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, 1995
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.
250 West 57th St. Associates 2.
June 30, 1995
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,
1995 1994 1995 1994
Income:
Basic rent, from a related
party (Note B) $ 79,289 $ 80,372 $ 173,113 $ 160,743
Advance of primary overage
rent, from a related
party (Note B) 188,000 188,000 376,000 376,000
--------- --------- ---------- ----------
Total income 267,289 268,372 549,113 536,743
--------- --------- ---------- ----------
Expenses:
Interest on mortgage 67,899 70,688 138,352 141,434
Supervisory services, to a
related party (Note C) 15,000 15,000 30,000 30,000
Amortization of mortgage
refinancing costs 1,948 4,344 5,493 8,688
--------- --------- ---------- ----------
Total expenses 84,847 90,032 173,845 180,122
--------- --------- ---------- ----------
Net income $ 182,442 $ 178,340 $ 375,268 $ 356,621
========== ========= ========== ==========
Earnings per $5,000 partici-
pation unit, based on 720
participation units out-
standing during the year $ 253.39 $ 247.69 $ 521.21 $ 495.31
========= ========== ========== ==========
Distributions per $5,000
participation consisted of
the following:
Income $ 253.39 $ 247.69 $ 521.21 $ 495.31
Increase (Decrease) in
capital deficit (3.39) 2.31 (21.21) 4.69
--------- ---------- ---------- ----------
Total distributions $ 250.00 $ 250.00 $ 500.00 $ 500.00
========= ========== ========== ==========
At June 30, 1995 and 1994, there were $3,600,000 of participations
outstanding.
250 West 57th St. Associates 3.
June 30, 1995
250 West 57th St. Associates
Condensed Balance Sheet
(Unaudited)
June 30, 1995 December 31, 1994
Assets
Current assets:
Cash $ 84,124 $ 84,485
--------- ----------
Total current assets 84,124 84,485
--------- ----------
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 40,906 87,333
Less: Accumulated amortization 2,597 80,089
---------- ----------
38,309 7,244
---------- ----------
Total assets $2,239,868 $2,209,164
========== ==========
Liabilities and Capital
Current liabilities:
Accrued interest payable $ 22,621 $ 23,511
Deferred credit 22,104 -0-
First mortgage principal payments
due within one year (Note B) 18,483 16,350
---------- ----------
Total current liabilities 63,208 39,861
Long-term debt (Note B) 2,869,360 2,877,271
Capital (deficit) (See analysis, page 4):
June 30, 1995 (692,700) -0-
December 31, 1994 -0- (707,968)
---------- ----------
Total liabilities and capital:
June 30, 1995 $2,239,868
December 31, 1994 ========== $ 2,209,164
===========
250 West 57th St. Associates 4.
June 30, 1995
250 West 57th St. Associates
Analysis of Capital (Deficit)
(Unaudited)
June 30, 1995 December 31, 1994
Capital deficit:
January 1, 1995 $ (707,968)
January 1, 1994 $ (701,467)
Add, Net income:
January 1, 1995 through June 30, 1995 375,268 -0-
January 1, 1994 through
December 31, 1994 -0- 1,944,494
---------- ----------
(332,700) 1,243,027
Less, Distributions:
Distribution, November 30, 1994
of Secondary Overage Rent
for the lease year ended
September 30, 1994 -0- 1,230,995
Distributions January 1, 1995
through June 30, 1995 360,000 -0-
Distributions, January 1, 1994
through December 31, 1994 -0- 720,000
---------- ----------
360,000 1,950,995
---------- ----------
Capital (deficit):
June 30, 1995 $ (692,700)
December 31, 1994 $ (707,968)
========== ==========
250 West 57th St. Associates 5.
June 30, 1995
250 West 57th St. Associates
Condensed Statements of Cash Flows
(Unaudited)
January 1, 1995 January 1, 1994
through through
June 30, 1995 June 30, 1994
Cash flows from operating activities:
Net income $ 375,268 $ 356,621
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of mortgage refinancing
costs 5,493 8,688
Change in mortgage refinancing costs (36,558) -0-
Change in accrued interest payable (890) (44)
Change in deferred credit 22,104 -0-
----------- -----------
Net cash provided by operating
activities 365,417 365,265
Cash flows from financing activities:
Cash distributions (360,000) (360,000)
Principal payments on long-term debt (5,778) (5,259)
----------- -----------
Net cash used in financing activities (365,778) (365,259)
----------- -----------
Net increase (decrease) in cash (361) 6
Cash, beginning of period 84,485 84,478
----------- -----------
Cash, end of period $ 84,124 $ 84,484
=========== ===========
January 1, 1995 January 1, 1994
through through
June 30, 1995 June 30, 1994
Cash paid for:
Interest $ 139,242 $ 141,477
=========== ===========
250 West 57th St. Associates 6.
June 30, 1995
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, Stanley Katzman and Ralph W.
Felsten (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 & Bettex, 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
250 West 57th St. Associates 7.
June 30, 1995
overage rent equal to 50% of any remaining balance of Net Lessee's
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, 1994, Net Lessee
reported net operating profit of $3,487,544 after deduction of
Basic Rent. Net Lessee paid Primary Overage Rent of $752,000,
together with Secondary Overage Rent of $1,367,772 for the fiscal
year ended September 30, 1994. The Secondary Overage Rent of
$1,367,772 represents 50% of the excess of the net operating
profit of $3,487,544 over $752,000. After the payment of $136,777
to Counsel as an additional payment for supervisory services, the
balance of $1,230,995 was distributed to the Participants on
November 30, 1994.
