UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-----
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
Commission File Number : 0-17148
PAINEWEBBER INCOME PROPERTIES EIGHT LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 04-2921780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No .
<PAGE>
PAINEWEBBER INCOME PROPERTIES EIGHT LIMITED PARTNERSHIP
BALANCE SHEETS
December 31, 1996 and September 30, 1996 (Unaudited)
(In thousands)
ASSETS
December 31 September 30
----------- ------------
Cash and cash equivalents $ 620 $ 433
Accounts receivable 2 1
Other assets - 9
------- ------
$ 622 $ 443
======= ======
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable and accrued expenses $ 42 $ 41
Accounts payable - affiliates 2 2
Equity in losses of joint ventures in
excess of investments and advances 1,202 810
Partners' deficit (624) (410)
------ ------
$ 622 $ 443
====== ======
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
For the three months ended December 31, 1996 and 1995 (Unaudited)
(In thousands)
General Limited
Partners Partners
-------- --------
Balance at September 30, 1995 $ (595) $(19,596)
Net loss (12) (1,169)
------ --------
Balance at December 31, 1995 $ (607) $(20,765)
====== ========
Balance at September 30, 1996 $ (387) $ (23)
Net loss (2) (212)
------ --------
Balance at December 31, 1996 $ (389) $ (235)
====== ========
See accompanying notes.
<PAGE>
PAINEWEBBER INCOME PROPERTIES EIGHT LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the three months ended December 31, 1996 and 1995 (Unaudited)
(In thousands, except per Unit data)
1996 1995
---- ----
Revenues:
Hotel revenues $ - $1,949
Interest and other income 8 20
------ ------
8 1,969
Expenses:
Hotel operating expenses - 1,391
Interest expense - 1,291
Depreciation and amortization - 240
General and administrative 68 91
------ ------
68 3,013
------ ------
Operating loss (60) (1,044)
Partnership's share of
ventures' losses (154) (137)
------ ------
Net loss $ (214) $(1,181)
====== =======
Net loss per 1,000 Limited
Partnership Units $(5.96) $(32.88)
====== =======
The above net loss per 1,000 Limited Partnership Units is based upon the
35,548,976 Limited Partnership Units outstanding during each period.
See accompanying notes.
<PAGE>
PAINEWEBBER INCOME PROPERTIES EIGHT LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the three months ended December 31, 1996 and 1995 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1996 1995
---- ----
Cash flows from operating activities:
Net loss $ (214) $(1,181)
Adjustments to reconcile net loss
to net cash used in operating activities:
Interest expense on loan payable
to Marriott Corporation - 159
Partnership's share of ventures' losses 154 137
Depreciation and amortization - 240
Changes in assets and liabilities:
Accounts receivable (1) (47)
Due to/from Marriott Corporation - 774
Inventories - 2
Other assets 9 3
Accounts payable and accrued expenses 1 14
Accrued interest payable - (301)
------ ------
Total adjustments 163 981
------ ------
Net cash used in operating activities (51) (200)
------ ------
Cash flows from investing activities:
Distributions from joint ventures 238 -
Additional investments in joint ventures - (70)
Additions to operating investment property - (37)
Net withdrawals from capital expenditure
reserve - (76)
------ ------
Net cash provided by (used in)
investing activities 238 (183)
------ ------
Net increase (decrease) in cash and
cash equivalents 187 (383)
Cash and cash equivalents, beginning of period 433 1,362
------ ------
Cash and cash equivalents, end of period $ 620 $ 979
====== ======
Cash paid during the period for interest $ - $1,433
====== ======
See accompanying notes.
<PAGE>
PAINEWEBBER INCOME PROPERTIES
EIGHT LIMITED PARTNERSHIP
Notes to Financial Statements
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained in
the Partnership's Annual Report for the year ended September 30, 1996. In the
opinion of management, the accompanying financial statements, which have not
been audited, reflect all adjustments necessary to present fairly the results
for the interim period. All of the accounting adjustments reflected in the
accompanying interim financial statements are of a normal recurring nature.
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles which requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of December 31, 1996 and September 30,
1996 and revenues and expenses for the three-month periods ended December 31,
1996 and 1995. Actual results could differ from the estimates and assumptions
used.
