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EXCEL - IDEA: XBRL DOCUMENT - 250 WEST 57TH ST ASSOCIATES L.L.C. | Financial_Report.xls |
EX-31.2 - EXHIBIT 31.2 - 250 WEST 57TH ST ASSOCIATES L.L.C. | c22392exv31w2.htm |
EX-31.1 - EXHIBIT 31.1 - 250 WEST 57TH ST ASSOCIATES L.L.C. | c22392exv31w1.htm |
EX-24.1 - EXHIBIT 24.1 - 250 WEST 57TH ST ASSOCIATES L.L.C. | c22392exv24w1.htm |
EX-32.2 - EXHIBIT 32.2 - 250 WEST 57TH ST ASSOCIATES L.L.C. | c22392exv32w2.htm |
EX-32.1 - EXHIBIT 32.1 - 250 WEST 57TH ST ASSOCIATES L.L.C. | c22392exv32w1.htm |
Table of Contents
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011
OR
o | 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 0-2666
250 WEST 57th ST. ASSOCIATES L.L.C.
(Exact name of Registrant as specified in its charter)
A New York Limited Liability Company | 13-6083380 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
One Grand Central Place
60 East 42nd Street
New York, New York 10165
(Address of principal executive offices)
60 East 42nd Street
New York, New York 10165
(Address of principal executive offices)
(212) 687-8700
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
None
Securities registered pursuant to Section 12(g) of the Act:
$3,600,000 of Participations in LLC Member Interests
$3,600,000 of Participations in LLC Member Interests
Indicate by check mark whether 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 Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to
submit and post such files). Yes
o
No o
Indicate by check mark whether Registrant is a shell company (as defined in Rule 12b-2 of the Act)
Yes o No þ
Indicate by check mark whether Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company þ |
TABLE OF CONTENTS
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
250 West 57th St. Associates L.L.C.
(A Limited Liability Company)
Condensed Balance Sheets
(Unaudited)
(A Limited Liability Company)
Condensed Balance Sheets
(Unaudited)
June 30, 2011 | December 31, 2010 | |||||||
Assets |
||||||||
Real Estate at 250-264 West
57th Street, New York,
New York: |
||||||||
Building |
$ | 4,940,682 | $ | 4,940,682 | ||||
Less: accumulated depreciation |
4,940,682 | 4,940,682 | ||||||
0 | 0 | |||||||
Building improvements |
39,267,944 | 38,748,700 | ||||||
Less: accumulated depreciation |
6,516,229 | 6,009,941 | ||||||
32,751,715 | 32,738,759 | |||||||
Tenant improvements |
2,438,753 | 1,097,942 | ||||||
Less: accumulated depreciation |
286,177 | 59,351 | ||||||
2,152,576 | 1,038,591 | |||||||
Land |
2,117,435 | 2,117,435 | ||||||
Total real estate, net |
37,021,726 | 35,894,785 | ||||||
Cash and cash equivalents |
1,316,893 | 1,513,152 | ||||||
Due from Supervisor |
60,000 | 60,000 | ||||||
Deferred costs |
377,812 | 192,400 | ||||||
Other receivable |
57,758 | | ||||||
Leasing commissions, less accumulated
amortization of $1,107,859 in 2011 and
$1,011,122 in 2010 |
778,853 | 773,944 | ||||||
Mortgage refinancing costs, less accumulated
amortization of $1,104,629 and $946,107 |
1,123,191 | 1,281,713 | ||||||
Total assets |
$ | 40,736,233 | $ | 39,715,994 | ||||
Liabilities and members deficiency |
||||||||
Liabilities: |
||||||||
Mortgages payable |
$ | 40,432,050 | $ | 40,914,878 | ||||
Accrued mortgage interest |
186,490 | 188,882 | ||||||
Payable to Lessee, a related party |
5,206,727 | 3,245,027 | ||||||
Accrued expenses and other liabilities |
329,749 | 157,323 | ||||||
Accrued supervisory fees, a related party |
| 31,000 | ||||||
Total liabilities |
46,155,016 | 44,537,110 | ||||||
Commitments and contingencies |
| | ||||||
Members deficiency (At June 30, 2011
and December 31, 2010, there were 720 units (at
$5,000 per unit) of participation units
outstanding) |
(5,418,783 | ) | (4,821,116 | ) | ||||
Total liability and members
deficiency |
$ | 40,736,233 | $ | 39,715,994 | ||||
See notes to the condensed financial statements.
