<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

               Annual Report Pursuant to Section 13 or 15(d) of
                        Securities Exchange Act of 1934

                                                               Commission File
For the year ended December 31, 1997                           Number  0-13500
                   -----------------                                   -------


                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
------------------------------------------------------------------------------
            (exact name of Registrant as specified in its charter)

       Massachusetts                                     04-2808184
-----------------------                      ---------------------------------
(State of organization)                      (IRS Employer Identification No.)

5 Cambridge Center, Cambridge, Massachusetts                          02142
--------------------------------------------                        ----------
  (Address of principal executive offices)                          (Zip Code)

Registrant's telephone number including area code: (617) 234-3000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

                     Units of Limited Partnership Interest
                               (Title of Class)

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
                                                  -----    -----

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. [ ]

No market exists for the limited partnership interests of the registrant, and,
therefore, no aggregate market value can be computed.

                      DOCUMENTS INCORPORATED BY REFERENCE
                                   - None -

                                           Exhibit Index is located on Page 53

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                                    PART I

Item 1.  Business.

Organization

         1626 New York Associates Limited Partnership (the "Partnership") was
organized as a Massachusetts limited partnership under the Massachusetts
Uniform Limited Partnership Act on December 6, 1983, for the purpose of owning
a general partnership interest in, and serving as a general partner of,
Nineteen New York Properties Limited Partnership (the "Operating
Partnership"), a Massachusetts limited partnership. The Operating Partnership
was organized on December 6, 1983 for the purpose of acquiring a diversified
portfolio of nineteen commercial properties (the "Properties") located in New
York City, from the John D. and Catherine T. MacArthur Foundation.

         The general partners of the Partnership (collectively, the "General
Partners") are Two Winthrop Properties, Inc., a Massachusetts corporation
("Two Winthrop"), Winthrop Interim Partners I, A Limited Partnership, a
Maryland limited partnership ("WIPI") and Linnaeus-Lexington Associates
Limited Partnership, a Massachusetts limited partnership
("Linnaeus-Lexington"). Two Winthrop is a wholly-owned subsidiary of First
Winthrop Corporation ("First Winthrop"), a Delaware corporation which in turn
is controlled by Winthrop Financial Associates, A Limited Partnership ("WFA").
The general partners of WIPI are Two Winthrop and Linnaeus-Phoenix Associates
Limited Partnership, a Massachusetts limited partnership ("Linnaeus-Phoenix").
See "Change in Control".

         The Partnership was initially capitalized with contributions totaling
$2,500,019 from the General Partners. On October 13, 1984, the Partnership
completed a private placement of 1,344 units of limited partnership interest
(the "Units") at an aggregate purchase price of $336,000,000 pursuant to
Regulation D under the Securities Act of 1933.

Description of Business

         The business of the Partnership is investing as a general partner in
the Operating Partnership. The other general partner of the Operating
Partnership is First Winthrop. The limited partners of the Operating
Partnership are WFA and WFC Realty Co., Inc. ("WFC"), a Massachusetts
corporation which is a wholly-owned subsidiary of First Winthrop.

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The Properties

         In January 1984, the Operating Partnership acquired the Properties
consisting of: (1) seventeen commercial office buildings and the land
underlying such buildings located at 757 Third Avenue (the land was acquired
in May 1984), 410 Park Avenue, 535 Fifth Avenue, 545 Fifth Avenue, 61
Broadway, 1372 Broadway, 366 Madison Avenue, 1697 Broadway, 509 Fifth Avenue,

300 Park Avenue South, 227 East 45th Street, 134 West 29th Street, 218-220
Fifth Avenue, 31-33-39 West 34th Street, 271 Church Street, 136-20 Roosevelt
Avenue and 345 Adams Street; (2) the 15 Columbus Circle building and a
leasehold interest in the ground underlying such building; and (3) the ground
underlying another office building located at 450 Park Avenue.

         The Operating Partnership financed the acquisition of the Properties
primarily through (a) the $336,000,000 raised from Limited Partners of the
Partnership, (b) the assumption of existing mortgage loans, and (c) the
placement of the $330,000,000 loan from General Electric Pension Trust
("GEPT"), which has been refinanced.

         As of December 31, 1997, the remaining Properties in which the
Operating Partnership owned an interest consisted of six commercial buildings
and the land underlying them, including 757 Third Avenue, 535 Fifth Avenue,
545 Fifth Avenue, 509 Fifth Avenue, 1372 Broadway and 300 Park Avenue South.
However, on January 13, 1998, the Operating Partnership sold its 1372 Broadway
property. From 1984 through 1992, the Operating Partnership sold seven of its
properties and exchanged two other properties for the land underlying The 15
Columbus Circle Building, which land and building were subsequently
transferred to GEPT pursuant to a consensual bankruptcy plan in full
satisfaction of the loan encumbering the property. The Operating Partnership
sold one additional property in 1993 and conveyed its 227 East 45th Street
property to a designee of the lender by a deed in lieu of foreclosure in the
first quarter of 1996. See "Property Matters"

Property Matters

         A.       Sales/Dispositions

         1372 Broadway - On January 13, 1998, this property was sold to an
unaffiliated third party for $52,000,000. Prior to the sale, the purchaser
acquired the portion of the Modified Loan (as defined below) allocated to 1372
Broadway thereby removing it from the cross-collateralization provision of the
Modified Loan. The unsatisfied portion of the loan originally allocated to
1372 Broadway was reallocated among the other properties.

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<PAGE>

         227 East 45th Street - During 1995, the Partnership concluded that
the debt securing the property was substantially greater than the value of the
property. As a result, on January 15, 1996 the Partnership and Sanwa Business
Credit Corporation ("Sanwa"), the lender holding the mortgage on the property,
agreed that in exchange for the delivery by the Partnership of a deed in lieu
of foreclosure to a designee of Sanwa, Sanwa would release the Partnership
from any liabilities or obligations associated with the mortgage loan on 227
East 45th Street and would release its second mortgage on the 509 Fifth Avenue
property for no additional consideration. The Operating Partnership
transferred title to the property to Sanwa on January 24, 1996. As required by
the terms of the January 15 agreement, Sanwa released the Operating
Partnership, as of the closing date, from all claims, demands, liabilities,
obligations, actions and causes of any kind with regard to the Sanwa loan,
other than the second mortgage on 509 Fifth Avenue, which second mortgage was

subsequently released. See "Item 8, Consolidated Financial Statements and
Supplementary Data, Note-3."

         B.       Loan Restructuring.

         The Fuji Loan - 535 Fifth Avenue, 545 Fifth Avenue, 1372 Broadway and
757 Third Avenue. Over the course of time, it became apparent to the Operating
Partnership and The Fuji Bank, Ltd. ("Fuji"), the holder of the mortgage debt
encumbering 535 and 545 Fifth Avenue, 1372 Broadway and 757 Third Avenue (the
"Fuji Properties"), that the reserves established to fund improvements and
operating deficits under the restructured Fuji loan would be exhausted, and
the Fuji loan would go into default, as early as 1996. Early in 1995, the
Operating Partnership began marketing for sale of 535-545 Fifth Avenue. A sale
at the price established by the General Partners would have accomplished,
among other goals, a reduction in the loan balance, a reduction in the monthly
drain on reserves and delay a default on the remaining loan balance until
1997. In April 1995, Fuji noted in a letter to the Partnership its belief that
the reserves would be depleted in early 1996. Over the following months, the
Operating Partnership continued to market 535-545 Fifth Avenue and also began
pursuing discussions with Fuji aimed at restructuring the debt to continue to
preserve the Partnership's interest in the remaining Fuji Properties. By
September of 1995, the Operating Partnership had not received interest at a
price sufficient to conclude a sale of the properties and terminated its
marketing efforts on 535-545 Fifth Avenue. At this point, the Operating
Partnership also evaluated a bankruptcy strategy; however, restrictions in the
applicable loan documents gave the Operating Partnership's lenders effective
control over substantially all of the Operating Partnership's cash and cash
flow, so that neither

                                      4

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the Operating Partnership nor the Partnership had sufficient reserves to fund
a bankruptcy reorganization.

         Based on its belief of an impending default on the Fuji loan, Fuji
began formally soliciting third-party offers for the loan in late September
1995. Fuji's decision to sell the loan effectively put an end to further
discussions with Fuji regarding a restructuring of the loan. At that time, the
loan had a principal balance of approximately $207 million, plus accrued
interest of approximately $40 million. The Fuji loan accrued interest at fixed
annual interest rate of 9.69%, but required payments to be made at a rate of
6.5% per annum (scheduled to increase to 7.5% on January 1, 1998). The Fuji
loan was scheduled to mature in January 2001.

         Among other bidders, a venture comprised of Apollo Real Estate
Advisors, L.P. ("Apollo"), an affiliate of the General Partners, and Emmes
Ventures, Inc. ("Emmes") submitted a proposal to purchase the Fuji loan. After
a period of negotiations, the Apollo/Emmes proposal to purchase the Fuji loan
was accepted. Zeus Property LLC ("Zeus"), a newly-organized limited liability
company owned by affiliates of Apollo and Emmes, purchased the loan for $115
million on February 28, 1996. See "Change in Control" below.


         In connection with its purchase of the Fuji loan, Zeus agreed to
grant the Operating Partnership certain concessions. The Operating Partnership
obtained a reduction in the current interest required to be paid under the
modified loan which, based on current projections, would greatly reduce the
likelihood of monetary default under the loan prior to February 28, 1998, the
new maturity date for a portion of the loan (which maturity date was
subsequently extended). Zeus also arranged to provide the Operating
Partnership with additional financing of up to $19.5 million to be extended on
an unsecured, non-recourse basis to be used for capital improvements and
tenant lease-up costs to the Fuji Properties. The amount to be loaned and the
costs to be funded are each within the discretion of Zeus. At December 31,
1997, the Partnership had borrowed approximately $12,761,000 under this credit
line. As part of the restructuring of the Fuji loan, each Fuji Property was
conveyed by the Operating Partnership to separate newly-created limited
liability companies indirectly wholly-owned by the Operating Partnership and
its partners.

         The modified Fuji loan (the "Modified Loan") is comprised of several
component non-recourse loans, all held by Zeus and its affiliates. The most
senior loan component consists of a series of secured notes in the aggregate
principal amount of $104,550,000, each having an annual interest rate of 295
basis

                                      5
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points over 30-day LIBOR, maturing on February 28, 1998 unless extended at
Zeus' option (the "Secured A Notes"). Zeus exercised its option to extend the
maturity date of this portion of the Modified Loan to March 31, 1998. It is
expected that Zeus will continue to extend the Modified Loan on a month by
month basis until the Properties are sold. There can be no assurance, however,
that Zeus will continue to extend this note.

         A junior component consists of secured notes in the aggregate
principal amount of $102,450,000, each having a fixed annual interest rate of
14% for the next three years and then 16.75% thereafter, maturing on February
28, 2016 (the "Secured B Notes"). The Secured A Notes and Secured B Notes are
collectively secured by first mortgages on the Fuji Properties. A third
component is the unsecured $19,550,000 note (the "Unsecured Note")
representing the additional financing expected to be drawn upon by the
Operating Partnership to fund capital improvements and tenant lease-up costs
with respect to the Fuji Properties. The Unsecured Note bears interest at a
fixed annual rate of 14% for the next three years and then 16.75% thereafter
and were scheduled to mature on February 28, 1998. As with the Secured A
Notes, Zeus, however, is currently extending the Unsecured Note on a month by
month basis. There can be no assurance, however, that Zeus will continue to
extend this note.

