FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-19166
PAINEWEBBER PREFERRED YIELD FUND, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1130506
----------------------- ---------------------------------
(State of organization) (IRS Employer Identification No.)
7175 West Jefferson Avenue, Suite 4000
Lakewood, Colorado 80235
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 980-1000
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 .
----- -----
Exhibit Index Appears on Page 13
Page 1 of 14 Pages
<PAGE>
PaineWebber Preferred Yield Fund, L.P.
Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1998
Table of Contents
Page
----
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets - September 30, 1998 and
December 31, 1997 3
Statements of Income - Three and Nine Months Ended
September 30, 1998 and 1997 4
Statements of Cash Flows - Nine Months Ended
September 30, 1998 and 1997 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Exhibit Index 13
Signature 14
2
<PAGE>
PAINEWEBBER PREFERRED YIELD FUND, L.P.
BALANCE SHEETS
(unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 3,070,149 $19,606,352
Rent and other receivables, net 129,994 175,075
Equipment held for sale or lease, net of accumulated depreciation o
$2,240,531 and $4,103,002 at 1998 and 1997 and write-downs of
$454,117 and $112,754 at 1998 and 1997 40,643 729,481
Net investment in direct financing leases 332 170,230
Equipment on operating leases, net of accumulated depreciation of
$2,327,354 at 1998 and $11,966,110 at 1997 and write-downs of
$180,718 at 1998 and $300,945 at 1997 1,934,693 8,253,386
Other assets, net 9,688 9,688
----------- -----------
Total assets $ 5,185,499 $28,944,212
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Prepaid rent $ - $ 6,072,331
Accounts payable and other liabilities 1,152,695 1,307,583
Payables to affiliates 194,495 263,591
Deferred rental income and deposits 232,015 246,840
Distributions payable to partners - 16,486,153
Discounted lease rentals 1,113,597 1,523,570
----------- -----------
Total liabilities 2,692,802 25,900,068
----------- -----------
Partners' Equity:
General Partners 98,560 110,227
Limited Partners:
Class A 2,052,436 2,498,859
Class B 341,701 435,058
----------- -----------
Total partners' equity 2,492,697 3,044,144
----------- -----------
Total liabilities and partners' equity $ 5,185,499 $28,944,212
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PAINEWEBBER PREFERRED YIELD FUND, L.P.
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ -----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE:
Rentals from operating leases $ 817,780 $ 2,378,308 $ 2,382,127 $ 8,384,289
Direct financing lease income 2,022 74,136 13,333 346,477
Gain on sales of equipment 588,608 18,717 951,768 219,759
Other, principally interest 42,470 45,635 172,262 131,643
----------- ----------- ----------- -----------
Total revenue 1,450,880 2,516,796 3,519,490 9,082,168
----------- ----------- ----------- -----------
EXPENSES:
Depreciation 437,438 1,659,833 1,406,920 5,588,167
Management fees to general partners 24,440 52,225 74,655 310,824
Interest 145,950 201,944 471,873 619,822
General and administrative 44,891 59,819 182,351 160,819
Provision for losses on equipment - 1,000,000 550,000 1,000,000
----------- ----------- ----------- -----------
Total expenses 652,719 2,973,821 2,685,799 7,679,632
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 798,161 $ (457,025) $ 833,691 $ 1,402,536
=========== =========== =========== ===========
NET INCOME (LOSS) ALLOCATED:
To the General Partners $ 39,908 $ (22,850) $ 38,489 $ 70,127
To the Class A Limited Partners 663,471 (374,813) 690,601 1,221,776
To the Class B Limited Partner 94,782 (59,362) 104,601 110,633
----------- ----------- ----------- -----------
$ 798,161 $ (457,025) $ 833,691 $ 1,402,536
=========== =========== =========== ===========
Net income (loss) per weighted average
Class A limited partner unit outstanding $ 4.67 $ (2.64) $ 4.86 $ 8.59
=========== =========== =========== ===========
Weighted average Class A limited partner
units outstanding 142,128 142,128 142,128 142,128
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PAINEWEBBER PREFERRED YIELD FUND, L.P.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------------
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ (4,416,756) $ 6,467,114
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Recovery of investment in direct financing leases (12,294) 914,766
Proceeds from sales of equipment 6,174,111 3,481,611
Purchase of equipment on operating leases - (3,929)
------------- ------------------
Net cash provided by investing activities 6,161,817 4,392,448
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of discounted lease rentals (409,973) (943,289)
Cash distributions paid to partners (17,871,291) (9,220,907)
------------- --------------
Net cash used in financing activities (18,281,264) (10,164,196)
------------- -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (16,536,203) 695,366
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,606,352 2,879,451
