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 JUNE 30, 1997
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
June 30, 1997 and March 31, 1997 (Unaudited)
(In thousands)
ASSETS
June 30 March 31
------- --------
Operating investment properties:
Land $ 3,962 $ 3,962
Building and improvements 28,334 28,322
---------- -----------
32,296 32,284
Less accumulated depreciation (11,156) (10,823)
---------- -----------
21,140 21,461
Investments in unconsolidated joint ventures 22,687 22,525
Cash and cash equivalents 4,129 4,325
Prepaid expenses - 13
Accounts receivable, net 42 139
Accounts receivable - affiliates 312 260
Deferred rent receivable 345 353
Deferred expenses, net 631 660
---------- -----------
$ 49,286 $ 49,736
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 622 $ 474
Interest payable 60 60
Bonds payable 1,503 1,503
Mortgage notes payable 9,614 9,649
Co-venturer's share of net assets of
consolidated joint venture 187 187
Partners' capital 37,300 37,863
---------- -----------
$ 49,286 $ 49,736
========== ===========
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the three months ended June 30, 1997 and 1996 (Unaudited)
(In thousands)
General Limited
Partners Partners
-------- --------
Balance at March 31, 1996 $ (936) $40,215
Net loss (2) (222)
Cash distributions (3) (250)
------ -------
Balance at June 30, 1996 $ (941) $39,743
====== =======
Balance at March 31, 1997 $ (950) $38,813
Net loss (1) (57)
Cash distributions (5) (500)
------ -------
Balance at June 30, 1997 $ (956) $38,256
====== =======
See accompanying notes
<PAGE>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended June 30, 1997 and 1996 (Unaudited)
(In thousands, except per Unit data)
1997 1996
---- ----
Revenues:
Rental income and expense
reimbursements $ 758 $ 644
Interest and other income 73 56
-------- ------
831 700
Expenses:
Interest expense 243 254
Depreciation and amortization 381 376
Property operating expenses 265 294
Real estate taxes 80 79
General and administrative 66 90
Bad debt expense 16 27
-------- ------
1,051 1,120
-------- ------
Operating loss (220) (420)
Investment income:
Interest income on notes receivable
from unconsolidated ventures 200 200
Partnership's share of unconsolidated
ventures' losses (38) (4)
-------- ------
Net loss $ (58) $ (224)
======== =======
Net loss per Limited
Partnership Unit $ (0.03) $(0.11)
======= =======
Cash distributions per Limited
Partnership Unit $ 0.25 $ 0.13
======== ======
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 three months ended June 30, 1997 and 1996 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1997 1996
---- ----
Cash flows from operating activities:
Net loss $ (58) $ (224)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Partnership's share of unconsolidated
ventures' losses 38 4
Depreciation and amortization 381 376
Amortization of deferred financing costs 5 5
Changes in assets and liabilities:
Prepaid expenses 13 8
Accounts receivable 97 (210)
Accounts receivable - affiliates (52) (2)
Deferred rent receivable 8 185
Deferred expenses (24) (21)
Accounts payable and accrued expenses 148 (155)
------ -------
Total adjustments 614 190
------ -------
Net cash provided by (used in) operating
activities 556 (34)
------ -------
Cash flows from investing activities:
Distributions from unconsolidated joint ventures 216 561
Additions to operating investment properties (12) (269)
Additional investments in unconsolidated joint
ventures (416) (273)
------ -------
Net cash (used in) provided by investing
activities (212) 19
------ -------
Cash flows from financing activities:
Repayment of principal on mortgage notes payable (35) (31)
District bond assessments - 16
Distributions to partners (505) (253)
------ -------
Net cash used in financing activities (540) (268)
------ -------
Net decrease in cash and cash equivalents (196) (283)
Cash and cash equivalents, beginning of period 4,325 4,042
------ -------
Cash and cash equivalents, end of period $4,129 $ 3,759
====== =======
Cash paid during the period for interest $ 238 $ 249
====== =======
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, 1997. In the
opinion of management, the accompanying financial statements, which have not
been audited, reflect all adjustments necessary to present fairly the
results for the interim period. All of the accounting adjustments reflected
in the accompanying interim financial statements are of a normal recurring
nature.
