FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
[] 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 0-2670
60 EAST 42ND ST. ASSOCIATES
(Exact name of registrant as specified in its charter)
New York 13-6077181
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)
Registrant's telephone number, including area code (212) 687-8700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
$7,000,000 of Participations in Partnership Interests
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
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
The aggregate market of the voting stock held by non-affiliates of
the Registrant: Not applicable, but see Items 5 and 10 of this
report.
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
An Exhibit Index is located on pages through of this Report.
Number of pages (including exhibits) in this filing: 34 <PAGE>
PART I
Item 1. Business.
(a) General
Registrant is a partnership which was organized on
September 25, 1958. On October 1, 1958, Registrant acquired fee
title to the Lincoln Building (the "Building") and the land
thereunder, located at 60 East 42nd Street, New York, New York
(the "Property"). Registrant's partners are Anthony E. Malkin,
Scott D. Malkin, Stanley Katzman, Thomas N. Keltner, Jr., John L.
Loehr, Peter L. Malkin, and Richard A. Shapiro (individually, a
"Partner" and, collectively, the "Partners"), each of whom also
acts as an agent for holders of participations in the Registrant
(each holder of a participation, individually, a "Participant"
and, collectively, the "Participants"). Registrant leases the
Property to Lincoln Building Associates (the "Lessee") under a
long-term net operating lease (the "Lease") the current term of
which expires on September 30, 2008. There is one additional 25-
year renewal term which, if exercised, will extend the Lease until
September 30, 2033.
Lessee is a partnership whose members consist of, among
others, Mr. Peter Malkin. Four of the seven Partners in
Registrant are current members and one partner is a retired,
former member of the law firm of Wien & Malkin LLP, 60 East 42nd
Street, New York, New York, which acts as counsel to Registrant
and to Lessee (the "Counsel"). See Items 10, 11, 12 and 13 hereof
for a description of the ongoing services rendered by, and compen-
sation paid to, Counsel and for a discussion of certain
relationships which may pose actual or potential conflicts of
interest among Registrant, Lessee and certain of their respective
affiliates.
As of December 31, 1997, the Building was approximately
95% occupied by approximately 575 tenants who engage principally
in the practice of law, accounting, real estate, engineering and
advertising. Registrant does not maintain a full-time staff. See
Item 2 hereof for additional information concerning the Property.
(b) The Mortgage
A new mortgage loan on the Property was closed on
October 6, 1994 (the "Mortgage Loan"). The material terms of the
Mortgage Loan are as follows:
(i) A principal amount of $12,020,814;<PAGE>
(ii) Annual charges of $1,063,842, payable in equal
monthly installments of $88,654, representing interest only at the
rate of 8.85% per annum;
(iii) A term of ten years; and
(iv) A maturity date of October 31, 2004. The Mortgage
Loan is prepayable in whole after October 6, 1995, with a penalty
providing certain interest protection to the mortgagee. The
Mortgage Loan is prepayable in whole without penalty during the
90-day period prior to its maturity date.
The refinancing costs were capitalized by Registrant and are
being expensed ratably during the period of the mortgage extension
from October 6, 1994 to October 31, 2004.
(c) The Lease
The Lease, as modified, provides:
(i) Lessee is required to pay Registrant an annual
basic rent of $1,087,842 (the "Basic Rent"), which is equal to the
sum of $1,063,842, the constant annual charges on the first
mortgage calculated in accordance with the terms of the Lease,
plus $24,000 for supervisory services payable to Counsel. See
Note 4 of Notes to Financial Statements filed under Item 8 hereof
(the "Notes").
(ii) (A) additional rent (the "Additional Rent") equal
to the lesser of (x) Lessee's net operating income for the lease
year or (y) $1,053,800 and (B) further additional rent ("Further
Additional Rent") equal to 50% of any remaining balance of
Lessee's net operating income for such lease year. (Lessee has no
obligation to make any payment of Additional Rent or Further
Additional Rent until after Lessee has recouped any cumulative
operating loss accruing from and after September 30, 1977. There
is currently no accumulated operating loss against which to offset
payment of Additional Rent or Further Additional Rent.)
(iii) An advance against Additional Rent equal to the
lesser of (x) Lessee's net operating income for the preceding
lease year or (y) $1,053,800, which, in the latter amount, will
permit basic distributions to Participants at an annual rate of
approximately 14.95% per annum on their remaining cash investment
in Registrant; provided, however, if such advances exceed Lessee's
net operating income for any Lease year, advances otherwise
required during the subsequent lease year shall be reduced by an
amount equal to such excess until Lessee shall have recovered,
through retention of net operating income, the full amount of such
excess.
-2-<PAGE>
Further Additional Rent income is recognized when earned
from the Lessee, at the close of the lease year ending
September 30. Such income is not determinable until the Lessee,
pursuant to the Lease, renders to Registrant a certified report on
the operation of the Property. Further Additional Rent for the
lease year ended September 30, 1997 was $2,110,080. After the
payment of $47,545 for fees and expenses in connection with the
September 4, 1997 Consent Solicitation Program and $206,254 to
Counsel as an additional payment for supervisory services, the
balance of $1,856,281 was distributed to the Participants on
December 2, 1997.
If the Mortgage is modified, upon the first refinancing
which would result in an increase in the amount of the outstanding
principal balance of the mortgage, the Basic Rent shall be equal
to the Wien & Malkin LLP annual supervisory fee of $24,000 plus an
amount equal to the product of the new debt service percentage
rate under the refinanced mortgage multiplied by the principal
balance of the mortgage immediately prior to such refinancing. If
there are subsequent refinancings which result in an increase in
the amount of the outstanding principal balance of the mortgage,
the principal balance referred to above shall be reduced by the
amount of the mortgage amortization payable from Basic Rent
subsequent to the first refinancing.
(d) Competition
Pursuant to tenant space leases at the Building, the
average base rent payable to Lessee is approximately $26 per
square foot (exclusive of electricity charges and escalation).
Such rate is competitive with the average rental rate charged by
similar office buildings offering comparable space in the
immediate vicinity of the Building. Registrant has been advised
that buildings of comparable age and condition to the Building
charge rental rates within $2.00 - $3.00 per square foot of the
average rental rate at the Building. Rental rates for space are
in the high $30's to low $50's per square foot at the following
three nearby buildings: 101 Park Avenue (a new office building
with modern facilities and located at 40th Street); Republic
National Bank Building (a modern building on Fifth Avenue and 41st
Street); the Met Life Building (a premier building erected in
1961).
In the overall rental market for commercial space in
Manhattan, rents range from approximately $48 per square foot for
prime office space to approximately $10 per square foot in less
developed industrial and/or secondary commercial areas.
Accordingly, the average rent at the Building may be considered
competitive in the area, given the relative condition of
surrounding buildings and the nature of services, amenities and
office space offered by them as compared to the Building.
-3-<PAGE>
(e) Tenant Leases
Lessee operates the Building free from any federal,
state or local government restrictions involving rent control or
other similar rent regulations which may be imposed upon
residential real estate in New York City. Any increase or de-
crease in the amount of rent payable by a tenant is governed by
the provisions of the tenant's lease, or, if a new tenant, by then
existing trends in the rental market for office space.
Item 2. Property.
Registrant owns the Building located at 60 East 42nd
Street, New York, New York, known as the "Lincoln Building," and
the land thereunder. See Item 1. Registrant's fee title to the
Property is encumbered by the Mortgage Loan with an unpaid
principal balance of $12,020,814 at December 31, 1997. For a
description of the terms of the Mortgage Loan, see Item 1 of
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and Note 3 of the Notes thereto. The Building,
erected in 1930, has 55 floors, a concourse and a lower lobby. It
is located diagonally opposite Grand Central Terminal, on 42nd
Street between Park Avenue and Madison Avenue. The Building is
net leased to Lessee. See Item 1 hereof and Note 4 of the Notes
for additional information concerning the Lease.
Item 3. Legal Proceedings.
The property of Registrant is the subject of the
following material 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
-4-<PAGE>
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 Lessee.
Item 4. Submission of Matters to a Vote of Participants.
On September 4, 1997 the consent of the Participants was
sought to approve certain governance proposals, including the
designation of additional Successor Agents, as described in the
Statement. Subsequently, on September 25, 1997, the Partners
mailed to the non-responding Participants a request for a response
to the solicitation of consents; and on October 31, 1997, the
Partners mailed notification that the required consents for the
Agent succession had been received and that the other matters were
still pending. See Item 1(a).
