UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [XX]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only
[XX] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
Commission File No. 0-2666
250 West 57th St. Associates
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[XX] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
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applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and
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which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
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250 WEST 57th ST. ASSOCIATES
c/o Wien & Malkin LLP
60 East 42nd Street - 26th floor
New York, New York 10165-0015
Telephone (212) 687-8700
Telecopier (212) 986-7679
STATEMENT BY THE AGENTS IN THE
SOLICITATION OF PARTICIPANT CONSENTS
Dated June 28, 1999
This Statement is issued in connection with the
Solicitation of Participant Consents by Peter L. Malkin and
Anthony E. Malkin as the agents (the "Agents") for the
participants (the "Participants") in 250 West 57th St. Associates
("Associates"). Associates was formed in 1953 to acquire the land
and improvements known as 250 West 57th Street in New York City
(the "Building"), subject to a net operating lease (the "Lease")
to Fisk Building Associates (the "Lessee"). See Section I. -
Background.
The Agents are requesting that the Participants consent
to a program proposed by the Lessee for financing and completing
improvements which the Lessee and the Agents have concluded are
necessary to preserve the Building's physical plant, its
competitive market position, and Associates' long-term investment
return. Under the Lessee's proposal, a substantial portion of the
cost of such improvements and certain other improvements in the
future will be paid from the proceeds of an increase in the fee
mortgage (the "Fee Mortgage"), and the Lessee's basic rent to
Associates will increase to pay the resulting increase in debt
service. This Fee Mortgage financing will spread the improvement
cost and stabilize the amount available for distribution to the
Participants.
As attorneys-in-fact for the Participants, the Agents
will implement the program after receiving the Participants'
consent. As part of this program, the Agents will be authorized,
as they deem appropriate for the benefit of Associates from time
to time in the future, to refinance the Fee Mortgage with an
institutional lender and without personal liability for a
principal amount not to exceed $15,000,000 plus refinancing
costs. The proceeds of any increased debt will be applied to the
Property, and any increased debt service will be paid by an
equivalent increase in basic rent paid by the Lessee.
It is anticipated that this Statement and the
accompanying form of Consent will be mailed to the Participants
on June 28, 1999. The Solicitation of Consents will terminate 90
days after the date of this letter, unless extended by the
Agents, but in no event later than December 31, 1999. The Agents
will advise all Participants of the Solicitation results not
later than 90 days after the termination date, including any
extension.
I. BACKGROUND
A. Organization of Associates
Associates is a New York joint venture organized in
1953 by Lawrence A. Wien, who served until his death as one of
Associates' joint venturers. Peter L. Malkin continues to serve
as a joint venturer, and Anthony E. Malkin is the other joint
venturer. Each joint venturer acts as the Agent for one or more
groups of Participants under a participating agreement for each
group (a "Participating Agreement").
The terms of the Participating Agreements are
identical. Participants have the right to approve or disapprove
certain Agent actions, including this financing and improvement
program. The percentage of Participants required to approve this
proposal is described in Section XI. - Terms of Solicitations of
Consents.
B. The Property
The Property consists of 250 West 57th Street, a
409,000 square feet 26-story building that occupies the entire
blockfront on the south side of West 57th Street between Broadway
and Eighth Avenue (the "Property" or the "Building"). The
Building was constructed in 1921.
The Building contains retail stores on the street level
and approximately 341 office tenants engaged in a variety of
businesses and professions. As of June 1, 1999, the Building was
approximately 99% occupied.
C. The Lease
1. Term
The current term of the Lease expires in 2003, with a
25-year renewal term expiring in 2028. Associates has consented
to the Agents' granting the Lessee three additional 25-year
renewal options expiring in 2103. There is no change in the
terms of the Lease during the renewal periods.
2. Rent
The Lease requires the Lessee to pay the following rent
for each fiscal year (October 1 through September 30):
a. Basic rent ("Basic Rent") each year equal to the
sum of (i) the annual debt service on the Fee Mortgage and (ii)
$28,000.
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b. Overage rent ("Overage Rent") equal to (i) 100% of
the Lessee's net profit from the Property up to $752,000
("Primary Overage Rent") and (ii) 50% of the Lessee's remaining
net profit ("Secondary Overage Rent").
Basic Rent is payable monthly and is subject to
adjustment equal to any increase or decrease in Fee Mortgage debt
service on the existing principal amount. Primary Overage Rent
is advanced monthly based on the Lessee's net profit for the
prior fiscal year and then adjusted in the following fiscal year
based upon actual results. Secondary Overage Rent is payable
within 60 days after fiscal year-end.
For the past 10 fiscal years, the Lessee has paid the
full $752,000 of Primary Overage Rent plus Secondary Overage
Rent. For the most recent fiscal year ended September 30, 1998,
the Lessee paid $752,000 of Primary Overage Rent plus $2,282,064
of Secondary Overage Rent. Although the Lessee is permitted to
deduct accumulated losses from certain prior fiscal years against
advances for Primary Overage Rent, there is currently no
accumulated loss from past fiscal years to be deducted against
current or future payments of Primary Overage Rent. See Section
I.F. Financial Information.
3. Other Material Lease Terms
The Lessee pays all insurance, real estate tax, repair,
maintenance and other operating expenses for the Property. The
Lessee is not required to make capital improvements to the
Property.
The Lessee has the right to assign the Lease without
Associates' consent, so long as the assignee assumes all Lease
obligations. The Lessee also has the right to surrender the
Lease to Associates on 60 days' notice.
D. Fee Mortgage
The Fee Mortgage balance is currently approximately
$2,800,000, having been last refinanced in 1995, when it was
increased to provide advances for Property renovation. The
maximum Fee Mortgage authorized under this program is $15,000,000
plus refinancing costs, on the basis that (i) the proceeds of any
increase in the Fee Mortgage shall be applied to improvements and
repairs at the Property and (ii) any increased debt service on
the Fee Mortgage shall be paid by Associates from an equivalent
increase in Basic Rent paid by the Lessee.
