PAINEWEBBER MORTGAGE PARTNERS FIVE L P, 10-K405, 1995-11-29

PAINEWEBBER MORTGAGE PARTNERS FIVE L P
10-K405, 1995-11-29
REAL ESTATE

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR FISCAL YEAR ENDED: AUGUST 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: 0-17149

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
(Exact name of registrant as specified in its charter)

Delaware 04-2889712
(State of organization) (I.R.S.Employer
Identification No.)

265 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code:(617) 439-8118

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each class which registered
None None

Securities registered pursuant to Section 12(g) of the Act:

UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of class)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X

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
-----

DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
Prospectus of registrant dated Part IV
December 3, 1985, as supplemented

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
1995 FORM 10-K

TABLE OF CONTENTS

PART I Page

Item 1 Business I-1

Item 2 Properties I-3

Item 3 Legal Proceedings I-3

Item 4 Submission of Matters to a Vote of
Security Holders I-4

PART II

Item5 Market for the Partnership's Limited
Partnership Interests and
Related Security Holder Matters II-1

Item6 Selected Financial Data II-1

Item7 Management's Discussion and Analysis
of Financial Condition
and Results of Operations II-2

Item8 Financial Statements and Supplementary Data II-5

Item9 Changes in and Disagreements with
Accountants on Accounting
and Financial Disclosure II-5

PART III

Item10 Directors and Executive Officers
of the Partnership III-1

Item 11 Executive Compensation III-3

Item12 Security Ownership of Certain Beneficial
Owners and Management III-3

Item13 Certain Relationships and Related Transactions III-3

PART IV

Item14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K IV-1

Signatures IV-2

Index to Exhibits IV-3

Financial Statements and Supplementary Data F-1 to F-14
PART I

Item 1. Business

PaineWebber Mortgage Partners Five, L.P. (the "Partnership") is a limited
partnership formed in October 1985 under the Uniform Limited Partnership Act of
the State of Delaware for the purpose of investing in a diversified portfolio of
income-producing operating properties through land purchase-leaseback
transactions and first mortgage loans. The Partnership sold $38,849,400 in
Limited Partnership Units (776,988 Units at $50 per Unit) from December 3, 1985
to December 2, 1987 pursuant to an Amended Registration Statement filed on Form
S-11 under the Securities Act of 1933 (Registration No. 33-934). Limited
Partners will not be required to make any additional capital contributions.

The Partnership originally owned land and made first mortgage loans secured
by buildings with respect to four operating properties. As discussed further
below, the Partnership's investments related to one of the properties were sold
in fiscal 1990. As of August 31, 1995, the Partnership owns two operating
properties directly as a result of foreclosure actions resulting from defaults
under the terms of the mortgage loans receivable, and has one remaining loan
receivable and land investment. The Partnership's operating properties and
security for its mortgage loan investment are described below.

Property name Type of Property and
and Location Date of Investment Size Type of Ownership (1)

Hacienda Plaza Retail and 78,415 Fee
(2) Office sq. ownership
Pleasanton, CA Complex ft.; of land
8/15/86 6.3 and
acres improvements
of
land

Spartan Place (3) Shopping 151,489 Fee
Spartanburg, SC Center sq. ownership
4/28/88 ft.; of land
13.9 and
acres improvements
of land

Park South (4) Apartments 240 Fee
Charlotte, NC 12/29/88 units; ownership
19 of land
acres and first
of land mortgage
lien on
improvements

(1)See Notes to the Financial Statements filed with this Annual Report for a
description of the transactions through which the Partnership has acquired
these real estate investments.

(2)On June 22, 1990, the Partnership was granted title to the Hacienda Plaza
property and assumed ownership as a result of certain defaults by the
borrower under the terms of the Partnership's mortgage loan receivable. The
Partnership has been operating the property utilizing the services of a
local property management company since the date of the foreclosure.

(3)On February 12, 1991, the Partnership received the title to the Spartan
Place property and assumed ownership as a result of certain defaults by the
borrower under the terms of the Partnership's mortgage loan receivable. The
Partnership is currently operating the property utilizing the services of a
local property management company.

(4)The Partnership owns a 23% interest in the land underlying the Park South
Apartments and has an equivalent interest in the related secured mortgage
loan. The remaining 77% interest in the land and mortgage loan receivable
is owned by an affiliated partnership, Paine Webber Qualified Plan Property
Fund Four, LP.

In November 1989, the Partnership sold the land it had previously owned and
leased back to Ballston Place Associates Limited Partnership (`BPA''). The
Partnership also allowed BPA to prepay the mortgage loan secured by the Ballston
Place Phase I apartment building. BPA made a cash payment of approximately
$11,402,000 to the Partnership on November 29, 1989 in return for the
Partnership's agreement to release the first leasehold mortgage applicable to
the Ballston Place Apartments Phase I. In connection with the sale, the
Partnership received a fixed installment note in the principal amount of
$355,200, which was to be payable in eight annual installment payments beginning
April 1, 1992 and ending on April 1, 1999. The fixed installment note was to
bear interest, beginning in April of 1992, equal to the interest rate applicable
to one-year U.S. Treasury bills and was guaranteed as to its payment by the
parent company of the borrowing entity. During fiscal 1992, the borrower failed
to make the required April 1, 1992 initial installment payment due the
Partnership and filed for protection under Chapter 11 of the U.S. Bankruptcy
Code due to defaults on the first mortgage loan secured by the property..
Throughout fiscal 1993, management pursued legal action against the guarantors
of the note in an effort to collect the principal and interest receivable.
During the quarter ended February 28, 1993, a settlement agreement between the
Partnership and the guarantors was approved by the United States Bankruptcy
Court whereby the Partnership received a cash payment of $81,000 to fully
satisfy all of the borrower's outstanding obligations to the Partnership.

The Partnership's investment objectives are to:

(1)preserve and protect the Limited Partners' capital;
(2)preserve the Limited Partners' buying power (i.e., provide an inflation
hedge);
(3)provide the Limited Partners with cash distributions from investment income;
and
(4)achieve long-term appreciation in the value of Partnership's investments.

Through August 31, 1995, the Limited Partners had received cumulative cash
distributions totalling approximately $26,137,000, or $703 per original $1,000
investment for the Partnership's earliest investors. This return includes
distributions of $322 per original $1,000 investment from the prepayment of the
Ballston Place mortgage loan and related land repurchase in November of 1989.
In addition, the Partnership retains interests in three of the four investment
properties underlying its original mortgage loan and land investments. The
Partnership's success in meeting its capital appreciation objective will depend
upon the proceeds received from the final liquidation of its remaining
investments. The amount of such proceeds will ultimately depend upon the value
of the underlying investment properties at the time of their final liquidation,
which cannot presently be determined. At the present time, real estate values
for commercial office buildings are generally depressed nationwide due to an
oversupply of competing space in many markets and the trend of corporate
consolidations and downsizing which has followed in the wake of the last
national recession. In addition, values for retail shopping centers in certain
markets have begun to be affected by the effects of overbuilding and
consolidations among retailers which have resulted in an oversupply of space.
Management believes that such conditions are temporary and will change as
certain market corrections occur.

The Partnership expects to finance or sell its investments and have its
mortgage loan repaid from time to time. It is expected that most sales and
repayments will be made after a period of between seven and fifteen years after
the conclusion of the offering period, although sales and repayments may occur
at earlier or later dates. In deciding whether to take any such actions, the
Managing General Partner will consider such factors as the amount of
appreciation in value, if any, to be realized, the risks of continued investment
and the anticipated advantages to be gained from continuing to hold the
investment. The proceeds from such sales, financings or refinancings of the
investments will not be reinvested but will be distributed to the Partners, so
that the Partnership will in effect be self-liquidating. As discussed further
in Item 7, the Partnership had been negotiating for the possible sale of the
Spartan Place Shopping Center. Subsequent to year-end, the potential sale
transaction could not be completed. Management is currently considering whether
to re-market the property for sale or to hold the property and invest the funds
to redevelop the shopping center, which has a substantial amount of vacant
space.
The Partnership's operating properties and the property securing its
mortgage loan investment are located in real estate markets in which they face
significant competition for the revenues they generate. The apartment complex
competes with numerous similar projects generally on the basis of price,
location and amenities. Apartment properties in all markets also compete with
the local single family home market for prospective tenants. The availability
of low home mortgage interest rates over the past two years has generally caused
this competition to increase in all areas of the country. The shopping center
and the retail/office complex compete for long-term commercial tenants with
numerous projects of similar type generally on the basis of rental rates,
location and tenant improvement allowances. The Partnership has no real estate
investments located outside the United States. The Partnership is engaged
solely in the business of real estate investment. Therefore, a presentation of
information about industry segments is not applicable.

