<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED MARCH 31, 1998
                                                         ----------------


                          Commission File Number 1-9648
                                                --------


                              NATIONAL REALTY, L.P.
            --------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


           Delaware                                          75-2163175
--------------------------------                         -------------------
(State or Other Jurisdiction of                           (I.R.S. Employer
 Incorporation or Organization)                          Identification No.)


10670 North Central Expressway, Suite 300, Dallas, Texas         75231
--------------------------------------------------------------------------------
      (Address of Principal Executive Office)                  (Zip Code)


                                 (214) 692-4700
                        ---------------------------------
                         (Registrant's Telephone Number,
                              Including Area Code)


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


Units of Limited Partner Interest                       6,323,438
---------------------------------             -------------------------------
         (Class)                              (Outstanding at April 30, 1998)




                                        1
<PAGE>   2

                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

The accompanying Consolidated Financial Statements have not been audited by
independent certified public accountants, but in the opinion of the management
of National Realty, L.P., all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of consolidated results of
operations, consolidated financial position and consolidated cash flows at the
dates and for the periods indicated, have been included.


                              NATIONAL REALTY, L.P.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        March 31,       December 31,
                                                                          1998              1997
                                                                      ------------      ------------
                                                                           (dollars in thousands)
<S>                                                                   <C>               <C>         
                   Assets

Real estate held for investment
   Land .........................................................     $     46,732      $     48,738
   Buildings and improvements ...................................          382,711           386,477
                                                                      ------------      ------------
                                                                           429,443           435,215

   Less - accumulated depreciation ..............................         (223,688)         (223,791)
                                                                      ------------      ------------
                                                                           205,755           211,424

Real estate under contract for sale, net of
   accumulated depreciation ($2,626 in 1998) ....................            3,412                --

Notes and interest receivable, net of deferred
   gains of $13,720 in 1998 and 1997 ............................           30,842            26,853
   Less - allowance for estimated losses ........................           (1,910)           (1,910)
                                                                      ------------      ------------
                                                                            28,932            24,943

Cash and cash equivalents .......................................           10,771            17,180
Accounts receivable .............................................            4,104             3,327
Prepaid expenses ................................................              955             1,069
Escrow deposits and other assets (including $296
   in 1998 and $267 in 1997 from affiliates) ....................            6,356             6,597
Marketable equity securities of affiliate, at
   market .......................................................            2,887             2,814
Deferred financing costs ........................................           11,361            12,226
                                                                      ------------      ------------

                                                                      $    274,533      $    279,580
                                                                      ============      ============
</TABLE>



The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                        2
<PAGE>   3

                              NATIONAL REALTY, L.P.
                     CONSOLIDATED BALANCE SHEETS - Continued


<TABLE>
<CAPTION>
                                                                   March 31,       December 31,
                                                                     1998              1997
                                                                 ------------      ------------
                                                                     (dollars in thousands)
<S>                                                              <C>               <C>         
    Liabilities and Partners' Equity (Deficit)

Liabilities
   Notes and interest payable ..............................     $    337,658      $    339,102
   Accrued property taxes ..................................            5,745             6,906
   Accounts payable and other liabilities ..................            4,942             3,163
   Tenant security deposits ................................            3,231             7,242
                                                                 ------------      ------------
                                                                      351,576           356,413

Commitments and contingencies

Redeemable General Partner Interest ........................           45,442            45,442

Partners' equity (deficit)
   General Partner .........................................            2,832             2,822
   Limited Partners (6,323,438 units in 1998 and
      1997) ................................................          (78,317)          (78,024)
   Unrealized gain on marketable equity securities
      of affiliate .........................................            2,617             2,544
                                                                 ------------      ------------
                                                                      (72,868)          (72,658)

   Less - Redeemable General Partner Interest ..............          (49,617)          (49,617)
                                                                 ------------      ------------

                                                                     (122,485)         (122,275)

                                                                 $    274,533      $    279,580
                                                                 ============      ============
</TABLE>



The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                        3
<PAGE>   4

                              NATIONAL REALTY, L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                          For the Three Months
                                                                            Ended March 31,
                                                                 -----------------------------------
                                                                        1998                1997
                                                                 ---------------     ---------------
                                                                       (dollars in thousands,
                                                                          except per unit)
<S>                                                              <C>                 <C>            
Revenues
   Rents ...................................................     $        28,258     $        27,720
   Interest ................................................               1,320                 839
                                                                 ---------------     ---------------

                                                                          29,578              28,559

Expenses
   Interest ................................................               8,711               8,521
   Depreciation ............................................               2,523               2,464
   Property taxes and insurance ............................               2,846               3,018
   Utilities ...............................................               3,015               3,156
   Property-level payroll costs ............................               1,656               1,672
   Repairs and maintenance .................................               5,914               5,662
   Other operating expenses ................................               1,191               1,153
   Property management fees ................................               1,209               1,193
   General and administrative ..............................               2,005               1,947
                                                                 ---------------     ---------------

                                                                          29,070              28,786
                                                                 ---------------     ---------------


Net income (loss) ..........................................     $           508     $          (227)
                                                                 ===============     ===============


Earnings per unit
   Net income (loss) .......................................     $           .08     $          (.04)
                                                                 ===============     ===============


