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 QUARTER ENDED June 30, 2000
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: 0-17151
PAINEWEBBER/CMJ PROPERTIES LP
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2780288
-------- ----------
(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>
INDEPENDENT ACCOUNTANTS' REPORT
To the Partners
Paine Webber/CMJ Properties, LP
We have reviewed the accompanying condensed balance sheet of Paine
Webber/CMJ Properties LP as of June 30, 2000 and the related condensed
statements of operations, changes in partners' capital (deficit) and cash flows
for each of the three and six month periods ended June 30, 2000 and 1999. These
condensed financial statements are the responsibility of the Partnership's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Paine Webber/CMJ Properties LP as of December
31, 1999, and the related statements of operations, changes in partners' capital
(deficit) and cash flows for the year then ended (not presented herein); and in
our report dated March 1, 2000, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying condensed balance sheet as of December 31, 1999 is fairly stated,
in all material respects, in relation to the balance sheet from which it has
been derived.
/s/ Reznick, Fedder & Silverman
-------------------------------
REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
August 14, 2000
<PAGE>
PAINE WEBBER/CMJ PROPERTIES, LP
CONDENSED BALANCE SHEETS
June 30, 2000 and December 31, 1999
(In thousands of dollars)
(See Independent Accountants' Report)
ASSETS
------
June 30 December 31
--------- -----------
(Unaudited)
Cash and cash equivalents $ 386 $ 449
Investments in local limited
partnerships, at equity - -
------- -------
$ 386 $ 449
======= =======
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Accounts payable - affiliates $ 50 $ -
Accrued expenses 21 27
Partners' capital 315 422
------- -------
$ 386 $ 449
======= =======
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the six months ended June 30, 2000 and 1999 (Unaudited)
(In thousands of dollars)
General Limited
Partner Partners Total
------- -------- -----
Balance at December 31, 1998 $ (74) $ 340 $ 266
Net income 3 296 299
------- ------- -------
Balance at June 30, 1999 $ (71) $ 636 $ 565
======= ======= =======
Balance at December 31, 1999 $ (72) $ 494 $ 422
Distributions - (2,755) (2,755)
Net income 72 2,576 2,648
------- ------- -------
Balance at June 30, 2000 $ - $ 315 $ 315
======= ======= =======
See accompanying notes.
<PAGE>
PAINE WEBBER/CMJ PROPERTIES, LP
CONDENSED STATEMENTS OF OPERATIONS For the three
and six months ended June 30, 2000 and 1999 (Unaudited)
(In thousands of dollars, except per Unit amounts)
(See Independent Accountants' Report)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Other income from local limited
partnerships $ - $ 413 $ - $ 413
Interest income 12 5 38 8
------ ------ ------- ------
12 418 38 421
Expenses:
Management fees 17 49 50 99
General and administrative 49 31 90 52
------ ------ ------- ------
66 80 140 151
------ ------ ------- ------
Operating income (loss) (54) 338 (102) 270
Gain on sale of local limited
partnership interests - - 2,711 -
Partnership's share of local limited
partnerships' income (losses) - (59) 39 29
------ ------ ------- ------
Net income (loss) $ (54) $ 279 $ 2,648 $ 299
======= ====== ======= ======
Net income (loss) per Limited
Partnership Unit $(6.12) $31.54 $294.61 $33.85
====== ====== ======= ======
The above net income (loss) per Limited Partnership Unit is based upon the
8,745 Limited Partnership Units outstanding for each period.
See accompanying notes.
