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, 1998
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, 1998 and August 31, 1997 (Unaudited)
(In thousands)
ASSETS
May 31 August 31
------ ---------
Real estate investments:
Investment properties held for sale, net $ 4,900 $ 4,900
Land - 230
Mortgage loan receivable - 1,270
------- --------
4,900 6,400
Cash and cash equivalents 921 6,795
Interest and land rent receivable - 21
Accounts receivable 36 48
Prepaid expenses 23 19
Deferred expenses, net - 20
------- --------
$ 5,880 $ 13,303
======= ========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 23 $ 33
Accounts payable and accrued expenses 82 298
Tenant security deposits 93 88
Deferred management fees 245 245
Partners' capital 5,437 12,639
------- --------
$ 5,880 $ 13,303
======= ========
See accompanying notes.
<PAGE>
PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
STATEMENTS OF OPERATIONS
For the three and nine months ended May 31, 1998 and 1997 (Unaudited)
(In thousands, except per Unit amounts)
Three Months Ended Nine Months Ended
May 31, May 31,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
Revenues:
Interest from mortgage
loans $ - $ 29 $ 45 $ 86
Land rent - 8 34 19
Other income 13 33 172 95
------ -------- ------- --------
13 70 251 200
Expenses:
Management fees 24 34 81 103
General and administrative 72 57 191 184
Amortization of deferred
expenses - 2 20 4
------ -------- ------- --------
96 93 292 291
------ -------- ------- --------
Operating loss (83) (23) (41) (91)
Gain on sale of land - - 455 -
Income from operations of
investment properties
held for sale, net 51 180 353 459
------ -------- ------- --------
Net income (loss) $ (32) $ 157 $ 767 $ 368
======== ======== ======= ========
Net income (loss) per
Limited Partnership
Unit $(0.04) $0.20 $ 0.98 $0.47
====== ===== ======= =====
Cash distributions per
Limited Partnership
Unit $ 0.07 $0.17 $10.25 $0.51
======= ===== ====== =====
The above net income (loss) 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 CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the nine months ended May 31, 1998 and 1997 (Unaudited)
(In thousands)
General Limited
Partners Partners
-------- --------
Balance at August 31, 1996 $ (101) $ 12,617
Net income 4 364
Cash distributions (4) (396)
------ --------
Balance at May 31, 1997 $ (101) $ 12,585
====== ========
Balance at August 31, 1997 $ (99) $ 12,738
Net income 8 759
Cash distributions (3) (7,966)
------ --------
Balance at May 31, 1998 $ (94) $ 5,531
====== ========
See accompanying notes.
<PAGE>
PAINEWEBBER MORTGAGE PARTNERS FIVE, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended May 31, 1998 and 1997 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 767 $ 368
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of land (455) -
Amortization of deferred expenses 20 4
Changes in assets and liabilities:
Interest and land rent receivable 21 -
Accounts receivable 12 27
Prepaid expenses (4) 7
Accounts payable-affiliates (10) -
Accounts payable and accrued expenses (216) (156)
Tenant security deposits 5 4
------- -------
Total adjustments (627) (114)
------- -------
Net cash provided by operating
activities 140 254
------- -------
Cash flows from investing activities:
Net proceeds from sale of land 685 -
Repayment of mortgage loan 1,270 -
------- -------
Net cash provided by operating
activities 1,955 -
------- -------
Cash flows from financing activities:
Distributions to partners (7,969) (400)
------- -------
Net decrease in cash and cash equivalents (5,874) (146)
Cash and cash equivalents, beginning of period 6,795 2,637
------- -------
Cash and cash equivalents, end of period $ 921 $ 2,491
======= =======
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, 1997. In the opinion
of management, the accompanying financial statements, which have not been
audited, reflect all adjustments necessary to present fairly the results for the
interim period. All of the accounting adjustments reflected in the accompanying
interim financial statements are of a normal recurring nature.
