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 DECEMBER 31, 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 : 0-14857
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Virginia 04-2866287
(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>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and March 31, 1995 (Unaudited)
(In Thousands)
ASSETS
December 31 March 31
Operating investment properties:
Land $ 3,962 $ 3,962
Buildings and improvements 27,899 25,769
--------- ---------
31,861 29,731
Less accumulated depreciation ( 9,005) (8,222)
--------- ---------
22,856 21,509
Investments in unconsolidated joint
ventures, at equity 24,223 25,036
Cash and cash equivalents 3,764 6,460
Escrowed cash 161 -
Prepaid expenses 21 12
Accounts receivable, net 291 77
Accounts receivable - affiliates 232 215
Deferred rent receivable - 29
Deferred expenses, net 752 234
--------- ---------
$ 52,300 $ 53,572
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 762 $ 285
Bonds payable 1,621 1,648
Notes payable 9,811 9,900
Minority interest in net assets of
consolidated joint venture 187 187
Partners' capital 39,919 41,552
--------- ---------
$ 52,300 $ 53,572
========= =========
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the nine months ended December 31, 1995 and 1994 (Unaudited)
(In Thousands)
General Limited
Partners Partners
Balance at March 31, 1994 $ (804) $52,611
Net loss (11) (1,051)
------- --------
Balance at December 31, 1994 $ (815) $51,560
====== =======
Balance at March 31, 1995 $ (912) $42,464
Net loss (9) (866)
Cash distributions (8) (750)
------- -------
Balance at December 31, 1995 $ ( 929) $40,848
======= =======
See accompanying notes.
<PAGE>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended December 31, 1995 and 1994 (Unaudited)
(In thousands, except per Unit data)
Three Months Ended Nine Months Ended
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
Revenues:
Rental income and expense
reimbursements $ 582 $ 459 $1,592 $1,354
Interest and other income 65 88 219 234
------- ------- ------ ------
647 547 1,811 1,588
Expenses:
Property operating expenses 507 328 1,084 934
Depreciation and amortization 362 283 870 759
Interest expense 247 209 774 756
General and administrative 151 186 428 457
Bad debt expense - - 27 3
------- ------- ------ ------
1,267 1,006 3,183 2,909
------- ------- ------- -------
Operating loss (620) (459) (1,372) (1,321)
Investment income:
Interest income on notes
receivable
from unconsolidated
ventures 200 200 600 600
Partnership's share
of unconsolidated
ventures' income (losses) 4 39 (103) (591)
------- ------- ------ ------
Net loss $ (416) $ (220) $ (875) $ (1,312)
======= ======= ======= ========
Net loss per Limited
Partnership Unit $(0.20) $(0.11) $(0.43) $(0.65)
====== ====== ====== ======
Cash distributions per Limited
Partnership Unit $ 0.13 $ - $ 0.38 $ -
======= ====== ====== ======
The above net loss and cash distributions per Limited Partnership Unit are
based upon the 2,000,000 Limited Partnership Units outstanding during each
period.
See accompanying notes.
<PAGE>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended December 31, 1995 and 1994 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1995 1994
---- ----
Cash flows from operating activities:
Net loss $ (875) $(1,062)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Partnership's share of unconsolidated
ventures' losses 103 341
Depreciation and amortization 870 759
Amortization of deferred financing costs 15 48
Interest expense on zero coupon loans - 230
Changes in assets and liabilities:
Escrowed cash (161) (37)
Prepaid expenses (9) (38)
Accounts receivable (214) (93)
Accounts receivable - affiliates (17) 159
Deferred rent receivable 29 46
Deferred expenses (620) -
Other assets - (43)
Accounts payable and accrued expenses 477 322
---------- ----------
Total adjustments 473 1,694
---------- ----------
Net cash provided by (used for)
operating activities (402) 632
---------- ----------
Cash flows from investing activities:
Distributions from unconsolidated
joint ventures 987 1,769
Additions to operating investment properties (2,130) (107)
Additional investments in unconsolidated
joint ventures (277) (1,527)
----------- ---------
Net cash provided by (used for)
investing activities (1,420) 135
---------- ----------
Cash flows from financing activities:
Repayment of principal and deferred
interest on long-term debt (116) (4,066)
Issuance of note payable - 3,480
Payment of deferred financing costs - (146)
Distributions to partners (758) -
------------ ----------
Net cash used for financing activities (874) (732)
------------ ----------
Net increase (decrease) in cash and
cash equivalents (2,696) 35
Cash and cash equivalents, beginning of period 6,460 6,263
------------ ---------
Cash and cash equivalents, end of period $ 3,764 $ 6,298
=========== ========
Cash paid during the period for interest $ 759 $ 2,476
=========== ========
See accompanying notes.
