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
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SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 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 : 0-15036
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>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
BALANCE SHEETS
February 29, 1996 and August 31, 1995 (Unaudited)
(In thousands)
ASSETS
February 29 August 31
Real estate investments:
Investment properties held for sale $11,200 $11,200
Land 1,115 3,177
Mortgage loans, net 6,813 13,001
---------- -------
19,128 27,378
Cash and cash equivalents 1,903 1,851
Interest receivable 60 118
Accounts receivable 8 23
Deferred expenses, net 108 138
Other assets 23 43
----------- ----------
$21,230 $29,551
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 32 $ 44
Accounts payable and accrued expenses 146 137
Unearned rental income 26 26
Tenant security deposits 47 47
Other liabilities - 50
Partners' capital 20,979 29,247
-------- --------
$21,230 $29,551
======== ========
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT
For the six months ended February 29, 1996 and February 28, 1995 (Unaudited)
(In thousands)
General Limited
Partners Partners
Balance at August 31, 1994 $(35) $37,215
Net income 13 1,271
Cash distributions (14) (1,345)
------ -------
Balance at February 28, 1995 $(36) $37,141
==== =======
Balance at August 31, 1995 $ (18) $29,265
Net income 24 2,329
Cash distributions (12) (10,609)
------ --------
Balance at February 29, 1996 $ (6) $20,985
====== =======
See accompanying notes.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
STATEMENTS OF INCOME
For the six months ended February 29, 1996 and February 28, 1995 (Unaudited)
(In thousands, except per Unit data)
Three Months Ended Six Months Ended
February 29/28 February 29/28,
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Interest from mortgage loans $ 179 $ 353 $ 517 $ 706
Land rent 45 114 144 249
Other interest income 118 35 156 65
------- ------- -------- -------
342 502 817 1,020
Expenses:
Management fees 37 63 88 126
General and administrative 159 170 244 244
Amortization of deferred
expenses 5 7 30 14
------- ------- -------- -------
201 240 362 384
------- ------- -------- -------
Operating income 141 262 455 636
Income from operations of investment
properties held for sale, net 278 468 520 648
Gain on sale of land - - 1,378 -
------ ------ ------ ------
Net income $ 419 $ 730 $2,353 $1,284
===== ===== ====== ======
Net income per Limited
Partnership Unit $ 0.47 $0.81 $ 2.60 $1.42
====== ===== ====== =====
Cash distributions per Limited
Partnership Unit $11.27 $0.75 $11.83 $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.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
STATEMENTS OF CASH FLOWS
For the six months ended February 29, 1996 and February 28,1995(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1996 1995
Cash flows from operating activities:
Net income $ 2,353 $ 1,284
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of land (1,378) -
Amortization of deferred expenses 30 14
Changes in assets and liabilities:
Interest receivable 58 -
Accounts receivable 15 (7)
Tax and tenant security deposit escrows - 20
Other assets 20 3
Accounts payable - affiliates (12) -
Accounts payable and accrued expenses 9 (33)
Other liabilities (50) 50
Tenant security deposits - (1)
------- ------
Total adjustments (1,308) 46
------- ------
Net cash provided by operating activities 1,045 1,330
------- ------
Cash flows from investing activities:
Net proceeds from sale of land 3,440 -
Proceeds received from repayment of
mortgage loan 6,188 -
------- ------
Net cash provided by investing activities 9,628 -
------- ------
Cash flows from financing activities:
Distributions to partners (10,621) (1,359)
------- ------
Net increase (decrease) in cash and cash equivalents 52 (29)
Cash and cash equivalents, beginning of period 1,851 2,682
------- ------
Cash and cash equivalents, end of period $ 1,903 $ 2,653
======== =======
See accompanying notes.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
Notes to Financial Statements
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained in
the Partnership's Annual Report for the year ended August 31, 1995.
In the opinion of management, the accompanying financial statements, which
have not been audited, reflect all adjustments necessary to present fairly
the results for the interim period. All of the accounting adjustments
reflected in the accompanying interim financial statements are of a normal
recurring nature.
2. 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 29, 1996 and August 31, 1995 (in
thousands):
Property Amount of Mortgage Loan Cost of Land
2/29/96 8/31/95 2/29/96 8/31/95
The Corner at Seven $ - (1) $ 6,188 $ - (1) $2,062
Corners Shopping Center
Fairfax County, Virginia
Willow Creek Apartments 3,055 3,055 345 345
Wichita, Kansas
Park South Apartments 4,230 4,230 770 770
-------- -------- -------- --------
Charlotte, North Carolina
7,285 13,473 1,115 3,177
Less: General loan
loss reserve (472) (472) - -
-------- -------- -------- --------
$ 6,813 $13,001 $1,115 $3,177
======= ======= ====== ======
(1) See below for discussion of The Corner at Seven Corners mortgage loan
repayment and related land sale in the first quarter of fiscal 1996.
