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 March 31, 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
                March 31, 1999 and September 30, 1998 (Unaudited)
                                 (In thousands)

                                     ASSETS

                                                    March 31  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        831       1,239
Cash and cash equivalents                              1,015       1,530
Escrowed funds                                             -          76
Accounts receivable, net                                   -           8
Other assets                                               -          34
                                                    --------   ---------
                                                    $  1,846   $   4,656
                                                    ========   =========

                        LIABILITIES AND PARTNERS' CAPITAL

Mortgage note payable                               $      -   $   1,550
Accounts payable and accrued expenses                     45          90
Accounts payable - affiliates                             14           7
Accrued interest payable                                   -          14
Accrued real estate taxes                                  -          62
Other liabilities                                          -           4
Partners' capital                                      1,787       2,929
                                                    --------   ---------
                                                    $  1,846   $   4,656
                                                    ========   =========





                             See accompanying notes.


<PAGE>


            PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF OPERATIONS
     For the three and six months ended March 31, 1999 and 1998 (Unaudited)
                      (In thousands, except per Unit data)

                                        Three Months Ended   Six Months Ended
                                              March 31,           March 31,
                                        ------------------   ----------------
                                          1999      1998      1999      1998
                                          ----      ----      ----      ----
Revenues:
   Rental income and expense
     recoveries                         $    -     $   135    $   43   $   260
   Interest and other income                26         324        50       386
                                        ------     -------    ------   -------
                                            26         459        93       646
Expenses:
   Mortgage interest                         -          46        18        92
   Property operating expenses               -          29        13        65
   Depreciation and amortization             -          30         -        51
   Real estate taxes                         -          20        11        41
   Management fees                          14          16        28        33
   General and administrative               67          37       146       111
                                        ------     -------    ------   -------
                                            81         178       216       393
                                        ------     -------    ------   -------
Operating income (loss)                    (55)        281      (123)      253

Partnership's share of
   unconsolidated ventures' income         353         480       683       731
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                              $  298     $   761    $  504   $ 5,458
                                        ======     =======    ======   =======

Per  Limited Partnership Unit:
   Net income                           $ 7.77     $ 19.83    $13.14   $142.22
                                        ======     =======    ======   =======

   Cash distributions                   $ 5.12     $171.03    $43.24   $177.06
                                        ======     =======    ======   =======

   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 six months ended March 31, 1999 and 1998 (Unaudited)
                                 (In thousands)


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

Balance at September 30, 1997                      $  (653)    $  5,655
Cash distributions                                      (5)      (6,723)
Net income                                              58        5,400
                                                   -------     --------
Balance at March 31, 1998                          $  (600)    $  4,332
                                                   =======     ========

Balance at September 30, 1998                      $  (609)    $  3,538
Cash distributions                                      (4)      (1,642)
Net income                                               5          499
                                                   -------     --------
Balance at March 31, 1999                          $  (608)    $  2,395
                                                   =======     ========






















                             See accompanying notes.


<PAGE>


            PAINE WEBBER INCOME PROPERTIES SEVEN LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          For the six months ended March 31, 1999 and 1998 (Unaudited)
                Increase (Decrease) in Cash and Cash Equivalents
                                 (In thousands)
                                                           1998         1997
                                                           ----         ----
Cash flows from operating activities:
  Net income                                            $    504      $ 5,458
  Adjustments to reconcile net income to
   net cash (used in) provided by
   operating activities:
    Depreciation and amortization                              -           51
    Amortization of deferred financing costs                   -            3
    Partnership's share of unconsolidated
      ventures' income                                      (683)        (731)
    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           38
      Accounts receivable                                      8          (22)
      Other assets                                            34            3
      Accounts payable and accrued expenses                  (45)          (9)
      Accounts payable - affiliates                            7           (1)
      Accrued interest payable                               (14)           -
      Accrued real estate taxes                              (62)         (38)
                                                        --------      -------
        Total adjustments                                   (623)      (5,180)
                                                        --------      -------
        Net cash (used in) provided by operating
          activities                                        (119)         278
                                                        --------      -------

