Shearson Union Square Associates Ltd Partnership – ‘10-K’ for 12/31/94

As of:  Friday, 3/31/95   ·   For:  12/31/94   ·   Accession #:  928790-95-13   ·   File #:  33-06678

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Annual Report   —   Form 10-K
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         27±   113K 
 2: EX-27       Union Square Hotel Partners L.P. Financial Data        1      5K 
                          Schedule for 1994 Year-End 10-K                        

10-K   —   Annual Report
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION                                
Washington, D.C. 20549                                                          

FORM 10-K                                                                       

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE   
ACT OF 1934                                                                     

For the fiscal year ended December 31, 1994                                     

OR                                                                              

[  ] TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        
EXCHANGE ACT OF 1934                                                            

Commission file number:  33-6678                                                

UNION SQUARE HOTEL PARTNERS LIMITED PARTNERSHIP                                 
Exact name of registrant as specified in its charter                            

Delaware                                      13-3389008                        
State or other jurisdiction of incorporation  I.R.S. Employer Identification No.

3 World Financial Center, 29th Floor, New York, New York   10285                
Address of principal executive offices                     zip code             

Registrant's telephone number, including area code: (212) 526-3237              

Securities registered pursuant to Section 12(b) of the Act:  None               

Securities registered pursuant to Section 12(g) of the Act:                     

DEPOSITARY UNITS OF LIMITED PARTNERSHIP INTEREST                                
Title of Class                                                                  

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 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                                                  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-K is not contained herein, and will not be contained, to the    
best of the Registrant's knowledge, in definitive proxy or information          
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K.   (x)                                              

Documents Incorporated by Reference:  See Exhibit Index on Page 8.              

PART I                                                                          

Item 1.  Business                                                               

(a)     General Development of Business.                                        

Union Square Hotel Partners L.P. (the "Partnership), formerly Shearson Union    
Square Associates L.P. (see Item 10.  "Certain Matters Involving Affiliates"),  
is a Delaware limited partnership formed in June 1986.  The general partner of  
the Partnership is Union Square/GP Corp., (the "General Partner"), formerly     
Shearson Union Square/GP Corp. (see Item 10.  "Certain Matters Involving        
Affiliates"), a Delaware corporation and an affiliate of Lehman Brothers Inc.   
("Lehman"), formerly Shearson Lehman Brothers Inc. (see Item 10.  "Certain      
Matters Involving Affiliates").  The Partnership was formed to acquire the      
Hyatt on Union Square (the "Property" or "Hotel") located in San Francisco,     
California and operated under a long-term lease (the "Operating Lease") by      
California Hyatt Corporation ("California Hyatt"), a subsidiary of Hyatt        
Corporation ("Hyatt").  The Hotel was renamed the Grand Hyatt San Francisco on  
February 1, 1990.  See Note 3 to the Financial Statements contained herein at   
Item 8 for additional information concerning the Hotel and the Operating Lease. 

Between September 24, 1986, the date of the initial closing, and March 26,      
1987, the date of the final closing, 7,174,100 depositary units of limited      
partnership interest ("Units", holders of Units are herein referred to as       
"Unitholders") were issued.  The net proceeds of the offering, after payment of 
offering and organization costs and acquisition fees aggregated $67,650,091.    

The Partnership commenced operation on August 29, 1986 with the acquisition of  
the Hotel for a purchase price of $127,727,472.  The purchase price, related    
costs and establishment of initial reserve accounts were funded by the issuance 
of (1) a first mortgage loan (the "Mortgage Loan") for $70,000,000; (2) a loan  
payable secured by a second mortgage on the Hotel (the "Loan Payable") for      
$13,325,000; and (3) a note payable (the "Note Payable") for $55,000,000.  The  
Note Payable was issued by an affiliate of the General Partner to enable the    
Partnership to consummate the purchase of the Hotel and was repaid in full on   
January 13, 1987 from the proceeds of the offering.                             

Renovation Plan.  During 1988, the Partnership and California Hyatt mutually    
agreed upon a renovation program (the "Renovation Plan") which was to be        
effected for a cost not expected to exceed $20,000,000.  During 1989 and early  
1990, the Renovation Plan was completed.  The Hotel was renamed The Grand Hyatt 
San Francisco and reopened on February 1, 1990.  The total amount expended      
toward the Renovation Plan was $20,676,768, of which $1,886,383 came from the   
FF&E Reserve Fund, $1,874,379 was the California Hyatt's contribution and       
$16,916,006 was funded by the Partnership.  For information regarding the       
financing of the Renovation Plan, please refer to Note 3 to the Financial       
Statements contained herein at Item 8.                                          

The Restructuring.  Due to the funding of the Renovation Plan and the downturn  
in operating results of the Hotel, the Partnership experienced decreasing       
levels of liquidity.  As a result, the Partnership was not able to meet its     
January 2, 1992 debt-service payment with respect to the Mortgage Loan or the   
December 31, 1991 repayment of an unsecured note due to the Mortgage Lender     
with respect to the Renovation Plan (the "Unsecured Note").  Following the      
Partnership's receipt of a notice of default (the "Default Notice") and the     
acceleration of the Partnership's debt obligations, the Partnership consummated 
a restructuring of its financing and property leasing arrangements (the         
"Restructuring").  See Note 4 to the Financial Statements which is incorporated 
herein by reference thereto for information concerning the terms of the         
Restructuring.                                                                  

(b)     Financial Information About Industry Segments.                          
The Partnership's sole business is to own and lease the Hotel that is operated  
by California Hyatt, under the Operating Lease.  All of the Partnership's       
revenues and assets relate solely to such industry segment.                     

(c)     Narrative Description of Business.                                      
The Partnership's principal objectives were to (i) provide quarterly cash       
distributions, a portion of which were anticipated to be non-taxable due to     
depreciation deductions, (ii) preserve and protect capital and (iii) achieve    
long-term appreciation in the value of the Property for distribution upon sale. 
However, due to the poor economic conditions in the hospitality industry and    
the resulting decline in the Hotel's operations, objective (i) has not been     
achieved and it is unlikely that objectives (ii) and (iii) can be achieved.     

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Competition.                                                                    
The Hotel operates in a highly competitive market.  The Partnership has         
identified 21 existing first-class and luxury properties with a total of        
approximately 12,885 guest rooms which are competitive with the Hotel.          

The Westin St. Francis, the Hyatt Regency, the Fairmont Hotel, the Ritz Carlton 
and the Sheraton Palace with a total of 3,485 guest rooms are considered by the 
Partnership to be primary competitors.  These hotels are considered primary     
competitors due to their size, meeting facilities and market mix relative to    
the Hotel.  The remaining sixteen properties, with a total of approximately     
9,400 rooms, are secondary competitors which compete with the Hotel to a lesser 
degree.                                                                         

Eight hotels, the Ritz Carlton, the Sheraton Palace, the Mandarin Hotel, the    
Pan Pacific Hotel (formerly the Portman Hotel), the Nikko Hotel, the Park       
Hyatt, the San Francisco Marriott and the Hyatt Fisherman's Wharf opened after  
the Partnership commenced operations.  These hotels have a total of 4,110 rooms 
and compete in varying degrees with the Hotel.  The continued introduction of   
new properties has exerted downward pressure on occupancy and room rates        
throughout the city.                                                            

Employees.                                                                      
The Partnership's business is managed by the General Partner and the            
Partnership has no employees.  The Hotel's staff are employees of California    
Hyatt.                                                                          

Item 2.  The Property                                                           

The Hotel, which is located on Union Square at the center of San Francisco's    
downtown retail district, has 693 rooms, two restaurants, one lounge and 22,000 
square feet of meeting and banquet facilities and four retail tenants.  The     
36-story Hotel encompasses approximately 660,000 total square feet on a 35,391  
square foot site.  It was built in 1973 and substantially refurbished in 1982   
and 1989, at which time the Hotel was converted to a Grand Hyatt.  See Note 3   
to the Financial Statements incorporated herein by reference thereto for        
additional information regarding the Hotel.                                     

Item 3.  Legal Proceedings                                                      

See Note 8 to the Financial Statements, incorporated herein by reference        
thereto.                                                                        

Item 4.  Submission of Matters to a Vote of Security Holders                    

There were no matters submitted to the Unitholders for a vote during the fourth 
quarter of the Partnership's past fiscal year.                                  

PART II                                                                         

Item 5.  Market for the Partnership's Limited Partnership interests and         
Security Holder Matters                                                         

(a) Market Information.  The Partnership has issued no common stock.  There is  
no established trading market for the units.  The securities issued by the      
Partnership consist of units of Limited Partnership interest.                   

