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 March 31, 2000
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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Navarre-500 Building Associates
Condensed Statement of Income
(Unaudited)
For the Three Months
Ended March 31,
2000 1999
Income:
Rent income, from a
related party (Note B) $ -0- $ 291,875
Dividend Income 33,046 -0-
Interest Income 35,034 -0-
--------- ---------
Total income 68,080 291,875
--------- ---------
Expenses:
Leasehold rent (Note B) -0- 121,875
Supervisory services, to a
related party (Note C) -0- 10,000
Amortization of leasehold -0- 1,632
Interest Expense 9,542 -0-
--------- ---------
Total expenses 9,542 133,507
--------- ---------
Net income $ 58,538 $ 158,368
========= =========
Earnings per $5,000
participation unit, based on
640 participation units
outstanding during the period $ 91.47 $ 247.45
========= =========
Distributions per $5,000
Participation:
Income $ 91.47 $ 247.45
Return of capital 73,528.66 2.55
--------- ---------
Total distributions 73,620.13 $ 250.00
========= =========
At March 31, 2000 and 1999, there were $3,200,000 of
participations outstanding.
Navarre-500 Building Associates
Condensed Balance Sheet
(Unaudited)
Assets March 31, 2000 December 31, 1999
Cash $ -0- $ 62,816
Purchase money note
receivable -0- 52,500,000
Accrued interest receivable -0- 56,937
Escrow Account held by
Wien & Malkin LLP 2,822,827 -0-
----------- -----------
Total Assets 2,822,827 $52,619,753
=========== ===========
Current Liabilities
Accrued expenses of Sale
of Leasehold -0- $ 212,647
Advances from partner,
a related party -0- 2,525,935
----------- -----------
Total Current liabilities $ -0- $ 2,738,582
=========== ===========
Capital
Capital January 1: $49,881,171 218,618
Add, Net income of Partnership -0- 617,182
Add, Net income of co-tenancy:
January 1, 2000 through
March 31, 2000 58,538
January 1, 1999 through
December 31, 1999 -0- 49,685,371
----------- -----------
$49,939,709 $50,521,171
Distributions of partnership:
Cash distributions $47,116,882 640,000
In-kind liquidating distributions
to partners of their undivided
interests of partnership assets
on December 23, 1999, at cost -0- 195,000
----------- ----------
TOTAL DISTRIBUTIONS $47,116,882 $ 835,800
Navarre-500 Building Associates
Condensed Balance Sheet
(Unaudited)
(continued)
Contribution, on December 23, 1999 March 31, 2000 December 31, 1999
to capital co-tenancy of cost
basis of co-tenants' undivided
interests in assets received on
dissolution of partnership -0- 195,000
Co-Tenants' Capital
March 31, 2000 $2,822,827 -0-
Co-Tenant Capital
December 31, 1999 -0- $49,881,171
---------- -----------
Total liabilities and
Co-Tenants' Capital:
March 31, 2000 $2,822,827
==========
December 31, 1999 $52,619,753
===========
Navarre-500 Building Associates
Condensed Statement of Cash Flows
(Unaudited)
January 1, 2000 January 1, 1999
through through
March 31, 2000 March 31, 1999
Cash flows from operating activities:
Net income $ 58,538 $ 158,368
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of leasehold -0- 1,632
Change in deferred credit -0- 82,292
----------- ----------
Net cash provided by operating
activities 58,538 242,292
----------- ----------
Cash flows from investing activities:
Purchase Money Note receivable $52,500,000 -0-
Accrued Interest receivable 56,937 -0-
Accrued expenses of sale (212,647) -0-
----------- ----------
Net cash provided by investing
activities 52,344,290 -0-
----------- ----------
Cash flows from financing activities:
Cash Distributions (47,116,882) (160,000)
Advances from Partner (2,525,935) -0-
----------- ----------
Net cash used in financing
activities (49,642,817) (160,000)
----------- ----------
Increase in cash during period 2,760,011 82,292
Cash, beginning of quarter 62,816 53,333
----------- ----------
Cash, end of quarter $ 2,822,827 $ 135,625
=========== ==========
Notes to Condensed Financial Statements (unaudited)
Note A Organization and basis of Presentation
In the opinion of management, the accompanying
unaudited condensed financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present
fairly the financial position of Registrant as of March 31, 2000,
its results of operations and cash flows for the three months
ended March 31, 2000 and 1999 and its changes in Partners'
capital for the three months ended March 31, 2000. Information
included in the condensed balance sheet as of December 31, 1999
has been derived from the audited balance sheet included in
Registrant's, Form 10-K for the year ended December 31, 1999 (the
"10-K") previously filed with the Securities and Exchange
Commission (the "SEC"). Pursuant to rules and regulations of the
SEC, certain information and disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
from these financial statements unless significant changes have
taken place since the end of the most recent fiscal year.
