<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
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 0-13500
1626 New York Associates Limited Partnership
--------------------------------------------
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2808184
- --------------------------------- ------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
--------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
--------------
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
-- --
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1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Real estate:
Land $10,270 $10,270
Buildings and improvements, net of accumulated
depreciation of $55,137 and $51,925 as of
September 30, 1999 and December 31, 1998, respectively 37,210 38,490
------- -------
47,480 48,760
Other Assets:
Cash and cash equivalents 115 291
Restricted cash 5,612 2,410
Accounts receivable, net of reserves of $18 and $85
as of September 30, 1999 and December 31, 1998, respectively 123 104
Prepaid expenses and other assets 1,017 1,825
Deferred rent receivable 7,292 7,669
Deferred costs, net 3,756 3,974
------- -------
Total Assets $65,395 $65,033
======= =======
</TABLE>
See notes to consolidated financial statements.
2 of 15
<PAGE>
>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
Consolidated Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
(Continued)
LIABILITIES AND PARTNERS' DEFICIT
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Liabilities:
Mortgage notes payable to affiliates $ 75,450 $ 75,450
Notes and loans payable and accrued interest
to general partners and affiliates 41,305 35,114
Accounts payable, accrued expenses, security
deposits and other liabilities 3,851 3,717
Accrued interest on mortgage notes to affiliates 60,946 58,667
--------- ---------
Total Liabilities 181,552 172,948
--------- ---------
Commitments and Contingencies
Partners' Deficit:
Limited Partners' Deficit - Units of Investor
Limited Partnership Interest
$250,000 stated value per unit; authorized, issued and outstanding
-1,340 as of September 30, 1999 and December 31, 1998 (119,652) (111,791)
Less: investor notes (68) (68)
--------- ---------
(119,720) (111,859)
General Partners' Equity 3,563 3,944
--------- ---------
Total Partners' Deficit (116,157) (107,915)
--------- ---------
Total Liabilities and Partners' Deficit $ 65,395 $ 65,033
========= =========
</TABLE>
See notes to consolidated financial statements.
3 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Revenues:
Rent and escalation income $ 9,804 $ 26,775
Interest and other income 231 328
Gain on sale of property - 17,046
--------- ---------
Total revenues 10,035 44,149
--------- ---------
Expenses:
Interest on obligations to affiliates 8,853 17,541
Interest - 1,682
Depreciation and amortization 3,707 8,002
Real estate and other taxes 2,141 5,281
Utilities 1,043 2,575
Cleaning and security 1,006 2,499
Asset and property management fees 370 385
Repairs and maintenance 232 778
Payroll 523 919
General and administrative 127 847
Professional fees 275 392
Provision for doubtful accounts - 60
--------- ---------
Total expenses 18,277 40,961
--------- ---------
Net (loss) income $ (8,242) $ 3,188
========= =========
Net loss allocated to general partners $ (381) $ (558)
========= =========
Net (loss) income allocated to investor limited partners $ (7,861) $ 3,746
========= =========
Net (loss) income per unit of investor limited
partnership interest $(5,866.42) $2,795.52
========= =========
</TABLE>
See notes to consolidated financial statements.
4 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Revenues:
Rental and escalation income $ 3,426 $ 8,529
Interest and other income 91 104
---------- ----------
Total revenues 3,517 8,633
---------- ----------
Expenses:
Interest on obligations to affiliates 3,044 6,112
Interest - 567
Depreciation and amortization 1,303 2,675
Real estate and other taxes 515 1,751
Utilities 485 1,117
Cleaning and security 331 741
Asset and property management fees 131 159
Repairs and maintenance 71 169
Payroll 209 388
General and administrative 39 320
Professional fees 70 141
---------- ----------
Total expenses 6,198 14,140
---------- ----------
Net loss $ (2,681) $ (5,507)
========== ==========
Net loss allocated to general partners $ (119) $ (247)
========== ==========
Net loss allocated to investor limited partners $ (2,562) $ (5,260)
========== ==========
Net loss per unit of investor limited
partnership interest $(1,911.94) $(3,925.37)
========== ==========
</TABLE>
See notes to consolidated financial statements.
5 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
Consolidated Statement of Partners' Deficit (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Investor Investor
Limited Limited General Total
Partnership Partners' Partners' Partners'
Interest Deficit Equity Deficit
------------------ ---------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Balance - December 31, 1998 1,340 $ (111,859) $ $3,944 $(107,915)
Net loss - (7,861) (381) (8,242)
----- ----------- ------ ---------
Balance - September 30, 1999 1,340 $ (119,720) $ $3,563 $(116,157)
===== =========== ====== =========
</TABLE>
See notes to consolidated financial statements.
