FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission file number 0-2666
250 WEST 57th ST. ASSOCIATES
(Exact name of registrant as specified in its charter)
A New York Partnership 13-6083380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 East 42nd Street, New York, New York 10165
(Address of principal executive offices)
(Zip Code)
(212) 687-8700
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
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 [ ] .
An Exhibit Index is located on Page 14 of this Report.
Number of pages (including exhibits) in this filing: 14
2.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
250 West 57th St. Associates
Condensed Statement of Income
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Income:
Basic rent, from a related
party (Note B) $ 79,289 $ 79,289 $ 158,579 $ 158,579
Advance of primary overage
rent, from a related
party (Note B) 188,000 188,000 376,000 376,000
--------- --------- ---------- ----------
Total income 267,289 267,289 534,579 534,579
--------- --------- ---------- ----------
Expenses:
Interest on mortgage 66,994 67,468 134,111 135,047
Supervisory services, to
a related party (Note C) 15,000 15,000 30,000 30,000
Amortization of mortgage
refinancing costs 1,957 1,957 3,915 3,915
--------- --------- ---------- ----------
Total expenses 83,951 84,425 168,026 168,962
--------- --------- ---------- ----------
Net income $ 183,338 $ 182,864 $ 366,553 $ 365,617
========== ========= ========== ==========
Earnings per $5,000 parti-
cipation unit, based on
720 participation units
out- standing during the
year $ 254.64 $ 253.98 $ 509.10 $ 507.80
========= ========== ========== ==========
Distributions per $5,000
participation consisted
of the following:
Income $ 250.00 $ 250.00 $ 500.00 $ 500.00
========= ========== ========== ==========
At June 30, 1997 and 1996, there were $3,600,000 of participations
outstanding.
3.
250 West 57th St. Associates
Condensed Balance Sheet
(Unaudited)
June 30, 1997 December 31, 1996
Assets
Current assets:
Cash $ 84,125 $ 84,125
--------- ----------
Total current assets 84,125 84,125
--------- ----------
Real estate, at cost:
Property situated at 250-264 West
57th Street, New York, New York:
Land 2,117,435 2,117,435
Building 4,940,682 4,940,682
Less: Accumulated depreciation 4,940,682 4,940,682
---------- ----------
-0- -0-
Building improvements 688,000 688,000
Less: Accumulated depreciation 688,000 688,000
---------- ----------
-0- -0-
Tenants' installations and
improvements 249,791 249,791
Less: Accumulated amortization 249,791 249,791
---------- ----------
-0- -0-
Other assets:
Mortgage refinancing costs 41,106 41,106
Less: Accumulated amortization 18,269 14,355
---------- ----------
22,837 26,751
---------- ----------
Total assets $2,224,397 $2,228,311
========== ==========
Liabilities and Capital
Current liabilities:
Accrued interest payable $ 22,318 $ 22,399
First mortgage principal payments
due within one year (Note B) 22,289 21,270
---------- ----------
Total current liabilities 44,607 43,669
Long-term debt (Note B) 2,826,774 2,838,179
Capital (deficit) (See analysis,
page 4):
June 30, 1997 (646,984) -0-
December 31, 1996 -0- (653,537)
---------- ----------
Total liabilities and capital:
June 30, 1997 $2,224,397
December 31, 1996 ========== $ 2,228,311
===========
4.
250 West 57th St. Associates
Analysis of Capital (Deficit)
(Unaudited)
June 30, 1997 December 31, 1996
Capital deficit:
January 1, 1997 $ (653,537)
January 1, 1996 $ (665,228)
Add, Net income:
January 1, 1997 through
June 30, 1997 366,553 -0-
January 1, 1996 through
December 31, 1996 -0- 2,224,320
---------- ----------
(286,984) 1,559,092
Less, Distributions:
Distribution, November 30, 1996
of Secondary Overage Rent
for the lease year ended
September 30, 1996 -0- 1,492,629
Distributions January 1, 1997
through June 30, 1997 360,000 -0-
Distributions, January 1, 1996
through December 31, 1996 -0- 720,000
---------- ----------
360,000 2,212,629
---------- ----------
Capital (deficit):
June 30, 1997 $ (646,984)
December 31, 1996 ========== $ (653,537)
==========
5.
