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 JUNE 30, 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 : 0-17881
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Virginia 04-2985890
(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 EQUITY PARTNERS THREE LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and March 31, 1996 (Unaudited)
(In thousands)
ASSETS
June 30 March 31
------- --------
Operating investment properties, at cost:
Land $ 4,208 $ 4,208
Building and improvements 14,167 14,153
------- --------
18,375 18,361
Less accumulated depreciation (3,529) (3,395)
-------- --------
14,846 14,966
Investments in unconsolidated joint
ventures, at equity 14,816 15,154
Cash and cash equivalents 3,775 3,439
Escrowed cash 49 -
Accrued interest and other receivables 55 119
Accounts receivable - affiliates 7 7
Prepaid expenses 14 7
Deferred expenses, net 185 193
------- -------
$33,747 $33,885
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Notes payable and deferred interest $11,442 $11,255
Accounts payable and accrued expenses 63 75
Tenant security deposits 14 14
Advances from consolidated ventures 328 198
Accrued real estate taxes 18 13
Partners' capital 21,882 22,330
-------- --------
$33,747 $33,885
======= =======
See accompanying notes.
<PAGE>
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the three months ended June 30, 1996 and 1995 (Unaudited)
(In thousands)
General Limited
Partners Partners
------- --------
Balance at March 31, 1995 $(208) $23,629
Cash distributions (3) (252)
Net loss (1) (81)
----- -------
Balance at June 30, 1995 $(212) $23,296
===== =======
Balance at March 31, 1996 $(218) $22,548
Cash distributions (3) (252)
Net loss (2) (191)
----- -------
Balance at June 30, 1996 $(223) $22,105
====== =======
See accompanying notes.
<PAGE>
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended June 30, 1996 and 1995 (Unaudited)
(In thousands, except per Unit data)
1996 1995
---- ----
Revenues:
Rental income and expense
reimbursements $ 563 $ 552
Interest income 47 63
----- -----
610 615
Expenses:
Interest expense 295 463
Property operating expenses 131 114
Real estate taxes 37 24
General and administrative 84 77
Depreciation and amortization 134 154
----- -----
681 832
----- -----
Operating loss (71) (217)
Partnership's share of unconsolidated
ventures' income (losses) (122) 135
----- -----
Net loss $(193) $ (82)
===== =====
Net loss per
Limited Partnership Unit $(3.78) $(1.61)
====== ======
Cash distributions per
Limited Partnership Unit $ 5.00 $ 5.00
====== ======
The above per Limited Partnership Unit information is based upon the 50,468
Limited Partnership Units outstanding during each period.
See accompanying notes.
<PAGE>
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended June 30, 1996 and 1995 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1996 1995
---- ----
Cash flows from operating activities:
Net loss $ (193) $ (82)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Partnership's share of unconsolidated
ventures' income (losses) 122 (135)
Depreciation and amortization 134 154
Amortization of deferred loan costs 10 8
Interest expense on zero coupon loans 197 437
Changes in assets and liabilities:
Accrued interest and other receivables 64 (38)
Prepaid expenses (7) (6)
Deferred expenses (2) -
Accounts payable and accrued expenses (12) 36
Accrued real estate expenses 5 -
Tenant security deposits - 1
Advances from consolidated ventures 130 155
------- -------
Total adjustments 641 612
------- -------
Net cash provided by operating activities 448 530
------- -------
Cash flows from investing activities:
Additional investments in unconsolidated
joint ventures - (75)
Net additions to escrowed cash (49) -
Additions to operating investment properties (14) (4)
Distributions from unconsolidated joint ventures 216 437
------- ------
Net cash provided by investing activities 153 358
------- -------
Cash flows from financing activities:
Cash distributions to partners (255) (255)
Payment of deferred financing costs - (229)
Payments of principal on notes payable (10) -
------- -------
Net cash used in financing activities (265) (484)
------- -------
Net increase in cash and cash equivalents 336 404
Cash and cash equivalents, beginning of period 3,439 3,824
-------- --------
Cash and cash equivalents, end of period $ 3,775 $ 4,228
======== =======
Cash paid during the period for interest $ 88 $ -
========= ========
See accompanying notes.
