10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(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, 2013

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 0-2670

60 EAST 42ND ST. ASSOCIATES L.L.C.

(Exact name of Registrant as specified in its charter)

A New York Limited Liability Company	13-6077181
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Grand Central Place

60 East 42nd Street

New York, New York 10165

(Address of principal executive offices)

(212) 687-8700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to section 12(g) of the Exchange Act:

$7,000,000 of Participations in LLC Member Interests

Indicate by check mark whether 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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x.    No  ¨.

Indicate by check mark whether Registrant is a shell company (as defined in Rule 12b-2 of the Act)    Yes  ¨    No  x.

Indicate by check mark whether Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller Reporting Company	x

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

60 East 42nd St. Associates L.L.C.

(A Limited Liability Company)

Condensed Balance Sheets

	June 30, 2013			December 31, 2012
	(Unaudited)
Assets
Real estate:
Building: One Grand Central Place, located at 60 East 42nd Street and 301 Madison Avenue, New York, N.Y.	$	16,960,000		$	16,960,000
Less: accumulated depreciation		(16,960,000	)		(16,960,000	)
		—			—
Building improvements and equipment		68,910,171			68,039,708
Less: accumulated depreciation		(14,794,995	)		(13,918,390	)
		54,115,176			54,121,318
Tenant improvements		12,636,874			8,779,779
Less: accumulated depreciation		(3,453,492	)		(2,525,493	)
		9,183,382			6,254,286
Land		7,240,000			7,240,000
Total real estate, net		70,538,558			67,615,604
Cash and cash equivalents		1,295,087			2,095,727
Due from Supervisor, a related party		87,202			87,202
Receivable from Participants—NYS estimated tax		47,248			—
Rent receivable		11,075			—
Prepaid insurance		—			15,764
Deferred costs		3,669,736			3,310,685
Leasing costs, less accumulated amortization of $1,639,896 in 2013 and $1,749,117 in 2012		3,475,858			3,043,218
Mortgage refinancing costs, less accumulated amortization of $2,392,550 in 2013 and $2,188,848 in 2012		875,169			684,783
Total assets	$	79,999,933		$	76,852,983
Liabilities and members’ deficiency
Liabilities:
Mortgages payable	$	92,257,412		$	89,109,449
Accrued mortgage interest		423,929			417,546
Payable to Lessee, a related party		2,215,574			21,951
Due to Supervisor, a related party		805,699			789,033
Accrued expenses		14,533			4,415
Total liabilities		95,717,147			90,342,394
Commitments and contingencies		—			—
Members’ deficiency (at March 31, 2013 and December 31, 2012, there were 700 units (at $10,000 per unit) of participation units outstanding)		(15,717,214	)		(13,489,411	)
Total liabilities and members’ deficiency	$	79,999,933		$	76,852,983

See notes to the condensed financial statements.

60 East 42^nd St. Associates L.L.C.

(A Limited Liability Company)

Condensed Statements of Operations

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2012			2013			2012
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue:
Basic rent income, from a related party	$	1,879,844		$	1,868,604		$	3,748,612			3,737,200
Advance of additional rent income, from a related party		263,450			263,450			526,900			526,900
Total rent income		2,143,294			2,132,054			4,275,512			4,264,100
Dividend and other income		140			195			367			418
Total revenue		2,143,434			2,132,249			4,275,879			4,264,518
Expenses:
Interest on mortgages		1,364,014			1,362,892			2,701,905			2,733,888
Supervisory services to a related party		49,134			48,478			98,269			96,956
Depreciation of building and tenant improvements and equipment		1,010,357			743,812			1,817,854			1,397,208
Amortization of leasing costs		154,079			208,150			274,935			286,083
Formation transaction expenses		132,363			56,229			333,598			82,822
Professional fees, including amounts to a related party		345,470			68,677			713,070			154,358
Other		23,866			15,887			40,841			15,887
Total expenses		3,079,283			2,504,125			5,980,472			4,767,202
Net loss	$	(935,849	)	$	(371,876	)	$	(1,704,593	)	$	(502,684	)
Loss per $10,000 participation unit, based on 700 participation units outstanding during each period	$	(1,336.93	)	$	(531.25	)	$	(2,435.13	)	$	(718.12	)
Distributions per $10,000 participation unit consisted of the following:
Income	$	—		$	—		$	—		$	—
Return of capital		373.72			373.72			747.44			747.44
Total distributions	$	373.72		$	373.72		$	747.44		$	747.44

See notes to the condensed financial statements.

60 East 42nd St. Associates L.L.C.

(A Limited Liability Company)

Statement of Members’ Deficiency

	For the Six Months Ended June 30, 2013			For the Year Ended December 31, 2012
	(Unaudited)
Members’ deficiency
January 1, 2013	$	(13,489,411	)
January 1, 2012				$	(13,296,760	)
Add net income (loss):
January 1, 2013 through June 30, 2013		(1,704,593	)
January 1, 2012 through December 31, 2012					3,736,707
		(15,194,004	)		(9,560,053	)
Less distributions:
January 1, 2013 through June 30, 2013		523,210
January 1, 2012 through December 31, 2012					3,929,358
Total distributions		523,210			3,929,358
Members’ deficiency at the end of the period	$	(15,717,214	)	$	(13,489,411	)

See notes to the condensed financial statements.

60 East 42nd St. Associates L.L.C.

(A Limited Liability Company)

Condensed Statements of Cash Flows

	For the Six Months Ended June 30, 2013			For the Six Month Ended June 30, 2012
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(1,704,593	)	$	(502,684	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation of building and tenant improvements and equipment		1,817,854			1,397,208
Amortization of leasing costs		274,935			286,083
Amortization of mortgage refinancing costs		203,702			181,808
Leasing costs paid		(707,575	)		—
Changes in operating assets and liabilities:
Other receivable		—			(5,844	)
Prepaid insurance		15,764			(31,617	)
Rent receivable		(11,075	)		—
Due to Supervisor, a related party		171,249			(171,210	)
Accrued expenses		10,118			(19,500	)
Accrued supervisory fees to a related party		—			(81,265	)
Accrued mortgage interest		6,383			(5,392	)
Net cash provided by operating activities		76,762			1,047,587
Cash flows from investing activities:
Purchase of building and tenant improvements		(2,547,185	)		(947,932	)
Net cash used in investing activities		(2,547,185	)		(947,932	)
Cash flows from financing activities:
Receivable from Participants—NYS estimated tax		(47,248	)		—
Refinancing costs		(394,088	)		—
Proceeds from mortgage payable		4,382,397			—
Repayment of mortgages payable		(1,234,434	)		(1,168,067	)
Distributions to Participants		(523,210	)		(523,210	)
Deferred costs		(513,634	)		(1,999,293	)
Net cash provided by (used in) financing activities		1,669,783			(3,690,570	)
Net decrease in cash and cash equivalents		(800,640	)		(3,590,915	)
Cash and cash equivalents, beginning of period		2,095,727			10,466,377
Cash and cash equivalents, end of period	$	1,295,087		$	6,875,462
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,491,820		$	2,557,470
Non-cash investing and financing activities:
Deferred costs included in Due to Supervisor, a related party	$	296,499		$	297,983
Purchase of Building and tenant improvements included in payable to Lessee, a related party	$	2,215,574		$	2,045,392

See notes to the condensed financial statements.

Note A Interim Period Reporting

In the opinion of management, the accompanying unaudited condensed financial statements of 60 East 42^nd 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, 2013, its results of operations for the three and six months ended June 30, 2013 and 2012 and its cash flows for the six months ended June 30, 2013 and 2012. Information included in the condensed balance sheet as of December 31, 2012 has been derived from the audited balance sheet included in Registrant’s Form 10-K for the year ended December 31, 2012 (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, 2013 are not necessarily indicative of the results to be expected for any interim period or the full year.

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 (the “Building”), formerly known as the Lincoln Building, at the address 60 East 42nd Street, New York, New York 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 in his respective member interest in Registrant (the “Participants”). The Members in Registrant hold senior positions at Malkin Holdings LLC (“Malkin Holdings” or “Supervisor”), 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.

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 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 original and remaining cash investment of $7,000,000 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. Registrant recognizes Further Additional Rent when earned from the Lessee at the close of the lease year ending September 30^th and records such amount in revenue in the three months ended September 30th.

Rent income, earned from a related party, was $4,275,512 and $4,264,100 for the six months ended June 30, 2013 and 2012, respectively.

For the lease year ended September 30, 2012, Lessee had net operating income of $12,466,335. Lessee paid advances against Additional Rent of $1,053,800 for that lease year prior to September 30, 2012 and Further Additional Rent of $5,706,265 subsequent to September 30, 2012. The Further Additional Rent of $5,706,265 represents 50% of the excess of the Lessee’s net operating income of $12,466,335 over $1,053,800. After deducting $2,500,000, mainly for fees relating to (i) a proposed consolidation of Registrant, other public and private entities supervised by the Supervisor and the Supervisor and certain affiliated management companies into Empire State Realty Trust, Inc., a newly formed real estate investment trust (collectively the “Consolidation”) and the initial public offering of Class A common stock of Empire State Realty Trust, Inc. (the “IPO”), and for the increase in the supervisory fee to Supervisor, accounting fees and general contingencies, (ii) the annual NYS filing fee of $3,000, and the (iii) additional payment to Supervisor of $320,327 (representing the additional payment, as defined in Note E, of $327,707 less $7,380 previously paid), the balance of $2,882,938 was distributed by Registrant to the Participants on December 12, 2012.

The Supervisor of the Registrant has solicited consents of Participants in the Registrant and other public limited liability companies supervised by the Supervisor to the proposed Consolidation pursuant to a prospectus/consent solicitation statement included in a registration statement on Form S-4 declared effective by the SEC. In the proposed transaction, (x) the property interests of the Registrant, such other public limited liability companies and certain private entities supervised by the Supervisor, and (y) the Supervisor and certain affiliated management companies would be contributed to the operating partnership of Empire State Realty Trust, Inc., a newly organized real estate investment trust.

Consents are required from Participants in the Registrant and such other public limited liability companies for them to contribute their interests in the Consolidation. The Supervisor of the Registrant has received the required consents of Participants in the Registrant to the Consolidation. The Supervisor has also received the required consents of participants in 250 West 57^th St. Associates L.L.C. to the Consolidation. The Supervisor has received the required supermajority consents from participants in Empire State Building Associates L.L.C. Following the receipt of the required supermajority approval, each participant in Empire State Building Associates L.L.C. who had voted against, or abstained, or not submitted a consent form regarding the Consolidation, was sent a 10-day buyout notice stating that its interest was subject to buyout for $100 if it did not consent to the Consolidation. The period for consenting to the Consolidation for those sent the buyout notice, as extended, has not yet terminated.

Consents have been obtained from participants in the private entities and the Supervisor and certain affiliated companies and affiliates of the Supervisor for them to make such contributions. The consideration to be paid to the contributing companies and entities in the Consolidation will be allocated in accordance with exchange values determined based on appraisals by an independent third party.

Note D Mortgages Payable

On November 29, 2004, a first mortgage (“Senior Mortgage”) was placed on the Property in the amount of $84,000,000 with Prudential Insurance Company of America (“Prudential”) 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 Senior 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, 2013 the balance is $72,837,163. The Senior Mortgage matures on November 5, 2014 with a principal balance of $69,600,350.

On November 5, 2009 Registrant took out an additional $16,000,000 loan with Prudential secured by a second mortgage on the Property, subordinate to the first mortgage (“Subordinate 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 25-year amortization schedule and is co-terminus with the Senior Mortgage. At June 30, 2013, the balance is $15,037,852. The Subordinate Mortgage matures on November 5, 2014 with a principal balance of $14,585,904.

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.

On May 23, 2013, Registrant closed on a $12,000,000 loan with Signature Bank, subordinate to the mortgages with Prudential, to be used for capital improvements and tenanting costs. $382,397 was drawn for closing costs and an additional $4,000,000 was drawn on June 18, 2013. The loan matures on November 5, 2014, co-terminus with the Prudential loans. The loan requires payments of interest only at the greater of (i) 3.75% or (ii) 1/2% plus the lender’s prime rate. Any portion of the loan bearing interest at the variable rate may be prepaid without payment of a prepayment fee.

Prior to maturity, the Registrant has the option of fixing the interest rate, up to three times with minimum increments of $3,000,000, on all or any portion of the principal then outstanding. In such event, the rate shall be fixed until the maturity date at an annual rate equal to either:

(a) Option A: The greater of (i) 3.75% or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a maturity closest to the maturity date. If the Registrant elects Option A, the loan may be prepaid in whole or in part (in multiples of $100,000) at any time upon not less than thirty days’ notice subject to a prepayment fee equal to (i) 1% multiplied by (ii) the number of years or partial years remaining in the term of the loan, multiplied by (iii) the amount of such prepayment. There is no prepayment fee if paid during the 60 day period preceding the maturity date.

(b) Option B: The greater of (i) 4.00% or (ii) 300 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a maturity closest to the maturity date. There is no prepayment fee if this option is elected.

The estimated fair value of Registrant’s mortgage debt based on available market information is approximately $96,053,326 as of June 30, 2013. The fair value of borrowings is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by the Registrant.

As of June 30, 2013, mortgage financing costs of $3,267,719 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, 2013, Registrant had incurred costs related to the Program of $83,134,430 (including building and tenant improvements) 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 up to $100,000,000. Costs of the Program in excess of financing, if applicable, will be funded out of additional financing—up to an aggregate loan amount of $100,000,000, plus financed costs, and Lessee’s operating cash flow. Amounts Payable to Lessee related to the Program were $2,215,574 and $21,951 as of June 30, 2013 and December 31, 2012, respectively.

Note E Supervisory Services

Supervisory and other services are provided to Registrant by its supervisor, Malkin Holding LLC (“Malkin Holdings” or “Supervisor”), a related party. Entities for the benefit of Peter L. Malkin’s family own member interests in Lessee.

Registrant pays Supervisor for supervisory services and disbursements. The basic fee (the “Basic Payment”) had been payable at the rate of $24,000 per annum, payable $2,000 per month, since October 1, 1958. The Basic Payment was increased, with the approval of the Agents, by an amount equal to the increase in the Consumer Price Index since such date, resulting in an increase in the Basic Payment to $180,000 per annum effective July 1, 2010 to be adjusted annually for any subsequent increase in the Consumer Price Index. The Basic Payment was adjusted to $189,158 effective July 1, 2012. 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. 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.

Supervisor also receives a payment (“Additional Payment”) equal to 10% of all distributions received by Participants in Registrant in excess of 14% per annum on their remaining cash investment in Registrant (which remaining cash investment at June 30, 2013 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. Pursuant to such arrangements, Registrant incurred supervisory fees of $98,269 and $96,956 for the six month periods ended June 30, 2013 and 2012, respectively. Supervisor receives $7,380 a year as an advance against the Additional Payment, which Registrant expenses monthly.

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.

No remuneration was paid during the six month periods ended June 30, 2013 and 2012 by Registrant to any of the Members. Included in professional fees are amounts for services from related parties of $8,458 and $91,729 for the three and six months month ended June 30, 2013, respectively, and $31,088 and $80,188 for the three and six months month ended June 30, 2012, respectively

Distributions are paid from a cash account held by Supervisor. That account is included in the condensed Balance Sheets as “Due from Supervisor, a related party.” The funds of $87,202 at June 30, 2013 and December 31, 2012 were paid to participants on July 1, 2013 and January 1, 2013, respectively.

Reference is made to Note C above for a description of the terms of the Lease between Registrant and Lessee. The respective interests, if any, of the Members in Registrant and in Lessee arise solely from ownership of their respective Participations in Registrant and, in the case of Peter L. Malkin, his individual ownership of a member interest 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.

Note F Subsequent Events

Except as disclosed in “Part II, Other Information, Item 1(b),” there have not been any events that have occurred that would require adjustments to or disclosure in this Quarterly Report on Form 10-Q.

Note G Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, Financial Accounting Standards Board guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).

The Registrant uses the following methods and assumptions in estimating fair value disclosures for financial instruments.

Cash and cash equivalents, due from Supervisor, a related party, accrued mortgage interest, payable to Lessee, a related party, due to Supervisor, a related party, rent receivable, a related party, receivable from Participants—NYS estimated tax, and accrued expenses: The carrying amount of cash and cash equivalents, due from Supervisor, a related party, accrued mortgage interest, payable to Lessee, a related party, due to Supervisor, a related party, rent receivable, a related party, receivable from Participants—NYS estimated tax, and accrued expenses reported in Registrant’s Condensed Balance Sheets approximate fair value due to the short term maturity of these instruments.

Mortgages payable: The fair value of borrowings, as disclosed in Note D, is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made to the Registrant.

The methodologies used for valuing financial instruments have been categorized into three broad levels as follows:

Level 1—Quoted prices in active markets for identical instruments.

Level 2—Valuations based principally on other observable market parameters, including:

• Quoted prices in active markets for similar instruments;

• Quoted prices in less active or inactive markets for identical or similar instruments;

• Other observable inputs (such as risk free interest rates, yield curves, volatilities, prepayment

speeds, loss severities, credit risks and default rates); and

• Market corroborated inputs (derived principally from or corroborated by observable market data).

