PRUDENTIAL BACHE WATSON & TAYLOR LTD-4, PRE 14A, 1996-07-03

PRUDENTIAL BACHE WATSON & TAYLOR LTD-4
PRE 14A, 1996-07-03
REAL ESTATE

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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
PRELIMINARY COPY

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:

[X] Preliminary Proxy Statement [X] Confidential, for
Use of the Commis-
sion Only (as per-
mitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12

Prudential-Bache/Watson & Taylor, Ltd.-4
(Name of Registrant as Specified in its Charter)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.

(1) Title of each class of securities to which transaction
applies: Units representing ownership interests in
limited partnership interests

(2) Aggregate number of securities to which transaction
applies: 66,555.

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined): The amount on which the
filing fee is calculated was determined pursuant to
Rule 0-11(c)(2) of the Exchange Act by multiplying
1/50th of 1% by $12,210,000, the aggregate amount of
cash to be received by the registrant.

(4) Proposed maximum aggregate value of transaction:
$12,210,000.

(5) Total fee paid: $2,442.

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Sched-
ule and the date of its filing.

(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
ONE SEAPORT PLAZA
NEW YORK, NY 10292-0116

July __, 1996

Dear Unitholders:

We are pleased to inform you that on June 13,
1996, Prudential-Bache/Watson & Taylor, Ltd.-4 (the
"Partnership") entered into a contract of sale to sell
(the "Sale") the properties owned by the Partnership (the
"Properties") other than certain undeveloped land to
Public Storage, Inc. (the "Buyer"). The purchase price
for these nine Properties is $12,210,000. The Partner-
ship is seeking to sell such undeveloped land.

The Partnership intends to make a cash distribu-
tion to Unitholders representing the bulk of the purchase
price promptly after the closing of the Sale. The Part-
nership would then anticipate being able to make one or
more subsequent distributions within approximately one
year after the closing of the Sale, and thereafter to
liquidate (the "Liquidation"). The Partnership estimates
that these liquidating distributions will aggregate
approximately $xx per unit.

THE SALE AND LIQUIDATION REQUIRES THE CONSENT OF
A MAJORITY OF THE UNITS. YOUR APPROVAL IS VERY IMPOR-
TANT.

PRUDENTIAL-BACHE PROPERTIES, INC., THE MANAGING
GENERAL PARTNER OF THE PARTNERSHIP, AND GEORGE S. WATSON
AND A. STARKE TAYLOR, III, THE INDIVIDUAL GENERAL PART-
NERS OF THE PARTNERSHIP, BELIEVE THAT THE SALE AND LIQUI-
DATION ARE IN THE BEST INTERESTS OF THE PARTNERSHIP AND
RECOMMEND THAT YOU CONSENT TO THE SALE AND LIQUIDATION.
THE GENERAL PARTNERS BASE THEIR RECOMMENDATION ON, AMONG
OTHER THINGS, THE FOLLOWING FACTORS:

(1) Their belief that current market condi-
tions are favorable for the sale of the
Partnership's Properties,

(2) The timing of the sale is consistent with
the anticipated holding period for Units
set forth in the initial offering,

(3) The Sale and Liquidation provides liquid-
ity to Unitholders,

(4) The price and terms negotiated with the
Buyer were the result of a competitive
bidding process and were the most favor-
able of the offers received to acquire the
Properties in the bidding process de-
scribed under "THE TRANSACTION--Background
of the Sale of the Properties" in the
attached Consent Statement,

(5) The purchase price exceeds the aggregate
appraised value of the Properties, as
determined by Cushman & Wakefield, an
independent, third-party appraisal firm.
(see "THE TRANSACTION--Fairness Opinion
and Appraisals" in the attached Consent
Statement), and

(6) An opinion from Robert A. Stanger & Co. to
the effect that the consideration to be
received in the Sale is fair from a finan-
cial point of view to the Partnership (see
"THE TRANSACTION--Fairness Opinion and
Appraisals" in the attached Consent State-
ment).

Unitholders should be aware that, if the Sale is
consummated, the Partnership would not receive the bene-
fits of any potential increases in cash flow or the value
of the Properties following the Sale.

The attached Consent Statement contains detailed
information concerning the proposed Sale and Liquidation.
We urge you to read the Consent Statement and enclosed
materials carefully before voting. If you have any
questions please feel free to call our consent solici-
tors, Morrow & Co., Inc. at (800) xxx-xxxx.

Very truly yours,

Thomas F. Lynch, III
President
Prudential-Bache Properties, Inc.
Managing General Partner

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
ONE SEAPORT PLAZA
NEW YORK, NY 10292-0116
______________________

NOTICE OF PROPOSED ACTION BY WRITTEN CONSENT
JULY __, 1996
______________________

To the Unitholders of Prudential-Bache/Watson & Taylor,
Ltd.-4:

NOTICE IS HEREBY GIVEN to the holders (the
"Unitholders") of the limited partnership interests in the
Partnership (the "Units") of Prudential-Bache/Watson &
Taylor, Ltd.-4, a Texas limited partnership (the "Partner-
ship"), that Prudential-Bache Properties, Inc., the Managing
General Partner of the Partnership ("PB Properties"), is
soliciting written consents, in lieu of a meeting of
Unitholders, to approve a single proposal, involving (a) the
sale of substantially all of the assets of the Partnership,
other than certain undeveloped land, as contemplated by the
Contract of Sale, dated as of June 13, 1996 (the "Contract
of Sale"), by and between the Partnership and Public Stor-
age, Inc. and the sale of such undeveloped land on such
terms and conditions as the Managing General Partner may
determine and (b) the complete liquidation and dissolution
of the Partnership (collectively, the "Transaction"), all as
more fully described in the accompanying Consent Statement.
The Transaction must be approved by the holders of a majori-
ty of the Units, which approval shall constitute the approv-
al of the Partnership.

Only Unitholders of record at the close of busi-
ness on July 1, 1996 are entitled to give their consent to
these actions.

The accompanying Consent Statement describes the
Transaction in detail.

YOUR CONSENT TO THIS PROPOSAL IS IMPORTANT

DEADLINE: 10:00 A.M., NEW YORK TIME, ON JULY __, 1996

TO ENSURE THAT YOUR INTEREST WILL BE REPRESENTED,
PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED CONSENT CARD
AND PROMPTLY MAIL IT IN THE ENCLOSED SELF-ADDRESSED
POSTAGE-PREPAID ENVELOPE.

Your approval is important. Please read the
Consent Statement carefully and then complete, sign and date
the enclosed Consent Card and return it in the self-ad-
dressed postage-prepaid envelope. Any Consent Card which is
signed and returned but does not specifically disapprove the
Transaction will be treated as approving the Transaction.

To be counted, the Consent Card must be received
on or before 10:00 a.m. New York time on July __, 1996
(unless such time is extended). A consent may be revoked by
written notice received on or before the expiration of the
time for responding.

Your prompt response is appreciated.

PRUDENTIAL-BACHE PROPERTIES, INC.,
Managing General Partner

New York, New York
July __, 1996

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4

CONSENT STATEMENT

ACTION BY WRITTEN CONSENT
JULY __, 1996

This Consent Statement is being furnished to the
holders ("Unitholders") of the limited partnership interests
(the "Units") in Prudential-Bache/Watson & Taylor, Ltd.-4.,
a Texas limited partnership (the "Partnership"), in connec-
tion with the solicitation of consents by Prudential-Bache
Properties, Inc., the Managing General Partner of the Part-
nership, on behalf of the Partnership. Unitholders are
being asked to consent to a proposal which, if approved and
consummated, would result in the sale (the "Sale") of sub-
stantially all of the Partnership's assets other than cer-
tain undeveloped land for cash, the sale of such undeveloped
land on such terms and conditions as the Managing General
Partner may determine and the complete liquidation and
dissolution of the Partnership (collectively, the "Transac-
tion"). The Partnership's assets consist substantially of
eleven properties, nine of which are being sold to the Buyer
and which are commercial real estate properties consisting
of office/warehouse, mini-warehouse and retail facilities
(the "Properties"). The Partnership also owns two parcels
of undeveloped land.

The Partnership has entered into a Contract of
Sale (the "Contract of Sale") with Public Storage, Inc. (the
"Buyer"), dated as of June 13, 1996, for the sale of the
Properties to the Buyer for $12,210,000 in cash. Pursuant
to the Amended and Restated Certificate and Agreement of
Limited Partnership of the Partnership (the "Partnership
Agreement"), the sale of all or substantially all of the
Partnership's assets, which will result in the dissolution
and ultimate liquidation of the Partnership, must be ap-
proved by Unitholders who are the record holders of a major-
ity of the Units.

No person has been authorized to give any information
or to make any representation other than those contained in
this Consent Statement in connection with the solicitation
of consents made hereunder and, if given or made, such
information or representation must not be relied upon as
having been authorized by the Partnership or any other
person. The delivery of this Consent Statement shall not
under any circumstances create an implication that there has
been no change in the affairs of the Partnership since the
date hereof or that the information herein is correct as of
any time subsequent to its date.

______________________________

THE CONSENT STATEMENT AND FORM OF CONSENT ARE FIRST
BEING MAILED TO UNITHOLDERS ON OR ABOUT JULY __, 1996.

THE DATE OF THIS CONSENT STATEMENT
IS JULY __, 1996

TABLE OF CONTENTS
Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
Selected Historical Financial Data . . . . . . . . . .
ACTION BY CONSENT . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . .
Matters to be Considered . . . . . . . . . . . . . . .
Recommendations of the General Partners . . . . . . .
Action by Consent; Record Date . . . . . . . . . . . .
Consents . . . . . . . . . . . . . . . . . . . . . . .
THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . .
Description of the Partnership . . . . . . . . . . . .
Partners in the Partnership . . . . . . . . . . . . .
Background of the Sale of the Properties . . . . . . .
Recommendation of the General Partners . . . . . . . .
Fairness Opinion and Appraisals . . . . . . . . . . .
Certain Income Tax Consequences and Considerations . .
Accounting Treatment . . . . . . . . . . . . . . . . .
Reason for Obtaining Unitholder Approval . . . . . . .
THE CONTRACT OF SALE . . . . . . . . . . . . . . . . . . .
Closing Conditions . . . . . . . . . . . . . . . . .
Inspections . . . . . . . . . . . . . . . . . . . . .
Closing Conditions . . . . . . . . . . . . . . . . . .
Remedies . . . . . . . . . . . . . . . . . . . . . . .
Covenants . . . . . . . . . . . . . . . . . . . . . .
Certain Expenses . . . . . . . . . . . . . . . . . . .
Casualty and Condemnation . . . . . . . . . . . . . .
Termination . . . . . . . . . . . . . . . . . . . . .
FINAL DISTRIBUTIONS AND LIQUIDATION . . . . . . . . . . .
NO APPRAISAL RIGHTS . . . . . . . . . . . . . . . . . . . .
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF . . . . . .
MARKET PRICES FOR THE PARTNERSHIP'S UNITS AND
DISTRIBUTIONS TO UNITHOLDERS AND THE GENERAL PARTNERS . .
Market Price . . . . . . . . . . . . . . . . . . . . .
Distributions . . . . . . . . . . . . . . . . . . . .
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . .

Contract of Sale . . . . . . . . . . . . . . . . . Annex A
Stanger Fairness Opinion . . . . . . . . . . . . . Annex B
Partnership Annual Report on Form 10-K for the year ended
December 31, 1995 . . . . . . . . . . . . . . . . . Annex C
Partnership Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996 . . . . . . . . . . . . . . . Annex D
Ernst & Young letter . . . . . . . . . . . . . . . Annex E

[Begin Box]

SUMMARY

The following is a summary of certain information con-
tained elsewhere in this Consent Statement, including the Annexes
hereto, which are a part of this Consent Statement. Reference is
made to, and this summary is qualified in its entirety by, the
more detailed information contained in this Consent Statement.
Unless otherwise defined herein, capitalized terms used in this
summary have the respective meanings ascribed to them elsewhere
in this Consent Statement. Unitholders are urged to read this
Consent Statement in its entirety.

THE PARTNERSHIP

Prudential-Bache/
Watson & Taylor,
Ltd.-4 The Partnership owns and operates nine
properties, five of which are commercial
real estate properties consisting of of-
fice/warehouse, mini-warehouse and retail
facilities, and four of which are unim-
proved properties (the "Properties"). The
offices of the Partnership are located at
One Seaport Plaza, New York, New York
10292-0116.

CONSENT DEADLINE

Deadline for Consents Consents must be received by ______,
July __, 1996, at 10:00 a.m., New York
time (unless such time is extended).

THE TRANSACTION

General The Transaction to be approved by
Unitholders is a single proposal for the
Sale and Liquidation. The purchase
price for the Properties is $12,210,000.

Final Distributions and
Liquidation As promptly as practicable following the
consummation of the Sale, the Managing
General Partner will determine the
amount of assets that it believes will
be sufficient to provide for the
Partnership's liabilities, including
contingent liabilities, if any. The
remainder of the Partnership's cash will
be distributed in accordance with the
Partnership Agreement, in an initial
liquidating distribution. Once all of
its obligations have been satisfied and
any undeveloped land is sold, the Part-
nership will distribute its remaining
cash and dissolve. It is expected that
the bulk of the distribution will be
made promptly after the Sale and the
remainder within approximately one year.
The Partnership estimates that these
liquidating distributions will aggregate
approximately $xx per Unit.

Background See "THE TRANSACTION -- Background of
the Sale of the Properties."

Recommendation of the
General Partners PB Properties, George S. Watson and A.
Starke Taylor, III, the general partners
of the Partnership (the "General Part-
ners"), have carefully considered the
Transaction and concluded that the
Transaction is in the best interests of
the Partnership and the Unitholders.
Accordingly, the General Partners have
approved the Transaction and recommend
that Unitholders vote in favor of the
Transaction. See "THE TRANSACTION --
Recommendation of the General Partners."

Opinion of Financial
Advisor Robert A. Stanger & Co. ("Stanger")
acted as financial advisor to the Partner-
ship in connection with the Transaction.
The Partnership has received a fairness
opinion from Stanger to the effect that
the consideration to be received in the
Sale is fair from a financial point of
view to the Partnership. See "THE TRANS-
ACTION -- Fairness Opinion and Apprais-
als."

Independent Appraisals The Partnership received MAI-certified
appraisals of the Properties from an inde-
pendent, third-party appraisal firm,
Cushman & Wakefield, Inc. ("Cushman &
Wakefield"), dated September 1995. The
purchase price exceeds the aggregate ap-
praised value of the Properties. See
"THE TRANSACTION -- Fairness Opinion and
Appraisals."

The Buyer Public Storage, Inc., the Buyer, is an
equity real estate investment trust
("REIT") organized as a corporation
under the laws of the State of Califor-
nia. The Buyer is a fully integrated,
self-administered and self-managed REIT
that acquires, develops, owns and oper-
ates self-service mini-warehouse facili-
ties and also manages similar properties
for third parties. The Buyer is the
largest owner and operator of mini-ware-
houses in the United States. The Buyer
has been the manager of the day-to-day
operations of the improved Properties
since 1988. The offices of the Buyer
are located at 600 North Brand Blvd.,
Glendale, California. The Buyer has
entered into contracts with certain
other partnerships formed by the General
Partners under which such other partner-
ships would sell properties to the Buy-
er. See "THE TRANSACTION--Background of
the Sale of the Properties."

Security Ownership
and Voting of
the General Partners As of July 1, 1996, none of the General
Partners or any director or officer of any
of the General Partners owned directly or
beneficially any of the Units. Prudential
Securities Incorporated, an affiliate of
PB Properties, beneficially owned 391
Units (.6% of the outstanding Units) as of
July 1, 1996. Prudential Securities In-
corporated intends to vote its Units to
approve the Transaction. George S. Watson
and A. Starke Taylor, III (collectively,
the "Individual General Partners") own 0
"equivalent units." See "VOTING SECURI-
TIES AND PRINCIPAL HOLDERS THEREOF,"

Effective Time of the
Transaction It is anticipated that the Transaction
will be consummated as promptly as prac-
tical after the requisite Unitholder
approval has been obtained and all other
conditions to the Transaction have been
satisfied or waived.

Conditions to the
Transaction;
Termination of
the Transaction The Transaction is conditioned upon, among
other things, the approval thereof by
Unitholders of record owning a majority of
the Units. The Transaction may be termi-
nated if it is not consummated by March
13, 1997. The Partnership may terminate
the Transaction if the Partnership re-
ceives a more favorable offer for the pur-
chase of the Properties. In the latter
case, a termination fee of $231,990 (plus
expenses up to $15,000) shall be payable
to the Buyer. A termination fee would
also be payable if Unitholder approval is
not obtained and a contract or letter of
intent to sell the properties at a price
exceeding the Purchase Price is entered
into within 180 days of the termination of
the Contract of Sale. See "THE CONTRACT OF
SALE -- Conditions; Termination."

No Appraisal Rights Unitholders do not have appraisal rights
in connection with the Transaction. See
"NO APPRAISAL RIGHTS."

Certain Income Tax
Consequences and
Considerations For U.S. Federal income tax purposes,
the Partnership will be required to
report a loss of approximately $10.9
million in connection with the Sale of
the Properties. As a result, each tax-
able Partner will recognize a loss of
approximately $158 per Unit, and each
nontaxable Partner, $173 per Unit, held
by such Partner. See "THE TRANSACTION -
- Certain Income Tax Consequences and
Considerations."

Accounting Treatment For financial reporting purposes, the
Sale will be treated as a sale of prop-
erties. See "THE TRANSACTION -- Ac-
counting Treatment."

Regulatory Matters No Federal or State regulatory require-
ments must be complied with or approvals
obtained in connection with the Transac-
tions.

ACTION BY CONSENT

Record Date; Units
Entitled to Consent Unitholders of record at the close of
business on July 1, 1996, are entitled
to execute an action by written consent.
At such date there were outstanding
66,555 Units, each of which will entitle
the record owner thereof to one vote.

Purpose of the Action Written consents are being solicited to
approve (a) the sale of the Properties,
which comprise substantially all of the
assets of the Partnership (the "Sale")
and (b) the complete liquidation and
dissolution of the Partnership and the
distribution of the assets of the Part-
nership in accordance with the Partner-
ship Agreement, other than such assets
as are set aside to provide for the
payment of all liabilities of the Part-
nership (the "Liquidation," and together
with the Sale, the "Transaction").

Votes Required The approval of the Transaction will
require the written consent of
Unitholders of record holding a majority
of all outstanding Units of the Partner-
ship entitled to consent thereto. Such
approval will constitute the approval of
the Partnership.

PRUDENTIAL BACHE/WATSON & TAYLOR LTD.-4
SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data for
each of the years in the five-year period ended December 31, 1995
and the quarters ended March 31, 1995 and 1996, has been derived
from the Partnership's financial statements. The selected
financial data set forth below should be read in conjunction with
the financial statements and related notes thereto included in
the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1995 and the unaudited financial statements and
related notes thereto included in the Partnership's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996, copies
of which are attached hereto.

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------------------------- ---------------------------
1995 1994 1993 1992 1991 1996 1995

<S> <C> <C> <C> <C> <C> <C> <C>
Rental income $ 1,945,915 $ 1,837,381 $ 1,584,984 $ 1,407,964 $ 1,443,283 $ 463,611 $ 482,748

Provision for loss $ 900,000 -- $ 800,000 $ 484,000 $ 6,858,000 -- --
on impairment of
assets

Net income (loss) $ (717,009) $ 276,355 $ (667,213) $ (688,472) $ (7,219,794) $ 95,484 $ 81,683

Net income (loss) $ (11.51) $ 3.17 $ (10.75) $ (10.76) $ (107.94) $ 1.32 $ 0.98
per Unit

Total assets $ 13,635,938 $ 14,858,287 $ 15,616,124 $ 16,885,088 $ 18,158,889 $ 12,876,512 $ 14,787,693

Total Unitholder
distributions $ 582,846 $ 740,757 $ 615,634 $ 427,283 $ 662,386 $ 794,654 $ 145,569

Unitholder
distributions per

Unit $ 8.76 $ 11.13 $ 9.25 $ 6.42 $ 9.95 $ 11.94 $ 2.19

</TABLE>

[End Box]

ACTION BY CONSENT

GENERAL

This Consent Statement is being furnished on behalf
\ of the Partnership to the holders of the ownership interest
in the limited partnership interests of the Partnership in
connection with the solicitation of consents by PB Proper-
ties, as Managing General Partner of the Partnership.

This Consent Statement and accompanying form of
Consent Card is first being mailed to Unitholders on or
about July __, 1996.

MATTERS TO BE CONSIDERED

Consents are being solicited to approve a proposal
involving the sale of the Properties other than certain
undeveloped land, which comprise substantially all of the
assets of the Partnership, the complete liquidation and
dissolution of the Partnership the sale of such undeveloped
land on such terms as the Managing General Partner may
determine, and the distribution of the assets (which follow-
ing the Sale and the sale of the undeveloped land will
consist principally of cash and cash equivalents) of the
Partnership, other than such assets as are set aside to
provide for the payment of liabilities of the Partnership.

RECOMMENDATIONS OF THE GENERAL PARTNERS

The General Partners have approved the Sale of the
Properties and the complete liquidation and dissolution of
the Partnership and recommend that Unitholders consent to
the Transaction. See "THE TRANSACTION -- Background of the
Sale of the Properties; Recommendation of the General Part-
ners."

ACTION BY CONSENT; RECORD DATE

July 1, 1996, has been fixed as the record date (the
"Record Date") for the determination of Unitholders entitled
to consent with respect to the Transaction. As of the close
of business on the Record Date, there were 66,555 Units
outstanding and entitled to consent, which Units were held
by approximately 4,270 Unitholders of record. Each
Unitholder of record at the close of business on the Record
Date is entitled to consent on the Transaction and cast one
vote for each Unit held by returning a properly executed
Consent Card.

The consent of Unitholders who are the record holders
of a majority of all outstanding Units entitled to vote
thereon is required to approve the Transaction. Under
applicable law, in tabulating the vote for any matter,
abstentions and broker non-votes will have the same effect
as votes against the Transaction.

CONSENTS

This Consent Statement is being furnished to
Unitholders in connection with the solicitation of consents
by and on behalf of the Partnership.

Any consent given pursuant to this solicitation may
be revoked by the person giving it at any time before 10:00
a.m. New York time on July __, 1996 (unless the time for
responses is extended), by sending a written notice of such
revocation to the Partnership's consent solicitor, Morrow &
Co., Inc., so that such notice arrives before such time.
Any written notice of revocation or subsequent consent
should be sent to Morrow & Co., Inc., ____________, Atten-
tion: ____.

Under applicable law and the Amended and Restated
Certificate and Agreement of Limited Partnership of the
Partnership (the "Partnership Agreement") any matter upon
which the Unitholders are entitled to act may be submitted
to the Unitholders for a vote by written consent without a
meeting.

The Partnership has retained Morrow & Co., Inc. to
aid in the solicitation of consents for a fee of approxi-
mately $____, plus expenses. In addition to solicitation by
use of the mails, officers, directors and employees of PB
Properties or its affiliates may solicit consents in person
or by telephone, telegram or other means of communication.
Such officers, directors and employees will not be addition-
ally compensated, but may be reimbursed for reasonable out-
of-pocket expenses in connection with such solicitation.
All costs and expenses of this solicitation, including the
cost of preparing and mailing this Consent Statement, will
be borne by the Partnership.

UNITHOLDERS SHOULD NOT SEND ANY UNIT CERTIFICATES WITH THEIR
CONSENT CARDS.

THE TRANSACTION

DESCRIPTION OF THE PARTNERSHIP

The Partnership was formed to acquire, develop, own
and operate self-storage and business center facilities. In
December 1986, the Partnership completed an offering through
which it sold 66,555 Units, representing gross proceeds to
the Partnership of approximately $33.2 million. The Part-
nership will terminate on December 31, 2010 unless terminat-
ed sooner under the provisions of the Partnership Agreement.

The Partnership invested in and operates the Proper-
ties, which consist substantially of nine properties, five
of which are commercial real estate properties consisting of
office/warehouse, mini-warehouse and retail facilities, and
four of which are unimproved properties.

Excepted from the Properties are two parcels of
undeveloped land. The first parcel consists of .5199 acres
of vacant land on the west side of Williams Road, approxi-
mately 1,800 feet south of John T. White Road in Forth
Worth, Texas. The site has approximately 147 feet of front-
age along the west side of Williams Road. The property is
zoned C-Multi-Family. The property was appraised at Septem-
ber 30, 1994 at $11,000.

