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 November 30, 1995
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: 0-17146
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND TWO, LP
(Exact name of registrant as specified in its charter)
Delaware 04-2752249
(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>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND TWO, LP
BALANCE SHEETS
November 30, 1995 and August 31, 1995 (Unaudited)
(In thousands)
ASSETS
November 30 August 31
Real estate investments:
Land $ 1,000 $ 1,000
Mortgage loans, net 7,327 7,327
Investment in joint venture, at equity 3,241 3,198
Investment property held for sale,
net of allowance for possible
investment loss of $1,200 8,300 8,300
19,868 19,825
Cash and cash equivalents 1,577 5,379
Tax and insurance escrow 245 197
Interest and other receivables 125 90
Prepaid expenses 10 15
$ 21,825 $ 25,506
LIABILITIES AND PARTNERS' CAPITAL
Accrued real estate taxes $ 206 $ 183
Accounts payable and accrued expenses 29 95
Accounts payable - affiliates 12 12
Tenant security deposits and other liabilities 53 56
Note payable 1,326 1,311
Partners' capital 20,199 23,849
$ 21,825 $ 25,506
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the three months ended November 30, 1995 and 1994 (Unaudited)
(In thousands)
General Limited
Partners Partners
Balance at August 31, 1994 $(33) $23,964
Cash distributions (2) (169)
Net income 1 54
Balance at November 30, 1994 $(34) $23,849
Balance at August 31, 1995 $ (33) $23,882
Cash distributions (2) (4,033)
Net income 4 381
Balance at November 30, 1995 $ (31) $20,230
See accompanying notes.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND TWO, LP
STATEMENTS OF INCOME
For the three months ended November 30, 1995 and 1994
(Unaudited)
(In thousands, except per Unit data)
1995 1994
Revenues:
Interest from mortgage loans $ 294 $ 366
Land rent 29 51
Interest income 49 12
372 429
Expenses:
Management fees 12 11
General and administrative 67 73
Provision for possible uncollectible
amounts 56 98
135 182
Operating income 237 247
Partnership's share of venture's
income 43 36
Income (loss) from operations of
investment property held for sale, net 105 (228)
Net income $ 385 $ 55
Net income per Limited
Partnership Unit $ 10.53 $1.49
Cash distributions per Limited
Partnership Unit $111.28 $4.65
The above net income and cash distributions per Limited Partnership Unit are
based upon the 36,241 Units of Limited Partnership Interest outstanding during
each period.
See accompanying notes.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND TWO, LP
STATEMENTS OF CASH FLOWS
For the three months ended November 30, 1995 and 1994 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1995 1994
Cash flows from operating activities:
Net income $ 385 $ 55
Adjustments to reconcile net income to
net cash provided by operating activities:
Partnership's share of venture's income (43) (36)
Changes in assets and liabilities:
Tax and insurance escrow (48) (45)
Interest and other receivables (35) 176
Prepaid expenses 5 5
Accrued real estate taxes 23 (3)
Accounts payable and accrued expenses (66) (145)
Tenant security deposits (3) (7)
Total adjustments (167) (55)
Net cash provided by operating activities 218 -
Cash flows from financing activities:
Proceeds received from issuance of note payable 67 300
Principal payments on note payable (52) -
Distributions to partners (4,035) (171)
Net cash provided by (used for)
financing activities (4,020) 129
Net increase (decrease) in cash and
cash equivalents (3,802) 129
Cash and cash equivalents, beginning of period 5,379 1,042
Cash and cash equivalents, end of period $1,577 $1,171
Supplemental disclosure:
Cash paid during the period for interest $ 25 $ 15
See accompanying notes.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND TWO, LP
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 August 31, 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 accounting adjustments reflected in
the accompanying interim financial statements are of a normal recurring nature.
2. Related Party Transactions
The Adviser earned basic management fees of $12,000 and $11,000 for the
three-month periods ended November 30, 1995 and 1994, respectively. Accounts
payable - affiliates at both November 30, 1995 and August 31, 1995 consists of
management fees of $12,000 payable to the Adviser.
