<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934

                  For the Fiscal Year Ended DECEMBER 31, 1996

                             Commission File Number
                                    2-82765    

                              REAL EQUITY PARTNERS
                        A CALIFORNIA LIMITED PARTNERSHIP

                I.R.S. Employer Identification No. 95-3784125  

        9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA  90211

       Registrant's Telephone Number, Including Area Code (310) 278-2191

      Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:

                                      NONE

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  [X]
<PAGE>   2
PART I.

ITEM 1.   BUSINESS

Real-Equity Partners ("REP" or the "Partnership") is a limited partnership
which was formed under the laws of the State of California on September 9,
1981.  The Partnership was formed to invest in residential rental properties
either directly or through investment in joint ventures and other partnerships
which will invest in such real estate.  Commencing on September 27, 1983, REP
offered 30,000 units of the limited partnership interest (the "Units") through
a public offering managed by Lehman Brothers Inc.  REP's public offering was
completed within a year of its commencement.

The general partners of REP are National Partnership Investments Corp.
("NAPICO"), a California corporation (the "Corporate General Partner"), and
National Partnership Investments Associates II, a California limited
partnership ("NAPIA II").  NAPIA II consists of Charles H. Boxenbaum and an
unrelated individual as limited partners and NAPICO as general partner.  The
business of REP is conducted primarily by its general partners as REP has no
employees of its own.

Casden Investment Corporation ("CIC") owns 100 percent of NAPICO's stock.  The
current members of NAPICO's Board of Directors are Charles H.  Boxenbaum, Bruce
E. Nelson, Alan I. Casden, Henry C. Casden and Brian D. Goldberg.

As of December 31, 1996, the Partnership remains invested in five apartment
projects.  One property was foreclosed upon in 1996.  Substantially all of the
buildings are leased on a month-to-month basis.  The management of the
Partnership's properties is the responsibility of an affiliate of NAPICO (the
"Property Manager").  The principal business of the Property Manager is
residential property management.

The Partnership is subject to all of the risks incident to ownership of real
estate and interests therein, many of which relate to the lack of liquidity of
this type of investment.  These risks include changes in general economic
conditions, adverse local market conditions due to over-building or a decrease
in employment or neighborhood values, changes in supply or demand of competing
properties in an area, changes in interest rates and the availability and terms
of permanent mortgage funds which may render the sale or refinancing of a
property difficult or unattractive, changes in real estate and zoning laws,
increases in real property tax rates, the potential imposition of rent
controls, and the occurrence of uninsured losses, such as earthquakes, floods
or other factors beyond the control of the General Partners.  The illiquidity
of real estate investments generally will impair the ability of the Partnership
to respond promptly to changed circumstances.





<PAGE>   3
During 1996, the projects in which REP had invested were substantially rented.
The following is a schedule of the occupancy status, as of December 31, 1996,
of the projects in which REP has invested:


              SCHEDULE OF PROJECTS IN WHICH REP HAS AN INVESTMENT
                               DECEMBER 31, 1996



<TABLE>
<CAPTION>
                                               No. of                              Units          Percentage of
Name & Location                                Units                             Occupied          Total Units 
---------------                                ------                            --------         -------------
<S>                                              <C>                               <C>                <C>
Arbor Glen
 West Covina, CA                                 208                               205                 99%

Park Creek
 Canoga Park, CA                                 123                               109                 89%

Warner Willows I
 Woodland Hills, CA                               74                                74                100%

Warner Willows II
 Woodland Hills, CA                               73                                69                 95%

Willowbrook Apartments
 Reno, NV                                        183                               168                 92%
                                                ----                              ----                    
                                                 661                               625                 95%
                                                ====                              ====                    
</TABLE>





<PAGE>   4
ITEM 2.      PROPERTIES

Through acquisition, REP holds interests in real estate properties.  See Item 1
and Schedule XI for information pertaining to these properties.


ITEM 3.      LEGAL PROCEEDINGS

As of December 31, 1996, the Partnership's Corporate General Partner was a
plaintiff or defendant in several lawsuits.  Additionally, certain slip and
fall lawsuits, each of which is covered by insurance, are pending against the
Partnership although none are expected to result in any exposure to the
Partnership.


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

Not applicable.


PART II.

ITEM 5.      MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED
             SECURITY HOLDER MATTERS

The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by Lehman Brothers Inc.  It is not
anticipated that any public market will develop for the purchase and sale of
any partnership interest.  Limited Partnership Interests may be transferred
only if certain requirements are satisfied.  At December 31, 1996, there were
3,115 registered holders of units in REP.  It was intended that distributions
of Net Cash From Operations will be made to the limited partners of record on a
quarterly basis during the months of February, May, August, and November pro
rata in proportion to the number of units held.  From November 1994 through May
1996, distributions to the limited partners were not made due to the
Partnership setting aside funds for losses incurred by REP as a result of the
January 17, 1994 Northridge Earthquake.  The Partnership made two distributions
to the limited partners in 1996.





<PAGE>   5

ITEM 6.  SELECTED FINANCIAL DATA:




<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                           ------------------------------------------------------------------------------
                                 1996             1995            1994            1993            1992
                            ------------     ------------    ------------    ------------    ------------
<S>                         <C>              <C>             <C>             <C>             <C>
Rental Revenues             $  4,935,895     $  5,486,329    $  5,678,656    $  5,463,671    $  5,659,992

Interest Income                   89,711           49,476          37,710          12,779          34,848
                            ------------     ------------    ------------    ------------    ------------
   Total Revenues           $  5,025,606     $  5,535,805    $  5,716,366    $  5,476,450    $  5,694,840
                            ============     ============    ============    ============    ============
Net Income (Loss)           $    184,074     $   (324,850)   $ (1,024,765)   $   (279,385)   $ (1,455,688)
                            ============     ============    ============    ============    ============
Net Income (Loss)
   Per Limited
   Partnership Interest     $          6     $        (11)   $        (34)   $         (9)   $        (48)
                            ============     ============    ============    ============    ============
Rental Property
   Owned at Cost
   Less Accumulated
   Depreciation             $ 19,269,597     $ 23,563,382    $ 24,473,838    $ 25,384,299    $ 26,294,751
                            ============     ============    ============    ============    ============

Total Assets                $ 22,049,995     $ 26,365,792    $ 26,668,029    $ 27,182,103    $ 27,666,578
                            ============     ============    ============    ============    ============

Mortgage Notes Payable      $ 14,064,914     $ 17,747,363    $ 17,959,940    $ 15,517,461    $ 15,633,199
                            ============     ============    ============    ============    ============

Accrued Fees Due
   General Partner          $    693,560     $    651,320    $    609,195    $  2,836,956    $  2,626,812
                            ============     ============    ============    ============    ============

Cash Distributions
   Declared Per Limited
   Partnership Interest     $      10.00     $    -          $      15.00    $      10.00    $      10.00
                            ============     ============    ============    ============    ============
</TABLE>





<PAGE>   6
ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS:

LIQUIDITY

The Partnership's primary source of funds include cash flow from rental
operations and interest income on certificates of deposit and money market
accounts.