Table of Contents
250 West 57th St. Associates L.L.C.
(A Limited Liability Company)
Condensed Statements of Operations
(Unaudited)
(A Limited Liability Company)
Condensed Statements of Operations
(Unaudited)
For the Three Months | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue: |
||||||||||||||||
Basic minimum annual rent,
from a related party |
$ | 817,836 | $ | 817,836 | $ | 1,635,503 | $ | 1,635,503 | ||||||||
Advance of primary overage
rent, from a related party |
188,000 | 188,000 | 376,000 | 376,000 | ||||||||||||
Total rent income |
1,005,836 | 1,005,836 | 2,011,503 | 2,011,503 | ||||||||||||
Interest and dividend income |
235 | 172 | 486 | 204 | ||||||||||||
Total revenue |
1,006,071 | 1,006,008 | 2,011,989 | 2,011,707 | ||||||||||||
Expenses: |
||||||||||||||||
Interest on mortgages |
645,848 | 658,950 | 1,294,972 | 1,320,896 | ||||||||||||
Supervisory services, to a related party |
30,500 | 15,000 | 61,000 | 30,000 | ||||||||||||
Depreciation of building and tenant
improvements |
367,610 | 235,517 | 733,114 | 469,574 | ||||||||||||
Amortization of leasing commissions |
46,043 | 43,833 | 96,737 | 96,557 | ||||||||||||
Professional fees |
30,850 | 600 | 63,833 | 3,600 | ||||||||||||
Total expenses |
1,120,851 | 953,900 | 2,249,656 | 1,920,627 | ||||||||||||
Net Income (Loss) |
$ | (114,780 | ) | $ | 52,108 | $ | (237,667 | ) | $ | 91,080 | ||||||
Earnings (loss) per $5,000 participation
unit, based on 720 participation units
outstanding during the period |
$ | (159.42 | ) | $ | 72.37 | $ | (330.09 | ) | $ | 126.50 | ||||||
Distributions per $5,000
participation unit
consisted of the following: |
||||||||||||||||
Income |
$ | 0 | $ | 72.37 | $ | 0 | $ | 126.50 | ||||||||
Return of capital |
250.00 | 177.63 | 500.00 | 373.50 | ||||||||||||
Total distributions |
$ | 250.00 | $ | 250.00 | $ | 500.00 | $ | 500.00 | ||||||||
See notes to the condensed financial statements.
Table of Contents
250 West 57th St. Associates L.L.C.
(A Limited Liability Company)
Statements of Members Deficiency
(Unaudited)
(A Limited Liability Company)
Statements of Members Deficiency
(Unaudited)
For the | For the | |||||||
Six Months Ended | Year Ended | |||||||
June 30, 2011 | December 31, 2010 | |||||||
Members deficiency: |
||||||||
January 1, 2011 |
$ | (4,821,116 | ) | |||||
January 1, 2010 |
$ | (4,871,646 | ) | |||||
Add, net income (loss): |
||||||||
January 1, 2011 through June 30, 2011 |
(237,667 | ) | | |||||
January 1, 2010 through December 31, 2010 |
| 4,666,313 | ||||||
(5,058,783 | ) | (205,333 | ) | |||||
Less, distributions: |
||||||||
Distributions January 1, 2011 through
June 30, 2011 |
360,000 | | ||||||
Distributions January 1, 2010
through December 31, 2010 |
| 720,000 | ||||||
Distribution, November 30, 2010 |
| 3,895,783 | ||||||
360,000 | 4,615,783 | |||||||
Members deficiency at the end of the
period: |
$ | (5,418,783 | ) | $ | (4,821,116 | ) | ||
See notes to the condensed financial statements.
Table of Contents
250 West 57th St. Associates L.L.C.
(A Limited Liability Company)
Condensed Statements of Cash Flows
(Unaudited)
(A Limited Liability Company)
Condensed Statements of Cash Flows
(Unaudited)
For the | For the | |||||||
Six Months Ended | Six Months Ended | |||||||
June 30, 2011 | June 30, 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | (237,667 | ) | $ | 91,080 | |||
Adjustments
to reconcile net income (loss) to net
cash provided by operating activities: |
||||||||
Depreciation of building and tenant
improvements |
733,114 | 469,574 | ||||||
Amortization of leasing commissions |
96,737 | 96,557 | ||||||
Amortization of mortgage refinancing costs |
158,522 | 158,522 | ||||||
Changes in operating assets and liabilities: |
||||||||
Other receivable |
(57,758 | ) | (103,980 | ) | ||||
Leasing commissions paid |
(101,646 | ) | (85,292 | ) | ||||
Change in accrued mortgage interest |
(2,392 | ) | (2,273 | ) | ||||
Change in accrued supervisory fees, a
related party |
(31,000 | ) | | |||||
Change in accrued expenses and other
liabilities |
172,426 | | ||||||
Net cash provided by operating activities |
730,336 | 624,188 | ||||||
Cash flows from investing activities: |
||||||||
Purchase of building and tenant improvements |
(1,860,055 | ) | (718,763 | ) | ||||
Increase (decrease) in payable to Lessee |
1,961,700 | (199,241 | ) | |||||
Net cash provided by (used in) investing activities |
101,645 | (918,004 | ) | |||||
Cash flows from financing activities: |
||||||||
Repayment of mortgages payable |
(482,828 | ) | (457,024 | ) | ||||
Financing costs |
| 50 | ||||||
Deferred costs |
(185,412 | ) | | |||||
Distributions to Participants |
(360,000 | ) | (360,000 | ) | ||||
Members distributions held by Supervisor |
| (60,000 | ) | |||||
Net cash used in financing activities |
(1,028,240 | ) | (876,974 | ) | ||||
Net decrease in cash and cash equivalents |
(196,259 | ) | (1,170,790 | ) | ||||
Cash and cash equivalents, beginning of period |
1,513,152 | 1,953,929 | ||||||
Cash and cash equivalents, end of period |
$ | 1,316,893 | $ | 783,139 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for interest |
$ | 1,138,842 | $ | 1,164,647 | ||||
See notes to the condensed financial statements.