Included in general and administrative expenses for three months ended
November 30, 1995 and 1994 is $37,000 and $43,000, respectively, representing
reimbursements to an affiliate of the Managing General Partner for providing
certain financial, accounting and investor communication services to the
Partnership.
Also included in general and administrative expenses for the three months
ended November 30, 1995 and 1994 is $2,000 and $500, respectively, representing
fees earned by Mitchell Hutchins Institutional Investors, Inc.
for managing the Partnership's cash assets.
3. Mortgage Loan and Land Investments
The outstanding first mortgage loans and the cost of the related land to
the Partnership at November 30, 1995 and August 31, 1995 are as follows (in
thousands):
Amount
Property of Mortgage Loan Cost of Land
Eden West Apartments $ 3,500 $ 400
Omaha, NE
The Timbers Apartments 4,275 600
Raleigh, NC
Subtotal 7,775 1,000
Less: General loan reserve (448) -
$ 7,327 $ 1,000
The loans are secured by first mortgages on the properties, the owner's
leasehold interest in the land and an assignment of all leases, where
applicable. Interest is payable monthly at rates between 11.5% and 11.75% per
annum and the principal is due at maturity. Among the provisions of the lease
agreements, the Partnership is entitled to additional rent based upon the gross
revenues in excess of a base amount, as defined. For the three-month periods
ended November 30, 1995 and 1994, no additional rents were received. As
discussed in the Annual Report, the lessees have the option to purchase the land
for specified periods of time at a price based on fair market value, as defined,
but not less than the original cost to the Partnership. As of November 30, 1995,
all of the options to purchase the land were exercisable.
The objectives of the Partnership with respect to its mortgage loan and
land investments are to provide current income from fixed mortgage interest
payments and base land rents, then to provide increases to this current income
through participation in the annual revenues generated by the properties as they
increase above the specified base amounts. In addition, the Partnership's
investments are structured to share in the appreciation in value of the
underlying real estate. Accordingly, upon either sale, refinancing, maturity of
the mortgage loan or exercise of the option to repurchase the land, the terms of
the leases call for the Partnership to receive a 37% to 52% share of the
appreciation above a specified base amount.
Eden West Apartments
During the last quarter of fiscal 1995, the Partnership received notice
from the Eden West borrower of its intent to prepay the Partnership's mortgage
loan and repurchase the underlying land. The amount to be received by the
Partnership as its share of the appreciation of the Eden West property has not
been agreed upon to date. The terms of the Partnership's ground lease provide
for the possible resolution of disputes between the parties over value issues
through an arbitration process. Presently, the Partnership and the borrower
continue to try to resolve their differences regarding the value of the
property. If an agreement cannot be reached, the borrower could require the
Partnership to submit to arbitration during fiscal 1996. In addition to the
amount to be determined as the Partnership's share of the property's
appreciation under the ground lease, the terms of the Eden West mortgage loan
require a prepayment penalty which would be equal to 3.75% of the outstanding
principal balance of $3,500,000. If completed, the proceeds of this transaction
would be distributed to the Limited Partners. However, the transaction remains
contingent on, among other things, a resolution of the value issue and the
borrower obtaining sufficient financing to repay its obligations to the
Partnership. Accordingly, there are no assurances that this transaction will be
consummated.
The Timbers Apartments
Under the terms of the Timbers modification executed in fiscal 1989, the
amount payable to the Partnership is equal to the cash flow of the property
available after the payment of operating expenses, not to exceed 11.75% of the
note balance, but in no event less than 7.75% of the note balance. The amount
deferred each year will accrue interest at the original rate of 11.75% beginning
at the end of that year and the total deferred amount plus accrued interest will
be payable upon maturity of the note in September of 1998. The total balance of
the principal and deferred interest receivable at November 30, 1995 and August
31, 1995 was $6,626,000 and $6,570,000, respectively. The Partnership has
established an allowance for possible uncollectible amounts for the cumulative
amount of deferred interest owed under the Timbers modification ($2,351,000 at
November 30, 1995 and $2,295,000 at August 31, 1995) due to the uncertainty as
to the collection of the deferred interest from this investment. During the
quarter ended November 30, 1995, the Partnership received a payment of $54,000
from the Timbers' borrower as a partial payment of deferred interest owed.
