SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996 Commission File Number 0-13500
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2808184
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
One International Place, Boston, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8600
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
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1996 1995
(Note 1)
ASSETS
Real Estate, at cost:
Land..................................................... $ 24,436,720 $ 26,476,945
Buildings and improvements, net of accumulated
depreciation and allowance for impairment of value
of $126,645,946 and $129,020,358 as of
June 30, 1996 and December 31, 1995,
respectively......................................... 109,797,869 119,259,953
------------- -------------
134,234,589 145,736,898
-------------- --------------
Other Assets:
Cash and cash equivalents, at cost, which
approximates market value............................ 301,974 266,836
Restricted cash.......................................... 9,191,215 11,633,278
Accounts receivable, net of reserves of
$316,882 and $410,703 as of June 30, 1996
and December 31, 1995, respectively 892,956 756,342
Deferred rent receivable................................. 8,204,332 8,232,352
Deferred costs, net of accumulated amortization
of $21,435,990 and $21,434,999 as of
June 30, 1996 and December 31, 1995,
respectively........................................ 4,422,666 6,260,039
Prepaid expenses and other assets 4,791,016 5,826,765
--------------- ---------------
$ 162,038,748 $ 178,712,510
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage note payable to affiliates 207,000,000 $ -
Fuji and Sanwa Mortgage.................................. - 231,409,347
Other Mortgage Notes, Net of unamortized discount 19,217,970 19,272,538
Loans payable, accounts payable and accrued interest
to general partners and affiliates 10,630,509 46,221,992
Accounts payable, security deposits and accrued expenses 7,164,796 8,616,797
Accrued interest on mortgage notes to affiliates 29,387,779 -
Accrued interest on other mortgage notes 980,974 27,929,643
Deferred purchase price obligation 1,497,614 1,497,614
--------------- -------------
275,879,642 334,947,931
------------- --------------
Partners' Capital:
Limited Partners
Units of Limited Partnership Interest, $250,000 stated value per unit;
1,344 Units authorized and issued,
1,340 outstanding.................................... (116,600,891) (121,456,837)
Less Investor notes...................................... (68,542) (68,542)
General Partners......................................... 2,828,539 (34,710,042)
-------------- --------------
Total Partners' Deficit.............................. (113,840,894) (156,235,421)
------------- --------------
Total Liabilities and Partners' Deficit $ 162,038,748 $ 178,712,510
============= =============
See Notes to Consolidated Financial Statements
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
CONSOLDATED STATEMENTS OF OPERATIONS
For the Three and Six Months
Ended June 30, 1996 and 1995 Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Note 1) 1996 1995 1996 1995
Income:
Rental......................................... $ 10,628,303 $ 12,680,989 $ 22,450,264 $ 24,172,417
Interest and other income...................... 26,890 195,499 169,338 417,422
----------------- ------------------ ------------------ -----------
10,655,193 12,876,488 22,619,602 24,589,839
--------------- ------------------ ------------------ -----------
Expenses:
Real estate taxes.............................. 2,417,629 2,651,829 4,847,488 5,327,630
Payroll ....................................... 302,405 345,561 791,037 726,782
Utilities...................................... 1,047,951 1,310,856 2,156,596 2,326,150
Repairs and maintenance........................ 1,585,615 1,442,736 2,801,781 3,032,733
General and administrative..................... 616,037 726,838 966,007 1,232,740
Management fees................................ 27,865 623,117 371,966 1,265,495
Interest on obligations to affliates 4,178,992 681,054 6,484,890 1,873,304
Depreciation................................... 3,272,575 2,555,156 5,997,787 5,613,440
Amortization................................... 1,413,610 883,259 2,297,269 1,831,216
----------------- ------------------ ------------------ ---------------
15,837,298 16,324,949 30,704,461 32,359,436
Net loss before extraordinary gain (5,182,105) (3,448,461) (8,084,859) (7,769,597)
Extraordinary gain on transfer of 227 East 45th - - 13,688,046 -
---------------- ------------------ ------------------- ----------
Net Income (Loss).................................... $ (5,182,105) $ (3,448,461) $ 5,603,187 $(7,769,597)
================= ================== ================== ==========
Net Income (Loss) Allocated to General
Partners............................................ $ (195,252) $ (86,611) $ 747,241 $ (203,899)
================= ================== ================== =========
Net Loss Before Extraordinary Item Allocated
to Limited Partners................................. $ (4,986,853) $ (3,361,850) $(7,882,150) $(7,565,698)
Extraordinary Gain Allocated to Investor
Limited Partners.................................... - - 12,738,096 -
----------------- ------------------ ------------------ -----------
Net Income (Loss) Allocated to Investor
Limited Partners.................................... $ (4,986,853) $ (3,361,850) $ 4,855,946 $(7,565,698)
================= ================== ================== ==========
Net Loss Per Unit of Investor Limited Partnership
Interest Before Extraordinary Gain $ (3,722) $ (2,509) $ (5,882) $ (5,646)
Extraordinary Gain Per Unit of Investor Limited
Partnership Interest................................. - - 9,506 -
----------------- ------------------ ------------------ -----------
Net Income (Loss) Per Unit of Investor Limited
Partnership Interest................................. $ (3,722) $ (2,509) $ 3,624 $ (5,646)
================= ================== ================== ===========
Weighted Average Number of Units of Limited
Partnership Interests Outstanding 1,340 1,340 1,340 1,340
================== ================== ================= ===========
See Notes to Consolidated Financial Statements.