<PAGE>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussion should
be read in conjunction with the financial statements and footnotes in the
Partnership's Annual Report for the year ended March 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. Investments in Unconsolidated Joint Venture Partnerships
As of December 31, 1995 and 1994, the Partnership had investments in
five unconsolidated joint venture partnerships which own operating
properties as more fully described in the Partnership's Annual Report. The
unconsolidated joint ventures are accounted for by using the equity method
because the Partnership does not have a voting control interest in the
ventures. Under the equity method, the assets, liabilities, revenues and
expenses of the unconsolidated joint ventures do not appear in the
Partnership's financial statements. Instead, the investments are carried at
cost adjusted for the Partnership's share of each venture's earnings, losses
and distributions. The Partnership reports its share of unconsolidated joint
venture earnings or losses three months in arrears.
Summarized operations of the unconsolidated joint ventures, for the
periods indicated, are as follows:
Condensed Combined Summary of Operations
For the three and nine months ended September 30, 1995 and 1994
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
Revenues:
Rental revenues and
expense recoveries $ 2,784 $ 2,843 $ 8,138 $ 7,963
Interest and other income 45 72 140 143
-------- -------- ------- -------
2,829 2,915 8,278 8,106
Expenses:
Property operating expenses 967 951 2,771 2,668
Real estate taxes 620 684 1,879 2,069
Mortgage interest expense 246 169 682 840
Interest expense payable to
partner 200 200 600 600
Depreciation and amortization 768 733 2,342 2,237
-------- -------- ------- -------
2,801 2,737 8,274 8,414
-------- -------- ------- -------
Net income (loss) $ 28 $ 178 $ 4 $ (308)
======== ======== ======= =======
Net income (loss):
Partnership's share of
combined
income (loss) $ 16 $ 60 $ (68) $ (527)
Co-venturers' share of
combined
incomes (loss) 12 118 72 219
-------- -------- ------- -------
$ 28 $ 178 $ 4 $ (308)
======== ======== ====== ========
<PAGE>
Reconciliation of Partnership's Share of Operations
For the three and nine months ended September 30, 1995 and 1994
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
Partnership's share of combined
income (loss), as shown above $ 16 $ 60 $ (68) $ (527)
Amortization of excess basis (12) (21) (35) (64)
-------- -------- ------- -------
Partnership's share of
unconsolidated
ventures' income (losses) $ 4 $ 39 $ (103) $ (591)
======= ======= ====== =======
3. Operating Investment Properties
At December 31, 1995 and March 31, 1995, the Partnership's balance sheet
includes two operating investment properties: the wholly-owned Crystal Tree
Commerce Center and the Sunol Center Office Buildings, owned by Sunol Center
Associates, a majority-owned and controlled joint venture. The Crystal Tree
Commerce Center consists of three one-story retail plazas containing an
aggregate of 74,923 square feet of leasable space and one four-story office
building containing 40,115 square feet of leasable space, located in North
Palm Beach, Florida. The Sunol Center Office Buildings comprise 116,680
square feet of leasable space, located in Pleasanton, California. The
Partnership reports the operations of Sunol Center Associates on a
three-month lag.