2. Operating Investment Property
The Partnership acquired a 100% interest in the Marriott Suites Hotel
located in Newport Beach, California from the Marriott Corporation
("Marriott") on August 10, 1988. The Hotel consists of 254 two-room suites
encompassing 201,606 square feet located on approximately 4.8 acres of land.
The Hotel was managed for the Partnership by Marriott and its affiliates (the
"Manager"), as described below. The Partnership purchased the operating
investment property for approximately $39,946,000, including an acquisition
fee paid by Marriott to the Adviser of $580,000 and a $325,000 guaranty fee
paid to Marriott. The Hotel was acquired subject to a first mortgage loan
with an initial principal balance of $29,400,000. In addition, the
Partnership provided an initial working capital reserve of approximately
$554,000 to the Manager for Hotel operations.
Since the time of its acquisition, the Hotel experienced substantial
recurring losses after debt service. Through September 30, 1991, the Hotel's
cash flow deficits were funded by Marriott, as discussed further below. After
Marriott had fulfilled its obligation to fund deficits, the Partnership and
the lender reached an agreement, which was finalized in fiscal 1993, to
modify the terms of the first mortgage loan. The Partnership was in default
of the modified terms of the first mortgage loan agreement secured by the
Newport Beach Marriott Suites Hotel as of September 30, 1995. During fiscal
1995, the Partnership reached the limit on the debt service deferrals imposed
by the 1993 loan modification agreement. On February 19, 1996, the first
mortgage loan secured by the Newport Beach Marriott Suites Hotel was
purchased by a new lender, and the Partnership subsequently received formal
notice of default from this new lender. Subsequently, the Partnership
received a notice of a foreclosure sale scheduled for August 7, 1996, at
which time title to the Newport Beach Marriott Suites Hotel was transferred
to the mortgage lender. The transfer of the Hotel's title to the lender was
accounted for as a troubled debt restructuring in accordance with Statement
of Financial Accounting Standards No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructurings." As a result, the Partnership
recorded an extraordinary gain from settlement of debt obligation of
approximately $23,459,000, partially offset by a loss on transfer of assets
at foreclosure of approximately $137,000. The extraordinary gain arises due
to the fact that the balance of the mortgage loan and related accrued
interest exceeded the estimated fair market value of the Hotel investment,
and other assets transferred to the lender, at the time of the foreclosure.
The loss on transfer of assets results from the fact that the net carrying
value of the Hotel exceeded its estimated fair value at the time of the
foreclosure.
The Partnership elected early application of SFAS 121 effective for fiscal
1995. The effect of such application was the recognition of an impairment
loss on the wholly-owned Hotel property in fiscal 1995. The impairment loss
resulted because, in management's judgment, the default status of the
mortgage loan secured by the property, combined with the lack of near-term
prospects for sufficient future improvement in market conditions in the
Orange County market in which the property is located, were not expected to
enable the Partnership to recover the adjusted cost basis of the property.
The Partnership recognized an impairment loss of $6,369,000 to write down the
operating investment property to its estimated fair value of $20,000,000 as
of September 30, 1995. Fair value was estimated using an independent
appraisal of the operating property. Such appraisals make use of a
combination of certain generally accepted valuation techniques, including
direct capitalization, discounted cash flows and comparable sales analysis.
The guaranty fee referred to above was paid in exchange for an agreement
(the "Payment Agreement") by Marriott to fund, for a four-year period, the
amounts necessary in the event that revenues generated by the Hotel were not
sufficient to pay: (1) debt service payments on the mortgage loan; (2) a
cumulative preferred return to the Partnership equal to 7.5% of the
Partnership's Net Investment, as defined (the "Preferred Return"); and (3)
operating losses incurred by the Hotel; if any, up to $5,000,000. The
Partnership had no obligation to reimburse Marriott for the first $1,500,000
of funds so advanced. The payment by Marriott Corporation of the $1,500,000
non-refundable advance was accounted for as a reduction to the basis of the
operating investment property. Funds advanced in excess of $1,500,000 were in
the form of non-recourse loans (the "Loans"). The Loans were payable to
Marriott, with interest on the amounts advanced calculated at a monthly
compounded rate of 10% per annum, only under certain circumstances, out of
excess proceeds generated by any sale or refinancing of the Hotel. At the
date of foreclosure, August 7, 1996, the loan payable to Marriott Corporation
totalled $6,875,000, including accrued interest. Since the loans were only
payable out of sale or refinancing proceeds, the foreclosure of the Hotel
resulted in the cancellation of this debt obligation, which is included in
the extraordinary gain discussed further above.