Weighted average units of limited partner interest
   used in computing earnings per unit .....................           6,323,438           6,319,884
                                                                 ===============     ===============
</TABLE>




The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                        4
<PAGE>   5

                              NATIONAL REALTY, L.P.
              CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
                    FOR THE THREE MONTHS ENDED MARCH 31, 1998



<TABLE>
<CAPTION>
                                                                          
                                                                         Accumulated      Redeemable
                                                                            Other          General         Partners'
                                          General         Limited       Comprehensive      Partner          Equity
                                          Partner         Partners         Income          Interest        (Deficit)
                                        -----------     -----------      -----------     -----------      -----------
                                                             (dollars in thousands, except per unit)
<S>                                     <C>             <C>              <C>             <C>              <C>         
Balance, January 1, 1998 ...........    $     2,822     $   (78,024)     $     2,544     $   (49,617)     $  (122,275)

Comprehensive Income

  Unrealized gain on marketable
    equity securities of affiliate..             --              --               73              --               73

  Net income .......................             10             498               --              --              508
                                                                                                          -----------
                                                                                                                  581
  Distributions ($.125 per unit) ...             --            (791)              --              --             (791)
                                        -----------     -----------      -----------     -----------      -----------


Balance, March 31, 1998 ............    $     2,832     $   (78,317)     $     2,617     $   (49,617)     $  (122,485)
                                        ===========     ===========      ===========     ===========      ===========
</TABLE>




The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                        5
<PAGE>   6

                              NATIONAL REALTY, L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                      For the Three Months
                                                                        Ended March 31,
                                                                 ------------------------------
                                                                     1998              1997
                                                                 ------------      ------------
                                                                     (dollars in thousands)
<S>                                                              <C>               <C>         
Cash Flows From Operating Activities
   Rents collected .........................................     $     27,480      $     27,958
   Interest collected ......................................            1,004               601
   Interest paid ...........................................           (7,724)           (7,236)
   Payments for property operations ........................          (16,687)          (16,574)
   General and administrative expenses paid ................           (3,687)           (2,572)
                                                                 ------------      ------------
      Net cash provided by operating activities ............              386             2,177

Cash Flows From Investing Activities
   Real estate improvements ................................             (266)             (627)
   Funding of notes receivable .............................           (3,804)           (5,156)
                                                                 ------------      ------------
      Net cash (used in) investing activities ..............           (4,070)           (5,783)

Cash Flows From Financing Activities
   Payments on mortgage notes payable ......................           (1,407)           (1,419)
   Deposits on pending financings ..........................             (500)               --
   Receipt from escrow .....................................               --            12,423
   Deferred financing costs ................................              (27)           (1,117)
   Exercise of warrants ....................................               --                20
   Distributions to unitholders ............................             (791)             (632)
                                                                 ------------      ------------
      Net cash provided by (used in) financing
         activities ........................................           (2,725)            9,275
                                                                 ------------      ------------

      Net increase (decrease) in cash and cash
         equivalents .......................................           (6,409)            5,669

Cash and cash equivalents at beginning of period ...........           17,180             5,872
                                                                 ------------      ------------
Cash and cash equivalents at end of period .................     $     10,771      $     11,541
                                                                 ============      ============

Reconciliation of net income (loss) to net cash
   provided by operating activities
Net income (loss) ..........................................     $        508      $       (227)
   Adjustments to reconcile net income (loss) to
      net cash provided by operating activities
   Depreciation ............................................            2,523             2,464
   Decrease in other assets ................................              114             3,992
   (Increase) in interest receivable .......................             (184)             (127)
   (Decrease) increase in interest payable .................              (37)              538
   (Decrease) in other liabilities .........................           (2,538)           (4,463)
                                                                 ------------      ------------
      Net cash provided by operating activities ............     $        386      $      2,177
                                                                 ============      ============

Schedule of noncash financing activities

   Unrealized gain on marketable equity securities
      of affiliate .........................................     $         73      $      2,006
</TABLE>


The accompanying notes are an integral part of these Consolidated Financial
Statements.

                                        6
<PAGE>   7

                              NATIONAL REALTY, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.        BASIS OF PRESENTATION

The accompanying Consolidated Financial Statements of National Realty, L.P. and
consolidated entities (the "Partnership") have been prepared in conformity with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
Operating results for the three month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the Consolidated Financial
Statements and Notes thereto included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 1997 (the "1997 Form 10- K").

NOTE 2.        EARNINGS PER UNIT

Net income (loss) per unit of limited partner interest (per "unit") is presented
in accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share". Net income (loss) per unit is computed based upon the
weighted average number of units outstanding during each period. The limited
partners of National Realty, L.P. ("National Realty") have a 99% interest and
the general partner, Syntek Asset Management, L.P. (the "General Partner" or
"SAMLP"), has an aggregate 1% interest in the net income, net loss and
distributions of National Realty. National Realty is allocated 99% of the net
income or net loss of National Operating, L.P. ("NOLP" or the "Operating
Partnership"), and the General Partner is allocated an aggregate 1% of the net
income or net loss of the Operating Partnership. The 1% General Partner interest
in each of National Realty and the Operating Partnership is equal to a 1.99%
interest on a combined basis. Accordingly, net income (loss) per unit is derived
by dividing 98.01% of the net income (loss) in each period by the respective
weighted average units of limited partner interest.