6 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
Consolidated Statement of Cash Flows (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) income $ (8,242) $ 3,188
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation 3,212 6,806
Amortization 568 1,368
Change in deferred rent receivable 377 (3,013)
Gain on sale of property - (17,046)
Provision for doubtful accounts (67) 56
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable, prepaid
expenses and other assets (181) 1,261
Increase (decrease) in accounts payable, accrued expenses,
security deposits and other liabilities 134 (2,383)
-------- --------
Net cash used in operating activities (4,199) (9,763)
-------- --------
Cash Flows from Investing Activities:
Net proceeds from sale of property - 50,389
Additions to buildings and improvements (1,932) (4,527)
Increase in deferred leasing costs (350) (1,923)
-------- --------
Net cash (used in) provided by investing activities (2,282) 43,939
-------- --------
Cash Flows from Financing Activities:
Payment of accrued interest on mortgage notes to affiliates - (5,252)
Increase in accrued mortgage interest 2,279 10,803
Principal payments on mortgage notes to affiliates - (7,270)
Increase in notes payable and accrued interest to
general partners and affiliates 6,191 9,283
Principal payments on other mortgage notes - (37,867)
Increase in restricted cash (2,165) (3,347)
Payment of deferred financing costs - (399)
Deferred purchase price obligation payment - (209)
-------- --------
Net cash provided by (used in) financing activities 6,305 (34,258)
-------- --------
Net decrease in cash and cash equivalents (176) (82)
Cash and cash equivalents, beginning of year 291 221
-------- --------
Cash and cash equivalents, end of year $ 115 $ 139
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 2,796 $ 11,307
======== ========
Supplemental Disclosure of Non-Cash Investing Activities:
Sale of property in 1999 and 1998 - See Notes 2 and 4
</TABLE>
See notes to consolidated financial statements.
7 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and
discussions should be read in conjunction with the consolidated financial
statements, related footnotes and discussions contained in the
Partnership's Annual Report on Form 10-K for the year ended December 31,
1998.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature except as discussed in Notes 2 and 4. The balance sheet
at December 31, 1998 was derived from audited financial statements at such
date.
1626 New York Associates Limited Partnership (the "Investor Partnership")
was organized to acquire and own a 99% general partnership interest in and
serve as a general partner of Nineteen New York Properties Limited
Partnership (the "Operating Partnership"). The Investor Partnership and
the Operating Partnership are collectively referred to as the
"Partnerships."
As of September 30, 1999, the Operating Partnership owned one commercial
rental property located in New York City (the "Property").
The results of operations for the nine months ended September 30, 1999 and
1998 are not necessarily indicative of the results to be expected for the
full year.
2. Sale of Property and Liquidation of Partnership
In November 1999, the Partnership sold its remaining property, 757 Third
Avenue, to an unaffiliated third party for $102,000,000. All proceeds were
used to satisfy any related indebtedness. Upon winding up of the
Partnerships affairs, the Partnership will be liquidated.
3. Debt Modification with Related Parties
On October 22, 1998, the debt securing the Partnership's remaining
property, 757 Third Avenue, was restructured into two non-recourse loans.
The first component in the amount of $27,193,000, bears interest at 295
basis points over 30-day LIBOR (8.35 % at September 30, 1999), and was
scheduled to mature on February 1, 1999, but has been extended to December
31, 1999. The second component in the amount of $48,257,000, bears
interest at 9% and matures on February 28, 2016. A mandatory prepayment of
$7,500,000 against the second component was due on February 1, 1999, but
has been extended to December 31, 1999.
8 of 15
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1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Debt Modification with Related Parties (Continued)
A third component of the Modified Loan is an unsecured note (the
"Unsecured Note") representing the additional financing expected to be
drawn upon by the Operating Partnership to fund capital improvements and
tenant lease-up costs with respect to the remaining property. However, any
borrowings under this credit line are subject to the lender's discretion.
Accordingly, it is possible that the Operating Partnership may not be able
to borrow against this credit line each time it deems it necessary. The
outstanding balance against the Unsecured Note was $22,336,000 as of
September 30, 1999 and is included in notes payable and accrued interest
to general partners and affiliates. The Unsecured Note bears interest at a
fixed annual rate 14% through February 28, 1999 and then 16.75% thereafter
and was scheduled to mature on February 28, 1998, but was extended to
December 31, 1999.