-5-<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related
Security Holder Matters.
Registrant, a partnership, was organized on September
25, 1958.
The securities registered by it under the Securities
Exchange Act of 1934, as amended, consist of participations in the
partnership interests of the Partners in Registrant (the
"Participations") and are not shares of common stock or the
equivalent. The Participations represent each Participant's
fractional share in a Partner's undivided interest in Registrant.
One full unit of the Participations was offered at an original
purchase price of $10,000; fractional units were also offered for
proportionate purchase prices. Registrant has not repurchased
Participations in the past and is not likely to change its policy
in the future.
(a) The Participations neither are traded on an
established securities market nor are readily tradable on a
secondary market or the equivalent thereof. Based on Registrant's
transfer records, Participations are sold by the holders thereof
from time to time in privately negotiated transactions and, in
many instances, Registrant is not aware of the prices at which
such transactions occur. During 1997, Registrant was advised of
42 transfers of Participations. In two instances, the indicated
purchase price was equal to two times the face amount of the
Participations transferred, i.e., $20,000 for a $10,000
participation. In all other cases, no consideration was
indicated.
(b) As of December 31, 1997, there were 740 holders of
Participations of record.
(c) Registrant does not pay dividends. During each of
the years ended December 31, 1997 and 1996, Registrant made
regular monthly distributions of $124.57 for each $10,000
Participation. On December 2, 1997 and November 30, 1996,
Registrant made additional distributions for each $10,000
Participation of $2,651.83 and $2,637.61, respectively. Such
distributions represented primarily Additional Rent and Further
Additional Rent payable by Lessee in accordance with the terms of
the Lease. See Item 1 hereof. There are no restrictions on
Registrant's present or future ability to make distributions;
however, the amount of such distributions, particularly dis-
tributions of Additional Rent and Further Additional Rent, depends
solely on Lessee's ability to make payments of Basic Rent,
Additional Rent and Further Additional Rent to Registrant. See
-6-<PAGE>
Item 1 hereof. Registrant expects to make distributions so long
as it receives the payments provided for under the Lease. See
Item 7 hereof.
-7-<PAGE>
Item 6.
60 EAST 42nd ST. ASSOCIATES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Basic rent income.......... $ 1,087,842 $ 1,087,842 $ 1,087,842 $ 1,122,040 $ 1,132,075
Advance of additional
rent income............... 1,053,800 1,053,800 1,053,800 1,053,800 1,053,800
Further additional
rent income............... 2,110,080 2,051,475 1,565,928 2,202,847 2,654,582
Total revenue........... $ 4,251,722 $ 4,193,117 $ 3,707,570 $ 4,378,687 $ 4,840,457
Net income................. $ 2,877,925 $ 2,867,971 $ 2,430,979 $ 3,051,227 $ 3,442,052
Earnings per $10,000
participation unit,
based on 700 participation
units outstanding during
the year.................. $ 4,111 $ 4,097 $ 3,473 $ 4,359 $ 4,917
Total assets............... $ 7,497,168 $ 7,521,944 $ 7,546,720 $ 7,660,149 $ 7,453,321
Long-term obligations...... $12,020,814 $12,020,814 $12,020,814 $12,020,814 $ -
Distributions per $10,000
participation unit, based
on 700 participation
units outstanding during
the year:
Income.................. $ 4,111 $ 4,097 $ 3,473 $ 4,006 $ 4,908
Return of capital....... 35 35 35 - -
Total distributions..... $ 4,146 $ 4,132 $ 3,508 $ 4,006 $ 4,908
</TABLE>
-8-<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
Registrant was organized solely for the purpose of
acquiring the Property subject to a net operating lease held by
Lessee. Registrant is required to pay, from Basic Rent under the
Lease, mortgage charges and amounts for supervisory services.
Registrant is required to pay from Additional Rent and Further
Additional Rent additional amounts for supervisory services and
then to distribute the balance of such Additional Rent and Further
Additional Rent to the Participants. Under the Lease, Lessee has
assumed sole responsibility for the condition, operation, repair,
maintenance and management of the Property. Registrant need not
maintain substantial reserves or otherwise maintain liquid assets
to defray any operating expenses of the Property.
The following summarizes the material factors affecting
Registrant's results of operations for the three years ended
December 31, 1997:
(a) Total income increased for the year ended December 31,
1997 as compared with the year ended December 31, 1996.
Such increase is attributable to the payment of an
increased amount of Further Additional Rent received by
Registrant in 1997. Total income increased for the year
ended December 31, 1996 as compared with the year ended
December 31, 1995. Such increase is attributable to the
payment of an increased amount of Further Additional
Rent to Registrant in 1996. See Note 4 of the Notes.
(b) Total expenses increased for the year ended December 31,
1997 as compared with the year ended December 31, 1996.
Such increase resulted from an increase in the
additional payment for supervisory services payable with
respect to an increased amount of Further Additional
Rent received by Registrant in 1997 and professional
fees incurred in connection with the Consent
Solicitation Program. Total expenses increased for the
year ended December 31, 1996 as compared with the year
ended December 31, 1995. Such increase resulted from an
increase in the additional payment for supervisory
services payable with respect to Further Additional Rent
received by Registrant in 1996.
Registrant's results of operations are affected
primarily by the amount of rent payable to it under the Lease.
The amount of Overage Rent payable to Registrant is affected by
the cycles in the New York City economy and real estate rental
market. It is difficult for management to forecast the New York
City real estate market over the next few years.
Liquidity and Capital Resources
-9-<PAGE>
There has been no significant change in Registrant's
liquidity for the year ended December 31, 1997 as compared with
the year ended December 31, 1996.
No amortization payments are due under the Mortgage to
fully satisfy the outstanding principal balance at maturity, and
furthermore, Registrant does not maintain any reserve to cover the
payment of such Mortgage indebtedness at maturity. Therefore,
repayment of the Mortgage will depend on Registrant's ability to
arrange a refinancing. Assuming that the Property continues to
generate an annual net profit in future years comparable to that
in past years, and assuming further that current real estate
trends continue in the geographic area in which the Property is
located, Registrant anticipates that the value of the Property
would be in excess of the amount of the Mortgage balance at
maturity.
Registrant anticipates that funds for working capital
for the Property will be provided by rental payments received from
Lessee and, to the extent necessary, from additional capital
investment by the partners in Lessee and/or external financing.
However, as noted above, Registrant has no requirement 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 Lease is in effect.
Inflation
Inflationary trends in the economy do not directly
affect Registrant's operations since, as noted above, Registrant
does not actively engage in the operation of the Property.
Inflation may impact the operations of Lessee. Lessee is required
to pay Basic Rent, regardless of the results of its operations.
Inflation and other operating factors affect only the amount of
Additional Rent and Further Additional Rent payable by Lessee,
which is based on Lessee's net operating profit.
Item 8. Financial Statements and Supplementary Data.
The financial statements, together with the accompanying
report by, and the consent to the use thereof, of Jacobs Evall &
Blumenfeld LLP immediately following, are being filed in response
to this item.
Item 9. Disagreement on Accounting and Financial Disclosure.
Not applicable.
-10-<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Registrant has no directors or officers or any other
centralization of management. There is no specific term of office
for any Partner. The table below sets forth as to each Partner as
of December 31, 1997 the following: name, age, nature of any
family relationship with any other Partner, business experience
during the past five years and principal occupation and employment
during such period, including the name and principal business of
any corporation or any organization in which such occupation and
employment was carried on and the date such individual became a
Partner:
Nature Principal Date
of Family Occupation Individual
Relation- Business and became
Name Age ship Experience Employment Partner
Anthony E. Malkin 35 son of President of President of 1997
Peter L. real estate W&M Properties,
Malkin, management Inc.
brother company
of
Scott D.
Malkin
Scott D. Malkin 39 son of Chairman and CEO of 1997
Peter L. CEO of real S.D. Malkin
Malkin, estate Properties, Inc.
brother development
of company
Anthony E.