The Partnership has no employees; it has, however, entered into an Advisory
Contract with PaineWebber Properties Incorporated (the "Adviser"), which is
responsible for the day-to-day operations of the Partnership. The Adviser is a
wholly-owned subsidiary of PaineWebber Incorporated ("PWI"), a wholly-owned
subsidiary of PaineWebber Group Inc. ("PaineWebber").

The general partners of the Partnership (the "General Partners") are Fifth
Mortgage Partners, Inc. and Properties Associates 1985, L.P. Fifth Mortgage
Partners, Inc., a wholly-owned subsidiary of PaineWebber, is the Managing
General Partner of the Partnership. The Associate General Partner is Properties
Associates 1985, L.P., a Virginia limited partnership, certain limited partners
of which are also officers of the Adviser and the Managing General Partner.
Subject to the Managing General Partner's overall authority, the business of the
Partnership is managed by the Adviser. The terms of transactions between the
Partnership and affiliates of the
Managing General Partner of the Partnership are set forth in Items 11 and 13
below to which reference is hereby made for a description of such terms and
transactions.

Item 2. Properties

As of August 31, 1995, the Partnership owns two operating properties
directly as a result of foreclosures on certain mortgage loans receivable during
fiscal 1991 and 1990, as noted in Item 1 above to which reference is made for
the description, name and location of such properties. Additionally, as of
August 31, 1995 the Partnership owns, and has leased back to the sellers, the
land underlying the investment property referred to under Item 1.

Occupancy figures for each fiscal quarter during 1995, along with an average
for the year, are presented below for each property.

Percent Occupied At
Fiscal 1995
11/30/942/28/95 5/31/95 8/31/95 Average

Hacienda Plaza 87% 88% 86% 86% 87%

Spartan Place 80% 78% 66% 38% 66%

Park South 96% 94% 92% 97% 95%

Item 3. Legal Proceedings

In November 1994, a series of purported class actions (the "New York Limited
Partnership Actions") were filed in the United States District Court for the
Southern District of New York concerning PaineWebber Incorporated's sale and
sponsorship of various limited partnership investments, including those offered
by the Partnership. The lawsuits were brought against PaineWebber Incorporated
and Paine Webber Group Inc. (together "PaineWebber"), among others, by allegedly
dissatisfied partnership investors. In March 1995, after the actions were
consolidated under the title In re PaineWebber Limited Partnership Litigation,
the plaintiffs amended their complaint to assert claims against a variety of
other defendants, including Fifth Mortgage 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 Mortgage Partners
Five, L.P., PaineWebber, Fifth Mortgage 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 Mortgage Partners Five, L.P.,
also allege that following the sale of the partnership interests, PaineWebber,
Fifth Mortgage Partners, Inc. and PA1985 misrepresented financial information
about the Partnership's value and performance. The amended complaint alleges
that PaineWebber, Fifth Mortgage 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. The defendants' time to move against or answer the complaint has
not yet expired.

Pursuant to provisions of the Partnership Agreement and other contractual
obligations, under certain circumstances the Partnership may be required to
indemnify Fifth Mortgage Partners, Inc., PA1985 and their affiliates for costs
and liabilities in connection with this litigation. The General Partners intend
to vigorously contest the allegations of the action, and believe that the action
will be resolved without material adverse effect on the Partnership's financial
statements, taken as a whole.

The Partnership is not subject to any other material pending legal
proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

None. PART II

Item 5. Market for the Partnership's Limited Partnership Interests and Related
Security Holder Matters

At August 31, 1995 there were 6,106 record holders of Units in the
Partnership. There is no public market for the resale of Units, and it is not
anticipated that a public market for Units will develop. The Managing General
Partner will not redeem or repurchase Units.

Item 6. Selected Financial Data

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
SELECTED FINANCIAL DATA
For the years ended August 31, 1995, 1994, 1993, 1992 and 1991
(in thousands, except per Unit data)

1995 1994 1993 1992 1991

Revenues $ 300 $ 248 $ 231 $ 249 $ 561

Operating income (loss)$ (193) $ (201) $ (153) $ (561) $ 232

Loss on foreclosure - - - - $ (579)

Provision for possible
investment loss $(1,000) $ (1,300) $ (900) $ (1,502) $ (1,438)

Income from
investment properties
held for sale $ 480 $ 886 $ 837 $ 901 $ 521

Net loss $ (713) $ (614) $ (215) $ (1,161) $ (1,263)

Net loss
per Limited
Partnership Unit $ (0.91) $ (0.78) $ (0.27) $ (1.48) $ (1.61)

Cash distributions
per Limited
Partnership Unit $ 0.99 $ 0.86 $ 0.73 $ 0.68 $ 0.68

Total assets $ 14,175 $ 15,592 $ 16,977 $ 17,723 $ 19,375

The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Annual
Report.

The above net loss and cash distributions per Limited Partnership Unit are
based upon the 776,988 Limited Partnership Units outstanding during each year.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

LIQUIDITY AND CAPITAL RESOURCES

The Partnership offered Limited Partnership Interests to the public from
December 3, 1985 to December 2, 1987 pursuant to an Amended Registration
Statement filed under the Securities Act of 1933. Gross proceeds of
$38,849,400 were received by the Partnership and, after deducting selling
expenses and offering costs, $33,600,000 was invested in four operating
properties in the form of first mortgage loans and land purchase-leaseback
transactions. Since the time that the original investments were made, the
Partnership has liquidated its Ballston Place mortgage loan and land
investments. In addition, the Partnership has assumed direct ownership of the
Hacienda Plaza and Spartan Place properties subsequent to foreclosure
proceedings resulting from defaults under the terms of the Partnership's first
mortgage loans.

The Spartan Place Shopping Center, in Spartanburg, South Carolina, was 38%
occupied as of August 31, 1995, down from 85% as of August 31, 1994 and 66% as
of the end of the third quarter. As previously reported, Circuit City vacated
one of the anchor tenant spaces at the property during the quarter ended May 31,
1995 to move to a location they believed to be better suited to their future
operations. Circuit City had occupied 16,412 square feet, or 11% of the net
leasable space at the Center, and remains obligated to pay annual base rent of
approximately $112,000, plus its pro rata share of operating expenses, through
the end of its lease term, in January 2008. In addition, management of
Phar-Mor, another anchor tenant which occupied 26% of the leasable space at
Spartan Place, closed their store at Spartan Place and terminated their lease
in July 1995 as part of their bankruptcy reorganization plan. A number of
smaller shop space tenants also either went out of business or failed to
renew their leases during fiscal 1995. Re-leasing the Circuit City and
Phar-Mor space to high-profile, strong credit tenants will be critical to
increasing shopper traffic at the center which will be necessary to retain
the existing tenants and to lease the vacant shop space. However, such
re-leasing plans could require a major expansion and/or repositioning of
the shopping center. Alternatively, management has considered a possible
sale of the property prior to undertaking any major re-leasing commitments
and potentially spending significant funds on capital and tenant
improvements. During the quarter ended May 31, 1995, the Partnership received
two offers to purchase Spartan Place. Subsequent to the end of the fiscal year,
the Partnership entered into a purchase and sale agreement with the higher
bidder at a negotiated sales price of $6,150,000. Under the terms of the
contract, the buyer had thirty days to perform its due diligence procedures.
Subsequent to the buyer's due diligence period, the offer to purchase the
property was withdrawn. Management of the Partnership is currently considering
whether to re-market the property for sale or to hold the property and invest
the funds required to re-lease and/or redevelop the property, which, as noted
above, has a
substantial amount of vacant space. Funds for such a redevelopment would be
provided from a combination of Partnership cash reserves and secured borrowings.
Management is currently reassessing its total return analysis for the
redevelopment versus potential sell `as is'' alternatives and expects to
formalize its strategy for the Spartan Place investment in early fiscal 1996.

