-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jn9rc3DSqS/6cX9vSRbxLqHKk7fMkKW2Bh7W0NrTbsH3jklFBh1eMRns/O5rBw3P GYygs5oq5uy8DImNA+LJmg== 0000352723-96-000003.txt : 19960725 0000352723-96-000003.hdr.sgml : 19960725 ACCESSION NUMBER: 0000352723-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960710 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAINE WEBBER QUALIFIED PLAN PROPERTY FUND LP CENTRAL INDEX KEY: 0000352723 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 133069311 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17145 FILM NUMBER: 96592712 BUSINESS ADDRESS: STREET 1: 265 FRANKLIN ST 15TH FL CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174398118 10-Q 1 THIS IS A 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 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 : 0-17145 PAINE WEBBER QUALIFIED PLAN PROPERTY FUND, LP (Exact name of registrant as specified in its charter) Delaware 13-3069311 (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 . PAINE WEBBER QUALIFIED PLAN PROPERTY FUND, LP BALANCE SHEETS May 31, 1996 and August 31, 1995 (Unaudited) (In thousands ) ASSETS May 31 August 31 ------ --------- Real estate investments: Investment property held for sale, net $ 3,964 $ 3,918 Cash and cash equivalents 325 223 Escrowed cash 122 53 Accounts receivable 38 198 Prepaid insurance and other assets 19 6 -------- -------- $ 4,468 $ 4,398 ======== ======== LIABILITIES AND PARTNERS' CAPITAL Accounts payable and accrued expenses $ 14 $ 38 Accounts payable - affiliates 3 3 Accrued real estate taxes 45 69 Tenant security deposits and other liabilities 20 28 Partners' capital 4,386 4,260 -------- -------- $ 4,468 $ 4,398 ======== ======== STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) For the nine months ended May 31, 1996 and 1995 (Unaudited) (In thousands) General Limited Partners Partners -------- -------- Balance at August 31, 1994 $(26) $ 4,423 Net income 1 104 Cash distributions (2) (170) ---- -------- Balance at May 31, 1995 $(27) $ 4,357 ==== ======== Balance at August 31, 1995 $(26) $ 4,286 Net income 2 277 Cash distributions (2) (151) ---- -------- Balance at May 31, 1996 $(26) $ 4,412 ==== ======== See accompanying notes. PAINE WEBBER QUALIFIED PLAN PROPERTY FUND, LP STATEMENTS OF INCOME For the three and nine months ended May 31, 1996 and 1995 (Unaudited) (In thousands, except for per Unit data) Three Months Ended Nine Months Ended May 31, May 31, ------------------ ----------------- 1996 1995 1996 1995 ---- ---- ---- ---- Revenues: Interest from mortgage loan $ - $ 81 $ - $ 244 Land rent - 12 - 36 Interest earned on short-term investments 4 5 9 20 ----- ----- ---- ----- 4 98 9 300 Expenses: Management fees 3 3 9 9 General and administrative 60 76 179 185 ----- ----- ---- ----- 63 79 188 194 ----- ----- ---- ----- Operating income(loss) (59) 19 (179) 106 Income from operations of investment property held for sale, net 184 - 458 - ----- ----- ---- ----- Net income $ 125 $ 19 $ 279 $ 106 ===== ===== ==== ===== Net income per Limited Partnership Unit $6.58 $1.02 $14.72 $5.56 ===== ===== ====== ===== Cash distributions per Limited Partnership Unit $2.69 $2.69 $ 8.07 $9.07 ===== ===== ======= ===== The above per Limited Partnership Unit information is based upon the 18,781 Units of Limited Partnership Interest outstanding for each period. See accompanying notes. PAINE WEBBER QUALIFIED PLAN PROPERTY FUND, LP STATEMENTS OF CASH FLOWS For the nine months ended May 31, 1996 and 1995 (Unaudited) Increase (Decrease) in Cash and Cash Equivalents (In thousands) 1996 1995 ---- ---- Cash flows from operating activities: Net income $ 279 $ 106 Adjustments to reconcile net income to net cash provided by operating activities: Changes in assets and liabilities: Escrowed cash (69) 50 Interest and land rent receivable - (93) Accounts receivable 160 (6) Prepaid insurance and other assets (13) - Accounts payable - affiliates - 1 Accounts payable and accrued expenses (24) (53) Accrued real estate taxes (24) - Tenant security deposits and other liabilities (8) - -------- ------- Total adjustments 22 (101) -------- ------- Net cash provided by operating activities 301 5 Cash flows from investing activities: Purchase of land (46) - Cash flows from financing activities: Distributions to partners (153) (172) -------- --------- Net increase (decrease) in cash and cash equivalents 102 (167) Cash and cash equivalents, beginning of period 223 473 --------- -------- Cash and cash equivalents, end of period $ 325 $ 306 ========= ======= See accompanying notes. PAINE WEBBER QUALIFIED PLAN PROPERTY FUND, LP Notes to Financial Statements (Unaudited) 1. General The accompanying financial statements, footnotes and discussion should be read in conjunction with the financial statements and footnotes contained in the Partnership's Annual Report for the year ended August 31, 1995. 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 The Adviser earned management fees of $9,000 for both of the nine-month periods ended May 31, 1996 and 1995. Included in general and administrative expenses for the nine months ended May 31, 1996 and 1995 is $74,000 and $84,000, respectively, representing reimbursements to an affiliate of the General Partner for providing certain financial, accounting and investor communication services to the Partnership. Also included in general and administrative expenses for the nine months ended May 31, 1996 and 1995 is $1,000, representing fees earned by Mitchell Hutchins Institutional Investors, Inc. for managing the Partnership's cash assets. 