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 QUARTER ENDED JUNE 30, 1999

                                    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: 0-15037


         PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
           -----------------------------------------------------
          (Exact name of registrant as specified in its charter)


            Delaware                                           04-2870345
            --------                                           ----------
(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>

            PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS
                June 30, 1999 and September 30, 1998 (Unaudited)
                                 (In thousands)

                                     ASSETS

                                                  June 30   September 30
                                                  -------   ------------
Operating investment property:
   Land                                           $     -   $     391
   Buildings and improvements                           -       2,421
   Equipment and fixtures                               -          61
                                                  -------   ---------
                                                        -       2,873
   Less accumulated depreciation                        -      (1,104)
                                                  -------   ---------
                                                        -       1,769

Investments in unconsolidated
  ventures, at equity                                   5       1,239
Cash and cash equivalents                           1,831       1,530
Escrowed funds                                          -          76
Accounts receivable, net                                -           8
Other assets                                            -          34
                                                  -------   ---------
                                                  $ 1,836   $   4,656
                                                  =======   =========

                        LIABILITIES AND PARTNERS' CAPITAL

Mortgage note payable                             $     -   $   1,550
Accounts payable and accrued expenses                  34          90
Accounts payable - affiliates                           6           7
Accrued interest payable                                -          14
Accrued real estate taxes                               -          62
Other liabilities                                       -           4
Partners' capital                                   1,796       2,929
                                                  -------   ---------
                                                  $ 1,836   $   4,656
                                                  =======   =========







                             See accompanying notes.


<PAGE>


            PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF OPERATIONS
     For the three and nine months ended June 30, 1999 and 1998 (Unaudited)
                      (In thousands, except per Unit data)

                                      Three Months Ended      Nine Months Ended
                                          June 30,                June 30,
                                     -------------------     ------------------
                                      1999        1998        1999       1998
                                      ----        ----        ----       ----
Revenues:
   Rental income and
     expense recoveries              $   -     $   134      $   43     $   394
   Interest and other income            24          18          74         404
                                     -----     -------      ------     -------
                                        24         152         117         798
Expenses:
   Mortgage interest                     -          45          18         137
   Property operating expenses           -          17          13          82
   Depreciation and amortization         -          26           -          77
   Real estate taxes                     -          20          11          61
   Management fees                      15          14          43          47
   General and administrative           52          47         198         159
                                     -----     -------      ------     -------
                                        67         169         283         563
                                     -----     -------      ------     -------
Operating income (loss)                (43)        (17)       (166)        235

Partnership's share of
  unconsolidated ventures'
  income                               240         390         923       1,121
Partnership's share of gain (loss)
  on sale of operating investment
  property                               -           -         (60)      4,474
Venture partner's share of
  consolidated venture's
  operations                             -           -           4           -
                                     -----     -------      ------     -------
Net income                           $ 197     $   373      $  701     $ 5,830
                                     =====     =======      ======     =======

Per  Limited Partnership Unit:
   Net income                       $ 5.13     $  9.72      $18.27     $151.93
                                    ======     =======      ======     =======

   Cash distributions               $ 4.90     $  5.12      $48.14     $182.18
                                    ======     =======      ======     =======

   The above per Limited  Partnership  Unit information is based upon the 37,969
Limited Partnership Units outstanding during each period.




                             See accompanying notes.


<PAGE>


            PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP

        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
          For the nine months ended June 30, 1999 and 1998 (Unaudited)
                                 (In thousands)


                                                  General      Limited
                                                  Partners     Partners
                                                  --------     --------

Balance at September 30, 1997                     $   (653)    $  5,655
Cash distributions                                      (7)      (6,917)
Net income                                              61        5,769
                                                  --------     --------
Balance at June 30, 1998                          $   (599)    $  4,507
                                                  ========     ========

Balance at September 30, 1998                     $   (609)    $  3,538
Cash distributions                                      (6)      (1,828)
Net income                                               7          694
                                                  --------     --------
Balance at June 30, 1999                          $   (608)    $  2,404
                                                  ========     ========






















                             See accompanying notes.