The following is a combined summary of property operating expenses for
the Crystal Tree Commerce Center and the Sunol Center Office Buildings as
reported in the Partnership's consolidated statements of operations for the
three and nine months ended December 31, 1995 and 1994 (in thousands):
Three Months Ended Nine Months Ended
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
Property operating expenses:
Real estate taxes $ 89 $ 30 $ 148 $ 166
Repairs and maintenance 169 98 326 249
Utilities 30 30 109 100
Management fees 42 40 87 85
Administrative and other 177 130 414 334
------- ------ ------- ------
$ 507 $ 328 $ 1,084 $ 934
======= ===== ======= ======
4. Related Party Transactions
Accounts receivable - affiliates at both December 31, 1995 and March 31,
1995 includes $100,000 due from one joint venture for interest earned on a
permanent loan and $117,000 and $100,000, respectively, of investor
servicing fees due from three of the joint ventures for reimbursement of
certain expenses incurred in reporting Partnership operations to the Limited
Partners of the Partnership. Accounts receivable - affiliates at both
December 31, 1995 and March 31, 1995 also includes $15,000 of expenses paid
by the Partnership on behalf of the joint ventures and other affiliates.
<PAGE>
Included in general and administrative expenses for both nine-month
periods ended December 31, 1995 and 1994 is $153,000, 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 both of the
nine-month periods ended December 31, 1995 and 1994 is $11,000, representing
fees earned by Mitchell Hutchins Institutional Investors, Inc. for managing
the Partnership's cash assets.
5. Notes Payable
Notes payable at December 31, 1995 and March 31, 1995 consist of
the following (in thousands):
December 31 March 31
9.125% nonrecourse loan payable
to an insurance company, which is
secured by the 625 North Michigan
Avenue operating investment property.
Monthly payments including interest
of $55 are due beginning July 1, 1994
through maturity on May 31, 1999.
The terms of the note were modified
effective May 31, 1994 (see discussion
below). $ 6,381 $ 6,437
8.39% nonrecourse note payable
to an insurance company, which
is secured by the Crystal Tree
Commerce Center operating
investment property. Monthly
payments including interest of
$28 are due beginning November
15, 1994 through maturity on
September 19, 2001 (see
discussion below). 3,430 3,463
--------- ---------
$ 9,811 $ 9,900
======== ========
On April 29, 1988, the Partnership borrowed $4,000,000 in the form of a
zero coupon loan secured by the 625 North Michigan operating property which
bore interest at an annual effective compounded rate of 9.8% and had a
scheduled maturity date in May of 1995. During the quarter ended June 30,
1994, an agreement was reached with the lender of the zero coupon loan on a
proposal to refinance the loan. The terms of the agreement called for the
Partnership to make a principal pay down of $541,000. The maturity date of
the loan, which now requires principal and interest payments on a monthly
basis as set forth above, was extended to May 31, 1999. The terms of the
loan agreement also required the establishment of an escrow account for real
estate taxes, as well as a capital improvement escrow which is to be funded
with monthly deposits from the Partnership aggregating approximately
$700,000 through the scheduled maturity date. Formal closing of the
modification and extension agreement occurred on May 31, 1994.
In addition, during 1986 and 1987 the Partnership received the proceeds
from three additional nonrecourse zero coupon loans in the initial amounts
of $3 million, $4.5 million and approximately $1.9 million, which were
secured by the Warner/Red Hill Business Center, the Monterra Apartments and
the Chandler's Reach Apartments, respectively. Legal liability for the
repayment of the two loans secured by the Warner/Red Hill and Monterra
properties rested with the related joint ventures and, accordingly, these
amounts were recorded on the books of the joint ventures. Interest expense
on the Warner/Red Hill and Monterra loans accrued at 9.36%, compounded
annually, and was due at maturity in August of 1993 and September of 1994,
respectively, at which time total principal and interest payments
aggregating $5,763,000 and $8,645,000, respectively, became due and payable.
The nonrecourse zero coupon loan secured by the Chandler's Reach Apartments,
which bore interest at 10.5%, compounded annually, matured on August 1, 1994
with an outstanding balance of $3,462,000. During the quarter ended December
31, 1993, the Partnership negotiated and signed a letter of intent to modify
and extend the maturity of the Warner/Red Hill zero coupon loan with the
existing lender. The terms of the extension and modification agreement,
which was finalized in August 1994, provide for a 10-year extension of the
note effective as of the original maturity date of August 15, 1993. During
the term of the agreement, the loan will bear interest at 2.875% per annum
and monthly principal and interest payments of $24,000 will be required. In
addition, the lender required a participation in the proceeds of a future
sale or debt refinancing in order to enter into this agreement. Accordingly,
upon the sale or refinancing of the property, the lender will receive 40% of
the residual value of the property, as defined, after the payment of the
outstanding balance of the loan payable. The principal balance of the
Warner/Red Hill loan as of September 30, 1995 was $5,513,000.
