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 March 31, 1998
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 require-
ments for the past 90 days.
Yes [ X ]. No [ ] .
An Exhibit Index is located on Page 13 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
Ended March 31,
1998 1997
Income:
Basic rent, from a related
party (Note B) $ 79,289 $ 79,289
Advance of primary overage
rent, from a related
party (Note B) 188,000 188,000
-------- --------
Total income 267,289 267,289
-------- --------
Expenses:
Interest on mortgage 66,609 67,117
Supervisory services, to a
related party (Note C) 15,000 15,000
Amortization of mortgage
refinancing costs 1,957 1,957
-------- --------
Total expenses 83,566 84,074
-------- --------
Net income $183,723 $183,215
======== ========
Earnings per $5,000 partici-
pation unit, based on 720
participation units out-
standing during the year $ 255.17 $ 254.47
======== ========
Distributions per $5,000 participation:
Distributions per $5,000
participation consisted of
the following:
Income $ 250.00 $ 250.00
======== ========
At March 31, 1996 and 1997, there were $3,600,000 of participations
outstanding.
3.
250 West 57th St. Associates
Condensed Balance Sheet
(Unaudited)
March 31, 1998 December 31, 1997
Assets
Current assets:
Cash $ 84,124 $ 84,124
---------- ----------
Total current assets 84,124 84,124
---------- ----------
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 24,142 22,184
---------- ----------
16,964 18,922
---------- ----------
Total assets $2,218,523 $2,220,481
========== ==========
Liabilities and Capital
Current liabilities:
Accrued interest payable $ 22,188 $ 22,232
First mortgage principal payments
due within one year (Note B) 23,910 23,358
---------- ----------
Total current liabilities 46,098 45,590
Long-term debt (Note B) 2,808,632 2,814,821
Capital (deficit) (See analysis, page 4):
March 31, 1998 (636,207) -0-
December 31, 1997 -0- (639,930)
---------- ----------
Total liabilities and capital:
March 31, 1998 $2,218,523
December 31, 1997 ========== $2,220,481
==========
4.
250 West 57th St. Associates
Analysis of Capital (Deficit)
(Unaudited)
March 31, 1998 December 31, 1997
Capital:
January 1, 1998 $ (639,930)
January 1, 1997 $ (653,537)
Add, Net income:
January 1, 1998 through
March 31, 1998 183,723 -0-
January 1, 1997 through
December 31, 1997 -0- 1,909,974
---------- ----------
(456,207) 1,256,437
Less, Distributions:
Distribution, December 2, 1997
of Secondary Overage Rent
for the lease year ended
September 30, 1997 -0- 1,176,367
Distributions January 1, 1998
through March 31, 1998 180,000 -0-
Distributions, January 1, 1997
through December 31, 1997 -0- 720,000
---------- ----------
180,000 1,896,367
---------- ----------
Capital (deficit):
March 31, 1998 $ (636,207)
December 31, 1997 ========== $ (639,930)
==========
5.
250 West 57th St. Associates
Condensed Statements of Cash Flows
(Unaudited)
January 1, 1998 January 1, 1997
through through
March 31, 1998 March 31, 1997
Cash flows from operating activities:
Net income $ 183,723 $ 183,215
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of mortgage refinancing
costs 1,957 1,957
Change in accrued interest payable (44) (40)
----------- -----------
Net cash provided by operating
activities 185,636 185,132
----------- -----------
Cash flows from financing activities:
Cash distributions (180,000) (180,000)
Principal payments on long-term debt (5,636) (5,132)
----------- -----------
Net cash used in financing activities (185,636) (185,132)
----------- -----------
Net increase (decrease) in cash -0- -0-
Cash, beginning of period 84,124 84,124
----------- -----------
Cash, end of period 84,124 $ 84,124
=========== ===========
January 1, 1998 January 1, 1997
through through
March 31, 1998 March 31, 1997
Cash paid for:
Interest $ 66,653 $ 67,157
=========== ===========
250 West 57th St. Associates 6.
March 31, 1998
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited condensed financial state-
ments have been prepared in accordance with the instructions to
Form 10-Q and therefore do not include all information and foot-
notes 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 dis-
close the financial condition and results of Registrant's opera-
tions for the periods indicated and are adequate to make the
information presented therein not misleading.
Note B - Interim Period Reporting
The results for the interim period 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 (collectively, the "Property"). As of April 15, 1998,
Registrant's joint venturers are Peter L. Malkin and Anthony E.
Malkin (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
Peter L. Malkin is among its partners. In addition, he is also a
member 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.
March 31, 1998
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 original cash investment.
For the lease year ended September 30, 1997, Net Lessee
reported net operating profit of $3,405,968 after deduction of
Basic Rent. Net Lessee paid Primary Overage Rent of $752,000,
together with Secondary Overage Rent of $1,326,984 for the fiscal
year ended September 30, 1997. The Secondary Overage Rent of
$1,326,984 represents 50% of the excess of the net operating
profit of $3,405,968 over $752,000. After payment of $19,909 for
fees and expenses in connection with the August 6, 1997 Consent
Solicitation Program and $130,708 to Counsel as an additional
payment for supervisory services, the balance of $1,176,367 was
distributed to the Participants on December 2, 1997.
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;
250 West 57th St. Associates 8.
March 31, 1998
(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.
