þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
A New York Limited Liability Company | 13-6077181 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company þ |
Item 1. | Financial Statements. |
June 30, 2011 | December 31, 2010 | |||||||
Assets |
||||||||
Real estate: |
||||||||
Building |
$ | 16,960,000 | $ | 16,960,000 | ||||
Less: accumulated depreciation |
16,960,000 | 16,960,000 | ||||||
0 | 0 | |||||||
Building improvements and equipment |
67,386,889 | 66,034,042 | ||||||
Less: accumulated depreciation |
12,912,610 | 12,076,880 | ||||||
54,474,279 | 53,957,162 | |||||||
Tenant improvements |
6,008,077 | 5,598,316 | ||||||
Less: accumulated depreciation |
961,944 | 515,948 | ||||||
5,046,133 | 5,082,368 | |||||||
Land |
7,240,000 | 7,240,000 | ||||||
Total real estate, net |
66,760,412 | 66,279,530 | ||||||
Cash and cash equivalents |
10,101,205 | 11,555,334 | ||||||
Due from Supervisor |
87,202 | 87,202 | ||||||
Other receivable |
3,357 | 3,357 | ||||||
Deferred costs |
683,118 | 454,277 | ||||||
Leasing commissions, less accumulated
amortization of $2,899,269 in 2011 and
$2,742,063 in 2010 |
1,210,552 | 1,367,758 | ||||||
Mortgage refinancing costs, less accumulated amortization of $1,643,422 in 2011 and
$1,461,613 in 2010 |
1,230,210 | 1,412,019 | ||||||
Total assets |
$ | 80,076,056 | $ | 81,159,477 | ||||
Liabilities and members deficiency |
||||||||
Liabilities: |
||||||||
Mortgages payable |
$ | 92,614,550 | $ | 93,719,850 | ||||
Accrued mortgage interest |
433,720 | 438,819 | ||||||
Accrued supervisory fees, a related party |
156,000 | 78,000 | ||||||
Payable to Lessee, a related party |
1,928,007 | 1,082,082 | ||||||
Due to Supervisor |
| 43,555 | ||||||
Accrued expenses |
60,775 | 238,200 | ||||||
Total liabilities |
95,193,052 | 95,600,506 | ||||||
Commitments and contingencies |
| | ||||||
Members
deficiency (At June 30, 2011 and December 31, 2010, there were 700 units (at $10,000 per
unit) of participation units outstanding) |
(15,116,996 | ) | (14,441,029 | ) | ||||
Total liabilities and members deficiency |
$ | 80,076,056 | $ | 81,159,477 | ||||
For the Three | For the Six | |||||||||||||||
Months Ended June 30, | Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue: |
||||||||||||||||
Basic rent income, from a related party |
$ | 1,868,518 | $ | 1,868,769 | $ | 3,737,032 | $ | 3,737,537 | ||||||||
Advance of additional rent income, from a
related party |
263,450 | 263,450 | 526,900 | 526,900 | ||||||||||||
Total rent income |
2,131,968 | 2,132,219 | 4,263,932 | 4,264,437 | ||||||||||||
Dividend income |
268 | 414 | 548 | 821 | ||||||||||||
Total revenue |
2,132,236 | 2,132,633 | 4,264,480 | 4,265,258 | ||||||||||||
Expenses: |
||||||||||||||||
Interest on mortgages |
1,394,642 | 1,424,671 | 2,796,948 | 2,856,589 | ||||||||||||
Supervisory services, to a related party |
46,845 | 7,845 | 93,690 | 15,690 | ||||||||||||
Depreciation of building improvements and
equipment |
648,277 | 420,337 | 1,281,725 | 832,609 | ||||||||||||
Amortization of leasing commissions |
77,246 | 92,289 | 157,206 | 208,328 | ||||||||||||
Professional fees, including amounts to a
related party |
36,800 | | 87,668 | 3,000 | ||||||||||||
Total expenses |
2,203,810 | 1,945,142 | 4,417,237 | 3,916,216 | ||||||||||||
Net Income (Loss) |
$ | (71,574 | ) | $ | 187,491 | $ | (152,757 | ) | $ | 349,042 | ||||||
Income (loss) per $10,000 participation unit,
based on 700 participation units
outstanding during each period |
$ | (102.25 | ) | $ | 267.84 | $ | (218.22 | ) | $ | 498.63 | ||||||
Distributions per $10,000 participation
unit consisted of the following: |
||||||||||||||||
Income |
$ | 0 | $ | 267.84 | $ | 0 | $ | 498.63 | ||||||||
Return of capital |
373.72 | 105.88 | 747.44 | 248.81 | ||||||||||||
Total distributions |
$ | 373.72 | $ | 373.72 | $ | 747.44 | $ | 747.44 | ||||||||