NOTE 3.        NOTES RECEIVABLE

During the first quarter of 1998, the Partnership funded a total of $3.4 million
of a $3.9 million loan commitment to Centura Tower, Ltd. The loan is secured by
2.244 acres of undeveloped land in Dallas, Texas. The loan bears interest at
12.0% per annum, requires monthly payments of interest only and matures in
January 2003. In April 1998, the Partnership funded an additional $111,000.

In March 1998, the Partnership funded $162,000 of a $2.2 million loan commitment
to Varner Road Partners, L.L.C. The loan is currently secured by a contract to
purchase 129.77 acres of land in Riverside County, California and when fully
funded, will be secured by the land and a pledge of the stock of the borrower.
The loan bears interest at



                                        7
<PAGE>   8

                              NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 3.        NOTES RECEIVABLE (Continued)

15.0% per annum and matures in September 1999. All principal and interest are
due at maturity. In April 1998, the Partnership funded an additional $250,000.

In 1997, the Partnership funded a total of $1.3 million of a $1.5 million loan
commitment to Bordeaux Investments Two, L.L.C. ("Bordeaux"). The loan is secured
by (i) a 100% limited partnership interest in Bordeaux, which owns a shopping
center in Oklahoma City, Oklahoma; (ii) 100% of the stock of Bordeaux
Investments One, Inc., which owns approximately 6.5 acres of undeveloped land in
Oklahoma City, Oklahoma; and (iii) the personal guarantees of the Bordeaux
partners. The loan bears interest at 14.0% per annum, requires monthly payments
of interest only at 12.0% per annum, with the deferred interest payable on
December 15, annually, and matures in January 1999. Through April 1998, an
additional $74,000 was funded and the loan was modified, increasing the
principal balance to $1.4 million. The Partnership has committed to fund an
additional $93,000, at which time the loan will be modified to increase the
principal balance to its maximum of $1.5 million. The Partnership received the
required December 15, 1997 deferred interest payment in January 1998.

NOTE 4.        REAL ESTATE AND DEPRECIATION

The Partnership has a 75% general partner interest in Southern Palms Associates,
which owns Southern Palms Shopping Center. In August 1992, Southern Palms
Associates filed a voluntary petition in bankruptcy, seeking, among other
things, to restructure the $9.3 million nonrecourse mortgage secured by the
shopping center. In December 1993, an agreement was reached with the lender to
modify the $9.3 million first mortgage, reducing the interest rate and extending
the maturity date. Southern Palms Associates remains in bankruptcy in order to
resolve certain partnership issues involving the 25% general partner. In
December 1997, the Partnership entered into an agreement with the 25% general
partner, which provided such partner with an option to purchase the
Partnership's 75% interest in Southern Palms Associates. The 25% general partner
exercised his option in May 1998.

NOTE 5.        INCOME TAXES

No federal or state income taxes have been provided for in the accompanying
Consolidated Statements of Operations as the partners include their share of
Partnership income or loss in their respective tax returns. For income or loss
allocation purposes, limited partners are allocated their proportionate share of
income or loss commencing with the calendar month subsequent to their entry into
the Partnership.

NOTE 6.        LEGAL PROCEEDINGS

Moorman Settlement.  The Partnership is party to a settlement agreement,
dated as of May 9, 1990, between plaintiffs Joseph B. Moorman, et al.



                                       8
<PAGE>   9

                              NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.        LEGAL PROCEEDINGS (Continued)

and defendants Robert A. McNeil, National Realty, the Operating Partnership,
SAMLP, Gene E. Phillips and William S. Friedman, and Shearson Lehman Hutton
Inc., successor-in-interest to defendant E.F. Hutton & Company Inc., relating to
the action entitled Moorman, et al. v. Southmark Corporation, et al. Such action
was filed on September 2, 1987, in the Superior Court of the State of
California, County of San Mateo. On May 9, 1990, the Partnership agreed to
settle such action pursuant to the terms of a written agreement (the "Moorman
Settlement Agreement"). On June 29, 1990, after a hearing as to its fairness,
reasonableness and adequacy, the Moorman Settlement Agreement was granted final
court approval.

The Moorman Settlement Agreement is complex and the following summary is
qualified in its entirety by reference to the text thereof, which was previously
included as an exhibit to the Partnership's Form 10-Q for the quarter ended
March 31, 1990, as filed with the Securities and Exchange Commission. The
Moorman Settlement Agreement provides for a plan (the "Moorman Settlement Plan")
consisting of, among other things, the following: (i) the appointment and
operation of a committee (the "Oversight Committee"), to oversee the
implementation of the Moorman Settlement Plan, (ii) the appointment and
operation of an audit committee having a majority of members unaffiliated with
Messrs. Phillips and Friedman or SAMLP, (iii) the establishment of specified
annually increasing targets described below (each a "Target") for each of the
next five years through May 1995, relating to the price of the units of limited
partner interest as decreased for certain distributions to unitholders, (iv) an
agreement by SAMLP not to seek reimbursement of greater than $500,000 per year
for Messrs. Phillips' and Friedman's salaries for serving as general partners of
SAMLP, (Mr. Friedman resigned as general partner of SAMLP effective March 4,
1994) and a deferral of such payments until such time as a Target may be met,
and, if SAMLP resigns as General Partner, a waiver of any compensation so
deferred, (v) a deferral until such time as a Target may be met of certain
future annual General Partner compensation payable, pursuant to the
Partnership's governing documents, to SAMLP or its affiliates, and, if SAMLP
resigns as General Partner, a waiver of any compensation so deferred, (vi) the
required distribution to unitholders of all the Partnership's operating cash
flow in excess of certain renovation costs, unless the Oversight Committee
approves alternative uses for such operating cash flow, (vii) the issuance of
Warrants to purchase an aggregate of up to 2,019,579 units (the "Warrants") to
Class Members, (viii) the contribution by certain co-defendants of cash and
notes payable to the Partnership aggregating $5.5 million (including $2.5
million to be contributed by SAMLP and its general partners over a four-year
period), (ix) the amendment of the Partnership Agreement to reduce the vote
required to remove the General Partner from a two-thirds vote to a majority vote
of the units, (x) the Partnership's redemption of its unit purchase rights and
an agreement not to adopt a similar rights plan without Oversight Committee
approval and (xi) the Partnership's payment