Distributions of net cash from operations were normally intended to be made to
the Limited Partners of record on a quarterly basis during the months of
February, May, August, and November pro rata in proportion to the number of
Units held.  The distributions for February, May and August, 1994, in the
amount of $150,000 each were made to the limited partners.  From November 1994
through May 1996, distributions to the limited partners were not made due to
the Partnership setting aside funds for losses incurred by REP as a result of
the January 17, 1994 Northridge Earthquake.  The Partnership made two
distributions, each in the amount of $150,000, to the limited partners in 1996.

Currently, it is anticipated that the Partnership will continue to meet its
current and long-term obligations as they become due.

CAPITAL RESOURCES

As of December 31, 1984, REP received proceeds of $30,000,000 from the sale of
limited partnership interests, pursuant to a registration statement on Form
S-11.

RESULTS OF OPERATIONS

REP was formed to invest in residential rental properties either directly or
through investments in joint ventures and other partnerships which will invest
in such real estate, as discussed in Item 1.  The seven rental properties
originally owned by REP were acquired at various times during 1984 and 1985.
The Partnership remains invested in five rental properties as of December 31,
1996.

Rental operations consist primarily of rental income and depreciation expense,
debt service, and normal operating expenses to maintain the properties.
Depreciation is provided on the straight-line method over the estimated useful
lives of the buildings and equipment.  Substantially all of the rental units in
the apartment projects are leased on a month-to-month basis.

An annual property management fee, which shall in any event not exceed 5% of
gross revenues from each property under management, is payable by the
properties to an affiliate of NAPICO.

The Parkside Apartments rental property was operating at a deficit and NAPICO
was unsuccessful in its attempt to negotiate a mortgage modification with the
lender to improve the situation.  In March 1995, the Parkside Apartments rental
property ceased making payments to the mortgage lender.  The mortgage lender
filed a notice of default on January 17, 1996, and foreclosed on the property
on May 23, 1996.  The foreclosure resulted in a gain of $259,088 because the
Partnership was relieved of nonrecourse liabilities which were in excess of the
net book value of the property.

Occupancy at the Warner Willows I and II properties averaged 94%, 95% and 96%
in 1996, 1995 and 1994, respectively.  Both properties operated with positive
cash earnings in 1996, 1995 and 1994 (excluding earthquake repair costs,
depreciation and principal payments on the mortgage loans).  Positive cash
earnings for 1996 were approximately $96,000 and $38,000 for Warner Willows I
and II, respectively, for 1995 they were approximately $87,000 and $45,000 for
Warner Willows I and II, respectively, and for 1994 approximately $156,000 and
$110,000 for Warner Willows I and II, respectively.  See below for estimated
costs related to the Northridge Earthquake, which are not included in these
amounts.





<PAGE>   7
Occupancy at the Arbor Glen property averaged 96%, 95% and 96% in 1996, 1995
and 1994, respectively.  The property operated positively in 1996, 1995 and
1994, and produced cash flows of approximately $189,000, $137,000 and $210,000,
respectively, (excluding depreciation and principal payments on the mortgage
loan).

Occupancy at the Park Creek property averaged 81%, 83% and 92% in 1996, 1995
and 1994, respectively.  The property operated positively during 1996, 1995 and
1994, producing cash earnings of approximately $97,000, $78,000 and $193,000,
respectively, (excluding earthquake repair costs, depreciation and principal
payments on the mortgage loan).  See below for estimated  costs related to the
Northridge Earthquake, which are not included in these amounts.

Occupancy at the Willowbrook property averaged 94%, 96% and 97%, in 1996, 1995
and 1994, respectively.  The property operated positively during 1996, 1995 and
1994, producing cash flows of approximately $364,000, $259,000 and $260,000,
respectively, (excluding depreciation and principal payments on the mortgage
loan).

On January 17, 1994, the Park Creek and Warner Willows I and II rental
properties sustained damage, estimated at approximately $1,454,000, due to the
Northridge Earthquake in January 1994.  Insurance proceeds of approximately
$630,000 have been allocated to the Partnership in 1994, as the estimated full
settlement under a master umbrella insurance policy covering earthquake damage
for these and other properties managed by a related party.  The total estimated
expenditures needed to repair the properties, net of the insurance recoveries,
is approximately $824,000, and has been expensed in 1994 since they do not
extend the useful life of the properties.  Included in liabilities is
approximately $516,000 and $628,000 at December 31, 1996 and 1995,
respectively, related to the Northridge Earthquake damages.  Through December
31, 1996, approximately $938,000 has been paid for earthquake repairs and of
this amount approximately $849,000 was paid to an affiliate of NAPICO.
Included in payments to the affiliate of NAPICO was $111,600 paid under a
contract for $121,607 entered into by the Partnership on February 22, 1996,
after receiving competitive bids.  The remaining earthquake repair work will be
competitively bid.

In March 1996, the Partnership received from the insurance company a final
settlement payment of $334,591 related to the earthquake loss.  This has been
reflected in income in 1995 and included as a receivable at December 31, 1995.

The Partnership operations consist primarily of interest income earned on
certificates of deposit and other temporary investments of funds not required
for investment in projects.  The amount of interest income varies with market
rates available on certificates of deposit and with the amount of funds
available for investment.

Operating expenses of the Partnership consist substantially of recurring
general and administrative expenses and professional fees for services rendered
to the Partnership and interest on the deferred acquisition fee due the General
Partners.

The Partnership is incurring interest expense at a rate of 8% per annum on the
unpaid fees due the general partner.  Under the terms of the Amended and
Restated Certificate and Agreement of Limited Partnership, the Partnership is
obligated to the general partner for a deferred acquisition fee for services
rendered in connection with the selection, purchase, development, and
management of the Partnership and monitoring the operations of the properties,
in an amount which, when calculated on a present value basis (using a discount
factor of 8% for this purpose) from the date of payment to the general partners
to September 27, 1984 equals 10% of the gross proceeds of the offering
($3,000,000).  Distribution of any part of this fee from net cash from
operations shall be subordinate to receipt by each limited partner of an amount
equal to a cumulative noncompounded 6% distribution.  The acquisition fee
distributed in any year from net cash from operations shall not exceed an
amount equal to 3% of investment in properties (approximately $600,000) plus
any proceeds from sale or refinancing of the properties.  An annual property
management fee, which shall not in any event exceed 5% of gross revenues from
each property under management, is also payable to an affiliate of the
corporate general partner.  On March 21, 1994, excess proceeds received from
the Park Creek and the Warner Willows I and II refinancings were used to
partially pay the deferred acquisition fees due the general partner.  As of
December 31, 1996 and 1995, approximately $694,000 and $651,000, respectively,
was outstanding.





