UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
Commission File Number : 0-10979
PAINE WEBBER INCOME PROPERTIES THREE LIMITED PARTNERSHIP (Exact name
of registrant as specified in its charter)
Delaware
13-3038189
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization)
Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code (617) 439-8118
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 .
Page 1 of 12
<PAGE>
-10-
PAINE WEBBER INCOME PROPERTIES THREE LIMITED PARTNERSHIP
BALANCE SHEETS
March 31, 1996 and September 30, 1995 (Unaudited)
(In thousands)
ASSETS
March 31 September 30
Operating investment property, at cost:
Land $ 950 $ 950
Building and improvements 4,088 4,088
-------- ---------
5,038 5,038
Less accumulated depreciation (1,338) (1,287)
-------- ---------
Net operating investment property 3,700 3,751
Investments in joint ventures, at equity 2,701 3,030
Cash and cash equivalents 572 296
Deferred expenses, net 63 74
Note and interest receivable, net - -
------------ ------------
$ 7,036 $ 7,151
======== =======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 4 $ 4
Accrued expenses 24 40
Mortgage note payable 1,486 1,549
Partners' capital 5,522 5,558
--------- --------
$ 7,036 $ 7,151
======== =======
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) For the six
months ended March 31, 1996 and 1995 (Unaudited)
(In thousands)
General Limited
Partners Partners
Balance at September 30, 1994 $ (59) $5,776
Cash distributions (2) (209)
Net income 2 245
---------- --------
Balance at March 31, 1995 $ (59) $5,812
======== ======
Balance at September 30, 1995 $ (61) $5,619
Cash distributions (2) (209)
Net income 2 173
---------- --------
Balance at March 31, 1996 $ (61) $5,583
======== ======
See accompanying notes.
<PAGE>
PAINE WEBBER INCOME PROPERTIES THREE LIMITED PARTNERSHIP
STATEMENTS OF INCOME
For the three and six months ended March 31, 1996 and 1995
(Unaudited) (In thousands, except per Unit data)
Three Months Ended Six Months Ended
March 31, March 31,
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Rental revenues $ 119 $ 119 $ 239 $ 239
Interest income 7 3 10 6
-------- -------- --------- ---------
126 122 249 245
Expenses:
Interest expense 39 42 79 85
Management fees 4 4 8 8
Depreciation expense 26 26 51 51
General and administrative 87 138 175 210
-------- ------- ------- --------
156 210 313 354
-------- ------- ------- --------
Operating loss (30) (88) (64) (109)
Partnership's share of ventures'
income 122 195 239 356
--------- ------- -------- --------
Net income $ 92 $ 107 $ 175 $ 247
========= ====== ====== =======
Net income per Limited
Partnership Unit $4.20 $4.99 $8.00 $11.34
===== ===== ===== =======
Cash distributions per Limited
Partnership Unit $4.85 $4.85 $9.70 $ 9.70
===== ===== ===== =======
The above net income and cash distributions per Limited Partnership Unit are
based upon the 21,550 Units of Limited Partnership Interest outstanding for each
period.
See accompanying notes.
<PAGE>
PAINE WEBBER INCOME PROPERTIES THREE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS For the six months
ended March 31, 1996 and 1995 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1996 1995
---- ----
Cash flows from operating activities:
Net income $ 175 $ 247
Adjustments to reconcile net income to
net cash used for operating activities:
Depreciation expense 51 51
Amortization of deferred financing costs 11 11
Partnership's share of ventures' income (239) (356)
Changes in assets and liabilities:
Accounts payable and accrued expenses (16) 18
---------- ---------
Total adjustments (193) (276)
--------- --------
Net cash used for operating activities (18) (29)
---------- ---------
Cash flows from investing activities:
Distributions from joint ventures 568 308
--------- ---------
Cash flows from financing activities:
Distributions to partners (211) (211)
Principal payments on mortgage note payable (63) (58)
---------- ---------
Net cash used for financing activities (274) (269)
--------- --------
Net increase in cash and cash equivalents 276 10
Cash and cash equivalents, beginning of period 296 217
--------- --------
Cash and cash equivalents, end of period $ 572 $ 227
======== =======
Cash paid during the period for interest $ 68 $ 74
========= ========
See accompanying notes.