<PAGE>
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
1. Organization
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 March 31, 1996.
In the opinion of management, the accompanying financial statements, which
have not been audited, reflect all adjustments necessary to present fairly the
results for the interim period. All of the accounting adjustments reflected in
the accompanying interim financial statements are of a normal recurring
nature.
2. Related Party Transactions
Included in general and administrative expenses for the three-month periods
ended June 30, 1996 and 1995 is $25,000 and $26,000, 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 June 30, 1996 and 1995 is $7,000 and $1,000, respectively, representing
fees earned by Mitchell Hutchins Institutional Investors, Inc. for managing
the Partnership's cash assets.
3. Investments in Unconsolidated Joint Venture Partnerships
As of June 30, 1996, the Partnership has investments in two unconsolidated
joint venture partnerships which own operating properties as more fully
described in the Partnership's Annual Report. The unconsolidated joint
ventures are accounted for by using the equity method because the Partnership
does not have a voting control interest in these ventures. Under the equity
method, the assets, liabilities, revenues and expenses of the joint ventures
do not appear in the Partnership's financial statements. Instead, the
investments are carried at cost adjusted for the Partnership's share of each
venture's earnings, losses and distributions. The Partnership reports its
share of unconsolidated joint venture earnings or losses three months in
arrears.
Summarized operations of the unconsolidated joint ventures, for the periods
indicated, are as follows:
Condensed Combined Summary of Operations
For the three months ended March 31, 1996 and 1995
(in thousands)
1996 1995
---- ----
Revenues:
Rental revenues and expense recoveries $ 1,032 $ 1,125
Interest and other income 9 2
------- -------
1,041 1,127
Expenses:
Property operating expenses 417 369
Real estate taxes 43 49
Interest expense 249 71
Depreciation and amortization 433 462
-------- --------
1,142 951
Net income (loss) $ (101) $ 176
======== ========
Net income (loss)
Partnership's share of
combined income (losses) $ (117) $ 140
Co-venturers' share of
combined income (losses) 16 36
--------- ---------
$ (101) $ 176
========== =========
<PAGE>
Reconciliation of Partnership's Share of Operations
For the three months ended June 30, 1996 and 1995 (in thousands)
1996 1995
---- ----
Partnership's share of operations,
as shown above $ (117) $ 140
Amortization of excess basis (5) (5)
-------- ------
Partnership's share of
unconsolidated ventures'
income (losses) $ (122) $ 135
========= ======
4. Operating Investment Properties
At June 30, 1996, the Partnership has investments in two consolidated joint
venture partnerships which own operating investment properties. The
consolidated ventures have December 31 year-ends for both tax and financial
reporting purposes. Accordingly, the Partnership's policy is to report the
financial position, results of operations and cash flows of these ventures
on a three-month lag. All material transactions between the Partnership and
these joint ventures have been eliminated upon consolidation, except for
lag-period cash transfers. Such lag period cash transfers are accounted for
as advances from consolidated ventures on the accompanying balance sheets.
As discussed in the Partnership's Annual Report, the Partnership owns a
controlling interest in the Colony Plaza General Partnership, which was
formed to acquire and operate the Colony Plaza Shopping Center located in
Augusta, Georgia. The shopping center, which consists of approximately
217,000 square feet of leasable retail space, was acquired by the joint
venture on January 18, 1990.
On January 27, 1995, the Partnership purchased 99% of its co-venture
partner's interest in Portland Pacific Associates Two for $233,000. The
remaining 1% interest of the co-venturer was assigned to Third Equity
Partners, Inc., the Managing General Partner of the Partnership, in return
for a release from any further obligations or duties called for under the
terms of the joint venture agreement. As a result, the Partnership assumed
control over the affairs of the joint venture. Portland Pacific Associates
Two owns the Willow Grove Apartments, a 119-unit complex located in
Beaverton, Oregon.