(b) Holders.  The number of Unitholders as of December 31, 1994 was 5,773.      

(c) Dividends.  Beginning with the second quarter of 1988, the General Partner  
has deferred payment of distributions and will not resume payment until such    
time as the Hotel's cash flow reaches a sufficient level in excess of its debt  
service.  The terms of the First Mortgage Loan provide that at the time of any  
cash distribution, a cash flow to debt service ratio of not less than 1.2:1     
must have been met or exceeded for the four most recently completed quarters    
and that cash available for debt service immediately after such distributions   
must be not less than $3,500,000.                                               

As of the end of the prior fiscal year, the cash flow to debt service ratio was 
0.83:1, and the Partnership's cash generated by property operations available   
for debt service was $5,649,380.  This ratio is determined based on the         
contract interest rate of 9.699%.                                               

Pursuant to the settlement of class actions against the Partnership and others  
(the "Settlement"), Shearson paid cash distributions to class member Limited    
Partners, in the amount of $.40 per Unit on February 12, 1993, $.30 per Unit on 
February 14, 1992 and $.10 per Unit on March 8, 1991.  See Note 8 to the        
Financial Statements incorporated herein by reference thereto for additional    
information concerning the Settlement.                                          

Item 6.  Selected Financial Data                                                

For the Years ending December 31,                                               

     1994         1993         1992         1991          1990

Total Income  $  7,005,899 $  5,412,650 $  4,255,525  $  2,841,245 $  1,563,720 

Net Loss       (11,015,227) (12,404,566) (13,825,960)  (15,257,829) (22,509,326)

Net Loss                                                                        
Per Unit(1)          (1.52)       (1.71)       (1.91)        (2.11)       (3.11)

Long-term                                                                       
obligations(2) 130,684,497  126,508,947  122,783,001   111,644,711  102,851,341 

Total Assets   106,774,719  109,887,083  115,656,493   120,254,329  125,999,197 

Cash                                                                            
Distributions                                                                   
Per Unit (1)           .00          .00          .40(3)        .30(3)     .10(3)

(1)     Based on 7,174,100 units outstanding.                                   

(2)     Accrued interest is not included in long-term obligations with the      
exception of interest accrued on the Loan Payable, which according to the       
original terms of this note, is not payable currently.  In addition, pursuant   
to the Restructuring, past due interest on the Mortgage Loan is being deferred  
and will be due and payable upon maturity of the Mortgage Loan.  Accordingly,   
such deferred interest is included as a long-term obligation.                   

(3)     Paid by Shearson pursuant to the Settlement.                            

Item 7.  Management's Discussion and Analysis of Financial Condition and        
Results of Operations                                                           

Liquidity and Capital Resources                                                 

The Partnership's liquidity and capital resources have been substantially       
impacted by the funding of the Renovation Plan which was completed in January   
1990 (the "Renovation Plan") and extensive borrowing subsequent to the initial  
offering.  Combined with weak results from operations since 1989, these factors 
led to a default by the Partnership on its January 2, 1992 debt-service payment 
with respect to its $70 million first mortgage loan (the "Mortgage Loan").      
This default created other defaults under the Partnership's subordinate         
financings.  Effective June 30, 1992, a restructuring of the Partnership's      
indebtedness and property leasing arrangements (the "Restructuring") was        
successfully executed resulting in the waiver or cure of each of the            
Partnership's defaults.  Please refer to Note 4 to the Financial Statements,    
which are incorporated herein by reference thereto for additional details       
regarding the Restructuring and the Mortgage Loan.                              

There can be no assurance that the Partnership's hotel (the "Hotel" or          
"Property") will generate sufficient cash flow to enable the Partnership to     
satisfy its debt service obligations.  The Partnership made its quarterly debt  
service payments, due on January 2, 1994, April 2, 1994, July 5, 1994 and       
October 3, 1994, as well as the quarterly debt service payment, due on January  
2, 1995 to the Bank of Nova Scotia ("BNS"), with cash flow from operations.  In 
addition, on July 5, 1994 a payment of $405,083 was made to BNS representing    
the excess of rents received by the Partnership less disbursements for the      
period from July 1, 1993 through June 30, 1994, as required by the Amended and  
Restated Promissory Note Secured by the Deed of Trust dated June 30, 1992.      
This payment was applied toward reducing BNS's portion of the accrued interest  
on the Partnership's Mortgage Loan.  While the General Partner currently        
expects that the Partnership's cash flow will be sufficient to meet the minimum 
pa yment on April 2, 1995 due under the restructured terms of the Mortgage      
Loan, there can be no assurance that cash flow will continue to be sufficient   
to satisfy future payments.  The General Partner is prepared to request         
financial support from an affiliate, Lehman Brothers Holdings Inc. ("Lehman     
Brothers Holdings"), to supplement cash flow from the Hotel should the need     
arise.  Lehman Brothers Holdings has indicated that it would evaluate the need  
for additional funding on a quarterly basis.                                    

On April 27, 1993, Lehman Brothers Inc. elected not to renew the Guaranty of    
the minimum pay rate under the restructured Mortgage Loan for the year          
commencing July 4, 1993.  The General Partner believes that this decision does  
not reflect a change of position by Lehman Brothers Inc., and that they will    
evaluate the future need for additional funding on a quarterly basis.  The      
General Partner anticipates the need for continued interest accruals and        
deferrals pursuant to the Restructuring, for the foreseeable future.  However,  
if the Partnership continues to remit only the minimum debt service payments,   
interest will continue to accrue.  This accrual of interest may affect the      
Partnership's ability to refinance and/or sell the hotel property at a price    
which enables the repayment of the Partnership's restructured debt, including   
the accrued and deferred interest.                                              

At December 31, 1994, the Partnership had cash, which is held in an interest    
bearing account, of $2,668,685 compared to $1,488,632 at December 31, 1993.     
The increase primarily is due to the increase in cash provided by operating     
activities.                                                                     

Replacement reserve receivable decreased from $327,929 at December 31, 1993 to  
$89,506 at December 31, 1994, largely due to expenditures for furniture,        
fixtures and equipment ("FF&E") exceeding additions to the reserve.  Rent       
receivable increased by $40,703 from December 31, 1993 to $194,244, due to the  
increase in rent from operations and the timing of payments.                    

California Hyatt was required to reimburse the Partnership $3,000,000 with      
respect to the installation of life safety systems at the Hotel (including      
sprinklers) and the necessary abatement of asbestos.  The terms of this         
agreement required California Hyatt to make 36 monthly payments of principal    
plus interest beginning in January 1991, as a deduction from the Hotel's        
operating profit.  Thus, the Partnership reduced building costs and established 
a receivable from California Hyatt in the amount of $600,000 at December 31,    
1990, which represented management's estimate of the portion of such            
reimbursements in excess of normal lease payments otherwise anticipated to be   
received.  As a result of the amendment to the Hotel lease, completed as part   
of the Restructuring, California Hyatt's effective commitment to reimburse the  
Partnership for the installation of life safety systems at the Hotel (including 
sprinklers) and the necessary abatement of asbestos, was reduced in 1992 by     
$187,500. Accordingly, this amount was added to the Partnership's cost of the   
life safety system.  As a result of the final payment made March 31, 1994,      
"Receivable - Life Safety System" declined from $6,287 at December 31, 1993 to  
$0 at December 31, 1994.                                                        

Accounts payable and accrued expenses increased to $66,420 at December 31, 1994 
compared with $44,718 at December 31, 1993, primarily due to the accrual of     
$18,400 for additional taxes due to the City of San Francisco for 1991, 1992    
and 1993.  Accrued interest increased to $11,580,105 at December 31, 1994       
compared with $7,885,464 at December 31, 1993, which is the net of accrued      
interest expense for the period less the minimum interest payments and the      
payment from excess cash flow made on the Mortgage Loan.  Deferred interest     
increased from $7,452,135 at December 31, 1993 to $8,020,283 at December 31,    
1994 and Notes and Loans - Affiliate increased from $45,209,234 at December 31, 
1993 to $48,891,636 at December 31, 1994.  These accounts have increased due to 
compounding of interest on the principal balances.                              