Level 3—Valuations based significantly on unobservable inputs.

• Valuations based on third-party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable as Level 2 valuations.

• Valuations based on internal models with significant unobservable inputs.

These levels form a hierarchy. The Registrant follows this hierarchy for its financial instruments measured at fair value on a recurring and nonrecurring basis and other required fair value disclosures. The classifications are based on the lowest level of input that is significant to the fair value measurement.

Fair Value of Financial Instruments

The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies as discussed in Fair Value Measurements. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Registrant could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The mortgages payable had an estimated fair value based on discounted cash flow models, based on Level 3 inputs, of approximately $96,053,326, compared to the book value of the related debt of $92,257,412 at June 30, 2013.

Disclosure about fair value of financial instruments is based on pertinent information available to the Registrant as of June 30, 2013. Although the Registrant is not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

Note H Offering Costs and Formation Transaction Expenses

In connection with the Consolidation and IPO the Registrant has incurred or will incur incremental accounting fees, legal fees and other professional fees. Such costs will be deferred and recorded as a reduction of proceeds of the Consolidation and IPO, or expensed if the Consolidation and IPO is not consummated. Certain costs associated with the Consolidation and IPO not directly attributable to the solicitation of consents and the IPO, but rather related to structuring the formation transaction, are expensed as incurred.

Through June 30, 2013, Registrant has incurred external offering costs of $3,669,736, of which the Registrant has incurred $359,051 and $830,055 for the six months ended June 30, 2013 and 2012, respectively. A total of $296,499 and $451,082 of these costs are in Due to Supervisor at June 30, 2013 and December 31, 2012, respectively. Additional offering costs for work done by employees of the Supervisor of $91,729 and $80,188 for the six months ended June 30, 2013 and 2012, respectively, were incurred and advanced by the Supervisor and have been or will be reimbursed to the Supervisor by the Registrant.

Correction of an Immaterial Error in the Financial Statements

The Registrant’s prior period financial results have been adjusted to reflect an immaterial correction which has no impact to the net change in cash reported on the statement of cash flows. During fiscal year 2012, the Registrant determined that certain costs related to the structuring of the consolidation transaction that were previously included in deferred offering costs should have been expensed in the periods incurred. The correction impacted the 2012, 2011 and 2010 periods and had accumulated to an amount of $538,123 as of June 30, 2012. Adhering to applicable guidance for accounting changes and error corrections, the Registrant concluded that the error was not material to any of the prior period financial statements. The correction resulted in immaterial changes to deferred costs and formation transaction expenses for the years ended December 31, 2011 and 2010, and for interim periods within those years and within 2012.

The Registrant applied the guidance for accounting changes and error corrections and revised the prior period financial statements presented.

The following table presents the effect this correction had on our prior period reported financial statements. Additionally, financial information included elsewhere in this Form 10-Q that is impacted by the adjustment have been revised, as applicable.

	For the six months ended June 30, 2012
	As reported			Adjustment			As adjusted
Formation transaction expenses	$	—		$	82,822		$	82,822
Net loss		(419,862	)		(82,822	)		(502,684	)
Net cash provided by operating activities		1,130,409			(82,822	)		1,047,587
Net cash used in financing activities		(3,773,392	)		82,822			(3,690,570	)
Net change in cash and cash equivalents		(3,590,915	)		—			(3,590,915	)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

Readers of this discussion are advised that the discussion should be read in conjunction with the financial statements of Registrant (including related notes thereto) appearing elsewhere in this Form 10-Q. Certain statements in this discussion may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Registrant’s current expectations regarding future results of operations, economic performance, financial condition and achievements of Registrant, and do not relate strictly to historical or current facts. Registrant has tried, wherever possible, to identify these forward-looking statements by using words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or words of similar meaning.

Although Registrant believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties, which may cause the actual results to differ materially from those anticipated in the forward looking statements. Such factors include, but are not limited to, the following: general economic and business conditions, which will, among other things, affect demand for rental space, the availability of prospective tenants, lease rents and the availability of financing; adverse changes in Registrant’s real estate market, including, among other things, competition with other real estate owners, risks of real estate development and acquisitions; governmental actions and initiatives; and environmental/safety requirements.

Financial Condition and Results of Operations

Registrant was organized for the purpose of acquiring the Property subject to an operating lease held by Lessee. Registrant is required to pay, from Basic Rent under the Lease, mortgage charges and a portion of the fee for supervisory services. Registrant is required to pay from Additional Rent and Further Additional Rent an Additional Payment to Supervisor and other expenses and then to distribute the balance of such Additional Rent and Further Additional Rent less any additions to reserves to the Participants. See Note C to the condensed financial statements herein. Pursuant to the Lease, Lessee has assumed sole responsibility for the condition, operation, repair, maintenance and management of the Property. Registrant is not required to 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 Lease. The amount of Additional Rent and Further Additional Rent payable to Registrant is affected by the New York City economy and real estate rental market, which is difficult for management to forecast.

During the six month period ended June 30, 2013, Registrant made regular monthly distributions of $124.57 for each $10,000 Participation ($1,494.89 per annum for each $10,000 Participation). There are no restrictions on Registrant’s present or future ability to make distributions; however, the amount of such distributions, particularly distributions of Additional Rent and Further Additional Rent, depends on the ability of Lessee to make payments of Basic Rent, Additional Rent and Further Additional Rent to Registrant. Registrant expects to make distributions so long as it receives the payments provided for under the Lease.

The following summarizes, with respect to the current period and the corresponding period of the previous year, the material factors regarding Registrant’s results of operations for such periods:

Total rental income increased by $11,412 for the six-month period ended June 30, 2013 as compared with the corresponding period of the prior year primarily attributable to an increase in Basic Rent income from the Lessee to cover the increase in debt service on the loan with Signature Bank that closed on May 23, 2013 for the six month period ended June 30, 2013 as compared with the corresponding period of the prior year.

Total rental income increased by $11,240 for the three-month period ended June 30, 2013 as compared with the corresponding period of the prior year primarily attributable to an increase in Basic Rent income from the Lessee to cover the increase in debt service on the loan with Signature Bank that closed on May 23, 2013 for the three-month period ended June 30, 2013 as compared with the corresponding period of the prior year.

Total expenses increased by $1,213,270 for the six-month period ended June 30, 2013 as compared with the corresponding period of the prior year. Such increase is the result of (i) an increase in depreciation of building and tenant improvements and equipment of $420,646 attributable to depreciation on improvements placed in service in 2012 and the first six months of 2013, (ii) an increase of $1,313 in supervisory fees, consisting of a cost-of-living increase, (iii) an increase in professional fees of $558,712 including (a) a net increase in fees to Malkin Holdings of $11,541 and legal and accounting fees for services rendered in connection with the Consolidation and IPO, (b) an increase in consulting fees for the design and implementation of a new accounting system, and (c) matters pertaining to the class action litigation (as described in Legal Proceedings), (iv) an increase in other expenses of $24,954, mainly attributable to allocated officers and directors insurance which commenced in the second quarter of 2012, and (v) an increase in formation transaction expenses of $250,776, mainly attributable to the solicitation of consents from Participants in the Registrant and other public limited liability companies supervised by the Supervisor to the proposed Consolidation and IPO, partially offset by (vi) a decrease in amortization of leasing costs of $11,148 attributable to the full amortization of some leasing costs capitalized in prior years, and (vii) a net decrease in interest on the mortgages of $31,983, consisting of an increase of $21,894 attributable to amortization of financing costs included in interest expense resulting from the additional Signature Bank loan and a net decrease of $53,877 attributable to a reduction in the Prudential loan balances due to principal amortization.

Total expenses increased by $575,158 for the three-month period ended June 30, 2013 as compared with the corresponding period of the prior year. Such increase is the result of (i) an increase in depreciation of building and tenant improvements and equipment of $266,545 attributable to depreciation on improvements placed in service in 2012 and the first six months of 2013, (ii) an increase of $656 in supervisory fees, consisting of a cost-of-living increase, (iii) an increase in professional fees of $276,793 consisting of (a) an increase in legal fees for services rendered in connection with the Consolidation and IPO, partially offset by a decrease in fees to Malkin Holdings of $22,631 and a decrease in accounting fees, (b) an increase in consulting fees for the design and implementation of a new accounting system, and (c) matters pertaining to the class action litigation (as described in Legal Proceedings), (iv) an increase in other expenses of $7,979, mainly attributable to allocated officers and directors insurance which commenced in the second quarter of 2012, (v) an increase in formation transaction expenses of $76,134, mainly attributable to the solicitation of consents from Participants in the Registrant and other public limited liability companies supervised by the Supervisor to the proposed Consolidation and IPO, and (vi) a net increase in interest on the mortgages of $1,122, consisting of an increase of $21,893 attributable to amortization of financing costs included in interest expense resulting from the additional Signature Bank loan and a net decrease of $20,771 attributable to a reduction in the Prudential loan balance due to principal amortization, partially offset by (vii) a decrease in amortization of leasing costs of $54,071 attributable to the full amortization of some leasing costs capitalized in prior years.

Liquidity and Capital Resources

Registrant’s liquidity has decreased at June 30, 2013 as compared with December 31, 2012 as a result of costs incurred in connection with the Consolidation and IPO. Registrant may from time to time set aside cash for contingencies. Adverse developments in economic, credit and investment markets over the last several years have impaired general liquidity (although some improvement in such markets has arisen recently) and the developments may negatively impact Registrant and/or space tenants at the Building. Any such impact should be ameliorated by the fact that (a) each of Registrant and its Lessee has very low debt in relation to asset value, (b) the maturity of Registrant’s existing and planned debt will not occur within the next 16 months, and (c) the Building’s rental revenue is derived from a substantial number of tenants in diverse businesses with lease termination dates spread over numerous years.

Amortization payments due under the $84,000,000 loan commenced August 5, 2007, calculated on a 25-year amortization schedule. Amortization payments due under the additional $16,000,000 loan commenced December 5, 2009 calculated on a 25-year amortization schedule. The Signature Bank loan requires payments of interest only. The mortgages, including the Signature Bank loan, mature on November 5, 2014 at which time the aggregate principal balance due will be $96,411,371, assuming the entire $12,000,000 is drawn on the Signature Bank loan.

Registrant does not maintain any reserve to cover the payments of such mortgage indebtedness at maturity. Therefore, repayment of the mortgages will depend on Registrant’s ability to arrange a refinancing. Assuming that the Property continues to generate an annual net profit in future years comparable to that in past years, and assuming further that real estate capital and operating markets return to more stable patterns, consistent with long-term historical real estate trends in the geographic area in which the Property is located, Registrant anticipates that the value of the Property will be in excess of the amount of the mortgage balances at maturity.

Registrant anticipates that funds for short-term working capital requirements for the Property will be provided by cash on hand and rental payments received from Lessee. Long-term sources of working capital will be provided by rental payments received from the Lessee and external financing. However, as noted above, Registrant has no requirement to maintain substantial reserves to defray any operating expenses of the Property.

The Supervisor of the Registrant has solicited consents of Participants in the Registrant and other public limited liability companies supervised by the Supervisor to the proposed Consolidation pursuant to a prospectus/consent solicitation statement included in a registration statement on Form S-4 declared effective by the SEC. In the proposed transaction, (x) the property interests of the Registrant, such other public limited liability companies and certain private entities supervised by the Supervisor, and (y) the Supervisor and certain affiliated management companies would be contributed to the operating partnership of Empire State Realty Trust, Inc., a newly organized real estate investment trust.

Consents are required from Participants in the Registrant and such other public limited liability companies for them to contribute their interests in the Consolidation. The Supervisor of the Registrant has received the required consents of Participants in the Registrant to the Consolidation. The Supervisor has also received the required consents of participants in 250 West 57^th St. Associates L.L.C. to the Consolidation. The Supervisor has received the required supermajority consents from participants in Empire State Building Associates L.L.C. Following the receipt of the required supermajority approval, each participant in Empire State Building Associates L.L.C who had voted against, or abstained, or not submitted a consent form regarding the Consolidation, was sent a 10-day buyout notice stating that its interest was subject to buyout for $100 if it did not consent to the Consolidation. The period for consenting to the Consolidation for those sent the buyout notice, as extended, has not yet terminated.

Consents have been obtained from participants in the private entities and the Supervisor and certain affiliated companies and affiliates of the Supervisor for them to make such contributions. The consideration to be paid to the contributing companies and entities in the Consolidation will be allocated in accordance with exchange values determined based on appraisals by an independent third party.

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, 2012. Inflationary trends in the economy do not directly affect Registrant’s operations since Registrant does not actively engage in the operation of the Property. Inflation may impact the operations of Lessee. Lessee is required to pay Basic Rent, regardless of the results of its operations. Inflation and other operating factors affect the amount of Additional Rent and Further Additional Rent payable by Lessee, which is based on Lessee’s net operating profit.

Security Ownership

As of June 30, 2013, the Members in Registrant owned of record and beneficially an aggregate $25,833 of participations in Registrant, representing 0.37% of the currently outstanding Participations therein.

As of June 30, 2013, certain of the Members in Registrant held additional Participations in Registrant as follows:

Peter L. Malkin owned of record as trustee or co-trustee an aggregate of $59,049 of Participations. Peter L. Malkin disclaims any beneficial ownership of such Participations.

Entities for the benefit of members of Peter L. Malkin’s family owned of record and beneficially $160,000 of Participations. Peter L. Malkin disclaims any beneficial ownership of such Participations, except that related family trusts or entities are required to complete scheduled payments to him.

Anthony E. Malkin owned of record as co-trustee an aggregate of $45,000 of Participations. Anthony E. Malkin disclaims any beneficial ownership of such Participations.

Trusts for the benefit of members of Anthony E. Malkin’s family owned of record and beneficially $40,000 of Participations. Anthony E. Malkin disclaims any beneficial ownership of such Participations.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. The Supervisor after evaluating the effectiveness of Registrant’s “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, 2013, the end of the period covered by this report, has concluded that as of that date Registrant’s 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 Registrant’s internal controls over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, Registrant’s internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The property of Registrant was the subject of the following material litigation:

(a) Malkin Holdings and Peter L. Malkin, a member in Registrant, were engaged in a proceeding with Lessee’s former managing agent, Helmsley-Spear, Inc., commenced in 1997, concerning the management, leasing, and supervision of the Property that is subject to the Lease to Lessee. In this connection, certain costs for legal and professional fees and other expenses were paid by Malkin Holdings and Mr. Malkin. Malkin Holdings and Mr. Malkin have represented that such costs will be recovered only to the extent that (a) a competent tribunal authorizes payment or (b) an investor voluntarily agrees that his or her proportionate share be paid. On behalf of himself and Malkin Holdings, Mr. Malkin has requested, or intends to request, such voluntary agreement from all investors, which may include renewing such request in the future for any investor who previously received such request and failed to confirm agreement at that time. Because any related payment has been, or will be, made only by consenting investors, Registrant has not provided for the expense and related liability with respect to such costs in these financial statements.

(b) In March 2012, five putative class actions, or the Class Actions, were filed in New York State Supreme Court, New York County by Participants in Empire State Building Associates L.L.C. (“ESBA”) and several other entities supervised by the Supervisor (on March 1, 2012, March 7, 2012, March 12, 2012, March 14, 2012 and March 19, 2012). The plaintiffs assert claims against Malkin Holdings LLC, Malkin Properties, L.L.C., Malkin Properties of New York, L.L.C., Malkin Properties of Connecticut, Inc., Malkin Construction Corp., Anthony E. Malkin, Peter L. Malkin, the Estate of Leona M. Helmsley, Empire State Realty OP, L.P. and Empire State Realty Trust, Inc. for breach of fiduciary duty, unjust enrichment, and/or aiding and abetting breach of fiduciary duty. They allege, among other things, that the terms of the Consolidation and the process by which it was structured (including the valuation that was employed) are unfair to the participants in the existing entities, the Consolidation provides excessive benefits to Malkin Holdings and its affiliates and the then-draft prospectus/consent solicitation filed with the SEC failed to make adequate disclosure to permit a fully informed decision about the proposed Consolidation. The complaints seek money damages and injunctive relief preventing the proposed Consolidation. The actions were consolidated and co-lead plaintiffs’ counsel were appointed by the New York State Supreme Court by order dated June 26, 2012. Furthermore, an underlying premise of the Class Actions, as noted in discussions among plaintiffs’ counsel and defendants’ counsel, was that the Consolidation had been structured in such a manner that would cause participants in ESBA, 60 East 42nd St. Associates L.L.C. and 250 West 57th St. Associates L.L.C. (the “subject LLCs”) immediately to incur substantial tax liabilities.

