<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission file number 0-2666
250 WEST 57th ST. ASSOCIATES
(Exact name of registrant as specified in its charter)
A New York Partnership 13-6083380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 East 42nd Street, New York, New York 10165
(Address of principal executive offices)
(Zip Code)
(212) 687-8700
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ]. No [ ] .
An Exhibit Index is located on Page 13 of this Report. Number of pages
(including exhibits) in this filing: 13<PAGE>
PART I. FINANCIAL INFORMATION
250 West 57th St. Associates
Condensed Income Statement
(Unaudited)
Item 1. Financial Statements.
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
Income:
Basic rent, from a
related party (Note B) $ 79,289 $ 79,289 $ 237,868 $ 237,868
Advance of primary
overage rent, from a
related party (Note B) 188,000 188,000 564,000 564,000
Secondary Overage Rent,
from a related party
(Note B) 2,282,064 1,326,984 2,282,064 1,326,984
---------- ---------- ---------- ----------
Total income 2,549,353 1,594,273 3,083,932 2,128,852
---------- ---------- ---------- ----------
Expenses:
Interest on mortgage 66,337 66,869 199,421 200,980
Supervisory services, to a
related party (Note C) 243,206 145,708 273,206 175,708
Amortization of mortgage
refinancing costs 1,957 1,957 5,872 5,872
Fees and Expenses -0- 19,909 -0- 19,909
---------- ---------- ---------- ----------
Total expenses 311,500 234,443 478,499 402,469
---------- ---------- ---------- ----------
Net Income $2,237,853 $1,359,830 $2,605,433 $1,726,383
========== ========== ========== ==========
Earnings per $5,000
participation unit,
based on 720 participation
units outstanding
during the year $ 3,108.13 $ 1,888.65 $ 3,618.66 $ 2,397.75
========== ========== ========== ==========
Distributions per $5,000
participation consisted
of the following:
Income $ 3,108.13 $ 1,888.65 $ 3,618.66 $ 2,397.75
Increase (Decrease) in
capital deficit (2,858.13) (1,638.65) (2,868.66) (1,647.75)
---------- ---------- ---------- ----------
Total distribution $ 250.00 $ 250.00 $ 750.00 $ 750.00
========== ========== ========== ==========
At September 30, 1998 and 1997, there were $3,6000,000 of participations
outstanding.<PAGE>
250 West 57th St. Associates
Condensed Balance Sheet
(Unaudited)
Assets September 30, 1998 December 31, 1997
Current assets:
Cash $ 84,124 $ 84,124
Rent receivable, from Fisk
Building Associates, a
related party (Note B) 2,282,064 -0-
---------- -----------
Total current assets 2,366,188 84,124
========== ===========
Real estate, at cost:
Property situated at 250-264 West
57th Street, New York, New York:
Land: 2,117,435 2,117,435
Building: 4,940,682 4,940,682
Less: Accumulated depreciation 4,940,682 4,940,682
--------- -----------
-0- -0-
Building improvements: 688,000 688,000
Less: Accumulated depreciation 688,000 688,000
---------- -----------
-0- -0-
Tenants' installations and
improvements 249,791 249,791
Less: Accumulated amortization 249,791 249,791
---------- -----------
-0- -0-
Other assets:
Mortgage refinancing costs 41,106 41,106
Less: Accumulated amortization 28,056 22,184
---------- -----------
13,050 18,922
---------- -----------
Total assets $4,496,673 $ 2,220,481
========== ===========
Liabilities and Capital
Current liabilities:
Accrued interest payable $ 22,097 $ 22,232
Accrued Supervisory Services,
to a related party (Note C) $ 228,206 $ -0-
First mortgage principal payments
due within one year (Note B) $ 25,057 $ 23,358
---------- -----------
Total current liabilities 275,360 45,590
Long-term debt (Note B) 2,795,810 2,814,821
Capital (See analysis, page 4):
September 30, 1998 1,425,503 -0-
December 31, 1997 -0- (639,930)
---------- -----------
Total liabilities and capital:
September 30, 1998 4,496,673
December 31, 1997 ========== 2,220,481
==========
250 West 57th St. Associates
Analysis of Capital
(Unaudited)
September 30, 1998 December 31, 1997
Capital:
January 1, 1998 $ (639,930)
January 1, 1997 (653,537)
Add, Net income:
January 1, 1998 through
September 30, 1998 2,605,433 -0-
January 1, 1997 through
December 31, 1997 -0- 1,909,974
---------- -----------
1,965,503 1,256,437
Less Distributions:
Distribution, December 2, 1997
of Secondary Overage Rent for
the lease year ended
September 30, 1997 -0- 1,176,367
Distributions January 1, 1998