                                        9
<PAGE>   10

                              NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.        LEGAL PROCEEDINGS (Continued)

of certain settlement costs, including plaintiffs' attorneys' fees in the amount
of $3.4 million. The Moorman Settlement Plan remains in effect until SAMLP has
resigned as General Partner and a successor general partner is elected and takes
office, and the Warrants remained exercisable for five years from the date of
issuance and expired on February 14, 1997. Prior to their expiration a total of
1,631 Warrants were exercised for the purchase of 1,226 units.

SAMLP, on behalf of itself and its general partners, has made the payments of
$2.5 million (including accrued interest), to the Partnership, as required by
the Moorman Settlement Agreement.

If Targets are not met for any two successive years of the Moorman Settlement
Plan or for the final year of the Moorman Settlement Plan, SAMLP will be
required to withdraw as General Partner effective at the time a successor
general partner is elected. Upon, among other things, the withdrawal of SAMLP as
General Partner and the due election and taking office of a successor, the
Moorman Settlement Plan would terminate.

The Targets for the first and second anniversary dates were not met. Since the
Targets were not met for two successive years, the Moorman Settlement Agreement
requires that SAMLP resign as General Partner, effective upon the election and
qualification of its successor. On July 8, 1992, SAMLP notified the Oversight
Committee of the failure to meet the Target for two successive years.

Upon, among other things, the withdrawal of SAMLP as General Partner and the due
election and taking office of a successor, the Moorman Settlement Plan will
terminate. Withdrawal of SAMLP as General Partner pursuant to the Moorman
Settlement Agreement requires unitholders to elect a successor general partner
by majority vote. Upon the withdrawal or removal of the General Partner without
the selection of a successor, the Partnership would be dissolved.

The Moorman Settlement Agreement provides that between the date of the
certification causing the General Partner's resignation and the date a successor
general partner takes office, the resigning General Partner shall limit its
activities, as General Partner, to the conduct of the business of the
Partnership in the ordinary course, shall not, without consent of the Oversight
Committee, purchase or sell any real estate or other assets of the Partnership
not in progress on said date, shall cooperate in the election of a successor
general partner and shall cooperate with its successor to facilitate a change in
the office of General Partner of the Partnership. The resigning General Partner
will continue to receive fees, expenses and distributions, if any, while the
solicitation is prepared.

The withdrawal of the General Partner would require the Partnership to acquire
the General Partner's interest in the Partnership (the



                                       10
<PAGE>   11

                              NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.        LEGAL PROCEEDINGS (Continued)

"Redeemable General Partner Interest") at its then fair value, and to pay
certain fees and other compensation, as provided in the Partnership Agreement
and the Moorman Settlement Agreement. Under the Moorman Settlement Agreement,
payment for such Redeemable General Partner Interest, fees and other
compensation may, at the Oversight Committee's option, be paid over a three year
period pursuant to a secured promissory note bearing interest at the prime rate
and containing commercially reasonable terms and collateral. Under the Moorman
Settlement Plan, the purchase price for Redeemable General Partner Interest
would be calculated, as of the time SAMLP withdraws as General Partner under the
Partnership's governing documents. The Managing General Partner has calculated
the Redeemable General Partner Interest at December 31, 1997 to be $49.6
million, and believes there has been no material change in such value since such
date. The Partnership would be entitled to offset against any such payment the
then outstanding principal balance ($4.2 million at March 31, 1998) plus all
accrued but unpaid interest ($7.5 million at March 31, 1998) on the note
receivable from SAMLP for its capital contribution to the Partnership. In the
accompanying Consolidated Financial Statements, the Redeemable General Partner
Interest is shown as a reduction of Partners' Equity. The note receivable from
the General Partner has been offset against the Redeemable General Partner
Interest. The Oversight Committee previously has informed the Partnership that
it calculated the amount of such Redeemable General Partner Interest to be less
than the amount calculated by the Managing General Partner. When SAMLP withdraws
as General Partner of the Partnership, the value of the Redeemable General
Partner Interest would depend on the fair value of the Partnership's assets at
the time of calculation and there can be no assurance that the Redeemable
General Partner Interest, fees and other compensation payable on any such
withdrawal will not be substantially higher or lower than any current estimate
or calculation.