The parties entered into a Stipulation of Settlement dated September 28, 2012, resolving the Class Actions. The Stipulation of Settlement recites that the Consolidation was approved by overwhelming consent of the participants in the private entities. The Stipulation of Settlement states that counsel for the plaintiff class satisfied themselves that they have received adequate access to relevant information, including the independent valuer’s valuation process and methodology, that the disclosures in the Registration Statement on Form S-4, as amended, are appropriate, that the Consolidation presents potential benefits, including the opportunity for liquidity and capital appreciation, that merit the participants’ serious consideration and that each of named class representatives intends to support the Consolidation as modified. The Stipulation of Settlement further states that counsel for the plaintiff class are satisfied that the claims regarding tax implications, enhanced disclosures, appraisals and exchange values of the properties that would be consolidated into Empire State Realty Trust, Inc., and the interests of the participants in the subject LLCs and the private entities, have been addressed adequately, and they have concluded that the settlement pursuant to the Stipulation of Settlement and opportunity to consider the proposed Consolidation on the basis of revised consent solicitations are fair, reasonable, adequate and in the best interests of the plaintiff class.

The defendants in the Stipulation of Settlement denied that they committed any violation of law or breached any of their duties and did not admit that they had any liability to the plaintiffs.

The terms of the settlement include, among other things (i) a payment of $55 million, with plaintiffs’ counsel’s court-approved attorneys’ fees and, in the case of shares of common stock and/or operating partnership units, after the termination of specified lock-up periods, to participants in the subject LLCs, a minimum of 80% in cash and maximum of 20% in freely-tradable shares of common stock and/or freely-tradable operating partnership units to be distributed, after reimbursement of plaintiffs’ counsel’s court-approved expenses and payment of the subject LLCs and the private entities pursuant to a plan of allocation to be prepared by counsel for plaintiffs; (ii) defendants’ agreement that (a) the IPO will be on the basis of a firm commitment underwriting; (b) if, during the solicitation period of the subject LLCs, any of the three subject LLCs’ percentage of total exchange value is lower than what is stated in the final prospectus/consent solicitation statement by 10% or more, such decrease will be promptly disclosed by defendants to participants in the subject LLCs; and (c) unless total gross proceeds of $600,000,000 are raised in the IPO, defendants will not proceed with the Consolidation without further approval of the subject LLCs; and (iii) defendants’ agreement to make additional disclosures in the prospectus/consent solicitation regarding certain matters (which were included therein). The payment in settlement of the Class Actions will be made by the Estate of Leona M. Helmsley and affiliates of Malkin Holdings (provided that none of Malkin Holdings and its affiliates that would become a direct or indirect subsidiary of Empire State Realty Trust, Inc. in the Consolidation will have any liability for such payment) and certain participants in the private entities who agree to contribute. The Registrant and its participants will not bear any of the settlement payment.

The settlement further provides for the certification of a class of participants in the three subject LLCs and all of the private entities, other than defendants and other related persons and entities, and a release of any claims of the members of the class against defendants and related persons and entities, as well as underwriters and other advisors. The release in the settlement excludes certain claims, including but not limited to, claims arising from or related to any supplement to the Registration Statement on Form S-4 that is declared effective to which the plaintiffs’ counsel objects in writing, which objection will not be unreasonably made or delayed, so long as plaintiffs’ counsel has had adequate opportunity to review such supplement. The settlement is subject to court approval. It is not effective until such court approval is final, including the resolution of any appeal. Defendants continue to deny any wrongdoing or liability in connection with the allegations in the Class Actions.

On January 18, 2013, the parties jointly moved for preliminary approval of such settlement, for permission to send notice of the settlement to the class, and for the scheduling of a final settlement hearing (collectively, “preliminary approval”).

On January 28, 2013, six participants in ESBA filed an objection to preliminary approval, and cross-moved to intervene in the action and for permission to file a separate complaint on behalf of ESBA participants. The court denied the cross motion of such objecting participants, and the court denied permission for such objecting participants to file a separate complaint as part of the Class Action, but permitted them to file a brief solely to support their allegation that the buyout would deprive non-consenting participants in ESBA of “fair value” in violation of the New York Limited Liability Company Law. The court rejected the objecting participants’ assertion that preliminary approval be denied and granted preliminary approval of the settlement.

Pursuant to a decision issued on April 30, 2013, the court rejected the allegation regarding the New York Limited Liability Company Law and ruled in the Supervisor’s favor, holding that such buyout provisions are legally binding and enforceable and that participants do not have the rights they claimed under the New York Limited Liability Company Law.

On May 2, 2013, the court held a hearing regarding final approval of the Class Actions settlement, at the conclusion of which the court stated that it intended to approve the settlement. On May 17, 2013, the court issued its Opinion and Order. The court rejected the objections by all objectors and upheld the settlement in its entirety. Of the approximately 4,500 class members who are participants in all of the subject LLCs and private entities included in the Consolidation, 12 opted out of the settlement. Those who opted out will not receive any share of the settlement proceeds, but can pursue separate claims for monetary damages. They are bound by the settlement agreement regarding equitable relief, so they cannot seek an injunction to halt the Consolidation or IPO. The settlement will not become final until resolution of any appeal.

Also on May 17, 2013, the court issued its Opinion and Order on attorneys’ fees. Class counsel applied for an award of $15.0 million in fees and $295,895 in expenses, which the court reduced to $11.59 million in fees and $265,282 in expenses.

The participants who challenged the buyout provision filed a notice of appeal of the court’s April 30, 2013 decision and moved before the appellate court for a stay of all proceedings relating to the settlement, including such a stay as immediate interim relief. On May 1, 2013, their request for immediate interim relief was denied. On May 13, 2013, the supervisor filed its brief in opposition to the motion for the stay. On June 18, 2013, the appellate court denied the motion for the stay. On July 16, 2013, these participants filed their brief and other supporting papers on their appeal of the April 30, 2013 decision, which is required to perfect the appeal.

In addition, on June 20, 2013, these same participants filed additional notices of appeal of the trial court’s rulings in the Class Actions. These notices of appeals related to (i) the order entered February 22, 2013 granting preliminary approval of the Class Action settlement and setting a hearing for final approval; (ii) the order entered February 26, 2013, refusing to sign a proposed order to show cause for a preliminary injunction regarding the Consolidation; (iii) an order entered April 2, 2013, denying the motion to intervene and to file a separate class action on behalf ESBA participants; (iv) the order entered April 10, 2013, refusing to sign the order to show cause seeking to extend the deadline for class members to opt out of the Class Action settlement; (v) the Final Judgment and Order entered May 17, 2013; (vi) the order entered May 17, 2013 approving the Class Action settlement; and (vii) the order entered May 17, 2013 awarding class counsel attorneys’ fees and costs.

Any decision on the appeal on the New York Limited Liability Law issue could take many months. The Registrant cannot predict the timing or outcome of an appeal process or any related relief, if such appeal were successful. If the court’s decision were reversed by the appellate court, there is a risk that it could have a material adverse effect on Empire State Realty Trust, Inc., which could take the form of monetary damages or other equitable relief, and the court could order some or all of the relief that the objecting participants have requested, as described above. Although there can be no assurance, the Registrant believes that the trial court’s decision was correct, and that it will be upheld on appeal.

As noted, class members who objected to the Class Action settlement filed notices of appeal from the court’s decision to approve the Stipulation of Settlement. As a result, the Registrant and Empire State Realty Trust, Inc. may incur costs associated with defending any such appeal or paying any judgment if defendants lose. The Registrant cannot predict the timing or outcome of an appeal. If the court’s decision were reversed by an appellate court, there is a risk that it could have a material adverse effect on Empire State Realty Trust, Inc., including the imposition of monetary damages, injunctive relief or both. Although there can be no assurance, the Registrant believes that the trial court’s decision was correct, and that it will be upheld on appeal.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 6. Exhibits

EXHIBIT INDEX

Document Number
10.15	Subordinate Note and Mortgage dated May 23, 2013 by and between 60 East 42nd St. Associates L.L.C. and Signature Bank.
24.1	Power of Attorney dated July 15, 2013, between Members of Registrant and Mark Labell which is being filed as Exhibit 24.1 to Registrant’s 10-Q for the period ended June 30, 2013.
31.1	Certification of Andrew Prentice, 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 Andrew Prentice, 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.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Documents
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, 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 Members in Registrant, pursuant to Power of Attorney, dated July15, 2013 (the “Power”) and is supervisor of the accounting functions.

60 EAST 42NDST. ASSOCIATES L.L.C. (Registrant)
By:	/s/ Mark Labell

Mark Labell Senior Vice President, Finance of Malkin Holdings LLC,

Supervisor of 60 East 42^nd St. Associates L.L.C.* and as Attorney-in-Fact on behalf of:

Peter L. Malkin, Member

Anthony E. Malkin, Member

Dated: August 9, 2013

* Registrant’s organizational documents do not provide for a Chief Executive Officer, Chief Financial Officer or Chief Accounting 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 Form 10-Q is being signed by a senior executive and senior member of the financial/accounting staff of Registrant’s Supervisor in such capacities.

EX-10.15

Exhibit 10.15

SUBORDINATE MORTGAGE NOTE

$12,000,000.00 As of May 23, 2013 Melville, New York

FOR VALUE RECEIVED, 60 EAST 42^ND ST. ASSOCIATES L.L.C. (F/K/A 60 EAST 42^ND ASSOCIATES), a New York limited liability company, with offices at c/o Malkin Holdings LLC, 60 East 42nd Street, New York, New York 10165 (the “Maker”), promises to pay to SIGNATURE BANK, a New York banking corporation, having an office at 68 South Service Road, Melville, New York 11747 (the “Payee”), or such other place as may be designated in writing by the holder of this Note, the principal sum of Twelve Million and 00/100 Dollars ($12,000,000.00) or so much thereof as shall have been advanced to the Maker pursuant to the terms of a loan agreement of even date herewith between the Maker and the Payee (the “Loan Agreement”), together with interest as hereinafter provided.

All outstanding principal and accrued and unpaid interest shall be due and payable on November 5, 2014 (the “Maturity Date”).

Until the interest rate on this Note is fixed as set forth below, amounts outstanding under this Note shall bear interest at an annual rate equal at all times to the greater of (i) three and three quarters of one percent (3.75%) or (ii) one half of one percent (1/2%) plus the Prime Rate of the Payee (the “Variable Rate”). The “Prime Rate” is the rate established from time to time by the Payee as its “Prime Rate”. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. Such annual rate will change on the effective date of any change in the Prime Rate. The Payee will not be obligated to notify the Maker of any change in the Prime Rate.

Prior to the Maturity Date, the Maker shall have the option (by notice given to Payee at least two (2) Business Days prior to the effective date of the fixing of the interest rate to which such notice pertains), up to three (3) times with minimum increments of $3,000,000.00, to fix the interest rate on all or any portion of the principal on this Note then outstanding. In such event, the rate shall be fixed until the Maturity Date at an annual rate equal to either:

(a) Option A: The greater of (i) three and three quarters of one percent (3.75%) or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a maturity closest to the Maturity Date as most recently made available by the Federal Reserve Board as of two (2) Business Days prior to the effective date of the fixing of the interest rate. If the Maker elects Option A, the Maker shall be subject to the payment of prepayment fees as set forth below.

(b) Option B: The greater of (i) four percent (4.00%) or (ii) 300 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a maturity closest to the Maturity Date as most recently made available by the Federal Reserve Board as of two (2) Business Days prior to the effective date of the fixing of the interest rate. If the Maker elects Option B, the Maker may prepay this Note during the term of this Note without any prepayment fees.

Interest shall be payable commencing on June 10, 2013 and monthly thereafter on the tenth (10^th) day of each month (the “Debit Date”). Interest shall be calculated on the basis of a 360-day year and collected on the basis of the actual number of days elapsed.

Monthly payments on this Note will be of interest only.

Until the Debt (as defined in the Mortgage, as hereinafter defined) has been repaid in full, the Maker agrees to maintain an operating account (account #15020xxxxx) for the Mortgaged Property (as hereinafter defined) with the Payee. Maker hereby unconditionally and irrevocably authorizes the Payee to automatically debit from such account any and all payments due hereunder and unconditionally warrants and represents to Payee that it shall, until the Debt has been repaid in full, maintain sufficient funds in such account to pay same. Time is of the essence as to all dates set forth herein, provided, however, that whenever any payment that is to be made under this Note shall be stated to be due on a Saturday, Sunday or public holiday or the equivalent for banks generally under the laws of the State of New York (any other day being a “Business Day”), such payment shall be made on the next succeeding Business Day.

This Note may be prepaid in whole or in part (in multiples of One Hundred Thousand and 00/100 Dollars ($100,000.00), at any time and from time to time upon not less than thirty (30) days notice to Payee, provided that all accrued and unpaid interest through the date of prepayment shall then be paid. Maker may withdraw any such notice of prepayment at any time. Any portion of this Note which is prepaid and being interest at a rate based on the Variable Rate, may be prepaid without the payment of any prepayment fee. Any portion of this Note which is prepaid and not bearing interest at the Variable Rate, may be prepaid subject to the payment of a prepayment fee equal to an amount calculated by multiplying (i) one percent (1%) times (ii) the number of years or partial years remaining in the term of this Note times (iii) the amount of such prepayment. No prepayment fee shall be due and payable during the sixty (60) day period immediately preceding the Maturity Date. In addition, if the Maker has elected Option B as the interest rate on this Note, as more fully described above, no prepayment fee shall be due and payable.

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IT IS HEREBY EXPRESSLY AGREED, that the said principal sum secured by this Note shall become due at the option of the holder hereof on the happening of any default or event by which, under the terms of the Mortgage securing this Note, said principal sum may or shall become due and payable; also, that all of the covenants, conditions and agreements contained in said Mortgage are hereby made part of this instrument.

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

This Note is secured by a mortgage (the “Mortgage”) made by the Maker to the Payee of even date herewith on Maker’s fee interest in the property situate at 60 East 42^nd Street, New York, New York.

Except for (i) the obligations of the Maker under the provisions of Paragraph 37 of the Mortgage, (ii) any acts or omissions constituting fraud or misrepresentation by the Maker in connection with applying for the loan secured by the Mortgage or in supplying information or documentation to the Payee subsequent to the date hereof, (iii) the fraudulent misappropriation or misapplication of the Rents collected at the Mortgaged Property (as defined in the Mortgage), (iv) liability for rental or other income generated from the Mortgaged Property received by the Maker after default beyond applicable notice, grace and/or cure periods, if any, under the Mortgage which is not applied to the Mortgaged Property (except that payments made to affiliates of the Maker for amounts accrued in prior years, or in amounts which are in excess of then-market rates shall not be considered applied to the Mortgaged Property), or (v) deliberate waste, the liability of the Maker, its permitted successors or assigns, under this Note or any other documents executed in connection with the Mortgage is hereby strictly limited to the interest of the Maker, its permitted successors or assigns, in the Mortgaged Property and any judgment in favor of the Payee shall be satisfied only against the Mortgaged Property. Any judgment in favor of the Payee by reason of any breach of any of the items described in clauses (i) through (v) of this Paragraph may also be enforced against and collected out of the other assets of the Maker as well as the Mortgaged Property. No judgment arising under this Note may be satisfied against any asset of any member of the Maker, and the Payee shall neither seek, demand nor be entitled to obtain a deficiency judgment.

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This Note may not be changed or terminated orally.

60 EAST 42ND ST. ASSOCIATES L.L.C.
By:	/s/ Anthony E. Malkin
Name:	Anthony E. Malkin
Title:	Member

STATE OF NEW YORK	)
	)ss.:
COUNTY OF NEW YORK	)

On the 21st day of May, 2013, before me, the undersigned, personally appeared Anthony E. Malkin, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacities, and that by his signatures on the instrument, the individual, or the person on behalf of which the individual acted, executed the instrument.

/s/ Judy H. Love

Notary Public

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Subordinate Mortgage Note

60 EAST 42^ND ST. ASSOCIATES L.L.C.

(F/K/A 60 EAST 42^ND ASSOCIATES)

- to -

SIGNATURE BANK

Premises: 60 East 42^nd Street, New York, New York

The within premises lie in

Section 5, Block 1276, Lot 42

in New York County

CULLEN AND DYKMAN LLP

100 QUENTIN ROOSEVELT BOULEVARD

GARDEN CITY, NEW YORK 11530

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SUBORDINATE MORTGAGE

THIS MORTGAGE, made as of the 23^rd day of May, 2013, between 60 EAST 42^ND ST. ASSOCIATES L.L.C., a New York limited liability company, with offices at c/o Malkin Holdings LLC, 60 East 42nd Street, New York, New York 10165 (the “Mortgagor”) and SIGNATURE BANK, a New York banking corporation, having an office at 68 South Service Road, Melville, New York 11747 (the “Mortgagee”).

W I T N E S S E T H

WHEREAS, the Mortgagor is now the owner in fee simple of the entire premises hereinafter described by metes and bounds as set forth on the attached Schedule A (the “Premises”); and

WHEREAS, the Mortgagor is the owner in fee simple of the buildings and improvements now or hereafter located on the Premises (the “Improvements”); and

WHEREAS, the Mortgagor is now indebted to the Mortgagee in the sum of Twelve Million and 00/100 Dollars ($12,000,000.00), lawful money of the United States, to be paid according to a certain subordinate mortgage note bearing even date herewith (the “Note”) and to be advanced in accordance with the terms and conditions of a loan agreement of even date herewith between the Mortgagor and the Mortgagee (the “Loan Agreement”), together with any additional sums due under the terms of the Note, the Loan Agreement and this Mortgage (the “Debt”).

