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 SEPTEMBER 30, 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 : 0-10995
PAINE WEBBER GROWTH PROPERTIES LP
(Exact name of registrant as specified in its charter)
Delaware 04-2772109
(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 GROWTH PROPERTIES LP
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and March 31, 1996 (Unaudited)
(In thousands)
ASSETS
September 30 March 31
------------ --------
Operating investment property, at cost:
Land $ 2,029 $ 2,029
Buildings, improvements and equipment 13,897 13,827
-------- ---------
15,926 15,856
Less accumulated depreciation (6,597) (6,263)
-------- ---------
9,329 9,593
Investments in unconsolidated joint
ventures, at equity 1,112 987
Cash and cash equivalents 1,114 1,323
Real estate tax and insurance escrow deposit 162 247
Capital improvement and replacement escrow 218 271
Accounts receivable 3 1
Deferred loan costs, net 487 496
Other assets 14 61
-------- --------
$ 12,439 $ 12,979
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 161 $ 266
Accrued interest payable 239 211
Advances from consolidated venture - 250
Tenant security deposits 16 18
Other liabilities 25 27
Mortgage note payable 6,852 6,890
Partners' capital 5,146 5,317
-------- --------
$ 12,439 $ 12,979
========= ========
See accompanying notes.
<PAGE>
PAINE WEBBER GROWTH PROPERTIES LP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended September 30, 1996 and 1995 (Unaudited)
(In thousands, except per Unit data)
Three Months Ended Six Months Ended
September 30, September 30,
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Rental income $ 498 $ 515 $1,002 $ 997
Reimbursements from affiliates 47 52 88 96
Interest and other income 36 33 69 116
------ ------- ------ -------
581 600 1,159 1,209
Expenses:
Property operating expenses 219 296 485 548
Depreciation 168 169 334 337
Interest expense 146 146 291 292
Real estate taxes 55 57 112 111
Management fees 8 9 16 18
General and administrative 57 77 100 198
------- -------- ------- -------
653 754 1,338 1,504
------- -------- ------- -------
Operating loss (72) (154) (179) (295)
Venture partner's share of
consolidated venture's
operations 1 1 2 2
Partnership's share of
unconsolidated
ventures' income 61 78 165 129
-------- --------- ------- -------
Net loss $ (10) $ (75) $ (12) $ (164)
======= ======== ======== ======
Net loss per Limited
Partnership Unit $(0.34) $(2.58) $(0.41) $(5.58)
====== ====== ====== ======
Cash distributions per
Limited Partnership Unit $ 2.69 $ 3.15 $5.38 $96.29
====== ====== ===== ======
The above net loss and cash distributions per Limited Partnership Unit are based
upon the 29,194 Units of Limited Partnership Interest outstanding during each
period.
See accompanying notes.
<PAGE>
PAINE WEBBER GROWTH PROPERTIES LP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the six months ended September 30, 1996 and 1995 (Unaudited)
(In thousands)
General Limited
Partners Partners
-------- --------
Balance at March 31, 1995 $ - $ 8,610
Cash distributions (2) (2,811)
Net loss (2) (162)
--------- --------
Balance at September 30, 1995 $ (4) $ 5,637
========= ========
Balance at March 31, 1996 $ (6) $ 5,323
Cash distributions (2) (157)
Net loss - (12)
--------- --------
Balance at September 30, 1996 $ (8) $ 5,154
========= ========
See accompanying notes.