250 West 57th St. Associates
Condensed Statements of Cash Flows
(Unaudited)
January 1, 1997 January 1, 1996
through through
June 30, 1997 June 30, 1996
Cash flows from operating activities:
Net income $ 366,553 $ 365,617
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of mortgage refinancing
costs 3,915 3,915
Change in accrued interest payable (81) (74)
----------- -----------
Net cash provided by operating
activities 370,387 369,458
Cash flows from financing activities:
Cash distributions (360,000) (360,000)
Principal payments on long-term debt (10,387) (9,458)
----------- -----------
Net cash used in financing activities (370,387) (369,458)
----------- -----------
Net increase (decrease) in cash -0- -0-
Cash, beginning of period 84,125 84,124
----------- -----------
Cash, end of period $ 84,125 $ 84,124
=========== ===========
January 1, 1997 January 1, 1996
through through
June 30, 1997 June 30, 1996
Cash paid for:
Interest $ 134,193 $ 135,121
=========== ===========
250 West 57th St. Associates 6.
June 30, 1997
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with the instructions
to Form 10-Q and therefore do not include all information and
footnotes necessary for a fair presentation of financial position,
results of operations and statement of cash flows in conformity
with generally accepted accounting principles. The accompanying
unaudited condensed financial statements include all adjustments
(consisting only of normal recurring accruals) which are, in the
opinion of the joint venturers in Registrant, necessary for a fair
statement of the results for such interim periods. The joint
venturers in Registrant believe that the accompanying unaudited
condensed financial statements and the notes thereto fairly
disclose the financial condition and results of Registrant's
operations for the periods indicated and are adequate to make the
information presented therein not misleading.
Note B - Interim Period Reporting
The results for interim periods are not necessarily
indicative of the results to be expected for a full year.
Registrant is a New York joint venture which was
organized on May 25, 1953. On September 30, 1953, Registrant
acquired fee title to the "Fisk Building" (the "Building") and the
land thereunder located at 250-264 West 57th Street, New York, New
York (hereinafter, collectively, the "Property"). Registrant's
joint venturers are Peter L. Malkin and Stanley Katzman (the
"Joint Venturers"), each of whom also acts as an agent for holders
of participations in their undivided joint venture interests in
Registrant (the "Participants").
Registrant leases the Property to Fisk Building
Associates (the "Net Lessee"), under a long-term net operating
lease (the "Net Lease"), the current term of which expires on
September 30, 2003. Net Lessee is a New York partnership in which
Mr. Malkin is among its partners. In addition, each of the Joint
Venturers is also among the members of the law firm of Wien &
Malkin LLP, 60 East 42nd Street, New York, New York, counsel to
Registrant and Net Lessee ("Counsel"). See Note C of this Item 1
("Note C").
Under the Net Lease, Net Lessee must pay (i) annual
basic rent equal to the sum of $28,000 plus an amount equal to the
rate of constant payments for interest and amortization required
annually under the first mortgage described below (the "Basic
Rent"), and (ii)(A) primary overage rent equal to the lesser of
(1) Net Lessee's net operating income for the preceding lease year
or (2) $752,000 (the "Primary Overage Rent"), and (B) secondary
overage rent equal to 50% of any remaining balance of Net Lessee's
250 West 57th St. Associates 7.
June 30, 1997
net operating income for such lease year ("Secondary Overage
Rent").
Net Lessee is required to make a monthly payment to
Registrant, as an advance against Primary Overage Rent, of an
amount equal to its operating profit for its previous lease year
in the maximum amount of $752,000 per annum. Net Lessee currently
advances $752,000 each year which permits Registrant to make
regular monthly distributions at 20% per annum on the
Participants' remaining cash investment.