For the | For the | |||||||
Six Months Ended | Year Ended | |||||||
June 30, 2011 | December 31, 2010 | |||||||
Members deficiency: |
||||||||
January 1, 2011 |
$ | (14,441,029 | ) | |||||
January 1, 2010 |
$ | (13,459,008 | ) | |||||
Add net income (loss): |
||||||||
January 1, 2011 through June 30, 2011 |
(152,757 | ) | | |||||
January 1, 2010 through December 31, 2010 |
| 64,399 | ||||||
(14,593,786 | ) | (13,394,609 | ) | |||||
Less distributions: |
||||||||
Monthly distributions: |
||||||||
January 1, 2011 through June 30, 2011 |
523,210 | | ||||||
January 1, 2010 through December 31, 2010 |
| 1,046,420 | ||||||
Total distributions |
523,210 | 1,046,420 | ||||||
Members deficiency at the end of the period: |
$ | (15,116,996 | ) | $ | (14,441,029 | ) | ||
For the | For the | |||||||
Six Month Ended | Six Month Ended | |||||||
June 30, 2011 | June 30, 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | (152,757 | ) | $ | 349,042 | |||
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
||||||||
Depreciation of improvements and equipment |
1,281,725 | 832,609 | ||||||
Amortization of leasing commissions |
157,206 | 208,328 | ||||||
Amortization of mortgage refinancing costs |
181,810 | 181,809 | ||||||
Changes in operating assets and liabilities: |
||||||||
Due to Supervisor |
(43,555 | ) | | |||||
Accrued supervisory fees, to a related party |
78,000 | | ||||||
Accrued mortgage interest and other expenses |
(182,524 | ) | (5,521 | ) | ||||
Net cash provided by operating activities |
1,319,905 | 1,566,267 | ||||||
Cash flows from investing activities: |
||||||||
Purchase of building improvements and equipment |
(1,352,847 | ) | (1,507,463 | ) | ||||
Purchase of tenant improvements |
(409,761 | ) | | |||||
Increase in payable to Lessee |
845,925 | 1,506,778 | ||||||
Net cash used in investing activities |
(916,683 | ) | (685 | ) | ||||
Cash flows from financing activities: |
||||||||
Other receivable |
| (2,165 | ) | |||||
Repayment of mortgages payable |
(1,105,300 | ) | (1,045,935 | ) | ||||
Financing costs |
| (2,831 | ) | |||||
Distributions to Participants |
(523,210 | ) | (523,210 | ) | ||||
Deferred costs |
(228,841 | ) | | |||||
Net cash used in financing activities |
(1,857,351 | ) | (1,574,141 | ) | ||||
Net decrease in cash and cash equivalents |
(1,454,129 | ) | (8,559 | ) | ||||
Cash and cash equivalents, beginning of period |
11,555,334 | 16,810,403 | ||||||
Cash and cash equivalents, end of period |
$ | 10,101,205 | $ | 16,801,844 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for interest |
$ | 2,620,237 | $ | 2,679,601 | ||||
Item 2. | Managements Discussion and Analysis of
Financial Condition and Results of Operations. |
Item 4T. | Controls and Procedures. |
(a) | Evaluation of disclosure controls and procedures. The Supervisor after evaluating the
effectiveness of Registrants disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of June 30, 2011, the end of
the period covered by this report, has concluded that as of that date Registrants disclosure
controls and procedures were effective and designed to ensure that material information
relating to Registrant would be made known to it by others within those entities on a timely
basis. |
|
(b) | Changes in internal controls over financial reporting. There were no changes in Registrants
internal controls over financial reporting that occurred during the most recent fiscal quarter
that have materially affected, or are reasonably likely to materially affect, Registrants
internal controls over financial reporting. |
Item 1. | Legal Proceedings. |
Item 6. | Exhibits |
Number | Document | Page* | ||||||
3 | (a) | Partnership Agreement, dated September 25,
1958, which was filed by letter dated March 31,
1981 (Commission File No. 0-2670) as Exhibit No.