         In the absence of a substantial improvement in the commercial rental
market and the operation of the Fuji Properties, the Partnership is not
expected be able to meet its financial obligations on the Modified Loan. See
Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information relating to the ability of the
Partnership to make distributions to its partners. The principal benefit of

the Modified Loan to the Operating Partnership was the substantial reduction
in current debt service requirements through maturity. The only current debt
service payments required to be made under the Modified Loan for this two-year
period are the interest payments on the Secured A Notes. Interest on all other
components of the Modified Loan are payable to the extent of available cash
flow from the Fuji Properties and otherwise accrue until sufficient cash flow
is available for payment. A mandatory prepayment of $25 million against the
Secured B Notes was required to be made on March 15, 1998, which payment date
was extended on a month by month basis, and the Fuji Properties will be
required to meet a Value to Loan test of 125% coverage. As a result of the
modification, the likelihood of a monetary default has been deferred from 1996
to maturity. Consequently, the negative tax consequences associated with a
foreclosure or other transfer of the Fuji Properties was deferred for at least
two years. It is expected that Zeus will not foreclose on the Properties but
instead will direct that they be sold. It is not expected that

                                      6
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the sales proceeds will be sufficient to generate any net proceeds to the
Partnership.

         In exchange for this deferral, and for the credit facility of $19.55
million available for capital improvements and tenant leasing costs, the
Operating Partnership has agreed to modify certain of the remedy provisions
which would apply after a default. Essentially, these provisions have the
effect of facilitating and expediting a transfer of the Fuji Properties in the
event of a default. Further, the Modified Loan grants Zeus the right to
require a transfer of one or more of the Fuji Properties at any time after
March 15, 1998 or immediately in the event Zeus delivers to the Operating
Partnership a letter from an acceptable law firm to the effect that such
transfer will not result in any cancellation of indebtedness income to the
Operating Partnership (as was the case with respect to 1372 Broadway). See
"Property Matters." As described below, the Operating Partnership also
consented to the replacement of Winthrop Management as the managing and
leasing agent for the properties and the appointment of new third-party
management and leasing agents. See "Property Management".

         The Receivables Loan - 300 Park Avenue South and 509 Fifth Avenue. In
connection with the Modified Loan, certain affiliates of the General Partners
(collectively, the "Affiliates") entered into an agreement with the Operating
Partnership, the Partnership and an affiliate of Zeus with regard to amounts
owed to the Affiliates by the Operating Partnership and the Partnership (the
"Winthrop Debt Agreement"). Prior to the entering into of this agreement, the
Affiliates were owed in the aggregate approximately $46.6 million by the
Operating Partnership and the Partnership. This amount was comprised of cash
advances made to the Partnership and the Operating Partnership in order to
fund operating deficits and also includes accrued interest on outstanding
balances as well as unpaid deferred fees related to the on-site management of
the properties, asset management and syndication. Under the Winthrop Debt
Agreement, the Affiliates contributed approximately $36.6 million of the $46.6
million to the Operating Partnership. The remaining $10 million receivable was
evidenced by a promissory note (the "Receivables Note") issued by the
Operating Partnership which is secured by a pledge of the excess cash flow

from 509 Fifth Avenue and 300 Park Avenue South and is payable only from those
properties. See "The Dime Loan" below. The Receivables Note was then sold to
an affiliated of Zeus for a payment of $6,000,000. The Receivables Note has an
annual base interest rate of 6% and an additional annual contingent interest
rate of 9%. Interest is payable only from available cash flow after payment of
debt service on the Dime Loan. Interest, to the extent it cannot be paid
currently, accrues until the maturity of the Receivables Note which was
extended from July 31, 1997 to August 31, 1999.

                                      7
<PAGE>
         The Dime Loan - 300 Park Avenue South and 509 Fifth Avenue. On August
25, 1997, the Partnership refinanced its existing indebtedness secured by its
300 Park Avenue South and 509 Fifth Avenue properties. The existing loans,
aggregating $19,091,000 (plus $824,000 of accrued and unpaid interest) which
were scheduled to mature were refinanced with two new loans aggregating
$24,000,000. These loans have an annual interest rate of 265 basis points over
30-day LIBOR (8.5% at December 31, 1997), maturing on the earlier of two
years. In addition, a capital improvement escrow account was established at
closing with the excess proceeds from the loans. In connection with the
refinancings, the Operating Partnership's 300 Park Avenue South and 509 Fifth
Avenue properties were conveyed by the Operating Partnership to newly created
limited liability companies which are wholly-owned, indirectly, by the
Operating Partnership and its partners. The Partnership incurred approximately
$944,000 in financing costs in connection with the refinancings.

Deferred Purchase Price

         In connection with the acquisition of the Properties, the Operating
Partnership agreed to make deferred payments to the seller in future years
equal to 6% of the gross proceeds of certain refinancings, sales or transfers
of any of the Properties or equal to the fair market value of any Properties
not disposed of by January 18, 2006. At the time of the acquisition of the
Properties, the Operating Partnership estimated this liability at $25,296,177
based on the cash portion of the purchase price paid at that time. In
connection with the various refinancings and sales which have occurred in
1990, as well as the payments of $22,705,703 already made to the seller as a
Deferred Purchase Price, the total liability is now estimated to be
$1,497,612. In connection with the sale of 1372 Broadway in January 1998, the
Registrant paid $209,000 against the Deferred Purchase Price.

Winthrop Funding

         In 1985, the Partnership obtained a 99.99% interest in Winthrop
Funding for $99.99 and also contributed to Winthrop Funding the final
installment of the Investor Notes in the aggregate amount of $42,998,592.
Winthrop Funding issued zero coupon bonds in the face amount of $40,850,000 at
a discount of $21,367,818 with the final installment of the Investor Notes
pledged as collateral. As of March 1992, Winthrop Funding collected the entire
amount of the last installment of the Investor Notes except for $68,542 which
remains outstanding as of December 31, 1997. As of May 1992, Winthrop Funding
paid the entire face amount of the zero coupon bonds to the bondholders.

                                      8

<PAGE>

Employees

         As of December 31, 1997, the Partnership did not have any employees.
Services are generally performed for the Partnership by the General Partners
and their affiliates and agents retained by them. Other services are performed
for the Operating Partnership by affiliates and agents retained by the
Operating Partnership.

Property Management

         From 1985 until March 1996, Winthrop Management (a Massachusetts
general partnership and an affiliate of WFA) or its affiliates performed the
day to day management services for the Properties, including preparation of
operating budgets, collection of rents, repairs and maintenance, advertising,
maintenance of records, maintenance of insurance and financial reporting. See
Item 13, "Certain Relationships and Related Transactions."

         As part of the sale and restructuring of the Fuji loan, the Operating
Partnership agreed to retain new management and leasing agents for all of its
properties. On March 1, 1996, the Operating Partnership's properties began
being managed by Axiom Real Estate Management, Inc. (an affiliate of Grubb &
Ellis Company) and leasing activity will be performed by the Galbreath
Company, Newmark & Co. and Koll Company. These firms are neither affiliated
with WFA nor Apollo, Emmes or Zeus, except that Apollo is a minority
stockholder of Koll. The terms of these contracts are at market rates. The
Operating Partnership is not permitted to change the management agent or
leasing agents unless these parties are in default of their obligations under
their respective agreements and the Operating Partnership shall have submitted
to Zeus a suitable replacement candidate(s), acceptable to Zeus. One effect of
this is to terminate the payment of all management or leasing fees to the
General Partners and their affiliates by the Operating Partnership, the
Partnership or the properties. The Partnership will receive from the
Properties up to $240,000 as reimbursement for Partnership expenses.

         Effective April 1, 1998, property management services will begin
being performed by New Rock Realty Management Company, LLC ("New Rock"), an
affiliate of Zeus. New Rock will provide these services on the same terms as
these services are currently being provided.

Insurance

         The Partnership maintains property and liability insurance on the
Properties which it believes to be adequate.

                                      9
<PAGE>

Change in Control

         Until December 22, 1994, the sole general partner of Linnaeus
Associates Limited Partnership ("Linnaeus"), which was the sole general
partner of WFA, was Arthur J. Halleran, Jr. On December 22, 1994, the general

partnership interest in Linnaeus was transferred to W.L. Realty, L.P. ("W.L.
Realty") pursuant to an Investment Agreement entered into among Nomura Asset
Capital Corporation ("NACC"), Mr. Halleran and certain other individuals who
comprised the then senior management of WFA. W.L. Realty is a Delaware limited
partnership, the general partner of which was, until July 18, 1995, A.I.
Realty Company, LLC ("Realtyco"), an entity owned by certain employees of
NACC. On July 18, 1995 Londonderry Acquisition II Limited Partnership
("Londonderry II"), a Delaware limited partnership, and affiliate of Apollo
Real Estate Advisors, L.P. ("Apollo"), acquired, among other things,
Realtyco's general partner interest in W.L. Realty and a sixty four percent
(64%) limited partnership interest in W.L. Realty and WFA acquired the general
partner interest in Linneaus-Lexington.

         As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty, which is the sole general partner of Linnaeus
and, which in turn was, until October 27, 1997 the sole, and currently is the
managing, general partner of WFA. As a result of the foregoing, effective July
18, 1995, Londonderry II, an affiliate of Apollo, became the controlling
entity of Two Winthrop and WIPI. In connection with the transfer of control,
the officers and directors of Two Winthrop and WIPI resigned and Londonderry
II appointed new officers and directors. See Item 10, "Directors and Executive
Officers of Registrant."


Item 2.  Properties.

         The Partnership does not own any interest in real property other than
its general partnership interest in the Operating Partnership. The Operating
Partnership does not own any interests in real property other than the
Properties, which are described under the caption "The Properties" in Item 1
above and below.

757 Third Avenue. The property, which is currently being marketed for sale,
consists of a 27-story office building containing approximately 468,327
rentable square feet of space and approximately 24,567 square feet of land.
The property is located at the northeast corner of Third Avenue and East
Forty-Seventh Street in midtown Manhattan and is used principally by
telecommunications, law, financial and retail firms. Planned

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capital improvements at the property include cooling tower upgrade and tenant
improvements.

         KPMG Peat Marwick, a big-six accounting firm, currently leases
approximately 97,302 square feet (21% of total space). In addition, this
tenant has entered into lease amendments pursuant to which it will occupy an
additional 74,841 square feet (16.4% of total space) during 1998 and 1999. The
lease with KPMG Peat Marwick is scheduled to expire May 2012.

         The following table sets forth the occupancy rates for the last five
years and the associated gross rental per square foot amount, as footnoted.


                              Percentage                Average Annual Total
                              Occupancy                 Gross Rental Per SF
         Year                 Rate(1)                   of Occupied Space (2)
         ----                 -------                   ---------------------

         1993                 94%                               42.52
         1994                 95%                               42.93
         1995                 98%                               38.34
         1996                 87%                               34.66
         1997                 93%                               37.94

 (1)     Occupancy rates are based on December 31 of indicated year and are not
         yearly averages.
 (2)     Calculated using operating revenues, including rent escalations and
         other revenues, for the entire year divided by the total square
         footage of occupied space (based on the occupancy rates reported in
         this table).

                                      11

<PAGE>

         The following table sets forth certain information concerning lease
expirations (assuming no renewals for this property for the period from
January 1, 1998 through December 31, 2007).

          Number of         Aggregate SF     Annualized       Percentage
          Tenants Whose     Covered by       Rental for       of Total
          Leases            Expiring         Leases           Annualized
          Expire            Leases           Expiring         Rental (1)
          ------            ------           --------         ----------

1998        6               74,932           1,931,375          14%
1999        6               31,282           1,408,101          12%
2000        4               18,028             548,400           5%
2001        1                3,659             120,747           1%
2002        4               65,159           2,065,747          22%
2003        5               28,010           1,189,190          16%
2004        1                6,235             218,225           4%
2005        1               11,740             406,452           7%
2006        0                    0                   0           0%
2007        4               58,058           2,000,135          36%

(1)      Based on actual base rent plus increase from various escalation
         provisions as of December 31, 1996.

535 Fifth Avenue. The property consists of a 36-story multi-tenant building
containing approximately 292,266 rentable square feet of space and
approximately 16,545 square feet of land. The property is located on the
northeast corner of Fifth Avenue and East 44th Street. The space is
principally leased by personnel, law, banking, retail and accounting firms.
Planned capital improvements at the property include base building work and
facade upgrade.