<PAGE>


            PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          For the nine months ended June 30, 1999 and 1998 (Unaudited)
                Increase (Decrease) in Cash and Cash Equivalents
                                 (In thousands)
                                                           1999       1998
                                                           ----       ----
Cash flows from operating activities:
  Net income                                            $   701      $ 5,830
  Adjustments to reconcile net income to
   net cash (used in) provided by operating activities:
    Depreciation and amortization                             -           77
    Amortization of deferred financing costs                  -            4
    Partnership's share of unconsolidated
      ventures' income                                     (923)      (1,121)
    Partnership's share of gain (loss) on sale of
      operating investment property                          60       (4,474)
    Venture partner's share of consolidated
      venture's operations                                  (4)            -
     Changes in assets and liabilities:
      Escrow deposits                                        76           15
      Accounts receivable                                     8          (54)
      Other assets                                           34            3
      Accounts payable and accrued expenses                 (56)         (38)
      Accounts payable - affiliates                          (1)          (1)
      Accrued interest payable                              (14)           -
      Accrued real estate taxes                             (62)         (18)
                                                        -------      -------
        Total adjustments                                  (882)      (5,607)
                                                        -------      -------
        Net cash (used in) provided by
          operating activities                             (181)         223
                                                        -------      -------

Cash flows from investing activities:
   Net proceeds from sale of operating
     investment property                                    230            -
   Distributions from unconsolidated joint ventures       2,097        5,060
                                                        -------      -------
        Net cash provided by investing activities         2,327        5,060
                                                        -------      -------

Cash flows from financing activities:
   Distributions to partners                             (1,834)      (6,924)
   Principal payments on long-term debt                     (11)         (47)
                                                        -------      -------
        Net cash used in financing activities            (1,845)      (6,971)
                                                        -------      -------

Net increase (decrease) in cash and cash equivalents        301       (1,688)
Cash and cash equivalents, beginning of period            1,530        2,856
                                                        -------      -------
Cash and cash equivalents, end of period                $ 1,831      $ 1,168
                                                        =======      =======

Cash paid during the period for interest                $    32      $   133
                                                        =======      =======
                             See accompanying notes.


<PAGE>


                         PAINE WEBBER INCOME PROPERTIES
                            SEVEN LIMITED PARTNERSHIP
                   Notes to Consolidated 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,  1998.  In the
opinion of management, the accompanying consolidated 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 require  management  to make  estimates  and  assumptions  that affect the
reported amounts of assets and liabilities and disclosures of contingent  assets
and  liabilities  as of June 30, 1999 and  September  30, 1998 and  revenues and
expenses  for the three and nine  months  ended June 30,  1999 and 1998.  Actual
results could differ from the estimates and assumptions used.

      The  Partnership  originally  invested  the  net  proceeds  of the  public
offering,   through  five  joint  venture   partnerships,   in  seven  operating
properties,  comprised of five multi-family  apartment complexes,  one mixed-use
office and retail property and one shopping center. During fiscal 1997, three of
the multi-family  properties were sold. A fourth multi-family  property was sold
on December 18, 1997. In addition,  during the first quarter of fiscal 1999, the
retail  portion of the Concourse  property was sold.  The office portion of this
mixed-use property had been lost through foreclosure proceedings on December 17,
1992.  The shopping  center  property was also sold during the first  quarter of
fiscal 1999.  Subsequent to these  transactions,  the  Partnership  has only one
remaining  real  estate  investment,  a joint  venture  interest  in the  Colony
Apartments. See Notes 3 and 4 for a description of these transactions and of the
remaining  real estate  investment.  The  Partnership  is currently  focusing on
potential disposition  strategies for the remaining investment in its portfolio.
Although no assurances can be given, it is currently  contemplated that the sale
of the  Partnership's  Colony  Apartments  investment  could be completed during
calendar year 1999.  The sale of the remaining  property would be followed by an
orderly liquidation of the Partnership.