During September 1994, the Partnership obtained three new nonrecourse,
current-pay mortgage loans and used the proceeds to pay off the zero coupon
loans secured by the Monterra and Chandler's Reach apartment properties.
These three new loans were in the initial principal amounts of $4,920,000
secured by the Monterra Apartments, $3,600,000 secured by the Chandler's
Reach Apartments, and $3,480,000 secured by the Crystal Tree Commerce
Center. The legal liability for the loans secured by the Monterra Apartments
and Chandler's Reach Apartments rests with the related joint ventures and,
accordingly, these amounts are recorded on the books of the joint ventures.
As of September 30, 1995, the principal balances of the Monterra and
Chandler's Reach loans were $4,865,000 and $3,559,000, respectively. The
Partnership has indemnified the Monterra and Chandler's Reach joint
ventures, along with the related co-venture partners, against all
liabilities, claims and expenses associated with these borrowings. The three
new nonrecourse loans have terms of seven years and mature in September of
2001. The Chandler's Reach loan bears interest at a rate of 8.33% and
requires monthly principal and interest payments of $29,000. The Monterra
loan bears interest at a rate of 8.45% and requires monthly principal and
interest payments of $40,000. The Crystal Tree loan bears interest at a rate
of 8.39% and requires monthly principal and interest payments of $28,000.
6. Bonds Payable
Bonds payable consist of the Sunol Center joint venture's share of
liabilities for bonds issued by the City of Pleasanton, California for
public improvements that benefit the Sunol Center operating investment
property. Bond assessments are levied on a semi-annual basis as interest
and principal become due on the bonds. The bonds for which the operating
investment property is subject to assessment bear interest at rates ranging
from 5% to 7.87%, with an average rate of 7.2%. Principal and interest are
payable in semi-annual installments. In the event the operating investment
property is sold, Sunol Center Associates will no longer be liable for the
bond assessments.
7. Contingencies
The Partnership is involved in certain legal actions. The Managing General
Partner believes these actions will be resolved without material adverse
effect on the Partnership's financial statements, taken as a whole.
<PAGE>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As discussed in the Annual Report, subsequent to the completion of the
last of the debt refinancing transactions during fiscal 1995, management
performed an analysis of its cash flows and liquidity needs for the purpose of
determining the timing and amount of the reinstatement of quarterly
distributions to the partners. Based on such analysis, quarterly distributions
were reinstated with the payment made on May 15, 1995 for the quarter ended
March 31, 1995 at the rate of 1% per annum on original invested capital.
Management had suspended the Partnership's regular quarterly distributions in
order to accumulate the funds necessary to complete the refinancings of the zero
coupon loans secured by the Warner/Red Hill, Monterra, Chandler's Reach and 625
North Michigan properties. Management believes that it is prudent to distribute
cash flow conservatively at the present time due to the capital needs associated
with the Partnership's four commercial office/R&D buildings and one
retail/office property. Capital improvements are planned at 625 North Michigan
over the next two years, including the completion of facade repairs, common area
enhancements, elevator control system upgrading and a possible lobby area retail
space expansion and renovation. The 625 North Michigan Office Building was 88%
occupied as of December 31, 1995. As discussed further below, substantial
leasing costs have been incurred at Sunol Center during fiscal 1996, and
significant leasing costs could be incurred at 1881 Worcester Road and the
Crystal Tree Commerce Center in the near term.
Leasing at Sunol Center increased to 100% at December 31, 1995 from 32% at
March 31, 1995 as a result of two significant lease signings. A tenant that
signed a 7-year lease on 39,085 square feet took occupancy during the first
quarter, and a tenant which has committed to lease 60,000 square feet took
occupancy of 28,000 square feet of such space during the second quarter. Of the
balance of this tenant's space, 20,000 square feet had been occupied by another
tenant which vacated the property subsequent to the end of the third quarter
upon the expiration of its lease. The existing tenant will take occupancy of
this space and the remaining 12,000 square feet over the next 10 months. During
the first nine months of fiscal 1996, the Partnership funded $2,143,000 to the
Sunol Center joint venture primarily to pay for tenant improvements and leasing
commissions in connection with the new leases. With the new leasing activity,
once all the required capital work is completed no further operating deficits
are expected at Sunol Center for the next several years. At Crystal Tree,
occupancy increased from 87% to 92% during the quarter ended December 31, 1995
due to the signing of four new leases. The securing of these leases required an
initial investment in tenant improvement costs. Market conditions in the south
Florida area remain very competitive and continued tenant turnover is likely in
the near term. In addition, management completed certain capital improvements at
Crystal Tree during the current quarter, including resealing the parking lot,
completing a major roof repair, restaining the walkway, refurbishing the main
front fountain and completing the repainting of the office tower portion of the
property.