<PAGE>
PAINE WEBBER/CMJ PROPERTIES, LP
CONDENSED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2000 and 1999 (Unaudited)
(In thousands of dollars)
(See Independent Accountants' Report)
2000 1999
---- ----
Cash flows from operating activities:
Net income $ 2,648 $ 299
Adjustments to reconcile net income to net cash
used in operating activities:
Partnership's share of local limited
partnerships' income (39) (29)
Other income from local limited partnerships - (413)
Gain on sale of local limited partnership
interests (2,711) -
Changes in assets and liabilities:
Accounts payable - affiliates 50 -
Accrued expenses (6) (9)
------- -------
Total adjustments (2,706) (451)
------- -------
Net cash used in operating activities (58) (152)
Cash flows from investing activities:
Distributions from local limited partnerships 2,750 437
Cash flows from financing activities:
Distributions to limited partners (2,755) -
------- -------
Net (decrease) increase in cash and cash equivalents (63) 285
Cash and cash equivalents, beginning of period 449 341
------- -------
Cash and cash equivalents, end of period $ 386 $ 626
======= =======
See accompanying notes.
<PAGE>
PAINE WEBBER/CMJ PROPERTIES, LP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. General
-------
The accompanying condensed 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 December 31,
1999. 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.
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles
which require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities as of June 30, 2000 and December 31, 1999 and revenues and
expenses for the three and six months ended June 30, 2000 and 1999. Actual
results could differ from the estimates and assumptions used.
As discussed further in the Partnership's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000, the Partnership has been focusing on a
sale of the Villages at Montpelier Apartments, its only remaining real estate
investment, and a liquidation of the Partnership. As discussed further in Note
3, subsequent to the quarter end, on July 28, 2000, the Villages at Montpelier
Apartments was sold to an unrelated party for $22.5 million. With the sale of
the Villages at Montpelier property completed, the Partnership immediately began
the process of conducting an orderly liquidation. A Liquidating Distribution,
which included the net proceeds of the Villages at Montpelier transaction, along
with the remaining Partnership reserves after the payment of all
liquidation-related expenses, was made on August 25, 2000 (see Note 4).
2. Related Party Transactions
--------------------------
The Adviser earned basic management fees of $50,000 and $99,000 during the
six-month periods ended June 30, 2000 and 1999, respectively. Accounts payable -
affiliates at June 30, 2000 consists of management fees of $50,000 payable to
the Adviser.
Included in general and administrative expenses for the six-month periods
ended June 30, 2000 and 1999 is $16,000 and $19,000, 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 six-month
periods ended June 30, 2000 and 1999 is $2,000 and $1,000, respectively,
representing fees earned by an affiliate, Mitchell Hutchins Institutional
Investors, Inc., for managing the Partnership's cash assets.
3. Local Limited Partnerships
--------------------------
The Partnership had an investment in one local limited partnership at June
30, 2000 (six at December 31, 1999) which owned an operating investment
property, as discussed further in the Annual Report. Subsequent to the quarter
end, on July 28, 2000, South Laurel Apartments Limited Partnership, a limited
partnership in which the Partnership had an interest, sold its operating
investment property, the Villages at Montpelier Apartments, located in Laurel,
Maryland, to an unrelated party for $22.5 million. The sale generated net
proceeds to the Partnership of approximately $6,169,000, after the repayment of
the outstanding first mortgage loan of approximately $11,423,000, accrued
interest of approximately $67,000, a prepayment penalty of $71,000, closing
costs of approximately $640,000 and a payment of approximately $4,130,000 to the
local general partner for its share of the net proceeds in accordance with the
terms of the local limited partnership agreement.
As previously reported, as a limited partner of the local limited
partnerships, the Partnership did not control property disposition decisions.
The partnership agreements stated that the limited partner could cause the sale
of the assets of the local limited partnerships subsequent to June 30, 1995, but
not earlier than one year after it had given written notice to the operating
general partner of its intent to cause such sale, and only if, during such
one-year period, the operating general partner did not cause the sale of such
assets. If the operating general partner had not caused the assets of the
partnership to be sold within such one-year period, the limited partner could
cause such sale, but only after it had offered to sell such assets to the
operating general partner, and either the operating general partner did not
accept such offer within 90 days of receiving it, or the operating general
partner did not complete the sale in accordance with such offer after accepting
the terms. In October 1998, the Partnership gave the written notice described
above to the operating general partner of all six local limited partnerships
after meeting with representatives of the operating general partner to discuss
the Partnership's desire to liquidate its investments in the near term.