3 to Registrants Form 10-K for the fiscal year
ended December 31, 1980, is incorporated by
reference as an exhibit hereto. |
||||||
3 | (b) | Amended Business Certificate of Registrant filed
with the Clerk of New York County on November 28,
1997, reflecting a change in the Partners of
Registrant, was filed as Exhibit 3(b) to
Registrants 10-Q for the quarter ended March 31,
1998, and is incorporated by reference as an
exhibit hereto. |
||||||
3 | (c) | Registrants Consent and Operating Agreement
dated as of November 28, 2001 |
||||||
3 | (d) | Certificate of Conversion of Registrant to a
limited liability company dated November 28, 2001
filed with the New York Secretary of State on
December 3, 2001. |
||||||
4 | Form of Participating Agreement, which
was filed as Exhibit No. 4 to Registrants Form
S-1 Registration Statement, as amended (the
Registration Statement) by letter dated
June 28, 1954 and assigned File No. 2-10981, is
incorporated by reference as an exhibit hereto. |
|||||||
10 | (a) | Deed of Lincoln Building to WLKP Realty Corp.,
which was filed as Exhibit No. 5 to Registrants
Registration Statement by letter dated June 28,
1954 and assigned File No. 2-10981, is
incorporated by reference as an exhibit hereto. |
Number | Document | Page* | ||||||
10 | (c) | Form of Lease between Registrant and
Lincoln Building Associates, which
was filed as Exhibit No. 9 to Registrants
Registration Statement by letter dated June 28,
1954 and assigned File No. 2-10981, is
incorporated by reference as an exhibit hereto. |
||||||
10 | (d) | Deed from Lincoln Building Associates to
Registrant, dated October 1, 1958, which was
filed by letter dated March 31, 1981 (Commission
File No. 0-2670) as Exhibit No. 10(d) to
Registrants Form 10-K for the fiscal year ended
December 31, 1980, is incorporated by reference
as an exhibit hereto. |
||||||
10 | (e) | Second Modification of Lease Agreement,
dated January 1, 1977, which was filed by letter
dated March 28, 1980 (Commission File No. 0-2670)
as Exhibit II under Item 10(b) of Registrants
Form 10-K for the fiscal year ended December 31,
1979, is incorporated by reference as an exhibit
hereto. |
||||||
10 | (f) | Third Modification of Lease Agreement,
which was filed by letter dated March 28, 1980
(Commission File No. 0-2670) as Exhibit II under
Item 10(b) of Registrants Form 10-K for the
fiscal year ended December 31, 1979, is
incorporated by reference as an exhibit hereto. |
||||||
10 | (g) | Amendment to Registrants Operating Agreement as
of July 1, 2010 which was filed under Item 10(g)
of Registrants Form 10-Q for the fiscal period
ended June 30, 2010 and is incorporated by
reference as an exhibit hereto. |
||||||
24.1 | Power of Attorney dated September 8, 2011,
between Members of Registrant and Mark Labell
which is being filed as Exhibit 24.1 to
Registrants 10-Q for the quarter ended June 30,
2011. |
Number | Document | Page* | ||||||
31.1 | Certification of Mark Labell, Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 |
|||||||
31.2 | Certification of Mark Labell, Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 |
|||||||
32.1 | Certification of Mark Labell, Pursuant to 18
U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
|||||||
32.2 | Certification of Mark Labell, Pursuant to 18
U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Page references are based on sequential numbering system. |
60 EAST 42ND ST. ASSOCIATES L.L.C. | ||||
(Registrant) | ||||
By:
|
/s/ Mark Labell
Peter L. Malkin, Member Anthony E. Malkin, Member |
By:
|
/s/ Mark Labell
Peter L. Malkin, Member Anthony E. Malkin, Member |
* | Mr. Labell supervises accounting functions for Registrant. |
NAME | CAPACITY | DATE | ||
/s/ Peter L. Malkin
|
Member | September 8, 2011 | ||
/s/ Anthony E. Malkin
|
Member | September 8, 2011 | ||
1. | I have reviewed this quarterly report on Form 10-Q of 60 East 42nd
St. Associates L.L.C.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of Registrant as of, and
for, the periods presented in this report; |
4. | Registrants other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for Registrant and we have: |
