0000100412-95-000003.txt : 19950821 0000100412-95-000003.hdr.sgml : 19950821 ACCESSION NUMBER: 0000100412-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: 250 WEST 57TH ST ASSOCIATES CENTRAL INDEX KEY: 0000100412 STANDARD INDUSTRIAL CLASSIFICATION: 6512 IRS NUMBER: 136083380 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02666 FILM NUMBER: 95561372 BUSINESS ADDRESS: STREET 1: C/O WEIN MALKIN & BETTEX STREET 2: 60 WEST EAST 42ND STREET CITY: NEW YORK STATE: NY ZIP: 10165 BUSINESS PHONE: 2126878700 10-Q 1 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. EX-27 2
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 84,124 0 0 0 0 84,124 7,995,908 5,878,473 2,239,868 63,208 0 0 0 0 (692,700) 2,239,868 549,113 549,113 0 0 35,493 0 138,352 375,268 0 375,268 0 0 0 375,268 521.21 521.21 Includes unamortized mortgage refinance costs of $38,309 Accrued interest on mortgage of $22,621, deferred credit of $22,104 and first mortgage principal payment due within one year of $18,483 Includes long-term debt of $2,869,360 Rental income Supervisory servises of $30,000 and amortization of mortgage refinance costs of $5,493 Earnings per $5,000 participation unit, based 720 participation units outstanding during the year