<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, 1997
                                                          --------------


                         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                6,331,339            
---------------------------------     -------------------------------
         (Class)                      (Outstanding at April 30, 1997)





                                       1
<PAGE>   2
                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

The accompanying Consolidated Financial Statements have not been examined 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,
                                                               1997          1996    
                                                            ---------      ---------
                                                             (dollars in thousands)
<S>                                                         <C>            <C>      
                   Assets
                   ------

Real estate held for investment
 Land                                                       $  50,112      $  51,342
 Buildings and improvements                                   392,937        396,626
                                                            ---------      ---------
                                                              443,049        447,968

 Less - accumulated depreciation                             (223,063)      (223,204)
                                                            ---------      ---------
                                                              219,986        224,764

Real estate under contract for sale, net of
 accumulated depreciation ($2,606 in 1997)                      2,940             --

Notes and interest receivable, net of deferred
 gains of $15,787 in 1997 and 1996                             20,472         15,189
 Less - allowance for estimated losses                         (1,910)        (1,910)
                                                            ---------      ---------
                                                               18,562         13,279

Cash and cash equivalents                                      11,541          5,872
Accounts receivable                                             1,902          2,040
Prepaid expenses                                                1,297          1,663
Escrow deposits and other assets (including $383
 in 1997 from affiliates)                                       4,366         18,496
Marketable equity securities of affiliate, at
 market                                                         3,279          1,272
Deferred financing costs                                       13,265         13,947
                                                            ---------      ---------

                                                            $ 277,138      $ 281,333
                                                            =========      =========

</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,
                                                              1997           1996    
                                                            ---------      ---------
                                                             (dollars in thousands)
<S>                                                         <C>            <C>      
    Liabilities and Partners' Equity (Deficit)
    ------------------------------------------

Liabilities
 Notes and interest payable                                 $ 324,638      $ 325,921
 Pension notes and related interest payable                    13,864         13,478
 Accrued property taxes                                         4,857          6,928
 Accounts payable and other liabilities
    (including $85 in 1996 to affiliates)                       4,584          3,040
 Tenant security deposits                                       3,119          7,057
                                                            ---------      ---------
                                                              351,062        356,424

Commitments and contingencies

Redeemable General Partner Interest                            37,855         37,855

Partners' equity (deficit)
 General Partner                                                2,644          2,649
 Limited Partners (6,331,358 units in 1997 and
    6,328,303 units in 1996)                                  (75,402)       (74,568)
 Unrealized gain on marketable equity securities
    of affiliate                                                3,009          1,003
                                                            ---------      ---------
                                                              (69,749)       (70,916)

 Less - Redeemable General Partner Interest                   (42,030)       (42,030)
                                                            ---------      ---------

                                                             (111,779)      (112,946)
                                                            ---------      ---------

                                                            $ 277,138      $ 281,333
                                                            =========      =========
</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,    
                                                               ----------------------------
                                                                   1997            1996   
                                                               -----------      -----------
                                                                   (dollars in thousands,
                                                                      except per unit)
<S>                                                            <C>              <C>         
Revenues
 Rents                                                         $    27,720      $    27,014
 Interest                                                              839              746
                                                               -----------      -----------
                                                                    28,559           27,760
Expenses
 Interest                                                            8,521            8,427
 Depreciation                                                        2,464            2,510
 Property taxes and insurance                                        3,018            3,093
 Utilities                                                           3,156            2,970
 Property-level payroll costs                                        1,672            1,670
 Repairs and maintenance                                             5,662            5,492
 Other operating expenses                                            1,153            1,098
 Property management fees                                            1,193            1,155
 General and administrative                                          1,947            1,813
                                                               -----------      -----------

                                                                    28,786           28,228
                                                               -----------      -----------

Net (loss)                                                     $      (227)     $      (468)
                                                               ===========      ===========

Earnings per unit
 Net (loss)                                                    $      (.04)     $      (.07)
                                                               ===========      ===========

Weighted average units of limited partner interest
 used in computing earnings per unit                             6,319,884        6,417,943
                                                               ===========      ===========
</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, 1997




<TABLE>
<CAPTION>
                                                              Unrealized
                                                               Gain On     Redeemable
                                                              Marketable    General      Partners'
                                     General      Limited       Equity      Partner       Equity
                                     Partner      Partners    Securities   Interest      (Deficit) 
                                     -------      --------    ----------   --------      ---------
                                                        (dollars in thousands)
<S>                                  <C>          <C>           <C>        <C>           <C>       
Balance, January 1, 1997             $ 2,649      $(74,568)     $1,003     $(42,030)     $(112,946)