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"). See Exhibit 10. 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.
June 30, 1995
(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. See Exhibit 10 for the terms of the
Mortgage Loan.
Registrant incurred approximately $36,558 of expenses in
connection with the Refinancing, including $17,754 which was paid
to Counsel for various services and disbursements. Net Lessee
paid these expenses, obviating the need to increase the principal
amount of the Mortgage Loan.
Net Lessee is obligated to pay Basic Rent equal to the
sum of annual mortgage charges and supervisory fees. Accordingly,
effective March 3, 1995, Basic Rent was reduced by $4,329 a year,
such amount representing the annual savings in mortgage charges
under the refinanced Mortgage Loan. Assuming that Net Lessee
continues to earn a profit in excess of Basic Rent and Primary
Overage Rent, Registrant should receive increased Secondary
Overage Rent at the annual rate of $2,164 (one half of the annual
savings on the Mortgage Loan). The Refinancing will not affect
the amount of regular monthly distributions to the Participants.
Prior to the Refinancing, the Property was subject to a
mortgage loan with the following material terms:
(i) a maturity date of June 1, 1995, with an
option to extend the loan for an additional five-year
term at 300 basis points over the highest five-year U.S.
Treasury Note Yield, but not less than 9.75% per annum,
with constant monthly payments based upon a 30-year
amortization schedule;
(ii) during the initial term, monthly payments of
$24,457 aggregating $293,486 per annum applied first to
interest at the rate of 9.75% per annum and the balance
in reduction of principal; and
(iii) no prepayment until the fourth loan year or,
if Registrant exercises its option to extend the loan,
no prepayment until the fourth extended loan year.
Thereafter, prepayment in full, but not in part, upon
furnishing to Apple Bank (a) not more than 120 days and
not less than 60 days' prior written notice and (b) a
prepayment fee of 3% based on the then outstanding
principal balance, which fee shall decrease to 2% during
250 West 57th St. Associates 9.
June 30, 1995
the fifth loan year (or fifth extended loan year),
except that no prepayment fee will be charged to
Registrant if prepayment is made within 90 days prior to
maturity under the initial term or extended term of the
Mortgage Loan.
It is anticipated that the refinancing of the Mortgage
Loan will have no material effect on the amounts of Basic Rent,
monthly advances against Primary Overage Rent, the annual basic
payment for supervisory services made to Counsel or the regular
monthly distributions to the Participants. See Note C.
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, 1995, 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, 1995 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, 1995.
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, and 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 and distributes to the Participants quarterly source
of distribution reports.
250 West 57th St. Associates 10.
June 30, 1995
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
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 Joint Venturers by reason of his interest in
Counsel, is entitled to receive his pro rata share of any legal
fees or other remuneration paid to Counsel for legal services
rendered to Registrant and Net Lessee.
As of June 30, 1995, the Joint Venturers owned of record
and beneficially $18,333.34 of Participations, representing less
than 1% of the currently outstanding Participations in Registrant.
In addition, as of June 30, 1995, 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 purposes 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 sole respons-
ibility 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 amount of Secondary Overage Rent is affected by the New York
City economy and its real estate market. It is difficult to
forecast whether the New York City economy and real estate market
will improve over the next few years.
Registrant does not pay dividends. During the three and
six month periods ended June 30, 1995, 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,
250 West 57th St. Associates 11.
June 30, 1995
1994, Registrant made an additional distribution for each $5,000
participation of $1,710. Such distribution represented Secondary
Overage Rent payable by Net Lessee in accordance with the terms of
the Net Lease. 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 decreased for the three-month period
ended June 30, 1995 as compared with the three-month
period ended June 30, 1994. Such decrease resulted
from a decrease in the Basic Rent now payable under
the Net Lease.
Total income increased for the six-month period ended
June 30, 1995 as compared with the six-month period
ended June 30, 1994. Such increase resulted from an
increase in the Basic Rent paid by Net Lessee to
cover certain costs (the Commitment Fee) in
connection with the Refinancing. See Note B.
Total expenses decreased for the three and six month
periods ended June 30, 1995 as compared to the three
and six month periods ended June 30, 1994. Such
decrease resulted from both a decrease in interest
expense on the Mortgage Loan and amortization of the
costs incurred in connection with the Refinancing.
See Note B.
Liquidity and Capital Resources
There has been no significant change in Registrant's
liquidity for the three and six month periods ended June 30, 1995,
as compared with the three and six month periods ended June 30,
1994.
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. 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
250 West 57th St. Associates 12.
June 30, 1995
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
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.
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,
1994, which report and all exhibits thereto are incorporated
herein by reference and made a part hereof.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibit hereto is 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.
June 30, 1995
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 30, 1989 (the "Power").
250 WEST 57TH ST. ASSOCIATES
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: August 7, 1995
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 7, 1995
_________________________
* Mr. Katzman supervises accounting functions for
Registrant.
250 West 57th St. Associates 14.
June 30, 1995
EXHIBIT INDEX
10 Modification of Mortgage dated as of March 1, 1995 between
Registrant and the Apple Bank for Savings, a copy of which
was filed with Form 10-K for the year ended December 31,
1994, a copy of which is incorporated herein by reference as
an exhibit hereto.