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles
which 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, 1998 and August 31, 1997 and revenues and expenses
for the three- and nine-month periods ended May 31, 1998 and 1997. Actual
results could differ from the estimates and assumptions used.
As discussed further in Note 2, the Partnership's mortgage loan and land
investments secured by the Park South Apartments were repaid in January 1998.
Subsequent to this transaction, the Partnership has one remaining real estate
investment, the wholly-owned Hacienda Plaza office and retail complex (see Note
3). The Partnership plans to actively market this property for sale during the
second half of calendar 1998. The goal of the Managing General Partner is to
complete the sale of the remaining asset and a liquidation of the Partnership by
December 31, 1998. There are no assurances, however, that the sale of the
remaining asset and the liquidation of the Partnership will be completed within
this time frame.
2. Mortgage Loan and Land Investments
----------------------------------
The outstanding first mortgage loan and the cost of the related land to
the Partnership at August 31, 1997 were as follows (in thousands):
Property Amount of Mortgage Loan Cost of Land
-------- ----------------------- ------------
Park South Apartments
Charlotte, North Carolina $1,270 $ 230
On January 20, 1998, the Partnership received $1,270,000 from the borrower
of the mortgage loan secured by the Park South Apartments, which represented the
full repayment of the first leasehold mortgage loan held by the Partnership.
Simultaneously, the Park South owner purchased the Partnership's interest in the
underlying land at a price of $685,000 which included a premium of $455,000 over
the Partnership's cost basis in the land of $230,000. This premium represented a
50% share in the appreciation in the value of the operating investment property
above a specified base amount as called for under the terms of the ground lease.
The Park South mortgage loan opened to prepayment without penalty on December
29, 1997. The Partnership owned a 23% interest in the land underlying the Park
South Apartments and had an equivalent interest in the first mortgage loan
secured by the improvements. The remaining 77% interest in the land and mortgage
loan receivable was owned by an affiliated partnership, Paine Webber Qualified
Plan Property Fund Four, LP. The Partnership distributed the net proceeds of the
Park South transaction to the Limited Partners on February 27, 1998 in the form
of a special distribution in the amount of approximately $1,981,000, or $51 per
original $1,000 investment.
The Park South loan was secured by a first mortgage on the property, the
owner's leasehold interest in the land and an assignment of all tenant leases.
Interest was payable monthly and the principal was due at maturity on December
28, 2001. The annual interest rate on the Park South mortgage loan was 9%. The
land lease had a term of 40 years. Among the provisions of the lease agreement,
the Partnership was entitled to additional rent based upon gross revenues of the
underlying property in excess of a base amount, as defined. The Partnership
received additional rent under the terms of the Park South Apartments land lease
totalling $26,000 and $3,000 during the nine months ended May 31, 1998 and 1997,
respectively.
3. Investment Properties Held for Sale
-----------------------------------
At May 31, 1998 and August 31, 1997, the Partnership owned one operating
investment property (Hacienda Plaza) directly as a result of foreclosure
proceedings resulting from uncured defaults under the terms of a first mortgage
loan held by the Partnership. Until August 1997, the Partnership had owned
another operating property (Spartan Place) that it had acquired through
foreclosure proceedings. As discussed further below, this property was sold to a
third party on August 25, 1997. 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 94% occupied as of May 31, 1998. 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, 1998 and August 31, 1997 is
$4,900,000.
Spartan Place Shopping Center
-----------------------------
The Partnership assumed ownership of the Spartan Place Shopping Center,
which is a 151,489 square foot retail center in Spartanburg, South Carolina, on
February 12, 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. Subsequent to the date of the
foreclosure, the Partnership 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. On August 25, 1997, the Partnership sold the Spartan
Place property to an unrelated third party for $4,450,000. After closing costs
and adjustments, the Partnership realized net proceeds of approximately
$4,381,000 from the sale of Spartan Place. As a result of the sale of the
Spartan Place Shopping Center, a Special Distribution of approximately
$5,750,000, or $148 per original $1,000 investment, was made on October 15, 1997
to unitholders of record as of August 25, 1997. The Special Distribution
included the net proceeds from the sale of the Spartan Place Shopping Center as
well as substantially all of the $1,550,000 letter of credit proceeds that had
been held in the Partnership's cash reserves since being collected from the
Spartan Place borrower at the time of the original default and foreclosure on
February 12, 1991. Approximately $180,000 of those proceeds was retained by the
Partnership to provide for the potential capital needs of the Partnership's
wholly-owned Hacienda Plaza property.
