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 FEBRUARY 28, 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 : 0-15036
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
(Exact name of registrant as specified in its charter)
Delaware 04-2841746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No .
Page 1 of 12
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
BALANCE SHEETS
February 28, 1995 and August 31, 1994
(Unaudited)
ASSETS
February 28 August 31
Real estate investments:
Investment properties held
for sale, net $18,100,500 $18,100,500
Land 3,177,000 3,177,000
Mortgage loans, net 13,001,500 13,001,500
34,279,000 34,279,000
Cash and cash equivalents 2,653,379 2,682,258
Interest receivable 117,742 117,742
Accounts receivable 43,738 36,675
Tax and tenant security deposit escrows 73,309 94,083
Deferred expenses, net 151,430 165,110
Other assets 83,426 86,281
$37,402,024 $37,461,149
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 56,062 $ 56,062
Accounts payable and accrued expenses 123,402 156,155
Other liabilities 50,000 -
Tenant security deposits 67,866 68,695
Partners' capital 37,104,694 37,180,237
$37,402,024 $37,461,149
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the six months ended February 28, 1995 and 1994
(Unaudited)
General Limited
Partners Partners
Balance at August 31, 1993 $(35,987) $37,131,479
Net income 14,556 1,426,543
Cash distributions (13,729) (1,345,490)
BALANCE AT FEBRUARY 28, 1994 $(35,160) $37,212,532
Balance at August 31, 1994 $(35,131) $37,215,368
Net income 12,966 1,270,710
Cash distributions (13,729) (1,345,490)
BALANCE AT FEBRUARY 28, 1995 $(35,894) $37,140,588
See accompanying notes.
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
STATEMENTS OF INCOME
For the six months ended February 28, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
February 28, February 28,
1995 1994 1995 1994
REVENUES:
Interest from mortgage loan $353,225 $353,225 $ 706,450 $ 706,450
Land rent 114,484 114,820 248,701 232,384
Other interest income 34,772 18,110 64,804 36,239
502,481 486,155 1,019,955 975,073
EXPENSES:
Management fees 62,927 62,927 125,854 125,854
General and administrative
expenses 171,174 112,173 244,596 225,246
Amortization of deferred
expenses 6,840 6,840 13,680 13,680
240,941 181,940 384,130 364,780
Operating income 261,540 304,215 635,825 610,293
Income from operations of
investment properties
held for sale, net 468,224 368,780 647,851 830,806
NET INCOME $729,764 $672,995 $1,283,676 $1,441,099
Net income per Limited
Partnership Unit $0.81 $0.74 $1.42 $1.59
Cash distributions per Limited
Partnership Unit $0.75 $0.75 $1.50 $1.50
The above net income and cash distributions per Limited Partnership Unit are
based upon the 896,993 Units ($50 per Unit) of Limited Partnership Interest
outstanding during each period.
See accompanying notes.
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
STATEMENTS OF CASH FLOWS
For the six months ended February 28, 1995 and 1994
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
1995 1994
Cash flows from operating activities:
Net income $ 1,283,676 $1,441,099
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization of deferred expenses 13,680 13,680
Changes in assets and liabilities:
Accounts receivable (7,063) (85,781)
Tax and tenant security deposit escrows 20,774 23,053
Other assets 2,855 20,712
Accounts payable - affiliates - (33,975)
Accounts payable and accrued expenses (32,753) (89,171)
Other liabilities 50,000 -
Tenant security deposits (829) (1,367)
Total adjustments 46,664 (152,849)
Net cash provided by operating activities 1,330,340 1,288,250
Cash flows from financing activities:
Distributions to partners (1,359,219) (1,359,219)
Net decrease in cash and cash equivalents (28,879) (70,969)
Cash and cash equivalents, beginning of period 2,682,258 2,510,636
Cash and cash equivalents, end of period $2,653,379 $2,439,667
See accompanying notes.
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, 1994.