Due to the downturn in operating results of the Hotel, the General Partner      
suspended payment of cash distributions starting with the second quarter of     
1988.  However, a cash distribution in the amount of $.40 per unit, which       
represents the third and final distribution pursuant to the Settlement, was     
paid to class member Limited Partners on February 12, 1993.  See Note 8 to the  
Financial Statements contained herein at Item 8.  Future distributions will be  
dependent on the Partnership's cash flow from operations and will be restricted 
until such time as the Hotel's cash flow reaches a sufficient level in excess   
of its debt service as required under the terms of the restructured Mortgage    
Loan.                                                                           

Results of Operations                                                           

1994 versus 1993                                                                
The Partnership's Hotel operates in a highly competitive environment which      
continues to have an adverse affect on the Partnership's rental income.         
Operations during the year ended December 31, 1994, while improved over results 
for the corresponding period in 1993, continued to be affected by a combination 
of reduced travel and strong competition in the San Francisco hotel market.     

The average occupancy rate and average room rate for the year ended December    
31, 1994 were 75.45% and $141.17, respectively,  compared to 71.42% and         
$138.43, respectively, for the corresponding period in 1993.                    

For the year ended December 31, 1994, the Partnership incurred a net loss of    
$11,015,227 compared to a net loss of $12,404,566 for the year ended December   
31, 1993.  The decrease in the Partnership's net loss is primarily attributable 
to an increase in income from operations and a decrease in depreciation and     
amortization due to a portion of personal property becoming fully depreciated,  
which was partially offset by an increase in interest expense.                  

For the year ended December 31, 1994, rental income included operating income   
of $5,816,107 compared to $4,045,593 for the same period in 1993.  The          
improvement for the year ended December 31, 1994 is largely due to improved     
Hotel operating results.  Operating results were positively impacted by         
increases in room sales, telecommunication sales and other rental income,       
resulting from higher average occupancy and room rates at the Hotel during 1994 
compared to 1993.  Also contributing is the reduction of room, food and         
beverage, and telecommunications expenses.  Miscellaneous income decreased by   
$253,887 to $2,765 in 1994 reflecting the one-time receipt of real estate tax   
abatements in 1993.                                                             

Total expenses were $18,021,126 for the year ended December 31, 1994, compared  
to $17,817,216 for the year ended December 31, 1993.  The increase primarily is 
due to a larger interest expense resulting from the accrual of interest on the  
principal debt balance and an increase in the prime rate in 1994, partially     
offset by a decrease in depreciation and amortization expense.                  

1993 versus 1992                                                                
The Partnership's Hotel operates in an intensely competitive environment which  
had an adverse affect on the Partnership's rental income.  Operations during    
the year ended December 31, 1993, while improved compared to 1992 results, were 
affected by reduced travel due to the sluggish national and Pacific Rim         
economies, and strong competition in the San Francisco market.                  

The average occupancy rate and average room rate for the year ended December    
31, 1993 were 71.42% and $138.43, respectively,  compared to 68.2% and $137.04, 
respectively, for the corresponding period in 1992.                             

For the year ended December 31, 1993, the Partnership incurred a net loss of    
$12,404,566 compared to a net loss of $13,825,960 for the year ended December   
31, 1992.  The decrease in the Partnership's net loss primarily was             
attributable to an increase in rents from operations.  In addition, the         
Partnership incurred lower general and administrative expenses during the year  
ended December 31, 1993. For the year ended December 31, 1993, rental income    
included operating income of $4,045,593 compared to $3,155,626 for the same     
period in 1992.  The improvement for the year ended December 31, 1993 largely   
was due to improved Hotel operating results and the modified rent calculation   
pursuant to the Restructuring beginning with the third quarter of 1992.         
Operating results were impacted positively by increases in both room and food   
and beverage sales, which were the result of higher average occupancy and room  
rates at the Hotel during 1993 as compared to 1992.  The Partnership recognized 
miscellaneous income of $256,652 for the year ended December 31, 1993 which     
related to real estate tax reductions.                                          

Total expenses were $17,817,216 for the year ended December 31, 1993, compared  
to $18,104,772 for the year ended December 31, 1992.  The decline primarily was 
due to the decrease in Partnership general and administrative expenses          
resulting from lower consulting and legal fees in 1993.                         

The Restructuring resulted in the Partnership recording a gain of $23,287 for   
the year ended December 31, 1992.                                               

Item 8.  Financial Statements and Supplementary Data                            

See Item 14 "Exhibits, Financial Statement Schedules, and Reports on Form 8-K"  
for a listing of the financial statements filed with this report.               

Item 9.  Changes in and Disagreements with Accountants on Accounting and        
Financial Disclosure                                                            

None.                                                                           

PART III                                                                        

Item 10.  Directors and Executive Officers of the Registrant                    

The Partnership has no officers or directors.  The General Partner, Union       
Square/GP Corp., formerly Shearson Union Square/GP Corp., is an affiliate of    
Lehman, and has offices at the same location as the Partnership.  The General   
Partner manages and controls substantially all of the Partnership's affairs and 
has general responsibility and ultimate authority in all matters affecting the  
Partnership business.  All of the officers and directors of the General Partner 
are also officers and employees of Lehman.                                      

Certain officers of the General Partner are now serving (or in the past have    
served) as officers or directors of entities which act as general partners of a 
number of real estate limited partnerships which have sought relief under the   
United States Bankruptcy Code.  The partnerships which have filed bankruptcy    
petitions own real estate which has been adversely affected by the economic     
conditions in the markets in which that real estate is located and,             
consequently, the partnerships sought the protection of the bankruptcy laws     
primarily to protect the partnerships' assets from loss through foreclosure.    

The Officers and/or Directors of the General Partner are as follows:            

Name                    Office                                  

       Jeffrey C. Carter       President, Director and Chief Financial Officer
Rocco F. Andriola       Director and Vice President             

There is no family relationship among any of the foregoing directors or         
officers.  All of the foregoing directors have been elected to serve one year   
terms.  The business experience during the past five years of each of the       
directors and officers of the General Partner of the Partnership is detailed    
below.                                                                          

Jeffrey C. Carter, 49, is a Senior Vice President of Lehman Brothers in the     
Diversified Asset Group.  Mr. Carter joined Lehman Brothers in September 1988.  
From 1972 to 1988, Mr. Carter held various positions with Helmsley-Spear        
Hospitality Services, Inc. and Stephen W. Brener Associates, Inc. including     
Director of Consulting Services at both firms.  From 1982 through 1987, Mr.     
Carter was President of Keystone Hospitality Services, an independent hotel     
consulting and brokerage company.  Mr. Carter received his B.S. degree in Hotel 
Administration from Cornell University and an M.B.A. degree from Columbia       
University.                                                                     

Rocco F. Andriola, 36, is a Senior Vice President of Lehman Brothers in its     
Diversified Asset Group.  Since joining Lehman Brothers in 1986, Mr. Andriola   
has been involved in a wide range of restructuring and asset management         
activities involving real estate and other direct investment transactions.      
From 1986-89, Mr. Andriola served as a Vice President in the Corporate          
Transactions Group of Shearson Lehman Brothers' office of the general counsel.  
Prior to joining Lehman Brothers, Mr. Andriola practiced corporate and          
securities law at Donovan Leisure Newton & Irvine in New York.  Mr. Andriola    
received a B.A. degree from Fordham University, a J.D. degree from New York     
University School of Law, and an LL.M degree in Corporate Law from New York     
University's Graduate School of Law.                                            

Certain Matters Involving Affiliates                                            
On July 31, 1993, Shearson Lehman Brothers Inc. ("Shearson") sold certain of    
its domestic retail brokerage and asset management businesses to Smith Barney,  
Harris Upham & Co. Incorporated ("Smith Barney").  Subsequent to this sale,     
Shearson changed its name to Lehman Brothers Inc.  The transaction did not      
affect the ownership of the Partnership or the Partnership's General Partners.  
However, the assets acquired by Smith Barney included the name "Shearson."      
Consequently, effective October 21, 1993, the General Partner changed its name  
to Union Square/GP Corp., and effective December 29, 1993, the Partnership      
changed its name to Union Square Hotel Partners Limited Partnership to delete   
any reference to "Shearson."                                                    

Item 11.  Executive Compensation                                                

All of the directors and executive officers of the General Partner are          
employees of Lehman Brothers Inc.  They do not receive any salaries or other    
compensation from the Partnership.                                              

Item 12.  Security Ownership of Certain Beneficial Owners and Management        

To the knowledge of the General Partner, no person owns more than 5% of the     
outstanding Units.                                                              

Item 13.  Certain Relationships and Related Transactions                        

All of the officers and directors of the General Partner are employees of       
Lehman Brothers Inc.  For information regarding transactions with affiliates,   
please refer to Note 6 to the Financial Statements incorporated herein by       
reference thereto.                                                              