The second tract consists of .7662 acres of vacant
land located on the north side of Beltline Road, approxi-
mately 180 feet east of Surveyor Boulevard in Addison,
Texas. The property has approximately 191 feet of frontage
along the north side of Beltline Road. The property is
zoned I-1, Industrial District. The property was appraised
at September 30, 1995 at $425,000.

In seeking to sell these parcels of
undeveloped land, the Managing General Partner makes no
assurances as to its success in selling them or as to the
purchase prices thereof.

GENERAL PARTNERS OF THE PARTNERSHIP

The general partners of the Partnership are PB Prop-
erties, the Managing General Partner, and George S. Watson
and A. Starke Taylor, III, the Individual General Partners
(collectively, the "General Partners").

BACKGROUND OF THE SALE OF THE PROPERTIES

In late 1995, the General Partners of the Partnership
considered seeking bids for the Properties, and, assuming
acceptable bids were received, entering into agreements to
sell the Properties subject to limited partner approval,
obtaining limited partner approval, and, after the sale,
liquidating the Partnership. Stanger was retained to pro-
vide advice with respect thereto. Stanger advised the
General Partners that the market for the sale of self-stor-
age properties was favorable, based on, among other things,
(i) strong performance trends in the self-storage industry,
(ii) bullish expectations among self-storage buyers and
investors, (iii) increasing economic viability of self-
storage development activity in many areas, and the conse-
quent potential future negative impact on occupancies and
rental rates for existing facilities, (iv) a very high level
of availability of equity capital and currently deep pool of
buyers with budgeted acquisition capital targeting self-
storage properties, (v) re-emergence of lending activity and
debt capital to the self-storage market, (vi) favorable
trends in acquisition parameters of major buyers and a
resulting increase in property values and (vii) increased
ability to market properties on favorable terms.

Accordingly, based in part on such information, as
well as, (i) current market conditions appearing favorable
for a sale, (ii) the original business plan for the Partner-
ship envisioning a sale at approximately such time and (iii)
the General Partners ability to evaluate bids before commit-
ting to a sale, the General Partners determined to seek bids
for the Properties.

On December 18, 1995, the Partnership, as well as
Prudential Bache/Watson & Taylor, Ltd.-I, Prudential
Bache/Watson & Taylor, Ltd.-2 and Prudential Bache/Watson &
Taylor, Ltd.-3 (three other partnerships formed by the
General Partners to invest primarily in similar properties)
(the "Other Partnerships") announced that they were solicit-
ing bids for their properties, invited interested parties to
bid on any or all of the properties held by such partner-
ships and announced that, if acceptable bids were received
by a partnership, the partnership would enter into agree-
ments to sell the properties, subject to the approval of its
limited partners. If so approved, the partnership would
liquidate and distribute its net assets to its partners.

The Partnership then retained Stanger as its finan-
cial advisor. The Partnership and its advisors contacted
approximately 100 potential bidders concerning the possible
sale of the Properties, of whom approximately 35 returned
executed confidentiality agreements, and were each sent an
offering package which contained business and financial
information pertinent to the Properties and the properties
of the Other Partnerships.

The Partnership received eleven bids to purchase some
or all of the Properties. The terms and conditions of each
bid were reviewed based upon certain factors which the
Partnership had instructed bidders were especially impor-
tant. Such factors included, but were not limited to,
price, certainty of closing (including the definiteness of
financing and financial capability of the bidder), the
existence of potential downward adjustments to the purchase
price in the bid as a result of due diligence or claims by
the Buyer, including but not limited to reductions in pur-
chase price for any structural repairs, capital costs and
deferred maintenance items, and the absence of closing
contingencies of the sale relating to the purchase of assets
of any of the Other Partnerships.

As a result of this review and discussions with
bidders, the terms of certain bids were modified. Among the
bids reviewed was a bid from a private company for the
assets of the Partnership and all the assets of the Other
Partnerships in which the nominal amount of the offer allo-
cated to the Partnership's Properties exceeded the Buyer's
offer. However, the bidder had not visited the properties,
indicated the bid was subject to potential reductions fol-
lowing a due diligence physical review of the properties and
a review by its accountants of financial information related
to the Properties, and subsequently indicated that its bid
was contingent on the acquisition of all the assets of the
Other Partnerships as well as the Partnership. In addition,
the bidder failed to provide sufficient evidence of its
ability to finance the acquisition. When informed that its
offer for the properties of two of the Other Partnerships
would not be accepted, the bidder withdrew its bid for the
Partnership's Properties.

During the course of these reviews and discussions,
the Buyer, which had not previously submitted a bid for the
Properties, submitted a bid for the Properties, as well as
bids for substantially all of the properties held by the
Other Partnerships.

Each of these bids was conditioned on the acceptance
of the Buyer's other bids. The Partnership negotiated with
the Buyer regarding price separately from the Other Partner-
ships. Each partnership insisted that the price offered for
its properties by the Buyer be higher than any other bona
fide bid received by such partnership. In addition, each
partnership insisted that the price to be paid for its
properties not be affected by the price to be paid for the
properties of any other partnership. Each partnership also
insisted that, once signed, the contract with it not be
conditioned on the contract entered into by any other part-
nership, and that the termination of one contract would not
have any effect on any other contract. The Contract of Sale
is not conditioned on any contract with any Other Partner-
ship, consistent with the original guidelines provided to
bidders. The Buyer's proposal was the most favorable re-
ceived for the Properties.

The Buyer is an equity real estate investment trust
("REIT") organized as a corporation under the laws of the
State of California. The Buyer is a fully integrated, self-
administered and self-managed REIT that acquires, develops,
owns and operates self-service mini-warehouse facilities.
The Buyer is the largest owner and operator of mini-ware-
houses in the United States. The offices of the Buyer are
located at 600 North Brand Blvd., Glendale, California and
its telephone number is (818) 244-8080.

The Buyer has been the manager of the day-to-day
operations of the Properties, as well as the properties held
by the Other Partnerships, since 1988.

The Buyer has entered into contracts with the Other
Partnerships under which each of the Other Partnerships
would sell its properties to the Buyer (other than, in
certain cases, undeveloped land owned by such partnerships).

RECOMMENDATIONS OF THE GENERAL PARTNERS

The General Partners of the Partnership, believe that
the Sale is fair and reasonable to the Unitholders, and
recommend that the Unitholders approve the Transaction. In
arriving at their determination, the General Partners con-
sidered each of the factors discussed below:

(i) Their belief that current market conditions are
favorable for the sale of the Properties.

(ii) The timing of the Sale is consistent with the
anticipated holding period for Units set forth in
the initial offering.

(iii) The Sale provides liquidity to Unitholders.

(iv) The price and terms agreed to by the Buyer are the
result of a competitive bidding process and are
the most favorable available to the Partnership,
based upon the bidding process described above
under "Background of the Sale of the Properties."

(v) The purchase price exceeds the aggregate appraised
value of properties, as determined by Cushman &
Wakefield, an independent appraisal firm (see "--
Fairness Opinion and Appraisals").

(vi) The fairness opinion of Stanger that the consider-
ation to be received in the Sale is fair from a
financial point of view to the Partnership, de-
scribed below under "Fairness Opinion and Apprais-
als."

(vii) The terms and conditions of the Contract of
Sale, described under "THE CONTRACT OF SALE."
In particular, the fact that the Buyer's
obligations are not subject to obtaining
financing. If the Buyer were to terminate
its obligations, it would forfeit the
$915,750 Downpayment. Further, the Contract
of Sale limits claims that the Buyer can make
against the Partnership. Finally, the Con-
tract of Sale can be terminated by the Part-
nership if the Partnership receives and ac-
cepts an unsolicited better offer for the
Properties, although the Partnership would
then be obligated to return the Downpayment
and pay an additional $231,990 (plus expenses
up to $15,000) to the Buyer. A termination
fee would also be payable if Unitholder ap-
proval is not obtained and a contract or
letter of intent to sell the properties at a
price exceeding the Purchase Price is entered
into within 180 days of the termination of
the Contract of Sale.

Unitholders should be aware that, if the Sale is ap-
proved, the Partnership would not receive the benefits of
any potential increases in cash flow or the value of the
Properties following the Sale.

The General Partners found it impracticable to, and
therefore did not, quantify or otherwise assign specific or
relative weights to the above factors in its consideration
of the Contract of Sale, and instead, considered the various
above factors in their totality.

FAIRNESS OPINION AND APPRAISALS

Fairness Opinion from Stanger

Stanger was engaged by PB Properties on behalf of the
Partnership, in its capacity as Managing General Partner of
the Partnership, to provide financial advisory services and
to render an opinion as to the fairness to the Partnership
from a financial point of view of the consideration to be
received in the Sale. The full text of the Opinion, which
contains descriptions of the assumptions and qualifications
made, matters considered and limitations on the review and
opinion, is set forth in Annex B to this Proxy Statement and
should be read in its entirety. Certain of the material
assumptions, qualifications and limitations to the fairness
opinion are set forth below. The summary set forth below
does not purport to be a complete description of the analy-
sis used by Stanger in rendering the fairness opinion.
Arriving at a fairness opinion is a complex analytical
process not necessarily susceptible to partial analysis or
amenable to summary description.

In connection with its analysis, Stanger made certain
assumptions, described more fully below, which the Partner-
ship advised Stanger it would be reasonable to make. The
Partnership imposed no conditions or limitations on the
scope of Stanger's investigation or with respect to the
methods and procedures to be followed in rendering the
fairness opinion. The Partnership has agreed to indemnify
Stanger against certain liabilities arising out of its
engagement to render financial advisory services and to
prepare and deliver the fairness opinion.

EXPERIENCE OF STANGER - Stanger, founded in 1978, has
provided information, research, investment banking and
consulting services to clients throughout the United States,
including major New York Stock Exchange firms and insurance
companies and over 70 companies engaged in the management
and operation of partnerships and real estate investment
trusts. The investment banking activities of Stanger in-
clude financial advisory services, asset and securities
valuations, asset sale transaction structuring and negotia-
tion, industry and company research and analysis, litigation
support and expert witness services, and due diligence
investigations in connection with both publicly registered
and privately placed securities transactions.

Stanger, as part of its investment banking business, is
regularly engaged in the valuation of businesses and their
securities in connection with mergers, acquisitions, reorga-
nizations and for estate, tax, corporate and other purposes.
In particular, Stanger's valuation practice principally
involves partnerships, partnership securities and the assets
typically owned through partnerships including, but not
limited to, real estate, oil and gas reserves, cable televi-
sion systems and equipment leasing assets.

SUMMARY OF MATERIALS CONSIDERED - In the course of
Stanger's analysis to render its opinion regarding the Sale,
Stanger: (i) reviewed the Contract of Sale and this Consent
Statement, (ii) reviewed the Partnership's annual reports on
Form 10-K for the three years ending December 31, 1993, 1994
and 1995 and the Partnership's quarterly report on Form 10-Q
for the three months ending March 31, 1996, (iii) reviewed
the Appraisals of the Properties prepared by Cushman &
Wakefield ("Cushman & Wakefield"), an independent appraisal
firm, as of September 30, 1995, (iv) reviewed summary his-
torical operating statements for each of the Properties for
1995 and the first quarter of 1996, and budgets for 1996,
(v) performed site inspections of each of the Properties
owned by the Partnership, (vi) reviewed information regard-
ing purchases and sales of self-storage/office-warehouse
properties and other information relating to acquisition
criteria for self-storage/office-warehouse properties, (vii)
discussed with management of the Partnership conditions in
self-storage/office-warehouse property markets, conditions
in the market for sales/acquisitions of properties similar
to those owned by the Partnership, current and projected
operations and performance, and the financial condition of
the Partnership and (viii) conducted such other studies,
analyses, inquiries and investigations as Stanger deemed
appropriate.

SUMMARY OF ANALYSIS - The following is a summary of
certain reviews conducted by Stanger in connection with and
in support of its fairness opinion. The summary of the
Opinion and analysis of Stanger set forth in this Proxy is
qualified in its entirety by reference to the full text of
such Opinion.

Review of Method of Sale. Stanger observed that the
portfolio of Properties owned by the Partnership was offered
for sale pursuant to a competitive bidding process. Poten-
tial purchasers were identified based on a review of certain
real estate industry publications, a review of publicly
traded real estate investment trusts, and industry contacts.
Prospective buyers were identified based on such factors as
type of properties owned or managed, geographical location
of current portfolio, and disclosed acquisition objectives.
Based on this process, approximately 100 prospective pur-
chasers were identified and contacted regarding their inter-
est in the Properties.

A confidential memorandum describing each Property was
prepared, which included a physical description, photo-
graphs, available site plans, location maps, market area
demographics and, where applicable, unit configuration,
gross potential income, historical physical occupancy, and a
summary of financial information. As a result of the pro-
cess described above, 35 confidential memorandums were
distributed to prospective buyers after receipt of confiden-
tiality agreements. Eleven bidders submitted proposals to
purchase some or all of the Properties of the Partnership.
Bids were evaluated both on an individual property basis and
on a portfolio basis.

Review of Appraisals and Purchase Price - In preparing
its opinion, Stanger relied in part upon the Appraisals of
the Partnership's portfolio of properties which were pre-
pared as of September 30, 1995 by Cushman & Wakefield.

Stanger observed the Appraisals were certified by a Member
of the Appraisal Institute and were conducted utilizing the
income approach and/or the sales comparison approach to
establish value. In addition, Stanger observed that in the
course of conducting the Appraisals, Cushman & Wakefield
collected and analyzed local market data, including but not
limited to, rental rates at competing properties and/or
capitalization rates and/or prices per unit or prices per
square foot or prices per acre paid in actual sales transac-
tion involving similar type properties in the general market
area of each Property. Stanger observed the aggregate
appraised value of the Properties owned by the Partnership
and to be sold to the Buyer was $12,165,000.

Stanger observed that the Purchase Price is $12,210,000
and that such amount is $45,000 greater than the appraised
value of $12,165,000 based on independent appraisals pre-
pared by Cushman & Wakefield as of September 30, 1995. The
Purchase Price, at $12,210,000, thus represents a .4% premi-
um to the sum of the appraised values.

CONCLUSIONS - Based on the foregoing, Stanger concluded
that, based upon its analysis and assumptions, and as of the
date of the fairness opinion, the consideration to be re-
ceived in the Sale is fair to the Partnership from a finan-
cial point of view.

ASSUMPTIONS - In evaluating the Sale, Stanger relied
upon and assumed, without independent verification, the
accuracy and completeness of all financial and other infor-
mation contained in the Consent Statement or that was fur-
nished or otherwise communicated to Stanger. Stanger did
not perform an independent appraisal of the assets and
liabilities of the Partnership and relied upon and assumed
the accuracy of the Appraisals. Stanger also relied on the
assurances of the Managing General Partner that any finan-
cial statements, projections, budgets, or value estimates
contained in the Consent Statement or otherwise provided to
Stanger were reasonably prepared on a basis consistent with
actual historical experience and reflecting the best cur-
rently available estimates and good faith judgments; that no
material changes have occurred in the appraised value of the
portfolio or the information reviewed between the date of
the Appraisals or the date of other information provided and
the date of the opinion; and that the Managing General
Partner is not aware of any information or facts that would
cause the information supplied to Stanger to be incomplete
or misleading in any material respect.

In connection with preparing the fairness opinion,
Stanger was not engaged to, and consequently did not, pre-
pare any written report or compendium of its analysis for
internal or external use beyond the analysis set forth in
Annex B. Stanger does not intend to deliver any additional
written summary of the analysis.

COMPENSATION; PRIOR RELATIONSHIPS - For rendering
financial advisory services with respect to the sale of the
Partnership's portfolio and preparing the fairness opinion
in connection with the Sale Stanger is being paid a fee of
$196,350 by the Partnership, a substantial portion of which
will be paid upon the closing of the Sale. Stanger will
also receive fees totalling $939,300 for financial advisory
services and preparing fairness opinions in connection with
the sale of assets owned by the Other Partnerships. In
addition, Stanger will also be reimbursed for certain out-
of-pocket expenses, including legal fees, and will be indem-
nified against certain liabilities including certain liabil-
ities under the Federal securities laws. The fee was nego-
tiated with Stanger. During the past two years, Stanger has
rendered certain consulting services to the Partnership and
its affiliates and the Other Partnerships, for which it has
received customary compensation aggregating approximately
$262,918. Stanger has also rendered financial advisory
services to REIT affiliates of the Buyer during the past two
years, for which it has received customary compensation
aggregating approximately $334,086.

LIMITATIONS AND QUALIFICATIONS - Stanger was not re-
quested to, and therefore did not: (i) select the method of
determining the consideration offered in the Sale, (ii) make
any recommendation to Limited Partners whether to approve or
reject the Sale or (iii) express any opinion as to the
business decision to effect the Sale, alternatives to the
Sale or tax factors resulting from the Sale. Stanger's
opinion is based on business, economic, real estate and
securities markets, and other conditions as of the date of
its analysis. Events occurring after that date may materi-
ally affect the assumptions used in preparing the Opinion.
See "--Background of the Sale of the Properties."

Among the factors considered in its selection were
Stanger's experience in connection with self-storage assets
and mergers, acquisitions and reorganizations of real estate
partnerships and its expertise in real estate valuations and
transactions.

Cushman & Wakefield Appraisal Reports. Various subsidiaries
of Cushman & Wakefield, Inc. completed individual appraisal
reports on each Property as of September 30, 1995. The term
Cushman & Wakefield shall mean the particular subsidiary
which prepared the appraisal report. Property inspections
were conducted and included discussions with on-site manag-
ers. Appraisers also conducted market research regarding
local and regional economic conditions, competitive self-
storage/office warehouse/office showroom properties (exist-
ing and potential) and recent comparable sales transactions.
The sum of the individual appraised values of the Properties
in the reports is $12,165,000.

In each appraisal, Cushman & Wakefield used the Sales
Comparison Approach and/or the Income Approach to develop a
market value estimate for each property, except for one
property wherein Cushman & Wakefield concluded that the
Sales Cost Approach was not appropriate. The Cost Approach
was not used due to the difficulty in quantifying the vari-
ous forms of obsolescence and, in addition, because it is
generally recognized that market participants do not rely on
the Cost Approach in making their investment decisions.

Land Valuation Methodology. While there are several methods
that may be employed to estimate the value of undeveloped
land parcels, the Sales Comparison Approach is generally
considered to be the best approach when there is sufficient-
ly comparable sales data to draw a meaningful conclusion.
The Sales Comparison Approach was utilized in evaluating the
Partnership's undeveloped land parcels.

Sales Comparison Approach. Cushman & Wakefield utilized the
Sales Comparison Approach as one of two methods to estimate
the market value of each Property. The basic steps involved
in the Sale Comparison Approach are: (i) research recent,
relevant property sales and current offerings throughout the
competitive area; (ii) select and analyze those properties
considered most similar to the property appraised consider-
ing changes in economic conditions that may have occurred
between the sale date and the date of value, and other
physical, functional or locational factors; (iii) identify
sales which include favorable financing and calculate the
cash equivalent price; (iv) reduce the sale prices to
common units of comparison such as the price per square foot
of building area, and the effective gross income multiplier;
(v) make appropriate comparative adjustments to the prices
of the comparable properties to relate them to the property
being appraised; and (vi) interpret the adjusted sales data
and draw a logical value conclusion.

Within each of the nine appraisals, the sales prices
inherent in the comparable sales transactions were reduced
to those common units of comparison used by buyers and
sellers to analyze improved properties. The two primary
units of comparison developed by Cushman & Wakefield were
the sales price per square foot, or sales price per acre in
the case of certain unimproved land parcels, and the effec-
tive gross income multiplier
(EGIM) methods of analysis.

Income Approach. Cushman & Wakefield also employed the
Income Approach in developing a market value estimate for
each property except for the four land parcels. In utiliz-
ing the Income Approach, Cushman & Wakefield developed an
unleveraged discounted cash flow analysis for each property
based upon an eleven year cash flow forecast inclusive of
the estimated proceeds from a hypothetical sale at the end
of the tenth year period. The estimated proceeds from the
hypothetical sale at the end of the ten year holding period
were based upon the eleventh year's net operating income
from the property.

The basis for the growth rates which were applied to
the revenues and expenses of the properties in the portfolio
included the following considerations: Cushman &
Wakefield's analysis of the historical operating performance
of the properties; Cushman & Wakefield's internal database
of revenues and operating expenses for other comparable
properties; and Cushman & Wakefield's analysis of the proba-
ble market conditions which would affect the revenues and
operating expenses for each of the properties.

The basis for the discount rate utilized by Cushman &
Wakefield includes the following: Cushman & Wakefield's
internal database for comparable properties; Cushman &
Wakefield's regular, periodic survey of more than 20 insti-
tutional owners of properties; and publicly available,
published real estate industry statistics. On the basis of
this data and analysis, Cushman & Wakefield utilized a
specific and independently determined discount rate for each
property in the portfolio of 13.5%.

Cushman & Wakefield is a commercial real estate company
which provides a broad array of services to its domestic and
international clients. Cushman & Wakefield and affiliates
have offices nationwide covering most of the major real
estate markets, and its business activities include commer-
cial leasing, tenant representations, appraisals and valua-
tions, feasibility studies, sales and financings of income-
producing properties, real estate advisory and consulting
services, property management and market research. Cushman
& Wakefield has, from time to time, provided services to PB
Properties and its affiliates, and may do so in the future.
As compensation for its services in connection with the
appraisals, the Partnership paid the various Cushman &
Wakefield companies which prepared the reports fees total-
ling ___________ and reimbursed them for their out-of-pocket
expenses.

An appraisal is only an estimate of value, as to the
specific date stated in the appraisal, and is subject to the
assumptions and limiting conditions stated in the report.
As an opinion, it is not a measure of realizable value and
may not reflect the amount which would be received if the
property was sold. Reference should be made to the entire
appraisal report.

CERTAIN INCOME TAX CONSEQUENCES AND CONSIDERATIONS

General

The following discussion summarizes generally the
material estimated Federal income tax consequences arising
from the consummation of the Sale and provides a general
overview of certain State income tax considerations. This
summary is not intended to and should not be considered an
opinion respecting the Federal or State income tax conse-
quences. Due to the complexity of the tax issues involved,
Unitholders are urged to consult with their personal tax
advisors regarding their individual circumstances and the
tax reporting consequences of the transaction.

Based upon the description of the Sale contained
in this Consent Statement, the Partnership's independent
accountants have advised the Partnership that THE SALE WILL
RESULT IN A TOTAL LOSS FOR FEDERAL INCOME TAX PURPOSES IN
1996 OF APPROXIMATELY $10.9 MILLION OR AN AVERAGE OF APPROX-
IMATELY $158 PER UNIT FOR A TAXABLE UNITHOLDER AND AN AVER-
AGE OF APPROXIMATELY $173 PER UNIT FOR A NON-TAXABLE
UNITHOLDER. Approximately $5.6 million of such loss (or an
average of approximately $81 per Unit for a taxable
Unitholder and an average of approximately $89 per Unit for
a non-taxable Unitholder) will represent Section 1231 Loss
(defined below) and approximately $5.3 (or an average of
approximately $77 per Unit for a taxable Unitholder and an
average of approximately $84 for a non-taxable Unitholder)
will represent capital loss. However, due to varying admis-
sion dates and the operation of the Partnership Agreement,
the amount of recognized gain that is allocated to a Unit
depends upon a Unitholder's admission date.

The summary is based upon the Internal Revenue
Code of 1986, as amended (the "Code"); existing final,
temporary and proposed Treasury regulations thereunder (the
"Regulations" or "Treas. Reg. SECTION"); published rulings and
practices of the Internal Revenue Service (the "IRS"); and
court decisions, each as currently in effect. There can be
no assurance that the IRS will agree with the conclusions
herein or that future legislation or administrative changes
or court decisions will not significantly modify the Federal
income tax law regarding the matters described herein,
potentially with retroactive effect.

The maximum tax rate imposed on an individual's
net capital gains (the excess of net long-term capital gain
over short-term capital loss) is 28%, while the maximum
marginal tax rate composed on the ordinary income of
individuals may be up to 39.6%, thereby resulting in a
substantial differential between the maximum capital gain
and maximum ordinary income tax rates.

This summary does not discuss all the Federal
income tax aspects of the Transaction that may be relevant
to a particular Unitholder in light of his personal circum-
stances, or to certain types of Unitholders subject to
special treatment. For example, insurance companies, sub-
chapter S corporations, partnerships, pension and profit-
sharing plans, tax-exempt organizations, non-U.S. taxpayers
and others may be subject to special rules not discussed
below.