<PAGE>
PAINE WEBBER GROWTH PROPERTIES LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended September 30, 1996 and 1995 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1996 1995
---- ----
Cash flows from operating activities:
Net loss $ (12) $ (164)
Adjustments to reconcile net loss to net cash
used in operating activities:
Reimbursements from affiliates (88) (96)
Venture partner's share of consolidated
venture's operations (2) (2)
Partnership's share of unconsolidated
ventures' income (165) (129)
Depreciation 334 337
Amortization of deferred loan costs 9 8
Changes in assets and liabilities:
Real estate tax and insurance escrow deposit 85 79
Accounts receivable (1) (3)
Other assets 47 27
Accounts payable and accrued expenses (104) (142)
Accrued interest payable 28 28
Advances from consolidated venture (250) -
Other liabilities (2) (3)
Tenant security deposits (2) (4)
--------- ---------
Total adjustments (111) 100
--------- ---------
Net cash used in operating activities (123) (64)
---------- ---------
Cash flows from investing activities:
Distributions from unconsolidated joint ventures 128 352
Net withdrawals from capital
improvement and replacement escrow 53 56
Additions to operating investment property (70) (48)
--------- ---------
Net cash provided by investing activities 111 360
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage note payable (38) (35)
Distributions to partners (159) (2,813)
---------- ---------
Net cash used in financing activities (197) (2,848)
---------- ---------
Net decrease in cash and cash equivalents (209) (2,552)
Cash and cash equivalents, beginning of period 1,323 3,493
---------- ---------
Cash and cash equivalents, end of period $ 1,114 $ 941
========== =========
Cash paid during the period for interest $ 254 $ 256
========== =========
See accompanying notes.
<PAGE>
PAINE WEBBER GROWTH PROPERTIES LP
Notes to Consolidated 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 March 31, 1996.
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. Investments in Unconsolidated Joint Ventures
The Partnership has investments in four unconsolidated joint ventures at
September 30, 1996 and 1995. Three of the unconsolidated joint ventures own
and operate residential apartment complexes. As discussed further in the
Annual Report, one unconsolidated joint venture (Parkwoods) had owned and
operated a residential apartment complex until the property was completely
destroyed by a fire in October of 1991. On April 15, 1994, this venture sold
the land at the former site of the Parkwoods apartment complex to an
affiliate of the Partnership's co-venture partner for $4,750,000. Despite
the sale of the remaining real property, the Parkwoods joint venture has not
been liquidated to date due to certain outstanding legal matters related to
the aforementioned fire.
On December 23, 1994, Austin Northcastle Partners, a joint venture in
which the Partnership had an interest, sold the property known as the
Northcastle Apartments, located in Austin, Texas, to an unrelated third
party for $6,100,000. Final approval of the sale, which involved the
assumption of the outstanding first mortgage loan secured by the property,
was received from the Department of Housing and Urban Development on April
26, 1995. After transaction costs and the assumption of the outstanding
first mortgage loan, the joint venture received net proceeds of $1,620,000
from the sale. The Partnership's share of such proceeds was $1,581,000, in
accordance with the terms of the joint venture agreement. On June 15, 1995,
the Partnership made a special distribution of $2,627,000, or $90 per unit,
to the Limited Partners which included the net proceeds from the Northcastle
sale and certain excess Partnership reserves.
The unconsolidated joint ventures are accounted for on the equity method
in the Partnership's financial statements because the Partnership does not
have a voting control interest in these ventures. Under the equity method
the investments are carried at cost adjusted for the Partnership's share of
the venture's earnings, losses and distributions. The Partnership's policy
is to recognize its share of ventures' operations three months in arrears.
<PAGE>
Summarized operations of the unconsolidated joint ventures, for the
periods indicated, are as follows:
CONDENSED COMBINED SUMMARY OF OPERATIONS
For the three and six months ended June 30, 1996 and 1995
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
Rental revenues and
expense recoveries $1,151 $1,160 $2,345 $ 2,308
Interest and other income 24 39 50 62
------ ------ ------ --------
1,175 1,199 2,395 2,370
Property operating expenses 520 512 1,045 1,025
Interest expense 392 396 785 793
Depreciation 204 216 408 432
------- ------- ------- --------
1,116 1,124 2,238 2,250
------- ------- ------- --------
Net income $ 59 $ 75 $ 157 $ 120
======= ======= ======= ========
Net income:
Partnership's share of
combined income
(losses) $ 61 $ 78 $ 165 $ 129
Co-venturers' share of
combined income
(losses) (2) (3) (8) (9)
------ -------- -------- --------
$ 59 $ 75 $ 157 $ 120
====== ======== ======== ========
3. Operating Investment Property
The Partnership has a controlling interest in one joint venture, Nob
Hill Partners, which owns Nob Hill Apartments, a 368-unit apartment complex
located in San Antonio, Texas. As explained further in the Annual Report,
during fiscal 1993 the Partnership assumed control over the affairs of the
joint venture as a result of the withdrawal of the co-venture partner and
the assignment of its remaining interest to First PW Growth Properties,
Inc., the Managing General Partner of the Partnership. Accordingly, the
accompanying financial statements present the financial position, results of
operations and cash flows of this joint venture on a consolidated basis. The
joint venture has a year-end of December 31 for both tax and financial
reporting purposes. Accordingly, the Partnership's policy is to report the
consolidated results of the joint venture on a three-month lag.