         The Chase Manhattan Bank, a financial institution, has a lease for
31,300 square feet (10.7% of the total space). The total annualized rent
payable by Chase was $1,000,000, for the year ended December 31, 1997. This
lease was scheduled to expire on January 31, 2005; however, effective February
28, 1998, a lease termination agreement was entered into pursuant to which
this lease was terminated. The Operating Partnership received a payment of
$1,091,549.58 in consideration of the lease termination.

                                      12

<PAGE>

         The following table sets forth the occupancy rates or the last five
years and the associated gross rental per square foot amount, as footnoted.

                                Percentage             Average Annual Total
                                Occupancy              Gross Rental Per SF
         Year                   Rate (1)               of Occupied Space (2)
         ----                   --------               ---------------------

         1993                     66%                         31.75
         1994                     73%                         29.14
         1995                     79%                         28.87
         1996                     89%                         25.60
         1997                     87%                         25.24

(1)      Occupancy rates are based on December 31 of indicated year and are
         not yearly averages.
(2)      Calculated using operating revenues, including rent escalations and
         other revenues, for the entire year divided by the total square
         footage of occupied space (based on the occupancy rates reported in
         this table).

         The following table sets forth certain information concerning lease
expirations (assuming no renewals for this property for the period from
January 1, 1998 through December 31, 2007).

                               Aggregate SF     Annualized        Percentage
             Number of         Covered by       Rental for        of Total
             Tenants Whose     Expiring         Leases            Annualized
             Leases Expire     Leases           Expiring (1)      Rental(1)
             -------------     --------         ------------      ---------

1998              2             1,444              35,431          1%
1999              7            11,215             284,353          4%
2000              6            43,468           1,073,124         16%
2001              1             2,427              63,102          1%
2002              4             8,457             280,419          5%
2003              5            35,726           1,046,620         19%
2004              3             8,345             189,491          4%
2005              7            47,304           1,623,341         37%
2006              3            13,632             361,396          8%
2007              1             2,469              70,417          3%


(1)      Based on actual base rent plus increases from various escalation
         provisions as of December 31, 1997.

545 Fifth Avenue. The property consists of a 13-story multi-tenant building
containing 173,878 rentable square feet of space and approximately 12,575
square feet of land. The property is located on the southeast corner of Fifth
Avenue and East 45th Street. The space is principally leased by post
production, communication and retail firms. Planned capital improvements at
the property include base building work. The property's book value and gross
revenues contribute less than 10 percent to the

                                      13
<PAGE>

total assets and revenue of the registrant and its consolidated subsidiaries.

509 Fifth Avenue. The property consists of a 12-story building containing
53,800 rentable square feet of space and 4,625 square feet of land. The
property is located between East 42nd and 43rd streets in midtown Manhattan.
The space is used by banking and retail businesses. The property's book value
and gross revenues contribute less than 10 percent to the total assets and
revenue of the registrant and its consolidated subsidiaries. Planned capital
improvements at the property include elevator cab rehabilitation.

300 Park Avenue South. The property consists of a 14-story multi-tenant office
building containing approximately 176,895 rentable square feet of space and
11,406 square feet of land. The property is located on the northeast corner of
Park Avenue South and East 22nd in the Gramercy Park area of Manhattan. The
space is used by a variety of businesses, including, publishing, personnel and
modeling agencies. The property's book value and gross revenues contribute
less than 10 percent to the total assets and revenue of the registrant and its
consolidated subsidiaries. Planned capital improvements at the property
include sidewalk restoration.


Item 3.  Legal Proceedings.

         To the best of the General Partners' knowledge, as of December 31,
1997, there are no material pending legal proceedings to which the Partnership
or the Operating Partnership is a party or to which any of their properties
are subject.


Item 4.  Submission of Matters to a Vote of Security Holders.

         No matter was submitted to a vote of security holders during the
period covered by this report.

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<PAGE>

                                    PART II

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters.

         There is no public trading market for the Units of limited
partnership interest in the Partnership. Trading is infrequent and occurs only
through private transactions. Furthermore, transfers of Units are subject to
significant limitations contained in the Partnership's partnership agreement
including a requirement that the General Partners consent to the transfer,
which consent may be granted or withheld in the sole discretion of the General
Partners. A copy of the Partnership's partnership agreement (the "Partnership
Agreement") was filed as Exhibit 3 to the Registration Statement.

         As of March 1, 1998, there were 1,171 holders of 1,339 Units.

         The Partnership Agreement provides that Cash Flow (as defined
therein) will be distributed to the partners in specified proportions at
reasonable intervals during the fiscal year, but in any event no less often
than 90 days after the close of each fiscal year. There are no restrictions
under the Partnership Agreement on the Partnership's present or future ability
to make distributions of cash flow. The Partnership, at the sole discretion of
the General Partners, may retain all or any portion of the Partnership's net
distributable cash flow to the extent deemed necessary to cover anticipated
expenses and to provide reserves for unexpected future property and
Partnership financial needs. Cash flow distributed to partners will be net of
any such amounts so retained. The Partnership did not make any cash
distributions in 1997, 1996 or 1995. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for information
with respect to the Partnership's ability to make distributions in the future.

                                      15
<PAGE>

Item 6.  Selected Financial Data.

         The following represents selected financial data for Registrant for
the years ended December 31, 1997, 1996, 1995, 1994 and 1993. The data should
be read in conjunction with the financial statements included elsewhere
herein. This data is not covered by the independent auditors' report.

<TABLE>
<CAPTION>
                                                            For the Year Ended December 31,
                                                            -------------------------------
                                        1997             1996             1995             1994             1993
                                        ----             ----             ----             ----             ----
                                                           (in thousands except per unit data)
<S>                                   <C>              <C>              <C>              <C>              <C>
Total Revenues                        $  43,302        $  43,864        $  47,957        $  49,084        $  51,425
Total Expenses                           64,970           62,992           87,165           62,715           66,488
Loss Before Gain(Loss) on Sales         (21,668)         (19,128)         (39,208)         (13,631)         (15,063)

Gain(Loss) on Sale of
  Properties/Interest in Joint
  Venture                                  --               --               --               --              1,403
Net Loss Before
  Extraordinary Gain                    (21,668)         (19,128)         (39,208)         (13,631)         (13,660)
Extraordinary Gain                         --             14,419             --               --             40,091
Net Income (Loss)                     $ (21,668)       $  (4,709)       $ (39,208)       $ (13,631)       $  26,431
                                      =========        =========        =========        =========        =========
Net (Loss) Income per Unit
  Of Limited Partnership
  Outstanding                         $ (15,537)       $  (5,740)       $ (27,747)       $  (9,997)       $  17,731
Total Assets                            171,508          163,647          178,713          214,670          223,715
Total Liabilities (1)                   316,958          287,429          334,948          331,697          337,854
Investment in Joint
  Ventures Total Deficit (2)          $(145,450)       ($123,782)       $(156,235)       $(117,027)       $(114,139)
</TABLE>


------------------------

(1)      Total Liabilities includes long-term debt net of unamortized discount
         of $252,658,000, $251,641,000, $250,681,000, $224,342,000 and
         $228,403,000 for the years 1993, 1994, 1995, 1996 and 1997
         respectively.

(2)      Does not include receivables represented by Investor Note
         installments totaling $68,542 at December 31, 1993, 1994, 1995, 1996
         and 1997. Such installments are credited to capital upon actual
         receipt.

                                      16

<PAGE>

Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations

This Item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.

         The matters discussed in this Form 10-K contain certain
forward-looking statements and involve risks and uncertainties (including
changing market conditions, competitive and regulatory matters, etc.) detailed
in the disclosure contained in this Form 10-K and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time.
The discussion of the Registrant's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Registrant's business and
results of operation. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.

Liquidity and Capital Resources


         The Registrant serves as the general partner of Nineteen New York
Properties Limited Partnership (the "Partnership"). As of March 1, 1998, all
of the Partnership's five remaining properties (the "Properties") are office
buildings located in New York City. On January 13, 1998, the Partnership sold
its 1372 Broadway property. The Registrant's sole source of revenue is from
distributions from the Partnership and interest income on cash reserves. The
Registrant is responsible for its operating expenses. The Partnership receives
rental revenue from tenants and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments.

         The Registrant had maturing mortgage debt, totaling approximately
$29,000,000, plus accrued interest, due between July 31, 1997 and December 31,
1997, approximately $102,000,000 (the Secured A Notes) due February 28, 1998
and a $25,000,000 mandatory principal payment (against the Secured B Notes)
due March 15, 1998. The Registrant has extended $10,000,000 of the 1997
maturing liabilities until August 31, 1999. The remaining $19,000,000 of debt,
which was due in 1997, was refinanced with a new lender and a portion of the
Secured A Notes was satisfied when the Registrant's 1372 Broadway property was
sold in January 1998 (see below). On February 15, 1998, Zeus extended the
maturity date of the Secured A Notes and the $25 million prepayment against
the Secured B Notes until March 31, 1998. See Item 1, "Property Matters" and
Item 8, "Consolidated Financial Statements and Supplementary Data", Notes 3,
4, and 10 for a

                                      17
<PAGE>

description of the terms and conditions of the current loans encumbering
Registrant's Properties. As a result, the Registrant has maturing mortgage
debt, totaling approximately $89,100,000, due March 31, 1998. Although there
can be no assurance the lender will do so, it is anticipated that the lender
will continue to extend the maturity date on a month by month basis for the
near future. Based on the current value of the Properties it is highly
unlikely the Registrant will be able to meet its 1998 obligations.
Accordingly, there is a substantial likelihood that some or all of the
Properties will be sold or lost through foreclosure in 1998. This raises
substantial doubt about the Registrant's ability to continue as a going
concern. In the event that Properties are sold, all proceeds would be used to
satisfy any related outstanding indebtedness.

         The Registrant's original objective of capital appreciation will not
be achieved and it is anticipated that the Registrant's partners will not
receive any future distributions. Accordingly, the Registrant's partners will
not receive a return of their original investment.

         The Registrant and the Partnership had $221,000 of cash and cash
equivalents and $7,341,000 of restricted cash at December 31, 1997, as
compared to $125,000 and $9,406,000, respectively, at December 31, 1996.
Restricted cash primarily includes amounts held in mortgage collateral
accounts. The $96,000 increase in cash and cash equivalents at December 31,
1997, as compared to December 31, 1996, was due to $28,900,000 of cash
provided by financing activities, which was substantially offset by
$19,356,000 of cash used in investing activities and $9,448,000 of cash used
in operating activities. Cash provided by financing activities consisted of

$24,000,000 of proceeds received from the refinancing of the Registrant's 300
Park Avenue South and 509 Fifth Avenue properties, which was offset by
$19,091,000 of cash used for the repayments of the prior first mortgages and
$944,000 of cash used for deferred financing costs. Cash from financing
activities was also adjusted by the accrual of $13,165,000 of interest on
mortgage notes payable, $9,869,000 in borrowings against the unsecured line of
credit and $254,000 in accrued and unpaid interest thereon, and $920,000 of
accrued and unpaid interest on the Receivables Note. In addition, Registrant
used $1,421,000 of cash provided by financing activities for principal
payments on mortgage notes to affiliates. Cash used in investing activities
consisted of $14,546,000 of improvements to real estate, the majority of which
were tenant improvements, and $4,810,000 of cash used for deferred leasing
costs. All other increases (decreases) in certain assets and liabilities are
the result of the timing of receipt and payment of various activities.

                                      18
<PAGE>

         The Partnership's only other source of liquidity is a $19,550,000
unsecured credit line provided by Zeus. This credit line can be used by the
Partnership to fund capital improvements and tenant lease-up costs at the Fuji
Properties. However, any borrowings under this credit line are subject to
Zeus' discretion. Accordingly, it is possible that the Partnership may not be
able to borrow against this credit line each time it deems it necessary. As of
December 31, 1997, the outstanding borrowings against the unsecured credit
line were $12,761,000.