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.Mortgage Loan and Land Investments
The following are the first mortgage loans outstanding and the cost of the
related land to the Partnership at February 28, 1995 and August 31, 1994:
Property Amount of Mortgage Loan Cost of Land
The Corner at Seven $ 6,188,000 $2,062,000
Corners Shopping Center
Fairfax County, Virginia
Willow Creek Apartments 3,055,000 345,000
Wichita, Kansas
Park South Apartments 4,230,000 770,000
Charlotte, North Carolina
13,473,000 3,177,000
Less: General loan loss reserve (471,500) -
$13,001,500 $3,177,000
In general, the loans are secured by first mortgages on the properties, the
owner's leasehold interest in the land and an assignment of all tenant
leases. Interest is payable monthly and the principal is due at maturity.
The interest rates on the mortgage loans range from 9.0% to 11.25%. The
land leases have terms of 40 years. Among the provisions of the lease
agreements, the Partnership is entitled to additional rent based upon gross
revenues of the underlying properties in excess of a base amount, as
defined. During the six months ended February 28, 1995, the Partnership
received additional rent under the terms of The Corner at Seven Corners
Shopping Center and Park South Apartments land leases totalling $41,205 and
$37,920, respectively. During the six months ended February 28, 1994, the
Partnership received additional rent under the terms of The Corner at Seven
Corners Shopping Center and Park South Apartments land leases totalling
$49,374 and $13,434, respectively. The lessees have the option to purchase
the land for specified periods of time, beginning between February of 1995
and December of 1997, at a price based on fair market value, as defined,
but not less than the original cost to the Partnership. The Partnership's
investments are structured to share in the appreciation in the 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 Partnership will receive a 40% to 50% share of the appreciation
above a specified base amount.
The mortgage loan secured by The Corner at Seven Corners Shopping Center
became prepayable in February 1995. On December 16, 1994, the borrower
notified the Partnership of an intent to prepay the loan and exercise the
option to purchase the land. Along with such formal notice, the borrower
sent a $50,000 deposit to the Partnership in accordance with the terms of
the ground lease. Management is presently negotiating with the borrower
regarding the share of the property's appreciation due to the Partnership
under the terms of the ground lease. If the parties reach an agreement
regarding this compensation and the borrower can obtain adequate financing,
a prepayment transaction could be completed by the end of 1995.
3.Investment Properties Held for Sale
Cordova Creek Apartments
As discussed in the Annual Report, the Partnership foreclosed under the terms
of the mortgage loan secured by Cordova Creek Apartments on February 20, 1990,
due to non-payment of the required interest payments. The Partnership now
owns the land and improvements and employs a local property management company
to manage the day-to-day operations of the apartment complex, which is located
in Memphis, Tennessee. An affiliated partnership, PaineWebber Qualified Plan
Property Fund Three, LP ("QP3"), originally invested $250,000 for a 3.5%
interest in the mortgage loan secured by Cordova Creek and the related ground
lease. As a result of the foreclosure, QP3 retains a 3.5% interest in the net
cash flow and the future sale or refinancing proceeds related to the operating
property.
The fair value of the operating property, net of selling expenses, at the date
of foreclosure, was estimated by management to be approximately equal to the
combined cost basis of the land and the original face amount of the mortgage
loan, totalling $6,900,500. This amount is included in the balance of
investment properties held for sale at February 28, 1995 and August 31, 1994.
During the current quarter, the Partnership entered into an agreement to sell
the Cordova Creek Apartments to an unaffiliated third party for $9,100,000.
After payment of required transaction costs and compensation to QP3 for its
3.5% interest, the net proceeds to be realized by the Partnership from such a
sale would be approximately $8.6 million. Closing of this potential sale
transaction is scheduled to occur by the end of April 1995. However, there
can be no assurances that this transaction will be consummated. If the
transaction is consummated as planned, the Partnership would expect to
distribute the majority of the net sale proceeds from such a transaction to
the Limited Partners, most likely in June 1995.
Martin Sunnyvale Research and Development Center
As discussed in the Annual Report, the Partnership foreclosed under the terms
of the mortgage loan secured by the Martin Sunnyvale Research and Development
Center on July 12, 1991. The borrower had defaulted on the payment terms of
the loan due to significant lease turnover during 1991. The property is
located in Sunnyvale, California. The combined carrying value of the original
land and loan investments, of $5,100,000, was adjusted to management's
estimate of the fair value of the property as of the date of the foreclosure,
of $3,400,000, and reclassified to investment properties held for sale. Since
the date of foreclosure, the Partnership has recorded provisions for possible
investment loss totalling $900,000 to write down the carrying value of the
Martin Sunnyvale investment property to reflect additional declines in its
estimated fair value, net of selling expenses. The resulting net carrying
value of $2,500,000 is included in the balance of investment properties held
for sale on the accompanying balance sheets at February 28, 1995 and August
31, 1994.