Interest payable on the existing Fee Mortgage principal
balance is at the annual rate of 9.4%. The Fee Mortgage matures
June 1, 2000. Based upon preliminary discussions with Apple Bank
for Savings, the current holder of the Fee Mortgage, it is
anticipated that for the initial Fee Mortgage increase in 1999 of
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about $1,500,000 the annual interest rate will be about 5.2%
through such maturity date in 2000. For the subsequent Fee
Mortgage refinancing and increase at then current market interest
rates, it is anticipated that the debt service will be based on a
25-year amortization schedule and the maturity will be
approximately five years. The increase in the Fee Mortgage may
be incurred in multiple drawdowns or from different lenders, in
order to enhance borrowing cost efficiency, and the mortgage may
be standing with interest only.
E. Competition
Pursuant to new space leases, the average rental rate
currently asked of prospective office tenants at the Building is
approximately $30.00 per square foot (exclusive of electricity
charges). The Building's existing rents are currently lower than
those charged by similar office buildings of similar age and
location.
The Lessee operates the Building free of any federal,
state or local governmental rent regulation. Rents are governed
by existing leases and market conditions.
F. Financial Information
The Participants have received total distributions
representing an annual return on their original cash investment
at rates of approximately 77.0% for 1998, 52.7% for 1997, and
61.5% for 1996. These percentages were calculated by dividing
the cash payments to the Participants in each year by the
Participants' original $3,600,000 cash investment in the
Property. Certain Participants may have purchased their
interests for amounts different than the original cash
investment, and their return on their investment will thus be
different.
Each monthly installment of Basic Rent is applied to
pay monthly debt service on the Fee Mortgage and basic
supervisory compensation to Wien & Malkin LLP. Primary Overage
Rent is applied to pay monthly distributions to the Participants,
and Secondary Overage Rent is applied to pay additional
distributions to the Participants, in each case including any
required additional supervisory compensation to Wien & Malkin
LLP. See Section I.G. - Supervisory Services to Associates.
Attached are audited financial statements of Associates
as of December 31, 1996, 1997, and 1998, including in each case
the balance sheets and the related statements of income,
partners' capital and cash flows. Also, See Section VIII.
Agents' Discussion and Analysis of Financial Condition and
Results of Operation.
Rogoff & Company, P.C., serves as Associates'
independent public accountants and has performed certain other
financial accounting work for Associates, including tax return
preparation.
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G. Supervisory Services to Associates
No Agent receives remuneration from Associates for
serving as Agent. Peter L. Malkin is Chairman and Anthony E.
Malkin is Senior Director of Supervisory Services of Wien &
Malkin LLP.
Wien & Malkin LLP has acted as supervisor and legal
counsel for each of Associates and the Lessee from inception. A
non-exclusive list of Wien & Malkin LLP's supervisory services to
Associates includes maintaining partnership records, performing
physical inspections of the Property, reviewing insurance
coverage, conducting annual partnership meetings, issuing reports
to the Participants, administrative oversight of special
transactions such as the proposed program, monthly receipt of
rent from the Lessee, payment of monthly and additional
distributions to the Participants, payment of all other
disbursements, confirmation of the payment of real estate taxes,
review of financial statements submitted to Associates by the
Lessee and of audited financial statements and tax information
prepared by Associates' independent certified public accountants,
and distribution of such materials to the Participants. Wien &
Malkin LLP also prepares quarterly, annual and other periodic
filings with the Securities and Exchange Commission and
applicable state authorities.
In consideration of its supervisory services to
Associates, Wien & Malkin LLP receives (i) a basic payment of
$28,000 a year ("Basic Supervisory Compensation"), (ii) an
additional payment of $12,000 a year from Primary Overage Rent so
long as the Participants receive annual distributions of at least
$540,000 (15% of their original $3,600,000 investment) and (iii)
an additional payment of 10% of the cash distributions to
Participants from Overage Rent in excess of $540,000 (payments
under items (ii) and (iii) being "Additional Supervisory
Compensation"). Wien & Malkin LLP pays all disbursements
relating to Wien & Malkin LLP's ordinary services to Associates,
including accounting and other professional fees, filing and
search fees, document preparation, and mailing costs. For the
year ended December 31, 1998, Associates paid Wien & Malkin LLP
Basic Supervisory Compensation of $28,000 and Additional
Supervisory Compensation of $259,959.
II. OPERATIONS MATTERS
A. Proposed Improvement Program
The improvements proposed to be completed after
December 31, 1998 are shown in Exhibit A and are estimated to
cost approximately $7.7 to $10 million over five years. Each
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item has been recommended by Wien & Malkin LLP supervisory staff
after extensive review with outside engineering consultants and
on-site staff. Included in the budget are: (a) $1,107,000 for
replacement of the Building's approximately 1,300 windows, (b)
$1,415,000 for facade, courtyard, and roof set-back renovation,
(c) $685,000 for a new energy efficient chiller plant, (d)
$300,000 for converting the Building's remaining DC electrical
feeds to AC, (e) $1,012,500 for main lobby and entrance
improvements, (f) $160,000 for upgrade of public bathrooms, (g)
$1,380,000 for public corridor and elevator lobby improvements,
(h) $105,000 for security and communication system improvements,
and (i) $290,000 for upgrade and replacement of elevator
equipment and system. An additional amount has been allowed for
other work requirements which might arise during major upgrade of
systems and facade. To the extent additional work is not
required, the contingency balance will be available for
improvement of tenant spaces or will not be funded.
B. Financing
The $7.7 to $10 million estimated cost of the
improvements over approximately five years will be funded
substantially through an increase in the Fee Mortgage (from the
current approximately $2,800,000). Associates will own the
improvements paid from the Fee Mortgage proceeds and will pay the
increased debt service from an equivalent increase in Basic Rent
paid to Associates by the Lessee. The increased Basic Rent and
cash payments for improvements will be deducted in computing
Overage Rent. Assuming that $752,000 of Primary Overage Rent
continues to be fully paid each year without reduction for
funding improvements, the new debt service and improvement costs
will be borne equally by Associates and the Lessee and will be
spread through mortgage renewals over many years, thus
stabilizing distributions to Participants.