through September 30, 1998 540,000 -0-
Distributions January 1, 1997
through December 31, 1997 -0- 720,000
---------- -----------
540,000 1,896,367
---------- -----------
Capital:
September 30, 1998 1,425,503
December 31, 1997 ========== $ (639,930)
===========
<PAGE>
250 West 57th St. Associates
Condensed Statement of Cash Flows
(Unaudited)
January 1, 1998 January 1, 1997
through through
September 30, 1998 September 30, 1997
Cash flows from operating activities:
Net income $ 2,605,433 $1,726,383
Adjustments to reconcile net
income to cash provided by
operating activities:
Amortization of mortgage
refinancing costs 5,872 5,872
Change in accrued interest payable (135) (124)
Change in accrued expenses 228,206 150,617
Change in additional rent due (2,282,064) (1,326,984)
----------- ----------
Net cash provided by operating
activities 557,312 555,764
----------- ----------
Cash flows from financing activities:
Cash distributions (540,000) (540,000)
Principal payments on long-term debt (17,312) (15,764)
------------ ----------
Net cash used in financing
activities (557,312) (555,764)
------------ ----------
Net increase (decrease) in cash -0- -0-
Cash, beginning of period 84,124 84,124
------------ ----------
Cash, end of period $ 84,124 $ 84,124
============ ==========
January 1, 1998 January 1, 1997
through through
September 30, 1998 September 30, 1997
Cash paid for:
Interest $ 199,556 $ 201,104
============ ==========
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations and statement of cash flows in
conformity with generally accepted accounting principles. The accompanying
unaudited condensed financial statements include all adjustments (consisting
only of normal recurring accruals) which are, in the opinion of the joint
venturers in Registrant, necessary for a fair statement of the results for such
interim periods. The joint venturers in Registrant believe that the
accompanying unaudited condensed financial statements and the notes thereto
fairly disclose the financial condition and results of Registrant's operations
for the periods indicated and are adequate to make the information presented
therein not misleading.
Note B - Interim Period Reporting
The results for the interim period are not necessarily
indicative of the results to be expected for a full year.
Registrant is a New York joint venture which was organized on
May 25, 1953. On September 30, 1953, Registrant acquired fee title to the "Fisk
Building" (the "Building") and the land thereunder located at 250-264 West 57th
Street, New York, New York (collectively, the "Property"). As of April 15,
1998, Registrant's joint venturers are Peter L. Malkin and Anthony E. Malkin
(the "Joint Venturers"), each of whom also acts as an agent for holders of
participations in their undivided joint venture interests in Registrant (the
"Participants").
Registrant leases the Property to Fisk Building Associates (the
"Net Lessee"), under a long-term net operating lease (the "Net Lease"), the
current term of which expires on September 30, 2003. Net Lessee is a New York
partnership in which Peter L. Malkin is among its partners. In addition, he
is also a member of the law firm of Wien & Malkin LLP, 60 East 42nd Street, New
York, New York, counsel to Registrant and Net Lessee ("Counsel"). See Note C
of this Item 1 ("Note C").
Under the Net Lease, Net Lessee must pay (i) annual basic rent
equal to the sum of $28,000 plus an amount equal to the rate of constant
payments for interest and amortization required annually under the first
mortgage described below (the "Basic Rent"), and (ii)(A) primary overage rent
equal to the lesser of (1) Net Lessee's net operating income for the preceding
lease year
or (2) $752,000 (the "Primary Overage Rent"), and (B) secondary overage rent
equal to 50% of any remaining balance of Net Lessee's net operating income for
such lease year ("Secondary Overage Rent").
Net Lessee is required to make a monthly payment to Registrant,
as an advance against Primary Overage Rent, of an amount equal to its operating
profit for its previous lease year in the maximum amount of $752,000 per annum.
Net Lessee currently advances $752,000 each year, which permits Registrant to
make regular monthly distributions at 20% per annum on the Participants'
remaining original cash investment.
