FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 0-768
GARMENT CAPITOL ASSOCIATES
(Exact name of registrant as specified in its
charter)
A New York Partnership 13-6083208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 East 42nd Street, New York, New York 10165
(Address of principal executive offices)
(Zip Code)
(212) 687-8700
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ]. No [ ].
An Exhibit Index is located on Page 14 of this Report.
Number of pages (including exhibits) in this filing: 17
<PAGE>
2.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Garment Capitol Associates
Condensed Statement of Income
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Income:
Rent income, from a related
party (Note B) $272,500 $272,500 $545,000 $545,000
Dividend income 10 80 21 2,926
Interest income 26,819 -0- 26,819 -0-
-------- -------- -------- --------
Total income 299,329 272,580 571,840 547,926
-------- -------- -------- --------
Expenses:
Interest on mortgage 111,883 82,609 192,039 165,994
Supervisory services, to a
related party (Note C) 10,625 10,625 21,250 21,250
Amortization of mortgage
refinancing costs 7,042 7,042 14,084 14,085
-------- -------- -------- --------
Total expenses 129,550 100,276 227,373 201,329
-------- -------- -------- --------
Net income $169,779 $172,304 $344,467 $346,597
======== ======== ======== ========
Earnings per $5,000 partici-
pation unit, based on 1,050
participation units outstand-
ing during the year $ 161.69 $ 164.10 $ 328.06 $ 330.09
======== ======== ======== ========
Distributions per $5,000 parti-
cipation unit consisted of the
following:
Income $ 142.36 $ 145.74 $ 284.72 $ 291.48
======== ======== ======== ========
At June 30, 1996 and 1995, there were $5,250,000 of participations
outstanding.
<PAGE>
3.
Garment Capitol Associates
Condensed Balance Sheet
(Unaudited)
Assets June 30, 1996 December 31, 1995
Current assets
Cash $ 106,352 $ 88,199
Due from lessee 1,011,896 -0-
---------- ----------
Total current assets 1,118,248 88,199
---------- ----------
Real Estate
Land 2,500,000 2,500,000
---------- ----------
Building 8,000,000 8,000,000
Less, allowance for depreciation 8,000,000 8,000,000
---------- ----------
-0- -0-
---------- ----------
Intangible assets
Mortgage refinancing costs 107,050 107,050
Less, allowance for amortization 67,109 53,025
---------- ----------
39,941 54,025
---------- ----------
Total assets $3,658,189 $2,642,224
========== ==========
Liabilities and Capital
Current liabilities
Accrued interest payable $ 34,335 $ 26,906
Prepaid interest 9,066 -0-
Principal payments of first mortgage
payable within one year 3,999,947 133,052
---------- ----------
Total current liabilities 4,043,348 159,958
Long-term debt -0- 2,912,936
---------- ----------
4,043,348 3,072,894
---------- ----------
Capital
Capital deficit, January 1, (430,670) (512,096)
Add, Net income:
January 1, 1996 through June 30, 1996 344,467
January 1, 1995 through December 31, 1995 693,538
Less, Distributions:
Monthly distributions,
January 1, 1996 through June 30, 1996 298,956
January 1, 1995 through December 31, 1995 612,112
---------- ----------
Capital deficit:
June 30, 1996 (385,159)
December 31, 1995 (430,670)
---------- ----------
Total liabilities and capital deficit:
June 30, 1996 $3,658,189
December 31, 1995 $2,642,224
========== ==========
<PAGE>
4.
Garment Capitol Associates
Condensed Statement of Cash Flows
(Unaudited)
January 1, 1996 January 1, 1995
through through
June 30, 1966 June 30, 1995
Cash flows from operating activities:
Net income $ 344,467 $ 346,597
Adjustments to reconcile net income
to cash provided by operating activities:
Amortization of mortgage refinancing costs 14,084 14,085
Change in accrued interest payable 7,429 (37,922)
Change in prepaid interest 9,066 -0-
--------- ---------
Net cash provided by
operating activities 375,046 322,760
Cash flows from financing activities:
Cash distributions (298,956) (306,056)
Change in due from lessee (1,011,896) -0-
Change in first mortgage 953,959 (205,262)
Mortgage refinancing costs -0- (37,568)
--------- ---------
Net cash used in financing activities (356,893) (548,886)
--------- ---------
Net increase (decrease) in cash 18,153 (226,126)
Cash, beginning of period 88,199 321,323
--------- ---------
Cash, end of period $ 106,352 $ 95,197
========= =========
January 1, 1996 January 1, 1995
through through
June 30, 1996 June 30, 1995
Cash paid for:
Interest $ 184,610 $ 203,916
========= ========
<PAGE>
Garment Capitol Associates 5.