PART IV                                                                         
Item 14.  Exhibits, Financial Statements, and Reports on Form 8-K               

(a) (1) and (2)                                                                 
UNION SQUARE HOTEL PARTNERS LIMITED PARTNERSHIP                                 
INDEX TO FINANCIAL STATEMENTS                                                   

Report of Independent Public Accountants                        F-1             

Financial Statements:                                                           

Balance Sheets - At December 31, 1994 and 1993                  F-2             

Statements of Operations - For the years ended                                  
December 31, 1994, 1993 and 1992                                F-3             

Statements of Changes in Partners' Capital (Deficit) -                          
For the years ended December 31, 1994, 1993 and 1992            F-3             

Statements of Cash Flows - For the years ended                                  
December 31, 1994, 1993 and 1992                                F-4             

Notes to Financial Statements                                   F-5             

Independent Accountants' Report on Schedule III                 F-12            

Schedule III - Real Estate and Accumulated Depreciation         F-13            

All other schedules for which provision is made in the applicable accounting    
regulations of the Securities and Exchange Commission have been omitted as (1)  
the information required is disclosed in the financial statements and notes     
thereto; (2) the schedules are not required under the related instructions; or  
(3) the schedules are inapplicable.                                             

Exhibit Index                                                   

(a)(3)  Exhibits                                                                

3.a     Amended and restated Agreement of Limited Partnership of
   Shearson Union Square Associates dated August 18, 1986 (included in
      Amendment No. 2 to registration Statement No. 33-6678) incorporated by
reference.                                                      

       10.a    Stipulation and Agreement of Compromise and Settlement filed in
    the Court of Chancery of the State of Delaware in and for New Castle
County in June 8, 1990.                                         

   10.b    Documents for Restructuring of Indebtedness Encumbering the
     Grand Hyatt Union Square Hotel among Shearson Union Square Associates
       Limited Partnership, as Borrower, and The Bank of Nova Scotia, as First
    Lien Holder, Capital Growth Mortgage Investors, L.P., as Second Lien
     Holder, Hyatt Corporation, as Third Lien Holder, and California Hyatt
Corporation, as Hotel Manager dated June 30, 1992.              

(b)             Reports on form 8-K filed in the fourth quarter of fiscal 1994. 

None.                                           

SIGNATURES                                                                      

Pursuant to the requirements of the Securities Exchange Act of 1934, the        
Registrant has duly caused this report to be signed on its behalf by the        
undersigned, thereunto duly authorized.                                         

                                 UNION SQUARE HOTEL PARTNERS, L.P.

                             BY:     Union Square GP/Corp.
                               General Partner

Date:  March 30, 1995                                                           
                            BY:     s/Jeffrey C. Carter/
                         Name:   Jeffrey C. Carter
                               Title:  President, Director and
                                       Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the        
Registrant has duly caused this report to be signed on its behalf by the        
undersigned, thereunto duly authorized.                                         

                     UNION SQUARE/GP CORP.
               General Partner

Date:  March 30, 1995                                                           
                            BY:     s/Jeffrey C. Carter/
                         Name:   Jeffrey C. Carter
                               Title:  President, Director and
                                       Chief Financial Officer

Date:  March 30, 1995                                                           
                            BY:     s/Rocco F. Andriola/
                         Name:   Rocco F. Andriola
                                   Title:  Director and Vice President

Report of Independent Public Accountants                                        

To the Partners of                                                              
Union Square Hotel Partners, L.P.:                                              

We have audited the accompanying balance sheets of Union Square Hotel Partners, 
L.P. (formerly Shearson Union Square Associates, L.P.), as of December 31, 1994 
and 1993, and the related statements of operations, partners' deficit and cash  
flows for each of the three years in the period ended December 31, 1994.  These 
financial statements are the responsibility of the Partnership's management.    
Our responsibility is to express an opinion on these financial statements based 
on our audits.                                                                  

We conducted our audits in accordance with generally accepted auditing          
standards.  Those standards require that we plan and perform the audit to       
obtain reasonable assurance about whether the financial statements are free of  
material misstatement.  An audit includes examining, on a test basis, evidence  
supporting the amounts and disclosures in the financial statements.  An audit   
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation.  We believe that our audits provides a reasonable basis 
for our opinion.                                                                

As discussed in Note 2 to the financial statements, the carrying value of the   
Partnership's real estate exceeds estimated fair value as of December 31, 1994  
and 1993.  The recovery of the carrying value of the Partnership's real estate  
is dependent upon the improvement of market conditions.  The ultimate outcome   
of this matter cannot presently be determined.  In accordance with generally    
accepted accounting principles, no provision for impairment is required.        
Accordingly, no provision for any asset impairment has been made in the         
accompanying financial statements.                                              

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of Union Square Hotel Partners,   
L.P. as of December 31, 1994 and 1993, and the results of its operations and    
its cash flows for each of the years in the period ended December 31, 1994 in   
conformity with generally accepted accounting principles.                       

The accompanying financial statements have been prepared assuming that the      
Partnership will continue as a going concern.  As discussed in Note 4 to the    
financial statements, the Partnership has suffered recurring losses from        
operations and the guaranty of the Partnership's debt service payments by an    
affiliate of the General Partner expired during 1993, which raises substantial  
doubt about the Partnership's ability to continue as a going concern.  The      
General Partner's plans in regard to these matters are also described in Note   
4.  The financial statements do not include any adjustments that might result   
from the outcome of this uncertainty.                                           

COOPERS & LYBRAND L.L.P.                                                        

Hartford, Connecticut                                                           
February 24, 1995                                                               

Balance Sheets                                                                  
December 31, 1994 and 1993                                                      

Assets                                  1994            1993                    

Real estate, at cost (Note 3):                                                  
Land                            $ 32,231,229    $ 32,231,229    
Building                          80,121,007      80,060,478    
Furniture, fixtures                                             
and equipment                     28,749,108      27,423,641    

                             141,101,344     139,715,348
Less-accumulated depreciation            (38,235,817)    (33,222,871)           

                             102,865,527     106,492,477

Cash                                       2,668,685       1,488,632            
Replacement reserve                                                             
receivable (Note 3)                           89,506         327,929            
Rent receivable (Note 4)                     194,244         153,541            
Receivable-life safety system                      -           6,287            
Deferred charges, net of accumulated                                            
amortization of $3,388,028 in 1994                                              
and $2,926,568 in 1993                       956,757       1,418,217            

    Total Assets            $106,774,719    $109,887,083

Liabilities and Partners' Deficit                                               

Liabilities:                                                                    
Accounts payable and                                                        
accrued expenses                      $     66,420   $      44,718          
Due to affiliates (Note 6)            28,342          17,372    
Mortgage loan payable                                           
(Note 4)                          70,000,000      70,000,000    
Accrued interest                  11,580,105       7,885,464    
Deferred interest                  8,020,283       7,452,135    
Notes and Loans - Affiliate                                     
(Notes 4, 5, and 6)               48,891,636      45,209,234    
Loan payable-Hyatt (Note 4)        3,772,578       3,847,578    

    Total Liabilities        142,359,364     134,456,501

Partners' Deficit:                                                              
General Partner                   (1,039,066)       (928,914)   
Limited Partners                 (34,545,579)    (23,640,504)   

  Total Partners' Deficit     (35,584,645)    (24,569,418)

Total Liabilities and                                 
 Partners' Deficit          $106,774,719    $109,887,083

Statements of Operations                                                        
For the years ended December 31, 1994, 1993 and 1992                            

Income                          1994            1993            1992            

Rental income (Notes 3 and 4):                                                  
    Operating income        $  5,816,107    $  4,045,593    $  3,155,626
    Replacement escrow         1,147,573       1,080,728       1,031,793
Interest income                       39,454          29,677          45,608    
Miscellaneous income                   2,765         256,652          22,498    

    Total Income               7,005,899       5,412,650       4,255,525

Expenses                                                                        

Interest expense                                                                
(Notes 4, 5 and 6)                12,337,774      11,453,674      11,130,646    
Depreciation and amortization      5,474,406       6,165,463       6,513,409    
General and administrative           208,946         198,079         460,717    

    Total Expenses            18,021,126      17,817,216      18,104,772

Net Loss before                                             
       extraordinary item     (11,015,227)    (12,404,566)    (13,849,247)

Extraordinary Item                                                              

Gain on restructuring,                                          
    net (Note 4)                       -               -          23,287

     Net Loss                $(11,015,227)   $(12,404,566)   $(13,825,960)