         In August 1997, the senior portion of the Modified Loan, that was
allocated to 1372 Broadway, was sold by Zeus to the ultimate purchaser of the
property. On January 13, 1998, the Partnership sold its 1372 Broadway property
to an unaffiliated third party for $52,000,000. All of the proceeds were used
to partially satisfy the $94,000,000 allocated portion of the Modified Loan
(including accrued and unpaid interest), with the unsatisfied portion of the
Modified Loan being reallocated among the remaining Fuji Properties. For
financial reporting purposes, the sale will result in a gain in 1998. For tax
reporting purposes, the Registrant's partners will be allocated a substantial
gain in 1998 due to recapture of tax benefits received in prior years.

         On August 25, 1997, the Partnership refinanced its existing
indebtedness secured by its 300 Park Avenue South and 509 Fifth Avenue
properties which was scheduled to mature. The existing loans, aggregating
$19,091,000 (plus $824,000 of accrued and unpaid interest) were refinanced
with a new loan aggregating $24,000,000 (allocated $16,800,000 to 300 Park
Avenue South and $7,200,000 to 509 Fifth Avenue). The loan has an annual
interest rate of 265 basis points over 30-day LIBOR (8.50% at December 31,
1997), and matures in two years. No scheduled principal payments are required
until maturity. Any principal payments that are made will be made out of the
excess cash flows from the Properties, as defined. In addition, a capital
improvement escrow account was established at closing with the excess proceeds
from the loan. In connection with the refinancing, the Partnership's 300 Park
Avenue South and 509 Fifth Avenue properties were conveyed by the Partnership
to newly created limited liability companies which are wholly-owned,
indirectly, by the Partnership and its partners. The Partnership incurred
approximately $944,000 in financing costs in connection with the refinancing.


         There have been, and it is possible there may be other Federal, state
and local legislation and regulations enacted relating to the protection of
the environment and individual rights (such as the American with Disabilities
Act). The Partnership is unable to predict the extent, if any, to which such
new legislation or regulation might occur and the degree to

                                      19
<PAGE>

which such existing or new legislation or regulations might adversely affect
the Partnership's liquidity and capital resources.

         The Registrant is dependent upon the General Partner for management
and administrative services. The General Partner has completed an assessment
and believes that its computer systems will function properly with respect to
dates in the year 2000 and thereafter (the "Year 2000 Issue"). Accordingly, it
is not expected that the Registrant will incur any material costs associated
with, or be materially affected by, the Year 2000 Issue.

Real Estate Market

         The income and expenses of operating the Properties owned by the
Partnership are subject to factors outside its control, such as the
over-supply of similar properties, increases in unemployment, population
shifts, or changes in patterns or needs of users. Expenses, such as local real
estate taxes and miscellaneous expenses, are subject to change and cannot
always be reflected in rental rate increases due to market conditions. In
addition, there are risks inherent in owning and operating office buildings
because such properties are labor intensive and are susceptible to the impact
of economic and other conditions outside the control of the Registrant.

Results of Operations

         a.       1997 Compared to 1996

         The Registrant generated a net loss of approximately $21.7 million
for the year ended December 31, 1997, as compared to a net loss before
extraordinary gain of approximately $19.1 million for the year ended December
31, 1996. The increase in net loss before the extraordinary gain was due to a
decrease in revenues and an increase in expenses.

         Base rent and rent escalations (collectively "rental income")
decreased to approximately $42.3 million for the year ended December 31, 1997,
as compared to approximately $43.3 million for the year ended December 31,
1996. Rental income declined due to a decrease in rental income at 757 Third
Avenue and 535 Fifth Avenue, which was slightly offset by an increase in
rental income at 545 Fifth Avenue. The lower rental income was primarily the
result of new tenants occupying space at the Properties with current base
years for escalation purposes, thus reducing the amount of escalation billings
for 1997, as compared to 1996. Rental income at the other properties remained
relatively constant.

                                      20

<PAGE>

         Expenses increased by approximately $2.0 million for the year ended
December 31, 1997, as compared to 1996. The increase in interest, depreciation
and amortization expenses were partially offset by a decrease in asset and
property management fees. Overall operating expenses (i.e., real estate and
other taxes, payroll, utilities, repairs and maintenance, and cleaning and
security) remained relatively constant.

         Interest expense increased primarily due to an increase in the
principal indebtedness on the unsecured line of credit and the Modified Loan
incurring interest at an overall higher interest rate in 1997, as compared to
1996. Depreciation and amortization expenses increased due to the effect of
the current years additions to fixed assets, primarily tenant improvements,
and the increase in amortization of leasing costs. This increase was slightly
offset by the effect of assets becoming fully depreciated in 1996. Asset and
property management fees declined due to the elimination of the asset
management fee payable to a related party and the new management agreement
(which changed the previous fee of 2.5% of cash receipts to a fixed fee).

         On May 27, 1997, approximately 90,000 square feet of unoccupied space
at the Partnerships 757 Third Avenue Property was re-leased, representing
approximately 20% of the building. As of December 31, 1997 and 1996, the
current portfolio's occupancy was 92% and 84%, respectively. During 1997, the
Operating Partnership signed new, renewal, extension, and expansion leases
totaling 419,782 square feet at rental terms comparable to buildings of
similar quality in the market. The increase in occupancy and the ability to
retain tenants is a direct result of the improved economy.

         b.       1996 compared to 1995

         The Registrant generated a net loss before extraordinary gain of
approximately $19.1 million for the year ended December 31, 1996, as compared
to a net loss of approximately $39.2 million for the year ended December 31,
1995. The decrease in net loss was due to the loss due to permanent impairment
recorded in 1995.

         Base rent and rent escalations (collectively "rental income")
decreased to approximately $43.3 million for the year ended December 31, 1996,
as compared to approximately $47.0 million for the year ended December 31,
1995. Rental income was negatively impacted by the loss of the 227 East 45th
property by approximately $3,125,000, coupled with a decrease in rental income
at 757 Third Avenue and 1372 Broadway of approximately

                                      21
<PAGE>

$1,992,000 and approximately $1,236,000, respectively, for the year ended
December 31, 1996, as compared to 1995.

         These decreases were partially offset by an increase in rental income
at 535 Fifth Avenue of approximately $1,075,000. The lower rental revenues
were primarily the result of lower effective rental rates and decreased
occupancy. Rental income at the other properties remained relatively constant.


         Expenses, before loss for permanent impairment of 22.5 million, for
the year ended December 31, 1996, as compared to 1995, declined by
approximately $1,673,000 partially as a result of the loss of Registrant's 227
East 45th Street property. The decreases in overall operating expenses (i.e.,
real estate and other taxes, payroll, utilities, repairs and maintenance, and
cleaning and security) of $2,019,000, asset and property management fees of
$1,102,000 and depreciation and amortization expense of approximately
$1,680,000, were only partially offset by an increase in interest expense of
$3,633,000.

         Operating expenses declined as a result of Registrant's 227 East 45th
Street deed in lieu of foreclosure. Asset and property management fees
declined due to the elimination of the asset management fee payable to a
related party, the new management agreement (which changed the previous fee of
2.5% of cash receipts to a fixed fee) and the disposition of Registrant's 227
East 45th Street property. Depreciation and amortization expenses declined due
to the recorded loss on permanent impairment recorded on Registrant's
properties.

         The extraordinary gain was recognized on the transfer of Registrant's
227 East 45th Street property. The recorded amount of all of the obligations
associated with the property was $25,140,000, which exceeded the net book
value of assets and liabilities of the property by $14,419,000.

         As of December 31, 1996 and 1995, the current portfolio's occupancy
was 84% and 89%, respectively. For the year ended December 31, 1996, the
Partnership signed new, renewal, extension, and expansion leases totaling
143,000 square feet at rental terms comparable to buildings of similar quality
in the market. This leasing activity only slightly offset the decline in
occupancy.

                                      22

<PAGE>

Item 8.  Financial Statements and Supplementary Data

                       CONSOLIDATED FINANCIAL STATEMENTS

                         YEAR ENDED DECEMBER 31, 1997

                                     INDEX

                                                                         Page
                                                                         ----

Independent Auditors' Reports............................................F - 2

Consolidated Financial Statements:

Balance Sheets as of December 31, 1997 and 1996..........................F - 4

Statements of Operations for the Years Ended
     December 31, 1997, 1996 and 1995....................................F - 5

Statements of Changes in Partners' Deficit for the
  Years Ended December 31, 1997, 1996 and 1995...........................F - 6

Statements of Cash Flows for the Years Ended
     December 31, 1997, 1996 and 1995....................................F - 7

Notes to Consolidated Financial Statements...............................F - 8

Financial Statement Schedule:

Schedule III - Real Estate and Accumulated Depreciation
     at December 31, 1997...............................................F - 25

Financial statement schedules not included have been omitted because of the
absence of conditions under which they are required or because the information
is included elsewhere in the consolidated financial statements.

                                     F-1

<PAGE>

                         Independent Auditors' Report

To the Partners
1626 New York Associates Limited Partnership:

We have audited the accompanying consolidated balance sheets of 1626 New York
Associates Limited Partnership, (a Massachusetts limited partnership) and
subsidiaries (the "Partnership") as of December 31, 1997 and 1996, and the
related consolidated statements of operations, changes in partners' deficit
and cash flows for the years then ended. Our audits also included the
consolidated financial statement schedule supplied pursuant to Item 14(a)(2).
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming
that the Partnership will continue as a going concern. As discussed in Note 2
to the consolidated financial statements, the Partnership has balloon payments
totaling approximately $89,100,000 due on March 31, 1998. The inability of the
Partnership to meet these obligations raises substantial doubt about the
Partnership's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of 1626 New York Associates Limited Partnership and subsidiaries as of
December 31, 1997 and 1996, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

                                                 /s/ Imowitz Koenig & Co., LLP

New York, N.Y.
March 24, 1998



<PAGE>

To the Partners of 1626 New York Associates Limited Partnership:

We have audited the accompanying consolidated statement of operations, changes
in partners' deficit and cash flows of 1626 New York Associates Limited
Partnership (the Partnership) for the year ended December 31, 1995. These
financial statements are the responsibility of the Partnership's 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 results of operations and cash flows of 1626 New York
Associates Limited Partnership for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP




Boston, Massachusetts
March 15, 1996






<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                          CONSOLIDATED BALANCE SHEETS
                       (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                 -----------------------

                                                                   1997           1996
                                                                 --------       --------
<S>                                                              <C>            <C>
ASSETS

Real estate:

     Land                                                        $ 24,440       $ 24,440
     Buildings and improvements, net of accumulated
        depreciation of $141,658 and $130,617,
        in 1997 and 1996, respectively                            114,383        110,878
                                                                 --------       --------

                                                                  138,823        135,318

Other Assets:

     Cash and cash equivalents                                        221            125
     Restricted cash                                                7,341          9,406
     Accounts receivable, net of reserves of $259 and $748
         in 1997 and 1996, respectively                               489            751
     Prepaid expenses and other assets                              4,630          4,796
     Deferred rent receivable                                      12,306          8,424
     Deferred costs, net                                            7,698          4,827
                                                                 --------       --------

Total Assets                                                     $171,508       $163,647
                                                                 ========       ========
</TABLE>

                See notes to consolidated financial statements.