------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,070,149 $ 3,574,817
============= =============
Supplemental schedule of cash flow information:
Interest paid $ 471,873 $ 624,389
============= ==============
NON CASH TRANSACTIONS:
Equipment subject to operating leases
converted to direct financing leases at renewal - $ 87,769
============= ==============
Distributions declared but not paid to partners - $ 1,196,867
============= ==============
Prepaid rent applied in sales of equipment $ 5,146,636 $ -
============= ==============
Deferred rental income and deposits reclassified to allowance
for write-downs - $ 283,666
============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PAINEWEBBER PREFERRED YIELD FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for annual
financial statements. In the opinion of the General Partners, all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. The balance sheet at
December 31, 1997, was derived from the audited financial statements
included in the Partnership's Annual Report on Form 10-K. Operating results
for the three and nine month periods ended September 30, 1998, are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1998. For further information, refer to the financial
statements of PaineWebber Preferred Yield Fund, L.P. (the "Partnership"),
and the related notes, included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 1997, previously filed with the
Securities and Exchange Commission.
The Partnership is in its liquidation period as defined in the Partnership
Agreement. During the liquidation period, the Partnership no longer
acquires new leases and the existing lease portfolio is in the process of
running-off. As of September 30, 1998, the Partnership had sold a
substantial portion of its assets. The amount and timing of any liquidating
distributions will depend upon a variety of factors including, but not
limited to, the actual proceeds from the sale of any of the Partnership's
assets, the ultimate settlement amounts of the Partnership's liabilities
and obligations, actual costs incurred during the liquidation period,
including management fees and administrative costs, and the timing of the
liquidation and dissolution.
In March 1998, the Partnership adopted Financial Accounting Standards No.
130, Reporting Comprehensive Income ("Statement 130"), which requires
comprehensive income to be displayed prominently within the financial
statements. Comprehensive income is defined as all recognized changes in
equity during a period from transactions and other events and circumstances
except those resulting from investments by owners and distributions to
owners. Net income and items that previously have been recorded directly in
equity are included in comprehensive income. Statement 130 affects only the
reporting and disclosure of comprehensive income but does not affect
recognition or measurement of income. The adoption did not have an impact
on the Partnership's financial reporting.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("Statement 131"). Statement 131
provides guidance for reporting information about operating segments in
annual financial statements and requires reporting of selected information
about operating segments in interim financial reports of public companies.
An operating segment is defined as a component of a business that engages
in business activities from which it may earn revenue and incur expenses, a
component whose operating results are regularly reviewed by the company's
chief operating decision maker, and a component for which discrete
financial information is available. Statement 131 establishes quantitative
thresholds for determining operating segments of a company. Statement 131
is effective for fiscal years beginning after December 15, 1997, with
earlier application permitted. The Partnership adopted Statement 131 in the
first quarter of 1998. The adoption did not have an impact on its financial
reporting.
6
<PAGE>
PAINEWEBBER PREFERRED YIELD FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
2. TRANSACTIONS WITH AFFILIATES
Management Fees to General Partners
-----------------------------------
The General Partners receive a quarterly fee in an amount equal to 2.0% of
gross rentals for Full Payout Leases, as defined in the Partnership
Agreement, and 5.0% of gross rentals for other leases (payable 55% to the
Managing General Partner and 45% to the Administrative General Partner) as
compensation for services rendered in connection with the management of the
equipment. At September 30, 1998, management fees of $181,995 are included
in payables to affiliates.
Accountable General and Administrative Expenses
-----------------------------------------------
The General Partners are entitled to reimbursement of certain expenses paid
on behalf of the Partnership which are incurred in connection with the
Partnership's operations. Such reimbursable expenses recorded by the
Partnership amounted to $6,250 and $12,500 for the three and nine months
ended September 30, 1998, respectively. At September 30, 1998, reimbursable
expenses of $12,500 are included in payables to affiliates.
