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, 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 : 0-15035
PAINEWEBBER GROWTH PARTNERS THREE L.P.
(Exact name of registrant as specified in its charter)
Delaware 04-2882258
(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 GROWTH PARTNERS THREE L.P.
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and March 31, 1996 (Unaudited)
(In thousands)
ASSETS
December 31 March 31
----------- --------
Operating investment property, at cost:
Land $ - $ 670
Buildings - 7,932
Equipment and improvements - 572
----------- ----------
- 9,174
Less accumulated depreciation - (3,336)
----------- ----------
- 5,838
Investment in unconsolidated joint
venture, at equity 102 73
Cash and cash equivalents 1,162 801
Accounts receivable - 2
Prepaid expenses - 16
Deferred expenses, net - 67
Other assets - 227
----------- ----------
$ 1,264 $ 7,024
=========== ==========
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable and accrued expenses $ 16 $ 106
Accrued interest payable - 231
Loans payable to affiliates - 357
Advances from consolidated venture - 95
Deferred management fees payable to affiliate 1,266 1,244
Note payable - 8,330
Partners' deficit (18) (3,339)
----------- ----------
$ 1,264 $ 7,024
=========== ==========
See accompanying notes.
<PAGE>
PAINEWEBBER GROWTH PARTNERS THREE L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended December 31, 1996 and 1995 (Unaudited)
(In thousands, except for per Unit data)
Three Months Ended Nine Months Ended
December 31, December 31,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Rental income $ 719 $ 363 $1,457 $1,070
Interest and other income 56 8 75 25
------- ------- ------ ------
775 371 1,532 1,095
Expenses:
Property operating expenses 401 189 760 541
Interest expense 385 144 654 432
Depreciation 134 67 270 202
Partnership management fees - 32 22 96
General and administrative 43 51 99 138
------- ------- ------ ------
963 483 1,805 1,409
------- ------- ------ ------
Operating loss (188) (112) (273) (314)
Partnership's share of
unconsolidated venture's
income (loss) 7 (40) (32) (151)
Gain on sale of operating
investment property 3,231 - 3,231 -
Co-venture partner's share of
consolidated venture's
operations 395 - 395 -
------- ------- ------ ------
Net income (loss) $3,445 $ (152) $3,321 $ (465)
====== ======= ====== =======
Net income (loss) per
Limited Partnership Unit $127.55 $ (5.66) $122.96 $(17.23)
======= ======= ======= =======
The above net income (loss) per Limited Partnership Unit is based upon the
25,657 Limited Partnership Units outstanding during each period.
See accompanying notes.
<PAGE>
PAINEWEBBER GROWTH PARTNERS THREE L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the nine months ended December 31, 1996 and 1995 (Unaudited)
(In thousands)
General Limited
Partners Partners
-------- --------
Balance at March 31, 1995 $ (113) $(2,616)
Net loss (23) (442)
--------- -------
Balance at December 31, 1995 $ (136) $(3,058)
======== =======
Balance at March 31, 1996 $ (143) $(3,196)
Net income 166 3,155
-------- -------
Balance at December 31, 1996 $ 23 $ (41)
======== =======
See accompanying notes.
<PAGE>
PAINEWEBBER GROWTH PARTNERS THREE L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended December 31, 1996 and 1995 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1996 1995
---- ----
Cash flows from operating activities:
Net income (loss) $ 3,321 $ (465)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Gain on sale of operating investment
property (3,231) -
Co-venture partner's share of consolidated
venture's operations (395) -
Partnership's share of unconsolidated
venture's loss 32 151
Depreciation 270 202
Deferred management fees 22 96
Amortization of deferred financing costs 67 41
Changes in assets and liabilities:
Accounts receivable 2 -
Prepaid expenses 16 15
Accounts payable and accrued expenses (90) 48
Accrued interest payable 34 26
Advances from consolidated venture (95) (5)
-------- -------
Total adjustments (3,368) 574
-------- -------
Net cash provided by operating
activities (47) 109
Cash flows from investing activities:
Net proceeds from sale of operating
investment property 469 -
Distribution from unconsolidated venture - 164
Contribution to unconsolidated venture (61) (164)
-------- -------
Net cash provided by investing
activities 408 -
-------- -------
Net increase in cash and cash equivalents 361 109
Cash and cash equivalents, beginning of period 801 704
-------- -------
Cash and cash equivalents, end of period $ 1,162 $ 813
======== =======
Cash paid during the period for interest $ 553 $ 365
======== =======
See accompanying notes.
<PAGE>
PAINEWEBBER GROWTH PARTNERS THREE, L.P.
