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 December 31, 1998

                                    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: 0-14857


            PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
           -----------------------------------------------------
          (Exact name of registrant as specified in its charter)


            Virginia                                           04-2866287
            --------                                           ----------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


265 Franklin Street, Boston, Massachusetts                         02110
------------------------------------------                         -----
(Address of principal executive offices)                           (Zip Code)


Registrant's telephone number, including area code  (617) 439-8118
                                                    --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|.

<PAGE>

               PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS
                December 31, 1998 and March 31, 1998 (Unaudited)
                                 (In thousands)

                                     ASSETS
                                                 December 31    March 31
                                                 -----------    --------
Operating investment properties:
   Land                                           $    3,700    $     5,218
   Building and improvements                          18,943         32,691
                                                  ----------    -----------
                                                      22,643         37,909
   Less accumulated depreciation                     (10,181)       (15,131)
                                                  ----------    -----------
                                                      12,462         22,778

Investments in and notes receivable 
   from unconsolidated joint ventures,
   at equity                                          15,097         24,369
Cash and cash equivalents                              6,029          3,118
Restricted cash                                          258            150
Prepaid expenses                                           -             13
Accounts receivable                                       80             69
Accounts receivable - affiliates                          35            308
Net advances to consolidated ventures                    121              -
Deferred rent receivable                                  97            415
Deferred expenses, net                                   364            732
Other assets                                             478            290
                                                  ----------    -----------
                                                  $   35,021    $    52,242
                                                  ==========    ===========

                        LIABILITIES AND PARTNERS' CAPITAL

Net advances from consolidated ventures           $        -    $        32
Accounts payable and accrued expenses                    420            412
Interest payable                                         201             71
Bonds payable                                              -          1,420
Mortgage notes payable                                14,500         14,720
Partners' capital                                     19,900         35,587
                                                  ----------    -----------
                                                  $   35,021    $    52,242
                                                  ==========    ===========



                             See accompanying notes


<PAGE>


               PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS
   For the three and nine months ended December 31, 1998 and 1997 (Unaudited)
                      (In thousands, except per Unit data)

                                  Three Months Ended     Nine Months Ended
                                     December 31,           December 31, 
                                   -----------------     -----------------
                                    1998       1997        1998      1997
                                    ----       ----        ----      ----
Revenues:
   Rental income and expense
     reimbursements              $  1,441   $1,459     $  3,553     $ 2,971
   Interest and other income          426      112          540         246
                                 --------   ------     --------     -------
                                    1,867    1,571        4,093       3,217
Expenses:
   Interest expense                   298      361          864         846
   Depreciation and amortization      600      480        1,567       1,183
   Property operating expenses        635      673        1,365       1,230
   Real estate taxes                   67       71          227         230
   General and administrative         137      156          345         412
                                 --------   ------     --------     -------
                                    1,737    1,741        4,368       3,901
                                 --------   ------     --------     -------
Operating income (loss)               130     (170)        (275)       (684)

Gain on sale of operating
  investment property               7,401        -        7,401           -

Consolidated venture partner's
  share of operations                (187)       -         (187)          -

Investment income from 
 unconsolidated ventures:
   Interest income on notes 
     receivable from 
     unconsolidated ventures            -      200          400         600
   Partnership's share of 
     gains on sale of 
     unconsolidated operating
     investment properties         18,891        -       18,891           -
   Partnership's share of 
     unconsolidated ventures'
     income (losses)                 (599)     (17)         (82)         10
                                 --------   ------     --------     -------

Net income (loss)                $ 25,636   $   13      $26,148     $   (74)
                                 ========   =======     =======     ========

Net income (loss) per
 Limited Partnership Unit        $  12.69   $  0.01     $ 12.94     $ (0.04)
                                 ========   =======     =======     =======

Cash distributions per
 Limited Partnership Unit        $  20.41   $  0.25     $ 20.91     $  0.75
                                 ========   =======     =======     =======


   The above net income (loss) and cash  distributions  per Limited  Partnership
Unit are based upon the 2,000,000 Limited  Partnership Units outstanding  during
each period.
                             See accompanying notes.


<PAGE>


               PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP

        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
        For the nine months ended December 31, 1998 and 1997 (Unaudited)
                                 (In thousands)

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

Balance at March 31, 1997                     $   (950)        $ 38,813
Net loss                                            (1)             (73)
Cash distributions                                 (15)          (1,500)
                                              --------         --------
Balance at December 31, 1997                  $   (966)        $ 37,240
                                              ========         ========

Balance at March 31, 1998                     $   (973)        $ 36,560
Net income                                         275           25,873
Cash distributions                                 (15)         (41,820)
                                              --------         --------
Balance at December 31, 1998                  $   (713)        $ 20,613
                                              ========         ========























                             See accompanying notes


<PAGE>


               PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the nine months ended December 31, 1998 and 1997 (Unaudited) Increase
             (Decrease) in Cash and Cash Equivalents (In thousands)

                                                           1998       1997
                                                           ----       ----
Cash flows from operating activities:
  Net income (loss)                                    $  26,148    $    (74)
  Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Gain on sale of operating investment property          (7,401)          -
   Partnership's share of gains on sale of
     unconsolidated investment properties                (18,891)          -
   Consolidated venture partner's share of
     operations                                              187           -
   Partnership's share of unconsolidated 
     ventures' income (losses)                                82         (10)
   Depreciation and amortization                           1,567       1,183
   Amortization of deferred financing costs                   15          15
   Changes in assets and liabilities:
     Prepaid expenses                                         13         123
     Accounts receivable                                     (11)       (284)
     Accounts receivable - affiliates                        273         (45)
     Deferred rent receivable                                 19          (7)
     Deferred expenses                                      (236)        353
     Accounts payable and accrued expenses                     8        (333)
     Interest payable                                        130         (21)
     Net advances to/from consolidated ventures             (153)        112
                                                       ---------    --------
      Total adjustments                                  (24,398)      1,086
                                                       ---------    --------
      Net cash provided by operating activities            1,750       1,012
                                                       ---------    --------

