FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission file number 0-2673
NAVARRE-500 BUILDING ASSOCIATES
(Exact name of registrant as specified in its charter)
A New York Co-Tenancy Formerly 13-6082674
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 East 42nd Street, New York, New York 10165
(Address of principal executive offices)
(Zip Code)
(212) 687-8700
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ]. No [ ].
An Exhibit Index is located on Page 11 of this Report.
Number of pages (including exhibits) in this filing: 12
Navarre-500 Building Associates
June 30, 2002
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Navarre-500 Building Associates
Condensed Statements of Income
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
Income:
Rent income, from a
related party (Note B) $ -0- $ -0- $ -0- $ -0-
Dividend Income 4,340 32,738 8,951 73,216
Interest Income -0- -0- -0- -0-
--------- --------- --------- ---------
Total income 4,340 32,738 8,951 73,216
--------- --------- --------- ---------
Expenses:
Leasehold rent (Note B) -0- -0- -0- -0-
Supervisory services, to a
related party (Note C) -0- -0- -0- -0-
Fees 389 321 3,389 14,074
Interest expense -0- -0- -0- -0-
--------- --------- --------- ---------
Total expenses 389 321 3,389 14,074
--------- --------- --------- ---------
Net income $ 3,951 $ 32,417 $ 5,562 $ 59,142
========= ========= ========= =========
Earnings per $5,000
participation unit,
based on 640 participation
units outstanding
during the period $ 6.17 $ 50.65 $ 8.69 $ 92.41
========= ========= ========= =========
Distributions per $5,000
Participation:
Income $ -0- $ -0- $ -0- $ -0-
Return of capital -0- -0- -0- -0-
--------- --------- --------- ---------
Total distributions $ -0- $ -0- $ -0- $ -0-
========= ========= ======== ========
As of June 30, 2002, the investment of the Participants had been
repaid in full but the Participants continue to hold pro rata
interests in Registrant based upon the original participating
interests.
See notes to condensed financial statements.
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Navarre-500 Building Associates
June 30, 2002
Navarre-500 Building Associates
Condensed Balance Sheets
(Unaudited)
Assets June 30, 2002 December 31, 2001
Cash $ -0- $ -0-
Escrow account held by
Wien & Malkin LLP 1,024,415 1,018,853
----------- -----------
Total Assets $ 1,024,415 $ 1,018,853
----------- -----------
Current Liabilities
Total Current liabilities $ -0- $ -0-
----------- -----------
Capital
Capital January 1: $ 1,018,853 $ 2,934,976
Add, Net income
January 1, 2002 through
June 30, 2002 5,562 -0-
January 1, 2001 through
December 31, 2001 -0- 83,877
----------- -----------
$1,024,415 $ 3,018,853
Cash distributions -0- (2,000,000)
----------- -----------
Capital, June 30, 2002 1,024,415 -0-
Capital, December 31, 2001 -0- 1,018,853
---------- -----------
Total liabilities and
Capital:
June 30, 2002 $1,024,415
==========
December 31, 2001 $ 1,018,853
===========
See notes to condensed financial statements.
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Navarre-500 Building Associates
June 30, 2002
Navarre-500 Building Associates
Condensed Statements of Cash Flows
(Unaudited)
January 1, 2002 January 1, 2001
through through
June 30, 2002 June 30, 2001
Cash flows from operating activities:
Net income and net cash provided
by operating activities $ 5,562 $ 59,142
----------- ----------
Cash flows from financing activities:
Cash Distributions -0- -0-
Advances from Partner -0- -0-
----------- ----------
Net cash used in financing
Activities -0- -0-
----------- ----------
Increase in cash during period 5,562 59,142
Cash, beginning of period 1,018,853 2,934,976
----------- ----------
Cash, end of period $ 1,024,415 $ 2,994,118
=========== ==========
See notes to condensed financial statements
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Navarre-500 Building Associates
June 30, 2002
Notes to Condensed Financial Statements (unaudited)
Note A Organization and basis of Presentation
In the opinion of management, the accompanying
unaudited condensed financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present
fairly the financial position of Registrant as of June 30, 2002,
its results of operations for the six months and three months
ended June 30, 2002 and 2001 and cash flows for the six months
ended June 30, 2002 and 2001 and its changes in Partners' capital
for the six months ended June 30, 2002. Information included in
the condensed balance sheet as of December 31, 2001 has been
derived from the audited balance sheet included in Registrant's
Form 10-K for the year ended December 31, 2001 (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 accounting principles
generally accepted in the United States of America 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 six
months ended June 30, 2002 are not necessarily indicative of the
results to be expected for the full year.