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30, 1996 and 1995 (Unaudited)
Cash flow from operating activities:
Net income (loss)...................................................... $ 5,603,187 $ (7,769,597)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization..................................... 8,295,056 7,444,656
Deferred rent receivable.......................................... 28,020 (692,327)
Gain on transfer of 227 East 45th Street (13,688,046) -
------------------- ----------
.................................................................. 238,217 (1,017,268)
Changes in assets and liabilities:
Decrease in accounts payable, security deposits and
accrued expenses.................................................. (1,452,001) (5,055,332)
(Increase) decrease in accounts receivable (136,614) 159,771
Decrease in prepaids and other assets............................. 1,035,749 5,240,682
Accrued interest.................................................. 2,439,110 2,242,005
----------------- ------------
Net cash provided by operating activities 2,124,461 1,569,858
-------------- ------------
Cash flows from investing activities:
Increase in deferred costs........................................ (108,045) (884,288)
Additions to buildings and improvements (3,265,001) (2,682,734)
---------------- --------------
Net cash used by investing activities............................. (3,373,046) (3,566,982)
----------------- ------------
Cash flows from financing activities:
Accounts and loans payable to general
partners and affiliates........................................ (1,104,282) 1,643,770
Restricted Cash................................................... 2,442,573 380,101
Principal payments on mortgages and other loans (54,568) (49,334)
---------- ----------------------
Net cash provided by financing activities 1,283,723 1,974,537
-------------- ---------------------
Net increase (decrease) in cash and cash equivalents 35,138 (22,587)
Cash and cash equivalents, beginning................................... 266,836 107,865
----------------- -----------------
Cash and cash equivalents, end......................................... $ 301,974 $ 85,278
================= =================
Cash paid for interest................................................. $ 7,221,232 $ 6,936,311
================= =================
NON CASH INVESTING AND FINANCING ACTIVITIES
As further discussed in Note 6, on January 24, 1996, the Operating Partnership
transferred its ownership interest in 227 East 45th St. to Sanwa Business Credit
Corporation ("Sanwa"). In exchange for this ownership interest the Operating
Partnership was relieved of its obligations to repay the Sanwa mortgage and
notes secured by both the 227 East property and the 509 Fifth Ave. property. The
net balance associated with all assets of the property as of January 24, 1996
was $11,048,644. The recorded amount of all obligations associated with the
properties as of January 24, 1996 totaled $24,360,690.
As further discussed in Note 4, on February 28, 1996, the General Partners
forgave loan balances and other amounts due totaling $36,791,340. This debt
forgiveness has been treated as a capital contribution by the General Partners.
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER'S CAPITAL
- --------------------------------------------------------------------------------------------------------------------------------
Units of General
For the Six Months Ended Limited Partners' Limited
June 30, 1996 and 1995 Partnership Capital Partners' Total
(Unaudited) (Note 1) Interest (Deficit) Deficit Capital
- ------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 1,340 $ (34,710,042) $ (121,525,379) $ (156,235,421)
Net Income ............................. - 747,241 4,855,946 36,791,340
Contributions - 36,791,3402 - 36,791,340
----------------------------------------------------------------------------
Balance, June 30, 1996.................. 1,340 $ 2,828,539 $ (116,669,433) $ (113,840,894)
============================================================================
Balance, December 31, 1994 1,340 $(32,683,191) $ (84,344,235) $(117,027,426)
Net Loss................................... - (203,899) (7,565,698) (7,769,597)
--------------------------------------------------------------------------
Balance, June 30, 1995..................... 1,340 $(32,887,090) $ (91,909,933) $(124,797,023)
--------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed consolidated financial statements included herein have been
prepared by the Registrant, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The Registrant's accounting and
financial reporting policies are in conformity with generally accepted
accounting principles and include adjustments in interim periods considered
necessary for a fair presentation of the results of operations. All adjustments
are of a normal and recurring nature except as described in Notes 5 and 6.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these consolidated financial statements be
read in conjunction with the consolidated financial statements and notes thereto
included in the Registrant's latest Form 10-K. The balance sheet at December 31,
1995 was derived from audited financial statements at such date.
