FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
[ ] 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 O-2666
250 WEST 57TH ST. ASSOCIATES L.L.C.
(Exact name of registrant as specified in its charter)
New York 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)
Registrant's telephone number, including area code (212) 687-8700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
$3,600,000 of Participations in Joint-Venture Interests
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 reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ x ] No [ ]
The aggregate market of the voting stock held by non-affiliates
of the Registrant: Not applicable, but see Items 5 and 10 of
this report.
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 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.
An Exhibit Index is located on pages 33 through 35 hereof.
Number of pages (including exhibits) in this filing: 47
PART I
Item 1. Business.
(a) General
Registrant is a joint venture which was organized on
May 25, 1953. On September 30, 1953, Registrant acquired fee
title to The Fisk Building, 250-264 West 57th Street, New York,
New York (the "Building") and to the land thereunder (the
"Property"). On November 30, 2001, Registrant converted to a
limited liability company under New York law and is now known as
250 West 57th St. Associates L.L.C. The conversion does not
change any aspect of the assets and operations of Registrant
other than to protect its participants from any future liability
to a third party. Registrant's joint venturers are Peter L.
Malkin and Anthony E. Malkin (individually, a "Joint Venturer"
and, collectively, the "Joint Venturers") each of whom also acts
as an agent for holders of participations in their undivided
joint venture interests in Registrant (each holder of a
participation, individually, a "Participant" and, collectively,
the "Participants").
Registrant leases the Property to Fisk Building
Associates (the "Net Lessee"), a partnership, under a long-term
net operating lease dated May 1, 1954 (the "Net Lease"), the
current term of which expires on September 30, 2003. Net Lessee
is a New York partnership in which Trusts created by Peter L.
Malkin for family members are beneficial owners of an interest in
Net Lessee. In addition, one of the Joint Venturers is also a
member of Wien & Malkin LLP, 60 East 42nd Street, New York, New
York, which provides supervisory and other services to Registrant
and the Net Lessee ("Supervisor"). See Items 10, 11, 12 and 13
hereof for a description of the on-going services rendered by,
and compensation paid to, Supervisor and for a discussion of
certain relationships which may pose actual or potential
conflicts of interest among Registrant, Net Lessee and certain of
their respective affiliates.
As of December 31, 2001, the Building was approximately
91% occupied by approximately 299 tenants, a majority of whom are
engaged in the practices of law, dentistry and accounting, and
the businesses of publishing, insurance and entertainment.
Registrant does not maintain a full-time staff. See Item 2
hereof for additional information concerning the Building.
(b) Net Lease
Effective May 1, 1975, the lease between 250 West 57th
St. Associates, as lessor, and Fisk Building Associates, as
lessee, provides for basic rent equal to mortgage principal and
interest payments plus $28,000 payable to Wien & Malkin LLP for
supervisory services. The lease modification dated November 17,
2000 between 250 West 57th St. Associates, as lessor, and Fisk
Building Associates, as lessee, provides that the basic rent will
be equal to the sum of $28,000 plus the installment payments for
interest and amortization ( not including any balloon payment due
at maturity ) required annually under the new $15,500,000 first
mortgage loan ( the "First Mortgage") from Emigrant Savings
Bank. Basic rent is payable in monthly installments on the first
day of each calendar month in an amount equal to $2,333.33 plus
the projected debt service due on the First Mortgage on the first
day of the ensuing calendar month ( with a reconciliation to be
made as soon as practicable thereafter ): provided, however, that
basic rent due on December 1, 2000 shall include interest prepaid
at the closing of the First Mortgage or accrued thereafter. Basic
rent shall be adjusted on a dollar-for-dollar basis by changes in
the annual debt service on the First Mortgage.
-1-
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, 2001, Net Lessee
reported net operating profit of $6,343,859 after deduction of
Basic Rent. Net Lessee paid Primary Overage Rent of $752,000,
together with Secondary Overage Rent of $2,732,389 for the fiscal
year ended September 30, 2001. The Secondary Overage Rent of
$2,732,389 represents 50% of the excess of the net operating
profit of $6,343,859 over $752,000 less $63,451 representing
interest earned and retained by Registrant on funds borrowed for
the improvement program. After the payment of $273,239 to
Supervisor as an additional payment for supervisory services, the
balance of $2,459,150 was distributed to the Participants on
November 30, 2001.
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 report on the Net
Lessee's operation of the Property. The Net Lease requires that
this report be delivered to Registrant annually within 60 days
after the end of each such lease year. Accordingly, all
Secondary Overage Rent income and related supervisory service
expense can only be determined after the receipt of such report.
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. See Note 4 of Notes to Financial
Statements filed under Item 8 hereof (the "Notes") regarding
Secondary Overage Rent payments by Net Lessee for the fiscal
years ended December 31, 2001, 2000 and 1999.
The Net Lease provides for one renewal option of 25
years. The Participants in Registrant have consented to the
granting of options to the Net Lessee to extend the Net Lease for
three additional 25-year renewal terms on or before the
expiration of the then applicable renewal term.
(c) Mortgage Loan Refinancing
Effective November 17, 2000, a new first mortgage was
placed on the property with Emigrant Savings Bank in the amount
of $15,500,000. The Mortgage matures on December 1, 2005. At the
closing, the amount of $7,000,000 was advanced to pay off the
existing first and second mortgages held by Apple Bank for
Savings and to pay for closing and related costs and the costs of
improvements made to the property. The balance of the first
mortgage loan will be advanced in stages through May 31, 2003 to
pay for additional improvements to the property.
-2-
Monthly payments under the mortgage are interest only.
Amounts advanced at the closing bear interest at the rate of
7.511% throughout the term of the mortgage. Amounts advanced
after the closing will bear interest at a floating rate equal to
1.65 percentage points above 30, 60, 90, 180 or 360 day LIBOR or
the yield on 30-day U.S. Treasury Securities, as selected by
Associates.
On June 1, 2003 the interest rate on all amounts
advanced following the closing will be converted to a fixed rate
equal to 1.65 percentage points above the then-current yield on
U.S. Treasury Securities having the closest maturity to December
1, 2005.
The mortgage may be prepaid at any time, in whole only,
upon payment of a prepayment penalty based on a yield maintenance
formula. There will be no prepayment penalty if the mortgage is
paid in full during the last 90 days of the term thereof.
(d) Competition
The average annual base rental rate payable to Net
Lessee for leases being done at this time is $26.45 per square
foot (exclusive of electricity charges and escalation).
Current asking rents for the building range from $42 to
$50 per square foot.
