemable. Most of the
     guidance in SFAS No. 150 is effective for all financial instruments entered
     into or modified after May 31, 2003 and otherwise is effective at the
     beginning of the first interim period beginning after June 15, 2003. The
     Corporation does not expect that this statement will have an impact on the
     Corporation's financial statements.

3.   CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES

     During the three and nine months ended September 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 Corporation's current Chief Executive Officer.

     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 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.





                                       11
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


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

     ASSET MANAGEMENT SERVICES (CONTINUED)

     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, which will continue until the Corporation is liquidated. Following
     the liquidation of the Corporation, any amounts payable for asset
     management fees will be determined by the trustee of the liquidating trust.
     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 September 30, 2003 by Kestrel and during the three months
     ended September 30, 2002 by PCIC as described above.

     PROPERTY MANAGEMENT SERVICES

     The Operating Partnership has contracted with affiliates to provide
     Property Management Services pursuant to agreements that provide for a fee
     of 3% of cash receipts. Kestrel provided Property Management Services
     during the three and nine months ended September 30, 2003 and 2002. All
     numbers in the tables below include the Corporation's share of fees paid to
     Kestrel by properties owned by joint ventures in which it has an interest.




                                       12
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


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

     PROPERTY MANAGEMENT SERVICES (CONTINUED)

The following table summarizes the amounts paid to affiliates for expense
reimbursements, Asset Management Fees, Transition Management Fees and Property
Management Fees for the three and nine month periods ended September 30, 2003
and 2002.


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

                             Shelbourne                     Shelbourne
                             Management        Kestrel      Management          Kestrel
                             ----------        -------      ----------          -------
<S>                          <C>             <C>           <C>                 <C>
Asset Management Fee          $   --          $50,000       $   --              $  --
Property Management Fee       $   --          $20,067       $   --              $  --
Transition Management Fee     $   --          $   -         $83,300             $  --

<CAPTION>

         NINE MONTHS ENDED SEPTEMBER 30, 2003            NINE MONTHS ENDED SEPTEMBER 30, 2002

                             Shelbourne                     Shelbourne
                             Management        Kestrel      Management          Kestrel
                             ----------        -------      ----------          -------
<S>                          <C>             <C>           <C>                 <C>
Expense Reimbursement (1)    $   --            $   --        $ 18,750           $   --
Asset Management Fee         $   --            $150,000      $135,805           $   --
Property Management Fee      $   --            $140,534      $  --              $256,508
Transition Management Fee    $   --            $   --        $208,250           $   ---
</TABLE>


 (1) The Asset Management Fees were modified in connection with the
     Transaction to eliminate expense reimbursement.

     ALLOCATION OF DIVIDENDS BY THE CORPORATION

     Dividends payable to HX Investors for the nine months ended September 30,
     2003 and 2002 on account of shares of common stock owned by HX Investors
     were $21,614,380 and $0, respectively. No dividends were paid during the
     nine months ended September 30, 2002.

     The stockholders' Priority Return (defined in note 8 below) was satisfied
     on July 9, 2003. Consequently, the Class B Unitholder, HX Investors, which
     is entitled to receive distributions only after the satisfaction of the
     Priority Return, has received distribution payments totaling $722,551 since
     the Priority Return was satisfied.

     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 nine months ended September 30, 2003
     were $30,814 of which $12,941 is payable by Shelbourne Management to HX
     Investors pursuant to their agreement.




                                       13
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


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

     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

     As of September 30, 2003, the Corporation owned one property that is
     located in Towson, Maryland.

     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 previously
     deferred gain and realized an accounting gain of $9,285,661.

     On August 1, 2003 the Corporation entered into a contract to sell its
     property located in Towson, Maryland. The sale, which is subject to the
     purchaser's satisfactory completion of its due diligence process, is
     expected to close, if at all, in the first quarter of 2004.

5.   INVESTMENTS 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 December 31, 2002 the Corporation was invested in three joint ventures,
     (568 Broadway, Century Park, and Seattle Landmark). As of September 30,
     2003 the Corporation was invested in two joint ventures (Seattle Landmark
     and Accotel). 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 Company 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 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.