Units issued on exercise of
 warrants                                 --            20          --           --             20

Distributions ($.10 per unit)             --          (632)         --           --           (632)

Unrealized gain on marketable
 equity securities of affiliate           --            --       2,006           --          2,006

Net (loss)                                (5)         (222)         --           --           (227)
                                     -------      --------      ------     --------      ---------

Balance, March 31, 1997              $ 2,644      $(75,402)     $3,009     $(42,030)     $(111,779)
                                     =======      ========      ======     ========      =========
</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,     
                                                       ----------------------
                                                         1997          1996    
                                                       --------      --------
                                                       (dollars in thousands)
<S>                                                    <C>           <C>     
Cash Flows From Operating Activities
 Rents collected                                       $ 27,958      $ 27,087
 Interest collected                                         601           732
 Interest paid                                           (7,236)       (7,407)
 Payments for property operations                       (16,574)      (16,338)
 General and administrative expenses paid                (2,572)       (1,922)
                                                       --------      --------
    Net cash provided by operating activities             2,177         2,152

Cash Flows From Investing Activities
 Real estate improvements                                  (627)         (611)
 Funding of notes receivable                             (5,156)           -- 
                                                       --------      --------
    Net cash (used in) investing activities              (5,783)         (611)

Cash Flows From Financing Activities
 Borrowings from financial institutions                      --         2,400
 Payments from (to) affiliates, net                          --          (559)
 Payments on mortgage notes payable                      (1,419)       (3,526)
 Receipt from escrow                                     12,423            --
 Deferred financing costs                                (1,117)          (44)
 Exercise of warrants                                        20            --
 Distributions to unitholders                              (632)       (8,489)
                                                       --------      --------
    Net cash provided by (used in) financing
     activities                                           9,275       (10,218)
                                                       --------      --------

    Net increase (decrease) in cash and cash
      equivalents                                         5,669        (8,677)

Cash and cash equivalents at beginning of period          5,872        20,699
                                                       --------      --------
Cash and cash equivalents at end of period             $ 11,541      $ 12,022
                                                       ========      ========

Reconciliation of net (loss) to net cash
 provided by operating activities
Net (loss)                                             $   (227)     $   (468)
 Adjustments to reconcile net (loss) to net
    cash provided by operating activities
 Depreciation                                             2,464         3,041
 (Increase) decrease in other assets                      3,992          (694)
 (Increase) in interest receivable                         (127)           (3)
 Increase in interest payable                               538            75
 Increase (decrease) in other liabilities                (4,463)          201
                                                       --------      --------
    Net cash provided by operating activities          $  2,177      $  2,152
                                                       ========      ========

Schedule of noncash financing activities

 Unrealized gain on marketable equity securities
    of affiliate                                       $  2,006      $    195
</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, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.  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, 1996 (the "1996 Form
10-K").

NOTE 2.  EARNINGS PER UNIT

Net (loss) per unit of limited partner interest (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 (loss) per unit is
derived by dividing 98.01% of the net (loss) in each period by the respective
weighted average units of limited partner interest.

NOTE 3.  NOTES RECEIVABLE

In January 1997, the Partnership funded a $1.2 million loan 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 annually on December 15,
1997 and 1998, and matures in January 1999.  The Partnership has the option to
reduce the principal balance of the loan by $50,000 in exchange for 75%
ownership of Bordeaux.

In February 1997, the Partnership funded a third loan to JNC Enterprises, Inc.
("JNC") in the amount of $2.5 million.  The loan is secured by a 70.87% limited
partner interest in a limited partnership which owns 250 acres  of undeveloped
land in Fort Worth, Texas.  The





                                       7
<PAGE>   8
                             NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 3.  NOTES RECEIVABLE (Continued)

note bears interest at 12% per annum, requires quarterly payments of interest
only and matures in October 1997.  In March 1997, the Partnership funded an
additional $1.5 million and modified the loan by increasing the principal
balance to $4.0 million.

In January 1997, the note receivable secured by the Nellis Bonanza Shopping
Center in Las Vegas, Nevada matured.  The borrower did not make the required
principal payment.  Therefore, the note was classified as non-performing at
December 31, 1996.  The Partnership has instituted foreclosure proceedings and
anticipates that it will not incur a loss on foreclosure as the estimated value
of the collateral property exceeds the carrying value of the note.