On October 18, 1995, the Partnership signed a letter of intent to sell
the Nob Hill Apartments to a third party for $10 million. The sale was
subject to the satisfactory completion of the buyer's due diligence and
formal approval from the U.S. Department of Housing and Urban Development
(HUD) to the buyer's assumption of the outstanding first mortgage loan. In
January 1996, the buyer withdrew the offer to purchase the property. During
the fourth quarter of fiscal 1996, efforts to sell the property were
renewed. During the first quarter of fiscal 1997, a purchase and sale
agreement was signed with a new prospective buyer for a purchase price of
$10 million. As of October 1996, the terms of the agreement were amended to
reflect a reduction in the purchase price to $9.5 million. The Partnership
and the buyer are working toward a December 1996 closing for the sale
transaction. However, this sale will remain subject to formal approval from
HUD to the buyer's assumption of the outstanding first mortgage loan, which
may not be received for several months. Until this contingency is removed,
there are no assurances that this transaction will be consummated.
<PAGE>
The following is a summary of property operating expenses for the three and
six months ended June 30, 1996 and 1995 (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
Repairs and maintenance $ 33 $ 84 $ 78 $ 147
Utilities 32 34 70 64
Management fees 21 21 42 41
Insurance 16 14 31 29
Administrative and other 117 143 264 267
------ ------ ------ ------
$ 219 $ 296 $ 485 $ 548
====== ====== ====== ======
4. Related Party Transactions
The Partnership accrues as income reimbursements due from certain of the
joint ventures for the Partnership's management fees and certain
out-of-pocket expenses, as specified in the respective joint venture
agreements. Such reimbursements totalled $88,000 and $96,000 for the six
months ended September 30, 1996 and 1995, respectively.
The Adviser earns management fees equal to approximately 10% of the
Distributable Cash generated by the Partnership, as defined, subject to
certain limitations. Such management fees totalled $16,000 and $18,000 for
the six months ended September 30, 1996 and 1995, respectively.
Included in general and administrative expenses for the six months ended
September 30, 1996 and 1995 is $41,000 and $47,000, respectively,
representing reimbursements to an affiliate of the Managing General Partner
for providing certain financial, accounting and investor communication
services to the Partnership.
The Partnership uses the services of Mitchell Hutchins Institutional
Investors, Inc. ("Mitchell Hutchins") for the managing of cash assets.
Mitchell Hutchins is a subsidiary of Mitchell Hutchins Asset Management,
Inc., an independently operated subsidiary of PaineWebber. Mitchell Hutchins
earned fees of $2,000 and $5,000 (included in general and administrative
expenses) for managing the Partnership's cash assets during the six months
ended September 30, 1996 and 1995, respectively.
<PAGE>
5. Mortgage Note Payable
Mortgage note payable at September 30, 1996 and March 31, 1996 consists
of the following debt of Nob Hill Partners, the Partnership's consolidated
joint venture (in thousands):
September 30 March 31
------------ --------
7.375% mortgage note payable
secured by the Nob Hill
operating property. The fair
value of the mortgage note
payable approximated its
carrying value as of June 30,
1996 and December 31, 1995. $ 6,852 $6,890
======= ======
The above debt obligation represents a nonrecourse mortgage note payable
to a third party and insured by the U.S. Department of Housing and Urban
Development (HUD). The principal and interest on the note are to be paid in
monthly installments of approximately $49,000 commencing December 1, 1993,
until maturity on November 1, 2023. In addition, the property submits
monthly escrow deposits of approximately $29,000 for taxes, insurance and a
replacement reserve required under the terms of the HUD regulatory
agreement.
6. Contingencies
As discussed in detail in the Partnership's Annual Report for the year
ended March 31, 1996, the Partnership is involved in certain legal actions.