NOW, THEREFOR, to secure the payment of the Debt, the Mortgagor hereby mortgages to the Mortgagee, the Premises and the Improvements together with:

(A) all right, title and interest of the Mortgagor in and to the land lying in the streets and roads in front of and adjoining the Premises;

(B) (a) all appurtenances to the Mortgaged Property, as hereinafter defined;

(b) to the extent owned by the Mortgagor, all machinery, equipment, fixtures (including, but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures) and other property of every kind and nature whatsoever owned by the Mortgagor, or in which the Mortgagor has or shall have an interest, now or hereafter located upon the Mortgaged Property or appurtenances thereto and usable in connection with the Mortgaged Property (the “Equipment”), and the right, title and interest of the Mortgagor in and to any of the Equipment which may be subject to any security agreements (as defined in subdivision (A)(73) of Section 9-102 of the Uniform Commercial Code of New York), superior in lien to the lien of this Mortgage;

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(c) all awards or payments, including interest thereon, which may be made with respect to the Mortgaged Property, whether from the exercise of the right of eminent domain (including any transfer made in lieu of the exercise of said right) or for any other injury to or decrease in the value of the Mortgaged Property, to the extent of Mortgagor’s interest therein;

(d) all leases and other agreements affecting the use or occupancy of the Mortgaged Property now or hereafter entered into (the “Leases”) and the right to receive and apply the rents, issues and profits of the Mortgaged Property (the “Rents”) to the payment of the Debt, to the extent of Mortgagor’s interest therein;

(e) all proceeds of any unearned premiums on any insurance policies covering the Mortgaged Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments or settlements made in lieu thereof in reduction of the Debt, for damage to the Mortgaged Property, to the extent of Mortgagor’s interest therein; and

(f) the right, in the name and on behalf of the Mortgagor, to appear in and defend any action or proceeding brought with respect to the Mortgaged Property and to commence any action or proceeding to protect the interest of the Mortgagee in the Mortgaged Property.

The Premises, the Improvements and the Equipment together with the property, rights and interests stated in Paragraphs (A) and (B) above are herein collectively called the “Mortgaged Property”.

This is a subordinate mortgage subject to that certain consolidated mortgage held of record by The Prudential Insurance Company of America in the original consolidated principal amount of Ninety Six Million Twelve Thousand Five Hundred Twenty Four and 00/100 Dollars ($96,012,524.00) which terms are set forth in the Spreader, Consolidation and Modification of Mortgage and Security Agreement dated as of November 5, 2009 and recorded in the Office of the City Register, New York County on November 16, 2009 under CRFN 2009000xxxxxx which consolidates the mortgages more fully described on Exhibit A annexed hereto and made a part hereof (the “First Mortgage” or “Senior Mortgage”) and to the rights of the holder of the First Mortgage (the “Senior Mortgagee”) in and to the Mortgaged Property.

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And the Mortgagor covenants and warrants with the Mortgagee that:

1. The Mortgagor will pay the Debt as provided in the Note and as otherwise provided herein.

2. The Mortgagor warrants the title to the Mortgaged Property subject to the matters set forth in the title policy issued by First American Title Insurance Company and insuring the lien of this Mortgage.

3. The Mortgagor will keep the Mortgaged Property insured against loss or damage by fire with extended coverage, flood insurance, terrorism/war risk insurance (to the extent available to the Mortgagor at commercially reasonable rates, as determined by the Mortgagor in its reasonable discretion, which are comparable to premiums per dollar of fire insurance coverage, in an amount not less than the principal amount of the Debt) and such other hazards as the Mortgagee shall from time to time require in amounts approved by the Mortgagee and shall pay the premiums for such insurance as same become due and payable. All policies of insurance (the “Policies”) shall be issued by an insurer reasonably acceptable to the Mortgagee and shall contain the standard New York mortgagee clause endorsement naming the Mortgagee loss payee and additional insured (subject to the rights of the holder of the First Mortgage). The Mortgagor will assign and deliver the Policies to the Mortgagee (subject to the rights of the holder of the First Mortgage). Not later than fifteen (15) days prior to the expiration date of each of the Policies the Mortgagor will deliver to the Mortgagee satisfactory evidence of the renewal of each of the Policies. If the Mortgaged Property is partially damaged by fire or other casualty, the Mortgagee shall make seventy-five (75%) percent of the net insurance proceeds received by the Mortgagee in connection with such damage available to the Mortgagor in order to restore the Mortgaged Property, provided that: (i) the net insurance proceeds are sufficient, in the opinion of the Mortgagee, to fully restore the Mortgaged Property or, if such proceeds are insufficient to fully restore the Mortgaged Property, the Mortgagor shall have deposited with the Mortgagee or, if required by the holder of the First Mortgage, with the holder of the First Mortgage, cash in an amount equal to the difference between the reasonably estimated cost of restoring the Mortgaged Property and the amount of the net insurance proceeds; (ii) the Mortgagor is not then in default under the terms of the Note or this Mortgage; and (iii) in the opinion of the Mortgagee reasonably exercised the Mortgaged Property can be fully restored within twelve (12) months from the occurrence of such damage. The remaining twenty-five (25%) percent of the net insurance proceeds shall be released to the Mortgagor once the renovation or restoration is substantially completed and following such renovation or restoration the rents under the Leases and income from the Mortgaged Porperty are sufficient (as reasonably determined by Mortgagee) to pay the debt service under the Note, the First Mortgage, real estate taxes on the Premises and the operating expenses related thereto. If held by the Mortgagee, the Mortgagee will hold all insurance proceeds in an interest-bearing money market account. The interest earned thereon shall be the property of the Mortgagor and shall be disbursed to the Mortgagor in the manner and for the purposes that insurance proceeds are to be disbursed pursuant to this paragraph 3. In the event insurance proceeds are made available to repair or restore the Mortgaged Property in accordance with the foregoing, the Mortgagor shall retain an architect, at its sole cost and expense (whose fees shall be paid out of the insurance proceeds), who shall

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submit plans and specifications to the Mortgagee for the repair or restoration of the Mortgaged Property (indicating that such repair or restoration can be completed within the period provided for herein) and a budget itemizing the projected costs of such repair or restoration. Such plans and specifications and the budget are subject to the Mortgagee’s prior written approval (not to be unreasonably withheld, delayed or conditioned). Prior to the commencement of any repair or restoration the Mortgagor shall obtain, at its sole cost and expense, all necessary permits and approvals therefor. If the insurance proceeds are held by the Mortgagee and not by the holder of the First Mortgage, the Mortgagee shall periodically disburse seventy-five (75%) percent of such net insurance proceeds to pay for work completed or materials installed pursuant to the approved plans and specifications and budget. The expenses incurred by the Mortgagor (including, without limitation, architect’s and attorney’s fees and all “soft” and “hard” costs in connection with such restoration) shall be paid by the Mortgagor to the extent that seventy-five (75%) percent of the net insurance proceeds are insufficient to pay for such expenses. The Mortgagee shall not at any time be required to disburse any insurance proceeds to the Mortgagor if the undisbursed balance of such net insurance proceeds is, in the opinion of the Mortgagee, reasonably exercised, insufficient to timely complete the restoration of the Mortgaged Property free and clear of all liens in accordance with the aforesaid plans and specifications and budget. In the event the Mortgaged Property is damaged to a greater extent than set forth above, in the opinion of the Mortgagee, reasonably exercised, and subject to terms of the First Mortgage, any sums paid to the Mortgagee by any insurer may be retained and applied by the Mortgagee toward payment of the Debt in such priority and proportions as the Mortgagee in its discretion shall deem proper or, at the discretion of the Mortgagee, the same may be paid, either in whole or in part, to the Mortgagor for such purposes as the Mortgagee shall designate. If the Mortgagee shall receive and retain such insurance money, the lien of this Mortgage shall be reduced only by the amount thereof received after expenses of collection and retained by the Mortgagee and actually applied by the Mortgagee in reduction of the Debt. The provisions of Subsection 4 of Section 254 of the Real Property Law of New York covering the insurance of buildings against loss by fire shall not apply to this Mortgage. The Mortgagee shall be entitled, in the event of other insurance and contribution between the insurers, to receive from the insurance moneys to be paid such an amount as would have been payable under the policy or policies held for the benefit of the Mortgagee in case there had been no contribution.

Notwithstanding anything contained in this paragraph 3 to the contrary, in the event of a casualty loss covered by this Section 3, but subject to the provisions of the First Mortgage, all insurance proceeds up to the sum of $1,000,000.00 shall be paid directly to the Mortgagor as trustee on account of the repair of the casualty to the Mortgaged Premises (subject to the rights of the Senior Mortgagee). Said funds shall be paid by the Mortgagor to the contractors/subcontractors on account of said work which shall be performed in accordance with applicable municipal codes and the provisions of the Note or this Mortgage and the First Mortgage.

Notwithstanding anything contained in this paragraph 3 to the contrary, provided that no Event of Default shall have occurred and be continuing, the proceeds of any rent loss or business interruption insurance will be paid to the Mortgagor (subject to the rights of the Senior Mortgagee).

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Notwithstanding anything herein set forth to the contrary, all or any portion of the insurance required to be maintained under this Mortgage may be issued by an insurance company organized and owned in whole or in part by the Mortgagor and the Ground Lessee or either of them, provided (i) that any such insurance company shall reinsure substantially all of the risk underwritten by it and not deemed reimbursable by government programs such as the Terrorism Risk Insurance Program and (ii) such insurance company shall issue certificates of insurance in form and substance satisfactory to the Mortgagee in its discretion reasonably exercised. Such insurance company need not be rated by any insurance agency or company.

4. The Mortgagor will pay all taxes, assessments, water rates, sewer rents and other charges, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Premises, now or hereafter levied or assessed against the Mortgaged Property (the “Taxes”) as same become due and payable. The Mortgagor will deliver to the Mortgagee, within thirty (30) days after such Taxes are due and payable, a receipted tax bill, evidencing that the Taxes have been paid.

5. The Mortgagor, in addition to the payments of interest and principal or both payable pursuant to the Note and this Mortgage, will pay to the Mortgagee on each payment date an amount (the “Escrow Fund”) which would be sufficient to pay the Taxes payable, or estimated by the Mortgagee to be payable, during the ensuing twelve (12) months from the date of calculation, divided by the number of Installments due during the period ending one (1) month prior to the date any such real estate tax is payable. The Escrow Fund and the payments of interest or principal or both payable pursuant to the Note and this Mortgage shall be added together and shall be paid as an aggregate sum by the Mortgagor to the Mortgagee (the “Installments”). The Mortgagee will apply the Escrow Fund to payments required to be made by the Mortgagor pursuant to Paragraph 4 hereof. If the amount of the Escrow Fund shall exceed the amounts due pursuant to Paragraph 4 hereof, the Mortgagee shall in its discretion: (a) return any excess to the Mortgagor; (b) credit such excess against the Debt in such priority and proportions as the Mortgagee in its discretion shall deem proper; or (c) credit such excess against future payments to be made to the Escrow Fund. In allocating such excess the Mortgagee may deal with the person shown on the records of the Mortgagee to be the owner of the Mortgaged Property. If the Escrow Fund is not sufficient to pay the Taxes, the Mortgagor shall pay to the Mortgagee, upon request, an amount which the Mortgagee shall estimate as sufficient to make up the deficiency, in default whereof the Mortgagee may apply any sums in its hands to the payment of the following items in any order in its uncontrolled discretion:

(i) Taxes;

(ii) Interest on the principal;

(iii) Amortization of the principal;

(iv) Late charges payable pursuant to the provisions hereof.

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Until expended or applied as above provided, any amounts in the Escrow Fund shall constitute additional collateral security for the Debt and shall not bear interest.

Notwithstanding the above, Mortgagor will not be required to escrow for Taxes provided that no default shall exist hereunder beyond any applicable grace or notice period and Mortgagor is providing Mortgagee with evidence of payment of Taxes within thirty (30) days after the due date of the same.

6. Notwithstanding any taking by any public or quasi-public authority through eminent domain or otherwise, the Debt shall not be reduced until any award or payment therefor shall have been actually received after expenses of collection and applied by the Mortgagee to the discharge of the Debt and the Mortgagee shall not be limited to the interest paid on the award by the condemning authority, but shall be entitled to receive out of the award interest on the principal at the rate herein provided. The Mortgagee shall make the proceeds of such award available for the restoration of the Mortgaged Property pursuant to the provisions of paragraph 3 hereof, and any remaining proceeds after the completion of such restoration may be applied by the Mortgagee to the discharge of the Debt whether or not then due and payable. If the Mortgaged Property is sold, through foreclosure or otherwise, prior to the receipt by the Mortgagee of such award or payment, the Mortgagee shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive said net award or payment or a portion thereof sufficient to pay the Debt, whichever is less.

7. The Mortgagee has the right to enter the Mortgaged Property for the purpose of enforcing its interests as set forth herein. Nevertheless, subject to the terms of this Paragraph 7, the Mortgagee waives the right to enter the Mortgaged Property for the purpose of collecting the Rents and grants the Mortgagor the right to collect, use and enjoy the Rents, and until the Mortgagee shall enter the Mortgaged Property to enforce its rights under this Mortgage, the Mortgagor shall have all rights to enforce the lessor’s rights under all Leases and other agreements referenced in this Mortgage The Mortgagor shall hold the Rents, or an amount sufficient to discharge all current sums due on the Debt, in trust for use in the payment of the Debt. The right of the Mortgagor to collect the Rents may be revoked by the Mortgagee upon the occurrence of any Event of Default by giving notice of such revocation to the Mortgagor. Following such notice the Mortgagee may enter upon the Mortgaged Property, collect, retain and apply the Rents toward payment of the Debt in such priority and proportions as the Mortgagee in its discretion shall deem proper.

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The Mortgagor shall not, without the consent of the Mortgagee, accept prepayments of installments of Rent for a period of more than (1) month in advance or further assign the whole or any part of the Rents. The Mortgagee shall have all of the rights against lessees of the Mortgaged Property as set forth in Section 291-f of the Real Property Law of New York. The Mortgagor will: (a) fulfill or perform each and every provision thereof on its part to be fulfilled or performed; (b) if requested by Mortgagee, promptly send to the Mortgagee copies of all notices of default which it shall send or receive thereunder; and (c) enforce all of the terms, covenants and conditions contained in the Leases upon the lessee’s part to be performed, short of termination thereof. In addition to the rights which the Mortgagee may have hereunder, in the event of any default under this Mortgage, the Mortgagee, at its option, may require the Mortgagor to pay monthly in advance to the Mortgagee, or to any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Mortgaged Property as may be in the possession of the Mortgagor. Upon default in any such payment the Mortgagor will vacate and surrender possession of the Mortgaged Property to the Mortgagee or to such receiver and in default thereof the Mortgagor may be evicted by summary proceedings or otherwise.

In the event that Ground Lessee enters into subleases that require subordination, non-disturbance and attornment agreements, the Mortgagee will have the right to approve any such subleases (such approval not to be unreasonably withheld, delayed or conditioned) and will, in connection with any such approved sublease, enter into a commercially reasonable subordination, non-disturbance and attornment agreement with the subtenant thereunder, in form and substance satisfactory to the Mortgagee and its counsel in all respects in their discretion, reasonably exercised.

Notwithstanding anything herein set forth to the contrary, as long as no Event of Default shall have occurred and be continuing, Ground Lessee shall have the right, without the consent of Mortgagee, to (i) sublease portions of the Premises, (ii) amend any such sublease and/or (iii) terminate any such sublease.

8. The Mortgagor will cause the Mortgaged Property to be maintained in good condition and repair. Except as contemplated by the Loan Agreement and subject to the rights of the subtenants under the Leases, the Improvements and the Equipment shall not be removed, demolished or altered (except for normal replacement of the Equipment) without the consent of the Mortgagee. Subject to the rights of the holder of the Senior Mortgage, the Mortgagor shall promptly comply with all laws, orders and ordinances affecting the Mortgaged Property or the use thereof and shall promptly repair, replace or rebuild (the “Work”) any part of the Mortgaged Property which may be destroyed by any casualty or become damaged, worn or dilapidated or which may be affected by any proceeding of the character referred to in Paragraph 6 hereof and shall complete and pay for any structure at any time in the process of construction or repair on the Premises. If such casualty shall be covered by the Policies, the Mortgagor’s obligation to do the Work shall be contingent upon the Mortgagee’s paying to the Mortgagor the proceeds of the Policies, or such portion thereof as shall be necessary, upon completion of the Work to the Mortgagee’s satisfaction. Notwithstanding the foregoing, by its acceptance of this Mortgage, the Mortgagee acknowledges that the Mortgagor is performing material alterations to the Mortgaged Property to improve and upgrade them. Such improvement program and alterations in connection with leasing space to subtenants shall be permitted without consent of the Mortgagee.