<PAGE>   8
ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements and Supplementary Data are listed under Item 14.

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

Not applicable.





<PAGE>   9
                              REAL-EQUITY PARTNERS
                       (A California limited partnership)

                             FINANCIAL STATEMENTS,
                          FINANCIAL STATEMENT SCHEDULE
                   AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
                               DECEMBER 31, 1996





<PAGE>   10
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
Real-Equity Partners
(A California limited partnership)

We have audited the accompanying balance sheets of Real-Equity Partners (a
California limited partnership) as of December 31, 1996 and 1995, and the
related statements of operations, partners' equity (deficiency) and cash flows
for each of the three years in the period ended December 31, 1996.  Our audits
also included the financial statement schedule listed in the index on item 14.
These financial statements and financial statement schedule are the
responsibility of the management of the Partnership.  Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Real-Equity Partners as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.  Also, in our
opinion, such financial statement schedule when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.





DELOITTE & TOUCHE LLP

Los Angeles, California
March 26, 1997





<PAGE>   11
                              REAL-EQUITY PARTNERS
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 1996 AND 1995

                                     ASSETS
<TABLE>
<CAPTION>
                                                                        1996            1995
                                                                    -----------    ------------
     <S>                                                            <C>            <C>
     RENTAL PROPERTY, at cost (Notes 1 and 2)
          Land                                                     $  6,553,357    $  7,077,565
          Buildings                                                  22,096,723      26,949,118
          Furniture and equipment                                     3,720,901       4,034,243
                                                                   ------------    ------------
                                                                     32,370,981      38,060,926
          Less accumulated depreciation                             (13,101,384)    (14,497,544)
                                                                   ------------    ------------

                                                                     19,269,597      23,563,382
                                                                   ------------    ------------

     CASH AND CASH EQUIVALENTS                                        1,884,218       1,794,041
                                                                   ------------    ------------

     OTHER  ASSETS:
          Due from affiliated rental agent, including restricted
               cash held for security deposits of $36,876 and
               $35,973 at December 31, 1996 and 1995,
               respectively (Note 5)                                    652,923         448,634
          Other receivables and prepaid expenses                        243,257         225,144
          Receivable for earthquake loss (Note 1)                         -             334,591
                                                                   ------------    ------------
                                                                        896,180       1,008,369
                                                                   ------------    ------------

               TOTAL ASSETS                                        $ 22,049,995    $ 26,365,792
                                                                   ============    ============

                               LIABILITIES AND PARTNERS' EQUITY
     LIABILITIES:
          Mortgage notes payable (Notes 2 and 8)                   $ 14,064,914    $ 17,747,363
          Accrued fees and expenses due general partner
               (Notes 6 and 8)                                          693,560         651,320
          Accrued interest payable (Note 2)                              56,541         388,551
          Accounts payable and accrued expenses (Note 1)                179,681         269,663
          Liability for earthquake loss (Note 1)                        516,150         627,738
          Tenant security deposits                                      229,690         255,772
                                                                   ------------    ------------
                                                                     15,740,536      19,940,407
                                                                   ------------    ------------
     COMMITMENTS AND CONTINGENCIES (Notes 1, 6 and 7)

     PARTNERS' EQUITY                                                 6,309,459       6,425,385
                                                                   ------------    ------------

                TOTAL LIABILITIES AND PARTNERS' EQUITY             $ 22,049,995    $ 26,365,792
                                                                   ============    ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.





<PAGE>   12

                              REAL-EQUITY PARTNERS
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                           1996           1995            1994
                                                        ----------     -----------    ------------
<S>                                                     <C>            <C>            <C>
RENTAL OPERATIONS:
     Revenues
        Rental income                                   $4,764,778     $ 5,195,601     $ 5,398,696
        Other income                                       171,117         290,728         279,960
                                                        ----------     -----------    ------------
                                                         4,935,895       5,486,329       5,678,656
                                                        ----------     -----------    ------------
     Expenses
        Operating expenses                               2,201,513       2,803,364       2,567,290
        Management fees - affiliate (Note 5)               243,445         301,998         305,370
        Depreciation (Note 1)                              824,434         910,456         910,461
        General and administrative expenses                265,435         254,768         254,340
        Interest expense (Note 2)                        1,407,333       1,739,076       1,653,369
        Provision (benefit) for earthquake loss
           (Note 1)                                          -            (334,591)        824,093
                                                        ----------     -----------    ------------

                                                         4,942,160       5,675,071       6,514,923
                                                        ----------     -----------    ------------

        Loss from rental operations                         (6,265)       (188,742)       (836,267)
                                                        ----------     -----------    ------------

PARTNERSHIP OPERATIONS:
     Interest income                                        89,711          49,476          37,710
                                                        ----------     -----------    ------------
     Expenses
        General and administrative expenses                 77,939          93,076         114,850
        Professional fees                                   38,281          50,383          28,722
        Interest expense - general partner (Note 6)         42,240          42,125          82,636
                                                        ----------     -----------    ------------

                                                           158,460         185,584         226,208
                                                        ----------     -----------    ------------

        Loss from partnership operations                   (68,749)       (136,108)       (188,498)
                                                        ----------     -----------    ------------

GAIN ON FORECLOSURE OF RENTAL PROPERTY
     (Note 1)                                              259,088           -               -
                                                        ----------     -----------    ------------

NET INCOME (LOSS)                                       $  184,074     $  (324,850)   $ (1,024,765)
                                                        ==========     ===========    ============
NET INCOME (LOSS) PER LIMITED PARTNERSHIP
     INTEREST (Note 4)                                  $        6     $       (11)   $        (34)
                                                        ==========     ===========    ============
</TABLE>





   The accompanying notes are an integral part of these financial statements.