(e) Tenant Leases
Net Lessee operates the Building free from any federal,
state or local government restrictions involving rent control or
other similar rent regulations which may be imposed upon
residential real estate in Manhattan. Any increase or decrease
in the amount of rent payable by a tenant is governed by the
provisions of the tenant's particular lease. With respect to the
retail leases, the tenants are required to pay electricity
charges and taxes, and some tenants are required to pay cost of
living increases in rent. In one particular instance, percentage
rent was included in the tenant's lease in lieu of cost of living
increases.
-3-
Item 2. Properties.
As stated in Item 1 hereof, Registrant owns the
Building located at 250-264 West 57th Street, New York, New York,
known as the "Fisk Building", and the land thereunder.
Registrant's fee title to the Property is encumbered by a
Mortgage Loan which, at December 31, 2001, had an unpaid
principal balance of $7,000,000. For a description of the terms
of the Mortgage Loan see Note 3 of the Notes.
The Building, erected in 1921 and containing 26 floors,
occupies the entire block front on the south side of West 57th
Street between Broadway and Eighth Avenue, New York, New York.
The Building has ten passenger and three freight elevators and is
equipped with a combination of central and individual window unit
air-conditioning.
The Building is net leased to Net Lessee under the Net
Lease. A modification of the Net Lease, effective October 1,
1984, provides for a further renewal term of 25 years, from
October 1, 2003 through September 30, 2028. There is no change in
the terms of the Net Lease during the renewal periods. See Item
1 hereof.
A majority of the Building's tenants are engaged in the
entertainment business, insurance business, publishing, and the
practice of law, accounting and dentistry. In addition, there
are several commercial tenants located on the street level of the
Building, including a restaurant and several retail stores.
Item 3. 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
partnerships 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.
-4-
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 counterclaims; 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 then continued 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 properties, including the Registrant's
Lessee. The arbitration hearings were concluded in June 2000, and
the arbitrators issued their decision on March 30, 2001, ordering
that the termination of Helmsley-Spear, Inc. would require a new
vote by the partners in the Lessee, setting forth procedures for
such a vote, and denying the other claims of all parties.
Following the decision, Helmsley-Spear, Inc. applied to the court
for confirmation of the decision, and Mr. Malkin and Wien &
Malkin LLP applied to the court for an order setting aside that
part of the decision regarding the procedure for partnership
voting to terminate Helmsley-Spear, Inc. and various other parts
of the decision on legal grounds. The court granted the motion to
confirm the arbitrators' decision and denied the application to
set aside part of the arbitrators' decision. Mr. Malkin and Wien
& Malkin LLP have served notice of appeal of the court's
determination.
4. Submission of Matters to a Vote of Participants.
No matters were submitted to the participants during
the last quarter of the period covered by this report.
PART II
Item 5. Market for Registrant's Common Equity
and Related Security Holder Matters.
Registrant was a joint venture pursuant to an agreement
entered into among various individuals dated May 1, 1954. As of
November 30, 2001, Registrant is a limited liability company.
Registrant has not issued any common stock. The
securities registered by it under the Securities Exchange Act of
1934, as amended, consist of participations in the joint venture
interests of the Joint Venturers in Registrant (each,
individually, a "Participation" and, collectively,
"Participations") and are not shares of common stock or their
equivalent. The Participations represent each Participant's
fractional share in the Joint Venturers' undivided interest in
Registrant and are divided approximately equally among the Joint
Venturers. Each unit of the Participations was originally
offered at a purchase price of $5,000; fractional units were also
offered at proportionate purchase prices. Registrant has not
repurchased Participations in the past and it is not likely to
change its policy in the future.
-5-
(a) The Participations neither are traded on an
established securities market nor are readily tradable on a
secondary market or the substantial equivalent thereof. Based on
Registrant's transfer records, Participations are sold by the
holders thereof from time to time in privately negotiated
transactions and, in many instances, Registrant is not aware of
the prices at which such transactions occur. Registrant was
advised of 30 transfers of Participations during 2001. In one
instance, the indicated purchase price was equal to 3.6 times the
face amount of the Participation transferred, i.e., $18,000 for a
$5,000 Participation. In all other cases, no consideration was
indicated.
(b) As of December 31, 2001, there were 575 holders of
Participations of record.
(c) Registrant does not pay dividends. During the
years ended December 31, 2001 and 2000, 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, 2001 and November 30, 2000, Registrant made additional
distributions for each $5,000 Participation of $3,415 and $3,157,
respectively. Such distributions represented primarily Secondary
Overage Rent payable by Net Lessee. There are no restrictions on
Registrant's present or future ability to make distributions;
however, the amount of such distributions, particularly
distributions of Secondary Overage Rent, depends solely on Net
Lessee's ability to make payments of Basic Rent, Primary Overage
Rent and Secondary Overage Rent to Registrant. (See Item 1
hereof). Registrant expects to make distributions so long as it
receives the payments provided for under the Net Lease. See Item
7 hereof.
-6-
[SELECTED FINANCIAL DATA]
Item 6.
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
SELECTED FINANCIAL DATA
Year ended December 31,
2001 2000 1999 1998 1997
Basic minimum annual rent income $ 553,770 $ 429,740 $ 341,274 $ 317,157 $ 317,157
Primary overage rent income 752,000 752,000 752,000 752,000 752,000
Secondary overage rent income 2,732,389 2,525,723 2,262,956 2,282,064 1,326,984
Total revenues $4,038,159 $3,707,463 $3,356,230 $3,351,221 $2,396,141
Net income....................... $3,058,314 $2,952,546 $2,719,635 $2,787,347 $1,909,974
Earnings per $5,000 participation
unit, based on 720 participation
units outstanding during each
year $ 4,248 $ 4,101 $ 3,777 $ 3,871 $ 2,653
Total assets $8,405,356 $6,759,030 $3,905,210 $2,212,651 $2,220,481
Long-term obligations $7,000,000 $7,000,000 $ - $2,789,171 $2,814,821
Distributions per $5,000
participation unit, based on
720 participation units
outstanding during each year:
Income $ 4,248 $ 4,101 $ 3,777 $ 3,850 $ 2,634
Return of capital 167 56 52 - -
Total distributions $ 4,415 $ 4,157 $ 3,829 $ 3,850 $ 2,634
-7-
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
Registrant was organized solely for the purpose of
owning the Property described in Item 2 hereof 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 then to distribute
the balance of such Basic Rent to holders of Participations.
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. The following summarizes the
material factors for the three most recent years affecting
Registrant's results of operations for such periods:
(a) Total income increased for the year ended December 31, 2001
as compared with the year ended December 31, 2000. The
increase resulted from interest income and an increase in
Basic minimum rent and Secondary Overage Rent. See Note 4
of the Notes. Total income increased for the year ended
December 31, 2000 as compared with the year ended December
31, 1999. The increase resulted from an increase in Basic
minimum rent, an increase in interest and dividend income
and an increase in Secondary Overage Rent. See Note 4 of the
Notes.