(a) | Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to Registrant is made known to us by
others within those entities, particularly during the period in which this
report is being prepared; |
(b) | Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of Registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in Registrants internal
control over financial reporting that occurred during Registrants most recent
fiscal quarter (Registrants fourth fiscal quarter in the case of an annual
report) that has
materially affected, or is reasonably likely to materially affect,
Registrants internal control over financial reporting; and |
5. | Registrants other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to Registrants
auditors and the audit committee of Registrants board of directors (or persons
performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect Registrants ability to record, process,
summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or
other employees who have a significant role in Registrants internal controls
over financial reporting. |
By: | /s/ Mark Labell | |||
Name: | Mark Labell | |||
Title: | Senior Vice President, Finance Malkin Holdings LLC, Supervisor of 60 East 42nd St. Associates L.L.C. |
1. | I have reviewed this quarterly report on Form 10-Q of 60 East 42nd
St. Associates L.L.C.; |
2. | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of Registrant as of, and
for, the periods presented in this report; |
4. | Registrants other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for Registrant and we have: |
(a) | Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to Registrant is made known to us by
others within those entities, particularly during the period in which this
report is being prepared; |
(b) | Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of Registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in Registrants internal
control over financial reporting that occurred during Registrants most recent
fiscal quarter (Registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, Registrants internal control over financial reporting; and |
5. | Registrants other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to Registrants
auditors and the audit committee of Registrants board of directors (or persons
performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect Registrants ability to record, process,
summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or
other employees who have a significant role in Registrants internal controls
over financial reporting. |
By: | /s/ Mark Labell | |||
Name: | Mark Labell | |||
Title: | Senior Vice President, Finance Malkin Holdings LLC, Supervisor of 60 East 42nd St. Associates L.L.C. |
By: | /s/ Mark Labell | |||
Mark Labell | ||||
Senior Vice President, Finance Malkin Holdings LLC, Supervisor |
* | Registrants organizational documents do not provide for a Chief Executive Officer or other
officer with equivalent rights and duties. As described in the Report, Registrant is a limited
liability company which is supervised by Malkin Holdings LLC. Accordingly, this Chief Executive
Officer certification is being signed by a senior executive of Registrants supervisor. |
By: | /s/ Mark Labell | |||
Mark Labell | ||||
Senior Vice President, Finance Malkin Holdings LLC, Supervisor |
* | Registrants organizational documents do not provide for a Chief Financial Officer or other
officer with equivalent rights and duties. As described in the Report, Registrant is a limited
liability company which is supervised by Malkin Holdings LLC. Accordingly, this Chief Financial
Officer certification is being signed by a senior member of the financial/accounting staff of
Registrants supervisor. |
Condensed Balance Sheets (Unaudited) (Parenthetical) (USD $)
|
3 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2011
|
Dec. 31, 2010
|
|
Real estate: | Â | Â | Â |
Leasing commissions, less accumulated amortization | $ 2,899,269 | $ 2,899,269 | $ 2,742,063 |
Mortgage refinancing costs, less accumulated amortization | 1,643,422 | 1,643,422 | 1,461,613 |
Liabilities: | Â | Â | Â |
Participation units, outstanding | 700 | 700 | 700 |