<PAGE>
PAINE WEBBER INCOME PROPERTIES THREE
LIMITED PARTNERSHIP
Notes to Financial Statements
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained
in the Partnership's Annual Report for the year ended September 30, 1995.
In the opinion of management, the accompanying financial statements, which
have not been audited, reflect all adjustments necessary to present fairly
the results for the interim period. All of the adjustments reflected in the
accompanying interim financial statements are of a normal recurring nature.
2. Real Estate Investments
The Partnership directly owns one operating investment property (Northeast
Plaza) and has investments in three joint venture partnerships which own
operating properties as more fully described in the Partnership's Annual
Report. The joint ventures are accounted for by using the equity method
because the Partnership does not have a voting control interest in the
ventures. Under the equity method, the assets, liabilities, revenues and
expenses of the joint ventures do not appear in the Partnership's financial
statements. Instead, the investments are carried at cost adjusted for the
Partnership's share of the ventures' earnings, losses and distributions.
Summarized operating results of the three joint ventures for the three and
six months ended March 31, 1996 and 1995 are as follows:
Condensed Combined Summary of Operations For the three and
six months ended March 31, 1996 and 1995
(in thousands)
Three Months Ended Six Months Ended
March 31,
March 31,
1996 1995 1996 1995
---- ---- ---- ----
Rental revenues and expense
recoveries $ 1,475 $1,585 $ 2,993 $ 3,109
Interest and other income 80 37 126 75
---------- --------- --------- ----------
1,555 1,622 3,119 3,184
Property operating expenses 708 637 1,403 1,258
Interest expense 440 432 870 861
Depreciation and amortization 196 209 404 413
---------- -------- --------- ----------
1,344 1,278 2,677 2,532
--------- ------- -------- ---------
Net income $ 211 $ 344 $ 442 $ 652
========== ======= ======== =========
Net income:
Partnership's share of
combined income $ 147 $ 220 $ 289 $ 406
Co-venturers' share of
combined income 64 124 153 246
------------ -------- --------- -----------
$ 211 $ 344 $ 442 $ 652
========== ======= ========= ==========
<PAGE>
Reconciliation of Partnership's Share of Operations For the three
and six months ended March 31, 1996 and 1995 (in thousands)
Three Months Ended Six Months Ended
March 31,
March 31,
1996 1995 1996 1995
---- ---- ---- ----
Partnership's share of income,
as shown above $ 147 $ 220 $ 289 $ 406
Amortization of excess basis (25) (25) (50) (50)
---------- -------- ---------- --------
Partnership's share of
ventures' income $ 122 $ 195 $ 239 $ 356
========= ======= ======== ======
During the fourth quarter of fiscal 1995, management began to actively
market the Camelot Apartments, in which the Partnership has a joint venture
interest, for sale. In addition, the Partnership has engaged in preliminary
discussions with its co-venture partners regarding the possible sale of the
Partnership's interest in the Camelot joint venture. In accordance with the
terms of the joint venture agreement, the co-venturers have the right to
match any third party offer obtained to buy the property. Subsequent to the
end of the second quarter of fiscal 1996, the Partnership and the
co-venture partners reached an agreement to sell the property to a third
party prospective buyer for $15,150,000. The potential sale will be subject
to the satisfactory completion of due diligence by the buyer. As a result,
there can be no assurances that this sale transaction will be completed. If
the proposed sale were to close, the Partnership's share of the net sale
proceeds, after repayment of the outstanding mortgage indebtedness and the
co-venture partners' share of the proceeds, would be expected to total
approximately $5.9 million.