The following is a combined summary of property operating expenses for the
consolidated joint ventures for the three months ended March 31, 1996 and
1995 (in thousands):
1996 1995
---- ----
Common area maintenance $ 35 $ 26
Utilities 22 18
Management fees 21 21
Administrative and other 53 49
------- -------
$ 131 $ 114
======= =====
5. Notes payable
Notes payable and accrued interest at June 30, 1996 and March 31, 1996
consist of the following (in thousands):
June 30 March 31
------ --------
10.5% nonrecourse loan payable by
the Partnership to a finance company,
which is secured by the Colony Plaza
operating investment property. All
interest and principal is due at
maturity, on December 29, 1996. Interest
is compounded semi-annually. Accrued
interest at June 30, 1996 and March 31,
1996 amounted to $3,827 and $3,630,
respectively. The fair value of the
mortgage note approximated its carrying
value at June 30, 1996 and March 31,
1996. See discussion below. $ 7,877 $7,680
<PAGE>
9.59% nonrecourse loan payable by
the consolidated Portland Pacific
Associates Two to a finance company,
which is secured by the Willow Grove
operating investment property. The note
requires monthly principal and interest
payments of $32 from April 1995 through
maturity in March 2002. The fair value
of the mortgage note approximated its
carrying value at March 31, 1996 and
December 31, 1995. 3,565 3,575
-------- -------
$ 11,442 $11,255
======== =======
On November 16, 1995, the zero coupon loan issued in the name of the
Partnership and secured by a mortgage on One Paragon Place was refinanced with
proceeds of a seven-year $8,750,000 loan from a new lender issued in the name of
the unconsolidated Richmond Paragon Partnership. The zero coupon loan had an
outstanding balance of approximately $10.4 million at the time of the
refinancing. Additional funds required to complete the refinancing transaction
were contributed from the Partnership's cash reserves. The new note is secured
by a first mortgage on the One Paragon Place Office Building and is recorded on
the books of the unconsolidated joint venture. The new loan bears interest at 8%
per annum and requires monthly principal and interest payments of $68,000
through maturity, on December 10, 2002. The Partnership has indemnified the
Richmond Paragon Partnership and the related co-venture partner against all
liabilities, claims and expenses associated with this borrowing.
The borrowing secured by Colony Plaza is scheduled to mature on December 29,
1996, at which time total principal and accrued interest of $8,290,190 will be
due and payable. Management is currently negotiating with the existing lender
regarding a potential extension and modification of the outstanding first
mortgage loan. In addition, management is also pursuing possible alternative
financing sources. Any refinancing or modification transaction is likely to
require a sizable principal paydown in order to reduce the loan-to-value ratio
of the mortgage note payable. If the refinancing or extension of this loan is
not accomplished by the stated maturity date, the lender could choose to
initiate foreclosure proceedings. Under such circumstances, the Partnership may
be unable to hold this investment and recover the carrying value. The financial
statements of the Partnership have been prepared on a going concern basis which
assumes the realization of assets and the ability to refinance the existing
debt. These financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
6. Contingencies
As discussed in detail in the Partnership's Annual Report for the year ended
March 31, 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 EQUITY PARTNERS THREE LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As discussed further in the Annual Report, management continues to focus its
efforts on refinancing the Partnership's remaining zero coupon loan secured by
the Colony Plaza shopping center. This loan, which had an outstanding balance of
$7,877,000 at June 30, 1996, is scheduled to mature in December 1996, at which
time approximately $8,290,000 would be due. Management is currently negotiating
with the existing lender regarding a potential extension and modification of the
outstanding first mortgage loan. In addition, management is also pursuing
possible alternative financing sources. As discussed further in the Annual
Report, as expected Wal-Mart closed its 82,000 square foot store at Colony Plaza
