FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 0-2673
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>
2.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Navarre-500 Building Associates
Condensed Statement of Income
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Income:
Rent income, from a related
party (Note B) $ 291,875 $ 291,875 $ 875,625 $ 875,625
Additional rent, from
a related party (Note B) -0- -0- 1,071,252 840,704
---------- --------- ---------- ----------
Total income 291,875 291,875 1,946,877 1,716,329
---------- --------- ---------- ----------
Expenses:
Leasehold rent (Note B) 121,875 121,875 365,625 365,625
Supervisory services, to a
related party (Note C) 10,000 10,000 127,525 104,470
Amortization of leasehold 1,631 5,742 4,893 17,226
---------- --------- ---------- ----------
Total expenses 133,506 137,617 498,043 487,321
---------- --------- ---------- ----------
Net income $ 158,369 $ 154,258 $1,448,834 $1,229,008
========== ========= ========== ==========
Earnings per $5,000 partici-
pation unit, based on 640
participation units out-
standing during the year $ 247.45 $ 241.03 $ 2,263.80 $ 1,920.32
========== ========= ========== ==========
Distributions per $5,000
participation consisted
of the following:
Income $ 247.45 $ 241.03 $ 2,263.80 $ 1,920.32
Return of capital 1,524.00 1,206.21 7.65 26.92
----------- ---------- ----------- -----------
Total distributions $ 1,771.45 $1,447.24 $ 2,271.45 $ 1,947.24
=========== ========== =========== ===========
At September 30, 1996 and 1995, there were $3,200,000 of participations
outstanding.<PAGE>
Navarre-500 Building Associates
Condensed Statement of Income
(Unaudited) 3.
Assets September 30, 1996 December 31, 1995
Current assets
Cash $ 135,625 $ 53,334
---------- ----------
Total current assets 135,625 53,334
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 3,020,029 3,015,137
---------- ----------
179,971 184,863
---------- ----------
Total assets $ 315,596 $ 238,197
========== ==========
Liabilities and Capital
Current liabilities
Deferred credit:
Portion of rent income
collected in advance for the
month of December, 1996 $ 82,292 $ -0-
---------- ----------
Total current liabilities 82,292 -0-
---------- ----------
Capital
Capital January 1, 238,197 244,722
Add, Net income:
January 1, 1996 through Sept. 30,1996 1,448,834
January 1, 1995 through Dec. 31, 1995 1,399,709
---------- ----------
1,687,031 1,644,431
Less, Distributions:
Monthly distributions,
January 1, 1996 through Sept. 30, 1996 480,000
January 1, 1995 through Dec. 31, 1995 640,000
Distribution on August 31, 1995
of Additional Rent for the
lease year ended June 30, 1995 766,234
Distribution on August 31, 1996
of Additional Rent for the
lease year ended June 30, 1996 973,727
---------- ----------
Total distributions 1,453,727 1,406,234
---------- ----------
Capital:
September 30, 1996 233,304
December 31, 1995 238,197
---------- ----------
Total liabilities and capital:
September 30, 1996 $ 315,596
December 31, 1995 ========== $ 238,197
==========<PAGE>
4.
Navarre-500 Building Associates
Condensed Statement of Cash Flows
(Unaudited)
January 1, 1996 January 1, 1995
through through
September 30, 1996 September 30, 1995
Cash flows from operating activities:
Net income $1,448,834 $1,229,008
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of leasehold 4,893 17,226
Change in deferred credit 82,292 82,292
----------- -----------
Net cash provided by operating
activities 1,536,019 1,328,526
----------- -----------
Cash flows from financing activities:
Cash distributions (1,453,727) (1,246,234)
----------- -----------
Net cash used in financing
activities (1,453,727) (1,246,234)
----------- -----------
Change in cash 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.
September 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 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 Stanley Katzman (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, 2024. The Lease provides for one 21-year
renewal option. If this option is 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 the
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, 2024. The Sublease provides for one renewal
option. If this option is exercised the Sublease will expire
on April 30, 2045. 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 Registrant and to Sublessee ("Counsel"). See Note
C of this Item 1 ("Note C"). <PAGE>
Navarre-500 Building Associates 6.
September 30, 1996
Under the Sublease, Sublessee must pay (i) annual
basic rent of $1,167,500 during the current renewal term and
the additional renewal term (the "Basic Rent") and (ii)
additional rent to Registrant during the current term and the
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, 1996, Sublessee
paid Additional Rent of $1,071,252. After additional payment
for supervisory services of $97,525 to Counsel, the $973,727
balance was distributed to the Participants on August 31,
1996. 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 September 30, 1996, 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 nine
month periods ended September 30, 1996 by Registrant to
either of the Partners as such. Pursuant to the fee
arrangements described herein, Registrant paid Counsel
$10,000 and $30,000, respectively, of the Basic Payment for
the three and nine month periods ended September 30, 1996.