For the lease year ended September 30, 1998, Net Lessee reported
net operating profit of $5,316,128 after deduction of Basic Rent. Net Lessee
paid Primary Overage Rent of $752,000, together with Secondary Overage Rent of
$2,282,064 for the fiscal year ended September 30, 1998. The Secondary Overage
Rent of $2,282,064 represents 50% of the excess of the net operating profit of
$5,316,128 over $752,000. After payment of $228,206 to Counsel as an
additional payment for supervisory services, the balance of $2,053,858 will be
distributed to the Participants on November 30, 1998.
Secondary Overage Rent income is recognized when earned from Net
Lessee, at the close of the lease year ending September 30. Such income is not
determinable until Net Lessee, pursuant to the Net Lease, renders to Registrant
a certified report on the operation of the Property. The Net Lease does not
provide for the Net Lessee to render interim reports to Registrant, so no
income is reflected for the period between the end of the lease year and the
end of Registrant's fiscal year.
The Net Lease provides for one renewal option of 25 years. The
Participants in Registrant and the partners in Net Lessee have agreed to
execute three additional 25-year renewal terms on or before the expiration of
the then applicable renewal term.
Effective March 1, 1995, the first mortgage loan on the
Property, in the principal amount of $2,890,758, held by Apple Bank for Savings
("Apple Bank") was refinanced (the "Refinancing"). The material terms of the
refinanced mortgage loan (the "Mortgage Loan") are as follows:
(i) a maturity date of June 1, 2000;
(ii) monthly payments of $24,096 aggregating $289,157 per
annum applied first to interest at the rate of 9.4% per annum and
the balance in reduction of principal;
(iii) no prepayment until after the third loan year.
Thereafter, a 3% penalty will be imposed in the fourth loan year
and a 2% penalty during the fifth loan year. No prepayment penalty
will be imposed if the Mortgage Loan is paid in full during the
last 90 days of the fifth loan year; and
(iv) no Partner or Participant will have any personal
liability for principal of, or interest on, the Mortgage Loan.
Note C - Supervisory Services
Registrant pays Counsel for legal fees and supervisory services
and disbursements: (i) $40,000 per annum (the "Basic Payment"); and (ii) an
additional payment of 10% of all distributions to Participants in any year in
excess of the amount representing a return to them at the rate of 15% per annum
on their remaining cash investment (the "Additional Payment"). At September
30, 1998, the Participants' remaining cash investment was $3,600,000. Of the
Basic Payment, $28,000 is payable from Basic Rent and $12,000 is payable from
Primary Overage Rent received by Registrant.
No remuneration was paid during the nine month period ended
September 30, 1998 by Registrant to either of the Joint Venturers as such.
Pursuant to the fee arrangements described herein, Registrant also paid Counsel
$30,000 of the Basic Payment and $15,000 on account of the Additional Payment
for the nine month period ended September 30, 1998.
The supervisory services provided to Registrant by Counsel
include legal, administrative and financial services. The legal and
administrative services include acting as general counsel to Registrant,
maintaining all of its partnership and Participant records, performing physical
inspections of the Building, reviewing insurance coverage and conducting annual
partnership meetings. Financial services include monthly receipt of rent from
Net Lessee, payment of monthly and additional distributions to the Participants,
payment of all other disbursements, confirmation of the payment of real estate
taxes, and active review of financial statements submitted to Registrant by Net
Lessee and financial statements audited by and tax information prepared by
Registrant's independent certified public accountant, and distribution of such
materials to the Participants. Counsel also prepares quarterly, annual and
other periodic filings with the Securities and Exchange Commission and
applicable state authorities.
Reference is made to Note B of Item 1 ("Note B") for a
description of the terms of the Net Lease between Registrant and Net Lessee.
The respective interests, if any, of each Joint Venturer in Registrant and in
Net Lessee arise solely from such person's ownership of participations in
Registrant and partnership interests or participations in Net Lessee. The
Joint Venturers receive no extra or special benefit not shared on a pro rata
basis with all other Participants in Registrant or partners in Net Lessee.
However, one of the Joint Venturers, by reason of his respective partnership
interest in Counsel, is entitled to receive his share of any legal fees or
other remuneration paid to Counsel for legal services rendered to Registrant
and Net Lessee.