Net Loss Allocated (Note 2):                                                    

To the General Partner          $   (110,152)   $   (124,045)   $   (138,260)   
To the Limited Partners          (10,905,075)    (12,280,521)    (13,687,700)   

                             $(11,015,227)   $(12,404,566)   $(13,825,960)

Per limited partnership unit                                                    
(7,174,100 outstanding):                                                        
Net Loss before                                                 
     extraordinary item      $      (1.52)   $      (1.71)   $      (1.91)

     Net Loss                $      (1.52)   $      (1.71)   $      (1.91)

Statements of Partners' Capital (Deficit)                                       
For the years ended December 31, 1994, 1993 and 1992                            

                     Limited         General         Total
                         Partners'       Partner's       Partners'

Balance at December 31, 1991    $  2,327,717    $  (666,609)    $  1,661,108    

Net loss                         (13,687,700)      (138,260)     (13,825,960)   

Balance at December 31, 1992     (11,359,983)      (804,869)     (12,164,852)   

Net loss                         (12,280,521)      (124,045)     (12,404,566)   

Balance at December 31, 1993     (23,640,504)      (928,914)     (24,569,418)   

Net loss                         (10,905,075)      (110,152)     (11,015,227)   

Balance at December 31, 1994    $(34,545,579)   $(1,039,066)    $(35,584,645)   

Statements of Cash Flows                                                        
For the years ended December 31, 1994, 1993 and 1992                            

Cash Flows from Operating Activities:                                           

                    1994            1993            1992

Net loss                        $(11,015,227)   $(12,404,566)   $(13,825,960)   
Adjustments to reconcile                                                        
net loss to net cash                                                            
provided by (used for)                                                          
operating activities:                                                           
Depreciation and                                                          
amortization                    5,474,406       6,165,463       6,513,409 
     Gain on restructuring              -               -         (23,287)
Rental income from                                              
     replacement escrow        (1,147,573)     (1,080,728)     (1,031,793)
Increase in deferred                                            
interest on loan                                                
    payable-affiliate          3,682,402       3,306,097       2,755,459
Increase (decrease)                                             
in cash arising from                                            
changes in operating                                            
assets and liabilities:                                         
       Rent receivable            (40,703)        140,518        (294,059)
            Due from Hyatt             -          30,355               -
Receivable -                                    
life safety                                     
            system                 6,287          68,713         137,500
Accounts payable                                
and accrued                                     
            expenses              21,702        (219,687)        145,552
             Due to affiliates     10,970         (55,081)        (18,154)
Due to California                               
             Hyatt                      -               -        (678,063)
Accrued and                                     
deferred                                        
            interest           4,262,789       3,678,827       7,623,267

Net cash provided by (used for)                                                 
operating activities               1,255,053        (370,089)      1,303,871    

Cash Flows from Investing Activities:                                           

Proceeds from replacement                                                 
reserve receivable              1,385,996       1,410,987         513,076 
     Additions to real estate  (1,385,996)     (1,410,987)       (513,076)

Net cash used for                                                               
investing activities                       -               -               -    

Cash Flows from                                                                 
Financing Activities:                                                           

     Loan payable - Hyatt         (75,000)        (75,000)       (250,000)
Restructuring note                                              
    payable - affiliate                -               -       1,000,000
     Restructuring costs                -               -      (1,018,085)

Net cash used for financing                                                     
activities                           (75,000)        (75,000)       (268,085)   

Net increase (decrease) in cash    1,180,053        (445,089)      1,035,786    
Cash at beginning of period        1,488,632       1,933,721         897,935    

Cash at end of period           $  2,668,685    $  1,488,632    $  1,933,721    

Supplemental Disclosure of Cash Flow Information:                               

Cash paid during the period                                                 
for interest                  $  4,392,583    $  4,468,750    $      6,968  

Notes to Financial Statements                                                   
December 31, 1994, 1993 and 1992                                                

1. Organization                                                                 
Union Square Hotel Partners L. P. (the "Partnership"), formerly Shearson Union  
Square Associates Limited Partnership (see below), was formed in June 1986      
under the Delaware Revised Uniform Limited Partnership Act for the purpose of   
acquiring the Hyatt on Union Square (the "Hotel"), located in San Francisco,    
California, under a long-term operating lease.                                  

Initial capital of $1,000 was contributed by Union Square/GP Corp. (the         
"General Partner"), formerly Shearson Union Square/GP Corp. (see below), a      
Delaware corporation and an affiliate of Lehman Brothers Inc.  The agreement of 
limited partnership authorized the issuance of a maximum of 7,174,100           
Depository Units (the "Units") which represent Partnership interests.  At March 
26, 1987, an aggregate of 7,174,100 units was issued, and the offering was      
terminated.                                                                     

On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic    
retail brokerage and asset management businesses to Smith Barney, Harris Upham  
& Co. Incorporated ("Smith Barney").  Subsequent to the sale, Shearson changed  
its name to Lehman Brothers Inc. ("Lehman").  The Transaction did not affect    
the ownership of the General Partner.  However, the assets acquired by Smith    
Barney included the name "Shearson."  Consequently, effective October 21, 1993, 
the General Partner changed its name to Union Square/GP Corp., and effective    
December 29, 1993, the Partnership changed its name to Union Square Hotel       
Partners Limited Partnership.                                                   

2. Significant Accounting Policies                                              

Basis of Accounting. The accompanying financial statements of the Partnership   
have been prepared on the accrual basis of accounting.                          

Real Estate Depreciation. Real estate investments, which consist of land,       
building and personal property, are recorded at cost, less accumulated          
depreciation.  Cost includes the initial purchase price of the property plus    
closing costs, acquisition and legal fees, and capital improvements.            
Depreciation is computed using the straight-line method based on the estimated  
useful life of 40 years.  Depreciation of real property is computed over the    
remaining useful life of the building.  Depreciation of the personal property   
is computed under the straight-line method over an estimated useful life of 7   
years.                                                                          

When building and personal property are sold or otherwise disposed of, when     
required, the asset account and related accumulated depreciation account are    
relieved, and any gain or loss is included in operations.                       

The current estimated market value of the hotel real estate investment as of    
December 31, 1994 continues to improve from that of prior years.  However,      
while the property has not been appraised recently, management believes that    
the carrying value of the Partnership's real estate exceeds fair market value   
at December 31, 1994.  The Partnership's hotel real estate investments is       
carried at cost, less accumulated depreciation.  The Partnership's depreciated  
investment is exceeded by the amount of the outstanding nonrecourse             
indebtedness.  Accordingly, no adjustment has been made to the carrying value.  
The ultimate outcome of this matter presently can not  be determined.  In       
accordance with generally accepted accounting principles, a provision for       
impairment is not required.  Accordingly, no provision for any asset impairment 
has been made in the accompanying financial statements.                         

Deferred Charges. The following fees and costs have been capitalized and are    
amortized on a straight-line basis over the following periods:                  

Mortgage consent fee                    7 years                 
Mortgage and loan origination fee       10-1/3 years            
Mortgage loan placement fee             10-1/3 years            
Loan negotiation fee                    10-1/3 years            

An improvement program supervisory fee incurred in 1989 has been capitalized on 
a pro rata basis, based on annual improvement program expenditures in relation  
to the total expected expenditures during the term of the improvement program,  
and is depreciated using the applicable method and life.                        

Offering Costs. Offering costs are nonamortizable and have been deducted from   
the Limited Partners' capital.                                                  

Income Taxes. No income tax provision (benefit) has been recorded on the books  
of the Partnership, as the respective shares of taxable income (loss) are       
reportable by the partners on their individual tax returns.                     

Concentration of Credit Risk. Financial instruments which potentially subject   
the Partnership to a concentration of credit risk principally consist of cash   
in excess of the financial institutions' insurance limits.  The Partnership     
invests available cash with high credit quality financial institutions.         

Partnership Agreement. Pursuant to the terms of the Partnership Agreement, all  
profits and losses incurred prior to the month in which Unitholders were first  
admitted shall be allocated 99.99% to the General Partner and .01% to the       
Assignor Limited Partner.  Thereafter, all income, profits and losses shall be  
allocated 99% to the Unitholders and 1% to the General Partner, except for the  
profits from the sale or other disposition of all or any substantial part of    
the Hotel.                                                                      

Profits of the Partnership from the sale or other disposition of all or any     
substantial part of the Hotel shall be allocated to the General Partner in an   
amount equal to the greater of 1% of the profits or the amount distributable to 
the General Partner as sale or refinancing proceeds from such sale.  All        
remaining profits shall be allocated among the Unitholders.                     