The following is a summary of Hotel revenues and operating expenses for
the three months ended December 31, 1995 (in thousands):
1995
----
Revenues:
Guest rooms $1,483
Food and beverage 366
Other revenue 100
------
$1,949
======
Operating expenses:
Guest rooms $ 420
Food and beverage 310
Other operating expenses 538
Management fees - Manager 39
Real estate taxes 84
------
$1,391
======
The operating expenses of the Hotel noted above included significant
transactions with the Manager. All Hotel employees were employees of the
Manager and the related payroll costs were allocated to the Hotel operations
by the Manager. A majority of the supplies and food purchased during the
prior period were purchased from an affiliate of the Manager. In addition,
the Manager also allocates employee benefit costs, advertising costs and
management training costs to the Hotel.
3. Investments in Joint Venture Partnerships
The Partnership has investments in four joint ventures which own five
operating properties as more fully described in the Partnership's Annual
Report. The joint ventures are accounted for under the equity method in the
Partnership's financial statements because the Partnership does not have a
voting control interest in the ventures. Under the equity method, the
investment in a joint venture is carried at cost adjusted for the
Partnership's share of the venture's earnings, losses and distributions.
<PAGE>
Summarized operations of the four joint ventures for the three months
ended December 31, 1996 and 1995 are as follows:
Condensed Combined Summary of Operations
For the three months ended December 31, 1996 and 1995
(in thousands)
1996 1995
---- ----
Rental revenues and expense reimbursements $ 987 $ 962
Other income 24 27
------ ------
1,011 989
Property operating expenses 534 550
Interest expense 381 390
Depreciation and amortization 216 227
------ ------
1,131 1,167
------ ------
Net loss $ (120) $ (178)
====== ======
Net loss:
Partnership's share of
combined income (loss) $ (122) $ (134)
Co-venturers' share of
combined income (loss) 2 (44)
------ ------
$ (120) $ (178)
====== ======
Reconciliation of Partnership's Share of Operations
Partnership's share of combined
loss, as shown above $ (122) $ (134)
Amortization of excess basis (32) (3)
------ ------
Partnership's share of ventures' losses $ (154) $ (137)
======= ======
4. Related Party Transactions
Included in general and administrative expenses for three months ended
December 31, 1996 and 1995 is $22,000 and $23,000, respectively, representing
reimbursements to an affiliate of the Managing General Partner for providing
certain financial, accounting and investor communication services to the
Partnership.
Also included in general and administrative expenses for the three months
ended December 31, 1996 and 1995 is $700 and $200, respectively, of fees paid
to an affiliate, Mitchell Hutchins Institutional Investors, Inc., for
managing the Partnership's cash assets.
5. Contingencies
As discussed in more detail in the Annual Report for the year ended
September 30, 1996, the Partnership is involved in certain legal actions. At
the present time, the Managing General Partner is unable to determine what
impact, if any, the resolution of these matters may have on the
Partnership's financial statements, taken as a whole.
<PAGE>
PAINEWEBBER INCOME PROPERTIES EIGHT LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The Partnership originally owned fee simple interests in two Marriott
hotels, the Newport Beach Marriott Suites Hotel, a 254-suite hotel located in
Newport Beach, California, and the Marriott Suites - Perimeter Center, a
224-suite hotel located in Atlanta, Georgia. As previously reported, the
Partnership had been in default under the modified terms of the mortgage loan
secured by the Newport Beach Marriott Suites Hotel since March 1995. On February
19, 1996, the first mortgage loan secured by the Newport Beach Marriott Suites
Hotel was purchased by a new lender, and the Partnership subsequently received
formal notice of default from this new lender. Subsequently, the Partnership
received a notice of a foreclosure sale scheduled for August 7, 1996, at which
time title to the Newport Beach Marriott Suites Hotel was transferred to the
mortgage lender. Despite an improvement in the Hotel's operating results over
the last year, the estimated value of the Hotel property remained substantially
less than the obligation to the mortgage lender. Given the significant
deficiency which existed between the estimated fair value of the Hotel and the
outstanding debt obligation payable to the mortgage lender, management believed
that it would not be prudent to use any of the Partnership's capital resources
to cure the default or contest the foreclosure without substantial modifications
to the loan terms which would afford the Partnership the opportunity to recover
such additional investments plus a portion of its original investment in the
Hotel. The new mortgage lender was not willing to grant the required
concessions.