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9. The Debt will, at the option of the Mortgagee, become immediately due and payable in the event that the Mortgagor shall, without the prior written consent of the Mortgagee, (a) permit the Mortgaged Property or any part thereof or any interest therein to be sold, transferred, conveyed or further encumbered to any other person or entity, or (b) sell, transfer, convey or encumber the Mortgaged Property or any part thereof or any interest therein, which shall include but not be limited to (i) where the Mortgagor is a corporation, the sale, transfer, pledge or encumbrance of any of the outstanding shares of the corporation or the dilution of the present stockholding or corporate control by issuance of new or treasury stock or by conversion of any non-voting stock or other securities to voting stock, or (ii) where the Mortgagor is a partnership, the sale, transfer, pledge or encumbrance of any of the interests in the Mortgagor, or the withdrawal, resignation or retirement of the general partner, or (iii) where the Mortgagor is a limited liability company, the sale, transfer, pledge or encumbrance of any of the interests in the Mortgagor.

Notwithstanding the foregoing, transfers of interests in the Mortgagor will be permitted without the consent of the Mortgagee, provided that Peter L. Malkin and/or Anthony Malkin and/or their controlled affiliates shall continue to have substantial and active participation in the management of the Mortgagor (as determined by the Mortgagee in its reasonable discretion). Notwithstanding the foregoing, no interest in the Mortgagor may be transferred to a person who appears as a “Sanctioned Party” on the list promulgated by the United States Office of Foreign Assets Control.

Provided that no Event of Default shall then exist, the Mortgagee shall consent to the transfer of the fee interest of the Mortgagor in the Mortgaged Property from the Mortgagor to a single purpose Delaware limited liability company (“New Mortgagor”) which is a subsidiary of Empire State Realty OP, L.P. (“OP”), the New Mortgagor and the assumption by the New Mortgagor of the obligations of the Mortgagor under this Mortgage and the other Loan Documents. In consideration for the Mortgagee (i) consenting to the transfer of the Mortgagor’s fee interest in the Mortgaged Property from the Mortgagor to the New Mortgagor and (ii) consenting to the assumption by the New Mortgagor of the obligations of the Mortgagor under this Mortgage and the the Loan Documents accruing on or after the effective date of such transfer and assumption, the New Mortgagor or the Mortgagor shall pay to the Mortgagee prior to or simultaneously with the transfer of the Mortgaged Property and assumption of the Loan the reasonable fees and expenses of the Mortgagee’s counsel for the preparation of the documents executed in connection therewith as well as the fees and expenses for the recording or filing of such documentation.

The Mortgagor shall waive its right to accelerate the Debt pursuant to any provision of this Mortgage or the other Loan Documents which might otherwise provide such right to the Mortgagee solely on account of the foregoing transactions. The waiver set forth herein is limited precisely as written and shall not be deemed to (a) be a consent to or a waiver of any other term or condition of any of this Mortgage or the other Loan Documents or (b) prejudice any right or rights which the Mortgagee may have in the future under or in connection with this Mortgage or the other Loan Documents.

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Nothing contained in this Mortgage or the other Loan Documents shall be construed as a prohibition on the pledge or encumbrance of any of the interests in OP, as security or otherwise, and such pledge or encumbrance shall not entitle the Mortgagee to accelerate the Debt. Further, the sale, transfer, exchange, redemption or issuance of securities of Empire State Realty Trust, Inc., the general partner of OP, and the sale, transfer, exchange, redemption or issuance of interest in OP shall be permitted without the consent of the Mortgagee and no such sale, transfer, exchange, redemption or issuance shall constitute a transfer entitling the Mortgagee to accelerate the Debt.

10. After request by the Mortgagee, the Mortgagor, within ten (10) days and at its expense, will furnish to the Mortgagee a statement, duly acknowledged and certified, setting forth the amount of the Debt, the rate of interest thereon, the date Installments were last paid, the offsets or defenses thereto, if any, and that the Note and this Mortgage have not been modified or, if modified, giving particulars of such modification.

11. All notices and other communications under this Mortgage are to be in writing and addressed to each party as set forth below. Notices shall be deemed to have been duly given upon the earliest of: (i) actual receipt; (ii) one (1) day after having been timely deposited for overnight delivery, fee prepaid, with a reputable overnight courier service, having a reliable tracking system; or (iii) three (3) days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by certified mail, postage prepaid, return receipt requested, and in the case of clause (b) and (c) irrespective of whether delivery is accepted. A new address for notice may be established by written notice to the other; provided, however, that no change of address will be effective until written notice thereof actually is received by the party to whom such address change is sent. Notice to outside counsel or parties other than the named Mortgagor and Mortgagee, now or hereafter designed by a party as entitled to notice, are for convenience only and are not required for notice to a party to be effective in accordance with this Section. Notice addresses are as follows:

To Mortgagee:

Signature Bank

68 South Service Road

Melville, New York 11747

Attention: John Zieran, Senior Vice President

With a copy to:

Cullen and Dykman LLP

100 Quentin Roosevelt Boulevard

Garden City, New York 11530

Attention: Amy F. Hecht, Esq.

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To Mortgagor:

60 East 42^nd St. Associates L.L.C.

c/o Malkin Properties, L.L.C.

One Grand Central Place

60 East 42^nd Street

New York, New York 10165

Attention:

With a copy to:

Malkin Holdings LLC

One Grand Central Place

60 East 42^nd Street

New York, New York 10165

Attention: Legal

12. If this Mortgage is foreclosed, the Mortgaged Property or any interest therein may, at the discretion of the Mortgagee, be sold in one or more parcels and in any order or manner.

13. If any law or ordinance is enacted or adopted which imposes a tax, either directly or indirectly, on the Note, this Mortgage or the Debt, the Mortgagor will pay such tax with interest and penalties thereon, if any. In the event that the Mortgagee shall be advised by counsel chosen by it that the payment of such tax or interest and penalties by the Mortgagor would be unlawful, taxable to the Mortgagee or unenforceable or would provide the basis for a defense of usury, then and in that event the Mortgagee shall have the option, by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable.

14. If at any time the United States of America, any state thereof or any subdivision of any such state shall require revenue or other stamps to be affixed to the Note or this Mortgage, or shall impose any other tax or charge on the same, the Mortgagor will pay for the same with interest and penalties thereon, if any.

15. The Mortgagee and its agents will have the right to enter and inspect the Mortgaged Property at all reasonable times.

16. The Mortgagor will keep adequate books and records of account in accordance with generally accepted accounting practices consistently applied and will furnish the Mortgagee with (i) annual reviewed financial statements for the Mortgagor within one hundred twenty (120) days after the end of each calendar year, as customarily prpared for the Mortgagor; (ii) a copy of its signed federal income tax returns, including all schedules, within thirty (30) days of the date of filing thereof; and (iii) if requested by Mortgagee, a rent roll for the Premises. In addition, the Mortgagor will submit to the Mortgagee copies of any operating statements or the like when the Mortgagor is required to submit such information to any administrative or regulatory authority or agency having jurisdiction. In addition to but not in lieu of any other remedies available to the Mortgagee, upon the Mortgagor’s failure to supply to the Mortgagee timely as provided above the records and/or other information required by this Paragraph 16 within thirty (30) days of written request therefor and until such records and/or information are furnished, interest payable under the Note and/or this Mortgage shall be at the rate of twenty-four (24%) percent per annum or the maximum rate allowed to be charged by law, whichever is lower.

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17. The Mortgagor will observe and perform each and every term to be observed or performed by the Mortgagor pursuant to the terms of any agreement or recorded instrument affecting or pertaining to the Mortgaged Property.

18. The Debt will become due at the option of the Mortgagee upon any one or more of the following events (each an “Event of Default”):

(a) if any Installment is not paid when due and said default is not cured after ten (10) days prior notice;

(b) if any of the Taxes are not paid when the same are due and payable and said default is not cured after ten (10) days notice;

(c) if the Policies are not kept in full force and effect or if the Policies are not assigned and delivered to the Mortgagee upon request;

(d) if the Mortgagor does not furnish a statement, in the manner provided herein, of the amount of the Debt and the offsets or defenses thereto, if any;

(e) if without the consent of the Mortgagee any Improvement or the Equipment (except for normal replacement of the Equipment) is removed, demolished or altered or if the Mortgaged Property is not kept in good condition and repair;

(f) if any of the Rents are prepaid for a period of more than one (1) month in advance or if any of the Rents are assigned without the consent of the Mortgagee, except as otherwise provided in Paragraph 7 hereof;

(g) if any material representation or warranty of the Mortgagor or of any person (a “Guarantor”) guaranteeing payment of the Debt or any portion thereof or the performance by the Mortgagor of any of the terms of the notes, the Mortgage or this Agreement, made herein or in any such guaranty or in any certificate, report, financial statement or other instrument furnished in connection with the making of the Note, this Mortgage or any such guaranty, shall prove false or misleading in any material respect;

(h) if the Mortgagor or any Guarantor shall make an assignment for the benefit of creditors;

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(i) if a receiver, liquidator or trustee of the Mortgagor or of any Guarantor shall be appointed or if the Mortgagor or any Guarantor shall be adjudicated a bankrupt or insolvent or if any petition for bankruptcy, reorganization or arrangement pursuant to the Federal Bankruptcy Code or any similar federal or state statute shall be filed by or against the Mortgagor or any Guarantor or if any proceeding for the dissolution or liquidation of the Mortgagor or of any Guarantor shall be instituted and, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by the Mortgagor or such Guarantor, upon the same not being discharged, stayed or dismissed within one hundred twenty (120) days;

(j) if the Mortgagor does not reimburse the Mortgagee upon demand for all expenses incurred in remedying any default of the Mortgagor hereunder or in appearing in, defending or bringing any action or proceeding to protect the Mortgagee’s interest in the Mortgaged Property, including reasonable attorneys’ fees, with interest as provided herein;

(k) if for fifteen (15) days after notice from the Mortgagee the Mortgagor shall continue to be in default under any other covenant of the Mortgagor hereunder;

(l) if, after a default thereunder, the Mortgagee elects to enforce its rights under the Note or any instrument which may be held by the Mortgagee as additional security for the Debt;

(m) if the Mortgagor shall be in default under any other mortgage covering any part of the Mortgaged Property whether it is superior or inferior in lien to this Mortgage, including, without limitation, the First Mortgage;

(n) if the Mortgaged Property becomes subject to (i) any tax lien which is superior to the lien of this Mortgage, other than a lien for local Taxes and assessments not due and payable, or (ii) any mechanic’s, materialman’s or other lien and such lien shall remain undischarged for sixty (60) days;

(o) if the Mortgagor fails to promptly cure any violations of laws or ordinances affecting or which may be interpreted to affect the Mortgaged Property;

(p) if the Mortgagor shall convey or lease any air development rights with respect to the Mortgaged Property, inasmuch as the Mortgagor agrees that such sale or lease would conclusively impair the Mortgagee’s security; or

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(q) if the Mortgaged Property is encumbered by any mortgage lien other than the lien of this Mortgage and the lien of the First Mortgage, provided, however, that the Mortgagor shall be permitted to further encumber the Mortgaged Property provided that (i) the aggregate of all secured debt of the Mortgagor shall not exceed fifty (50%) percent of the fair market value of the assets mortgaged, (ii) the holder of any such subordinate indebtedness shall enter into a subordination agreement with the Mortgagee, in form and substance satisfactory to the Mortgagee and its counsel in all respects in the exercise of reasonable discretion, and (iii) such subordinate financing does not create a default under the documents executed in connection with the First Mortgage. The Mortgagee and the Mortgagor shall attempt to agree upon the appraised value of the property being mortgaged; and if they cannot agree after thirty (30) days, then either party may require that such value be determined by an independent M.A.I. appraiser reasonably agreeable to both parties engaged at Mortgagor’s expense.

Notwithstanding anything contained herein to the contrary, except for items 18(a), 18(b) and 18(q), the Mortgagee shall give Mortgagor thirty (30) days written notice of non-monetary defaults (i.e., defaults that cannot be cured by the payment of a liquidated sum of money) prior to accelerating the Mortgage. In the event the default is of the nature that cannot be cured within thirty (30) days and Mortgagor commences to cure same and diligently continues to attempt to cure, the same shall not constitute a default and Mortgagor shall have additional reasonable period of time in which to cure. If a default occurs under the First Mortgage, such default shall not be deemed an Event of Default unless and until the grace or cure period under the First Mortgage shall have expired without the cure therefor having been effected. In the event that the Mortgagee shall have cured such default, then the actual cost of such cure shall be reimbursed by the Mortgagor, which reimbursement shall be due and payable within five (5) days after demand therefor, and no Event of Default shall be deemed to have occurred except upon the Mortgagor’s failure to pay such reimbursement within such five (5) day period.

Upon the occurrence of any one of the foregoing events set forth in this Paragraph 18 and upon the Mortgagee exercising its option to declare the Debt immediately due and payable by reason thereof, the Mortgagor will pay, from the date of that event, interest at the rate of twenty-four (24%) percent per annum (the “Default Rate”).

19. If the Mortgagor fails to make any payment or to do any act as herein provided, the Mortgagee may, but without any obligation to do so and upon reasonable notice to or demand on the Mortgagor (except where immediate action is required to avert a loss or forfeiture) and without releasing the Mortgagor from any obligation hereunder, make or do the same in such manner and to such extent as the Mortgagee may deem necessary to protect the security hereof, the Mortgagee being authorized to enter upon the Mortgaged Property for such purposes, or appear in, defend or bring any action or proceeding to protect its interests in the Mortgaged Property or to foreclose this Mortgage or collect the Debt. The cost and expense thereof (including reasonable attorneys’ fees), with interest as provided in this paragraph, shall be due from Mortgagor upon demand made by the Mortgagee. All such costs and expenses incurred by the Mortgagee in remedying such default or in appearing in, defending or bringing any such action or proceeding shall be paid with interest at the Default Rate for the period after notice from the Mortgagee that such cost or expense was incurred to the date of payment to the Mortgagee. All such costs and expenses incurred by the Mortgagee pursuant to the terms hereof, with interest, shall be deemed to be secured by this Mortgage.

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20. Mortgagor will pay a charge of five (5%) percent of any amount which cannot be debited from its account due to insufficient balances on the Debit Date (as defined in the Note), as liquidated damages for failure to make timely payment and such late charge shall be secured by this Mortgage.

21. In any action to foreclose this Mortgage the Mortgagee shall be entitled to the appointment of a receiver without notice, and without regard to the adequacy of the security.

22. The failure of the Mortgagee to insist upon strict performance of any term of the Note or this Mortgage shall not be deemed to be a waiver of any term of the Note or this Mortgage. The Mortgagor shall not be relieved of the Mortgagor’s obligations hereunder by reason of (a) the failure of the Mortgagee to comply with any request of the Mortgagor to take any action to foreclose this Mortgage or otherwise enforce any of the provisions hereof or of the Note, (b) the release, regardless of consideration, of the whole or any part of the Mortgaged Property, or (c) any agreement or stipulation by the Mortgagee extending the time of payment or otherwise modifying or supplementing the terms of the Note or this Mortgage. The Mortgagee may resort for the payment of the Debt to any other security held by the Mortgagee in such order and manner as the Mortgagee, in its discretion, may elect. The Mortgagee may take action to recover the Debt or any portion thereof or to enforce any covenant hereof without prejudice to the right of the Mortgagee thereafter to foreclose this Mortgage. The rights of the Mortgagee under this Mortgage shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of the Mortgagee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.

23. If the Mortgagor consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several.

24. The terms of the Note and this Mortgage shall be construed by the laws of the State of New York, except as herein expressly provided to the contrary.

25. This Mortgage is both a real property mortgage and a security agreement. The Mortgaged Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of the Mortgagor in the Mortgaged Property.

The Mortgagor will, at the request of the Mortgagee, deliver to the Mortgagee any and all further instruments which the Mortgagee shall require in order to further secure and perfect the lien of this Mortgage. The Mortgagee is authorized and empowered to file financing statements, as required by the Uniform Commercial Code, to perfect its lien against the foregoing types of personal property without first obtaining the signature of the Mortgagor on the financing statements.

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26. The Mortgagor (and the undersigned representative of the Mortgagor, if any) has full power, authority and legal right to execute this Mortgage and to keep and observe all of the terms of the Note and this Mortgage on the Mortgagor’s part to be performed.

27. The Mortgagee has the right to appear in and defend any action or proceeding brought with respect to the Mortgaged Property and to bring any action or proceeding, in the name and on behalf of the Mortgagor, which Mortgagee, in its discretion, feels should be brought to protect its interests in the Mortgaged Property.

28. If any term, covenant or condition of the Note or this Mortgage is held to be invalid, illegal or unenforceable in any respect, the Note and this Mortgage shall be construed without such provision.

29. This Mortgage may be executed in any number of duplicate originals and each such duplicate original shall be deemed to constitute but one and the same instrument.

30. If the Mortgagor is a corporation, the execution and delivery of this Mortgage has been duly authorized by the board of directors of the Mortgagor and there is no requirement under its certificate of incorporation or its by-laws for consent of shareholders to this transaction; or if the Mortgagor is a partnership, the execution and delivery of this Mortgage has been duly authorized by the partners of the Mortgagor pursuant to its partnership agreement; or if the Mortgagor is a limited liability company, the execution and delivery of this Mortgage has been duly authorized in accordance with its operating agreement.

31. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Mortgage shall be used interchangeably in singular or plural form. The word “Mortgagor” shall mean “each Mortgagor and/or any subsequent owner or owners of the Mortgaged Property or any part thereof or interest therein”. The word “Mortgagee” shall mean “the Mortgagee or any subsequent holder of the Note”. The word “Note” shall mean “the Note or any other evidence of indebtedness secured by this Mortgage”. The word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority or other entity. The words “Mortgaged Property” shall include any portion of the Mortgaged Property or interest therein. The word “Debt” shall mean the principal with interest thereon and all other sums due pursuant to the Note and/or this Mortgage and secured by this Mortgage. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms and the singular form of nouns and pronouns shall include the plural and vice versa.

32. This Mortgage cannot be changed orally but only in writing by the person to be charged.

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33. The Mortgagor hereby agrees that upon its failure to pay the Debt on the maturity date the Mortgagor will pay to the Mortgagee interest on the then unpaid principal at the Default Rate from the maturity date and until the actual receipt and collection of the Debt by the Mortgagee. This charge shall be added to the principal and shall be deemed to be part of the Debt. This paragraph, however, shall not be construed as an agreement or privilege to extend this Mortgage, nor as a waiver of any other right or remedy accruing to the Mortgagee by reason of any such default.

34. The Mortgagor hereby waives the right to assert a counterclaim other than a compulsory counterclaim in any action or proceeding brought against it by the Mortgagee and waives trial by jury in any action or proceeding brought by either party hereto against the other or in any counterclaim asserted by the Mortgagee against the Mortgagor on any matters whatsoever arising out of or in any way connected with the Note, this Mortgage or the Debt.

35. This Mortgage is subject to the express condition that at no time shall the Mortgagor be obligated or required to pay interest on the principal balance due hereunder at a rate which could subject the Mortgagee to either civil or criminal liability as a result of being in excess of the maximum interest rate which the Mortgagor is permitted by law to contract or agree to pay. If by the terms of this Mortgage the Mortgagor is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the rate of interest under this Mortgage and/or the Note shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments toward the reduction of principal and not to the interest due hereunder.

36. The Mortgagor covenants that the Mortgagor will, in compliance with Section 13 of the Lien Law, receive the advances secured hereby and will hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the cost of the improvement and will apply the same first to the payment of the cost of the improvement before using any part of the total of the same for any other purpose.

37. The Mortgagor hereby represents and warrants to the Mortgagee that, to the best of Mortgagor’s knowledge and belief, the Mortgaged Property and the use thereof are and have been in full compliance with all federal, state and local laws, ordinances, rules and regulations regarding hazardous and toxic materials. The Mortgagor hereby indemnifies and holds the Mortgagee free of and harmless from and against any and all claims, demands, damages or liabilities the Mortgagee may incur as a result of the failure of the Mortgaged Property to be or to have been in full compliance with all federal, state and local laws, ordinances, rules and regulations regarding hazardous and toxic materials.

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38. Except for (i) the obligations of the Mortgagor under the provisions of Paragraph 37 of this Agreement, (ii) any acts or omissions constituting fraud or misrepresentation by the Mortgagor in connection with applying for the loan evidenced by the Note and secured by the Mortgage and the Note or this Mortgage or in supplying information or documentation to the Mortgagee subsequent to the date hereof, (iii) the fraudulent misappropriation or misapplication of the Rents collected at the Mortgaged Property, (iv) liability for rental or other income generated from the Mortgaged Property received by the Mortgagor after default beyond applicable notice, grace and/or cure periods, if any, under the Note or this Mortgage which is not applied to the Mortgaged Property (except that payments made to affiliates of the Mortgagor for amounts accrued in prior years, or in amounts which are in excess of then-market rates shall not be considered applied to the Mortgaged Property), or (v) deliberate waste, the liability of the Mortgagor, its permitted successors or assigns, under the Note, this Mortgage and any other document evidencing or securing the Debt is hereby strictly limited to the interest of the Mortgagor, its permitted successors or assigns, in the Mortgaged Property and any judgment in favor of the Mortgagee shall be satisfied only against the Mortgaged Property. Any judgment in favor of the Mortgagee by reason of any of the items set forth in clauses (i) through (v) of this Paragraph 38 may also be enforced against and collected out of the other assets of the Mortgagor as well as the Mortgaged Property. No judgment arising out of the Note or this Mortgage may be satisfied against any asset of any member of the Mortgagor, and the Mortgagee shall neither seek, demand nor be entitled to obtain a deficiency judgment.

39. Mortgagee may, either with or without entry or taking possession of the Mortgaged Property as provided in this Mortgage or otherwise, personally or by its agents or attorneys, and without prejudice to the right to bring an action for judicial foreclosure of this Mortgage, sell the Mortgaged Property or any part thereof pursuant to any procedures provided by applicable law, and all estate, right, title, interest, claim and demand therein, and right of redemption thereof, at one or more sales as an entity or in parcels, and at such time and place upon such terms and after such notice thereof as may be required or permitted by applicable law.

40. If an Event of Default shall have occurred and be continuing, the Mortgagee shall have the right (but not the obligation) to apply partial payments on account of principal, interest, tax escrow installments or tax arrears as it shall determine in its sole discretion, reasonably exercised.

41. Upon payment in full of the Debt (by wire transfer of immediately available funds), Mortgagee will assign this Mortgage to Mortgagor or its designee, at no additional cost other than (a) reasonable legal fees incurred therewith; and (b) an assignment fee of $1,500.00. However, Mortgagee shall have no responsibility or liability in the event the original Note or other documents are lost and shall, upon request if necessary, provide a lost note affidavit in form satisfactory to Mortgagee and its counsel.

42. Notwithstanding anything herein to the contrary, wherever herein or in any other document evidencing or securing the Debt the Mortgagee or its counsel shall have discretion to approve or accept some document, action or state of facts, such discretion shall be exercised in a commercially reasonable manner.

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IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor as of the date first above written.

60 EAST 42ND ST. ASSOCIATES L.L.C.
By:	/s/ Anthony E. Malkin
Name:	Anthony E. Malkin
Title:	Member

STATE OF NEW YORK	)
	)ss.:
COUNTY OF NEW YORK	)

On the 21st day of May, 2013, before me, the undersigned, personally appeared Anthony E. Malkin, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person on behalf of which the individual acted, executed the instrument.

/s/ Judy H. Love

Notary Public

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SCHEDULE A

ALL THAT CERTAIN PLOT, PIECE OR PARCELS OF LAND, SITUATE, LYING AND BEING IN THE BOROUGH OF MANHATTAN, OF THE CITY, IN THE COUNTY AND STATE OF NEW YORK, BOUNDED AND DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE SOUTHERLY SIDE OF 42^ND STREET, DISTANT 105 FEET WESTERLY FROM THE CORNER FORMED BY THE INTERSECTION OF THE SOUTHERLY SIDE OF 42^ND STREET WITH THE WESTERLY SIDE OF PARK AVENUE;

RUNNING THENCE SOUTHERLY PARALLEL WITH THE WESTERLY SIDE OF PARK AVENUE, 197 FEET 6 INCHES TO THE NORTHERLY SIDE OF 41^ST STREET;

THENCE WESTERLY ALONG THE NORTHERLY SIDE OF 41^ST STREET, 179 FEET 9 INCHES;

THENCE NORTHERLY PARALLEL WITH THE EASTERLY SIDE OF MADISON AVENUE AND PART OF THE WAY THROUGH A PARTY WALL, 52 FEET;

THENCE WESTERLY PARALLEL WITH THE NORTHERLY SIDE OF 41^ST STREET, 20 FEET 3 INCHES;

THENCE SOUTHERLY AGAIN PARALLEL WITH THE EASTERLY SIDE OF MADISON AVENUE, 3 FEET;

THENCE WESTERLY AGAIN PARALLEL WITH THE NORTHERLY SIDE OF 41^ST STREET AND PART OF THE WAY THROUGH A PARTY WALL, 100 FEET TO THE EASTERLY SIDE OF MADISON AVENUE;

THENCE NORTHERLY ALONG THE EASTERLY SIDE OF MADISON AVENUE, 49 FEET 9 INCHES;

THENCE EASTERLY PARALLEL WITH THE SOUTHERLY SIDE OF 42^ND STREET AND PART OF THE WAY THROUGH A PARTY WALL, 100 FEET;

THENCE NORTHERLY AGAIN PARALLEL WITH THE EASTERLY SIDE OF MADISON AVENUE, 24 FEET 8-1/4 INCHES;

THENCE EASTERLY AGAIN PARALLEL WITH THE SOUTHERLY SIDE OF 42^ND STREET, 18 FEET 6 INCHES;

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THENCE NORTHERLY AGAIN PARALLEL WITH THE EASTERLY SIDE OF MADISON AVENUE, 74 FEET AND  ³/₄ OF AN INCH TO THE SOUTHERLY SIDE OF 42^ND STREET;

THENCE EASTERLY ALONG THE SOUTHERLY SIDE OF 42^ND STREET, 181 FEET 6 INCHES TO THE POINT OR PLACE OF BEGINNING.

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Mortgagor:	60 EAST 42ND ST. ASSOCIATES L.L.C.
Mortgagee:	SIGNATURE BANK
Section:	5
Block:	1276
Lot:	42
Street Address:	60 East 42nd Street, New York, New York

Check One Box Only

1. ¨ The attached mortgage covers real property principally improved or to be improved by one or more structures containing in the aggregate not more than six residential dwelling units, each having their own separate cooking facilities.

2. x The attached mortgage does not cover real property improved as described above.

60 EAST 42ND ST. ASSOCIATES L.L.C.
By:	/s/ Anthony E. Malkin
Name:	Anthony E. Malkin
Title:	Member

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EXHIBIT A

1. Mortgage dated the 31^st day of January, 1941 made by Lincoln Building Corporation to Aetna Life Insurance Company in the amount of $6,000,000 and recorded in the Office of the City Register of the County of New York (the “Register’s Office”) on the 31^st day of January, 1941 in Liber 4475 Page 442;

2. Mortgage dated the 31^st day of July, 1947 made by Lincoln Building Corporation to Aetna Life Insurance Company in the principal amount of $5,637,222.37 and recorded in the Register’s Office on the 1^st day of August, 1947 in Reel 4928 Page 537 which Mortgage was consolidated with the above Mortgage to form a single lien in the amount of $10,000.000 and spread to cover Lots 42 and 44 pursuant to a Spreader and Consolidation Agreement dated the 31^st day of July, 1947 and recorded in the Register’s Office on the 1^st day of August, 1947 in Reel 4928 Page 559, which Mortgages, as consolidated, were assigned by an Assignment of Mortgage dated the 25^th day of March, 1954 made by Aetna Life Insurance Company to The Prudential Insurance Company of America and recorded in the Register’s Office on the 1^st day of April, 1954 in Liber 5457 Page 356;

3. Mortgage dated the 31^st day of March, 1954 made by WLKP Realty Corp. to The Prudential Insurance Company in the amount of $7,550,000.00 and recorded in the Register’s Office on the 1^st day of April, 1954 in Liber 5457 Page 352 which Mortgage was consolidated with the above Mortgages to form a single lien in the amount of $16,000,000.00 pursuant to a Consolidation Agreement dated the 31^st day of March, 1954 between The Prudential Insurance Company of America and WLKP Realty Corp. and recorded in the Register’s Office on the 1^st day of April, 1954 in Liber 5457 Page 358 (which was the subject of a Participation Agreement dated the 31^st day of March, 1954 between The Prudential Insurance Company of America and Aetna Life Insurance Company and recorded in the Register’s Office on the 1^st day of April, 1954 in Liber 5457 Page 372 whereby The Prudential Life Insurance Company of America has ownership in the loan to the extent of $8,000,000.00 and Aetna Life Insurance Company has ownership in the loan to the extent of $8,000,000.00, as modified by a Supplemental Agreement of Mortgage, Participation Agreement dated the 26^th day of October, 1955 between The Prudential Insurance Company of America and Aetna Life Insurance Company and recorded in Liber 5581 Page 503 each agree to extend the loan of their sharing in ownership agreement at which point Aetna Life Insurance Company shall assign to The Prudential Insurance Company of America its interest);

4. Mortgage dated the 1^st day of October, 1958 made by Lincoln Building Associates to The Prudential Insurance Company of America in the amount of $2,618,269.06 and recorded in the Register’s Office on the 2^nd day of October, 1958 in Liber 5775 Page 355 which Mortgage, by its terms, was consolidated with the above Mortgages to form a single lien in the amount of $17,200,000.00 (which was the subject of a Participation Agreement dated the 1^st day of October, 1958 between The Prudential Insurance Company of America and Aetna Life Insurance Company and recorded in the Register’s Office on the 2^nd day of October, 1958 in Liber 5775 Page 359 whereby The Prudential Life Insurance Company of America has ownership in the loan to the extent of $9,909,134.41 and Aetna Life Insurance Company has ownership in the loan to the extent of $7,290,865.59;

22

5. Mortgage dated the 2^nd day of April, 1964 made by 60 E. 42^nd St. Associates to The Prudential Insurance Company of America in the amount of $1,574,134.86 and recorded in the Register’s Office on the 2^nd day of October, 1964 in Liber 6273 Page 248 which Mortgage, by its terms, was consolidated with the above Mortgages to form a single lien in the amount of $16,330,000.00 (which was the subject of an Agreement of Participation of Mortgages Agreement dated the 24^th day of April, 1964 between The Prudential Insurance Company of America and Aetna Life Insurance Company and recorded in the Register’s Office on the 27^th day of April, 1964 in Liber 6273 Page 252 and thereafter Aetna Life Insurance Company executed an Assignment of Mortgage dated the 28^th day of March, 1969 to The Prudential Insurance Company of America and recorded in the Register’s Office on the 2^nd day of April, 1969 in Reel 135 Page 1287 (which assigned its interest in the mortgages described above), as modified by an Agreement dated the 1^st day of April, 1969 between Grancent Corp. and The Prudential Insurance Company of America and recorded in the Register’s Office on the 2^nd day of April, 1969 in Reel 135 Page 1291 and by an Agreement dated as of the 1^st day of April, 1979 between 60 East 42^nd St. Association and The Prudential Insurance Company of America and recorded in the Register’s Office on the 5^th day of November, 1979 in Reel 501 Page 816, and further modified by an Agreement dated the 1^st day of April, 1981 made between 60 East 42^nd St. Association and The Prudential Insurance Company of America and recorded in the Register’s Office on the 3^rd day of September, 1981 in Reel 581 Page 1314, which Mortgages, as consolidated, were thereafter assigned by an Assignment of Mortgage dated the 29^th day of September, 1982 made by The Prudential Insurance Company of America to Bankers Life Company and recorded in the Register’s Office on the 5^th day of October, 1982 in Reel 642 Page 271, and thereafter modified by an Agreement dated the 30^th day of September, 1982 between 60 East 42^nd St. Association and Bankers Life Company and recorded in the Register’s Office on the 3^rd day of November, 1982 in Reel 647 Page 1382, and thereafter assigned by an Assignment of Mortgage dated September 1987 made by Principal Mutual Life Insurance Company f/k/a Bankers Life Company to Apple Bank for Savings and recorded in the Register’s Office on the 23^rd day of December, 1987 in Reel 1337 Page 1651, as confirmed and modified by an Agreement of Confirmation and Modification of Mortgage Agreement dated as of the 30^th day of September, 1987 between 60 East 42^nd St Associates and Apple Bank for Savings and recorded in the Register’s Office on the 30^th day of October, 1987 in Reel 1311 Page 1517, as assigned by an Assignment of Mortgage dated the 13^th day of September, 1994 made by Apple Bank for Savings to Morgan Guaranty Trust Company of New York, as Trustee under Declaration of Trust dated December 9, 1960, as amended, of its commingled Pension Trust Fund, and recorded in the Register’s Office on the 11^th day of October, 1994 in Reel 2145 Page 21, which Mortgages, as consolidated, were thereafter amended by an Amended Mortgage and Security Agreement and Assignment of Leases and Rents Agreement dated the 6^th day of October, 1994 made between 60 East 42^nd St. Association and Morgan Guaranty Trust Company of New York, as Trustee under Declaration of Trust dated December 9, 1960, as amended, of its commingled Pension Trust Fund, and recorded in the Register’s Office on the 11^th day of October, 1994 in Reel 2145 Page 25, which Mortgages, as consolidated, were thereafter assigned by an Assignment of Mortgage dated the 16^th day of November, 2004 made by JPMorgan Chase Bank, as Trustee under Amended and Restated Declaration of Trust, dated November 13, 2001, as amended, for its commingled Pension Trust Fund (Mortgage Private Placement) f/k/a Morgan Guaranty Trust Company of New York, as Trustee under Declaration of Trust dated December 9, 1960,a s amended, of its commingled Pension Trust Fund (Fixed Income-Mortgages) to The Prudential Insurance Company of America and recorded in the Register’s Office on the 28^th day of December, 2004 as CRFN 2004000xxxxxx;

23

6. Mortgage dated the 8^th day of March, 2000 made by 60 East 42^nd St. Association to Emigrant Savings Bank in the amount of $27,979,186.47 and recorded in the Register’s Office on the 10^th day of May, 2000 in Reel 3099 Page 600 which Mortgage was assigned by an Assignment of Mortgage dated the 16^th day of November, 2004 made by Emigrant Savings Bank to The Prudential Insurance Company of America and recorded in the Register’s Office on the 28^th day of December, 2004 as CRFN 2004000xxxxxx;

7. Mortgage dated as of the 23^rd day of November, 2004 made by 60 East 42^nd St. Associates L.L.C. to The Prudential Insurance Company of America in the amount of $44,000,000.53 and recorded in the Register’s Office on the 28^th day of December, 2004 as CRFN 2004000xxxxxx which Mortgage was consolidated with the above Mortgages to form a single lien in the amount of $84,000,000.00 pursuant to an Agreement of Spreader, Consolidation and Modification of Mortgage and Security Agreement dated as of the 23^rd day of November, 2004 between The Prudential Insurance Company of America and 60 East 42^nd St. Associates L.L.C. and recorded in the Register’s Office on the 28^th day of December, 2004 as CRFN 2004000xxxxxx, as amended by a First Amendment to Agreement of Spreader, Consolidation and Modification of Mortgage and Security Agreement dated as of the 23^rd day of November, 2004 between The Prudential Insurance Company of America and 60 East 42^nd Associates L.L.C. and recorded in the Register’s Office on the 3^rd day of February, 2006 as CRFN 2006000xxxxxx;

8. Mortgage dated as of the 5^th day of November, 2009 made by 60 East 42^nd St. Associates L.L.C. to The Prudential Insurance Company of America in the amount of $16,000,000.00 and recorded in the Register’s Office on the 16^th day of November, 2009 as CRFN 2009000xxxxxx.