Net cash flow shall be distributed 99% to the Unitholders and 1% to the General 
Partner until each Unitholder has received an aggregate cumulative compounded   
distribution for each fiscal year equal to 12% of their capital investment      
("Preferred Return").  Thereafter, distributions shall be allocated 90% to the  
Unitholders and 10% to the General Partner.                                     

Sale or refinancing proceeds shall be distributed 99% to the Unitholders and 1% 
to the General Partner until such time as the Unitholders have received         
cumulative distributions of sale or refinancing proceeds in an amount equal to  
their unreturned original investment plus an aggregate amount of the net cash   
flow and sale or refinancing proceeds equal to their aggregate Preferred        
Return.  Any remaining sale or refinancing proceeds shall first be applied to   
the payment to the General Partner of a subordinated disposition fee, if any,   
equal to 3% of sales proceeds and thereafter shall be allocated 90% to the      
Unitholders and 10% to the General Partner.  In conjunction with the settlement 
agreement discussed in Note 8, the General Partner's share of the proceeds, in  
the event of a sale or refinancing of the property, will be reduced to 5%.      

3. Real Estate                                                                  
The Partnership's real estate consists of a 693-room hotel known as the Grand   
Hyatt San Francisco (formerly "Hyatt on Union Square") located in Union Square  
in San Francisco, California.  The Hotel was originally constructed in 1973 and 
was purchased by the Partnership on August 29, 1986.                            

The Hotel was purchased subject to an operating lease with California Hyatt     
Corporation ("California Hyatt"), a subsidiary of Hyatt Corporation ("Hyatt"),  
which provides for an initial term of 20 years expiring on December 31, 1994    
and two 10-year renewal options.  On August 19, 1986, the first 10-year renewal 
option was exercised, extending the lease term to December 31, 2004.            

Rent payable under the lease has been modified by the restructuring agreement   
effective June 30, 1992 (see note 4). Pursuant to the terms of the operating    
lease, California Hyatt is required to maintain a reserve fund ("FF&E Reserve   
Fund") for the replacement of furnishings and equipment in the Hotel.  This     
reserve is funded by the operating revenues of the Hotel and will be funded at  
3% of the Hotel's gross receipts through 1997 and 4% thereafter.  During 1988,  
the Partnership and California Hyatt mutually agreed upon a renovation program  
which was to be effected for a cost not expected to exceed $20,000,000. During  
1989 and early 1990, the renovation program was completed.  The Hotel was       
renamed The Grand Hyatt San Francisco and reopened on February 1, 1990. Other   
conditions of the renovation program provided that 70% of the 1990 replacement  
escrow was to be applied to the Partnerships liability to California Hyatt in   
1990.  From January 1, 1991 to June 30, 1992, 70% of replacement escrow income  
was to be applied to the outstanding balance of the loan payable - Hyatt.  As   
of December 31, 1990, $20,676,768 related to the renovation program was         

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expended.  In connection with the reopening of the Hotel in 1990, the           
Partnership recorded a write-down in carrying value of personal property which  
was replaced during the renovation, based on the original purchase price        
allocated to such property.                                                     

During 1991, the Partnership and California Hyatt reached an agreement on the   
revised terms of California Hyatt's contribution to the renovation program.     
This contribution was to be 10% of the total renovation costs, in excess of     
funds provided by the FF&E Reserve, up to a maximum of $2,000,000.  As a result 
of the revised agreement, the total contribution from California Hyatt (which   
was fully funded at December 31, 1991) amounted to $1,874,379, and accordingly, 
a reduction in the renovation contribution in the amount of $125,621 was        
recorded.  In addition, renovation costs in excess of $20,000,000 were to be    
assumed and capitalized by the Partnership.                                     

At December 31, 1990, the Partnership recorded a receivable from California     
Hyatt in the amount of $600,000.  This balance represented the net proceeds to  
be reimbursed to the Partnership under the second amendment to the lease        
relating to the costs incurred for the asbestos removal and installation of the 
life safety systems.  Payments were to be received in 36 equal monthly          
installments, including interest at prime plus .5%.  The balance due was        
reduced by $187,500 as a result of the Restructuring Agreement.                 

Asbestos was removed or abated where necessary, in conjunction with the         
installation of sprinklers and other life safety systems.  As disclosed in the  
original prospectus, the Hotel contains asbestos in certain areas which have    
been determined to be nonhazardous and in conformity with all current statutes. 
This situation may or may not impact the future value of the property.          

The following is summarized information with respect to the operations of the   
Hotel provided by the lessee for the years ended December 31, 1994, 1993 and    
1992.                                                                           

                    1994            1993            1992

Hotel revenues                  $ 38,252,425    $ 36,024,256    $ 34,392,536    
Hotel expenses                   (26,698,442)    (26,829,851)    (26,026,302)   

Gross operating profit          11,553,983       9,194,405       8,366,234  

Less:                                                                           
Adjustments to gross                                                        
operating profit:                                                           
       FF&E Reserve            1,147,573       1,080,728       1,031,793
       Taxes                   1,491,415       1,479,842       1,583,514
       Other adjustments       2,213,762       2,908,545       2,013,034

                               4,852,750       5,469,115       4,628,341

Adjusted gross                                                                  
operating profit                $  6,701,233    $  3,725,290    $  3,737,893    

Rental income to                                                                
the Partnership                 $  5,816,107    $  4,045,593    $  3,155,626    

4. Restructuring Agreement                                                      
Under the terms of the Mortgage Loan, a regular installment of interest in the  
amount of $3,394,650 was due on January 2, 1992.  Under the terms of the Note   
Payable, $1 million in principal and $341,502 in accrued interest was due on    
December 31, 1991.  None of the foregoing payments were made, and the           
Partnership did not have sufficient funds to make such payments.  On January 9, 
1992, the Partnership received a notice from the First Mortgagee that the       
Partnership was in default on its obligations with respect to the Mortgage Loan 
and Note Payable.  Such defaults entitled the Mortgage Lender to accelerate the 
Mortgage Loan and Note Payable subject to any defenses available to the         
Partnership.  On January 21, 1992, an affiliate of the General Partner, which   
guaranteed the Note Payable, fulfilled its commitment to repay the outstanding  
balance of the Note Payable.  On March 3, 1992, the Partnership received a      
notice whereby the bank declared the entire principal and interest under the M  
ortgage Loan immediately due and payable.  On March 9, 1992, the First          
Mortgagee recorded, with the San Francisco County Recorder, a Notice of Default 
and Election to Sell under Deed of Trust (the "Default Notice").                

The default on the Mortgage Loan also constituted an event of default under the 
"Loan Payable - affiliate," the Supplemental Loan and the Hyatt Loan.  On March 
25, 1992, the Partnership received a notice of acceleration from the holder of  
the Loan Payable - affiliate, which declared the entire principal and accrued   
interest on the loan due and payable.                                           

On June 30, 1992, Union Square Hotel Partners Limited Partnership (the          
"Partnership") consummated a restructuring of its financing and property        
leasing arrangements.                                                           

Mortgage Loan Payable - First Deed of Trust Note.  Under the terms of the       
restructuring, the outstanding principal amount of the Note - $70,000,000 -     
will continue to accrue interest at the annual rate of 9.699%.  Payments of     
interest will be limited, however, to the Partnership's cash flow from the      
Hotel.  Minimum interest payments (the "Minimum Payments") must be made         
semi-annually and shall be computed on the principal balance of the First Deed  
of Trust, less a $15,000,000 principal participation purchased by Lehman        
Brothers Lending Corp, formerly Shearson Lending Corp, an affiliate of the      
General Partner.  The par rate for the Minimum Payments are as follows: 6.5%    
through January 2, 1994; 7.5% through January 2, 1995; 8.5% through January 2,  
1996; and 9.699% thereafter until maturity on January 2, 1997.  The amount of   
any accrued and unpaid interest is to be added to the principal of the First    
Deed of Trust Note.                                                             

Lehman Brothers Holdings Inc. (the "Guarantor") formerly Shearson Lehman        
Brothers Holdings Inc., an affiliate of the General Partner, provided a payment 
guaranty (the "Guaranty") to the Bank with respect to the Minimum Payments      
required to be made through July 3, 1993.  The Guarantor may, at its sole       
option, extend the Guaranty for successive one-year periods through the         
maturity date of the First Deed of Trust Note.  In the event that the Guarantor 
does not elect to extend the Guaranty, the Partnership's interest payments      
thereafter will be due and payable quarterly, rather than semi-annually as      
previously provided.  On April 27, 1993, Lehman Brothers Inc. elected not to    
renew the Guaranty of the minimum pay rate commencing July 4, 1993.             