Due to the foreclosure losses of the Newport Beach and Atlanta Marriott
Suites Hotels, which represented a combined 63% of the Partnership's original
investment portfolio, the Partnership will be unable to return any significant
portion of the original capital contributed by the Limited Partners. The amount
of capital which will be returned will depend upon the proceeds recovered from
the final liquidation of the remaining investments. The amount of such proceeds
will ultimately depend upon the value of the underlying investment properties at
the time of their final disposition, which, for the most part, cannot presently
be determined. Nonetheless, at the present time the Partnership's interest in
The Meadows in the Park Apartments is the only investment with any significant
value to the Partnership based on the estimated current market values of the
underlying properties. The status of the remaining investments is discussed in
more detail below.
The loans secured by the Spinnaker Landing and Bay Club Apartments were
scheduled to mature in December 1996. Due to semi-annual real estate tax
payments made during the third fiscal quarter, as well as the payment of ongoing
operating expenses, the monthly cash flow available from the properties was
insufficient to pay the minimum debt service required in May 1996. A notice of
default was issued by the mortgage lender in the fourth quarter of fiscal 1996.
As of December 31, 1996, the combined debt obligation to the first mortgage
holder for both properties totalled $6,298,000. The estimated combined fair
value of the properties, while higher than their net carrying values, is
significantly less than this debt balance. In light of these circumstances,
effective in September 1996 the venture partners entered into a Property
Disposition Agreement with the lender. Under the terms of the agreement, the
lender agreed to delay foreclosure of the properties in order to provide the
venture with an opportunity to complete a sale. Any sale of the properties is
expected to be for an amount significantly below the outstanding debt balance.
However, under the terms of the agreement with the lender, the Partnership and
the co-venture partner can qualify to receive a nominal payment from the sales
proceeds if a sale is completed by the end of the second quarter of fiscal 1997
and certain other conditions are met. As part of the agreement, a receiver was
appointed for the property and will be responsible for the collection of rents
and the payment of operating expenses through the end of the forbearance period.
In December 1996, the Spinnaker Bay joint venture executed a purchase and
sale agreement with an unrelated third party to sell the properties for an
amount less than the total debt obligation. If the transaction were to close and
the conditions referred to above were met, the Partnership could end up
receiving a nominal amount from the proceeds of the sale transaction. However,
the sale remains contingent upon the buyer's due diligence and the receipt of a
financing commitment. Accordingly, there are no assurances that the transaction
will be consummated. The Partnership has a large negative carrying value for its
investment in Spinnaker Bay Associates as of December 31, 1996 because prior
year equity method losses and distributions have exceeded the Partnership's
investments in the venture. Consequently, the Partnership will recognize a gain
upon either the sale or the foreclosure of the operating investment properties.