<PAGE>   13

                              REAL-EQUITY PARTNERS
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                  STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994




<TABLE>
<CAPTION>
                                                       General          Limited
                                                       Partners         Partners            Total
                                                       --------        -----------      ----------
   <S>                                                 <C>             <C>              <C>
   EQUITY (DEFICIENCY),
      January 1, 1994                                $ (706,827)      $ 8,931,827      $ 8,225,000

      Net loss for 1994                                 (10,248)       (1,014,517)      (1,024,765)
      Cash distributions ($15.00 per limited
      partner unit) for 1994 (Note 1)                    -               (450,000)        (450,000)
                                                     ----------       -----------      -----------  
   EQUITY (DEFICIENCY),
      December 31, 1994                                (717,075)        7,467,310        6,750,235

      Net loss for 1995                                  (3,249)         (321,601)        (324,850)
                                                     ----------       -----------      -----------  

   EQUITY (DEFICIENCY),
      December 31, 1995                                (720,324)        7,145,709        6,425,385

      Net income for 1996                                 1,840           182,234          184,074
      Cash distributions ($10.00 per limited
      partner unit) for 1996 (Note 1)                     -              (300,000)        (300,000)
                                                     ----------       -----------      -----------  
   EQUITY (DEFICIENCY),
      December 31, 1996                              $ (718,484)      $ 7,027,943      $ 6,309,459
                                                     ==========       ===========      ===========
</TABLE>





   The accompanying notes are an integral part of these financial statements.





<PAGE>   14
                              REAL-EQUITY PARTNERS
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                  1996           1995           1994
                                                               ----------     ----------     -----------
<S>                                                            <C>           <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net  loss                                                    $  184,074     $ (324,850)     $(1,024,765)
  Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
        Depreciation                                              824,434        910,456          910,461
        Gain on foreclosure of rental property                   (259,088)
        Provision (benefit) for earthquake loss                     -           (334,591)         824,093
  Changes in operating assets and liabilities:
       Decrease (increase) in:
            Due from affiliated rental agent                     (287,141)       254,491          245,541
            Other receivables and prepaid expenses                (38,579)        69,985         (182,690)
            Receivable for earthquake loss                        334,591            -            629,590
       Increase (decrease) in:
             Accrued fees and expenses due general partner         42,240         42,125       (2,227,761)
             Accounts payable and accrued expenses                (13,866)        43,642           60,522
             Accrued interest payable                             (50,548)       202,000           31,627
             Liability for earthquake loss                       (111,588)       (28,990)        (796,956)
             Tenant security deposits                              (5,388)       (23,587)          (2,903)
                                                               ----------     ----------      -----------
             Net cash provided by (used in)
                  operating activities                            619,141        839,671       (1,365,875)
                                                               ----------     ----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to partners                                      (300,000)           -           (450,000)
  Principal payments on mortgage notes payable                   (228,964)      (212,577)        (661,157)
  Proceeds from mortgage notes payable                              -                -          5,785,000
  Payment of mortgage notes payable                                 -                -         (2,681,364)
                                                               ----------     ----------      -----------
              Net cash provided by (used in)
                   financing activities                          (528,964)      (241,567)       1,825,113
                                                               ----------     ----------      -----------
NET INCREASE IN CASH AND CASH
  EQUIVALENTS                                                      90,177        598,104          459,238

CASH AND CASH EQUIVALENTS,
  beginning of year                                             1,794,041      1,195,937          736,699
                                                               ----------     ----------      -----------
CASH AND CASH EQUIVALENTS,
  end of year                                                  $1,884,218     $1,794,041      $ 1,195,937
                                                               ==========     ==========      ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest Paid                                                $1,356,785     $1,537,075      $ 1,621,740
                                                               ==========     ==========      ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.





<PAGE>   15
                              REAL-EQUITY PARTNERS
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                       1996             1995        1994
                                                                     ----------        -------    --------
<S>                                                                  <C>               <C>          <C>
NON CASH INVESTING AND FINANCING ACTIVITIES
    During 1996, the Partnership was relieved of a nonrecourse
       mortgage note payable and related accrued interest upon
       foreclosure of a rental property, summarized as follows:
           Mortgage note payable                                     $ 3,453,485       $  -         $ -
           Accrued interest payable                                      281,462          -           -
           Write off of rental property                               (3,469,351)         -           -
           Write off of other assets and liabilities                      (6,508)         -           -
                                                                     -----------        -----       -----
                Gain on foreclosure of rental property               $   259,088        $ -         $ -
                                                                     ===========        =====       =====
</TABLE>




   The accompanying notes are an integral part of these financial statements.





<PAGE>   16

                              REAL-EQUITY PARTNERS
                       (a California limited partnership)
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       a.     Organization

              Real-Equity Partners (the "Partnership") was formed under the
              California Limited Partnership Act on September 9, 1981.  The
              Partnership was formed to invest in residential rental projects.
              The Partnership invested in seven residential apartment projects;
              one of these properties was foreclosed in March 1993.  The
              general partners of the Partnership are National Partnership
              Investments Corp. (NAPICO), the corporate general partner, and
              National Partnership Investments Associates II (NAPIA II), a
              California limited partnership.  Casden Investment Corporation
              owns 100 percent of NAPICO's stock.  The general partner of NAPIA
              II is NAPICO and one of the limited partners is an officer of
              NAPICO.

              The Partnership offered and issued 30,000 units of limited
              partnership interests through a public offering.  The terms of
              the Amended and Restated Certificate and Agreement of Limited
              Partnership (the "Partnership Agreement") provide, among other
              things, for allocation to the partners of profits, losses and any
              special allocations with respect thereto.  Under the terms of the
              Partnership Agreement, cash available for distribution is to be
              allocated 90 percent to the limited partners as a group and 10
              percent to the general partners.  Based on cash distributions
              made to the limited partners as of December 31, 1996, $834,188
              was due to the general partners as their 10% percent share of
              cash available for distribution.  This amount was paid to the
              general partners in February 1997.

              In the case of the sale or refinancing of a property, the general
              partners shall first receive out of the net proceeds from sale or
              refinancing any unpaid portion of the deferred acquisition fee
              (see Note 6).  Thereafter, the general partners shall receive 1
              percent of the net proceeds from the sale or refinancing until
              the limited partners have received an amount equal to their
              adjusted capital value (as defined in the Partnership Agreement)
              plus cumulative distributions (including net cash from
              operations) equal to a non-compounded 6 percent annual
              distribution with respect to their adjusted capital value, and
              then the general partners shall receive 15 percent of the balance
              of any net proceeds from sale or refinancing.

