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 May 31, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______ to _____.
Commission File Number: 0-17149
PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2889712
- ------------------------------- ------------------
(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 MORTGAGE PARTNERS FIVE, L.P.
BALANCE SHEETS
May 31, 1997 and August 31, 1996 (Unaudited)
(In thousands)
ASSETS
May 31 August 31
------ ---------
Real estate investments:
Investment properties held for sale, net $ 8,900 $ 8,900
Land 230 230
Mortgage loan receivable 1,270 1,270
------- -------
10,400 10,400
Cash and cash equivalents 2,491 2,637
Interest and land rent receivable 10 10
Accounts receivable 60 87
Prepaid expenses 20 27
Deferred expenses, net 21 25
------- -------
$13,002 $13,186
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 33 $ 33
Accounts payable and accrued expenses 151 307
Tenant security deposits 89 85
Deferred management fees 245 245
Partners' capital 12,484 12,516
------- -------
$13,002 $13,186
======= =======
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the nine months ended May 31, 1997 and 1996 (Unaudited)
(In thousands)
General Limited
Partners Partners
-------- --------
Balance at August 31, 1995 $ (90) $13,716
Net income 3 301
Cash distributions (3) (329)
------ -------
Balance at May 31, 1996 $ (90) $13,688
====== =======
Balance at August 31, 1996 $ (101) $12,617
Net income 4 364
Cash distributions (4) (396)
------ -------
Balance at May 31, 1997 $ (101) $12,585
====== =======
See accompanying notes.
<PAGE>
PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
STATEMENTS OF INCOME
For the three and nine months ended May 31, 1997 and 1996 (Unaudited)
(In thousands, except per Unit amounts)
Three Months Ended Nine Months Ended
May 31, May 31,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Interest from mortgage loan $ 29 $ 29 $ 86 $ 86
Land rent 8 7 19 29
Other interest income 33 31 95 99
------- ------ ------- -------
70 67 200 214
Expenses:
Management fees 34 33 103 102
General and administrative 57 63 184 228
Amortization of deferred
expenses 2 2 4 4
------- ------- ------- -------
93 98 291 334
------- ------- ------ -------
Operating loss (23) (31) (91) (120)
Income from operations of
investment properties
held for sale, net 180 66 459 424
------- ------- ------ -------
Net income $ 157 $ 35 $ 368 $ 304
======= ======= ====== =======
Net income per Limited
Partnership Unit $0.20 $0.05 $0.47 $0.39
===== ===== ===== =====
Cash distributions per Limited
Partnership Unit $0.17 $0.09 $0.51 $0.43
===== ===== ===== =====
The above net income and cash distributions per Limited Partnership Unit are
based upon the 776,988 Units ($50 per Unit) of Limited Partnership Interest
outstanding during each period.
See accompanying notes.
<PAGE>
PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended May 31, 1997 and 1996 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 368 $ 304
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization of deferred expenses 4 4
Changes in assets and liabilities:
Accounts receivable 27 (55)
Prepaid expenses 7 (4)
Accounts payable and accrued expenses (156) (101)
Tenant security deposits 4 6
------- -------
Total adjustments (114) (150)
------- -------
Net cash provided by operating activities 254 154
Cash flows from financing activities:
Distributions to partners (400) (332)
------- -------
Net decrease in cash and cash equivalents (146) (178)
Cash and cash equivalents, beginning of period 2,637 2,692
------- -------
Cash and cash equivalents, end of period $ 2,491 $ 2,514
======= =======
See accompanying notes.
<PAGE>
PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
Notes to Financial Statements
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained in
the Partnership's Annual Report for the year ended August 31, 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 require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities as of May 31, 1997 and August 31, 1996 and revenues
and expenses for the three- and nine-month periods ended May 31, 1997 and
1996. Actual results could differ from the estimates and assumptions used.
2. Mortgage Loan and Land Investments
The following first mortgage loan was outstanding at May 31, 1997 and August
31, 1996 (in thousands):
Date of
Property Amount of Loan Interest Rate Loan and Term
-------- -------------- ------------- -------------
Park South Apartments $1,270 9% 12/29/88
Charlotte, North Carolina 13 years
The loan is secured by a first mortgage on the property and an assignment of
all tenant leases. Interest is payable monthly and the principal is due at
maturity.