24

9.

Subordinate Mortgage

60 EAST 42^ND ST. ASSOCIATES L.L.C.

- to -

SIGNATURE BANK

Premises: 60 East 42^nd Street, New York, New York

The within premises lie in

Section 5, Block 1276, Lot 42

in New York County

Record and Return To:

CULLEN AND DYKMAN LLP

100 QUENTIN ROOSEVELT BOULEVARD

GARDEN CITY, NEW YORK 11530

ATTENTION: AMY F. HECHT, ESQ.

25

EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Mark Labell as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Report on Form 10-Q for the quarter ended June 30, 2013 of 60 East 42nd St. Associates L.L.C. and to file the same with all exhibits thereto, and other documents in connection therewith, with the United States Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent and his substitutes may lawfully do or cause to be done by virtue hereof.

NAME	CAPACITY	DATE
/s/ Peter L. Malkin Peter L. Malkin	Member	July 15, 2013
/s/ Anthony E. Malkin Anthony E. Malkin	Member	July 15, 2013

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Andrew Prentice, certify that:

1 I have reviewed this quarterly report on Form 10-Q of 60 East 42^nd 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 Registrant’s 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 Registrant’s 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 Registrant’s internal control over financial reporting that occurred during Registrant’s most recent fiscal quarter (Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, Registrant’s internal control over financial reporting; and

5 Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Registrant’s auditors and the audit committee of Registrant’s 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 Registrant’s 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 Registrant’s internal controls over financial reporting.

Date: August 9, 2013

By	/s/ Andrew Prentice
Name: Andrew Prentice
Title: Chief Accounting Officer
Malkin Holdings LLC, Supervisor of
60 East 42nd St. Associates L.L.C.*

* Registrant’s 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 Registrant’s supervisor.

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Mark Labell, certify that:

1 I have reviewed this quarterly report on Form 10-Q of 60 East 42^nd 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 Registrant’s 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 Registrant’s 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 Registrant’s internal control over financial reporting that occurred during Registrant’s most recent fiscal quarter (Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, Registrant’s internal control over financial reporting; and

5 Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Registrant’s auditors and the audit committee of Registrant’s 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 Registrant’s 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 Registrant’s internal controls over financial reporting.

Date: August 9, 2013

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.*

* Registrant’s 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 Registrant’s supervisor.

EX-32.1

Exhibit 32.1

60 East 42^nd St. Associates L.L.C.

Certification Pursuant to 18 U.S.C., Section 1350 as adopted

Pursuant to Section 906

of Sarbanes – Oxley Act of 2002

The undersigned, Andrew Prentice, is signing this Chief Executive Officer certification as Chief Accounting Officer of Malkin Holdings LLC, the supervisor* of 60 East 42^nd St. Associates L.L.C. (“Registrant”) to certify that:

1. the Quarterly Report on Form 10-Q of Registrant for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

Dated: August 9, 2013

By	/s/ Andrew Prentice
Andrew Prentice
Chief Accounting Officer
Malkin Holdings LLC, Supervisor of
60 East 42nd St. Associates L.L.C.*

* Registrant’s 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 Registrant’s supervisor.

EX-32.2

Exhibit 32.2

60 East 42^nd St. Associates L.L.C.

Certification Pursuant to 18 U.S.C., Section 1350 as adopted

Pursuant to Section 906

of Sarbanes – Oxley Act of 2002

The undersigned, Mark Labell, is signing this Chief Financial Officer certification as a senior member of the financial/accounting staff of Malkin Holdings LLC, the supervisor* of 60 East 42^nd St. Associates L.L.C. (“Registrant”), to certify that:

1. the Quarterly Report on Form 10-Q of Registrant for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

Dated: August 9, 2013

By	/s/ Mark Labell
Mark Labell
Senior Vice President, Finance
Malkin Holdings LLC, Supervisor of
60 East 42nd St. Associates L.L.C.*

* Registrant’s 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 Registrant’s supervisor.

XML

Lease - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012
Leases [Line Items]
Operating lease expiration date			Sep. 30, 2033
Debt instrument amount	$ 100,000,000		$ 100,000,000
Additional Rent			1,053,800
Annual rate of basic distributions to Participants	14.95%		14.95%
Cash investment	7,000,000		7,000,000
Return rate on distribution			14.00%
Advance against additional rent paid to Supervisors			7,380
Period in which report is to be submitted to Registrant			60 days
Rent earned from related party	2,143,294	2,132,054	4,275,512	4,264,100
Net operating income of Lessee					12,466,335
Advance against Additional Rent paid prior to September 30, 2012					1,053,800
Further Additional Rent paid after September 30, 2012					5,706,265
Excess of Lessee's net operating income					50.00%
Amount of additional payment to Supervisor deducted before calculating amount distributed by Registrant to the participants					2,500,000
Additional Payment to Supervisors, current period			320,327
Additional Payment to Supervisors, net			327,707
Distributed by Registrant to the Participants						2,882,938
Annual NYS filing fee			3,000
Buyout interest payable	100		100
Buyout notice period			10 days
Lessee's [Member]
Leases [Line Items]
Percentage of excess of net operating profit, percentage	50.00%		50.00%
Base [Member]
Leases [Line Items]
Annual basic rent			24,000
Maximum [Member]
Leases [Line Items]
Debt instrument amount	100,000,000		100,000,000
Monthly Additional Rent [Member]
Leases [Line Items]
Additional Rent			$ 87,817

XML

Condensed Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue:
Basic rent income, from a related party	$ 1,879,844	$ 1,868,604	$ 3,748,612	$ 3,737,200
Advance of additional rent income, from a related party	263,450	263,450	526,900	526,900
Total rent income	2,143,294	2,132,054	4,275,512	4,264,100
Dividend and other income	140	195	367	418
Total revenue	2,143,434	2,132,249	4,275,879	4,264,518
Expenses:
Interest on mortgages	1,364,014	1,362,892	2,701,905	2,733,888
Supervisory services to a related party	49,134	48,478	98,269	96,956
Depreciation of building and tenant improvements and equipment	1,010,357	743,812	1,817,854	1,397,208
Amortization of leasing costs	154,079	208,150	274,935	286,083
Formation transaction expenses	132,363	56,229	333,598	82,822
Professional fees, including amounts to a related party	345,470	68,677	713,070	154,358
Other	23,866	15,887	40,841	15,887
Total expenses	3,079,283	2,504,125	5,980,472	4,767,202
Net loss	$ (935,849)	$ (371,876)	$ (1,704,593)	$ (502,684)
Loss per $10,000 participation unit, based on 700 participation units outstanding during each period	$ (1,336.93)	$ (531.25)	$ (2,435.13)	$ (718.12)
Distributions per $10,000 participation unit consisted of the following:
Income
Return of capital	$ 373.72	$ 373.72	$ 747.44	$ 747.44
Total distributions	$ 373.72	$ 373.72	$ 747.44	$ 747.44

XML

Lease

6 Months Ended

Jun. 30, 2013

Leases [Abstract]

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 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 original and remaining cash investment of $7,000,000 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. Registrant recognizes Further Additional Rent when earned from the Lessee at the close of the lease year ending September 30^th and records such amount in revenue in the three months ended September 30th.

Rent income, earned from a related party, was $4,275,512 and $4,264,100 for the six months ended June 30, 2013 and 2012, respectively.

For the lease year ended September 30, 2012, Lessee had net operating income of $12,466,335. Lessee paid advances against Additional Rent of $1,053,800 for that lease year prior to September 30, 2012 and Further Additional Rent of $5,706,265 subsequent to September 30, 2012. The Further Additional Rent of $5,706,265 represents 50% of the excess of the Lessee’s net operating income of $12,466,335 over $1,053,800. After deducting $2,500,000, mainly for fees relating to (i) a proposed consolidation of Registrant, other public and private entities supervised by the Supervisor and the Supervisor and certain affiliated management companies into Empire State Realty Trust, Inc., a newly formed real estate investment trust (collectively the “Consolidation”) and the initial public offering of Class A common stock of Empire State Realty Trust, Inc. (the “IPO”), and for the increase in the supervisory fee to Supervisor, accounting fees and general contingencies, (ii) the annual NYS filing fee of $3,000, and the (iii) additional payment to Supervisor of $320,327 (representing the additional payment, as defined in Note E, of $327,707 less $7,380 previously paid), the balance of $2,882,938 was distributed by Registrant to the Participants on December 12, 2012.

The Supervisor of the Registrant has solicited consents of Participants in the Registrant and other public limited liability companies supervised by the Supervisor to the proposed Consolidation pursuant to a prospectus/consent solicitation statement included in a registration statement on Form S-4 declared effective by the SEC. In the proposed transaction, (x) the property interests of the Registrant, such other public limited liability companies and certain private entities supervised by the Supervisor, and (y) the Supervisor and certain affiliated management companies would be contributed to the operating partnership of Empire State Realty Trust, Inc., a newly organized real estate investment trust.

Consents are required from Participants in the Registrant and such other public limited liability companies for them to contribute their interests in the Consolidation. The Supervisor of the Registrant has received the required consents of Participants in the Registrant to the Consolidation. The Supervisor has also received the required consents of participants in 250 West 57^th St. Associates L.L.C. to the Consolidation. The Supervisor has received the required supermajority consents from participants in Empire State Building Associates L.L.C. Following the receipt of the required supermajority approval, each participant in Empire State Building Associates L.L.C. who had voted against, or abstained, or not submitted a consent form regarding the Consolidation, was sent a 10-day buyout notice stating that its interest was subject to buyout for $100 if it did not consent to the Consolidation. The period for consenting to the Consolidation for those sent the buyout notice, as extended, has not yet terminated.

Consents have been obtained from participants in the private entities and the Supervisor and certain affiliated companies and affiliates of the Supervisor for them to make such contributions. The consideration to be paid to the contributing companies and entities in the Consolidation will be allocated in accordance with exchange values determined based on appraisals by an independent third party.

XML

Mortgages Payable - Additional Information (Detail) (USD $)	1 Months Ended	6 Months Ended	12 Months Ended					6 Months Ended		1 Months Ended		6 Months Ended	1 Months Ended		6 Months Ended
	Jun. 18, 2013	Jun. 30, 2013	Dec. 31, 2004	Dec. 31, 2000	Dec. 31, 1999	May 23, 2013	Dec. 31, 2012	Jun. 30, 2013 Debt Instrument Interest Rate Fixing Option One [Member]	Jun. 30, 2013 Debt Instrument Interest Rate Fixing Option Two [Member]	Jul. 05, 2007 First Mortgage [Member]	Nov. 29, 2004 First Mortgage [Member]	Jun. 30, 2013 First Mortgage [Member]	Nov. 29, 2004 Pre Existing First Mortgage [Member]	Nov. 29, 2004 Pre Existing Second Mortgage [Member]	Jun. 30, 2013 Second Mortgage [Member]	Nov. 05, 2009 Second Mortgage [Member]
Debt Instrument [Line Items]
Debt instrument amount		$ 100,000,000									$ 84,000,000					$ 16,000,000
Repayments of debt										35,000,000	49,000,000		12,020,814	27,979,186
Debt instrument, interest rate										5.34%					7.00%
Loan, monthly payments												507,838			113,085
Loan, amortization schedule												25 years			25 years
Loan, balance amount												72,837,163			15,037,852
Principal amount on maturity date												69,600,350			14,585,904
Debt maturity date												Nov. 05, 2014			Nov. 05, 2014
Maximum period for no prepayment penalty at the end of term		60 days
Closed loan amount with Signature Bank						12,000,000
Amount drawn for closing costs						382,397
Additional loan amount	4,000,000	4,382,397
Debt maturity date		Nov. 05, 2014
Interest rate terms		The loan requires payments of interest only at the greater of (i) 3.75% or (ii) 1/2% plus the lender's prime rate.						If the Registrant elects Option A, the loan may be prepaid in whole or in part (in multiples of $100,000) at any time upon not less than thirty days' notice subject to a prepayment fee equal to (i) 1% multiplied by (ii) the number of years or partial years remaining in the term of the loan, multiplied by (iii) the amount of such prepayment. There is no prepayment fee if paid during the 60 day period preceding the maturity date.
Interest rate		3.75%							4.00%
Interest rate, Minimum		0.50%
Minimum increments		3,000,000
Number of basis points								2.75%	3.00%
Minimum amount of multiple used for prepayment								100,000
Minimum notice period								30 days
Prepayment fee percentage								1.00%
Loan prepaid period without prepayment fee		60 days
Fair value of mortgage debt		96,053,326
Mortgage financing costs		3,267,719
Estimated cost of building improvements program					22,800,000
Increase in estimated cost of building improvements program				28,000,000
Further increase in estimated cost of building improvement			100,000,000
Cost incurred by Registrant related to building improvements program		83,134,430
Estimated cost of initial building improvements program on completion		100,000,000
Payable to Lessee, a related party		$ 2,215,574					$ 21,951

XML

Statement of Members' Deficiency (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Members' deficiency
Members' deficiency, Beginning Balance	$ (13,489,411)	$ (13,296,760)
Add net income (loss):
Net income (loss)	(1,704,593)	3,736,707
Members' deficiency before distribution	(15,194,004)	(9,560,053)
Less distributions:
Distributions	523,210	3,929,358
Total distributions	523,210	3,929,358
Members' deficiency, Ending Balance	$ (15,717,214)	$ (13,489,411)

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Interim Period Reporting

6 Months Ended

Jun. 30, 2013

Quarterly Financial Information Disclosure [Abstract]

Interim Period Reporting

Note A Interim Period Reporting

In the opinion of management, the accompanying unaudited condensed financial statements of 60 East 42^nd 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, 2013, its results of operations for the three and six months ended June 30, 2013 and 2012 and its cash flows for the six months ended June 30, 2013 and 2012. Information included in the condensed balance sheet as of December 31, 2012 has been derived from the audited balance sheet included in Registrant’s Form 10-K for the year ended December 31, 2012 (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, 2013 are not necessarily indicative of the results to be expected for any interim period or the full year.

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Mortgages Payable

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Mortgages Payable

Note D Mortgages Payable

On November 29, 2004, a first mortgage (“Senior Mortgage”) was placed on the Property in the amount of $84,000,000 with Prudential Insurance Company of America (“Prudential”) 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 Senior 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, 2013 the balance is $72,837,163. The Senior Mortgage matures on November 5, 2014 with a principal balance of $69,600,350.

On November 5, 2009 Registrant took out an additional $16,000,000 loan with Prudential secured by a second mortgage on the Property, subordinate to the first mortgage (“Subordinate 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 25-year amortization schedule and is co-terminus with the Senior Mortgage. At June 30, 2013, the balance is $15,037,852. The Subordinate Mortgage matures on November 5, 2014 with a principal balance of $14,585,904.

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.

On May 23, 2013, Registrant closed on a $12,000,000 loan with Signature Bank, subordinate to the mortgages with Prudential, to be used for capital improvements and tenanting costs. $382,397 was drawn for closing costs and an additional $4,000,000 was drawn on June 18, 2013. The loan matures on November 5, 2014, co-terminus with the Prudential loans. The loan requires payments of interest only at the greater of (i) 3.75% or (ii) 1/2% plus the lender’s prime rate. Any portion of the loan bearing interest at the variable rate may be prepaid without payment of a prepayment fee.