Note B Interim Period Reporting
Registrant was organized as a partnership on March
21, 1958. Registrant owned the tenant's interest in the long-
term ground lease (the "Lease") of the buildings located at 500
and 512 Seventh Avenue and 228 West 38th Street, New York, New
York (the "Property") until Registrant sold the Lease on
December 23, 1999. Registrant ceased to be a partnership on
December 23, 1999 when the interests of its partner Agents were
redeemed by conveyance to them of direct pro rata interests in
the Property. The partnership's final tax return was filed for
the period ending December 23, 1999. After December 23, 1999,
such former partners (the "Agents") continued the ownership of
the Lease as co-tenants for the benefit of the Participants, and
the co-tenancy has conducted its business under the name
"Navarre-500 Building Associates", a co-tenancy, all for the
benefit of the Participants on all the same pre-existing
economic and investment terms through the date of such sale and
thereafter. In accord with the applicable agreements regarding
sale, each of Associates and Lessee is required to hold 5% of
its sales proceeds in reserve satisfaction of all post-closing
obligations. At June 30, 2002 the balance in the escrow account
was $1,022,993.
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Navarre-500 Building Associates
June 30, 2002
Registrant's Agents were Peter L. Malkin and Thomas
N. Keltner, Jr. who are now the co-tenant Agents. The land
underlying the buildings was owned by an unaffiliated third
party and was leased to Registrant under the Lease. The current
term of the Lease as extended was to expire on May 1, 2024. The
Lease provided for one 21-year renewal option. The annual rent
payable by Registrant under the Lease was $487,500 during the
current and renewal term.
Registrant did not operate the Property, but subleased
the Property to 500-512 Seventh Avenue Associates ("Sublessee")
pursuant to a net operating sublease (the "Sublease"), the
current renewal term was to expire on April 30, 2024. The
Sublease provided for one renewal option co-extensive with the
Lease. Peter L. Malkin, an Agent in Registrant, has also been a
partner and now a co-tenant in Sublessee. The Agents in
Registrant are also members of Wien & Malkin LLP, which provides
supervisory and other services to Registrant and to Sublessee
("Supervisor"). See Note C of this Item 1 ("Note C").
Under the Sublease, Sublessee was required to pay (i)
annual basic rent of $1,167,500 during the current renewal term
and the additional renewal term (the "Basic Rent") and (ii)
additional rent to Registrant during the current term and the
renewal term equal to 50% of Sublessee's net operating profit in
excess of $620,000 for each lease year ending June 30 (the
"Additional Rent").
Note C Supervisory Services
Prior to the sale of the property, Registrant paid
Supervisor Basic and Additional Payments (as described below) for
supervisory services and disbursements. The supervisory fees
were $40,000 per annum, prior to Registrants' sale of its
property, (the "Basic Payment") plus 10% of all distributions to
Participants in any year in excess of the amount representing a
return at the rate of 23% per annum on their remaining cash
investment in Registrant (the "Additional Payment"). At June 30,
2002, the investment of the Participants had been repaid in full
but the Participants continue to hold pro rata interests in
Registrant based upon the original participating interests.
Following such sale of the property, Registrant paid
Supervisor for supervisory and other services and disbursements
at hourly rates in lieu of Basic and Additional Payments.