Cash flows from investing activities:
  Net proceeds from sale of operating 
    investment property                                   15,589           -
  Distributions from unconsolidated joint ventures        28,683         852
  Additions to operating investment properties              (250)       (110)
  Net withdrawals from restricted cash                      (108)          -
  Additional investments in unconsolidated
    joint ventures                                          (602)       (971)
                                                       ---------    --------
      Net cash provided by (used in) 
        investing activities                              43,312        (229)
                                                       ---------    --------

Cash flows from financing activities:
  Repayment of principal on mortgage notes payable          (220)       (207)
  Repayment of district bond assessments                     (96)        (31)
  Distributions to partners                              (41,835)     (1,515)
                                                       ---------    --------
      Net cash used in financing activities              (42,151)     (1,753)
                                                       ---------    ---------

Net increase (decrease) in cash and cash equivalents       2,911        (970)
Cash and cash equivalents, beginning of period             3,118       4,617
                                                       ---------    --------
Cash and cash equivalents, end of period               $   6,029    $  3,647
                                                       =========    ========
Cash paid during the period for interest               $     719    $    831
                                                       =========    ========

Supplemental Schedule of Noncash Financing Activities:
------------------------------------------------------
  Assumption of bonds payable by buyer 
    of operating investment property                   $   1,324    $      -
                                                       =========    ========


                             See accompanying notes.


<PAGE>


               PAINEWEBBER EQUITY PARTNERS ONE 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  in  the
Partnership's Annual Report for the year ended March 31, 1998. 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.

      The  accompanying  financial  statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting  principles
which  requires  management to make  estimates and  assumptions  that affect the
reported amounts of assets and liabilities and disclosures of contingent  assets
and  liabilities  as of December  31, 1998 and March 31, 1998 and  revenues  and
expenses for each of the three- and  nine-month  periods ended December 31, 1998
and 1997. Actual results could differ from the estimates and assumptions used.

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

      Accounts  receivable - affiliates  at December 31, 1998 and March 31, 1998
includes $20,000 and $167,000, respectively, of investor servicing fees due from
several  joint  ventures  for  reimbursement  of certain  expenses  incurred  in
reporting  Partnership  operations to the Limited  Partners of the  Partnership.
Accounts  receivable - affiliates  at both  December 31, 1998 and March 31, 1998
also includes  $15,000 of expenses paid by the  Partnership  on behalf of one of
the   joint    ventures    during   fiscal   1993.    In   addition,    accounts
receivable-affiliates  at March 31, 1998  includes  $126,000  due from one joint
venture for interest earned on a permanent loan.

      Included in general and administrative expenses for the nine-month periods
ended  December  31,  1998  and 1997 is  $138,000  and  $136,000,  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-month
periods  ended  December 31, 1998 and 1997 is $4,000 and $10,000,  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  December  31,  1998,  the   Partnership  had  investments  in  two
unconsolidated  joint venture partnerships (four at December 31, 1997) which own
operating properties as more fully described in the Partnership's Annual Report.
The  unconsolidated  joint ventures are accounted for by using the equity method
because the Partnership does not have a voting control interest in the ventures.
Under the equity method, the assets,  liabilities,  revenues and expenses of the
unconsolidated  joint  ventures  do not  appear in the  Partnership's  financial
statements.  Instead,  the  investments  are  carried at cost  adjusted  for the
Partnership's  share of each venture's earnings,  losses and distributions.  The
Partnership reports its share of unconsolidated joint venture earnings or losses
three  months in arrears.  As discussed  further in Note 4,  effective in fiscal
1998 the  Partnership  assumed  control  over the  affairs  of  Warner/Red  Hill
Associates.  Accordingly,  this venture,  which had been accounted for under the
equity method in prior years, is presented on a consolidated  basis beginning in
the fourth quarter of fiscal 1998.

      On  October  2,  1998,  Lake  Sammamish   Limited   Partnership  and  Crow
PaineWebber  LaJolla  Limited  Partnership,  two  joint  ventures  in which  the
Partnership had an interest,  sold the properties  known as the Chandler's Reach
Apartments  and the Monterra  Apartments to the same  unrelated  third  parties.
Chandler's Reach, located in Redmond,  Washington,  was sold for $17.85 million,
and Monterra,  located in LaJolla,  California,  was sold for $20.1 million. The
Partnership received net proceeds of approximately  $12,359,000 from the sale of
Chandler's  Reach  after  deducting  closing  costs of  approximately  $561,000,
closing  proration  adjustments of approximately  $55,000,  the repayment of the
existing mortgage note of approximately  $3,415,000 and a prepayment  penalty of
approximately  $354,000 (of which $205,000 was paid by the buyer), and a payment
of  approximately  $1,311,000 to the  Partnership's  co-venture  partner for its
share of the sale proceeds in accordance with the joint venture  agreement.  The
Partnership received net proceeds of approximately  $14,796,000 from the sale of
Monterra  after  deducting  closing  costs of  approximately  $306,000,  closing
proration adjustments of approximately  $114,000,  the repayment of the existing
mortgage  note  of  approximately   $4,672,000  and  a  prepayment   penalty  of
approximately  $500,000 (of which $295,000 was paid by the buyer), and a payment
of approximately $7,000 to the Partnership's co-venture partner for its share of
the  sale  proceeds  in  accordance  with  the  joint  venture  agreement.   The
Partnership  distributed  $24,800,000  of the net proceeds from the sales of the
Chandler's Reach and Monterra  properties in the form of a special  distribution
to the Limited  Partners of $248 per original $1,000  investment on November 13,
1998.  The  remainder  of the  net  proceeds  were  retained  and  added  to the
Partnership's  cash  reserves  to ensure  that the  Partnership  has  sufficient
capital resources to fund its share of potential capital improvement expenses at
its  remaining  investment  properties.  Due  to  the  Partnership's  policy  of
reporting significant lag-period transactions in the period in which they occur,
the Partnership  accelerated  the  recognition of the operating  results of Lake
Sammamish Limited  Partnership and Crow PaineWebber  LaJolla Limited Partnership
during the quarter ended  December 31, 1998 and recorded gains of $9,208,000 and
$9,683,000, respectively, on the sales of the operating investment properties.