With regard to the five properties that were still receiving government
subsidies, the associated distributable cash flow restrictions, substantial
capital reserve requirements and regulatory reporting obligations, which are
characteristic of all subsidized low-income housing properties, significantly
limited the pool of potential buyers for these real estate assets. Furthermore,
the uncertainty regarding potential future reductions in the level of federal
government assistance for these programs further restricted the properties'
marketability. Consequently, a negotiated sale of the Partnership's interests in
these properties to the operating general partners, which receive management fee
revenues from the properties through an affiliated management company, was
deemed to be in the best interests of the Limited Partners. On February 15,
2000, the Partnership sold its interests in five of the six real estate limited
partnerships that it held: Holbrook Apartments Company, which owned the
Ramblewood Apartments in Holbrook, Massachusetts; Fawcett's Pond Apartment
Company, which owned the Village at Fawcett's Pond Apartments in Hyannis,
Massachusetts; Quaker Meadows Apartment Company, which owned the Quaker Court
Apartments and The Meadows Apartments in Lynn, Massachusetts; Marvin Gardens
Associates, which owned the Marvin Gardens Apartments in Cotati, California; and
Colonial Farms Ltd., which owned the Colonial Farms Apartments in Modesto,
California. The limited partnership interests were sold for total consideration
of $2,750,000 to affiliates of the operating general partners of the local
limited partnerships. The sales closed into escrow on February 15, 2000 pending
the receipt of the required regulatory approvals from the various lenders and
state and federal housing agencies that subsidize the related residential
apartment properties. The sale proceeds were to be released to the Partnership
upon the receipt of all of the required regulatory approvals, but in no event
later than March 31, 2000. On March 1, 2000, the affiliated buyers agreed to the
release of the escrowed funds to the Partnership and indemnified the Partnership
for any approvals not yet received. A special distribution of the net proceeds
from these sale transactions in the amount of $2,755,000, or $315.00 per
original $1,000 investment, was made to the Limited Partners on April 7, 2000.
The Partnership recognized a gain of $2,711,000 during the quarter ended March
31, 2000 in connection with these sale transactions.
Notwithstanding the restrictions on the Partnership's ability to cause a
sale of the properties, the Partnership and the operating general partner of the
Villages at Montpelier limited partnership reached an informal agreement during
the third quarter of 1999 to initiate a joint marketing effort for the sale of
the Villages at Montpelier property, which no longer receives any government
subsidies. In July, marketing proposals were requested from three real estate
brokerage firms with a strong background in selling apartment properties. In
August, after a review of each company's proposals and their capabilities to
sell this property, the Partnership selected one of the firms and negotiated an
agreement with them to sell the property. Marketing materials were prepared and
comprehensive sale efforts began as of the end of February 2000. As a result of
such efforts, several offers were received. After interviewing each prospective
buyer and conducting a review of their financial capabilities and previous
acquisitions, the Partnership and the local general partner selected an offer. A
purchase and sale contract was subsequently negotiated with this unrelated
third-party prospective purchaser and an agreement was signed on May 26, 2000,
at which time a deposit of $100,000 was received. In accordance with the amended
provisions of the purchase and sale agreement, the prospective buyer completed
its due diligence work on June 30, 2000 and made an additional non-refundable
deposit of $900,000 at that time. The sale closed as described above on July 28,
2000. Because the buyer of the Villages at Montpelier property received formal
permission prior to the closing to prepay the existing HUD-insured mortgage loan
secured by the property, no further HUD approval was required, and the
Partnership was able to proceed with its planned liquidation (see Note 4).
The local limited partnerships were accounted for on the equity method.
Under the equity method of accounting for limited partnership interests, the
investments are carried at cost adjusted for the Partnership's share of the
local limited partnership's earnings, losses and distributions. Losses in excess
of the investment in individual local limited partnerships are not recognized
currently, but rather, are offset against future earnings from such entities.