The supervisory services provided to Registrant by
Supervisor have included providing or coordinating counsel to
Registrant, maintaining all of its partnership and Participant
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Navarre-500 Building Associates
June 30, 2002
records, performing physical inspections of the Building, review-
ing insurance coverage, conducting annual supervisory review
meetings, receipt of monthly rent from Net Lessee, payment of
monthly and additional distributions to the Participants, payment
of all other disbursements, confirmation of the payment of real
estate taxes, and active review of financial statements submitted
to Registrant by Net Lessee and financial statements audited by
and tax information prepared by Registrant's independent
certified public accountant, and distribution of such materials
to the Participants. Supervisor also prepares quarterly, annual
and other periodic filings with the Securities and Exchange
Commission and applicable state authorities.
Pursuant to the fee arrangements described above, there
was no payment made to Supervisor by Registrant for the six month
period ended June 30, 2002.
No remuneration was paid during the six month period
ended June 30, 2002 by Registrant to any of the Agents as such.
Reference is made to Note B of Item 1 (Note "B") for a
description of the terms of the Sublease between Registrant and
Sublessee. The respective interests, if any, of the Agents in
Registrant and Sublessee arise solely from their respective
ownership of participations, if any, in Registrant and, in the
case of Mr. Malkin, his ownership of a partnership or co-tenant
interest in Sublessee. The Agents as such received no extra or
special benefit not shared on a pro rata basis with all other
Participants in Registrant or partners or co-tenants in
Sublessee. However, each of the Agents, by reason of his
interests in Supervisor, may receive income attributable to any
fees or remuneration paid to Supervisor for services rendered to
Registrant and Sublessee.
As of June 30, 2002, the Agents owned of record and
beneficially $8,125 participations in Registrant, representing
0.25% of the currently outstanding participations therein.
In addition, as of June 30, 2002, certain of the Agents
in Registrant (or their respective spouses) held additional
Participations as follows:
Entities for the benefit of members of Peter L. Malkin's
family owned of record and beneficially $35,000 of
Participations. Mr. Malkin disclaims any beneficial
ownership of such Participations, except that related
trusts are required to complete scheduled payments to
Mr. Malkin.
Peter L. Malkin, Trustee of Mattee Saunders 1983 Trust,
owned $7,500 of Participations. Mr. Malkin disclaims
any beneficial ownership of such Participations.
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Navarre-500 Building Associates
June 30, 2002
In accordance with the provisions of the respective
participating agreements, Peter L. Malkin, in his capacity as
agent, purchased from non-consenting Participants an aggregate of
$1,875 of participations for the benefit of consenting
Participants, all on the terms described in the Agents' Consent
Solicitations dated July 15, 1999. Each such purchase may be
revised at the discretion of the Agents upon receipt of the
consent from the applicable non-consenting Participant.
Note D Professional Fees
During the six months ended June 30, 2001, fees totaling
$13,303 were paid to the firm of Wien & Malkin LLP, a related
party
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Registrant was a partnership and is now a co-tenancy.
As stated in Note B, Registrant was organized for the purpose of
acquiring the Master Lease subject to the Sublease. Basic Rent
received under the Sublease was used to pay annual rent due under
the Master Lease and the Basic Payment to Supervisor for
supervisory services. The balance of the Basic Rent was
distributed to the Participants. Additional Rent was distributed
to the Participants after the Additional Payment to Supervisor.
See Note C above. Pursuant to the Sublease, Sublessee had
assumed sole responsibility for the condition, operation, repair,
maintenance and management of the Property. Registrant did not
need to maintain substantial reserves or otherwise maintain
liquid assets to defray any operating expenses of the Property.
Registrant did not pay dividends. On January 1, 2000,
a regular distribution of $36,882 was made to participants and a
distribution of sales proceeds of $47,080,000 was made on January
14, 2000. On October 3, 2001 a distribution of $2,000,000 was made
to the participants.
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Navarre-500 Building Associates
June 30, 2002
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Property of Registrant is the subject of the following
pending litigation:
Wien & Malkin LLP, et. al. v. Helmsley-Spear, Inc., et.
al. On June 19, 1997 Wien & Malkin LLP and Peter L. Malkin filed
an action in the Supreme Court of the State of New York, against
Helmsley-Spear, Inc. and Leona Helmsley concerning various
partnerships which own, lease or operate buildings managed by
Helmsley-Spear, Inc., including Registrant's property. In their
complaint, plaintiffs sought the removal of Helmsley-Spear, Inc.
as managing and leasing agent for all of the buildings.