Malkin
Stanley Katzman 65 None Attorney-at-Law Senior Partner 1988
Wien & Malkin LLP,
Counsellors-
at-Law
Thomas N. Keltner,
Jr. 51 None Attorney-at-Law Senior Partner 1996
Wien & Malkin LLP,
Counsellors-
at-Law
-11-<PAGE>
Nature Principal Date
of Family Occupation Individual
Relation- Business and became
Name Age ship Experience Employment Partner
John L. Loehr 61 None Attorney-at-Law Retired former 1996
Senior Partner
Wien & Malkin LLP,
Counsellors-
at-Law
Peter L. Malkin 64 Father Attorney-at-Law Senior Partner 1970
of Wien & Malkin LLP,
Anthony E. Counsellors-
and at-Law
Scott D.
Malkin
Richard A. Shapiro 52 None Attorney-at-Law Senior Partner 1996
Wien & Malkin LLP,
Counsellors-
at-Law
As stated above, four of the Partners are current
members of Counsel and one Partner is now a retired former member
of Counsel. See Items 11, 12 and 13 hereof for a description of
the services rendered by, and the compensation paid to, Counsel
and for a discussion of certain relationships which may pose
actual or potential conflicts of interest among Registrant, Lessee
and certain of their respective affiliates.
The names of entities which have a class of securities
registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or are subject to the requirements of Section 15(d) of
that Act, and in which the Partners are either a director, joint
venturer or general partner are as follows:
Stanley Katzman is a joint venturer in 250 West 57th St.
Associates; and a general partner in Empire State
Building Associates, Navarre-500 Building Associates and
Garment Capitol Associates.
John L. Loehr is a general partner in Empire State
Building Associates and Garment Capitol Associates.
Peter L. Malkin is a joint venturer in 250 West 57th St.
Associates; and a general partner in Empire State
Building Associates, Navarre-500 Building Associates and
Garment Capitol Associates.
Item 11. Executive Compensation.
As stated in Item 10 hereof, Registrant has no directors
or officers or any other centralization of management.
-12-<PAGE>
No remuneration was paid during the current fiscal year
ended December 31, 1997 by Registrant to any of the Partners as
such. Registrant pays Counsel, for supervisory services and
disbursements, fees of $24,000 per annum plus an additional
payment of 10% of all distributions to Participants in Registrant
in any year in excess of the amount representing an annual return
of 14% on the Participants' remaining cash investment in
Registrant (which remaining cash investment, at December 31, 1996,
was equal to the Participant's original cash investment of
$7,000,000). Pursuant to such fee arrangements, Registrant paid
Counsel a total of $237,634 (consisting of $24,000 as an annual
basic payment for supervisory services and $213,634 as an
additional payment for supervisory services) during the fiscal
year ended December 31, 1997. The supervisory services included
preparing of reports and related documentation required by the
Securities and Exchange Commission, monitoring of all areas of
federal and local securities law compliance, preparing certain
financial reports, as well as the supervising of accounting and
other documentation related to the administration of Registrant's
business. Out of its fees, Counsel paid all disbursements and
costs of regular accounting services. As noted in Items 1 and 10
of this report, four of the Partners are also current members of
Counsel.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
(a) Registrant has no voting securities. See Item 5
hereof. At December 31, 1997, no person owned of record or was
known by Registrant to own beneficially more than 5% of the
outstanding Participations.
(b) At December 31, 1997, the Partners (see Item 10
hereof) beneficially owned, directly or indirectly, the following
Participations:
Name and Address Amount of Percent
of Beneficial Beneficial of
Title of Class Owners Ownership Class
Participations Thomas N. Keltner, Jr.$ 2,500.00 .036%
in Partnership 1111 Park Avenue
Interests New York, NY 10128
Name and Address Amount of Percent
of Beneficial Beneficial of
Title of Class Owners Ownership Class
Participations John L. Loehr $ 5,000.00 .071%
in Partnership 286 Alpine Circle
Interests River Vale, NJ 07675
-13-<PAGE>
Peter L. Malkin $47,500.00 .679%
21 Bobolink Lane
Greenwich, CT 06830
At such date, certain of the Partners (or their
respective spouses) held additional Participations as follows:
Peter L. Malkin owned of record as trustee or co-trustee
an aggregate of $49,048 of Participations. Mr. Malkin
disclaims any beneficial ownership of such
Participations.
Isabel Malkin, the wife of Peter L. Malkin, owned
individually and beneficially $35,000 of Participations.
Mr. Malkin disclaims any beneficial ownership of such
Participations.
Richard A. Shapiro owned of record as custodian a $5,000
Participation. Mr. Shapiro disclaims any beneficial
ownership of such Participation.
(c) Not applicable.
Item 13. Certain Relationships and Related Transactions.
(a) As stated in Items 1 and 10 hereof, Messrs.
Katzman, Keltner, Loehr, Anthony E. Malkin, Peter L. Malkin, Scott
D. Malkin and Shapiro are the seven Partners in Registrant and
also act as agents for Participants in their respective part-
nership interests therein. Mr. Peter Malkin is also among the
partners in Lessee. As a consequence of one of the seven Partners
being a partner in Lessee and four of the seven Partners being
current members of Counsel (which represents Registrant and
Lessee), certain actual or potential conflicts of interest may
arise with respect to the management and administration of the
business of Registrant. However, under the respective
Participating Agreements pursuant to which the Partners act as
agents for the Participants, certain transactions require the
prior consent from Participants owning a specified interest under
the Agreements in order for the agents to act on the Participants'
behalf. Such transactions, among others, include modification and
extension of the Lease or the Mortgage Loan, or a sale or other
disposition of the Property or substantially all of Registrant's
other assets.
See Items 1 and 2 hereof for a description of the terms
of the Lease. As of December 31, 1997, Mr. Peter Malkin owned a
partnership interest in Lessee. The respective interests, if any,
of the Partners in Registrant and Lessee arise solely from
ownership of their respective Participations, and, in the case of
-14-<PAGE>
Mr. Peter Malkin, his individual ownership of a partnership
interest in Lessee. The Partners receive no extra or special
benefit not shared on a pro rata basis with all other Participants
in Registrant or partners in Lessee. However, each of the four
Partners who is a current Partner in Counsel, by reason of his
respective interest in Counsel, is entitled to receive his pro
rata share of any legal fees or other remuneration paid to Counsel
for professional services rendered to Registrant and Lessee. See
Item 11 hereof for a description of the remuneration arrangements
between Registrant and Counsel relating to supervisory services
provided by Counsel.
Reference is also made to Items 1 and 10 hereof for a
description of the relationship between Registrant and Counsel, of
which five of the Partners are among the members. The respective
interests of each Partner in any remuneration paid or given by
Registrant to Counsel arises solely from such Partner's ownership
of an interest in Counsel. See Item 11 hereof for a description
of the remuneration arrangements between Registrant and Counsel
relating to supervisory services provided by Counsel.
(b) Reference is made to paragraph (a) above.
(c) Not applicable.
(d) Not applicable.
-15-<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a)(1) Financial Statements:
Consent of Jacobs Evall & Blumenfeld LLP, Certified
Public Accountants, dated March 18, 1998.
Accountant's Report of Jacobs Evall & Blumenfeld LLP,
Certified Public Accountants, dated January 31, 1998.
Balance Sheets at December 31, 1997 and at December 31,
1996 (Exhibit A).
Statements of Income for the fiscal years ended December
31, 1997, 1996 and 1995. (Exhibit B).
Statement of Partners' Capital Deficit for the fiscal
year ended December 31, 1997 (Exhibit C-1).
Statement of Partners' Capital Deficit for the fiscal
year ended December 31, 1996 (Exhibit C-2).
Statement of Partners' Capital Deficit for the fiscal
year ended December 31, 1995 (Exhibit C-3).
Statements of Cash Flows for the fiscal years ended
December 31, 1997, 1996 and 1995 (Exhibit D).
Notes to Financial Statements for the fiscal years ended
December 31, 1997, 1996 and 1995.
(2) Financial Statement Schedules:
List of Omitted Schedules.
Real Estate and Accumulated Depreciation - December 31,
1997 (Schedule III).
(3) Exhibits: See Exhibit Index.
(b) No report on Form 8-K was filed by Registrant
during the last quarter of the period covered by
this report.
-16-<PAGE>
[LETTERHEARD OF
JACOBS EVALL & BLUMENFELD LLP
CERTIFIED PUBLIC ACCOUNTANTS]
March 18, 1998
60 East 42nd St. Associates
New York, N. Y.