              Losses are allocated 99% to the limited partners and 1% to the
              general partners.

       b.     Use of Estimates

              The preparation of financial statements in conformity with
              generally accepted accounting principles requires management to
              make estimates and assumptions that affect the reported amounts
              of assets and liabilities and disclosure of contingent assets and
              liabilities at the date of the financial statements and reported
              amounts of revenues and expenses during the reporting period.
              Actual results could differ from those estimates.

       c.     Rental Property and Depreciation

              Rental property is stated at cost.  Depreciation is provided on
              the straight-line method over the estimated useful lives of the
              buildings and equipment as follows:





                                       5
<PAGE>   17
                              REAL-EQUITY PARTNERS
                       (a California limited partnership)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1996


1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

<TABLE>
<CAPTION>
              Asset                                         Estimated Useful Lives
              -----                                         ----------------------
              <S>                                                <C>
              Buildings                                           30 years
              Furniture and equipment                              5 years
</TABLE>

              The Parkside Apartments rental property was operating at a
              deficit and NAPICO was unsuccessful in its attempt to negotiate a
              mortgage modification with the lender to improve the situation.
              In March 1995, the Parkside Apartments rental property ceased
              making payments to the mortgage lender.  The mortgage lender
              filed a notice of default on January 17, 1996, and foreclosed on
              the property on May 23, 1996.  The foreclosure resulted in a gain
              of $259,088 because the Partnership was relieved of nonrecourse
              liabilities which were in excess of the net book value of the
              property.  The gain was classified as an ordinary gain because
              the fair value of the property approximated the liabilities that
              were relieved.

              On January 17, 1994, the Park Creek and Warner Willows I and II
              rental properties sustained damage, estimated at approximately
              $1,454,000, due to the Northridge Earthquake in the Los Angeles
              area.  Insurance proceeds of approximately $630,000 have been
              allocated to the Partnership in 1994, as the estimated full
              settlement under a master umbrella insurance policy covering
              earthquake damage for these and other properties managed by a
              related party.  The total estimated expenditures needed to repair
              the properties, net of the insurance recoveries, which nets to
              approximately $824,000, have been expensed in 1994 since they do
              not extend the useful life of the properties.

              In March 1996, the Partnership received from the insurance
              company a final settlement payment of $334,591 related to the
              earthquake loss.  This has been reflected in income in 1995 and
              as a receivable at December 31, 1995.

              Substantially all of the apartments are leased on a
              month-to-month basis.

       d.     Cash and Cash Equivalents

              Cash and cash equivalents consist of unrestricted cash and bank
              certificates of deposits with an original maturity of three
              months or less.

       e.     Impairment of Long-Lived Assets

              The Partnership reviews long-lived assets to determine if there
              has been any permanent impairment whenever events or changes in
              circumstances indicate that the carrying amount of the asset may
              not be recoverable.  If the sum of the expected future cash flows
              is less than the carrying amount of the assets, the Partnership
              recognizes an impairment loss.





                                       6
<PAGE>   18
                              REAL-EQUITY PARTNERS
                       (a California limited partnership)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1996


2.     MORTGAGE NOTES PAYABLE

       Mortgage notes payable consists of the following:

<TABLE>
<CAPTION>
                                                                                       1996               1995   
                                                                                       ----               ----
       <S>    <C>                                                                    <C>                <C>

       a.     Mortgage note bearing interest at the rate of 10.375 percent per
              annum payable in monthly installments of approximately $44,300
              including interest through August 1997, at which time the then
              outstanding principal balance is due and payable.  The Partnership
              is in process of refinancing the loan and is of the opinion that
              it will obtain financing at comparable terms.  Secured by land and
              buildings with a net book value of $5,625,203 at December 31,
              1996.
                                                                                     $4,991,907         $5,005,180

       b.     Mortgage note bearing interest at the rate of prime plus two
              percent per annum, adjusted semi-annually; currently payable in
              monthly installments of $13,653 including interest through
              September 22, 1998, at which time the then outstanding principal
              balance is due and payable.  Secured by land and buildings with a
              net book value of $3,296,373 at December 31, 1996.  The interest
              rate at December 31, 1996 was 10.25 percent per annum.
                                                                                      1,311,730          1,339,420
                                                                                                      
       c.     Mortgage note bearing interest at the rate of prime plus two
              percent per annum, adjusted semi-annually; currently payable in
              monthly installments of $28,547 including interest through March
              1, 2001, at which time the then outstanding principal balance is
              due and payable.  Secured by land and buildings with a net book
              value of $3,423,341 at December 31, 1996.  The interest rate at
              December 31, 1996 was 10.25 percent per annum.

                                                                                      2,764,546          2,823,624
                                                                                                                                 
       d.     Mortgage note bearing interest at the rate of prime plus two
              percent per annum, adjusted semi-annually; currently payable in
              monthly installments of $27,904 including interest

</TABLE>





                                       7
<PAGE>   19
                              REAL-EQUITY PARTNERS
                       (a California limited partnership)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1996


2.     MORTGAGE NOTES PAYABLE (CONTINUED)

<TABLE>
<CAPTION>
                                                                                         1996                 1995   
                                                                                      ----------           ----------
       <S>    <C>                                                                    <C>                <C>
              through March 1, 2001, at which time the then outstanding
              principal balance is due and payable.  Secured by land and
              buildings with a net book value of $3,118,285 at December 31,
              1996.  The interest rate at December 31, 1996 was 10.25 percent
              per annum.
                                                                                     2,702,119           2,759,964

       e.     Mortgage note bearing interest at the rate of 9.75 percent per
              annum; payable in monthly installments of approximately $36,900
              including interest through April 1997, at which time the then
              outstanding principal balance is due and payable.  Secured by land
              and buildings with a net book value of $3,555,373 at December 31,
              1995.  In March 1995, the Partnership ceased making payments to
              the mortgage lender of this property and the mortgage was in
              default (Note 1).  Included in accrued interest payable at
              December 31, 1995 is $281,462 in delinquent interest.  Included in
              accounts payable and accrued expenses at December 31, 1995 was
              delinquent property taxes of $52,602.