      Summarized  operations  of the  unconsolidated  joint  ventures,  for  the
periods indicated, are as follows:

                    Condensed Combined Summary Of Operations
        For the three and nine months ended September 30, 1998 and 1997
                                 (in thousands)

                                   Three Months Ended     Nine Months Ended
                                      September 30,          September 30,
                                   ------------------     -----------------
                                    1998       1997        1998      1997
                                    ----       ----        ----      ----

Revenues:
   Rental revenues and 
     expense recoveries           $ 2,914     $ 2,142     $ 8,527   $ 7,693
   Interest and other income           75          52         178       144
                                  -------     -------     -------   -------
                                    2,989       2,194       8,705     7,837
Expenses:
   Property operating expenses      1,128         762       2,767     2,912
   Real estate taxes                  606         526       1,575     1,577
   Mortgage interest expense        1,060         106       1,411       538
   Interest expense payable 
     to partner                         -         200         400       600
   Depreciation and 
     amortization                     776         552       2,300     2,153
                                  -------     -------     -------   -------
                                    3,570       2,146       8,453     7,780
                                  -------     -------     -------   -------
Operating income (loss)              (581)         48         252        57

Gains on sale of operating
  investment properties            21,756          -       21,756         -
                                  -------     -------     -------   -------

Net income                        $21,175     $   48      $22,008   $    57
                                  =======     ======      =======   =======

Net income:
   Partnership's share
     of combined income 
     (loss)                       $18,805     $   (5)     $19,345   $    45
   Co-venturers' share 
     of combined income  
     (loss)                         2,370         53        2,663        12
                                  -------     ------      -------   -------
                                  $21,175     $   48      $22,008   $    57
                                  =======     ======      =======   =======

               Reconciliation of Partnership's Share of Operations
         For the three and nine months ended December 31, 1998 and 1997
                                 (in thousands)

                                   Three Months Ended     Nine Months Ended
                                      December 31,          December 31,  
                                   ------------------     -----------------
                                    1998       1997        1998      1997
                                    ----       ----        ----      ----

   Partnership's share of
     combined income (losses),
     as shown above               $18,805     $  (5)      $19,345   $    45
   Amortization of excess basis      (513)      (12)         (536)      (35)
                                  -------     -----       -------   -------
   Partnership's share of
     unconsolidated ventures' 
     income (losses)              $18,292     $ (17)      $18,809   $    10
                                  =======     =====       =======   =======

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

                                    Three Months Ended     Nine Months Ended
                                        December 31,         December 31,  
                                    ------------------    ------------------
                                    1998       1997        1998      1997
                                    ----       ----        ----      ----

   Partnership's share of
     unconsolidated ventures' 
     income (losses)              $  (599)    $ (17)      $   (82)  $   10
   Partnership's share of
     gains on sale of 
     operating investment 
     properties                    18,891         -        18,891        -
                                  -------     -----       -------   ------
                                  $18,292     $ (17)      $18,809   $   10    
                                  =======     =====       =======   ======

4.   Operating Investment Properties
     ------------------------------- 

      At December  31,  1998,  the  Partnership's  balance  sheet  includes  two
operating  investment  properties (three at December 31, 1997): the wholly-owned
Crystal Tree Commerce Center and the Warner/Red Hill Business  Center,  owned by
Warner/Red Hill Associates,  a majority-owned  and controlled joint venture.  On
November  20,  1998,  Sunol  Center  Associates,  a joint  venture  in which the
Partnership had an interest,  sold the property known as the Sunol Center Office
Buildings,  to an  unrelated  third party for $15.75  million.  The Sunol Center
Office  Buildings  comprise  116,680 square feet of leasable  space,  located in
Pleasanton,  California.  The Partnership received net proceeds of approximately
$15,532,000  from the sale of Sunol  Center  after  deducting  closing  costs of
approximately  $161,000 and net closing  proration  adjustments of approximately
$57,000. As a result of the sale, the Partnership made a special distribution to
the Limited Partners of $15,520,000,  or $155.20 per original $1,000 investment,
on December 4, 1998.

      Effective  August 1,  1997,  the  co-venture  partner in  Warner/Red  Hill
Associates  assigned its interest in the joint venture to First Equity Partners,
Inc., the Managing General Partner of the  Partnership,  in return for a release
from any further obligations under the terms of the joint venture agreement.  As
a result,  the  Partnership  assumed control of the operations of the Warner/Red
Hill joint  venture.  Accordingly,  the venture is presented  on a  consolidated
basis in the Partnership's  financial statements beginning in the fourth quarter
of fiscal 1998.  Previously  the venture was  accounted for on the equity method
(see Note 3). The Crystal  Tree  Commerce  Center  consists  of three  one-story
retail plazas  containing  an aggregate of 74,923 square feet of leasable  space
and one four-story  office  building  containing  40,115 square feet of leasable
space, located in North Palm Beach, Florida. The Warner/Red Hill Business Center
consists of three  two-story  office  buildings  totalling  93,895 net  rentable
square feet located in Tustin, California. The Partnership's policy is to report
the operations of the consolidated joint ventures on a three-month lag. However,
the Partnership's policy is also to record significant  lag-period  transactions
in the period in which they occur. Accordingly,  the Partnership accelerated the
recognition  of the  operating  results of Sunol  Center  Associates  during the
quarter ended December 31, 1998 and recorded a gain of $7,401,000 on the sale of
the operating investment property.