On January 27, 1995, National Realty, SAMLP, the Oversight Committee and William
H. Elliott executed an Implementation Agreement which provides for the
nomination of an entity controlled by Mr. Elliott as successor general partner
and for the resolution of all related matters under the Moorman Settlement. On
February 20, 1996, the parties to the Implementation Agreement executed an
Amended and Restated Implementation Agreement.

On September 23, 1996, the Supervising Judge entered an order granting tentative
approval of the Amended and Restated Implementation Agreement and the form of
notice to be sent to the original class members. On April 7, 1997, the
Supervising Judge entered an order amending the September 23, 1996 order,
approving the formal notice and setting a hearing on the Implementation
Agreement for June 27, 1997. A notice was sent to all class members and
unitholders in April 1997 and the hearing was held on June 27, 1997. On
September 8, 1997, the Supervising Judge rendered a Statement of Decision in
which he declined to approve the Implementation Agreement. As a result of the
Statement of Decision, the



                                       11
<PAGE>   12

                              NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.        LEGAL PROCEEDINGS (Continued)

existing Moorman Settlement Agreement remains in full force and effect and all
of the provisions of the Amended and Restated Implementation Agreement have been
voided.

On December 15, 1997, National Realty, SAMLP, the Oversight Committee, Joseph B.
Moorman, Invenex and the Moorman Class Counsel executed an Agreement for
Establishment of Class Distribution Fund and Election of Successor General
Partner (the "Resolution Agreement") which provides for the nomination of an
entity affiliated with SAMLP to be the successor general partner of the
Partnership, for the establishment of a fund for the benefit of the Moorman
Class Members consisting of cash and properties owned by the Partnership and for
the resolution of all related matters under the Moorman Settlement Agreement.

The Resolution Agreement was submitted to the Supervising Judge and on February
11, 1998, the Supervising Judge entered an order granting preliminary approval
of the Resolution Agreement and scheduled a hearing to be held on June 8, 1998,
for consideration of preliminary approval of a business plan for the operation
of the entity which will receive the cash and properties and to consider a form
of notice to be distributed to the Moorman Class Members describing the
Resolution Agreement and the business plan.

Upon final approval by the Supervising Judge, the proposal to elect the
successor general partner will be submitted to the unitholders of National
Realty for a vote.

Upon approval by the National Realty unitholders, SAMLP shall withdraw as
General Partner and the successor general partner shall take office. If the
required approvals are obtained, it is anticipated that the successor general
partner will be elected and take office during the third quarter of 1998.

SAMLP has agreed to waive its rights under the Moorman Settlement Agreement to
receive any payment from the Partnership of the fees it is entitled to receive
upon the election of a successor general partner. As of December 31, 1997, this
fee was calculated to be $49.6 million.

Upon final approval by the Supervising Judge, the Partnership will transfer $1.9
million in cash and five shopping center properties to the new entity which will
be owned by the Moorman Class Members and managed for their benefit by a court
approved board. This fund is being established in order to provide additional
benefits to the Moorman Class Members.

Upon the election and taking office of the successor general partner and the
transfer of the cash and properties to the Class Fund, the Moorman Settlement
Plan and the Oversight Committee shall be terminated.



                                       12
<PAGE>   13

                              NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.        LEGAL PROCEEDINGS (Continued)

On September 26, 1997, one of the original Moorman litigation defendants, Robert
A. McNeil, filed motions to (i) be installed as receiver for the Partnership and
(ii) disband the Oversight Committee. A hearing on the motions was set for
February 5, 1998. However, the Supervising Judge continued the hearing to June
8, 1998.

Other. The Partnership is involved in various lawsuits arising in the ordinary
course of business. Management of the Partnership is of the opinion that the
outcome of these lawsuits would have no material impact on the Partnership's
financial condition.

NOTE 7.        SUBSEQUENT EVENTS

At March 31, 1998, the Brookview Apartments, a 156 unit apartment complex in
Smyrna, Georgia, was under contract for sale for $4.5 million. In April 1998,
the Partnership completed the sale receiving $432,000 in net cash after the
payment of various closing costs associated with the sale with the purchaser
assuming the existing $4.0 million mortgage. The Partnership paid a real estate
brokerage commission of $180,000 to Carmel Realty, Inc. ("Carmel Realty"), an
affiliate of the Partnership's Managing General Partner, based on the $4.5
million sales price of the property. The Partnership will recognize a gain of
approximately $2.9 million on the sale.

Also at March 31, 1998, the Creekwood Apartments, a 300 unit apartment complex
in College Park, Georgia, was under contract for sale for $5.5 million. In April
1998, the Partnership completed the sale receiving $884,000 in net cash after
the payment of various closing costs associated with the sale with the purchaser
assuming the existing $4.6 million mortgage. The Partnership paid a real estate
brokerage commission of $166,000 to Carmel Realty based on the $5.5 million
sales price of the property. The Partnership will recognize a gain of
approximately $2.8 million on the sale.

Further in April 1998, the Partnership sold 338 acres of undeveloped land in
Granby, Colorado, for $800,000 in cash. The Partnership received net cash of
$792,000 after the payment of various closing costs associated with the sale.
The Partnership paid a real estate brokerage commission of $24,000 to Carmel
Realty based on the $800,000 sales price of the property. The Partnership will
recognize a gain of approximately $750,000 on the sale.