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles which requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of June 30, 1997 and March 31, 1997 and
revenues and expenses for each of the three-month periods ended June 30,
1997 and 1996. Actual results could differ from the estimates and
assumptions used.
2. Related Party Transactions
Accounts receivable - affiliates at June 30, 1997 and March 31, 1997
includes $146,000 and $100,000, respectively, due from two joint ventures
for interest earned on permanent loans and $151,000 and $145,000,
respectively, of investor servicing fees due from several joint ventures for
reimbursement of certain expenses incurred in reporting Partnership
operations to the Limited Partners of the Partnership. Accounts receivable -
affiliates at both June 30, 1997 and March 31, 1997 also includes $15,000 of
expenses paid by the Partnership on behalf of one of the joint ventures
during fiscal 1993.
Included in general and administrative expenses for the three-month
periods ended June 30, 1997 and 1996 is $47,000 and $50,000, 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
three-month periods ended June 30, 1997 and 1996 is $5,000 and $7,000,
respectively, representing fees earned by an affiliate, Mitchell Hutchins
Institutional Investors, Inc., for managing the Partnership's cash assets.
3. Investments in Unconsolidated Joint Venture Partnerships
As of June 30, 1997 and 1996, 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.
<PAGE>
Summarized operations of the unconsolidated joint ventures, for the
periods indicated, are as follows:
Condensed Combined Summary of Operations
For the three months ended March 31, 1997 and 1996
(in thousands)
1997 1996
---- ----
Revenues:
Rental revenues and expense recoveries $ 2,686 $ 2,770
Interest and other income 38 34
------- -------
2,724 2,804
Expenses:
Property operating expenses 1,083 1,048
Real estate taxes 473 495
Mortgage interest expense 217 220
Interest expense payable to partner 200 200
Depreciation and amortization 780 780
------- -------
2,753 2,743
------- -------
Net income (loss) $ (29) $ 61
======= =======
Net income (loss):
Partnership's share of combined
income (loss) $ (26) $ 8
Co-venturers' share of combined
income (loss) (3) 53
------- -------
$ (29) $ 61
======= =======
Reconciliation of Partnership's Share of Operations
For the three months ended June 30, 1997 and 1996
(in thousands)
1997 1996
---- ----
Partnership's share of combined
income (loss), as shown above $ (26) $ 8
Amortization of excess basis (12) (12)
------- -------
Partnership's share of unconsolidated
ventures' losses $ (38) $ (4)
======= =======
4. Operating Investment Properties
At June 30, 1997 and March 31, 1997, 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.
<PAGE>
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 months ended June 30, 1997 and 1996 (in thousands):
1997 1996
---- ----
Property operating expenses:
Insurance $ 13 $ 13
Repairs and maintenance 81 115
Utilities 44 41
Management fees 26 23
Administrative and other 101 102
------ -------
$ 265 $ 294
====== =======
5. 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, the liability for the bond assessments would be
transferred to the buyer. Therefore, the Sunol Center joint venture would
no longer be liable for the bond assessments.
6. Mortgage Notes Payable
Mortgage notes payable at June 30, 1997 and March 31, 1997 consist of
the following (in thousands):
June 30 March 31
------- --------
9.125% nonrecourse loan payable to
an insurance company, which is
secured by the 625 North Michigan
Avenue operating investment property
(see discussion below). The terms of
the note were modified effective May
31, 1994. Monthly payments,
including interest, of $55 are due
beginning July 1, 1994 through
maturity on May 31, 1999. In
addition, the loan requires monthly
deposits to a capital improvement
escrow. The fair value of the
mortgage note payable approximated
its carrying value at June 30, 1997
and March 31, 1997. $ 6,257 $ 6,279
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. The fair
value of the mortgage note payable
approximated its carrying value at
June 30, 1997 and March 31, 1997. 3,357 3,370
------- -------
$ 9,614 $ 9,649
======= =======
In addition to the long-term mortgage debt described above, the
Partnership has indemnified Warner/Red Hill Associates, Crow/PaineWebber-
LaJolla, Ltd. and Lake Sammamish Limited Partnership, along with the
related co-venture partners, against all liabilities, claims and expenses
associated with certain outstanding secured borrowings of the unconsolidated
joint ventures. During the quarter ended December 31, 1993, the Partnership
negotiated and signed a letter of intent with the existing lender to modify
and extend the maturity of a zero coupon loan secured by the Warner/Red Hill
Office Building with an accreted principal balance of $5,763,000. The terms
of the extension and modification agreement, which was finalized in August
1994, provided 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, which is recorded on the books of the unconsolidated joint
venture, 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 Warner/Red Hill 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 extension and modification
agreement also required the Partnership to establish an escrow account in
the name of the joint venture and to fund such escrow with an equity
contribution of $350,000. The escrowed funds are to be used solely for the
payment of capital and tenant improvements, leasing commissions and real
estate taxes related to the Warner/Red Hill property. The balance of the
escrow account is to be maintained at a minimum level of $150,000. In the
event that the escrow balance falls below $150,000, all net cash flow from
the property is to be deposited into the escrow until the minimum balance is
re-established.