Amount of participation unit | $ 10,000 | $ 10,000 | $ 10,000 |
Condensed Statements of Operations (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Revenue: | Â | Â | Â | Â |
Basic rent income, from a related party | $ 1,868,518 | $ 1,868,769 | $ 3,737,032 | $ 3,737,537 |
Advance of additional rent income, from a related party | 263,450 | 263,450 | 526,900 | 526,900 |
Total rent income | 2,131,968 | 2,132,219 | 4,263,932 | 4,264,437 |
Dividend income | 268 | 414 | 548 | 821 |
Total revenue | 2,132,236 | 2,132,633 | 4,264,480 | 4,265,258 |
Expenses: | Â | Â | Â | Â |
Interest on mortgages | 1,394,642 | 1,424,671 | 2,796,948 | 2,856,589 |
Supervisory services, to a related party | 46,845 | 7,845 | 93,690 | 15,690 |
Depreciation of building improvements and equipment | 648,277 | 420,337 | 1,281,725 | 832,609 |
Amortization of leasing commissions | 77,246 | 92,289 | 157,206 | 208,328 |
Professional fees, including amounts to a related party | 36,800 | 0 | 87,668 | 3,000 |
Total expenses | 2,203,810 | 1,945,142 | 4,417,237 | 3,916,216 |
Net Income (Loss) | $ (71,574) | $ 187,491 | $ (152,757) | $ 349,042 |
Income (loss) per $10,000 participation unit, based on 700 participation units outstanding during each period | $ (102.25) | $ 267.84 | $ (218.22) | $ 498.63 |
Distributions per $10,000 participation unit consisted of the following: | Â | Â | Â | Â |
Income | $ 0 | $ 267.84 | $ 0 | $ 498.63 |
Return of capital | $ 373.72 | $ 105.88 | $ 747.44 | $ 248.81 |
Total distributions | $ 373.72 | $ 373.72 | $ 747.44 | $ 747.44 |
Document and Entity Information
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Document and Entity Information [Abstract] | Â |
Entity Registrant Name | 60 EAST 42ND STREET ASSOCIATES L.L.C. |
Entity Central Index Key | 0000090794 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2011 |
Amendment Flag | false |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 0 |
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Supervisory Services
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Supervisory Services [Abstract] | Â |
Supervisory Services |
Note E Supervisory Services
Registrant pays Supervisor for supervisory services and disbursements. The basic fee has been
payable at the rate of $24,000 per annum, payable $2,000 per month, since October 1, 1958. The
Agents approved an increase in such fee in an amount equal to the increase in the consumer price
index since such date, resulting in an increase in the basic fee to $180,000 per annum effective
July 1, 2010. The basic fee will be subject to further increase in accordance with any future
increase in the consumer price index. The fee is payable (i) not less than $2,000 per month and
(ii) the balance out of available reserves from Further Additional Rent. If Further Additional Rent
is insufficient to pay such balance, any deficiency shall be payable in the next year in which
Further Additional Rent is sufficient. In addition, the Agents also approved payment by Registrant,
effective July 1, 2010, of the expenses in connection with regular accounting services related to
maintenance of Registrant’s books and records. Such expenses were previously paid by Supervisor.
The basic supervisory services provided to Registrant by Supervisor include, but are not
limited to, maintaining all of its entity and Participant records, performing physical inspections
of the Building, providing or coordinating certain counsel services to Registrant, reviewing
insurance coverage and conducting annual supervisory review meetings, receipt of monthly rent from
Lessee, payment of monthly and additional distributions to the Participants, payment of all other
disbursements, confirmation of the payment of real estate taxes, active review of financial
statements submitted to Registrant by Lessee and financial statements audited by and tax
information prepared by Registrant’s independent registered public accounting firm, and
distribution of related materials to the Participants. Supervisor also prepares quarterly, annual
and other periodic filings with the SEC and applicable state authorities.