June 30, 1996
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 partners in Registrant, necessary for a fair
statement of the results for such interim periods. The partners
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 pre-
sented 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 was organized on January 10, 1957. On May 1,
1957, Registrant acquired fee title to the Garment Capitol
Building (the "Building") and the land thereunder, located at 498
Seventh Avenue, New York, New York (the "Property"). Registrant's
partners are Stanley Katzman, John L. Loehr and Peter L. Malkin
(collectively the "Partners"), each of whom also acts as an agent
for holders of participations in their respective partnership
interests in Registrant (the "Participants").
Registrant does not operate the Property. Registrant leased
the Property to 498 Seventh Avenue Associates (the "Original
Lessee") under a net operating lease (the "Lease") which commenced
as of May 1, 1957 and currently expires on April 30, 2007. Lessee
has one 25-year renewal option which has not been exercised and
which, if exercised, will extend the Lease to April 30, 2032.
In 1994 and 1995, the Original Lessee made capital calls on
its partners in the aggregate amount of $1,300,000 to defray
certain operating expenses and improvement costs at the Property.
Despite these new capital infusions, however, the Original Lessee
concluded that to return the Property to profitability would
require a very large additional capital investment, estimated by
<PAGE>
Garment Capitol Associates 6.
June 30, 1996
the Original Lessee to be as high as $16,000,000. Therefore, on
December 29, 1995, in accordance with the terms of the Operating
Lease, the Original Lessee assigned the Operating Lease to 4987
Corporation (the "New Lessee"), thereby effectively terminating
the liability of the Original Lessee and its partners under the
Lease. The shares in the New Lessee are owned by the partners in
the Original Lessee except that a substantial portion of the
shares owned by Peter L. Malkin are held by him for the benefit of
members of his family but he retains voting control.
The New Lessee has paid basic rent under the Lease through
August 1, 1996. Registrant applied or reserved these rents to
cover (1) its monthly mortgage payments to the Apple Bank for
Savings ("Apple Bank") on Registrants' fee mortgage on the
Property (the "Mortgage Loan"), (2) its monthly fee for
supervisory services and (3) its distributions to the Participants
in Registrant. The New Lessee did not pay the New York City real
estate taxes and Business Improvement District ("BID") assessments
in the amounts of $936,180.00 and $29,695.14, respectively, and
certain other minor assessments and charges aggregating less than
$1,500, all of which were due on January 1, 1996 or shortly
thereafter. The New Lessee also failed to pay the New York City
real estate taxes and BID assessments in the amounts of
$1,053,254.50 and $28,529.26, respectively, which were due on July
1, 1996. As a result, although payment of the January 1, 1996 and
July 1, 1996 real estate taxes and BID assessments has been made
as described below, the New Lessee is in default of the Operating
Lease as of January 1, 1996.
The New Lessee has requested that Registrant forbear from
exercising its rights and remedies under the Lease, including
termination of the Lease, by reason of the failure to pay the
January 1, 1996 and July 1, 1996 real estate taxes and BID
assessments, while Registrant solicits the consent of the
Participants to a sale of the Property. On July 26, 1996, the
Partners mailed to the Participants a STATEMENT ISSUED BY THE
AGENTS IN CONNECTIONS WITH THE SOLICITATIONS OF THE CONSENTS OF
THE PARTICIPANTS (the "Statement") requesting their authorization
for a sale of the Property and forbearance in favor of the New
Lessee. The details of the Partners' proposal are provided in the
Statement. If Registrant does forbear, the New Lessee has agreed
to cooperate fully with Registrant in connection with the sale of
the Property and to continue to perform its other obligations
under the Lease, including payment of basic rent, to enable
Registrant to continue its monthly distributions to the
Participants, pay its supervisory fee and pay its monthly mortgage
obligation. The continuation of the Lease will also serve to
insulate Registrant from third party liabilities attendant on
property operations. Because the consent solicitation program
includes the continuation of the Lease with the New Lessee,
<PAGE>
Garment Capitol Associates 7.