Harbour Bay Plaza
On August 25, 1995, the borrower of the Harbour Bay Plaza loan repaid the
Partnership's first leasehold mortgage loan secured by Harbour Bay Plaza
Shopping Center and purchased the Partnership's interest in the underlying land
for total consideration of $3,833,000. The principal balance of the mortgage
loan was $2,850,000 plus interest accrued through August 25, 1995 of $23,000.
The Partnership's cost basis in the land was $750,000. Pursuant to the ground
lease, the Partnership received $211,000 in excess of the outstanding mortgage
loan and land investments as its share of the appreciation in value of the
operating investment property above a specified base amount. The net proceeds
from this transaction were distributed to the Limited Partners as a Special
Distribution of $106 per original $1,000 investment on October 13, 1995. 4.
Investment in Joint Venture
As discussed in the Annual Report, on June 12, 1990, the borrower of the
mortgage loan secured by the Marshalls at East Lake Shopping Center,
Oxford/Concord Associates, filed a Chapter 11 petition with the United States
Bankruptcy Court for the Northern District of Georgia. On November 14, 1990, the
Bankruptcy Court ordered that both the Partnership and the borrower submit plans
for the restructuring of the mortgage loan and ground lease agreements. During
fiscal 1991, the Partnership and the borrower reached a settlement agreement
which involved the formation of a joint venture to own and operate the property
on a go-forward basis. The formation of the joint venture was approved by the
Bankruptcy Court and became effective in December of 1991. The Partnership
contributed its rights and interests under its mortgage loan to the joint
venture and the loan was extinguished. In addition, the Partnership contributed
the land underlying the operating property to the joint venture and the related
ground lease was terminated. Oxford/Concord Associates contributed all of its
rights, title and interest in and to the improvements, subject to the
Partnership's loan, to the joint venture.
Since the Partnership received an equity interest in full satisfaction of
its outstanding mortgage loan receivable, the transaction was accounted for as a
troubled debt restructuring in accordance with Statement of Financial Accounting
Standards No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructurings". Accordingly, the Partnership would have recognized a loss to
the extent that the face amount of the mortgage loan and the carrying value of
the land exceeded the fair value of the equity interest acquired. However,
management estimated that the fair value of the equity interest acquired was
approximately equal to the face amount of the loan and the investment in land.
Therefore, no loss was recorded at the time of the restructuring. The carrying
value of the mortgage loan receivable and land comprising the Partnership's
investment in Marshalls at East Lake, which totalled $3,500,000, was
reclassified to investment in joint venture, effective December 11, 1991.
Subsequent to the restructuring, the Partnership has accounted for its equity
investment as if it had acquired the interest for cash, in accordance with SFAS
No. 15. Based upon the provisions of the joint venture agreement, the
Partnership's investment in the Marshalls joint venture is accounted for on the
equity method in the Partnership's financial statements because the Partnership
does not have a voting control interest in the venture. Under the equity method,
the investment is carried at cost, adjusted for the Partnership's share of
earnings, losses and distributions.
Summarized operating results of the venture for the three-month periods
ended November 30, 1995 and 1994 are as follows (in thousands):
1995 1994
Revenues:
Rental revenues and
expense reimbursements $ 124 $ 110
Expenses:
Property operating expenses 36 35
Real estate taxes 9 6
Depreciation and amortization 36 33
81 74
Net income $ 43 $ 36
Net income:
Partnership's share of net income $ 43 $ 36
Co-venturer's share of net income - -
$ 43 $ 36
<PAGE>
5. Investment Property Held for Sale
Mercantile Tower Office Building
As discussed in the Annual Report, the Partnership assumed ownership of
the Mercantile Tower Office Building, in Kansas City, Missouri, through a
deed-in-lieu of foreclosure action on April 12, 1993 as a result of certain
uncured defaults on the Partnership's mortgage loan receivable. The Partnership
complies with the guidelines set forth in the Statement of Position entitled
"Accounting for Foreclosed Assets", issued by the American Institute of
Certified Public Accountants, to account for its investment properties acquired
through foreclosures. Under the Statement of Position, a foreclosed asset is
recorded at the lower of cost or estimated fair value, reduced by the estimated
costs to sell the asset. Cost is defined as the fair value of the asset at the
date of the foreclosure. Adjustments to the carrying value of the assets
subsequent to foreclosure are recorded through the use of a valuation allowance.