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 for the three- and nine-month periods ended May 31, 1998 and
for Hacienda Plaza and Spartan Place for the three- and nine-month periods ended
May 31, 1997 are as follows (in thousands):
Three Months Ended Nine Months Ended
May 31, May 31,
------------------ ------------------
1998 1997 1998 1997
---- ---- ---- ----
Revenues:
Rental income and
expense
reimbursements $ 369 $ 434 $ 1,050 $ 1,251
Other income 3 3 8 9
-------- ------- ------- -------
372 437 1,058 1,260
Expenses:
Property operating
expenses 269 170 513 542
Property taxes and
insurance 52 87 192 259
-------- ------- ------- -------
321 257 705 801
-------- ------- ------- -------
Income from operations
of investment
properties held
for sale, net $ 51 $ 180 $ 353 $ 459
======== ======= ======= =======
<PAGE>
4. Related Party Transactions
--------------------------
The Adviser earned basic management fees of $81,000 and $103,000 for the
nine-month periods ended May 31, 1998 and 1997, respectively. Accounts payable -
affiliates at May 31, 1998 and August 31, 1997 consist of management fees of
$23,000 and $33,000, respectively, payable to the Adviser.
Included in general and administrative expenses for the nine months ended
May 31, 1998 and 1997 is $101,000 and $107,000, 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, 1998 and 1997 is $6,000 and $5,000, 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
- -------------------------------
As discussed further below, the Partnership's mortgage loan and land
investments secured by the Park South Apartments were repaid on January 20,
1998, and the Partnership's wholly-owned Spartan Place Shopping Center was sold
on August 25, 1997. Subsequent to these transactions, the Partnership has one
remaining real estate investment, the wholly-owned Hacienda Plaza office and
retail complex. The Partnership assumed direct ownership of this property in
June 1990 following foreclosure proceedings resulting from a default under the
terms of the Partnership's first leasehold mortgage loan. As discussed further
below, it is expected that the Hacienda Plaza property will be marketed and sold
during the second half of calendar 1998. Management's current goal would be to
complete the sale of the remaining asset and a liquidation of the Partnership by
December 31, 1998. There are no assurances, however, that the sale of the
remaining asset and the liquidation of the Partnership will be completed within
this time frame. The net proceeds from the final sale transaction will be
distributed to the Limited Partners along with the remaining Partnership cash
reserves after the payment of all liquidation-related expenses.
The first mortgage loan secured by the Park South Apartments was scheduled
to mature on December 28, 2001; however, it opened to prepayment without penalty
on December 29, 1997. On January 20, 1998, the Partnership received $1,270,000
from the borrower of the mortgage loan secured by Park South, which represented
the full repayment of the first leasehold mortgage loan held by the Partnership.
Simultaneously, the Park South owner purchased the Partnership's interest in the
underlying land at a price of $685,000 which included a premium of $455,000 over
the Partnership's cost basis in the land of $230,000. This premium represented a
50% share in the appreciation in the value of the operating investment property
above a specified base amount as called for under the terms of the ground lease.
The Partnership owned a 23% interest in the land underlying the Park South
Apartments and had an equivalent interest in the first mortgage loan secured by
the improvements. The remaining 77% interest in the land and mortgage loan
receivable was owned by an affiliated partnership, Paine Webber Qualified Plan
Property Fund Four, LP. As a result of the disposition on January 20, 1998 of
the Partnership's investments secured by the Park South Apartments, the
Partnership made a Special Distribution of the net proceeds of this transaction
on February 27, 1998 to unitholders of record as of January 20, 1998 in the
amount of approximately $1,981,000, or $51 per original $1,000 investment.