The wholly-owned Hacienda Plaza office and retail complex was 86% leased as
of August 31, 1995. As previously reported, a substantial amount of office and
retail space and undeveloped land remains available within the same planned
development area in which the property is located. Despite this fact, rental
rates in the Pleasanton, California office and retail market have improved in
recent months and fewer concessions are being offered. A portion of the land in
the planned development area in which Hacienda Plaza is located has been re-
zoned for residential use. Approximately 800 housing units are scheduled for
construction in the near future. This development and any future residential
development in the immediate vicinity of Hacienda Plaza would reduce the amount
of developable land available for new competing office space and would increase
the pedestrian traffic for the retail tenants at the Partnership's property. As
a result of these conditions, management believes that operations at the
Hacienda Plaza investment property may be stabilizing after several years of
intense local office and retail market competition. The Managing General
Partner continues to plan to make selective capital improvements aimed at
enhancing marketing and leasing efforts until market conditions favorable to a
sale of the property can be achieved. A substantial amount of the property's
cash flow has been, and will likely continue to be, reinvested to pay for the
leasing costs associated with attracting new tenants and renewing existing
leases.

Occupancy at the Park South Apartments in Charlotte, North Carolina,
averaged 95% for the year ended August 31, 1995, compared to an average of 96%
for the prior fiscal year. Operations of the property continue to fully support
the debt service and ground lease payments owed to the Partnership in addition
to providing a small amount of supplemental rent under the terms of the ground
lease. Such results are reflective of the strengthening local and national
market conditions for multi-family residential properties and the favorable
position that this property enjoys in its local sub-market. At August 31,
1995, the Partnership had available cash and cash equivalents
of approximately $2,692,000. Such cash and cash equivalents will be used for
the working capital requirements of the Partnership, distributions to the
partners and, if necessary, for leasing costs related to the Spartan Place and
Hacienda Plaza properties. Beginning with the quarter ended November 30, 1992,
the Managing General Partner began a program to gradually increase the quarterly
distribution rate to the Limited Partners. The quarterly distribution rate
increased to 3% per annum on remaining invested capital during the quarter ended
February 28, 1995. Given the potential future capital needs of the
Partnership's two wholly-owned properties, as well as the loss of income at
Spartan Place which resulted from the significant increase in vacancy during
fiscal 1995, the Adviser has recommended a reduction in the Partnership's
quarterly distribution rate. It is expected that the distribution rate will be
reduced to 1% per annum on remaining invested capital effective for the payment
to be made on January 15, 1996 for the quarter ending November 30, 1995.
Distributions would be expected to remain at this level until Spartan Place is
either sold or its operations have been stabilized. The source of future
liquidity and distributions to the partners is expected to be from the
operations and future sale of the two wholly-owned investment properties,
mortgage interest and land rent payments from the Partnership's mortgage loan
and ground lease investments, interest income on the Partnership's cash
reserves, the repayment of the mortgage loan receivable and the sale of the
underlying parcel of land.

RESULTS OF OPERATIONS
1995 Compared to 1994

The Partnership's net loss increased by $99,000 in fiscal 1995, when
compared to the prior year. The primary reason for this increase was a decline
in income from investment properties held for sale of $407,000. Income from
investment properties held for sale decreased mainly due to an increase in real
estate tax expense at Spartan Place and significant capital improvement and
leasing costs incurred at Hacienda Plaza. Real estate taxes increased by
$86,000 at Spartan Place. At Hacienda Plaza, despite ending the year at the
same 86% leasing level that existed at August 31, 1994, the property experienced
a fair amount of tenant turnover, downsizing and relocation during the year.
Such leasing activity resulted in increased bad debt expense from tenants who
vacated the property and expenditures on tenant improvements and leasing
commissions to re-lease the vacated space. In addition, certain capital
improvement projects were completed during the year at Hacienda Plaza. Under
the Partnership's accounting policy with respect to assets held for sale,
capital and tenant improvement costs and leasing commissions are expensed as
incurred. An overall increase in rental revenues at Hacienda Plaza offset the
decrease in rental income at Spartan Place which resulted from the decrease in
occupancy during fiscal 1995, as discussed further above. Unless the vacant
Phar-Mor anchor space at the center is leased in the near term, revenues will be
significantly lower in fiscal 1996 since Phar-Mor paid rent on such space for
most of fiscal 1995.

The decrease in income from investment properties held for sale was
partially offset by a decrease in the provision for possible investment loss in
the current year. The provision for possible investment loss decreased by
$300,000 in fiscal 1995. The fiscal 1995 provision of $1 million represents an
adjustment to reduce the carrying value of the investment in Spartan Place to
management's estimate of fair value at August 31, 1995. The value decline
during fiscal 1995 was primarily the result of the Phar-Mor lease termination
discussed further above. No adjustment was made to the carrying value of the
Hacienda Plaza investment for fiscal 1995. In fiscal 1994, the Partnership
recorded an additional provision of $400,000 related to the Hacienda Plaza
property, along with a $900,000 adjustment to the carrying value of the Spartan
Place Shopping Center, to reflect additional declines in management's estimates
of the fair values of the investment properties. In addition to the decrease in
the provision for possible investment loss, the Partnership's operating loss
decreased by $8,000. Operating loss decreased due to an increase in interest
income of $47,000, which resulted from an increase in interest rates earned on
cash and cash equivalents when compared to the prior year, and an increase in
land rent revenue from the Park South Apartments of $6,000. The increases in
interest income and land rent revenue were partially offset by an increase in
general and administrative expenses of $44,000 primarily due to an increase in
professional fees.

1994 Compared to 1993

The Partnership reported a net loss of $614,000 for the year ended August
31, 1994, as compared to a net loss of $215,000 in the prior fiscal year. This
unfavorable change in the Partnership's operating results was primarily due to
an increase in the provision for possible investment loss during fiscal 1994.
The provision for possible investment loss increased by $400,000, from $900,000
in fiscal 1993 to $1,300,000 in fiscal 1994. The fiscal 1993 provision
represented an adjustment to reduce the carrying value of the investment in
Hacienda Plaza to management's estimate of fair value as of August 31, 1993. In
fiscal 1994, the Partnership recorded an additional provision of $400,000
related to the Hacienda Plaza property, along with a $900,000 adjustment to the
carrying value of the Spartan Place Shopping Center, to reflect additional
declines in management's estimates of the fair values of the investment
properties. The unfavorable change in the Partnership's operations can also be
partly attributed to an increase of $48,000 in the Partnership's operating loss,
which was offset by an increase in income from the operations of investment
properties held for sale. The primary reason for the increase in the
Partnership's operating loss was a partial recovery of $81,000 recorded in
fiscal 1993 on the Ballston Place note receivable which had been fully reserved
for in fiscal 1992. Income from investment properties held for sale, which
represents the combined net operating income of the Hacienda Plaza and Spartan
Place properties, increased by $49,000 in fiscal 1994 mainly due to decreases in
all expense categories, most notably real estate taxes. Real estate tax expense
declined during fiscal 1994 due to an increase in real estate tax reimbursements
at the Spartan Place Shopping Center. The favorable change in expenses at
Spartan Place and Hacienda Plaza was offset by a decrease in rental revenues at
Hacienda Plaza. The decrease in Hacienda Plaza's rental income was due to a
decrease in occupancy during the first half of fiscal 1994.

1993 Compared to 1992

The Partnership reported a net loss of $215,000 for the year ended August
31, 1993, as compared to a net loss of $1,161,000 for the prior fiscal year.
The decrease in net loss was primarily due to a provision for possible
investment loss of $1,502,000 recorded in the prior year. The provision
represented an adjustment to reduce the carrying values of the investments in
Spartan Place and Hacienda Plaza to management's estimate of fair value as of
August 31, 1992. In fiscal 1993, the Partnership recorded an additional
provision of $900,000 to reflect a further decline in the estimated fair value
of Hacienda Plaza. The decrease in net loss was also partly attributable to a
decrease in operating loss, which was offset, in part, by a decrease in income
from the operations of investment properties held for sale. The primary reason
for the decrease in operating loss was that fiscal 1992 operations reflect a
provision for possible uncollectible amounts of $355,200, representing the
reserve established against the Ballston Place note receivable referred to
above. The partial recovery of this note receivable, in the amount of $81,000,
was included in the fiscal 1993 statement of operations.