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 29, 1996, the Partnership received additional rent
under the terms of the Park South Apartments land lease totalling $40,000.
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 $41,000 and $38,000,
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 its intent to prepay the loan and exercise the
option to purchase the land during 1995. On November 22, 1995, the borrower
of The Corner at Seven Corners loan prepaid the Partnership's first leasehold
mortgage loan and purchased the Partnership's interest in the underlying land
for total consideration of $9,628,000. The principal balance of the mortgage
loan was $6,188,000 plus interest accrued through November 22, 1995 of
$43,000. The Partnership's cost basis in the land was $2,062,000. Pursuant to
the ground lease, the Partnership received $1,378,000 in excess of its land
investment as its share of the appreciation in value of the operating
investment property above a specified base amount. The net proceeds from this
prepayment transaction were distributed to the Limited Partners as part of a
special distribution paid on January 31, 1996 in the amount of $214 per
original $1,000 investment.
3. Investment Properties Held for Sale
Martin Sunnyvale Research and Development Center
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 contains 39,000 rentable square feet
and 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 29, 1996 and August 31, 1995.
During fiscal 1994, the Partnership 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 15 months. If any of the existing tenants were to
vacate, the market value of Martin Sunnyvale, as well as the available
property cash flow, could be severely reduced unless a replacement tenant is
secured. Subsequent to the time that the Partnership began to market Martin
Sunnyvale for sale, the Partnership was 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 investments in the property, which were 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 doubtful that a qualified purchaser for the property could
be found. Accordingly, the Partnership has suspended its marketing efforts
until this matter is resolved.
<PAGE>
Bell Forge Square Shopping Center
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 contains 127,000 rentable square feet and 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 29,
1996 and August 31, 1995.
Cordova Creek Apartments
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. As a result of the foreclosure, the Partnership
owned the land and improvements and employed a local property management
company to manage the day-to-day operations of the 196 - unit 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
retained a 3.5% interest in the net cash flow and the eventual sale 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.
During the quarter ended May 31, 1995, the Partnership sold 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 realized by the Partnership from the sale totalled approximately
$8.7 million. Closing of this sale occurred on April 12, 1995. A special
distribution of $215 per original $1,000 investment, or $9,643,000, was made
to Limited Partners on June 15, 1995, which represented approximately $195
from the Cordova Creek net sale proceeds and $20 as a distribution from cash
reserves which were deemed to be in excess of the Partnership's expected
future requirements.
<PAGE>
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 Martin
Sunnyvale and Bell Forge investment properties held for sale for the three
and six months ended February 29, 1996 and February 28, 1995 and for the
Cordova Creek Apartments for the three and six months ended February 28, 1995
are shown below (in thousands):
Three Months Ended Six Months Ended
February 29/28, February 29/28,
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Rental income $ 361 $ 660 $ 721 $ 1,326
Other income 92 91 150 156
-------- ------- ------- --------
453 751 871 1,482
Expenses:
Property operating expenses 57 133 184 629
Property taxes and
insurance 118 145 167 192
-------- ------- ------- --------
175 278 351 821
-------- ------- ------- --------
Income from operations, net $ 278 $ 473 $ 520 $ 661
====== ===== ===== ======
Partnership's share of
combined operations $ 278 $ 468 $ 520 $ 648
QP3's share of Cordova Creek
operations - 5 - 13
------- ------ ------ ------
$ 278 $ 473 $ 520 $ 661
====== ===== ====== ======
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 $88,000 and $126,000 for the
six-month periods ended February 29, 1996 and February 28, 1995,
respectively. Accounts payable - affiliates at February 29, 1996 and August
31, 1995 consists of management fees of $32,000 and $44,000, respectively,
payable to the Adviser.
Included in general and administrative expenses for the six months ended
February 29, 1996 and February 28, 1995 is $91,000 and $104,000,
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 months ended
February 29, 1996 and February 28, 1995 is $5,000 and $4,000, 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. At the present time,
the Managing General Partner is unable to estimate the impact, if any, of
these matters on the Partnership's financial statements, taken as a whole.