At the present time, the Managing General Partner is unable to determine
what impact, if any, the resolution of these matters may have on the
Partnership's financial statements, taken as a whole.
<PAGE>
PAINE WEBBER GROWTH PROPERTIES LP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As discussed further in the Partnership's Annual Report, management began
to market the Nob Hill Apartments property for sale during the spring of 1995.
On October 18, 1995, the Partnership signed a letter of intent with a third
party to sell the Nob Hill Apartments for $10 million. As part of its due
diligence process, the buyer raised certain issues regarding required repairs to
the property and requested a price concession to offset the cost of such
repairs. During the third quarter of fiscal 1996, the Partnership negotiated
with the buyer over the magnitude of the required repairs and the amount of the
costs required to complete the repairs. However, no agreement could be reached
regarding these issues and, in January 1996, the buyer withdrew the offer to
purchase the property. During the fourth quarter of fiscal 1996, efforts to sell
the property were renewed. During the first quarter of fiscal 1997, a purchase
and sale agreement was signed with a new prospective buyer for a purchase price
of $10 million. Subsequent to the end of the second quarter of fiscal 1997, the
terms of the agreement were amended to reflect a reduction in the purchase price
to $9.5 million as a result of certain required repair work at the property. The
Partnership and the buyer are working toward a December 1996 closing for the
sale transaction. However, this sale will remain subject to formal approval from
the U.S. Department of Housing and Urban Development to the buyer's assumption
of the outstanding first mortgage loan, which may not be received for several
months. Until this contingency is removed, there are no assurances that this
transaction will be consummated. While the Nob Hill property is currently 94%
occupied, development of a significant number of new multi-family units is
currently underway. Increased competition has begun to result in pressure to
reduce rental rates or use rent concessions as leasing incentives to maintain
occupancy levels and market share. In addition, despite the recent extensive
capital improvement program at the property, the property's age will require
that ongoing capital expenditures be made to maintain the property's competitive
condition. As a result of these circumstances, management believes that the
value of this 25-year-old, 368-unit, San Antonio, Texas apartment complex may be
at or near its peak for the current market cycle.
The sale of the Nob Hill Apartments, if completed, would position the
Partnership for a possible liquidation within the next 2-to-3 years. However,
there are no assurances that the Partnership will complete the sales of the
remaining properties under acceptable terms within this time frame. Subsequent
to a sale of Nob Hill, the Partnership would have ownership interests in three
remaining apartment properties located in the markets of Boulder, Colorado
(Tantra Lake), greater Dallas (Chisholm Place) and Stockton, California (Grouse
Run). The Boulder market remains strong at the present time due to a history of
healthy population growth, a stable employment base and an established public
policy to limit new apartment construction. Despite a fairly significant amount
of new construction coming on-line in the greater Dallas market during fiscal
1997, the performance of the Chisholm Place Apartments is expected to remain
strong due to the property's larger unit sizes, its excellent location and its
well-maintained physical appearance. Management has been able to maintain high
occupancy levels at Grouse Run (93% for the quarter ended September 30, 1996) by
offering various rental concessions in recent years. Recently, management has
begun to see slight improvement in the local Stockton market conditions,
reflecting the overall improvements in California's economic climate in recent
months. Management of the Partnership expects to see continued gradual
improvement in these market conditions during fiscal 1997. If this trend were to
continue, the Partnership may have a favorable opportunity to sell the Grouse
Run property within the next 2-to-3 years. Management's hold versus sell
decisions for its remaining investments will continue to be based upon an
assessment of the best expected overall returns to the Limited Partners.
The $8.5 million first mortgage loan secured by the Tantra Lake Apartments
was scheduled to mature on July 1, 1996. As discussed further in the Annual
Report, management's goal has been to structure a replacement loan with the
flexibility to permit a future sale of the property in the event that a
liquidation of the Partnership is pursued over the next 2-to-3 years, as
discussed further above. During the current quarter, on August 6, 1996, the
Partnership closed on a new loan for the Tantra Lake joint venture and the
existing first mortgage loan was repaid in full. The new mortgage loan, in the
principal amount of $8,850,000, bears interest at 7.68% per annum, requires
interest-only payments throughout its term and is scheduled to mature on
September 1, 2001. The terms of the new loan will reduce Tantra Lake's required
annual debt service by more than $300,000 and significantly improve cash flow to
the Partnership. In addition, the new loan is assumable upon a sale and allows
for prepayment in full at any time. A penalty tied to a yield maintenance
calculation would be charged for any prepayment in the first two years of the
term. Thereafter, a penalty equal to 1% of the outstanding principal balance
would be due in conjunction with any prepayment transaction.