Accordingly, these unaudited condensed financial statements
should be read in conjunction with the financial statements,
notes to financial statements and the other information in the
10-K. The results of operations for the three months ended March
31, 2000 are not necessarily indicative of the results to be
expected for the full year.
Note B Interim Period Reporting
Registrant was organized as a partnership on March
21, 1958. Registrant owned the tenant's interest in the long-
term ground lease (the "Lease") of the buildings located at 500
and 512 Seventh Avenue and 228 West 38th Street, New York, New
York (the "Property") until Registrant sold the Lease on
December 23, 1999 on the economic terms described in the
accompanying financial statements. Registrant ceased to be a
partnership on December 23, 1999 when the interests of its
partner Agents were redeemed by conveyance to them of direct pro
rata interests in the Property. The partnership's final tax
return was filed for the period ending December 23, 1999. After
December 23, 1999, such former partners (the "Agents") continued
the ownership of the Lease as co-tenants for the benefit of the
Participants, and the co-tenancy has conducted its business
under the name "Navarre-500 Building Associates, a co-tenancy",
all for the benefit of the Participants on all the same pre-
existing economic and investment terms through the date of such
sale and thereafter. In accordance with the terms of the
contract of sale, Seller is required to hold 5% of the gross
sales price in reserve for one year for contingencies. At March
31, 2000 the balance in the escrow account was $2,822,827.
Accordingly, reference herein to Registrant is a reference to
Navarre-500 Building Associates, a co-tenancy. Registrant's
Agents were Peter L. Malkin and Thomas N. Keltner, Jr. who are
now the co-tenant Agents. The land underlying the buildings was
owned by an unaffiliated third party and was leased to
Registrant under the Lease. The current term of the Lease as
extended was to expire on May 1, 2024. The Lease provided for
one 21-year renewal option. The annual rent payable by
Registrant under the Lease was $487,500 during the current and
renewal term.
Registrant did not operate the Property, but subleased
the Property to 500-512 Seventh Avenue Associates ("Sublessee")
pursuant to a net operating sublease (the "Sublease"), the
current renewal term, was to expire on April 30, 2024. The
Sublease provided for one renewal option co-extensive with the
Lease. Peter L. Malkin, an Agent in Registrant, has also been a
partner, and now a co-tenant in Sublessee. The Agents in
Registrant are also members of Wien & Malkin LLP, which provides
supervisory and other services to Registrant and to Sublessee
("Supervisor"). 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 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").
There was no Additional Rent paid by Sublessee for the
lease year ended June 30, 1999.
Note C Supervisory Services
Registrant paid Supervisor for special legal services
at hourly rates and for supervisory services and disbursements.
The supervisory fees are $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 March 31, 2000, such remaining
original cash investment was $3,200,000, representing the
original cash investment of the Participants in Registrant.
No remuneration was paid during the three month period
ended March 31, 2000 by Registrant to any of the Agents as such.
The supervisory services included, among other items, the
preparation of certain reports required by the Securities and
Exchange Commission, the monitoring or coordination of certain
other areas of legal compliance, the preparation of certain
financial reports, as well as the supervision of accounting and
other documentation related to the administration of Registrant's
business. Out of its fees, Supervisor paid all disbursements and
costs of regular accounting services.
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
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 received 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
Supervisor, is entitled to receive his pro rata share of any fees
or other remuneration paid to Supervisor for services rendered to
Registrant and Sublessee.
As of March 31, 2000, the Partners owned of record and
beneficially $8,125 participations in Registrant, representing
0.25% of the currently outstanding participations therein.
In addition, as of March 31, 2000, certain of the
Partners in Registrant (or their respective spouses) held
additional Participations as follows:
Entities for the benefit of members of Peter L. Malkin's
family owned of record and beneficially $35,000 of
Participations. Mr. Malkin disclaims any beneficial
ownership of such Participations, except that related
Trusts are required to complete scheduled payments to
Mr. Malkin.
Peter L. Malkin, Trustee of Mattee Saunders 1983 Trust,
owned $7,500 of Participations. Mr. Malkin disclaims
any beneficial ownership of such Participations.
In accordance with the provisions of the respective
participating agreements, Peter L. Malkin and Thomas N. Keltner,
Jr., in their capacity as agent, purchased from non-consenting
Participants an aggregate of $6,875 of participations for the
benefit of consenting Participants, all on the terms described in
the Agents' Consent Solicitations dated July 15, 1999. Each such
purchase may be revised at the discretion of the Agents upon
receipt of the consent from the applicable non-consenting
Participant.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Registrant was a partnership and is now a co-tenancy.