      The following is a combined summary of property operating expenses for the
Crystal Tree Commerce  Center,  the Sunol Center Office  Buildings  (through the
date of sale) and the  Warner/Red  Hill  Business  Center  (fiscal 1999 only) as
reported in the  Partnership's  consolidated  statements of  operations  for the
three and nine months ended December 31, 1998 and 1997 (in thousands):

                                   Three Months Ended   Nine Months Ended
                                       December 31,        December 31,        
                                   ------------------   ------------------ 
                                    1998       1997        1998      1997
                                    ----       ----        ----      ----
     Property operating expenses:
      Insurance                    $   14    $  36       $   44   $   66
      Repairs and maintenance         245      248          506      438
      Utilities                       119      169          279      264
      Management fees                  81       56          129      106
      Administrative and other        176      164          407      356
                                   ------    -----       ------   ------
                                   $  635    $ 673       $1,365   $1,230
                                   ======    =====       ======   ======

5.    Bonds Payable
      -------------

      Bonds  payable at December  31, 1997  consisted  of the Sunol Center joint
venture's  share of  liabilities  for bonds  issued  by the City of  Pleasanton,
California for public  improvements  that  benefited the Sunol Center  operating
investment  property.  Bond  assessments  were levied on a semi-annual  basis as
interest  and  principal  became  due on the  bonds.  The  bonds  for  which the
operating  investment  property was subject to assessment bore interest at rates
ranging from 5% to 7.87%,  with an average rate of 7.2%.  Principal and interest
were payable in  semi-annual  installments  and were due to mature in years 2004
through 2017. As a result of the sale of the  operating  investment  property on
November  20,  1998 (see Note 4), the  liability  for the bond  assessments  was
transferred to the buyer.

6.    Mortgage Notes Payable
      ----------------------

     Mortgage  notes  payable at December 31, 1998 and March 31, 1998 consist of
the following (in thousands):

                                                 December 31      March 31
                                                 -----------      --------

     9.125%  nonrecourse loan payable to
     an  insurance  company,   which  is
     secured  by the 625 North  Michigan
     Avenue     operating     investment
     property.  The  terms  of the  note
     were  modified  effective  May  31,
     1994.  Monthly payments,  including
     interest,  of $55 are due beginning
     July 1, 1994  through  maturity  on
     May 31, 1999. In addition, the loan
     requires   monthly  deposits  to  a
     capital   improvement  escrow.  The
     fair  value  of the  mortgage  note
     payable  approximated  its carrying
     value  at  December  31,  1998  and
     March 31, 1998.                              $ 6,114        $ 6,188

     8.39%  nonrecourse  note payable to
     an  insurance  company,   which  is
     secured   by   the   Crystal   Tree
     Commerce      Center      operating
     investment    property.     Monthly
     payments,  including  interest,  of
     $28 are due beginning  November 15,
     1994 through  maturity on September
     19,  2001.  The  fair  value of the
     mortgage note payable  approximated
     its carrying  value at December 31,
     1998  and  March  31,  1998.                   3,275          3,318

     Nonrecourse   note  payable  to  an
     insurance  company which is secured
     by the  Warner/Red  Hill  operating
     investment  property.  The note was
     amended  and  restated  during 1994
     (see  discussion  below).  The note
     bears interest at 2.875% per annum,
     requires  monthly  payments  of $24
     and has a scheduled  maturity  date
     of August  1, 2003.                            5,111          5,214  
                                                  -------        -------   
                                                  $14,500        $14,720
                                                  =======        =======

      During the quarter ended December 31, 1993, the Partnership negotiated and
signed a letter of intent  with the  existing  lender to modify  and  extend the
maturity of a zero coupon loan secured by the  Warner/Red  Hill Office  Building
with an accreted principal balance of $5,763,000. The terms of the extension and
modification  agreement,  which was  finalized  in August  1994,  provided for a
10-year  extension of the note  effective as of the  original  maturity  date of
August 15, 1993.  During the term of the agreement,  the loan will bear interest
at 2.875% per annum and monthly  principal and interest payments of $24,000 will
be required. In addition, the lender required a participation in the proceeds of
a  future  sale or debt  refinancing  in order to  enter  into  this  agreement.
Accordingly,  upon the sale or refinancing of the Warner/Red Hill property,  the
lender will receive 40% of the residual value of the property, as defined, above
a specified  level after the  repayment of the  outstanding  balance of the loan
payable. The extension and modification  agreement also required the Partnership
to establish an escrow account in the name of the joint venture and to fund such
escrow with an equity  contribution  of $350,000.  The escrowed  funds are to be
used  solely  for the  payment  of  capital  and  tenant  improvements,  leasing
commissions and real estate taxes related to the Warner/Red  Hill property.  The
balance  of the  escrow  account  is to be  maintained  at a  minimum  level  of
$150,000.  In the event that the escrow  balance falls below  $150,000,  all net
cash flow from the property is to be deposited into the escrow until the minimum
balance is re-established.  It is not practicable for management to estimate the
fair value of the mortgage note secured by the Warner/Red Hill property  without
incurring excessive costs due to the unique terms of the note.