While occupancy at the 1881 Worcester Road Office Building had increased to
100% as of December 31, 1995, a lease with the property's largest tenant is due
to expire in July 1996. This tenant, which currently occupies 49% of the
building's net leasable area, is considering consolidating its area lease
obligations at another location and is not likely to renew its lease at 1881
Worcester Road. The three remaining leases at 1881 Worcester Road are due to
expire in calendar 1998. If, as expected, the aforementioned tenant vacates the
property in calendar 1996, management plans to make certain capital improvements
aimed at making the 1881 Worcester Road property more appealing to traditional
office space users. Management believes that these improvements could allow for
increased rental rates and a potentially quicker lease up of vacant space. The
total costs of completing the improvements are expected to be less than
$200,000. At the Warner/Red Hill Business Center, in addition to a decline in
occupancy experienced during fiscal 1995, one of the property's major tenants
that occupies approximately 25% of the property's net rentable area has been
experiencing cash flow problems and has retained a commercial leasing agent to
market a portion of its space for sublease. Unless its operations improve in the
near-term, this tenant is unlikely to renew its lease which is scheduled to
expire in July 1998. Furthermore, to the extent that its operating results
deteriorate further, and if the tenant is unable to sublease the space, the
Partnership may be unable to collect future rent owed under the lease
obligation. The occupancy level of Warner/Red Hill was 86% as of December 31,
1995.
At December 31, 1995, the Partnership and its consolidated joint venture
had available cash and cash equivalents of $3,764,000. These funds, along with
the future cash flow distributions from the operating properties, will be
utilized for the working capital requirements of the Partnership, monthly debt
service payments, for the funding of capital enhancements and potential leasing
costs for the operating investment properties and for distributions to the
partners. The source of future liquidity and distributions to the partners is
expected to be from the sales or refinancings of the operating investment
properties.
Results of Operations
Three Months Ended December 31, 1995
The Partnership's net loss increased by $196,000 for the three months
ended December 31, 1995 when compared to the same period in the prior year. This
unfavorable change in net operating results is primarily due to an increase in
property operating expenses of $179,000, an increase in depreciation and
amortization of $79,000 and an increase in interest expense of $38,000 over the
same period in the prior year. The increase in property operating expenses and
depreciation and amortization is primarily attributable to the extraordinary
maintenance expenses, capital improvements, tenant improvement costs and leasing
commissions incurred at both of the consolidated operating properties, Sunol
Center and Crystal Tree Commerce Center. The capitalized tenant improvements and
leasing commissions incurred also resulted in an increase of $123,000 in rental
income for the current three-month period to offset these expenses. Interest
expense in the current three-month period increased as a result of the fiscal
1995 debt refinancings, which resulted in the placement of a new loan secured by
the Crystal Tree Commerce Center.