Cash flows from investing activities:
   Net proceeds from sale of operating investment
     property                                                230            -
   Distributions from unconsolidated joint ventures        1,031        5,027
                                                        --------      -------
        Net cash provided by investing activities          1,261        5,027
                                                        --------      -------

Cash flows from financing activities:
   Distributions to partners                              (1,646)      (6,728)
   Principal payments on long-term debt                      (11)         (31)
                                                        --------      -------
        Net cash used in financing activities             (1,657)      (6,759)
                                                        --------      -------

Net decrease in cash and cash equivalents                   (515)      (1,454)
Cash and cash equivalents, beginning of period             1,530        2,856
                                                        --------      -------
Cash and cash equivalents, end of period                $  1,015      $ 1,402
                                                        ========      =======

Cash paid during the period for interest                $     32      $    89
                                                        ========      =======


                             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 March 31, 1999 and  September  30, 1998 and revenues and
expenses  for the three and six months  ended  March 31,  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, 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 $28,000 and $33,000 for the
six-month periods ended March 31, 1999 and 1998, respectively.  Accounts payable
- affiliates at March 31, 1999 and September 30, 1998 consist of management fees
of $14,000 and $7,000, respectively, payable to the Adviser.

      Included in general and  administrative  expenses for the six months ended
March 31,  1999 and 1998 is  $46,000  and  $44,000,  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 six months
ended March 31, 1999 and 1998 is $1,000 and $6,000,  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 March 31, 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 six
months ended March 31, 1999 and 1998 are as follows:

                    Condensed Combined Summary of Operations
           For the three and six months ended March 31, 1999 and 1998
                                 (in thousands)

                                      Three Months Ended   Six Months Ended
                                           March 31,           March 31,
                                      ------------------   ----------------
                                       1999      1998        1999     1998
                                       ----      ----        ----     ----

   Rental revenues and expense
     recoveries                       $1,701    $1,774      $3,468    $3,773
   Interest and other income              82        56         162       151
                                      ------    -------     ------    ------
                                       1,783     1,830       3,630     3,924

   Property operating expenses           417       403         902     1,063
   Interest expense                      322       353         665       792
   Real estate taxes                     367       397         710       821
   Depreciation and amortization         223       197         468       515
                                      ------    -------     ------    ------
                                       1,329     1,350       2,745     3,191
                                      ------    -------     ------    ------
   Operating income                      454       480         885       733

   Gain (loss) on sale of operating
     investment property                   -         -        (109)    4,869
                                      ------    ------      ------    ------
       Net income                     $  454    $  480      $  776    $5,602
                                      ======    ======      ======    ======


   Net income:
     Partnership's share of
       combined income                $  353    $  480      $  630    $5,334
     Co-venturers' share of
       combined income                   101         -         146       268
                                      ------    ------      ------    ------
                                      $  454    $  480      $  776    $5,602
                                      ======    ======      ======    ======


               Reconciliation of Partnership's Share of Operations
           For the three and six months ended March 31, 1999 and 1998
                                 (in thousands)


                                       Three Months Ended   Six Months Ended
                                           March 31,           March 31,
                                      ------------------   ----------------
                                       1999      1998        1999     1998
                                       ----      ----        ----     ----
   Partnership's share of
     combined income, as
     shown above                      $  353    $  480     $   630    $5,334
   Amortization of excess basis            -         -          (7)     (129)
                                      ------    ------     -------    ------
   Partnership's share of
     unconsolidated ventures'
     net income                       $  353    $  480     $   623    $5,205
                                      ======    ======     =======    ======
<PAGE>

      The  Partnership's  share  of  unconsolidated   ventures'  net  income  is
presented  as  follows  in  the   consolidated   statements  of  operations  (in
thousands):