Table of Contents
Notes to Condensed Financial Statements (Unaudited)
Note A Interim Period Reporting
In the opinion of management, the accompanying unaudited condensed financial statements of 250
West 57th St. Associates L.L.C. (Registrant) reflect all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial position of Registrant as of June 30,
2011 and its results of operations for the three and six months ended June 30, 2011 and 2010 and
cash flows for the six months ended June 30, 2011 and 2010. Information included in the condensed
balance sheet as of December 31, 2010 has been derived from the audited balance sheet included in
Registrants Form 10-K for the year ended December 31, 2010 (the 10-K) previously filed with the
Securities and Exchange Commission (the SEC). Pursuant to rules and regulations of the SEC,
certain information and disclosures normally included in financial statements prepared in
accordance with U.S. generally accepted accounting principles have been condensed or omitted from
these financial statements unless significant changes have taken place since the end of the most
recent fiscal year. Accordingly, these unaudited condensed financial statements should be read in
conjunction with the financial statements, notes to financial statements and the other information
in the 10-K. The results of operations for the three and six months ended June 30, 2011 are not
necessarily indicative of the results to be expected for any interim period or the full year.
Reclassification
Certain prior year balances have been reclassified to conform with the current period presentation.
Note B Organization
Registrant is a New York limited liability company which was organized as a joint venture on
May 25, 1953. On September 30, 1953, Registrant acquired fee title to the building known as 250
West 57th Street (the Building), formerly known as the Fisk Building, and the land
thereunder located at 250-264 West 57th Street, New York, New York (collectively, the Property).
On November 30, 2001, Registrant converted to a limited liability company under New York law and is
now known as 250 West 57th St. Associates L.L.C. The conversion did not change any
aspect of the assets and operations of Registrant other than to protect its Participants from
future liability to a third party. Registrants members (Members) are Peter L. Malkin and
Anthony E. Malkin (collectively, the Agents), each of whom also acts as an agent for holders of
participations (Participations) in their respective member interests in Registrant (the
Participants). The Members in Registrant hold senior positions at Malkin Holdings LLC (Malkin
Holdings or the Supervisor) (formerly Wien & Malkin LLC), One Grand Central Place, 60 East 42nd
Street, New York, New York, which provides supervisory and other services to Registrant and Lessee.
See Note E below.
Table of Contents
Note C Lease
Registrant does not operate the Property. Registrant leases the Property to Fisk Building
Associates L.L.C. (the Lessee) under a long-term net operating lease dated May 1, 1954 (the
Lease). In 1985, the Participants in Registrant consented to Registrants Agents granting Lessee
four options to extend the Lease, in each case for an additional twenty-five year renewal period,
the last expiring in 2103, all on the same terms as the original lease. The Agents intend to grant
such options on behalf of Registrant, subject to Lessees compliance with such consents. Such
options have been granted by the Agents and exercised by Lessee as to (a) the first renewal period
from October 1, 2003 through September 30, 2028, and (b) the second renewal period from October 1,
2028 through September 30, 2053. The Participants in Registrant have consented to the granting of
options to the Lessee to extend the lease for two additional 25-year renewal terms expiring in
2103. Lessee is a New York limited liability company whose members consist of, among others,
Anthony E. Malkin and entities for the benefit of members of Peter L. Malkins and Anthony E.
Malkins family.
Under the Lease, effective May 1, 1975, between Registrant and Lessee, basic annual rent
(Basic Rent) was equal to mortgage principal and interest payments plus $28,000 for partial
payment to Malkin Holdings for supervisory services. The lease modification dated November 17,
2000, and as further modified, between Registrant and Lessee provides that Basic Rent will be equal
to the sum of $28,000 plus the installment payments for interest and amortization (not including
any balloon payment due at maturity) currently payable on all mortgages. Basic Rent is payable in
monthly installments on the first day of each calendar month in an amount equal to $2,333.33 plus
the projected debt service due on the mortgages on the first day of the ensuing calendar month
(with a reconciliation to be made as soon as practicable thereafter). Basic Rent shall be adjusted
on a dollar-for-dollar basis by changes in the annual debt service on the mortgages. See Note D.