2.  Related Party Transactions
    --------------------------

      The Adviser  earned total  management  fees of $43,000 and $47,000 for the
nine-month periods ended June 30, 1999 and 1998, respectively.  Accounts payable
- affiliates at June 30, 1999 and September 30, 1998 consist of management  fees
of $6,000 and $7,000, respectively, payable to the Adviser.

      Included in general and administrative  expenses for the nine months ended
June 30,  1999 and  1998 is  $69,000  and  $66,000,  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 nine months
ended June 30,  1999 and 1998 is $3,000 and $7,000,  respectively,  representing
fees earned by an affiliate,  Mitchell Hutchins Institutional  Investors,  Inc.,
for managing the Partnership's cash assets.

3.  Investments in Unconsolidated Joint Venture Partnerships
    ---------------------------------------------------------

      As of June 30,  1999,  the  Partnership's  only  remaining  investment  in
unconsolidated  joint venture  partnerships  is its investment in Chicago Colony
Apartments  Associates  which  owns  the  Colony  Apartments,  located  in Mount
Prospect, Illinois, as more fully described in the Partnership's Annual Report.

      On November 17, 1998,  Chicago  Colony Square  Associates  sold the Colony
Square Shopping  Center to an unrelated  third party for $2.3 million.  The sale
generated net proceeds of approximately  $1,014,000,  after the repayment of the
outstanding first mortgage loan of approximately  $864,000,  accrued interest of
approximately  $13,000  (including  a  prepayment  penalty of  $9,000),  closing
proration   adjustments   of   approximately   $221,000  and  closing  costs  of
approximately  $188,000.  The  Partnership  received 100% of the net proceeds in
accordance  with the terms of the joint  venture  agreement.  As a result of the
sales of The  Concourse  Retail  Plaza (see Note 4) and Colony  Square  Shopping
Center, a special distribution of approximately  $1,253,000, or $33 per original
$1,000  investment,  was  made  on  December  15,  1998.  Of this  total,  $5.92
represented  net proceeds  from the sale of The Concourse  Retail Plaza,  $26.69
represented  net proceeds  from the sale of Colony  Square  Shopping  Center and
$0.39 represented Partnership reserves that exceeded future requirements.

      On December 18, 1997, Daniel Meadows Partnership, a joint venture in which
the Partnership had an interest,  sold its operating  investment  property,  The
Meadows on the Lake Apartments, located in Birmingham,  Alabama, to an unrelated
third party for $9.525 million. The sale generated net proceeds of approximately
$4.4  million,  after  repayment  of the  outstanding  first  mortgage  loan  of
approximately  $4.7 million and closing  costs of  approximately  $400,000.  The
Partnership  received 100% of the net proceeds in  accordance  with the terms of
the joint venture agreement.

      The unconsolidated  joint venture  investments are accounted for using the
equity method because the Partnership does not have a voting control interest in
the 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 the  ventures'  earnings  and losses and  distributions.
Summarized  operations of the  unconsolidated  joint  ventures for the three and
nine months ended June 30, 1999 and 1998 are as follows:

                    Condensed Combined Summary of Operations
           For the three and nine months ended June 30, 1999 and 1998
                                 (in thousands)

                                    Three Months Ended     Nine Months Ended
                                          June 30,             June 30,
                                    ------------------     ------------------
                                     1999       1998         1999       1998
                                     ----       ----         ----       ----

   Rental revenues and
     expense recoveries            $1,707      $1,796      $5,175     $5,569
   Interest and other income           73          40         235        191
                                   ------      ------      ------     ------
                                    1,780       1,836       5,410      5,760

   Property operating expenses        533         474       1,435      1,537
   Interest expense                   320         347         985      1,139
   Real estate taxes                  366         402       1,076      1,223
   Depreciation and amortization      249         223         717        738
                                   ------      ------      ------     ------
                                    1,468       1,446       4,213      4,637
                                   ------      ------      ------     ------
   Operating income                   312         390       1,197      1,123