The Bank waived immediate repayment of the Past Due Interest, but the amount    
will accrue interest at a the Bank's "prime" rate plus one percent.  The        
balance is due upon maturity of the note.                                       

Loan Payable - Affiliate - Second Deed of Trust Note.  Capital Growth Mortgage  
Investors, L.P. ("Capital Growth"), the holder of the second deed of trust in   
the Hotel, agreed to reduce the interest rate applicable to the note from 12.5% 
to 11%.  The reduction of the interest rate is effective from and after January 
2, 1992.  Capital Growth also agreed to waive the mandatory prepayments on      
account of interest of $261,199, $1,014,379 and $1,996,457, otherwise required  
to be paid on January 2, 1995, January 2, 1996 and January 2, 1997,             
respectively.  Capital Growth also agreed to waive any prepayment (or yield     
maintenance) charges in connection with the prepayment of all or any portion of 
the principal or accrued interest under the Second Deed of Trust Note.          

Capital Growth also agreed to automatically extend the maturity date of the     
Second Deed of Trust Note to the same maturity date as the First Deed of Trust  
Note, so long as the maturity date is no later than January 2, 1999.            

Loan Payable - Hyatt - Third Deed of Trust Note.  Hyatt Corporation ("Hyatt")   
the holder of a third deed of trust note collateralized by the Hotel forgave    
$2,000,000 of the outstanding indebtedness under the Third Deed of Trust Note.  
Hyatt also reduced the interest rate from one percent above the prime rate to   
the lesser of (i) the prime rate or (ii) eight percent.  Hyatt also agreed to a 
deferral of interest to the extent that the interest payments otherwise         
required to be paid under the note are not available from cash flow.  Hyatt     
also agreed to extend the maturity date of the  note to the maturity date of    
the First Deed of Trust Note-January 2, 1997.  The Partnership made principal   
payments of $75,000 during 1994 and 1993 and $250,000 during 1992.              

The effect of these concessions by Hyatt is a calculated amount of $1,041,372   
for the Partnership resulting in a reduction of the Third Deed of Trust Note by 
such amount.  The amount has been recorded as the extraordinary item, gain on   
restructuring for $23,287, net of restructuring expenses of $1,018,085.         

Operating lease - California Hyatt Corporation. California Hyatt Corporation    
operates the Hotel under the terms of a lease agreement ("the Lease") with the  
Partnership.  California Hyatt agreed to change the amount to be retained by    
California Hyatt under the terms of the lease effective July 1, 1992 through    
December 31, 1996, from an amount equal to 20% of the Hotel's net profit to an  
amount equal to (i) one percent of the Hotel's gross revenues plus (ii) 7.5% of 
the Hotel's net profit. California Hyatt agreed that after December 31, 1996    
and until the First Deed of Trust Note matures, but in any event not after      
January 2, 1999, the amount to be retained by California Hyatt will be an       
amount equal to (i) one percent of the Hotel's gross revenues plus (ii) ten     
percent of the Hotel's net profit. Thereafter, the amount to be retained by     
California Hyatt will return to 20% of the Hotel's net profit as required by    
the Lease for periods prior to the restructuring.  Amounts due to the Partne    
ship will be remitted 20 days after the end of each month.                      

Furthermore, California Hyatt agreed that the Partnership will have the         
unilateral right to terminate the Lease, without cause, at any time from the    
date of the restructuring through December 31, 1998, upon payment of a fee in a 
fixed amount ranging from $10,000,000 to $16,032,500, which amount increases    
with the passage of time. California Hyatt further agreed that upon payment of  
the Early Termination Fee, it would cause Hyatt to forgive the entire amount of 
indebtedness under the Third Deed of Trust Note.                                

In addition, California Hyatt agreed that the Partnership may terminate the     
Lease, without the payment of a termination fee, in the event that (i) the      
Hotel generates a deficit for any calendar year and (ii) the Partnership        
prepays all indebtedness due under the Third Deed of Trust Note. California     
Hyatt may, however, cure any such deficit and avoid a termination of the Lease  
by paying the amount of such deficit to the Partnership.                        

Restructuring expense note.  In order to provide the Partnership with the funds 
to cover the costs of restructuring and ongoing administrative expenses, Lehman 
Lending Corp. has committed to lend the Partnership up to $1,000,000.  Advances 
borrowed under this agreement will accrue interest at prime plus 1% and all     
principal and accrued interest will be due and payable on the maturity date of  
the Bank of Nova Scotia Note.  The entire $1,000,000 is outstanding as of       
December 31, 1994 and 1993.                                                     

5. Note Payable                                                                 
In order to effect the renovation program, the Partnership has obtained the     
consent of the First Mortgagee for various modifications of the first Mortgage  
Loan which permits the use of substantially all of the Partnership's reserve    
funds for reinvesting into the Hotel and also permits Hyatt Corporation to      
provide financing to the Partnership.  In consideration for such consent, the   
Partnership paid a fee of $1,000,000 to the First Mortgagee which is evidenced  
by a note, bearing interest at 9.699%, compounded annually, due either upon the 
sale of the Hotel or December 31, 1991, whichever occurs first (see Note 6).    
As a result of the Partnership's failure to pay the principal and accrued       
interest on December 31, 1991, the note was declared in default.  The lender    
pursued its remedies under which, Lehman Holdings, Inc. ("LB Holdings"),        
formerly Shearson Lehman Holdings Inc., is required to make payment as          
guarantor of the note.  LB Holdings fulfilled its commitment to repay the       
outstand ing balance in January 1992.  The Partnership's obligation is included 
in Notes & Loans - Affiliates.                                                  

6. Transactions with Related Parties                                            

Notes Payable. LB Holdings, an affiliate of the General Partner, has fulfilled  
it's guarantee of payment of the $1,000,000 plus interest thereon to the First  
Mortgagee (see Note 5).  As a result, the Partnership is now obligated to LB    
Holdings in the amount of $1,341,502 in the form of a note which bears interest 
at 9.699% and becomes payable upon the sale of the property.                    

As required under the class action settlement, on March 4, 1991, an affiliate   
of the General Partner and the Partnership entered into the Settlement Loan up  
to a maximum of $10 million, bearing interest at an annual simple interest rate 
of 5%.  Proceeds of the loan were to be used to the extent needed to fund       
operating and fixed expenses.  On the effective date of the loan, $8,217,302 of 
the proceeds were used to retire an interim loan plus accrued interest.  On     
July 12, 1991, the remaining proceeds of $1,782,698 were drawn and used to pay  
a portion of the interest with respect to the First Mortgage Loan indebtedness. 
As of December 31, 1994 and 1993, the full principal balance of $10,000,000     
remains outstanding.  The outstanding principal and accrued interest matures    
and becomes payable upon the sale of the property or upon a refinancing which   
provides proceeds sufficient to repay other existing indebtedness.              

On July 12, 1991, a note was issued from an affiliate of the General Partner in 
the amount of $1,611,953 (the Supplemental Loan).  The Supplemental Loan        
specifically provided for the proceeds to be used to pay a portion of the       
interest with respect to the First Mortgage Loan indebtedness.  The note bears  
interest at an annual rate of prime plus 1%.  The entire note balance remains   
outstanding at December 31, 1994 and 1993.  The outstanding principal and       
accrued interest mature and become payable upon the sale of the Property or     
upon a refinancing which provides proceeds sufficient to repay other existing   
indebtedness.                                                                   

The letter of default issued March 3, 1992 by the Bank of Nova Scotia also      
constituted an event of default under the Supplemental Loan.  The default was   
cured through the restructuring of the Mortgage Loan Payable (see Note 4).      