Lessee is required to make a monthly payment to Registrant, as an advance against primary
overage rent (Primary Overage Rent), of an amount equal to its operating profit for its previous
lease year in the maximum amount of $752,000 per annum. Lessee currently advances $752,000 each
year, which is recorded in revenues in monthly installments of $62,667 and permits Registrant to
make regular monthly distributions at 20% per annum on the Participants remaining original cash
investment (which remaining cash investment at June 30, 2011, was equal to the participants
original cash investment of $3,600,000) and to pay $1,667 monthly to Supervisor as an advance of
the additional payment (the Additional Payment).
Lessee is also required to make an annual payment to Registrant of secondary overage rent
(Secondary Overage Rent) subsequent to September 30th of the amount representing 50%
of the excess of the net operating profit (as defined) of the Lessee for the lease year ending
September 30th over the Primary Overage Rent of $752,000, less the amount representing
interest earned and retained by Registrant on funds borrowed for the building improvement program
described below. Since it is not practicable to estimate Secondary Overage Rent for the lease year
ending on September 30th which would be allocable to the first nine months of the lease
year until the Lessee, pursuant to the Lease, renders to Registrant a report on the operation of
the Property. Registrant recognizes Secondary Overage Rent when earned from the Lessee, at the
close of the lease year ending September 30th and records such amount in revenue in the
three months ended September 30th.
Table of Contents
For the lease year ended September 30, 2010, Lessee reported net operating profit of
$10,915,299 after deduction of Basic Rent. Lessee paid Primary Overage Rent of $752,000 for that
lease year prior to September 30, 2010 and Secondary Overage Rent of $5,081,285 subsequent to
September 30, 2010. The Secondary Overage Rent of $5,081,285 represents 50% of the excess of the
Lessees net operating profit of $10,915,299 over $752,000, less $363 representing interest earned
and retained by Registrant on funds borrowed for the improvement program. As a result, the
Secondary Overage Rent paid by the Lessee subsequent to September 30, 2010 of $5,081,285 plus $363
of interest income was available for distribution by Registrant to the Participants. After
deducting $750,000 for general contingencies, the Additional Payment to Supervisor of $452,865
(Note E) of which $20,000 was advanced from annual Primary Overage Rent of $752,000 and annual
New York State filing fees of $3,000, the balance of $3,895,783 was distributed by Registrant to
the Participants on November 30, 2010.
As a result of its revenue recognition policy, rental income for the year ending December 31
includes the advances of Primary Overage Rent received from October 1 to December 31, but does not
include any portion of Secondary Overage Rent based on the Lessees operations during that period.
Note D Mortgages
On December 29, 2004, a first mortgage (the First Mortgage) was placed on the Property in
the amount of $30,500,000 with Prudential Insurance Company of America. At closing, $3,000,000 was
drawn and the remaining $27,500,000 was drawn during 2005. These draws paid off the pre-existing
first mortgage of $15,500,000 with Emigrant Savings Bank on September 1, 2005 and were used to
finance capital improvements as needed. The initial draw of $3,000,000 and all subsequent draws
required constant equal monthly payments of interest only, at the rate of 5.33% per annum until
January 5, 2007. Commencing February 5, 2007 Registrant is required to make monthly payments of
$184,213 applied to interest and principal calculated on a 25-year amortization schedule. The
balance of the First Mortgage is $27,594,504 at June 30, 2011. The First Mortgage matures on
January 5, 2015 when the principal balance will be $24,754,972. The First Mortgage may be prepaid
at any time, in whole only, upon payment of a prepayment penalty based on a yield maintenance
formula. There is no prepayment penalty if the First Mortgage is paid in full during the last 90
days of the term.
On May 25, 2006, a second mortgage (the Second Mortgage) was placed on the Property in the
amount of $12,410,000 with Prudential Insurance Company of America. $2,100,000 was drawn at closing
and $10,310,000 had been drawn as of March 5, 2009. The initial draw of $2,100,000 and all
subsequent draws required constant equal monthly payments of interest only, at the rate of 6.13%
per annum until March 5, 2009. Commencing April 5, 2009, Registrant is required to make monthly
payments of $80,947 applied to interest and principal calculated on a 25- year amortization
schedule. The balance of the Second Mortgage is $11,902,930 at June 30, 2011. The Second Mortgage
matures on January 5, 2015 when the principal balance will be $10,961,870. The Second Mortgage may
be prepaid at any time, in whole only, upon payment of a prepayment penalty based on a yield
maintenance formula. There is no prepayment penalty if the Second Mortgage is paid in full during
the last 60 days of the term.
Table of Contents
On October 15, 2009, Registrant closed on a $21,000,000 line of credit from Signature Bank
secured by a mortgage on the Property, subordinate to the existing senior mortgage debt held by
Prudential Insurance Company of America in the original amount of $42,910,000, and to be used for
capital improvements. $934,616 was drawn at closing and is the balance at June 30, 2011. The new
loan requires payments of interest only and is co-terminus with the existing senior mortgage debt.