3. Note and Interest Receivable, Net
Note and interest receivable at March 31, 1996 and September 30, 1995
consists of a $3,445,336 note received in connection with the Partnership's
sale of its joint venture interest in the Briarwood joint venture in
December of 1984. The note has been netted against deferred gain on the sale
of a like amount on the Partnership's balance sheet. The note bears interest
at 9% annually, matures on January 1, 2000 and is subordinated to a first
mortgage loan. Interest and principal payments on the note are payable only
to the extent of net cash flow from the properties sold, as defined in the
sale documents. Any interest not received will accrue additional interest of
9% per annum. The Partnership's policy has been to defer recognition of all
interest income on the note until collected due to the uncertainty of its
collectibility. To date, the Partnership has not received any interest
payments. Per the terms of the note agreement, accrued interest receivable
as of March 31, 1996 would be approximately $5,676,000. Since the properties
securing the note continue to generate operating deficits and the
Partnership's note receivable is subordinated to other first mortgage debt,
there is significant uncertainty as to the collectibility of both the
principal and accrued interest as of March 31, 1996. As a result, the
portion of the remaining gain to be recognized, which is represented by the
note and accrued interest, has been deferred until realized in cash.
4. Related Party Transactions
Management fees earned by the Adviser totaled $8,000 for each of the
six-month periods ended March 31, 1996 and 1995. Accounts payable affiliates
at March 31, 1996 and September 30, 1995 consists of $4,000 of management
fees payable to the Adviser at both dates.
Included in general and administrative expenses for the six months ended
March 31, 1996 and 1995 is $36,000 and $35,000, respectively, representing
reimbursements to an affiliate of the General Partner for providing certain
financial, accounting and investor communication services to the
Partnership.
5. Mortgage Note Payable and Contingencies
The mortgage note payable at March 31, 1996 and September 30, 1995 is
secured by the Partnership's wholly-owned Northeast Plaza Shopping Center.
On March 29, 1994, the Partnership refinanced the existing wraparound
mortgage note secured by Northeast Plaza, which had been in default for over
two years, with a new loan issued by the prior underlying first mortgage
lender. The new loan, in the initial principal amount of $1,722,000, has a
term of five years and bears interest at a fixed rate of 9% per annum.
Monthly principal and interest payments of approximately $21,900 are due
until maturity in May 1999. The loan may be prepaid at anytime without
penalty.
Management believes that the Partnership's efforts to sell or refinance the
Northeast Plaza property have been impeded by potential buyer and lender
concerns of an environmental nature with respect to the property. During
1990, it was discovered that certain underground storage tanks of a Mobil
service station located adjacent to the shopping center had leaked and
contaminated the groundwater in the vicinity of the station. Since the time
that the contamination was discovered, Mobil Oil Corporation (Mobil) has
investigated the problem and is progressing with efforts to remedy the soil
and groundwater contamination under the supervision of the Florida
Department of Environmental Regulation, which has approved Mobil's remedial
action plan. During fiscal 1990, the Partnership had obtained an
indemnification agreement from Mobil in which Mobil agreed to bear the cost
of all damages and required clean-up expenses. Furthermore, Mobil
indemnified the Partnership against its inability to sell, transfer, or
obtain financing on the property because of the contamination.
As a result of the contamination of the groundwater at Northeast Plaza, the
Partnership has incurred certain damages, primarily related to the inability
to sell the property and to delays in the process of refinancing the
property's mortgage indebtedness. The Partnership has incurred significant
out-of-pocket and legal expenses in connection with such sale and
refinancing efforts. Despite repeated requests by the Partnership for
compensation under the terms of the indemnification agreement, to date Mobil
has refused to compensate the Partnership for any of these damages. During
the first quarter of fiscal 1993, the Partnership filed suit against Mobil
for breach of indemnity and property damage. On April 28, 1995, Mobil Oil
Corporation was successful in obtaining a Partial Summary Judgment which
removed the case from the Federal Court system. Subsequently, the
Partnership has filed an action in the Florida State Court system. This
action is for substantially all of the same claims and utilizes the
substantial discovery and trial preparation work already completed for the
Federal case. A jury trial is scheduled for September 23, 1996. The outcome
of these legal proceedings cannot presently be determined.
The Partnership is involved in certain other legal actions. At the present
time, the General Partner cannot estimate the impact, if any, of these
matters on the Partnership's financial statements, taken as a whole.