The favorable changes in the Partnership's operating loss were partially
offset by a decrease in income from the operations of investment properties held
for sale. Income from investment properties held for sale decreased by $64,000
in fiscal 1993 mainly due to the recognition of income during the prior year of
$117,000, representing the recovery of rental income receivable at Hacienda
Plaza which had been written off in an earlier period. This non-recurring
recovery was offset by improved operating results at the Spartan Place Shopping
Center in fiscal 1993 as a result of improved leasing activity.

Inflation

The Partnership completed its ninth full year of operations in fiscal 1995
and the effects of inflation and changes in prices on the Partnership's revenues
and expenses to date have not been significant.

The impact of inflation in future periods may be offset, in part, by an
increase in revenues because the Partnership's two wholly-owned commercial
properties have leases which require the tenants to pay for a significant
portion of the property operating expenses. In addition, the Partnership's
remaining land lease provides for additional rent based upon increases in the
revenues of the related operating property which would tend to rise with
inflation. Such increases in revenues would be expected to at least partially
offset the increases in Partnership and property operating expenses resulting
from inflation. As noted above, the wholly-owed Spartan Place Shopping Center
currently has a significant amount of unleased space. During a period of
significant inflation, increased operating expenses attributable to space that
remained unleased at such time would not be recoverable and would adversely
affect the Partnership's net cash flow.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data are included under Item 14
of this Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None. PART III

Item 10. Directors and Executive Officers of the Partnership

The Managing General Partner of the Partnership is Fifth Mortgage Partners,
Inc., a Delaware corporation, which is a wholly-owned subsidiary of
PaineWebber. The Associate General Partner of the Partnership is Properties
Associates 1985, L.P., a Virginia limited partnership, certain limited partners
of which are also officers of the Adviser and the Managing General Partner. The
Managing General Partner has overall authority and responsibility for the
Partnership's operation, however, the day-to-day business of the Partnership is
managed by the Adviser pursuant to an advisory contract.

(a) and (b) The names and ages of the directors and principal executive
officers of the Managing General Partner of the Partnership are as follows:

Date elected
Name Office Age to Office

Lawrence A. Cohen President and Chief Executive
Officer 42 5/15/91
Albert Pratt Director 84 8/27/85 *
J. Richard Sipes Director 48 6/9/94
Walter V. Arnold Senior Vice President and
Chief Financial Officer 48 10/29/85
James A. Snyder Senior Vice President 50 7/6/92
John B. Watts III Senior Vice President 42 6/6/88
David F. Brooks First Vice President and
Assistant Treasurer 53 8/27/85 *
Timothy J. Medlock Vice President and Treasurer 34 6/1/88
Thomas W. Boland Vice President 33 12/1/91
Dorothy F. Haughey Secretary 69 8/27/85 *
* The date of incorporation of the Managing General Partner

(d) There is no family relationship among any of the foregoing directors or
officers of the Managing General Partner of the Partnership. All of the
foregoing directors and executive officers have been elected to serve until the
annual meeting of the Managing General Partner.

(e) All of the directors and officers of the Managing General Partner hold
similar positions in affiliates of the Managing General Partner, which are the
corporate general partners of other real estate limited partnerships sponsored
by PWI, and for which PaineWebber Properties Incorporated serves as the
Adviser. The business experience of each of the directors and principal
executive officers of the Managing General Partner is as follows:

Lawrence A. Cohen is President and Chief Executive Officer of the Managing
General Partner and President and Chief Executive Officer of the Adviser which
he joined in January 1989. He is a also member of the Board of Directors and
the Investment Committee of the Adviser. From 1984 to 1988, Mr. Cohen was First
Vice President of VMS Realty Partners where he was responsible for origination
and structuring of real estate investment programs and for managing national
broker-dealer relationships. He is a member of the New York Bar and is a
Certified Public Accountant.

Albert Pratt is a Director of the Managing General Partner, a Consultant of
PWI and a limited partner of the Associate General Partner. Mr. Pratt joined
PWI as Counsel in 1946 and since that time has held a number of positions
including Director of both the Investment Banking Division and the International
Division, Senior Vice President and Vice Chairman of PWI and Chairman of
PaineWebber International, Inc.

J. Richard Sipes is a Director of the Managing General Partner and a Director
of the Adviser. Mr. Sipes is an Executive Vice President at PaineWebber. He
joined the firm in 1978 and has served in various capacities within the Retail
Sales and Marketing Division. Before assuming his current position as Director
of Retail Underwriting and Trading in 1990, he was a Branch Manager, Regional
Manager, Branch System and Marketing Manager for a PaineWebber subsidiary,
Manager of Branch Administration and Director of Retail Products and Trading.
Mr. Sipes holds a B.S. in Psychology from Memphis State University.

Walter V. Arnold is a Senior Vice President and Chief Financial Officer of
the Managing General Partner and a Senior Vice President and Chief Financial
Officer of the Adviser which he joined in October 1985. Mr. Arnold joined PWI
in 1983 with the acquisition of Rotan Mosle, Inc. where he had been First Vice
President and Controller since 1978, and where he continued until joining the
Adviser. He began his career in 1974 with Arthur Young & Company in Houston.
Mr. Arnold is a Certified Public Accountant licensed in the state of Texas.

James A. Snyder is a Senior Vice President of the Managing General Partner
and a Senior Vice President and Member of the Investment Committee of the
Adviser. Mr. Snyder re-joined the Adviser in July 1992 having served previously
as an officer of PWPI from July 1980 to August 1987. From January 1991 to July
1992, Mr. Snyder was with the Resolution Trust Corporation where he served as
the Vice President of Asset Sales prior to re-joining PWPI. From February 1989
to October 1990, he was President of Kan Am Investors, Inc., a real estate
investment company. During the period August 1987 to February 1989, Mr. Snyder
was Executive Vice President and Chief Financial Officer of Southeast Regional
Management Inc., a real estate development company.

John B. Watts III is a Senior Vice President of the Managing General Partner
and a Senior Vice President of the Adviser which he joined in June 1988. Mr.
Watts has had over 16 years of experience in acquisitions, dispositions and
finance of real estate. He received degrees of Bachelor of Architecture,
Bachelor of Arts and Master of Business Administration from the University of
Arkansas.

David F. Brooks is a First Vice President and Assistant Treasurer of the
Managing General Partner and a First Vice President and an Assistant Treasurer
of the Adviser. Mr. Brooks joined the Adviser in March 1980. From 1972 to
1980, Mr. Brooks was an Assistant Treasurer of Property Capital Advisors, Inc.
and also, from March 1974 to February 1980, the Assistant Treasurer of Capital
for Real Estate, which provided real estate investment, asset management and
consulting services.

Timothy J. Medlock is a Vice President and Treasurer of the Managing General
Partner and a Vice President and Treasurer of the Adviser which he joined in
1986. From June 1988 to August 1989, Mr. Medlock served as the Controller of
the Managing General Partner and the Adviser. From 1983 to 1986, Mr. Medlock
was associated with Deloitte Haskins & Sells. Mr. Medlock graduated from
Colgate University in 1983 and received his Masters in Accounting from New York
University in 1985.

Thomas W. Boland is a Vice President of the Managing General Partner and a
Vice President and Manager of Financial Reporting of the Adviser which he joined
in 1988. From 1984 to 1987, Mr. Boland was associated with Arthur Young &
Company. Mr. Boland is a Certified Public Accountant licensed in the state of
Massachusetts. He holds a B.S. in Accounting from Merrimack College and an
M.B.A. from Boston University. Dorothy F. Haughey is Secretary of the
Managing General Partner, Assistant Secretary of PaineWebber and Secretary of
PWI. Ms. Haughey joined PaineWebber in 1962.

(f) None of the directors and officers was involved in legal proceedings
which are material to an evaluation of his or her ability or integrity as a
director or officer.

(g) Compliance With Exchange Act Filing Requirements: The Securities
Exchange Act of 1934 requires the officers and directors of the Managing General
Partner, and persons who own more than ten percent of the Partnership's limited
partnership units, to file certain reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and ten-
percent beneficial holders are required by SEC regulations to furnish the
Partnership with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, the
Partnership believes that, during the year ended August 31, 1995, all filing
requirements applicable to the officers and directors of the Managing General
Partner and ten-percent beneficial holders were complied with.

Item 11. Executive Compensation

The directors and officers of the Partnership's Managing General Partner
receive no current or proposed remuneration from the Partnership.