The combined balance of the land and the mortgage loan investment at the time
title was transferred was $10,500,000. The estimated fair value of the operating
property at the date of foreclosure, net of selling expenses, was $9,500,000.
Accordingly, a write-down of $1,000,000 was recorded as a loss on foreclosure in
fiscal 1993. An additional write-down of $1,200,000 was recorded as a provision
for possible investment loss in fiscal 1994 to reflect a further decline in
management's estimate of the fair value of the investment property. The net
carrying value of the Mercantile Tower investment property as of November 30,
1995 and August 31, 1995, of $8,300,000, is classified as an investment property
held for sale on the Partnership's balance sheets.
The Partnership records income or loss from the investment property held
for sale in the amount of the difference between the property's gross revenues
and the sum of property operating expenses (including leasing costs and
improvement expenses) and interest on the line of credit borrowings described in
Note 6. Summarized operating results for Mercantile Tower for the three-month
periods ended November 30, 1995 and 1994 are as follows (in thousands):
1995 1994
Revenues:
Rental revenues and expense
recoveries $ 412 $ 370
Interest and other income 2 2
414 372
Expenses:
Property operating expenses 219 521
Interest expense 25 15
Property taxes and insurance 65 64
309 600
Income (loss) from operations
of investment property held
for sale, net $ 105 $ (228)
<PAGE>
6. Note payable
Note payable as of November 30, 1995 and August 31, 1995 consists of
the following secured indebtedness (in thousands):
November 30 August 31
Line of credit borrowings secured by the Mercantile Tower property (see Note
5). Draws under the line, up to a maximum of $2,000,000, can be made through
March 15, 1996, only to fund approved leasing and capital improvement costs
related to the Mercantile Tower property. The outstanding borrowings bear
interest at the prime rate (8.75% at November 30, 1995) plus 1% per annum.
Interest-only payments were due on a monthly basis through February 1995.
Thereafter, monthly principal and interest payments are due through
maturity on February 10, 2001. $ 1,326 $ 1,311
7. Contingencies
The Partnership is involved in certain legal actions. The Managing General
Partner believes these actions will be resolved without material adverse effect
on the Partnership's financial statements, taken as a whole.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND TWO, LP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As previously reported, since current market interest rates for first
mortgage loans are considerably lower than the rates on the Partnerships
mortgage loan investments (11.5% to 11.75%), and with the increased availability
of credit in the capital markets for real estate transactions, the likelihood of
the Partnership's mortgage loan investments being prepaid has been high for
those mortgage loans which have terms that allow for prepayment. The Harbour Bay
Plaza loan became fully prepayable without penalty in January 1994. The loan
secured by the Harbour Bay Plaza Shopping Center bore interest at 11.75%. On
August 24, 1995, the owner of Harbour Bay Plaza repaid the Partnership's
mortgage loan and purchased the underlying land. The total net proceeds received
by the Partnership amounted to approximately $3.8 million. The Partnership's
mortgage loan and land investments had an aggregate cost basis of $3.6 million.
Pursuant to the ground lease, the Partnership received $211,000 in excess of the
outstanding mortgage loan and land investments as its share of the appreciation
in value of the operating investment property above a specified amount. The net
proceeds from this transaction, in the amount of $106 per original $1,000 unit,
were distributed to the Limited Partners on October 13, 1995.