Neither Associates nor the Participants will be
personally liable for the Fee Mortgage. To minimize interest
charges, the Agents will seek the advance of the Fee Mortgage
increase in installments as the work proceeds. The maximum Fee
Mortgage debt authorized by the program will be $15,000,000, and
the actual amount will depend upon future improvements and
repairs at the Property and funding available from cash flow.
The Fee Mortgage increase, as advanced, will be held by
Associates and applied to the improvement program as expended by
the Lessee. For purposes of determining Overage Rent, the
interest earned on the temporary investment of the Fee Mortgage
increase until expended in connection with the improvement
program shall be treated as income of the Lessee.
If the Lessee were to pay for the improvements in the
first five years without such financing, the full cost would be
currently deducted against Overage Rent. 100% of the
distributions to Participants is derived from Overage Rent. If
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the full cost were deducted as spent against Overage Rent,
distributions to Participants would be significantly reduced, if
not eliminated, during the next five years. The proposed Fee
Mortgage financing will instead spread the improvement cost
through successive refinancings over a longer term and stabilize
the amount of Overage Rent payable by the Lessee for distribution
to Participants.
C. Basic Rent
Currently, Basic Rent is $317,157 a year, to be
adjusted to reflect any increase or decrease in debt service on
the existing principal amount of the Fee Mortgage. Under the
program proposed in this Statement, the Basic Rent payable to
Associates by the Lessee will increase to pay all debt service on
the increase in the Fee Mortgage.
Assuming a cumulative increase in the Fee Mortgage over
five years from $2,800,000 to $11,800,000 with interest at 7.5%
on the additional $9,000,000 and with 25 year amortization,
annual Basic Rent will increase by $798,110 to pay debt service
on the Fee Mortgage increase, and Overage Rent will decrease by
one-half of that amount, prior to any increase in Overage Rent
due to increased revenue resulting from the improvements.
D. Lease Modification
The Lease will be modified as required to confirm the
increase in Basic Rent.
E. Solicitation and Program Expenses
The expenses for the consent solicitation, lease
amendment, refinancing, recording taxes, legal fees, and related
costs will be paid from the Fee Mortgage increase which is
serviced by the Lessee's Basic Rent increase and deducted in
computing Overage Rent. Wien & Malkin LLP will represent as
counsel Associates and the Lessee in connection with this program
at standard hourly rates, and Associates will indemnify Wien &
Malkin LLP and the Agents as well as their advisers and
affiliates and the managing agent against any claim or expense
arising in connection with the program.
IV CERTAIN EFFECTS OF THE IMPROVEMENT AND FINANCING PROGRAM
A. Generally
Payment for the improvement program (whether by
repayment of the Fee Mortgage increase through increased Basic
Rent or direct payment for services and materials) is deductible
in computing Overage Rent. Therefore, each of Associates and the
Lessee will ultimately bear one-half of the cost of the
improvement program. Stated differently, the value of the
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Property and of Associates' interest in it will be enhanced, and
the Lessee will have contributed half the cost.
The Agents believe there are good prospects that
increases in rental income from tenants will offset and
ultimately be greater than the increases in the Lessee's expense
for Basic Rent over the course of the program, thus moderating or
avoiding any reduction of Overage Rent and distributions.
The improvement and financing program will have no
direct effect on the Agents as such. There is no change in the
Basic Supervisory Fee or the formula under which Wien & Malkin
LLP receives Additional Supervisory Compensation, but such
compensation will vary in proportion to any variation in Overage
Rent. See Section VI. - Potential Conflicts of Interest.
B. Tax Consequences
The improvements paid through the Fee Mortgage increase
shall be made by the Lessee as agent for Associates and shall be
the property of Associates. The applicable income tax deductions
for depreciation shall benefit the Participants. To the extent
the improvement program is funded from the Fee Mortgage increase,
non-deductible amortization payments by Associates under the Fee
Mortgage will ultimately equal the tax benefits of the
depreciation. If the proposed Fee Mortgage terms require
amortization payments through successive refinancings over a 25-
year period, the Participants will receive a timing benefit
because depreciation deductions will be available during the
early years of debt repayment when depreciation exceeds loan
amortization. Accordingly, there is a tax benefit to the
Participants as a result of the improvement and financing
program.
V. RECOMMENDATIONS
The Agents recommend that the Participants approve the
improvement and financing program, for the following reasons:
-- The improvements will attract more
creditworthy tenants at higher rental rates.
-- The improvements are needed to meet the
physical and marketing requirements of the
Property and will enhance its value.
-- The Fee Mortgage financing of the
improvements will spread their cost and stabilize
distributions to Participants. In the absence of
financing, the Agents believe that the Lessee
either (a) will not undertake all of the
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improvements so the opportunity to improve and
protect profit and distributions to Participants
will be diminished or (b) will undertake the
improvements solely with current cash flow,
thereby significantly reducing or eliminating
distributions to Participants during the next five
years.
The data and background materials regarding this
financing and improvement program are on file in the office of
Wien & Malkin LLP and are available for review by Participants.
For appointments to inspect and copy such data, and for copies of
such data by mail, call Stanley Katzman, Esq. at (212) 687-8700.
VI. POTENTIAL CONFLICTS OF INTEREST
A. Certain Ownership of Participations in Associates
As of June 1, 1999, the Agents beneficially owned,
directly or indirectly, the following Participations:
Anthony E. Malkin owned of record as co-trustee an
aggregate of $8,333 of Participations. Anthony E. Malkin
disclaims any beneficial ownership of such Participations.
Members of the family of Peter L. Malkin and Anthony E.
Malkin, or trusts for their benefit, owned of record or
beneficially $88,333.34 of other Participations. Peter L. Malkin
disclaims any beneficial ownership of such Participations.
B. Relationships with the Lessee
As of June 1, 1999, record and beneficial ownership of
13% of the Lessee is held by Peter L. Malkin, Anthony E. Malkin,
members of their family, and trusts for their benefit. Certain
actions by the Lessee require approval of no less than 75% of the
partnership interests in the Lessee. The Agents have been advised
that the requisite partners in the Lessee have approved the
improvement and financing program on the condition that the
program is approved by the Participants.