During September 1994, the Partnership obtained three new nonrecourse,
current-pay mortgage loans in the amounts of $3,600,000 secured by the
Chandler's Reach Apartments, $4,920,000 secured by the Monterra Apartments
and $3,480,000 (see description above) secured by the Crystal Tree Commerce
Center. The Chandler's Reach and Monterra nonrecourse loans, which are
recorded on the books of the unconsolidated joint ventures, 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. This loan will have an outstanding balance of
$3,199,000 at maturity. The Monterra loan bears interest at a rate of 8.45%
and requires monthly principal and interest payments of $40,000. This loan
will have an outstanding balance of approximately $4,380,000 at maturity.
<PAGE>
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information Relating to Forward-Looking Statements
- --------------------------------------------------
The following discussion of financial condition includes forward-looking
statements which reflect management's current views with respect to future
events and financial performance of the Partnership. These forward-looking
statements are subject to certain risks and uncertainties, including those
identified in Item 7 of the Partnership's Annual Report on Form 10-K for the
year ended March 31, 1997 under the heading "Certain Factors Affecting Future
Operating Results", which could cause actual results to differ materially from
historical results or those anticipated. The words "believe", "expect",
"anticipate," and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which were made based on facts and conditions as they existed as of
the date of this report. The Partnership undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Liquidity and Capital Resources
- -------------------------------
In light of the continued strength in the national real estate market with
respect to multi-family apartment properties and the recent improvements in the
office/R&D property markets, management believes that this may be an opportune
time to begin the process of selling the Partnership's operating investment
properties. As a result, management is currently focusing on potential
disposition strategies for the remaining investments in the Partnership's
portfolio. Although there are no assurances, it is currently contemplated that
sales of the Partnership's remaining assets could be completed within the next
2-to-3 years. The two multi-family apartment properties in which the Partnership
has an interest continue to experience strong occupancy levels and increasing
rental rates. As discussed further below, the operations of the five commercial
office and retail properties in the Partnership's portfolio are either stable or
improving. As a result of the improvement in operations of the properties in the
Partnership's portfolio, particularly at Sunol Center, the Partnership increased
the quarterly distribution to $5.00 per original $1,000 investment, which is
equivalent to a 2% annualized return, effective for the distribution paid on May
15, 1997 for the quarter ended March 31, 1997.
Sunol Center, in Pleasanton, California, remained 100% leased to three
tenants at June 30, 1997. The BART (Bay Area Rapid Transit) station, which will
serve the Hacienda Business Park in which Sunol Center is located, opened ahead
of schedule in early May 1997. None of the current leases at Sunol Center expire
before October 2001. The overall market remains strong with increasing rental
rates and a low vacancy level. Selective development in the area is continuing
as a result of this low vacancy level. Four new Pleasanton owner/user or
build-to-suit office developments, totalling 542,000 square feet, are currently
under construction. In addition, three major speculative office/flex
developments are also under construction in this market. These speculative
projects have all pre-leased a significant amount of their space. The existing
rental rates on the leases at Sunol Center are significantly below current
market rates. Provided there is not a dramatic increase in either planned
speculative development or build-to-suit development with current tenants in the
local market, the Partnership can be expected to achieve a materially higher
sale price for the Sunol Center property as the existing leases with
below-market rental rates approach their expiration dates. Accordingly,
management plans to defer any sale efforts for the immediate future in order to
capture this expected increase in value. In the meantime, management will
continue to closely monitor all planned development activity in the market.