<PAGE>
PAINE WEBBER QUALIFIED PLAN PROPERTY FUND FOUR, LP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
On November 22, 1995, the borrower of The Corner at Seven Corners loan
prepaid the Partnership's first leasehold mortgage loan and purchased the
Partnership's interest in the underlying land for total consideration of
$9,628,000. The principal balance of the mortgage loan was $6,188,000 plus
interest accrued through November 22, 1995 of $43,000. The Partnership's cost
basis in the land was $2,062,000. Pursuant to the ground lease, the Partnership
received $1,378,000 in excess of its land investment as its share of the
appreciation in value of the operating investment property above a specified
base amount. The net proceeds from this prepayment transaction were distributed
to the Limited Partners as part of a special distribution paid on January 31,
1996 in the amount of $214 per original $1,000 investment. Management believes
that the amount paid to the Partnership under the terms of the ground lease
reflects the fair value of the property, as supported by the Partnership's most
recent independent appraisal.
As previously reported, the 39,000 square foot Martin Sunnyvale Research
and Development Center is 100% occupied by three tenants. However, rental rates
continue to be depressed in the Sunnyvale market due to the substantial existing
oversupply of R&D space, and future prospects for the high technology industries
in Northern California remain 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. In light of this situation, during fiscal 1994 the
Partnership engaged the management and leasing agent to explore the market for
potential buyers for this investment property. If any of the existing tenants
were to vacate, the market value of Martin Sunnyvale, as well as the available
property cash flow, could be significantly reduced unless a replacement tenant
is secured. Subsequent to the time that the Partnership began to market the
property for sale, the Partnership was 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 at the site. The state water
agency has issued a final report identifying two tenants which had occupied the
property prior to 1985 and may have caused the potential environmental problem.
Both prior tenants are Fortune 500 companies and both have been ordered at their
own expense to perform the necessary testing, cleanup and documentation as
required by the California state water agency. The Partnership will be required
to monitor the efforts of these two firms. The environmental testing was paid
for by one of the parties identified as a potential contaminator. Management has
engaged local counsel to monitor all legal actions to insure that the
Partnership's rights are fully protected. In addition, management will seek full
indemnification from the parties identified as being responsible. Until such
time as either a full indemnification is obtained or the property's
environmental risk is eliminated, it is doubtful that a qualified purchaser for
the property could be found. Accordingly, the Partnership has suspended its
marketing efforts until this matter is resolved.
At the Partnership's other wholly-owned commercial investment, Bell Forge
Square Shopping Center in Nashville, Tennessee, occupancy stood at 96% at
February 29, 1996, unchanged from August 31, 1995. Bell Forge Square currently
has 3,450 square feet of available space to lease. As discussed in the Annual
Report, the Partnership and its leasing agent are negotiating with one of the
Center's anchor tenants to expand its store and extend its lease. If completed,
such expansion and related tenant relocations could bring the occupancy level at
Bell Forge Square up to 100%. Subsequent to the end of the quarter, Discovery
Zone, which is one of the major tenants at Bell Forge Square, filed for Chapter
11 bankruptcy protection. Discovery Zone occupies approximately 11,800 square
feet, or 9% of the center's net rentable area. Discovery Zone is expected to
close certain of its facilities as part of a bankruptcy reorganization plan. It
is uncertain at this time, whether the Bell Forge Square location would be
affected by any of these store closings. In any event, management believes that
the Discovery Zone space could be re-leased quickly at a comparable rental rate
in the event that the lease is terminated as part of the bankruptcy proceedings.
During the first quarter of fiscal 1995, the Partnership began actively
marketing the Cordova Creek Apartments for sale. On April 12, 1995, the
Partnership sold the property to an unaffiliated third party for $9,100,000.
This sale represented a substantial gain on the Partnership's original
investment in Cordova Creek, of $6,900,500, 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, LP ("QP3") contributed $250,000 or
approximately 3.5% of the total net investment, toward the original land and
mortgage loan investments in Cordova Creek. After payment of required
transaction costs and compensation to QP3 for its 3.5 % interest, the net
proceeds realized by the Partnership from the sale totalled approximately $8.7
million. The Partnership made a special distribution of $215 per original $1,000
investment, or $9,643,000, to the Limited Partners on June 15, 1995, which
included the Cordova Creek net sale proceeds and an amount of cash reserves
which were deemed to be in excess of the Partnership's expected future
requirements. As a result of the dispositions of the Cordova Creek and The
Corner at Seven Corners investments, cash flow from the Partnership's remaining
investments would not be sufficient to support the prior distribution rate of
5.75% per annum on remaining invested capital. As a result, the distribution
rate has been reduced to 4.5% per annum effective for the payment to be made on
April 15, 1996 for the current quarter.