Notes to Consolidated Financial Statements
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussions should be
read in connection with the financial statements and footnotes contained in
the Partnership's Annual Report for the year ended March 31, 1996. 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 December 31, 1996 and March 31, 1996
and revenues and expenses for each of the three- and nine-month periods
ended December 31, 1996 and 1995. Actual results could differ from the
estimates and assumptions used.
As discussed further in Note 2, as a result of the sale of the operating
property owned by the Summerwind joint venture in December 1996, the
Partnership has one remaining joint venture investment, the Woodchase
Apartments (see Note 3). Management of the Partnership is currently
evaluating a potential liquidation of the Partnership which could be
accomplished during calendar 1997. There are no assurances, however, that
the disposition of the Partnership's remaining asset will be accomplished
within this time frame.
2. Related Party Transactions
The Adviser earned management fees of $22,000 and $96,000 for the
nine-month periods ended December 31, 1996 and 1995, respectively. A
limitation on cumulative management fees payable to the Adviser was reached
in the first quarter of fiscal 1997. Deferred management fees at December
31, 1996 and March 31, 1996 consist of $1,266,000 and $1,244,000,
respectively, due to PWPI. See the Partnership's Annual Report for further
information regarding deferred management fees. In connection with a
potential settlement of the litigation referred to in Note 6, the Adviser
has preliminarily agreed to forego payment of these deferred management
fees. Any recognition of a gain from the forgiveness of these management
fees will be deferred until the settlement of the litigation is finalized.
Included in general and administrative expenses for the nine-month periods
ended December 31, 1996 and 1995 is $30,000 and $35,000, 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 both of the
nine-month periods ended December 31, 1996 and 1995 is $2,000, representing
fees earned by an affiliate, Mitchell Hutchins Institutional Investors,
Inc., for managing the Partnership's cash assets.
3. Operating Investment Property
As of March 31, 1996, the Partnership's balance sheet included one
operating investment property; the Summerwind Apartments, owned by Tara
Associates, Ltd., a majority owned and controlled joint venture. As
discussed further below, the Summerwind Apartments was sold on December 27,
1996 to an unrelated third party. Tara Associates, Ltd., a Georgia limited
partnership (the "joint venture"), was organized on December 19, 1983 to
acquire and operate a 208-unit apartment complex, Summerwind Apartments,
located in Jonesboro, Georgia. On October 8, 1985, the Partnership acquired
a 70% general partnership interest in the joint venture. The remaining 30%
general and limited partnership interests were owned by John Lie-Nielson
(the "co-venturer"). Effective February 23, 1990, the co-venturer's general
partnership interest was converted to a limited partnership interest,
thereby giving the Partnership control over the operating investment
property.
On December 27, 1996, Tara Associates, Ltd. sold the Summerwind Apartments
to an unrelated third party for a net price of $550,000 plus the assumption
of the outstanding principal balance of the mortgage loan secured by the
property of $8,330,000 (see Note 5). The Partnership received net proceeds
of approximately $319,000 after deducting closing costs and other credits to
the buyer. For income tax reporting purposes, the Summerwind joint venture
was required to maintain its accounting records on a calendar year basis. As
a result, the Partnership had accounted for its joint venture investment
based on financial information which was three months in arrears to that of
the Partnership. Due to the Partnership's policy of accounting for
significant lag-period transactions in the period in which they occur, the
gain on this sale transaction was recognized during the quarter ended
December 31, 1996. Accordingly, in addition to the operations for the nine
months ended September 30, 1996, the Partnership's operating results for the
third quarter of fiscal 1997 also reflect the operations of the Summerwind
joint venture for the period October 1, 1996 through the date of the sale.
The following is a summary of property operating expenses reported on the
Partnership's consolidated statements of operations for the three and nine
months ended December 31, 1996 and 1995 (in thousands):
Three Months Ended Nine Months Ended
December 31, December 31,
---------------- -----------------
1996 (1) 1995 1996 (1) 1995
------- ---- ------- -----
Property operating expenses:
Repairs and maintenance $ 161 $ 74 $ 296 $ 197
Utilities 42 18 77 51
Property taxes 49 25 99 74
Management fees 37 18 74 53
Salaries and administrative 112 54 214 166
------ ------ ------ ------
$ 401 $ 189 $ 760 $ 541
====== ====== ====== ======
(1) Due to the Partnership's three-month reporting lag and the sale of the
Summerwind Apartments on December 27, 1996, as discussed above, the
Partnership reported operations of the consolidated venture from October 1,
1996 through the date of sale in the results for the three and nine months
ended December 31, 1996. Accordingly, the property operating expenses
summarized above for the three and nine months ended December 31, 1996
reflect almost an additional three months of operations.