Interest on the new loan is at a floating rate of prime plus 1.0% with a floor of 6.50% per annum
unless Registrant elects to fix the rate on the floating rate balance, in minimum increments of
$5,000,000, for the then-remaining loan term. Registrant has two options to fix the then floating
rate balance. Such fixed rate shall be (a) 300 basis points over the Treasury Bill rate with a
floor of 6.50% per annum or (b) if Registrant then chooses to eliminate any loan prepayment
penalty, 325 basis points over the Treasury Bill rate with a floor of 6.75% per annum.
The estimated fair value of Registrants mortgage debt based on available market information
is approximately $42,073,340 as of June 30, 2011.
In 1999, the Participants in Registrant and the members in Lessee consented to a building
improvement program (the Program) estimated to cost approximately $12,200,000. In 2004, the
Participants and Lessee approved an increase in the Program from $12,200,000 to approximately
$31,400,000 under substantially the same conditions as had previously been approved. To induce the
Lessee to approve the Program, Registrants Participants authorized a grant to the Lessee, upon
completion of the Program, of the right to further extensions of the Lease beyond 2103, based on
the net present benefit to Registrant of the improvements made.
The Program for improvements was further increased in 2006 from $31,400,000 to up to
$82,300,000, again on the basis that such increase would allow a further extension of the Lease
based on the net present benefit to Registrant of the improvements made. The Participants in
Registrant and the members in Lessee have approved increasing the financing from the total of
$42,910,000 provided by the First and Second Mortgages to up to $63,900,000. As of June 30, 2011,
Registrant had incurred or accrued costs related to the improvement program of $41,018,697 and
estimated that costs upon completion will be approximately $82,300,000. The balance of the costs of
the Program will be financed primarily by the additional borrowings available under the $21,000,000
previously approved loan that closed on October 15, 2009 and Lessees operating cash flow.
Note E Supervisory Services
Registrant pays Supervisor for supervisory services and disbursements. The basic fee has been
payable at the rate of $40,000 per annum, payable $3,333 per month, since the fiscal year ended
September 30, 1980. The Agents have approved an increase in such fee in an amount equal to the
increase in the Consumer Price Index since such date, resulting in an increase in the basic fee to
$102,000 per annum effective July 1, 2010. The basic fee will be subject to further increase in
accordance with any future increase in the Consumer Price Index. The fee is payable (i) not less
than $2,333 per month, (ii) an additional $1,000 per month out of Primary Overage Rent payment and
(iii) the balance out of available reserves from Secondary Overage Rent. Any deficiency in the
portion of the fee payable from Primary or Secondary Overage Rent shall be payable out of Secondary
Overage Rent in the next year in which Secondary Overage Rent is sufficient. The Agents also
approved payment by Registrant, effective July 1, 2010, of the
expenses in connection with regular accounting services related to maintenance of Registrants
books and records. Such expenses were previously paid by Supervisor.
Table of Contents
Registrant pays Supervisor an Additional Payment equal to 10% of all distributions to
Participants in any year in excess of the amount representing a return to them at the rate 15% per
annum on their remaining cash investment in Registrant (which remaining cash investment at June 30,
2011 was equal to the Participants original cash investment of $3,600,000). For tax purposes, such
Additional Payment is recognized as a profits interest, and the Supervisor is treated as a partner,
all without modifying each Participants distributive share of reportable income and cash
distributions.
The basic supervisory services provided to Registrant by Supervisor include, but are not
limited to, maintaining all of its entity and Participant records, performing physical inspections
of the Building, providing or coordinating certain counsel services to Registrant, reviewing
insurance coverage, conducting annual supervisory review meetings, receipt of monthly rent from
Lessee, payment of monthly and additional distributions to the Participants, payment of all other
disbursements, confirmation of the payment of real estate taxes, active review of financial
statements submitted to Registrant by Lessee and financial statements audited by and tax
information prepared by Registrants independent registered public accounting firm, and
distribution of related materials to the Participants. Supervisor also prepares quarterly, annual
and other periodic filings with the SEC and applicable state authorities.
Registrant also pays Supervisor for other services at hourly rates. Pursuant to the fee
arrangements described herein, Registrant incurred supervisory service fees of $61,000 for the
six-month period ended June 30, 2011. No remuneration was paid during the six-month periods ended
June 30, 2011 and 2010 by Registrant to either of the Members.
Reference is made to Note C above for a description of the terms of the Lease between
Registrant and Lessee. The respective interests of the Members in Registrant and in Lessee arise
solely from ownership of their respective Participations in Registrant and Anthony E. Malkins
participating interest in Lessee and Peter L. Malkin and Anthony E. Malkins family entities
ownership of member interests in Lessee. The Members as such receive no extra or special benefit
not shared on a pro rata basis with all other Participants in Registrant or members in Lessee.