              A Trust Deed Sale was completed and the property was foreclosed on
              May 23, 1996, therefore, the mortgage note was written off in
              1996.
                                                                                          -              3,453,485

       f.     Mortgage note insured by the Department of Housing and Urban
              Development (HUD) under the Section 221(d)(4) program, bearing
              interest at the rate of 7 percent per annum, payable in monthly
              installments of approximately $19,500 including interest through
              2013, at which time the then outstanding principal balance is due
              and payable.  Secured by land and buildings with
</TABLE>





                                       8
<PAGE>   20
                              REAL-EQUITY PARTNERS
                       (a California limited partnership)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1996


2.     MORTGAGE NOTES PAYABLE (CONTINUED)

<TABLE>
       <S>    <C>                                                                    <C>                <C>
       a net book value of $3,806,395 at December 31, 1996. The project is
       regulated by HUD as to rent charges, operating methods and annual
       distributions.
                                                                         
                                                                                        2,294,612          2,365,690
                                                                                      -----------        -----------

                                                                                      $14,064,914        $17,747,363
                                                                                      ===========        ===========
</TABLE>

       Maturities on the mortgage notes payable, are as follows:

<TABLE>
<CAPTION>
              Years Ended December 31,
              ------------------------
               <S>                                                       <C>
                 1997                                                    $ 5,784,330
                 1998                                                      2,033,005
                 1999                                                        765,563
                 2000                                                        771,935
                 2001                                                      2,858,354
               Thereafter                                                  1,851,727
                                                                         -----------
                                                                         $14,064,914
                                                                         ===========
</TABLE>

3.     INCOME TAXES

       No provision has been made for income taxes in the accompanying
       financial statements as such taxes, if any, are the liability of the
       individual partners.  The major differences in tax and financial
       reporting result from the use of different bases and depreciation
       methods for rental property held by the Partnership.

4.     NET LOSS PER LIMITED PARTNERSHIP INTEREST

       Net loss per limited partnership interest was computed by dividing the
       limited partners' share of net loss by 30,000, the number of limited
       partnership interests outstanding during each year.

5.     RELATED PARTY TRANSACTION

       The Partnership has entered into agreements with an affiliate of NAPICO
       to manage the operations of the rental properties.  The agreements are
       on a month-to-month basis and provide, among other things, for a
       management fee equal to 5% of gross rentals and other collections plus
       reimbursement of certain expenses.  The affiliate received property
       management fees of $243,445 and $301,998 and $305,370  in 1996, 1995 and
       1994 respectively.





                                       9
<PAGE>   21
                              REAL-EQUITY PARTNERS
                       (a California limited partnership)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1996


5.     RELATED PARTY TRANSACTION (CONTINUED)

       An affiliate of NAPICO performed certain of the earthquake repairs at
       the Park Creek and Warner Willows I and II rental properties.  The
       payments to this affiliate for these repairs was approximately $849,000
       as of December 31, 1996 (Note 1).  Included in payments to the affiliate
       of NAPICO was $111,600 paid under a contract for $121,607 entered into
       by the Partnership on February 22, 1996, after receiving competitive
       bids.  The remaining earthquake repair work will be competitively bid.

6.     FEES AND EXPENSES DUE GENERAL PARTNER

       Under the terms of the Partnership Agreement, the Partnership is
       obligated to NAPICO for a deferred acquisition fee.  This fee is for
       services rendered in connection with the management of the Partnership,
       and the selection, purchase, acquisition, development and monitoring the
       operations of its properties.  Distribution of any part of this fee from
       net cash from operations shall be subordinated to receipt by each
       limited partner of an amount equal to a cumulative, non-compounded 6
       percent annual distribution with respect to his adjusted capital value
       (as defined in the Partnership Agreement).  The aggregate amount of the
       deferred acquisition fee distributed in any year from net cash from
       operations shall not exceed an amount equal to 3 percent of the
       investment in properties plus any proceeds from sale or refinancing of
       the properties.  The deferred acquisition fee shall be an amount which,
       when present valued at 8 percent from certain dates, as defined in the
       partnership agreement, equals 10 percent of the gross proceeds of the
       offering ($3,000,000).  Distribution of the deferred acquisition fee
       will be made from net cash from operations and net proceeds from sale or
       refinancing for a maximum of 15 years, or until the above limit is met.

       The present value of the deferred acquisition fee of $1,783,767 has been
       reflected in the accompanying financial statements and has been
       capitalized as part of the cost of rental property acquired.  The amount
       outstanding as of December 31, 1996 and 1995 was $693,560 and $651,320,
       respectively, which is not currently payable based on the terms of the
       Partnership Agreement.  Approximately $2,300,000 was paid in March 1994
       to NAPICO out of refinancing proceeds.

       The Partnership reimburses NAPICO for certain expenses.  The
       reimbursement to NAPICO was $12,426, $10,704 and $10,313 in 1996, 1995
       and 1994, respectively, and is included in partnership expenses.

7.     CONTINGENCIES

       The corporate general partner of the Partnership is a plaintiff in
       various lawsuits and has also been named as defendant in other lawsuits
       arising from transactions in the ordinary course of business.  In the
       opinion of management and the corporate general partner, these claims
       will not result in any material liability to the Partnership.





                                       10
<PAGE>   22
                              REAL-EQUITY PARTNERS
                       (a California limited partnership)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1996


8.     FAIR VALUE OF FINANCIAL INSTRUMENTS

       Statement of Financial Accounting Standards No. 107, "Disclosure about
       Fair Value of Financial Instruments," requires disclosure of fair value
       information about financial instruments, when it is practicable to
       estimate that value.  One of the mortgage notes payable is insured by
       HUD and is secured by a rental property.  The operations generated by
       the property are subject to various government rules, regulations and
       restrictions which make it impracticable to estimate the fair value of
       this mortgage note payable.  The book values of all other debt
       instruments approximate their fair values because the interest rates of
       these instruments are comparable to rates currently offered to the
       Partnership.  The carrying amount of other assets and liabilities
       reported on the balance sheets that require such disclosure approximates
       fair value due to their short-term maturity.





                                       11
<PAGE>   23
                                                                    SCHEDULE III

                              REAL-EQUITY PARTNERS
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1996



<TABLE>
<CAPTION>
                                                                                           Total Land,
                                                                          Buildings         Buildings,
Partnership                Number of  Outstanding                     Furnishings and   Furnishings and      Accumulated
Location                     Units     Mortgage         Land              Equipment         Equipment         Depreciated
-----------                ---------  -----------     ---------       ----------------  ----------------     ------------
<S>                           <C>    <C>              <C>               <C>                <C>               <C>
Arbor Glen -
  West Covina, CA             208    $ 4,991,907      $1,253,592        $ 8,874,255        $10,127,847       $ 4,502,644

Park Creek -
  Canoga Park, CA             123      1,311,730       1,403,251          4,213,772          5,617,023         2,320,650

Warner Willows I -
   Woodlands Hills, CA         74      2,764,546       1,609,206          3,871,310          5,480,516         2,057,175

Warner Willows II -
  Woodland Hills, CA           73      2,702,119       1,419,077          3,531,025          4,950,102         1,831,817

Willowbrook Apartments -
  Reno, NV                    183      2,294,612         868,231          5,327,262          6,195,493         2,389,098
                              ---    -----------      ----------        -----------        -----------       -----------
                              661    $14,064,914      $6,553,357        $25,817,624        $32,370,981       $13,101,384
                              ===    ===========      ==========        ===========        ===========       ===========
</TABLE>





<PAGE>   24
                                                                    SCHEDULE III
                                                                     (Continued)
                              REAL-EQUITY PARTNERS
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1996


NOTES:               1.       Rental property is stated at cost.  Depreciation
                              is provided for on the straight-line method over
                              the estimated useful lives of the buildings and
                              equipment.  Substantially all of the apartments
                              are leased on a month-to-month basis.