The fair value of the Park South loan, which does not become prepayable until
December 1997, has been estimated using discounted cash flow analysis and
approximated the loan's carrying value as of May 31, 1997 and August 31,
1996.
In addition to the above mortgage loan, the following land purchase-leaseback
transaction had also been entered into as of May 31, 1997 and August 31, 1996
(in thousands):
Cost of Land
Property to the Partnership Annual Base Rent
-------- ------------------ ----------------
Park South Apartments $ 230 $21 through 12/28/28
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
additional rent of $3,000 and $13,000 during the nine-month periods ended May
31, 1997 and 1996, 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.
<PAGE>
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 investment is structured to share in the appreciation in value
of the underlying real estate. Accordingly, upon either sale, refinancing,
maturity of the mortgage loan or exercise of the option to repurchase the
land, the Partnership will receive a 50% share of the appreciation above a
specified base amount.
3. Investment Properties Held for Sale
At May 31, 1997 and August 31, 1996, the Partnership owned two operating
investment properties directly as a result of foreclosure proceedings
resulting from uncured defaults under the terms of first mortgage loans held
by the Partnership. 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 and
retail space in Pleasanton, California, was 89% leased as of May 31, 1997.
The combined balance of the land and the mortgage loan investments at the
time title was transferred to the Partnership 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. Since the date of the foreclosure, the Partnership has recorded
provisions for possible investment loss totalling $3,300,000 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 resulting net carrying value of the Hacienda Plaza investment property
at both May 31, 1997 and August 31, 1996 is $4,900,000.
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 33% occupied
as of May 31, 1997. 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. Since the date of
the foreclosure, the Partnership has recorded provisions for possible
investment loss totalling $3,840,000 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 resulting net carrying
value of the Spartan Place investment property at both May 31, 1997 and
August 31, 1996 is $4,000,000.
During fiscal 1996, the Partnership entered into a preliminary agreement to
sell the Spartan Place property to a third party. Subsequent to the buyer's
due diligence period, however, the offer was withdrawn. Subsequent to the
termination of this sales contract, the Partnership remarketed the property
to other interested parties while at the same time examining potential
financing strategies for the capital and tenant improvement costs to be
incurred should the Partnership decide to hold the property through the
required re-leasing period. The property, as noted above, has a substantial
amount of vacant space. Funds for such re-leasing costs would be provided
from a combination of Partnership cash reserves and secured borrowings.
<PAGE>
During the quarter ended May 31, 1997, the Partnership entered into an
agreement which gave another prospective third-party buyer a 60-day
exclusive right to purchase the Spartan Place Shopping Center. Subsequent to
the end of the quarter, the agreement expired. The Partnership is currently
evaluating whether to continue negotiations with this prospective buyer or
to suspend the marketing efforts until the anchor spaces at the property can
be re-leased. A decision on whether to continue to market the property for
sale is expected to be made by the end of fiscal 1997.
The Partnership recognizes income from its investment properties held for
sale in the amount of the excess of the properties' gross revenues over the
sum of property operating expenses (including capital improvement expenses
and leasing commissions), taxes and insurance. Combined summarized operating
results for Hacienda Plaza and Spartan Place for the three- and nine-month
periods ended May 31, 1997 and 1996 are as follows (in thousands):
Three Months Ended Nine Months Ended
May 31, May 31,
------------------ --------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Rental income and
expense reimbursements $ 434 $ 372 $ 1,251 $ 1,191
Other income 3 2 9 7
----- ------ -------- --------
437 374 1,260 1,198
Expenses:
Property operating expenses 170 252 542 618
Property taxes and insurance 87 56 259 156
----- ------ -------- -------
257 308 801 774
----- ------ -------- -------
Income from operations of
investment properties held
for sale, net $ 180 $ 66 $ 459 $ 424
===== ====== ======== =======
4. Related Party Transactions
The Adviser earned basic management fees of $103,000 and $102,000 for the
nine-month periods ended May 31, 1997 and 1996, respectively. Accounts
payable - affiliates at both May 31, 1997 and August 31, 1996 consists of
management fees of $33,000 payable to the Adviser.