                                     F-3

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                          CONSOLIDATED BALANCE SHEETS
                       (In Thousands, Except Unit Data)
                                  (Continued)

<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' DEFICIT                                                     DECEMBER 31,
                                                                               --------------------------

                                                                                 1997             1996
                                                                               ---------        ---------
<S>                                                                            <C>              <C>
Liabilities:

     Mortgage notes payable to affiliates                                      $ 166,536        $ 205,171
     Other mortgage notes payable                                                 61,867           19,171
     Accounts payable, notes and loans payable, and accrued
         interest to general partners and affiliates                              24,739           13,695
     Accounts payable, accrued expenses, security
         deposits and other liabilities                                           10,085            8,826
     Accrued interest on mortgage notes to affiliates                             52,135           38,108
     Accrued interest on other mortgage notes                                         98              960
     Deferred purchase price obligation                                            1,498            1,498
                                                                               ---------        ---------

Total Liabilities                                                                316,958          287,429
                                                                               ---------        ---------

Commitments and Contingencies

Partners' Deficit:

     Limited Partners' Deficit - Units of Investor Limited Partnership
         Interest $250,000 stated value per unit; authorized, issued and
         outstanding -1,340 as of December 31, 1997
         and 1996                                                               (149,968)        (129,148)
     Less: investor notes                                                            (68)             (68)
                                                                               ---------        ---------

                                                                                (150,036)        (129,216)

     General Partners' Equity                                                      4,586            5,434
                                                                               ---------        ---------

         Total Partners' Deficit                                                (145,450)        (123,782)
                                                                               ---------        ---------

Total Liabilities and Partners' Deficit                                        $ 171,508        $ 163,647
                                                                               =========        =========
</TABLE>

                See notes to consolidated financial statements.

                                     F-4

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                  -------------------------------------------------

                                                                     1997               1996               1995
                                                                  -----------        -----------        -----------
<S>                                                               <C>                <C>                <C>
Revenues:
     Base rent                                                    $    35,824        $    34,896        $    36,751
     Rent escalations                                                   6,506              8,391             10,231
     Other                                                                972                577                975
                                                                  -----------        -----------        -----------

         Total revenues                                                43,302             43,864             47,957
                                                                  -----------        -----------        -----------

Expenses (including $25,049, $21,961 and $6,547
     paid or accrued to the general partners and affiliates
     in 1997, 1996 and 1995) (see Notes 4 and 6):

     Interest                                                          28,807             26,592             22,628
     Depreciation                                                      11,041              9,969             11,598
     Amortization                                                       1,794              1,281              1,634
     Real estate and other taxes                                        9,502              9,626             10,339
     Utilities                                                          4,590              4,889              5,130
     Cleaning and security                                              4,080              3,804              4,416
     Asset and property management fees                                   549              1,460              2,562
     Repairs and maintenance                                            1,314              1,563              1,774
     Payroll                                                            1,350              1,198              1,440
     General and administrative                                         1,194              1,219              1,548
     Professional fees                                                    544              1,049              1,288
     Provision for doubtful accounts                                      205                342                308
     Loss due to permanent impairment                                    --                 --               22,500
                                                                  -----------        -----------        -----------

         Total expenses                                                64,970             62,992             87,165
                                                                  -----------        -----------        -----------

Loss before extraordinary gain                                        (21,668)           (19,128)           (39,208)

     Extraordinary gain on transfer of 227 East 45th Street              --               14,419               --
                                                                  -----------        -----------        -----------

Net loss                                                          $   (21,668)       $    (4,709)       $   (39,208)
                                                                  ===========        ===========        ===========



Net (loss) income allocated to general partners                   $      (848)       $     2,982        $    (2,027)
                                                                  ===========        ===========        ===========

Net loss before extraordinary item allocated to
   investor limited partners                                      $   (20,820)       $   (18,393)       $   (37,181)

Extraordinary gain allocated to investor limited partners                --               10,702               --
                                                                  -----------        -----------        -----------

Net loss allocated to investor limited partners                   $   (20,820)       $    (7,691)       $   (37,181)
                                                                  ===========        ===========        ===========

Net loss per unit of investor limited partnership
     interest before extraordinary gain                           $(15,537.31)       $(13,726.12)       $(27,747.01)

Extraordinary gain per unit of investor limited
   partnership interest                                                  --             7,986.57               --
                                                                  -----------        -----------        -----------

Net loss per unit of investor limited
   partnership interest                                           $(15,537.31)       $ (5,739.55)       $(27,747.01)
                                                                  ===========        ===========        ===========
</TABLE>

                See notes to consolidated financial statements.

                                     F-5

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

            CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
                 YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                       (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                   Units of
                                   Investor          Investor            General
                                    Limited           Limited           Partners'            Total
                                  Partnership        Partners'          (Deficit)          Partners'
                                   Interest          (Deficit)            Equity           (Deficit)
                                  -----------       -----------        -----------        -----------
<S>                               <C>               <C>                <C>                <C>
Balance - December 31, 1994             1,340       $   (84,344)       $   (32,683)       $  (117,027)

    Net Loss                             --             (37,181)            (2,027)           (39,208)
                                  -----------       -----------        -----------        -----------

Balance - December 31, 1995             1,340          (121,525)           (34,710)          (156,235)

    Net (Loss) Income                    --              (7,691)             2,982             (4,709)

    Capital Contributions                --                --               37,162             37,162
                                  -----------       -----------        -----------        -----------

Balance - December 31, 1996             1,340          (129,216)             5,434           (123,782)

    Net Loss                             --             (20,820)              (848)           (21,668)
                                  -----------       -----------        -----------        -----------

Balance - December 31, 1997             1,340       $  (150,036)       $     4,586        $  (145,450)
                                  ===========       ===========        ===========        ===========
</TABLE>

                See notes to consolidated financial statements.

                                     F-6

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)

<TABLE>
<CAPTION>
                                                                                        YEARS ENDED DECEMBER 31,
                                                                              ----------------------------------------

                                                                                1997            1996            1995
                                                                              --------        --------        --------
<S>                                                                           <C>             <C>             <C>
Cash Flows from Operating Activities:

Net loss                                                                      $(21,668)       $ (4,709)       $(39,208)
Adjustments to reconcile net loss to net cash
 used in operating activities:
     Depreciation and amortization                                              13,925          12,086          13,737
     Interest expenses to related party                                           --               694           3,765
     Deferred fees to related party                                               --               267           1,858
     Change in deferred rent receivable                                         (3,882)           (484)            536
     Reduction in carrying value of income producing properties                   --              --            22,500
     Gain on transfer of 227 East 45th Street                                     --           (14,419)           --
     Provision for doubtful accounts                                              (489)            337            (683)

Changes in operating assets and liabilities:

     Decrease in accounts receivable, prepaid
        expenses and other assets                                                1,407               8              65
     Increase (decrease) in accounts payable, accrued expenses,
        security deposits and other liabilities                                  1,259           1,359          (4,765)
     Increase in accrued mortgage interest                                        --              --             2,877
                                                                              --------        --------        --------

         Net cash (used in) provided by operating activities                    (9,448)         (4,861)            682
                                                                              --------        --------        --------

Cash Flows from Investing Activities:

     Additions to buildings and improvements                                   (14,546)         (7,549)         (7,746)
     Increase in deferred leasing costs                                         (4,810)           (863)         (1,510)
                                                                              --------        --------        --------

         Cash used in investing activities                                     (19,356)         (8,412)         (9,256)
                                                                              --------        --------        --------

Cash Flows from Financing Activities:

     Proceeds from other mortgage notes payable                                 24,000            --              --
     Repayment of other mortgage notes payable                                 (19,091)           --              --
     Increase in accrued mortgage interest                                      13,165          11,138            --

     Principal payments on mortgage notes to affiliates                         (1,421)         (1,829)           --
     Increase  in accounts payable, notes and loans
        payable and accrued interest to general partners and affiliates         11,697           3,694             475
     Principal payments on other mortgage notes                                    (80)           (101)           (959)
     Decrease in restricted cash                                                 1,574             229           9,217
     Payment of deferred refinancing costs                                        (944)           --              --
                                                                              --------        --------        --------

         Net cash provided by financing activities                              28,900          13,131           8,733
                                                                              --------        --------        --------

         Net increase (decrease) in cash and cash equivalents                       96            (142)            159

Cash and cash equivalents, beginning of year                                       125             267             108
                                                                              --------        --------        --------

Cash and cash equivalents, end of year                                        $    221        $    125        $    267
                                                                              ========        ========        ========

Supplemental Disclosure of  Cash Flow Information:

     Cash paid for interest                                                   $ 13,377        $ 13,120        $ 16,368
                                                                              ========        ========        ========

Supplemental Disclosure of Non-Cash Investing
and Financing Activities:
     Transfer of debt in 1997 - See Note 4
     Deed in lieu of foreclosure in 1996 - See Note 5
     Related party debt forgiveness and modification in
     1996 - See Notes 2 and 6
</TABLE>

                See notes to consolidated financial statements.

                                     F-7

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


NOTE 1 -        ORGANIZATION

                1626 New York Associates Limited Partnership (the "Investor
                Partnership") was organized on December 6, 1983 under the
                Massachusetts Uniform Limited Partnership Act to acquire and
                own a 99% General Partnership interest in and serve as a
                General Partner of Nineteen New York Properties Limited
                Partnership, a Massachusetts Limited Partnership (the
                "Operating Partnership"), which was also organized on December
                6, 1983. The Investor Partnership and the Operating
                Partnership are collectively referred to as the
                "Partnerships".

                As of December 31, 1997, the Operating Partnership owns six
                commercial rental properties located in New York City. These
                properties are referred to herein individually as a "Property"
                and collectively as the "Properties". On January 13, 1998, the
                Operating Partnership sold its 1372 Broadway property (see
                Note 10).

                The Operating Partnership financed the purchase of the
                Properties through a private offering by the Investor
                Partnership of 1,344 units of Limited Partnership Interest
                (1340 units outstanding at December 31, 1997 and 1996) at
                $250,000 per Unit (the "Unit") for an approximate 94% interest
                in operating profits and losses of the Investor Partnership
                (see Note 6).

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                Basis of Presentation - Going Concern

                The accompanying financial statements have been prepared on a
                going concern basis, which contemplates the realization of
                assets and the satisfaction of liabilities in the normal
                course of business. The Partnerships have maturing mortgage
                debt, totaling approximately $89,100,000 due March 31, 1998
                (see Notes 3, 4 and 6). Based on the current value of the
                Properties, it is highly unlikely the Partnerships will be
                able to meet their 1998 obligations. Accordingly, it appears
                there is a substantial likelihood that some or all of the
                Properties, if not sold, will be lost through

                                     F-8



<PAGE>

                foreclosure in 1998. In the event that Properties are sold,
                all proceeds would be used to satisfy any related outstanding
                indebtedness. This raises substantial doubt about the
                Partnerships' ability to continue as a going concern. The
                consolidated financial statements do not include any
                adjustments that might result from the outcome of these
                uncertainties.

                Consolidation

                The accompanying consolidated financial statements of the
                Investor Partnership have been prepared on a consolidated
                basis with those of the Operating Partnership and its wholly -
                owned subsidiaries. All significant intercompany accounts and
                transactions have been eliminated in consolidation.

                Use of Estimates

                The preparation of financial statements in conformity with
                generally accepted accounting principles requires management
                to make estimates and assumptions that affect the amounts
                reported in the financial statements and accompanying notes.
                Such estimates that are particularly susceptible to change
                relate to the Partnership's estimate of the fair value of real
                estate. Actual results could differ from those estimates.

                Real Estate

                Real estate is carried at cost, adjusted for depreciation and
                impairment of value. Acquisition fees are capitalized as a
                cost of real estate. In accordance with Statement of Financial
                Accounting Standards ("SFAS") No. 121, "Accounting for the
                Impairment of long-lived Assets and for long-lived Assets to
                Be Disposed Of", the Partnership records impairment losses for
                long-lived assets used in operations when indicators of
                impairment are present and the undiscounted cash flows are not
                sufficient to recover the asset's carrying amount. The
                impairment loss is measured by comparing the fair value of the
                asset to its carrying amount.

                Cash and Cash Equivalents

                The Partnership considers all highly liquid investments with
                an original maturity of three months or less at the time of
                purchase to be cash equivalents.