The mortgage loans secured by the Eden West Apartments and The Timbers
Apartments bear interest at annual rates of 11.5% and 11.75%, respectively. The
Eden West loan prohibited prepayment through June 1, 1994 and includes a
prepayment premium for any prepayment between June 1994 and May 1998 at rates
between 5% and 1.25% of the mortgage loan balance. The Timbers loan contains a
prohibition against prepayment until September 1, 1997. During the last quarter
of fiscal 1995, the Partnership received notice from the Eden West borrower of
its intent to prepay the Partnership's mortgage loan and repurchase the
underlying land. The amount to be received by the Partnership as its share of
the appreciation of the Eden West property has not been agreed upon to date. The
terms of the Partnership's ground lease provide for the possible resolution of
disputes between the parties over value issues through an arbitration process.
Presently, the Partnership and the borrower continue to try to resolve their
differences regarding the value of the property. If an agreement cannot be
reached, the borrower could require the Partnership to submit to arbitration
during fiscal 1996. In addition to the amount to be determined as the
Partnership's share of the property's appreciation under the ground lease, the
terms of the Eden West mortgage loan require a prepayment penalty which would be
equal to 3.75% of the outstanding principal balance of $3,500,000. If completed,
the proceeds of this transaction would be distributed to the Limited Partners.
However, the transaction remains contingent on, among other things, a resolution
of the value issue and the borrower obtaining sufficient financing to repay its
obligations to the Partnership. Accordingly, there are no assurances that this
transaction will be consummated.
Occupancy at the Marshalls at East Lake Shopping Center as of November 30,
1995 was 97%, up from its level of 89% as of one year earlier. In addition,
subsequent to the quarter-end, a new lease was signed for the remaining 1,600
square feet of the center, bringing the occupancy level to 100%. Cash flow from
the venture for fiscal 1996 is projected to increase to $272,000 as a result of
the successful leasing activity during fiscal 1995. The next lease expirations
are not scheduled until the spring of 1996. As previously reported, Marshalls,
the center's anchor tenant, opened another store in 1994 at a new competitive
center approximately four miles from the Marshalls at East Lake Shopping Center.
Marshalls' sales at East Lake have been relatively strong and their management
has confirmed that they plan to keep the East Lake store open through at least
1997. However, there can be no assurances that such plans are not subject to
change. The initial term of the Marshalls lease at East Lake runs through
January 31, 2003. Notwithstanding their obligation under the lease agreement,
the loss of the center's only anchor tenant could have serious adverse effects
on management's ability to retain its other tenants and to lease vacant space.
Management continues to monitor this situation closely. Management is also
monitoring the operating performance of a 3,000 square foot tenant which has
indicated that unless it experienced strong holiday sales it may be unable to
continue its operations beyond the scheduled expiration of its lease agreement
in May 1996.
The occupancy level at the wholly-owned Mercantile Tower Office Building
was 62% at November 30, 1995, up from 59% as of November 30, 1994 but down from
a level of 67% as of August 31, 1995. Even prior to the recent decline in
occupancy, the pace of the lease-up was below management's expectations. With
significant competition remaining in the downtown Kansas City office market,
management is finding it difficult to obtain economically viable lease terms
from the limited number of tenants which are looking to lease space in the local
market. During fiscal 1994, the Partnership closed on a $2 million line of
credit which was to be used to pay for the majority of the required tenant
improvement and capital enhancement costs expected to be incurred to achieve a
stabilized occupancy level. This nonrecourse, fully amortizable line of credit
is payable with interest at 1% over prime, and has a 7-year term with
interest-only payments in the first year. Monthly payments due under the
borrowing agreement began to include scheduled principal amortization effective
in March 1995. The line of credit borrowings are collateralized by a first lien
against the Mercantile Tower property, which includes an adjoining parking
facility. The draw period has a 2-year term which ends in March 1996, and draw
downs under the line of credit can only be made in connection with costs
associated with signed leases and contracts for capital improvements. As of
November 30, 1995, the Partnership had drawn approximately $1,482,000 under the
line of credit. With the recent drop-off in leasing activity, it now appears
likely that the Partnership will not draw down the entire $2,000,000 balance of
the line of credit before the expiration of the draw period. In order to achieve
its leasing goals, the Partnership will need an extension of the draw period.