The Partnership has engaged the management and leasing agent to explore the
market for potential buyers for the investment property which is 100% leased
to three tenants. All of the existing leases are scheduled to expire within
the next 24 months. Management believes that marketing Martin Sunnyvale
for sale at this time is in the best interests of the Partnership because by
selling the property now the Partnership could save the substantial costs of
re-leasing the space as the existing leases expire. If any of the existing
tenants were to vacate, the market value of Martin Sunnyvale, as well as the
available property cash flow, would be severely reduced. There can be no
assurances, however, that the Partnership will successfully secure acceptable
terms for a sale of this property in the near term. Moreover, since the
Partnership began to market Martin Sunnyvale for sale, the Partnership has
been notified by a California state water agency of a potential environmental
problem at Martin Sunnyvale. As a result of governmental required testing,
management has learned that there has been a contamination of the underground
soil and water. This contamination may have been caused by either a previous
occupant at the site or by an occupant of a nearby property. The
environmental testing was paid for by one of the parties identified as a
potential contaminator. Management believes that this contamination occurred
prior to the Partnership's initial mortgage loan and ground lease investment
in the property, which was made in 1985. Due to this and other recently
discovered environmental contamination in the area, there have been several
lawsuits filed by California state water agencies against prior occupants of
this site and nearby sites. Management has engaged local counsel to monitor
all legal actions to insure that the Partnership's rights are fully protected.
Management will seek full indemnification from the parties potentially
responsible. Until such time as either a full indemnification is obtained or
the property's environmental risk is eliminated, it is extremely doubtful that
a qualified purchaser for the property will be found. Accordingly, the
Partnership has suspended its marketing efforts until this matter is
resolved.
Bell Forge Square Shopping Center
As discussed in the Annual Report, on October 4, 1991, the Partnership
received a deed in lieu of foreclosure on the mortgage loan secured by the
Bell Forge Square Shopping Center. The property is located in Nashville,
Tennessee. The combined value of the land and the face amount of the mortgage
loan, of $9,000,000, was reclassified to investment properties held for sale
at the time of the foreclosure. During fiscal 1992, the Partnership had
recorded a provision for possible investment loss of $600,000 to write down
the carrying value of the Bell Forge Square investment property to reflect a
decline in its estimated fair value, net of selling expenses, as of August 31,
1992. During fiscal 1993, the Partnership recorded an adjustment to reduce
the valuation allowance by $300,000 to reflect a subsequent increase in the
estimated fair value of the Bell Forge Square property. The resulting net
carrying value of $8,700,000 is included in the balance of investment
properties held for sale on the accompanying balance sheets at February 28,
1995 and August 31, 1994.
The Partnership recognizes income from the investment properties held for sale
equal to its share of the excess of the properties' gross revenues over the
sum of property operating expenses (including capital improvement costs),
taxes and insurance.
Combined summarized operating results of the three investment properties held
for sale for the three and six months ended February 28, 1995 and 1994 are
shown below:
Three Months Ended Six Months Ended
February 28, February 28,
1995 1994 1995 1994
Rental income $659,830 $639,259 $1,326,472 $1,274,181
Other income 91,272 55,035 154,992 108,720
751,102 694,294 1,481,464 1,382,901
Property operating expenses 133,066 187,769 628,599 354,808
Property taxes and insurance 144,757 133,255 192,243 185,652
277,823 321,024 820,842 540,460
Income from operations, net $473,279 $373,270 $ 660,622 $ 842,441
Partnership's share of
combined operations $468,224 $368,780 $ 647,851 $ 830,806
QP3's share of Cordova Creek
operations 5,055 4,490 12,771 11,635
$473,279 $373,270 $ 660,622 $ 842,441
Property operating expenses for the six months ended February 28, 1995 include
capital improvement costs at the Bell Forge Square Shopping Center of
approximately $326,000.