At February 29, 1996, the Partnership had available cash and cash
equivalents of approximately $1,903,000. Such cash and cash equivalents 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
Three Months ended February 29, 1996
The Partnership reported net income of $419,000 for the three months ended
February 29, 1996, as compared to net income of $730,000 for the same period in
the prior year. The primary reason for the decrease in net income is a decrease
in interest from mortgage loans of $174,000, a decrease in land rent of $69,000
and a decrease in income from operations of investment properties held for sale
of $190,000. Income from mortgage loans and land rent decreased during the
current three month period as a result of The Corner at Seven Corners mortgage
loan repayment and related land sale in November 1995, as discussed further
above. The decrease in income from operations of investment properties held for
sale is primarily attributable to the inclusion of the operating results of the
Cordova Creek Apartments, which was sold during April 1995, in the prior year's
income.
Six Months Ended February 29, 1996
The Partnership reported net income of $2,353,000 for the six months ended
February 29, 1996, as compared to net income of $1,284,000 for the same period
in the prior year. The primary reason for the increase in net income is the gain
recognized on the sale of The Corner at Seven Corners land of $1,378,000, as
discussed further above. This gain is partially offset by a decrease in
operating income of $181,000 and a decrease in income from operations of
investment properties held for sale of $128,000. The decrease in operating
income is mainly due to a decrease in mortgage loan interest and a decrease in
land rent as a result of The Corner at Seven Corners mortgage repayment and
related land sale in November 1995. The decrease in interest from mortgage loans
and land rent was partially offset by an increase in other interest income of
$91,000 as a result of interest being earned on the proceeds from The Corner at
Seven Corners mortgage repayment and land sale prior to the distribution on
January 31, 1996.
The decrease in income from operations of investment properties held for
sale is primarily attributable to the inclusion of the operating results of the
Cordova Creek Apartments, which was sold during April 1995, in the prior year's
income. This decrease in income was partially offset by a decrease in capital
improvement expenditures incurred at the Bell Forge Square Shopping Center in
the current six-month period. Such expenses were significantly higher in the
prior year due to the repair and improvement of the property's exterior facade.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
As previously disclosed, Fourth Qualified Properties, Inc. and Properties
Associates 1985, L.P., the General Partners of the Partnership, were named as
defendants in a class action lawsuit against PaineWebber Incorporated
("PaineWebber") and a number of its affiliates relating to PaineWebber's sale of
70 direct investment offerings, including the offering of interests in the
Partnership. In January 1996, PaineWebber signed a memorandum of understanding
with the plaintiffs in the class action outlining the terms under which the
parties have agreed to settle the case. Pursuant to that memorandum of
understanding, PaineWebber irrevocably deposited $125 million into an escrow
fund under the supervision of the United States District Court for the Southern
District of New York to be used to resolve the litigation in accordance with a
definitive settlement agreement and a plan of allocation which the parties
expect to submit to the court for its consideration and approval within the next
several months. Until a definitive settlement and plan of allocation is approved
by the court, there can be no assurance what, if any, payment or non-monetary
benefits will be made available to unitholders in Paine Webber Qualified Plan
Property Fund Four, LP Under certain limited circumstances, pursuant to the
Partnership Agreement and other contractual obligations, PaineWebber affiliates
could be entitled to indemnification for expenses and liabilities in connection
with this litigation. At the present time, the General Partners cannot estimate
the impact, if any, of this matter on the Partnership's financial statements,
taken as a whole.
In February 1996, approximately 150 plaintiffs filed an action entitled
Abbate v. PaineWebber Inc. in Sacramento, California Superior Court against
PaineWebber Incorporated and various affiliated entities concerning the
plaintiffs' purchases of various limited partnership interests, including those
offered by the Partnership. The complaint alleges, among other things, that
PaineWebber and its related entities committed fraud and misrepresentation and
breached fiduciary duties allegedly owed to the plaintiffs by selling or
promoting limited partnership investments that were unsuitable for the
plaintiffs and by overstating the benefits, understating the risks and failing
to state material facts concerning the investments. The complaint seeks
compensatory damages of $15 million plus punitive damages. The eventual outcome
of this litigation and the potential impact, if any, on the Partnership's
unitholders cannot be determined at the present time.
Items 2 through 5: NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K: NONE
<PAGE>
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, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's interim financial statements for the quarter ended February 29,
1996 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 1903
<SECURITIES> 0
<RECEIVABLES> 6881
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1971
<PP&E> 12315
<DEPRECIATION> 0
<TOTAL-ASSETS> 21230
<CURRENT-LIABILITIES> 251
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20979
<TOTAL-LIABILITY-AND-EQUITY> 21230
<SALES> 0
<TOTAL-REVENUES> 2715
<CGS> 0
<TOTAL-COSTS> 362
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2353
<INCOME-TAX> 0
<INCOME-CONTINUING> 2353
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2353
<EPS-PRIMARY> 2.60
<EPS-DILUTED> 2.60
</TABLE>