                                       14
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


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% (3.875% at September 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.

     As of September 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 Shelbourne OPs and the 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.

     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 OPs 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.

     At September 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 September 30, 2003 on the Loan was 3.875%.


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




                                       15
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


8.   CLASS B PARTNERSHIP INTERESTS (CONTINUED)

     Directors of the Corporation authorized the issuance by the Operating
     Partnership of, and the Operating Partnership issued, Class B Units to 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
     July 9, 2003 was $0.94 per share and was satisfied on that date.
     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.

     On August 1, 2003, the Board of Directors declared a dividend to the common
     shareholders of $3.00 per share. The Class B Unitholder was entitled to a
     distribution of $444,328. The dividend and distribution was paid on August
     21, 2003. The total amount of distributions received by the Class B
     Unitholder since the Priority Return was satisfied on July 9, 2003 is
     $722,551.

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 entitle the holder to a quarterly
     distribution equal to 1.25% of the aggregate liquidation preference of the
     Class A Units ($812,674). In addition, prior to the modification described
     below, 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 and prior to the modification described below, Shelbourne
     Management had the right to cause the Operating Partnership to reacquire
     the Class A Units upon the occurrence of certain events including, 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 was 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 if 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 (see below); or (v) the taking of
     any action with respect to the Accor S.A. properties without the consent of
     the Class A Unitholder (the "Class A Trigger Events").

     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. (See note 3)

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, which are triple net leased to an affiliate of Accor S.A (the
     "Accor S.A. Properties"). 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



                                       16
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


10.  ACCOTEL TRANSACTION (CONTINUED)

     Properties II, Inc., and Shelbourne Properties III, Inc., respectively. The
     Accor S.A. 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 preference to which the holder of the Class A Units
     was previously entitled ($812,674 in the case of the Operating
     Partnership).

     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.







                                       17
<PAGE>


                          SHELBOURNE PROPERTIES I, INC.
                          FORM 10Q - SEPTEMBER 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 its
         property 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.

         Due to the adoption by the shareholders of the Plan of Liquidation on
         October 29, 2002, the Corporation will be required to transfer any
         remaining assets on or prior to October 29, 2004 to a liquidating trust
         in order to avoid adverse tax consequences. In addition, the holder of
         the Class A Units is presently entitled to require the Operating
         Partnership to purchase the Class A Unit at a premium if a Class A
         Trigger Event occurs (as defined below) at any time prior to October
         29, 2004 (which would occur if the assets were transferred to a
         liquidating trust). The



                                       18
<PAGE>


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

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

         ORGANIZATION (CONTINUED)

         Corporation is presently negotiating with the holder of the Class A
         Units to shorten this time frame. If the Corporation is successful in
         its negotiations, it is expected that the Corporation will transfer its
         remaining assets to a liquidating trust as early as April 2004, thereby
         eliminating the expenses associated with a public corporation. There
         can be no assurance that the Corporation will be successful in its
         negotiations with the Class A Unitholder. Finally, if the Corporation
         is successful in liquidating all of its assets prior to October 29,
         2004 or such earlier date as may be permitted without incurring
         additional expense, the Corporation will make a final distribution and
         its affairs will be wound up without utilization of a liquidating
         trust.

         At such time as the assets of the Company are distributed to a
         liquidating trust, which could be as early as the second quarter 2004,
         the interests in such trust will be non-transferrable. Accordingly,
         investors will not be able to sell their interests in the liquidating
         trust but will receive distributions from the liquidating trust as the
         remaining assets are liquidated.

         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, which are triple net leased to an affiliate of Accor
         S.A. (the "Accor S.A. Properties"). 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 Accor S.A. 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



                                       19
<PAGE>


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

         THE ACCOTEL TRANSACTION(CONTINUED)

         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 so long as 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 "Class A
         Trigger Events").

         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.

         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, in Ft. Lauderdale,
         Florida 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 paid 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 I. On April 29, 2003, Century Park I Joint Venture, a
         joint venture in which the Corporation held indirectly a 50% interest,
         sold its 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 $9,403,450 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 allocated to the Corporation and
         is reported in equity income from joint venture.