Registrant paid Counsel an additional payment of $97,525 for
the nine month period ended September 1996.
The supervisory services provided to Registrant by
Counsel include legal and administrative services and
financial services. The legal and administrative services
include acting as general counsel to Registrant, maintaining
all of its partnership and Participant records, performing
physical inspections of the Building, reviewing insurance
coverage and conducting annual partnership meetings.
Financial services include monthly receipt of rent from
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, review of financial statements
submitted to Registrant by Sublessee, review of financial
statements audited by and tax information prepared by
Registrant's independent certified public accountant, and
distribution of such materials to the Participants. Counsel<PAGE>
Navarre-500 Building Associates 7.
September 30, 1996
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 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 and supervisory
services rendered to Registrant and Sublessee.
As of September 30, 1996, the Partners owned of
record and beneficially $33,125 of participations in
Registrant, representing about 1% of the currently
outstanding participations therein.
In addition, as of September 30, 1996, 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 owned of record as a trustee, but
not beneficially, $2,500 of Participations. Mr.
Malkin disclaims any beneficial ownership of such
Participations.
Stanley Katzman owned of record as a trustee, but
not beneficially, $5,000 of Participations. Mr.
Katzman 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 the
Sublease. 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.<PAGE>
Navarre-500 Building Associates 8.
September 30, 1996
Additional Rent is distributed to the Participants after the
Additional Payment to Counsel. See Note C. Pursuant to the
Sublease, Sublessee has assumed 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 nine month periods ended September 30, 1996,
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.
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 remained the same for the three
month period ended September 30, 1996 as
compared with the three month period ended
September 30, 1995. Total income increased
for the nine month period ended September 30,
1996 as compared with the nine month period
ended September 30, 1995. Such increase
resulted from an increase in the Additional
Rent paid by Sublessee for the lease year
ended June 30, 1996. See Note B. Total
expenses decreased for the three month period
ended September 30, 1996 as compared with the
three month period ended September 30, 1995.
Such decrease resulted from a decrease in
amortization of leasehold. Total expenses
increased for the nine month period ended
September 30, 1996, as compared with the nine
month period ended September 30, 1995. Such
increase resulted mainly from an increase in
the Additional Payment paid to Counsel based
on the Additional Rent for the lease year
ended June 30, 1996. See Note B.<PAGE>
Navarre-500 Building Associates 9.
September 30, 1996
Liquidity and Capital Resources
There has been no significant change in Registrant's
liquidity for the three and nine month periods ended September 30,
1996 as compared with the three and nine month periods ended
September 30, 1995.
Registrant anticipates that funds for working capital
will continue to be provided by Sublessee through rental payments
made in accordance with the terms of the Sublease. 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, 1995, 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 material legal proceedings to which
Registrant is a party.
Item 6. Exhibits and Report on Form 8-K
(a) The exhibit hereto is incorporated by reference.
(b) Registrant has not filed any report on Form
8-K during the quarter for which this report is being filed.<PAGE>
Navarre-500 Building Associates 10.
September 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
August 6, 1996 (the "Power").
NAVARRE-500 BUILDING ASSOCIATES
(Registrant)
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: November 13, 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: November 13, 1996
______________________
* Mr. Katzman supervises accounting functions for
Registrant.<PAGE>
Navarre-500 Building Associates 11.
September 30, 1996
EXHIBIT INDEX
Number Document Page*
25 Power of Attorney dated August
6, 1996, between Peter L. Malkin
and Stanley Katzman as Partners
in Registrant and Richard A.
Shapiro and Stanley Katzman.
______________________
*Page references are based on sequential numbering system.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Balance Sheet as of September 30, 1996 and the Statement Of Income
for the period ended September 30, 1996, and is qualified in its entirety by
reference to such financial statements.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 135,625
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 135,625
<PP&E> 3,200,000
<DEPRECIATION> 3,020,029
<TOTAL-ASSETS> 315,596
<CURRENT-LIABILITIES> 82,292<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 233,304
<TOTAL-LIABILITY-AND-EQUITY> 315,596
<SALES> 1,946,877<F2>
<TOTAL-REVENUES> 1,946,877
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 498,043<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,448,834
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,448,834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,448,834
<EPS-PRIMARY> 2,263.80<F4>
<EPS-DILUTED> 2,263.80<F4>
<FN>
<F1>Deferred credit
<F2>Rental income and additional rent
<F3>Leasehold rent expense, supervisory services and
amortization of leasehold
<F4>Earnings per $5,000 participation unit, based on 640 participation units
outstanding during the period
</FN>
</TABLE>