The 64,000 square foot 1881 Worcester Road Office Building was 51% leased
as of June 30, 1997, unchanged from the previous quarter. As previously
reported, a tenant which had occupied 19% of the net leasable area moved out of
the building during the second quarter of fiscal 1997, although its lease
obligation was scheduled to continue until December 1998. Also, during the third
quarter of fiscal 1997, a settlement payment in the amount of $100,000 was
received from this tenant in return for a release from its remaining lease
obligation. During the third quarter of fiscal 1997, a lease expansion and
extension agreement was signed with the building's sole remaining tenant. This
tenant, which agreed to extend its lease term from three to six years, now
occupies the entire second floor of this two-story building, increasing its
occupancy from 29% to 51% of the net rentable area. The market for office space
in the suburban Boston area in which 1881 Worcester Road is located has
continued to strengthen in recent months. Average vacancy levels at similar
buildings in the area have declined to approximately 5%. As a result, very few
large blocks of space are available. During the first quarter of fiscal 1998,
the property management team completed the renovation of the building's lobby,
and a new leasing agent was retained to market the vacant space at the property.
The lobby renovations and the new leasing agent have stimulated leasing activity
which has resulted in serious lease negotiations with a prospective tenant that
would lease the entire first floor. In addition, several other prospective
tenants have expressed an interest in pursuing negotiations in the event that
this lease agreement cannot be completed. Consequently, management is cautiously
optimistic that the leasing of the vacant first floor at 1881 Worcester Road,
which comprises over 31,000 square feet, will be successfully completed in the
near term.
The Warner/Red Hill Business Center was 97% leased as of June 30, 1997, up
from 80% at the end of the prior quarter. One lease was signed during the
current quarter with a new tenant that moved into a 3,160 square foot space. Two
additional leases totalling 13,923 square feet were also secured by the leasing
team during the first quarter. These tenants are expected to take occupancy
during the second quarter. Leases with two tenants occupying a total of 10,146
square feet are scheduled to expire over the next twelve months. It is expected
that both tenants will renew their leases. Local rental rates for office space
have experienced a modest increase in recent months. This is the first positive
sign of potentially improving market conditions in the Tustin, California area
in several years. With the lack of speculative office construction in the local
market, the property's leasing team is cautiously optimistic that the general
market conditions will continue to improve during fiscal 1998.
The 625 North Michigan Office Building in Chicago, Illinois, was 87%
leased at June 30, 1997, compared to 82% at the end of the prior quarter. Four
new tenants totalling 8,422 square feet took occupancy during the quarter, and
one tenant expanded its space by 720 square feet. Another tenant occupying 1,509
square feet vacated its space at the end of its lease term. During the quarter,
two leases were signed with new tenants that will occupy 7,840 square feet, and
one existing tenant signed a lease for a 1,023 square foot expansion. These
tenants are expected to move into their spaces during the second quarter. Over
the remainder of calendar year 1997, leases with six tenants occupying a total
of 11,594 square feet will expire. The property's leasing team expects most of
these tenants to renew their leases. The modernization of the building's
elevator controls is currently underway. This work is expected to continue for
the remainder of calendar year 1997 at an estimated total cost of approximately
$700,000.
The occupancy level at the Crystal Tree Commerce Center in North Palm Beach
Florida was 95% as of June 30, 1997, a 1% decrease from the prior quarter. No
new leases were signed during the quarter. However, two tenants occupying 2,652
square feet were renewed. One tenant occupying 790 square feet moved from the
Center during the first quarter. Another tenant vacated its 1,924 square foot
space and relocated into the 790 square foot space. Over the remainder of
calendar year 1997, leases with five tenants totalling 4,304 square feet will
expire. Of these, four tenants totalling 2,889 square feet are expected to
renew. While rental rates and occupancy levels in the local market are gradually
increasing, rents are not expected to rise to a level over the near term that
would justify new construction. The Partnership is positioning Crystal Tree for
a future sale by having the property's management and leasing team negotiate
rental rates for new leases on a triple-net basis, whereby each tenant will be
responsible for 100% of its share of operating expenses. Only 20% of the leases
at the property are currently on a triple-net basis. As a result, in 80% of the
leases, the property owner is currently responsible for the tenant's portion of
operating expenses above a base amount. By the year 2000, the leasing plan for
Crystal Tree calls for 84% of the leases to have been converted to a triple-net
basis. Because most new leases in the local market are on a triple-net basis,
this conversion is expected to increase interest from prospective buyers of the
property and result in a higher sale price.
