[LETTERHEAD OF
WIEN MALKIN & BETTEX
COUNSELLORS AT LAW
January 31, 1996
To Participants in 250 West 57th St. Associates
Federal Identification Number 13-6083380
We enclose the annual report of 250 West 57th St. Associates,
the joint venture which owns the Fisk Building at 250 West 57th
Street, New York City, for the year ended December 31, 1995.
The reported income for 1995 was $1,781,573. This was more
than distributions of $1,738,833 representing the current monthly
distributions totalling $720,000 per annum and the additional dis-
tribution of $1,018,833, which was paid to participants on
November 30, 1995. The difference, mainly representing the
payment of mortgage refinancing costs, is an increase in capital
investment. The mortgage refinancing costs will be deductible for
tax purposes over the period of the mortgage, from March 1, 1995
through June 1, 2000.
Since the inception of this investment, a portion of the dis-
tributions has constituted a return of capital, and has not been
reportable as income. As a result, the book value on December 31,
1995 of an original cash investment of $10,000 was a deficit bal-
ance of $1,848.
Additional rent for the lease year ended September 30, 1995
was $1,906,342 or an excess of $1,154,342 over advances of
$752,000 by the lessee against additional rent ($720,000 to par-
ticipants plus $32,000 to Wien, Malkin & Bettex). The total
amount distributed was $1,132,037 after payment of $22,305 for
expenditures in connection with the refinancing of the first
mortgage on March 1, 1995. As approved by the participants, Wien,
Malkin & Bettex received $113,204 and the balance of the
additional rent of $1,018,833 was distributed to the participants
on November 30, 1995. The additional distribution of $1,018,833
represented an annual return of about 28.3% on the original cash
investment of $3,600,000. Regular monthly distributions are at
the rate of 20% per annum on the cash investment so that total
distributions for the year ended December 31, 1995 were about
48.3% on the original cash investment.
(over)
Re: 250 West 57th St. Associates 2.
The enclosed Schedule K-1 form(s) (Form 1065), containing
1995 tax information, must be reviewed in detail by your
accountant.
If you have any question about the enclosed material, please
communicate with us at our New York office or, if it is more con-
venient, at our branch office in Palm Beach, Florida.
Please retain this letter and the enclosed Schedule K-1
form(s) for the preparation of your income tax returns for the
year 1995.
Cordially yours,
WIEN, MALKIN & BETTEX
By: Stanley Katzman
SK:fm
Encs.
[LETTERHEAD OF
KAUFMAN GOLDSTEIN
CERTIFIED PUBLIC ACCOUNTANTS]
Independent Accountant's Report
To the Participants in
250 West 57th St. Associates (a Partnership):
We have audited the accompanying balance sheet of 250 West 57th
St. Associates ("Associates") as of December 31, 1995, and the
related statements of income, partners' capital deficit and cash flows
for the year then ended. These financial statements are the
responsibility of Associates' management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides 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
Associates as of December 3l, 1995, and the results
of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
Kaufman Goldstein
Certified Public Accountants
60 East 42nd Street
New York, New York 10165
January 29, 1996
250 West 57th St. Associates
Balance Sheet
December 31, 1995
Assets
Cash:
National Westminster Bank, USA $ 24,124
Distribution account held by
Wien, Malkin & Bettex 60,000
84,124
Fisk Building, 250 West 57th Street, New York City:
Land $2,117,435
Building $4,940,682
Less: Accumulated depreciation 4,940,682 -
Building improvements 688,000
Less: Accumulated depreciation 688,000 -
Tenants' installations and improvements 249,791
Less: Accumulated amortization 249,791 - 2,117,435
Mortgage refinancing costs 41,106
Less: Accumulated amortization 6,524 34,582
Total Assets $2,236,141
Liabilities and Partners' Capital Deficit
Liabilities:
First mortgage $2,878,818
Accrued interest on first mortgage 22,551
Total Liabilities 2,901,369
Partners' Capital Deficit, December 31, 1995 ( 665,228)
Total Liabilities and Partners' Capital Deficit $2,236,141
The accompanying notes are an integral part of these financial statements.
250 West 57th St. Associates
Statement of Income
For the Year Ended December 31, 1995
Income:
Basic rent $ 331,691
Additional rent 1,906,342
Total income 2,238,033
Expenses:
Interest on first mortgage $273,835
Supervisory services 173,204
Total expenses 447,039
Net income before amortization 1,790,994
Amortization of mortgage refinancing costs 9,421
Net income $1,781,573
The accompanying notes are an integral part of these financial statements.
250 West 57th St. Associates
Statement of Partners' Capital Deficit
December 31, 1995
Partners' capital deficit, January l, 1995 ($ 707,968)
Add: Net income for the year ended December 31, 1995 1,781,573
1,073,605
Less: Monthly distributions January l, 1995
through December 31, 1995 $ 720,000
Distribution on November 30, 1995 of balance
of additional rent for the lease year
ended September 30, 1995 1,018,833 1,738,833
Partners' capital deficit, December 31, 1995 ($ 665,228)
The accompanying notes are an integral part of these financial statements.