Wien & Malkin LLP receives $48,000 annually from the
Lessee for acting as supervisor and additional supervisory
compensation of 10% of distributions of cash profit of the Lessee
in excess of $100,000 per annum. Wien & Malkin LLP will serve as
counsel to Associates in connection with this program at standard
hourly rates.
The Agents and Wien & Malkin LLP as well as their
advisers and affiliates and the managing agent are being
indemnified by the Lessee and Associates in connection with the
improvement and financing program.
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VII. FEES AND EXPENSES
All fees and expenses relating to this solicitation and
the Fee Mortgage increase, including all independent consultants,
will be paid from the Fee Mortgage increase which is serviced by
the Lessee's Basic Rent increase and deducted in determining
Overage Rent.
VIII. AGENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATION
For 1998 for each original $10,000 Participation,
Associates made regular monthly distributions from Primary
Overage Rent aggregating $2,000 plus additional distributions
from Secondary Overage Rent aggregating $5,700. See Section
I.C.2. - The Lease.
The following summarizes certain material factors
affecting Associates' results of operations for the two years
ended December 31, 1998:
a. Total income increased for 1998
compared with the prior year, attributable to
increased Overage Rent.
b. Total income decreased for 1997
compared with the prior year, attributable to
decreased Overage Rent.
IX. LIQUIDITY AND CAPITAL RESOURCES
There has been no significant change in Associates'
liquidity for the twelve-month period ended December 31, 1998, as
compared with the twelve-month period ended December 31, 1997.
X. INFLATION
Inflationary trends in the economy may impact the
operations of the Lessee, and therefore, Overage Rent.
Historically, inflation generally has resulted in an increase in
Overage Rent.
XI. TERMS OF SOLICITATION OF CONSENTS
Peter L. Malkin acts for Participants owning 60% of the
original $3,600,000 investment in Associates, and Anthony E.
Malkin acts for the remaining 40% of the Participants. On June
1, 1999, no person held Participations aggregating more than 5%
of the total outstanding Participations.
On June 1, 1999, there were about 563 Participants
holding Participations. Each Participant's voting percentage in
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his or her group is determined by a fraction, whose numerator is
the face amount of the Participation and denominator is the
group's original investment in Associates.
The Joint Venture Agreement requires 75% consent for
approval of the proposals in this Statement. Under the
Participating Agreement for each group represented by a Joint
Venturer, 75% of the total Participations in such group is
required for such Joint Venturer's approval of the program.
The solicitation of consents will terminate 90 days
after the date of this Statement, but may be extended by the
Agents through December 31, 1999. There is no record date
establishing the identity of the Participants entitled to vote
for the program. Holders of Participations as of June 1, 1999
will be recognized as entitled to vote. However, if any
Participation is transferred before the consent with respect to
that Participation is given, the transferee will be entitled to
vote. If consent to the proposals has been given prior to the
transfer of a Participation, the transferee will be bound by the
vote of the transferor.
Wien & Malkin LLP has been authorized by the Agents to
solicit the consents of Participants by mail, telecopier,
telephone and telegram after the mailing of this Statement.
Consent Forms which are signed and returned without a choice
indicated will be deemed to constitute a binding consent. Any
consent (including a deemed consent) is irrevocable.
Participations are not traded on an established
securities market, nor are they readily tradable on a secondary
or equivalent market. Based on Associates' transfer records,
Participations are sold by holders from time to time in privately
negotiated transactions, and, in some instances, Associates is
unaware of the prices at which such transactions occur. However,
Associates has been advised that the known price for isolated
private sales during the past four years has ranged from $25,000
to $30,000 per $10,000 original investment.
Exhibit A
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Exhibit A
Fisk Building-250 West 57th Street
Property Improvement Schedule
Project/Item Budget
Elevator equipment and system upgrade &
replacement $ 290,000
Public corridor and elevator lobby improvements 1,380,000
Bathroom upgrades 160,000
Main lobby and entrance improvements 1,012,500
Windows replacement program 1,107,000
Facade, courtyard and setbacks renovation 1,415,000
New energy efficient chiller plant 685,000
House tanks replacement & capacity upgrade 75,000
DC electric conversion 300,000
New energy efficient heating plant 175,000
Security & communication system improvements 105,000
Misc. mechanical upgrades & new backflow system 150,000
Consultant fees 94,000
Contingency 701,500
__________
Total $7,650,000*
* Note: An additional amount of up to $2,350,000 is being
allowed for other work requirements which might arise during
major upgrade of systems and facade. To the extent additional
work is not required, this additional contingency balance will
be available for improvement of tenant spaces or will not be
funded.
CONSENT
250 WEST 57th ST. ASSOCIATES
As a Participant in 250 West 57th St. Associates, the
undersigned hereby takes the following action in response to the
letter from Peter L. Malkin to Participants in 250 West 57th St.
Associates dated June 28, 1999 and the accompanying Statement by
the Agents in the Solicitation of Participant Consents
(collectively, the "Statement"):
1. Proposed Improvement and Financing Program
CONSENT WITHHOLD CONSENT
______ Consent to _______ Disapprove of
and Approve of _______ Abstain from
Consenting to
the program for financing and completing approximately $7.7 to
$10 million of improvements, all as described in the Statement.
2. Discretionary Refinancing Authority of the Agents
CONSENT WITHHOLD CONSENT
______ Consent to _______ Disapprove of
and Approve of _______ Abstain from
Consenting to
giving present and successor Agents discretionary authority to
refinance the Fee Mortgage for a principal amount not to exceed
$15,000,000 plus refinancing costs, with an institutional lender,
non-recourse, from time to time in the future, all as described
in the Statement.
THE AGENTS RECOMMEND YOUR CONSENT TO ALL THE FOREGOING
ITEMS. A PARTICIPANT WHO ABSTAINS IS TREATED THE SAME AS A
PARTICIPANT WHO DOES NOT CONSENT.
Dated: , 1999
_________________________
Signature
PLEASE SIGN, DATE AND PROMPTLY RETURN THIS CONSENT.
ONCE GIVEN, CONSENT MAY NOT BE REVOKED.
IF THIS FORM IS SIGNED, DATED AND RETURNED WITHOUT A CHOICE
INDICATED,
THE PARTICIPANT EXECUTING SAME SHALL BE DEEMED
TO HAVE CONSENTED.