For the lease year ended September 30, 1996, Net Lessee
reported net operating profit of $4,068,953 after deduction of
Basic Rent. Net Lessee paid Primary Overage Rent of $752,000,
together with Secondary Overage Rent of $1,658,477 for the fiscal
year ended September 30, 1996. The Secondary Overage Rent of
$1,658,477 represents 50% of the excess of the net operating
profit of $4,068,953 over $752,000. After payment of $165,848 to
Counsel as an additional payment for supervisory services, the
balance of $1,492,629 was distributed to the Participants on
November 30, 1996.
Secondary Overage Rent income is recognized when earned
from Net Lessee, at the close of the lease year ending September
30. Such income is not determinable until Net Lessee, pursuant to
the Net Lease, renders to Registrant a certified report on the
operation of the Property. The Net Lease does not provide for the
Net Lessee to render interim reports to Registrant, so no income
is reflected for the period between the end of the lease year and
the end of Registrant's fiscal year.
The Net Lease provides for one renewal option of 25
years. The Participants in Registrant and the partners in Net
Lessee have agreed to execute three additional 25-year renewal
terms on or before the expiration of the then applicable renewal
term.
Effective March 1, 1995, the first mortgage loan on the
Property, in the principal amount of $2,890,758, held by Apple
Bank for Savings ("Apple Bank") was refinanced (the
"Refinancing"). The material terms of the refinanced mortgage
loan (the "Mortgage Loan") are as follows:
(i) a maturity date of June 1, 2000;
(ii) monthly payments of $24,096 aggregating
$289,157 per annum applied first to interest at the rate
of 9.4% per annum and the balance in reduction of
principal;
(iii) no prepayment until after the third loan year.
Thereafter, a 3% penalty will be imposed in the fourth
loan year and a 2% penalty during the fifth loan year.
250 West 57th St. Associates 8.
June 30, 1997
No prepayment penalty will be imposed if the Mortgage
Loan is paid in full during the last 90 days of the
fifth loan year; and
(iv) no Partner or Participant will have any
personal liability for principal of, or interest on, the
Mortgage Loan.
Note C - Supervisory Services
Registrant pays Counsel for legal fees and supervisory
services and disbursements: (i) $40,000 per annum (the "Basic
Payment"); and (ii) an additional payment of 10% of all
distributions to Participants in any year in excess of the amount
representing a return to them at the rate of 15% per annum on
their remaining cash investment (the "Additional Payment"). At
June 30, 1997, the Participants' remaining cash investment was
$3,600,000. Of the Basic Payment, $28,000 is payable from Basic
Rent and $12,000 is payable from Primary Overage Rent received by
Registrant.
No remuneration was paid during the three and six month
periods ended June 30, 1997 by Registrant to any of the Joint
Venturers as such. Pursuant to the fee arrangements described
herein, Registrant also paid Counsel $10,000 and $20,000,
respectively, of the Basic Payment and $5,000 and $10,000,
respectively, on account of the Additional Payment, for the three
and six month periods ended June 30, 1997.
The supervisory services provided to Registrant by
Counsel include legal, administrative services and financial
services. The legal and administrative services include acting as
general counsel to Registrant, maintaining all of its partnership
records, performing physical inspections of the Building,
reviewing insurance coverage and conducting annual partnership
meetings. Financial services include monthly receipt of rent from
the Net Lessee, payment of monthly and additional distributions to
the Participants, payment of all other disbursements, confirmation
of the payment of real estate taxes, active review of financial
statements submitted to Registrant by the Net Lessee and financial
statements audited by and tax information prepared by Registrants'
independent certified public accountant, and distribution of such
materials to the Participants. Counsel also prepares quarterly,
annual and other periodic filings with the Securities and Exchange
Commission and applicable state authorities.