The Partnership is required to pay certain fees to the Adviser and the
General Partners are entitled to receive a share of cash distributions and a
share of profits and losses. These items are described in Item 13. The
Partnership has paid cash distributions to the Unitholders on a
quarterly basis at rates ranging from 2% to 3% per annum on remaining invested
capital over the past five years. However, the Partnership's Units of Limited
Partnership Interest are not actively traded on any organized exchange, and no
efficient secondary market exists. Accordingly, no accurate price information
is available for these Units. Therefore, a presentation of historical
Unitholder total returns would not be meaningful.

Item 12. Security Ownership of Certain Beneficial Owners and Management

(a) The Partnership is a limited partnership issuing Units of Limited
Partnership Interest, not voting securities. All the outstanding stock of the
Managing General Partner, Fifth Mortgage Partners, Inc., is owned by
PaineWebber. Properties Associates 1985, L.P., the Associate General Partner,
is a Virginia limited partnership, certain limited partners of which are also
officers of the Adviser and the Managing General Partner. Properties Associates
1985 was the Initial Limited Partner of the Partnership. No limited partner is
known by the Partnership to own beneficially more than 5% of the outstanding
interests of the Partnership.

(b) Neither the directors and officers of the Managing General Partner nor
the limited partners of the Associate General Partner individually own any Units
of Limited Partnership interest of the Partnership. No director or officer of
the Managing General Partner nor the limited partners of the Associate General
Partner possess a right to acquire beneficial ownership of Units of Limited
Partnership Interest of the Partnership.

(c) There exists no arrangement, known to the Partnership, the operation of
which may at a subsequent date result in a change in control of the Partnership.

Item 13. Certain Relationships and Related Transactions
The General Partners of the Partnership are Fifth Mortgage Partners, Inc.
(the "Managing General Partner"), a wholly-owned subsidiary of PaineWebber Group
Inc. ("PaineWebber"), and Properties Associates 1985, L.P. (the "Associate
General Partner"), a Virginia limited partnership, certain limited partners of
which are also officers of the Adviser and the Managing General Partner.
Subject to the Managing General Partner's overall authority, the business of the
Partnership is managed by the Adviser pursuant to an advisory contract. The
Adviser is a wholly-owned subsidiary of PaineWebber Incorporated ("PWI"), a
wholly-owned subsidiary of PaineWebber.

The General Partners, the Adviser and PWI receive fees and compensation
determined on an agreed-upon basis, in consideration of various services
performed in connection with the sale of the Units, the management of the
Partnership and the acquisition, management and disposition of Partnership
investments.

Acquisition fees in the amount of 3% of the gross offering proceeds were
paid to the Adviser for analyzing, structuring and negotiating the acquisitions
of the Partnership's investments. The Adviser may receive a commission, in an
amount not yet determinable, upon the disposition of certain Partnership
investments.

Distributable Cash, as defined, of the Partnership will be distributed 98%
to the Limited Partners, 1% to the General Partners and 1% to the Adviser as an
asset management fee. Residual proceeds resulting from disposition of
Partnership investments will be distributed generally, 95% to the Limited
Partners, 3.99% to the Adviser as an asset management fee and 1.01% to the
General Partners after the prior receipt by the Limited Partners of their
original capital contributions and a cumulative annual return of 10%, as set
forth in the Amended Partnership Agreement.
Any taxable income or tax loss (other than from a Capital Transaction) of
the Partnership will be allocated 98.989899% to the Limited Partners and
1.010101% to the General Partners. Taxable income or tax loss arising from a
sale or refinancing of investment properties will be allocated to the Limited
Partners and the General Partners in proportion to the amounts of sale or
refinancing proceeds to which they are entitled; provided that the General
Partners shall be allocated at least 1% of taxable income arising from a sale or
refinancing. Allocations of the Partnership's operations between the General
Partners and the Limited Partners for financial accounting purposes have been
made in conformity with the allocations of taxable income or tax loss.

The Adviser has been contracted to perform specific management
responsibilities; to administer day-to-day operations of the Partnership and to
report periodically the performance of the Partnership to the Managing General
Partner. The Adviser will be paid a base management fee of 1/2 of 1% of the
gross proceeds of the offering, in addition to the asset management fee
described above, for these services. The Adviser earned base and asset
management fees totalling $139,000 for the year ended August 31, 1995. In
accordance with the Partnership Agreement, management fees payable in respect to
any fiscal year ending prior to December 1, 1987 were to be deferred to the
extent that cash distributions were insufficient to provide a 9% noncumulative
annual return to the limited partners in respect to such fiscal year. Any
portion of the management fees so deferred ($245,000 at August 31, 1995) are to
be paid (without interest) from cash distributions in any succeeding fiscal year
after the limited partners have received a 9% annual return for that fiscal year
or from Residual Proceeds, as defined.

The Managing General Partner and its affiliates are reimbursed for their
direct expenses relating to the offering of Units, the administration of the
Partnership and the acquisition and operations of the Partnership's real
property investments.

An affiliate of the Managing General Partner performs certain accounting,
tax preparation, securities law compliance and investor communications and
relations services for the Partnership. The total costs incurred by this
affiliate in providing such services are allocated among several entities,
including the Partnership. Included in general and administrative expenses for
the year ended August 31, 1995 is $139,000, representing reimbursements to this
affiliate for providing such services to the Partnership.

The Partnership uses the services of Mitchell Hutchins Institutional
Investors, Inc. ("Mitchell Hutchins") for the managing of cash assets. Mitchell
Hutchins is a subsidiary of Mitchell Hutchins Asset Management, Inc., an
independently operated subsidiary of PaineWebber. Mitchell Hutchins earned fees
of $5,000 (included in general and administrative expenses) for managing the
Partnership's cash assets during fiscal 1995. Fees charged by Mitchell Hutchins
are based on a percentage of invested cash reserves which varies based on the
total amount of invested cash which Mitchell Hutchins manages on behalf of PWPI.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as part of this report:

(1) and (2) Financial Statements and Schedules:

The response to this portion of Item 14 is submitted as a separate
section of this report. See Index to Financial Statements and
Financial Statement Schedules at page F-1.

Financial statements for the property securing the Partnership's
remaining mortgage loan have not been included since the
Partnership has no contractual right to the information and cannot
otherwise practicably obtain the information.

(3) Exhibits:

The exhibits listed on the accompanying index to exhibits at page IV-3
are filed as part of this Report.

(b) No reports on Form 8-K were filed during the last quarter of fiscal
1995.

See (a)(3) above. (d) Financial Statement Schedules

The response to this portion of Item 14 is submitted as a separate
section of this report. See Index to Financial Statements and
Financial Statement Schedules at page F-1.

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 MORTGAGE PARTNERS FIVE, L.P.

By: Fifth Mortgage Partners, Inc.
Managing General Partner

By: /s/ Lawrence A. Cohen
Lawrence A. Cohen
President and Chief Executive Officer

By: /s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and
Chief Financial Officer

By:/s/ Thomas W. Boland
Thomas W. Boland
Vice President

Dated: November 27, 1995

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Partnership in
the capacity and on the dates indicated.

By: /s/ Albert Pratt Date:November 27, 1995
Albert Pratt
Director

By:/s/ J. Richard Sipes Date:November 27, 1995
J. Richard Sipes
Director

ANNUAL REPORT ON FORM 10-K
ITEM 14(A)(3)

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.

INDEX TO EXHIBITS

Page Number in
Exhibit No. Description of Document the Report or
Other Reference

(3) and (4) Prospectus of the Registrant Filed with the
dated December 3, 1985, as Commission
supplemented, with pursuant to Rule
particular reference to the 424(c) and
Restated Certificate and incorporated
Agreement of Limited herein by
Partnership. reference.

(10) Material contracts Filed with the
previously filed as exhibits Commission
to registration statements pursuant to
and amendments thereto of Section 13 or
the registrant together with 15(d) of the
all such contracts filed as Securities
exhibits of previously field Exchange Act of
Forms 8-K and Forms 10-K are 1934 and
hereby incorporated herein incorporated
by reference. herein by
reference.

(13) Annual Reports to Limited No Annual Report
Partners for the year
ended August 31,
1995 has been
sent to the
Limited
Partners. An
Annual Report
will be sent to
the Limited
Partners
subsequent to
this filing.