4. Unconsolidated Joint Venture Partnership
The Partnership has an investment in one unconsolidated joint venture, St.
Louis Woodchase Associates, which owns and operates an operating investment
property, as more fully described in the Partnership's Annual Report. The
unconsolidated joint venture is accounted for on the equity method in the
Partnership's financial statements because the Partnership does not have a
voting control interest in the venture. Under the equity method, the
investment is carried at cost adjusted for the Partnership's share of
venture's earnings and losses and distributions. The Partnership recognizes
its share of the operating results of its unconsolidated joint venture based
on financial results of the venture which are three months in arrears to
that of the Partnership.
<PAGE>
Summarized operating results of the unconsolidated joint venture, for the
periods indicated, are as follows:
Condensed Summary of Operations
For the three and nine months ended September 30, 1996 and 1995
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Rental revenues $ 396 $ 388 $1,130 $1,124
Other income 18 17 50 38
------ ------- ------ ------
414 405 1,180 1,162
Expenses:
Interest expense 158 224 473 657
Property operating expenses 120 123 391 378
Real estate taxes 22 26 65 78
Depreciation 104 90 296 265
------ ------- ------ ------
404 463 1,225 1,378
------ ------- ------ ------
Net income (loss) $ 10 $ (58) $ (45) $ (216)
====== ======= ====== ======
Net income (loss):
Partnership's share of net
income (loss) $ 7 $ (40) $ (32) $ (151)
Co-venturer's share of net
income (loss) 3 (18) (13) (65)
------ ------ ------ ------
$ 10 $ (58) $ (45) $ (216)
====== ====== ====== ======
5. Note Payable
Note payable at December 31, 1996 and March 31, 1996 consists of the
following (in thousands):
December 31 March 31
----------- --------
Mortgage loan payable by the
consolidated Tara Associates, Ltd.
which secured Housing Authority of
Clayton County Collateralized
Loan-to-Lender Housing Revenue
Bonds. The non-recourse mortgage
loan was secured by a deed to secure
debt and a security agreement
covering Tara Associates, Ltd.'s
real and personal property. The loan
bore interest at a floating rate
which was reset weekly based on the
market rate for tax exempt
securities with similar maturities.
The fair value of the mortgage note
payable approximated its carrying
value as of December 31, 1995. As
discussed further in Note 3, on
December 27, 1996 Tara Associates,
Ltd. sold the Summerwind Apartments
to an unrelated third party which
assumed the outstanding first
mortgage loan. $ - $ 8,330
<PAGE>
6. Contingencies
As discussed in more detail in the Annual Report for the year ended March
31, 1996, the Partnership is involved in certain legal actions. At the
present time, the Managing General Partner is unable to determine what
impact, if any, the resolution of these matters may have on the
Partnership's financial statements, taken as a whole.
<PAGE>
PAINEWEBBER GROWTH PARTNERS THREE L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
During the third quarter of fiscal 1997, the Partnership signed a letter
of intent with an unrelated third party to sell the Summerwind Apartments for a
net price of $550,000 in cash. The net purchase price reflects the assumption by
the purchaser of the $8,330,000 first mortgage loan secured by the operating
investment property. The Partnership received net proceeds of approximately
$319,000 after deducting closing costs and other credits to the buyer. The
Partnership's original investment in the Summerwind joint venture totalled
approximately $2.4 million. Despite recovering less than 15% of the original
investment, management believes it was the right time to sell this asset in
light of the property's estimated market value, the limited potential for
near-term appreciation and the uncertain prospects for extending or refinancing
the venture's long-term debt, as discussed further below.