On August 25, 1997, the Partnership sold the Spartan Place property to an
unrelated third party for $4,450,000. After closing costs and adjustments, the
Partnership realized net proceeds of approximately $4,381,000 from the sale of
Spartan Place. As a result of the sale of the Spartan Place Shopping Center, a
Special Distribution of approximately $5,750,000, or $148 per original $1,000
investment, was made on October 15, 1997 to unitholders of record as of August
25, 1997. The Special Distribution included the net proceeds from the sale of
the Spartan Place Shopping Center as well as substantially all of the $1,550,000
letter of credit proceeds that had been held in the Partnership's cash reserves
since being collected from the Spartan Place borrower at the time of the
original default and foreclosure on February 12, 1991. Approximately $180,000 of
those proceeds was retained by the Partnership to provide for the potential
capital needs of the Partnership's wholly-owned Hacienda Plaza property. Due to
the Spartan Place Special Distribution and the resulting decrease in the
Partnership's cash flow, the Partnership's annualized distribution rate was
adjusted from 2% to 1% beginning with the distribution for the quarter ended
November 30, 1997, which was made on January 15, 1998. Despite the repayment of
the Park South investments during the second quarter, the Partnership expects to
be able to maintain a 1% annual distribution rate on the remaining invested
capital balance for the remainder of 1998.
The wholly-owned Hacienda Plaza office and retail complex was 94% occupied
as of May 31, 1998, up from 93% at the end of the second quarter. As previously
reported, overall occupancy levels for the local Pleasanton, California office
market have improved considerably over the past two years, 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 been improving during this period as
well. In addition, a significant number 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 that 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. While the retail portion of
the property was maintained at 97% occupancy for the third quarter of fiscal
1998, the occupancy of the office portion of the property improved to 94% from
91% last quarter. In addition, the property's leasing team is in negotiations
with 2 prospective tenants to lease a total of 3,326 square feet. If leases are
signed with these tenants, the property would be 98% occupied. During the third
quarter, there was activity on 5 leases in the office portion of the property,
which contains 46,600 of the building's 78,415 square feet. The property's
leasing team signed leases with two new tenants that now occupy a total of 5,609
square feet. However, two tenants occupying a total of 2,287 square feet decided
not to renew when their leases expired. Another tenant occupying 2,104 square
feet closed its office operations, but will continue to pay rent until the space
is re-leased or until its lease expiration date of December 31, 1998. During the
quarter ended May 31, 1998, the Partnership interviewed prospective real estate
brokers about marketing Hacienda Plaza for sale. Subsequent to the end of the
third quarter, the Partnership selected a national brokerage firm to begin the
marketing process. Sales materials are in the process of being prepared and
active marketing efforts are scheduled to commence in July 1998.
At May 31, 1998, the Partnership had available cash and cash equivalents
of $921,000. Such cash and cash equivalents will be used for the working capital
needs of the Partnership, distributions to the partners and, if necessary, for
capital improvements and/or leasing costs at Hacienda Plaza. The source of
future liquidity and distributions to the partners is expected to be from the
operations and future sale of the remaining wholly-owned investment property and
interest income on the Partnership's cash reserves.
Results of Operations
Three Months Ended May 31, 1998
- -------------------------------
The Partnership reported a net loss of $32,000 for the three months ended
May 31, 1998, as compared to net income of $157,000 for the same period in the
prior year. This unfavorable change in net operating results of $189,000 was due
to a $129,000 decrease in income from operations of investment properties held
for sale and a $60,000 increase in the Partnership's operating loss.
Income from operations of investment properties held for sale decreased
primarily due to the sale of Spartan Place during the fourth quarter of fiscal
1997. Spartan Place had net operating income of $91,000 during the third quarter
of the prior year. In addition, net operating income decreased by $38,000 at
Hacienda Plaza for the current three-month period primarily due to an increase
of $127,000 in capital expenditures. In accordance with the Partnership's
accounting policy for assets held for sale, such costs are expensed as incurred.