Nine Months Ended December 31, 1995
The Partnership's net loss decreased by $437,000 for the nine months ended
December 31, 1995, when compared to the same period in the prior year, primarily
due to a decrease in the Partnership's share of unconsolidated venture's losses
of $488,000. The Partnership's share of unconsolidated ventures' losses
decreased mainly as a result of decreases in the net losses at the Monterra
Apartments and Warner/Red Hill joint ventures. The net loss of the Monterra
joint venture decreased primarily as a result of a significant decrease in
interest expense. The venture's interest expense decreased due to the
refinancing of the zero coupon loan secured by Monterra in September 1994. The
refinancing transaction changed Monterra's debt from a compounding zero coupon
loan with a balance of $8,645,000, bearing interest at 9.36% at the time of the
refinancing, to a current pay mortgage loan with an outstanding balance of
$4,865,000, bearing interest at 8.45%, at the end of the current quarter. The
net loss at the Warner/Red Hill joint venture decreased mainly due to a
significant decrease in depreciation expense. Depreciation expense decreased due
to the write-down of the operating investment property to its estimated fair
value at the end of fiscal 1995 in accordance with SFAS 121, as discussed
further in the Partnership's Annual Report. As a result of the write-down, the
remaining depreciable basis of the operating investment property was
significantly lower than in the prior fiscal year. The decline in the
Partnership's share of unconsolidated ventures' losses was partially offset by
an increase in the Partnership's operating loss of $51,000, due to increases in
property operating expenses and depreciation expense which were partially offset
by an increase in rental revenue at the Partnership's consolidated operating
properties, as explained further above in the discussion of results for the
three-month periods.
<PAGE>
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 70 limited partnership investments, including those offered by
the Partnership. The lawsuits were brought against PaineWebber Incorporated and
Paine Webber Group Inc. (together "PaineWebber"), among others, by allegedly
dissatisfied partnership investors. In March 1995, after the actions were
consolidated under the title In re PaineWebber Limited Partnership Litigation,
the plaintiffs amended their complaint to assert claims against a variety of
other defendants, including First Equity Partners, Inc. and Properties
Associates 1985, L.P. ("PA1985"), which are the General Partners of the
Partnership and affiliates of PaineWebber. On May 30, 1995, the court certified
class action treatment of the claims asserted in the litigation.
The amended complaint in the New York Limited Partnership Actions alleges
that, in connection with the sale of interests in PaineWebber Equity Partners
One Limited Partnership, PaineWebber, First Equity Partners, Inc. and PA1985 (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 Equity
Partners One Limited Partnership, also allege that following the sale of the
partnership interests, PaineWebber, First Equity Partners, Inc. and PA1985
misrepresented financial information about the Partnership's value and
performance. The amended complaint alleges that PaineWebber, First Equity
Partners, Inc. and PA1985 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.
In January 1996, PaineWebber signed a memorandum of understanding with the
plaintiffs in the New York Limited Partnership Actions outlining the terms under
which the parties have agreed to settle the case. Pursuant to that memorandum of
understanding, PaineWebber irrevocably deposited $125 million into an escrow
fund under the supervision of the United States District Court for the Southern
District of New York to be used to resolve the litigation in accordance with a
definitive settlement agreement and plan of allocation 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 investors in PaineWebber Equity Partners One
Limited Partnership. Pursuant to provisions of the Partnership Agreement and
other contractual obligations, under certain circumstances the Partnership may
be required to indemnify First Equity Partners, Inc., PA1985 and their
affiliates for costs and liabilities in connection with this litigation.
Management has had discussions with representatives of PaineWebber and, based on
such discussions, the Partnership does not believe that PaineWebber intends to
invoke the aforementioned indemnifications in connection with the settlement of
this litigation.
Item 2. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.
<PAGE>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PAINEWEBBER EQUITY PARTNERS ONE
LIMITED PARTNERSHIP
By: First Equity Partners, Inc.
Managing General Partner
By: /s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Dated: February 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Partnership's audited financial
statements for the 9 months ended December 31, 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,764
<SECURITIES> 0
<RECEIVABLES> 524
<ALLOWANCES> 1
<INVENTORY> 0
<CURRENT-ASSETS> 4,469
<PP&E> 56,084
<DEPRECIATION> 9,005
<TOTAL-ASSETS> 52,300
<CURRENT-LIABILITIES> 762
<BONDS> 11,432
<COMMON> 0
0
0
<OTHER-SE> 39,919
<TOTAL-LIABILITY-AND-EQUITY> 52,300
<SALES> 0
<TOTAL-REVENUES> 2,411
<CGS> 0
<TOTAL-COSTS> 2,382
<OTHER-EXPENSES> 103
<LOSS-PROVISION> 27
<INTEREST-EXPENSE> 774
<INCOME-PRETAX> (875)
<INCOME-TAX> 0
<INCOME-CONTINUING> (875)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (875)
<EPS-PRIMARY> (0.43)
<EPS-DILUTED> (0.43)
</TABLE>