         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




                                       20
<PAGE>


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


         LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

         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 of each of
         the Companies (the "Borrowers") 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% 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 September 30, 2003, 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 Shelbourne OPs and
         the 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 OPs 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.

         At September 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 3.875%.

         The Company had $1,506,871 in cash and cash equivalents at September
         30, 2003 of which $1,326,101 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 $956,810 during the nine months ended
         September 30, 2003. As discussed further below, the increase resulted
         from $47,423,715 of net cash provided by operating activities and
         $22,088,668 of net cash provided by investing activities which were
         largely offset by $68,555,573 of net cash used in financing activities.

         In addition to the cash and cash equivalents reported at September 30,
         2003, the Corporation's joint ventures held cash at September 30, 2003
         of which the Corporation's allocable share was $225,827.

         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 nine months ended September 30, 2003 amounted to
         $1,773,984 as compared to $3,226,728 for the nine months ended
         September 30, 2002. The decrease is due to the sale of Southport
         Shopping Center on January 21, 2003. Distributions in excess of
         earnings from joint venture investments increased by $5,819,223 to
         $10,308,348 for the nine months ended September 30, 2003 from
         $4,489,125 for the nine months ended September 30, 2002. The primary
         reason for this increase was proceeds generated by 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



                                       21
<PAGE>


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


         LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

         improvements made to real estate prior to the sale at Loch Raven Plaza
         in Townson, Maryland and Southport Shopping Center of $214,478 and
         $7,903, respectively.

         Cash used in financing activities consisted of dividends paid to common
         stockholders ($51,465,018), distributions made to the Class A
         Unitholders ($30,814), distributions made to Class B Unitholders
         ($722,551), satisfaction of the Credit Facility ($23,832,274), and
         principal payments on the Loan ($10,000,000) which were partially
         offset by proceeds from the Loan $17,495,084.

         RESULTS OF OPERATIONS

         NINE MONTHS ENDED SEPTEMBER 30, 2003 VS. SEPTEMBER 30, 2002

         Net income

         The Corporation's net income available for common shareholders
         increased by $64,786,653 to $45,937,142 for the nine months ended
         September 30, 2003 from a net loss of $18,849,511 for the nine months
         ended September 30, 2002. The increase in net income was primarily due
         to a decrease in costs and expenses as well as an increase in equity
         income from joint ventures and gains on the sale of real estate. The
         Corporation's income before equity income from joint ventures, gain on
         sale of real estate, interest and other income was $281,131 for the
         nine months ended September 30, 2003 as compared to a net loss of
         $21,131,753 for the nine months ended September 30, 2002.

         Rental Revenues

         Rental revenues decreased by $1,653,766, or approximately 49%, to
         $1,738,680 for the nine months ended September 30, 2003 from $3,392,446
         for the nine months ended September 30, 2002 due to the January 2003
         sale of Southport Shopping Center. Because of the sale, base rental
         revenue, excluding percentage rent, declined by $1,635,828 for the nine
         months ended September 30, 2003 to $1,134,358 from $2,770,186 for the
         nine months ended September 30, 2002. Percentage rent decreased by
         $17,938 for the nine months ended September 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
         offset by Loch Raven collecting a total of $4,858 in percentage rent
         from tenants. These decreases were partially offset by an increase in
         rental revenue at Loch Raven Plaza for the nine months ended September
         30, 2003 to $955,708 from $943,206 for the nine months ended September
         30, 2002.

         Costs and Expenses

         Costs and expenses for the nine months ended September 30, 2003 were
         $1,457,549, representing a decrease of $23,066,650 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 nine months ended September 30, 2002 were $6,072,066.
         Therefore, without giving effect to the costs incurred in 2002 for the
         purchase of the Advisory Agreements, expenses decreased by $4,614,517
         for the nine months ended September 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 as well as
         a reduction in operating expenses. The sale of Southport Shopping
         Center in January 2003 also contributed to the decrease in costs and
         expenses.