250 West 57th St. Associates
Statement of Cash Flows
For the Year Ended December 31, 1995
Cash flows from operating activities:
Net income $1,781,573
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of mortgage refinancing costs 9,421
Change in interest accrued on first mortgage ( 960)
Net cash provided by operating activities 1,790,034
Cash flows from financing activities:
Monthly distributions to participants ($ 720,000)
Distribution on November 30, 1995 of balance
of additional rent for the lease year
ended September 30, 1995 ( 1,018,833)
Mortgage refinancing costs incurred ( 36,759)
Amortization payments on first mortgage ( 14,803)
Net cash used in financing activities ( 1,790,395)
Net (decrease) in cash ( 361)
Cash at beginning of year 84,485
Cash at end of year $ 84,124
Supplemental Cash Flow Disclosures
Year Ended December 31, 1995
Cash paid during the year for interest $ 274,795
The accompanying notes are an integral part of these financial statements.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1995
1 - Depreciation:
Depreciation of the cost of the building was computed by the
straight-line method over estimated useful life of 30 years through
September 30, 1983.
The cost of the building improvements was depreciated by the
straight-line method over various periods from date of completion of
improvement through September 30, 1983.
The cost of tenants' installations and improvements was
amortised by the straight-line method over the terms of the leases.
2 - First mortgage:
(a) Effective May 24, 1990, a first mortgage was placed on
the property with the Apple Bank for Savings in the amount of
$2,934,861. Annual mortgage charges were $293,486, payable in monthly
installments, applied first to interest at the rate of 9 3/4% per
annum and the balance to principal. The mortgage was refinanced on
March l, 1995.
(b) Effective March 1, 1995, a new first mortgage was placed
on the property with the Apple Bank for Savings in the amount of
$2,890,758. Annual mortgage charges are $289,157, payable in equal
monthly installments, applied first to interest at the rate of 9.40%
per annum and the balance to principal. The mortgage will mature on
June l, 2000, with a balance of $2,777,754.
(c) Prepayment privileges: The mortgage is not prepayable
until March l, 1998. Thereafter, a 3% penalty will be imposed through
February 28, 1999 and a 2% penalty will be imposed until March 2,
2000. There will be no prepayment penalty if the mortgage is paid in
full during the last 90 days of the term of the mortgage.
(d) Principal payments required to be made areas follows:
Year Ending December 31,
1996 $19,369
1997 21,270
1998 23,358
1999 25,650
2000 2,789,171
$2,878,818
3 - Mortgage refinancing costs:
Capitalized mortgage refinancing costs of $41,106 representing
$36,759 incurred in connection with the refinanced mortgage on March 1,
1995, and the remaining balance of the costs of $4,347 for the
Re: 250 West 57th St. Associates
Notes to Financial Statements
December 31, 1995
May 24, 1990 refinancing are being charged to expense ratably during
the period of the new mortgage from March l, 1995 to June 1, 2000.
4 - Lease:
(a) Effective May l, 1975, the lease between 250 West 57th St.
Associates as lessor, and Fisk Building Associates, as lessee provides
for basic rent equal to mortgage charges plus $28,000 payable to Wien,
Malkin & Bettex for supervisory services. Basic rent is currently
$317,157 a year to pay mortgage charges of $289,157 and $28,000 to
Wien, Malkin & Bettex.
Upon any refinancing of the first mortgage, the basic rent
will be modified and will be equal to the sum of $28,000, plus an
amount equal to the rate of constant payments for interest and
amortization required under any such first mortgage immediately
subsequent to refinancing computed on the principal balance of the
mortgage immediately prior to such refinancing. Thus, in the event the
first mortgage is refinanced so as to increase the principal balance,
the basic rent will not be modified to include the charges on the
additional portion of the mortgage. Associates will have to pay such
charges out of primary additional rent described below.
(b) In accordance with a lease modification, effective October
l, 1984 primary additional rent is equal to the lesser of $752,000 per
annum or the net operating profit of the property, as defined, after
deduction of basic rent. If the full primary additional rent of
$752,000 is paid, it will equal 20% of the original $3,600,000 cash
investment plus $32,000 payable to Wien, Malkin & Bettex for
supervisory services. Advances against primary additional rent are
paid by the lessee based on the net operating profit of the property
for the prior year to a maximum amount of $752,000. Primary additional
rent for the lease year ended September 30, 1995 was $752,000.
Advances against primary additional rent of $752,000 per annum for the
lease year ending September 30, 1996 are being paid.
Secondary additional rent is equal to 50% of the net
operating profit of the property after payment of basic rent and
primary additional rent for lease years ending September 30. Secondary
additional rent for the lease year ended September 30, 1995 was
$1,154,342.
(c) The lessee has exercised its option to renew the lease for
a period of 25 years, from October l, 1978 through September 30, 2003.
The lease modification effective October 1, 1984 provides for an
additional renewal term of 25 years from October 1, 2003 through
September 30, 2028; the holders of more than 80% of the participations
in 250 West 57th St. Associates have consented to the granting of
options to the lessee to extend the lease for three additional 25-year
renewal terms. There is no change in the terms of the lease during the
renewal periods.
Re: 250 West 57th St. Associates
Notes to Financial Statements
December 31, 1995
5 - Supervisory services and related party transactions:
Payments for supervisory services, including disbursements and
cost of accounting services, are made to the firm of Wien, Malkin &
Bettex. Some partners in that firm are also partners in Associates.
6 - Income taxes:
Net income is computed without regard to income tax expense,
since the partnership does not pay a tax on its income; instead, any
such taxes are paid by the participants in their individual capacities.
7 - Concentration of credit risk:
Associates maintains cash balances in a bank and in a
distribution account held by Wien, Malkin & Bettex. The bank balance
is insured by the Federal Deposit Insurance Corporation up to $100,000,
and at December 31, 1995 was completely insured. The distribution
account held by Wien, Malkin & Bettex is not insured. The funds held
in the distribution account were paid to the participants on January l,
1996.