As discussed further in the Annual Report, management had filed for a
refund of approximately $450,000 in costs incurred to secure the necessary
building permits which were obtained prior to the sale of the land underlying
the former Parkwoods Apartments from a federal agency responsible for
administering federal aid in connection with the 1991 Oakland fire. An agreement
was reached during the second quarter of fiscal 1996 to a release schedule for
money previously funded by the Parkwoods joint venture to pay for building
permits. The joint venture received a partial refund of such expenses totalling
approximately $146,000 in December 1995. However, the federal agency has
subsequently denied the joint venture's claim for a refund of the remaining
$300,000 in costs incurred. Management believes that the joint venture is
entitled to a full refund of the costs incurred and continues to vigorously
pursue the refund. Presently, there are no assurances that any amounts will be
recovered.
At September 30, 1996, the Partnership and its consolidated joint venture
had available cash and cash equivalents of approximately $1,114,000. Such cash
and cash equivalents, along with future cash flow distributions from the
Partnership's operating properties, will be used for the working capital needs
of the Partnership, for the funding of the Partnership's share of capital
improvements or operating deficits of the investment properties, if necessary,
and for distributions to the partners. As a result of improvements in the
operations of the remaining properties in the Partnership's portfolio, the
Partnership expects to increase its distribution rate from 2% to 3% on remaining
invested capital. This potential increase would be effective for the
distribution to be paid on February 14, 1997 for the quarter ended December 31,
1996. The source of future liquidity and distributions to the partners is
expected to be through proceeds received from the sales or refinancings of the
four remaining investment properties. Such sources of liquidity are expected to
be adequate to cover the Partnership's needs on both a short-term and long-term
basis.
Results of Operations
Three Months Ended September 30, 1996
The Partnership reported a net loss of $10,000 for the three-month period
ended September 30, 1996 as compared to a net loss of $75,000 for the same
period in the prior year. This $65,000 favorable change in net operating results
is primarily attributable to an $82,000 decrease in the Partnership's operating
loss. The Partnership's operating loss decreased due to a decrease in expenses
of $101,000. Expenses decreased mainly due to a decrease in property operating
expenses from the consolidated Nob Hill joint venture of $77,000 and a decrease
in the Partnership's general and administrative expenses of $20,000. Property
operating expenses decreased primarily due to the extensive maintenance program
undertaken at Nob Hill Apartments in the prior year to prepare the property for
sale. General and administrative expenses decreased due to a reduction in
certain required professional services. The decrease in expenses was partially
offset by a decrease in revenues of $19,000. The decrease in revenues is mainly
due to a decrease in rental income of $17,000 at the Nob Hill Apartments. Rental
income decreased due to the use of discounts on new leases and reduced renewal
rates for current tenants at Nob Hill Apartments.
The decrease in the Partnership's operating loss was partially offset by a
decrease in the Partnership's share of unconsolidated ventures' income of
$17,000. The Partnership's share of unconsolidated ventures' income decreased
primarily due to a decrease of $24,000 in the net income of the Grouse Run joint
venture. This decrease in the venture's net income is primarily attributable to
an increase in real estate tax expense.
Six Months Ended September 30, 1996
The Partnership reported a net loss of $12,000 for the six-month period
ended September 30, 1996 as compared to a net loss of $164,000 for the same
period in the prior year. This $152,000 favorable change in net operating
results is mainly due to a decrease in the Partnership's operating loss of
$116,000. The decrease in the Partnership's operating loss is attributable to a
$166,000 decrease in expenses. Expenses decreased mainly due to a $63,000
decrease in property operating expenses from the consolidated Nob Hill joint
venture and a $98,000 decrease in general and administrative expenses. The
decrease in property operating expenses is mainly due to the extensive
maintenance program implemented at Nob Hill Apartments in the prior year to
prepare the property for sale. General and administrative expenses decreased
largely due to a reduction in certain required professional services. The
decrease in expenses was partially offset by a decrease in interest and other
income of $47,000. Interest and other income decreased primarily due to a
significant decrease in the Partnership's average outstanding cash balance for
the current six-month period due to the temporary investment of the proceeds
from the sale of the Northcastle property during the prior year.