(b) Total expenses increased for the year ended December 31,
2001 as compared with the year ended December 31, 2000. The
increase resulted from an increase in second mortgage
interest expense, an increase in the additional payment for
supervisory services payable with respect to an increased
amount of Secondary Overage Rent received by Registrant in
2001, and an increase in amortization of mortgage
refinancing costs and depreciation. See Notes 3 and 5 of the
Notes. Total expenses increased for the year ended December
31, 2000 as compared with the year ended December 31, 1999.
The increase resulted from an increase in the additional
payment for supervisory services, payment of second mortgage
interest expense, and an increase in professional fees and
amortization of mortgage refinancing costs. See Notes 3 and
5 of the Notes.
-8-
{SELECTED FINANCIAL DATA]
Item 7.
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
QUARTERLY RESULTS OF OPERATIONS (Continued)
Three Months Ended
March 31, June 30, September 30, December 31,
2001 2001 2001 2001
Statement of Income Data:
Basic rent income $138,443 $138,442 $ 138,443 $138,442
Advance of primary
overage rent income 188,000 188,000 188,000 188,000
Secondary overage rent
income - - 2,732,389 -
Dividend and interest
income 21,864 16,123 11,248 4,826
Total revenues 348,307 342,565 3,070,080 331,268
Interest on mortgage 131,443 131,442 131,443 131,442
Supervisory services 15,000 15,000 288,239 15,000
Professional fees 68 462 23 20,102
Depreciation of building
improvements 5,917 5,917 5,917 33,971
Amortization of mortgage
refinancing costs 25,630 25,630 25,630 25,630
Total expenses 178,058 178,451 451,252 226,145
Net income $170,249 $164,114 $2,618,828 $105,123
Earnings per $5,000
participation unit, based
on 720 participation
units outstanding during
each period $ 236 $ 228 $ 3,637 $ 146
-9-
[SELECTED FINANCIAL DATA}
Item 7.
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
QUARTERLY RESULTS OF OPERATIONS
The following table presents the Company's operating results for each of the
eight fiscal quarters in the period ended December 31, 2001. The information
for each of these quarters is unaudited and has been prepared on the same basis
as the audited financial statements included in this Annual Report on Form 10-K.
In the opinion of management, all necessary adjustments, which consist only of
normal and recurring accruals, have been included to present fairly the
unaudited quarterly results. This data should be read together with the
financial statements and the notes thereto included in this Annual Report on
Form 10-K.
Three Months Ended
March 31, June 30, September 30, December 31,
2000 2000 2000 2000
Statement of Income Data:
Basic rent income $101,518 $103,387 $ 104,707 $120,128
Advance of primary
overage rent income 188,000 188,000 188,000 188,000
Secondary overage
rent income - - 2,525,723 -
Dividend and
interest income 17,959 11,133 2,515 14,309
Total revenues 307,477 302,520 2,820,945 322,437
Interest on mortgages 87,673 89,370 90,520 110,706
Supervisory services 15,000 15,000 272,572 10,000
Professional fees - 74,660 - (34,300)
Amortization of mortgage
refinancing costs 34,114 8,610 8,610 18,298
Total expenses 136,787 187,640 371,702 104,704
Net income $170,690 $114,880 $2,449,243 $217,733
Earnings per $5,000
participation unit, based
on 720 participation
units outstanding during
each period $ 237 $ 160 $ 3,402 $ 302
-10-
Liquidity and Capital Resources
Registrant's liquidity has changed significantly for
the twelve months ended December 31, 2001, as compared with the
twelve months ended December 31, 2000, as a result of a new
mortgage placed on the property in November, 2000, and Registrant
may from time to time establish a reserve for contingent or
unforeseen liabilities.
No amortization payments are due under the Mortgage to
fully satisfy the outstanding principal balance at maturity, and
furthermore, Registrant does not maintain any reserve to cover
the payment of such Mortgage indebtedness at maturity.
Therefore, repayment of the Mortgage will depend on Registrant's
ability to arrange a refinancing. Assuming that the Property
continues to generate an annual net profit in future years
comparable to that in past years, and assuming further that
current real estate trends continue in the geographic area in
which the Property is located, Registrant anticipates that the
value of the Property would be in excess of the amount of the
Mortgage balance at maturity.
Registrant anticipates that funds for working capital
for the Property will be provided by rental payments received
from Lessee and, to the extent necessary, from additional capital
investment by the partners in 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.
Inflation
Inflationary trends in the economy do not directly
affect Registrant's operations since Registrant does not actively
engage in the operation of the Property. Inflation may impact
the operations of Net Lessee. Net Lessee is required to pay
Basic Rent, regardless of the results of its operations.
Inflation and other operating factors affect the amount of
Primary and Secondary Overage Rent payable by Net Lessee, which
is based on Net Lessee's net operating profit.
Item 8. Financial Statements and Supplementary Data.
The financial statements, together with the accom-
panying report by, and the consent to the use thereof, of J.H.
Cohn LLP immediately following, are being filed in response to
this item.
-11-
Item 9. Disagreements on Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Registrant has no directors or officers or any other
centralization of management. There is no specific term of
office for any Joint Venturer in Registrant. The table below
sets forth as to each individual who served as a Joint-Venturer
in Registrant as of December 31, 2001 the following: name, age,
nature of any family relationship with any other Joint Venturer,
business experience during the past five years and principal
occupation and employment during such period, including the name
and principal business of any corporation or any organization in
which such occupation and employment was carried on and the date
such individual became a Joint-Venturer in Registrant:
Date
Principal Individual
Nature of Occupation became
Family Business and Joint
Name Age Relationship Experience Employment Venturer
Peter L. Malkin 67 Father of Real Estate Senior Partner 1982
Anthony E. Supervision and Chairman
Malkin Wien & Malkin
LLP
Anthony E. Malkin 39 Son of Real Estate Senior Director 1998
Peter L. Supervision of Supervisory
Malkin and management Services of Wien
company & Malkin LLP and
President of W&M
Properties, L.L.C.
As stated in Item 1 hereof, one of the Joint Venturers
is a member of Supervisor. See Items 11, 12 and 13 hereof for a
description of the services rendered by, and the compensation
paid to, Supervisor and for a discussion of certain relationships
which may pose actual or potential conflicts of interest among
Registrant, Net Lessee and certain of their respective
affiliates.