in July 1996 to open a "Supercenter" store at a new location in the Augusta
market. Although Wal-Mart will remain obligated to pay rent and its share of
operating expenses at Colony Plaza through the term of its lease, which expires
in March 2009, the loss of the center's principal anchor tenant will likely
adversely affect the Partnership's ability to retain existing tenants and to
lease vacant space at the center unless a strong replacement anchor tenant is
obtained. To date, management has been informed that two shop tenants totalling
8,400 square feet, which have lease expiration dates in July 1997 and December
1997, will also vacate Colony Plaza to open stores at the new Wal-Mart anchored
center. However, the tenants have not informed management when they plan to
vacate Colony Plaza. As with Wal-Mart, these tenants will remain liable for
payment of both rent and their respective shares of operating expenses through
the remainder of their lease terms. During the current quarter, the Partnership
hired new property management and leasing agents to oversee this period of
restabilization for the Colony Plaza property. The new leasing agents have
already entered into preliminary discussions with a number of potential
replacement anchor tenants for the Wal-Mart space. Additionally, the leasing
team is in renewal discussions with four tenants comprising 11,200 square feet.
The anchor tenant vacancy at Colony Plaza will make obtaining new financing very
difficult. Accordingly, management is currently focusing its efforts on
extension and modification negotiations with the existing first mortgage lender.
As a result of the Wal-Mart vacancy, any refinancing or modification transaction
is likely to require a sizable principal paydown to reduce the loan-to-value
ratio of the mortgage note payable.
As previously reported, on November 16, 1995 the Partnership refinanced
the zero coupon loan secured by the One Paragon Place Office Building which had
a principal balance of $10.4 million with a new loan issued in the name of the
joint venture which owns the property. The new loan had an initial principal
balance of $8,750,000, bears interest at a rate of 8% per annum and requires
monthly principal and interest payments of approximately $68,000. The loan,
which is recorded on the books of the unconsolidated joint venture, is scheduled
to mature on December 10, 2002. The refinancing transaction required a paydown
of approximately $1.6 million on the outstanding debt balance in order to
satisfy the lender's loan-to-value ratio requirements. The Partnership
contributed the funds required to complete this refinancing transaction. One
Paragon Place was 99% occupied at June 30, 1996. The suburban Richmond, Virginia
office market continues to strengthen with high occupancy levels and improving
rental rates as a result of steady job and population growth. Recently, the
level of new construction activity has increased somewhat with a number of
build-to-suit and speculative buildings in the process of being completed.
Nonetheless, the market is projected to remain strong in the near term, and One
Paragon Place is expected to compete favorably against both existing and new
properties in its submarket. During the next 18 months, leases comprising 27% of
One Paragon Place's leasable area will be up for renewal. With current market
rental rates higher than rates on the leases up for renewal, management expects
revenues at the property to increase as new leases or renewals are signed.
The DeVargas Mall had an average leasing level of 89% for the first quarter
of fiscal 1997. As previously reported in the Annual Report, during the fourth
quarter of fiscal 1996 management signed a lease with a national department
store retailer which will occupy 27,910 square feet at DeVargas, or
approximately 11% of the property's leasable area. To accommodate this new
anchor tenant, leases with two tenants totalling 7,007 square feet were
terminated and two additional tenants totalling 12,388 square feet were
relocated and downsized to spaces totalling 5,741 square feet. In addition,
leasing discussions are ongoing with a potential 16,000 square foot tenant to
fill a vacant mini-anchor space at the Mall. Funding of the required tenant
improvements for the 27,910 square foot lease referred to above and for any
significant new leases will be accomplished by means of additional advances
under the lines of credit provided by the Partnership's co-venture partner.