         Operating expenses decreased by $740,344 for the nine months ended
         September 30, 2003 as compared to the nine months ended September 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 $99,800 at Loch Raven Plaza. This increase resulted
         primarily from parking lot maintenance due to above average snowfall.




                                       22
<PAGE>


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


         RESULTS OF OPERATIONS (CONTINUED)

         Costs and Expenses (Continued)

         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 nine months ended September 30, 2003 as compared to $697,004
         for the same period in 2002.

         Partnership asset management fees and transition management fees
         decreased to $150,000 for the nine months ended September 30, 2003 from
         $344,055 for the same period in 2002. In 2002, prior to the
         Transaction, the fees were based on 1.25% of the Corporation's gross
         asset value, which amounted to $135,805 during 2002, and effective
         February 14, 2002, after the Transaction, were based on a fixed asset
         management fee of $27,778 per month which amounted to $208,250 for the
         period beginning February 15, 2002 through September 30, 2002. The
         total asset management fee and transition management fees paid for the
         nine months ended September 30, 2002 were $344,055. Effective October
         1, 2002, the asset management fee payable by the Corporation was
         reduced to $50,000 per quarter.

         Administrative costs decreased to $792,862 for the nine months ended
         September 30, 2003 from $3,731,224 for the same period in 2002. This
         reduction is due to certain costs incurred in 2002 in connection with
         the Transaction and legal, professional and consulting fees incurred in
         2002. Property management fees decreased to $53,947 from $98,699 for
         the nine month periods ending September 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 nine months ended September 30,
         2003 was due to the sale of Southport Shopping Center.

         Non-Operating Income and Expenses

         Equity income from investments in joint ventures increased by
         $34,540,251 to $37,398,925 for the nine months ended September 30, 2003
         as compared to $2,858,674 for the nine months ended September 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. The increase in income from investments in joint ventures
         is also attributable to the Corporation's joint venture investment in
         Century Park I Joint Venture, in which the Corporation held a 50%
         indirect interest, which sold its property located in San Diego, CA on
         April 29, 2003. Century Park I 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 sale, the Corporation experienced a decrease in
         equity income from 568 Broadway Joint Venture for the nine months ended
         September 30, 2003 as compared to the nine months ended September 30,
         2002 of $1,886,706 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 nine months
         ended September 30, 2003 as compared to the nine months ended September
         30, 2002 of $148,798 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 $35,296 for
         the nine months ended September 30, 2003 as compared to the same period
         in 2002.

         The decrease is a result of certain improvements to the property. These
         improvements were expensed instead of capitalized because they are not
         expected to increase the property's net realizable value. These
         expenses were partially offset due to the cessation of depreciation and
         amortization in accordance with liquidation accounting.



                                       23
<PAGE>


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


         RESULTS OF OPERATIONS (CONTINUED)

         Non-Operating Income and Expenses (Continued)

         During the first nine months of 2003, interest expense amounted to
         $317,571, which consisted of $52,314 paid in connection with the Credit
         Facility and $265,257 incurred in connection with the Loan, as compared
         to $596,335 the first nine 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
         Agreement and interest of $423,602 in connection with the Credit
         Facility.

         Interest income decreased slightly to $33,168 during the nine months
         ended September 30, 2003 from $39,760 during the nine months ended
         September 30, 2002 due to lower cash balances invested with lower
         yields.

         Other income increased to $9,193 for the nine months ended September
         30, 2003 from $5,878 for the nine months ended September 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.

         THREE MONTHS ENDED SEPTEMBER 30, 2003 VS. SEPTEMBER 30, 2002

         Net income

         The Corporation's net income available for common shareholders
         decreased by $630,837 to a net loss of $365,938 for the three months
         ended September 30, 2003 from $264,899 for the three months ended
         September 30, 2002. The decrease was due to decreases in rental income,
         equity income from joint ventures, and interest income. These decreases
         were offset partially by decreases in costs and expenses and interest
         expense. The Corporation's loss before equity income from joint
         ventures, gain on sale of real estate, interest and other income was
         $51,713 for the three months ended September 30, 2003 as compared to a
         loss of $534,759 for the three months ended September 30, 2002.