                     2.       The total cost of land, buildings, and equipment
                              for federal income tax purposes at December 31,
                              1996 is approximately $38,896,531.

                     3.       Investments in property and equipment are as
                              follows:

<TABLE>
<CAPTION>
                                                                               Buildings
                                                                              Furnishings,
                                                                                  And
                                                         Land                   Equipment                   Total   
                                                     ------------             ------------             -------------
<S>                                                   <C>                      <C>                      <C>
Balance at January 1, 1994                            $7,077,565               $30,983,361              $38,060,926

Net additions, 1994                                        -                         -                        -    
                                                      ----------               -----------              -----------

Balance of December 31, 1994                           7,077,565                30,983,361               38,060,926

Net additions, 1995                                        -                         -                        -    
                                                      ----------               -----------              -----------

Balance of December 31, 1995                           7,077,565                30,983,361               38,060,926

Net additions, 1996                                       -                         -                        -

Less Parkside foreclosure                               (524,208)               (5,165,737)              (5,689,945)
                                                      ----------               -----------              ----------- 

Balance at December 31, 1996                          $6,553,357               $25,817,624              $32,370,981
                                                      ==========               ===========              ===========
</TABLE>





<PAGE>   25
                                                                    SCHEDULE III
                                                                     (Continued)


                              REAL-EQUITY PARTNERS
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1996



<TABLE>
<CAPTION>
                                                                          Buildings,
                                                                         Furnishings,
                                                                             And
                                                                          Equipment  
                                                                         ------------
<S>                                                                      <C>
ACCUMULATED DEPRECIATION:
------------------------ 

Balance at January 1, 1994                                               $12,676,627

Net additions, 1994                                                          910,461
                                                                         -----------

Balance at December 31, 1994                                              13,587,088

Net additions 1995                                                           910,456
                                                                         -----------

Balance at December 31, 1995                                              14,497,544

Net additions 1996                                                           824,434

Less Parkside foreclosure                                                 (2,220,594)
                                                                         ----------- 

Balance at December 31, 1996                                             $13,101,384
                                                                         ===========
</TABLE>





<PAGE>   26
PART III.

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

REAL-EQUITY PARTNERS (the "Partnership") has no directors or executive officers
of its own.

National Partnership Investment Corporation ("NAPICO" or "the Managing General
Partner") is a wholly owned subsidiary of Casden Investment Corporation, an
affiliate of The Casden Company.  The following biographical information is
presented for the directors and executive officers of NAPICO with principal
responsibility for the Partnership's affairs.

CHARLES H. BOXENBAUM, 67, Chairman of the Board of Directors and Chief
Executive Officer of NAPICO.

Mr. Boxenbaum has been associated with NAPICO since its inception.  He has been
active in the real estate industry since 1960, and prior to joining NAPICO was
a real estate broker with the Beverly Hills firm of Carl Rhodes Company.

Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate
Association, National Institute of Real Estate Brokers, Appraisal Institute,
various mortgage banking seminars, and the North American Property Forum held
in London, England.  In 1963, he was the winner of the Snyder Award, the
highest annual award offered by the National Association of Real Estate Boards
for Best Exchange.  He is one of the founders and a past director of the First
Los Angeles Bank, organized in November 1974.  Mr. Boxenbaum was a member of
the Board of Directors of the National Housing Council.  Mr. Boxenbaum received
his Bachelor of Arts degree from the University of Chicago.

BRUCE E. NELSON, 45, President and a director of NAPICO.

Mr. Nelson joined NAPICO in 1980 and became President in February 1989.  He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs.  Mr. Nelson is also involved
in the identification, analysis and negotiation of real estate investments.

From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators.  Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles.  Mr. Nelson received his
Bachelor of Arts degree from the University of Wisconsin and is a graduate of
the University of Colorado School of Law.  He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.

ALAN I. CASDEN, 51, Chairman of The Casden Company, an affiliate of Casden
Properties (formerly CoastFed Properties), a director and member of the audit
committee of NAPICO, and chairman of the Executive Committee of NAPICO.

Mr. Casden is Chairman of the Board, Chief Executive Officer and a principal
shareholder of The Casden Company and Casden Investment Company.  Prior to
that, he was the president and chairman of Mayer Group, Inc., which he joined
in 1975.  He is also president of Mayer Management, Inc., a real estate
management firm.   Mr. Casden has been involved in approximately $3 billion of
real estate financings and sales and has been responsible for the development
and construction of more than 12,000 apartment units and 5,000 single-family
homes and condominiums.





<PAGE>   27
Mr. Casden is a member of the American Institute of Certified Public
Accountants and of the California Society of Certified Public Accountants.  Mr.
Casden is a member of the advisory board of the National Multi-Family Housing
Conference, the Multi-Family Housing Council, and the President's Council of
the California Building Industry Association.  He also serves on the advisory
board to the School of Accounting of the University of Southern California.  He
holds a Bachelor of Science degree from the University of Southern California.

HENRY C. CASDEN, 53, President, Chief Operating Officer and Secretary of The
Casden Company and a director and secretary of NAPICO.

Mr. Casden has been President and Chief Operating Officer of The Casden
Company, as well as a director of NAPICO since February 1988.  He became
secretary of both companies in late 1994.  From 1982 to 1988, Mr. Casden was of
counsel and a partner in the Los Angeles law firm of Troy, Casden & Gould.
From 1978 to 1981, he was of counsel and a partner in the Los Angeles law firm
of Loeb & Loeb.  From 1972 to 1978, Mr.  Casden was a member of the Beverly
Hills law firm of Fink & Casden, Professional Corporation.

Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School.  Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.

BRIAN D. GOLDBERG, 33, Chief Financial Officer of The Casden Company and a
director of NAPICO.

Mr. Goldberg joined The Casden Company in 1990 as Vice President of Finance and
became Chief Financial Officer in March 1991.  Prior to joining The Casden
Company, Mr. Goldberg was with Arthur Andersen & Co., an international public
accounting firm, from August 1985 until July 1990 in their Los Angeles office.
He received his bachelor of science degree in Accounting from the University of
Denver.  Mr. Goldberg is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.