As discussed further in the Annual Report, the Summerwind joint venture
had been generating excess cash flow from operations as a result of the low
level of the variable interest rate on the venture's first mortgage loan. Such
excess cash flow was being used to pay Partnership operating expenses. The debt
secured by the Summerwind property, which required interest-only payments on a
monthly basis, was provided by tax-exempt revenue bonds issued by a local
housing authority. The interest rate on such debt, which was tied to comparable
tax-exempt bond obligations, was significantly lower than rates on conventional
mortgage financing. In fact, the venture's cash flow would likely not have been
sufficient to support conventional financing, including monthly principal
amortization, at current market interest rates. The mortgage loan secured by the
Summerwind Apartments was subject to various prepayment provisions including a
mandatory redemption on March 16, 1997, the first scheduled remarketing date, as
defined, which coincided with the expiration of the letter of credit agreement
which secured the underlying bonds. Unless the letter of credit was replaced or
extended, the venture's mortgage loan would have been immediately due and
payable upon this scheduled expiration date. Management's estimate of the fair
market value of the Summerwind Apartments put the value of the property at or
slightly above the amount of the outstanding first mortgage loan as of December
1996. Accordingly, it was unlikely that the property would have satisfied a
letter of credit issuer's loan-to-value ratio requirements for issuing a new
letter of credit. Consequently, the property would have been subject to
foreclosure proceedings during fiscal 1997 if the Partnership had not completed
the sale transaction. The price that the buyer was willing to pay for the
Summerwind property was based mainly upon the ability to earn management fees
and to receive current net cash flow after completing a modification and
extension agreement with the mortgage lender. The modification and extension
agreement required that the buyer deposit significant additional collateral with
the mortgage lender.
As a result of the sale of the Summerwind Apartments, the Partnership has
one remaining joint venture investment, the Woodchase Apartments. Management of
the Partnership will now focus on achieving a near-term sale of the property and
possibly completing a liquidation of the Partnership by the end of calendar
1997. There are no assurances, however, that the disposition of the
Partnership's remaining asset will be accomplished within this time frame.
On September 13, 1995, the Partnership, along with its co-venture
partner, refinanced the mortgage debt secured by the Woodchase Apartments with a
new lender. The new non-recourse mortgage loan was in the initial principal
amount of $8,200,000 and bears interest at a rate of 7.5% per annum. The new
loan requires monthly principal and interest payments of approximately $57,000
and matures on October 1, 2002. In refinancing the Woodchase debt obligation,
management obtained assumable financing which reduced the venture's debt service
costs and enhances the marketability of the property for a possible sale. Market
conditions for multi-family properties in the St. Louis sub-market in which
Woodchase is located are stable at the present time with a limited amount of new
construction activity in progress. Management expects to begin exploring
potential sale opportunities in the fourth quarter.
Upon the sale or disposition of the Partnership's investments, the
taxable gain or loss incurred will be allocated among the partners. In the case
where a taxable gain would be incurred, gain would first be allocated to the
General Partners in an amount at least sufficient to eliminate their deficit
capital balance, if any. The majority of the remaining gain would then be
allocated to the Limited Partners. In certain cases, the Limited Partners could
be allocated taxable income in excess of any liquidation proceeds that they may
receive. Income from the sale or disposition of the Partnership's investments
will represent passive income to the partners which can be offset by each
partner's existing passive losses, including any carryovers from prior years.
At December 31, 1996, the Partnership had available cash and cash
equivalents of approximately $1,162,000. Such cash and cash equivalents will be
used for the working capital needs of the Partnership through its expected
liquidation. The source of future liquidity and distributions to the partners is
expected to be through the proceeds received from the sale or refinancing of the
Partnership's remaining investment property. Subsequent to the eventual sale of
the Woodchase investment, the net sale proceeds, along with any remaining
Partnership reserves after the payment of all liquidation-related expenses, will
be distributed to the Limited Partners.
Results of Operations
Three Months Ended December 31, 1996
- ------------------------------------
The Partnership reported net income of $3,445,000 for the three-month
period ended December 31, 1996 as compared to a net loss of $152,000 for the
same period in the prior year. The Partnership's net income for the current
three-month period is a result of the gain recognized from the sale of the
Summerwind Apartments in December 1996, as discussed above. The gain amounted to
$3,231,000, which represents the difference between the gross purchase price of
$8,880,000 net of selling costs, and the carrying value of the operating
investment property, net of accumulated depreciation. The sale of the operating
investment property owned by the consolidated Summerwind joint venture was also
responsible for significant increases in both total revenues and total expenses,
of $404,000 and $480,000, respectively. Operations of the Summerwind joint
venture are normally reported on a three-month lag. However, due to the sale of
the venture's property on December 27, 1996, the recognition of operations was
accelerated through the date of the sale in the current period. In addition, a
$32,000 decrease in management fees also contributed to the favorable change in
net operating results for the current three-month period. Management fees
decreased as a result of the Partnership having reached a limitation during the
first quarter of fiscal 1997 on the cumulative amount of allowable management
fees payable to the Adviser pursuant to the Partnership's advisory contract.
The Partnership's share of unconsolidated venture's income, which
represents the operating results of the Woodchase joint venture, amounted to
$7,000 for the three-month period ended December 31, 1996 as compared to a net
loss of $40,000 for the same period in the prior year. The $47,000 favorable
change in the Partnership's share of the Woodchase joint venture's operations is
mainly due to a $67,000 decrease in the venture's interest expense. Interest
expense decreased due to the September 1995 refinancing of the venture's prior
mortgage debt, as discussed further above, which resulted in a lower interest
rate and lower debt service costs.