Distributions received from investments in limited partnerships with carrying
values of zero were recorded as other income in the Partnership's statements of
operations. Summarized operating results of the local limited partnerships
follow:
<PAGE>
Condensed Combined Summary of Operations
For the three and six months ended June 30, 2000 and 1999
(In thousands of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
Rental revenues, including
government subsidies $ 1,077 $ 2,435 $ 2,919 $ 4,906
Interest income 39 25 91 49
------- ------- ------- -------
1,116 2,460 3,010 4,955
Property operating expenses 765 1,682 1,804 3,021
Interest expense 274 681 844 1,361
Depreciation and amortization 116 340 339 687
------- ------- ------- -------
1,155 2,703 2,987 5,069
Net income (loss) ------- ------- ------- -------
$ (39) $ (243) $ 23 $ (114)
======= ======= ======= =======
Net income (loss):
Partnership's share of
combined operations $ (33) $ (212) $ 23 $ (96)
Local partners' share of
combined operations (6) (31) - (18)
------- ------- ------- -------
$ (39) $ (243) $ 23 $ (114)
======= ======= ======= =======
Reconciliation of Partnership's Share of Operations
For the three and six months ended June 30, 2000 and 1999
(In thousands of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
Partnership's share of combined
operations, as shown above $ (33) $ (212) $ 23 $ (96)
Losses in excess of basis not
recognized by Partnership 33 153 60 128
Income offset with prior year
unrecognized losses - - (44) (3)
------- ------- ------- -------
Partnership's share of local
limited partnerships' income $ - $ (59) $ 39 $ 29
======= ======= ======= =======
4. Subsequent Events
-----------------
As discussed in Note 3, on July 28, 2000, South Laurel Apartments Limited
Partnership, a limited partnership in which the Partnership had an interest,
sold its operating investment property, the Villages at Montpelier Apartments,
to an unrelated party for $22.5 million. The sale generated net proceeds to the
Partnership of approximately $6,169,000, after the repayment of the outstanding
first mortgage loan of approximately $11,423,000, accrued interest of
approximately $67,000, a prepayment penalty of $71,000, closing costs of
approximately $640,000 and a payment of approximately $4,130,000 to the local
general partner for its share of the net proceeds in accordance with the terms
of the local limited partnership agreement. As a result of the sale of the
Villages at Montpelier Apartments, which was the Partnership's final real estate
asset, the Partnership was dissolved on August 25, 2000. As part of this
dissolution, a liquidating distribution of $735.72 per original $1,000
investment, or approximately $6,435,000, was made on August 25, 2000 to
unitholders of record as of the July 28, 2000 sale date. The liquidating
distribution included the net proceeds resulting from the sale of the Villages
at Montpelier Apartments, as well as the Partnership's remaining reserves after
paying liquidation-related expenses. The remaining reserves represented
undistributed operating cash flow which was distributed 99% to the Limited
Partners and 1% to the General Partners in accordance with the terms of the
Partnership Agreement. The liquidating distribution of $6,435,000 was lower than
the Partnership's share of the net proceeds from the sale of the Villages at
Montpelier property combined with the cash, net of the accounts payable and
accrued expenses, on the accompanying balance sheet as of June 30, 2000, which
totalled $6,484,000, by $49,000. This difference reflects final Partnership
operating and liquidation-related expenses of $76,000, net of additional
interest income of $31,000, and less the General Partners' 1% share of the
operating cash flow component of the liquidating distribution, which totalled
approximately $4,000. Included in the final liquidation-related expenses were
management fees of $5,000 payable to the Adviser for fees owed through the date
of the sale of the final asset, reimbursements totalling $20,000 to an affiliate
of the Managing General Partner for providing certain financial, accounting and
investor communication services to the Partnership through its liquidation and
cash management fees of $6,000 paid to Mitchell Hutchins (see Note 2) for
managing the Partnership's cash assets through the liquidation date.