   Gain (loss) on sale of
     operating investment
     property                           -           -        (109)     4,870
                                   ------      ------      ------     ------
       Net income                  $  312      $  390      $1,088     $5,993
                                   ======      ======      ======     ======

   Net income:
     Partnership's share of
       combined income             $  240      $  390      $  870     $5,725
     Co-venturers' share of
       combined income                 72           -         218        268
                                   ------      ------      ------     ------
                                   $  312      $  390      $1,088     $5,993
                                   ======      ======      ======     ======

               Reconciliation of Partnership's Share of Operations
           For the three and nine months ended June 30, 1999 and 1998
                                 (in thousands)

                                    Three Months Ended     Nine Months Ended
                                         June 30,              June 30,
                                    ------------------     ------------------
                                     1999       1998         1999       1998
                                     ----       ----         ----       ----
   Partnership's share of
      combined income, as
      shown above                  $  240      $  390      $  870     $5,725
   Amortization of excess basis         -           -          (7)      (130)
                                   ------      ------      ------     ------
   Partnership's share of
      unconsolidated ventures'
      net income                   $  240      $  390      $  863     $5,595
                                   ======      ======      ======     ======

      The  Partnership's  share  of  unconsolidated   ventures'  net  income  is
presented as follows in the accompanying  consolidated  statements of operations
(in thousands):
<PAGE>
                                    Three Months Ended   Nine Months Ended
                                          June 30,            June 30,
                                   -------------------   ------------------
                                     1999       1998        1999      1998
                                     ----       ----        ----      ----
   Partnership's share of
     unconsolidated ventures'
     income                        $  240      $  390      $  923    $1,121
   Partnership's share of gain
     (loss) on sale of
     operating investment
     property                           -           -         (60)    4,474
                                   ------      ------      ------    -------
   Partnership's share of
      unconsolidated
      ventures' net income         $  240      $  390      $  863    $5,595
                                   ======      ======      ======    ======

4.  Operating Investment Property
    -----------------------------

      The Partnership had a controlling interest in one joint venture, West Palm
Beach Concourse Associates,  which owned the Concourse Retail Plaza. On November
10, 1998, West Palm Beach Concourse  Associates sold The Concourse  Retail Plaza
property to an unrelated  party for $2 million.  The sale generated net proceeds
of  approximately  $225,000,  after  the  assumption  of the  outstanding  first
mortgage loan of  approximately  $1,539,000,  accrued  interest of approximately
$4,000,  net closing proration  adjustments of approximately  $2,000 and closing
costs  of  approximately  $231,000.  The  Partnership  received  100% of the net
proceeds  in  accordance  with the terms of the  joint  venture  agreement.  The
Partnership distributed the net proceeds of approximately $225,000, or $5.92 per
original $1,000 investment,  from the sale of The Concourse Retail Plaza as part
of a Special Distribution made to the limited partners on December 15, 1998 (see
Note 3).

      The  following is a summary of property  operating  expenses for the three
and nine-month periods ended June 30, 1999 and 1998 (in thousands):

                                    Three Months Ended     Nine Months Ended
                                         June 30,              June 30,
                                    ------------------     ------------------
                                     1999       1998         1999       1998
                                     ----       ----         ----       ----

     Repairs and maintenance        $   -     $    4       $   1      $    15
     Utilities                          -          1           1            3
     Insurance                          -          1           2            4
     Administrative and other           -          8           5           49
     Management fees                    -          3           4           11
                                    -----     ------       -----      -------
                                    $   -     $   17       $  13      $    82
                                    =====     ======       =====      =======
5.  Mortgage Note Payable
    ---------------------