Partnership Status

Under current law, a "partnership" is not a tax-
able entity and incurs no Federal income tax liability.
Instead, each partner is required to take into account in
computing his income tax liability his allocable share of
the partnership's items of income, gain, loss, deduction and
credit (hereinafter referred to as "income or loss"). The
distribution of cash attributable to partnership income is
generally not a separate taxable event. This tax treatment,
however, depends entirely upon the Partnership's classifica-
tion as a "partnership" (rather than an "association taxable
as a corporation") for Federal income tax purposes. This
summary assumes, and PB Properties believes, that the Part-
nership has been and will continue to be properly classified
as a "partnership" for Federal income tax purposes, but no
assurance can be given to Limited Partners that this will
continue to be true and no opinion of counsel or of the
Partnership's independent accountants or ruling from the IRS
is currently being sought with respect to this partnership
status issue.

Federal Income Tax Consequences

A sale of the Properties would have certain tax
implications to the Unitholders that should be considered.

Based on its terms, the Sale will result in the
realization of a loss for Federal income tax purposes, which
in turn will cause the Partnership's partners to recognize a
loss.

The potential tax consequences to the Unitholders,
assuming the Sale is consummated in 1996.

Generally, the sale or other disposition of a
property for an "amount realized" in excess of the "adjusted
basis" of such property will result in the recognition of
taxable income by the taxpayer. The amount realized is
ordinarily the selling price reduced by the expenses of
sale. The "adjusted basis" of property is its cost (includ-
ing nondeductible capital expenditures made by the taxpayer
at the time of purchase) or other basis in the hands of the
taxpayer with certain additions or subtractions for expendi-
tures, transaction costs or recoveries of capital, during
the period of time from acquisition of the property until
the sale or other disposition. To determine the gain or
loss on the sale or other disposition of property the ini-
tial cost basis must be (i) adjusted upward or increased to
include the cost of expenditures for capital expenditures
such as improvements, betterments, commissions and other
nondeductible charges; and (ii) adjusted downward or de-
creased by (a) items that represent a return of capital and
(b) depreciation and amortization.

Under Section 1231 of the Code (which deals with
capital gains and losses), to the extent that a taxpayer's
Section 1231 Gains for any taxable year from all sources
exceed such taxpayer's Section 1231 Losses (defined below)
from all sources for the year, subject to certain exceptions
(such as depreciation recapture discussed below), such net
Section 1231 Gain (subject to the 5-year rule stated below)
shall be treated as a long-term capital gain. In addition,
Section 1231 Gain shall be treated as ordinary income to the
extent of prior Section 1231 Losses from any source that
were treated as ordinary in any of the previous five years.
Section 1231 Gains are those gains arising from the sale or
exchange of "Section 1231 Property" which means (i) depre-
ciable assets used in a trade or business, or (ii) real
property used in a trade or business and held for more than
one year. Conversely, Section 1231 Losses are those losses
arising from the sale or exchange of Section 1231 Property.
If Section 1231 Losses exceed Section 1231 Gains, such
losses would be treated as ordinary losses.

Under Sections 1245 and 1250 of the Code (which
deals with depreciation recapture), a portion of the amount
allowed as depreciation expense with respect to Section 1231
Property may be "recaptured" as ordinary income upon sale or
other disposition rather than as long-term capital gains
("Section 1245 Gain" and "Section 1250 Gain" respectively).
The Partnership will have minimal, if any, Section 1245 Gain
and Section 1250 Gain as a result of the Sale. Section 1245
Gain is taxed at the marginal ordinary income tax rate of
the taxpayer as opposed to the 28% individual capital gains
rate.

Under Section 702(a)(3) of the Code (which gener-
ally deals with the "pass through" tax items from a partner-
ship to its partners), a partnership is required to sepa-
rately state, and the partners are required to account
separately, for their distributive share of all gains and
losses. Accordingly, each Unitholder's allocable share of
the Section 1231 Gain and depreciation recapture realized by
the Partnership as a result of consummating the Sale in 1996
will be reportable by such Unitholder on his 1996 individual
tax return (subject to the various rules described herein
whereby, based on determinations made at the Unitholder
level as opposed to the Partnership level, such income can
be fully or partially offset by suspended passive losses
from any source, if any). Each Unitholder's allocable share
of Section 1245 Gain, Section 1231 Gain and Partnership net
taxable income or loss will be reflected on his 1996 Sched-
ule K-1 for the partnership year ended September 30, 1996.

Net long-term capital gains of individuals, trusts
and estates will be taxed at a maximum rate of 28%, while
ordinary income (such as Section 1245 gain or Section 1250
gain) will be taxed at a maximum rate depending upon that
Unitholder's taxable income, of up to 39.6%. With respect
to net capital losses, the amount of net long-term capital
loss that can be utilized to offset ordinary income will be
limited to the sum of net capital gains from other sources
recognized by the Unitholder during the tax year, plus
$3,000 ($1,500 in the case of a married individual filing a
separate return). The excess amount of such net long-term
capital loss may be carried forward and utilized in subse-
quent years subject to the same limitations. A corporate
Unitholder cannot deduct net capital losses (i.e., it can
only deduct a capital loss to the extent of its capital
gains). A corporation can carry back a capital loss to each
of the three preceding tax years and can carry the loss
forward for five years subject to the same limitations.

While the issue is not free from doubt, the IRS,
pursuant to Section 291(a) of the Code (which generally
addresses the calculation of taxable income for purposes of
the "alternate minimum tax"), would likely require a corpo-
rate Unitholder to treat 20% of the portion of the gain on
the Sale allocated to such corporate Unitholder that would
otherwise be Section 1231 Gain as ordinary income to the
extent of depreciation claimed, and the following discussion
and estimates assumes such treatment. The total potential
amount of Section 291(a) ordinary income recharacterization
for a corporate Unitholder is minimal, if any.

A Unitholder's allocable share of any Partnership
loss realized on the Sale of its Properties (other than
capital loss from the sale of investment properties) will be
characterized as passive activity loss that may offset
passive activity gains from other passive activity invest-
ments. Moreover, assuming that all of the Properties are
sold, because the sale of the Properties will terminate the
Unitholder's interest in the passive activity, a
Unitholder's allocable share of any Partnership loss real-
ized on the sale of its investments, or loss realized by the
Unitholders upon liquidation of his or her Units, will not
be subject to the loss limitations. In addition, the Sale
should constitute a disposition of substantially all of a
passive activity, thereby entitling a Unitholder to deduct
all suspended passive losses attributable to the Partner-
ship.

The distribution of the approximately $165 per
Unit proceeds from the Sale will first reduce a Unitholder's
Federal income tax basis in his Unit, and, to the extent the
amount of the distribution is in excess of that basis, such
excess will be taxed as a long-term or short-term capital
gain, depending on a Unitholder's holding period. If upon
the subsequent termination of the Partnership a Unitholder
has a basis remaining for his Unit, the amount of such
remaining basis will give rise, in the year of the termina-
tion, to a long-term or short-term capital loss, depending
on a Unitholder's holding period. Such capital loss can be
used to offset (i) net Section 1231 Gains that have not been
otherwise recharacterized as ordinary income, and (ii) net
capital gains from all other sources that are incurred in
the year of Sale.

Actual gain amounts may vary from the estimates
set forth above.

Certain State Income Tax Considerations

Because each State's tax law varies, it is impos-
sible to predict the tax consequences to the Unitholders in
all the State tax jurisdictions in which they may be subject
to tax. Accordingly, the following is a general summary of
certain common (but not necessarily uniform) principles of
State income taxation. Unitholder's should consult their
own tax advisors regarding the State income tax consequences
of the Transaction.

State tax consequences to each Unitholder will
depend upon the provisions of the State tax laws to which
the Unitholder is subject. The Partnership will generally
be treated as engaged in business in each of the States in
which the Properties are located, and the Unitholders would
generally be treated as doing business in such States and
therefore subject to tax in such State. Most States modify
or adjust the taxpayer's Federal taxable income to arrive at
the amount of income potentially subject to State tax.
Resident individuals generally pay State tax on 100 percent
of such State-modified income, while corporations and other
taxpayers generally pay State tax only on that portion of
State-modified income assigned to the taxing State under the
State's own apportionment and allocation rules.

General

The discussions set forth above are only a summary
of the material Federal income tax consequences of the
Transaction to the Unitholders and of certain State income
tax considerations. They do not address all potential tax
consequences that may be applicable to a Unitholder, and may
not be applicable to certain categories of Unitholders, such
as non-United States persons, tax-exempt entities or finan-
cial institutions. It also does not address the State,
local or foreign tax consequences of the Transaction. AC-
CORDINGLY, UNITHOLDER'S SHOULD CONSULT THEIR OWN TAX ADVI-
SORS REGARDING THE SPECIFIC INCOME TAX CONSEQUENCES OF THE
TRANSACTION TO THEM, INCLUDING THE APPLICABILITY AND EFFECT
OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.

ACCOUNTING TREATMENT

For financial reporting purposes, the transaction
will be treated as a sale of properties and the gain from
the sale will be recorded in the Partnership's Statement of
Operations, reduced by all expenses of sale, including
appraisals, fairness opinion and other professional fees and
transfer taxes. Under generally accepted accounting principles,
the Partnership would incur a loss of approximately 300,000.

REASON FOR OBTAINING UNITHOLDER APPROVAL

Pursuant to the Partnership Agreement, the sale of
all or substantially all of the Partnership's assets must be
approved by holders of a majority of the outstanding Units.

THE CONTRACT OF SALE

The following is a summary of the material terms
of the Contract of Sale. This summary does not purport to
be complete and reference is made to the Contract of Sale,
which is attached to this Consent Statement as Annex A and
is incorporated herein by reference. Defined terms used but
not defined herein have the same meaning as in the Contract
of Sale.

THE SALE

The Partnership has entered into the Contract of
Sale with the Buyer pursuant to which it has agreed to sell
the Properties to the Buyer for a purchase price of
$12,210,000. The Buyer has made a downpayment of $915,750
(the "Downpayment"), which is being held by the Escrow
Agent. The Contract of Sale provides that upon the terms
and subject to the conditions of the Contract of Sale, the
Closing shall take place three business days following
satisfaction of the conditions to closing.

TITLE AND ENVIRONMENTAL DEFECTS

The Contract of Sale provides that the Buyer may,
within 20 days of delivery of certain title reports and
related documents with respect to the Properties, deliver to
the Partnership written notice setting forth its objections
to any matters encumbering title to the Properties other
than the Permitted Exceptions (generally, immaterial title
defects) (collectively "Title Defects") and within the time
frames set forth below, any Environmental Defects (general-
ly, hazardous materials located in, on or under any of the
Properties in violation of environmental laws). The Title
Defects and the Environmental Defects are sometimes re-
ferred to herein as, the "Defects". With respect to Title
Defects the Partnership shall have the option to (i) cure
any or all of the Title Defects prior to Closing, (ii)
remove such Property from the transaction and adjust the
Purchase Price by the allocated value of the affected Prop-
erty, (iii) grant the Buyer a credit against the Purchase
Price equal to the cost to cure such Title Defects or (iv)
terminate the Contract of Sale, in which latter event,
provided that the Buyer is not in default, the Downpayment,
together with any interest thereon, shall be returned to the
Buyer. With respect to any Environmental Defect, the Part-
nership shall have the option to (i) cure any or all of the
Environmental Defects prior to Closing or (ii) grant the
Buyer a credit against the Purchase Price equal to the cost
to cure such Environmental Defects. If the cost to correct
any Environmental Defect exceeds 10% of the allocated value
of the affected Property, the Partnership shall have the
option to remove such affected Property from the transaction
and adjust the Purchase Price by such allocated value.

The Contract of Sale provides that (i) the Part-
nership shall have the right to adjourn the Closing Date for
such reasonable period, not to exceed sixty days, as shall
be necessary to cure any such Defect and (ii) the Partner-
ship shall have the right, subject to the terms and condi-
tions hereof, to cause the Closing to take place with re-
spect to the other Properties and then to cause the Closing
to take place with respect to the affected Property within
such reasonable period, not to exceed thirty days, as shall
be necessary to cure any such Defect.

In order to establish an Environmental Defect, the
Buyer shall be required to deliver to the Partnership on or
prior to 10 days after (i) the Buyer's receipt of the Phase
I environmental site assessment for each Property or (ii) if
applicable, the Buyer's receipt of a final Phase II environ-
mental assessment for any Property, a report reasonably
detailing any Environmental Defect. The Buyer and the
Partnership have agreed to make reasonable efforts to agree
as to the existence of and the cost to cure any Environmen-
tal Defect. If the Buyer and the Partnership do not agree
on the foregoing within 15 days after the Partnership's
receipt of the Buyer's notice described above, then the
parties shall submit the matter to binding arbitration.

Other than the aforementioned Title and Environmental
Defects, the Contract of Sale calls for the sale of the
Properties in an "As Is, Where Is" condition, with no fur-
ther adjustment to the purchase price for structural repairs
and deferred maintenance items, if any, or other factors
relating to the physical condition of the Properties, sub-
ject to the Casualty and Condemnation provisions discussed
below.

CLOSING CONDITIONS

The obligations of each party to close under the
Contract of Sale are subject to (i) the approval of the Sale
by the holders of a majority of the Units, (ii) there being
no law or court order preventing the Sale or any litigation
by a governmental entity seeking to prevent the Sale, (iii)
the representations and warranties of the other party being
true and correct in all material respects and (iv) the other
party having performed, in all material respects, its cove-
nants in the Contract of Sale.

REMEDIES

If the Buyer shall elect to proceed with the
performance of the Contract of Sale notwithstanding the
failure to be satisfied of any conditions to Closing, the
Buyer shall be deemed to have waived the requirement that
those conditions be satisfied. The Buyer's sole recourse
for the Partnership's failure to consummate the Closing in
accordance with the terms of the Contract of Sale shall be,
at the Buyer's option, (i) if appropriate, to sue for
specific performance, or (ii) to terminate the Contract of
Sale and receive a "Termination Fee" in an amount equal to
the Buyer's reasonable out of pocket attorneys' fees for
outside counsel incurred by the Buyer in connection with the
transactions contemplated by the Contract of Sale but in no
event to exceed $15,000, which Termination Fee shall be in
addition to the return of the Downpayment plus all accrued
interest thereon and, if the Partnership executes a contract
or letter of intent to sell the Properties within 180 days
from termination of the Contract of Sale, to receive an
amount equal to 1.9% of the purchase price as liquidated
damages. In the event that the Managing General Partner of
the Partnership does not recommend or withdraws its recom-
mendation to the limited partners of the Partnership to vote
to grant the Partnership Consent for any reason other than
as is required by its fiduciary obligations to the Partner-
ship due to a change in circumstances after the date of the
Contract of Sale, the Partnership shall pay to the Buyer an
amount equal to 1.9% of the Purchase Price (plus the Buyer's
expenses, not to exceed $15,000) as liquidated damages,
together with a refund of the Downpayment, and the Partner-
ship shall have no further obligation to the Buyer whatsoev-
er.

If the Buyer shall be unable or unwilling to
consummate the Closing in violation of the terms of the
Contract of Sale, the Partnership shall have the right (i)
to terminate the Contract of Sale and retain the Downpayment
and interest thereon as liquidated and agreed upon damages,
and neither the Partnership nor the Buyer shall have any
further rights or obligations hereunder.

The Contract of Sale further provides that except
as expressly set forth therein, none of the representations
and warranties contained in the Contract shall survive the
Closing.

COVENANTS

The Contract of Sale provides that the Partnership
will not initiate, solicit, negotiate with or provide infor-
mation to any person (other than the Buyer) concerning any
merger, sale of substantial assets out of the ordinary
course of business or similar transaction involving the
Properties to be sold to the Buyer, provided that the Part-
nership may negotiate with or furnish information to a third
party if the Managing General Partner of the Partnership
determines, in its sole discretion, that its fiduciary
duties require it to take such actions.

The Contract of Sale also provides that the Part-
nership shall operate the Properties in the ordinary and
usual course, consistent with past practice.

The Contract of Sale further provides that each
party thereto will use all reasonable efforts to perform all
acts required to consummate the transactions contemplated
thereby as promptly as practicable.

CERTAIN EXPENSES

The Contract of Sale provides that the Partner-
ship shall pay for (a) the cost of any Surveys, the premium
for any title insurance and any other costs of closing and
(b) transfer taxes, documentary stamp taxes, recording
charges and other taxes or charges imposed by any governmen-
tal entity in connection with the transfer of the Proper-
ties. The Contract of Sale also provides that the Partner-
ship shall deliver to the Buyer at the Partnership's sole
cost and expense any (i) Phase I environmental site assess-
ments, (ii) Phase II environmental assessments of the Prop-
erties, (iii) pay for any other Phase II environmental
assessments which are reasonably required by the Phase I
environmental site assessments to be conducted at the Prop-
erties. Each of the parties shall otherwise pay for any and
all costs which it may incur in connection with the Contract
of Sale.

CASUALTY AND CONDEMNATION

The Contract of Sale provides that if, prior to
the Closing Date, any of the Properties is damaged due to a
casualty (a "Casualty") and the cost of repairing such
damage, in accordance with the Partnership's insurance
claims, is less than $100,000, then the Partnership shall
repair such Casualty prior to the Closing Date or assign to
the Buyer the proceeds of the Partnership's policy of casu-
alty insurance and pay to the Buyer the amount of any de-
ductible. If the cost of repairing a Casualty to any Prop-
erty, in accordance with the Partnership's insurance claims,
equals or exceeds $100,000, then the Partnership shall have
the option to repair the Casualty to such Property prior to
Closing to the condition it was in prior to the Casualty or
if the Partnership does not repair the Property, the Buyer
shall have the option to remove such Property from the
transaction and adjust the Purchase Price as hereinafter
provided or have the Partnership assign to the Buyer the
insurance proceeds and pay to the Buyer the amount of any
deductible. Notwithstanding anything herein to the con-
trary, (i) the Partnership shall have the right to adjourn
the Closing Date for such reasonable period as shall be
necessary to repair any such Casualty and (ii) the Partner-
ship shall have the right, subject to the terms and condi-
tions hereof, to cause the Closing to take place with re-
spect to the other Properties and then cause the Closing to
take place with respect to the affected Property within such
reasonable period as shall be necessary to repair any such
Casualty.

If, prior to the Closing Date, all or any portion
of any Property is condemned or taken by eminent domain,
then the Contract of Sale shall nevertheless remain in full
force and effect without any abatement of the Purchase
Price. In such event, the Partnership shall convey such
Property to the Buyer at the Closing in its then condition,
and the Buyer shall be entitled to receive all net or con-
demnation awards otherwise payable to the Partnership as a
result of such loss or damage and, in full satisfaction of
any claims by the Buyer against the Partnership, the Part-
nership shall assign to the Buyer, without recourse or
warranty of any nature whatsoever, all of the Partnership's
right, title and interest in and to any claims the Partner-
ship may have to any condemnation awards, as well as all
rights or pending claims of the Partnership with respect to
such condemnation or taking of such Property, and the Part-
nership shall pay to the Buyer all payments theretofore made
by such condemning authorities as a result of such loss
after deducting therefrom the costs of collection thereof.

TERMINATION

The Contract of Sale may be terminated as follows:

(a) By the Partnership, if during the term of the
Contract of Sale the Partnership has received a bona fide
offer from an unrelated third party which the Managing
General Partner of the Partnership has determined is more
favorable to the Partnership and its partners than the terms
hereof (the "Topping Offer"), provided that the Partnership
has provided the Buyer with at least 5 days written notice
of the terms of such offer and the right to match such
offer, and further provided that the Partnership shall pay
to the Buyer, simultaneously with the acceptance of the
Topping Offer (regardless of whether the sale contemplated
by the Topping Offer is consummated), a "Topping Fee" an
amount equal to 1.9% of the Purchase Price plus an amount
equal to the Buyer's reasonable out of pocket attorney's
fees for outside counsel incurred by the Buyer in connection
with the transactions contemplated by the Contract of Sale
but in no event are the attorney's fees to exceed $15,000.

(b) By the Partnership or the Buyer, if a court
of competent jurisdiction issues a binding and final order
permanently preventing the sale of the Properties to the
Buyer.

(c) By the Partnership or the Buyer, if the
Closing does not occur on or before March 13, 1997, provided
that the party seeking to terminate is not in breach of the
Contract of Sale.

(d) By the Partnership or the Buyer, if the
Unitholders vote not to grant the Consent, provided that, if
(i) the Closing does not occur due to a failure to obtain
the Consent and (ii) the Partnership enters into a contract
or a letter of intent within 180 days after the termination
of the Contract of Sale, to sell the Properties at a price
which exceeds the Purchase Price, the Partnership shall pay
to the Buyer the Topping Fee.

FINAL DISTRIBUTIONS AND LIQUIDATION

As promptly as practicable following the consumma-
tion of the Sale, the Managing General Partner will deter-
mine the amount of assets that it believes will be suffi-
cient to provide for the Partnership's contingent liabili-
ties, if any. The remainder of the Partnership's cash will
be distributed to the Unitholders and the General Partners,
in accordance with the Partnership Agreement, in an initial
liquidating distribution. Once all contingent obligations
have been satisfied, the Partnership will distribute its
remaining net assets, if any, and dissolve.

The Partnership estimates that the total
distribution will be approximately $-- per Unit. This
estimate is based on the factors set forth below. THERE CAN
BE NO ASSURANCES AS TO THE ACTUAL AMOUNTS DISTRIBUTED, OR AS
TO THE AMOUNTS SET FORTH BELOW. ACTUAL AMOUNTS MAY VARY
MATERIALLY FROM THESE FIGURES.

Gross Purchase Price $12,210,000

Partnership Working Capital 200,000

Expenses of Sale 1,428,000

Net Distributable Amount $10,982,000

GP Distributions $--

Net LP Distributable Amount $10,982,000

Per Unit $--

NO APPRAISAL RIGHTS
If Unitholders owning a majority of the Units on
the Record Date vote in favor of the Transaction, such
approval will bind all Unitholders. The Partnership Agree-
ment and the Texas Revised Limited Partnership Act, under
which the Partnership is governed, do not give rights of
appraisal or similar rights to Unitholders who dissent from
the vote of the majority in approving or disapproving the
Transaction. Accordingly, dissenting Unitholders do not
have the right to have their Units appraised and to have the
value of their Units returned to them because they disap-
prove of the action of a majority of the Unitholders.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

On the Record Date, there were 66,555 Units issued
and outstanding and entitled to consent.

According to publicly available information, as of
July 1, 1996, no person or entity beneficially owns more
than 5% of the outstanding Units.

As of the Record Date, none of the General Part-
ners nor any officer or director thereof owned any Units.
Prudential Securities Incorporated, an affiliate of PB
Properties, owned 391 Units as of the Record Date.

MARKET PRICES FOR THE PARTNERSHIP'S UNITS AND
DISTRIBUTIONS TO UNITHOLDERS AND THE GENERAL PARTNERS

MARKET PRICE

The Units are not listed on any national or re-
gional securities exchange or quoted on the NASDAQ system,
and there is no established public trading market for the
Units. A significant secondary market has not developed,
and it is not expected that one will develop in the future.

DISTRIBUTIONS

Since the inception of the Partnership through
July __, 1996, the Partnership has made distributions of
$5.3, or an average of $79 per Unit, to the Unitholders
pursuant to the terms of the Partnership Agreement. The
following table sets forth the amount of such distributions
paid per Unit in the years indicated.

1994
First quarter $3.50
Second quarter 2.88
Third quarter 2.40
Fourth quarter 2.19

1995
First quarter 2.19
Second quarter 2.19
Third quarter 2.19
Fourth quarter 2.19

1996
First quarter 1.25

AVAILABLE INFORMATION

This Consent Statement does not purport to be a
complete description of all agreements and matters relating
to the condition of the Partnership, its Properties and the
transactions described herein. Accompanying this Consent
Statement are the Form 10-K for the year ended December 31,
1995, and Form 10-Q for the quarter ended March 31, 1996,
which provide additional information regarding the Partner-
ship. With respect to statements contained in this Consent
Statement as to the content of any contract or other docu-
ment filed as an exhibit to the Form 10-K and Form 10-Q,
each such statement is qualified in all respects by refer-
ence to such exhibit and the schedules thereto which may be
obtained without charge upon written request to the Partner-
ship. If making such a request, please send it to the
Prudential-Bache/Watson & Taylor, Ltd.-4, One Seaport Plaza,
New York, NY 10292-0116.

The information concerning the Buyer contained
herein was supplied by the Buyer. Although the Partnership
does not have any knowledge that any such information is
untrue, neither the Partnership nor any of its partners
takes any responsibility for the accuracy or completeness of
such information.