[LETTERHEARD OF
ROGOFF & COMPANY, P.C.
CERTIFED PUBLIC ACCOUNTANTS]
Independent Auditor's Report
To the Participants in
250 West 57th St. Associates (a Partnership):
We have audited the accompanying balance sheet of 250 West 57th
St. Associates as of December 31, 1998, and the related statements of
income, of partners' capital (deficit) and of cash flows for the year
then ended. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
250 West 57th St. Associates at December 31, 1998, and the results
of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
New York, New York
January 30, 1999
250 West 57th St. Associates
Balance Sheet
December 31, 1998
Assets
Cash:
Fleet Bank $ 24,124
Distribution account held by
Wien & Malkin LLP 60,000
84,124
Fisk Building, 250 West 57th Street,
New York City:
Land $2,117,435
Building $4,940,682
Less: Accumulated depreciation 4,940,682 -
Building improvements 688,000
Less: Accumulated depreciation 688,000 -
Tenants' installations and
improvements 249,791
Less: Accumulated amortization 249,791 - 2,117,435
Mortgage refinancing costs 41,106
Less: Accumulated amortization 30,013 11,093
Total Assets $2,212,652
Liabilities and Partners' Capital (Deficit)
Liabilities:
First mortgage $2,814,822
Accrued interest on first mortgage 22,049
Total liabilities 2,836,871
Partners' Capital (Deficit), December 31, 1998 ( 624,219)
Total Liabilities and Partners' Capital (Deficit) $2,212,652
The Accompanying Notes are an Integral Part of these Financial Statements.
250 West 57th St. Associates
Statement of Income
For the Year Ended December 31, 1998
Income:
Basic rent $ 317,157
Additional rent 3,034,064
Total income 3,351,221
Expenses:
Interest on first mortgage $265,616
Supervisory services 290,428
Total expenses 556,044
Net income before amortization 2,795,177
Amortization of mortgage refinancing costs 7,830
Net income $2,787,347
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Statement of Partners' Capital (Deficit)
December 31, 1998
Partners' capital (deficit), January 1, 1998 $( 639,930)
Add: Net income for the year ended December 31, 1998 2,787,347
2,147,417
Less: Monthly distributions to participants
January 1, 1998 through
December 31, 1998 $ 720,000
Distribution to participants on
November 30, 1998 of balance of
additional rent for the lease year
ended September 30, 1998 2,051,636 2,771,636
Partners' capital (deficit), December 31, 1998 $( 624,219)
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Statement of Cash Flows
For the Year Ended December 31, 1998
Cash flows from operating activities:
Net income $2,787,347
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of mortgage refinancing costs 7,830
Change in accrued interest on first mortgage ( 184)
Net cash provided by operating activities 2,794,993
Cash flows from financing activities:
Monthly distributions to participants $( 720,000)
Distribution on November 30, 1998 of balance
of additional rent for the lease year ended
September 30, 1998 (2,051,636)
Amortization payments on first mortgage ( 23,357)
Net cash used by financing activities (2,794,993)
Net change in cash -
Cash at beginning of year 84,124
Cash at end of year $ 84,124
Supplemental Cash Flow Disclosures
Year Ended December 31, 1998
Cash paid during the year for interest $ 265,800
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1998
1. Business Activity
250 West 57th St. Associates ("Associates") is a joint venture which
owns an office building located in New York City. The building is
net leased to Fisk Building Associates.
2. Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared on the accrual basis of
accounting.
Depreciation
Depreciation of the cost of the building was computed by the straight-
line method over estimated useful life of 30 years through September 30,
1983.
The cost of the building improvements was depreciated by the straight-
line method over various periods from date of completion of improvement
through September 30, 1983.
The cost of tenants' installations and improvements was amortized by
the straight-line method over the terms of the leases.
Amortization
Capitalized mortgage refinancing costs of $41,106 are being charged
to expense ratably during the period of the mortgage from March 1,
1995 to June 1, 2000.
Use of Estimates
Preparing financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts
of income and expenses during the reporting period. Actual results
could differ from those estimates.
3. Lease and Related Party Transactions
(a) Effective May 1, 1975, the lease between 250 West 57th St.
Associates as lessor, and Fisk Building Associates, as lessee,
provides for basic rent equal to mortgage principal and interest
payments plus $28,000 payable to Wien & Malkin LLP for supervisory
services. Basic rent is currently $317,157 a year to pay mortgage
charges of $289,157 and $28,000 to Wien & Malkin LLP.
Upon any refinancing of the first mortgage, the basic rent will
be modified and will be equal to the sum of $28,000, plus an amount
equal to the rate of constant payments for interest and amortization
required under any such first mortgage immediately subsequent to
refinancing computed on the principal balance of the mortgage
immediately prior to such refinancing. Thus, in the event the first
mortgage is refinanced so as to increase the principal balance, the
basic rent will not be modified to include the charges on the
additional portion of the mortgage. Associates will have to pay such
charges out of primary additional rent described below.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1998
3. Lease - (continued)
(b) In accordance with a lease modification, effective October 1, 1984,
primary additional rent is equal to the lesser of $752,000 per annum or
the net operating profit of the property, as defined, after deduction of
basic rent. If the full primary additional rent of $752,000 is paid, it
will equal 20% of the original $3,600,000 cash investment plus $32,000
payable to Wien & Malkin LLP for supervisory services. Advances against
primary additional rent are paid by the lessee based on the net
operating profit of the property for the prior year to a maximum amount
of $752,000. Primary additional rent for the lease year ended September
30, 1998 was $752,000. Advances against primary additional rent of
$752,000 per annum for the lease year ending September 30, 1999 are
being paid.
Secondary additional rent is equal to 50% of the net operating
profit of the property after payment of basic rent and primary
additional rent for lease years ending September 30. Secondary
additional rent for the lease year ended September 30, 1998 was
$2,282,064.
(c) The lessee has exercised its option to renew the lease for a
period of 25 years, from October 1, 1978 through September 30, 2003.