      Mortgage note payable on the  consolidated  balance sheet at September 30,
1998 related to the Partnership's  consolidated  joint venture,  West Palm Beach
Concourse  Associates,  and was secured by the  venture's  operating  investment
property.  At  September  30,  1998,  mortgage  note  payable  consisted  of the
following (in thousands):
                                                     September 30
                                                     ------------
     11.12% first  mortgage,  payable in
     installments   of  $20  per  month,
     including interest, through January
     1, 2005. All outstanding  principal
     and  accrued  interest  was  due on
     January 10, 2005. The fair value of
     this note payable  approximated its
     carrying  value as of September 30,
     1998.                                             $ 1,550
                                                       =======

      In  accordance  with  the  Concourse  mortgage  loan  agreements,  certain
insurance premiums and real estate taxes were required to be held in escrow. The
balance of escrow  deposits on the  accompanying  balance sheet at September 30,
1998 consisted of such escrowed  insurance premiums and real estate taxes in the
aggregate amount of $76,000.

      On November 10, 1998, in conjunction with the sale of the Concourse Retail
Plaza described in Note 4, the unrelated  purchaser of the property  assumed the
mortgage note payable.  Therefore,  the  Partnership no longer has any liability
associated with this debt.

<PAGE>



            PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information Relating to Forward-Looking Statements
--------------------------------------------------

      The following  discussion of financial condition includes  forward-looking
statements  which  reflect  management's  current  views with  respect to future
events and  financial  performance  of the  Partnership.  These  forward-looking
statements  are  subject to certain  risks and  uncertainties,  including  those
identified  in Item 7 of the  Partnership's  Annual  Report on Form 10-K for the
year ended  September  30, 1998 under the  heading  "Certain  Factors  Affecting
Future Operating Results," which could cause actual results to differ materially
from historical  results or those  anticipated.  The words "believe,"  "expect,"
"anticipate,"  and  similar  expressions  identify  forward-looking  statements.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements,  which were made based on facts and conditions as they existed as of
the date of this report.  The  Partnership  undertakes no obligation to publicly
update or revise  any  forward-looking  statements,  whether  as a result of new
information, future events or otherwise.

Liquidity and Capital Resources
-------------------------------

      As previously  reported,  the Partnership had reviewed its options for The
Concourse  Retail Plaza at the beginning of fiscal 1998 and  determined  that it
was the  appropriate  time to market the  property  for sale.  During the second
quarter of fiscal 1998, the  Partnership  initiated  discussions  with area real
estate firms concerning potential marketing strategies for selling The Concourse
and solicited  marketing  proposals from several of these firms. After reviewing
their  respective  proposals  and  conducting   interviews  to  determine  their
expertise and track record in selling properties  similar to The Concourse,  the
Partnership  selected a Florida-based  firm.  During the third quarter of fiscal
1998, a marketing package was finalized and comprehensive  sale efforts began in
early May. On August 14, 1998, a purchase and sale  agreement was signed with an
unrelated  third  party.  On  November  10,  1998,  West  Palm  Beach  Concourse
Associates sold The Concourse  Retail Plaza property to this unrelated party for
$2 million. The sale generated net proceeds of approximately $225,000, after the
assumption of the outstanding  first mortgage loan of approximately  $1,539,000,
accrued interest of approximately  $4,000, net closing proration  adjustments of
approximately   $2,000  and  closing  costs  of  approximately   $231,000.   The
Partnership  received 100% of the net proceeds in  accordance  with the terms of
the joint venture agreement. The mortgage loan, which was assumable,  contains a
prohibition  on  prepayment  through  January 10,  2000.  As a result,  any sale
transaction  completed  prior to such date had to involve an  assumption of this
mortgage loan which carries an interest rate of 11.12% per annum. The sale price
was  discounted to reflect this  above-market  interest rate.  Nonetheless,  the
Managing  General Partner believed that a current sale was in the best interests
of the Limited Partners. As discussed further below, the Partnership recorded an
impairment  writedown  of $418,000  in fiscal  1998 to reflect the net  proceeds
received from the sale during the first quarter of fiscal 1999.