All documents filed after the date of this Consent
Statement but before action by consent is taken shall be
deemed to be incorporated by reference into this Consent
Statement. Copies of these documents will be available
without charge upon request to Prudential-Bache/Watson &
Taylor, Ltd.-4, One Seaport Plaza, New York, NY 10292-0116.
Any statement contained in a document incorporated or deemed
to be incorporated by reference in this Consent Statement
shall be deemed to be modified or superseded for purposes of
this Consent Statement to the extent that a statement con-
tained in this Consent Statement (or in any other subse-
quently filed document that also is or is deemed to be
incorporated by reference in this Consent Statement) modi-
fies or supersedes such statement. Any statement so modi-
fied or superseded shall not be deemed, except as so modi-
fied or superseded, to constitute a part of this Consent
Statement.

Annex A

Contract of Sale

DRAFT
FORM OF OPINION

Prudential-Bache Properties, Inc.
Managing General Partner
Prudential-Bache/Watson & Taylor, Ltd.-4
One Seaport Plaza, 16th Floor
New York, New York 10292

Gentlemen:

You have advised us that Prudential-Bache/Watson &
Taylor, Ltd.-4 (the "Partnership") is entering into a trans-
action (the "Sale") in which the nine properties owned by
the Partnership (the "Properties") will be sold to Public
Storage, Inc. (the "Buyer"), for an all-cash purchase price
of $12,210,000, (the "Consideration"). The limited partners
of the Partnership will be asked to approve the Sale.

Prudential-Bache Properties, Inc., in its capacity as
the managing general partner of the Partnership, has re-
quested on behalf of the Partnership that Robert A. Stanger
& Co., Inc. ("Stanger") provided its opinion as to the
fairness to the Partnership, from a financial point of view,
of the Consideration to be received in the Sale.

In the course of our review to render this opinion, we
have, among other things:

* Reviewed the Consent Statement related to the Sale
and filed with the Securities and Exchange Commis-
sion ("SEC") on July __, 1996;

* Reviewed the Contract of Sale between the Partner-
ship and the Buyer, dated June 13, 1996;

* Reviewed the Partnership's annual reports filed
with the SEC on Form 10-K for the three fiscal
years ending December 31, 1993, 1994 and 1995 and
the quarterly reports filed with the SEC on Form
10-Q for the three-month period ending March 31,
1996, which reports the Partnership's management
has indicated to be the most current financial
statements available;

* Reviewed the MAI-certified appraisals of the Prop-
erties owned by the Partnership dated September
30, 1995 performed by Cushman & Wakefield, Inc.
(the "Appraisals");

* Reviewed summary historical operating statements
for each of the Properties for 1995 and the first
quarter of 1996 and operating budgets for 1996;

* Performed site inspections of each of the Proper-
ties owned by the Partnership;

* Reviewed information regarding purchases and sales
of self-storage/office-warehouse properties and
other information relating to acquisition criteria
for self-storage/office-warehouse properties;

* Discussed with management of the Partnership con-
ditions in self-storage/office-warehouse property
markets, conditions in the market for
sales/acquisitions of properties similar to those
owned by the Partnership, current and projected
operations and performance, and the financial
condition of the Partnership;

* Conducted other studies, analyses, inquiries and
investigations as Stanger deemed appropriate.

In rendering this fairness opinion, we have relied upon
and assumed, without independent verification, the accuracy
and completeness of all financial and other information
contained in the Proxy Statement or that was furnished or
otherwise communicated to us by the Partnership and the
property manager. We have not performed an independent
appraisal of the assets and liabilities of the Partnership
and have relied upon and assumed the accuracy of the Ap-
praisals. We have also relied on the assurances of the
Managing General Partner that any financial statements,
projections, budgets, or value estimates contained in the
Consent Statement or otherwise provided to us, were reason-
ably prepared on bases consistent with actual historical
experience and reflecting the best currently available
estimates and good faith judgments; that no material changes
have occurred in the appraised value of the properties or
the information reviewed between the date of the Appraisals
or the date of the other information provided and the date
of this letter, and that the Managing General Partner is not
aware of any information or facts that would cause the
information supplied to us to be incomplete or misleading in
any material respect.

We have not been requested to, and therefore did not:
(i) select the method of determining the Consideration
offered in the Sale, (ii) make any recommendation to the
Unitholders of the Partnership with respect to whether to
approve or reject the Sale or (iii) express any opinion as
to the business decision to effect the Sale, alternatives to
the Sale, or tax factors resulting from the Sale. Our
opinion is based on business, economic, real estate and
securities markets, and other conditions as of the date of
our analysis and addresses the Sale in the context of infor-
mation available as of the date of our analysis. Events
occurring after that date may materially affect the assump-
tions used in preparing the opinion.

Based upon and subject to the foregoing, and in reli-
ance thereon, it is our opinion that as of the date of this
letter the Consideration to be received in the Sale is fair
to the Partnership from a financial point of view.

The preparation of a fairness opinion is a complex
process and is not necessarily susceptible to partial analy-
sis or summary description. We have advised the Partnership
that our entire analysis must be considered as a whole and
that selecting portions of our analysis and the factors
considered by us, without considering all analyses and
facts, could create an incomplete view of the evaluation
process underlying this opinion.

Yours truly

Robert A. Stanger & Co., Inc.
Shrewsbury, NJ

Annex C

1995 10-K

Annex D

March 1996 10-Q

Annex D

E&Y Tax Letter

[FORM OF FRONT OF CARD]

PRUDENTIAL BACHE/WATSON & TAYLOR, LTD.-4

CONSENT CARD

CONSENT IS SOLICITED ON BEHALF OF PRUDENTIAL-BACHE PROPER-
TIES, INC., THE MANAGING GENERAL PARTNER ("PB PROPERTIES")
OF PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4 (THE "PARTNER-
SHIP"). THE GENERAL PARTNERS RECOMMEND CONSENT ON THE
PROPOSAL.

Unitholders should not send any Certificates with this
Consent Card. Unitholders are urged to mark, sign, date and
mail promptly this Consent Card in the envelope provided.
Consent Card must be received by 10:00 a.m. New York time on
July __, 1996, unless the time is extended.

THIS CARD, IF SIGNED AND RETURNED, SHALL BE DEEMED TO
APPROVE THE PROPOSAL IF NOT INDICATED TO THE CONTRARY.

EACH CONSENT CARD MUST BE SIGNED AND DATED.

Sign exactly as addressed to you. Joint owners should each
sign. If signing as executor, administrator, attorney,
trustee, or guardian, give title as such. If a corporation,
sign in full corporate name by authorized officer. If a
partnership, sign in the name of authorized person.

[FORM OF BACK OF CARD]

SALE OF ASSETS AND LIQUIDATION

The undersigned hereby votes all Units beneficially
owned by the undersigned on the proposed Sale of Assets
and Liquidation as follows:

/ / Approve / / Disapprove / / Abstain

the sale of substantially all of the assets of the
Partnership as contemplated by the Contract of Sale by
and between the Partnership and Public Storage, Inc.
and the complete liquidation and dissolution of the
Partnership, all as more fully described in the Consent
Statement dated July __, 1996.

SIGNATURE

--------------------------

Date: --------------, 1996

PLEASE SIGN, DATE AND RETURN THIS CONSENT CARD USING
THE ENCLOSED ENVELOPE.

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 1995

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from _______________________ to ______________________

Commission file number 0-15381

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Texas 75-2083046
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

One Seaport Plaza, New York, N.Y. 10292-0116
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 214-1016

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

Depositary Units of Limited Partnership Interest
- --------------------------------------------------------------------------------
(Title of class)

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 CK No _

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. [CK]

DOCUMENTS INCORPORATED BY REFERENCE

Registrant's Annual Report to Unitholders for the year ended December 31,
1995 is incorporated by reference into Parts I, II and IV of this Annual Report
on Form 10-K

Amended and Restated Certificate and Agreement of Limited Partnership,
included as part of the Registration Statement on Form S-11 (File No. 33-1213)
filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the
Securities Act of 1933, as amended, is incorporated by reference into Part IV of
this Annual Report on Form 10-K

Index to exhibits can be found on pages 9 through 11.

<PAGE>

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I PAGE
----
<S> <C> <C>
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 4
Item 3 Legal Proceedings................................................................ 5
Item 4 Submission of Matters to a Vote of Unitholders................................... 5
PART II
Item 5 Market for the Registrant's Units and Related Unitholder Matters................. 5
Item 6 Selected Financial Data.......................................................... 6
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 6
Item 8 Financial Statements and Supplementary Data...................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 6
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 6
Item 11 Executive Compensation........................................................... 8
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 8
Item 13 Certain Relationships and Related Transactions................................... 8
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Financial Statements and Financial Statement Schedules........................... 9
Exhibits......................................................................... 9
Reports on Form 8-K.............................................................. 10
SIGNATURES.................................................................................... 16
</TABLE>

PART I

Item 1. Business

General

Prudential-Bache/Watson & Taylor, Ltd.-4 (the ``Registrant''), a Texas
limited partnership, was formed on October 11, 1985 and will terminate on
December 31, 2010 unless terminated sooner under the provisions of the Amended
and Restated Certificate and Agreement of Limited Partnership (the ``Partnership
Agreement''). The Registrant was formed for the purpose of acquiring,
developing, owning and operating business centers, retail shopping centers,
mini-storage facilities and other similar commercial real estate and investing
in unimproved commercial properties with the proceeds raised from the initial
sale of depositary units (``Units''). The Registrant's fiscal year for book and
tax purposes ends on December 31.

The Registrant operates eleven properties, five of which are commercial real
estate properties and six of which are unimproved properties. The commercial
real estate properties consist of office/warehouse, mini-warehouse and retail
facilities. For more information regarding the Registrant's properties
(collectively, the ``Properties'' or individually, a ``Property''), see Item 2
Properties. For more information regarding the Registrant's operations, see Item
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Registrant's Annual Report to Unitholders for the year ended
December 31, 1995 (``Registrant's Annual Report'') which is filed as an exhibit
hereto. The Registrant is engaged solely in the business of real estate
investment; therefore, presentation of industry segment information is not
applicable.

On December 15, 1995, the Management Committee of the Registrant determined
to seek bids for all of the properties held by the Registrant. As of March 22,
1996, preliminary bids have been received for all properties. If bids for the
properties are deemed acceptable by the Registrant, the Registrant intends to
enter into agreements to sell the properties, subject to the approval of the
Unitholders owning a majority of the Units as required by the Partnership
Agreement. If such sales are approved and consummated, the Registrant will
liquidate and distribute its net assets to its partners. There can, of course,
be no assurance that acceptable bids will be received or that any transactions
will be consummated.

General Partners

The general partners of the Registrant are Prudential-Bache Properties, Inc.
(``PBP''), George S. Watson and A. Starke Taylor, III (collectively, the
``General Partners''). PBP is the Managing General Partner and is responsible
for the day-to-day operations of the Registrant and its investments. See Note E
to the financial statements in the Registrant's Annual Report which is filed as
an exhibit hereto.

Competition

The General Partners and/or their affiliates have formed, and may continue to
form, various entities to engage in businesses which may be competitive with the
Registrant.

The Registrant competes with national and regional real estate owners and
operators, some of whom have more experience and resources than the Registrant.
Such owners and operators may include insurance companies, mortgage banks,
pension funds, and other real estate investors, including foreign investors,
syndicated partnerships, and real estate investment trusts. The primary factors
affecting a particular property's ability to successfully compete against other
properties include the location of such property, the suitability of its design
to a prospective tenant's needs, the manner in which it is managed and marketed,
and rental rates. The extent to which the Registrant is affected by competition
will depend, in part, on existing market conditions. The property managers,
Public Storage Management, Inc. and Public Storage Commercial Properties Group,
Inc., manage other properties which compete with the Registrant's properties
within the same geographical area.

Employees

The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partners and their affiliates
pursuant to the Partnership Agreement as amended. See Note E to the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.

Item 2. Properties

As of December 31, 1995, the Registrant owns the following properties:

<TABLE>
<CAPTION>
Average
Occupancy Rates Monthly Rental
for the year ended Rates Per
December 31, Land Rentable Unit as of
Property Location 1995(1) (in acres) Units December 31, 1995
- ------------------------------------------- ------------------- ---------- -------- -----------------
<S> <C> <C> <C> <C>
Improved Properties
Downtown Business Center (Nashville, TN) 99.7% 3.50
Office/warehouse 30 $ 620 - $3,150
--------
Airport South Business Center (Nashville,
TN) 99.4 4.25
Office/warehouse 52 $ 395 - $2,800
--------
Big A Mini-Warehouse (Forest Park, GA) 53.7 7.00
Mini-warehouse 996 $ 19 - $ 795
--------
Towneast Business Center (Mesquite, TX) 96.3 3.38
Office/warehouse 35 $ 350 - $ 826
Mini-warehouse 60 $ 45 - $ 73
--------
95
--------
Dale City (Dale City, VA) 98.1 8.00
Office/warehouse 70 $250 - $1,800
Retail 8 $1,000 - $1,985
Mini-warehouse 122 $ 89 - $ 200
--------
200
--------
Unimproved Properties
Airport South (Nashville, TN) N/A 3.06 None N/A
Mansfield (Mansfield, TX) N/A 36.34 None N/A
Yancy Camp (Dallas, TX) N/A 2.08 None N/A
Highway 360 (Arlington, TX) N/A 1.94 None N/A
Dimension (Fort Worth, TX) N/A 0.52 None N/A
Beltline Central (Addison, TX) N/A 0.77 None N/A
--------
1,373
--------
--------
(1) Average occupancy rates are calculated by averaging the monthly occupancies determined by dividing
occupied square footage by available square footage as of each month-end.
- ---------------------------------------------------------------------------------------------------------
</TABLE>

The Managing General Partner believes the Registrant's properties are
adequately insured.

For the years ended December 31, 1995, 1994 and 1993 the following improved
properties' rental revenue exceeded 15% of the Registrant's total revenue:

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Dale City 39% 40% 36%
Downtown Business Center 17 16 *
Airport South Business Center 17 16 16
</TABLE>

* Property's rental revenue was 15% or less of the Registrant's total revenue
for the year.

No single tenant accounted for 10% or more of the Registrant's total revenue
for any of the three years in the period ended December 31, 1995.

For additional information describing the Registrant's properties, see
Supplementary Schedule III-Real Estate and Accumulated Depreciation on page 14
in Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.

Item 3. Legal Proceedings

This information is incorporated by reference to Note G to the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.

Item 4. Submission of Matters to a Vote of Unitholders

None

PART II

Item 5. Market for the Registrant's Units and Related Unitholder Matters

As of March 1, 1996, there were 4,293 holders of record owning 66,555 Units.
A significant secondary market for the Units has not developed, and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in Section 18.2 of the Partnership Agreement limiting the
ability of a Unitholder to transfer Units. Consequently, holders of Units may
not be able to liquidate their investments in the event of an emergency or for
any other reason.

The following per Unit cash distributions were paid to Unitholders on or
about 45 days after the end of the specified quarter.

<TABLE>
<CAPTION>
Quarter Ended 1995 1994
- ---------------------- ----- -----
<S> <C> <C>
March 31 $2.19 $3.50
June 30 2.19 2.88
September 30 2.19 2.40
December 31 2.19 2.19
</TABLE>

There are no material restrictions upon the Registrant's present or future
ability to make distributions in accordance with the provisions of the
Partnership Agreement. Distributions for 1995 and 1994 were made from current
and previously undistributed cash generated by operations. Unitholder
distributions were approximately $583,000 and $741,000 for the years ended
December 31, 1995 and 1994, respectively. All of the distributions paid to
Unitholders during 1995 and approximately $530,000 of the distributions paid to
Unitholders during 1994 represent a return of capital on a generally accepted
accounting principles (GAAP) basis (return of capital on a GAAP basis is
calculated as Unitholder distributions less net income allocated to
Unitholders). The Registrant currently expects that recurring quarterly cash
distributions will continue to be paid in the foreseeable future from cash
generated by operations. For discussion of other factors that may affect the
amounts of future distributions, see Management's Discussion and Analysis of
Financial Condition and Results of Operations on pages 10 through 11 of the
Registrant's Annual Report which is filed as an exhibit hereto.

Item 6. Selected Financial Data

The following table presents selected financial data of the Registrant.
This data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 9 of the Registrant's Annual
Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
----------- ----------- ----------- ----------- -----------
Total revenues $ 2,027,520 $ 1,938,381 $ 1,787,959 $ 1,641,776 $ 1,687,392
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Provision for loss on impairment
of assets $ 900,000 $ -- $ 800,000 $ 484,000 $ 6,858,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) $ (717,009) $ 276,355 $ (667,213) $ (688,472) $(7,219,794)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per Unit $ (11.51) $ 3.17 $ (10.75) $ (10.76) $ (107.94)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total assets $13,635,938 $14,858,287 $15,616,124 $16,885,088 $18,158,889
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total distributions $ 633,475 $ 805,171 $ 669,167 $ 464,438 $ 719,986
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Unitholder Distributions per
Unit $ 8.76 $ 11.13 $ 9.25 $ 6.42 $ 9.94
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

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

This information is incorporated by reference to pages 10 through 11 of the
Registrant's Annual Report which is filed as an exhibit hereto.

Item 8. Financial Statements and Supplementary Data

The financial statements are incorporated by reference to pages 2 through 9
of the Registrant's Annual Report which is filed as an exhibit hereto.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None

PART III

Item 10. Directors and Executive Officers of the Registrant

There are no directors or executive officers of the Registrant. The
Registrant is managed by the Managing General Partner.

The Registrant, the Registrant's General Partners, PBP's directors and
executive officers and other persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such General Partners, PBP's executive officers,
directors and Unitholders who own greater than ten percent of the Registrant's
Units are required by Securities and Exchange Commission regulations to furnish
the Registrant with copies of all Forms 3, 4 or 5 they file. All of these filing
requirements were satisfied on a timely basis. In making these disclosures, the
Registrant has relied solely on written representations of the General Partners,
PBP's directors and executive officers and other persons who own greater than
ten percent of the Registrant's Units or copies of the reports they have filed
with the Securities and Exchange Commission during and with respect to its most
recent fiscal year.

Prudential-Bache Properties, Inc., Managing General Partner

The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:

<TABLE>
<S> <C>
Name Position
Thomas F. Lynch, III President, Chief Executive Officer, Chairman of the
Board of Directors and Director
Barbara J. Brooks Vice President--Finance and Chief Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Chester A. Piskorowski Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
</TABLE>

THOMAS F. LYNCH, III, age 37, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice
President of Prudential Securities Incorporated (``PSI''), an affiliate of PBP.
Mr. Lynch also serves in various capacities for other affiliated companies. Mr.
Lynch joined PSI in November 1989.

BARBARA J. BROOKS, age 47, is the Vice President--Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.

EUGENE D. BURAK, age 50, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.

CHESTER A. PISKOROWSKI, age 52, is a Vice President of PBP. He is a Senior
Vice President of PSI and is the Senior Manager of the Specialty Finance Asset
Management area. Mr. Piskorowski has held several positions within PSI since
April 1972. Mr. Piskorowski is a member of the New York and Federal Bars.

FRANK W. GIORDANO, age 53, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management, Inc., an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.

NATHALIE P. MAIO, age 45, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently she also serves
in various capacities for other affiliated companies.

James M. Kelso ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and Director effective June 30, 1995.
Effective June 30, 1995, Thomas F. Lynch, III was elected President, Chief
Executive Officer, Chairman of the Board of Directors and Director. Robert J.
Alexander ceased to serve as Vice President effective August 25, 1995. Eugene D.
Burak was elected Vice President effective October 9, 1995.

There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.

Individual General Partners

George S. Watson, age 55, is a financial specialist and a certified public
accountant. He is also a member of the board of directors of Lyco Energy
Corporation as well as the Advisory Council of the University of Texas Business
School and a member of its Chancellor's Council. Mr. Watson attended the
University of Texas in Austin, graduating summa cum laude in 1963 with a B.B.A.
in accounting and finance. He received his M.B.A. in accounting and finance from
the University of Texas in 1965, graduating first in his class and
summa cum laude. He has received various awards and scholarships and is a member
of many fraternal organizations including Phi Kappa Phi, the honorary scholastic
fraternity.

A. Starke Taylor, III, age 52, holds a bachelor of business administration
degree from Southern Methodist University which was awarded in 1966. He is past
president of the North Dallas Chamber of Commerce. Active in the community, Mr.
Taylor is the chairman of the board of Priority One, an international missionary
organization, the founding chairman of the board of the Park Central Athletic
Association, a member of the Dallas regional board of the Salvation Army, and a
board member of the Dallas Theological Seminary. Mr. Taylor was recognized in
1983 by D Magazine as one of Dallas's 10 most outstanding young business
leaders.

There are no family relationships among any of the foregoing individual
General Partners.

Item 11. Executive Compensation

The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to either individual General Partners or to directors and officers
of the Managing General Partner for their services. Certain officers and
directors of the Managing General Partner receive compensation from the Managing
General Partner and its affiliates, not from the Registrant, for services
performed for various affiliated entities, which may include services performed
for the Registrant; however, the Managing General Partner believes that any
compensation attributable to services performed for the Registrant is
immaterial. See Item 13 Certain Relationships and Related Transactions for
information regarding reimbursement to the General Partners for services
provided to the Registrant.

Item 12. Security Ownership of Certain Beneficial Owners and Management

As of March 1, 1996, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any interest in the
voting securities of the Managing General Partner.

As of March 1, 1996, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any of the Units
issued by the Registrant.

As of March 1, 1996, no Unitholder beneficially owns more than five percent
(5%) of the outstanding Units issued by the Registrant.

Item 13. Certain Relationships and Related Transactions

The Registrant has and will continue to have certain relationships with the
General Partners and their affiliates. However, there have been no direct
financial transactions between the Registrant and the individual General
Partners or the directors or officers of the Managing General Partner during
1995.

Reference is made to Notes A and E to the financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.

PART IV

<TABLE>
<CAPTION>
Page Number
In Annual
Report
-----------
<S> <C> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent
Auditors--Incorporated by reference to the Registrant's Annual
Report which is filed as an
exhibit hereto
Report of Independent Auditors 2
Financial Statements:
Statements of Financial Condition--December 31, 1995 and 1994 3
Statements of Operations--Three years ended December 31, 1995 4
Statements of Changes in Partners' Capital--Three years ended
December 31, 1995 4
Statements of Cash Flows--Three years ended December 31, 1995 5
Notes to Financial Statements 6
2. Financial Statement Schedules and Consent of Independent Auditors
Consent of Independent Auditors
Schedules:
II--Valuation and Qualifying Accounts and Reserves--Three years
ended December 31, 1995
III--Real Estate and Accumulated Depreciation at December 31, 1995
Notes to Schedule III--Real Estate and Accumulated Depreciation
All other schedules have been omitted because they are not
applicable or the required information is included in the financial
statements and the notes thereto.
3. Exhibits
Description:
3.01 Amended and Restated Certificate and Agreement of Limited
Partnership (1)
3.02 Amendment Number 10 to the Amended and Restated Certificate
and Agreement of Limited Partnership (5)
4.01 Certificate of Limited Partnership Interest (1)
4.02 Depositary Receipt (1)
10.01 Management Agreement (1)
10.02 Depositary Agreement (1)
10.03 Agreement Relating to General Partner Interests (1)
10.04 Construction Contract by and between the Watson & Taylor
Holding Joint Venture and Watson & Taylor Construction,
Inc., dated August 21, 1986 (1)
10.05 Special Warranty Deed by and between Prince William
Partners, Ltd. and the Registrant transferring title to the Dale
City Property to the Registrant (2)
10.06 Special Warranty Deed by and between 287-Mansfield Joint
Venture and the Registrant conveying title to the Mansfield
Property to the Registrant (2)
10.07 Warranty Deed by and between Messrs. Watson and Taylor and
the Registrant conveying title to the Highway 360 Strip (2)
10.08 Special Warranty Deed by and between Watson & Taylor Realty
Company, Trustee, and the Registrant conveying title to the
Dimension Tract (3)
10.09 Special Warranty Deed by and between Watson & Taylor Realty
Company, Trustee, and the Registrant conveying title to the
Yancy Camp Tract (3)
10.10 Special Warranty Deed by and between George S. Watson and A.
Starke Taylor, III and the Registrant conveying title to the
Belt Line Tract (4)
10.11 Construction Contract by and between Watson & Taylor Con-
struction, Inc. and the Registrant for construction of the
Dale City Business Center (2)
10.12 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage Man-
agement, Inc. (4)
10.13 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage Commercial
Properties Group, Inc. (4)
10.14 Agreement in connection with Closing of Purchase and Sale of
Real Estate between the Registrant and Paul Darby or
assigns, as Purchaser conveying title of the Black Bob and
119th Property, located in Olathe, Kansas (4)
10.15 General Warranty Deed by and between the Registrant and the
Purchaser of the Black Bob and 119th Property, located in
Olathe, Kansas, effective as of the 26th day of June 1989
(4)
13 Registrant's Annual Report to Unitholders for the year ended
December 31, 1995 (6) (with the exception of the information
and data incorporated by reference in Items 3, 7 and 8 of
this Annual Report on Form 10-K, no other information or
data appearing in the Registrant's Annual Report is to be
deemed filed as part of this report)
27 Financial Data Schedule (6)
(b) Reports on Form 8-K
Registrant's Current Report on Form 8-K dated December 6, 1995, as
filed with the Securities and Exchange Commission on December 6,
1995, relating to Item 5 regarding the communication of certain
information to the limited partners.
Registrant's Current Report on Form 8-K dated December 15, 1995, as
filed with the Securities and Exchange Commission on December 26,
1995, relating to Item 5 regarding the intention of the Partnership
to solicit bids for the partnership's properties.
------------------------------------
(1) Filed as an exhibit to Registration Statement on Form S-11 (No.
33-1213) and incorporated herein by reference.
(2) Filed as an exhibit to Registrant's Form 8-K filed with the
Securities and Exchange Commission on November 25, 1987 and incorporated
herein by reference.
(3) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1987 and incorporated herein by reference.
(4) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1988 and incorporated herein by reference.
(5) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991 and incorporated herein by reference.
(6) Filed herewith.
</TABLE>

CONSENT OF INDEPENDENT AUDITORS

To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-4

We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Prudential-Bache/Watson & Taylor, Ltd.-4 of our report dated February 16,
1996, included in the 1995 Annual Report to Limited Partners of
Prudential-Bache/Watson & Taylor, Ltd.-4.