As of September 30, 1998, the Joint Venturers owned of record
and beneficially $18,333 of Participations, representing less than 1% of the
currently outstanding Participations in Registrant.
In addition, as of September 30, 1998, certain of the Joint
Venturers in Registrant (or their respective spouses) held additional
Participations as follows:
Isabel Malkin, the wife of Peter L. Malkin, owned of record and
beneficially $70,000 of Participations. Peter L. Malkin
disclaims any beneficial ownership of such Participations.
Anthony E. Malkin owned of record as trustee, but not
beneficially, $8,333 of Participations. Anthony E. Malkin
disclaims any beneficial ownership of such Participations.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Registrant was organized solely for the purpose of owning the
Property subject to a net operating lease of the Property held by Net Lessee.
Registrant is required to pay, from Basic Rent, the charges on the Mortgage
Loan and amounts for supervisory services, and then to distribute the balance
of such Basic Rent to holders of Participations. See Note C. Pursuant to the
Net Lease, Net Lessee has assumed sole responsibility for the condition,
operation, repair, maintenance and management of the Property. Accordingly,
Registrant need not maintain substantial reserves or otherwise maintain liquid
assets to defray any operating expenses of the Property.
Registrant's results of operations are affected primarily by the
amount of rent payable to it under the Net Lease. The amounts of Primary
Overage Rent and Secondary Overage Rent are affected by the New York City
economy and its real estate market. It is difficult to forecast the New York
City economy and real estate market over the next few years.
Registrant does not pay dividends. During the nine month period
ended September 30, 1998, Registrant made regular monthly distributions of
$83.33 for each $5,000 participation ($1,000 per annum for each $5,000
participation). On November 30, 1998, Registrant will make an additional
distribution of $2,853 for each $5,000 participation. Such distribution
represented the balance of Secondary Overage Rent paid by Net Lessee in
accordance with the terms of the Net Lease after deducting the Additional
Payment to Counsel. See Notes B and C. There are no restrictions on
Registrant's present or future ability to make distributions; however, the
amount of such distributions depends solely on the ability of Net Lessee to
make monthly payments of Basic Rent, Primary Overage Rent and Secondary Overage
Rent to Registrant in accordance with the terms of the Net Lease. Registrant
expects to make distributions so long as it receives the payments provided for
under the Net Lease. See Note B.
The following summarizes with respect to the current period and
corresponding period of the previous year, the material factors affecting
Registrant's results of operations for such periods:
Total income increased for the three and nine month periods ended September 30,
1998, as compared with the three and nine month periods ended September 30,
1997. Such increase was the result of an increase in the Secondary Overage Rent
payable by the Net Lessee for the lease year ended September 30, 1998, as
compared with the lease year ended September 30, 1997.
Total expenses increased for the three and nine month periods ended September
30, 1998, as compared to the three and nine month periods ended September 30,
1997. Such increase was mainly attributable to an increase in the Additional
Payment being made to Counsel based on the Secondary Overage Rent payable for
the lease ended September 30, 1998.
Liquidity and Capital Resources
There has been no significant change in Registrant's liquidity
for the nine month period ended September 30, 1998, as compared with the nine
month period ended September 30, 1997.
The amortization payments due under the Mortgage Loan (see Note
B of Item 1 hereof) will not be sufficient to fully liquidate the outstanding
principal balance thereof at maturity in 2000. Registrant does not maintain
any reserve to cover the payment of any mortgage indebtedness at or prior to
maturity. Therefore, repayment of such indebtedness will depend on
Registrant's ability to arrange a further refinancing of the Mortgage Loan.
The ability of Registrant to obtain any such refinancing will depend upon
several factors, including the value of the Property at that time and future
trends in the real estate market and the economy in the geographic area in
which the Property is located.
Registrant anticipates that funds for working capital for the
Property will be provided by rental payments received from the Net Lessee and,
to the extent necessary, from additional capital investment by the partners in
the Net Lessee and/or external financing. However, as noted above, Registrant
has no requirement to maintain substantial reserves to defray any operating
expenses of the Property. Registrant foresees no need to make material
commitments for capital expenditures while the Net Lease is in effect.