Prior to maturity, the Registrant has the option of fixing the interest rate, up to three times with minimum increments of $3,000,000, on all or any portion of the principal then outstanding. In such event, the rate shall be fixed until the maturity date at an annual rate equal to either:

(a) Option A: The greater of (i) 3.75% or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a maturity closest to the maturity date. If the Registrant elects Option A, the loan may be prepaid in whole or in part (in multiples of $100,000) at any time upon not less than thirty days’ notice subject to a prepayment fee equal to (i) 1% multiplied by (ii) the number of years or partial years remaining in the term of the loan, multiplied by (iii) the amount of such prepayment. There is no prepayment fee if paid during the 60 day period preceding the maturity date.

(b) Option B: The greater of (i) 4.00% or (ii) 300 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a maturity closest to the maturity date. There is no prepayment fee if this option is elected.

The estimated fair value of Registrant’s mortgage debt based on available market information is approximately $96,053,326 as of June 30, 2013. The fair value of borrowings is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by the Registrant.

As of June 30, 2013, mortgage financing costs of $3,267,719 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, 2013, Registrant had incurred costs related to the Program of $83,134,430 (including building and tenant improvements) 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 up to $100,000,000. Costs of the Program in excess of financing, if applicable, will be funded out of additional financing—up to an aggregate loan amount of $100,000,000, plus financed costs, and Lessee’s operating cash flow. Amounts Payable to Lessee related to the Program were $2,215,574 and $21,951 as of June 30, 2013 and December 31, 2012, respectively.

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Organization

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

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 (the “Building”), formerly known as the Lincoln Building, at the address 60 East 42nd Street, New York, New York 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 in his respective member interest in Registrant (the “Participants”). The Members in Registrant hold senior positions at Malkin Holdings LLC (“Malkin Holdings” or “Supervisor”), 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.

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Condensed Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Accumulated amortized leasing commissions	$ 1,639,896	$ 1,749,117
Accumulated amortized mortgage refinancing costs	2,392,550	2,188,848
Participation units, outstanding	700	700
Amount of participation unit	$ 10,000	$ 10,000

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Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note G Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, Financial Accounting Standards Board guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).

The Registrant uses the following methods and assumptions in estimating fair value disclosures for financial instruments.

Cash and cash equivalents, due from Supervisor, a related party, accrued mortgage interest, payable to Lessee, a related party, due to Supervisor, a related party, rent receivable, a related party, receivable from Participants—NYS estimated tax, and accrued expenses: The carrying amount of cash and cash equivalents, due from Supervisor, a related party, accrued mortgage interest, payable to Lessee, a related party, due to Supervisor, a related party, rent receivable, a related party, receivable from Participants—NYS estimated tax, and accrued expenses reported in Registrant’s Condensed Balance Sheets approximate fair value due to the short term maturity of these instruments.

Mortgages payable: The fair value of borrowings, as disclosed in Note D, is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made to the Registrant.

The methodologies used for valuing financial instruments have been categorized into three broad levels as follows:

Level 1—Quoted prices in active markets for identical instruments.

Level 2—Valuations based principally on other observable market parameters, including:

• Quoted prices in active markets for similar instruments;

• Quoted prices in less active or inactive markets for identical or similar instruments;

• Other observable inputs (such as risk free interest rates, yield curves, volatilities, prepayment

speeds, loss severities, credit risks and default rates); and

• Market corroborated inputs (derived principally from or corroborated by observable market data).

Level 3—Valuations based significantly on unobservable inputs.

• Valuations based on third-party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable as Level 2 valuations.

• Valuations based on internal models with significant unobservable inputs.

These levels form a hierarchy. The Registrant follows this hierarchy for its financial instruments measured at fair value on a recurring and nonrecurring basis and other required fair value disclosures. The classifications are based on the lowest level of input that is significant to the fair value measurement.

Fair Value of Financial Instruments

The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies as discussed in Fair Value Measurements. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Registrant could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The mortgages payable had an estimated fair value based on discounted cash flow models, based on Level 3 inputs, of approximately $96,053,326, compared to the book value of the related debt of $92,257,412 at June 30, 2013.

Disclosure about fair value of financial instruments is based on pertinent information available to the Registrant as of June 30, 2013. Although the Registrant is not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

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Condensed Statements of Operations (Parenthetical) (USD $)	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Stated earnings per participation unit	$ 10,000	$ 10,000
Participation units outstanding	700	700

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Condensed Balance Sheets (USD $)	Jun. 30, 2013	Dec. 31, 2012
Building: One Grand Central Place, located at 60 East 42nd Street and 301 Madison Avenue, New York, N.Y.
Total real estate, net	$ 70,538,558	$ 67,615,604
Cash and cash equivalents	1,295,087	2,095,727
Due from Supervisor, a related party	87,202	87,202
Receivable from Participants - NYS estimated tax	47,248
Rent receivable	11,075
Prepaid insurance		15,764
Deferred costs	3,669,736	3,310,685
Leasing costs, less accumulated amortization of $1,639,896 in 2013 and $1,749,117 in 2012	3,475,858	3,043,218
Mortgage refinancing costs, less accumulated amortization of $2,392,550 in 2013 and $2,188,848 in 2012	875,169	684,783
Total assets	79,999,933	76,852,983
Liabilities:
Mortgages payable	92,257,412	89,109,449
Accrued mortgage interest	423,929	417,546
Payable to Lessee, a related party	2,215,574	21,951
Due to Supervisor, a related party	805,699	789,033
Accrued expenses	14,533	4,415
Total liabilities	95,717,147	90,342,394
Commitments and contingencies
Members' deficiency (at March 31, 2013 and December 31, 2012, there were 700 units (at $10,000 per unit) of participation units outstanding)	(15,717,214)	(13,489,411)
Total liabilities and members' deficiency	79,999,933	76,852,983
Building [Member]
Building: One Grand Central Place, located at 60 East 42nd Street and 301 Madison Avenue, New York, N.Y.
Real estate	16,960,000	16,960,000
Less: accumulated depreciation	(16,960,000)	(16,960,000)
Building Improvements and Equipment [Member]
Building: One Grand Central Place, located at 60 East 42nd Street and 301 Madison Avenue, New York, N.Y.
Real estate	68,910,171	68,039,708
Less: accumulated depreciation	(14,794,995)	(13,918,390)
Total real estate, net	54,115,176	54,121,318
Tenant Improvements [Member]
Building: One Grand Central Place, located at 60 East 42nd Street and 301 Madison Avenue, New York, N.Y.
Real estate	12,636,874	8,779,779
Less: accumulated depreciation	(3,453,492)	(2,525,493)
Total real estate, net	9,183,382	6,254,286
Land [Member]
Building: One Grand Central Place, located at 60 East 42nd Street and 301 Madison Avenue, New York, N.Y.
Total real estate, net	$ 7,240,000	$ 7,240,000

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events

Note F Subsequent Events

Except as disclosed in “Part II, Other Information, Item 1(b),” there have not been any events that have occurred that would require adjustments to or disclosure in this Quarterly Report on Form 10-Q.

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Offering Costs and Formation Transaction Expenses (Tables)

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Effect of Error Correction on Combined Financial Statements

The following table presents the effect this correction had on our prior period reported financial statements. Additionally, financial information included elsewhere in this Form 10-Q that is impacted by the adjustment have been revised, as applicable.

	For the six months ended June 30, 2012
	As reported			Adjustment			As adjusted
Formation transaction expenses	$	—		$	82,822		$	82,822
Net loss		(419,862	)		(82,822	)		(502,684	)
Net cash provided by operating activities		1,130,409			(82,822	)		1,047,587
Net cash used in financing activities		(3,773,392	)		82,822			(3,690,570	)
Net change in cash and cash equivalents		(3,590,915	)		—			(3,590,915	)

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Supervisory Services

6 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Supervisory Services

Note E Supervisory Services

Supervisory and other services are provided to Registrant by its supervisor, Malkin Holding LLC (“Malkin Holdings” or “Supervisor”), a related party. Entities for the benefit of Peter L. Malkin’s family own member interests in Lessee.

Registrant pays Supervisor for supervisory services and disbursements. The basic fee (the “Basic Payment”) had been payable at the rate of $24,000 per annum, payable $2,000 per month, since October 1, 1958. The Basic Payment was increased, with the approval of the Agents, by an amount equal to the increase in the Consumer Price Index since such date, resulting in an increase in the Basic Payment to $180,000 per annum effective July 1, 2010 to be adjusted annually for any subsequent increase in the Consumer Price Index. The Basic Payment was adjusted to $189,158 effective July 1, 2012. 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. 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.

Supervisor also receives a payment (“Additional Payment”) equal to 10% of all distributions received by Participants in Registrant in excess of 14% per annum on their remaining cash investment in Registrant (which remaining cash investment at June 30, 2013 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. Pursuant to such arrangements, Registrant incurred supervisory fees of $98,269 and $96,956 for the six month periods ended June 30, 2013 and 2012, respectively. Supervisor receives $7,380 a year as an advance against the Additional Payment, which Registrant expenses monthly.

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.

No remuneration was paid during the six month periods ended June 30, 2013 and 2012 by Registrant to any of the Members. Included in professional fees are amounts for services from related parties of $8,458 and $91,729 for the three and six months month ended June 30, 2013, respectively, and $31,088 and $80,188 for the three and six months month ended June 30, 2012, respectively

Distributions are paid from a cash account held by Supervisor. That account is included in the condensed Balance Sheets as “Due from Supervisor, a related party.” The funds of $87,202 at June 30, 2013 and December 31, 2012 were paid to participants on July 1, 2013 and January 1, 2013, respectively.

Reference is made to Note C above for a description of the terms of the Lease between Registrant and Lessee. The respective interests, if any, of the Members in Registrant and in Lessee arise solely from ownership of their respective Participations in Registrant and, in the case of Peter L. Malkin, his individual ownership of a member interest 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.

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Condensed Statements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net loss	$ (1,704,593)	$ (502,684)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation of building and tenant improvements and equipment	1,817,854	1,397,208
Amortization of leasing costs	274,935	286,083
Amortization of mortgage refinancing costs	203,702	181,808
Leasing costs paid	(707,575)
Changes in operating assets and liabilities:
Other receivable		(5,844)
Prepaid insurance	15,764	(31,617)
Rent receivable	(11,075)
Due to Supervisor, a related party	171,249	(171,210)
Accrued expenses	10,118	(19,500)
Accrued supervisory fees to a related party		(81,265)
Accrued mortgage interest	6,383	(5,392)
Net cash provided by operating activities	76,762	1,047,587
Cash flows from investing activities:
Purchase of building and tenant improvements	(2,547,185)	(947,932)
Net cash used in investing activities	(2,547,185)	(947,932)
Cash flows from financing activities:
Receivable from Participants-NYS estimated tax	(47,248)
Refinancing costs	(394,088)
Proceeds from mortgage payable	4,382,397
Repayment of mortgages payable	(1,234,434)	(1,168,067)
Distributions to Participants	(523,210)	(523,210)
Deferred costs	(513,634)	(1,999,293)
Net cash provided by (used in) financing activities	1,669,783	(3,690,570)
Net decrease in cash and cash equivalents	(800,640)	(3,590,915)
Cash and cash equivalents, beginning of period	2,095,727	10,466,377
Cash and cash equivalents, end of period	1,295,087	6,875,462
Supplemental disclosure of cash flow information:
Cash paid for interest	2,491,820	2,557,470
Non-cash investing and financing activities:
Deferred costs included in Due to Supervisor, a related party	296,499	297,983
Purchase of Building and tenant improvements included in payable to Lessee, a related party	$ 2,215,574	$ 2,045,392

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Supervisory Services - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Related Party Transaction [Line Items]
Basic annual fee			$ 24,000
Prior basic supervisory fee per month			2,000
Additional Payment of distributions received by the Participants			10.00%
Required rate of return on cash investment for Additional Payment			14.00%
Original cash investment	7,000,000		7,000,000
Supervisory service fees	49,134	48,478	98,269	96,956
Advance against additional rent paid to Supervisors			7,380
Professional fees, including amounts for services provided by related party	345,470	68,677	713,070	154,358
Due from Supervisor	87,202		87,202		87,202
Effective July 1, 2010 [Member]
Related Party Transaction [Line Items]
Increase in Basic Payment plus annual Consumer Price Index adjustment			180,000
Effective July 1, 2012 [Member]
Related Party Transaction [Line Items]
Increase in Basic Payment plus annual Consumer Price Index adjustment			189,158
Supervisor [Member]
Related Party Transaction [Line Items]
Due from Supervisor	87,202		87,202		87,202
Supervisor [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Monthly basic supervisory fees			2,000
Registrant [Member]
Related Party Transaction [Line Items]
Supervisory service fees			98,269	96,956
Professional fees, including amounts for services provided by related party	$ 8,458	$ 31,088	$ 91,729	$ 80,188

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Offering Costs and Formation Transaction Expenses

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Offering Costs and Formation Transaction Expenses

Note H Offering Costs and Formation Transaction Expenses

In connection with the Consolidation and IPO the Registrant has incurred or will incur incremental accounting fees, legal fees and other professional fees. Such costs will be deferred and recorded as a reduction of proceeds of the Consolidation and IPO, or expensed if the Consolidation and IPO is not consummated. Certain costs associated with the Consolidation and IPO not directly attributable to the solicitation of consents and the IPO, but rather related to structuring the formation transaction, are expensed as incurred.

Through June 30, 2013, Registrant has incurred external offering costs of $3,669,736, of which the Registrant has incurred $359,051 and $830,055 for the six months ended June 30, 2013 and 2012, respectively. A total of $296,499 and $451,082 of these costs are in Due to Supervisor at June 30, 2013 and December 31, 2012, respectively. Additional offering costs for work done by employees of the Supervisor of $91,729 and $80,188 for the six months ended June 30, 2013 and 2012, respectively, were incurred and advanced by the Supervisor and have been or will be reimbursed to the Supervisor by the Registrant.

Correction of an Immaterial Error in the Financial Statements

The Registrant’s prior period financial results have been adjusted to reflect an immaterial correction which has no impact to the net change in cash reported on the statement of cash flows. During fiscal year 2012, the Registrant determined that certain costs related to the structuring of the consolidation transaction that were previously included in deferred offering costs should have been expensed in the periods incurred. The correction impacted the 2012, 2011 and 2010 periods and had accumulated to an amount of $538,123 as of June 30, 2012. Adhering to applicable guidance for accounting changes and error corrections, the Registrant concluded that the error was not material to any of the prior period financial statements. The correction resulted in immaterial changes to deferred costs and formation transaction expenses for the years ended December 31, 2011 and 2010, and for interim periods within those years and within 2012.

The Registrant applied the guidance for accounting changes and error corrections and revised the prior period financial statements presented.

The following table presents the effect this correction had on our prior period reported financial statements. Additionally, financial information included elsewhere in this Form 10-Q that is impacted by the adjustment have been revised, as applicable.

	For the six months ended June 30, 2012
	As reported			Adjustment			As adjusted
Formation transaction expenses	$	—		$	82,822		$	82,822
Net loss		(419,862	)		(82,822	)		(502,684	)
Net cash provided by operating activities		1,130,409			(82,822	)		1,047,587
Net cash used in financing activities		(3,773,392	)		82,822			(3,690,570	)
Net change in cash and cash equivalents		(3,590,915	)		—			(3,590,915	)

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Offering Costs and Formation Transaction Expenses - Effect of Correction on Combined Financial Statements (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Organization And Offering Costs [Line Items]
Formation transaction expenses	$ 132,363	$ 56,229	$ 333,598	$ 82,822
Net loss	(935,849)	(371,876)	(1,704,593)	(502,684)	3,736,707
Net cash provided by operating activities			76,762	1,047,587
Net cash used in financing activities			1,669,783	(3,690,570)
Net change in cash and cash equivalents			(800,640)	(3,590,915)
As Reported [Member]
Organization And Offering Costs [Line Items]
Formation transaction expenses
Net loss				(419,862)
Net cash provided by operating activities				1,130,409
Net cash used in financing activities				(3,773,392)
Net change in cash and cash equivalents				(3,590,915)
Adjustment [Member]
Organization And Offering Costs [Line Items]
Formation transaction expenses				82,822
Net loss				(82,822)
Net cash provided by operating activities				(82,822)
Net cash used in financing activities				82,822
Net change in cash and cash equivalents
As Adjusted [Member]
Organization And Offering Costs [Line Items]
Formation transaction expenses				82,822
Net loss				(502,684)
Net cash provided by operating activities				1,047,587
Net cash used in financing activities				(3,690,570)
Net change in cash and cash equivalents				$ (3,590,915)

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Fair Value Measurements - Additional Information (Detail) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Fair Value Disclosures [Abstract]
Estimated fair value of mortgages payable	$ 96,053,326
Book value of mortgages payable	$ 92,257,412	$ 89,109,449

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Entity Registrant Name	60 EAST 42ND STREET ASSOCIATES L.L.C.
Entity Central Index Key	0000090794
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	0

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Offering Costs and Formation Transaction Expenses - Additional Information (Detail) (USD $)	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Registrant incurred capitalized external offering costs	$ 3,669,736
External offering costs	359,051	830,055
Offering costs due to Supervisor	296,499		451,082
Additional offering costs for work done by employees of Supervisor	91,729	80,188
Impact of error correction accumulated		$ 538,123