Plaintiffs also sought an order precluding Leona Helmsley from
exercising any partner management powers in the partnerships. In
August, 1997, the Supreme Court directed that the foregoing
claims proceed to arbitration. As a result, Mr. Malkin and Wien
& Malkin LLP filed an arbitration complaint against Helmsley-
Spear, Inc. and Mrs. Helmsley before the American Arbitration
Association. Helmsley-Spear, Inc. and Mrs. Helmsley served
answers denying liability and asserting various affirmative
defenses and counterclaims; and Mr. Malkin and Wien & Malkin LLP
filed a reply denying the counterclaims. By agreement dated
December 16, 1997, Mr. Malkin and Wien & Malkin LLP (each for
their own account and not in any representative capacity) reached
a settlement with Mrs. Helmsley of the claims and counterclaims
in the arbitration and litigation between them. Mr. Malkin and
Wien & Malkin LLP then continued 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. The arbitration hearings were concluded in June 2000, and
the arbitrators issued their decision on March 30, 2001, ordering
that the termination of Helmsley-Spear, Inc. would require a new
vote by the partners in the Lessee, setting forth procedures for
such a vote, and denying the other claims of all parties.
Following the decision, Helmsley-Spear, Inc. applied to the court
for confirmation of the decision, and Mr. Malkin and Wien &
Malkin LLP applied to the court for an order setting aside that
part of the decision regarding the procedure for partnership
voting to terminate Helmsley-Spear, Inc. and various other parts
of the decision on legal grounds. The court granted the motion to
confirm the arbitrators' decision and denied the application to
set aside part of the arbitrators' decision. Mr. Malkin and Wien
& Malkin LLP have served notice of appeal of the court's
determination.
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Item 6. Exhibits and Report on Form 8-K
(a) The exhibits hereto are incorporated by reference.
(b) Registrant has not filed any report on Form
8-K during the quarter for which this report is being filed
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Navarre-500 Building Associates
June 30, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
The individual signing this report on behalf of
Registrant is Attorney-in-Fact for Registrant and each of the
Partners in Registrant, pursuant to Powers of Attorney, dated
August 6, 1996 and May 14, 1998 (collectively, the "Power").
NAVARRE-500 BUILDING ASSOCIATES
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: August 20, 2002
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed by the undersigned as
Attorney-in-Fact for each of the Partners in Registrant, pursuant
to the Power, on behalf of Registrant on the date indicated.
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: August 20, 2002
__________________________
* Mr. Katzman supervises accounting functions for Registrant.
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Navarre-500 Building Associates
June 30, 2002
EXHIBIT INDEX
Number Document Page*
3(a) Partnership Agreement, dated March 21,
1958, which was filed as Exhibit 1 to
Registrant's S-1, as amended, by letter
dated April 3, 1958 and assigned File No.
2-14019, is incorporated herein by
reference.
3(b) Amended Business Certificate of Registrant
which was filed as Exhibit 3(b) to
Registrant's Annual Report on 10-K for the
fiscal year ended December 31, 1996 and is
incorporated herein by reference.
4 Form of Participation Agreement, which was
filed as Exhibit 4 to Registrant's S-1 by
letter dated April 3, 1958 and assigned
File No. 2-14019, is incorporated herein
by reference.
24 Powers of Attorney dated August 6, 1996
and May 14, 1998 between Peter L. Malkin
and Thomas N. Keltner, Jr., as Partners in
Registrant, and Stanley Katzman and
Richard Shapiro, which was filed as
Exhibit 24 to Registrant's 10-Q for the
quarter ended March 31, 1998 and is
incorporated herein by reference.
99 (1) Chief Executive Officer Certification
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99 (2) Chief Financial Officer Certification
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
__________________________
* Page references are based on sequential numbering system.
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