<PAGE>
PAINE WEBBER/CMJ PROPERTIES, LP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information Relating to Forward-Looking Statements
--------------------------------------------------
The following discussion of financial condition includes forward-looking
statements which reflect management's current views with respect to future
events and financial performance of the Partnership. These forward-looking
statements are subject to certain risks and uncertainties, including those
identified in Item 7 of the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1999 under the heading "Certain Factors Affecting Future
Operating Results," which could cause actual results to differ materially from
historical results or those anticipated. The words "believe," "expect,"
"anticipate," and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which were made based on facts and conditions as they existed as of
the date of this report. The Partnership undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Liquidity and Capital Resources
-------------------------------
On February 15, 2000, the Partnership sold its interests in five of the
six real estate limited partnerships that it held: Holbrook Apartments Company,
which owned the Ramblewood Apartments in Holbrook, Massachusetts; Fawcett's Pond
Apartment Company, which owned the Village at Fawcett's Pond Apartments in
Hyannis, Massachusetts; Quaker Meadows Apartment Company, which owned the Quaker
Court Apartments and The Meadows Apartments in Lynn, Massachusetts; Marvin
Gardens Associates, which owned the Marvin Gardens Apartments in Cotati,
California; and Colonial Farms Ltd., which owned the Colonial Farms Apartments
in Modesto, California. The limited partnership interests were sold for total
consideration of $2,750,000 to affiliates of the operating general partners of
the local limited partnerships. The sales closed into escrow on February 15,
2000 pending the receipt of the required regulatory approvals from the various
lenders and state and federal housing agencies that subsidize the related
residential apartment properties. The sale proceeds were to be released to the
Partnership upon the receipt of all of the required regulatory approvals, but in
no event later than March 31, 2000. On March 1, 2000, the affiliated buyers
agreed to the release of the escrowed funds to the Partnership and indemnified
the Partnership for any approvals not yet received. A special distribution of
the net proceeds from these sale transactions in the amount of $2,755,000, or
$315.00 per original $1,000 investment, was made to the Limited Partners on
April 7, 2000.
As previously reported, as a limited partner of the local limited
partnerships, the Partnership did not control property disposition decisions.
The partnership agreements stated that the limited partner could cause the sale
of the assets of the local limited partnerships subsequent to June 30, 1995, but
not earlier than one year after it had given written notice to the operating
general partner of its intent to cause such sale, and only if, during such
one-year period, the operating general partner did not cause the sale of such
assets. If the operating general partner had not caused the assets of the
partnership to be sold within such one-year period, the limited partner could
cause such sale, but only after it had offered to sell such assets to the
operating general partner, and either the operating general partner did not
accept such offer within 90 days of receiving it, or the operating general
partner did not complete the sale in accordance with such offer after accepting
the terms. In October 1998, the Partnership gave the written notice described
above to the operating general partner of all six local limited partnerships
after meeting with representatives of the operating general partner to discuss
the Partnership's desire to liquidate its investments in the near term. With
regard to the five properties that were still receiving government subsidies,
the associated distributable cash flow restrictions, substantial capital reserve
requirements and regulatory reporting obligations, which are characteristic of
all subsidized low-income housing properties, significantly limited the pool of
potential buyers for these real estate assets. Furthermore, the uncertainty
regarding potential future reductions in the level of federal government
assistance for these programs further restricted the properties' marketability.
Consequently, a negotiated sale of the Partnership's interests in these
properties to the operating general partners, which receive management fee
revenues from the properties through an affiliated management company, was
deemed to be in the best interests of the Limited Partners. As discussed further
above, this sale was completed on February 15, 2000.