<PAGE>
PAINE WEBBER INCOME PROPERTIES THREE LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The average occupancy level at the Camelot Apartments decreased to 89% for
the quarter ended March 31, 1996, down from 91% for the first quarter of fiscal
1996 and 96% for the fourth quarter of fiscal 1995. The capital improvement
program implemented at the property in 1994, which included the continuation of
a roof replacement process, combined with improved local market conditions, has
enabled management to raise rental rates over the past year. Despite the drop in
occupancy, fiscal year to date total revenues have remained relatively stable at
Camelot. Given the current strength of the national real estate market with
respect to multi-family apartment properties, management began to actively
market this property for sale during the fourth quarter of fiscal 1995. In
addition, the Partnership has engaged in preliminary discussions with its
co-venture partners regarding the possible sale of the Partnership's interest in
the Camelot joint venture. In accordance with the terms of the joint venture
agreement, the co-venturers have the right to match any third party offer
obtained to buy the property. Subsequent to the end of the second quarter, the
Partnership and the co-venture partners reached an agreement to sell the
property to a third party prospective buyer for $5,150,000. The potential sale
will be subject to the satisfactory completion of due diligence by the buyer. As
a result, there can be no assurances that this sale transaction will be
completed. If the proposed sale were to close, the Partnership's share of the
net sale proceeds, after repayment of the outstanding mortgage indebtedness and
the co-venture partners' share of the proceeds, would be expected to total
approximately $5.9 million. The Camelot joint venture has two outstanding first
mortgage loans which had a combined principal balance of $4,182,000 as of March
31, 1996. One of these first mortgage loans matured on January 1, 1996. The
venture has reached an agreement with this lender for an eight-month extension
of the maturity date to September 1, 1996 in return for a fee of $5,600. The
venture's other first mortgage loan is scheduled to mature on July 1, 1997. The
principal balance of the mortgage loan which matures in fiscal 1996 represents
less than 20% of the total estimated market value of the venture's operating
investment property. In light of the venture's low leverage level, the current
favorable interest rate environment and the continued strong supply of capital
for real estate lending, management expects to be able to secure a loan to
refinance this maturing obligation if the sale transaction is not completed.
The Partnership's three other properties are retail shopping centers, two
of which are located in Florida and one of which is located in Texas. At the
present time, real estate values for retail shopping centers in certain markets
have begun to be adversely affected by overbuilding and consolidations among
retailers which have resulted in an oversupply of space. Currently, occupancy
levels at all three of the Partnership's retail properties remain fairly strong,
and operations to date have not been significantly affected by this general
trend. At the Pine Trail Shopping Center, occupancy increased to 96% as of March
31, 1996, up from 95% as of December 31, 1995. The Pine Trail property did lose
two tenants which had occupied 10,000 square feet during the first quarter of
fiscal 1996. However, prior to the end of the first quarter, the leasing team
executed new agreements to re-lease one-half of this vacated space. During the
second quarter, the property's leasing team signed a 3,570 square foot lease
with a restaurant/nightclub, which will take occupancy in July 1996. In January
1997, a lease with one of the Center's largest tenants, Marshalls, occupying
30,000 square feet, will expire. In accordance with the terms of the lease, this
tenant must give notice to the owner by July 1996 if the tenant wishes to
exercise its five-year option to renew its current lease. The property's leasing
team is working diligently to retain this tenant. Capital improvements planned
for the next quarter include a roof replacement on one of the buildings and an
asphalt overlay on the portion of the property's parking lot serving a
supermarket which is one of the property's anchor tenants.
Central Plaza Shopping Center ended the second quarter at an 89% occupancy
level, compared to 96% as of December 31, 1995. At the beginning of the second
quarter, one tenant occupying 6,425 square feet moved out due to poor sales.