      In  addition  to  the  long-term   mortgage  debt  described   above,  the
Partnership had indemnified  Crow/PaineWebber - LaJolla, Ltd. and Lake Sammamish
Limited  Partnership,  along with the related co-venture  partners,  against all
liabilities,  claims and expenses  associated with certain  outstanding  secured
borrowings of the  unconsolidated  joint  ventures.  During  September 1994, the
Partnership  obtained two new  nonrecourse,  current-pay  mortgage  loans in the
amounts of $3,600,000  secured by the Chandler's Reach Apartments and $4,920,000
secured  by  the  Monterra   Apartments.   The  Chandler's  Reach  and  Monterra
nonrecourse loans, which were recorded on the books of the unconsolidated  joint
ventures,  both had  terms of  seven  years  and were  scheduled  to  mature  in
September of 2001.  The  Chandler's  Reach loan bore interest at a rate of 8.33%
and required monthly  principal and interest  payments of $29,000.  The Monterra
loan  bore  interest  at a rate of 8.45%  and  required  monthly  principal  and
interest  payments of $40,000.  As discussed  further in Note 3, the outstanding
balances of these  mortgage  loans were repaid in full out of the proceeds  from
the sales of the  Chandler's  Reach and Monterra  properties  which  occurred on
October 2, 1998.


<PAGE>

               PAINEWEBBER EQUITY PARTNERS ONE 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 March 31, 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
-------------------------------

      In light of the continued strength in the national real estate market with
respect to multi-family  apartment properties and the recent improvements in the
office/R&D  property markets,  management believes that this may be an opportune
time to begin the  process of selling  the  Partnership's  operating  investment
properties.  As a result,  management has been focusing on potential disposition
strategies  for  the  remaining  investments  in  the  Partnership's  portfolio.
Although there are no assurances, it is currently contemplated that sales of the
Partnership's  remaining  assets could be completed by the end of calendar  year
1999.  As  discussed  further  below,  marketing  efforts  for  the  sale of the
Chandler's Reach and Monterra apartment  properties commenced during the quarter
ended June 30,  1998,  and both  properties  were sold on  October  2, 1998.  In
addition, Sunol Center was sold on November 20, 1998. The operations of the four
remaining commercial office and retail properties in the Partnership's portfolio
are either stable or  improving.  As discussed  further  below,  management  has
tentative  plans to market the 1881  Worcester Road property for sale as soon as
certain leasing and environmental issues are resolved. Given the zoning approval
recently  received at the 625 North  Michigan  property,  as  discussed  further
below,  and the recent leasing  improvements  at the Crystal Tree and Warner/Red
Hill properties,  the Partnership is also exploring potential sale opportunities
for these properties.

      On  October  2,  1998,  Lake  Sammamish   Limited   Partnership  and  Crow
PaineWebber  LaJolla  Limited  Partnership,  two  joint  ventures  in which  the
Partnership had an interest,  sold the properties  known as the Chandler's Reach
Apartments  and the Monterra  Apartments to the same  unrelated  third  parties.
Chandler's Reach, located in Redmond,  Washington,  was sold for $17.85 million,
and Monterra,  located in LaJolla,  California,  was sold for $20.1 million. The
Partnership received net proceeds of approximately  $12,359,000 from the sale of
Chandler's  Reach  after  deducting  closing  costs of  approximately  $561,000,
closing  proration  adjustments of approximately  $55,000,  the repayment of the
existing mortgage note of approximately  $3,415,000 and a prepayment  penalty of
approximately  $354,000 (of which $205,000 was paid by the buyer), and a payment
of  approximately  $1,311,000 to the  Partnership's  co-venture  partner for its
share of the sale proceeds in accordance with the joint venture  agreement.  The
Partnership received net proceeds of approximately  $14,796,000 from the sale of
Monterra  after  deducting  closing  costs of  approximately  $306,000,  closing
proration adjustments of approximately  $114,000,  the repayment of the existing
mortgage  note  of  approximately   $4,672,000  and  a  prepayment   penalty  of
approximately  $500,000 (of which $295,000 was paid by the buyer), and a payment
of approximately $7,000 to the Partnership's co-venture partner for its share of
the sale proceeds in accordance with the joint venture agreement.

      Despite  incurring sizable  prepayment  penalties on the repayment of both
outstanding first mortgage loans,  management  believed that the current sale of
the  Chandler's  Reach and Monterra  properties was in the best interests of the
Limited Partners due to the exceptionally strong market conditions that exist at
the present time and which resulted in the achievement of very favorable selling
prices.  The  Partnership  distributed  $24,800,000 of the net proceeds from the
sales of the Chandler's  Reach and Monterra  properties in the form of a special
distribution to the Limited  Partners of $248 per original $1,000  investment on
November 13, 1998.  The remainder of the net proceeds were retained and added to
the  Partnership's  cash reserves to ensure that the  Partnership has sufficient
capital resources to fund its share of potential capital improvement expenses at
its  remaining  investment  properties.  Due  to  the  Partnership's  policy  of
reporting significant lag-period transactions in the period in which they occur,
the Partnership  accelerated  the  recognition of the operating  results of Lake
Sammamish Limited  Partnership and Crow PaineWebber  LaJolla Limited Partnership
during the quarter ended  December 31, 1998 and recorded gains of $9,208,000 and
$9,683,000, respectively, on the sales of the operating investment properties.