ANNUAL REPORT ON FORM 10-K
ITEM 14(A)(1) AND (2) AND 14(D)

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

Reference

PaineWebber Mortgage Partners Five, L.P.:

Report of independent auditors F-2

Balance sheets as of August 31, 1995 and 1994 F-3

Statements of operations for the years ended
August 31, 1995, 1994 and 1993 F-4

Statements of changes in partners' capital (deficit)
for the years ended August 31, 1995, 1994 and 1993 F-5

Statements of cash flows for the years ended
August 31, 1995, 1994 and 1993 F-6

Notes to financial statements F-7

Financial Statement Schedules:

Schedule III - Real Estate Owned F-13
Schedule IV - Investments in Mortgage Loans
on Real Estate F-14

Other schedules have been omitted since the required information is not present
or not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the financial statements,
including the notes thereto.

REPORT OF INDEPENDENT AUDITORS

The Partners of
PaineWebber Mortgage Partners Five, L.P.:

We have audited the accompanying balance sheets of PaineWebber Mortgage
Partners Five, L.P. as of August 31, 1995 and 1994, and the related statements
of operations, changes in partners' capital (deficit) and cash flows for each of
the three years in the period ended August 31, 1995. Our audits also included
the financial statement schedules listed in the Index at Item 14(a). These
financial statements and schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PaineWebber Mortgage
Partners Five, L.P. at August 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
August 31, 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedules, when considered
in relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.

/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP

Boston, Massachusetts
November 20, 1995

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.

BALANCE SHEETS
August 31, 1995 and 1994
(In Thousands, except per Unit data)

ASSETS
1995 1994
Real estate investments:
Investment properties held for sale, net
of allowance for possible investment
loss of $6,140 ($5,140 in 1994) $ 9,900 $10,900
Land 230 230
Mortgage loan receivable 1,270 1,270
11,400 12,400

Cash and cash equivalents 2,692 3,035
Interest and land rent receivable 10 10
Accounts receivable 26 88
Prepaid expenses 17 24
Deferred expenses, net of accumulated
amortization of $33 ($28 in 1994) 30 35
$14,175 $15,592

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable - affiliates $ 33 $ 33
Accounts payable and accrued expenses 192 132
Tenant security deposits 79 63
Deferred management fees 245 245
Total liabilities 549 473

Partners' capital:
General Partners:
Capital contributions 1 1
Cumulative net income 90 97
Cumulative cash distributions (181) (173)
Limited Partners ($50 per Unit,
776,988 Units issued and outstanding):
Capital contributions, net of offering costs 34,968 34,968
Cumulative net income 4,885 5,591
Cumulative cash distributions (26,137) (25,365)
Total partners' capital 13,626 15,119
$14,175 $15,592

See accompanying notes.

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.

STATEMENTS OF OPERATIONS
For the years ended August 31, 1995, 1994 and 1993
(In Thousands, except per Unit data)

1995 1994 1993
REVENUES:
Interest from mortgage loan $ 114 $ 114 $ 114
Land rent 35 29 27
Other interest income 151 104 90
300 247 231

EXPENSES:
Management fees 139 138 137
General and administrative 349 305 323
Amortization of deferred expenses 5 5 5
Recovery of possible
uncollectible amounts - - (81)
493 448 384
Operating loss (193) (201) (153)

Investment properties held for sale:
Provision for possible investment loss (1,000) (1,300) (900)
Income from investment
properties held for sale 480 887 838
(520) (413) (62)

NET LOSS $ (713) $ (614) $ (215)

Net loss per Limited
Partnership Unit $ (0.91) $ (0.78) $(0.27)

Cash distributions per Limited
Partnership Unit $ 0.99 $ 0.86 $ 0.73

The above net loss and cash distributions per Limited Partnership Unit are
based upon the 776,988 Units of Limited Partnership Interest outstanding during
each year.

See accompanying notes.

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the years ended August 31, 1995, 1994 and 1993
(In Thousands)

General Limited
Partners Partners Total

Balance at August 31, 1992 $ (54) $ 17,254 $ 17,200

Net loss (2) (213) (215)

Cash distributions (6) (567) (573)

BALANCE AT AUGUST 31, 1993 (62) 16,474 16,412

Net loss (6) (608) (614)

Cash distributions (7) (672) (679)

BALANCE AT AUGUST 31, 1994 (75) 15,194 15,119

Net loss (7) (706) (713)

Cash distributions (8) (772) (780)

BALANCE AT AUGUST 31, 1995 $ (90) $ 13,716 $ 13,626

See accompanying notes.

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
STATEMENTS OF CASH FLOWS
For the years ended August 31, 1995, 1994 and 1993
Increase (Decrease) in Cash and Cash Equivalents
(In Thousands)

1995 1994 1993
Cash flows from operating activities:
Net loss $ (713) $ (614) $ (215)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Provision for possible investment loss 1,000 1,300 900
Recovery of possible
uncollectible amounts - - (81)
Amortization of deferred expenses 5 5 5
Changes in assets and liabilities:
Accounts receivable 62 1 21
Prepaid expenses 7 (1) (1)
Accounts payable - affiliates - (28) 5
Accounts payable and accrued
expenses 60 (68) 47
Tenant security deposits 16 3 (10)
Total adjustments 1,150 1,212 886
Net cash provided by
operating activities 437 598 671

Cash flows from investing activities:
Proceeds from partial recovery of
note receivable - - 81

Cash flows from financing activities:
Distributions to partners (780) (679) (573)

Net (decrease) increase in
cash and cash equivalents (343) (81) 179

Cash and cash equivalents,
beginning of year 3,035 3,116 2,937

Cash and cash equivalents,
end of year $ 2,692 $ 3,035 $ 3,116

See accompanying notes.

1. General

PaineWebber Mortgage Partners Five, L.P. (the "Partnership") is a limited
partnership organized pursuant to the laws of the State of Delaware in
October 1985 for the purpose of investing in a diversified portfolio of
existing income-producing real properties through land purchase-leasebacks
and first mortgage loans. The initial capital was $2,000, representing
capital contributions of $1,000 by the General Partners and $1,000 for
twenty units by the Initial Limited Partner. The Partnership authorized the
issuance of Units (the "Units") of Limited Partnership Interest of which
776,988 Units (at $50 per Unit) were subscribed and issued between December
3, 1985 and December 2, 1987.

2. Summary of Significant Accounting Policies

Investment properties held for sale represent assets acquired by the
Partnership through foreclosure proceedings on first mortgage loans. The
Partnership's policy is to carry these assets at the lower of cost or
estimated fair value (net of selling expenses). The Partnership's cost
basis is equal to the fair value of the assets at the date of foreclosure.
Declines in the estimated fair value of the assets subsequent to foreclosure
are recorded through the use of a valuation allowance. Subsequent increases
in the estimated fair value of the assets result in reductions of the
valuation allowance, but not below zero. All costs incurred to hold the
assets are charged to expense and no depreciation expense is recorded.

The Partnership's investments in land subject to a ground lease is carried
at the lower of cost or net realizable value. The net realizable value of a
real estate investment held for long-term investment purposes is measured by
the recoverability of the investment through expected future cash flows on
an undiscounted basis, which may exceed the property's current market value.
The net realizable value of a property held for sale approximates its
current market value. The Partnership's land investment was not held for
sale as of August 31, 1995 or 1994. The Partnership has reviewed FAS No.
121 `Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of''which is effective for financial statements for
years beginning after December 15, 1995, and believes this new pronouncement
will not have a material effect on the Partnership's financial statements.

The Partnership's mortgage loan receivable is carried at cost. The
Partnership's policy is to provide for any valuation allowances for its
mortgage loan investment on a specific identification basis, principally by
evaluating the market value of the underlying collateral since the loans are
collateral dependent.

Deferred expenses represent acquisition fees paid to PaineWebber Properties
Incorporated (the "Adviser") as compensation for analyzing, structuring and
negotiating the Partnership's real estate investments. These costs are
being amortized using the straight-line method over the term of the
remaining mortgage loan (13 years).

For purposes of reporting cash flows, cash and cash equivalents include all
highly liquid investments with original maturities of 90 days or less.

No provision for income taxes has been made as the liability for such taxes
is that of the partners rather than the Partnership.