Notwithstanding the restrictions on the Partnership's ability to cause a
sale of the properties, the Partnership and the operating general partner of the
Villages at Montpelier limited partnership reached an informal agreement during
the third quarter of 1999 to initiate a joint marketing effort for the sale of
the Villages at Montpelier property, which no longer receives any government
subsidies. In July, marketing proposals were requested from three real estate
brokerage firms with a strong background in selling apartment properties. In
August, after a review of each company's proposals and their capabilities to
sell this property, the Partnership selected one of the firms and negotiated an
agreement with them to sell the property. Marketing materials were prepared and
comprehensive sale efforts began as of the end of February 2000. As a result of
such efforts, several offers were received. After interviewing each prospective
buyer and conducting a review of their financial capabilities and previous
acquisitions, the Partnership and the local general partner selected an offer. A
purchase and sale contract was subsequently negotiated with this unrelated
third-party prospective purchaser and an agreement was signed on May 26, 2000,
at which time a deposit of $100,000 was received. In accordance with the amended
provisions of the purchase and sale agreement, the prospective buyer completed
its due diligence work on June 30, 2000 and made an additional non-refundable
deposit of $900,000 at that time. Subsequent to the quarter end, on July 28,
2000, South Laurel Apartments Limited Partnership sold the Villages at
Montpelier Apartments, located in Laurel, Maryland, to an unrelated party for
$22.5 million. The sale generated net proceeds to the Partnership of
approximately $6,169,000, after the repayment of the outstanding first mortgage
loan of approximately $11,423,000, accrued interest of approximately $67,000, a
prepayment penalty of $71,000, closing costs of approximately $640,000 and a
payment of approximately $4,130,000 to the local general partner for its share
of the net proceeds in accordance with the terms of the local limited
partnership agreement. Because the buyer of the Villages at Montpelier property
received formal permission prior to the closing to prepay the existing
HUD-insured mortgage loan secured by the property, no further HUD approval was
required, and the Partnership was able to proceed with its planned liquidation.
At June 30, 2000, the Partnership had available cash and cash equivalents
of approximately $386,000. Such cash and cash equivalents were used by the
Partnership for its working capital requirements and liquidation-related
expenses with the remainder included in the final liquidating distribution to
the Limited Partners. As a result of the sale of the Villages at Montpelier
Apartments, which was the Partnership's final real estate asset, the Partnership
was dissolved on August 25, 2000. As part of this dissolution, a liquidating
distribution of $735.72 per original $1,000 investment, or approximately
$6,435,000, was made on August 25, 2000 to unitholders of record as of the July
28, 2000 sale date. The liquidating distribution included the net proceeds
resulting from the sale of the Villages at Montpelier Apartments, as well as the
Partnership's remaining reserves after paying liquidation-related expenses. The
remaining reserves represented undistributed operating cash flow which was
distributed 99% to the Limited Partners and 1% to the General Partners in
accordance with the terms of the Partnership Agreement. The liquidating
distribution of $6,435,000 was lower than the Partnership's share of the net
proceeds from the sale of the Villages at Montpelier property combined with the
cash, net of the accounts payable and accrued expenses, on the accompanying
balance sheet as of June 30, 2000, which totalled $6,484,000, by $49,000. This
difference reflects final Partnership operating and liquidation-related expenses
of $76,000, net of additional interest income of $31,000, and less the General
Partners' 1% share of the operating cash flow component of the liquidating
distribution, which totalled approximately $4,000.
Results of Operations
Three Months Ended June 30, 2000
--------------------------------
For the quarter ended June 30, 2000, the Partnership reported a net loss of
$54,000, as compared to net income of $279,000 for the same period in the prior
year. This unfavorable change in the Partnership's net operating results was
mainly the result of a $392,000 unfavorable change in the Partnership's
operating income (loss) which was partially offset by a $59,000 decrease in the
Partnership's share of local limited partnerships' losses for the current
three-month period. The unfavorable change in the Partnership's operating income
(loss) for the three months ended June 30, 2000 was mainly due to a decrease in
other income from local limited partnerships of $413,000. As discussed in the
notes to the financial statements, in accordance with the equity method
distributions received from investments in limited partnerships with carrying
values of zero were recorded as other income from local limited partnerships.
