[LETTERHEAD OF
WIEN & MALKIN LLP]
February 3, 1997
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, 1996.
The reported income for 1996 was $2,224,320. This was more
than distributions of $2,212,629 representing the current monthly
distributions totalling $720,000 per annum and the additional dis-
tribution of $1,492,629, which was paid to participants on
November 30, 1996. The difference, mainly representing amortiza-
tion payments on the mortgage, is an increase in capital invest-
ment.
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,
1996 of an original cash investment of $10,000 was a deficit bal-
ance of $1,815.
Additional rent for the lease year ended September 30, 1996
was $2,410,477 or an excess of $1,658,477 over advances of
$752,000 by the lessee against additional rent ($720,000 to par-
ticipants plus $32,000 to Wien, Malkin & Bettex LLP). As approved
by the participants, Wien, Malkin & Bettex LLP received $165,848
and the balance of the additional rent of $1,492,629 was
distributed to the participants on November 30, 1996. The
additional distribution of $1,492,629 represented an annual return
of about 41.5% 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, 1996 were about 61.5% on the original cash
investment.
The enclosed Schedule K-1 form(s) (Form 1065), containing
1996 tax information, must be reviewed in detail by your accoun-
tant.
If you have any question about the enclosed material, please
communicate with our office.
(over)
Re: 250 West 57th St. Associates 2.
Please retain this letter and the enclosed Schedule K-1
form(s) for the preparation of your income tax returns for the
year 1996.
Cordially yours,
WIEN & MALKIN LLP
By: Stanley Katzman
SK:fm
Encs.
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 as of December 31, 1996, and the related
statements of income, of partners' capital (deficit) and of cash
flows for the year then ended. These financial statements are the
responsibility of 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
250 West 57th St. Associates at December 31, 1996, and the results
of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Kaufman Goldstein
New York, New York
January 23, 1997
250 West 57th St. Associates
Balance Sheet
December 31, 1996
Assets
Cash:
Fleet Bank $ 24,124
Distribution account held by
Wien, Malkin & Bettex LLP 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 14,354 26,752
Total Assets $2,228,311
Liabilities and Partners' Capital (Deficit)
Liabilities:
First mortgage $2,859,449
Accrued interest on first mortgage 22,399
Total liabilities 2,881,848
Partners' Capital (Deficit), December 31, 1996 ( 653,537)
Total Liabilities and Partners' Capital (Deficit) $2,228,311
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, 1996
Income:
Basic rent $ 317,157
Additional rent 2,410,477
Total income 2,727,634
Expenses:
Interest on first mortgage $269,636
Supervisory services 225,848
Total expenses 495,484
Net income before amortization 2,232,150
Amortization of mortgage refinancing costs 7,830
Net income $2,224,320
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Statement of Partners' Capital (Deficit)
December 31, 1996
Partners' capital (deficit), January 1, 1996 $( 665,228)
Add: Net income for the year ended December 31, 1996 2,224,320
1,559,092
Less: Monthly distributions to participants
January 1, 1996 through
December 31, 1996 $ 720,000
Distribution to participants on
November 30, 1996 of balance of
additional rent for the lease year
ended September 30, 1996 1,492,629 2,212,629
Partners' capital (deficit), December 31, 1996 $( 653,537)
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, 1996
Cash flows from operating activities:
Net income $2,224,320
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of mortgage refinancing costs 7,830
Change in accrued interest on first mortgage ( 152)
Net cash provided by operating activities 2,231,998
Cash flows from financing activities:
Monthly distributions ($ 720,000)
Distribution on November 30, 1996 of balance
of additional rent for the lease year ended
September 30, 1996 ( 1,492,629)
Principal payments on first mortgage ( 19,369)
Net cash used by financing activities (2,231,998)
Net change in cash -
Cash at beginning of year 84,124
Cash at end of year $ 84,124
Supplemental Cash Flow Disclosures
Year Ended December 31, 1996
Cash paid during the year for interest $ 269,788
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1996
1. Business Activity
250 West 57th St. Associates ("Associates") is a joint venture which
owns an office building located in New York City. The building is net
leased to Fisk Building Associates.
2. Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared on the accrual basis of
accounting.
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 amortized by the
straight-line method over the terms of the leases.
Amortization
Capitalized mortgage refinancing costs of $41,106 are being charged to
expense ratably during the period of the mortgage from March 1, 1995 to
June 1, 2000.
Use of Estimates
Preparing financial statements in conformity with generally accepted
accounting principles requires management to make 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 income and
expenses during the reporting period. Actual results could differ from
those estimates.
3. Lease and Related Party Transactions
(a) 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 & Bettex LLP 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 LLP.
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.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1996
3. Lease - (continued)
(b) In accordance with a lease modification, effective October 1, 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 LLP 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, 1996 was $752,000. Advances against primary additional rent of
$752,000 per annum for the lease year ending September 30, 1997 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, 1996 was
$1,658,477.
(c) The lessee has exercised its option to renew the lease for a period
of 25 years, from October 1, 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.
(d) Some partners in Fisk Building Associates are also partners in
Associates.
4. 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 LLP.
Some partners in that firm are also partners in Associates.
5. First Mortgage
(a) 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 1,2000,
with a balance of $2,777,754.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1996
5. First Mortgage - (continued)
(b) Prepayment privileges: The mortgage is not prepayable until March
1, 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.
(c) Principal payments required to be made are as follows:
Year Ending December 31,
1997 $ 21,270
1998 23,358
1999 25,650
2000 2,789,171
$2,859,449
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 LLP. The bank balance is insured
by the Federal Deposit Insurance Corporation up to $100,000, and at
December 31, 1996 was completely insured. The distribution account held
by Wien, Malkin & Bettex LLP is not insured. The funds held in the
distribution account were paid to the participants on January 1, 1997.