                                     F-9
<PAGE>

                Depreciation


                The Operating Partnership provides for depreciation of its
                depreciable assets using the straight-line method over their
                estimated useful lives of 14 to 30 years for building and
                improvements and five to eight years for furnishings. Tenant
                improvements are depreciated by the straight-line method over
                the life of the respective tenant's lease.

                Deferred Rent Receivable

                The Operating Partnership leases space to tenants under
                various lease terms. For leases containing fixed rental
                increases during their term, rents are recognized on a
                straight-line basis over the term of the leases. For all other
                leases, rents are recognized over the term of the leases as
                earned.

                Deferred Costs

                Financing costs and leasing costs are capitalized and
                amortized using the straight-line method over the term of the
                related agreements. Financing costs are amortized as interest
                expense.

                Deferred costs at December 31, are as follows (in thousands):

                Category                             1997          1996
                --------                             ----          ----

                Financing costs                    $  5,310      $  5,252
                Leasing costs                        26,137        21,361
                                                   --------      --------
                                                     31,447        26,613

                Less: accumulated amortization      (23,749)      (21,786)
                                                   --------      --------

                                                   $  7,698      $  4,827
                                                   ========      ========

                Income Taxes

                Taxable income or loss of the Partnership is reported in the
                income tax returns of its partners. Accordingly, no provision
                for income taxes is made in the consolidated financial
                statements of the Partnership.

                Advertising

                The Operating Partnership expenses the cost of advertising as
                incurred. Advertising expenses of


                                     F-10


<PAGE>

                $134,000, $300,000 and $424,000 were incurred for 1997, 1996
                and 1995, respectively, and are included in general and
                administrative expenses.

                Restricted Cash

                Restricted cash consists primarily of amounts restricted
                pursuant to debt agreements and tenant security deposits.

                Disclosures About the Fair Value of Financial
                Instruments

                SFAS No. 107 "Disclosures About the Fair Value of Financial
                Instruments", requires that disclosure be made of estimates of
                the fair value of each class of financial instrument.
                Financial instruments held by the Partnership as of December
                31, 1997 and 1996, consisted primarily of cash and cash
                equivalents, short-term trade receivables and payables, for
                which the carrying amounts approximate fair values due to the
                short-term maturity of these instruments, and mortgage notes
                payable. Due to the reduced value of the Partnership's real
                estate properties, which is the security for these mortgages
                and the uncertainty of obtaining replacement financing, it is
                not practicable to estimate the fair value of such debt.

                Reclassifications

                Certain amounts from 1996 and 1995, have been reclassified to
                conform to the 1997 presentation.

                Partnership Allocations

                The net operating profits and losses and distributions of cash
                flow, as defined in the Partnership agreement of the Investor
                Partnership, with the exception of the depreciation
                deductions, which are allocated solely to the limited partners
                of the Investor Partnership, are, in general, allocated as
                follows:

                   Partner                                     Percentage
                   -------                                     ----------

                   Investor Limited Partners                     94.000%
                   Winthrop Interim Partners I,
                    A Limited Partnership ("WIPI:)                5.200%
                   Lineups Lexington Associates
                    Limited Partnership ("Linnaeus Lexington")     .752%
                   Two Winthrop Properties, Inc. ("Two Winthrop")  .048%


                                     F-11


<PAGE>

                Any gains (losses) resulting from sales, dispositions or
                refinancing of any of the properties are to be allocated first
                to the Partners having negative (positive) capital account
                balances, in proportion to and to the extent of such negative
                (positive) balances, and thereafter, according to the various
                provisions of the Partnership agreement. Due to this
                provision, $3,717,000 of the gain arising from the foreclosure
                of the Partnership's 227 East 45th Street property was
                allocated to the General Partners in 1996. No cash
                distributions to the Partners have been made.

                In connection with a related party debt modification (the
                "Related Party Debt") in 1996, the General Partners and
                certain of their affiliates contributed $37,162,000 to the
                Operating Partnership. This transaction has been treated as a
                capital contribution by the General Partners.


NOTE 3 -        MORTGAGE NOTES PAYABLE

                Dime Mortgage Loans

                The Dime Savings Bank loans (the "Dime Loan(s)") were secured
                by the Partnerships, 300 Park Avenue South and 509 Fifth
                Avenue properties. In 1992, the maturity date and payment
                terms with respect to the mortgage encumbering 300 Park Avenue
                South were modified.

                The interest rate of 9.5% and pay rate of interest only plus
                amortization payments (based on a 30-year amortization) were
                reduced as follows:

                         Period            Interest Rate           Pay Rate
                         ------            -------------           --------
                    5/01/92-12/31/92             0%                    0%
                    1/01/93-12/31/95             8%                    6%
                    1/01/96-12/31/97             8%                    8%

                The percentages shown are based on the $11,882,000 loan
                balance and the difference between the pay rate and the
                interest rate is deferred without interest.

                Due to the extension of the maturity date and the deferral of
                principal and certain interest payments, this restructuring
                constituted a troubled debt restructuring, as defined in SFAS
                No. 15, Accounting by Debtors and Creditors for Troubled Debt
                Restructurings. In accordance with SFAS 15, interest expense
                was


                                     F-12


<PAGE>

                computed using the effective interest method. The resulting
                effective interest rate was 6.15% per annum as of August 25,
                1997 and December 31, 1996. As of August 25, 1997 and December
                31, 1996, accrued and unpaid interest related to the Dime Loan
                with respect to 300 Park Avenue South, calculated in
                accordance with SFAS 15, was $824,000 and $903,000,
                respectively.

                On August 25, 1997, the Dime Loans were refinanced with
                Solomon Brothers Realty Corp. ("SBRC"). The existing Dime
                loans, aggregating $19,091,000 (plus $824,000 of accrued and
                unpaid interest) were refinanced with a new loan aggregating
                $24,000,000 (allocated $16,800,000 to 300 Park Avenue South
                and $7,200,000 to 509 Fifth Avenue). The SBRC loan has an
                annual interest rate of 265 basis points over 30-day LIBOR
                (8.50% at December 31, 1997), and matures in two years. No
                scheduled principal payments are required until maturity. Any
                principal payments that are made will be made out of the
                excess cash flows from the Properties, as defined. In
                addition, a capital improvement escrow account was established
                at closing with the excess proceeds from the loan. In
                connection with the refinancing, the Operating Partnership's
                300 Park Avenue South and 509 Fifth Avenue properties were
                conveyed by the Operating Partnership to newly created limited
                liability companies which are wholly-owned, indirectly, by the
                Operating Partnership and its partners. The Partnership
                incurred approximately $944,000 in financing costs in
                connection with the refinancing.

                Transfer of Debt

                In August 1997, a portion of the Related Party Debt, that was
                allocated to the 1372 Broadway property, was sold by the
                related party to the ultimate purchaser of the property, thus
                eliminating the property from the cross-collateralization
                provision of the related party loan (see Note 4).

                The principal balance in other mortgage notes payable as of
                December 31, 1997 and 1996, is as follows (in thousands):

                     Property                        1997              1996
                     --------                      --------          --------
                    300 Park Avenue South          $ 16,800          $ 11,882
                    509 Fifth Avenue                  7,200             7,289
                    1372 Broadway                    37,867                 -
                                                   --------          --------
                                                   $ 61,867          $ 19,171
                                                   ========          ========


                                     F-13


<PAGE>

                On January 13, 1998, the Partnership sold its 1372 Broadway
                property (see Note 10).

                Fuji Mortgage Notes

                The Fuji Bank, Ltd. Loan ("Fuji Loan" or "Fuji") with an
                outstanding loan balance of $207,000,000, and secured by the
                Partnerships' 757 Third Avenue, 535 Fifth Avenue, 545 Fifth
                Avenue, and 1372 Broadway properties ("Fuji Properties") was
                restructured on September 30, 1992. The interest rate through
                January 17, 1997 was to remain at 9.69% and was to adjust
                monthly thereafter at LIBOR plus .63%. The pay rates were
                reduced to equal ( as a percentage of $207,000,000) 6.5% from
                January 1, 1992 through December 31, 1997, 7.5% from January
                1, 1998 through December 31, 1999 and 8.25% from January 1,
                2000 through January 17, 2001, the new maturity date. Due to
                the extension of the maturity date and the deferral of certain
                interest amounts, this restructuring constituted a troubled
                debt restructuring as defined by SFAS 15. In accordance with
                SFAS 15, interest expense was computed using the effective
                interest rate method. The resulting effective interest rate
                was approximately 7.0% and 6.5%, per annum, in 1995 and 1994,
                respectively. At February 28, 1996, accrued and unpaid
                interest related to the Fuji Loan, calculated in accordance
                with SFAS 15, was $27,300,000.

                On February 28, 1996, the Fuji Loan was sold to an affiliate
                of the General Partner (see Note 4). In connection with the
                sale of the Fuji Loan, the Related Party Debt was modified
                (see Note 6).

                Sanwa Mortgage Notes

                The Operating Partnership had two non-recourse loans from
                Sanwa Business Credit Corporation ("Sanwa"). The Sanwa loans
                had been restructured in 1992. The interest rate on the
                restructured Sanwa loans was to equal the prime rate plus 2%,
                effective September 1, 1991. The pay rates required equaled 7%
                from September 1, 1992 through August 31, 1995; 8% from
                September 1, 1995 through August 31, 1998; and 9% from
                September 1, 1998 through December 31, 2001. The difference
                between the pay rate and the interest rate was deferred
                without interest. Interest expense in the accompanying
                consolidated financial statements for 1995 was computed using
                the effective interest method. The resulting effective
                interest rate was approximately 2.5% per annum in 1995.


                                     F-14




<PAGE>

                In January 1996, a deed in lieu of foreclosure agreement was
                reached between the Operating Partnership and Sanwa (see Note
                5).

NOTE 4 -        MORTGAGE NOTES PAYABLE TO AFFILIATES

                The Managing General Partner and Fuji both recognized that the
                Partnership would not be able to comply with the terms of the
                Fuji Loan and the Fuji Loan would go into default in early
                1996. On December 31, 1995, the loan had a principal balance
                of $207,000,000, plus accrued interest of $26,866,000
                (calculated utilizing the effective interest method). A
                venture comprised of Apollo Real Estate Advisors, L.P.
                ("Apollo"), an affiliate of the General Partners, and Emmes
                Ventures, Inc. ("Emmes") submitted a proposal to purchase the
                Fuji loan. Zeus Property LLC ("Zeus"), a newly-organized
                limited liability company owned by affiliates of Apollo and
                Emmes, purchased the loan from Fuji for $115 million on
                February 28, 1996.

                Under the terms of the modified Fuji Loan (the 'Modified
                Loan"), the Operating Partnership obtained a reduction in the
                current interest required to be paid under the Modified Loan
                which, based on projections, would greatly reduce the
                likelihood of monetary default under the loan prior to
                February 28, 1998, the new maturity date for a component of
                the modification. As part of the restructuring of the Fuji
                loan, each of the Fuji Properties was conveyed by the
                Operating Partnership to newly-created limited liability
                companies which are wholly-owned, indirectly, by the Operating
                Partnership and its partners.

                The Modified Loan is comprised of several component
                non-recourse loans, all held by Zeus and its affiliates. In
                August 1997, the senior portion of the Modified Loan, that was
                allocated to 1372 Broadway, was sold by Zeus to the ultimate
                purchaser of the property, thus eliminating the property from
                the cross-collateralization provision of the Modified Loan
                (see Note 10). The remaining senior component consists of a
                series of secured notes in the aggregate principal amount
                $64,086,000 and $102,721,000 at December 31, 1997 and 1996,
                respectively, (the "Secured A Notes"). These notes have an
                annual interest rate of 295 basis points over 30-day LIBOR
                (8.80% and 8.33% at December 31, 1997 and 1996, respectively),
                were scheduled to mature on February 28, 1998, but were
                extended to March 31, 1998.