Reference is made to Note B for a description of the
terms of the Net Lease between Registrant and Net Lessee. The
respective interests, if any, of each Joint Venturer in Registrant
and in Net Lessee arise solely from such person's ownership of
participations in Registrant and partnership interests or
participations in Net Lessee. The Joint Venturers receive no
250 West 57th St. Associates 9.
June 30, 1997
extra or special benefit not shared on a pro rata basis with all
other Participants in Registrant or partners in Net Lessee.
However, each of the two Joint Venturers who is currently a member
of Counsel, by reason of his respective partnership interest in
Counsel, is entitled to receive his share of any legal fees or
other remuneration paid to Counsel for legal services rendered to
Registrant and Net Lessee.
As of June 30, 1997, the Joint Venturers owned of record
and beneficially $24,167 of Participations, representing less than
1% of the currently outstanding Participations in Registrant.
In addition, as of June 30, 1997, certain of the Joint
Venturers in Registrant (or their respective spouses) held
additional Participations as follows:
Isabel Malkin, the wife of Peter L. Malkin, owned of
record and beneficially $70,000 of Participations.
Mr. Malkin disclaims any beneficial ownership of such
Participations.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Registrant was organized solely for the purpose of
owning the Property subject to a net operating lease of the
Property held by Net Lessee. Registrant is required to pay, from
Basic Rent, the charges on the Mortgage Loan and amounts for
supervisory services, and to then distribute the balance of such
Basic Rent to holders of Participations. See Note C of Item 1.
Pursuant to the Net Lease, Net Lessee has assumed responsibility
for the condition, operation, repair, maintenance and management
of the Property. Accordingly, Registrant need not maintain sub-
stantial reserves or otherwise maintain liquid assets to defray
any operating expenses of the Property.
Registrant's results of operations are affected
primarily by the amount of rent payable to it under the Net Lease.
The amounts of Primary Overage Rent and Secondary Overage Rent are
affected by the New York City economy and its real estate market.
It is difficult to forecast the New York City economy and real
estate market over the next few years.
Registrant does not pay dividends. During the three and
six month periods ended June 30, 1997, Registrant made regular
monthly distributions of $83.33 for each $5,000 participation
($1,000 per annum for each $5,000 participation). On November 30,
1996, Registrant made an additional distribution of $2,073 for
each $5,000 participation. Such distribution represented the
balance of Secondary Overage Rent payable by Net Lessee in
accordance with the terms of the Net Lease after deducting the
Additional Payment to Counsel. See Notes B and C. There are no
restrictions on Registrant's present or future ability to make
250 West 57th St. Associates 10.
June 30, 1997
distributions; however, the amount of such distributions depends
solely on the ability of Net Lessee to make monthly payments of
Basic Rent, Primary Overage Rent and Secondary Overage Rent to
Registrant in accordance with the terms of the Net Lease.
Registrant expects to make distributions so long as it receives
the payments provided for under the Net Lease. See Note B.
The following summarizes, with respect to the current
period and corresponding period of the previous year, the material
factors regarding Registrant's results of operations for such
periods:
Total income remained the same for the three and six-
month periods ended June 30, 1997 as compared with
the three and six-month periods ended June 30, 1996.
Total expenses decreased for the three and six month
periods ended June 30, 1997 as compared to the three
and six month periods ended June 30, 1996. Such
decrease resulted from a decrease in interest expense
on the Mortgage Loan.
Liquidity and Capital Resources
There has been no significant change in Registrant's
liquidity for the three and six month periods ended June 30, 1997,
as compared with the three and six month periods ended June 30,
1996.
The amortization payments due under the Mortgage Loan
(see Note B of Item 1 hereof) will not be sufficient to liquidate
fully the outstanding principal balance thereof at maturity in
2000. The Registrant does not maintain any reserve to cover the
payment of any mortgage indebtedness at or prior to maturity.
Therefore, repayment of such indebtedness will depend on
Registrant's ability to arrange a further refinancing of the
Mortgage Loan. The ability of Registrant to obtain any such
refinancing will depend upon several factors, including the value
of the Property at that time and future trends in the real estate
market and the economy in the geographic area in which the
Property is located.
