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, 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 12 of this Report.
Number of pages (including exhibits) in this filing: 12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Navarre-500 Building Associates
Condensed Statements of Income
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
Income:
Rent income, from a
related party (Note B) $ -0- $ 291,875 $ -0- $ 875,625
Dividend income 43,233 -0- 116,663 -0-
Interest income 48,290 -0- 83,324 -0-
--------- --------- --------- ---------
Total income $ 91,523 $ 291,875 $ 199,987 $ 875,625
--------- --------- --------- -------
Expenses:
Leasehold rent (Note B) -0- 121,875 -0- 365,625
Supervisory services, to a
related party (Note C) -0- 10,000 -0- 30,000
Amortization of leasehold -0- 1,631 -0- 4,893
Professional fees, including
$33,603 paid to a related
party in 2000 (Note D) 44,169 -0- 55,804 -0-
Interest expense -0- -0- 9,542 -0-
--------- --------- --------- ---------
Total expenses 44,169 133,506 65,346 400,518
--------- --------- --------- ---------
Net income $ 47,354 $ 158,369 $ 134,641 $ 475,107
========= ========= ========= =========
Earnings per $5,000
participation unit,
based on 640 participation
units outstanding
during the year $ 73.99 $ 247.45 $ 210.38 $ 742.35
========= ========= ========= =========
Distributions per $5,000
participation consisted
of the following:
Income $ -0- $ 247.45 $ 210.38 $ 742.35
Return of capital -0- 2.55 73,409.75 7.65
--------- --------- --------- ---------
Total distributions $ -0- $ 250.00 $73,620.13 $ 750.00
========= ========= ========= =========
As of September 30, 2000, the investment of the Participants had been
repaid in full but the Participants continue to hold pro rata interests in
Registrant based on the original participating interests.
Navarre-500 Building Associates
Condensed Balance Sheets
(Unaudited)
Assets September 30, 2000 December 31, 1999
Cash $ -0- $ 62,816
Escrow account held by
Wien & Malkin LLP 2,853,346 -0-
Purchase money note
receivable -0- 52,500,000
Accrued interest receivable 45,584 56,937
----------- -----------
Total assets $ 2,898,930 $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
September 30, 2000 134,641 -0-
January 1, 1999 through
December 31, 1999 -0- 49,685,371
----------- -----------
$50,015,812 $50,521,171
----------- -----------
Distributions of partnership and
co-tenancy:
Cash distributions:
to co-tenants,January 1, 2000
thru September 30, 2000 (47,116,882)
to partners, January 1, 1999
thru December 23, 1999 (640,000)
In-kind liquidating distributions
to partners of their undivided
interests of partnership assets
on December 23, 1999, at cost -0- (195,800)
----------- ----------
Total distributions $(47,116,882) $ (835,800)
----------- ----------
Navarre-500 Building Associates
Condensed Balance Sheets
(continued)
(Unaudited)
September 30, 2000 December 31,1999
Contribution, on December 23, 1999
to capital of co-tenancy of cost
basis of co-tenants' undivided
interests in assets received on
dissolution of partnership -0- 195,800
---------- -----------
Co-tenants' capital
September 30, 2000 $2,898,930
Co-tenants' capital
December 31, 1999 $49,881,171
---------- -----------
Total liabilities and
Co-tenants' capital:
September 30, 2000 $2,898,930
==========
December 31, 1999 $52,619,753
===========
Navarre-500 Building Associates
Condensed Statements of Cash Flows
(Unaudited)
January 1, 2000 January 1, 1999
through through
September 30, 2000 September 30, 1999
Cash flows from operating activities:
Net income $ 134,641 $ 475,107
Adjustments to reconcile net income
to cash provided by operating
activities:
Amortization of leasehold -0- 4,893
Change in deferred credit -0- 82,292
----------- ---------
Net cash provided by operating
activities $ 134,641 562,292
----------- ---------
Cash flows from investing activities:
Purchase money note receivable $52,500,000 $ -0-
Accrued interest receivable 11,353 -0-
Accrued expenses of sale (212,647) -0-
----------- ----------
Net cash provided by investing
activities $52,298,706 $ -0-
----------- ----------
Cash flows from financing activities:
Cash distributions $(47,116,882) $ (480,000)
Advances from partner (2,525,935) -0-
----------- ----------
Net cash used in financing
activities $(49,642,817) $ (480,000)
----------- ----------
Net increase in cash $ 2,790,530 $ 82,292
Cash, beginning of period 62,816 53,333
----------- ----------
Cash, end of period $ 2,853,346 $ 135,625
=========== ==========
Notes to Condensed Financial Statements (unaudited)
Note A 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 September 30, 2000, its results of
operations for the nine and three months ended September 30, 2000 and
1999, its cash flows for the nine months ended September 30, 2000 and
1999 and its changes in Partners' capital for the nine months ended
September 30, 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 nine months ended September
30, 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 September 30, 2000 the balance in the escrow account
was $2,853,346. 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"), of which 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 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 September
30, 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 nine month period ended
September 30, 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 Agents 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 or co-tenant interest in Sublessee. The
Agents received no extra or special benefit not shared on a pro rata
basis with all other Participants in Registrant or partners or co-
tenants in Sublessee. However, each of the Agents, by reason of his
respective 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 September 30, 2000, the Agents owned of record and
beneficially $8,125 participations in Registrant, representing 0.25% of
the currently outstanding participations therein.
In addition, as of September 30, 2000, certain of the Agents
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.
Note D Professional Fees
During the quarter ended September 30, 2000, professional fees
totaling $33,603 were paid to the firm of Wien & Malkin LLP, a related
party.
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: November 20, 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: November 20, 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.
13