Included in general and administrative expenses for the nine months ended May
31, 1997 and 1996 is $107,000 and $105,000, respectively, representing
reimbursements to an affiliate of the Managing General Partner for providing
certain financial, accounting and investor communication services to the
Partnership.
Also included in general and administrative expenses for the nine months
ended May 31, 1997 and 1996 is $5,000 and $6,000, respectively, representing
fees earned by an affiliate, Mitchell Hutchins Institutional Investors, Inc.,
for managing the Partnership's cash assets.
<PAGE>
PAINEWEBBER MORTGAGE PARTNERS FIVE, L. P.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
-------------------------------
The Spartan Place Shopping Center, in Spartanburg, South Carolina, was 33%
occupied as of May 31, 1997, unchanged from the end of the prior quarter. During
the quarter, the Center's leasing team continued to focus its efforts on
identifying potential tenants for the two available anchor spaces at Spartan
Place. Although there has been interest in the available spaces, to date no
leases have been signed. 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 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 its store at Spartan Place and
terminated its lease in July 1995 as part of its bankruptcy reorganization plan.
A number of smaller shop space tenants have either gone out of business or
failed to renew their leases subsequent to the anchor tenant vacancies.
Re-leasing the Circuit City and Phar-Mor spaces to high-profile, strong credit
tenants will be critical to increasing shopper traffic at the Center which will
be necessary to lease the vacant shop space. However, such re-leasing plans
could require a significant 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 or assuming financing for capital and tenant improvements.
During fiscal 1996, the Partnership entered into a preliminary agreement to sell
the Spartan Place property to a third party. Subsequent to the buyer's due
diligence period, however, the offer to purchase the property was withdrawn.
Subsequent to the termination of this sales contract, the Partnership remarketed
the property to other interested parties while at the same time examining
potential financing strategies for the capital and tenant improvement costs to
be incurred should the Partnership decide to hold the property through the
required re-leasing period.
During the quarter ended May 31, 1997, the Partnership entered into an
agreement which gave another prospective third-party buyer a 60-day exclusive
right to purchase the Spartan Place Shopping Center. Subsequent to the end of
the quarter, the agreement expired. The Partnership is currently evaluating
whether to continue negotiations with this prospective buyer or to suspend the
marketing efforts until the anchor spaces at the property can be re-leased. A
decision on whether to continue to market the property for sale is expected to
be made by the end of fiscal 1997. At the present time, real estate values for
retail shopping centers in certain markets are being adversely impacted by the
effects of consolidations and bankruptcies among retailers which have resulted
in an oversupply of space and by the generally flat rate of growth in overall
retail sales. Such general market conditions would appear to be adversely
impacting both the re-leasing and sale efforts for the Spartan Place property.
The wholly-owned Hacienda Plaza office and retail complex was 89% leased as
of May 31, 1997, up from 85% as of February 28, 1997. As previously reported,
overall occupancy levels for the local Pleasanton, California office market have
improved considerably over the past 12-to-18 months, reaching the mid-to-high
90% range. Such improvement is primarily the result of the resurgence in the
growth of the high technology industries. As a result, rental rates in the
Pleasanton office market have improved in recent months. In addition, a
significant amount of build-to-suit office and multi-family residential
properties have been constructed within the past year in the planned development
area in which Hacienda Plaza is located which has substantially reduced the
amount of available land which could be developed for competing speculative
office properties. As a result of these conditions, operations of the Hacienda
Plaza investment property have stabilized after several years of intense local
office and retail market competition. The occupancy in the retail portion of the
property increased to 89% during the third quarter of fiscal 1997, up from 81%
at the end of the prior quarter. This increase in occupancy was due to a new
retail tenant that leased approximately 2,600 square feet of space. The
property's leasing team also negotiated a lease assignment during the third
quarter when an existing retail tenant sold its business to a new owner.