However, all of the Members hold senior positions at Supervisor (which supervises Registrant and
Lessee) and, by reason of their positions at Supervisor, may receive income attributable to
supervisory or other remuneration paid to Supervisor by Registrant and Lessee.
Subsequent Events
Subsequent events have been evaluated for potential recognition and disclosure.
Table of Contents
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Forward Looking Statements
Readers of this discussion are advised that the discussion should be read in conjunction with
the financial statements of Registrant (including related notes thereto)
appearing elsewhere in this Form 10-Q. Certain statements in this discussion may constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements reflect Registrants current expectations regarding future
results of operations, economic performance, financial condition and achievements of Registrant,
and do not relate strictly to historical or current facts. Registrant has tried, wherever possible,
to identify these forward-looking statements by using words such as believe, expect,
anticipate, intend, plan, estimate or words of similar meaning.
Although Registrant believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, such statements are subject to risks and
uncertainties, which may cause the actual results to differ materially from those projected. Such
factors include, but are not limited to, the following: general economic and business conditions,
which will, among other things, affect demand for rental space, the availability of prospective
tenants, lease rents and the availability of financing; adverse changes in Registrants real estate
market, including, among other things, competition with other real estate owners, risks of real
estate development and acquisitions; governmental actions and initiatives; and environmental/safety
requirements.
Financial Condition and Results of Operations
Registrant was organized solely for the purpose of owning the Property subject to a net
operating lease of the Property held by Lessee. Registrant is required to pay, from Basic Rent
under the Lease, the charges on the First and Second mortgages and the line of credit and amounts
for supervisory services. Registrant is required to pay from Primary Overage Rent and Secondary
Overage Rent the Additional Payment to Supervisor, other expenses and then to distribute the
balance of such Overage Rent less any additions to reserves to the Participants. See Note E to the
condensed financial statements. Pursuant to the Lease, Lessee has assumed responsibility for the
condition, operation, repair, maintenance and management of the Property. Accordingly, Registrant
need not maintain substantial reserves or otherwise maintain liquid assets to defray any operating
expenses of the Property.
Registrants results of operations are affected primarily by the amount of rent payable to it
under the Lease. The amounts of Primary Overage Rent and Secondary Overage Rent are affected by
the New York City economy and real estate rental market, which is difficult for management to
forecast.
Registrant does not pay dividends. During the six-month period ended June 30, 2011,
Registrant made regular monthly distributions of $83.33 for each $5,000 Participation ($1,000 per
annum for each $5,000 participation). There are no restrictions on Registrants present or future
ability to make distributions; however, the amount of such distributions depends on the ability of
Lessee to make monthly payments of Basic Rent, Primary Overage Rent, and Secondary Overage Rent to
Registrant in accordance with the terms of the Lease. Registrant expects to make distributions so
long as it receives the payments provided for under the Lease.
On November 30, 2010, Registrant made an additional distribution of $5,411 for each $5,000
participation. Such distribution represented the balance of Secondary Overage Rent paid by Lessee
subsequent to September 30, 2010 in accordance with the terms of the Lease after deducting the
required Additional Payment to Supervisor, professional fees, annual New York
State filing fees and general contingencies. See Notes C and D to the condensed financial
statements herein.
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The following summarizes, with respect to the current period and corresponding period of the
previous year, the material factors affecting Registrants results of operations for such periods:
Total revenues increased for the six month period ended June 30, 2011 as compared
with the corresponding period of the prior year. Such increase was the result of an
increase in interest income for the six month period ended June 30, 2011 as compared
with the corresponding period of the prior year.
Total revenues increased for the three month period ended June 30, 2011 as compared
with the corresponding period of the prior year. Such increase was the result of an
increase in interest income for the three month period ended June 30, 2011 as
compared with the corresponding period of the prior year.
Total expenses increased for the six month period ended June 30, 2011 as compared
with the corresponding period of the prior year. Such increase is the net result of
a decrease in interest on the mortgages payable as a result of principal payments
that reduced the loan balance, an increase in basic supervisory fees to Malkin
Holdings effective July 1, 2010, an increase in depreciation of building and tenant
improvements attributable to an increase in depreciable assets placed in service, an
increase in amortization of leasing commissions as a result of additional leasing,
and an increase in professional fees due to the fact that accounting fees were
previously paid by Supervisor and due to the fees paid to Malkin Holdings for
services rendered in connection with certain matters regarding ownership and
operation of 250 West 57th St. for the six month period ended June 30, 2011 as
compared with the corresponding period of the prior year.