During the first quarter of fiscal 1996, the Partnership funded $63,000
to the Maplewood joint venture to cover its share of the venture's annual debt
service principal payment. Similar advances had been made in each of the two
preceding years. During the first quarter of fiscal 1997, the Partnership's
co-venture partner made another request for the Partnership to fund 70% of the
$95,000 principal payment due on the venture's mortgage loan on December 2,
1996. Based on its current analysis, management has concluded that it would not
be in the Partnership's best interests to continue to fund its share of the
Maplewood venture's cash flow deficits. Accordingly, management informed the
co-venture partner that the Partnership would not be making the requested
capital contribution. In January 1997, the co-venture partner contributed 100%
of the funds required to make the aforementioned principal payment. The mortgage
debt secured by the Maplewood Park Apartments was provided with tax-exempt
revenue bonds issued by a local housing authority. The bonds are secured by a
standby letter of credit issued to the joint venture by a bank. The letter of
credit, which is scheduled to expire in October 1998, is secured by a first
mortgage on the venture's operating property. The revenue bonds bear interest at
a floating rate that is determined daily by a remarketing agent based on
comparable market rates for similar tax-exempt obligations. Such rates generally
fluctuated between 3.5% and 4.5% per annum during fiscal 1996. In addition, the
venture is obligated to pay a letter of credit fee, a remarketing fee and a
housing authority fee under the terms of the financing agreement. The operating
property produces excess net cash flow after the debt service and related fees
due under the terms of the bond financing arrangement because of the low
tax-exempt interest rate paid on the bonds. However, as part of the joint
venture agreement the Partnership's co-venture partner receives a guaranteed
cash distribution on a monthly basis to the extent that the interest cost of the
venture's debt is less than 8.25% per annum. Conversely, the co-venture partner
is obligated to contribute funds to the venture to the extent that the interest
cost exceeds 8.25%. Over the past three years, the interest rate differential
distributions to the co-venturer under the foregoing arrangement have averaged
$189,000 per year. As of December 31, 1996, the Partnership and the co-venturer
were not in agreement regarding the cumulative cash flow distributed to the
co-venturer pursuant to this interest rate differential calculation. The
Partnership believes that the co-venturer has received an additional $79,000
over the amount it is entitled to under the terms of the joint venture agreement
through December 31, 1996. The ultimate resolution of this dispute cannot be
determined at the present time.
Since all of the economic benefits of the Maplewood joint venture currently
accrue to the co-venture partner in the form of the interest rate differential
payments described above, management concluded that continued funding of the
venture's annual cash flow deficits would not be prudent. Subsequently,
management made a proposal to the co-venture partner to sell the Partnership's
interest in the joint venture, but no agreement has been reached to date. The
current estimated market value of the Maplewood property, while higher than the
property's carrying value, may be at or only slightly above the amount of the
outstanding principal balance owed on the first mortgage loan as of December
1996. As a result, it is unlikely that the letter of credit underlying the
mortgage loan will be renewed upon its expiration in October 1998. The net
carrying value of the Partnership's investment in the Maplewood joint venture
was $428,000 as of December 31, 1996. Management believes that this net carrying
value may be recoverable if a sale agreement can be reached with the co-venture
partner. If, however, a sale agreement or letter of credit extension cannot be
achieved and a foreclosure of the operating property results, the Partnership
would recognize a loss equal to its remaining investment balance. The ultimate
outcome of this situation cannot be determined at the present time.
In October 1993, the sole anchor tenant of the Norman Crossing Shopping
Center vacated the center to relocate its operations. The tenant, which occupied
26,752 square feet of the property's net leasable area, is a national credit
grocery store chain which is still obligated under the terms of its lease which
runs through the year 2007. To date, all rents due from this tenant have been
collected. Nonetheless, the anchor tenant vacancy resulted in several tenants
receiving rental abatements during fiscal 1995 and has had an adverse effect on
the ability to lease other vacant shop space. During the last quarter of fiscal
1995, the former anchor tenant reached an agreement to sub-lease its space to a
new tenant. This new sublease tenant is a health club operator which occupies
20,552 square feet of the former anchor's space and will sublease the remaining
6,200 square feet. As a result of the new health club tenant opening for
business in February 1996, the rental abatements granted to the other tenants
were terminated. However, the long-term impact of this subleasing arrangement on
the operations of the property remains uncertain at this time. The joint venture
may have to continue to make tenant improvements and grant rental concessions in
order to maintain a high occupancy level. Funding for such improvements, along
with any operating cash flow deficits incurred during this period of
re-stabilization for the shopping center, would be provided primarily by the
Partnership. The Partnership has funded the operating deficits of the Norman
Crossing joint venture to date. However, given the Partnership's limited capital
resources, the Partnership cannot fund such deficits indefinitely. Consequently,
the Partnership may look to sell the operating property or its interest in the
joint venture in the near future. At the present time, market values for retail
shopping centers in certain markets are being adversely impacted by the effects
of overbuilding and consolidations among retailers which have resulted in an
oversupply of space. Based on the current estimated fair value of the Norman
Crossing Shopping Center, a sale under the existing market conditions would not
result in any significant proceeds above the mortgage loan balance. In light of
the above circumstances and a resulting reassessment of the Partnership's likely
remaining holding period for the Norman Crossing investment, the Partnership
recorded an allowance for possible investment loss of $588,000 in fiscal 1996 to
write down the net carrying value of the equity interest to management's
estimate of its net realizable value as of September 30, 1996.