The lease modification, effective October 1, 1984, provides for an
additional renewal term of 25 years from October 1, 2003 through
September 30, 2028; the holders of more than 80% of the participations
in 250 West 57th St. Associates have consented to the granting of
options to the lessee to extend the lease for three additional 25-year
renewal terms. There is no change in the terms of the lease during the
renewal periods.
(d) Some partners in Fisk Building Associates are also partners in
Associates.
4. Supervisory Services and Related Party Transactions
Payments for supervisory services, including disbursements and cost of
accounting services, are made to the firm of Wien & Malkin LLP. Some
partners in that firm are also partners in Associates.
5. Professional Fees and Related Party Transactions
Payments for professional fees, including disbursements, are made to
the firm of Wien & Malkin LLP. Some members of that firm are partners
in Associates.
6. First Mortgage
(a) Effective March 1, 1995, a new first mortgage was placed on the
property with the Apple Bank for Savings in the amount of $2,890,758.
Annual mortgage charges are $289,157, payable in equal monthly
installments, applied first to interest at the rate of 9.40% per
annum and the balance to principal. The mortgage will mature on
June 1, 2000, with a balance of $2,777,754.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1998
6. First Mortgage - (continued)
(b) Prepayment privileges: The mortgage is not prepayable until
March 1, 1998. Thereafter, a 3% penalty will be imposed through
February 28, 1999 and a 2% penalty will be imposed until March 2,
2000. There will be no prepayment penalty if the mortgage is paid
in full during the last 90 days of the term of the mortgage.
(c) Principal payments required to be made are as follows:
Year Ending December 31,
1999 $ 25,650
2000 2,789,172
$2,814,822
7. Income Taxes
Net income is computed without regard to income tax expense, since
the partnership does not pay a tax on its income; instead, any such
taxes are paid by the participants in their individual capacities.
8. Concentration of Credit Risk
Associates maintains cash balances in a bank and in a distribution
account held by Wien & Malkin LLP. The bank balance is insured by
the Federal Deposit Insurance Corporation up to $100,000, and at
December 31, 1998 was completely insured. The distribution account
held by Wien & Malkin LLP is not insured. The funds held in the
distribution account were paid to the participants on January 1, 1999.
[LETTERHEARD OF
ROGOFF & COMPANY, P.C
CERTIFIED PUBLIC ACCOUNTANTS]
Independent Accountant's Report
To the Participants in
250 West 57th St. Associates (a Partnership):
We have audited the accompanying balance sheet of 250 West 57th St.
Associates as of December 31, 1997, and the related statements of income, of
partners' capital (deficit) and of cash flows for the year then ended. These
financial statements are the responsibility of management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of 250 West 57th St.
Associates at December 31, 1997, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
Kaufman Goldstein
New York, New York
January 30, 1998
250 West 57th St. Associates
Balance Sheet
December 31, 1997
Assets
Cash:
Fleet Bank $ 24,124
Distribution account held by
Wien & Malkin LLP 60,000
84,124
Fisk Building, 250 West 57th Street,
New York City:
Land $2,117,435
Building $4,940,682
Less: Accumulated depreciation 4,940,682 -
Building improvements 688,000
Less: Accumulated depreciation 688,000 -
Tenants' installations and
improvements 249,791
Less: Accumulated amortization 249,791 - 2,117,435
Mortgage refinancing costs 41,106
Less: Accumulated amortization 22,183 18,923
Total Assets $2,220,482
Liabilities and Partners' Capital (Deficit)
Liabilities:
First mortgage $2,838,179
Accrued interest on first mortgage 22,233
Total liabilities 2,860,412
Partners' Capital (Deficit), December 31, 1997 ( 639,930)
Total Liabilities and Partners' Capital (Deficit) $2,220,482
The Accompanying Notes are an Integral Part of these Financial Statements.
250 West 57th St. Associates
Statement of Income
For the Year Ended December 31, 1997
Income:
Basic rent $ 317,157
Additional rent 2,078,984
Total income 2,396,141
Expenses:
Interest on first mortgage $267,721
Supervisory services 190,708
Professional fees 19,909
Total expenses 478,338
Net income before amortization 1,917,803
Amortization of mortgage refinancing costs 7,829
Net income $1,909,974
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Statement of Partners' Capital (Deficit)
December 31, 1997
Partners' capital (deficit), January 1, 1997 $( 653,537)
Add: Net income for the year ended December 31, 1997 1,909,974
1,256,437
Less: Monthly distributions to participants
January 1, 1997 through
December 31, 1997 $ 720,000
Distribution to participants on
December 2, 1997 of balance of
additional rent for the lease year
ended September 30, 1997 1,176,367 1,896,367
Partners' capital (deficit), December 31, 1997 $( 639,930)
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Statement of Cash Flows
For the Year Ended December 31, 1997
Cash flows from operating activities:
Net income $1,909,974
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of mortgage refinancing costs 7,829
Change in accrued interest on first mortgage ( 166)
Net cash provided by operating activities 1,917,637
Cash flows from financing activities:
Monthly distributions to participants $( 720,000)
Distribution on December 2, 1997 of balance
of additional rent for the lease year ended
September 30, 1997 (1,176,367)
Amortization payments on first mortgage ( 21,270)
Net cash used by financing activities (1,917,637)
Net change in cash -
Cash at beginning of year 84,124
Cash at end of year $ 84,124
Supplemental Cash Flow Disclosures
Year Ended December 31, 1997
Cash paid during the year for interest $ 267,887
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1997
1. Business Activity
250 West 57th St. Associates ("Associates") is a joint venture which
owns an office building located in New York City. The building is
net leased to Fisk Building Associates.
2. Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared on the accrual basis of
accounting.
Depreciation
Depreciation of the cost of the building was computed by the straight-
line method over estimated useful life of 30 years through
September 30, 1983.
The cost of the building improvements was depreciated by the straight-
line method over various periods from date of completion of improvement
through September 30, 1983.
The cost of tenants' installations and improvements was amortized by
the straight-line method over the terms of the leases.
Amortization
Capitalized mortgage refinancing costs of $41,106 are being charged to
expense ratably during the period of the mortgage from March 1, 1995 to
June 1, 2000.
Use of Estimates
Preparing financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of income and
expenses during the reporting period. Actual results could differ from
those estimates.