Total expenses increased for the three month period ended June 30, 2011 as compared
with the corresponding period of the prior year. Such increase for the three month
period is the net result of a decrease in interest on the mortgages payable as a
result of principal payments that reduced the loan balance, an increase in basic
supervisory fees to Malkin Holdings effective July 1, 2010, an increase in
depreciation of building and tenant improvements attributable to an increase in
depreciable assets placed in service, an increase in amortization of leasing
commissions as a result of additional leasing, and an increase in professional fees
due to the fact that accounting fees were previously paid by Supervisor and due to
the fees paid to Malkin Holdings for services rendered in connection with certain
matters regarding ownership and operation of 250 West 57th St. for the three month
period ended June 30, 2011 as compared with the corresponding period of the prior
year.
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Liquidity and Capital Resources
Registrants liquidity has decreased at June 30, 2011 as compared with December 31, 2010 as a
result of commitments under the improvement program. Registrant may from time to time set aside
cash for general contingencies. Recent adverse developments in economic, credit and investment
markets over the last several years impaired general liquidity (although some improvement in such
markets has arisen recently) and the developments may negatively impact Registrant and/or space
tenants at the Building. Any such impact should be ameliorated by the fact that (a) each of
Registrant and its Lessee has very low debt in relation to asset value, (b) the maturity of
Registrants existing and planned debt will not occur within the next 36 months, and (c) the
Buildings rental revenue is derived from a substantial number of tenants in diverse businesses
with lease termination dates spread over numerous years.
Amortization payments due under the First Mortgage commenced February 5, 2007, calculated on a
25-year amortization schedule. Amortization payments under the Second Mortgage commenced April 5,
2009, calculated on a 25-year amortization schedule. The First and the Second Mortgages mature on
January 5, 2015. The line of credit requires payment of interest only and also matures on January
5, 2015. Registrant does not maintain any reserve to cover the payment of such mortgage
indebtedness at maturity. Therefore, repayment of mortgage debt will depend on Registrants
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 real estate
capital and operating markets return to more stable patterns, consistent with long-term historical
real estate trends in the geographic area in which the Property is located, Registrant anticipates
that the value of the Property will be in excess of the amount of the senior mortgage debt and the
line of credit balances at maturity.
Registrant anticipates that funds for short-term working capital requirements for the Property
will be provided by cash on hand, approximately $20,000,000 available to be drawn on the line of
credit from Signature Bank, and rental payments received from the Lessee. Long-term sources of
working capital will be provided by rental payments received from the Lessee and, to the extent
necessary, from additional capital investment by the members 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.
Inflation
Registrant believes that there has been no material change in the impact of inflation on its
operations since the filing of its report on Form 10-K for the year ended December 31, 2010.
Security Ownership
The Members in Registrant do not hold any Participations in their individual capacities.
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As of June 30, 2011, certain of the Members in Registrant held Participations as follows:
Entities for the benefit of members of Peter L. Malkins family owned of record and
beneficially $167,500 of Participations. Peter L. Malkin disclaims any beneficial
ownership of such Participations, except that related family trusts or entities are
required to complete scheduled payments to Peter L. Malkin.
Peter L. Malkin owned of record as trustee, but not beneficially, $17,500 of
Participations. Peter L. Malkin disclaims any beneficial ownership of such
Participations.
Anthony E. Malkin owned of record as trustee, but not beneficially, $10,000 of
Participations. Anthony E. Malkin disclaims any beneficial ownership of such
Participations.
Item 4T. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures. The Supervisor after evaluating the
effectiveness of Registrants disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934, Rules 13a-15(e) and 15d-15(e)) as of June 30, 2011, the end of the period
covered by this report, has concluded that as of that date Registrants disclosure controls and
procedures were effective and designed to ensure that material information relating to
Registrant would be made known to it by others within those entities on a timely basis.
(b) Changes in internal controls over financial reporting. There were no changes in
Registrants internal controls over financial reporting that occurred during the most recent
fiscal quarter that have materially affected, or are reasonably likely to materially affect,
Registrants internal controls over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Property of Registrant was the subject of the following material litigation:
Malkin Holdings LLC and Peter L. Malkin, a member in Registrant, were engaged in a proceeding
with Lessees former managing agent, Helmsley-Spear, Inc., commenced in 1997, concerning the
management, leasing, and supervision of the property that is subject to the Lease to Lessee.
In this connection, certain costs for legal and professional fees and other expenses were paid
by Malkin Holdings and Mr. Malkin. Malkin Holdings and Mr. Malkin have represented that such
costs will be recovered only to the extent that (a) a competent tribunal authorizes payment or
(b) an investor voluntarily agrees that his or her proportionate share be paid. Accordingly,
Registrants allocable share of such costs is as yet undetermined, and Registrant has not
provided for the expense and related liability with respect to such costs in its financial
statements included in this Form 10-Q. As a result of an August 29, 2006 settlement agreement,
which included termination of this proceeding, Registrant will not recognize any gains or
losses from this proceeding other than the possible charges for the aforementioned fees and
expenses.