                     [THIS SPACE INTENTIONALLY LEFT BLANK.]

                                       13
<PAGE>   14

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

Introduction

National Realty, L.P. ("National Realty") is a Delaware limited partnership
formed on January 29, 1987, the business of which consists primarily of owning
and operating through National Operating, L.P., also a Delaware limited
partnership (the "Operating Partnership"), a portfolio of real estate. Most of
the Operating Partnership's properties were acquired in transactions consummated
on September 18, 1987, pursuant to which National Realty acquired all of the
assets, and assumed all of the liabilities, of 35 public and private limited
partnerships. National Realty and the Operating Partnership operate as an
economic unit and, unless the context otherwise requires, all references herein
to the "Partnership" shall constitute references to National Realty and the
Operating Partnership as a unit.

In November 1992, the Operating Partnership, in conjunction with a refinancing
of 52 of its apartment properties and a wraparound note receivable, transferred
such assets to Garden Capital, L.P. ("GCLP"), a Delaware limited partnership in
which the Operating Partnership holds a 99.3% limited partner interest.

Liquidity and Capital Resources

Cash and cash equivalents aggregated $10.8 million at March 31, 1998 compared to
$17.2 million at December 31, 1997. The principal reasons for this decrease in
cash are discussed in the paragraphs below.

The Managing General Partner of the Partnership's General Partner has discretion
in determining methods of obtaining funds for the Partnership's operations. The
Partnership's governing documents place no limitation on the amount of leverage
that the Partnership may incur either in the aggregate or with respect to any
particular property or other investment. At March 31, 1998, the aggregate
loan-to-value ratio of the Partnership's real estate portfolio was 44.8%,
computed on the basis of the ratio of total property-related debt to aggregate
appraised values as of December 31, 1997, as compared with a loan-to-value ratio
of 43.4% at December 31, 1997.

The Partnership's principal sources of cash flow have been and will continue to
be from property operations and externally generated funds. Externally generated
funds include borrowings, proceeds from the sale of Partnership properties and
other assets and proceeds from the issuance of debt secured by Partnership
properties or mortgage notes receivable. The Partnership expects that its cash
on hand, cash flow from property operations together with externally generated
funds will be sufficient to meet the Partnership's various cash needs in 1998,
including, but not limited to the payment of distributions, debt service
obligations coming due and property maintenance and improvements, as more fully
discussed in the paragraphs below.

In November 1992, in conjunction with the transfer of the net assets of 52
apartment complexes and a wraparound note receivable to GCLP, such



                                       14
<PAGE>   15

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

Liquidity and Capital Resources (Continued)

assets were refinanced under a $223 million blanket mortgage loan. The blanket
mortgage loan requires that cash flow from the GCLP properties be used to fund
various escrow and reserve accounts and limits the payment of distributions to
the Partnership. During the first quarter of 1998, the Partnership received
distributions from GCLP totaling $1.4 million compared to distributions totaling
$786,000 received during the first quarter of 1997 (excluding proceeds from the
released credit enhancement escrow, as described below).

In January 1997, GCLP replaced the credit enhancement escrow with a $18.5
million letter of credit. The letter of credit provided by a financial
institution in the amount of $18.5 million is for a term of not less than two
years. The letter of credit may be drawn upon to pay operating shortfalls of
GCLP's properties. The available amount under the letter of credit will be
reduced by the amount of each draw on the letter of credit. The Partnership
received net cash of $11.3 million from the released credit enhancement escrow,
after the payment of various costs associated with the letter of credit.

During the first quarter of 1998, the Partnership funded a total of $3.4 million
of a $3.9 million loan commitment to Centura Tower, Ltd. The loan is secured by
a mortgage on 2.244 acres of land in Dallas, Texas. In April 1998, the
Partnership funded an additional $111,000.

In 1997, the Partnership funded a total of $1.3 million of a $1.5 million loan
commitment to Bordeaux Investments Two, L.L.C. ("Bordeaux"). The loan is secured
by (i) a 100% limited partnership interest in Bordeaux, which owns a shopping
center in Oklahoma City, Oklahoma; (ii) 100% of the stock of Bordeaux
Investments One, Inc., which owns approximately 6.5 acres of undeveloped land in
Oklahoma City, Oklahoma; and (iii) the personal guarantees of the Bordeaux
partners. Through April 1998, an additional $74,000 was funded and the loan was
modified, increasing the principal balance to $1.4 million. The Partnership has
committed to fund an additional $93,000, at which time the loan will be modified
to increase the principal balance to its maximum of $1.5 million. The
Partnership received the required December 1997 deferred interest payment in
January 1998.

In March 1998, the Partnership funded $162,000 of a $2.2 million loan commitment
to Varner Road Partners, L.L.C. The loan, when fully funded, will be secured by
a mortgage on 129.77 acres of land in Riverside County, California and a pledge
of stock of the borrower. In April 1998, the Partnership funded an additional
$250,000.

On March 31, 1998, the Partnership paid its quarterly distribution, $.125 per
unit, or a total of $791,000, to unitholders of record on March 13, 1998.

The Partnership's net cash flow from property operations (rents collected less
payments for property operating expenses) decreased from



                                       15
<PAGE>   16

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

Liquidity and Capital Resources (Continued)

$11.4 million for the three months ended March 31, 1997 to $10.8 million for the
three months ended March 31, 1998. The decrease is due to the sales of one
apartment complex and three commercial properties subsequent to March 31, 1997.