During the quarter ended November 30, 1995, management approached the current
lender to propose such an extension. Negotiations are ongoing at the present
time. However, even if the Partnership receives the desired extension of the
line of credit draw period, there are no assurances that the Partnership will be
able to successfully secure leases with new tenants which would be necessary to
achieve a stabilized occupancy level at the property. Stabilizing the operations
of the Mercantile Tower property remains the primary goal of management, which
is presently analyzing alternative operating strategies in light of the current
market conditions. Until a stabilized occupancy level is achieved, the
Partnership's investment in Mercantile Tower is not expected to generate any
significant excess cash flow.
At November 30, 1995, the Partnership had available cash and cash
equivalents of approximately $1,577,000. Such cash and cash equivalents will be
used for the Partnership's working capital requirements and for 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 real estate and mortgage loan investments, repayment of the
Partnership's mortgage loans receivable and the proceeds from the sales or
refinancings of the underlying land, the operating investment property and the
joint venture investment property. The Partnership's quarterly distribution rate
to the Limited Partners stabilized at 2.5% per annum on remaining invested
capital as of the third quarter of fiscal 1995. The distribution rate is
expected to remain at this level pending the completion of the Eden West
prepayment transaction discussed further above. In the event that this potential
prepayment transaction is completed and the net proceeds are returned to the
Limited Partners, the Partnership's quarterly distribution rate on remaining
invested capital may have to be adjusted downward to reflect the reduction in
cash flows which would result from such a transaction.
Results of Operations
Three Months Ended November 30, 1995
The Partnership's net income increased by $330,000, to $385,000, for the
three months ended November 30, 1995 as compared to the same period in the prior
year, primarily due to a decline in leasing costs incurred at the wholly-owned
Mercantile Tower property. As a result of the Partnership's accounting policy
with regard to its investment properties acquired through foreclosure, all costs
associated with holding the asset are expensed as incurred. Capital enhancements
costs, tenant improvement expenses and related leasing commissions were $306,000
higher in the prior year. In addition, revenues from Mercantile Tower were
higher by $41,000 for the three months ended November 30, 1995, as a result of
the overall increase in occupancy achieved over the past two years. The lower
expenses and higher revenues at the Mercantile Tower property were partially
offset by a decrease in operating income of $48,000 during the current quarter.
The decrease in operating income is mainly due to a decrease in mortgage
interest and land rent revenues due to the prepayment and sale transactions
relative to the Harbour Bay Plaza mortgage loan and land investments during
fiscal 1995.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
As discussed in the Partnership's annual report on Form 10-K for the year
ended August 31, 1995, in November 1994, a series of purported class actions
(the "New York Limited Partnership Actions") were filed in the United States
District Court for the Southern District of New York concerning PaineWebber
Incorporated's sale and sponsorship of various limited partnership investments,
including those offered by the Partnership. The status of such litigation
remains unchanged at the present time. Refer to the description of the claims in
the fiscal 1995 annual report for further information. The General Partners
continue to believe that the action will be resolved without material adverse
effect 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:
A Current Report on Form 8-K has been filed on September 8, 1995 by the
registrant during the quarter reporting the sale of Harbour Bay Plaza Shopping
Center.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND TWO, LP
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 QUALIFIED PLAN PROPERTY
FUND TWO, LP
By: SECOND QUALIFIED PROPERTIES, INC.
Managing General Partner
By: /s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and Chief
Financial Officer
Dated: January 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's audited financial statements for the period ended November
30, 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> NOV-30-1995
<CASH> 1,577
<SECURITIES> 0
<RECEIVABLES> 10,251
<ALLOWANCES> 2,799
<INVENTORY> 0
<CURRENT-ASSETS> 1,957
<PP&E> 12,541
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,825
<CURRENT-LIABILITIES> 300
<BONDS> 1,326
<COMMON> 0
0
0
<OTHER-SE> 20,199
<TOTAL-LIABILITY-AND-EQUITY> 21,825
<SALES> 0
<TOTAL-REVENUES> 520
<CGS> 0
<TOTAL-COSTS> 79
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 56
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 385
<INCOME-TAX> 0
<INCOME-CONTINUING> 385
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 385
<EPS-PRIMARY> 10.53
<EPS-DILUTED> 10.53
</TABLE>