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Item 6. Exhibits
EXHIBIT INDEX
Number | Document | Page* | ||||
3 | (a) | Registrants Joint Venture Agreement,
dated May 25, 1953, which was filed as Exhibit
No. 3(a) to Registrants Registration Statement
on Form S-1 (the Registration Statement), is
incorporated by reference as an exhibit hereto. |
||||
3 | (b) | Amended Business Certificate of Registrant filed
with the Clerk of New York County on July 24,
1998, reflecting a change in the Partners of
Registrant, which was filed as Exhibit 3(b) to
Registrants Amended Quarterly Report on 10-Q for
the period ended September 30, 1998 and is
incorporated by reference as an exhibit hereto. |
||||
3 | (c) | Registrants Memorandum of Agreement among Joint
Venturers in 250 West 57th St.
Associates, dated June 9, 1953, filed as Exhibit
1 to the Registration Statement, is incorporated
by reference as an exhibit hereto. |
||||
3 | (d) | Registrants Consent and Operating Agreement
dated as of November 30, 2001 |
||||
3 | (e) | Certificate of Conversion of Registrant
to a limited liability company dated November
30, 2001, filed with the New York Secretary of
State on December 5, 2001. |
||||
4 | Registrants form of Participation
Agreement, which was filed as Exhibit No. 4(a) to
the Registration Statement, is incorporated by
reference as an exhibit hereto. |
|||||
10 | (a) | Lease between Registrant and Fisk Building
Associates LLC dated September 30, 1957, which
was filed as Exhibit No. 2(d) to the Registration
Statement, is incorporated by reference as an
exhibit hereto. |
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EXHIBIT INDEX
(cont.)
(cont.)
Number | Document | Page* | ||||
10 | (b) | Modification of Lease dated November 10, 1961,
was filed by letter dated November 21, 1961, as
Exhibit B to Registrants Statement of
Registration on Form 8-K for the month of
October, 1961, is incorporated by reference as an
exhibit hereto. |
||||
10 | (c) | Second Modification Agreement of Lease dated June
10, 1965, between Registrant and Fisk Building
Associates LLC, which was filed by letter dated
December 29, 1981, as Exhibit 10(c) to
Registrants Annual Report on Form 10-K for the
year ended September 30, 1981, is incorporated by
reference as an exhibit hereto. |
||||
10 | (d) | Fourth Lease Modification Agreement dated
November 12, 1985, between Registrant and Fisk
Building Associates LLC, which was filed by
letter dated January 13, 1986, as Exhibit 10(g)
to Registrants Annual Report on Form 10-K for
the year ended September 30, 1985, is
incorporated herein by reference as an exhibit
hereto. |
||||
10 | (e) | Modification of Mortgage dated as of March 1,
1995, between Registrant and the Apple Bank for
Savings, which was filed on March 30, 1995, as
Exhibit 10(e) to Registrants Annual Report on
Form 10-K, is incorporated herein by reference as
an exhibit hereto. |
||||
10 | (f) | Exercise of lease renewal option as of January 1,
2010 by Lessee for the period October 1, 2028 to
September 30, 2053 which was filed under Item
10(f) of Registrants Form 10-Q for the fiscal
period ended June 30, 2010 and is incorporated by
reference as an exhibit hereto. |
||||
10 | (g) | Amendment to Registrants Operating Agreement as
of July 1, 2010 which was filed under Item 10(g)
of Registrants Form 10-Q for the fiscal period
ended June 30, 2010 and is incorporated by
reference as an exhibit hereto. |
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EXHIBIT INDEX
(cont.)
(cont.)
Number | Document | Page* | ||||
24.1 | Power of Attorney dated September 8, 2011 between
Members in Registrant and Mark Labell which is being
filed as Exhibit 24.1 to
Registrants 10-Q for the quarter ended
June 30, 2011. |
|||||
31.1 | Certification of Mark Labell, Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 |
|||||
31.2 | Certification of Mark Labell, Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 |
|||||
32.1 | Certification of Mark Labell, Pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
|||||
32.2 | Certification of Mark Labell, Pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
* | Page references are based on sequential numbering system. |
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SIGNATURES
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 Members in Registrant, pursuant to Power of Attorney, dated September 8, 2011 (the
Power).
250 WEST 57th ST. ASSOCIATES L.L.C.
(Registrant)
(Registrant)
By: | /s/ Mark Labell | |||
Mark Labell*, Attorney-in-Fact on behalf of: | ||||
Peter L. Malkin, Member Anthony E. Malkin, Member |
||||
Date:
September 20, 2011
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 Members in Registrant, pursuant to
the Power, on behalf of Registrant and as a Member in Registrant on the date indicated.
By: | /s/ Mark Labell | |||
Mark Labell*, Attorney-in-Fact on behalf of: | ||||
Peter L. Malkin, Member Anthony E. Malkin, Member |
||||
Date:
September 20, 2011
* | Mr. Labell supervises accounting functions for Registrant. |