The names of entities which have a class of securities
registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or are subject to the requirements of Section 15(d) of
that Act, and in which the Joint Venturers are also either a
director, joint venturer or general partner are as follows:
Peter L. Malkin is a member in 60 East 42nd St.
Associates L.L.C. and Empire State Building Associates
L.L.C. and a general partner in Navarre-500 Building
Associates and Garment Capitol Associates.
Anthony E. Malkin is a member in 60 East 42nd St.
Associates L.L.C. and Empire State Building Associates
L.L.C.
-12-
Item 11. Executive Compensation.
As stated in Item 10 hereof, Registrant has no direc-
tors or officers or any other centralization of management.
No remuneration was paid during the fiscal year ended
December 31, 2001 by Registrant to any of the Joint Venturers as
such. Registrant pays Supervisor, 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
December 31, 2001, 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. See Item 1 hereof. Pursuant to such fee
arrangements, Registrant paid Supervisor $333,239 during the
fiscal year ended December 31, 2001. Registrant also paid to
Supervisor professional fees in the amount of $13,855 in
connection with the limited liability conversion. See Item 4.
The supervisory services provided to Registrant by Supervisor
include, but are not limited to, providing or coordinating with
counsel to Registrant, maintaining all of its partnership and
Participant records, performing physical inspections of the
Building, reviewing insurance coverage, conducting annual
supervisory review meetings, receipt of monthly 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. Supervisor
also prepares quarterly, annual and other periodic filings with
the Securities and Exchange Commission and applicable state
authorities.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) Registrant has no voting securities. See Item 5
hereof. At December 31, 2001, no person owned of record or was
known by Registrant to own beneficially more than 5% of the
outstanding Participations in the undivided Joint Venture
interests in Registrant.
(b) At December 31, 2001, the Joint Venturers (see
Item 10 hereof) did not beneficially own, directly or indirectly,
any Participations in Registrant.
At such date, certain of the Partners held additional
Participations as follows:
Anthony E. Malkin owned of record as co-trustee an
aggregate of $8,333 of Participations. Mr. Anthony E.
Malkin disclaims any beneficial ownership of such
Participations.
-13-
Entities for the benefit of members of Peter L.
Malkin's family owned of record and beneficially
$88,333 of Participations. Mr. Malkin disclaims any
beneficial ownership of such Participations, except
that trusts related to such entities are required to
complete scheduled payments to Mr. Malkin.
(c) Not applicable.
Item 13. Certain Relationships and Related Transactions.
(a) As stated in Item 1 hereof, each member acts
as agent for his respective group of Participants. As a
consequence of one of the two members being a member of
Supervisor (which supervises Registrant and Net Lessee), certain
actual or potential conflicts of interest may arise with respect
to the management and administration of the business of
Registrant. However, under the respective participating
agreements pursuant to which the members act as agents for the
Participants, certain transactions require the prior consent from
Participants owning a specified interest under the Agreements in
order for the agents to act on their behalf. Such transactions
include modifications and extensions of the Net Lease or the
Mortgage Loan, or a sale or other disposition of the Property or
substantially all of Registrant's other assets.
Reference is made to Items 1 and 2 hereof for a
description of the terms of the Net Lease between Registrant and
Net Lessee. The respective interest, if any, of each member in
Registrant and in Net Lessee arises solely from ownership of
Participations in Registrant and partnership interests or
participations in Net Lessee. The members receive no extra or
special benefit not shared on a pro rata basis with all other
Participants in Registrant or partners and participants in Net
Lessee. However, Mr. Peter L. Malkin, by reason of his
respective member interest in Supervisor, is entitled to receive
his pro rata share of any supervisory, service, or other
remuneration paid to Supervisor for services rendered to
Registrant and Net Lessee. See Item 11 hereof for a description
of the remuneration arrangements between Registrant and
Supervisor relating to supervisory services provided by
Supervisor.
Reference is also made to Items 1 and 10 hereof for a
description of the relationship between Registrant and
Supervisor. The respective interest of the members in any
remuneration paid or given by Registrant to Supervisor arose and
arises solely from the ownership of his respective member
interest therein. See Item 11 hereof for a description of the
remuneration arrangements between Registrant and Supervisor
relating to supervisory services provided by Supervisor.
(b) Reference is made to Paragraph (a) above.
(c) Not applicable.
(d) Not applicable.
-14-
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 10-K.
(a)(1) Financial Statements:
Consent of J.H. Cohn LLP, Certified Public Accountants,
dated March 6, 2002.
Accountant's Report of J.H. Cohn LLP, Certified Public
Accountants, dated March 6, 2002.
Balance Sheets at December 31, 2001 and at December 31,
2000 (Exhibit A).
Statements of Income for the fiscal years ended
December 31, 2001, 2000 and 1999 (Exhibit B).
Statement of Members' Deficiency for the fiscal year
ended December 31, 2001 (Exhibit C-1).
Statement of Members' Deficiency for the fiscal year
ended December 31, 2000 (Exhibit C-2).
Statement of Members' Deficiency for the fiscal year
ended December 31, 1999 (Exhibit C-3).
Statements of Cash Flows for the fiscal years ended
December 31, 2001, 2000 and 1999 (Exhibit D).
Notes to Financial Statements for the fiscal years
ended December 31, 2001, 2000 and 1999.
(2) Financial Statement Schedules:
List of Omitted Schedules.
Real Estate and Accumulated Depreciation - December 31,
2001 (Schedule III).
(3) Exhibits: See Exhibit Index.
(b) No report on Form 8-K was filed by Registrant
during the last quarter of the period covered by
this report.
- 15-
[LETTERHEAD OF J.H. COHN LLP
ACCOUNTANTS & CONSULTANTS]
INDEPENDENT ACCOUNTANTS' REPORT
To the participants in 250 West 57th St. Associates L.L.C.
(a Limited Liability Company)
New York, N. Y.
We have audited the accompanying balance sheets of 250 West 57th St. Associates
L.L.C. (the "Company") as of December 31, 2001 and 2000, and the related
statements of income, members' deficiency and cash flows for each of the three
years in the period ended December 31, 2001, and the supporting financial
statement schedule as contained in Item 14(a)(2) of this Form 10-K. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 250 West 57th St. Associates
L.L.C. as of December 31, 2001 and 2000, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
2001 in conformity with accounting principles generally accepted in the United
States of America, and the related financial statement schedule, when
considered in relation to the basic financial statements, presents fairly, in
all material respects, the information set forth therein.
J.H. Cohn LLP
New York, N. Y.
March 6, 2002
-16-
[LETTERHEAD OF J.H. COHN LLP
ACCOUNTANT & CONSULTANTS]
March 6, 2002
250 West 57th St. Associates L.L.C.
New York, N.Y.