3. Lease and Related Party Transactions
(a) Effective May 1, 1975, the lease between 250 West 57th St.
Associates as lessor, and Fisk Building Associates, as lessee, provides
for basic rent equal to mortgage principal and interest payments plus
$28,000 payable to Wien & Malkin LLP for supervisory services. Basic
rent is currently $317,157 a year to pay mortgage charges of $289,157
and $28,000 to Wien & Malkin LLP.
Upon any refinancing of the first mortgage, the basic rent will be
modified and will be equal to the sum of $28,000, plus an amount equal
to the rate of constant payments for interest and amortization required
under any such first mortgage immediately subsequent to refinancing
computed on the principal balance of the mortgage immediately prior to
such refinancing. Thus, in the event the first mortgage is refinanced
so as to increase the principal balance, the basic rent will not be
modified to include the charges on the additional portion of the
mortgage. Associates will have to pay such charges out of primary
additional rent described below.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1997
3. Lease - (continued)
(b) In accordance with a lease modification, effective October 1, 1984,
primary additional rent is equal to the lesser of $752,000 per annum
or the net operating profit of the property, as defined, after
deduction of basic rent. If the full primary additional rent of
$752,000 is paid, it will equal 20% of the original $3,600,000 cash
investment plus $32,000 payable to Wien & Malkin LLP for supervisory
services. Advances against primary additional rent are paid by the
lessee based on the net operating profit of the property for the prior
year to a maximum amount of $752,000. Primary additional rent for
the lease year ended September 30, 1997 was $752,000. Advances
against primary additional rent of $752,000 per annum for the lease
year ending September 30, 1998 are being paid.
Secondary additional rent is equal to 50% of the net operating
profit of the property after payment of basic rent and primary
additional rent for lease years ending September 30. Secondary
additional rent for the lease year ended September 30, 1997 was
$1,326,984.
(c) The lessee has exercised its option to renew the lease for a
period of 25 years, from October 1, 1978 through September 30, 2003.
The lease modification, effective October 1, 1984, provides for an
additional renewal term of 25 years from October 1, 2003 through
September 30, 2028; the holders of more than 80% of the participations
in 250 West 57th St. Associates have consented to the granting of
options to the lessee to extend the lease for three additional
25-year renewal terms. There is no change in the terms of the lease
during the renewal periods.
(d) Some partners in Fisk Building Associates are also partners in
Associates.
4. Supervisory Services and Related Party Transactions
Payments for supervisory services, including disbursements and cost of
accounting services, are made to the firm of Wien & Malkin LLP. Some
partners in that firm are also partners in Associates.
5. Professional Fees and Related Party Transactions
Payments for professional fees, including disbursements, are made to
the firm of Wien & Malkin LLP. Some members of that firm are partners
in Associates.
6. First Mortgage
(a) Effective March 1, 1995, a new first mortgage was placed on the
property with the Apple Bank for Savings in the amount of $2,890,758.
Annual mortgage charges are $289,157, payable in equal monthly
installments, applied first to interest at the rate of 9.40% per annum
and the balance to principal. The mortgage will mature on June 1, 2000,
with a balance of $2,777,754.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1997
6. First Mortgage - (continued)
(b) Prepayment privileges: The mortgage is not prepayable until
March 1, 1998. Thereafter, a 3% penalty will be imposed through
February 28, 1999 and a 2% penalty will be imposed until March 2,
2000. There will be no prepayment penalty if the mortgage is paid
in full during the last 90 days of the term of the mortgage.
(c) Principal payments required to be made are as follows:
Year Ending December 31,
1998 $ 23,358
1999 25,650
2000 2,789,171
$2,838,179
7. Income Taxes
Net income is computed without regard to income tax expense, since
the partnership does not pay a tax on its income; instead, any such
taxes are paid by the participants in their individual capacities.
8. Concentration of Credit Risk
Associates maintains cash balances in a bank and in a distribution
account held by Wien & Malkin LLP. The bank balance is insured by
the Federal Deposit Insurance Corporation up to $100,000, and at
December 31, 1997 was completely insured. The distribution account
held by Wien & Malkin LLP is not insured. The funds held in the
distribution account were paid to the participants on January 1,
1998.
Independent Accountant's Report
To the Participants in
250 West 57th St. Associates (a Partnership):
We have audited the accompanying balance sheet of 250 West
57th St. Associates as of December 31, 1996, and the related
statements of income, of partners' capital (deficit) and of cash
flows for the year then ended. These financial statements are the
responsibility of management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
250 West 57th St. Associates at December 31, 1996, and the results
of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Kaufman Goldstein
New York, New York
January 23, 1997
250 West 57th St. Associates
Balance Sheet
December 31, 1996
Assets
Cash:
Fleet Bank $ 24,124
Distribution account held by
Wien, Malkin & Bettex LLP 60,000
84,124
Fisk Building, 250 West 57th Street,
New York City:
Land $2,117,435
Building $4,940,682
Less: Accumulated depreciation 4,940,682 -
Building improvements 688,000
Less: Accumulated depreciation 688,000 -
Tenants' installations and
improvements 249,791
Less: Accumulated amortization 249,791 - 2,117,435
Mortgage refinancing costs 41,106
Less: Accumulated amortization 14,354 26,752
Total Assets $2,228,311
Liabilities and Partners' Capital (Deficit)
Liabilities:
First mortgage $2,859,449
Accrued interest on first mortgage 22,399
Total liabilities 2,881,848
Partners' Capital (Deficit), December 31, 1996 ( 653,537)
Total Liabilities and Partners' Capital (Deficit) $2,228,311
The Accompanying Notes are an Integral Part of these Financial Statements.