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 was used to pay annual rent due under
the Master Lease and the Basic Payment to Supervisor for
supervisory services. The balance of the Basic Rent was
distributed to the Participants. Additional Rent was distributed
to the Participants after the Additional Payment to Supervisor.
See Note C above. Pursuant to the Sublease, Sublessee had
assumed sole responsibility for the condition, operation, repair,
maintenance and management of the Property. Registrant did not
need to maintain substantial reserves or otherwise maintain
liquid assets to defray any operating expenses of the Property.
Registrant did not pay dividends. On January 1, 2000,
a regular distribution of $36,882 was made to participants and a
distribution of sales proceeds of $47,080,000 was made on January
14, 2000. There were no restrictions on Registrant's ability to
make distributions; however, the amount of such distributions,
particularly distributions of Additional Rent, depended solely on
the ability of Sublessee to make payments of Basic Rent and
Additional Rent to Registrant. Registrant expected to make
distributions so long as it received the payments provided for
under the Sublease. See Note B of Item 1 above.
Registrant's results of operations were affected
primarily by the amount of rent payable to it under the Sublease.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Property of Registrant is the subject of the following
pending litigation:
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, against
Helmsley-Spear, Inc. and Leona Helmsley concerning various
partnerships which own, lease or operate buildings managed by
Helmsley-Spear, Inc., including Registrant's property. In their
complaint, plaintiffs sought the removal of Helmsley-Spear, Inc.
as managing and leasing agent for all of the buildings.
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 filed an arbitration complaint against Helmsley-
Spear, Inc. and Mrs. Helmsley before the American Arbitration
Association. Helmsley-Spear, Inc. and Mrs. Helmsley served
answers denying liability and asserting various affirmative
defenses and counterclaims; and Mr. Malkin and Wien & Malkin LLP
filed a reply denying the counterclaims. By agreement dated
December 16, 1997, Mr. Malkin and Wien & Malkin LLP (each for
their own account and not in any representative capacity) reached
a settlement with Mrs. Helmsley of the claims and counterclaims
in the arbitration and litigation between them. Mr. Malkin and
Wien & Malkin LLP are continuing their prosecution of claims in
the arbitration for relief against Helmsley-Spear, Inc.,
including its termination as the leasing and managing agent for
various entities and properties, including the Registrant's
Sublessee.
Item 6. Exhibits and Report on Form 8-K
(a) The exhibits hereto are incorporated by reference.
(b) Registrant has not filed any report on Form
8-K during the quarter for which this report is being filed
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 Powers of Attorney, dated
August 6, 1996 and May 14, 1998 (collectively, the "Power").
NAVARRE-500 BUILDING ASSOCIATES
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: May 23, 2000
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 on the date indicated.
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: May 23, 2000
__________________________
* Mr. Katzman supervises accounting functions for Registrant.
EXHIBIT INDEX
Number Document Page*
3(a) Partnership Agreement, dated March 21,
1958, which was filed as Exhibit 1 to
Registrant's S-1, as amended, by letter
dated April 3, 1958 and assigned File No.
2-14019, is incorporated herein by
reference.
3(b) Amended Business Certificate of Registrant
which was filed as Exhibit 3(b) to
Registrant's Annual Report on 10-K for the
fiscal year ended December 31, 1996 and is
incorporated herein by reference.
4 Form of Participation Agreement, which was
filed as Exhibit 4 to Registrant's S-1 by
letter dated April 3, 1958 and assigned
File No. 2-14019, is incorporated herein
by reference.
24 Powers of Attorney dated August 6, 1996
and May 14, 1998 between Peter L. Malkin
and Thomas N. Keltner, Jr., as Partners in
Registrant, and Stanley Katzman and
Richard Shapiro, which was filed as
Exhibit 24 to Registrant's 10-Q for the
quarter ended March 31, 1998 and is
incorporated herein by reference.
__________________________
* 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 March 31, 2000 and the Statement Of Income
for the year ended March 31, 2000, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,822,827
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,822,827
<TOTAL-LIABILITY-AND-EQUITY> 2,822,827
<SALES> 0<F1>
<TOTAL-REVENUES> 68,080<F2>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,542
<INCOME-PRETAX> 58,538
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,538
<EPS-BASIC> 91.47<F3>
<EPS-DILUTED> 91.47<F3>
<FN>
<F1>Rental income
<F2>Dividend income and interest income
<F3>Earnings per $5,000 participation unit, based on 640 participation units
outstanding during the year.
</TABLE>
