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, 1997
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,
1997 1996 1997 1996
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- 914,282 1,071,252
---------- --------- ---------- ----------
Total income 291,875 291,875 1,789,907 1,946,877
---------- --------- ---------- ----------
Expenses:
Leasehold rent (Note B) 121,875 121,875 365,625 365,625
Supervisory services, to a
related party (Note C) 10,000 10,000 111,828 127,525
Amortization of leasehold 1,631 1,631 4,893 4,893
---------- --------- ---------- ----------
Total expenses 133,506 133,506 482,346 498,043
---------- --------- ---------- ----------
Net income $ 158,369 $ 158,369 $1,307,561 $1,448,834
========== ========= ========== ==========
Earnings per $5,000 partici-
pation unit, based on 640
participation units out-
standing during the year $ 247.45 $ 247.45 $ 2,043.06 $ 2,263.80
========== ========= ========== ==========
Distributions per $5,000
participation consisted
of the following:
Income $ 247.45 $ 247.45 $ 2,043.06 $ 2,263.80
Return of capital 1303.26 1,524.00 7.65 7.65
----------- ---------- ----------- -----------
Total distributions $ 1,550.71 $1,771.45 $ 2,050.71 $ 2,271.45
=========== ========== =========== ===========
At September 30, 1997 and 1996, there were $3,200,000 of participations
outstanding.<PAGE>
Navarre-500 Building Associates
Condensed Statement of Income
(Unaudited) 3.
Assets September 30, 1997 December 31, 1996
Current assets
Cash $ 135,625 $ 53,333
---------- ----------
Total current assets 135,625 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 3,026,558 3,021,665
---------- ----------
173,442 178,335
---------- ----------
Total assets $ 309,067 $ 231,668
========== ==========
Liabilities and Capital
Current liabilities
Deferred credit:
Portion of rent income
collected in advance for the
month of December, 1997 $ 82,292 $ -0-
---------- ----------
Total current liabilities 82,292 -0-
---------- ----------
Capital
Capital January 1, 231,668 238,193
Add, Net income:
January 1, 1997 through Sept. 30,1997 1,307,561 -0-
January 1, 1996 through Dec. 31, 1996 -0- 1,607,202
---------- ----------
1,539,229 1,845,395
Less, Distributions:
Monthly distributions,
January 1, 1997 through Sept. 30, 1997 480,000 -0-
January 1, 1996 through Dec. 31, 1996 -0- 640,000
Distribution on August 29, 1997
of Additional Rent for the
lease year ended June 30, 1997 832,454 -0-
Distribution on August 31, 1996
of Additional Rent for the
lease year ended June 30, 1996 -0- 973,727
---------- ----------
Total distributions 1,312,454 1,613,727
---------- ----------
Capital:
September 30, 1997 226,775 -0-
December 31, 1996 -0- 231,668
---------- ----------
Total liabilities and capital:
September 30, 1997 $ 309,067
December 31, 1996 ========== $ 231,668
==========<PAGE>
4.
Navarre-500 Building Associates
Condensed Statement of Cash Flows
(Unaudited)
January 1, 1997 January 1, 1996
through through
September 30, 1997 September 30, 1996
Cash flows from operating activities:
Net income $1,307,561 $1,448,834
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of leasehold 4,893 4,893
Change in deferred credit 82,292 82,292
----------- -----------
Net cash provided by operating
activities 1,394,746 1,536,019
----------- -----------
Cash flows from financing activities:
Cash distributions (1,312,454) (1,453,727)
----------- -----------
Net cash used in financing
activities (1,312,454) (1,453,727)
----------- -----------
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, 1997
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 LLP,
counsel to Registrant and to Sublessee ("Counsel"). See Note
C of this Item 1 ("Note C"). <PAGE>
Navarre-500 Building Associates 6.
September 30, 1997
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, 1997, Sublessee
paid Additional Rent of $914,282. After additional payment
for supervisory services of $81,828 to Counsel, the $832,454
balance was distributed to the Participants on August 29,
1997. 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, 1997, 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, 1997 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, 1997.
Registrant paid Counsel an additional payment of $81,828 for
the nine month period ended September 1997.
The supervisory services provided to Registrant by
Counsel include legal, administrative and financial services.
The legal and administrative services include acting as
general counsel to Registrant, maintaining all of its
partnership and Participant records, performing physical
inspections of the Building, reviewing insurance coverage and
conducting annual partnership meetings. Financial services
include monthly receipt of rent from 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<PAGE>
Navarre-500 Building Associates 7.