A summary of Notes and Loans - Affiliate is summarized as follows:              

                    1994            1993

LB Holdings - Guarantee         $ 1,606,702     $ 1,464,646     
Settlement loan                  10,000,000      10,000,000     
Supplemental loan                 2,047,071       1,899,667     
Second Deed of Trust (Note 4)    34,237,863      30,844,921     
Restructuring note (Note 4)       1,000,000       1,000,000     

                           $48,891,636     $45,209,234

Fees and Compensation.  The General Partner and its affiliates earned fees and  
compensation in connection with syndication and acquisition services rendered   
to the Partnership of approximately $10,000,000.  Under the terms of the        
Partnership Agreement, the Partnership reimburses the General Partner, at cost, 
for the performance of certain administrative services provided by a third      
party.  For the years ended December 31, 1994, 1993, and 1992, cost of such     
services were $37,325, $49,920, and $58,474 respectively.  At December 31, 1994 
and 1993, $28,342 and $17,372 were due to the General Partner for the           
performance of these services.                                                  

Cash.  Cash reflected on the Partnership's balance sheet at December 31, 1994   
was on deposit with an affiliate of the General Partner.  Cash reflected on the 
Partnership's balance sheet at December 31, 1993 was on deposit with an         
unaffiliated party.                                                             

7. Reconciliation of Financial Statement Net Loss and Partners' Deficit to      
Federal Income Tax Basis Net Loss and Partners' Deficit                         

                    1994            1993            1992

Financial statement net loss    $(11,015,227)   $(12,404,566)   $(13,825,960)   
Tax basis depreciation over                                                     
financial statement deprecation     (936,081)       (842,152)     (1,032,964)   
Tax basis amortization over                                                     
financial statement amortization    (291,450)        (14,320)        (14,320)   
Tax basis income from                                                           
forgiveness of debt over                                                        
financial statement income from                                                 
forgiveness of debt                        -               -         954,845    
Financial statement replacement                                                 
reserve income over tax                                                         
basis income                               -        (924,996)       (862,498)   
Financial statement legal costs                                                 
over tax basis legal costs                 -               -         879,520    
Other                                  1,033          10,878         309,964    

Federal income tax basis                                                        
net loss                        $(12,241,725)   $(14,175,156)   $(13,591,413)   

Financial statement                                                             
partners' deficit               $(35,584,645)   $(24,569,418)   $(12,164,852)   
Current year financial                                                          
statement net loss over                                                         
federal income tax basis                                                        
net loss                          (1,226,498)     (1,770,590)        234,547    
Cumulative financial statement                                                  
net loss over federal income                                                    
tax basis net loss               (18,952,092)    (17,181,502)    (17,416,049)   

Federal income tax basis                                                        
partners' deficit               $(55,763,235)   $(43,521,510)   $(29,346,354)   

Because many types of transactions are susceptible to varying interpretations   
under Federal and state income tax laws and regulations, the amounts reported   
above may be subject to change at a later date upon final determination by the  
taxing authorities.                                                             

8. Litigation                                                                   
During 1989, two class actions were brought by Unitholders in the Court of      
Chancery of the State of Delaware (the Delaware Chancery Court) against the     
Partnership and others.  In addition, during 1989, two class actions were filed 
by Unitholders in the United States District Court for the Northern District of 
California.  Pursuant to a court order dated October 24, 1989, the Delaware     
Chancery Court actions were consolidated by the Delaware Chancery Court (the    
Consolidated Delaware Action).  In all of the cases, the plaintiffs sought      
damages in an unspecified amount as well as attorneys' fees and costs.          

On December 18, 1990, the Delaware Chancery Court approved a settlement of the  
Consolidated Delaware Action which became effective March 4, 1991.  The terms   
of the settlement called for Shearson to provide Unitholders cash               
distributions, to the extent the Hotel did not generate sufficient cash flow,   
of 1%, 3% and 4% of class members' capital contributions in 1990, 1991 and      
1992, respectively.  On March 8, 1991, the first of these distributions was     
paid to class member Limited Partners in the amount of $.10 per $10 Unit, on    
February 14, 1992, the second distribution under the settlement was paid in the 
amount of $.30 per $10 Unit, and on February 12, 1993 the third and final cash  
distribution under the settlement was paid in the amount of $.40 per $10 Unit.  
Shearson also agreed to lend the Partnership up to a maximum of $10 million to  
cover debt service and other operating expenses through January 4, 1993, and to 
pay plaintiffs' attorneys' fees and expenses up to $1,350,000 and $50,000 ,     
respectively.  As of December 31, 1991, the Partnership had borrowed and        
expended the full $10 million available under the Shearson Loan.                

Subsequent to the settlement of the Consolidated Delaware Action, the           
California complaints were dismissed pursuant to a stipulation on January 3,    
1991.                                                                           

Report of Independent Accountants                                               

To the Partners of                                                              
Union Square Hotel Partners, L.P.:                                              

Our report on the financial statements of Union Square Hotel Partners, L.P.     
(formerly Shearson Union Square Associates, L.P.), a Delaware Limited           
Partnership, is included in this Form 10-K.  In connection with our audit of    
such financial statements, we have also audited the related financial statement 
schedule listed in the index of this Form 10-K.                                 

In our opinion, the financial statement schedule referred to above, when        
considered in relation to the basic financial statements taken as a whole,      
presents fairly, in all material respects, the information required to be       
included herein.                                                                

COOPERS & LYBRAND L.L.P.                                                        

Hartford, Connecticut                                                           
February 24, 1995                                                               

UNION SQUARE HOTEL PARTNERS, L.P.                                               
Schedule III - Real Estate and Accumulated Depreciation                         

December 31, 1994                                                               

                                                                Cost Capitalized
                                                          Subsequent
                              Initial Cost to Partnership     To Acquisition
                               -----------------------------   ---------------
                                             Buildings and   Buildings and
Description     Encumbrances    Land            Improvements    Improvements    

Commercial                                                                      
Property:                                                                       
Partnership                                                                     
Owned:                                                                          

Hotel Complex                                                                   
San Francisco,                                                                  
CA              $124,991,222    $ 32,231,229    $ 95,496,243    $ 13,373,872    

            $124,991,222    $ 32,231,229    $ 95,496,243    $ 13,373,872

UNION SQUARE HOTEL PARTNERS, L.P.                                               
Schedule III - Real Estate and Accumulated Depreciation (cont.)                 

December 31, 1994                                                               

                Gross Amount at Which Carried at Close of Period

                             Buildings and                 Accumulated
Description          Land         Improvements   Total          Depreciation    

Commercial Property:                                                            
Partnership Owned:                                                              

Hotel Complex                                                                   
San Francisco, CA    $ 32,231,229 $108,870,115   $141,101,344   $ 38,235,817    

                 $ 32,231,229 $108,870,115   $141,101,344   $ 38,235,817

                                                        (2)            (1)

UNION SQUARE HOTEL PARTNERS, L.P.                                               
Schedule III - Real Estate and Accumulated Depreciation                         

December 31, 1994                                                               

                                             Life on which
                                            Depreciation
                                         in Latest
                 Date of         Date            Income Statements
Description             Construction    Acquired        is Computed             

Commercial Property:                                                            
Partnership Owned:                                                              

Hotel Complex                                                                   
San Francisco, CA       1973            1986            (3)                     

(1)  For federal income tax purposes, the amount of accumulated depreciation is 
$66,772,934.                                                                    

(2)  For federal income tax purposes, the basis of land, building and personal  
property is $141,438,877.                                                       

(3)  Buildings and improvements - 40 years; personal property - 7 years.        

A reconciliation of the carrying amount of real estate and accumulated          
depreciation for the years ended December 31, 1994, 1993 and 1992:              

Real Estate investments:        1994            1993            1992            

Beginning of year               $139,715,348    $138,304,361    $137,791,285    
Acquisitions                       1,385,996       1,410,987         513,076    

End of year                     $141,101,344    $139,715,348    $138,304,361    

Accumulated Depreciation:                                                       

Beginning of year               $ 33,222,871    $ 27,519,175    $ 21,466,169    
Depreciation expense               5,012,946       5,703,696       6,053,006    

End of year                     $ 38,235,817    $ 33,222,871    $ 27,519,175    

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		12/31/04		2
		1/2/99		3
		12/31/98		3
		1/2/97		3
		12/31/96		3					10-K,  PRE 14A,  PREM14A
		1/2/96		3
		4/2/95		2
Filed on:		3/31/95
		3/30/95		2					10-Q
		2/24/95		2		3
		1/2/95		2		3
For Period End:		12/31/94		1		3
		10/3/94		2
		7/5/94		2
		6/30/94		2					10-Q
		4/2/94		2
		3/31/94		2					10-Q
		1/2/94		2		3
		12/31/93		2		3			10-K
		12/29/93		2
		10/21/93		2
		7/31/93		2
		7/4/93		2		3
		7/3/93		3
		7/1/93		2
		4/27/93		2		3
		2/12/93		2		3
		1/4/93		3
		12/31/92		2		3
		7/1/92		3
		6/30/92		2		3
		3/25/92		3
		3/9/92		3
		3/3/92		3
		2/14/92		2		3
		1/21/92		3
		1/9/92		3
		1/2/92		1		3
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