We consent to the use of our independent accountants' report dated January
31, 1998 covering our audits of the accompanying financial statements of 60
East 42nd St. Associates in connection with and as part of your December
31, 1997 annual report (Form 10-K) to the Securities and Exchange
Commission.
Jacobs Evall & Blumenfeld LLP
Certified Public Accountants
-17-<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the participants in 60 East 42nd St. Associates
(a Partnership)
New York, N. Y.
We have audited the accompanying balance sheets of 60 East 42nd St.
Associates as of December 31, 1997 and 1996 and the related statements of
income, partners' capital deficit and cash flows for each of the three years
in the period ended December 31, 1997, and the supporting financial statement
schedule as contained in Item 14(a)(2) of this Form 10-K. These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 60 East 42nd St. Associates
as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997
in conformity with generally accepted accounting principles, and the related
financial statement schedule, when considered in relation to the basic
financial statements, presents fairly, in all material respects, the
information set forth therein.
Jacobs Evall & Blumenfeld LLP
Certified Public Accountants
New York, N. Y.
January 31, 1998
-18-<PAGE>
EXHIBIT A
60 EAST 42nd ST. ASSOCIATES
BALANCE SHEETS
A S S E T S
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C> <C> <C>
Current Assets:
Cash in Fleet Bank $ 677 $ 677
Cash in distribution account held
by Wien & Malkin LLP (Note 10) 87,202 87,202
TOTAL CURRENT ASSETS........... 87,879 87,879
Real Estate (Notes 2a and 3):
Land................................. 7,240,000 7,240,000
Buildings............................ $16,960,000 $16,960,000
Less: Accumulated depreciation..... 16,960,000 - 16,960,000 -
Building improvements................ 1,574,135 1,574,135
Less: Accumulated depreciation..... 1,574,135 - 1,574,135 -
Other Assets:
Mortgage refinancing costs, less
accumulated amortization of
$80,233 in 1997 and $55,457
in 1996 (Note 2b)................... 169,289 194,065
TOTAL ASSETS................... $ 7,497,168 $ 7,521,944
LIABILITIES AND PARTNERS' CAPITAL DEFICIT
Long-term Liabilities:
Bonds, mortgages and similar debt:
First mortgage payable (Note 3).... $12,020,814 $12,020,814
TOTAL LIABILITIES.............. 12,020,814 12,020,814
Partners' Capital Deficit (Exhibit C).. (4,523,646) (4,498,870)
TOTAL LIABILITIES AND
PARTNERS' CAPITAL DEFICIT..... $ 7,497,168 $ 7,521,944
</TABLE>
See accompanying notes to financial statements.
-19-<PAGE>
EXHIBIT B
60 EAST 42nd ST. ASSOCIATES
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Revenue:
Rent income, from a related party (Note 4).... $4,251,722 $4,193,117 $3,707,570
Expenses:
Interest on mortgage (Note 3)................. 1,063,842 1,063,842 1,063,842
Supervisory services, to a related party
(Note 5)..................................... 237,634 236,528 187,973
Amortization of mortgage refinancing costs
(Note 2b).................................... 24,776 24,776 24,776
Professional fees, to a related party
(Note 6)..................................... 47,545 - -
1,373,797 1,325,146 1,276,591
NET INCOME, CARRIED TO PARTNERS'
CAPITAL DEFICIT (NOTE 9)........... $2,877,925 $2,867,971 $2,430,979
Earnings per $10,000 participation unit, based
on 700 participation units outstanding during
each year...................................... $ 4,111 $ 4,097 $ 3,473
</TABLE>
See accompanying notes to financial statements.
-20-<PAGE>
EXHIBIT C-1
60 EAST 42nd ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL DEFICIT
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Partners'
Partners' capital deficit
capital deficit Share of December 31,
January 1, 1997 net income Distributions 1997
<S> <C> <C> <C> <C>
Stanley Katzman Group....... $ (642,696) $ 411,132 $ 414,671 $ (646,235)
John L. Loehr Group......... (642,696) 411,132 414,671 (646,235)
Richard A. Shapiro Group.... (642,695) 411,132 414,672 (646,235)
Anthony E. Malkin Group
(formerly Donald A. Bettex
Group).................... (642,695) 411,132 414,672 (646,235)
Peter L. Malkin Group....... (642,696) 411,133 414,672 (646,235)
Scott D. Malkin Group
(formerly Ralph W. Felsten
Group).................... (642,696) 411,132 414,671 (646,235)
Thomas N. Keltner Jr. Group. (642,696) 411,132 414,672 (646,236)
$(4,498,870) $2,877,925 $2,902,701 $(4,523,646)
</TABLE>
See accompanying notes to financial statements.
-21-<PAGE>
EXHIBIT C-2
60 EAST 42nd ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL DEFICIT
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Partners'
Partners' capital deficit
capital deficit Share of December 31,
January 1, 1996 net income Distributions 1996
<S> <C> <C> <C> <C>
Stanley Katzman Group....... $ (639,156) $ 409,710 $ 413,250 $ (642,696)
John L. Loehr Group
(formerly Melvin H.
Halper Group)............. (639,156) 409,710 413,250 (642,696)
Richard A. Shapiro Group
(formerly C . Michael
Spero Group).............. (639,156) 409,710 413,249 (642,695)
Donald A. Bettex Group...... (639,156) 409,710 413,249 (642,695)
Peter L. Malkin Group....... (639,156) 409,710 413,250 (642,696)
Ralph W. Felsten Group...... (639,157) 409,710 413,249 (642,696)
Thomas N. Keltner Jr.
Group (formerly
Martin D. Newman Group).... (639,157) 409,711 413,250 (642,696)
$(4,474,094) $2,867,971 $2,892,747 $(4,498,870)
</TABLE>
See accompanying notes to financial statements.
-22-<PAGE>
EXHIBIT C-3
60 EAST 42nd ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL DEFICIT
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION> Partners'
Partners' capital deficit
capital deficit Share of December 31,
January 1, 1995 net income Distributions 1995
<S> <C> <C> <C> <C>
Stanley Katzman Group....... $ (635,617) $ 347,283 $ 350,822 $ (639,156)
Melvin H. Halper Group
(formerly Alvin
Silverman Group)......... (635,617) 347,283 350,822 (639,156)
C. Michael Spero Group...... (635,617) 347,283 350,822 (639,156)
Donald A. Bettex Group...... (635,616) 347,283 350,823 (639,156)
Peter L. Malkin Group....... (635,617) 347,283 350,822 (639,156)
Ralph W. Felsten Group...... (635,617) 347,282 350,822 (639,157)
Martin D. Newman Group...... (635,617) 347,282 350,822 (639,157)
$(4,449,318) $2,430,979 $2,455,755 $(4,474,094)
</TABLE>
See accompanying notes to financial statements.
-23-<PAGE>
EXHIBIT D
60 EAST 42nd ST. ASSOCIATES
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 2,877,925 $ 2,867,971 $ 2,430,979
Adjustments to reconcile net income to
cash provided by operating activities:
Amortization of mortgage refinancing
costs (Note 2b)............................. 24,776 24,776 24,776
Change in accrued interest payable........... - - (88,653)
Net cash provided by
operating activities................ 2,902,701 2,892,747 2,367,102
Cash flows from financing activities:
Cash distributions.............................. (2,902,701) (2,892,747) (2,455,755)
Net cash used in financing
activities.......................... (2,902,701) (2,892,747) (2,455,755)
Net change in cash................... - - (88,653)
Cash, beginning of year........................... 87,879 87,879 176,532
CASH, END OF YEAR.................... $ 87,879 $ 87,879 $ 87,879
Supplemental disclosure of cash flow information:
1997 1996 1995
Cash paid for:
Interest...................................... $ 1,063,842 $ 1,063,842 $ 1,152,495
</TABLE>
See accompanying notes to financial statements.
-24-<PAGE>
60 EAST 42nd ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
1. Business Activity
60 East 42nd St. Associates ("Associates") is a general partnership which
owns commercial property situated at 60 East 42nd Street and 301 Madison
Avenue, New York, New York. The property is net leased to Lincoln
Building Associates (the "Lessee").