4. Sale of Property
On January 13, 1998, the Partnership sold its 1372 Broadway property to an
unaffiliated third party for $52,000,000. All of the proceeds were used to
partially satisfy the approximately $94,000,000 allocated portion of the
Modified Loan (including accrued and unpaid interest), with the
unsatisfied portion of the Modified Loan being reallocated among the
remaining properties. For financial reporting purposes, the sale resulted
in a gain of approximately $17,046,000.
5. Transaction With Related Parties
For the nine months ended September 30, 1999 and 1998, the Operating
Partnership paid $370,000 and $385,000, respectively, in asset and
property management fees to an affiliate of the General Partner.
9 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q SEPTEMBER 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The matters discussed in this Form 10-Q contain certain forward-looking
statements and involve risks and uncertainties (including changing
market conditions, competitive and regulatory matters, etc.) detailed
in the disclosure contained in this Form 10-Q and the other filings
with the Securities and Exchange Commission made by the Registrant from
time to time. The discussion of the Registrant's liquidity, capital
resources and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the
effects of any changes to the Registrant's operations. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors,
including those identified herein.
This Item should be read in conjunction with the Consolidated Financial
Statements and other items contained elsewhere in this Report.
Liquidity and Capital Resources
The Registrant serves as the general partner of Nineteen New York
Properties Limited Partnership (the "Partnership"). In November 1999,
the Partnership sold its remaining property, 757 Third Avenue, to an
unaffiliated third party for $102,000,000. All proceeds were used to
satisfy any related indebtedness. Accordingly, the Registrant will be
liquidated.
The Registrant's sole source of revenue was from distributions from the
Partnership and interest income on cash reserves. The Registrant is
responsible for its operating expenses. The Partnership received rental
revenue from tenants and is responsible for operating expenses,
administrative expenses, capital improvements and debt service
payments.
The debt securing the Partnership's remaining property, 757 Third
Avenue, was restructured into two non-recourse loans. The first
component in the amount of $27,193,000, bears interest at 295 basis
points over 30-day LIBOR (8.35% at September 30, 1999), and was
scheduled to mature on February 1, 1999, but was extended to December
31, 1999. The second component in the amount of $48,257,000, bears
interest at 9% and matures on February 28, 2016. A mandatory prepayment
of $7,500,000 against the second component was due on February 1, 1999,
but was extended to December 31, 1999.
As a result of the disposition of the Registrant's remaining property,
for tax purposes, the Registrant's partners will be allocated
substantial gains in 1999 due to recapture of tax benefits received in
prior years.
The Registrant's original objective of capital appreciation will not be
achieved and it is anticipated that the Registrant's partners will not
receive any future distributions. Accordingly, the Registrant's
partners will not receive a return of their original investment.
10 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q-SEPTEMBER 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Liquidity and Capital Resources (Continued)
The Registrant and the Partnership had $115,000 of cash and cash
equivalents and $5,612,000 of restricted cash at September 30, 1999, as
compared to $291,000 and $2,410,000 respectively, at December 31, 1998.
Restricted cash primarily includes amounts held in mortgage collateral
accounts. The $176,000 decrease in cash and cash equivalents at
September 30, 1999, as compared to December 31, 1998, was due to
$4,199,000 of cash used in operating activities and $2,282,000 of cash
used in investing activities, which were partially offset by $6,305,000
of cash provided by financing activities. Cash used in investing
activities included $1,932,000 of improvements to real estate, the
majority of which were tenant improvements, and $350,000 of cash
expended on leasing activities. Cash provided by financing activities
included a $2,279,000 increase in accrued interest and a $6,191,000
increase in notes payable and accrued interest to general partners and
affiliates. In addition, Registrant's restricted cash increased by
$2,165,000, due to an increase in restricted cash operating accounts
and borrowings against the Unsecured Note. All other increases
(decreases) in certain assets and liabilities are the result of the
timing of receipt and payment of various activities.
The Partnership's only other source of liquidity was an unsecured
credit line provided by Zeus that had an outstanding balance of
$22,336,000 at September 30, 1999. This credit line has been used by
the Partnership to fund capital improvements and tenant lease-up costs
at the remaining property.
Results of Operations
Nine Months ended September 30, 1999 vs. September 30, 1998
The Registrant generated a net loss of approximately $8.2 million for
the nine months ended September 30, 1999, as compared to net income of
approximately $3.2 million for the nine months ended September 30,
1998. The operations of the Registrant for the nine months ended
September 30, 1999, as compared to September 30, 1998, declined due to
the gain on sale of the Registrant's 1372 Broadway property in January
1998. In October 1998, the Registrant transferred its 535 Fifth Avenue,
545 Fifth Avenue, 509 Fifth Avenue and 300 Park Avenue South properties
to their lender.