We consent to the use of our independent accountants' report dated March 6,
2002, covering our audits of the accompanying financial statements of 250
West 57th St. Associates L.L.C. in connection with and as part of your
December 31, 2001 annual report (Form 10-K) to the Securities and Exchange
Commission.
J.H. Cohn LLP
-17-
EXHIBIT A
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
BALANCE SHEETS
A S S E T S
December 31,
2001 2000
Current Assets:
Cash and cash equivalents (Note 10):
Cash in banks $ 774,604 $1,739,790
Cash in distribution account held by
Wien & Malkin LLP 60,000 60,000
Fidelity U.S. Treasury Income Portfolio 132,078 139,008
TOTAL CURRENT ASSETS 966,682 1,938,798
Real Estate, at cost:
Property situated at 250-264 West 57th
Street, New York, N. Y. (Notes 2b and 3):
Land 2,117,435 2,117,435
Building $4,940,682 - $4,940,682 -
Less: Accumulated depreciation 4,940,682 - 4,940,682 -
Building improvements 5,659,421 688,000
Less: Accumulated depreciation 739,722 4,919,699 688,000 -
Tenants' installations and improvements 249,791 249,791
Less: Accumulated depreciation 249,791 - 249,791 -
Building improvements,
construction in progress - 2,198,805
TOTAL REAL ESTATE 7,037,134 4,316,240
Other Assets:
Mortgage refinancing costs (Note 2c) 516,618 516,549
Less: Accumulated amortization 115,078 12,557
401,540 503,992
TOTAL ASSETS $8,405,356 $6,759,030
LIABILITIES AND MEMBERS' DEFICIENCY
Current Liabilities:
Accrued expenses $ 57,139 $ 43,814
Due to Fisk Building Associates,
a related party 2,170,902 417,065
Principal payments of mortgages payable
within one year (Note 3) - -
TOTAL CURRENT LIABILITIES 2,228,041 460,879
Long-term Liabilities:
Bonds, mortgages and similar debt:
Mortgage payable (Note 3) $7,000,000 $7,000,000
Less: Current installments
shown above - -
7,000,000 7,000,000
TOTAL LIABILITIES 9,228,041 7,460,879
Members' Deficiency (Exhibit C) (822,685) (701,849)
TOTAL LIABILITIES AND
MEMBERS' DEFICIENCY $8,405,356 $6,759,030
See accompanying notes to financial statements.
-18-
EXHIBIT B
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
STATEMENTS OF INCOME
Year ended December 31,
2001 2000 1999
Revenues:
Rent income, from a
related party (Note 4) $4,038,159 $3,707,463 $3,356,230
Dividend income 5,570 33,195 18,392
Interest income 48,491 12,721 -
4,092,220 3,753,379 3,374,622
Expenses:
Interest on mortgages
(Note 3) 525,770 378,269 287,423
Supervisory services, to
a related party (Note 5) 333,239 312,572 286,296
Professional fees, including fees
to a related party (Note 6) 20,655 40,360 37,748
Amortization of mortgage
refinancing costs (Note 2c) 102,520 69,632 43,520
Depreciation of building
improvements 51,722 - -
1,033,906 800,833 654,987
NET INCOME, CARRIED TO
MEMBERS' DEFICIENCY
(NOTE 9) $3,058,314 $2,952,546 $2,719,635
Earnings per $5,000
participation unit, based
on 720 participation units
outstanding during each year $ 4,248 $ 4,101 $ 3,777
See accompanying notes to financial statements.
-19-
EXHIBIT C-2
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
STATEMENT OF MEMBERS' DEFICIENCY
YEAR ENDED DECEMBER 31, 2000
Members' Members'
deficiency Share of deficiency
January 1, 2000 net income Distributions December 31, 2000
Anthony E. Malkin
Joint Venture #1............. $ (66,124) $ 295,255 $ 299,315 $ (70,184)
Anthony E. Malkin
Joint Venture #2............. (66,124) 295,254 299,315 (70,185)
Anthony E. Malkin
Joint Venture #3............. (66,124) 295,254 299,315 (70,185)
Anthony E. Malkin
Joint Venture #4............. (66,124) 295,254 299,315 (70,185)
Peter L. Malkin
Joint Venture #1.............. (66,124) 295,254 299,315 (70,185)
Peter L. Malkin
Joint Venture #2.............. (66,125) 295,255 299,315 (70,185)
Peter L. Malkin
Joint Venture #3.............. (66,124) 295,255 299,316 (70,185)
Peter L. Malkin
Joint Venture #4.............. (66,125) 295,255 299,315 (70,185)
Peter L. Malkin
Joint Venture #5.............. (66,125) 295,255 299,315 (70,185)
Peter L. Malkin
Joint Venture #6.............. (66,125) 295,255 299,315 (70,185)
$(661,244) $2,952,546 $2,993,151 $(701,849)
See accompanying notes to financial statements.
-20-
EXHIBIT C-3
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
STATEMENT OF MEMBERS' DEFICIENCY
YEAR ENDED DECEMBER 31, 1999
Members' Members'
deficiency Share of deficiency
January 1, 1999 net income Distributions December 31, 1999
Anthony E. Malkin
Joint Venture #1............. $ (62,422) $ 271,964 $ 275,666 $ (66,124)
Anthony E. Malkin
Joint Venture #2............. (62,422) 271,964 275,666 (66,124)
Anthony E. Malkin
Joint Venture #3............. (62,422) 271,964 275,666 (66,124)
Anthony E. Malkin
Joint Venture #4............. (62,422) 271,964 275,666 (66,124)
Peter L. Malkin
Joint Venture #1.............. (62,422) 271,964 275,666 (66,124)
Peter L. Malkin
Joint Venture #2.............. (62,422) 271,963 275,666 (66,125)
Peter L. Malkin
Joint Venture #3.............. (62,421) 271,963 275,666 (66,124)
Peter L. Malkin
Joint Venture #4.............. (62,422) 271,963 275,666 (66,125)
Peter L. Malkin
Joint Venture #5.............. (62,422) 271,963 275,666 (66,125)
Peter L. Malkin
Joint Venture #6.............. (62,422) 271,963 275,666 (66,125)
$(624,219) $2,719,635 $2,756,660 $(661,244)
See accompanying notes to financial statements.