      The  Partnership  and its  co-venture  partner  had also  begun  exploring
potential  opportunities  for the sale of the Colony  Square  property  in early
fiscal  1998.  As part of that  plan,  discussions  were held  with real  estate
brokerage  firms with a specialty  in small retail  centers like Colony  Square.
During the third  quarter of fiscal 1998,  the  Partnership  and its  co-venture
partner  selected a real estate brokerage firm to begin marketing this asset for
sale. Subsequently, an offer was received to purchase the Colony Square Shopping
Center  from a  prospective  third-party  buyer that met the  Partnership's  and
co-venture  partner's sale criteria. A purchase and sale agreement was signed on
July 9, 1998 with this prospective  buyer. On November 17, 1998,  Chicago Colony
Square Associates sold the Colony Square Shopping Center to this unrelated party
for $2.3 million.  The sale generated net proceeds of approximately  $1,014,000,
after the repayment of the  outstanding  first  mortgage  loan of  approximately
$864,000,  accrued  interest of  approximately  $13,000  (including a prepayment
penalty of $9,000),  closing proration adjustments of approximately $221,000 and
closing costs of approximately  $188,000.  The Partnership  received 100% of the
net proceeds in accordance with the terms of the joint venture  agreement.  As a
result of the sales of The  Concourse  Retail Plaza and Colony  Square  Shopping
Center, a Special Distribution of approximately  $1,253,000, or $33 per original
$1,000  investment,  was  made  on  December  15,  1998.  Of this  total,  $5.92
represented  net proceeds  from the sale of The Concourse  Retail Plaza,  $26.69
represented  net proceeds  from the sale of Colony  Square  Shopping  Center and
$0.39 represented Partnership reserves that exceeded future requirements.

      With the sales of The Concourse and Colony Square, the Partnership now has
one remaining  real estate  investment,  a joint venture  interest in the Colony
Apartments,  a 783-unit  complex located in Mount Prospect,  Illinois.  With the
improvements  in the apartment  segment of the real estate market and the strong
local job market in this  northwest  Chicago  suburb,  the  Partnership  and its
co-venture  partner decided to market the Colony  Apartments for sale during the
third quarter of fiscal 1998. A national real estate firm was selected to market
the property and comprehensive sale efforts began in late June 1998. As a result
of these sale efforts,  ten offers were received.  These prospective  purchasers
were then requested to submit best and final offers.  To reduce the  prospective
buyers'  due  diligence  work and the time  required  to  complete  it,  updated
operating reports as well as building  evaluation and environmental  information
on the property were provided to the top six prospective  buyers, who were asked
to submit best and final offers and did so. After  completing  an  evaluation of
the best and final offers,  the Partnership and its co-venture  partner selected
an offer.  However,  after  protracted  negotiations,  the  Partnership  and its
co-venture  partner were unable to finalize a purchase and sale  agreement  with
this  prospective  buyer.  In November 1998, the  Partnership and its co-venture
partner  re-opened  discussions  with  the  other  prospective  buyers  who  had
previously  submitted  best and final offers.  Two of these  prospective  buyers
expressed  interest.  Again,  however,  after extensive  discussions  with them,
neither  prospect would agree to acquire the property on terms acceptable to the
Partnership and its co-venture partner.

      During  the  second  quarter  of  fiscal  1999,  the  Partnership  and its
co-venture partner decided to re-market the Colony Apartments property for sale.
A new real estate firm with a strong background in selling apartment  properties
was selected and new sales materials were prepared.  The new marketing  campaign
was undertaken on April 21, 1999.  Colony Apartments was then widely marketed to
over 200 prospective purchasers. Of these prospects,  approximately 61 requested
and received the complete marketing package.  Seventeen offers were subsequently
received from these  prospective  buyers of which five  submitted best and final
offers.  After  interviewing  each prospective  buyer and conducting a review of
their financial capabilities and previous acquisitions,  the Partnership and its
co-venture  partner  selected  an  offer.  A  purchase  and  sale  contract  was
subsequently  negotiated with this unrelated  third-party  prospective purchaser
and an agreement was signed on June 28, 1999. In accordance  with the provisions
of the purchase and sale  agreement,  the  prospective  buyer  completed its due
diligence work within 15 days and made a non-refundable deposit of $500,000. The
only  remaining  contingency  is for approval by the lender for an assumption of
the first mortgage loan as part of the sale transaction. The Partnership expects
to receive this approval by September 15, 1999.