Our audits also included the financial statement schedules of
Prudential-Bache/Watson & Taylor, Ltd.-4 listed in Item 14(a). These schedules
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.

Ernst & Young LLP
New York, New York
March 29, 1996

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
- -------------------------------------------------------------------------------------------------------
Allowance for Loss on Impairment of Assets
<CAPTION>
Deductions - Amounts
Year Ended Balance at Additions - Amounts Written-off During Balance at
December 31, Beginning of Year Reserved During Year Year End of Year
- ------------ ----------------- -------------------- -------------------- -----------
<S> <C> <C> <C> <C>
1993 $ 7,342,000 $800,000 -- $ 8,142,000
1994 $ 8,142,000 -- -- $ 8,142,000
1995 $ 8,142,000 $900,000 -- $ 9,042,000
- -------------------------------------------------------------------------------------------------------
</TABLE>

Note: The Registrant's properties are valued at the lower of the carrying amount
or estimated fair value less costs to sell. As a result, a provision for loss on
impairment of assets of $900,000 was recorded for the year ended December 31,
1995.

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1995
<TABLE>
<CAPTION>
Initial cost to Gross amount at which
Registrant carried at
(Note B) Costs Permanent close of period
---------------------------- capitalized write-down ---------------------------
Buildings (sold) of im- Buildings
and subsequent to paired and
Description (Note A) Land improvements acquisition assets Land improvements
<S> <C> <C> <C> <C> <C> <C>
- --------------------------- ----------- ------------ ------------- --------- ---------- ------------
IMPROVED PROPERTIES:
Downtown Business
Centers I & II $ 709,956 $ 3,076,475 $ 232,692 $ -- $ 709,956 $ 3,309,167
(Nashville, TN)
Airport South
Business Center 764,820 3,431,125 100,938 -- 764,820 3,532,063
(Nashville, TN)
Big A Mini-Warehouse 341,117 3,032,936 67,447 -- 341,117 3,100,383
(Forest Park, GA)
Towneast Business Center 439,121 1,756,485 29,776 -- 438,771 1,786,611
(Mesquite, TX)
Dale City (Dale City, VA) 1,387,406 4,954,792 1,088,712 -- 1,387,406 6,043,504
UNIMPROVED PROPERTIES:
Dimension 76,326 -- -- -- 76,326 --
(Fort Worth, TX)
Airport South 547,432 -- -- -- 547,432 --
(Nashville, TN)
Highway 360 (Arlington, TX) 440,644 -- -- -- 440,644 --
Mansfield (Mansfield, TX) 3,929,084 -- -- (700,000) 3,229,084 --
Yancy Camp 829,448 -- -- -- 829,448 --
(Dallas, TX)
119th & Black Bob 587,871 -- (587,871) -- -- --
(Olathe, KS)
150th & Black Bob 815,396 -- (815,396) -- -- --
(Olathe, KS)
Beltline Central 505,790 -- -- -- 505,790 --
(Addison, TX)
----------- ------------ ------------- --------- ---------- ------------
$11,374,411 $ 16,251,813 $ 116,298 $(700,000) $9,270,794 $ 17,771,728
----------- ------------ ------------- --------- ---------- ------------
----------- ------------ ------------- --------- ---------- ------------
- ---------------------------------------------------------------------------------------------------------------------------
See notes on the following page

<CAPTION>
Life on which
depreciation
in latest
Accumulated Statement of
Total depreciation Date(s) of Date Operations
Description (Note A) (Note C) (Note D) construction acquired is computed
<S> <C> <C> <C> <C> <C>
- --------------------------- ----------- ------------- ------------ -------- -------------
IMPROVED PROPERTIES:
Downtown Business 5 to
Centers I & II $ 4,019,123 $ 1,340,288 1983, 1985 1986 25 years
(Nashville, TN)
Airport South 5 to
Business Center 4,296,883 1,097,885 1987 1987 25 years
(Nashville, TN)
5 to
Big A Mini-Warehouse 3,441,500 894,016 1986 1986 25 years
(Forest Park, GA)
5 to
Towneast Business Center 2,225,382 592,887 1987 1987 25 years
(Mesquite, TX)
5 to
Dale City (Dale City, VA) 7,430,910 1,898,708 1987 1987 25 years
UNIMPROVED PROPERTIES:
Dimension 76,326 -- -- 1987 N/A
(Fort Worth, TX)
Airport South 547,432 -- -- 1986 N/A
(Nashville, TN)
Highway 360 (Arlington, TX) 440,644 -- -- 1987 N/A
Mansfield (Mansfield, TX) 3,229,084 -- -- 1987 N/A
Yancy Camp 829,448 -- -- 1987 N/A
(Dallas, TX)
119th & Black Bob -- -- -- 1986 N/A
(Olathe, KS)
150th & Black Bob -- -- -- 1986 N/A
(Olathe, KS)
Beltline Central 505,790 -- -- 1986 N/A
(Addison, TX)
----------- -------------
$27,042,522 $ 5,823,784
----------- -------------
----------- -------------
- ------------------------------------------------------------------------------------------------------------------------

</TABLE>

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO SCHEDULE III
December 31, 1995

NOTE A--There are no mortgages, deeds of trust or similar encumbrances against
any of the properties.

NOTE B--Initial cost represents the initial purchase price of the properties
including acquisition fees.

<TABLE>
<CAPTION>
NOTE C--RECONCILIATION SUMMARY OF TRANSACTIONS--REAL ESTATE OWNED
<S> <C> <C> <C> <C>
Year ended December 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
Balance at beginning of year.............. $27,616,465 $27,558,067 $27,462,329
Net additions during year................. 136,241 58,398 95,738
Net deletions during year (1)............. (710,184) -- --
----------- ----------- -----------
Balance at close of year.................. $27,042,522 $27,616,465 $27,558,067
----------- ----------- -----------
----------- ----------- -----------
(1) The 150th & Black Bob property was sold in December 1995 for $678,072 net of
selling expenses.
During 1995, an allowance for loss on impairment of assets of $900,000 was provided
for, bringing the total allowance on the above assets to $9,042,000 as of December 31,
1995. See Note C to the financial statements of the Registrant's Annual Report filed
as an exhibit hereto.
The aggregate cost of land, buildings and improvements for Federal income tax
purposes for the tax year ended December 31, 1995 was $28,595,297.

NOTE D--RECONCILIATION SUMMARY OF TRANSACTIONS--ACCUMULATED DEPRECIATION

<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at beginning of year.............. $ 5,233,140 $ 4,616,561 $ 3,965,034
Depreciation during the year charged to
expense................................. 590,644 616,579 651,527
----------- ----------- -----------
Balance at close of year.................. $ 5,823,784 $ 5,233,140 $ 4,616,561
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Prudential-Bache/Watson & Taylor, Ltd.-4

By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President and Chief Accounting
Officer

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
Registrant and in the capacities (with respect to the General Partners) and on
the dates indicated.

By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Thomas F. Lynch, III Date: March 29, 1996
----------------------------------------
Thomas F. Lynch, III
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director
By: /s/ Barbara J. Brooks Date: March 29, 1996
----------------------------------------
Barbara J. Brooks
Vice President-Finance and
Chief Financial Officer
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: March 29, 1996
----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 29, 1996
----------------------------------------
Nathalie P. Maio
Director

SIGNATURES

Prudential-Bache/Watson & Taylor, Ltd.-4

By: Date: March 29, 1996

----------------------------------------
George S. Watson
General Partner
By: Date: March 29, 1996
----------------------------------------
A. Starke Taylor
General Partner

By: Date: March 29, 1996

----------------------------------------
George S. Watson
General Partner
By: Date: March 29, 1996
----------------------------------------
A. Starke Taylor
General Partner

1995 ANNUAL REPORT

1995
- --------------------------------------------------------------------------------
Prudential-Bache/ Annual
Watson & Taylor, Ltd.-4 Report

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
1995 Annual Report

REPORT OF INDEPENDENT AUDITORS

To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-4

We have audited the accompanying statements of financial condition of
Prudential-Bache/Watson & Taylor, Ltd.-4 as of December 31, 1995 and 1994, and
the related statements of operations, changes in partners' capital, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements 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 condition of Prudential-Bache/Watson &
Taylor, Ltd.-4 as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

As discussed in Note B to the financial statements, in 1995, the Partnership
changed its method of accounting for the carrying value of real estate by
adopting Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.

Ernst & Young LLP
New York, New York
February 16, 1996

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
-----------------------------
<S> <C> <C>
1995 1994
- ----------------------------------------------------------------------------------------------------
ASSETS
Land $ 9,270,794 $ 9,980,978
Buildings and improvements 17,630,626 17,504,795
Furniture, fixtures and equipment 141,102 130,692
Less: Accumulated depreciation and amortization (5,823,784 ) (5,233,140 )
Allowance for loss on impairment of assets (9,042,000 ) (8,142,000 )
------------ ------------
Property 12,176,738 14,241,325
Cash and cash equivalents 1,450,040 588,802
Other assets 9,160 28,160
------------ ------------
Total assets $13,635,938 $14,858,287
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 113,462 $ 37,303
Due to affiliates, net 107,175 30,185
Accrued real estate taxes 104,824 117,119
Deposits due to tenants 97,196 98,987
Unearned rental income 6,847 17,775
------------ ------------
Total liabilities 429,504 301,369
------------ ------------
Contingencies
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 13,002,889 14,351,976
General partners 203,545 204,942
------------ ------------
Total partners' capital 13,206,434 14,556,918
------------ ------------
Total liabilities and partners' capital $13,635,938 $14,858,287
------------ ------------
------------ ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1995 1994 1993
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $1,945,915 $1,837,381 $1,584,984
Interest 18,210 16,949 14,655
Other 63,395 84,051 188,320
---------- ---------- ----------
2,027,520 1,938,381 1,787,959
---------- ---------- ----------
EXPENSES
Property operating 643,826 635,806 569,513
Depreciation and amortization 590,644 616,579 651,527
Real estate taxes 216,826 216,656 175,265
General and administrative 361,121 192,985 258,867
Provision for loss on impairment of assets 900,000 -- 800,000
Loss on sale of land 32,112 -- --
---------- ---------- ----------
2,744,529 1,662,026 2,455,172
---------- ---------- ----------
Net income (loss) $ (717,009) $ 276,355 $ (667,213)
---------- ---------- ----------
---------- ---------- ----------
ALLOCATION OF NET INCOME (LOSS)
Unitholders $ (766,241) $ 211,086 $ (715,443)
General partners 49,232 65,269 48,230
---------- ---------- ----------
$ (717,009) $ 276,355 $ (667,213)
---------- ---------- ----------
---------- ---------- ----------
Net income (loss) per depositary unit $ (11.51) $ 3.17 $ (10.75)
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
</TABLE>

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1992 $16,212,724 $209,390 $16,422,114
Net income (loss) (715,443) 48,230 (667,213)
Distributions (615,634) (53,533 ) (669,167)
----------- -------- -----------
Partners' capital--December 31, 1993 14,881,647 204,087 15,085,734
Net income 211,086 65,269 276,355
Distributions (740,757) (64,414 ) (805,171)
----------- -------- -----------
Partners' capital--December 31, 1994 14,351,976 204,942 14,556,918
Net income (loss) (766,241) 49,232 (717,009)
Distributions (582,846) (50,629 ) (633,475)
----------- -------- -----------
Partners' capital--December 31, 1995 $13,002,889 $203,545 $13,206,434
----------- -------- -----------
----------- -------- -----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
<S> <C> <C> <C>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $1,952,196 $1,822,992 $1,633,929
Interest received 18,210 16,949 14,655
Other income received 63,395 84,051 188,320
Property operating expenses paid (596,941) (668,042) (577,304)
Real estate taxes paid (229,121) (196,709) (216,894)
General and administrative expenses paid (254,857) (313,065) (235,397)
---------- ---------- ----------
Net cash provided by operating activities 952,882 746,176 807,309
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of land 678,072 -- --
Property improvements (136,241) (58,398) (95,738)
---------- ---------- ----------
Net cash provided by investing activities 541,831 (58,398) (95,738)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (633,475) (882,114) (615,634)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 861,238 (194,336) 95,937
Cash and cash equivalents at beginning of year 588,802 783,138 687,201
---------- ---------- ----------
Cash and cash equivalents at end of year $1,450,040 $ 588,802 $ 783,138
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Net income (loss) $ (717,009) $ 276,355 $ (667,213)
---------- ---------- ----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for loss on impairment of assets 900,000 -- 800,000
Loss on sale of land 32,112 -- --
Depreciation and amortization 590,644 616,579 651,527
Changes in:
Other assets 19,000 5,320 9,112
Accounts payable and accrued expenses 76,159 (65,304) 11,636
Due to affiliates, net 76,990 (87,012) 4,043
Accrued real estate taxes (12,295) 19,947 (41,629)
Unearned rental income (10,928) (13,396) 13,036
Deposits due to tenants (1,791) (6,313) 26,797
---------- ---------- ----------
Total adjustments 1,669,891 469,821 1,474,522
---------- ---------- ----------
Net cash provided by operating activities $ 952,882 $ 746,176 $ 807,309
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Distributions to partners $ (633,475) $ (805,171) $ (669,167)
Increase (decrease) in distributions payable -- (76,943) 53,533
---------- ---------- ----------
Distributions paid to partners $ (633,475) $ (882,114) $ (615,634)
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS

A. General

Prudential-Bache/ Watson & Taylor, Ltd.-4 (the ``Partnership) is a Texas
limited partnership formed on October 11, 1985 which will terminate on December
31, 2010 unless terminated sooner under the provisions of the Amended and
Restated Certificate and Agreement of Limited Partnership (the ``Partnership
Agreement''). The Partnership was formed for the purpose of acquiring,
developing, owning and operating business centers, retail shopping centers and
mini-warehouse facilities, and investing in unimproved commercial properties.
The general partners of the Partnership are Prudential-Bache Properties, Inc.
(``PBP''), a wholly-owned subsidiary of Prudential Securities Group Inc., George
S. Watson, and A. Starke Taylor, III (collectively, the ``General Partners'').
PBP is the Managing General Partner and is responsible for the day-to-day
operations of the Partnership and its investments. At December 31, 1995, the
Partnership owned eleven properties.

B. Summary of Significant Accounting Policies

Basis of accounting

The books and records of the Partnership are maintained on the accrual basis
of accounting in accordance with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires the General Partners to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Property

Effective December 31, 1995, the Partnership adopted Statement of Financial
Accounting Standards (``SFAS'') No. 121, ``Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of.'' Under SFAS No.
121, impairment of properties to be held and used is determined to exist when
estimated amounts recoverable through future operations on an undiscounted basis
are below the properties' carrying value. If a property is determined to be
impaired, it should be recorded at the lower of its carrying value or its
estimated fair value. For properties that are held for sale, SFAS No. 121 states
that they should be recorded at the lower of carrying amount or estimated fair
value less costs to sell. On December 15, 1995, the Management Committee of the
Partnership determined to seek bids for all of the properties held by the
Partnership. Accordingly, effective December 31, 1995, the Partnership has
reclassified its properties from held for use to held for sale and has ceased
depreciating the properties for financial reporting purposes only. In connection
therewith, the Partnership recorded a provision for loss on impairment of assets
of $900,000.

The determination of estimated fair value is based, not only upon future cash
flows, which rely upon estimates and assumptions including expense growth,
occupancy and rental rates, but also upon market capitalization and discount
rates as well as other market indicators. The General Partners believe that the
estimates and assumptions used are appropriate in evaluating the carrying amount
of the Partnership's properties. However, changes in market conditions and
circumstances may occur in the near term which would cause these estimates and
assumptions to change, which, in turn, could cause the amounts ultimately
realized upon the sale or other disposition of the properties to differ
materially from their estimated fair value. Such changes may also require
write-downs in future years.

Prior to December 31, 1995, the Partnership carried its property investments
at the lower of depreciated cost or estimated amounts recoverable through future
operations and ultimate disposition of the property. Property investments were
depreciated or amortized using the straight-line method over their estimated
economic lives which range from 5 to 25 years depending on property type. A
provision for loss on impairment of assets was recorded when estimated amounts
recoverable through future operations and ultimate disposition of the property,
on an undiscounted basis, were below the depreciated cost.

Cash and cash equivalents

Cash and cash equivalents include money market funds whose cost approximates
market value.

Income taxes

The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Partnership may be subject to other
state and local taxes in jurisdictions in which it operates.

Profit and loss allocations and distributions

Net operating income before depreciation is allocated 92% to the Unitholders
and 8% to the General Partners. Net operating loss, provisions for loss on
impairment, and depreciation are allocated 99% to the Unitholders and 1% to the
General Partners.

Distributions of cash are made in accordance with the Partnership Agreement
and are allocated 92% to the Unitholders and 8% to the General Partners.

Proceeds upon the sale of the properties and liquidation of the Partnership
will be distributed in accordance with the Partnership Agreement.

C. Property

The Partnership's property is comprised of the following:

<TABLE>
<CAPTION>
December 31,
---------------------------
1995 1994
<S> <C> <C>
----------- -----------
Improved properties:
Downtown Business Center - Nashville, TN $ 2,678,835 $ 2,796,137
Airport South - Nashville, TN 3,198,998 3,302,123
Big A Mini Warehouse - Forest Park, GA 2,547,484 2,593,580
Towneast Business Center - Mesquite, TX 1,632,495 1,668,061
Dale City - Dale City, VA 5,532,202 5,684,516
----------- -----------
15,590,014 16,044,417
----------- -----------
Unimproved properties:
Dimension - Fort Worth, TX 76,326 76,326
Airport South - Nashville, TN 547,432 547,432
Highway 360 - Arlington, VA 440,644 440,644
Mansfield - Mansfield, TX 3,229,084 3,229,084
Yancy Camp - Dallas, TX 829,448 829,448
150th & Black Bob - Olathe, KS (A) -- 710,184
Beltline Central - Addison, TX 505,790 505,790
----------- -----------
5,628,724 6,338,908
----------- -----------
Less: allowance for loss on impairment of assets
(B) (9,042,000) (8,142,000)
----------- -----------
$12,176,738 $14,241,325
----------- -----------
----------- -----------
(A) The 150th & Black Bob property was sold in December 1995 for $678,072 net
of selling expenses which resulted in a loss of $32,112 for financial
reporting purposes.
(B) In 1995, the Partnership's properties are valued at the lower of the
carrying amount or estimated fair value less costs to sell. Accordingly, an
additional allowance for loss on impairment of assets of $900,000 was
recorded as of December 31, 1995.
</TABLE>

For the years ended December 31, 1995, 1994 and 1993 the following improved
properties' rental revenue exceeded 15% of the Registrant's total revenue:

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Dale City 39% 40% 36%
Downtown Business Center 17 16 *
Airport South Business Center 17 16 16
</TABLE>

* Property's rental revenue was 15% or less of the Registrant's total revenue
for the year.

No single tenant accounted for 10% or more of the Registrant's total revenue
for any of the three years in the period ended December 31, 1995.

D. Minimum Future Lease Revenues

The Partnership earns a majority of its rental income from month-to-month and
other short-term leasing arrangements. The Partnership also has certain
noncancellable operating leases on the Partnership's properties. The minimum
future rental revenues receivable under these noncancellable operating leases at
the Partnership's improved properties are approximately $901,000 and $196,000
for the years ending December 31, 1996 and 1997, respectively.

E. Related Parties

PBP and its affiliates perform services for the Partnership which include,
but are not limited to: accounting and financial management; transfer and
assignment functions; asset management (including direct management of the
Partnership's unimproved properties); investor communications; printing and
other administrative services. PBP and its affiliates receive reimbursements for
costs incurred in connection with these services, the amount of which is limited
by the provisions of the Partnership Agreement. The costs and expenses incurred
on behalf of the Partnership which are reimbursable to PBP and its affiliates
for the years ended December 31, 1995, 1994 and 1993, were approximately
$131,000, $85,000 and $104,000, respectively.

Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. In 1994, the Partnership recorded approximately $31,000 for the
reimbursement of prior periods' general, administrative and monitoring expenses
incurred by affiliates of the individual General Partners. Approximately $29,000
was incurred in 1995.

Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at December 31, 1995.

F. Income Taxes

The following is a reconciliation of net income (loss) for financial
reporting purposes to net income for tax reporting purposes for the years ended
December 31, 1995, 1994 and 1993, respectively:

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Net income (loss) per financial statements $(717,009) $ 276,355 $(667,213)
Book depreciation and amortization in excess of tax amounts 7,037 34,480 71,046
Rent received in advance, net of reversal of prior year
amount (10,928) (13,396) 13,036
Carrying costs on land held for investment, capitalized for
tax
purposes 110,803 79,714 78,854
Tax loss in excess of book loss on sale of land (205,854) -- --
Book gain in excess of tax gain on sale -- -- (30,620)
Other amounts deductible for tax purposes (15,047) -- --
Provision for loss on impairment of assets 900,000 -- 800,000
--------- --------- ---------
Tax basis net income $ 69,002 $ 377,153 $ 265,103
--------- --------- ---------
--------- --------- ---------
</TABLE>

The differences between the tax basis and book basis of partners' capital are
primarily attributable to the cumulative effect of the book to tax income
adjustments.

G. Contingencies

By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, a number of purported class actions then pending in various federal
district courts were transferred to a single judge of the United States District
Court for the Southern District of New York and consolidated for pretrial
proceedings under the caption In re Prudential Securities Incorporated Limited
Partnerships Litigation (MDL Docket 1005). On June 8, 1994, plaintiffs in the
transferred cases filed a complaint that consolidated the previously filed
complaints and named as defendants, among others, PSI, certain of its present
and former employees and PBP. The Partnership was not named a defendant in the
consolidated complaint, but the name of the Partnership was listed as being
among the limited partnerships at issue in the case.

On August 9, 1995, PBP, PSI and other Prudential defendants entered into a
Stipulation and Agreement of Partial Compromise and Settlement with legal
counsel representing plaintiffs in the consolidated actions. The court
preliminarily approved the settlement agreement by order dated August 29, 1995
and, following a hearing held November 17, 1995, found that the agreement was
fair, reasonable, adequate and in the best interests of the plaintiff class. The
court gave final approval to the settlement, certified a class of purchasers of
specific limited partnerships, including the Partnership, released all settled
claims by members of the class against the PSI settling defendants and
permanently barred and enjoined class members from instituting, commencing or
prosecuting any settled claim against the released parties. The full amount due
under the settlement agreement has been paid by PSI.

H. Subsequent Event

In February 1996, distributions of approximately $146,000 and $13,000 were
paid to the Unitholders and the General Partners, respectively, for the quarter
ended December 31, 1995.

Also in February 1996, a special distribution of approximately $649,000 was
paid to Unitholders representing the net proceeds from the sale of the 150th &
Black Bob property.

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

The Partnership owns and operates five commercial properties consisting of
office warehouse/mini-warehouse and retail facilities as well as six unimproved
properties. On December 15, 1995, the Management Committee of the Partnership
determined to seek bids for all of the properties held by the Partnership. As of
March 22, 1996, preliminary bids have been received for all properties. If bids
for the properties are deemed acceptable by the Partnership, the Partnership
intends to enter into agreements to sell the properties, subject to the approval
of the unitholders owning a majority of the Units, as required by the
Partnership Agreement. If such sales are approved and consummated, the
Partnership will liquidate and distribute its net assets to its partners. There
can, of course, be no assurance that acceptable bids will be received or that
any transactions will be consummated.