Subsequent to end of the third quarter, a lease was signed with another new
tenant that will operate a copy and printing center in a 2,315 square foot
retail space. This new tenant expects to open for business in August 1997 which
will bring the occupancy level of the retail portion of the property to 97% by
the end of the fiscal year. Occupancy of the office portion of the property
remained at 89% as of May 31, 1997. Although no leases were signed during the
quarter, the leasing team reports that it has been showing space in the office
building to prospective tenants frequently. Common area improvements are planned
to begin in the office building during the fourth quarter. These improvements,
which will include new carpeting, wall covering, lighting and seating, are aimed
at maintaining the office building's competitive position in the Pleasanton
market.
Occupancy at the Park South Apartments in Charlotte, North Carolina,
averaged 91% for the quarter ended May 31, 1997, compared to 90% for the
previous quarter. Operations of the property continue to fully support the debt
service and ground lease payments owed to the Partnership despite a weakening in
market conditions for existing properties in the greater Charlotte area over the
past year. A significant number of new apartment units have been added to the
overall Charlotte market during this time period, including several hundred new
units which are in Park South's sub-market, and a substantial amount of
additional units are currently either under construction or in the planning
stages. In order to remain competitive with these new units, Park South
currently offers reduced rental rates and/or discounted move-in rates to
prospective tenants. As an incentive to renew leases, current tenants are
offered minimal increases at the expiration of their leases. The use of rental
concessions and renewal incentives is expected to continue for the near term.
Notwithstanding the current market conditions, management believes that the
long-term prospects for the Park South property remain positive due to the
property's strong position within the marketplace and the region's outlook for
job and population growth over the next several years.
At May 31, 1997, the Partnership had available cash and cash equivalents of
$2,491,000. 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. The Partnership's quarterly distribution rate is currently
equivalent to a 2% per annum return on remaining invested capital. Distributions
are 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
Three Months Ended May 31, 1997
- -------------------------------
The Partnership's net income increased by $122,000 for the three months
ended May 31, 1997, when compared to the same period in the prior year. The
increase in net income was due to a $114,000 increase in income from the
operations of investment properties held for sale and an $8,000 decrease in the
Partnership's operating loss. Income from operations of investment properties
held for sale increased due to an improvement in net operating income of $85,000
at Hacienda Plaza and a $29,000 increase in net operating income at Spartan
Place for the third quarter of fiscal 1997. Net operating income was higher at
Hacienda Plaza mainly due to a $30,000 increase in rental income and decreases
in capital expenditures and leasing commissions of $52,000 and $16,000,
respectively. Rental income increased due to an increase in occupancy, from 82%
at May 31, 1996 to 89% at May 31, 1997, as well as an increase in average rental
rates due to the improving market conditions referred to above. Capital
expenditures decreased because certain parking area improvements were completed
during the prior three-month period. 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. Net operating income increased at
Spartan Place primarily due to an increase in reimbursements received from
tenants for common area maintenance costs.
The Partnership's operating loss decreased mainly due to a decline in
general and administrative expenses of $5,000. General and administrative
expenses decreased primarily due to a reduction in legal fees.
<PAGE>
Nine Months Ended May 31, 1997
- ------------------------------
The Partnership's net income increased by $64,000 for the nine months
ended May 31, 1997, when compared to the same period in the prior year. The
increase in net income was due to a $35,000 increase in income from the
operations of investment properties held for sale and a $29,000 decrease in the
Partnership's operating loss. Income from operations of investment properties
held for sale increased due to an improvement in net operating income of $70,000
at Hacienda Plaza, which was partially offset by a $35,000 decrease in net
operating income at Spartan Place. Net operating income was higher at Hacienda
Plaza mainly due to an $80,000 increase in rental income and decreases in real
estate taxes and leasing commissions of $18,000 and $12,000, respectively.
Rental income increased due to an increase in the property's average occupancy
level, as well as an increase in average rental rates due to the improving
market conditions referred to above. Real estate taxes decreased due to a
reduction in the property's tax assessment. A $43,000 increase in capital
expenditures at Hacienda Plaza partially offset the increases in rental income
and decreases in real estate taxes and leasing commissions. As noted above,
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. Net operating income decreased at Spartan Place mainly due to a
$20,000 decrease in rental income and a $16,000 increase in capital
expenditures. Rental income decreased at Spartan Place due to the decline in the
property's occupancy level over the past year which has resulted from the anchor
tenant vacancies discussed further above.