NOTE 4.  WARRANTS

Pursuant to the Moorman Settlement Agreement (as defined in NOTE 6. "LEGAL
PROCEEDINGS"), on February 14, 1992, the Partnership issued warrants to
purchase an aggregate of 2,019,579 of its units of limited partner interest
subject to adjustment.  Each warrant initially entitled the holder thereof to
purchase three quarters of one unit at the exercise price of $11.00 per
warrant.  The initial exercise price was equal to $14.67 per unit and increased
to $16.00 per unit on February 14, 1993.  The warrants were 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.  See NOTE 6. "LEGAL PROCEEDINGS."

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. 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.





                                       8
<PAGE>   9
                             NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



NOTE 6.  LEGAL PROCEEDINGS (Continued)

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 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.





                                       9
<PAGE>   10
                             NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.  LEGAL PROCEEDINGS (Continued)

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 "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





                                       10
<PAGE>   11
                             NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.  LEGAL PROCEEDINGS (Continued)

at December 31, 1996 to be $42.0 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, 1997) plus all accrued but unpaid interest
($6.4 million at March 31, 1997) 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.  However, the order
reserved jurisdiction to determine other matters which must be resolved prior
to final approval.  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.  In addition, the unitholders will vote upon
amendments to the National Realty Partnership Agreement which relate to the
proposed compensation of the successor general partner and other related
matters.

Provided that the successor general partner is elected pursuant to the terms of
the Amended and Restated Implementation Agreement, SAMLP shall receive
$12,471,500 from the Partnership.  This amount represents a compromise
settlement of the net amounts owed by the Partnership to SAMLP upon SAMLP's
withdrawal as General Partner and any amounts which SAMLP and its affiliates
may owe to the Partnership.  This amount shall be paid to SAMLP pursuant to a
promissory note in accordance with the terms set forth in the Amended and
Restated Implementation Agreement.

Upon approval by the unitholders, SAMLP shall resign as General Partner and the
successor general partner shall take office.  If the required





                                       11
<PAGE>   12
                             NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.  LEGAL PROCEEDINGS (Continued)

approvals are obtained, National Realty anticipates that the successor general
partner may be elected and take office during the third quarter of 1997.

The Amended and Restated Implementation Agreement provides that SAMLP, and its
affiliates owning units in National Realty, shall not vote to remove the
successor general partner, except for removal with cause, for a period of 36
months from the date the successor general partner takes office.

Upon the election and taking office of the successor general partner, the
Moorman Settlement Plan and the Oversight Committee shall  terminate.  If the
successor general partner nominee is not elected, the existing Moorman
Settlement Agreement shall remain in full force and effect and all of the
provisions of the Amended and Restated Implementation Agreement shall be
voided.

On September 3, 1996, Joseph B. Moorman filed a Motion for Orders Compelling
Enforcement of the Moorman Settlement Agreement, Appointment to a Receiver and
Collateral Relief with the Superior Court of the State of California in and for
the County of San Mateo.  The motion alleged that the settling defendants had
failed or refused to perform their obligations under the Moorman Settlement
Agreement and had breached the Moorman Settlement Agreement.  The motion also
requested that SAMLP be removed as general partner and a receiver be appointed
to manage the Partnership.  The motion also requested that American Realty
Trust, Inc. ("ART") be ordered to deliver to the Court all units which had been
purchased by ART since August 7, 1991.  A hearing was held on this motion on
October 4, 1996.  On January 2, 1997, the Supervising Judge entered an order
denying the motion.

On January 27, 1997, Joseph B. Moorman filed motions to (i) discharge the
Oversight Committee and (ii) vacate the Court's orders and renewed his prior
motions to compel enforcement of the Moorman Settlement Agreement, appoint a
receiver over the Partnership, and for collateral relief against ART.  Also on
January 27, 1997, Robert A. McNeil filed motions to (i) be installed as
receiver for the Partnership, (ii) vacate the Court's orders, and (iii) disband
the Oversight Committee.

A hearing on the motions to discharge or disband the Oversight Committee and to
vacate the Court's orders was held on March 21, 1997, and the Supervising Judge
ruled that neither Mr. McNeil nor Mr. Moorman had standing to bring the
motions.  The Supervising Judge also set June 27, 1997 as the hearing date for
final approval of the Amended and Restated Implementation Agreement.

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.





                                       12
<PAGE>   13
                             NATIONAL REALTY, L.P.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 7.  SUBSEQUENT EVENTS

In April 1997, the Partnership modified and extended the mortgage secured by
the Cross County Mall in Mattoon, Illinois.  In conjunction with the
modification, the Partnership made a principal reduction payment of $137,500.
The modified and extended mortgage bears interest at a variable rate, currently
10.4% per annum, requires monthly payments of principal and interest and has an
extended maturity of April 2002.