                                      Three Months Ended   Six Months Ended
                                           March 31,           March 31,
                                      ------------------   ----------------
                                       1999      1998        1999     1998
                                       ----      ----        ----     ----

   Partnership's share of
     unconsolidated ventures'
     income                           $  353    $  480     $   683    $  731
   Partnership's share of gain
     (loss) on sale of
     operating investment
     property                              -         -         (60)    4,474
                                      ------    ------     -------    ------
   Partnership's share of
     unconsolidated ventures'
     net income                       $  353    $  480     $   623    $5,205
                                      ======    ======     =======    ======

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 six-month periods ended March 31, 1999 and 1998 (in thousands):


                                    Three Months Ended   Six Months Ended
                                           March 31,         March 31,
                                    ------------------   ----------------
                                       1999      1998        1999     1998
                                       ----      ----        ----     ----


  Repairs and maintenance           $     -    $    7     $     1    $    11
     Utilities                            -         1           1          2
     Insurance                            -         1           2          3
     Administrative and other             -        16           5         41
     Management fees                      -         4           4          8
                                    -------    ------     -------    -------
                                    $     -    $   29     $    13    $    65
                                    =======    ======     =======    =======

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 amounts 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.

      As previously  reported,  the Partnership  and its co-venture  partner had
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,  the Colony Apartments, a 783-unit complex
located in Mount Prospect,  Illinois.  The occupancy level at Colony  Apartments
averaged 98% for the quarter, up 1% from the prior quarter and comparable to the
99%  level for the same  period in the prior  year.  In  addition,  the  average
monthly rental rate per apartment unit is budgeted to increase by  approximately
3% over the next twelve months.  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.  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. During the current quarter,
the Partnership and its co-venture partner decided to re-market the property for
sale. The  Partnership  and its co-venture  partner are actively  pursuing these
marketing  efforts  and  expect  to  complete  a  sale  of  the  property  and a
liquidation of the  Partnership  before the end of calendar year 1999.  However,
there are no assurances  that the sale of the final asset and the liquidation of
the Partnership will be completed within this time frame.

      At March  31,  1999,  the  Partnership  had cash and cash  equivalents  of
approximately  $1,015,000.  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, 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 March 31, 1999
---------------------------------

      The Partnership reported net income of $298,000 for the three months ended
March 31,  1999,  as compared to $761,000 for the same period in the prior year.
This  decrease in the  Partnership's  net income is  attributable  to a $336,000
unfavorable  change in the Partnership's  operating income (loss) and a $127,000
decrease in the  Partnership's  share of unconsolidated  ventures'  income.  The
unfavorable  change  in the  Partnership's  operating  income  (loss)  is mainly
attributable to other income  recognized during the three months ended March 31,
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 three-month period.

      The decrease in  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% 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 increased by $13,000
for the current  three-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 the absence of any
income from the Colony Square joint  venture for the current  period as a result
of the sale of the property on November 17, 1998.

Six Months Ended March 31, 1999
-------------------------------

      The  Partnership  reported net income of $504,000 for the six months ended
March 31, 1999, as compared to $5,458,000 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 six-month  period ended March 31, 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  six-month  period.  Also
contributing to the unfavorable change in net income is an unfavorable change in
the Partnership's operating income (loss) of $376,000. The unfavorable change in
the Partnership's operating income (loss) is mainly attributable to other income
recognized  during the six months ended March 31, 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 an 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  six-month
period.  The unfavorable change in the Partnership's net operating income (loss)
is 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  Retail
Plaza was  mainly  due to a decline  in rental  revenues  as a result of a lower
average occupancy level.

      A  decrease  of  $48,000  in the  Partnership's  share  of  unconsolidated
ventures'  income also  contributed  to the  decrease in the  Partnership's  net
income for the current six-month period. The decrease in 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% to 77.6% in the current six 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 $157,000 for the current  six-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 Meadows on the Lake  Apartments
which reported an operating loss of $72,000 for the first quarter of fiscal 1998
prior to its sale 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:  May 24, 1999