As discussed further in the Annual Report, the Partnership has no current
plans to market any of its operating investment properties for sale. While the
estimated market value of the One Paragon Place Office Building has stabilized
over the past two years, it remains significantly below the acquisition price
paid by the Partnership due to the residual effects of the overbuilding which
occurred in the late 1980's and the trend toward corporate downsizing and
restructurings which occurred in the wake of the last national recession. While
the local market conditions in Richmond are strengthening, as discussed further
above, it remains to be seen whether office building values will fully recover
to their levels of the late 1980's within the Partnership's remaining holding
period. In addition, at the present time real estate 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. As a result of the current leasing status of the
Partnership's two retail properties, as discussed further above, management
believes that the values of both properties might be significantly enhanced in
the near term if the Partnership is successful in stabilizing the respective
tenant rosters. With respect to the Partnership's apartment property, while the
market for sales of multi-family properties in most markets has been strong over
the past two years, the Willow Grove property is the Partnership's smallest
investment, at 10% of the original investment portfolio, and it generates a
stable cash flow which contributes to the payment of the Partnership's operating
costs and operating cash flow distributions. As a result, the Partnership will
most likely delay any active sales efforts for Willow Grove until conditions
become more favorable for potential dispositions of the three commercial
properties. Management's hold versus sell decisions will continue to be based on
an assessment of the best expected overall returns to the Limited Partners.
At June 30, 1996, the Partnership and its consolidated joint venture had
available cash and cash equivalents of approximately $3,775,000. These funds
will be utilized for the working capital requirements of the Partnership,
distributions to partners, refinancing expenses and potential principal paydowns
related to the Partnership's remaining zero coupon loan and to fund capital
enhancements and tenant improvements for the operating investment properties, if
necessary, in accordance with the respective joint venture agreements. The
source of future liquidity and distributions to the partners is expected to be
from cash generated by the Partnership's income-producing properties and from
the 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 on both a short-term and long-term basis.
Results of Operations
Three months ended June 30, 1996
The Partnership reported a net loss of $193,000 for the quarter ended June
30, 1996, as compared to a net loss of $82,000 for the same period in the prior
year. This increase of $111,000 in the Partnership's net loss resulted from an
unfavorable change in the Partnership's share of unconsolidated ventures'
operations of $257,000, which was partially offset by a decrease in the
Partnership's operating loss of $146,000. The unfavorable change in the
Partnerships share of unconsolidated ventures' operations, as well as the
decrease in the Partnership's operating loss, are primarily attributable to the
change in the entity reporting the interest expense associated with the
borrowing secured by the One Paragon Place Office Building. As discussed further
above and in the Annual Report, the zero coupon loan secured by the One Paragon
Place Office Building, originally issued in the name of the Partnership, was
refinanced with the proceeds of a new loan obtained by the One Paragon Place
joint venture. This refinancing transaction increased the interest expense at
the unconsolidated joint venture while at the same time decreasing the
Partnership's interest expense. Interest expense on the One Paragon Place
mortgage debt declined by $85,000 for the current three-month period as a result
of the lower principal balance and interest rate on the new loan. The
unfavorable change in the Partnership's share of unconsolidated ventures'
operations prior to the effect of the interest expense associated with the new
One Paragon Place loan was $82,000. The major portion of this unfavorable change
is attributable to a decrease in rental revenues at the DeVargas Mall and an
increase in property operating expenses at One Paragon Place for the three
months ended March 31, 1996. Property operating expenses at One Paragon Place
increased due to additional utility and maintenance expenses caused by a severe
winter. Rental revenues decreased at the DeVargas Mall due to a decrease in
average occupancy.