Capital expenditures increased mainly due to the remodeling of the lobby and
common areas in the office portion of the Hacienda Plaza property, which was
completed during the current quarter. The increase in capital expenditures was
partially offset by an increase in rental income of $86,000. Rental income
increased at Hacienda Plaza due to higher average rental rates and occupancy
levels compared to the same period in the prior year.
The Partnership's operating loss increased by $60,000 primarily due to a
decrease in total revenues of $57,000. Total revenues decreased due to
reductions in interest from mortgage loans and land rent of $29,000 and $8,000,
respectively, and a decline in other income of $20,000. Interest from mortgage
loans and land rent decreased due to the prepayment of the loan secured by the
Park South Apartments and the related sale of the underlying land which occurred
on January 20, 1998. Other income decreased by $20,000 due to a decline in
interest income on the Partnership's cash reserves. Interest income earned on
cash reserves decreased due to a reduction in the average outstanding balance of
the Partnership's cash and cash equivalents for the current quarter as compared
to the same period in the prior year. The reduction in the Partnership's cash
reserves reflects the distribution of the Spartan Plaza letter of credit
proceeds in October 1997, as discussed further above.
Nine Months Ended May 31, 1998
- ------------------------------
The Partnership's net income increased by $399,000 for the nine months
ended May 31, 1998 when compared to the same period in the prior year. The
increase in net income was primarily due to the $455,000 gain recognized on the
sale of the land underlying the Park South Apartments during the current fiscal
year. The increase in net income was also partly due to a $50,000 favorable
change in the Partnership's operating loss. The gain on the Park South
transaction and the decline in operating loss were partially offset by a
$106,000 decrease in income from operations of investment properties held for
sale for the current nine-month period.
The Partnership's operating loss decreased primarily due to an increase of
$77,000 in other income, which resulted mainly from a residual distribution of
rental income collected from the Spartan Place property subsequent to the sale
transaction described above, and an increase in land rent of $15,000 due to
additional land rent income received from the Park South Apartments in fiscal
1998 prior to the repayment transaction described above. In addition, management
fee expense decreased by $22,000 for the current nine-month period. Management
fees decreased due to a reduction in adjusted capital contributions, upon which
such fees are based, as a result of the capital distributions which followed the
Spartan Place sale and the prepayment transaction involving the Park South
Apartments investments, as discussed further above. The increases in other
income and land rent and the decrease in management fee expense were partially
offset by a decrease in interest from mortgage loans of $41,000 and an increase
in amortization of deferred expenses of $16,000. Interest from mortgage loans
decreased due to the Park South mortgage prepayment described above.
Amortization expense increased due to the write-off of all remaining unamortized
deferred expenses as a result of the repayment of the Park South mortgage loan
and the sale of the underlying land.
Income from operations of investment properties held for sale decreased by
$106,000 for the current nine-month period. Net operating income at Hacienda
Plaza increased by $139,000, which was offset by the $245,000 in net income from
Spartan Place which was recognized for the first nine months of fiscal 1997. Net
operating income at Hacienda Plaza increased mainly due to an increase of
$179,000 in rental income. Rental income increased due to increases in both
average rental rates and the occupancy level at the property compared to the
same period in the prior year.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings NONE
Items 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 2, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's unaudited financial statements for the quarter ended May 31, 1998
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-31-1998
<PERIOD-END> MAY-31-1998
<CASH> 921
<SECURITIES> 0
<RECEIVABLES> 36
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 980
<PP&E> 4,900
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,880
<CURRENT-LIABILITIES> 198
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,437
<TOTAL-LIABILITY-AND-EQUITY> 5,880
<SALES> 0
<TOTAL-REVENUES> 1,059
<CGS> 0
<TOTAL-COSTS> 292
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 767
<INCOME-TAX> 0
<INCOME-CONTINUING> 767
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 767
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.98
</TABLE>