September 30, 1997
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 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, 1997, 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, 1997, 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, $7,500 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<PAGE>
Navarre-500 Building Associates 8.
September 30, 1997
the Basic Rent is distributed to the Participants.
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, 1997,
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, 1997 as compared with the three
month period ended September 30, 1996. Total income
decreased for the nine month period ended September 30, 1997
as compared with the nine month period ended September 30,
1996. Such decrease resulted from a decrease in the
Additional Rent paid by Sublessee for the lease year ended
June 30, 1997. See Note B.
Total expenses remained the same for the three
month period ended September 30, 1997 as compared with the
three month period ended September 30, 1996. Total expenses
increased for the nine month period ended September 30, 1997,
as compared with the nine month period ended September 30,
1996. Such decrease resulted mainly from a decrease in the
Additional Payment paid to Counsel based on the Additional
Rent for the lease year ended June 30, 1997. See Note B.
Liquidity and Capital Resources
There has been no significant change in Registrant's
liquidity for the three and nine month periods ended September 30,
1997 as compared with the three and nine month periods ended
September 30, 1996. <PAGE>
Navarre-500 Building Associates 9.
September 30, 1997
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, 1996, which report and all exhibits thereto are
incorporated herein by reference and made a part hereof.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Wien & Malkin LLP, et. al. v. Helmsley-Spear, Inc., et.
al. On June 19, 1997 Wien & Malkin LLP and Peter L. Malkin filed
an action in the Supreme Court of the State of New York, on behalf
of themselves and various partnerships, including Registrant,
against Helmsley-Spear, Inc. and Leona Helmsley. The filing of
the action was accompanied by a motion for a Temporary Restraining
Order and a Preliminary Injunction by which the plaintiffs sought
the return of over $5,000,000 in Empire State Building Company
funds which were being wrongfully held by Helmsley-Spear, Inc., an
order preventing Leona Helmsley from further violations of the
partnership agreements of the partnerships, and expedited
discovery of Helmsley-Spear, Inc. and Leona Helmsley regarding the
financial status of Helmsley-Spear, Inc. In their complaint,
plaintiffs sought the same relief requested in the motion for a
Temporary Restraining Order and Preliminary Injunction, as well as
the removal of Helmsley-Spear, Inc. as managing and leasing agent
for all of the buildings owned by the partnerships on whose behalf
the action was brought. Plaintiffs also sought an order
precluding Leona Helmsley from exercising any partner management
powers in the partnerships. In August, 1997, the Supreme Court
directed that the foregoing claims proceed to arbitration. As a
result, Mr. Malkin and Wien & Malkin LLP have filed an arbitration
complaint against Helmsley-Spear, Inc. and Mrs. Helmsley before
the American Arbitration Association. Helmsley-Spear, Inc. and
Mrs. Helmsley have served answers denying liability and asserting
various affirmative defenses and counterclaims. Mr. Malkin and
Wien & Malkin LLP intend to file a reply denying the
counterclaims; the reply is due December, 1997.<PAGE>
Navarre-500 Building Associates 10.
September 30, 1997
Item 6. Exhibits and Report on Form 8-K
(a) The exhibit hereto is incorporated by reference.
(b) Registrant filed a Form 8-K on July 1, 1997
reporting the commencement of an action against Helmsley-Spear,
Inc. and Leona M. Helmsley. See Item 1.<PAGE>
Navarre-500 Building Associates 11.
September 30, 1997
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*
Dated: November 25, 1997
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*
Dated: November 25, 1997
______________________
* Mr. Katzman supervises accounting functions for
Registrant.<PAGE>
Navarre-500 Building Associates 12.
September 30, 1997
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.<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Balance Sheet as of September 30, 1997 and the Statement Of Income
for the period ended September 30, 1997, and is qualified in its entirety by
reference to such financial statements.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 135,625
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 135,625
<PP&E> 3,200,000
<DEPRECIATION> 3,026,558
<TOTAL-ASSETS> 309,067
<CURRENT-LIABILITIES> 82,292<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 226,775
<TOTAL-LIABILITY-AND-EQUITY> 309,067
<SALES> 1,789,907<F2>
<TOTAL-REVENUES> 1,789,907
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 482,346<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,307,561
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,307,561
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,307,561
<EPS-PRIMARY> 2,043.06<F4>
<EPS-DILUTED> 2,043.06<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>
<PAGE>
</TABLE>