During the year ended December 31, 1995, the Partnership's cash and cash
equivalents increased by approximately $861,000 due primarily to the cash
proceeds from selling the 150th & Black Bob unimproved property located in
Olathe, Kansas. Distributions during the year ended December 31, 1995 of
approximately $583,000 and $51,000 were paid to the unitholders and General
Partners, respectively. These distributions were funded from property
operations.

The Partnership's ability to make future distributions to the partners and
the amount of the distributions that may be made will be affected not only by
the amount of cash generated by the Partnership from the operations of its
properties, but also by the amount expended for capital improvements and the
amount set aside for anticipated capital improvements. A portion of the cash
generated by operations for the fourth quarter of 1995 was retained in
anticipation of capital expenditures in 1996. Capital improvements are currently
budgeted at approximately $242,000 for 1996.

Results of Operations

Average occupancy rates at the improved properties for the years ended
December 31, 1995, 1994 and 1993 were as follows:

<TABLE>
<CAPTION>
December 31,
---------------------------
<S> <C> <C> <C>
1995 1994 1993
-------------------------------------------------------------------------------------
Airport South Business Center 99.4% 96.2% 97.7%
Big A Mini-Warehouse 53.7 48.2 45.2
Downtown Business Center 99.7 96.5 88.6
Towneast Business Center 96.3 94.8 85.6
Dale City 98.1 99.1 94.4
-------------------------------------------------------------------------------------
(Average occupancy rates are calculated by averaging the monthly occupancies deter-
mined by dividing occupied square footage by available square footage as of each
month-end.)
</TABLE>

1995 vs. 1994

Net operating income, which excludes provision for loss on impairment of
assets, decreased by approximately $93,000 in the year ended December 31, 1995
as compared to the year ended December 31, 1994 for the reasons discussed below.

Rental income increased by approximately $109,000 or 6% in 1995 as compared
to 1994. The most significant increases occurred at the Downtown Business
Center, Airport South Business Center properties and Big A Mini-Warehouse;
however, there were also increases at the Towneast Business Center and Dale City
properties. All properties experienced improvements in average rental rates and
average occupancies, with the exception of Dale City where only rental rates
improved.

Other income decreased by approximately $21,000 in 1995 as compared to 1994
as a result of the decreasing number of older leases that include charges to
recover operating expenses.

Property operating expenses increased by approximately $8,000 for the year
ended December 31, 1995 as compared to December 31, 1994 due to increases in
payroll, management fees and utilities expenses, slightly offset by a decrease
in repairs and maintenance expense.

General and administrative expenses increased by approximately $168,000 for
the year ended December 31, 1995, as compared to 1994 due to the effectual
reimbursement of previously expensed general and administrative and monitoring
expenses owed to affiliates of the individual General Partners in 1994 which
reduced expenses in 1994, increases in costs associated with administering the
Partnership in 1995, and increases in professional fees including legal, audit
and tax, and appraisal fees.

A provision for loss on impairment of assets of $900,000 was recorded for the
year ended December 31, 1995 to reflect the Partnership's property held for sale
at the lower of the carrying amount or estimated fair value less costs to sell.

1994 vs. 1993

Net operating income, which excludes provisions for loss on impairment of
assets, increased by approximately $144,000 in the year ended December 31, 1994
as compared to the year ended December 31, 1993 for the reasons discussed below.

Rental income increased by approximately $252,000 or 16% in 1994 as compared
to 1993. The most significant increases occurred at the Downtown Business Center
and Dale City properties; however, there were also increases at the Towneast
Business Center and Airport South Business Center properties due to higher
average occupancies in 1994 as compared to 1993. Rental income at the Big A
Mini-Warehouse remained stable despite higher average occupancy rates as the
elimination of an exit ramp that provided access to the Big A property continued
to have a negative impact on rental rates.

Other income decreased by approximately $104,000 in 1994 as compared to 1993
as a result of the decreasing number of older leases that include charges to
recover operating expenses.

Property operating expenses increased by approximately $66,000 for the year
ended December 31, 1994 as compared to December 31, 1993 due to increases for
insurance and utilities (particularly trash removal and water) expenses and
leasing commissions, payroll and repairs and maintenance expenses. The increased
trash removal costs reflect the pass-through of landfill usage taxes and
increased municipal surcharges. Water rates have increased in Nashville where
two of the Partnership's five improved properties are located.

The increase in real estate taxes of approximately $41,000 for the year ended
December 31, 1994 as compared to the year ended December 31, 1993 was primarily
the result of the receipt of tax refunds in the first quarter of 1993.

General and administrative expenses decreased by approximately $66,000 for
the year ended December 31, 1994, as compared to 1993. The Partnership was, in
effect, reimbursed for previously expensed general and administrative and
monitoring expenses owed to affiliates of the individual General Partners for
prior years. The decrease was also due to lower legal costs at the property
level and lower overall costs of administering the Partnership.

OTHER INFORMATION

The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to Unitholders without charge upon written
request to:

Prudential-Bache/Watson & Taylor, Ltd.-4
P.O. Box 2016
Peck Slip Station
New York, New York 10272-2016

Peck Slip Station
BULK RATE
P.O. Box 2016
U.S. POSTAGE
New York, NY 10272
PAID
Automatic Mail

PBWT486/171674

<PAGE>

<ARTICLE> 5

<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Watson & Taylor Ltd 4
and is qualified in its entirety by reference
to such financial statements
<RESTATED>

<CIK> 0000780352
<NAME> P-B Watson & Taylor Ltd 4
<MULTIPLIER> 1

<FISCAL-YEAR-END> Dec-31-1995

<PERIOD-START> Jan-1-1995

<PERIOD-END> Dec-31-1995

<PERIOD-TYPE> 12-Mos

<CASH> 1,450,040

<SECURITIES> 0

<RECEIVABLES> 0

<ALLOWANCES> (9,042,000)

<INVENTORY> 0

<CURRENT-ASSETS> 9,160

<PP&E> 27,042,522

<DEPRECIATION> (5,823,784)

<TOTAL-ASSETS> 13,635,938

<CURRENT-LIABILITIES> 429,504

<BONDS> 0

<COMMON> 0

<OTHER-SE> 13,206,434

<TOTAL-LIABILITY-AND-EQUITY> 13,635,938

<SALES> 0

<TOTAL-REVENUES> 2,027,520

<CGS> 0

<TOTAL-COSTS> 0

<OTHER-EXPENSES> 1,844,529

<LOSS-PROVISION> 900,000

<INTEREST-EXPENSE> 0

<INCOME-PRETAX> (717,009)

<INCOME-TAX> 0

<INCOME-CONTINUING> 0

<DISCONTINUED> 0

<EXTRAORDINARY> 0

<CHANGES> 0

<NET-INCOME> (717,009)

<EPS-PRIMARY> (11.51)

<EPS-DILUTED> 0

</TABLE>

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended March 31, 1996

/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from _______________________ to ______________________

Commission file number 0-15381

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Texas 75-2083046
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

One Seaport Plaza, New York, N.Y. 10292-0116
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 214-1016

N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

Indicate by check CK 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 _CK_ No __

Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
ASSETS
Property held for sale $12,294,393 $12,176,738
Cash and cash equivalents 580,044 1,450,040
Other assets 2,075 9,160
----------- ------------
Total assets $12,876,512 $13,635,938
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 145,754 $ 113,462
Deposits due to tenants 92,152 97,196
Due to affiliates, net 71,505 107,175
Accrued real estate taxes 52,803 104,824
Unearned rental income 19,708 6,847
----------- ------------
Total liabilities 381,922 429,504
----------- ------------
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 12,296,080 13,002,889
General partners 198,510 203,545
----------- ------------
Total partners' capital 12,494,590 13,206,434
----------- ------------
Total liabilities and partners' capital $12,876,512 $13,635,938
----------- ------------
----------- ------------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
REVENUES
Rental income $463,611 $482,748
Interest 6,984 4,194
Other 5,675 21,758
------------ --------
476,270 508,700
------------ --------
EXPENSES
Property operating 182,375 171,777
General and administrative 150,144 62,757
Real estate taxes 48,267 47,899
Depreciation -- 144,584
------------ --------
380,786 427,017
------------ --------
Net income $ 95,484 $ 81,683
------------ --------
------------ --------
ALLOCATION OF NET INCOME
Unitholders $ 87,845 $ 65,027
------------ --------
------------ --------
General partners $ 7,639 $ 16,656
------------ --------
------------ --------
Net income per depositary unit $ 1.32 $ .98
------------ --------
------------ --------
- ---------------------------------------------------------------------------------------------------
</TABLE>

STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1995 $13,002,889 $203,545 $13,206,434
Net income 87,845 7,639 95,484
Distributions (794,654) (12,674 ) (807,328)
----------- -------- -----------
Partners' capital--March 31, 1996 $12,296,080 $198,510 $12,494,590
----------- -------- -----------
----------- -------- -----------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 478,513 $ 467,626
Interest received 6,984 4,194
Other income received 5,675 21,758
Property operating expenses paid (203,101) (129,806)
Real estate taxes paid (100,288) (103,601)
General and administrative expenses paid (132,796) (25,088)
---------- ---------
Net cash provided by operating activities 54,987 235,083
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (117,655) (52,599)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (807,328) (158,229)
---------- ---------
Net increase (decrease) in cash and cash equivalents (869,996) 24,255
Cash and cash equivalents at beginning of period 1,450,040 588,802
---------- ---------
Cash and cash equivalents at end of period $ 580,044 $ 613,057
---------- ---------
---------- ---------
- ---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 95,484 $ 81,683
---------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation -- 144,584
Changes in:
Other assets 7,085 2,864
Accounts payable and accrued expenses 32,292 60,891
Accrued real estate taxes (52,021) (55,702)
Due to affiliates, net (35,670) 18,749
Unearned rental income 12,861 (6,072)
Deposits due to tenants (5,044) (11,914)
---------- ---------
Total adjustments (40,497) 153,400
---------- ---------
Net cash provided by operating activities $ 54,987 $ 235,083
---------- ---------
---------- ---------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)

A. General

These financial statements have been prepared without audit. In the opinion
of Prudential-Bache Properties, Inc. (``Managing General Partner'') (``PBP''),
the financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of
Prudential-Bache/Watson & Taylor, Ltd.-4 (the ``Partnership'') as of March 31,
1996 and the results of its operations and its cash flows for the three months
ended March 31, 1996 and 1995. However, the operating results for the interim
periods may not be indicative of the results expected for the full year.

Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1995.

On December 15, 1995, the Management Committee of the Partnership determined
to seek bids for all the properties held by the Partnership. The Partnership is
continuing the process of attempting to sell the properties held by the
Partnership. However, there can be no assurances that any transactions will be
consummated. The Unitholders will be advised if the Partnership enters into a
definitive agreement to sell the properties. Accordingly, effective December 31,
1995, the Partnership has reclassified its properties to held for sale and has
ceased depreciating the properties for financial statement purposes only.
Properties held for sale are recorded at the lower of the carrying amount or the
estimated fair value less costs to sell.

B. Related Parties

PBP and its affiliates perform services for the Partnership which include,
but are not limited to: accounting and financial management, transfer and
assignment functions, asset management (including direct management of the
Partnership's unimproved properties), investor communications, printing and
other administrative services. PBP and its affiliates receive reimbursements for
costs incurred in connection with these services, the amount of which is limited
by the provisions of the Partnership Agreement. The costs and expenses incurred
on behalf of the Partnership which are reimbursable to PBP and its affiliates
for the three months ended March 31, 1996 and 1995 were approximately $34,000
and $25,000, respectively.

Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. Relating to the reimbursement of these services, the Partnership
recorded $1,200 and $1,250 for the three months ended March 31, 1996 and 1995,
respectively. The amount for the three months ended March 31, 1996 has been
reduced by a $5,000 overaccrual from 1995.

Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at March 31, 1996.

C. Subsequent Event

In May 1996, distributions of approximately $83,000 and $7,000 were paid to
the Unitholders and the General Partners, respectively, for the quarter ended
March 31, 1996. This represents a distribution of $1.25 per Unit as compared to
the previous quarter's distribution of $2.19 per Unit.

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

During the three months ended March 31, 1996, the Partnership's cash and cash
equivalents decreased by approximately $870,000 due to capital expenditures and
distributions paid to the partners in excess of cash flow from property
operations. Distributions made during the three months ended March 31, 1996
totaled approximately $159,000 of which $146,000 and $13,000 were paid to the
Unitholders and General Partners, respectively. These distributions were funded
from current and prior periods' property operations. Additionally, a special
distribution of approximately $649,000 was paid to Unitholders representing the
net proceeds from the sale of the 150th and Black Bob property. At the end of
1995, a major tenant moved out of Dale City. In order to reconfigure the
property for rental, the Partnership incurred construction costs of
approximately $100,000 in the first quarter of 1996. This, coupled with the loss
of rental income at the property for the quarter, had a negative impact on the
cash flow of the Partnership.

The Partnership's ability to make future distributions and the amount of the
distributions that may be made will be affected not only by the amount of cash
generated by the Partnership from the operations of its properties, including
the amount expended for property improvements, but also by the amount from and
the timing of any sale of the Partnership's properties.

Results of Operations

Average occupancy rates at the improved properties for the three months ended
March 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
March 31,
-----------------
<S> <C> <C>
Property 1996 1995
---------------------------------------------------------------------------------
Airport South Business Center 96.4% 99.1%
Big A Mini-Warehouse 46.2 54.1
Downtown Business Center 100.0 99.4
Towneast Business Center 95.1 96.5
Dale City 90.1 98.9
---------------------------------------------------------------------------------
(Average occupancy rates are calculated by averaging the monthly occupancies
determined by dividing occupied square footage by available square footage as
of each month-end.)
</TABLE>

Net income increased by approximately $14,000 for the three months ended
March 31, 1996 as compared to the corresponding period in the prior year
primarily for the reasons discussed below.

Rental income decreased by approximately $19,000 for the three months ended
March 31, 1996 as compared to the corresponding period in 1995. The three month
decrease is primarily due to decreased rental income at Big A Mini-Warehouse and
Dale City (as discussed above) because of the lower average occupancies at these
properties. These decreases were partially offset by increased rental income at
Downtown Business Center primarily due to higher commercial space rental rates.

Other income decreased by approximately $16,000 for the three months ended
March 31, 1996 as compared to the corresponding period in 1995 as a result of
the decreasing number of older leases that include charges to recover operating
expenses.

Property operating expenses increased by approximately $11,000 for the three
months ended March 31, 1996 as compared to the corresponding period in 1995
primarily due to increases in utilities and repairs and maintenance.

General and administrative expenses increased by approximately $87,000 for
the three months ended March 31, 1996 as compared to the corresponding period in
1995. This variance was primarily due to increased professional fees and other
costs relating to the anticipated solicitation of the consent of the limited
partners for the potential sale of the properties.

Depreciation expense decreased by approximately $145,000 for the three months
ended March 31, 1996 as compared to the corresponding period in 1995 due to the
reclassification of the Partnership's properties from held for use to held for
sale as of December 31, 1995. Under generally accepted accounting principles,
such properties are no longer depreciated and therefore no depreciation expense
has been recorded for the three months ended March 31, 1996.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings--None

Item 2. Changes in Securities--None

Item 3. Defaults Upon Senior Securities--None

Item 4. Submission of Matters to a Vote of Security Holders--None

Item 5. Other Information--None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Description:

4.01 Certificate of Limited Partnership Interest (filed as an
exhibit to Registration Statement on Form S-11 (No. 33-1213)
and incorporated herein by reference)

4.02 Depositary Receipt (filed as an exhibit to Registration
Statement on Form S-11 (No. 33-1213) and incorporated
herein by reference)

27.1 Financial Data Schedule (filed herewith)

(b) Reports on Form 8-K--None

SIGNATURE

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 hereunto duly authorized.

Prudential-Bache/Watson & Taylor, Ltd.-4

By: Prudential-Bache Properties, Inc.
A Delaware corporation,
Managing General Partner
By: /s/ Eugene D. Burak Date: May 15, 1996
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant

<ARTICLE> 5

<CIK> 0000780352
<NAME> P-B Watson & Taylor 4
<MULTIPLIER> 1

<FISCAL-YEAR-END> Dec-31-1996

<PERIOD-START> Jan-1-1996

<PERIOD-END> Mar-31-1996

<PERIOD-TYPE> 3-Mos

<CASH> 580,044

<SECURITIES> 0

<RECEIVABLES> 2,075

<ALLOWANCES> 0

<INVENTORY> 0

<CURRENT-ASSETS> 582,119

<PP&E> 12,294,393

<DEPRECIATION> 0

<TOTAL-ASSETS> 12,876,512

<CURRENT-LIABILITIES> 381,922

<BONDS> 0

<COMMON> 0

<OTHER-SE> 12,494,590

<TOTAL-LIABILITY-AND-EQUITY> 12,876,512

<SALES> 0

<TOTAL-REVENUES> 476,270

<CGS> 0

<TOTAL-COSTS> 0

<OTHER-EXPENSES> 380,786

<LOSS-PROVISION> 0

<INTEREST-EXPENSE> 0

<INCOME-PRETAX> 95,484

<INCOME-TAX> 0

<INCOME-CONTINUING> 0

<DISCONTINUED> 0

<EXTRAORDINARY> 0

<CHANGES> 0

<NET-INCOME> 95,484

<EPS-PRIMARY> 1.32

<EPS-DILUTED> 0

</TABLE>

CONTRACT OF SALE

THIS CONTRACT, made as of June 10, 1996, by and
between Prudential-Bache/Watson & Taylor, Ltd.-4, a Texas
limited partnership ("SELLER"), and Public Storage Inc., a
California corporation ("BUYER").

W I T N E S S E T H:

WHEREAS, Seller desires to sell and Buyer desires
to purchase (i) all of Seller's right, title and interest in
the real properties and improvements and any fixtures and
personalty, if any, presently existing and located thereon,
more particularly described on EXHIBIT A attached hereto
together with all rights and appurtenances pertaining there-
to and (ii) all of Seller's right, title and interest in
and to all other items set forth on Exhibit A attached
hereto (each individually, a "PROPERTY", and, collectively,
the "Properties"), all upon the terms and subject to the
conditions hereinafter set forth; and

WHEREAS, following such sale, Seller intends to
liquidate and distribute its net assets (including the
proceeds of such sale) to its partners.

NOW, THEREFORE, in consideration of the foregoing,
the sum of $1.00 by each party in hand paid to the other,
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby mutually
agree as follows:

1. Agreement to Purchase and Sell. Subject to
the terms and conditions hereinafter set forth, Seller
agrees to sell to Buyer and Buyer agrees to purchase from
Seller, free and clear of all liens, claims, encumbrances
and other charges, except the Permitted Exceptions (as
hereinafter defined), all of Seller's right, title and
interest in and to the Properties.

2. Purchase Price. The purchase price ("PUR-
CHASE PRICE") for the Properties, which Buyer agrees to pay,
is the sum of $12,210,000 payable as follows:

(a) $915,750 as the downpayment (the
"DOWNPAYMENT"), upon the execution of this Contract by wire
transfer of immediately available federal funds to the
account of Escrow Agent (as hereinafter defined), to be held
by the Escrow Agent in accordance with this Section 2.

(b) The remainder of the Purchase Price
at Closing (as hereinafter defined), by wire transfer of
immediately available federal funds to Escrow Agent's ac-
count pursuant to Seller's instructions.

Chicago Title Insurance Company shall act as
escrow agent (the "ESCROW AGENT") and shall hold the
Downpayment in accordance with the provisions of the agree-
ment annexed hereto as EXHIBIT B, which agreement is being
executed simultaneously with this Contract.

(c) Any other provision hereof to the con-
trary notwithstanding, it is expressly understood and agreed
that, in consideration of the execution of this Contract by
Seller and to support Seller's covenants and agreements in
this Agreement through the Inspection Period (as hereinafter
defined), in the event that Buyer exercises any right to
terminate this Contract as set forth herein, Escrow Agent
shall disburse the sum of One Hundred and No/100 Dollars
($100.00) ("INDEPENDENT CONSIDERATION") from the Downpayment
to Seller before disbursing the balance of the Downpayment
to Buyer. The Independent Consideration is in addition to
and independent of any other consideration or payment pro-
vided for in this Contract, is non-refundable and shall be
paid to Seller notwithstanding any other provision of this
Contract.

Any interest earned on the Downpayment shall be
paid to Buyer. At the Closing, such interest shall be a
credit against the Purchase Price.

3. Evidence of Title. (a) Seller shall convey
to Buyer at Closing (as hereinafter defined) good, valid,
marketable, indefeasible and insurable fee simple title to
the Properties, subject to any and all covenants, condi-
tions, rights of way, restrictions, easements and other
matters affecting title, which do not materially impair the
use or the value of the Property to which they relate (col-
lectively, the "PERMITTED EXCEPTIONS") provided however the
Permitted Exceptions shall expressly exclude any Unpermitted
Exceptions (as hereinafter defined).

(b) As used herein, the term "Unpermitted
Exception" shall mean with respect to any Property (provided
the same is not caused by the actions of Buyer):

(A) Any building encroachment or sign en-
croachment (i) on real estate not owned by Seller, (ii)
on a setback line, or (iii) in violation of a binding
easement burdening the Property, in each case which
materially impairs the use or value of the Property;

(B) Any defect in the Seller's chain of
title which would prevent Seller from being able to
convey title to the Property in fee simple at Closing
under the laws of the State in which the Property is
located, unless the Title Insurer is willing to issue a
policy of title insurance which contains affirmative
coverage for claims arising solely out of such defect;

(C) Any easement which burdens the Property
such that access or use is compromised, in each case
which materially impairs the use, access or value of
the Property;

(D) Any lack of access or easements neces-
sary to operate the Property in the manner which such
Property has been operated by Seller prior to Closing,
in each case which materially impairs the use, access
or value of the Property;

(E) Any liens for the payment of money other
than real estate taxes, association assessments, spe-
cial district taxes and related charges not yet due and
payable; and

(F) Any standard printed exceptions on the
title commitments which can be removed by an affidavit
or delivery to the Title Insurer of an appropriate
Survey (as hereinafter defined);

(G) (i) the failure to be in material confor-
mance with the then applicable local zoning codes or
deed restrictions, (ii) if a Property is not in confor-
mance with the then applicable local zoning codes, the
failure of such Property to have the status equivalent
to a "non-conforming use" and (iii) the existence of a
permanent and final order by the applicable local
jurisdiction which materially impairs the use or value
of the Property.

(c) Seller shall deliver to Buyer,
within twenty days after the date hereof, (i) commitments
for ALTA policies of owners title insurance (the "TITLE
COMMITMENTS") issued by Chicago Title Insurance Company
through Title Associates Inc. 430 Park Avenue New York, New
York 10022, as the Title Insurer's authorized Agent, showing
fee simple title to the Properties as vested in Seller and
to be vested in Buyer, subject to the Permitted Exceptions
and (ii) current surveys prepared by licensed public land
surveyors according to ALTA standards showing the boundaries
of the Properties, the location of any easements, rights-of-
ways, improvements, encroachments thereon, all matters on
the Title Commitments which can be shown and, certifying the
number of acres if possible (to the nearest one thousandth
acre) comprising the Properties (the "Surveys"). Within
twenty days after the delivery of the Title Commitments,
legible copies of all items referenced therein and the
Surveys, Buyer shall deliver to Seller written notice set-
ting forth its objections to any matters encumbering the
Properties including any Unpermitted Exceptions other than
the Permitted Exceptions collectively ("Title Defects") and
within the time frames set forth below any Environmental
Defects (as hereinafter defined). The Title Defects and the
Environmental Defects are sometimes referred to herein as,
the "DEFECTS." With respect to Title Defects Seller shall
have the option to (i) cure any or all of the Title Defects
prior to Closing, (ii) remove such Property from the trans-
action and adjust the Purchase Price as provided hereafter
on Exhibit C (iii) grant Buyer a credit against the Purchase
Price equal to the cost to cure such Title Defects or (iv)
terminate this Contract, in which latter event, provided
that Buyer is not in default hereunder, the Downpayment,
together with any interest thereon, shall be returned to
Buyer. With respect to any Environmental Defect, Seller
shall have the option to (i) cure any or all of the Environ-
mental Defects prior to Closing, or (ii) grant Buyer a
credit against the Purchase Price equal to the cost to cure
such Environmental Defects. If the cost to correct any
Environmental Defect exceeds 10% of the allocated value of
the affected Property as set forth in Exhibit C attached
hereto and made a part hereof, Seller shall have the option
to remove such affected Property from the transaction con-
templated hereby, and adjust the Purchase Price as provided
hereafter on Exhibit C. Notwithstanding anything herein to
the contrary, (i) Seller shall have the right to adjourn the
Closing Date for such reasonable period, not to exceed sixty
days, as shall be necessary to cure any such Defect and (ii)
Seller shall have the right, subject to the terms and condi-
tions hereof, to cause the Closing to take place with re-
spect to the other Properties and then to cause the Closing
to take place with respect to the affected Property within
such reasonable period, not to exceed thirty days, as shall
be necessary to cure any such Defect. The term "Environmen-
tal Defect" shall mean "Hazardous Materials" (hereinafter
defined) located in, on or under any one of the Real Proper-
ties in violation of any Environmental Laws (hereinafter
defined).