2. Summary of Significant Accounting Policies
a. Real Estate and Depreciation:
Real estate, consisting of land, buildings and building improvements,
is stated at cost. The buildings and building improvements are fully
depreciated.
b. Mortgage Refinancing Costs, Amortization and Related Party Transactions:
Mortgage refinancing costs of $249,522, incurred in connection with the
October 6, 1994 refinancing of the first mortgage payable (see Note 3),
are being charged to income ratably over the 10 year and 26 day term of
the mortgage, from October 6, 1994 through October 31, 2004.
c. Use of Estimates:
In preparing financial statements in conformity with generally accepted
accounting principles, management often makes estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. First Mortgage Payable
On October 6, 1994, a first mortgage was placed on the property with
Morgan Guaranty Trust Company of New York, as trustee of a pension trust,
to refinance an existing first mortgage in the amount of $12,020,814.
Annual mortgage charges are $1,063,842, payable in equal monthly
installments, for interest only at the rate of 8.85% per annum. The first
mortgage matures on October 31, 2004. The real estate is pledged as
collateral for the first mortgage.
Principal payments required to be made on long-term debt are as follows:
Year ending December 31, 2004 (payable in full,
October 31, 2004)......................................$12,020,814
-25-<PAGE>
60 EAST 42nd ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(continued)
4. Related Party Transactions - Rent Income
Rent income for the years ended December 31, 1997, 1996 and 1995, totaling
$4,251,722, $4,193,117 and $3,707,570, respectively, as provided under an
operating lease with the Lessee dated October 1, 1958, as modified,
consisted of the following:
1997 1996 1995
Basic rent income............. $1,087,842 $1,087,842 $1,087,842
Advance of additional rent.... 1,053,800 1,053,800 1,053,800
Further additional rent....... 2,110,080 2,051,475 1,565,928
$4,251,722 $4,193,117 $3,707,570
Effective October 6, 1994, the lease, as modified, provides for annual
basic rent of $1,087,842, which is equal to the sum of $1,063,842, the new
constant annual mortgage charges, plus $24,000.
The modified lease also provides for payments of additional rent, as
follows:
1. Advances of additional rent are payable in equal monthly installments
totaling an amount equal to the lesser of $1,053,800 or the defined
net operating income of the Lessee during the preceding fiscal year
ended September 30th (the "lease year"); and
2. Further additional rent is payable in an amount equal to 50% of the
Lessee's remaining net operating income, as defined, in each lease year.
The modified lease further provides for changes to be made in the basic
rent paid in the event of a refinancing of the first mortgage (Note 3).
In such case, unless there is an increase in the mortgage balance, the
annual basic rent will be modified and will be equal to the sum of $24,000
plus an amount equal to the revised mortgage charges. In the event such
mortgage refinancing results in an increase in the amount of outstanding
principal balance of the mortgage, the basic rent shall be equal to the
sum of $24,000 plus an amount equal to the product of the new debt service
percentage rate under the refinanced mortgage multiplied by the principal
balance of the mortgage immediately prior to the refinancing.
Additional rent is billed to and advanced by the Lessee in equal monthly
installments of $87,817. While it is not practicable to estimate that
portion of additional rent for the lease year ending on the ensuing
September 30th which would be allocable to the current three month period
ending December 31st, Associates'policy is to include in its income each
year the advances of additional rent income received from October 1st to
December 31st.
No other additional rent is accrued by Associates for the period between
the end of the Lessee's lease year ending September 30th and the end of
Associates' fiscal year ending December 31st.
The lease had an initial term expiring on September 30, 1983, with renewal
options for two additional periods of 25 years each. In 1982, the first
lease renewal option was exercised for the period from October 1, 1983
through September 30, 2008.
-26-<PAGE>
60 EAST 42nd ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(continued)
4. Related Party Transactions - Rent Income (Continued)
The Lessee may surrender the lease at the end of any month, upon sixty
days' prior written notice; the liability of the Lessee will end on the
effective date of such surrender.
A partner in Associates is also a partner in the Lessee.
5. Related Party Transactions - Supervisory Services
Fees for supervisory services (including disbursements and costs of
accounting services) for the years ended December 31, 1997, 1996 and
1995, totaling $237,634, $236,528 and $187,973, respectively, were paid
to the firm of Wien & Malkin LLP. Some members of that firm are partners
in Associates. Fees for supervisory services are paid pursuant to an
agreement, which amount is based on a rate of return of investment
achieved by the participants of Associates each year.
6. Related Party Transactions - Professional Fees
Professional fees for the year ended December 31, 1997, totaling $47,545
including disbursements, were paid to the firm of Wien & Malkin LLP, a
related party.
7. Number of Participants
There were approximately 725 participants in the participating groups at
December 31, 1997, 1996 and 1995.
8. Determination of Distributions to Participants
Distributions to participants during each year represent the excess of
rent income over the mortgage requirements and cash expenses.
-27-<PAGE>
60 EAST 42nd ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(continued)
9. Distributions and Amount of Income per $10,000 Participation Unit
Distributions and amount of income per $10,000 participation unit during
the years 1997, 1996 and 1995, based on 700 participation units
outstanding during each year, consisted of the following:
Year ended December 31,
1997 1996 1995
Income........................ $4,111 $4,097 $3,473
Return of capital............. 35 35 35
TOTAL DISTRIBUTIONS..... $4,146 $4,132 $3,508
Net income is computed without regard to income tax expense since
Associates does not pay a tax on its income; instead, any such taxes
are paid by the participants in their individual capacities.
10. Concentration of Credit Risk
Associates maintains cash balances in a bank and in a distribution
account held by Wien & Malkin LLP. The bank balance is insured by the
Federal Deposit Insurance Corporation up to $100,000, and at December
31, 1997 was completely insured. The distribution account held by Wien
& Malkin LLP is not insured. The funds held in the distribution account
were paid to the participants on January 1, 1998.
-28-<PAGE>
60 EAST 42nd ST. ASSOCIATES
OMITTED SCHEDULES
The following schedules have been omitted as not applicable in the
present instance:
SCHEDULE I - Condensed financial information of registrant.
SCHEDULE II - Valuation and qualifying accounts.
SCHEDULE IV - Mortgage loans on real estate.
-29-<PAGE>
60 EAST 42nd ST. ASSOCIATES
SCHEDULE III
Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
<CAPTION>
Column
<S> <C> <C>
A Description Land, buildings and building
improvements situated at
60 East 42nd Street and
301 Madison Avenue, New York, N.Y.
B Encumbrances - Morgan Guaranty Trust Company of New York,
as trustee of a pension trust
Balance at December 31, 1997.............................. $12,020,814
C Initial cost to company
Land...................................................... $ 7,240,000
Buildings................................................. $16,960,000
D Cost capitalized subsequent to acquisition
Building improvements..................................... $ 1,574,135
Carrying costs............................................ $ None
E Gross amount at which carried at
close of period
Land.................................................... $ 7,240,000
Buildings and building improvements..................... 18,534,135
Total................................................... $25,774,135(a)
F Accumulated depreciation.................................. $18,534,135(b)
G Date of construction 1930
H Date acquired October 1, 1958
I Life on which depreciation in latest
income statements is computed Not applicable
</TABLE>
(a) There have been no changes in the carrying values of real estate
for the years ended December 31, 1997, December 31, 1996 and December
31, 1995. The costs for federal income tax purposes are the same as
for financial statement purposes.
(b) Accumulated depreciation
Balance at January 1, 1995 $18,534,135
Depreciation:
F/Y/E 12/31/95 None
12/31/96 None
12/31/97 None None
Balance at December 31, 1997 $18,534,135
-30-<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, 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
March 20, 1998 (the "Power").
60 EAST 42ND ST. ASSOCIATES
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: April 15, 1998
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: April 15, 1998
______________________
* Mr. Katzman supervises accounting functions for Registrant.
-31-<PAGE>
Exhibit Index
Number Document Page*
3(a) Partnership Agreement, dated September 25,
1958, which was filed by letter dated
March 31, 1981 (Commission File No.
0-2670) as Exhibit No. 3 to Registrant's
Form 10-K for the fiscal year ended
December 31, 1980, is incorporated by
reference as an exhibit hereto.
3(b)(i) Amended Business Certificate of
Registrant filed with the Clerk of New
York County on September 3, 1997,
reflecting a change in the Partners of
Registrant.