The accompanying consolidated financial statements reflect the Partnership's
results of operations for an interim period and are not necessarily indicative
of the results of operations for the year ending December 31, 1996.
2. TAXABLE INCOME
The Partnership's results of operations on a tax basis are expected to differ
from net loss for financial reporting purposes primarily due to the accounting
differences in the recognition of rental income, depreciation and amortization.
3. COMMITMENTS AND CONTINGENCIES
As a general partner of the Operating Partnership, which owns the Property, the
Partnership is liable for recourse debts, liabilities and other obligations of
the Property to the extent not paid by the respective Property.
4. RELATED PARTIES
The Partnership incurred $336,684 of property and asset management fees and
$134,478 of leasing and construction fees through February 28, 1996, payable to
an affiliate of the general partner. As part of the sale of Fuji Loan,
(described in Note 5), the Partnership agreed to retain new management and
leasing agents for all of its properties. Effective March 1, 1996, the
Partnership's properties are managed by Axiom Real Estate Management, Inc. and
leasing activity is performed by the Galbreath Company, Newmark & Co. and Koll
Company. These firms are not affiliates of the general partner.
In connection with the sale of the Fuji Loan, Winthrop Financial Associates
("Winthrop") and certain of its affiliates entered into an agreement with the
Investor Partnership, the Operating Partnership and an affiliate of Zeus (as
hereinafter defined) with regard to amounts owed to Winthrop and its affiliates
by the Investor Partnership and the Operating Partnership (the "Winthrop Debt
Agreement"). Prior to this agreement, Winthrop and its affiliates were owed, in
the aggregate, $46,791,340 by the Investor Partnership and the Operating
Partnership. This amount is comprised of cash advances made by Winthrop to the
Operating Partnership, as well as unpaid deferred fees related to the on-site
management of the properties, asset management and syndication. This amount also
includes accrued interest on these outstanding balances.
4. RELATED PARTIES - Continued
Under the Winthrop Debt Agreement, Winthrop and its affiliates contributed
$36,791,340 of the $46,791,340 to the Operating Partnership. The remaining
$10,000,000 receivable has been evidenced by a promissory note issued by the
Operating Partnership (the "Receivables Note") which is secured by a pledge of
excess cash flow from 509 Fifth Avenue and 300 Park Avenue South and is payable
only from those properties. Upon receiving consent of The Dime Savings Bank, the
holder of the first mortgage, the Receivables Note is to be secured by second
mortgages on 509 Fifth Avenue and 300 Park Avenue South. Winthrop then sold the
Receivables Note to an affiliate of Zeus for a payment of $6 million in cash.
The Receivables Note has an annual base interest rate of 6% and an additional
annual contingent interest rate of 9%. Interest is payable only from available
cash flow after payment of debt service on The Dime Savings Bank first mortgage.
Interest, to the extent that it cannot be paid currently, accrues until the
maturity of this Note on July 31, 1997.
Distributions to Limited Partners, if any were to occur, are now subordinate to
only $10,000,000 of debt in respect of the Winthrop receivables instead of
$46,791,340.
5. DEBT MODIFICATION
On February 28, 1996 Zeus Property LLC ("Zeus"), purchased the existing debt
held by the Fuji Bank Ltd. for $115 million. In connection with its purchase of
the Fuji loan, Zeus agreed to grant the Operating Partnership certain
concessions. (see "Item 2. Management Discussion and Analysis of Financial
Condition").
6. DEED IN LIEU OF FORECLOSURE
On January 24, 1996 the Operating Partnership transferred the title to the
property located at 227 East 45th Street to Sanwa Business Credit Corporation
pursuant to a deed in lieu of foreclosure. (see "Item 2. Management Discussion
and Analysis of Financial Condition").