Rent and escalation income decreased to approximately $9.8 million for
the nine months ended September 30, 1999, as compared to approximately
$26.8 million for the nine months ended September 30, 1998. With
respect to the remaining property, 757 Third Avenue, rent and
escalation income decreased to approximately $9.8 million for the nine
months ended September 30, 1999, as compared to approximately $11.6
million for the nine months ended September 30, 1998. Rent and
escalation income decreased due to a decrease in occupancy for the nine
months ended September 30, 1999, as compared to 1998. Rental rates
remained relatively constant.
11 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q-SEPTEMBER 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Results of Operations (Continued)
Nine Months ended September 30, 1999 vs. September 30, 1998
Expenses decreased by approximately $22.7 million for the nine months
ended September 30, 1999, as compared to 1998. With respect to the
remaining property, expenses increased by approximately $1.6 million
for the nine months ended September 30, 1999, as compared to 1998, as a
result of an increase in depreciation and management fees, which was
partially offset by a decrease in interest expense. All other expenses
remained relatively constant at the Registrant's 757 Third Avenue
property.
Depreciation expense increased due to the effect of the current and
prior years additions to fixed assets, primarily tenant improvements.
Management fees increased due to the change of the managing agent that
occurred in connection with the debt extension in 1998. Interest
expense decreased due to a decline in the interest rate on the debt
outstanding on the Registrant's remaining property, which was slightly
offset by an increase in principal indebtedness on the Unsecured Note.
As of November 1, 1999 and 1998, the current property's occupancy was
89% and 96%, respectively. During the first nine months of 1999, the
Partnership signed renewal, extension, and expansion leases totaling
approximately 41,000 square feet at rental terms comparable to
buildings of similar quality in the market. The decrease in occupancy
is a direct result of certain lease terminations that occurred in the
fourth quarter of 1998.
Three Months ended September 30, 1999 vs. September 30, 1998
The Partnership generated a net loss of approximately $2.7 million for
the three months ended September 30, 1999, as compared to a net loss of
approximately $5.5 million for the three months ended September 30,
1998.
Rental and escalation income decreased to approximately $3.4 million
for the three months ended September 30, 1999 as compared to
approximately $8.5 million for the three months ended September 30,
1998. With respect to the remaining property, rent and escalation
income decreased to approximately $3.4 million for the three months
ended September 30, 1999, as compared to approximately $3.8 million for
the three months ended September 30, 1998. Rent and escalation income
decreased due to a decrease in occupancy for the three months ended
September 30, 1999 as compared to 1998. Rental rates remained
relatively constant.
12 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q-SEPTEMBER 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Results of Operations (Continued)
Three Months ended September 30, 1999 vs. September 30, 1998
Expenses decreased by approximately $7.9 million for the three months
ended September 30, 1999, as compared to 1998. With respect to the
remaining property, expenses increased by approximately $1.4 million
for the three months ended September 30, 1999, as compared to 1998, as
a result of an increase in depreciation and management fees, which was
partially offset by a decrease in interest expense. All other expenses
remained relatively constant at the Registrant's 757 Third Avenue
property.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
None
13 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q-SEPTEMBER 30, 1999
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8K:
No report on Form 8-K was filed during the period.
14 of 15
<PAGE>
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
FORM 10-Q-SEPTEMBER 30, 1999
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
BY: TWO WINTHROP PROPERTIES, INC.
MANAGING GENERAL PARTNER
BY: /s/ Michael L. Ashner
----------------------------
Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas Staples
----------------------------
Thomas Staples
Chief Financial Officer
DATED: November 19, 1999
15 of 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Interim Partners I, A Limited Partnership and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.000
<CASH> 5,727,000<F1>
<SECURITIES> 0
<RECEIVABLES> 141,000
<ALLOWANCES> 18,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 102,617,000
<DEPRECIATION> 55,137,000
<TOTAL-ASSETS> 65,395,000
<CURRENT-LIABILITIES> 0
<BONDS> 177,701,000<F2>
0
0
<COMMON> 0
<OTHER-SE> (116,157,000)
<TOTAL-LIABILITY-AND-EQUITY> 65,395,000
<SALES> 0
<TOTAL-REVENUES> 10,035,000
<CGS> 0
<TOTAL-COSTS> 9,297,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,853,000
<INCOME-PRETAX> (8,242,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,242,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,242,000)
<EPS-BASIC> (5,866.42)
<EPS-DILUTED> (5,866.42)
<FN>
<F1> Cash included $5,612,000 of restricted cash.
<F2> Includes accrued interest of $69,915,000.
</FN>
</TABLE>