3. Investment Property Held for Sale and Potential Partnership Liquidation As discussed further in the Annual Report, on June 19, 1995 the Partnership foreclosed under the terms of the mortgage loan secured by the Harwood Village Shopping Center. The property consists of 86,300 net rentable square feet and is located in Bedford, Texas (suburban Dallas). The Adviser has employed a local management company to operate the property on the Partnership's behalf. Prior to the foreclosure transaction, the Partnership's investments in Harwood Village had consisted of a 9.5% mortgage loan in the amount of $3,418,000 and land with a cost basis of $500,000 which was subject to a ground lease. Annual rent due under the terms of the ground lease totalled $47,500. The Partnership complies with the guidelines set forth in the Statement of Position entitled "Accounting for Foreclosed Assets," issued by the American Institute of Certified Public Accountants, to account for its investment properties acquired through foreclosure. Under the Statement of Position, a foreclosed asset is recorded at the lower of cost or estimated fair value, reduced by the estimated costs to sell the asset. Cost is defined as the fair value of the asset at the date of the foreclosure. Management believed that the fair value of the Harwood Village Shopping Center was approximately equal to the aggregate carrying value of the Partnership's land and mortgage loan investments at the date of the foreclosure, of $3,918,000. Accordingly, such carrying values were reclassified to investment property held for sale as of the date of foreclosure. During fiscal 1996, the Partnership purchased an additional out-parcel of land adjacent to the Harwood Village property for $46,000, which is included in the balance of investment property held for sale as of May 31, 1996. Declines in the estimated fair value of the asset subsequent to foreclosure are recorded through the use of a valuation allowance. Subsequent increases in the estimated fair value of the asset result in a reduction in the valuation allowance, but not below zero. During the quarter ended May 31, 1996, the Partnership signed a letter of intent to sell the Harwood Village Shopping Center to an unrelated third party for $4,925,000. The sale remained subject to, among other things, the negotiation of a definitive sales agreement, the satisfactory completion of the buyer's due diligence and the buyer's ability to obtain financing. Subsequent to the quarter-end, due to the buyer's inability to obtain the required financing, the sale transaction was not able to be completed. Management has since reviewed offers from other potential buyers and is currently in the process of negotiating another sales contract. Based on the current offers, if the Partnership were to agree to the terms of a sale of the Harwood Village property in the near term, the final negotiated sale price would likely be at an amount lower than the previously disclosed transaction, but still in excess of the current carrying amount of the investment property. However, since no definitive agreement has been signed to date, there can be no assurances that a sale transaction will be completed. If a sale does occur, it would be followed by a liquidation of the Partnership. The Partnership records income from the investment property held for sale in the amount of the difference between the property's gross revenues and property operating expenses (including leasing costs and improvement expenses), taxes and insurance. Summarized operating results for the Harwood Village Shopping Center for the three and nine month periods ended May 31, 1996 are as follow (in thousands): Three Nine Months Ended Months Ended 5/31/96 5/31/96 ------------ ------------ Rental revenues and expense recoveries $ 234 $ 633 Property operating expenses 14 67 Property taxes and insurance 29 86 Management fees 8 22 ------- ------- Total expenses 51 175 ------- ------- Income from investment property held for sale, net $ 183 $ 458 ======== ======= 4. Contingencies The Partnership is involved in certain legal actions. At the present time, the General Partner is unable to estimate the impact, if any, of these matters on the Partnership's financial statements, taken as a whole. . PAINE WEBBER QUALIFIED PLAN PROPERTY FUND LP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources As discussed further in the Annual Report, the Partnership assumed ownership of the Harwood Village North Shopping Center on June 19, 1995 as a result of foreclosure proceedings which followed certain uncured defaults under the terms of the Partnership's mortgage loan receivable. Subsequent to assuming ownership, the Adviser hired a local property management company to manage the day-to-day operations of the 86,300 square foot shopping center, which was 98% leased as of May 31, 1996. Since June of 1995, the Partnership has been working on renewing the leases that expire during fiscal 1996 and completing minor enhancements to improve the center's marketability in preparation for a possible sale of the property. The property's leasing team is currently working on renewing leases with four tenants representing 14,350 square feet, or approximately 17% of the center. During the current quarter, management's marketing efforts resulted in the signing of a letter of intent for the sale of the Harwood Village North Shopping Center to an unrelated third party for $4,925,000. The prospective sale was subject to, among other things, the negotiation of a definitive sales agreement, satisfactory completion of the buyer's due diligence and the buyer's ability to obtain financing. Subsequent to the quarter end, the potential buyer was unable to obtain the required financing and the sales contract was terminated. Management has since reviewed offers from other