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, 1995
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 0-2673
NAVARRE-500 BUILDING ASSOCIATES
(Exact name of registrant as specified in its charter)
A New York Partnership 13-6082674
(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 11 of this Report.
Number of pages (including exhibits) in this filing: 11.<PAGE>
Navarre-500 Building Associates 2.
June 30, 1995
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Navarre-500 Building Associates
Condensed Statement of Income
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
Income:
Rent income, from a related
party (Note B) $ 291,875 $ 291,875 $ 583,750 $ 583,750
Additional rent, from
a related party (Note B) 840,704 503,579 840,704 503,579
---------- ---------- ---------- ----------
Total income 1,132,579 795,454 1,424,454 1,087,329
---------- ---------- ---------- ----------
Expenses:
Leasehold rent (Note B) 121,875 121,875 243,750 243,750
Supervisory services, to a
related party (Note C) 84,470 50,758 94,470 60,758
Amortization of leasehold 5,742 5,742 11,484 11,484
---------- ---------- ---------- ----------
Total expenses 212,087 178,375 349,704 315,992
---------- ---------- ---------- ----------
Net income $ 920,492 $ 617,079 $1,074,750 $ 771,337
========== ========== ========== ==========
Earnings per $5,000 partici-
pation unit, based on 640
participation units out-
standing during the year $ 1,438.27 $ 964.19 $ 1,679.30 $ 1,205.21
========== ========== ========== ==========
Distributions per $5,000
participation consisted
of the following:
Income $ 1,438.27 $ 964.19 $ 1,679.30 $ 1,205.21
Increase in capital (1,188.27) (714.19) (1,179.30) (705.21)
----------- ---------- ----------- -----------
Total distributions $ 250.00 $ 250.00 $ 500.00 $ 500.00
=========== ========== =========== ===========
At June 30, 1995 and 1994, there were $3,200,000 of participations
outstanding.<PAGE>
Navarre-500 Building Associates 3.
June 30, 1995
Navarre-500 Building Associates
Condensed Statement of Income
(Unaudited)
Assets June 30, 1995 December 31, 1994
Current assets
Cash $ 135,625 $ 53,333
Additional rent due from
Sublessee, a related party (Note B) 840,704 -0-
---------- ----------
Total current assets 976,329 53,333
Real Estate
Leasehold on property situated
at 500 and 512 Seventh Avenue
New York, New York 3,200,000 3,200,000
Less, allowance for amortization 3,020,099 3,008,615
---------- ----------
179,901 191,385
---------- ----------
Total assets $1,156,230 $ 244,718
========== ==========
Liabilities and Capital
Current liabilities
Accrued expense (Note C) $ 74,470 $ -0-
Deferred credit:
Portion of rent income collected in
advance for the month of December 1995 82,292 -0-
---------- ----------
Total current liabilities 156,762 -0-
---------- ----------
Capital
Capital January 1, 244,718 267,684
Add, Net income:
January 1, 1995 through June 30, 1995 1,074,750 -0-
January 1, 1994 through December 31, 1994 -0- 1,079,855
---------- ----------
1,319,468 1,347,539
Less, Distributions:
Monthly distributions,
January 1, 1995 through June 30, 1995 320,000 -0-
January 1, 1994 through
December 31, 1994 -0- 640,000
Distribution on August 31, 1994
of Additional Rent for the
lease year ended June 30, 1994 -0- 462,821
---------- ----------
Total distributions 320,000 1,102,821
---------- ----------
Capital:
June 30, 1995 999,468 -0-
December 31, 1994 -0- 244,718
---------- ----------
Total liabilities and capital:
June 30, 1995 $1,156,230
December 31, 1994 ========== $ 244,718
==========<PAGE>
Navarre-500 Building Associates 4.
June 30, 1995
Navarre-500 Building Associates
Condensed Statement of Cash Flows
(Unaudited)
January 1, 1995 January 1, 1994
through through
June 30, 1995 June 30, 1994
Cash flows from operating activities:
Net income $1,074,750 $ 771,337
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of leasehold 11,484 11,484
Change in Additional
Rent due from Sublessee (840,704) (503,579)
Change in deferred credit 82,292 82,292
Change in accrued
supervisory services 74,470 40,758
----------- -----------
Net cash provided by operating
activities 402,292 402,292
----------- -----------
Cash flows from financing activities:
Cash distributions (320,000) (320,000)
----------- -----------
Net cash used in financing
activities (320,000) (320,000)
----------- -----------
Change in cash during quarter 82,292 82,292
Cash, beginning of period 53,333 53,333
----------- -----------
Cash, end of period $ 135,625 $ 135,625
=========== ===========<PAGE>
Navarre-500 Building Associates 5.