250 West 57th St. Associates
Statement of Income
For the Year Ended December 31, 1996
Income:
Basic rent $ 317,157
Additional rent 2,410,477
Total income 2,727,634
Expenses:
Interest on first mortgage $269,636
Supervisory services 225,848
Total expenses 495,484
Net income before amortization 2,232,150
Amortization of mortgage refinancing costs 7,830
Net income $2,224,320
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Statement of Partners' Capital (Deficit)
December 31, 1996
Partners' capital (deficit), January 1, 1996 $( 665,228)
Add: Net income for the year ended December 31, 1996 2,224,320
1,559,092
Less: Monthly distributions to participants
January 1, 1996 through
December 31, 1996 $ 720,000
Distribution to participants on
November 30, 1996 of balance of
additional rent for the lease year
ended September 30, 1996 1,492,629 2,212,629
Partners' capital (deficit), December 31, 1996 $( 653,537)
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Statement of Cash Flows
For the Year Ended December 31, 1996
Cash flows from operating activities:
Net income $2,224,320
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of mortgage refinancing costs 7,830
Change in accrued interest on first mortgage ( 152)
Net cash provided by operating activities 2,231,998
Cash flows from financing activities:
Monthly distributions ($ 720,000)
Distribution on November 30, 1996 of balance
of additional rent for the lease year ended
September 30, 1996 ( 1,492,629)
Principal payments on first mortgage ( 19,369)
Net cash used by financing activities (2,231,998)
Net change in cash -
Cash at beginning of year 84,124
Cash at end of year $ 84,124
Supplemental Cash Flow Disclosures
Year Ended December 31, 1996
Cash paid during the year for interest $ 269,788
The Accompanying Notes are an Integral part of these Financial Statements.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1996
1. Business Activity
250 West 57th St. Associates ("Associates") is a joint venture which
owns an office building located in New York City. The building is net
leased to Fisk Building Associates.
2. Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared on the accrual basis of
accounting.
Depreciation
Depreciation of the cost of the building was computed by the straight-
line method over estimated useful life of 30 years through September 30,
1983.
The cost of the building improvements was depreciated by the straight-
line method over various periods from date of completion of improvement
through September 30, 1983.
The cost of tenants' installations and improvements was amortized by the
straight-line method over the terms of the leases.
Amortization
Capitalized mortgage refinancing costs of $41,106 are being charged to
expense ratably during the period of the mortgage from March 1, 1995 to
June 1, 2000.
Use of Estimates
Preparing financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of income and
expenses during the reporting period. Actual results could differ from
those estimates.
3. Lease and Related Party Transactions
(a) Effective May 1, 1975, the lease between 250 West 57th St.
Associates as lessor, and Fisk Building Associates, as lessee, provides
for basic rent equal to mortgage principal and interest payments plus
$28,000 payable to Wien, Malkin & Bettex LLP for supervisory services.
Basic rent is currently $317,157 a year to pay mortgage charges of
$289,157 and $28,000 to Wien, Malkin & Bettex LLP.
Upon any refinancing of the first mortgage, the basic rent will be
modified and will be equal to the sum of $28,000, plus an amount equal
to the rate of constant payments for interest and amortization required
under any such first mortgage immediately subsequent to refinancing
computed on the principal balance of the mortgage immediately prior to
such refinancing. Thus, in the event the first mortgage is refinanced
so as to increase the principal balance, the basic rent will not be
modified to include the charges on the additional portion of the
mortgage. Associates will have to pay such charges out of primary
additional rent described below.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1996
3. Lease - (continued)
(b) In accordance with a lease modification, effective October 1, 1984,
primary additional rent is equal to the lesser of $752,000 per annum or
the net operating profit of the property, as defined, after deduction of
basic rent. If the full primary additional rent of $752,000 is paid, it
will equal 20% of the original $3,600,000 cash investment plus $32,000
payable to Wien, Malkin & Bettex LLP for supervisory services. Advances
against primary additional rent are paid by the lessee based on the net
operating profit of the property for the prior year to a maximum amount
of $752,000. Primary additional rent for the lease year ended September
30, 1996 was $752,000. Advances against primary additional rent of
$752,000 per annum for the lease year ending September 30, 1997 are
being paid.
Secondary additional rent is equal to 50% of the net operating
profit of the property after payment of basic rent and primary
additional rent for lease years ending September 30. Secondary
additional rent for the lease year ended September 30, 1996 was
$1,658,477.
(c) The lessee has exercised its option to renew the lease for a period
of 25 years, from October 1, 1978 through September 30, 2003. The lease
modification, effective October 1, 1984, provides for an additional
renewal term of 25 years from October 1, 2003 through September 30,
2028; the holders of more than 80% of the participations in 250 West
57th St. Associates have consented to the granting of options to the
lessee to extend the lease for three additional 25-year renewal terms.
There is no change in the terms of the lease during the renewal periods.
(d) Some partners in Fisk Building Associates are also partners in
Associates.
4. Supervisory Services and Related Party Transactions
Payments for supervisory services, including disbursements and cost of
accounting services, are made to the firm of Wien, Malkin & Bettex LLP.
Some partners in that firm are also partners in Associates.
5. First Mortgage
(a) Effective March 1, 1995, a new first mortgage was placed on the
property with the Apple Bank for Savings in the amount of $2,890,758.
Annual mortgage charges are $289,157, payable in equal monthly
installments, applied first to interest at the rate of 9.40% per annum
and the balance to principal. The mortgage will mature on June 1,2000,
with a balance of $2,777,754.
250 West 57th St. Associates
Notes to Financial Statements
December 31, 1996
5. First Mortgage - (continued)
(b) Prepayment privileges: The mortgage is not prepayable until March
1, 1998. Thereafter, a 3% penalty will be imposed through February 28,
1999 and a 2% penalty will be imposed until March 2, 2000. There will
be no prepayment penalty if the mortgage is paid in full during the last
90 days of the term of the mortgage.
(c) Principal payments required to be made are as follows:
Year Ending December 31,
1997 $ 21,270
1998 23,358
1999 25,650
2000 2,789,171
$2,859,449
6. Income Taxes
Net income is computed without regard to income tax expense, since the
partnership does not pay a tax on its income; instead, any such taxes
are paid by the participants in their individual capacities.
7. Concentration of Credit Risk
Associates maintains cash balances in a bank and in a distribution
account held by Wien, Malkin & Bettex LLP. The bank balance is insured
by the Federal Deposit Insurance Corporation up to $100,000, and at
December 31, 1996 was completely insured. The distribution account held
by Wien, Malkin & Bettex LLP is not insured. The funds held in the
distribution account were paid to the participants on January 1, 1997.