The Partnership's operating loss, prior to the effect of the change in the
entity reporting the interest on the loan secured by One Paragon Place,
increased by $114,000 for the three months ended June 30, 1996 primarily due to
a decrease in interest income, interest expense attributable to the Willow Grove
mortgage loan obtained in March 1995 and increases in real estate taxes and
general and administrative expenses. Interest income on Partnership cash
reserves declined due to a lower average cash balance in the current three-month
period as a result of the cash reserves used to complete the One Paragon Place
refinancing transaction in the third quarter of fiscal 1996.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings
As discussed in the prior quarterly and annual reports, in November 1994 a
series of purported class actions (the "New York Limited Partnership Actions")
were filed in the United States District Court for the Southern District of New
York concerning PaineWebber Incorporated's sale and sponsorship of 70 limited
partnership investments, including those offered by the Partnership. The
lawsuits were brought against PaineWebber Incorporated and Paine Webber Group
Inc. (together "PaineWebber"), among others, by allegedly dissatisfied
partnership investors. In March 1995, after the actions were consolidated under
the title In re PaineWebber Limited Partnership Litigation, the plaintiffs
amended their complaint to assert claims against a variety of other defendants,
including Third Equity Partners, Inc. and Properties Associates 1988, L.P.
("PA1988"), which are General Partners of the Partnership and affiliates of
PaineWebber. On May 30, 1995, the court certified class action treatment of the
claims asserted in the litigation.
In January 1996, PaineWebber signed a memorandum of understanding with the
plaintiffs in the New York Limited Partnership Actions outlining the terms under
which the parties have agreed to settle the case. Pursuant to that memorandum of
understanding, PaineWebber irrevocably deposited $125 million into an escrow
fund under the supervision of the United States District Court for the Southern
District of New York to be used to resolve the litigation in accordance with a
definitive settlement agreement and plan of allocation. On July 17, 1996,
PaineWebber and the class plaintiffs submitted a definitive settlement agreement
which has been preliminarily approved by the court and provides for the complete
resolution of the class action litigation, including releases in favor of the
Partnership and the General Partners, and the allocation of the $125 million
settlement fund among investors in the various partnerships at issue in the
case. As part of the settlement, PaineWebber also agreed to provide class
members with certain financial guarantees relating to some of the partnerships.
The details of the settlement are described in a notice mailed directly to class
members at the direction of the court. A final hearing on the fairness of the
proposed settlement has been scheduled for October 25, 1996.
The status of the other litigation involving the Partnership and its
General Partners remains unchanged from the description provided in the
Partnership's Annual Report on Form 10-K for the year ended March 31, 1996.
Under certain limited circumstances, pursuant to the Partnership Agreement
and other contractual obligations, PaineWebber affiliates could be entitled to
indemnification for expenses and liabilities in connection with the litigation
discussed above. At the present time, the Managing General Partner cannot
estimate the impact, if any, of the potential indemnification claims on the
Partnership's financial statements, taken as a whole. Accordingly, no provision
for any liability which could result from the eventual outcome of these matters
has been made in the accompanying financial statements of the Partnership.
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 EQUITY PARTNERS THREE 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 EQUITY PARTNERS THREE
LIMITED PARTNERSHIP
By: Third Equity Partners, Inc.
Managing General Partner
By: /s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Dated: August 13, 1996
<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 June 30,
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> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 3775
<SECURITIES> 0
<RECEIVABLES> 63
<ALLOWANCES> 1
<INVENTORY> 0
<CURRENT-ASSETS> 3900
<PP&E> 33191
<DEPRECIATION> 3529
<TOTAL-ASSETS> 33747
<CURRENT-LIABILITIES> 423
<BONDS> 11442
0
0
<COMMON> 0
<OTHER-SE> 21882
<TOTAL-LIABILITY-AND-EQUITY> 33747
<SALES> 0
<TOTAL-REVENUES> 610
<CGS> 0
<TOTAL-COSTS> 386
<OTHER-EXPENSES> 122
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 295
<INCOME-PRETAX> (193)
<INCOME-TAX> 0
<INCOME-CONTINUING> (193)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (193)
<EPS-PRIMARY> (3.78)
<EPS-DILUTED> (3.78)
</TABLE>