The average occupancy level at the Chandler's Reach Apartments in Redmond,
Washington, remained at 94% for the quarter ended June 30, 1997, unchanged from
the prior quarter. Conditions in the local market remain favorable as evidenced
by minimal new construction and increasing rental rates. Construction of
Microsoft Corporation's 37-acre campus, which is located within two miles of
Chandler's Reach, is ongoing and is expected to add 2,500 employees to the area.
The Redmond Town Center Mall, also located within two miles of the property, is
scheduled to open in August of 1997. This new mall will consist of 400,000
square feet of retail space, a 44-acre park and bike trails covering 120 acres.
These nearby amenities are expected to add to the appeal of Chandler's Reach
Apartments. Capital improvement plans at Chandler's Reach for the remainder of
calendar 1997 include the repainting of all of the building exteriors.
The average occupancy level at the Monterra Apartments in La Jolla,
California, was 97% for the quarter ended June 30, 1997, compared to 98% for the
prior quarter. The current occupancy level for competing properties averages
97%, and no new construction is planned in the local market area. As a result,
the leasing team at the Monterra property continues to raise the rental rates on
new leases. A major capital project to repair and/or replace water-damaged stair
towers and landings at the Monterra Apartments is scheduled to be completed by
the end of calendar 1997. The current cost estimate to complete this capital
project is approximately $250,000. Other capital work completed at the Monterra
Apartments during the first quarter included replacement of building gutters and
awnings, landscape upgrades, re-tiling of fountains, new signage and
miscellaneous clubhouse upgrades.
At June 30, 1997, the Partnership and its consolidated joint venture had
available cash and cash equivalents of approximately $4,129,000. 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 loan payments, the funding of capital enhancements and potential leasing
costs for its commercial property investments, and for distributions to the
partners. The source of future liquidity and distributions to the partners is
expected to be from the sales or refinancing of the operating investment
properties. Such sources of liquidity are expected to be sufficient to meet the
Partnership's needs on both a short-term and long-term basis. 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 June 30, 1997
- --------------------------------
The Partnership's net loss decreased by $166,000 for the three months
ended June 30, 1997 when compared to the same period in the prior year. This
favorable change in net loss is due to a decrease of $200,000 in the
Partnership`s operating loss. The Partnership's operating loss, which includes
the operating results of the wholly-owned Crystal Tree Commerce Center and the
consolidated Sunol Center joint venture, decreased mainly due to an increase in
rental income and a reduction in property operating expenses. Rental income
increased by $114,000 due to increases in average occupancies at both Crystal
Tree and Sunol Center. Property operating expenses decreased by $29,000
primarily due to a decline in repairs and maintenance costs at Sunol Center for
the current three-month period.
The decrease in operating loss was partially offset by an increase of
$34,000 in the Partnership's share of unconsolidated ventures' losses. The
increase in the Partnership's share of unconsolidated ventures' losses was
primarily a result of an increase in net loss at the 1881 Worcester Road joint
venture and a decrease in net income at 625 North Michigan. The net loss at the
1881 Worcester Road joint venture increased by $62,000 mainly as a result of the
decrease in occupancy during the second quarter of fiscal 1997, as discussed
further above. Net income at 625 North Michigan decreased by $19,000 also as a
result of a decrease in average occupancy. The increase in net loss at 1881
Worcester Road and the decrease in net income at 625 North Michigan were
partially offset by an increase of $33,000 in net income at the Warner/Red Hill
joint venture. Net income increased at Warner/Red Hill primarily due to an
increase in occupancy and a decrease in utilities expenses for the current
three-month period.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
NONE
Item 2. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
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: August 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's audited financial statements for the quarter ended June 30, 1997
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 4,129
<SECURITIES> 0
<RECEIVABLES> 355
<ALLOWANCES> 1
<INVENTORY> 0
<CURRENT-ASSETS> 4,483
<PP&E> 54,983
<DEPRECIATION> 11,156
<TOTAL-ASSETS> 49,286
<CURRENT-LIABILITIES> 682
<BONDS> 11,117
0
0
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</TABLE>