As discussed in NOTE 6. "LEGAL PROCEEDINGS," the Moorman litigation settlement
agreement (the "Moorman Settlement Agreement") sets forth certain aggressive,
annually increasing targets relating to the price of the Partnership's units of
limited partner interest which were not met, resulting in, among other things,
the required withdrawal of the General Partner upon election of a successor and
the resulting required purchase of the Redeemable General Partner Interest, as
defined below.

The withdrawal of the General Partner requires the Partnership to acquire the
General Partner's interest in the Partnership (the "Redeemable General Partner
Interest") at its then fair value, and to pay certain fees and other
compensation, as provided in the Partnership Agreement and the Moorman
Settlement Agreement. The Moorman Settlement Agreement provides that any payment
for such Redeemable General Partner Interest, fees and other compensation during
the pendency of the Moorman Settlement Agreement may, at the option of the
Oversight Committee (also established under the Moorman Settlement Agreement),
be made over three years pursuant to a secured promissory note bearing interest
at a financial institution's prime rate. The Managing General Partner has
calculated the fair value of the Redeemable General Partner Interest at December
31, 1997 to be $49.6 million, and believes that there has been no material
change in such value since that date. The Partnership would be entitled to
offset against such payment the then outstanding principal balance of the note
receivable ($4.2 million at March 31, 1998) plus all accrued and unpaid interest
($7.5 million at March 31, 1998) on the note receivable from the General Partner
representing its capital contribution to the Partnership. When Syntek Asset
Management, L.P. ("SAMLP") withdraws as General Partner of the Partnership, the
fair value of the Redeemable General Partner Interest would depend on the value
of the Partnership's assets at the time of calculation and there can be no
assurance that the Redeemable General Partner Interest, fees and other
compensation payable on any such withdrawal will not be substantially higher or
lower than any current estimate or calculation.

In the accompanying Consolidated Balance Sheets, the Redeemable General Partner
Interest is shown as a reduction in Partners' Equity and the note receivable
from the General Partner has been offset against the Redeemable General Partner
Interest.

On January 27, 1995, National Realty, SAMLP, the Oversight Committee and William
H. Elliott executed an Implementation Agreement which provides for the
nomination of a successor general partner and for the resolution of all related
matters under the Moorman Settlement. On February 20, 1996, the parties to the
Implementation Agreement executed an Amended and Restated Implementation
Agreement.



                                       16
<PAGE>   17

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

Liquidity and Capital Resources (Continued)

On September 23, 1996, the Supervising Judge entered an order granting tentative
approval of the Amended and Restated Implementation Agreement and the form of
notice to be sent to the original class members. On April 7, 1997, the
Supervising Judge entered an order amending the September 23, 1996 order,
approving the formal notice and setting a hearing on the Implementation
Agreement for June 27, 1997. A notice was sent to all class members and
unitholders in April 1997 and the hearing was held on June 27, 1997. On
September 8, 1997, the Supervising Judge rendered a Statement of Decision in
which he declined to approve the Implementation Agreement. As a result of the
Statement of Decision, the existing Moorman Settlement Agreement remains in full
force and effect and all of the provisions of the Amended and Restated
Implementation Agreement have been voided.

On December 15, 1997, National Realty, SAMLP, the Oversight Committee, Joseph B.
Moorman, Invenex and the Moorman Class Counsel executed an Agreement for
Establishment of Class Distribution Fund and Election of Successor General
Partner (the "Resolution Agreement") which provides for the nomination of an
entity affiliated with SAMLP to be the successor general partner of the
Partnership, for the establishment of a fund for the benefit of the Moorman
Class Members consisting of cash and properties owned by the Partnership and for
the resolution of all related matters under the Moorman Settlement Agreement.

The Resolution Agreement was submitted to the Supervising Judge and on February
11, 1998, the Supervising Judge entered an order granting preliminary approval
of the Resolution Agreement and scheduled a hearing to be held on June 8, 1998,
for consideration of preliminary approval of a business plan for the operation
of the entity which will receive the cash and properties and to consider a form
of notice to be distributed to the Moorman Class Members describing the
Resolution Agreement and the business plan.

Upon final approval by the Supervising Judge, the proposal to elect the
successor general partner will be submitted to the unitholders of National
Realty for a vote.

Upon approval by the National Realty unitholders, SAMLP shall withdraw as
General Partner and the successor general partner shall take office. If the
required approvals are obtained, it is anticipated that the successor general
partner will be elected and take office during the third quarter of 1998.

SAMLP has agreed to waive its rights under the Moorman Settlement Agreement to
receive any payment from the Partnership of the fees it is entitled to receive
upon the election of a successor general partner. As of December 31, 1997, this
fee was calculated to be $49.6 million.

Upon final approval by the Supervising Judge, the Partnership will transfer $1.9
million in cash and five shopping center properties to the



                                       17
<PAGE>   18

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

Liquidity and Capital Resources (Continued)

new entity which will be owned by the Moorman Class Members and managed for
their benefit by a court approved board. This fund is being established in order
to provide additional benefits to the Moorman Class Members.

Upon the election and taking office of the successor general partner and the
transfer of the cash and properties to the Class Fund, the Moorman Settlement
Plan and the Oversight Committee shall be terminated.