Registrant pays Supervisor for other services at hourly rates. Pursuant to the fee
arrangements described herein, Registrant incurred supervisory service fees of $93,690 for the
six-month period ended June 30, 2011. Supervisory fees were $15,690 for the six-month period ended
June 30, 2010. No remuneration was paid during the six-month periods ended June 30, 2011 and 2010
by Registrant to any of the Members.
Supervisor also receives a payment (“Additional Payment”) equal to 10% of all distributions to
Participants in Registrant in any year in excess of the amount representing a return to them at the
rate of 14% per annum on their remaining cash investment in Registrant (which remaining cash
investment at June 30, 2011 was equal to the Participants’ original cash investment of $7,000,000).
For tax purposes, such Additional Payment is recognized as a profits interest, and the Supervisor
is treated as a partner, all without modifying each Participant’s distributive share of reportable
income and cash distribution. Supervisor receives $7,380 a year as an advance against the
Additional Payment, which Registrant expenses monthly.
Reference is made to Note C above for a description of the terms of the Lease between
Registrant and Lessee. As of June 30, 2011, entities for the benefit of Peter L. Malkin’s family
own member interests in Lessee. The respective interests of the Members in Registrant and Lessee
arise solely from ownership of their respective Participations in Registrant and, in the case of
Peter L. Malkin, entity ownership of member interests for the benefit of family members in
Lessee. The Members as such receive no extra or special benefit not shared on a pro rata basis
with all other Participants in Registrant or members in Lessee. However, all of the Members hold
senior positions at Supervisor (which supervises Registrant and Lessee) and, by reason of their
positions at Supervisor, may receive income attributable to supervisory or other remuneration paid
to Supervisor by Registrant and Lessee.
Subsequent Events
Subsequent events have been evaluated for potential recognition and disclosure.
|
Interim Period Reporting
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Interim Period Reporting [Abstract] | Â |
Interim Period Reporting |
Note A Interim Period Reporting
In the opinion of management, the accompanying unaudited condensed financial statements of 60
East 42nd St. Associates L.L.C. (“Registrant”) reflect all adjustments, consisting of
normal recurring accruals, necessary to present fairly the financial position of Registrant as of
June 30, 2011 and its results of operations for the three and six months ended June 30, 2011 and
2010 and cash flows for the six months ended June 30, 2011 and 2010. Information included in the
condensed balance sheet as of December 31, 2010 has been derived from the audited balance sheet
included in Registrant’s Form 10-K for the year ended December 31, 2010 (the “10-K”) previously
filed with the Securities and Exchange Commission (the “SEC”). Pursuant to rules and regulations
of the SEC, certain information and disclosures normally included in financial statements prepared
in accordance with U.S. generally accepted accounting principles have been condensed or omitted
from these financial statements unless significant changes have taken place since the end of the
most recent fiscal year. Accordingly, these unaudited condensed financial statements should be
read in conjunction with the financial statements and notes thereto and the other information
contained in the 10-K. The results of operations for the three and six months ended June 30, 2011
are not necessarily indicative of the results to be expected for any interim period or the full
year.
Reclassification
Certain prior year balances have been reclassified to conform with the current period presentation.
|
Statement of Members' Deficiency (Unaudited) (USD $)
|
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2011
|
Dec. 31, 2010
|
|
Members' equity (Deficiency): | Â | Â |
Members' deficiency beginning balance | $ (14,441,029) | $ (13,459,008) |
Add, net income (loss) | Â | Â |
Net income (loss) | (152,757) | 64,399 |
Members' deficiency equity before distribution | (14,593,786) | (13,394,609) |
Less distributions: | Â | Â |
Monthly distributions | 523,210 | 1,046,420 |
Total distributions | 523,210 | 1,046,420 |
Members' deficiency ending balance | $ (15,116,996) | $ (14,441,029) |
Organization
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Organization [Abstract] | Â |
Organization |
Note B Organization
Registrant was originally organized as a partnership on September 25, 1958. On October 1,
1958, Registrant acquired fee title to One Grand Central Place, formerly known as the Lincoln
Building, at the address 60 East 42nd Street, New York, New York (the “Building”) and the land
there under (the “Property”). On November 28, 2001, Registrant converted to a limited liability
company under New York law and is now known as 60 East 42nd St. Associates L.L.C. The conversion
did not change any aspect of the assets and operations of Registrant other than to protect its
participants from liability to third parties. Registrant’s members (“Members”) are Peter L. Malkin
and Anthony E. Malkin (collectively, the “Agents”), each of whom also acts as an agent for holders
of participations (“Participations”) in their respective member interest in Registrant (the
“Participants”). The Members in Registrant hold senior positions at Malkin Holdings LLC (“Malkin
Holdings” or “Supervisor”) (formerly Wien & Malkin LLC), One Grand Central Place, 60 East 42nd
Street, New York, New York, which provides supervisory and other services to Registrant and to
Lessee. See Note E below.