A deed in lieu of foreclosure agreement was reached between the Operating
Partnership and Sanwa on January 15, 1996. Under the deed in lieu agreement, the
Operating Partnership transferred the title to the property located at 227 East
45th St. to Sanwa. In exchange, Sanwa released, as of the closing date, the
Operating Partnership from all claims, demands, liabilities, obligations,
actions and causes of any kind with regards to Sanwa, other than the second
mortgage lien on 509 Fifth Avenue. The 509 Fifth Avenue second mortgage lien
will be released between 106 days to 150 days after the transfer of 227 East
45th St. to Sanwa, provided the Operating Partnership does not file for
bankruptcy within a period of 91 days after the transfer of 227 East 45th St.
As of year end, the balance related to the mortgage was $16,627,710 which was
secured by both 227 East 45th St. and 509 Fifth Avenue. In addition, the Sanwa
note payable, which had a $7,781,634 balance, was secured by both 227 East 45th
St. and 509 Fifth Avenue. As a result of the above described transactions, the
Operating Partnership has recognized an extraordinary gain of $13,688,046. The
property was stated at its fair value at December 31, 1995 as a result of a
recorded write-down.
7. ACCOUNTING CHANGE
On January 1, 1996, the Partnership adopted Statement of Financial Accounting
Standards ("SFAS") No.121, "Accounting for the impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of", which requires impairment losses
to be recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient to
recover the asset's carrying amount. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. The adoption of
the SFAS had no effect on the Partnership's financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
The Partnership serves as the general partner of Nineteen New York
Properties Limited Partnership (the "Operating Partnership"). All of the
Operating Partnership's properties are office buildings located in New York
City. The Partnership's sole source of revenue is from distributions from the
Operating Partnership and interest income on its reserves. The Partnership is
responsible for its operating expenses. The Operating Partnership receives
rental revenue from tenants and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments.
The Partnership and the Operating Partnership had $301,974 of cash and
cash equivalents and $9,191,215 of restricted cash at June 30, 1996 as compared
to $266,836 and $11,633,278, respectively, at December 31, 1995. Restricted cash
includes amounts held in mortgage collateral accounts, restricted operating
accounts, and tenant security deposits and utility and real estate tax escrows.
The $35,138 increase in cash at June 30, 1996 as compared to December 31, 1995
was due to $2,124,461 of cash provided by operating activities and $1,283,723 of
cash provided by financing activities which was substantially offset by
$3,373,046 of cash used in investing activities. Cash used in investing
activities consisted primarily of $3,265,000 of improvements to real estate.
Cash provided by financing activities consisted of $2,442,573 decrease in
restricted cash, $1,104,282 repaid to general partners and affiliates and
$54,568 of mortgage principal payments.
The Operating Partnership's only other source of liquidity is a
$19,500,000 unsecured credit line provided by Zeus Property LLC ("Zeus"). This
credit line can be used by the Operating Partnership to fund capital
improvements and tenant lease-up costs at the Fuji Properties. However, any
borrowings under this credit line are subject to Zeus' discretion. Accordingly,
it is possible that the Operating Partnership may not be able to borrow against
this credit line each time it deems it necessary. There are no outstanding
amounts due under this credit line.
On February 28, 1996 Zeus purchased the existing debt held by The Fuji
Bank Ltd. for $115 million. The Operating Partnership obtained a reduction in
the current interest required to be paid under the modified loan which, based on
current projections, will greatly reduce the likelihood of monetary default
under the loan prior to February 28, 1998, the new maturity date for a portion
of the loan. As part of the restructuring of the Fuji loan, each of the
Operating Partnership's 535 and 545 Fifth Avenue, 1372 Broadway and 757 Third
Avenue properties (the "Fuji Properties") were conveyed by the Operating
Partnership to newly-created limited liability companies which are wholly-owned,
indirectly, by the Operating Partnership and its partners.
The modified Fuji loan (the "Modified Loan") is comprised of several
component non-recourse loans, all held by Zeus and its affiliates. The most
senior loan component consists of a series of secured notes in the aggregate
principal amount of $104,550,000, each having an annual interest rate of 295
basis points over 30-day LIBOR, maturing on February 28, 1998 unless extended at
Zeus' option (the "Secured A Notes").