-21-
EXHIBIT C-1
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
STATEMENT OF MEMBERS' DEFICIENCY
YEAR ENDED DECEMBER 31, 2001
Members' Members'
deficiency Share of deficiency
January 1, 2001 net income Distributions December 31, 2001
Anthony E. Malkin
Joint Venture #1 $ (70,184) $ 305,831 $ 317,915 $ (82,268)
Anthony E. Malkin
Joint Venture #2 (70,185) 305,831 317,915 (82,269)
Anthony E. Malkin
Joint Venture #3 (70,185) 305,831 317,915 (82,269)
Anthony E. Malkin
Joint Venture #4 (70,185) 305,831 317,915 (82,269)
Peter L. Malkin
Joint Venture #1 (70,185) 305,831 317,915 (82,269)
Peter L. Malkin
Joint Venture #2 (70,185) 305,831 317,915 (82,269)
Peter L. Malkin
Joint Venture #3 (70,185) 305,832 317,915 (82,268)
Peter L. Malkin
Joint Venture #4 (70,185) 305,832 317,915 (82,268)
Peter L. Malkin
Joint Venture #5 (70,185) 305,832 317,915 (82,268)
Peter L. Malkin
Joint Venture #6 (70,185) 305,832 317,915 (82,268)
$(701,849) $3,058,314 $3,179,150 $(822,685)
See accompanying notes to financial statements.
-22-
EXHIBIT D
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
STATEMENTS OF CASH FLOWS
Year ended December 31,
2001 2000 1999
Cash flows from operating activities:
Net income $ 3,058,314 $ 2,952,546 $ 2,719,635
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization 102,520 69,632 43,520
Change in additional rent due
from Fisk Building Associates (1,469) 11,835 (11,835)
Change in accrued expenses 13,325 11,491 10,273
Depreciation of building improvements 51,722 - -
Net cash provided by
operating activities 3,224,412 3,045,504 2,761,593
Cash flows from investing activities:
Payments for building improvements,
construction in progress - (1,953,845) -
Payments for building improvements (2,772,615) - -
Net cash used in investing
activities (2,772,615) (1,953,845) -
Cash flows from financing activities:
Cash distributions (3,179,150) (2,993,151) (2,756,660)
Principal payments on long-term debt - (4,289,171) (25,650)
Proceeds from second mortgage payable - 7,000,000 1,500,000
Payment of mortgage refinancing costs (69) (516,649) (89,402)
Advance from Fisk Building Associates 1,755,306 172,105 -
Net cash used in financing
activities (1,423,913) (626,866) (1,371,712)
Net change in cash (972,116) 464,793 1,389,881
Cash and cash equivalents,
beginning of year 1,938,798 1,474,005 84,124
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 966,682 $ 1,938,798 $ 1,474,005
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $ 525,770 $ 364,669 $ 279,258
Supplemental disclosures of noncash
investing and financing activities:
In 1999 the Company purchased certain building improvements, construction in
progress, totaling $244,960, by means of a financing agreement with the Lessee.
See accompanying notes to financial statements.
-23-
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
1. Business Activity and Reorganization
250 West 57th Street Associates L.L.C. (the "Company") owns commercial
property situated at 250 West 57th Street, New York, New York, known as the
"Fisk Building". The property is net leased to Fisk Building Associates (the
Lessee").
The Company operated as a joint venture, 250 West 57th Street Associates,
until November 30, 2001, when it converted to a limited liability company and
changed its name. Ownership percentages in the Company were unchanged by the
conversion. The Company continues to be treated as a partnership for tax
purposes, and the joint venture's income tax basis of the assets and
liabilities carried over to the limited liability company.
2. Summary of Significant Accounting Policies
a. Cash and cash equivalents:
Cash and cash equivalents include investments in money market funds and
all highly liquid debt instruments purchased with a maturity of three
months or less.
b. Real Estate and Depreciation:
Land and building:
The basis for building valuation was seventy per cent (70%) of the total
purchase price in 1953 of the land and building, $7,058,117, which
amounts to $4,940,682. The balance of the purchase price, $2,117,435,
was allocated to land cost. The seventy per cent allocation of total
cost to the building was based upon the percentage of assessed valuation
of the building to the total assessed valuation on the land and building
at the time of acquisition.
The building, building improvements of $688,000, and tenants
installations and improvements are fully depreciated.
In connection with the building improvements program which began in
1999 (see Note 3), costs totaling $4,971,421 at December 31, 2001,
including construction in progress at December 31, 2000 aggregating
$2,198,805, have been put into service. Depreciation of these assets
is being provided using the straight-line method over an estimated
useful life of 39 years.
c. Mortgage refinancing costs, amortization and related party transactions:
Mortgage refinancing costs incurred in connection with the 1996
modification of the previous first mortgage (see Note 3) were amortized
ratably over the extended term of the that mortgage, from March 1, 1996
through November 17, 2000.
Mortgage refinancing costs incurred in connection with the second
mortgage were amortized ratably over the extended term of the second
mortgage, from September 22, 1999 through November 17, 2000.
-24-
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
2. Summary of Significant Accounting Policies (continued)
c. Mortgage refinancing costs, amortization and related party transactions
(continued):
Mortgage refinancing costs paid in 2001 and 2000, totaling $516,618,
include charges incurred in connection with the new first mortgage. Such
charges include $38,817 paid to the firm of Wien & Malkin LLP, a related
party. These mortgage refinancing costs are being amortized ratably over
the term of the new first mortgage, from November 17, 2000 through
December 1, 2005.
d. Use of estimates:
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
3. Mortgage Indebtedness, Building Improvements Program and Subsequent Event
The previous first mortgage was held by Apple Bank for Savings and was
scheduled to mature on December 1, 2000, as extended from June 1, 2000.
Annual mortgage charges were $289,157, payable in equal monthly installments,
applied first to interest at the rate of 9.4% per annum and the balance to
principal.
In connection with a building improvements program ("the Program") approved
by the Participants and the Lessee, the Lessee began financing the Program
in 1999 and billing the Company for costs incurred. Effective September 22,
1999 a second mortgage was placed on the property with Apple Bank for
Savings, in the amount of $1,500,000, to finance the Program. The mortgage
required monthly payments of interest only based on the 30-day LIBOR rate
and was scheduled to mature on December 1, 2000, as extended from June 1,
2000.
A new first mortgage was placed on the property effective November 17, 2000,
with Emigrant Savings Bank in the amount of $15,500,000. The mortgage
matures on December 1, 2005. At the closing, $7,000,000 was advanced to pay
off the then-existing first and second mortgages held by Apple Bank for
Savings and to pay for closing and related costs and the costs of
improvements made to the property. The balance of the first mortgage loan
will be advanced in stages through May 31, 2003 to pay for additional
improvements to the property. All improvements made under the Program are
owned by the Company and financed through an increase in the fee mortgage,
which will be funded by an equivalent increase in the basic rent paid by the
Lessee to the Company (See Note 4). On January 23, 2002 an additional
$2,000,000 was drawn on the mortgage loan to pay for building improvement
advances by the Lessee.