potential buyers and is currently in the process of negotiating another sales contract. Based on the current offers, if the Partnership were to agree to terms for a sale of the Harwood Village property in the near term, the final negotiated sale price would likely be at an amount lower than the previously disclosed transaction. Nonetheless, management would still expect to receive net proceeds in an amount in excess of the current carrying value of the investment property on the Partnership's balance sheet. However, since no definitive agreement has been signed to date, there can be no assurances that a sale transaction will be completed. As of May 31, 1996, the Partnership had cash and cash equivalents of $325,000. Such cash and cash equivalents will be used for the working capital requirements of the Partnership and distributions to the partners. The source of future liquidity and distributions to the partners is expected to be through cash flow generated from the operations of the Harwood Village property and from the eventual sale of the operating investment property, as discussed further above. Upon the sale of the Harwood Village North Shopping Center, the Partnership will be liquidated and a final distribution, including any remaining cash reserves after payment of all liquidation-related expenses, will be made to the Limited Partners. Results of Operations Three Months Ended May 31, 1996 The Partnership reported net income of $125,000 for the three months ended May 31, 1996, compared to net income of $19,000 for the same period in the prior year. The favorable change in the Partnership's net operating results for these two periods reflects the foreclosure of the Harwood Village North Shopping Center discussed above. Prior to the foreclosure transaction in the fourth quarter of fiscal 1995, the Partnership's investments in Harwood Village had consisted of a 9.5% mortgage loan in the amount of $3,418,000 and land with a cost basis of $500,000 which was subject to a ground lease. Annual rent due under the terms of the ground lease totalled $47,500. Net operating income from the shopping center of $184,000 was recognized for the three-month period ended May 31, 1996, whereas interest and land rent of only $93,000 was recognized in the same period in the prior year. In addition, a decrease in the Partnership's general and administrative expenses of $16,000 also contributed to the favorable change in net operating results for the third quarter of fiscal 1996. General and administrative expenses were higher in the prior period mainly due to legal fees associated with the default on the Harwood Village mortgage loan. Nine Months Ended May 31, 1996 The Partnership reported net income of $279,000 for the nine months ended May 31, 1996, compared to net income of $106,000 for the same period in the prior year. The increase in net income is a direct result of the foreclosure of the Harwood Village North Shopping Center discussed above. The Partnership's income statement for the nine-month period ended May 31, 1995 reflects nine months of interest income and land rent from the Harwood Village mortgage loan and land investments, which totalled $280,000. Net operating income from the shopping center of $458,000 was recognized for the nine month period ended May 31, 1996. A decrease in interest earned on short-term investments of $11,000 partially offset the favorable change in net operating results for the current nine-month period. Interest income earned on the Partnership's cash reserves declined mainly as a result of a decrease in the average outstanding balance of such reserves. PART II Other Information Item 1. Legal Proceedings As previously disclosed, First Qualified Properties, Inc. and Properties Associates, the General Partners of the Partnership, were named as defendants in a class action lawsuit against PaineWebber Incorporated ("PaineWebber") and a number of its affiliates relating to PaineWebber's sale of 70 direct investment offerings, including the offering of interests in the Partnership. In January 1996, PaineWebber signed a memorandum of understanding with the plaintiffs in the class action 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 a plan of allocation which the parties expect to submit to the court for its consideration and approval within the next several months. Until a definitive settlement and plan of allocation is approved by the court, there can be no assurance what, if any, payment or non-monetary benefits will be made available to unitholders in PaineWebber Qualified Plan Property Fund, LP. 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 this litigation. At the present time, the General Partners cannot estimate the impact, if any, of these potential indemnification claims on the Partnership's financial statements, taken as a whole. Item 2. through 5. NONE Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: NONE (b) Reports on Form 8-K: NONE PAINE WEBBER QUALIFIED PLAN PROPERTY FUND, LP 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. PAINE WEBBER QUALIFIED PLAN PROPERTY FUND, LP By: FIRST QUALIFIED PROPERTIES, INC. General Partner By: /s/ Walter V. Arnold Walter V. Arnold Senior Vice President and Chief Financial Officer Dated: July 9, 1996 EX-27 2 ARTICLE 5 FDS FOR THE NINE MONTHS ENDED 5/31/96
5 This schedule contains summary financial information extracted from the Partnership's audited financial statements for the nine months ended May 31, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS AUG-31-1996 MAY-31-1996 325 0 38 0 0 504 3964 0 4468 82 0 0 0 0 4386 4468 0 467 0 188 0 0 0 279 0 279 0 0 0 279 14.72 14.72
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