      Colony  Apartments  is  under  a  contract  for  sale  to  this  unrelated
third-party buyer for $41,500,000.  Chicago Colony Associates, the joint venture
in which  the  Partnership  and its  co-venture  partner  hold an  interest,  is
expected to receive distributable net sale proceeds of approximately $23,350,000
after deducing  estimated  closing costs and property  proration  adjustments of
$1,150,000, a deduction for the assumption by the buyer of the $16,800,000 first
mortgage debt secured by the property,  and an estimated $200,000 which would be
used at the Colony joint  venture to pay for the  remaining  property  operating
expenses and other joint venture  costs.  The net sale  proceeds of  $23,350,000
would then be divided between the Partnership  and its co-venture  partner.  The
Partnership   is  expected  to  receive   approximately   $18,100,000   and  the
non-affiliated   co-venture   partner  is  expected  to  receive   approximately
$5,250,000  as  its  share  of  the  sale   proceeds.   The  total  proceeds  of
approximately $18,100,000, or approximately $477 per original $1,000 investment,
would  be  included  in the  Partnership's  Final  Distribution  to the  Limited
Partners,  along with the remaining  Partnership cash reserves after the payment
of all  liquidation-related  expenses.  Assuming  that  the  sale of the  Colony
Apartments  closes as expected,  the Final  Distribution  is expected to be paid
prior to the end of calendar year 1999.

      At June 30,  1999,  the  Partnership  had cash  and  cash  equivalents  of
approximately  $1,831,000.  Such cash and cash  equivalents  will be utilized as
needed for Partnership  requirements such as the payment of operating  expenses,
distributions  to  partners,  and the funding of  operating  deficits or capital
improvements  of the remaining joint venture,  if necessary,  in accordance with
the terms of the joint  venture  agreement.  The source of future  liquidity and
distributions  to the  partners is expected to be from  available  net cash flow
generated by the operations of the Partnership's  remaining  investment property
and from the net proceeds from the sale or refinancing  of such  property.  Such
sources of liquidity  are expected to be  sufficient  to meet the  Partnership's
needs on both a short-term and long-term basis.

      As noted above,  the  Partnership  expects to be  liquidated by the end of
calendar year 1999.  Notwithstanding  this, the Partnership believes that it has
made all necessary  modifications to its existing systems to make them year 2000
compliant and does not expect that  additional  costs  associated with year 2000
compliance,  if any, will be material to the Partnership's results of operations
or financial position.

Results of Operations
Three Months Ended June 30, 1999
--------------------------------

      The Partnership reported net income of $197,000 for the three months ended
June 30,  1999,  as compared to $373,000  for the same period in the prior year.
This  decrease  in the  Partnership's  net income is  attributable  to a $26,000
increase  in the  Partnership's  operating  loss and a $150,000  decrease in the
Partnership's  share of unconsolidated  ventures' income. The unfavorable change
in  the  Partnership's  operating  loss  is  attributable  to  the  sale  of the
consolidated  Concourse  Retail  Plaza on November 10,  1998.  The  consolidated
Concourse  joint venture  generated net income of $26,000 during the same period
in the prior year.

      The decrease in the Partnership's share of unconsolidated ventures' income
resulted  mainly from a decrease in the allocation of income to the  Partnership
from the Colony Apartments joint venture from 100% in the prior year to 77.6% in
the current  three-month period. In accordance with the joint venture agreement,
the method of allocating  income for each period is based upon the percentage of
operating cash flow distributed to each of the joint venture partners during the
period. The total net income at the Colony Apartments joint venture decreased by
$52,000 for the current  three-month period mainly due to an increase in repairs
and maintenance  expenses  related to preparing the property for a possible sale
transaction.