As stated above, the Meadows in the Park Apartments is the only one of the
Partnership's investments which would appear to have any significant value above
the related mortgage loan obligations based on current estimated market values.
Assuming that the overall market for multi-family apartment properties remains
strong in the near term, the Meadows joint venture may have a favorable
opportunity to sell the operating investment property during fiscal 1997. In
light of the expected fiscal 1997 disposition of the Partnership's interests in
the Spinnaker Landing and Bay Club Apartments, the potential disposition of the
Maplewood joint venture investment, and the possible near-term sales of the
Norman Crossing Shopping Center and the Meadows on the Lake Apartments, the
Partnership could be positioned for a possible liquidation within the next two
years. However, there are no assurances that the Partnership will be able to
dispose of its remaining investments within this time frame.
At December 31, 1996, the Partnership had available cash and cash
equivalents of $620,000. Such cash and cash equivalents will be utilized as
needed for Partnership requirements such as the payment of operating expenses
and the funding of joint venture capital improvements or operating deficits, to
the extent economically justified. The source of future liquidity and
distributions to the partners is expected to be through cash generated from
operations of the Partnership's income-producing investment properties and
proceeds received from the sale or refinancing of such properties. Such sources
of liquidity are expected to be sufficient to meet the Partnership's needs only
on a short-term basis. If the Partnership is able to dispose of its remaining
investments and complete a liquidation within the next two years, as discussed
further above, the Partnership should have sufficient liquidity to meet its
obligations.
Results of Operations
Three Months Ended December 31, 1996
- ------------------------------------
The Partnership recognized a net loss of $214,000 for the three months
ended December 31, 1996, as compared to a net loss of $1,181,000 for the same
period in the prior year. The primary reason for this decrease in net loss is a
decrease in the Partnership's operating loss of $984,000. This decrease in
operating loss is attributable to the foreclosure of the Newport Beach Marriott
Suites Hotel on August 7, 1996. The Hotel had been generating sizable operating
losses prior to its foreclosure.
The decrease in operating loss was partially offset by a slight increase in
the Partnership's share of ventures' losses of $17,000. This increase is due
largely to an increase in the rate of the amortization of certain closing costs
incurred in connection with the Partnership's original investments in the
ventures, resulting from accelerating the remaining holding period over which
the costs are expensed. The combined net operating results of the four joint
ventures improved by $58,000 for the three months ended December 31, 1996, when
compared to the same period in the prior year, mainly due to an increase in
rental revenues of $25,000 and a decrease in total expenses of $36,000. Rental
revenues increased at all of the multi-family properties, most signficantly at
The Meadows in the Park Apartments where income improved by 14% over the first
quarter of fiscal 1996. The decrease in combined expenses was mainlly due to a
reduction in repairs and maintenance costs at the Maplewood venture and a
decline in marketing costs at Spinnaker Bay Associates.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
The status of the litigation involving the Partnership's General Partners
and their affiliates remains unchanged from what was reported in the Annual
Report on Form 10-K for the year ended September 30, 1996.
Item 2. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.
<PAGE>
PAINEWEBBER INCOME PROPERTIES EIGHT LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PAINEWEBBER INCOME PROPERTIES
EIGHT LIMITED PARTNERSHIP
By: Eighth Income Properties, Inc.
Managing General Partner
By: /s/ Walter V. Arnold
---------------------
Walter V. Arnold
Senior Vice President and Chief
Financial Officer
Dated: February 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's audited financial statements for the three months ended December
31, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 620
<SECURITIES> 0
<RECEIVABLES> 2
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 622
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 622
<CURRENT-LIABILITIES> 44
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (624)
<TOTAL-LIABILITY-AND-EQUITY> 622
<SALES> 0
<TOTAL-REVENUES> 8
<CGS> 0
<TOTAL-COSTS> 68
<OTHER-EXPENSES> 154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (214)
<INCOME-TAX> 0
<INCOME-CONTINUING> (214)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (214)
<EPS-PRIMARY> (5.96)
<EPS-DILUTED> (5.96)
</TABLE>