June 30, 1996
Registrant has not yet sent a notice of default under the Lease
based on the failure of the New Lessee to pay the January 1, 1996
and July 1, 1996 real estate taxes and BID assessments but the
Partners have been advised that Registrant's right to send such a
notice has not been affected by this delay or by the acceptance of
rent since the default.
Although the failure to pay the January 1, 1996 and July 1,
1996 real estate taxes and BID assessments also constitutes a
breach of Registrant's obligations under the Mortgage Loan, Apple
Bank has agreed to forbear from exercising its rights and remedies
during the period of the solicitation of consents through a sale
of the Property based on arrangements made between the
shareholders of the New Lessee (or designees on their behalf) and
Apple Bank to fund the January 1, 1996 real estate taxes and BID
assessments and certain future real estate taxes and BID
assessments on the Property (together with the January 1, 1996
real estate taxes, the "Real Estate Taxes") through protective
advances under the Mortgage Loan. The shareholders of the New
Lessee (or designees on their behalf) have personally borrowed
from Apple Bank (a) on April 2, 1996, the sum of $1,012,274.18,
equal to the January 1, 1996 real estate taxes and BID assessments
and interest thereon to the date of the borrowing, and certain
other minor city charges and interest aggregating less than $1,500
and (b) on June 28, 1996, the sum of $1,081,783.76 equal to the
July 1, 1996 real estate taxes and BID assessment. The April 2,
1996 borrowing was used to fund a protective advance by Apple Bank
to pay the January 1, 1996 real estate taxes and BID assessments,
interest thereon and such minor charges, through the purchase of a
subordinate participating interest in the Mortgage Loan in such
amount. The June 28, 1996 borrowing was used to fund a protective
advance by Apple Bank to pay the July 1, 1996 Real Estate Taxes
and BID assessments through the purchase of an additional
subordinate participating interest in the Mortgage Loan in such
amount. Interest and principal required to be paid on the
protective advances and on any future protective advances will be
paid by the New Lessee so long as the Lease continues in effect.
As to future Real Estate Taxes, Apple Bank has agreed to make
additional personal loans to such individual shareholders (or
their designees) to fund further protective advances to cover the
Real Estate Taxes due January 1, 1997 (covering the period to June
30, 1997). Those individual borrowers intend to borrow the funds
from Apple Bank and fund the protective advances as required to
pay the January 1, 1997 Real Estate Taxes if the Participants
approve the program to sell the Property as described in the
Statement and so long as the Lease continues in effect.
<PAGE>
Garment Capitol Associates 8.
June 30, 1996
The Original Lessee was a partnership in which Peter L.
Malkin was among the partners. The stockholders in the New Lessee
are the partners in the Original Lessee. The Partners in
Registrant are also members of the law firm of Wien, Malkin &
Bettex, 60 East 42nd Street, New York, New York, counsel to
Registrant and to Original Lessee ("Counsel").
Under the Lease, New Lessee must pay (i) annual basic rent of
$1,090,000 (the "Basic Rent") to Registrant and (ii) additional
rent equal to 50% of New Lessee's net operating profit in excess
of $200,000 for each Lease year (the "Additional Rent").
Additional Rent income is recognized when earned from the New
Lessee, at the close of the lease years ending April 30. Such
income, if any, is not determinable until the New Lessee, pursuant
to the Lease, renders to Registrant a certified report on the
operation of the Property. The Lease does not provide for the New
Lessee to render interim reports to Registrant, so no Additional
Rent income is reflected for the period between the end of the
lease year and the end of Registrant's fiscal year.
The current term of the Lease expires on April 30, 2007, and
the Lease is subject to the renewal option described above.
Pursuant to the Lease, the Lessee has the option of surrendering
its leasehold interest, at any time, upon 60 days' prior written
notice without further liability after the date of surrender. In
addition, the New Lessee has the right to assign the Lease,
without Registrant's consent, so long as the assignee assumes, in
writing, all of the obligations of the Lease.
On March 23, 1995, Registrant entered into a Modification
and Extension Agreement (the "Modification"), as of December 1,
1992, with Apple Bank the Mortgage Loan, which was originally made
on November 30, 1987 in the principal amount of $3,485,000. The
Mortgage Loan is secured by a first mortgage on the Property.
Lessee reported net loss of $1,862,412 for the lease year
ended April 30, 1996; therefore, there was no additional rent
payable for such lease year. Consequently, no additional payments
for supervisory services were payable to Counsel for the lease
year ended April 30, 1996.