3(b)(ii) Amended Business Certificate of
Registrant filed with the Clerk of New
York County on November 28, 1997,
reflecting a change in the Partners of
Registrant.
4 Form of Participating Agreement, which
was filed as Exhibit No. 4 to
Registrant's Form S-1 Registration
Statement, as amended (the "Registration
Statement") by letter dated June 28,
1954 and assigned File No. 2-10981, is
incorporated by reference as an exhibit
hereto.
10(a) Deed of Lincoln Building to WLKP Realty
Corp., which was filed as Exhibit No. 5
to Registrant's Registration Statement
by letter dated June 28, 1954 and
assigned File No. 2-10981, is
incorporated by reference as an exhibit
hereto.
______________________
* Page references are based on a sequential numbering system.
-32-<PAGE>
Number Document Page*
10(b) First Mortgage evidenced by a Modifica-
tion, Extension & Consolidation
Agreement, dated March 31, 1954,
between WLKP Realty Corp. and The
Prudential Insurance Company of America
("Prudential"), which was filed as
Exhibit No. 6 to Registrant's
Registration Statement by letter dated
June 28, 1954 and assigned File No.
2-10981, is incorporated by reference
as an exhibit hereto.
10(c) Form of Net Lease between Registrant
and Lincoln Building Associates, which
was filed as Exhibit No. 9 to
Registrant's Registration Statement by
letter dated June 28, 1954 and assigned
File No. 2-10981, is incorporated by
reference as an exhibit hereto.
10(d) Deed from Lincoln Building Associates
to Registrant, dated October 1, 1958,
which was filed by letter dated
March 31, 1981 (Commission File No.
0-2670) as Exhibit No. 10(d) to
Registrant's Form 10-K for the fiscal
year ended December 31, 1980, is
incorporated by reference, as an
exhibit hereto.
10(e) Second Modification of Lease Agreement,
dated January 1, 1977, which was filed
by letter dated March 28, 1980
(Commission File No. 0-2670) as Exhibit
II under Item 10(b) of Registrant's
Form 10-K for the fiscal year ended
December 31, 1979, is incorporated by
reference as an exhibit hereto.
10(f) Third Modification of Lease Agreement,
which was filed by letter dated
March 28, 1980 (Commission File No.
0-2670) as Exhibit II under Item 10(b)
of Registrant's Form 10-K for the
fiscal year ended December 31, 1979, is
incorporated by reference as an exhibit
hereto.
-33-<PAGE>
Number Document Page*
13(a) Letter to Participants, dated February 6,
1998 and supplementary financial
reports for the fiscal year ended
December 31, 1997. The foregoing
material shall not be deemed to be
"filed" with the Commission or
otherwise subject to the liabilities of
Section 18 of the Securities Exchange
Act of 1934.
13(b) Letter to Participants, dated December 2,
1997 and accompanying financial reports
for the lease year ended September 30,
1997. The foregoing material shall not
be deemed to be "filed" with the
Commission or otherwise subject to the
liabilities of Section 18 of the
Securities Exchange Act of 1934.
24 Power of Attorney dated March 20, 1998
between Anthony E. Malkin, Scott D.
Malkin, John L. Loehr, Stanley Katzman,
Peter L. Malkin, Thomas N. Keltner,
Jr., and Richard A. Shapiro as Partners
of Registrant and Stanley Katzman and
Richard A. Shapiro.
27 Financial Data Schedule of Registrant
for the fiscal year ended December 31,
1997.
-34-<PAGE>
Exhibit 3(b)(i)
AMENDED BUSINESS CERTIFICATE
The undersigned hereby certify that a certificate of business
under the assumed name
60 EAST 42ND ST. ASSOCIATES
for the conduct of business at 60 East 42nd Street, New York, New
York, was filed in the office of the County Clerk New York County,
State of New York, on the 30th day of September, 1958, under index
number 8453/58B; that the last amended certificate was filed on
the 10th day of June, 1996 in the office of said County Clerk
under index number 8453/58B.
It is hereby further certified that this amended certificate
is made for the purposes of more accurately setting forth the
facts recited in the original certificate or the last amended
certificate and to set forth the following changes in such facts;*
DONALD A. BETTEX, residing at 700 Park Avenue, New York, New York
10021, has resigned as a member of 60 East 42nd St. Associates.
RALPH W. FELSTEN, residing at 300 East 54th Street, New York, New
York 10022, has resigned as a member of 60 East 42nd St.
Associates.
The members of 60 East 42nd St. Associates now consist of:
Stanley Katzman, Thomas N. Keltner, Jr., John L. Loehr, Peter L.
Malkin and Richard A. Shapiro.
In Witness Whereof, the undersigned have as of the 15th day
of June, 1997 made and signed this certificate.
s/s Donald A. Bettex s/s Thomas N. Keltner, Jr.
DONALD A. BETTEX THOMAS N. KELTNER, JR.
s/s Ralph W. Felsten
RALPH W. FELSTEN
<PAGE>
State of New York, County of New York ss.:
On this 27th day of September, 1997 before me personally
appeared DONALD A. BETTEX, RALPH W. FELSTEN and THOMAS N. KELTNER,
JR., to me known and known to me to be the individuals described
in and who executed the foregoing certificate, and they thereupon
duly acknowledged to me that they executed the same.
s/s Notary Public
Notary Public
-2-<PAGE>
Exhibit 3(b)(ii)
AMENDED BUSINESS CERTIFICATE
The undersigned hereby certify that a certificate of business
under the assumed name
60 EAST 42ND ST. ASSOCIATES
for the conduct of business at 60 East 42nd Street, New York, New
York, was filed in the office of the County Clerk New York County,
State of New York, on the 30th day of September, 1958, under index
number 8453/58B; that the last amended certificate was filed on
the 3rd day of September, 1997 in the office of said County Clerk
under index number 8453/58B.
It is hereby further certified that this amended certificate
is made for the purposes of more accurately setting forth the
facts recited in the original certificate or the last amended
certificate and to set forth the following changes in such facts;*
ANTHONY E. MALKIN, residing at 107 Doubling Road, Greenwich,
Connecticut 06830, has become a member of 60 East 42nd St.
Associates.
SCOTT D. MALKIN, residing at 27 Hereford Square, London SW74NB,
England, has become a member of 60 East 42nd St. Associates.
The members of 60 East 42nd St. Associates now consist of:
Stanley Katzman, Thomas N. Keltner, Jr., John L. Loehr, Anthony E.
Malkin, Peter L. Malkin, Scott D. Malkin and Richard A. Shapiro.
In Witness Whereof, the undersigned have as of the 2nd day of
November, 1997 made and signed this certificate.
s/s Thomas N. Keltner, Jr. s/s Anthony E. Malkin
THOMAS N. KELTNER, JR. ANTHONY E. MALKIN
s/s Scott D. Malkin
SCOTT D. MALKIN
<PAGE>
State of New York, County of New York ss.:
On this 25th day of November, 1997 before me personally
appeared THOMAS N. KELTNER, JR. and ANTHONY E. MALKIN, to me
known and known to me to be the individuals described in and who
executed the foregoing certificate, and they thereupon duly
acknowledged to me that they executed the same.
s/s Notary Public
Notary Public
State of Connecticut County of Fairfield ss.:
On this 5th day of November, 1997 before me personally
appeared SCOTT D. MALKIN, to me known and known to me to be the
individual described in and who executed the foregoing
certificate, and he thereupon duly acknowledged to me that he
executed the same.
s/s Notary Public
Notary Public
-2-<PAGE>
[LETTERHEARD OF
WIEN & MALKIN LLP]
February 6, 1998
To Participants in 60 East 42nd St. Associates
Federal Identification Number 13-6077181
We enclose the annual report of the partnership which owns the
premises at 60 East 42nd Street (the Lincoln Building), and at 301
Madison Avenue, New York City, for the year ended December 31, 1997.
The reported income for 1997 was $2,877,925. This was less than
distributions of $2,902,701, because of the amortization of mortgage
refinancing costs.
Monthly distributions during 1997 totalled $1,046,420, or about
14.9% per annum on the original cash investment of $7,000,000. The
distributions were made possible by advances from the lessee
totalling $1,053,800 against additional rent.