-25-
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
3. Mortgage Indebtedness, Building Improvements Program and Subsequent Event
(continued)
Monthly payments under the first mortgage are interest only. Amounts
advanced at the closing bear interest at the rate of 7.511% throughout the
term of the mortgage. Amounts advanced after the closing will bear interest
at a floating rate equal to 1.65 percentage points above 30, 60, 90, 180 or
360 day LIBOR or the yield on 30-day U.S. Treasury Securities, as selected by
the Company.
On June 1, 2003, the interest rate on all amounts advanced following the
closing will be converted to a fixed rate equal to 1.65 percentage points
above the then current yield on U.S. Treasury Securities having the closest
maturity to December 1, 2005.
The real estate is pledged as collateral for the first mortgage.
The estimated fair value of the Company's mortgage debt, based on the
available market information or other appropriate valuation methodologies,
was $7,100,000 and $7,000,000 at December 31, 2001 and 2000, respectively.
4. Related Party Transactions - Rent Income
Rent income earned during the years ended December 31, 2001, 2000 and 1999,
totaling $$4,038,159, $3,707,463 and $3,356,230, respectively, constitutes
the basic minimum annual rental plus overage rent under an operating lease
dated September 30, 1953 (as modified June 12, 1961, June 10, 1965, May 1,
1975, October 1, 1984, September 1, 1999 and November 17, 2000) with the
Lessee, consisting of the following:
Year ended December 31,
2001 2000 1999
Basic minimum annual rent $ 553,770 $ 429,740 $ 341,274
Primary overage rent 752,000 752,000 752,000
Secondary overage rent 2,732,389 2,525,723 2,262,956
$4,038,159 $3,707,463 $3,356,230
The lease, as modified, provides for rent income until September 30, 2003, as
follows:
A) A basic annual rent equal to the sum of $28,000 plus current mortgage
requirements for interest and amortization.
The lease modification dated November 17, 2000 provides that the basic
rent will be payable in equal monthly installments totaling an annual
amount equal to the sum of $28,000, plus payments for interest and
amortization (not including any balloon principal payment due at maturity)
required annually under the new $15,500,000 first mortgage loan from
Emigrant Savings Bank (Note 3), and any refinancings of such mortgage.
-26-
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
4. Related Party Transactions - Rent Income (continued)
B) A primary overage rent equal to the lesser of $752,000 per annum for each
year ending September 30th, or the Lessee's defined net operating profit
for its lease year ending September 30th after deduction of basic rent and
advances previously paid on account of primary overage rent; and
C) A secondary overage rent consisting of 50% of any remaining balance of the
Lessee's defined net operating profit (after payment of basic rent and
primary overage rent) for its lease year ending September 30th.
Primary overage rent has been billed to and advanced by the Lessee in equal
monthly installments of $62,667. While it is not practicable to estimate
that portion of overage rent for the lease year ending on the ensuing
September 30th which would be allocable to the current three month period
ending December 31st, the Company's policy is to include in its income each
year the advances of primary overage rent income received from October 1st to
December 31st.
No other overage rent is accrued by the Company for the period between the
end of the Lessee's lease year ending September 30th and the end of the
Company's fiscal year ending December 31st.
In 1978, the Lessee exercised its option to renew the lease for a 25 year
period from October 1, 1978 through September 30, 2003 on the same terms as
provided during the balance of the initial period. The lease modification
effective October 1, 1984 provides for an option for one renewal term of 25
years commencing October 1, 2003. The terms of the lease remain the same
during the renewal period.
The Lessee may surrender the lease at the end of any month, upon sixty days'
prior written notice; the liability of the Lessee will end on the effective
date of such surrender.
A member in the Company is also a partner in the Lessee.
5. Related Party Transactions - Supervisory Services
Fees for supervisory services (including disbursements and cost of regular
accounting services) during the years ended December 31, 2001, 2000 and 1999,
totaling $333,239, $312,572 and $286,296, respectively, were paid to the firm
of Wien & Malkin LLP. Some members of that firm are members in the Company.
Fees for supervisory services are paid pursuant to an agreement, which amount
is based on a rate of return of investment achieved by the participants of
the Company each year.
-27-
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
6. Related Party Transactions - Professional Fees
Professional fees (including disbursements) during the years ended December
31, 2001, 2000 and 1999, totaling $530, $34,260 and $31,855, respectively,
were paid to the firm of Wien & Malkin LLP, a related party.
7. Number of Participants
There were approximately 550 participants in the various joint ventures as of
December 31, 2001, 2000 and 1999.
8. Determination of Distributions to Participants
Distributions to participants during each year represent mainly the excess of
rent income received over the mortgage requirements and cash expenses.
9. Distributions and Amount of Income per $5,000 Participation Unit
Distributions and amount of income per $5,000 participation unit during the
years 2001, 2000 and 1999, based on 720 participation units outstanding
during each year, consisted of the following:
Year ended December 31,
2001 2000 1999
Income $4,248 $4,101 $3,777
Return of capital 167 56 52
Total distributions $4,415 $4,157 $3,829
Net income is computed without regard to income tax expense since the Company
does not pay a tax on its income; instead, any such taxes are paid by the
participants in their individual capacities.
10. Concentration of Credit Risk
The Company maintains cash balances in two banks, a money market fund
(Fidelity U.S. Treasury Income Portfolio) and in a distribution account held
by Wien & Malkin LLP. The bank balances are each insured by the Federal
Deposit Insurance Corporation up to $100,000. Uninsured balances of cash in
banks amounted to approximately $767,000 at December 31, 2001. The cash in
the money market fund and the distribution account held by Wien & Malkin LLP
is not insured. The funds held in the distribution account were paid to the
participants on January 1, 2002.
-28-
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
11. Contingencies
Wien & Malkin LLP and Peter L. Malkin are engaged in a dispute with the Lessee's
managing agent, Helmsley-Spear, Inc., concerning the management, leasing and
supervision of the property that is subject to the net lease to the operating
lessee. In this connection, certain legal and professional fees and other
expenses have been paid and incurred by Wien & Malkin LLP and Mr. Malkin, and
additional costs are expected to be incurred. Wien & Malkin LLP and Mr. Malkin
have represented that such costs will be recovered only to the extent that (a) a
competent tribunal authorizes payment by the Company or (b) a participant
voluntarily agrees that his or her proportionate share be paid. Accordingly, the
Companys' allocable share of such costs is as yet undetermined, and the Company
has not provided for the expense and related liability with respect to such
costs in these financial statements.