Nine Months Ended December 31, 1996
- -----------------------------------
The Partnership reported net income of $3,321,000 for the nine-month
period ended December 31, 1996 as compared to a net loss of $465,000 for the
same period in the prior year. The Partnership's net income for the current
nine-month period is a result of the gain recognized from the sale of the
Summerwind Apartments in December 1996, as discussed further above. The sale of
the operating investment property owned by the consolidated Summerwind joint
venture was also responsible for significant increases in both total revenues
and total expenses, of $437,000 and $396,000, respectively. As discussed further
above, due to the Partnership's policy of accounting for significant lag-period
transactions in the period in which they occur, the recognition of the
consolidated venture's operations was accelerated through the date of the sale
in the current period. Decreases in management fees of $74,000 and general and
administrative expenses of $38,000 also contributed to the favorable change in
net operating results for the current nine-month period. Management fees
decreased as a result of the Partnership having reached a limitation during the
first quarter of fiscal 1997 on the cumulative amount of allowable management
fees payable to the Adviser pursuant to the Partnership's advisory contract.
General and administrative expenses decreased mainly due to a decrease in
certain required professional fees when compared to the same period in the prior
year.
The Partnership's share of unconsolidated venture's loss, which represents
the operating results of the Woodchase joint venture, decreased by $119,000 for
the nine-month period ended December 31, 1996. This favorable change in the
Partnership's share of the Woodchase joint venture's operations is mainly due to
a $184,000 decrease in the venture's interest expense. Interest expense
decreased due to the September 1995 refinancing of the venture's prior mortgage
debt, as discussed further above, which resulted in a lower interest rate and
lower debt service costs.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
As discussed in prior quarterly and annual reports, 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 Third PW Growth Properties, 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.
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. On July 17, 1996,
PaineWebber and the class plaintiffs submitted a definitive settlement agreement
which has been preliminarily approved by the court and provides for the complete
resolution of the class action litigation, including releases in favor of the
Partnership and the General Partners, and the allocation of the $125 million
settlement fund among investors in the various partnerships at issue in the
case. As part of the settlement, PaineWebber also agreed to provide class
members with certain financial guarantees relating to some of the partnerships.
The details of the settlement are described in a notice mailed directly to class
members at the direction of the court. A final hearing on the fairness of the
proposed settlement was held in December 1996, and a ruling by the court as a
result of this final hearing is currently pending.
With regard to the Abbate action described in the Annual Report on Form
10-K for the year ended March 31, 1996, in September 1996 the court dismissed
many of the plaintiffs' claims as barred by applicable securities arbitration
regulations. Mediation with respect to the Abbate action was held in December
1996. As a result of such mediation, a tentative settlement between PaineWebber
and the plaintiffs was reached which would provide for complete resolution of
the action. PaineWebber anticipates that releases and dismissals with regard to
this action will be received by February 1997.
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 the litigation
discussed above. However, PaineWebber has agreed not to seek indemnification for
any amounts it is required to pay in connection with the settlement of the New
York Limited Partnership Actions. At the present time, the General Partners
cannot estimate the impact, if any, of the potential indemnification claims on
the Partnership's financial statements, taken as a whole. Accordingly, no
provision for any liability which could result from the eventual outcome of
these matters has been made in the accompanying financial statements of the
Partnership.
Item 2. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
A Current Report on Form 8-K was filed by the registrant on January 21,
1997 reporting the sale of Summerwind Apartments on December 27, 1996.
<PAGE>
PAINEWEBBER GROWTH PARTNERS THREE L.P.
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.
PAINEWEBBER GROWTH PARTNERS THREE L.P.
By: THIRD PW GROWTH PROPERTIES, INC.
Managing General Partner
By: /s/ Walter V. Arnold
---------------------
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Date: February 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 December 31,
1996 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-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 1,162
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,162
<PP&E> 102
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,264
<CURRENT-LIABILITIES> 16
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (18)
<TOTAL-LIABILITY-AND-EQUITY> 1,264
<SALES> 0
<TOTAL-REVENUES> 4,763
<CGS> 0
<TOTAL-COSTS> 1,151
<OTHER-EXPENSES> 32
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 654
<INCOME-PRETAX> 3,321
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,321
<EPS-PRIMARY> 122.96
<EPS-DILUTED> 122.96
</TABLE>