                                     F-15
<PAGE>

                The junior component consists of secured notes in the
                aggregate principal amount of $102,450,000 at December 31,

                1997 and 1996 (the "Secured B Notes"). These notes have a
                fixed annual interest rate of 14% through February 28, 1999
                and then 16.75% thereafter, maturing on February 28, 2016. A
                mandatory prepayment of $25 million against the Secured B
                Notes was scheduled to be made on March 15, 1998, but was
                extended to March 31, 1998.

                The Secured A Notes and Secured B Notes are collectively
                secured by first mortgages on the Fuji Properties.

                The following is a summary of the scheduled principal
                maturities by year under the Modified Loan (in thousands):

                              Year                      Amount
                              ----                  --------------
                              1998                  $       89,086
                              1999                               -
                              2000                               -
                              2001                               -
                              Thereafter                    77,450
                                                    --------------
                                                    $      166,536
                                                    ==============

                A third component of the Modified Loan is an unsecured
                $19,550,000 note (the "Unsecured Note") representing the
                additional financing expected to be drawn upon by the
                Operating Partnership to fund capital improvements and tenant
                lease-up costs with respect to the Fuji Properties. However,
                any borrowings under this credit line are subject to Zeus'
                discretion. Accordingly, it is possible that the Operating
                Partnership may not be able to borrow against this credit line
                each time it deems it necessary. The outstanding balance
                against the Unsecured Note was $12,761,000 and $2,892,000 as
                of December 31, 1997 and 1996, respectively, and is included
                in accounts payable, notes and loans payable and accrued
                interest to general partners and affiliates. The Unsecured
                Note bears interest at a fixed annual rate of 14% through
                February 28, 1999 and then 16.75% thereafter and was scheduled
                to mature on February 28, 1998, but was extended to March 31,
                1998.

                Interest expense incurred for the years ended December 31,
                1997 and 1996, relating to the Modified Loan was $23,504,000
                and $19,659,000, respectively.

                                     F-16
<PAGE>

                The principal benefit of the Modified Loan to the Partnership
                was a substantial reduction in current debt service
                requirements through February 1998. The only current debt
                service payments that were required to be made under the
                Modified Loan for this two-year period were the interest

                payments on the Secured A Notes. Interest on all other
                components of the Modified Loan were payable to the extent of
                available cash flow from the Fuji Properties, and otherwise,
                accrue until sufficient cash flow was available for payment.
                As a result of this modification, the likelihood of a monetary
                default had been deferred from 1996 to 1998.

NOTE 5 -        DEED IN LIEU OF FORECLOSURE

                In January 1996, a deed in lieu of foreclosure agreement was
                reached between the Operating Partnership and Sanwa. Pursuant
                to the deed in lieu of foreclosure agreement, the Operating
                Partnership transferred title to the property located at 227
                East 45th Street to Sanwa on January 24, 1996. In exchange,
                Sanwa released, as of the closing date, the Operating
                Partnership from all claims, demands, liabilities,
                obligations, actions and causes of any kind with regard to
                Sanwa.

                As of December 31, 1995, the related indebtedness to Sanwa was
                $24,409,000. As a result of the above described transactions,
                the Operating Partnership has recognized an extraordinary gain
                on extinguishment of debt of $14,419,000 in 1996. The property
                was stated at its fair value at December 31, 1995 as a result
                of a recorded write-down (see Note 7).

NOTE 6 -        CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES

                The General Partners of the Investor Partnership are Linnaeus
                Lexington, Two Winthrop and WIPI. Two Winthrop, the Managing
                General Partner of the Investor Partnership is wholly owned by
                First Winthrop Corporation ("First Winthrop") which in turn is
                controlled by Winthrop Financial Associates ("WFA"). The
                General Partners, who are all affiliates of WFA, own the
                remaining 6% interest in the profits and losses of the
                Investor Partnership. Additionally, WFA, First Winthrop and a
                subsidiary, WFC Realty Co., Inc. ("WFC Realty"), collectively
                own a 1% interest in the profits and losses of the Operating
                Partnership.

                                     F-17
<PAGE>

                WIPI is a public real estate limited partnership whose general
                partners are Two Winthrop and a limited partnership, some of
                whose partners are affiliates of WFA. Linnaeus Lexington, the
                other General Partner, is a limited partnership, some of whose
                partners are affiliates of WFA. WFA and its affiliates manage
                or advise a large number of partnerships organized to own or
                operate real estate as well as other investments, or to invest
                in other limited partnerships that own or operate real estate
                or other investments. An affiliate of Apollo acquired control
                of the general partner of WFA in July 1995. As a result,
                Apollo and its affiliates control the Partnerships.


                The following table sets forth the amount of fees, commissions
                and other costs which the Partnerships paid or accrued to the
                General Partners and their affiliates for the years ended
                December 31, 1997, 1996 and 1995 (in thousands):

                      Type of Compensation             1997     1996     1995
                      --------------------             ----     ----     ----

                      Asset Management Fee             $  -     $  -    $1,377
                      Property Management Fees            -      329     1,185
                      Leasing Commissions                 -       63       476
                      (capitalized as deferred costs)
                      Cleaning Fees and
                         Security Fees                    -        -       220
                      Construction Supervision Fee        -       72       609
                      (capitalized to the costs of
                        Buildings and Improvements)
                      Reimbursement for                  24        -         -
                       accounting and
                        administrative services

                As part of the sale of the Fuji Loan, the Partnership agreed
                to retain new management and leasing agents for all of its
                properties.

                In connection with the sale of the Fuji Loan, WFA and certain
                of its affiliates entered into an agreement with the Investor
                Partnership, the Operating Partnership and an affiliate of
                Zeus with regard to amounts owed to WFA and its affiliates by
                the Partnerships (the "Winthrop Debt Agreement"). Prior to
                this agreement, WFA and its affiliates were owed, in the
                aggregate, $47,162,000 by the Partnerships. This amount is
                comprised of cash advances made by WFA to the Operating
                Partnership, as well as unpaid deferred fees related to the
                on-site management of the properties, asset management and


                                     F-18

<PAGE>

                syndication. This amount also includes accrued interest on
                these outstanding balances.

                Under the Winthrop Debt Agreement, WFA and its affiliates
                contributed $37,162,000 of the $47,162,000 to the Operating
                Partnership in 1996. The remaining $10,000,000 receivable has
                been evidenced by a promissory note issued by the Operating
                Partnership (the "Receivables Note") and is payable from the
                excess cash flow, as defined, from 509 Fifth Avenue and 300
                Park Avenue South. WFA then sold the Receivables Note to an
                affiliate of Zeus for a payment of $6 million in cash. The
                Receivables Note has an annual base interest rate of 6% and an

                additional annual contingent interest rate of 9%. Interest, to
                the extent that it cannot be paid currently, accrues until
                maturity. The Note, which was scheduled to mature on July 31,
                1997, was extended to the earlier of August 31, 1999 or such
                time that the SBRC loan becomes due. Interest expense incurred
                during 1997 and 1996, relating to the Receivables Note was
                $1,521,000 and $1,279,000, respectively.

                WFA was entitled to nonrecurring fees for organizing the
                Investor Partnership, providing services for tax consultation,
                and acquisition and financing of the Properties. The total
                fees for these services were $44,911,000, of which $9,020,000
                was outstanding at February 28, 1996 and December 31, 1995,
                which was included in the Winthrop Debt Agreement.

                The Partnerships accrued interest on any unpaid fees or
                advances due to First Winthrop and its affiliates at an
                interest rate of prime plus .75%. The total interest incurred
                during 1996 and 1995 was $694,000 and $3,765,000,
                respectively. All unpaid fees, advances, and accrued and
                unpaid interest were included in the Winthrop Debt Agreement.

NOTE 7 -        IMPAIRMENT OF VALUE OF REAL ESTATE

                During 1995, Management determined that the Properties
                suffered an impairment in value which was considered to be
                other than temporary. Management's assessment of impairment in
                1995 was primarily related to the continued weak New York City
                commercial real estate market. As a result, the Partnership
                wrote down its investment in the Fuji Properties by
                $22,500,000 in 1995. As a result of the transfer of the
                Partnership's 227 East 45th Street property during 1996, the
                remaining impairment of value of real estate is $20,523,000,
                and


                                     F-19

<PAGE>

                is allocated $11,124,000 to 757 Third Avenue, $5,664,000 to
                535 Fifth Avenue and $3,735,000 to 545 Fifth Avenue.

NOTE 8 -        COMMITMENTS AND CONTINGENCIES

                (a)   The Operating Partnership leases the properties to
                      tenants under a variety of terms, including escalation
                      provisions, renewal options and obligations of the
                      tenants to reimburse operating expenses.

                The aggregate future minimum fixed lease payments receivable
                under non-cancelable leases at December 31, 1997, excluding
                1372 Broadway, are as follows (in thousands):


                              Year               Amount
                              ----              --------

                              1998              $ 27,712
                              1999                26,463
                              2000                24,672
                              2001                22,814
                              2002                21,498
                              Thereafter          98,199
                                                --------

                                                $221,358
                                                ========

                (b) Deferred Purchase Price Obligation

                As part of the original purchase price of the Properties, the
                Operating Partnership agreed to make deferred purchase price
                payments to the seller in future years, with respect to each
                Property, equal to 6% of the gross proceeds of certain
                refinancings, sales or transfers of the Property, or, if a
                Property has not been sold or deemed disposed of by January
                18, 2006, the Operating Partnership must pay the seller on
                that date an amount equal to the excess of (i) 6% of the
                appraised fair market value of such Property as encumbered by
                all liens, charges and other encumbrances on such Property
                except mortgage loans or any other mortgage encumbering such
                Property, over (ii) the amount of any deferred purchase price
                payments previously made with respect to such Property.

                At the acquisition date, the Operating Partnership recorded a
                liability to the seller of $25,296,000, representing the
                Operating Partnership's estimate of the amount due based on
                the original purchase price of the

                                     F-20
<PAGE>

                Properties. The total liability has been reduced to $1,498,000
                due to sales and transfers of various properties and
                management's estimate of fair market value. No payments were
                required as a result of the Operating Partnership transferring
                its 227 East 45th Street property to Sanwa in 1996. In
                connection with the sale of 1372 Broadway in January 1998 (see
                Note 10), the Partnership paid $209,000 against its deferred
                purchase price obligation.

                (c) Litigation

                The Operating Partnership has been named as a defendant in
                various lawsuits. These actions are at varying stages within
                the legal process, and the Operating Partnership has
                counterclaimed on several of the actions. The Partnership's
                management expects that the outcome of these actions will not

                have a material adverse impact on the accompanying
                consolidated financial statements.

NOTE 9 -        RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING

               The differences between the accrual method of accounting for
               income tax reporting and the accrual method of accounting used
               in the consolidated financial statements are as follows (in
               thousands):

<TABLE>
<CAPTION>
                                                            1997            1996            1995
                                                          --------        --------        --------
<S>                                                       <C>             <C>             <C>
             Net loss - financial statements              $(21,668)       $ (4,709)       $(39,208)

                Differences resulted from:
                   Depreciation                             (1,961)         (2,785)         (1,891)
                   Rent concessions                         (5,276)         (2,003)         (2,693)
                   Rental revenues                           2,710           2,000           1,512
                   Loss due to permanent impairment           --              --            22,500
                   Amortization                               (738)           (603)            152
                   Mortgage recording taxes                    151             352              94
                   Bad debt expense                           (484)            334            (684)
                   Interest expense                          8,995           7,194           1,791
                   Gain on disposal                           --             1,107            --
                   Other timing differences                    215           1,021             368
                                                          --------        --------        --------

                Net (loss) income -
                   income tax method                      $(18,056)       $  1,908        $(18,059)
                                                          ========        ========        ========
</TABLE>

                The Partnership's taxable (loss) income per unit of limited
                partnership interest for 1997, 1996 and 1995 was $(13,256),
                $678 and $(12,551), respectively.