Note C - Supervisory Services
Registrant pays Counsel for supervisory services and
disbursements (i) the basic payment of $42,500 per annum ("Basic
Payment"); (ii) an additional annual basic payment of the first
$37,500 of Additional Rent paid by Lessee in any lease year
<PAGE>
Garment Capitol Associates 9.
June 30, 1996
("Additional Basic Payment"); and (iii) an additional payment of
10% of all distributions to Participants in any year in excess of
the amount representing a return at the rate of 18% per annum on
their remaining cash investment in any year (the "Additional
Payment"). The Additional Basic Payment will be payable in each
year only from Additional Rent received by Registrant from New
Lessee. If Additional Rent in any year is inadequate to cover the
Additional Basic Payment, such deficiency shall be payable in the
following year in which Additional Rent is sufficient.
No remuneration was paid during the three month period ended
June 30, 1996 by Registrant to any of the Partners as such.
Pursuant to the fee arrangements described herein, Registrant paid
Counsel $42,500 during the fiscal year ended December 31, 1995.
Registrant also paid Counsel $10,625 and $21,250, respectively, of
the Basic Payment for supervisory services for the three and six
month periods ended June 30, 1996.
The supervisory services provided to Registrant by Counsel
include legal, administrative services and financial services.
The legal and administrative services include acting as general
counsel to Registrant, maintaining all of its partnership records,
performing physical inspections of the Building, reviewing
insurance coverage and conducting annual partnership meetings.
Financial services include monthly receipt of rent from the New
Lessee, payment of monthly and additional distributions to the
Participants, payment of all other disbursements, confirmation of
the payment of real estate taxes, and active review of financial
statements submitted to Registrant by the Lessee and financial
statements audited by and tax information prepared by Registrants'
independent certified public accountant, and distribution of such
materials to the Participants. Counsel also prepares quarterly,
annual and other periodic filings with the Securities and Exchange
Commission and applicable state authorities.
Reference is made to Note B of Item 1 ("Note B") for a
description of the terms of the Lease between Registrant and New
Lessee. As of June 30, 1996, Mr. and Mrs. Peter L. Malkin own
shares in the New Lessee. Mr. Malkin disclaims any beneficial
ownership of Mrs. Malkin's interest in the New Lessee.
The respective interests of Messrs. Katzman, Loehr and
Malkin, if any, in Registrant arise solely from the ownership of
their respective participations in Registrant. The Partners
receive no extra or special benefit not shared on a pro rata basis
with all other Participants in Registrant or partners in the New
Lessee. However, each of the Partners, by reason of his
respective interest in Counsel, is entitled to receive his pro
<PAGE>
Garment Capitol Associates 10.
June 30, 1996
rata share of any legal fees or other remuneration paid to Counsel
for legal and supervisory services rendered to Registrant and the
New Lessee.
As of June 30, 1996, the Partners owned of record and
beneficially an aggregate $50,000 of Participations, representing
less than 1% of the currently outstanding Participations in
Registrant.
In addition, as of June 30, 1996, certain of the Partners in
Registrant (or their respective spouses) held additional
Participations in Registrant as follows:
Peter L. Malkin owned of record as trustee, but not
beneficially, $5,000 of Participations. Mr. Malkin
disclaims any beneficial ownership of such Participations.
Isabel Malkin, the wife of Peter L. Malkin, owned of record
and beneficially, $21,250 of Participations. Mr. Malkin
disclaims any beneficial ownership of such Participations.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Registrant was organized solely for the purpose of acquiring
the Property subject to the Lease. Registrant is required to pay
from Basic Rent the annual charges due under the Mortgage Loan and
the Basic Payment for supervisory services, and to distribute the
balance to the Participants. Additional Rent is distributed to
the Participants after the Additional Basic Payment and the
Additional Payment is made to Counsel. See Note C of Item 1
("Note C"). Pursuant to the Lease, the New Lessee has assumed
responsibility for the condition, operation, repair, maintenance
and management of the Property. Registrant need not maintain
substantial reserves or otherwise maintain liquid assets to defray
any operating expenses of the Property.
Registrant does not pay dividends. During the three and six
month periods ended June 30, 1996, Registrant made regular monthly
distributions of $47.45 for each $5,000 participation ($569.40 per
annum for each $5,000 participation). As a result of no
Additional Rent being payable to Registrant for the lease year
ended April 30, 1996, there was no additional distribution for
1996. There are no restrictions on Registrant's present or future
ability to make distributions; however, the amount of such distri-
butions depends solely on the ability of New Lessee to make
monthly payments of Basic Rent and Additional Rent to Registrant
<PAGE>
Garment Capitol Associates 11.