Also in April 1997, the Partnership funded a $1.5 million loan to Highway 544
Partners, L.P. ("Highway Partners").  The loan is secured by a first lien on
approximately 49 acres of undeveloped land in Plano, Texas, a pledge of 100% of
the partnership interest and the personal guarantee of the owner of Highway
Partner's general partner.  The note receivable bears interest at 18% per
annum, requires quarterly interest only payments at 12% per annum, with the
deferred interest payable annually in April 1998 and 1999, and matures in April
1999.

In April 1997, the Partnership completed the sale of Tollhill East, a 81,115
square foot office building in Dallas, Texas, that was under contract for sale
at March 31, 1997.  The office building was sold for $7.0 million in cash, the
Partnership receiving net cash of $4.6 million after the payoff of $2.4 million
in existing mortgage debt and the payment of various closing costs associated
with the sale.  The Partnership paid Carmel Realty a real estate sales
commission of $209,000 based on the $7.0 million sales price of the property.
The Partnership will recognize a gain on the sale of approximately $3.3
million.

                         _____________________________


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





                                       13
<PAGE>   14
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (Continued)

Introduction (Continued)

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 $11.5 million at March 31, 1997 compared
to $5.9 million at December 31, 1996.  The principal reasons for this increase
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,
1997, the aggregate loan-to-value ratio of the Partnership's real estate
portfolio was 44.4%, computed on the basis of the ratio of total
property-related debt to aggregate appraised values as of December 31, 1996, as
compared with a loan-to-value ratio of 44.6% at December 31, 1996.

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 1997, including, but not limited to the payment of distributions,
debt service obligations coming due, including the "Pension Notes," 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 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 1997, the Partnership received
distributions from GCLP totaling $786,000 (excluding proceeds from the released
credit enhancement escrow, as described below), compared to distributions
totaling $550,000 received during the first quarter of 1996.

In January 1998, 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





                                       14
<PAGE>   15
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)


Liquidity and Capital Resources (Continued)

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.

In January 1997, the Partnership funded a $1.2 million loan 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.

In February 1997, the Partnership funded a third loan to JNC Enterprises, Ltd.
("JNC") in the amount of $2.5 million.  This loan is secured by a 70.87%
limited partner interest in a limited partnership which owns 250 acres of
undeveloped land in Fort Worth, Texas.  In March 1997, the Partnership funded
an additional $1.5 million increasing the loan's principal balance to $4.0
million.

In April 1997, the Partnership funded a $1.5 million loan to Highway 544
Partners, L.P. ("Highway Partners").  The loan is secured by a first lien on
approximately 49 acres of undeveloped land in Plano, Texas, 100% of the
partnership interests in Highway Partners and the personal guarantee of the
owner of the general partner of Highway Partners.

Also in April 1997, the Partnership completed the sale of Tollhill East, a
81,115 square foot office building in Dallas, Texas, that was under contract
for sale at March 31, 1997.  The office building was sold for $7.0 million in
cash, the Partnership receiving net cash of $4.6 million after the payoff of
$2.4 million in existing mortgage debt and the payment of various closing costs
associated with the sale.

On March 31, 1997, the Partnership paid its regular quarterly distribution,
$.10 per unit, or a total of $632,000, to unitholders of record on March 14,
1997.

The Partnership's net cash flow from property operations (rents collected less
payments for property operating expenses) increased from  $10.7 million for the
three months ended March 31, 1996 to $11.4 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.

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.





                                       15
<PAGE>   16
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (Continued)

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, 1996 to be $42.0 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,
1997) plus all accrued and unpaid interest ($6.4 million at March 31, 1997) 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.

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. However, the order
reserved jurisdiction to determine other matters which must be resolved prior
to final approval.  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.  In addition, the unitholders will vote upon
amendments to the National Realty Partnership Agreement which relate to the
proposed compensation of the successor general partner and other related
matters.

Provided that the successor general partner is elected pursuant to the terms of
the Amended and Restated Implementation Agreement, SAMLP shall





                                       16
<PAGE>   17
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (Continued)

receive $12,471,500 from the Partnership.  This amount represents a compromise
settlement of the net amounts owed by the Partnership to SAMLP upon SAMLP's
withdrawal as General Partner and any amounts which SAMLP and its affiliates
may owe to the Partnership.  This amount shall be paid to SAMLP pursuant to a
promissory note in accordance with the terms set forth in the Amended and
Restated Implementation Agreement.

Upon approval by the unitholders, SAMLP shall resign as General Partner and the
successor general partner shall take office.  If the required approvals are
obtained, National Realty anticipates that the successor general partner may be
elected and take office during the third quarter of 1997.