3. The Partnership Agreement and Related Party Transactions

The General Partners of the Partnership are Fifth Mortgage Partners, Inc.
(the "Managing General Partner"), a wholly-owned subsidiary of PaineWebber
Group Inc. ("PaineWebber"), and Properties Associates 1985, L.P. (the
"Associate General Partner"), a Virginia limited partnership, certain
limited partners of which are also officers of the Adviser and the Managing
General Partner. Subject to the Managing General Partner's overall
authority, the business of the Partnership is managed by the Adviser
pursuant to an advisory contract. The Adviser is a wholly-owned subsidiary
of PaineWebber Incorporated ("PWI"), a wholly-owned subsidiary of
PaineWebber.

Acquisition fees in the amount of 3% of the gross offering proceeds were
paid to the Adviser for analyzing, structuring and negotiating the
acquisitions of the Partnership's investments. The Adviser may receive a
commission, in an amount not yet determinable, upon the disposition of
certain Partnership investments.

Any taxable income or tax loss (other than from a Capital Transaction) of
the Partnership will be allocated 98.989899% to the Limited Partners and
1.010101% to the General Partners. Taxable income or tax loss arising from
a sale or refinancing of investment properties will be allocated to the
Limited Partners and the General Partners in proportion to the amounts of
sale or refinancing proceeds to which they are entitled; provided that the
General Partners shall be allocated at least 1% of taxable income arising
from a sale or refinancing. Allocations of the Partnership's operations
between the General Partners and the Limited Partners for financial
accounting purposes have been made in conformity with the allocations of
taxable income or tax loss.

The Adviser has been contracted to perform specific management
responsibilities; to administer day-to-day operations of the Partnership and
to report periodically the performance of the Partnership to the Managing
General Partner. The Adviser will be paid a base management fee of 1/2 of
1% of the gross proceeds of the offering, in addition to the asset
management fee described above, for these services. The Adviser earned base
and asset management fees totalling $139,000, $138,000 and $137,000 for the
years ended August 31, 1995, 1994 and 1993, respectively. Accounts payable
- affiliates at both August 31, 1995 and 1994 includes $33,000 of management
fees payable to PWPI. In accordance with the Partnership Agreement,
management fees payable in respect to any fiscal year ending prior to
December 1, 1987 were to be deferred to the extent that cash distributions
were insufficient to provide a 9% noncumulative annual return to the limited
partners in respect to such fiscal year. Any portion of the management fees
so deferred ($245,000 at August 31, 1995 and 1994) are to be paid (without
interest) from cash distributions in any succeeding fiscal year after the
limited partners have received a 9% annual return for that fiscal year or
from Residual Proceeds, as defined.

Included in general and administrative expenses for the years ended August
31, 1995, 1994 and 1993 is $157,000, $139,000 and $134,000, representing
reimbursements to an affiliate of the Managing General Partner for providing
certain financial, accounting and investor communication services to the
Partnership.

The Partnership uses the services of Mitchell Hutchins Institutional
Investors, Inc. ("Mitchell Hutchins") for the managing of cash assets.
Mitchell Hutchins is a subsidiary of Mitchell Hutchins Asset Management,
Inc., an independently operated subsidiary of PaineWebber. Mitchell
Hutchins earned $5,000, $9,000, and $5,000 for the years ended August 31,
1995, 1994 and 1993, respectively, (included in general and administrative
expenses) for managing the Partnership's cash assets.

4. Mortgage Loan and Land Investments

The following first mortgage loan was outstanding at August 31, 1995 and
1994 (in thousands):

Date of Loan
Property Amount of Loan Interest Rate and Maturity
1995 1994

Park South $ 1,270 $ 1,270 9.00% 12/29/88
Charlotte, NC 12/28/01

The loan is secured by a first mortgage on the Park South Apartments
property, the owner's leasehold interest in the land and an assignment of
all tenant leases. Interest is payable monthly and the principal is due at
maturity.

In relation to the above-mentioned mortgage loan, the following land
purchase-leaseback transaction had also been entered into as of August 31,
1995 and 1994 (in thousands):

Cost of Land
Property to the Partnership Annual Base Rental
1995 1994

Park South $ 230 $ 230 $ 21 through 12/28/28

The Partnership owns a 23% interest in the land underlying the Park South
Apartments and has an equivalent interest in the first mortgage loan secured
by the operating property. The remaining 77% interest in the land and
mortgage loan receivable is owned by an affiliated partnership, Paine Webber
Qualified Plan Property Fund Four, LP. The land lease has a term of 40
years. Among the provisions of the lease agreement, the Partnership is
entitled to additional rent based upon gross revenues in excess of a base
amount, as defined. The Partnership received $14,000, $8,000 and $6,000 of
additional rent from its Park South land lease during fiscal 1995, fiscal
1994 and fiscal 1993, respectively. The lessee has the option to repurchase
the land for a specified period of time beginning in December of 1997 at a
price based on the fair market value, as defined, but not less than the
original cost to the Partnership.

The objectives of the Partnership with respect to its mortgage loan and
land investments are to provide current income from fixed mortgage interest
payments and base land rents, then to provide increases to this current
income through participation in the annual revenues generated by the
property as they increase above a specified base amount. In addition, the
Partnership's remaining investment is structured to share in the
appreciation in value of the underlying real estate. Accordingly, upon
either sale, refinancing, maturity of the mortgage or exercise of the option
to repurchase the land, the Partnership will receive a 50% share of the
appreciation above a specified base amount.

5. Investment Properties Held for Sale

At August 31, 1995 and 1994, the Partnership owned two operating investment
properties directly as a result of foreclosure proceedings prompted by
defaults under the terms of the first mortgage loans held by the
Partnership. The balance of investment properties held for sale on the
accompanying balance sheet at August 31, 1995 and 1994 is comprised of the
following net carrying values (in thousands):

1995 1994

Hacienda Plaza $ 4,900 $ 4,900
Spartan Place Shopping Center 5,000 6,000
$ 9,900 $10,900

Descriptions of the transactions through which the Partnership acquired
these properties and of the properties themselves are summarized below:

HACIENDA PLAZA

The Partnership assumed ownership of Hacienda Plaza on June 22, 1990. The
property, which is comprised of 78,415 square feet of leasable office/retail
space, was 86% leased as of August 31, 1995. The property, which is located
in Pleasanton, California, had been operating below breakeven since the
inception of the loan and therefore had not been generating sufficient cash
flow to cover the mortgage interest and land rent payments due to the
Partnership. Rather than continue to support the cash flow shortfalls to
keep the mortgage loan current, the borrower agreed to transfer the
property's title to the Partnership. The combined balance of the land and
the mortgage loan investments at the time title was transferred was
$9,789,000. The estimated fair value of the operating property at the date
of foreclosure was $8,200,000. Accordingly, a write-down of $1,589,000 was
recorded in fiscal 1990. During fiscal 1994, 1993, 1992 and 1991, the
Partnership recorded provisions for possible investment loss of $400,000,
$900,000, $562,000 and $1,438,000, respectively, to write down the net
carrying value of the Hacienda Plaza investment property to reflect
additional declines in its estimated fair value, net of selling expenses.
The net carrying value of the investment property as of both August 31, 1995
and 1994 was $4,900,000, which carrying values include a valuation allowance
of $3,300,000.

SPARTAN PLACE SHOPPING CENTER

The Partnership assumed ownership of the Spartan Place Shopping Center, in
Spartanburg, South Carolina, on February 12, 1991. The property, which
consists of 151,489 square feet of leasable retail space, was 38% leased as
of August 31, 1995. Rather than continue to support the cash shortfalls
between the cash flow from property operations and required debt service to
keep the mortgage loan current, the borrower agreed to transfer the title to
the property to the Partnership in fiscal 1991. The combined balance of the
land and the mortgage loan investment at the time title was transferred,
including the unamortized balance of deferred costs associated with the
original acquisition of the Spartan Place investments, was $8,419,000.
Management estimated that the fair value of the property, net of selling
expenses, at the time of the foreclosure was $7,840,000. Accordingly, a
loss of $579,000 was recorded in fiscal 1991 to adjust the carrying value to
this estimate and the investment was reclassified to investment properties
held for sale. During fiscal 1995, 1994 and 1992, the Partnership recorded
provisions for possible investment loss of $1,000,000, $900,000 and
$940,000, respectively, to write down the net carrying value of the Spartan
Place investment property to reflect additional declines in its estimated
fair value, net of selling expenses. The net carrying value of the
investment property as of August 31, 1995 and 1994 was $5,000,000 and
$6,000,000, respectively, which carrying values include valuation allowances
of $2,840,000 and $1,840,000, respectively.