June 30, 1996
in accordance with the terms of the Lease. Registrant expects to
make distributions so long as it receives the payments provided
for under the Lease. See Note B.
Registrant's results of operations are affected primarily by
the amount of rent payable to it under the Lease. The following
summarizes, with respect to the current period and the
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 six month
periods ended June 30, 1996, as compared with the
three and six month periods ended June 30, 1995.
Such increase resulted mainly from interest income
on a loan to the Lessee. Total expenses increased
for the three and six month periods ended June 30,
1996, as compared with the three and six month
periods ended June 30, 1995. Such increase
resulted from an increase in interest expense on
the first mortgage reflecting interest on
additional principal borrowed for the payment of
Real Estate Taxes. See Note B.
Liquidity and Capital Resources
There has been no significant change in Registrant's
liquidity for the three and six month periods ended June 30, 1996
as compared with the three and six month periods ended June 30,
1995. As stated in Note B, Apple Bank has extended the Mortgage
Loan until December 1, 1997.
Registrant believes that the value of the Property is
currently in excess of the amount of the mortgage balance and
anticipates that the value of the Property will be in excess of
the mortgage balance at maturity. Changes in the short-term or
long-term financial liquidity position of Registrant are dependent
on the payments made by New Lessee under the Lease. Registrant
foresees no need for it to make material commitments for capital
expenditures while the 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,
1995, which report and all exhibits thereto are incorporated
herein by reference and made a part hereof.
<PAGE>
Garment Capitol Associates 12.
June 30, 1996
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings to which
Registrant is a party.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits hereto are being incorporated by
reference.
(b) Registrant filed a Definitive Proxy Statement on
Schedule 14A on July 25, 1996.
<PAGE>
Garment Capitol Associates 13.
June 30, 1996
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
Partners in Registrant, pursuant to a Power of Attorney, dated
April 10, 1996 (the "Power").
GARMENT CAPITOL ASSOCIATES
(Registrant)
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-fact*
Date: August 14, 1996
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 Partners in Registrant, pursuant
to the Power, on behalf of Registrant and as a Partner in
Registrant on the date indicated.
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-fact*
Date: August 14, 1996
______________________
* Mr. Katzman supervises accounting functions for
Registrant.
<PAGE>
Garment Capitol Associates 14.
June 30, 1996
EXHIBIT INDEX
Number Document Page*
2(a) Proxy Statement issued by the Agents
in connection with the solicitation
of consents of the Participants, which
was filed on Schedule 14A by Registrant
on July 25, 1996 and is incorporated
herein by reference.
2(b) Letter to Participant dated August 8,
1996 and accompanying financial reports
for the lease years ended April 30, 1996
and April 30, 1995. Foregoing material
shall not be deemed to be "filed" with
the Commission or otherwise subject to
the liabilities of Section 18 of the
Securities Exchange Act of 1934.
25 Power of Attorney dated April 10, 1996
between Peter L. Malkin, John L. Loehr
and Stanley Katzman as Partners in
Registrant and Richard A. Shapiro and
Stanley Katzman, which was filed as
Exhibit 25 to Registrant's 10-Q for
the quarter ended March 31, 1996 and
is incorporated herein by reference.
______________________
* Page references are based on a sequential numbering system.
[LETTERHEAD OF WIEN, MALKIN & BETTEX]
Exhibit 2(b)
August 8, 1996
TO PARTICIPANTS IN GARMENT CAPITOL ASSOCIATES:
We enclose the comparative combined operating report of
4987 Corporation and 498 Seventh Avenue Associates, for the
lease years ended April 30, 1996 and April 30, 1995. Additional
rent is payable to Garment Capitol Associates equal to 50% of
net profit in excess of $200,000 per annum. The lessee incurred
a loss of $1,862,412 for the lease year ended April 30, 1996;
therefore, there was no additional rent.
On July 26, 1996, we wrote to inform you of recent
developments regarding your investment in Garment Capitol
Associates, the fee owner of 498 Seventh Avenue in New York
City, and to request your consent to a sale of the property.
If you have any question, please communicate with Stanley
Katzman (212) 850-2630.