Additional rent for the lease year ended September 30, 1997 was
$3,163,880, or an excess of $2,110,080 over the advances of
$1,053,800. After deducting fees and expenses of $47,545 incurred in
connection with the September 4, 1997 consent solicitation program,
the balance of $2,062,535 was available for distribution and
additional supervisory fee. Wien & Malkin LLP received $206,254 and
the balance of the excess rent of $1,856,281 was distributed to the
participants on December 2, 1997. The additional distribution of
$1,856,281 represented an annual return of about 26.5% on the cash
investment of $7,000,000, so that total distributions for 1997 were
at the rate of about 41.4% per annum.
Taking into account that a portion of prior distributions
constituted a return of capital, the book value on December 31, 1997
of an original cash investment of $10,000 was a deficit balance of
$6,462.
The enclosed Schedule K-1 form(s) (Form 1065), containing 1997
tax information, must be reviewed in detail by your accountant.
If you have any question about the enclosed material, please
communicate with our office.
Please retain this letter and the enclosed Schedule K-1 form(s)
for the preparation of your income tax returns for the year 1997.
Cordially yours,
WIEN & MALKIN LLP
By: Stanley Katzman
SK:fm
Encs.<PAGE>
60 East 42nd St. Associates
Computation of Additional Payment for
Supervisory Services and Distribution
For the Year Ending December 31, 1996
Secondary additional rent $2,051,475
Primary additional rent, 1996:
Monthly distributions at about
14.9% per annum on $7,000,000
original investment $1,046,420
Additional monthly payment to
Wien, Malkin & Bettex 7,380 1,053,800
Total rent to be distributed 3,105,275
14% return on $7,000,000 investment 980,000
Subject to additional payment at 10%
to Wien, Malkin & Bettex $2,125,275
Additional payment at 10% $ 212,528
Paid to Wien, Malkin & Bettex as
advances for additional payment 7,380
Balance of additional payment to
Wien, Malkin & Bettex $ 205,148
Summary:
Additional distribution to participants $1,846,327
Payment to Wien, Malkin & Bettex, as above 205,148
Total secondary additional rent available
for distribution to participants and
payment to Wien, Malkin & Bettex $2,051,475
<PAGE>
[LETTERHEARD OF
JACOBS EVALL & BLUMENFELD LLP
CERTIFIED PUBLIC ACCOUNTANTS]
INDEPENDENT ACCOUNTANTS' REPORT
To the participants in 60 East 42nd St. Associates (a Partnership):
We have audited the accompanying balance sheet of 60 East 42nd St. Associates
("Associates") as of December 31, 1997, and the related statements of income,
partners' capital (deficit) and cash flows for the year then ended. These
financial statements are the responsibility of Associates' management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Associates as of December
31, 1997, and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
Jacobs Evall & Blumenfeld LLP
Certified Public Accountants
420 Lexington Avenue
New York, N. Y. 10170
January 31, 1998
<PAGE>
60 EAST 42ND ST. ASSOCIATES
BALANCE SHEET
DECEMBER 31, 1997
Assets
Cash in Fleet Bank $ 677
Cash in distribution account held
by Wien & Malkin LLP 87,202
87,879
Real estate at 60 East 42nd Street and
301 Madison Avenue, New York City:
Buildings $16,960,000
Less: Accumulated depreciation 16,960,000 -
Building improvements 1,574,135
Less: Accumulated depreciation 1,574,135 -
Land 7,240,000
Mortgage refinancing costs 249,522
Less: Accumulated amortization 80,233 169,289
Total assets $ 7,497,168
Liabilities and partners' capital (deficit)
Liabilities:
First mortgage $12,020,814
Partners' capital (deficit) (4,523,646)
Total liabilities and partners' capital (deficit) $ 7,497,168
See accompanying notes to financial statements.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
Income:
Basic rent income $1,087,842
Additional rent income 3,163,880
Total income 4,251,722
Expenses:
Interest on first mortgage $1,063,842
Supervisory services 237,634
Amortization of mortgage
refinancing costs 24,776
Professional fees 47,545
Total expenses 1,373,797
Net income $2,877,925
See accompanying notes to financial statements.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
YEAR ENDED DECEMBER 31, 1997
Partners' capital (deficit), January 1, 1997 $(4,498,870)
Add, Net income for the year ended
December 31, 1997 2,877,925
(1,620,945)
Less, Distributions:
Monthly distributions, January 1,
1997 through December 31, 1997 $1,046,420
Distribution on December 2, 1997 of
balance of additional rent for the
lease year ended September 30, 1997 1,856,281
2,902,701
Partners' capital (deficit),
December 31, 1997 $(4,523,646)
See accompanying notes to financial statements.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
Cash flows from operating activities
Net income $ 2,877,925
Adjustments to reconcile net income to
cash provided by operating activities:
Amortization of mortgage refinancing costs 24,776
Net cash provided by operating activities 2,902,701
Cash flows from financing activities
Monthly distributions to participants (1,046,420)
Distribution on December 2, 1997 of
balance of additional rent for the
lease year ended September 30, 1997 (1,856,281)
Net cash used in financing activities (2,902,701)
Net change in cash -
Cash at beginning of year 87,879
Cash at end of year $ 87,879
Supplemental disclosure of cash flows information
Cash paid in 1997 for:
Interest $ 1,063,842
See accompanying notes to financial statements.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Business Activity
60 East 42nd St. Associates ("Associates") is a general partnership
which owns commercial property at 60 East 42nd Street and 301 Madison
Avenue, New York, N.Y. The property is net leased to Lincoln Building
Associates.
2. Summary of Significant Accounting Policies
Use of estimates
In preparing financial statements in conformity with generally
accepted accounting principles, management often makes estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Land, buildings, building improvements and depreciation:
Land, buildings and building improvements are stated at cost.
Depreciation was provided on the straight-line method over the
estimated useful life of the buildings, 26 years from October 1,
1958, and the estimated useful life of the building improvements,
20 years, 5 months from May 1, 1964. The buildings and building
improvements are fully depreciated.
Mortgage refinancing costs and amortization:
Mortgage refinancing costs of $249,522, incurred in connection with
the October 6, 1994 refinancing of the first mortgage, are being
amortized ratably over the term of the mortgage, from October 6,
1994 through October 31, 2004.
3. First Mortgage Payable
On October 6, 1994, a first mortgage was placed on the property with
Morgan Guaranty Trust Company of New York, as trustee of a pension
trust, in the amount of $12,020,814. The first mortgage requires
constant equal monthly payments
<PAGE>
60 EAST 42ND ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. First Mortgage Payable (continued)
totalling $1,063,842 per annum for interest only, at the rate of 8.85%
per annum, and matures on October 31, 2004. The real estate is pledged
as collateral for the first mortgage.
Required principal payments on the first mortgage are as follows:
1998 through 2003 - 0 -
October 31, 2004 $12,020,814
4. Rent Income and Related Party Transactions
On January 4, 1982, Lincoln Building Associates (the lessee) exercised
its option to renew the lease for an additional period of 25 years, and
the lease period now extends through September 30, 2008. The lease
includes an option to renew for one additional period of 25 years
through September 30, 2033.
Effective October 6, 1994, the lease as modified provides for annual
basic rent of $1,087,842, which is equal to the sum of $1,063,842, the
constant annual mortgage charges, plus $24,000. In the event of a
mortgage refinancing, unless there is an increase in the mortgage
balance, the annual basic rent will be modified and will be equal to
the sum of $24,000 plus an amount equal to the revised mortgage
charges. In the event that such mortgage refinancing results in an
increase in the amount of outstanding principal balance of the
mortgage, the basic rent shall be equal to $24,000 plus an amount
equal to the product of the new debt service percentage rate under
the refinanced mortgage multiplied by the principal balance of the
mortgage immediately prior to the refinancing.
The lease, as modified, also provides for additional rent, as follows:
1. Additional rent equal to the first $1,053,800 of the lessee's
net operating income, as defined, in each lease year.
2. Further additional rent equal to 50% of the lessee's remaining
net operating income, as defined, in each lease year.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Rent Income and Related Party Transactions (continued)
For the lease year ended September 30, 1997, there was additional
rent of $3,163,880 based on an operating profit of $5,273,959
subject to additional rent.