The Amended and Restated Implementation Agreement provides that SAMLP, and its
affiliates owning units in National Realty, shall not vote to remove the
successor general partner, except for removal with cause, for a period of 36
months from the date the successor general partner takes office.

Upon the election and taking office of the successor general partner, the
Moorman Settlement Plan and the Oversight Committee shall  terminate.  If the
successor general partner is not elected, the existing Moorman Settlement
Agreement shall remain in full force and effect and all of the provisions of
the Amended and Restated Implementation Agreement shall be voided.

On September 3, 1996, Joseph B. Moorman filed a Motion for Orders Compelling
Enforcement of the Moorman Settlement Agreement, Appointment to a Receiver and
Collateral Relief with the Superior Court of the State of California in and for
the County of San Mateo.  The motion alleged that the settling defendants had
failed or refused to perform their obligations under the Moorman Settlement
Agreement and had breached the Moorman Settlement Agreement.  The motion also
requested that SAMLP be removed as general partner and a receiver be appointed
to manage the Partnership.  The motion also requested that American Realty
Trust, Inc. ("ART") be ordered to deliver to the court all units which had been
purchased by ART since August 7, 1991.  A hearing was held on this motion on
October 4, 1996.  On January 2, 1997, the Supervising Judge entered an order
denying the motion.

On January 27, 1997, Joseph B. Moorman filed motions to (i) discharge the
Oversight Committee and (ii) vacate the Court's orders and renewed  his prior
motions to compel enforcement of the Moorman Settlement Agreement, appoint a
receiver over the Partnership, and for collateral relief against ART.  Also on
January 27, 1997, Robert A. McNeil filed motions to (i) be installed as
receiver for the Partnership, (ii) vacate the Court's orders, and (iii) disband
the Oversight Committee.

A hearing on the motions to discharge or disband the Oversight Committee and to
vacate the Court's orders was held on March 21, 1997, and the Supervising Judge
ruled that neither Mr. McNeil nor Mr. Moorman had





                                       17
<PAGE>   18
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (Continued)

standing to bring the motions.  The Supervising Judge also set June 27, 1997 as
the hearing date for final approval of the Amended and Restated Implementation
Agreement.

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 a net loss of $227,000 for the three months ended
March 31, 1997 as compared to a net loss of $468,000 for the three months ended
March 31, 1996.  The primary factors contributing to the Partnership's
improvement in operating results are discussed in the following paragraphs.

Rents increased to $27.7 million for the three months ended March 31, 1997 from
$27.0 million for the three months ended March 31, 1996.  This increase is
primarily due to increased rental rates at the Partnership's apartments and
commercial properties.  Rents are expected to continue to increase during the
remainder of 1997.

Interest income increased from $746,000 for the three months ended March 31,
1996 to $839,000 for the three months ended March 31, 1997.  $242,000 of this
increase is attributable to loans funded in 1996 and 1997, partially offset by
a decrease of $81,000 due to a loan which matured in January 1997 and a
decrease of $65,000 due to decreased short-term investment income.  Interest
income for the remaining quarters of 1997 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
1997 all approximated those for 1996.

Tax Matters

National Realty is a publicly traded limited partnership and, for federal
income tax purposes, all income or loss generated by the Partnership is
included in the income tax returns of the individual partners.  In December
1987, Congress passed legislation requiring certain publicly traded
partnerships to be taxed as corporations.  National Realty qualifies for
"grandfather" treatment and will be treated as a partnership until at least
1997, unless the Partnership adds a substantial new line of business, which
would require approval of the Oversight Committee, and will continue to be so
treated thereafter if 90% or more of its gross income consists of qualifying
income from real estate activities.  As presently operated, the Partnership
meets these requirements.  Under Internal Revenue Service guidelines generally





                                       18
<PAGE>   19
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

Tax Matters (Continued)

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.

                     ______________________________________


                          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 5.   OTHER INFORMATION

See NOTE 4. "WARRANTS" of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in PART I
for information relating to unit purchase warrants that expired on February 14,
1997.





                                       19
<PAGE>   20
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 13, 1997                By:  /s/ Randall M. Paulson           
     -------------------------             -----------------------------------
                                           Randall M. Paulson
                                           President
                                        
                                        
                                        
                                        
                                        
Date:       May 13, 1997                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, 1997





<TABLE>
<CAPTION>
Exhibit                                                                  Page
Number                         Description                              Number
-------     ---------------------------------------------------         ------
  <S>       <C>                                                              <C>
  11.0      Computation of Earnings Per Unit                                 23
                                                                        
  27.0      Financial Data Schedule                                          24

</TABLE>




                                       22