June 30, 1995
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 presented therein not misleading.
Note B Interim Period Reporting
The results for interim periods are not
necessarily indicative of the results to be expected for a
full year.
Registrant was organized on March 21, 1958.
Registrant owns the tenant's interest in the master operating
leasehold (the "Master Lease") of the buildings located at
500 and 512 Seventh Avenue and 228 West 38th Street, New
York, New York (the "Property"). Registrant's partners are
Peter L. Malkin and C. Michael Spero (the "Partners"). The
land underlying the buildings is owned by an unaffiliated
third party and is leased to Registrant under a long-term
ground lease (the "Lease"). The current term of the Lease
expires on May 1, 2003. The Lease provides for two
additional 21-year renewal options. If these options are
both exercised, the Lease will expire on May 1, 2045. The
annual rent payable by Registrant under the Lease is $487,500
during the current and each renewal term.
Registrant does not operate the Property, but
subleases the Property to 500-512 Seventh Avenue Associates
(the "Sublessee") pursuant to a net operating sublease (the
"Sublease"), the current renewal term of which will expire on
April 30, 2003. The Sublease provides for two renewal
options for terms co-extensive with those contained in the
Lease. Peter L. Malkin, a partner in Registrant, is also a
partner in Sublessee. The Partners in Registrant are also
members of the law firm of Wien, Malkin & Bettex, counsel to<PAGE>
Navarre-500 Building Associates 6.
June 30, 1995
Registrant and to Sublessee (the "Counsel"). See Note C of
this Item 1 ("Note C").
Under the Sublease, Sublessee must pay (i) annual
basic rent of $1,167,500 during the current renewal term and
each additional renewal term (the "Basic Rent") and (ii)
additional rent to Registrant during the current term and
each renewal term equal to 50% of Sublessee's net operating
profit in excess of $620,000 for each lease year ending June
30 (the "Additional Rent").
For the lease year ended June 30, 1995, Sublessee
paid Additional Rent of $840,704. After additional payment
for supervisory services of $74,470 to Counsel, the $766,234
balance will be distributed to the Participants on August 31,
1995. Additional Rent income is recognized when earned from
the Sublessee, at the close of the lease year ending June 30.
No additional Rent is accrued by Registrant for the period
between Sublessee's lease year and Registrant's fiscal year.
Note C Supervisory Services
Registrant pays Counsel, for supervisory services
and disbursements, $40,000 per annum (the "Basic Payment")
plus 10% of all distributions to Participants in any year in
excess of the amount representing a return at the rate of 23%
per annum on their remaining cash investment in Registrant
(the "Additional Payment"). At June 30, 1995, such remaining
cash investment was $3,200,000, representing the original
cash investment of the Participants in Registrant.
No remuneration was paid during the three and six
month period ended June 30, 1995 by Registrant to either of
the Partners as such. Pursuant to the fee arrangements
described herein, Registrant paid Counsel $10,000 and
$20,000, respectively, of the Basic Payment for supervisory
services for the three and six month period ended June 30,
1995.
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 Sublessee, payment of
monthly rent to the fee owner, 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 Sublessee and financial<PAGE>
Navarre-500 Building Associates 7.
June 30, 1995
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 and distributes to the Participants
quarterly source of distribution reports.
Reference is made to Note B for a description of
the terms of the Sublease between Registrant and Sublessee.
The respective interests, if any, of the Partners in the
Registrant and Sublessee arise solely from their respective
ownership of participations, if any, in Registrant and, in
the case of Mr. Malkin, his ownership of a partnership
interest in Sublessee. The Partners receive no extra or
special benefit not shared on a pro rata basis with all other
Participants in Registrant or partners in Sublessee.
However, each of the Partners, by reason of his respective
partnership interest in Counsel, is entitled to receive his
pro rata share of any legal fees or other remuneration paid
to such law firm for legal services rendered to Registrant
and Sublessee.
As of June 30, 1995, the Partners owned of record
and beneficially $20,000 of participations in Registrant,
representing less than 1% of the currently outstanding
participations therein.