Registrant anticipates that funds for working capital
for the Property will be provided by rental payments received from
the Net Lessee and, to the extent necessary, from additional
capital investment by the partners in the Net Lessee and/or
external financing. However, as noted above, Registrant has no
requirement to maintain substantial reserves to defray any
operating expenses of the Property. Registrant foresees no need
to make material commitments for capital expenditures while the
Net Lease is in effect.
250 West 57th St. Associates 11.
June 30, 1997
Inflation
Registrant believes that there has been no material
change in the impact of inflation on its operations since the
filing of its report on Form 10-K for the year ended December 31,
1996, which report and all exhibits thereto are incorporated
herein by reference and made a part hereof.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Property of Registrant is the subject of the
following pending litigation:
Wien & Malkin LLP, et. al. v. Helmsley-Spear, Inc., et.
al. On June 19, 1997 Wien & Malkin LLP and Peter L. Malkin filed
an action in the Supreme Court of the State of New York, on behalf
of themselves and various partnerships, including Registrant,
against Helmsley-Spear, Inc. and Leona Helmsley. The filing of
the action was accompanied by a motion for a Temporary Restraining
Order and a Preliminary Injunction by which the plaintiffs sought
the return of over $5,000,000 in Empire State Building Company
funds which were being wrongfully held by Helmsley-Spear, Inc., an
order preventing Leona Helmsley from further violations of the
partnership agreements of the partnerships, and expedited
discovery of Helmsley-Spear, Inc. and Leona Helmsley regarding the
financial status of Helmsley-Spear, Inc. In their complaint,
plaintiffs seek the same relief requested in the motion for a
Temporary Restraining Order and Preliminary Injunction, as well as
the removal of Helmsley-Spear, Inc. as managing and leasing agent
for all of the buildings owned by the partnerships on whose behalf
the action was brought. Plaintiffs also seek an order precluding
Leona Helmsley from exercising any partner management powers in
the partnerships. Justice Ira Gammerman ordered that argument on
plaintiff's motion be heard June 24, and on the date ordered
further argument on July 14, 1997. Defendants filed opposition
papers to the motion for a Temporary Restraining Order and
Preliminary Injunction on June 26 and cross-moved for arbitration
on July 10. Plaintiffs filed reply papers on July 14, and
defendants filed reply papers on their cross-motion for
arbitration on July 26, 1997. Both motions are currently before
the court. In addition, plaintiffs have served document requests
on both defendants and notices of deposition on the officers of
Helmsley-Spear, Inc. and Leona Helmsley.
Item 4. Submission of Matters to a Vote of Participants.
The Partners are in the process of preparing a
solicitation of consents of the Participants to consider certain
governance issues, including the designation of additional
Successor Agents.
250 West 57th St. Associates 12.
June 30, 1997
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits hereto are being incorporated by
reference.
(b) Registrant filed a Form 8-K on July 1, 1997
reporting the commencement of an action against Helmsley-Spear,
Inc. and Leona M. Helmsley. See Item 1.
June 30, 1997
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.
The individual signing this report on behalf of
Registrant is Attorney-in-Fact for Registrant and each of the
Joint Venturers in Registrant, pursuant to a Power of Attorney,
dated March 29, 1996 (the "Power").
250 WEST 57TH ST. ASSOCIATES
(Registrant)
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: August 15, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed by the undersigned as
Attorney-in-Fact for each of the Joint Venturers in Registrant,
pursuant to the Power, on behalf of Registrant and as a Joint
Venturer in Registrant on the date indicated.
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: August 15, 1997
______________________
* Mr. Katzman supervises accounting functions for
Registrant.
250 West 57th St. Associates 14.
June 30, 1997
EXHIBIT INDEX
Number Document Page *
25 Power of Attorney dated March 29, 1996,
which was filed as Exhibit 24 to year
ended December 31, 1995 and is incor-
porated by reference as an exhibit
hereto.
______________________
*Page references are based on sequential numbering system.
250 West 57th St. Associates 13.