      During the quarter ended June 30, 1998, the  Partnership  began  exploring
potential  opportunities  to sell Sunol Center.  As part of these  efforts,  the
Partnership   initiated  discussions  with  real  estate  firms  with  a  strong
background in selling properties like Sunol Center. The Partnership subsequently
selected  a  national  firm that is a leading  seller of this type of  property.
Preliminary  sales  materials were prepared and initial  marketing  efforts were
undertaken.  A  marketing  package was then  finalized  and  comprehensive  sale
efforts began in June 1998. As a result of those  efforts,  several  offers were
received.  After  completing  an  evaluation  of these  offers and the  relative
strength of the prospective  purchasers,  the  Partnership  selected an offer. A
purchase  and  sale  agreement  was  negotiated  with an  unrelated  third-party
prospective buyer on September 21, 1998 and a non-refundable deposit of $750,000
was made on October 21, 1998. On November 20, 1998, Sunol Center  Associates,  a
joint venture in the Partnership had an interest, sold the property known as the
Sunol  Center  Office  Buildings,  located in  Pleasanton,  California,  to this
unrelated third party for $15.75 million.  The Partnership received net proceeds
of  approximately  $15,532,000  from the sale of Sunol  Center  after  deducting
closing costs of approximately $161,000 and net closing proration adjustments of
approximately  $57,000.  As a result of the sale, the Partnership made a special
distribution  to the Limited  Partners of  $15,520,000,  or $155.20 per original
$1,000  investment,  on December  4, 1998.  Due to the  Partnership's  policy of
recording significant lag-period transactions in the period in which they occur,
the Partnership  accelerated  the recognition of the operating  results of Sunol
Center Associates during the quarter ended December 31, 1998 and recorded a gain
of $7,401,000 on the sale of the operating investment  property.  With the sales
of the Chandler's Reach Apartments,  Monterra Apartments and Sunol Center Office
Buildings  during  the  quarter  ended  December  31,  1998,  and the  resulting
reduction  in  distributable  cash flow to be received by the  Partnership,  the
payment of a regular quarterly  distribution will be discontinued beginning with
the quarter  ending March 31, 1999. A final regular  quarterly  distribution  of
$5.00 per original  $1,000  investment,  which is  equivalent to a 2% annualized
rate of return on an original  $1,000  investment  will be made on February  12,
1999 for the quarter ended December 31, 1998.

      The 64,000 square foot 1881 Worcester Road Office Building was 100% leased
as of December 31, 1998, unchanged from the previous quarter.  With the property
100% leased to two  financially  strong tenants and no lease  expirations  until
2002,  management had been developing  potential sale strategies for this asset.
However,  during the first quarter of fiscal 1999 the tenant  leasing the entire
second floor of the property  informed the Partnership  that it is consolidating
its operations and requested a lease  termination.  This tenant's lease does not
expire until February 28, 2003. Negotiations with this tenant concerning a lease
termination  agreement continued during the third fiscal quarter.  During fiscal
1998,  the former  operator of a gas station  abutting the 1881  Worcester  Road
property  notified the  Partnership of a leak in an underground  storage tank on
the gas  station  property  and of the risk of  potential  contamination  of the
Partnership's  property.  Subsequent  to  this  notification,   the  Partnership
received an indemnification  from the former operator of the gas station against
any loss, cost or damage resulting from failure to remediate the  contamination.
The  extent  of the  contamination  and  any  resulting  impact  on  the  future
operations  and  market  value of the 1881  Worcester  Road  property  cannot be
determined at the present time. Negotiations are continuing with the operator of
the gas station to discuss the proposed clean-up plan.  Management believes that
the uncertainty  regarding the lease  termination  request and the contamination
issue could depress the sale price for the property.  As a result, the marketing
efforts for this property have been delayed.  After the re-leasing of the second
floor and resolution of the ground water  contamination  issue, this property is
expected to be marketed for sale.

      The  Warner/Red  Hill  Business  Center was 99% leased and  occupied as of
December 31,  1998,  compared to 97% leased and occupied at the end of the prior
quarter.  During the third  quarter of fiscal  1998, a tenant  occupying  13,160
square feet  declared  bankruptcy  and moved from the building in January  1998.
During the quarter ended June 30, 1998,  the  Partnership  signed a lease with a
replacement  tenant for the entire  13,160  square foot space.  This tenant took
occupancy  during the  quarter  ended  September  30,  1998.  In  addition,  the
bankruptcy case with the tenant that previously  occupied the 13,160 square foot
space was resolved during the second quarter,  with the Partnership  receiving a
settlement  of  $100,701  before  payment  of  attorney  fees.  During the third
quarter,  one tenant  signed a new lease for a total of 1,702 square feet.  Over
the next 12 months,  leases with four tenants will expire. Only one tenant, that
occupies  15,266  square  feet,  is not  expected  to renew its  lease.  With an
occupancy level of 99% and a stable base of tenants, the Partnership believes it
may be an opportune time to sell Warner/Red Hill Business  Center.  As part of a
plan to market the  property  for sale,  discussions  were  initiated  with real
estate  firms  with a  specialty  in selling  properties  like  Warner/Red  Hill
Business Center.  The Partnership  subsequently  selected a national real estate
firm that is a leading  seller of this property type to market  Warner/Red  Hill
for sale. As previously  reported,  the  co-venture  partner in Warner/Red  Hill
Associates  assigned its interest in the joint venture to First Equity Partners,
Inc., the Managing General Partner of the  Partnership,  in return for a release
from any further obligations under the terms of the joint venture agreement.  As
a result,  the  Partnership  assumed control of the operations of the Warner/Red
Hill joint  venture.  Accordingly,  the venture is presented  on a  consolidated
basis in the Partnership's  financial statements beginning in the fourth quarter
of fiscal  1998.  Previously  the venture had been  accounted  for on the equity
method.