In addition, as of June 30, 1995, certain of the
Partners in Registrant (or their respective spouses) held
additional Participations as follows:
Isabel W. Malkin, the wife of Peter L. Malkin,
owned of record and beneficially $5,000 of
Participations. Mr. Malkin disclaims any
beneficial ownership of such Participations.
Peter L. Malkin, Trustee of Mattee Saunders 1983
Trust, owned $2,500 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.
As stated in Note B, Registrant was organized for
the purpose of acquiring the Master Lease subject to a net
operating sublease held by Sublessee. Basic Rent received
under the Sublease is used to pay annual rent due under the
Master Lease and the Basic Payment to Counsel for supervisory
services. The balance of the Basic Rent is distributed to
the Participants. Additional Rent is distributed to the<PAGE>
Navarre-500 Building Associates 8.
June 30, 1995
Participants after the Additional Payment to Counsel. See
Note C of Item 1 above. Pursuant to the Sublease, Sublessee
has assumed sole responsibility for the condition, operation,
repair, maintenance and management of the Property.
Registrant has no requirement to 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, 1995, Registrant
made regular monthly distributions of $83.33 for each $5,000
participation ($1,000 per annum for each $5,000
participation). There are no restrictions on Registrant's
present or future ability to make distributions; however, the
amount of such distributions depends solely on the ability of
Sublessee to make payments of Basic Rent and Additional Rent
to Registrant in accordance with the terms of the Sublease.
Registrant expects to make distributions so long as it
receives the payments provided for under the Sublease. See
Note B of Item 1 above.
Registrant's results of operations are affected
primarily by the amount of rent payable to it under the
Sublease. 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, 1995 as compared with the three and
six month periods ended June 30, 1994. Such increase
resulted from an increase in Additional Rent payable by
Sublessee for the lease year ended June 30, 1995. See Note
B.
Total expenses increased for the three and six
month periods ended June 30, 1995 as compared with the three
and six month periods ended June 30, 1994. Such increase
resulted from an increase in the Additional Payment to be
made to Counsel based on the Additional Rent for the lease
year ended June 30, 1995. 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, 1995 as compared with the three and six month
periods ended June 30, 1994.
Registrant anticipates that funds for working
capital will continue to be provided by rental payments
received from Sublessee and, to the extent necessary, from<PAGE>
Navarre-500 Building Associates 9.
June 30, 1995
additional capital investment by the partners in Sublessee
and/or external financing. However, Registrant is not
required to maintain substantial reserves to defray any
operating expenses of the Property. Registrant foresees no
need to make material commitments for capital expenditures
while the Sublease 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 annual report on Form 10-K for the year ended
December 31, 1994, which report and all exhibits thereto are
incorporated herein by reference and made a part hereof.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There are no pending legal proceedings to which
Registrant is a party.
Item 6. Exhibits and Report on Form 8-K
(a) None.
(b) Registrant has not filed any report on Form
8-K during the quarter for which this report is being filed.<PAGE>
Navarre-500 Building Associates 10.
June 30, 1995
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 March 30, 1989 (the "Power").
NAVARRE-500 BUILDING ASSOCIATES
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: August 7, 1995
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 7, 1995
_________________________
* Mr. Katzman supervises accounting functions for
Registrant.<PAGE>
Navarre-500 Building Associates 11.
June 30, 1995
EXHIBIT INDEX
Registrant is not filing any exhibit as part of
this quarterly report on Form 10-Q.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 135,625
<SECURITIES> 0
<RECEIVABLES> 840,704
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 976,329
<PP&E> 3,200,000
<DEPRECIATION> 3,020,099
<TOTAL-ASSETS> 1,156,230
<CURRENT-LIABILITIES> 156,762<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 999,468
<TOTAL-LIABILITY-AND-EQUITY> 1,156,230
<SALES> 1,424,454<F2>
<TOTAL-REVENUES> 1,424,454
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 349,704<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,074,750
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,074,750
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,074,750
<EPS-PRIMARY> 1,679.30<F4>
<EPS-DILUTED> 1,679.30<F4>
<FN>
<F1>Accrued expense of $74,470 and deferred credit of $82,292
<F2>Rental income
<F3>Leasehold rent expense of $243,750, supervisory services of
$94,470 and amortization of leasehold of $11,484
<F4>Earnings per $5,000 participation unit, based 640 participation
units outstanding during the year
</FN>
</TABLE>