3. SALE OF PREPAID LEASES
Effective September 30, 1998, the Partnership sold the title and its
interest in certain equipment to an unaffiliated third party (Buyer). The
lease rentals had previously been discounted for cash and were recorded as
prepaid rent on the balance sheet. The Buyer assumed the prepaid rent
obligation of approximately $4,569,000 at September 30, 1998 and paid a
nominal amount of cash to the Partnership resulting in a net gain of
approximately $528,000 which is included in Gain on sale of equipment.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
I. RESULTS OF OPERATIONS
The following discussions should be read in conjunction with the Financial
Statements of the Partnership and the Notes thereto. This report contains,
in addition to historical information, forward- looking statements that
include risks and other uncertainties. The Partnership's actual results may
differ materially from those anticipated in these forward-looking
statements. Factors that might cause such a difference include those
discussed below, as well as general economic and business conditions,
competition and other factors discussed elsewhere in this report. The
Partnership undertakes no obligation to release publicly any revisions to
these forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of anticipated or
unanticipated events.
The Partnership is in its liquidation period as defined in the Partnership
agreement and as expected, the Partnership is not purchasing additional
equipment, initial leases are expiring and the amount of equipment being
sold has increased. As a result, both the size of the Partnership's leasing
portfolio and the amount of leasing revenue are declining. The amount and
timing of any liquidating distributions will depend upon a variety of
factors including, but not limited to, the actual proceeds from the sale of
any of the Partnership's assets, the ultimate settlement amounts of the
Partnership's liabilities and obligations, actual costs incurred during the
liquidation, including management fees and administrative costs, and the
timing of the liquidation and dissolution.
Substantially all of the Partnership's revenue during the quarter ended
September 30, 1998 was generated from the leasing of the Partnership's
equipment to unaffiliated third parties under triple net leases and from
proceeds from the sales of equipment. Interest income from temporary
investments comprised the balance of the Partnership's cash flow.
Under the terms of the triple net leases, substantially all of the expenses
related to the ownership and operation of the equipment are paid for by the
lessees. For equipment subject to operating leases, the Partnership records
depreciation expense pertaining to the equipment and related management
fees. The Partnership also records general and administrative expenses
consisting primarily of warehouse costs, investor reporting expenses and
transfer agent and audit fees as well as interest expense incurred in
connection with discounted transactions.
1998 Compared to 1997
---------------------
The Partnership's net income increased by $1,255,186 for the three months
ended September 30, 1998 ("1998 Quarter") as compared to the three months
ended September 30, 1997 ("1997 Quarter") due to the sale of a significant
portion of the Partnership's assets in October 1997 which necessitated
recording a provision for loss in the amount of $1,000,000 during the 1997
Quarter. In addition, the Partnership realized a gain of $527,890 during
the 1998 Quarter relating to the sale of a substantial portion of the
remaining assets of the Partnership. Net income for the nine months ended
September 30, 1998 ("1998 Period") decreased by $568,845 as compared to the
nine months ended September 30, 1997 ("1997 Period"), primarily due to the
continued liquidation of the Partnership's assets.
Rentals from operating leases declined by $1,560,528 and $6,002,162 or 66%
and 72%, respectively in the 1998 Quarter and 1998 Period as compared to
the 1997 Quarter and 1997 Period due principally to the October 1997 sale
discussed above.
Other income, principally interest, increased by $40,619 or 31% in the 1998
Period as compared to the 1997 Period, primarily due to the increase in
cash held in short-term interest bearing investments.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
I. RESULTS OF OPERATIONS, continued
Depreciation expense decreased by $1,222,395 and $4,181,247 or 74% and 75%
in the 1998 Quarter and 1998 Period as compared to the 1997 Quarter and
1997 Period, respectively, principally due to the continued sales of
equipment upon the scheduled expiration of leases which was consistent with
the reduction in rentals from operating leases.
Management fees incurred during the 1998 Quarter and the 1998 Period
decreased by $27,785 and $236,169 or 53% and 76% in comparison to the 1997
Quarter and 1997 Period, respectively, due to the decline in rentals from
both operating and direct finance leases which serve as the base upon which
such fees are calculated.
General and administrative expenses decreased in the 1998 Quarter compared
to the 1997 Quarter primarily due to a decrease in data processing charges
associated with Class A distributions. The increase for the 1998 Period
compared to the 1997 Period is primarily attributable to an increase in
1997 state withholding tax paid on behalf of the limited partners in the
second quarter of 1998.