Inflation
Registrant believes that there has been no material change in
the impact of inflation on its operations since the filing of its report on Form
10-K for the year ended December 31, 1997, which report and all exhibits
thereto are incorporated herein by reference and made a part hereof.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Property of Registrant is the subject of the following
pending litigation:
Wien & Malkin LLP, et al. v. Helmsley-Spear, Inc., et al. On
June 19, 1997 Wien & Malkin LLP and Peter L. Malkin filed an action in the
Supreme Court of the State of New York, against Helmsley-Spear, Inc. and Leona
Helmsley concerning various partnerships which own, lease or operate buildings
managed by Helmsley-Spear, Inc., including Registrant's property. In their
complaint, plaintiffs sought the removal of Helmsley-Spear, Inc. as managing
and leasing agent for all of the buildings. Plaintiffs also sought an order
precluding Leona Helmsley from exercising any partner management powers in the
partnerships. In August, 1997, the Supreme Court directed that the foregoing
claims proceed to arbitration. As a result, Mr. Malkin and Wien & Malkin LLP
filed an arbitration complaint against Helmsley-Spear, Inc. and Mrs. Helmsley
before the American Arbitration Association. Helmsley-Spear, Inc. and Mrs.
Helmsley served answers denying liability and asserting various affirmative
defenses and counterclaims; and Mr. Malkin and Wien & Malkin LLP filed a reply
denying the counterclaims. By agreement dated December 16, 1997, Mr. Malkin
and Wien & Malkin LLP (each for their own account and not in any representative
capacity) reached a settlement with Mrs. Helmsley of the claims and
counterclaims in the arbitration and litigation between them. Mr. Malkin and
Wien & Malkin LLP are continuing their prosecution of claims in the arbitration
for relief against Helmsley-Spear, Inc., including its termination as the
leasing and managing agent for various entities and properties, including the
Registrant's Lessee.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits hereto are being incorporated by reference.
(b) Registrant has not filed any report on Form 8-K during the quarter
for which this report is being filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The individual signing this report on behalf of Registrant is Attorney-in-
Fact for Registrant and each of the Joint Venturers in Registrant, pursuant to
Powers of Attorney, dated March 29, 1996 and May 14, 1998 (the "Power").
250 WEST 57TH ST. ASSOCIATES
(Registrant)
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: November , 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the undersigned as Attorney-in-Fact for each of the
Joint Venturers in Registrant, pursuant to the Power, on behalf of Registrant
on the date indicated.
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: November , 1998
_______________________________
* Mr. Katzman supervises accounting functions for Registrant.
<PAGE>
EXHIBIT INDEX
Number Document Page*
3(a) Registrant's Joint Venture Agreement,
dated May 25, 1953, which was filed as
Exhibit No. 3(a) to Registrant's
Registration Statement on Form S-1 (the
"Registration Statement"), is
incorporated by reference as an exhibit
hereto.
24 Powers of Attorney dated March 29, 1996
and May 14, 1998 between Partners in
Registrant and Stanley Katzman and
Richard A. Shapiro, which was filed as
Exhibit 24 to Registrant's 10-Q for the
quarter ended March 31, 1998 and is
incorporated by reference as an exhibit
hereto.
_______________________________
* Page references are based on sequential numbering system.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Balance Sheet as of September 30, 1998 and the Statement Of Income
for the year ended September 30, 1998, and is qualified in its entirety by
reference to such financial staements.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 84,124
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,366,188
<PP&E> 7,995,908
<DEPRECIATION> 5,878,473
<TOTAL-ASSETS> 4,496,673<F1>
<CURRENT-LIABILITIES> 275,360<F2>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,425,503
<TOTAL-LIABILITY-AND-EQUITY> 4,496,673<F3>
<SALES> 3,083,932<F4>
<TOTAL-REVENUES> 3,083,932
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 279,078<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 199,421
<INCOME-PRETAX> 2,605,433
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,605,433
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,605,433
<EPS-PRIMARY> 3,618.66<F6>
<EPS-DILUTED> 3,618.66<F6>
<FN>
<F1>Includes unamortized mortgage refinancing costs
<F2>Accrued interest on mortgage and first mortgage principal payment due
within one year and accrued supervisory services
<F3>Includes long-term debt
<F4>Rental income includes basic rent, advance of primary overage rent
and secondary overage rent
<F5>Supervisory services and amortization of mortgage refinance costs
<F6>Earnings per $5,000 participation unit, based on 720 participation units
outstanding during the period
</FN>
</TABLE>