      The 625 North  Michigan  Office  Building  in Chicago,  Illinois,  was 96%
leased and 95% occupied at December 31, 1998.  During the third  quarter,  a new
tenant  signed a lease and took  occupancy  of 2,602  square  feet of space.  In
addition,  one tenant occupying 2,115 square feet renewed its lease.  During the
second  quarter,  a lease was  signed  with an  existing  tenant  that  occupies
approximately  8,000  square feet.  This tenant will  relocate and expand into a
total of 10,200 square feet.  The space is still being  renovated in preparation
for the  tenant's  occupancy  which is now expected to occur by the end of March
1999. The downtown  Chicago real estate market continues to display an improving
trend.  A  competitive  office  property  within the local  market has  recently
obtained  approvals to convert its lower floors into a hotel. This should result
in the  removal of 290,000  square  feet of office  space  from the  market.  In
addition,  an office  tenant at that  property has  recently  completed a 62,000
square foot expansion, which brings the occupancy level in the building's office
portion to 100%. In this local market,  where there is no current or planned new
construction of office space, this reduction in vacant office space has resulted
in a reduction in the market  vacancy  level and places more upward  pressure on
rental rates.  The higher  effective rents currently being achieved at 625 North
Michigan are expected to increase cash flow and value as new tenants sign leases
and existing tenants sign lease renewals in calendar year 1999. Retail and hotel
development  in  the  local  market  continues,  as  evidenced  by  plans  for a
Nordstrom's-anchored  95,000  square  foot  retail  development  which  recently
received  preliminary approval from the City. This proposed  development,  which
will be located  two blocks  from 625 North  Michigan,  is part of a master plan
that  includes  several  new  hotels,   entertainment  and  parking   facilities
encompassing  five city  blocks.  Management  continues  to analyze a  potential
project for the property which includes an upgrade to the building lobby and the
addition of a major retail  component to the building's  North  Michigan  Avenue
frontage.  Rental rates paid by high-end  retailers on North Michigan Avenue are
substantially greater than those paid by office tenants. While the costs of such
a project would be substantial,  it could have a significant  positive effect on
the market value of the 625 North  Michigan  property.  During the quarter ended
June 30, 1998,  preliminary  approval was received  from the City to enclose the
arcade  sections of the first floor of the 625 North  Michigan  building,  which
opens  the way for  this  potential  retail  development.  Formal  approval  was
received at the September  meeting of the City  Council.  Now that this approval
has been obtained, the Partnership is exploring potential sale opportunities for
this property.

      The Crystal Tree  Commerce  Center in North Palm Beach,  Florida  remained
100% leased and occupied  for the quarter  ended  December 31, 1998.  During the
third quarter, five tenants occupying a total of 5,343 square feet renewed their
leases.  Two tenants  occupying  2,493 square feet moved from the Center and the
space was leased to two new tenants.  Over the next twelve  months,  leases with
seven  tenants  occupying  7,294 square feet will expire.  All seven tenants are
expected to renew their leases.  Rental rates and occupancy  levels in the local
market are continuing to increase gradually.  However, rents are not expected to
rise to a level  over  the  near  term  that  would  justify  new  construction.
Management is continuing to position Crystal Tree Commerce Center for a possible
sale by having the property's management and leasing team negotiate rental rates
for new leases on a  triple-net  basis.  This  requires  each  tenant to be 100%
responsible for its share of operating expenses. Currently, 61% of the leases at
the property are on a triple-net basis. Consequently,  at this time the property
owner is responsible for the tenant's portion of operating expenses above a base
amount for a total of 39% of the  leases.  Because  most new leases in the local
market are on a  triple-net  basis,  this  conversion  is  expected  to increase
interest  from  prospective  buyers of the  property and result in a higher sale
price.  With the  occupancy  level of 100% and a  stable  base of  tenants,  the
Partnership  believes it may be an opportune  time to sell Crystal Tree Commerce
Center.  As part of a plan to market  the  property  for sale,  the  Partnership
selected a Florida  real  estate  firm that is a leading  seller of this type of
property.  Preliminary  sales  materials  were  prepared  and initial  marketing
efforts  were   undertaken.   A  marketing   package  was  then   finalized  and
comprehensive  sale efforts  began in December  1998.  As a result of these sale
efforts,  twelve offers were received subsequent to the quarter-end.  As part of
the sale efforts to reduce the  prospective  buyer's due diligence  work and the
time required to complete it, updated operating reports as well as environmental
information  on the property were provided to the top  prospective  buyers,  who
were then asked to submit best and final offers and did so. After  completing an
evaluation  of  these  offers  and  the  relative  strength  of the  prospective
purchasers,  the Partnership will select an offer and currently expects to begin
negotiating a purchase and sale  agreement by February 28, 1999.  Since any sale
remains  contingent  upon,  among other things,  the negotiation of a definitive
sales agreement and satisfactory completion of the buyer's due diligence,  there
are no assurances that a sale transaction will be completed.

      At December 31, 1998, the Partnership and its  consolidated  joint venture
had available  cash and cash  equivalents  of  approximately  $6,029,000.  These
funds,  along  with the  future  cash  flow  distributions  from  the  operating
properties,  will  be  utilized  for the  working  capital  requirements  of the
Partnership,  monthly loan  payments,  the funding of capital  enhancements  and
potential  leasing  costs  for  its  commercial  property  investments,  and for
distributions to the partners.  The source of future liquidity and distributions
to the  partners  is  expected  to be from  the  sales  or  refinancings  of the
remaining  operating  investment  properties.  Such  sources  of  liquidity  are
expected to be sufficient to meet the  Partnership's  needs on both a short-term
and long-term basis.