|
Lease
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Lease [Abstract] | Â |
Lease |
Note C Lease
Registrant does not operate the Property. Registrant leases the Property to Lincoln Building
Associates L.L.C. (“Lessee”) pursuant to an operating lease as modified (the “Lease”), which is
currently set to expire on September 30, 2033. Lessee is a New York limited liability company whose
members consist of, among others, entities for the benefit of members of Peter L. Malkin’s family.
The Lease provides that Lessee is required to pay rent to Registrant as follows:
(i) annual basic rent (“Basic Rent”) equal to the sum of $24,000 plus the constant annual
mortgage charges on all mortgages. In accordance with the Ninth Lease Modification Agreement dated
November 5, 2009, Basic Rent was increased to cover debt service on a $100,000,000 mortgage. See
Note D. Basic Rent will be increased or decreased upon the refinancing of the mortgages provided
that the aggregate principal balance of all mortgages now or hereafter placed on the Property does
not exceed $100,000,000 plus refinancing costs.
(ii) additional rent (“Additional Rent”) equal to, on an annual basis, the lesser of (x)
Lessee’s net operating income (as defined) for the lease year ending September 30 or (y) $1,053,800
($87,817 per month) and further additional rent (“Further Additional Rent”) equal to 50% of any
remaining balance of Lessee’s net operating income for such lease year. (Lessee has no obligation
to make any payment of Additional Rent or Further Additional Rent until after Lessee has recouped
any cumulative operating loss accruing from and after September 30, 1977. There is currently no
accumulated operating loss against which to offset payment of Additional Rent or Further Additional
Rent.)
The Lease also requires an advance against Additional Rent equal to, on an annual basis, the
lesser of (x) Lessee’s net operating income for the preceding lease year or (y) $1,053,800 which is
recorded in revenue in monthly installments of $87,817, which, in the latter amount, will permit
basic distributions to Participants at an annual rate of approximately 14.95% per annum on their
remaining cash investment in Registrant; provided, however, if such advances exceed Lessee’s net
operating income for any lease year, advances otherwise required during the subsequent lease year
shall be reduced by an amount equal to such excess until Lessee shall have recovered, through
retention of net operating income, the full amount of such excess. After the Participants have
received distributions equal to a return of 14% per annum, $7,380 is paid to Supervisor from the
advances against Additional Rent.
Lessee is required to make an annual payment to Registrant of Further Additional Rent, which,
as explained above, is the amount representing 50% of the remaining net operating income reported
by Lessee for the lease year ending September 30th after deducting the advance against Additional
Rent. The Lease requires that the report be delivered by Lessee to Registrant annually within 60
days after the end of each such lease year. Since it is not practicable to estimate Further
Additional Rent for the lease year ending on September 30th which would be allocable to
the first nine months of the lease year until Lessee, pursuant to the Lease, renders to Registrant
a report on the operation of the Property. Registrant recognizes Further Additional Rent when
earned from the Lessee at the close of the lease year ending September 30th and records
such amount in revenue during the three months ended September 30th.