4.Related Party Transactions
The Adviser earned basic management fees of $125,854 for both of the six-month
periods ended February 28, 1995 and 1994. Accounts payable - affiliates at
both February 28, 1995 and August 31, 1994 consists of management fees of
$56,062 payable to the Adviser.
Included in general and administrative expenses for six months ended February
28, 1995 and 1994 is $104,416 and $91,154, 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 months ended
February 28, 1995 and 1994 is $4,001 and $2,690, respectively, representing
fees earned by Mitchell Hutchins Institutional Investors, Inc. for managing
the Partnership's cash assets.
5.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.
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 1995, the Partnership began actively
marketing the Cordova Creek Apartments for sale. On January 12, 1995, the
Partnership entered into an agreement to sell the property to an unaffiliated
third party for $9,100,000. The proposed offer would represent a substantial
gain on the Partnership's original investment in Cordova Creek. The Cordova
Creek investment was originally made by the Partnership on June 13, 1986 and was
structured as a ground lease and first leasehold mortgage. A total investment
of $6,900,500 was made by the Partnership in 1986, comprised of land purchased
for $289,500 and a $6,611,000 mortgage loan secured by the improvements. In
addition to the Partnership's initial investment, an affiliated partnership,
Paine Webber Qualified Plan Property Fund Three ("QP3") contributed $250,000 or
approximately 3.5% of the total net investment, toward the original land and
mortgage loan investment in Cordova Creek. The original fixed return on the
Partnership's investment was 11.25% per year. During 1988, the borrower
experienced financial problems at this property due to the overbuilt Memphis
apartment market and eventually defaulted under the terms of the ground lease
and mortgage. On February 20, 1990, the Partnership, together with QP3,
foreclosed and took title to the property. At the time of the takeover, the
property was 80% occupied and poorly managed. The Partnership selected a local
property management company to operate Cordova Creek and, during 1991 and 1992,
implemented a capital improvement program to upgrade the units and common areas.
For the past several years, Cordova Creek has maintained an average occupancy
level in excess of 95%. After payment of required transaction costs and
compensation to QP3 for its 3.5% interest, the net proceeds to be realized by
the Partnership at the negotiated sale price would be approximately $8.6
million. Management believes that accepting the proposed offer is in the
Partnership's best interests because values for this 9-year old, 196-unit
apartment complex may be at or near their peak for the current market cycle.
Overall market occupancy is high and rental rates continue their gradual
improvement. However, management expects that such market strength will lead to
new development activity in the near future. As a result, the improving market
trends may be short-lived. Closing of the proposed sale transaction is
scheduled to occur by the end of April 1995. However, there can be no
assurances that this transaction will be consummated. If the transaction is
consummated as planned, the Partnership would expect to distribute the majority
of the net sales proceeds from such a transaction to the Limited Partners,
most likely in June 1995.
As discussed in the Annual Report, the occupancy of the Martin Sunnyvale
Research and Development Center increased to 100% during fiscal 1994. With the
recent leasing activity, the operations of the property have been stabilized for
the near-term. However, rental rates continue to be depressed in the Sunnyvale
market due to the substantial existing oversupply of R&D space. Future
prospects for the high technology industries in Northern California are
generally considered uncertain at the present time. Accordingly, there are no
assurances that market conditions will be improved at the time of the
expirations of the three existing leases, which are scheduled to occur between
November 1996 and April 1997. Now that the property is fully occupied, the
Partnership has engaged the management and leasing agent to explore the market
for potential buyers for the investment property. Management believes that
marketing Martin Sunnyvale for sale at this time is in the best interests of
the Partnership because by selling the property now the Partnership could save
the substantial costs of re-leasing the space as the existing leases expire.
As described above, over the next 24 months, all three of the existing
leases will expire. If any of the existing tenants were to vacate, the market
value of Martin Sunnyvale, as well as the available property cash flow, would
be severely reduced. There can be no assurances, however, that the
Partnership will successfully secure acceptable terms for a sale of this
property in the near term. Moreover, since the Partnership began to market
Martin Sunnyvale for sale, the Partnership has been notified by a California
state water agency of a potential environmental problem at Martin Sunnyvale.