Additional rent is billed to and advanced by the lessee in equal
monthly installments of $87,817. While it is not practicable to
estimate that portion of additional rent of the lease year ending
on the ensuing September 30th which would be allocable to the current
three month period ending December 31st, Associates' policy is to
include in its income each year the advances of additional rent
income received from October 1st to December 31st.
No other additional rent is accrued by Associates for the period
between the end of the lessee's lease year ending September 30th and
the end of Associates' fiscal year ending December 31st.
A partner in Associates is also a partner in the lessee.
5. Supervisory Services and Related Party Transactions
Payments for supervisory services, including disbursements and cost of
accounting services, are made to the firm of Wien & Malkin LLP. Some
members of that firm are partners in Associates.
6. Professional Fees and Related Party Transactions
Payments for professional fees, including disbursements, are made to
the firm of Wien & Malkin LLP, a related party.
7. Income Taxes
Net income is computed without regard to income tax expense since
Associates does not pay a tax on its income; instead, any such taxes
are paid by the participants in their individual capacities.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
8. Concentration of Credit Risk
Associates maintains cash balances in a bank and in a distribution
account held by Wien & Malkin LLP. The bank balance is insured by
the Federal Deposit Insurance Corporation up to $100,000, and at
December 31, 1997 was completely insured. The distribution account
held by Wien & Malkin LLP is not insured. The funds held in the
distribution account were paid to the participants on January 1,
1998.
<PAGE>
[LETTERHEARD OF
WIEN & MALKIN LLP]
December 2, 1997
TO PARTICIPANTS IN 60 EAST 42ND ST. ASSOCIATES:
We enclose the operating report of the lessee, Lincoln
Building Associates, for the fiscal year of the lease ended
September 30, 1997. The lessee reported profit of $5,273,959
subject to additional rent for the lease year ended September 30,
1997, as against profit of $5,156,749 for the lease year ended
September 30, 1996. Additional rent for the lease year ended
September 30, 1997 was $3,163,880; $1,053,800 at $87,817 per
month was advanced against additional rent so that the balance of
additional rent is $2,110,080. After deducting fees and expenses
of $47,545 incurred in connection with the September 4, 1997
consent solicitation program, the balance of $2,062,535 is
available for distribution and additional supervisory fee.
Wien & Malkin LLP receives an additional payment for
supervisory services of 10% of distributions in excess of 14% per
annum on the cash investment. Accordingly, Wien & Malkin LLP
received $206,254 of the additional rent and the balance of
$1,856,281 is being distributed to the participants. A check for
your share of the additional distribution and the computation of
the additional payment to Wien & Malkin LLP and distribution are
enclosed.
The additional distribution of $1,856,281 represents a
return of about 26.5% on the cash investment of $7,000,000.
Regular monthly distributions are at the rate of about 14.9% a
year, so that distributions for the year ending December 31, 1997
will be about 41.4% per annum.
If you have any question about the enclosed material,
please communicate with the undersigned.
Cordially yours,
WIEN & MALKIN LLP
By: Stanley Katzman
SK:fm
Encs.<PAGE>
60 East 42nd St. Associates
Computation of Additional Payment for
Supervisory Services and Distribution
For the Year Ending December 31, 1997
Secondary additional rent $2,110,080
Less: fees and expenses relating
to the September 4, 1997 consent
solicitation program 47,545
2,062,535
Primary additional rent, 1997:
Monthly distributions at about
14.9% per annum on $7,000,000
original investment $1,046,420
Additional monthly payment to
Wien & Malkin LLP 7,380 1,053,800
Total rent to be distributed 3,116,335
14% return on $7,000,000 investment 980,000
Subject to additional payment at
10% to Wien & Malkin LLP $2,136,335
Additional payment at 10% $ 213,634
Paid to Wien & Malkin LLP as
advances for additional payment 7,380
Balance of additional payment to
Wien & Malkin LLP $ 206,254
Summary:
Additional distribution to participants $1,856,281
Payment to Wien & Malkin LLP, as above 206,254
Total secondary additional rent available
for distribution to participants and
payment to Wien & Malkin LLP $2,062,535
<PAGE>
[LETTERHEARD OF
ROGOFF & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS]
Lincoln Building Associates
60 East 42nd Street
New York, New York 10165
Gentlemen:
In accordance with our engagement, we have reviewed the special-purpose
statement of income and expense of Lincoln Building Associates for the lease
year ended September 30, 1997.
Our engagement included the examination of statements of receipts and
disbursements for the property, together with supporting records, but did not
include the verification by direct communication of the income from tenants
or liabilities and disbursements to vendors.
We have no knowledge of any contingent liabilities that should be
disclosed.
Based on our review, subject to the above, the accompanying special-
purpose statement of income and expense presents fairly the net operating
income, as defined, for the computation of additional rent, of Lincoln
Building Associates, for the lease year ended September 30, 1997.
Kaufman Goldstein
New York, New York
October 22, 1997<PAGE>
Lincoln Building Associates
Notes to Financial Statement
Note 1 - The lease as modified effective January 1, 1977 provides for
additional rent, as follows:
Additional rent equal to the first $1,053,800 of
the Lessee's net operating income, as defined, in
each lease year.
Further additional rent equal to 50% of the Lessee's
remaining net operating income, as defined, in each
lease year.
<PAGE>
EXHIBIT 24
60 EAST 42ND STREET ASSOCIATES
FILE NO. 0-2670
POWER OF ATTORNEY
We, the undersigned general partners of 60 East 42nd
Street Associates ("Associates"), hereby severally constitute and
appoint Stanley Katzman and Richard A. Shapiro and each of them,
individually, our true and lawful attorneys with full power to
them and each of them to sign for us, and in our names and in the
capacities indicated below on behalf of Associates, any and all
reports or other statements required to be filed with the
Securities and Exchange Commission under Section 13 or 15(d) of
the Securities Exchange Act of 1934.
Signature Title Date
/s/Anthony E. Malkin
Anthony E. Malkin General Partner March 18, 1998
/s/Scott D. Malkin
Scott D. Malkin General Partner March 20, 1998
/s/Stanley Katzman
Stanley Katzman General Partner March 18, 1998
/s/Peter L. Malkin
Peter L. Malkin General Partner March 18, 1998
/s/John L. Loehr
John L. Loehr General Partner March 18, 1998
/s/Richard A. Shapiro
Richard A. Shapiro General Partner March 18, 1998
/s/Thomas N. Keltner, Jr.
Thomas N. Keltner, Jr. General Partner March 18, 1998
{*Path}<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 18th day of March, 1998 before me personally came
ANTHONY E. MALKIN, STANLEY KATZMAN, PETER L. MALKIN, RICHARD A.
SHAPIRO and THOMAS N. KELTNER, JR., to me known to be the
individuals described in and who executed the foregoing
instrument, and acknowledged that they executed the same.
/s/Notary Public
NOTARY PUBLIC
-2-<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 18th day of March, 1998 before me personally came
JOHN L. LOEHR, to me known to be the individual described in and
who executed the foregoing instrument, and acknowledged that he
executed the same.
/s/Notary Public
NOTARY PUBLIC
-3-<PAGE>
STATE OF UK OF GREAT BRITAIN)
: ss.:
CITY OF LONDON, ENGLAND )
On the 20th day of March, 1998 before me personally came
SCOTT D. MALKIN, to me known to be the individual described in and
who executed the foregoing instrument, and acknowledged that he
executed the same.
/s/Notary Public
NOTARY PUBLIC
of London, England
-4-<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Balance Sheet as of December 31, 1997 and the Statement Of Income
for the year ended December 31, 1997, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 87,879
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 87,879
<PP&E> 25,774,135
<DEPRECIATION> 18,534,135
<TOTAL-ASSETS> 7,497,168<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (4,523,646)
<TOTAL-LIABILITY-AND-EQUITY> 7,497,168
<SALES> 4,251,722<F2>
<TOTAL-REVENUES> 4,251,722
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 309,955<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,063,842
<INCOME-PRETAX> 2,877,925
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,877,925
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,877,925
<EPS-PRIMARY> 4,111<F4>
<EPS-DILUTED> 4,111<F4>
<FN>
<F1>Includes unamortized mortgage refinance costs
<F2>Rental income
<F3>Supervisory services, Professional fees, and amortization of mortgage
refinance costs
<F4>Earnings per $10,000 participation unit, based on 700 participation
units outstanding during the period
</FN>
</TABLE>