A junior component consists of secured notes in the aggregate principal
amount of $102,450,000, each having a fixed annual interest rate of 14% for the
next three years and then 16.75% thereafter, maturing on February 28, 2016 (the
"Secured B Notes"). The Secured A Notes and Secured B Notes are collectively
secured by first mortgages on the Fuji Properties. A third component is the
unsecured $19,550,000 note (the "Unsecured Note") representing the additional
financing expected to be drawn upon by the Operating Partnership to fund capital
improvements and tenant lease-up costs with respect to the Fuji Properties. The
Unsecured Note bears interest at a fixed annual rate of 14% for the next three
years and then 16.75% thereafter and matures on February 28, 1998, unless
extended at Zeus' option.
In connection with the Modified Loan, loans in the form of cash
advances and deferred fees were made to the Partnership and the Operating
Partnership by Affiliates of the General Partner were restructured.
See Item 1, Note 4 for a discussion regarding affiliate loans.
Liquidity and Capital Resources - Continued
After giving effect to the loan restructuring, the Operating
Partnership's properties (the "Properties") were encumbered by approximately
$236,254,000 of principal amount of mortgage loans. The Partnership believes
that current cash flow will be sufficient to fund the current debt service
requirements on these loans until their maturity (December 31, 1997 with respect
to the loans encumbering 300 Park Avenue South and 509 Fifth Avenue and February
28, 1998 with respect to the Fuji Properties). However, in the absence of a
substantial improvement in the commercial rental market and the operations of
the Properties, the Partnership will not be able to meet its financial
obligations at maturity. Accordingly, if the Properties can not be sold,
refinanced or the existing loans modified at their maturity, there is a
substantial likelihood that some or all of the Properties will be lost through
foreclosure. At present, it appears that the Partnership's original objective of
capital appreciation will not be achieved and the Partnership's partners will
not receive a return of a substantial amount of their original investment.
On January 24, 1996, the Operating Partnership transferred the title to
the property located at 227 East 45th St. to Sanwa Business Credit Corporation
("Sanwa") pursuant to a deed in lieu of foreclosure. In exchange, Sanwa
released, as of the closing date, the Operating Partnership from all claims,
demands, liabilities, obligations, actions and causes of any kind with regards
to Sanwa, other than the second mortgage lien on 509 Fifth Avenue. The 509 Fifth
Avenue second mortgage lien was released between 106 days to 150 days after the
transfer of 227 East 45th St. to Sanwa.
As part of the debt restructuring process, the Operating Partnership
reviewed the properties to determined whether they have suffered an impairment
in value which is deemed to be other than temporary. Such instances arise when
the Operating Partnership concludes that expected future cash flows will not
enable the Partnerships to recover their investment. In making such assessments,
the Operating Partnership considers certain factors, which includes recessionary
effects on commercial real estate markets, current and future expected occupancy
rates, prospects for leasing at rates sufficient to support the existing
carrying value of the properties, expected changes in operating costs or
appraisal of an independent firm. The Operating Partnership determined that the
Properties suffered an impairment. Management's assessment of impairment is
primarily related to the continued weak New York City commercial real estate
market, coupled with a change in Management's focus given the inability of the
Properties to service the current debt obligations and the continued depletion
of the cash reserves. As a result, the Partnership wrote down its investment in
the Properties by $22,500,000 in 1995.
There have been, and it is possible there may be other Federal, state
and local legislation and regulations enacted relating to the protection of the
environment and individual rights (such as the Americans with Disabilities Act).
The Partnership is unable to predict the extent, if any, to which such new
legislation or regulations might occur and the degree to which such existing or
new legislation or regulations might adversely affect the Partnership's
liquidity and capital resources.
Real Estate Market
The income and expenses of operating the Properties owned by the
Operating Partnership are subject to factor's outside its control, such as the
over-supply of similar properties, increases in unemployment, population shifts,
or changes in patterns or needs of users. Expenses, such as local real estate
taxes and miscellaneous expenses, are subject to change and cannot always be
reflected in rental rate increases due to market conditions. In addition, there
are risks inherent in owning and operating office buildings because such
properties are labor intensive and are susceptible to the impact of economic and
other conditions outside the control of the Partnership.
These Market conditions have and will continue to have a significant
impact on the Partnership. In general, while the General Partners believe that
the loan restructurings represent an accomplishment of the immediate goals set
by the Operating Partnership, there will be little or no direct positive
benefits for the Partnership unless there is a significant recovery in market
conditions.
Results of Operations
Six Months ended June 30, 1996 vs. June 30, 1995
The Partnership generated a net loss before extraordinary gain of $8,084,859 for
the six months ended June 30, 1996, as compared to a net loss of $7,769,597 for
the six months ended June30, 1995.