The Partnership's operating loss decreased mainly due to a decline in
general and administrative expenses of $44,000. General and administrative
expense decreased primarily due to a reduction in legal and certain other
required professional fees. The decline in general and administrative expenses
was partially offset by a decrease in land rent revenue of $10,000. Land rent
revenue decreased because the Partnership received $3,000 as additional rent in
excess of a specified base amount from the Park South Apartments pursuant to the
terms of the ground lease during the current nine-month period, as compared to
$13,000 of additional rent received for the same period in the prior year.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
As previously reported, the Partnership's General Partners were named as
defendants in a class action lawsuit against PaineWebber Incorporated
("PaineWebber") and a number of its affiliates relating to PaineWebber's sale of
70 direct investment offerings of interests in various limited partnership
investments and REIT stocks, including those offered by the Partnership. In
January 1996, PaineWebber signed a memorandum of understanding with the
plaintiffs in the class action outlining the terms under which the parties have
agreed to settle the case. Pursuant to that memorandum of understanding,
PaineWebber irrevocably deposited $125 million into an escrow fund under the
supervision of the United States District Court for the Southern District of New
York to be used to resolve the litigation in accordance with a definitive
settlement agreement and plan of allocation. On July 17, 1996, PaineWebber and
the class plaintiffs submitted a definitive settlement agreement which 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 settlement was held in December 1996, and in March 1997 the
court issued a final approval of the settlement. The release of the $125 million
of settlement proceeds has not occurred to date pending the resolution of an
appeal of the settlement agreement by two of the plaintiff class members. As
part of the settlement agreement, PaineWebber has agreed not to seek
indemnification from the related partnerships and real estate investment trusts
at issue in the litigation (including the Partnership) for any amounts that it
is required to pay under the settlement.
In February 1996, approximately 150 plaintiffs filed an action entitled
Abbate v. PaineWebber Inc. in Sacramento, California Superior Court against
PaineWebber Incorporated and various affiliated entities concerning the
plaintiffs' purchases of various limited partnership interests, including those
offered by the Partnership. The complaint alleged, among other things, that
PaineWebber and its related entities committed fraud and misrepresentation and
breached fiduciary duties allegedly owed to the plaintiffs by selling or
promoting limited partnership investments that were unsuitable for the
plaintiffs and by overstating the benefits, understating the risks and failing
to state material facts concerning the investments. The complaint sought
compensatory damages of $15 million plus punitive damages against PaineWebber.
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
settlement between PaineWebber and the plaintiffs was reached which provided for
the complete resolution of such action. Final releases and dismissals with
regard to this action were received during the quarter ended May 31, 1997.
Based on the settlement agreements discussed above covering all of the
outstanding unitholder litigation, and notwithstanding the appeal of the class
action settlement referred to above, management does not expect that the
resolution of these matters will have a material impact on the Partnership's
financial statements, taken as a whole.
Item 2. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.
<PAGE>
PAINEWEBBER MORTGAGE PARTNERS FIVE, 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 MORTGAGE PARTNERS FIVE, L.P.
By: FIFTH MORTGAGE PARTNERS, INC.
-----------------------------
Managing General Partner
By: /s/ Walter V. Arnold
--------------------
Walter V. Arnold
Senior Vice President and Chief
Financial Officer
Dated: July 14, 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 May 31, 1997
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> AUG-31-1997
<PERIOD-END> MAY-31-1997
<CASH> 2,491
<SECURITIES> 0
<RECEIVABLES> 1,340
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,581
<PP&E> 9,130
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,002
<CURRENT-LIABILITIES> 273
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,484
<TOTAL-LIABILITY-AND-EQUITY> 13,002
<SALES> 0
<TOTAL-REVENUES> 659
<CGS> 0
<TOTAL-COSTS> 291
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 368
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-DILUTED> 0.47
</TABLE>