The decrease in the Partnership's operating loss was partially offset by
an increase in the Partnership's share of unconsolidated ventures' income of
$36,000. The Partnership's share of unconsolidated ventures' income increased
primarily due to an increase of $52,000 in the net income of the Tantra Lakes
joint venture. The increase in net income at Tantra Lakes is mainly due to an
increase in rental income of $28,000. Rental income increased due to an increase
in average monthly rental rates. In addition, depreciation expense decreased by
$16,000 due to some equipment having become fully depreciated during the prior
year.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
As discussed in prior quarterly and annual reports, 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 70 limited
partnership investments, including those offered by the Partnership. The
lawsuits were brought against PaineWebber Incorporated and Paine Webber Group
Inc. (together "PaineWebber"), among others, by allegedly dissatisfied
partnership investors. In March 1995, after the actions were consolidated under
the title In re PaineWebber Limited Partnership Litigation, the plaintiffs
amended their complaint to assert claims against a variety of other defendants,
including First PW Growth Properties, Inc. and Properties Associates, which are
the General Partners of the Partnership and affiliates of PaineWebber. On May
30, 1995, the court certified class action treatment of the claims asserted in
the litigation.
In January 1996, PaineWebber signed a memorandum of understanding with the
plaintiffs in the New York Limited Partnership Actions 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 plan of allocation. On July 17, 1996,
PaineWebber and the class plaintiffs submitted a definitive settlement agreement
which has been preliminarily approved by the court and provides for the complete
resolution of the class action litigation, including releases in favor of the
Partnership and the General Partners, and the allocation of the $125 million
settlement fund among investors in the various partnerships at issue in the
case. As part of the settlement, PaineWebber also agreed to provide class
members with certain financial guarantees relating to some of the partnerships.
The details of the settlement are described in a notice mailed directly to class
members at the direction of the court. A final hearing on the fairness of the
proposed settlement is scheduled to continue in November 1996.
With regard to the Abbate action described in the Annual Report on Form
10-K for the year ended March 31, 1996, in September 1996 the court dismissed
many of the plaintiffs' claims as barred by the applicable statutes of
limitations. The eventual outcome of this litigation and the potential impact,
if any, on the Partnership's unitholders remains undeterminable at the present
time.
The status of the other litigation involving the Partnership and its
General Partners remains unchanged from the description provided in the
Partnership's Annual Report on Form 10-K for the year ended March 31, 1996.
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 the litigation
discussed above. However, PaineWebber has agreed not to seek indemnificaiton for
any amounts it is required to pay in connection with the settlement of the New
York Limited Partnership Actions. At the present time, the Managing General
Partner cannot estimate the impact, if any, of the potential indemnification
claims on the Partnership's financial statements, taken as a whole. Accordingly,
no provision for any liability which could result from the eventual outcome of
these matters has been made in the accompanying financial statements of the
Partnership.
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 GROWTH PROPERTIES 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 GROWTH PROPERTIES LP
By: FIRST PW GROWTH PROPERTIES, INC.
Managing General Partner
By: /s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Date: November 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's audited financial statements for the six months ended September
30, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 1114
<SECURITIES> 0
<RECEIVABLES> 3
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1497
<PP&E> 17038
<DEPRECIATION> 6597
<TOTAL-ASSETS> 12439
<CURRENT-LIABILITIES> 416
<BONDS> 6852
0
0
<COMMON> 0
<OTHER-SE> 5146
<TOTAL-LIABILITY-AND-EQUITY> 12439
<SALES> 0
<TOTAL-REVENUES> 1324
<CGS> 0
<TOTAL-COSTS> 1045
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 291
<INCOME-PRETAX> (12)
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