In order to establish an Environmental Defect,
Buyer shall be required to deliver to Seller on or prior to
10 days after (i) Buyer's receipt of the Phase I environmen-
tal site assessment for each Property or (ii) if applicable
Buyers receipt of a final Phase II environmental assessment
prepared by LAW (as hereinafter defined) for any Property,
reasonably detailing any Environmental Defect. Buyer and
Seller shall make reasonable efforts to agree as to the
existence of and the cost to cure any Environmental Defect.
If Buyer and Seller do not agree on the foregoing within 15
days after Seller's receipt of Buyer's notice described
above, then the parties shall submit the matter to binding
arbitration in accordance with the terms hereof. As used
herein, "Environmental Laws" means all federal, state and
local statutes, codes, regulations, rules, ordinances,
orders, standards, permits, licenses, policies and require-
ments (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preserva-
tion, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or
as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Com-
pensation and Liability Act ("CERCLA"), 42 U.S.C. Section
9601 et seq., the Resource Conservation and Recovery Act of
1976 ("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency
Planning and Community Right-to-Know Act ("Right-to-Know
Act"), 42 U.S.C. Section 11001 et seq., the Clean Air Act
("CAA), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section
1251 et seq., the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq., the Safe Drinking Water Act
("Safe Drinking Water Act"), 42 U.S. C. Section 300f et
seq., the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011
et seq., the Occupational Safety and Health Act ("OSHA"), 29
U.S.C. Section 651 et seq., and the Hazardous Materials
Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials"
means: (1) "hazardous substances," as defined by CERCLA; (2)
"hazardous wastes," as defined by RCRA; (3) any radioactive
material including, without limitation, any source, special
nuclear or by-product material, as defined by AEA; (4)
friable asbestos; (5) polychlorinated biphenyls; and (6) any
other material, substance or waste regulated under any
Environmental Laws.

If any dispute between the parties is required by
the terms of this Contract to be submitted to arbitration.
Then such matter shall be submitted to binding arbitration
by the American Arbitration Association (the "Association")
(or any successor organization) (provided that, in the event
of a dispute as to an Environmental Defect, the arbitration
shall be performed by a reputable arbitrator with at least
10 years experience in environmental matters). All arbitra-
tion shall be finally determined in New York City and shall
be governed (except as provided above) in accordance with
the Rules for Commercial Arbitration of the Association (or
any successor thereto) and the judgment or the award ren-
dered may be entered in any court having jurisdiction. Each
party shall pay 50% of the fees and expenses of the Associa-
tion. The Closing Date shall be adjourned with respect to
the Property involved in any dispute (or, at Seller's or
Buyer's option, all of the Properties if the dispute in-
volves three or more Properties) pending resolution of the
matter in dispute. Upon resolution of such dispute Seller
shall take whatever action Seller is required to take pursu-
ant to this Contract or the final determination of an arbi-
trator.

4. Condition of the Properties. Subject only to
Seller's covenants, representations and warranties in this
Contract, Buyer shall purchase the Properties in their "AS
IS" condition at the Closing Date, subject to all latent and
patent defects (whether physical, financial or legal, in-
cluding title defects), based solely on Buyer's own inspec-
tion, analysis and evaluation of the Properties and not in
reliance on any records or other information obtained from
Seller or on Seller's behalf. Buyer acknowledges that it is
not relying on any statement or representation (other than
any representations, warranties, covenants and indemnifica-
tions contained in this Contract) that has been made or that
in the future may be made by Seller or any of Seller's
employees, agents, attorneys or representatives concerning
the condition of the Properties (whether relating to physi-
cal conditions, operating performance, title, or legal
matters). Without limiting the foregoing, any information
disclosed in writing to Buyer in connection with any inves-
tigations, inspections, tests or analyses performed prior to
Closing, shall be deemed acceptable to Buyer, and not viola-
tive of any warranty or representation of Seller, if Buyer
proceeds to Closing hereunder.

5. Closing. Upon the terms and subject to the
conditions of this Contract, the transfer of title and
possession of the Properties (the "CLOSING") shall be held
at the offices of Skadden, Arps, Slate, Meagher & Flom, 919
Third Avenue, New York, New York 10022, or as a closing by
mail at the offices of the Escrow Agent, 388 Market Street,
San Francisco, California, Attention: Michelle Viguie,
unless otherwise agreed in writing, at 10:00 a.m., local
time, on the date which is 3 business days after all of the
conditions to Closing as set forth in Sections 6, 7 and 8
hereof have been satisfied. The date on which the Closing
occurs is herein called the "Closing Date".

6. Conditions to Seller's and Buyer's Obligation
to Close. The obligations of Seller and Buyer to close
under this Contract are subject to the fulfillment, prior to
or at Closing, of each of the following:

(a) Seller shall have obtained consents
to the sale of the Properties (the "PARTNERSHIP CONSENT") as
provided by the terms of that certain Amended and Restated
Certificate and Agreement of Limited Partnership of Seller
dated as of April 24, 1986 (including any amendments, the
"PARTNERSHIP AGREEMENT") and applicable law.

(b) There shall not be in effect any
statute, regulation, order, decree or judgment of any gov-
ernmental entity having jurisdiction which renders illegal
or enjoins or prevents in any material respect the sale of
the Properties to Buyer.

7. Conditions to Seller's Obligation to Close.
The obligations of Seller to close under this Contract are
subject to the fulfillment, prior to or at Closing, of each
of the following:

(a) The representations and warranties
of Buyer shall have been true and correct in all material
respects when made and shall be true and correct in all
material respects as of the Closing Date, as if made at and
as of such date except as otherwise expressly provided
herein.

(b) On and as of the Closing Date,
Buyer shall have performed and complied with, in all materi-
al respects, all agreements and covenants required by this
Contract to be performed or complied with prior to or on the
Closing Date.

8. Conditions to Buyer's Obligation to Close.
The obligations of Buyer to close under this Contract are
subject to the fulfillment, prior to or at Closing, of each
of the following:

(a) The representations and warranties of
Seller shall have been true and correct in all material
respects when made and shall be true and correct in all
material respects as of the Closing Date, as if made at and
as of such date except as otherwise expressly provided
herein.

(b) On and as of the Closing Date, Seller
shall have performed and complied with, in all material
respects, all agreements and covenants required by this
Contract to be performed or complied with prior to or on the
Closing Date.

9. Deliveries.

(a) Seller's Deliveries. Upon the terms and
subject to the conditions of this Contract, on the Closing
Date (or such other date may be expressly provided), Seller
shall convey each Property and its related interests to
Buyer by delivery of the following documents which documents
shall be in form and substance reasonably acceptable to both
Buyer and Seller:

(i) quit claim deed or deed without
covenants if a quit claim deed can not be utilized in a
jurisdiction where a Property is located; so long as the
Title Insurer is willing to issue a policy of title insur-
ance which is customary in the applicable jurisdiction
containing no exceptions from coverage solely out of the
delivery by Seller of a quit claim deed or deed without
covenants);

(ii) bill of sale for each Property
conveying the fixtures and personalty owned by Seller, in
the form of Exhibit D attached hereto;

(iii) non-recourse assignment of
Seller's interest, as lessor, in any leases of space at the
Property including any security deposits thereunder (the
"LEASES") in the form of Exhibit D attached hereto;

(iv) non-recourse assignment, to the
extent assignable, of Seller's rights under any service or
maintenance contracts (including, without limitation, yellow
pages, landscaping, security and refuse removal contracts)
relating to the Property (the "SERVICE CONTRACTS") in the
form of Exhibit D attached hereto;

(v) non-recourse assignment, to
the extent assignable, of any licenses, permits and unex-
pired warranties and guarantees, if any, pertaining to the
Property;

(vi) certificates and resolutions
as may be reasonably requested by the Buyer and Title Insur-
er demonstrating the authority of the persons executing
documents at Closing.
(vii) non-recourse assignment of all
of Sellers's interest in and to any Phase I and Phase II
environment site assessment which Seller makes available to
Buyer;

(viii) non-foreign affidavit;

(ix) all documents and instruments
reasonably required by the Title Insurer to issue the title
policies;

(x) possession of the Properties to
Buyer;

(xi) notice to the tenants of each
Property prepared by Buyer notifying such tenants of the
transfer of title and assumption by Buyer of the landlord's
obligations under the Leases and the obligation to refund
the security deposits;

(xii) copies of current real Proper-
ty tax bills and utility statements with respect to any
unimproved property; and

(xiii) a certificate of the managing
general partner of Seller to the effect that all of the
representations and warranties of Seller are true and cor-
rect in all material respects at Closing;

(xiv) an Owner's Policy of Title
Insurance for each Property in an amount equal to the value
set forth on Exhibit C for such Property insuring Buyer's
title subject only to the Permitted Exceptions and otherwise
in form acceptable to Buyer and containing such endorsements
as may be reasonably requested by Buyer.

(b) Buyer's Deliveries. Upon the terms and
subject to the conditions of this Contract, on the Closing
Date, Buyer shall deliver the following:

(i) assumption of the Leases and Ser-
vice Contracts, substantially in the form of the instrument
annexed hereto as EXHIBIT D annexed hereto and made a part
hereof.

(ii) certificates and resolutions as may
be requested by Seller and Title Insurer demonstrating the
authority of the persons executing documents at Closing.

(iii) balance of the Purchase Price
by wire transfer.

10. Proration Items. The following shall be
apportioned on a per diem basis as of midnight of the day
preceding the Closing Date ("ADJUSTMENT DATE") and adjusted
between the parties on the basis of a thirty day month:

(a) Real estate and other taxes, assessments
and charges, and other municipal and state charges, license
and permit fees, water and sewer rents and charges, if any,
on the basis of the fiscal period for which assessed or
charged;

(b) Water, electric, gas, steam and other
utility charges for service furnished to the Properties;

(d) Base rents and any other rental payments
(including, without limitation, any percentage rent, escala-
tion charges for real estate taxes and operating expenses,
cost-of-living adjustments, parking rent) (the "RENTS") paid
or payable under the terms of the Leases for the month of
Closing. Where the Leases contain tenant obligations for
taxes, common area expenses, operating expenses or addition-
al charges of any nature ("CAM Charges"), and where Seller
shall have collected any portion thereof in excess of
amounts incurred by Seller for such items for the period
prior to the Closing Date, then there shall be an adjustment
and credit given to Buyer on the Closing Date for such
excess amounts collected. Buyer shall apply all such excess
amounts to the charges owed by Buyer for such items for the
period after the Closing Date and, if required by the Leas-
es, shall rebate or credit tenants with any remainder. If
it is determined at any time after Closing that the amount
collected during Seller's ownership period exceeded expenses
incurred during the same period by more than the amount
previously credited to Buyer at Closing, then Seller shall
promptly pay to Buyer the deficiency. Also, if it is deter-
mined after Closing that the amount collected during
Seller's ownership period is less than the expenses incurred
during the same period, then Buyer shall promptly pay to
Seller the deficiency, but only to the extent such deficien-
cy is actually collected by Buyer from the tenants under the
Leases.

(e) Any amounts paid or payable under any
Service Contracts being assigned to Buyer; and

(f) All costs associated with telephone
directory listings and any other prepaid advertising;

(g) Any other customary adjustments made in
connection with the sale of similar type buildings.

Seller will not assign to Buyer any of the hazard
insurance policies affecting the Properties then in force.
There will therefore be no proration of insurance costs at
Closing. Except as may be otherwise provided herein, all
other expenses which are attributable to the period prior to
the Closing Date shall be the obligation of Seller and those
which are attributable to the period from and after the
Closing Date shall be the obligation of Buyer.

For purposes of the foregoing apportionments and
adjustments, the following procedures shall govern:

(i) If the Closing Date shall occur
before the real estate tax rate is fixed, the apportionment
of such taxes shall be made upon the real estate taxes for
the immediately preceding year.

(ii) If there are water meters on the
Properties, Seller shall furnish meter readings to a date
not more than thirty days prior to the Adjustment Date; and
the unfixed meter charges for the intervening time to the
Adjustment Date shall be apportioned on the basis of such
meter readings, and any such meter charges for the period
subsequent to the Adjustment Date shall be paid by Buyer.

(iii) The apportionment of utility
charges shall be made upon the basis of charges shown on the
latest available bills for such utilities. The charges
shown on such available bills for periods prior to the
Adjustment Date shall be paid by Seller, and for the period
from the date of each such last available utility bill to
the Adjustment Date an apportionment shall be made based on
the amount charged for the period covered by such last
available bill.

(iv) All taxes, water and sewer charges
and assessments for public improvements which are liens upon
the Properties as of the Closing Date, will be allowed to
Buyer as a credit against the Purchase Price, subject to
apportionment as herein provided, and the existence of any
such lien shall not constitute an objection to title.

(v) If any tenants are required to pay
Rents which are collected by Buyer after the Closing Date
and which are attributable in whole or in part to any period
before to the Closing Date, the Buyer shall promptly pay to
Seller, Seller's proportionate share thereof.

(vi) If any tenant is in arrears in the
payment of Rents on the Closing Date, Rents received from
such tenant after the Closing Date shall be applied in the
following order of priority: (a) first to any months preced-
ing the month in which the Closing occurred; (b) then to the
month in which the Closing occurred; and (c) then to any
months following the month in which the Closing occurred.
If Rents or any portion thereof received by Seller or Buyer
after the Closing Date are payable to the other party by
reason of this allocation, the appropriate sum shall be
promptly paid to the other party.

Buyer and Seller agree that the provisions to this
Section 10 shall survive the Closing for a period of ninety
(90) days after the Closing Date, during which period Buyer
and Seller shall agree on a reconciliation of the prorations
described herein. If the parties cannot agree on a recon-
ciliation within such ninety (90) day period then such
matter shall be submitted to arbitration.

11. Surveys, Transfer Taxes and Other Costs.
Seller shall pay for (a) the cost of any Surveys, the premi-
um for any title insurance and any other costs of closing
and (b) transfer taxes, documentary stamp taxes, recording
charges and other taxes or charges imposed by any governmen-
tal entity in connection with the transfer of the Proper-
ties. Seller shall deliver to Buyer at Seller's sole cost
and expense any (i) Phase I environmental site assessments,
(ii) Phase II environmental assessments of the Properties
conducted by Law Engineering and Environmental Services
("LAW"), (iii) pay for any other Phase II environmental
assessments which are reasonably required by the Phase I
environmental site assessments to be conducted at the Prop-
erties and shall use reasonable efforts to obtain a letter
from LAW in the form attached hereto as Exhibit D. Other
than as expressly provided herein, each of the parties shall
pay for any and all costs which it may incur in connection
with the transactions contemplated herein.

The provisions of this Section 11 shall survive
the Closing.

12. Representations and Warranties of Sell-
er. As an inducement for Buyer to purchase the Properties
from Seller, Seller represents and warrants to Buyer the
following:

(a) Title to Real Estate. Seller has
good, valid, marketable, indefeasible and insurable title to
the Properties including the improvements and the personal-
ty, situated thereon which are owned by Seller subject to
the Permitted Exceptions.

(b) Organization and Authority.

(i) Seller is duly organized and valid-
ly existing under the laws of the State of Texas, has full
partnership power and authority to carry on its business as
it is being conducted and shall have upon receipt of the
Partnership Consent full partnership power and authority to
consummate the transaction.

(ii) Seller and the managing general
partner of Seller have the requisite partnership and corpo-
rate power and authority to execute, deliver and perform
this Contract. The execution, delivery and performance of
this Contract and the consummation of the transactions
contemplated hereby have been duly authorized by all neces-
sary partnership and corporate action on the part of Seller
and the managing general partner (subject to obtaining the
Partnership Consent). This Contract is a valid and binding
obligation of Seller, enforceable against Seller in accor-
dance with its terms.

(iii) Neither the execution and
delivery of this Contract nor the consummation of the trans-
actions contemplated hereby in the manner herein provided
nor the fulfillment of or compliance with the terms and
conditions hereof shall:

A. contravene any material provi-
sion of the Partnership Agreement; or

B. violate, be in conflict with,
constitute a default under, cause the acceleration of any
payments pursuant to, or otherwise impair the good standing,
validity, or effectiveness of any agreement, contract,
indenture, lease, or mortgage, or subject any properties or
assets of Seller to any indenture, mortgage, contract,
commitment, or agreement other than this Contract to which
Seller is a party or by which Seller is bound, which in the
aggregate would have a material adverse effect on the Prop-
erties or Seller's ability to perform all of its obligations
hereunder

(c) Pending Actions. No litigation actions
are pending or, to Seller's knowledge, threatened against
any of the Properties or Seller which would materially
adversely affect either the Properties or the Seller or
which challenge the execution, delivery or performance of
this Contract.

13. Representations and Warranties of Buyer. As
an inducement for Seller to sell the Properties to Buyer,
Buyer represents to Seller the following:

(a) Organization and Authority.

(i) Buyer is a corporation duly orga-
nized and validly existing under the laws of the State of
California and has full corporate power and authority to
carry on its business as it is now being conducted.

(ii) Buyer has the requisite corporate
power and authority to execute, deliver and perform this
Contract. The execution, delivery and performance of this
Contract and the consummation of the transactions contem-
plated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Contract is a
valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.

A. contravene any material provi-
sion of the Articles of Incorporation or Bylaws of Buyer; or

B. violate, be in conflict with,
constitute a default under, cause the acceleration of any
payments pursuant to, or otherwise impair the good standing,
validity, or effectiveness of any agreement, contract,
indenture, lease, or mortgage, or subject any properties or
assets of Buyer to any indenture, mortgage, contract, com-
mitment, or agreement to which Buyer is a party or by which
Buyer is bound which, in the aggregate, would have a materi-
al adverse effect on Buyer's ability to perform all of its
obligations hereunder.

(b) Adequate Funds. Buyer has adequate
funds or available credit resources to pay the Purchase
Price at the Closing as provided hereunder.

14. Default and Damages.

(a) Buyer's Remedies. If Buyer shall
elect to proceed with the performance of this Contract
notwithstanding the failure to be satisfied of any condi-
tions to Closing, Buyer shall be deemed to have waived the
requirement that those conditions be satisfied. Buyer's
sole recourse for Seller's failure to consummate the Closing
if required by the terms of this Contract shall be, at
Buyer's option, (i) if appropriate, to sue for specific
performance hereunder, or (ii) to terminate this Contract
and receive a "Termination Fee" in an amount equal to
Buyer's reasonable out of pocket attorneys' fees for outside
counsel incurred by Buyer in connection with the transac-
tions contemplated by this Contract but in no event to
exceed $15,000, which Termination Fee shall be in addition
to the return of the Downpayment plus all accrued interest
thereon and if Seller executes a contract or a letter of
intent to sell the Properties within 180 days from the
termination of this Contract to receive an amount equal to
$231,990 as liquidated damages. Notwithstanding anything to
the contrary contained in this Section 14 (a), Buyer shall
be entitled to receive the Topping Fee to the extent provid-
ed under Section 22 (a) and (e) of this Contract. In the
event that the managing general partner of Seller does not
recommend or withdraws its recommendation to the limited
partners of Seller to vote to grant the Partnership Consent
for any reason other than as is required by its fiduciary
obligations to Seller due to a change in circumstances after
the date hereof, Seller shall pay to Buyer an amount equal
to $231,990 plus an amount equal to Buyer's out-of-pocket
attorney's fees for outside counsel incurred by Buyer in
connection with the transactions contemplated by this Con-
tract but in no event to exceed $15,000.00, as liquidated
damages, together with a refund of the Downpayment and
Seller shall have no further obligation to Buyer whatsoever.

(b) Seller's Remedies. If Buyer shall be
unable or unwilling to consummate the Closing hereunder in
violation of the terms hereof, Seller shall have the right
(i) to terminate this Contract and retain the Downpayment as
liquidated and agreed upon damages, whereupon this Contract
shall be and become null and void, and neither Seller nor
Buyer nor any of their respective Representatives shall have
any further rights or obligations hereunder.

15. Brokers. Seller and Buyer hereby agree
to defend and hold the other harmless from any claim by a
broker or finder for a fee or expense which is based in any
way on an agreement or understanding made or alleged to have
been made by such broker or finder relating to the transac-
tion contemplated by this Contract.

The provisions of this Section 15 shall survive
the Closing.

16. Indemnification of Seller. Buyer agrees
to indemnify and hold harmless Seller and its general part-
ners and limited partners, their affiliates, their and their
affiliates' representatives, attorneys, accountants, agents
and employees and their and their affiliates' heirs, succes-
sors and assigns, from and against any claims or demands
for any expense, obligation, loss, cost, damage or injury
arising out of (a) the Buyer's inspection of the Properties
prior to or on the Closing Date and (b) the Buyer's opera-
tion and maintenance of the Properties from and after the
Closing Date.

The provisions of this Section 16 shall survive
the Closing.

17. Survival of Representations, Warranties
and Indemnifications. Except as otherwise expressly set
forth herein, none of the representations, warranties and
indemnifications contained in this Contract shall survive
the Closing.

18. Third Party Offers; Fiduciary Duties of
Seller. Anything herein to the contrary notwithstanding,
Seller will not initiate, solicit, negotiate with or provide
information to any person (other than Buyer) concerning any
merger, sale of substantial assets out of the ordinary
course of business or similar transaction involving the
Properties to be sold to Buyer hereunder, provided that
Seller may negotiate with or furnish information to a third
party if the undersigned managing general partner of Seller
determines, in its sole discretion, that its fiduciary
duties require it to take such actions.

19. Reasonable Efforts; Public Announcements.
Each party hereto will use all reasonable efforts to perform
all acts required to consummate the transactions contemplat-
ed hereby as promptly as practicable. Such acts shall
include, without limitation, the provision of any informa-
tion to and submission of any filing with any governmental
entity having jurisdiction. The foregoing notwithstanding,
except as may be required to comply with the requirements of
any applicable laws and the rules and regulations of each
stock exchange upon which the securities of either of the
parties is listed, no press release or similar public an-
nouncement or communication shall, if prior to the Closing,
be made or caused to be made concerning this Contract or the
transactions contemplated hereby, unless the parties shall
have consulted in advance with respect thereto. Seller
shall provide Buyer with reasonable access to the Properties
and all information in its possession reasonably relating to
the Properties. Buyer shall keep such information confiden-
tial and shall not disclose such information to anyone other
than its agents, attorney, consultant or directors unless
such information: (i) is or becomes generally known on a
nonconfidential basis from a source other than as a result
of a disclosure by or through the representatives, employees
or agents of Buyer or (ii) becomes known by Buyer on a
nonconfidential basis from a source which is not prohibited
from disclosing such information by a legal, contractual,
fiduciary or other obligation, or (iii) Buyer is required to
disclose such information under applicable law or by a court
of competent jurisdiction.

20. Partnership Consent. Seller shall
within 20 days after the date hereof file preliminary proxy
materials relating to the transactions contemplated hereby
with the Securities and Exchange Commission (the "SEC") and
diligently pursue clearance by the SEC and upon clearance of
such proxy materials by the SEC shall promptly call a meet-
ing, or solicit consents, of its limited partners to consid-
er such matters. Seller shall, subject to the fiduciary
duties of its managing general partner, make reasonable
efforts to secure the Partnership Consent as promptly as
practicable. Buyer will supply Seller with such information
and reasonable assistance as Seller may request in connec-
tion therewith. Buyer shall promptly deliver to the Seller
or the SEC any information or materials requested by Seller
or the SEC in connection with the transactions contemplated
hereby.