As a result of governmental required testing, management has learned that
there has been a contamination of the underground soil and water. This
contamination may have been caused by either a previous occupant at the site
or by an occupant of a nearby property. The environmental testing was paid
for by one of the parties identified as a potential contaminator. Management
believes that this contamination occurred prior to the Partnership's initial
mortgage loan and ground lease investment in the property, which was made in
1985. Due to this and other recently discovered environmental contamination
in the area, there have been several lawsuits filed by California state water
agencies against prior occupants of this site and nearby sites. Management
has engaged local counsel to monitor all legal actions to insure that the
Partnership's rights are fully protected. Management will seek full
indemnification from the parties potentially responsible. Until such time as
either a full indemnification is obtained or the property's environmental risk
is eliminated, it is extremely doubtful that a qualified purchaser for the
property will be found. Accordingly, the Partnership has suspended its
marketing efforts until this matter is resolved.
At the Bell Forge Square Shopping Center, the capital improvement program
designed to repair and improve the exterior facade and landscaping of the
shopping center, has been completed. Bell Forge remains 95% leased with 6,050
square feet of space currently available. This vacant space is adjacent to the
property's principal anchor tenant, which for the past several months has been
analyzing the merits of expanding into this space. However, prior to the end of
the quarter, this anchor tenant notified the Partnership that they would not
expand at this time. As a result of the anchor tenant's decision not to expand,
management is negotiating a lease for half of the vacant space with a women's
clothing and accessories retailer. Also, prior to the end of the quarter, one
of Bell Forge's tenants, occupying 6,402 square feet, filed for Chapter 11
protection under the U.S. Bankruptcy Code. They subsequently vacated their Bell
Forge store, and management is pursuing all available legal remedies against
them. Simultaneously, management is attempting to regain legal control of their
space and has begun marketing the space to potential replacement retail tenants.
The mortgage loans secured by the Willow Creek Apartments and The Corner at
Seven Corners Shopping Center bear interest at rates of 11.00% and 11.25% per
annum, respectively. With general real estate market conditions improving along
with the state of the overall economy, and with credit in the capital markets
for real estate transactions more accessible than in prior years, it is
possible, although not certain given the recent increase in interest rates, that
the current loans secured by these properties could be refinanced at lower
rates. However, the Partnership's mortgage loans contain certain restrictions
with regard to prepayments. The Willow Creek loan prohibits prepayment until
October 31, 1995 and includes a prepayment premium for any prepayment after
November 1995 at rates between 5% and 1% of the mortgage loan balance. In
addition to repaying the outstanding mortgage loans, the borrowers would be
required to exercise their options to purchase the related land at the time of
any prepayment transaction, including in such purchase price the Partnership's
share, if any, of the property's appreciation called for under the terms of the
ground lease. The Corner at Seven Corners mortgage loan became prepayable
without penalty on February 1, 1995. During December 1994, the borrower of The
Corner at Seven Corners loan sent formal notice to the Partnership of an intent
to prepay the first mortgage loan and to exercise the option to purchase the
underlying land. Management is presently negotiating with the borrower
regarding the share of the property's appreciation due to the Partnership under
the terms of the ground lease. If the parties reach agreement regarding this
compensation and the borrower can obtain adequate financing, a prepayment
transaction could be competed by the end of fiscal 1995.
At February 28, 1995, the Partnership had available cash and cash
equivalents of approximately $2,653,000. Such amounts will be used for the
working capital needs of the Partnership, distributions to the partners and, if
necessary, for tenant improvement expenses and other leasing costs of the
Partnership's investment properties acquired through foreclosure proceedings.
The source of future liquidity and distributions to the partners is expected to
be through cash generated from the Partnership's real estate and mortgage loan
investments, the repayment of the mortgage loans receivable and the future sales
or refinancings of the underlying land and the investment properties. Such
sources of liquidity are expected to be adequate to meet the Partnership's needs
on both a short-term and long-term basis.