Income for the six months ended June 30, 1995 was $22,619,602 as compared to
$24,589,839 for the six months ended June 30, 1995. The decrease in revenue was
due to a decrease in rental income of $1,722,153 and interest and other income
of $248,084.
Rental income was negatively impacted by the loss of the 227 East 45th property
during the first quarter of 1996 and a decrease in rental revenues at 757 Third
Avenue and 545 Fifth Avenue of approximately $905,000 and $92,000, respectively,
for the six months ended June 30, 1996, as compared to 1995. These decreases
were partially offset by an increase in rental income at 535 Fifth Avenue and
1372 Broadway of approximately $574,000 and $185,000, respectively. The lower
rental revenues were primarily the result of lower effective rental rates and
decreased occupancy.
During the first six months of 1996, the Operating Partnership signed new
renewal, extension, and expansion leases with eleven tenants totaling 51,655
square feet at rental terms comparable to buildings of similar quality in the
market. As of June 30, 1996 and 1995, the current portfolio's occupancy was 82%
and 89%, respectively.
Expenses for the six months ended June 30, 1996, as compared to 1995, declined
by approximately $1,655,000 partially as a result of the loss of 227 East 45th .
The decrease in operating expenses (i.e., real estate taxes, payroll, utilities,
reparis and maintenance) of $816,393, interest expense of $528,720, management
fees of $893,529 and general and administrative expenses of $266,733 were
partially offset by increases in amortization expense of $466,053 and
depreciation expense of $384,347.
Operating and interest expenses declined as a result of the loss of 227 East
45th. Management fees declined due to the elimination of the asset management
fee payable to a related party, the new management agreement (which changed the
previous fee of 2.5%of cash receipts to a fixed fee) and the disposition of the
227 East 45th Street property. General and administrative expenses declined as a
result of the loss of 227 East 45th and a decrease in legal expense.
Depreciation expense increased due to the depreciation of tenant improvements
placed in service in the prior year. Amortization expense increased due to the
increase in leasing commissions and the amortization of refinancing cost
associated with the new mortgage.
The extraordinary gain was recognized because the outstanding mortgage
indebtedness encumbering the 227 East 45th Street property exceeded the
Partnership's carrying value of the disposed property.
Three Months ended June 30, 1996 vs. June 30, 1995
The Partnership generated a net loss of $5,182,105 for the three months ended
June 30, 1996, as compared to a net loss of $3,448,461 for the three months
ended June 30, 1995.
Income for the three months ended June 30, 1996 was $10,655,193 as compared to
$12,875,488 for the three months ended June 30, 1995. The decrease in revenue
was due primarily to a decrease in rental income of $1,952,686.
Rental income was negatively impacted by the loss of the 227 East 45th property
during the first quarter of 1996 and a decrease in rental revenues at 757 Third
Avenue, 545 Fifth Avenue and 1372 Broadway for the three months ended June 30,
1996, as compared to 1995. These decreases were partially offset by an increase
in rental income at Registrant's remaining properties. The lower rental revenues
were primarily the result of lower effective rental rates and decreased
occupancy.
Total expenses for the three months ended June 30, 1996, as compared to 1995,
declined by approximately $488,000, primarily as a result of the loss of 227
East 45th. The decrease in operating expenses (i.e., real estate taxes, payroll,
utilities, repairs and maintenance) of approximately $397,382, interest expense
of $631,986, management fees of $595,252 and general and administrative expenses
of $110,801 were partially offset by increases in amortization expense of
$530,351 and depreciation expense of $717,419.
Results of Operations - Continued
Operating and interest expenses declined as a result of the 227 East 45th deed
in lieu of foreclosure. Management fees declined due to the elimination of the
asset management fee payable to a related party, the new management agreement
(which changed the previous fee of 2.5%of cash receipts to a fixed fee) and the
disposition of the 227 East 45th Street property. General and administrative
expenses declined as a result of the 227 East 45th deed in lieu of foreclosure.
Depreciation expense increased due to the depreciation of tenant improvements
placed in service in the prior year. Amortization expense increased due to the
increase in leasing commissions and the amortization of refinancing cost
associated with the new mortgage.
PART II - OTHER INFORMATION
NOT APPLICABLE
SIGNATURE
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.
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
(Registrant)
By: Two Winthrop Properties, Inc.
Managing General Partner
DATED: August 19, 1996 By: /s/ Michael Ashner
Michael Ashner
Chief Executive Officer
DATED: August 19, 1996 By: /s/ Edward V. Williams
Edward V. Williams
Chief Financial Officer