The original action commenced in June 1997 and was referred to arbitration. The
March 30, 2001 decision of the arbitrators, which was confirmed by the court,
(i) reaffirms the right of the partners in the Lessee to vote to terminate
Helmsley- Spear, Inc. without cause, (ii) dismisses Helmsley-Spear, Inc.'s
claims against Wien & Malkin LLP, and (iii) rejects the termination of
Helmsley-Spear, Inc. for cause.
Parts of the decision of the court are under appeal.
12. Receipt of Warrants and Stock in Telecommunications Companies
In 2000, the Company received shares of common stock and warrants from certain
unrelated companies in exchange for permission for those companies to provide
high speed internet access and other telecommunication services to the building.
The Lessee received an equal amount of shares and warrants. There are
restrictions as to the transfer of stock, and neither the warrants nor the stock
have had an ascertainable value since their issuance. Accordingly, the
accompanying financial statements do not reflect any value for these securities.
13. Reclassifications
Certain accounts in prior year financial statements have been reclassified to
conform with the presentation in the financial statements for 2001.
-29-
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
OMITTED SCHEDULES
The following schedules have been omitted as not applicable in the present
instance:
SCHEDULE I - Condensed financial information of registrant.
SCHEDULE II - Valuation and qualifying accounts.
SCHEDULE IV - Mortgage loans on real estate.
-30-
SCHEDULE III
250 WEST 57th ST. ASSOCIATES L.L.C.
(A Limited Liability Company)
Real Estate and Accumulated Depreciation
December 31, 2001
Column
A Description Office building and land located at
250-264 West 57th Street, New York,
New York, known as the "Fisk
Building".
B Encumbrances Emigrant Savings Bank
Balance at December 31, 2001...................... $ 7,000,000
C Initial cost to company
Land.............................................. $ 2,117,435
Building.......................................... $ 4,940,682
D Costs capitalized subsequent to acquisition
Building improvements and tenant installations
and improvements......... ....................... $ 5,909,212
Carrying costs....................................... $ NONE
E Gross amount at which carried at
close of period
Land.............................................. $ 2,117,435
Building and building improvements and
tenant installations and improvements........... 10,849,894
Total............................................. $12,967,329(a)
F Accumulated depreciation............................. $ 5,930,195(b)
G Date of construction 1921
H Date acquired September 30, 1953
I Life on which depreciation in latest
income statements is computed 39 years
(a) Gross amount of real estate
Balance at January 1, 1999 $7,995,908
Purchase of building improvements and construction
in progress(expenditures advanced by Lessee, a
related party, and recorded by the Company):
F/Y/E 12/31/99 $ 244,961
12/31/00 1,953,845
12/31/01 2,772,615 4,971,421
Balance at December 31, 2001 $12,967,329
The costs for federal income tax purposes are the same as for
financial statement purposes.
(b) Accumulated depreciation
Balance at January 1, 1999 $5,878,473
Depreciation:
F/Y/E 12/31/99 None
12/31/00 None
12/31/01 51,722 51,722
Balance at December 31, 2001 $5,930,195
-31-
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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 and May 14, 1998 (collectively, the
"Power").
250 WEST 57TH ST. ASSOCIATES L.L.C.
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: April 15, 2002
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 Powers, on behalf of the Registrant and as a
Joint Venturer in Registrant on the date indicated.
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: April 15, 2002
________________________
* Mr. Katzman supervises accounting functions for Registrant.
-32-
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.
3(b) Amended Business Certificate of Registrant
filed with the Clerk of New York County on
July 24, 1998 reflecting a change in the
Partners of Registrant which was filed as
Exhibit 3(b) to Registrant's Amended
Quarterly Report on 10-Q for the period ended
September 30, 1998 and is incorporated by
reference as an exhibit hereto.
3(c) Registrant's Memorandum of Agreement among
Joint Venturers in 250 West 57th St.
Associates, dated June 9, 1953, filed as
Exhibit 1 to the Registration Statement, is
incorporated by reference as an exhibit
hereto.
4 Registrant's form of Participation Agreement,
which was filed as Exhibit No. 4(a) to the
Registration Statement, is incorporated by
reference as an exhibit hereto.
10(a) Net Lease between Registrant and Fisk
Building Associates dated September 30, 1957,
which was filed as Exhibit No. 2(d) to the
Registration Statement, is incorporated by
reference as an exhibit hereto.
10(b) Modification of Net Lease dated
November 10, 1961, was filed by letter
dated November 21, 1961 as Exhibit B to
Registrant's Statement of Registration
on Form 8-K for the month of October,
1961, is incorporated by reference as
an exhibit hereto.
_______________________
* Page references are based on a sequential numbering system.
-33-
EXHIBIT INDEX
Number Document Page*
10(c) Second Modification Agreement of Net Lease
dated June 10, 1965, between Registrant and
Fisk Building Associates which was filed by
letter dated December 29, 1981 as Exhibit
10(c) to Registrant's Annual Report on Form
10-K for the year ended September 30, 1981 is
incorporated by reference as an exhibit
hereto.
10(d) Fourth Lease Modification Agreement dated
November 12, 1985 between Registrant and Fisk
Building Associates, which was filed by
letter dated January 13, 1986 as Exhibit
10(g) to Registrant's Annual Report on Form
10-K for the year ended, September 30, 1985,
is incorporated herein by reference as an
exhibit hereto.
10(e) Modification of Mortgage dated as of March 1,
1995 between Registrant and the Apple Bank
for Savings, which was filed on March 30,
1995 as Exhibit 10(e) to Registrant's Annual
Report on Form 10-K, is incorporated herein
by reference as an exhibit hereto.
13(a) Letter to Participants dated March 8, 2002
and supplementary financial reports for the
fiscal year ended December 31, 2001. The
foregoing material shall not be deemed
"filed" with the Commission or otherwise
subject to the liabilities of Section 18 of
the Securities Exchange Act of 1934.
13(b) Letter to Participants dated November 30,
2001 and supplementary financial reports for
the lease year ended September 30, 2001. The
foregoing material shall not be deemed
"filed" with the Commission or otherwise
subject to the liabilities of Section 18 of
the Securities Exchange Act of 1934.
_______________________
* Page references are based on a sequential numbering system.
-34-
EXHIBIT INDEX
Number Document Page*
24 Power of Attorney dated March 29, 1996 and
May 14, 1998 between Partners of Registrant
and Stanley Katzman and Richard A. Shapiro,
attached as Exhibit 24 to Registrant's 10-Q
for the quarter ended March 31, 1998, and
incorporated herein by reference as an
exhibit hereto.
_______________________
* Page references are based on a sequential numbering system.
-35-