Interest expense incurred during the 1998 Quarter and 1998 Period decreased
by $55,994 and $147,949 or 28% and 24% as compared to the 1997 Quarter and
1997 Period, respectively. Interest expense is composed of two components;
(i) interest expense incurred in connection with the discounting of certain
leases with unaffiliated lenders and (ii) interest incurred in connection
with the application of the prepaid rent received pursuant to the Master
Lease transaction. Both interest components decreased as the related
principal balances were repaid. For accounting purposes, the prepaid rent
was treated as a financing. Income was recognized ratably over the terms of
the leases and the related interest was charged to operations.
The Partnership performs ongoing assessments of the likelihood of lessee
defaults on existing leases and the effect that any such defaults may have
on the collectability of the Partnership's recorded accounts receivable,
and the recoverability of recorded equipment residual values based on
evaluations of the estimated future value of equipment. Residual values are
established equal to the estimated value to be received from the equipment
following termination of the lease. In estimating such values, the
Partnership considers all relevant facts regarding the equipment and the
lessee, including, for example, the likelihood that the lessee will
re-lease the equipment. The nature of the Partnership's leasing activities
is that it has credit and residual value exposure and, accordingly, in the
ordinary course of business, it will incur losses from those exposures. The
Partnership performs on-going quarterly assessments of its assets to
identify any other-than-temporary losses in value.
A provision for loss of $550,000 was recorded for the nine months ended
September 30, 1998. Of this amount, $350,000 is related to the estimated
decline in residual value on manufacturing and mining equipment returned to
the partnership at lease maturity and $200,000 is primarily related to
losses recorded as a provision and later realized on the sale of certain
material handling and office equipment at a lower fair market value than
originally anticipated.
The Partnership is in its liquidation period as defined in the Partnership
Agreement. During the liquidation period, the Partnership no longer
acquires new leases and the existing lease portfolio is in the process of
running-off. As of September 30, 1998, the Partnership had sold a
substantial portion of its assets. In January 1998, the Partnership
distributed $95 per Class A Limited Partner Unit and in April 1998,
distributed an additional $8 per Class A Limited Partner Unit. A
substantial portion of each distribution constituted a return of capital.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
II. LIQUIDITY AND CAPITAL RESOURCES
The September 30, 1998 sale of prepaid leases relieved the liability
associated with recording the prepayment of remaining rental payments due
under the user leases and the residual (salvage) value estimates for the
equipment subject to the user leases. Actual cash consideration received
from the sale was immaterial.
Rent and other receivables, net of the allowance for doubtful accounts,
decreased $66,359 from $175,075 at December 31, 1997 to $108,716 at
September 30, 1998 primarily due to the settlement of a bankruptcy claim
relating to one lessee.
Distributions may be characterized for tax, accounting and economic
purposes as a return of capital, a return on capital or both. The portion
of each distribution by a partnership, which exceeds its net income for the
fiscal period, may be deemed a return of capital. The Partnership declared
no distributions to the Class A Limited Partners for the three months ended
September 30, 1998. Based on the amount of net income reported by the
Partnership for accounting purposes, approximately 68% of the cash
distributions paid to the Class A Limited Partners from inception of the
Partnership through September 30, 1998 constituted a return of capital.
However, the total actual return on capital over the Partnership's life can
only be determined at the termination of the Partnership after all residual
cash flows (which include proceeds from the re-leasing and sale of the
equipment after initial lease terms expire) have been realized.
Year 2000 Issues
----------------
An affiliate provides accounting and other administrative services,
including data processing services to the Partnership. The affiliate has
conducted a comprehensive review of its computer systems to identify
systems that could be affected by the Year 2000 issue. The Year 2000 issue
results from computer programs being written using two digits rather than
four to define the applicable year. Certain computer programs which have
time-sensitive software could recognize a date using "00" as the year 1900
rather than the year 2000. This could result in major system failures or
miscalculations. Certain of the affiliate's software has already been
updated to correctly account for the Year 2000 issue. In addition, the
affiliate is engaged in a system conversion, whereby the affiliate's
primary lease tracking and accounting software is being replaced with new
systems which will account for the Year 2000 correctly. The affiliate
expects that the new system will be fully operational by December 31, 1999,
and therefore will be fully Year 2000 compliant. The affiliate does not
expect any other changes required for the Year 2000 to have a material
effect on its financial position or results of operations. As such, the
affiliate has not developed any specific contingency plans in the event it
fails to complete the conversion to a new system by December 31, 1999. In
addition, the affiliate does not expect any Year 2000 issues relating to
its customers and vendors to have a material effect on its financial
position or results of operations.