      As noted above, the Partnership  expects to be liquidated prior to the end
of calendar 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 December 31, 1998
------------------------------------

      The  Partnership  had net income of $25,636,000 for the three months ended
December  31,  1998 as  compared to net income of $13,000 for the same period in
the prior year.  The increase in net income was  primarily a result of the gains
realized  from the sale of three  operating  investment  properties  during  the
current  period.   As  discussed   further  above,   the  Partnership  sold  the
consolidated  Sunol Center Office  Buildings on November 20, 1998 and realized a
gain of $7,401,000.  The  Partnership  also realized gains from the sales of the
unconsolidated  Monterra Apartments and Chandler's Reach Apartments,  which were
both sold on October 2, 1998,  in the  amounts  of  $9,208,000  and  $9,683,000,
respectively.

      In addition to the gains  realized  from the sales of the three  operating
investment properties, the Partnership reported operating income of $130,000 for
the three  months ended  December  31, 1998 as compared to an operating  loss of
$170,000 for the same period in the prior year. This $300,000  favorable  change
in operating  income (loss) is primarily a result of an increase in interest and
other  income of  $314,000.  Interest  and  other  income  increased  due to the
interest income earned on the sales proceeds from the three operating investment
properties  discussed above. As noted above, a portion of the sale proceeds from
the Monterra and  Chandler's  Reach  transactions  was retained and added to the
Partnership's  cash reserves.  In addition,  due to the Partnership's  policy of
reporting all  significant  lag-period  transactions in the period in which they
occur,  the current  three-month  period ended  December  31, 1998  includes the
operating results of Sunol Center for the four and two-third months from July 1,
1998 through November 20, 1998, the date of sale, as compared to three months of
operations  for the same period in the prior  year.  Sunol's  operating  results
improved by approximately $92,000 mainly due to an increase in rental income.

      The Partnership's share of losses from  unconsolidated  ventures increased
by $582,000 during the three months ended December 31, 1998 when compared to the
same  period in the prior year.  This  increase  in the  Partnership's  share of
losses  from  the  unconsolidated  ventures  was  primarily  the  result  of the
prepayment penalties incurred in order to sell the Monterra and Chandler's Reach
properties. In order to prepay the outstanding debt on these two properties, the
joint  ventures  incurred   prepayment   penalties  of  $500,000  and  $354,000,
respectively.  The impact of the prepayment penalties was partially offset by an
increase in operating income from the Monterra and Chandler's Reach  properties,
mainly due to the acceleration of the lag-period discussed further above.

Nine Months Ended December 31, 1998
-----------------------------------

      The  Partnership  had net income of $26,148,000  for the nine months ended
December  31,  1998 as  compared to a net loss of $74,000 for the same period in
the prior year. The favorable change in net income (loss) was primarily a result
of the gains  realized from the sale of three  operating  investment  properties
during the current period.  As discussed further above, the Partnership sold the
consolidated  Sunol Center Office  Buildings on November 20, 1998 and realized a
gain of $7,401,000.  The  Partnership  also realized gains from the sales of the
unconsolidated  Monterra Apartments and Chandler's Reach Apartments,  which were
both sold on October 2, 1998,  in the  amounts  of  $9,208,000  and  $9,683,000,
respectively.

      In addition to the gains  realized  from the sales of the three  operating
investment  properties,  the Partnership  reported an operating loss of $275,000
for the nine months ended  December 31, 1998 as compared to an operating loss of
$684,000  for the same  period in the prior year.  This  $409,000  reduction  in
operating loss is primarily a result of an increase in interest and other income
of  $394,000.  Interest and other income  increased  due to the interest  income
earned on the sales  proceeds  from the three  operating  investment  properties
discussed  above.  As noted  above,  a  portion  of the sale  proceeds  from the
Monterra  and  Chandler's  Reach  transactions  was  retained  and  added to the
Partnership's  cash reserves.  In addition,  due to the Partnership's  policy of
reporting all  significant  lag-period  transactions in the period in which they
occur,  the current  nine-month  period  ended  December  31, 1998  includes the
operating  results of Sunol Center for the ten and two-third months from January
1, 1998 through  November 20, 1998, the date of sale, as compared to nine months
of operations for the same period in the prior year.  Sunol's  operating results
improved by approximately $95,000 mainly due to an increase in rental income.

      The Partnership's share of losses from unconsolidated ventures was $82,000
during the nine months ended December 31, 1998, as compared to income of $10,000
for  the  same  period  in  the  prior  year.  This  unfavorable  change  in the
Partnership's  share of  unconsolidated  ventures' income (losses) was primarily
the result of the  prepayment  penalties  incurred in order to sell the Monterra
and Chandler's  Reach  properties.  In order to prepay the  outstanding  debt on
these two  properties,  the joint  ventures  incurred  prepayment  penalties  of
$500,000 and $354,000,  respectively. The impact of the prepayment penalties was
partially  offset by an  increase in  operating  income  from the  Monterra  and
Chandler's  Reach  properties,  mainly due to the acceleration of the lag-period
discussed further above.
<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) Reports on Form 8-K:

     A Current  Report on Form 8-K dated  October  2, 1998 was filed  during the
current  quarter  to report  the  sales of the  Chandler's  Reach  and  Monterra
Apartment  properties  and  is  hereby  incorporated  herein  by  reference.  An
additional  Current  Report on Form 8-K dated November 20, 1998 was filed during
the current quarter to report the sale of the Sunol Center Office  Buildings and
is hereby incorporated herein by reference.



<PAGE>



                    PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the  Partnership  has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                         PAINEWEBBER EQUITY PARTNERS ONE
                               LIMITED PARTNERSHIP


                         By: First Equity Partners, Inc.
                             ---------------------------
                             Managing General Partner





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



Dated:  February 9, 1999