21. Casualty/Condemnation to the Properties.
(a) If, prior to the Closing Date, any of the Properties is
damaged due to a casualty (a "CASUALTY") and the cost of
repairing such damage, in accordance with Seller's insurance
claims, is less than $100,000, then Seller shall repair such
Casualty prior to the Closing Date or assign to Buyer the
proceeds of Seller's policy of casualty insurance and pay
to Buyer the amount of any deductible. If the cost of
repairing a Casualty to any Property, in accordance with
Seller's insurance claims, equals or exceeds $100,000, then
Seller shall have the option to repair the Casualty to such
Property prior to Closing to the condition it was in prior
to Closing or if Seller does not repair the Property, Buyer
shall have the option to remove such Property from the
transaction and adjust the Purchase Price as hereinafter
provided or have Seller assign to Buyer the insurance pro-
ceeds and pay to Buyer the amount of any deductible. Not-
withstanding anything herein to the contrary, (i) Seller
shall have the right to adjourn the Closing Date for such
reasonable period as shall be necessary to repair any such
Casualty and (ii) Seller shall have the right, subject to
the terms and conditions hereof, to cause the Closing to
take place with respect to the other Properties and then
cause the Closing to take place with respect to the affected
Property within such reasonable period as shall be necessary
to repair any such Casualty.

(b) If, prior to the Closing Date, all
or any portion of any Property is condemned or taken by
eminent domain, then this Contract shall nevertheless remain
in full force and effect without any abatement of the Pur-
chase Price. In such event, Seller shall convey such Prop-
erty to Buyer at the Closing in its then condition, and
Buyer shall be entitled to receive all net or condemnation
awards otherwise payable to Seller as a result of such loss
or damage and, in full satisfaction of any claims by Buyer
against Seller, Seller shall assign to Buyer, without re-
course or warranty of any nature whatsoever, all of Seller's
right, title and interest in and to any claims Seller may
have to any condemnation awards, as well as all rights or
pending claims of Seller with respect to such condemnation
or taking of such Property, and Seller shall pay to Buyer
all payments theretofore made by such condemning authorities
as a result of such loss after deducting therefrom the costs
of collection thereof.

(c) Notwithstanding anything contained
herein to the contrary, if Seller delivers notice for con-
demnation or eminent domain proceedings which are initiated
or threatened between the date of this Contract and the
Closing Date, Buyer shall have the right to participate in
any and all settlement discussions and other conferences
relating thereto, and Seller shall not accept any settlement
without Buyer's consent which shall not be unreasonably
withheld or delayed.

(d) Buyer is aware that a condemnation
proceeding is pending or threatened against to the Property
known as Big "A" Forest Park 4560 I75 Frontage Road Forest
Park Georgia. Buyer shall purchase such Property subject to
the condemnation proceeding and shall have no right to
remove such Property from the transaction or receive any
adjustment to the Purchase Price due to such condemnation.
At the closing the Seller shall assign any and all awards or
deliver any previously received awards with respect to such
condemnation proceeding to the Buyer. Buyer shall have the
same rights set forth in subsection (c) of this Section 21
with respect to such condemnation.

(e) With respect to the Property in
Mansfield County Texas (the "Mansfield Property") Seller
agrees to use reasonable efforts to execute that certain
contract of sale (the "Mansfield Contract") (a copy of which
Buyer has received and which shall be subject to Buyer's
reasonable approval, prior to execution) to purchase the
Mansfield Property with that certain buyer identified in the
Mansfield Contract. If Seller does not consummate the
transaction contemplated by the Mansfield Contract before
the Closing Date, (i) Buyer shall purchase the Mansfield
Property, subject to the Mansfield Contract, pursuant to and
under the terms of this Contract, (ii) Seller shall assign
its rights and obligations under the Mansfield Contract to
Buyer and (iii) Buyer shall assume all of Seller's obliga-
tion or liability under the Mansfield Contract. Upon such
assignment and assumption Seller shall have no obligation or
liability whatsoever to Buyer or any third party with re-
spect to the Mansfield Property or the Mansfield Contract.
If Seller consummates the transaction contemplated by the
Mansfield Contract prior to the Closing Date, Seller shall
on the Closing Date grant the Buyer a credit against the
Purchase Price in an amount equal to the proceeds of such
sale less any and all closing expenses incurred by Seller to
consummate the transaction contemplated by the Mansfield
Contract which shall include but not be limited to brokerage
commissions or fees, and escrow agent fees, but shall not
include title commitment fees, the premium for title insur-
ance or survey costs. Notwithstanding the foregoing in the
event that Seller does not enter into the Mansfield Contract
prior to the Closing Date, Buyer shall purchase the
Mansfield Property pursuant to and under the terms of this
Contract.

22. Termination. Notwithstanding anything
contained herein, this Contract may be terminated as fol-
lows:

(a) By Seller, if during the term of this
Contract Seller has received a bona fide offer from an
unrelated third party which the undersigned managing general
partner of Seller has determined is more favorable to
Seller and its partners than the terms hereof (the "TOPPING
OFFER"), provided that Seller has provided Buyer with at
least 5 days written notice of the terms of such offer and
the right to match the terms of such offer, and further
provided that Seller shall pay to Buyer, simultaneously with
the acceptance of the Topping Offer (regardless of whether
the sale contemplated by the Topping Offer is consummated),
an amount equal to $231,990 plus an amount equal to Buyer's
reasonable out of pocket attorney's fees for outside counsel
incurred by Buyer in connection with the transactions con-
templated by this Contract but in no event to exceed $15,000
(the "Topping Fee").

(b) By Seller in accordance with Section 3
and 14(b) hereof or by Buyer in accordance with Sections
14(a) hereof.

(c) By Seller or Buyer, if a court of compe-
tent jurisdiction issues a binding and final order perma-
nently preventing the sale of the Properties to Buyer.

(d) By Seller or Buyer, if the Closing does
not occur on or before nine months from the execution here-
of, provided that the party seeking to terminate is not in
breach of this Contract.

(e) By Seller or Buyer, if the partners of
Seller vote not to grant the Partnership Consent, provided
that, if (i) the Closing hereunder does not occur due to a
failure to obtain the Partnership Consent and (ii) the
Seller enters into a contract or a letter of intent within
180 days after the termination of this Contract, to sell the
Properties at a price which exceeds the Purchase Price,
Seller shall pay to Buyer the Topping Fee, simultaneously
with the execution of such contract or letter of intent,
regardless of whether the sale contemplated by the Topping
Offer is consummated.

In the event this Contract is terminated pursuant
to any of the foregoing provisions, this Contract shall
thereupon become null and void and neither Seller nor Buyer
nor any of their respective representatives shall have any
further rights or obligations hereunder except as set forth
above.

23. Payment of Termination Fee, Topping Fee or
Liquidated Damages.

(a) In the event that Seller is obligated to
pay Buyer the Termination Fee, the Topping Fee or any other
amount as liquidated damages (the "Buyer Payment Amounts"),
pursuant to this Contract Seller shall deposit into escrow,
at Buyer's direction, an amount equal to the Buyer Payment
Amounts and, subject to the terms of the escrow agreement
set forth below, Buyer shall be paid out of the escrow an
amount equal to the lesser of (i) the Buyer Payment Amounts
or (ii) the sum of (1) the maximum amount that can be paid
to Buyer without causing Buyer to fail to meet the require-
ments of Sections 856(c)(2) and (3) of the Internal Revenue
Code of 1986, as amended (the "Code") determined as if the
payment of such amount did not constitute income described
in Sections 856(c)(2)(A)-(H) or 856(c)(3)(A)-(1) of the Code
("Qualifying Income"), as determined by Buyer's certified
public accountants, plus (2) in the event Buyer received
either (A) a letter from Buyer's counsel indicating that
Buyer has received a ruling from the Internal Revenue Ser-
vice (the "IRS") described in Section 23 (b)(ii) an amount
equal to the Buyer Payment Amounts less the amount payable
under clause (1) above.

(b) The escrow agreement shall provide that
the Buyer Payment Amounts in escrow or any portion thereof
shall not be released to Buyer unless the escrow agent
receives any one or combination of the following: (i) a
letter from Buyer's certified public accountants indicating
the maximum amount that can be paid by the escrow agent to
Buyer without causing Buyer to fail to meet the requirements
of Sections 856(c)(2) and (3) of the Code determined as if
the payment of such amount did not constitute Qualifying
Income or a subsequent letter from Buyer's accountants
revising that amount, in which case the escrow agent shall
release such amount to Buyer, or (ii) a letter from Buyer's
counsel indicating that Buyer received a ruling from the IRS
holding that the receipt by Buyer of the Buyer Payment
Amounts would either constitute Qualifying Income or would
be excluded from gross income within the meaning of Sections
856(c)(2) and (3) of the Code (or alternatively, Buyer's
legal counsel has rendered a legal opinion to the effect
that the receipt by Buyer of the Buyer Payment Amounts would
either constitute Qualifying Income or would be excluded
from gross income within the meaning of Sections 856(c)(2)
and (3) of the Code), in which case the escrow agent shall
release the remainder of the Buyer Payment Amounts to Buyer.
Seller agrees to amend this Section 23 at the request of
Buyer in order to (A) maximize the portion of the Buyer
Payment Amounts that may be distributed to Buyer hereunder
without causing Buyer to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code, (B) improve Buyer's
chances of securing a favorable ruling described in this
Section 23(b)or (C) assist Buyer in obtaining a favorable
legal opinion from its counsel as described in this Section
23(b); provided that Buyer's legal counsel has rendered a
legal opinion to Buyer to the effect that such amendment
would not cause Buyer to fail to meet the requirements of
Section 856(c)(2) or (3) of the Code. The escrow agreement
shall also provide that any portion of the Buyer Payment
Amounts held in escrow for five years shall be released by
the escrow agent to the Seller. The Seller shall not be a
party to such escrow agreement and shall not bear any cost
of or have any liability resulting from the escrow agreement
or the terms and provisions of this Section 23 so long as
Seller disburses any amount due under this Contract to Buyer
or to any escrow agent.

24. Notices. Any notice which may be required or
may be desired to be given pursuant to this Contract shall
be in writing and shall be deemed delivered and effective
upon actual receipt at the following addresses or such other
addresses as the parties may notify each other by similar
notice:

If to Seller, to:

Prudential-Bache/Watson & Taylor, Ltd.-4
c/o Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street - 16th Floor
New York, New York 10292 - 0116
Attn: Brian Martin

With a copy to:

Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: James Freund

If to Buyer, to:

Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Attn: Harvey Lenkin

With a copy to:

Andrews & Kurth LLP
4200 Texas Commence Tower
Houston, TX 77002
Attn: David G. Runnels

25. General.

(a) Interpretation of Words. A mascu-
line pronoun wherever used herein shall be construed to
include the feminine or neuter where appropriate. The
singular form wherever used herein shall be construed to
include the plural where appropriate.

(b) Assignment; Successors and Assigns;
Third Party Beneficiaries.

(i) Neither of the parties hereto may
assign its respective rights under this Contract without the
consent of the other party. The foregoing notwithstanding,
Buyer shall be permitted, upon five days notice to Seller,
to assign its rights under this Contract to a subsidiary of
Buyer that is at least 90% owned by Buyer. Such assignment,
however, shall not relieve Buyer of, and Buyer shall remain
liable for, all of its obligations contained in this Con-
tract.

(ii) Except as otherwise provided here-
by, the provisions of this Contract shall be binding upon
and inure to the benefit of the parties hereto and their
respective legal representatives and successors in interest.

(iii) This Contract is not intended,
nor shall it be construed, to confer upon any party except
the parties hereto and their heirs, successors and permitted
assigns any rights or remedies under or by reason of this
Contract.

(c) Time of the Essence. Time shall be of
the essence with respect to the performance of all of the
obligations hereunder.

(d) Entire Contract. Subject to the terms
and conditions of the Confidentiality Agreement, this Con-
tract represents the entire understanding between the par-
ties with respect to the subject matter hereof, superseding
all prior or contemporaneous understandings or communica-
tions of any kind, whether written or oral. This Contract
may only be modified by a written agreement signed by both
parties hereto.

(e) Captions. The headings of the para-
graphs herein are for convenience only; they form no part of
this Contract and shall not affect its interpretation.

(f) Governing Law. The provisions of
this Contract shall be governed by and construed in accor-
dance with the laws of the State of New York applicable to
agreements entered into and to be performed wholly therein.

(g) Counterparts. This Contract may be
executed in several counterparts, each of which shall be
deemed an original. Such counterparts constitute but one
and the same instrument, which may be sufficiently evidenced
by one counterpart.

(h) Further Assurances. Each of the
parties hereto shall, at the request of the other party,
execute, acknowledge and deliver any further instruments,
and take such further actions, as the requesting party may
reasonably request, to carry out effectively the intent of
this Contract.

IN WITNESS WHEREOF, the parties hereto have executed
this Contract as of the day and year first above written.

Seller:

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4

By: PRUDENTIAL-BACHE PROPERTIES, INC.
Its Managing General Partner

By:
Name:
Title:

Buyer:

PUBLIC STORAGE, INC.

By:
Name:
Title:

EXHIBITS

Exhibit A - Property Description

Exhibit B - Escrow Agreement

Exhibit C - Property Value Allocations

Exhibit D - Instrument of Assumption

Exhibit E - Letter from LAW Engineering and Environmental
Services

(W&T, Ltd-4)
EXHIBIT A

PROPERTIES

NAME LOCATION

Downtown Business 800 Second Avenue
Center Nashville, Tenessee

Airport South 501 S. Metroplex Drive
Nashville, Tenessee
Big A 4560 1-75 Frontage Road
Clayton County, Georgia

Town East 4111 U.S. Highway 80,
Mesquite (Dallas), Texas
Woodbridge 3095 PS Business Center Road
Woodbridge, Virginia

Land (Airport 501 S. Metroplex Drive
South - #25) Nashville, Tenessee

Land/Mansfield U.S. 287/Turner-Warnell Road
Mansfield, Texas
Land Harry Hines Blvd/N. of LBJ Freeway
(Denton/I-35-#4) Dallas, Texas

Land (Arlington St Hwy 360, N. of East Abram
Bus. Ctr-#12) Arlington, Texas

The Properties include:

(A) All buildings and improvements located on the
Properties;

(B) All rights-of-way, alleys, waters, privileg-
es, easements, covenants and appurtenances which are on
or benefit the Properties;

(C) All right, title and interest of Seller in
and to any land lying in the bed of any public or pri-
vate street, road, avenue, alley or highway, opened,
closed or proposed, in front of or adjoining the Prop-
erties to the center line thereof in each case which
are appurtenances to such properties;

(D) All right, title and interest of Seller to
any unpaid award to which Seller may be entitled (1)
due to the taking, by condemnation or eminent domain of
any right, title or interest of Seller in the Proper-
ties, and (2) for any damage to the Properties due to
the change of grade of any street or highway;

(E) All right, title and interest of Seller to
any assignable licenses, permits, contract, leases,
sales agreements, construction agreements, maintenance
agreements, service agreements, guaranties, warranties,
telephone exchanges, advertising materials and trade
names with respect to the Properties except for the
name "Prudential" "Bache" or "Watson & Taylor" or any
combination thereof and;

(F) All Leases and security deposits with respect
to any of the Properties in which Seller holds an in-
terest as a landlord for the use and occupancy of all
or any part of the Properties.

EXHIBIT B

ESCROW AGREEMENT

Agreement made this day of 1996 by and among
Public Storage, Inc. Storage Corporation, ("PURCHASER"),
Prudential-Bache/Watson & Taylor, Ltd.-4 ("SELLER"), and
Chicago Title Insurance Company, Inc., as escrow agent
("ESCROW AGENT").

(i) The Parties hereto agree that the sum of
$915,750 (the "ESCROW AMOUNT"), to be held pursuant to a
Contract of Sale between Seller and Purchaser of even date
herewith (the "CONTRACT"), shall be held in escrow by the
Escrow Agent upon the terms and conditions set forth herein.

(ii) (A) The Escrow Agent shall deliver the
Escrow Amount then in its possession in accordance with
Paragraph 3 hereof to Seller (i) upon the Closing, as that
term is used in and in accordance with the Contract or (ii)
in the event that Seller makes a written demand therefor
stating that Purchaser has failed to perform Purchaser's
obligations under the Contract.

(B) Escrow Agent shall return the Escrow
Amount then in its possession in accordance with Paragraph 3
hereof to Purchaser in the event that Purchaser makes a
written demand therefor stating (i) that Seller has failed
to perform Seller's obligations under the Contract or (ii)
that Purchaser is otherwise entitled to the return of the
Escrow Amount in accordance with the terms of the Contract.

(C) In the event that Escrow Agent intends
to release the Escrow Amount and any interest earned thereon
in accordance with Paragraph 3 hereof to either party pursu-
ant to Paragraph 2(a)(ii) or 2(b) hereof, then Escrow Agent
shall give to the other party not less than ten days prior
written notice of such fact and, if Escrow Agent actually
receives written notice during such ten day period that such
other party objects to the release, then Escrow Agent shall
not release the Escrow Amount and any such dispute shall be
resolved as provided herein.

(D) In the event that a dispute shall arise
as to the disposition of the Escrow Amount or any other
funds held hereunder in escrow, Escrow Agent shall have the
right, at its option, to either hold the same or deposit the
same with a court of competent jurisdiction pending decision
of such court, and Escrow Agent shall be entitled to rely
upon the decision of such court.

(E) Escrow Agent may commingle the Escrow
Amount with other funds held in its "trustees account".

(F) Escrow Agent shall hold the Escrow
Amount in a savings bank account or a liquid assets account
in the City of San Francisco bearing interest at such rate
as may from time to time be paid or invest the Escrow Amount
in U.S. Treasury Bills or other securities guaranteed by the
Government of the United States of America. The rate of
interest or yield need not be the maximum available and
deposits, withdrawals, purchases and sales shall be made in
the sole discretion of Escrow Agent, which shall have no
liability whatsoever therefor except for its gross negli-
gence or willful misconduct. Discounts earned shall be
deemed interest for the purposes hereof.

(G) Escrow Agent shall have no liability
whatsoever arising out of or in connection with its activity
as Escrow Agent except for its gross negligence or willful
misconduct. Seller and Purchaser jointly and severally
agree to indemnify and hold harmless Escrow Agent from and
against any and all loss, cost, claim, cause of action,
damage, liability and expense (including attorneys' fees and
court costs) which may be incurred by reason of its acting
as Escrow Agent.

(H) Escrow Agent shall be entitled to rely
upon any judgment, certification, demand or other writing
delivered to it hereunder without being required to deter-
mine the authenticity or the correctness of any fact stated
therein, the propriety or validity thereof, or the jurisdic-
tion of a court issuing any such judgment. Escrow Agent may
act in reliance upon (i) any instrument or signature be-
lieved to be genuine and duly authorized, and (ii) advice of
counsel in reference to any matter or matters connected
herewith.

(I) Any notice, demand or other communica-
tion to Escrow Agent hereunder shall be in writing and
delivered in person or sent by certified mail, return re-
ceipt requested, postage prepaid, addressed to Escrow Agent
as follows:

Chicago Title Insurance Company
388 Market Street
San Francisco, California
Attention: Michelle Viguie

The same shall be deemed given on the date delivered, if
delivered in person, or on the third business day following
the date of mailing the same, if mailed.

(iii) The interest, if any, earned on the Escrow
Amount shall be for the account of Buyer. At the Closing,
such interest shall be a credit against the Purchase Price.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.

Purchaser:

Public Storage, Inc.

By:______________________________
Name:
Title:

Seller:

Prudential-Bache/Watson & Taylor, Ltd.-4

By: Prudential-Bache Properties, Inc.,
its managing general partner

By:______________________________
Name:
Title:

Chicago Title Insurance Company, Inc., as Escrow Agent

By:_____________________________
Name:
Title:

(W&T, Ltd-4)
EXHIBIT C

ALLOCATED VALUES

PROPERTY PURCHASE PRICE

Downtown Business $2,200,000
Center

Airport South $2,200,000
Big A $ 900,000

Town East $1,100,000
Woodbridge $4,500,000

Land (Airport $ 400,000
South - #25)

Land/Mansfield $ 605,000
Land $ 180,000
(Denton/I-35-#4)

Land (Arlington $ 125,000
Bus. Ctr-#12)

EXHIBIT D

OMNIBUS INSTRUMENT OF ASSUMPTION

FOR GOOD AND VALUABLE CONSIDERATION, the receipt
of which is hereby acknowledged, and in consideration of the
assignment by Prudential-Bache/Watson & Taylor, Ltd.-4, a
Texas limited partnership ("Seller"), to Public Storage Inc.
a California corporation ("Buyer"), of all of Seller's
right, title and interest in and to each and every one of
the following:

(i) all leases (the "Leases") of space located at
the real properties more particularly described on Schedule
I hereto (the "Premises") and any related security deposits
Set forth on Schedule I (the "Security Deposits") in the;

(ii) all fixtures, machinery, equipment and other
personal property (the "Personalty") attached or appurtenant
to the Premises;

(iii) all service and maintenance contracts,
construction contracts relating to the Premises (the "Ser-
vice Contracts"); and

(iv) all licenses, permits, consents, waiver,
variances and unexpired warranties and guarantees, if any,
telephone exchanges, advertisements, reports, surveys,
architectural plans relating to the Premises (collectively
with the Leases, Security Deposits, Personalty and Service
Contracts, the "Property").

Buyer hereby agrees to accept the foregoing as-
signment by Seller of the Property and assumes all liabili-
ties and obligations whether of Seller or otherwise in
connection therewith arising on or after the date hereof.

Buyer and Seller shall, at the request of the
other party, execute, acknowledge and deliver any further
instruments, and take such further actions, as may reason-
ably be requested, to carry out effectively the intent of
this Instrument.

This Instrument shall be binding upon and shall
inure to the benefit of Seller and Buyer and their succes-
sors and assigns.

IN WITNESS WHEREOF, the undersigned has executed
this Instrument as of the 10th day of June, 1996.

PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4

By:______________________________
Name:
Title:

PUBLIC STORAGE, INC.

By:______________________________
Name:
Title:

(W&T, Ltd-4)
SCHEDULE I

PROPERTIES

NAME LOCATION

Downtown Business 800 Second Avenue
Center Nashville, Tenessee

Airport South 501 S. Metroplex Drive
Nashville, Tenessee
Big A 4560 1-75 Frontage Road
Clayton County, Georgia

Town East 4111 U.S. Highway 80,
Mesquite (Dallas), Texas
Woodbridge 3095 PS Business Center Road
Woodbridge, Virginia

Land (Airport 501 S. Metroplex Drive
South - #25) Nashville, Tenessee

Land/Mansfield U.S. 287/Turner-Warnell Road
Mansfield, Texas
Land Harry Hines Blvd/N. of LBJ Freeway
(Denton/I-35-#4) Dallas, Texas

Land (Arlington St Hwy 360, N. of East Abram
Bus. Ctr-#12) Arlington, Texas

EXHIBIT E

LETTER OF ENVIRONMENTAL CONSULTANT

SECONDARY CLIENT AGREEMENT

This Agreement between _____________ and Law Environmental
Consultants, Inc. is being entered in consideration of
$200.00, the promise and obligations herein and other good
and valuable consideration, the adequacy of which is hereby
acknowledged by the parties. At the express request of
__________ ("Client") and with full disclosure to and ap-
proval from same, Law Environmental Consultants, Inc.
("Law") through its subsidiaries, affiliates, branches, or
divisions, as an independent consultant, agrees to provide
_________________, its corporate successors and assigns
(collectively "Secondary Client") for its additional benefit
and use, copies of certain final reports (specify reports)
prepared for Client by Law. Secondary Client may rely on
the contents of those reports as if those reports were
expressly prepared for Secondary Client subject to any
limitation placed on the scope, nature and type of Law's
services as stated in Law's proposal [specify] and/or report
and subject to these terms and conditions contained herein.
The services provided have been performed for Client and our
report may or may not be suitable for all purposes of Sec-
ondary Client.

STANDARD OF CARE AND WARRANTY. Law warrants that it has
performed its services with that degree of skill and care
ordinarily exercised by reputable members of the environmen-
tal engineering and scientific profession of Law or similar
locality. NO OTHER WARRANTY, EXPRESSED OR IMPLIED, IS MADE
OR INTENDED, except as set forth in the Reports.

DOCUMENTS. Secondary Client agrees that Law's report is
intended for Client and Secondary Client's exclusive reli-
ance and internal use, and is not for the general distribu-
tion or publication. Without the prior consent of Law, any
unauthorized use or further distribution by Secondary Client
shall be at Secondary Client's and recipient's sole risk and
without liability to Law.

CONFLICT OF INTEREST. By request and use of the referenced
report, Secondary Client expressly agrees to waive all
claims of existing or potential conflicts of interest
that may now exist or hereafter arise by Law's providing the
requested report should any dispute arise between Client and
Secondary Client.

LAW ENVIRONMENTAL CONSULTANTS, INC. ____________________

Signed: ___________________ Signed: ___________________

Title: ___________________ Title: ___________________

Date: ___________________ Date: ___________________