Nine Months Ended June 30, 1999
-------------------------------

      The Partnership  reported net income of $701,000 for the nine months ended
June 30, 1999, as compared to $5,830,000  for the same period in the prior year.
This  decrease  in the  Partnership's  net  income is mainly  attributable  to a
$4,474,000 gain recognized  during the nine-month  period ended June 30, 1998 on
the sale of the Meadows  property as well as a $60,000 loss recorded on the sale
of the  Colony  Square  property  during the  current  nine-month  period.  Also
contributing to the unfavorable  change in net income was an unfavorable  change
in the Partnership's operating income (loss) of $401,000. The unfavorable change
in the  Partnership's  operating  income (loss) is mainly  attributable to other
income  recognized  during the nine months  ended June 30,  1998  related to the
receipt of a residual cash distribution from the HMF joint venture in connection
with the final  liquidation  of that joint  venture.  Also  contributing  to the
unfavorable  change in the Partnership's  operating income (loss) was a decrease
in  interest  income and an increase  in general  and  administrative  expenses.
Interest income decreased mainly due to a lower average invested cash balance in
the current  period as a result of the temporary  investment of the Meadows sale
proceeds in the prior year  pending  the  distribution  to the Limited  Partners
which  occurred  in  February  of  1998.  General  and  administrative  expenses
increased mainly due to additional  required  professional  fees incurred during
the current  nine-month  period. The unfavorable change in the Partnership's net
operating  income (loss) was also partially due to an unfavorable  change in the
net operating  results of the  consolidated  Concourse Retail Plaza prior to its
sale on November 10, 1998. The unfavorable  change in the net operating  results
of the Concourse joint venture was mainly due to a decline in rental revenues as
a result of a lower average occupancy level.

      A  decrease  of  $198,000  in the  Partnership's  share of  unconsolidated
ventures'  income also  contributed  to the  decrease in the  Partnership's  net
income for the current  nine-month  period.  The  decrease in the  Partnership's
share of unconsolidated  ventures' income resulted mainly from a decrease in the
allocation of income to the Partnership from the Colony Apartments joint venture
from  100% in the prior  year to 77.6% in the  current  nine  month  period.  In
accordance with the joint venture agreement, the method of allocating income for
each period is based upon the percentage of operating  cash flow  distributed to
each of the joint venture  partners  during the period.  The total net income at
the Colony  Apartments  joint  venture  increased  by  $105,000  for the current
nine-month  period mainly due to increases in rental revenues  stemming from the
increases  in rental  rates  achieved  at the  property  over the past twelve to
fifteen months.  Also contributing to the decline in the Partnership's  share of
unconsolidated  ventures'  income was a decrease in the net income of the Colony
Square  joint  venture  for the  current  period  as a result of the sale of the
property on November 17, 1998. These  unfavorable  changes in the  Partnership's
share of unconsolidated ventures' income were partially offset by the absence in
the current  period of operating  results from the joint  venture that owned The
Meadows on the Lake  Apartments  which reported an operating loss of $72,000 for
the first  quarter of fiscal 1998 prior to the sale of the  property on December
18, 1997.


<PAGE>



                                     PART II
                                Other Information


Item 1. Legal Proceedings   NONE

Item 2. through 5.          NONE

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:              NONE

(b)   No reports on Form 8-K have been filed  during the  quarter for which this
      report is filed.



<PAGE>





            PAINE WEBBER INCOME PROPERTIES SEVEN 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.


                      PAINE WEBBER INCOME PROPERTIES SEVEN
                               LIMITED PARTNERSHIP


                              By:  SEVENTH INCOME PROPERTIES FUND, INC.
                                   ------------------------------------
                                   Managing General Partner




                              By: /s/ Walter V. Arnold
                                  --------------------
                                  Walter V. Arnold
                                  Senior Vice President and
                                  Chief Financial Officer


Dated:  August 9, 1999