On September 26, 1997, one of the original Moorman litigation defendants, Robert
A. McNeil, filed motions to (i) be installed as receiver for the Partnership and
(ii) disband the Oversight Committee. A hearing on the motions was set for
February 5, 1998. However, the Supervising Judge continued the hearing to June
8, 1998.

The outcome of this matter cannot presently be determined and the consolidated
financial statements do not include any adjustments that might result from the
outcome of this matter.

Results of Operations

The Partnership reported net income of $508,000 for the three months ended March
31, 1998 as compared to a net loss of $227,000 for the three months ended March
31, 1997. The primary factors contributing to the Partnership's improvement in
operating results are discussed in the following paragraphs.

Rents increased to $28.3 million for the three months ended March 31, 1998 from
$27.7 million for the three months ended March 31, 1997. This increase is
primarily due to increased rental rates at the Partnership's apartments and
commercial properties partially offset by a decrease of $797,000 due to the
sales of one apartment complex and three commercial properties subsequent to
March 31, 1997. Rents are expected to continue to increase during the remainder
of 1998.

Interest income increased from $839,000 for the three months ended March 31,
1997 to $1.3 million for the three months ended March 31, 1998. This increase is
attributable to loans funded in 1997. Interest income for the remaining quarters
of 1998 is expected to be comparable to that of the first quarter.

Interest expense, depreciation, property taxes and insurance, utilities,
property level payroll, repairs and maintenance, other property operation
expenses, property management fees and general and administrative expenses for
the three months ended March 31, 1998 all approximated those for the comparable
period in 1997.

Tax Matters

National Realty is a publicly traded limited partnership and, for federal income
tax purposes, all income or loss generated by the



                                       18
<PAGE>   19

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

Tax Matters (Continued)

Partnership is included in the income tax returns of the individual partners.
Under Internal Revenue Service guidelines generally applicable to publicly
traded partnerships and thus to the Partnership, a limited partner's use of his
or her share of partnership losses is
subject to special limitations.

Inflation

The effects of inflation on the Partnership's operations are not quantifiable.
Revenues from property operations generally fluctuate proportionately with
inflationary increases and decreases in housing costs. Fluctuations in the rate
of inflation also affect the sales values of the Partnership's properties and,
correspondingly, the ultimate gains to be realized by the Partnership from
property sales. To the extent that inflation affects interest rates, the
Partnership's earnings from short-term investments and the cost of new
borrowings as well as the cost of its variable rate borrowings will be affected.

Environmental Matters

Under various federal, state and local environmental laws, ordinances and
regulations, the Partnership may be potentially liable for removal or
remediation costs, as well as certain other potential costs relating to
hazardous or toxic substances (including governmental fines and injuries to
persons and property) where property-level managers have arranged for the
removal, disposal or treatment of hazardous or toxic substances. In addition,
certain environmental laws impose liability for release of asbestos-containing
materials into the air, and third parties may seek recovery from the Partnership
for personal injury associated with such materials.

The General Partner is not aware of any environmental liability relating to the
above matters that would have a material adverse effect on the Partnership's
business, assets or results of operations.

Year 2000

The Managing General Partner has advised the Partnership that its current
computer software has been certified by the Information Technology Association
of America ("ITAA") as year 2000 compliant. The Managing General Partner has
also advised the Partnership that it has recently received and plans to install
in 1998 the ITAA certified year 2000 compliant operating system for its computer
hardware.




                     [THIS SPACE INTENTIONALLY LEFT BLANK.]

                                       19
<PAGE>   20

                           PART II - OTHER INFORMATION


ITEM 1.        LEGAL PROCEEDINGS

See NOTE 6. "LEGAL PROCEEDINGS - Moorman Settlement," of NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS in PART I for information relating to legal proceedings.


ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits:

<TABLE>
<CAPTION>
Exhibit
Number                             Description
-------           ----------------------------------------------------
<S>               <C>
 11.0             Computation of Earnings Per Unit

 27.0             Financial Data Schedule
</TABLE>

(b)     Reports on Form 8-K:

        None.




                                       20
<PAGE>   21

                              NATIONAL REALTY, L.P.


                                 Signature Page


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                           NATIONAL REALTY, L.P.

                                           By its General Partner:

                                           SYNTEK ASSET MANAGEMENT, L.P.

                                           By its Managing General Partner:

                                           SYNTEK ASSET MANAGEMENT, INC.




Date:       May 14, 1998                     By: /s/ Randall M. Paulson
     -------------------------                -------------------------------
                                               Randall M. Paulson
                                               President



Date:       May 14, 1998                     By: /s/ Thomas A. Holland
     -------------------------                -------------------------------
                                               Thomas A. Holland
                                               Executive Vice President and
                                               Chief Financial Officer
                                               (Principal Financial and
                                               Accounting Officer)



                                       21
<PAGE>   22

                              NATIONAL REALTY, L.P.

                                   EXHIBITS TO

                          QUARTERLY REPORT ON FORM 10-Q

                      For the Quarter ended March 31, 1998

<TABLE>
<CAPTION>
Exhibit
Number                             Description
-------           ----------------------------------------------------
<S>               <C>
 11.0             Computation of Earnings Per Unit

 27.0             Financial Data Schedule
</TABLE>