         Rental Revenue

         Rental revenues decreased $586,668, or approximately 64%, to $328,098
         for the three months ended September 30, 2003 from $914,766 for the
         three months ended September 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
         September 30, 2003 by $4,560 to $327,790 from $323,230 for the three
         months ended September 30, 2002.

         Costs and Expenses

         Costs and expenses for the three months ended September 30, 2003
         amounted to $379,811, representing a decrease of $1,069,714 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 September 30,
         2002, not incurred during the three months ended September 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 $295,384 for the three months ended
         September 30, 2003 as compared to September 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 September 30, 2003 as compared to $263,082
         for the same period in 2002.




                                       24
<PAGE>


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


         RESULTS OF OPERATIONS (CONTINUED)

         Costs and Expenses (Continued)

         Partnership asset management fees decreased to $50,000 for the three
         months ended September 30, 2003 from $83,300 for the same period in
         2002 due to a reduction in the fixed asset management fee effective
         October 1, 2002 from $83,300 to $50,000 per quarter.

         Administrative costs decreased to $228,697 for the three months ended
         September 30, 2003 from $688,257 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 $9,024 from $27,412 for the periods ending September 30,
         2003 and 2002, respectively. The decrease is due to the sale of
         Southport Shopping Center in January 2003.

         Non-Operating Income and Expenses

         Equity income from investments in joint ventures decreased by $841,186
         to $209,309 for the three months ended September 30, 2003 as compared
         to $1,050,495 for the three months ended September 30, 2002. The
         Corporation experienced a decrease of $697,665 in equity income from
         its joint venture investment in 568 Broadway Joint Venture, in which
         the Corporation held 38.925% indirect interest, for the three months
         ended September 30, 2003 as compared to the same period ended in 2002.
         This decrease is due to the sale of the property on February 28, 2003.

         The Corporation experienced a decrease in equity income from Century
         Park I Joint Venture of $136,925 for the three months ended September
         30, 2003 as compared to the three months ended September 30, 2002 due
         to the sale of the property on April 29, 2003.

         The Corporation's joint venture investment known as Seattle Landmark
         Joint Venture, in which the corporation owns a 50% interest,
         experienced a decrease in equity income of $7,226 primarily due to less
         rental revenue, which was substantially offset by the cessation of
         depreciation and amortization expenses in accordance with liquidation
         accounting.

         During the third quarter of 2003, interest expense of $75,816 was
         incurred in connection with the Loan. The interest expense for the
         third quarter of 2002 of $254,333 was incurred in connection with the
         Credit Facility.

         Interest income decreased slightly to $6,994 during the three months
         ended September 30, 2003 from $11,953 during the three months ended
         September 30, 2002 due to lower cash balances invested and lower
         yields.

         No other income was earned during the three months ended September 30,
         2003 compared to $1,927 earned during the three months ended September
         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 - SEPTEMBER 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 September 30, 2003, borrowings allocated to
         the Corporation under the Loan totaled $7,495,084 and initially bore an
         interest rate of LIBOR plus 2.75%. Based on the balance allocated to
         the Corporation of the Loan at November 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 $8,432. 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 - SEPTEMBER 30, 2003


PART II - OTHER INFORMATION


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

No reports on Form 8-K were filed on behalf of the Registrant during the quarter
ended September 30, 2003.














                                       27
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                          SHELBOURNE PROPERTIES I, INC.
                          FORM 10Q - SEPTEMBER 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:   November 12, 2003                  By: /s/ Michael L. Ashner......
                                                ---------------------------
                                                 Michael L. Ashner
                                                 Chief Executive Officer








                                       28
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                          SHELBOURNE PROPERTIES I, INC.
                          FORM 10Q - SEPTEMBER 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                  (10)
         19, 2003, among the REITs and the operating partnerships

10.8     Form of Deed of Trust, Assignment of Leases and Rents, Security Agreement                        (10)
         and 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                  (10)
         I L.P., 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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<PAGE>

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


(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.

(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.