RESULTS OF OPERATIONS
Net income is comprised of operating income and income from operations of
the investment properties held for sale. The Partnership's net income decreased
by approximately $157,000 for the six months ended February 28, 1995, when
compared to the same period in the prior year. However, net income for the most
recent three-month period improved by over $57,000 versus the comparable period
in the prior year. Net income from the combined operations of the Cordova
Creek, Martin Sunnyvale and Bell Forge Square properties decreased by
approximately $183,000 for the current six-month period, primarily due to
significant capital improvement expenses incurred at the Bell Forge Square
Shopping Center during the first quarter. Such expenses, which totalled
approximately $326,000, were incurred in connection with the repair and
improvement of the property's exterior facade. The combined operations of the
three owned properties improved by approximately $99,000 for the most recent
three-month period. Such second quarter results, which do not include any
significant capital improvement expenditures, also reflect an increase in
combined revenues and a decrease in combined property operating expenses. The
decrease in income from operations of investment properties held for sale for
the six months ended February 28, 1995 was partially offset by an increase in
the Partnership's operating income of approximately $26,000. The increase in
operating income is primarily due to an increase in land rent revenue of
approximately $16,000 and an increase in interest income earned on invested cash
and cash equivalents of approximately $29,000. Land rent revenue increased as a
result of an increase in additional rent received under the terms of the Park
South ground lease. Such increase is reflective of the generally improving
conditions for multi-family apartment properties in most local markets.
Interest earned on cash and cash equivalents increased for both the three- and
six-month periods ended February 28, 1995 due to an increase in interest rates
earned on such investments. The increases in land rent revenue and interest
income earned on invested cash and cash equivalents for the six months ended
February 28, 1995 were partially offset by an increase in general and
administrative expenses of approximately $19,000. General and administrative
expenses increased by approximately $59,000 for the most recent three-month
period. These increases in general and administrative expenses are mainly due
to an increase in legal fees, as management has engaged local counsel to
monitor all legal actions concerning the environmental contamination at Martin
Sunnyvale and has incurred legal fees in connection with the proposed sale of
Cordova Creek, as discussed further above.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
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 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
defendants, including Fourth Qualified Properties, Inc. and Properties
Associates 1985, L.P., which are the General Partners in the Partnership and
affiliates of PaineWebber.
The amended complaint in the New York Limited Partnership Actions alleges
that, in connection with the sale of interests in PaineWebber Qualified Plan
Property Fund Four, LP, PaineWebber, Fourth Qualified Properties, Inc. and
Properties Associates 1985, L.P. (1) failed to provide adequate disclosure of
the risks involved; (2) made false and misleading representations about the
safety of the investments and the Partnership's anticipated performance; and (3)
marketed the Partnership to investors for whom such investments were not
suitable. The plaintiffs, who purport to be suing on behalf of all persons who
invested in PaineWebber Qualified Plan Property Fund Four, LP, also allege that
following the sale of the partnership interests, PaineWebber, Fourth Qualified
Properties, Inc. and Properties Associates 1985, L.P. misrepresented financial
information about the Partnership's value and performance. The amended
complaint alleges that PaineWebber, Fourth Qualified Properties, Inc. and
Properties Associates 1985, L.P. violated the Racketeer Influenced and Corrupt
Organizations Act ("RICO") and the federal securities laws. The plaintiffs seek
unspecified damages, including reimbursement for all sums invested by them in
the partnerships, as well as disgorgement of all fees and other income derived
by PaineWebber from the limited partnerships. In addition, the plaintiffs also
seek treble damages under RICO. The defendants' time to move against or answer
the complaint has not yet expired.
Pursuant to provisions of the Partnership Agreement and other contractual
obligations, under certain circumstances the Partnership may be required to
indemnify Fourth Qualified Properties, Inc., Properties Associates 1985, L.P.
and their affiliates for costs and liabilities in connection with this
litigation. The General Partners intend to vigorously contest the allegations
of the action, and 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:
No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, 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 FOUR, LP
By: FOURTH QUALIFIED PROPERTIES, INC.
Managing General Partner
By: /s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and Chief
Financial Officer
Dated: April 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnerships interim financial statments for the six months ended February 28,
1995 and is qualifed in its entirety by reference to such financial statements
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> FEB-28-1995
<CASH> 2,726,688
<SECURITIES> 0
<RECEIVABLES> 13,162,980
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,888,168
<PP&E> 21,277,500
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,402,024
<CURRENT-LIABILITIES> 297,330
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 37,104,694
<TOTAL-LIABILITY-AND-EQUITY> 37,402,024
<SALES> 0
<TOTAL-REVENUES> 1,667,806
<CGS> 0
<TOTAL-COSTS> 384,130
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,283,676
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,283,676
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,283,676
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.42