Subsequent to the end of fiscal 1995, the Partnership had entered into a
preliminary agreement to sell the Spartan Place property to a third party.
Subsequent to the buyer's due diligence period, the offer was withdrawn.
Management of the Partnership is currently considering whether to re-market
the property for sale or to hold the property and invest the funds required
to redevelop the property, which, as noted above, has a substantial amount

of vacant space. Funds for such a redevelopment would be provided from a
combination of Partnership cash reserves and secured borrowings.

The Partnership recognizes income from the investments properties held for
sale in the amount of the excess of the properties' gross revenues over
property operating expenses (including capital improvement expenses and
leasing commissions), taxes, insurance and other expenses. Combined
summarized operating results for Hacienda Plaza and Spartan Place for the
years ended August 31, 1995, 1994 and 1993 are as follows (in thousands):

1995 1994 1993
REVENUES:
Rental income and
expense reimbursements $ 1,914 $ 1,866 $ 1,872
Other income 12 8 11
1,926 1,874 1,883

EXPENSES:
Property operating expenses 812 580 608
Property taxes and insurance 367 316 335
Administrative and other expenses 267 91 102
1,446 987 1,045
Income from investment
properties held for sale $ 480 $ 887 $ 838

6. Leases

The Hacienda Plaza and Spartan Place investment properties have operating
leases with tenants which provide for fixed minimum rents and reimbursements
of certain operating costs. Rental revenues are recognized on a straight-
line basis over the life of the related lease agreements. Minimum future
rental revenues to be received by the Partnership under noncancellable
operating leases for the next five years and thereafter are as follows
(in thousands):

Year ending August 31, Amount

1996 $ 1,454
1997 1,251
1998 1,069
1999 944
2000 897
Thereafter 5,840
$11,455

7. Note Receivable

During the quarter ended November 30, 1989, the Partnership sold the land
it had previously owned and leased back to Ballston Place Associates Limited
Partnership ("BPA"). The Partnership also allowed BPA to prepay the mortgage
loan secured by the Ballston Place Phase I apartment building. BPA made a
cash payment of approximately $11,402,000 to the Partnership on November 29,
1989 in return for the Partnership's agreement to release the first leasehold
mortgage applicable to the Ballston Place Apartments Phase I. In connection
with the sale, the Partnership received a fixed installment note in the
principal amount of $355,200, which was to be payable in eight annual
installment payments beginning April 1, 1992 and ending on April 1, 1999.
The fixed installment note was to bear interest, beginning in April of 1992,
equal to the interest rate applicable to one-year U.S. Treasury bills and was
guaranteed as to its payment by the parent company of the borrowing entity.
During fiscal 1992, the borrower failed to make the required April 1, 1992
initial installment payment due the Partnership and filed for protection
under Chapter 11 of the U. S. Bankruptcy Code due to defaults on the first
mortgage loan secured by the property. The guarantor was a real estate
development company which experienced severe liquidity problems during fiscal
1992 and virtually ceased operations. The Partnership recorded an allowance
against the outstanding balance of the fixed installment note during 1992 due
to uncertainty as to its collectibility. Throughout fiscal 1993, management
pursued legal action against the guarantors in an effort to collect the
principal and interest receivable. During the quarter ended February 28,
1993, a settlement agreement between the Partnership and the guarantors was
approved by the United States Bankruptcy Court whereby the Partnership
received a cash payment of $81,000 to fully satisfy all of the borrower's
outstanding obligations to the Partnership. During fiscal 1993, the
Partnership recognized income in the amount of the cash settlement payment,
which is reflected in the Partnership's statement of operations.

8. Subsequent Event

On October 13, 1995, the Partnership distributed $2,000 to the General
Partners, $198,000 to the Limited Partners, and $2,000 to the Adviser as
asset management fees for the quarter ended August 31, 1995.

9. Contingencies

The Partnership is involved in certain legal actions. The Managing General
Partner believes that such actions will be resolved without material adverse
effect on the Partnership's financial statements, taken as a whole.

<TABLE>
<CAPTION>
SCHEDULE III - REAL ESTATE OWNED
PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
AUGUST 31, 1995
(In Thousands)

Gross Amount at
Cost of Which Carried Date of
Investment to at Close of Original Size of
Description Partnership (A) Period (A) Investment Investment
<S> <C> <C> <C> <C>
Retail and Office
Complex
Pleasanton, CA $ 9,789 $ 8,200 (1) 8/15/86 78,415
rentable
square feet on
6.3 acres of
land
Shopping Center
Spartanburg, SC 8,250 7,840 (2) 4/28/88 151,489
square feet
on 13.9 acres
Land underlying
apartment complex (B)
Charlotte, NC 230 230 12/29/88 19 acres
$18,269 $16,270

Notes:
(A)These amounts represent the original cost of each investment and the gross amount at which these investments are carried on
the balance sheet at August 31, 1995. The aggregate cost for federal income tax purposes at August 31, 1995 is
approximately $17,142,000.

(B)A senior mortgage on the apartment property in North Carolina is held by PaineWebber Mortgage Partners Five, L.P. See
Schedule IV.

(C) Reconciliation of real estate owned:
1995 1994 1993
Balance at beginning of year $16,270 $16,270 $16,270
Additions during the year - - -
Balance at end of year $16,270 $16,270 $16,270

(1)The Partnership assumed ownership of Hacienda Plaza, in Pleasanton, California, on June 22, 1990 as the result of
foreclosure proceedings. The cost of the land and balance of the mortgage loan at the time title was transferred was
$9,789,000. The Partnership recorded a $1,589,000 write-down to reflect the estimate of the property's fair value at the
time of the foreclosure. During fiscal 1994, 1993, 1992 and 1991, the Partnership recorded provisions for possible
investment loss of $400,000, $900,000, $562,000 and $1,438,000, respectively, to provide for further declines in the
estimated fair value, net of selling expenses, of the Hacienda Plaza investment property. The net carrying value of the
investment on the Partnership's balance sheet at August 31, 1995 amounted to $4,900,000. See Note 5 to the financial
statements for a further discussion.

(2)The Partnership assumed ownership of the Spartan Place Shopping Center, in Spartanburg, South Carolina, on February 12, 1991
as a result of foreclosure proceedings. The cost of the land ($1,600,000) and the balance of the mortgage loan ($6,650,000)
at the time title was transferred totalled $8,250,000. The Partnership recorded a $410,000 write-down to reflect the
estimate of the property's fair value at the time of foreclosure. In fiscal 1995, 1994 and 1992, the Partnership recorded
provisions for possible investment loss of $1,000,000, $900,000 and $940,000, respectively, to reflect additional declines
in the estimated fair value, net of selling expenses, of the Spartan Place property. The net carrying value of the

investment on the Partnership's balance sheet at August 31, 1995 amounted to $5,000,000. See Note 5 to the financial
statements for a further discussion.

</TABLE>

SCHEDULE IV - INVESTMENTS IN MORTGAGE LOANS ON REAL ESTATE

PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
AUGUST 31, 1995
(In Thousands)
Principal
amount of
loans subject
Carrying to delinquent
Final maturity Periodic Face amount of amount of principal
Description Interest rate Date payment terms mortgage mortgage or interest
<S> <C> <C> <C> <C> <C> <C>
FIRST MORTGAGE LOANS:

Apartment Complex 9% December 28, 2001 Interest monthly, $ 1,270 $ 1,270 -
Charlotte, NC principal at
maturity
TOTALS $ 1,270 $ 1,270

1995 1994 1993

Balance at beginning of year $ 1,270 $ 1,270 $ 1,270
Additions during the year - - -
Reductions during the year - - -

Balance at end of year $ 1,270 $ 1,270 $ 1,270
</TABLE>

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's audited financial statements for the year ended August 31, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<CASH> 2,692
<SECURITIES> 0
<RECEIVABLES> 1,306
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,745
<PP&E> 10,130
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,175
<CURRENT-LIABILITIES> 304
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 13,626
<TOTAL-LIABILITY-AND-EQUITY> 14,175
<SALES> 0
<TOTAL-REVENUES> 780
<CGS> 0
<TOTAL-COSTS> 493
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (713)
<INCOME-TAX> 0
<INCOME-CONTINUING> (713)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (713)
<EPS-PRIMARY> (.91)
<EPS-DILUTED> (.91)

</TABLE>