Later in the quarter, the Center lost an eyecare retail tenant occupying 5,700
square feet, but this space was subsequently re-leased to a similar retailer
that moved in subsequent to the end of the second quarter. Additionally, the
property's leasing team is negotiating with three potential new tenants, each of
which is interested in leasing approximately 2,500 square feet of space. One of
the Center's current restaurant tenants is planning to begin an extensive
renovation of its space at its own expense in the third quarter. A major roof
project has been undertaken this quarter and, over the next two fiscal years,
the property's management team intends to replace 56% of the roof, primarily in
the area above the anchor tenants.
As discussed in the Partnership's Annual Report, management believes that
the Partnership's efforts to sell or refinance the Northeast Plaza property have
been impeded by potential lender concerns of an environmental nature with
respect to the property. During 1990, it was discovered that certain underground
storage tanks of a Mobil service station located adjacent to the shopping center
had leaked and contaminated the groundwater in the vicinity of the station.
Since the time that the contamination was discovered, Mobil has investigated the
problem and is progressing with efforts to remedy the soil and groundwater
contamination under the supervision of the Florida Department of Environmental
Regulation, which has approved Mobil's remedial action plan. During fiscal 1990,
the Partnership had obtained a formal indemnification agreement from Mobil Oil
Corporation in which Mobil agreed to bear the cost of all damages and required
clean-up expenses. Furthermore, Mobil indemnified the Partnership against its
inability to sell, transfer or obtain financing on the property because of the
contamination. As a result of the contamination of the groundwater at Northeast
Plaza, the Partnership has incurred certain damages, primarily related to the
inability to sell the property and to delays in the process of refinancing the
property's mortgage indebtedness. The Partnership has incurred significant
out-of-pocket and legal expenses in connection with such sale and refinancing
efforts. Despite repeated requests by the Partnership for compensation under the
terms of the indemnification agreement, to date Mobil has refused to compensate
the Partnership for any of these damages. During the first quarter of fiscal
1993, the Partnership filed suit against Mobil for breach of indemnity and
property damage. On April 28, 1995, Mobil Oil Corporation was successful in
obtaining a Partial Summary Judgment which removed the case from the Federal
Court system. Subsequently, the Partnership filed an action in the Florida State
Court system. This action is for substantially all of the same claims and
utilizes the substantial discovery and trial preparation work already completed
for the Federal case. A jury trial is scheduled for September 23, 1996. The
outcome of these legal proceedings cannot presently be determined.
At March 31, 1996, the Partnership had available cash and cash equivalents
of $572,000. Such cash and cash equivalents will be used for working capital
requirements and distributions to the partners. The source of future liquidity
and distributions to the partners is expected to be through cash generated from
the operations of the Partnership's income-producing investment properties and
proceeds received from the sale or refinancing of such properties or sales of
the Partnership's interests in such properties. Such sources of liquidity are
expected to be sufficient to meet the Partnership's needs on both a short-term
and long-term basis. In addition, the Partnership has a note receivable that it
received as a portion of the proceeds from the sale of its interest in the
Briarwood joint venture in fiscal 1985. The note and related accrued interest
receivable have been netted against a deferred gain of a like amount on the
accompanying balance sheet. The interest owed on the note receivable is
currently payable only to the extent that the related properties generate excess
net cash flow. To date, no payments have been received on the note, which
matures on January 1, 2000, and none are expected in the near future. Since the
operating properties continue to generate net cash flow deficits and the
Partnership's note receivable is subordinated to the existing first mortgage
debt, there is significant uncertainty as to the collectibility of the principal
and accrued interest. Proceeds, if any, received on the note would represent a
source of additional liquidity for the Partnership.
Results of Operations
Three Months Ended March 31, 1996
Net income decreased by $15,000 for the three months ended March 31, 1996,
as compared to the same period in the prior year, due to a decrease in the
Partnership's share of ventures' income of $73,000. The Partnership's share of
ventures' income decrease by $73,000 primarily due to a decrease in the net
income of the Camelot Apartments joint of $52,000. Net income decreased at the
Camelot Apartments mainly due to increases in expenses related to the
preparation of the property for a possible sale during fiscal 1996 and
additional advertising expenses incurred in order to attract prospective tenants
due to the increase in the property's vacancy rate, as discussed further above.