SHAWN HORWITZ, 37, Executive Vice President, Chief Financial Officer of NAPICO.

Mr. Horwitz joined NAPICO in 1990 and is responsible for the financial affairs
of NAPICO and the limited partnerships sponsored by NAPICO.  Prior to joining
NAPICO, Mr. Horwitz was President for approximately one year of Star Sub Shops,
Inc. a corporation engaged in the business of selling fast food franchises, was
an audit manager in the real estate industry group for Altschuler, Melvoin &
Glasser for six years, and was an auditor with Arthur Young & Co. for 3 years.

Mr. Horwitz received his Bachelor of Commerce degree in accounting from Rhodes
University in South Africa and is a member of the Illinois Society of Certified
Public Accountants, the American Institute of Certified Public Accountants and
the South African Institute of Chartered Accountants.

BOB SCHAFER, 55, Senior Vice President and Corporate Controller.

Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible
for the financial reporting function of the Company.  Prior to this, he was a
Group and Division Controller at Bergen Brunswig for over eight years,
Controller at a Flintkote subsidiary for over four years, and Assistant
Controller at an electronics subsidiary of General Electric for two years.  Mr.
Schafer is a member of the California Society of Certified Public Accountants.
He holds a Bachelor of Science degree in accounting from Woodbury University,
Los Angeles.





<PAGE>   28
PATRICIA W. TOY, 67, Senior Vice President - Communications and Assistant
Secretary.

Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA.  From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments.  She holds a
Bachelor of Arts Degree from the University of Nebraska.

MARK L. WALTHER, 36, Executive Vice President, General Counsel and Assistant
Secretary.

Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships.  Prior to joining NAPICO, Mr.
Walther worked in the San Francisco law firm of Browne and Kahn which
specialized in construction litigation.  Mr. Walther received his Bachelor of
Arts Degree in Political Science from the University of California, Santa
Barbara and is a graduate of the University of California, Davis, School of
Law.  He is a member of the State Bar of Hawaii.





<PAGE>   29
ITEM 11.     MANAGEMENT REMUNERATION AND TRANSACTIONS

Real-Equity Partners has no officers, employees, or directors.  However, under
the terms of the Restated Certificate and Agreement of Limited Partnership, the
Partnership is obligated to the Corporate General Partner for a deferred
acquisition fee for services rendered in connection with the management of the
Partnership and the selection, purchase, development, and monitoring the
operations of the properties, in an amount approximately equal to 10 percent
(on a present value basis) of the gross proceeds of the offering.  Distribution
of any part of this fee shall be subordinated to receipt by each limited
partner of an amount equal to a cumulative noncompounded 6 percent annual
distribution with respect to his adjusted Adjusted Capital Value.  The
aggregate amount of the deferred acquisition fee distributed in any year from
net cash from operations shall not exceed an amount equal to 3 percent of
investment in properties (approximately $600,000).

An annual property management fee is also payable to an affiliate of the
Corporate General Partner which shall in any event not exceed 5 percent of
gross revenues from each property under management.  Management fees charged to
rental operations were approximately $243,000, $302,000 and $305,000 for 1996,
1995 and 1994, respectively.

An affiliate of the corporate general partner performed earthquake repairs at
the Park Creek and Warner Willows I and II rental properties.  The payments to
this affiliate for these repairs was approximately $737,000 as of December 31,
1996.

The Partnership reimburses NAPICO for certain expenses.  The reimbursement to
NAPICO was $12,426, $10,704 and $10,313 in 1996, 1995 and 1994, respectively,
and is included in operating expenses.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
             AND MANAGEMENT

(a)    Security Ownership of Certain Beneficial Owners

       The general partners own all of the outstanding general partnership
       interests of REP;  no person is known to own beneficially in excess of 5
       percent of the outstanding limited partnership interests.

ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Partnership has no officers, directors, or employees of its own.  All of
its affairs are managed by the Corporate General Partner, NAPICO.  The
transactions with NAPICO are primarily in the form of fees paid by the
Partnership to the NAPICO for services rendered to the Partnership, as
discussed in Item 11 and the notes to the accompanying financial statements.





<PAGE>   30
ITEM 14.        FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS

FINANCIAL STATEMENTS

Report of Independent Public Accountants.

Balance Sheets as of December 31, 1996 and 1995.

Statements of Operations for the years ended December 31, 1996, 1995 and 1994.

Statements of Partners' Equity (Deficiency) for the years ended December 31,
1996, 1995 and 1994.

Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.

Notes to Financial Statements as of December 31, 1996.

FINANCIAL STATEMENT SCHEDULE

Schedule III - Real Estate and Accumulated Depreciation, December 31, 1996.

The remaining schedules are omitted because the required information is
included in the financial statements and notes thereto or they are not
applicable or not required.

EXHIBITS

(3)    Articles of incorporation and bylaws:  The registrant is not
       incorporated.  The Partnership Agreement was filed with Form S-11
       Registration No. 2-82765 incorporated herein by reference.

(10)   Material contracts:  The registrant is not party to any material
       contracts, other than the Amended and Restated Certificate and Agreement
       of Limited Partnership dated September 9, 1981, and the seven apartment
       projects located in California and Nevada as previously filed at the
       Securities Exchange Commission, File No. 2-82765 which is hereby
       incorporated by reference.

(13)   Annual report to security holders:  Pages __ to __.

REPORTS ON FORM 8-K

A report on Form 8-K dated November 26, 1996, was filed with the Securities and
Exchange Commission.  This Form 8-K disclosed that the registrant became aware
of an entity conducting a tender offer for units in the registrant.  The
General Partners on behalf of the registrant, responded to the offer in
registrant's Semi-Annual Report mailed to the limited partners on or about
November 18, 1996.  The Corporate General Partner advised the limited partners
that it does not believe that this reported offer appears to reflect the full
value of the limited partnership interests, and that each investor must consult
with his or her tax advisor regarding the amount and character of any tax gain
or loss.





<PAGE>   31
                                   SIGNATURES


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


REAL-EQUITY PARTNERS

By:       NATIONAL PARTNERSHIP INVESTMENTS CORP.
          The General Partner


_______________________________________________________
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer


_______________________________________________________
Bruce E. Nelson
Director and President


_______________________________________________________
Alan I. Casden
Director


_______________________________________________________
Henry C. Casden
Director


_______________________________________________________
Brian D. Goldberg
Director


_______________________________________________________
Shawn D. Horwitz
Executive Vice President and
Chief Financial Officer


_______________________________________________________
Bob E. Schafer
Senior Vice President and Corporate Controller