For the lease year ended September 30, 2010, Lessee reported net operating income of
$1,164,498. Lessee paid advances against Additional Rent of $1,053,800 for that lease year prior to
September 30, 2010 and Further Additional Rent of $55,347 subsequent to September 30, 2010. The
Further Additional Rent of $55,347 represents 50% of the excess of the Lessee’s net operating
income of $1,164,498 over $1,053,800. During November 2010 Registrant did not make any additional
distribution of Further Additional Rent received for the lease year ending September 30, 2010 to
Participants but added to the contingency reserves of Registrant.
|
Mortgages Payable
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Mortgages Payable [Abstract] | Â |
Mortgages Payable |
Note D Mortgages Payable
On November 29, 2004, a new first mortgage (“Mortgage”) was placed on the Property in the
amount of $84,000,000 with Prudential Insurance Company of America to provide financing for the
improvement program described below. At closing, $49,000,000 was drawn to pay off the former first
mortgage with Morgan Guaranty Trust Company in the amount of $12,020,814 and the second mortgage in
the amount of $27,979,186 with Emigrant Savings Bank. The remaining $35,000,000 available under the
Mortgage was drawn on various dates through July 5, 2007. The proceeds of $49,000,000 drawn at
closing and all subsequent draws have been used to pay for refinancing costs and capital
improvements as needed. The initial draw of $49,000,000 and all subsequent draws required constant
equal monthly payments of interest only, at the rate of 5.34% per annum, until July 5, 2007.
Commencing August 5, 2007, Registrant is required to make equal monthly payments of $507,838
applied to interest and then principal calculated on a 25-year amortization schedule. The entire
$84,000,000 has been drawn and at June 30, 2011 the balance is $77,010,194. The Mortgage matures on
November 5, 2014 at which time the principal balance will be $69,797,589.
On November 5, 2009 Registrant took out an additional $16,000,000 loan with Prudential
Insurance Company of America secured by a second mortgage on the Property, subordinate to the first
mortgage and to be used for capital improvements. The loan requires payments of interest at 7% per
annum and principal in the aggregate amount of $113,085 calculated on a twenty-five year
amortization schedule and is co-terminus with the first mortgage. At June 30, 2011, the balance is
$15,604,356. The mortgage matures on November 5, 2014 with a principal balance of $14,613,782.
The mortgage loans may be prepaid at any time, in whole only, upon payment of a prepayment
penalty based on a yield maintenance formula. There is no prepayment penalty if the mortgages are
paid in full during the last 60 days of the term.
The estimated fair value of Registrant’s mortgage debt based on available market information
is approximately $97,019,193 as of June 30, 2011.
Mortgage financing costs of $2,873,632 were capitalized by Registrant and are being amortized
ratably over the terms of the mortgages.
In 1999, the Participants of Registrant and the members in Lessee consented to a building
improvements program (the “Program”) estimated to cost approximately $22,800,000. In 2000, the
Participants of Registrant and members in Lessee approved an increase in the Program from
$22,800,000 to approximately $28,000,000 under substantially the same conditions as had
previously been approved. To induce the Lessee to approve the Program, Registrant authorized
the Agents to grant to the Lessee, upon completion of the Program, the right to further
extensions of the Lease to 2083. The Program was further increased in 2004 to up to
$100,000,000. Such increase is expected to permit extending the Lease beyond 2083, based on the
net present benefit to Registrant of the improvements made. The granting of such Lease extension
rights upon completion of the Program is expected to trigger a New York State Transfer Tax under
current tax rules, which will be paid from mortgage proceeds and/or the Lessee’s operating cash
flow. As of June 30, 2011, Registrant had incurred costs related to the Program of $73,394,966
and estimates that the Program upon completion will be approximately $100,000,000 including
sprinkler work, required to be completed by 2019. The Participants of Registrant and the
members in Lessee had approved increased refinancing of $16,000,000 from the total of
$84,000,000 provided by the Mortgage to up to $100,000,000. As noted above, the additional
$16,000,000 financing closed on November 5, 2009. Costs of the Program in excess of financing,
if applicable, will be funded out of Lessee’s operating cash flow.
|
Condensed Statements of Operations (Unaudited) (Parenthetical) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Expenses: | Â | Â | Â | Â |
Participation unit outstanding, per unit amount | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 |
Participation units, outstanding | 700 | 700 | 700 | 700 |