The Partnership received distributions totalling $437,000 during the quarter
ended June 30, 1999, of which $413,000 was recorded as other income. No cash
distributions were received during the current period. Management fees, which
are based on the Partnership's invested assets, decreased due to the sale of the
five local limited partnership interests on February 15, 2000. The decrease in
management fee expense was partially offset by an increase in general and
administrative expenses of $18,000 for the current three-month period. General
and administrative expenses increased mainly due to certain legal fees incurred
in the current period in conjunction with the Partnership's planned liquidation.
The decrease in the Partnership's share of local limited partnerships'
losses was the result of the sale of the five local limited partnership
interests on February 15, 2000. At June 30, 1999, the Fawcett's Pond investment
was the only investment with a positive equity method carrying value. During the
prior three-month period, the Partnership's share of local limited partnerships'
operations represented only the allocable portion of the net losses of the
Fawcett's Pond partnership which was one of the investments sold on February 15,
2000. As discussed further in the notes to the accompanying financial
statements, under the equity method of accounting for limited partnership
interests, the Partnership did not record losses from investment properties when
losses exceeded the Partnership's equity method basis in the properties, and
future income was recognized only when it exceeded the previously unrecorded
losses.
Six Months Ended June 30, 2000
------------------------------
For the six months ended June 30, 2000, the Partnership reported net
income of $2,648,000, as compared to net income of $299,000 for the same period
in the prior year. The $2,349,000 increase in the Partnership's net income was
primarily a result of the gain of $2,711,000 realized in the current period from
the sale of the five local limited partnership interests discussed further
above. This favorable change in the Partnership's net operating results was also
partially attributable to a $10,000 increase in the Partnership's share of local
limited partnerships' income for the current six-month period. As discussed
further above, under the equity method of accounting for limited partnership
interests, losses in excess of the investment in individual local limited
partnerships were not recognized currently, but rather, were offset against
future earnings from such entities. The Partnership's share of local limited
partnerships' income for the prior period represents the allocable portion of
the operations of the Fawcett's Pond partnership for the six months ended June
30, 1999. The Partnership's share of local limited partnerships' income for the
current period consists of the allocable portion of the operations of the
Ramblewood partnership for the period from January 1, 2000 through February 15,
2000. As a result, the numbers are not comparable.
The gain realized on the sale of the five local limited partnership
interests and the increase in the Partnership's share of local limited
partnerships' income were partially offset by a $372,000 unfavorable change in
the Partnership's operating income (loss) for the current six-month period. This
unfavorable change was mainly attributable to a $413,000 decrease in other
income from local limited partnerships and a $38,000 increase in general and
administrative expenses. As discussed in the notes to the financial statements,
in accordance with the equity method distributions received from investments in
limited partnerships with carrying values of zero were recorded as other income
from local limited partnerships. The Partnership received distributions
totalling $437,000 during the six months ended June 30, 1999, of which $413,000
was recorded as other income. No cash distributions were received during the
current period. General and administrative expenses increased mainly due to
certain legal fees incurred in the current period in conjunction with the
Partnership's planned liquidation. The decrease in other income from local
limited partnerships and the increase in general and administrative expenses
were partially offset by an increase in interest income and a reduction in
management fee expense. Interest income increased during the current period due
to interest earned on the sale proceeds of the five local limited partnerships
which were temporarily invested in money market instruments pending the special
distribution to the Limited Partners which occurred on April 7, 2000. Management
fees, which are based on the Partnership's invested assets, decreased for the
six months ended June 30, 2000 due to the sale of the five local limited
partnership interests on February 15, 2000.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings. NONE
--------------------------
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 dated July 28, 2000 was filed by the registrant
subsequent to the quarter ended June 30, 2000 to report the sale of the
Partnership's final real estate asset, the Villages at Montpelier Apartments,
and is hereby incorporated herein by reference.
<PAGE>
PAINE WEBBER/CMJ PROPERTIES, LP
SIGNATURE
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/CMJ PROPERTIES, LP
By: PW SHELTER FUND, INC.
------------------------
Managing General Partner
By: /s/ Walter V. Arnold
--------------------
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Dated: August 25, 2000