Cordially yours,
WIEN, MALKIN & BETTEX
BY: Stanley Katzman
SK:fm
Encs.
<PAGE>
[LETTERHEAD OF KAUFMAN GOLDSTEIN]
4987 Corporation
60 East 42nd Street
New York, New York 10165
Gentlemen:
In accordance with our engagement, we have reviewed the
special-purpose comparative combined statement of income and
expense, as defined, of 4987 Corporation and 498 Seventh Avenue
Associates for the lease years ended April 30, 1996 and 1995.
Our engagement included the examination of statements of
receipts and disbursements, together with supporting records,
submitted by Helmsley-Spear, Inc., the managing agent for the
property, but did not include the verification by direct
communication of the income from tenants or liabilities and
disbursements to vendors.
In our opinion, subject to the above, the accompanying
special-purpose comparative combined statement of income and
expense presents fairly the combined net operating (loss), as
defined, of 4987 Corporation and 498 Seventh Avenue Associates
for the lease years ended April 30, 1996 and 1995.
Respectfully submitted,
Kaufman Goldstein
New York, New York
May 22, 1996
<PAGE>
4987 Corporation and 498 Seventh Avenue Associates
Comparative Combined Statement of Income and Expense
(Unaudited)
May l, 1995 May 1, 1994
through through Increase
April 30, 1996 April 30, 1995 (Decrease)
Income:
Rent $6,280,797 $6,395,782 ($114,985)
Electricity - net (52,167) (32,770) ( 19,397)
Real estate tax refund -0- 470,454 ( 470,454)
Miscellaneous 113,276 105,293 7,983
--------- --------- ---------
Total Income 6,341,906 6,938,759 ( 596,853)
--------- --------- ---------
Expenses:
Rent paid 1,090,000 1,090,000 -0-
Labor costs 1,467,021 1,348,879 118,142
Real estate taxes 1,999,790 2,455,608 ( 455,818)
Repairs, supplies and improvements 1,874,920 2,684,061 ( 809,141)
Management and leasing 689,280 588,076 101,204
Steam 294,386 196,903 97,483
Water - net 123,975 ( 28,315) 152,290
Professional fees 207,839 280,256 ( 72,417)
Insurance 187,832 190,016 ( 2,184)
Amortization of elevator
improvements 201,183 201,183 -0-
Interest on notes payable -
re elevator improvements -0- 2,937 ( 2,937)
Fire alarm service 27,559 30,356 ( 2,797)
Cartage 12,882 50,240 ( 37,358)
Miscellaneous 27,651 70,590 ( 42,939)
---------- ---------- ---------
Total Expenses 8,204,318 9,160,790 ( 956,472)
--------- --------- ---------
Net (loss) for the lease year ( 1,862,412) ( 2,222,031) ( 359,619)
Less, Exclusion under lease -0- -0- -0-
----------- ----------- ----------
Net income subject to
additional rent -0- -0- -0-
$========== $========== $=========
Additional rent, at 50% -0- -0- -0-
$========== $========== $========
The accompanying letter of transmittal is an integral part of this statement.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Balance Sheet as of June 30, 1996 and the Statement Of Income
for the period ended June 30, 1996, and is qualified in its entirety by
reference to such financial statements
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 106,352
<SECURITIES> 0
<RECEIVABLES> 1,011,896<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,118,248
<PP&E> 10,500,000
<DEPRECIATION> 8,000,000
<TOTAL-ASSETS> 3,658,189<F2>
<CURRENT-LIABILITIES> 4,043,348<F3>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (385,159)
<TOTAL-LIABILITY-AND-EQUITY> 3,658,189
<SALES> 545,000<F4>
<TOTAL-REVENUES> 571,840<F5>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 35,334<F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 192,039
<INCOME-PRETAX> 344,467
<INCOME-TAX> 0
<INCOME-CONTINUING> 344,467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 344,467
<EPS-PRIMARY> 328.06<F7>
<EPS-DILUTED> 328.06<F7>
<FN>
<F1>Due from lessee
<F2>Includes unamortized mortgage refinancing costs
<F3>Accrued interest and first mortgage principal payment due
within one year and prepaid interest
<F4>Rental income
<F5>Includes dividend income and interest income
<F6>Supervisory services and amortization of mortgage refinancing costs
<F7>Earnings per $5,000 participation unit, based on 1,050 participation
units outstanding during the period
</FN>
</TABLE>