New Accounting Pronouncements
-----------------------------
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("Statement
133"). Statement 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. Statement 133 is effective for fiscal years beginning after June 15,
1999, with earlier application permitted.
10
<PAGE>
II. LIQUIDITY AND CAPITAL RESOURCES, continued
New Accounting Pronouncements, continued
----------------------------------------
The Partnership will adopt Statement 133 in the first quarter of 1999. The
General Partner does not expect the adoption to have an impact on its
financial reporting.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act
---------------------------------------------------------------------------
of 1995
-------
The statements contained in this report which are not historical facts may
be deemed to contain forward- looking statements with respect to events,
the occurrence of which involve risks and uncertainties, and are subject to
factors that could cause actual future results to differ both adversely and
materially from currently anticipated results, including, without
limitation, the level of lease originations, realization of residual
values, the availability and cost of financing sources and the ultimate
outcome of any contract disputes. Certain specific risks associated with
particular aspects of the Partnership's business are discussed under
Results of Operations in this report and under Results of Operations in the
1997 Form 10-K when and where applicable.
11
<PAGE>
PAINEWEBBER PREFERRED YIELD FUND, L.P.
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 5. OTHER INFORMATION
On May 15, 1998 Joseph P. Ciavarella, Vice President, Treasurer and Chief
Financial Officer of the Administrative General Partner resigned.
During October 1998, Paul L. Novello, Vice President, Chief Financial Officer,
Secretary and Treasurer of the Administrative General Partner, resigned and was
replaced by Carmine Fusco.
Carmine Fusco, age 30, is Vice President, Secretary, Treasurer and Chief
Financial and Accounting Officer of the Administrative General Partner, he also
serves as an Assistant Vice President within the Private Investments Department
of PaineWebber Incorporated. Mr. Fusco had previously been employed as a
Financial Valuation Consultant in the Business Valuation Group of Deloitte &
Touche, LLP from January 1997 to August 1998. He was employed as a Commodity
Fund Analyst in the Managed Futures Department of Dean Witter Reynolds
Incorporated, from October 1994 to November 1995. Prior to joining Dean Witter,
Mr. Fusco was a Mutual Fund Accountant with the Bank of New York Company
Incorporated. He received his Bachelor of Science degree in Accounting and
Finance in May 1991 from Rider University and a Master of Business
Administration from Seton Hall University in June 1996. Mr. Fusco is a Chartered
Financial Analyst candidate.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(b) The Partnership did not file any reports on Form 8-K during the three
months ended September 30, 1998.
12
<PAGE>
Item No. Exhibit Index
27 Financial Data Schedule
13
<PAGE>
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, thereunto duly authorized.
PaineWebber Preferred Yield Fund, L.P. (Registrant)
By: CAI Equipment Leasing II Corporation
A General Partner
Date: November 13, 1998 By: /s/Anthony M. DiPaolo
------------------------------------------
Anthony M. DiPaolo
Senior Vice President, Treasurer and Chief
Administrative Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of income and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,070,149
<SECURITIES> 0
<RECEIVABLES> 129,994
<ALLOWANCES> 0
<INVENTORY> 40,643
<CURRENT-ASSETS> 0
<PP&E> 1,934,693
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,185,499
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,492,697
<TOTAL-LIABILITY-AND-EQUITY> 5,185,499
<SALES> 951,768
<TOTAL-REVENUES> 3,519,490
<CGS> 0
<TOTAL-COSTS> 2,685,799
<OTHER-EXPENSES> 74,655
<LOSS-PROVISION> 550,000
<INTEREST-EXPENSE> 471,873
<INCOME-PRETAX> 833,691
<INCOME-TAX> 0
<INCOME-CONTINUING> 833,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 833,691
<EPS-PRIMARY> 4.86
<EPS-DILUTED> 4.86
</TABLE>