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 distribu-
tions to Participants in any year in excess of the amount repre-
senting a return to them at the rate of 15% per annum on their
remaining cash investment (the "Additional Payment"). At March
31, 1998, 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 month period
ended March 31, 1998 by Registrant to either of the Joint
Venturers as such. Pursuant to the fee arrangements described
herein, Registrant also paid Counsel $10,000 of the Basic Payment
and $5,000 on account of the Additional Payment for the three
month period ended March 31, 1998.
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
and Participant records, performing physical inspections of the
Building, reviewing insurance coverage and conducting annual
partnership meetings. Financial services include monthly receipt
of rent from Net Lessee, payment of monthly and additional
distributions to the Participants, payment of all other
disbursements, confirmation of the payment of real estate taxes,
and active review of financial statements submitted to Registrant
by Net Lessee and financial statements audited by and tax
information prepared by Registrant's 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 of Item 1 ("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
250 West 57th St. Associates 9.
March 31, 1998
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 extra or special benefit not shared on a pro rata basis
with all other Participants in Registrant or partners in Net
Lessee. However, one of the Joint Venturers, 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 April 15, 1998, the Joint Venturers owned of
record and beneficially $18,333 of Participations, representing
less than 1% of the currently outstanding Participations in
Registrant.
In addition, as of April 15, 1998, certain of the Joint
Venturers in Registrant (or their respective spouses) held ad-
ditional 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.
Anthony E. Malkin owned of record as trustee, but not
beneficially $8,333 of Participations. Mr. Anthony E.
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. Pursuant to
the Net Lease, Net Lessee has assumed sole responsibility for the
condition, operation, repair, maintenance and management of the
Property. Accordingly, Registrant need not maintain substantial
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.
250 West 57th St. Associates 10.
March 31, 1998
Registrant does not pay dividends. During the three
month period ended March 31, 1998, Registrant made regular monthly
distributions of $83.33 for each $5,000 participation ($1,000 per
annum for each $5,000 participation). On December 2, 1997,
Registrant made an additional distribution of $1,634 for each
$5,000 participation. Such distribution represented the balance
of Secondary Overage Rent paid by Net Lessee in accordance with
the terms of the Net Lease after deducting the Additional Payment
to Counsel and expenses in connection with the Consent
Solicitation program. See Notes B and C. There are no
restrictions on Registrant's present or future ability to make
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 affecting Registrant's results of operations for such
periods:
Total income remained the same for the three-month
period ended March 31, 1998 as compared with the
three-month period ended March 31, 1997. Total
expenses decreased for the three month period ended
March 31, 1998 as compared to the three month period
ended March 31, 1997. 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 month period ended March 31, 1998, as
compared with the three month period ended March 31, 1997.
The amortization payments due under the Mortgage Loan
(see Note B of Item 1 hereof) will not be sufficient to fully
liquidate the outstanding principal balance thereof at maturity in
2000. 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
250 West 57th St. Associates 11.
March 31, 1998
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.
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,
1997, 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, against
Helmsley-Spear, Inc. and Leona Helmsley concerning various part-
nerships which own, lease or operate buildings managed by
Helmsley-Spear, Inc., including Registrant's property. In their
complaint, plaintiffs sought the removal of Helmsley-Spear, Inc.
as managing and leasing agent for all of the buildings.
Plaintiffs also sought an order precluding Leona Helmsley from
exercising any partner management powers in the partnerships. In
August, 1997, the Supreme Court directed that the foregoing claims
proceed to arbitration. As a result, Mr. Malkin and Wien & Malkin
LLP filed an arbitration complaint against Helmsley-Spear, Inc.
and Mrs. Helmsley before the American Arbitration Association.
Helmsley-Spear, Inc. and Mrs. Helmsley served answers denying
liability and asserting various affirmative defenses and counter-
claims; and Mr. Malkin and Wien & Malkin LLP filed a reply denying
the counterclaims. By agreement dated December 16, 1997, Mr.
Malkin and Wien & Malkin LLP (each for their own account and not
in any representative capacity) reached a settlement with Mrs.
Helmsley of the claims and counterclaims in the arbitration and
litigation between them. Mr. Malkin and Wien & Malkin LLP are
continuing their prosecution of claims in the arbitration for
relief against Helmsley-Spear, Inc., including its termination as
the leasing and managing agent for various entities and proper-
ties, including the Registrant's Lessee.
250 West 57th St. Associates 12.
March 31, 1998
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits hereto are being incorporated by reference.
(b) Registrant has not filed any report on Form 8-K during
the quarter for which this report is being filed.
250 West 57th St. Associates 13.
March 31, 1998
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 Powers of Attorney,
dated March 29, 1996 and May 14, 1998 (collectively, the "Power").
250 WEST 57TH ST. ASSOCIATES
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: June 1, 1998
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 on the date
indicated.
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: June 1, 1998
______________________
* Mr. Katzman supervises accounting functions for
Registrant.
250 West 57th St. Associates 14.
March 31, 1998
EXHIBIT INDEX
Number Document Page*
3(a) Registrant's Joint Venture Agreement,
dated May 25, 1953, which was filed as
Exhibit No. 3(a) to Registrant's
Registration Statement on Form S-1
(the "Registration Statement"), is
incorporated by reference as an
exhibit hereto.
24 Powers of Attorney dated March 29,
1996 and May 14, 1998 between Partners
in Registrant and Stanley Katzman and
Richard A. Shapiro.
______________________
* Page references are based on sequential numbering system.