The decrease in the Partnership's share of ventures' income was partially offset
by a decrease in the Partnership's operating loss of $58,000. The decline in the
Partnership's operating loss was a result of a decrease in general and
administrative expenses of $51,000. General and administrative expenses
decreased primarily due to a decrease in legal and other professional fees
incurred during the current three-month period in connection with the continued
litigation against Mobil Oil Corporation, as discussed further above. Such
expenses are expected to increase again once the scheduled trial date
approaches.
Six Months Ended March 31, 1996
Net income decreased by $72,000 for the six months ended March 31, 1996,
as compared to the same period in the prior year, due to a decrease in the
Partnership's share of ventures' income of $117,000. The Partnership's share of
ventures' income decreased by $117,000 due to decreases in the net income at
both the Camelot Apartments and Central Plaza joint venturees. Net income
decreased at the Camelot Apartments mainly due to increases in expenses related
to the preparation of the property for a possible sale during fiscal 1996 and
additional advertising expenses incurred in order to attract prospective tenants
due to the increase in the property's vacancy rate. Net income decreased at
Central Plaza as a result of the decline in occupancy discussed further above
and an increase in repairs and maintenance expenses due to the unusually harsh
winter weather. The decrease in the Partnership's share of ventures' income was
partially offset by a decrease in the Partnership's operating loss of $45,000.
The decline in the Partnership's operating loss was primarily a result of a
decrease in general and administrative expenses of $35,000. General and
administrative expenses decreased mainly due to a decrease in legal and other
professional fees incurred during the current six-month period in connection
with the continued litigation against Mobil Oil Corporation, as discussed
further above. Such expenses are expected to increases again once the scheduled
trial date approaches.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
As previously disclosed, Third Income Properties, Inc., the General Partner
of the Partnership, was named as a defendant in a class action lawsuit against
PaineWebber Incorporated ("PaineWebber") and a number of its affiliates relating
to PaineWebber's sale of 70 direct investment offerings, including the offering
of interests in the Partnership. In January 1996, PaineWebber signed a
memorandum of understanding with the plaintiffs in the class action outlining
the terms under which the parties have agreed to settle the case. Pursuant to
that memorandum of understanding, PaineWebber irrevocably deposited $125 million
into an escrow fund under the supervision of the United States District Court
for the Southern District of New York to be used to resolve the litigation in
accordance with a definitive settlement agreement and a plan of allocation which
the parties expect to submit to the court for its consideration and approval
within the next several months. Until a definitive settlement and plan of
allocation is approved by the court, there can be no assurance what, if any,
payment or non-monetary benefits will be made available to unitholders in Paine
Webber Income Properties Three Limited Partnership. Under certain limited
circumstances, pursuant to the Partnership Agreement and other contractual
obligations, PaineWebber affiliates could be entitled to indemnification for
expenses and liabilities in connection with this litigation. At the present
time, the General Partner cannot estimate the impact, if any, of this matter on
the Partnership's financial statements, taken as a whole.
Item 2. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.
<PAGE>
PAINE WEBBER INCOME PROPERTIES THREE LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINE WEBBER INCOME PROPERTIES THREE
LIMITED PARTNERSHIP
By: THIRD INCOME PROPERTIES, INC.
General Partner
By:/s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and Chief
Financial Officer
Date: May 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's audited financial statements for the quarter ended February 29,
1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 572
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 572
<PP&E> 7739
<DEPRECIATION> 1338
<TOTAL-ASSETS> 7036
<CURRENT-LIABILITIES> 28
<BONDS> 1486
0
0
<COMMON> 0
<OTHER-SE> 5522
<TOTAL-LIABILITY-AND-EQUITY> 7036
<SALES> 0
<TOTAL-REVENUES> 488
<CGS> 0
<TOTAL-COSTS> 234
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 79
<INCOME-PRETAX> 175
<INCOME-TAX> 0
<INCOME-CONTINUING> 175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 175
<EPS-PRIMARY> 9.70
<EPS-DILUTED> 9.70
</TABLE>