NOTE 10 -       SUBSEQUENT EVENTS

                On January 13, 1998, the Partnership sold its 1372 Broadway
                property to an unaffiliated third party for

                                     F-21
<PAGE>

                $52,000,000. All of the proceeds were used to partially
                satisfy the approximately $94,000,000 allocated portion of the
                Modified Loan (including accrued and unpaid interest), with
                the unsatisfied portion of the Modified Loan being reallocated
                among the remaining Fuji Properties. For financial reporting
                purposes, the sale will result in a gain in 1998.


                On March 10, 1998, in connection with the extension of the
                maturity date of the Secured A Notes, the $25 million
                prepayment against the Secured B Notes, and the Unsecured Note
                until March 31, 1998, the Partnership agreed to retain an
                entity affiliated with Zeus as its new managing agent for all
                properties, effective April 1, 1998.

NOTE 11 -       PRO FORMA FINANCIAL INFORMATION

                The following pro forma consolidated balance sheet as of
                December 31, 1997 and the pro forma consolidated statement of
                operations for the year then ended give effect to the sale of
                the Partnership's 1372 Broadway property. The adjustments
                related to the pro forma consolidated balance sheet assume the
                transaction was consummated at December 31, 1997, while the
                adjustments to the pro forma consolidated income statement
                assume the transaction was consummated at the beginning of the
                year presented. The sale occurred on January 13, 1998.

                The pro forma adjustments required are to eliminate the
                assets, liabilities and operating activity of 1372 Broadway.

                These pro forma adjustments are not necessarily reflective of
                the results that actually would have occurred if the sale had
                been in effect, as of, and for the period presented or what
                may be achieved in the future.

                                     F-22

<PAGE>

                     Pro Forma Consolidated Balance Sheet
                               December 31, 1997
                       (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                                                                   Pro Forma           Pro Forma
                                                              Historical          Adjustments         (Unaudited)
                                                             ------------        ------------        ------------
<S>                                                          <C>                 <C>                 <C>
ASSETS

Real Estate:

      Land                                                   $     24,440        $     (4,298)       $     20,142
      Buildings and improvements                                  256,041             (63,722)            192,319
      Accumulated depreciation                                   (141,658)             39,593            (102,065)
                                                             ------------        ------------        ------------
                                                                  138,823             (28,427)            110,396

Other Assets:

      Cash and cash equivalents                                       221                --                   221
      Restricted cash                                               7,341              (2,424)              4,917
      Accounts receivable, net                                        489                (117)                372
      Prepaid expenses and other assets                             4,630              (1,115)              3,515
      Deferred rent receivable                                     12,306              (3,219)              9,087
      Deferred costs, net                                           7,698              (1,299)              6,399
                                                             ------------        ------------        ------------

Total Assets                                                 $    171,508        $    (36,601)       $    134,907
                                                             ============        ============        ============

LIABILITIES AND PARTNERS' DEFICIT

Liabilities:

      Mortgage notes payable to affiliates                   $    166,536        $       --          $    166,536
      Other mortgage notes payable                                 61,867             (37,867)             24,000
      Accounts payable, notes and loans payable,
         and accrued interest to general partners
         and affiliates                                            24,739                --                24,739
      Accounts payable, accrued expenses, security
         deposits and other liabilities                            10,085              (3,868)              6,217
      Accrued interest on mortgage notes to affiliates             52,135                --                52,135
      Accrued interest on other mortgage notes                         98                --                    98
      Deferred purchase price obligation                            1,498                (209)              1,289
                                                             ------------        ------------        ------------

Total Liabilities                                                 316,958             (41,944)            275,014
                                                             ------------        ------------        ------------


Partners' Deficit:

      Limited Partners' Deficit - Units of
         Investor Limited Partnership Interest
         $250,000 stated value per unit; authorized,
         issued and outstanding -1,340 as of
         December 31, 1997 and 1996                              (149,968)              5,135            (144,833)
      Less: investor notes                                            (68)               --                   (68)
                                                             ------------        ------------        ------------

                                                                 (150,036)              5,135            (144,901)

      General Partners' Equity                                      4,586                 208               4,794
                                                             ------------        ------------        ------------

         Total Partners' Deficit                                 (145,450)              5,343            (140,107)
                                                             ------------        ------------        ------------

Total Liabilities and Partners' Deficit                      $    171,508        $    (36,601)       $    134,907
                                                             ============        ============        ============
</TABLE>

                                     F-23

<PAGE>

                Pro Forma Consolidated Statement of Operations
                     For the Year Ended December 31, 1997
                       (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                                                            Pro Forma           Pro Forma
                                                        Historical         Adjustments         (Unaudited)
                                                      ------------        ------------        ------------
<S>                                                   <C>                 <C>                 <C>
Revenues:

     Base rent                                        $     35,824        $     (9,583)       $     26,241
     Rent escalations                                        6,506              (1,522)              4,984
     Other                                                     972                (201)                771
                                                      ------------        ------------        ------------

                           Total Revenues                   43,302             (11,306)             31,996
                                                      ------------        ------------        ------------

Expenses:

     Interest                                               28,807              (3,628)             25,179
     Depreciation                                           11,041              (3,064)              7,977
     Amortization                                            1,794                (647)              1,147
     Real estate and other taxes                             9,502              (2,275)              7,227
     Utilities                                               4,590              (1,136)              3,454
     Cleaning and security                                   4,080                (675)              3,405
     Asset and property management fees                        549                (131)                418
     Repairs and maintenance                                 1,314                (203)              1,111
     Payroll                                                 1,350                (295)              1,055
     General and administrative                              1,194                (286)                908
     Professional fees                                         544                 (97)                447
     Provision for doubtful accounts                           205                --                   205
                                                      ------------        ------------        ------------

                         Total Expenses                     64,970             (12,437)             52,533
                                                      ------------        ------------        ------------

Net loss                                              $    (21,668)       $      1,131        $    (20,537)
                                                      ============        ============        ============

Net loss allocated to general partners                $       (848)       $       (103)       $       (951)
                                                      ============        ============        ============

Net loss allocated to investor limited partners       $    (20,820)       $      1,234        $    (19,586)
                                                      ============        ============        ============

Net loss per unit of investor limited
   partnership interest                               $ (15,537.31)       $     920.89        $ (14,616.42)
                                                      ============        ============        ============
</TABLE>

                                     F-24

<PAGE>

<TABLE>
<CAPTION>
                                                                                                                     Schedule III
                                           1626 New York Associates Limited Partnership
                                             Real Estate and Accumulated Depreciation
                                             ----------------------------------------
                                                        December 31, 1997
                                                        -----------------
                                                          (In Thousands)


                                         January 1984 Acquisition Costs
                                               Real Estate Assets                        Mortgage
                                       ------------------------------------              Discount
                     Encumbrances                            Buildings                  Allocation
                      (excluding                                and         ----------------------------------
  Description      accrued interest)        Land           Improvements           Land          Bldgs & Imp.          Total
----------------   -----------------  ----------------  ------------------  ----------------  ----------------  -----------------
<S>                <C>                <C>               <C>                 <C>               <C>               <C>
757 Third Avenue   $         74,362   $        11,934   $          66,872   $          (125)  $          (397)  $         78,284

535 Fifth Avenue             34,792             6,034              29,991              (300)           (1,222)            34,503

545 Fifth Avenue             17,427             3,152              18,013              (331)           (1,351)            19,483

1372 Broadway (4)            77,822             4,385              34,343              (155)             (491)            38,082

509 Fifth Avenue              7,200               900               4,053               (88)             (351)             4,514

300 Park Avenue              16,800             1,982              14,230               (46)             (145)            16,021
                   -----------------  ----------------  ------------------  ----------------  ----------------  -----------------

TOTAL              $        228,403   $        28,387   $         167,502   $        (1,045)  $        (3,957)  $        190,887
                   =================  ================  ==================  ================  ================  =================

<CAPTION>
                     Costs Capitalized / (Deducted)                          Gross Balances @ 12/31/97 (1)
                        Subsequent to Acquisition      ------------------------------------------------------------------------
                    ---------------------------------                                          Impairments
                                         Buildings                           Buildings           to Land
                                            and                                 and                 &
  Description            Land          Improvements          Land           Improvements        Building           Total (2)
----------------   ----------------  ----------------  ----------------  -----------------  ----------------   ----------------
<S>                <C>               <C>               <C>               <C>                <C>                <C>
757 Third Avenue   $           130   $        30,626   $        11,939   $         97,382   $       (11,124)   $        98,197

535 Fifth Avenue               (10)           21,291             5,724             50,060            (5,664)            50,120

545 Fifth Avenue                (5)           17,689             2,816             34,351            (3,735)            33,432

1372 Broadway (4)               68            30,151             4,298             63,722                 -             68,020

509 Fifth Avenue                (1)              230               811              3,932                 -              4,743

300 Park Avenue                 (5)            9,953             1,931             24,038                 -             25,969
                   ----------------  ----------------  ----------------  -----------------  ----------------   ----------------

TOTAL              $           177   $       109,940   $        27,519   $        273,485   $       (20,523)   $       280,481
                   ================  ================  ================  =================  ================   ================


<CAPTION>
                                                             Life
                                                            on which
                                                           Deprecia-
                                                            tion is
                                                            computed
                                            Date           in latest
                      Accumulated            of           statement of
  Description       Depreciation (3)       Constr.         operations
----------------   -----------------   ---------------   --------------
<S>                <C>                 <C>               <C>
757 Third Avenue   $         47,811         1963         5 - 30 Years

535 Fifth Avenue             23,487         1926         5 - 30 Years

545 Fifth Avenue             14,091         1900         5 - 30 Years

1372 Broadway (4)            39,593         1914         5 - 30 Years

509 Fifth Avenue              3,098         1915         5 - 30 Years

300 Park Avenue              13,578         1920         5 - 30 Years
                   -----------------

TOTAL              $        141,658
                   =================
</TABLE>

                            See accompanying notes.

                                     F-25

<PAGE>

                                                                  SCHEDULE III

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                   REAL ESTATE AND ACCUMULATED DEPRECIATION
                               December 31, 1997
                                (In Thousands)

<TABLE>
<CAPTION>
NOTES:
<S>           <C>                                                                       <C>
(1)           The aggregate cost federal income tax purpose is $302,474.

(2)           Balance, January 1, 1995                                                  $    289,511
              Improvements capitalized subsequent to acquisition                               7,746
              Impairment of value                                                            (22,500)
                                                                                        -------------

              Balance, December 31, 1995                                                     274,757
              Improvements capitalized subsequent to acquisition                               7,549
              Cost of rental property disposed of                                            (18,348)
              Impairment of value of rental property disposed of                               1,977
                                                                                        -------------

              Balance, December 31, 1996                                                     265,935
              Improvements capitalized subsequent to acquisition                              14,546
                                                                                        -------------

              Balance, December 31, 1997                                                $    280,481
                                                                                        =============



(3)           Balance, January 1, 1995                                                  $    117,422
              Additions charged to expense                                                    11,598
                                                                                        -------------

              Balance, December 31, 1995                                                     129,020
              Additions charged to expense                                                     9,969
              Accumulated depreciation of rental property disposed of                         (8,372)
                                                                                        -------------

              Balance, December 31, 1996                                                     130,617
              Additions charged to expense                                                    11,041
                                                                                        -------------

              Balance, December 31, 1997                                                $    141,658
                                                                                        =============

(4)           Property was sold on January 13, 1998.
</TABLE>

                                     F-26

<PAGE>

Item 9.  Changes in and Disagreements on Accounting and Financial Disclosure.

         Effective September 19, 1996, the Partnership dismissed its prior
Independent Auditors, Arthur Andersen LLP ("Arthur Andersen") and retained as
its new Independent Auditors, Imowitz Koenig & Co., LLP ("Imowitz Koenig").
Arthur Andersen's Independent Auditors' Report on the Partnership financial
statements for calendar year ended December 31, 1995, did not contain an
adverse opinion or a disclaimer of opinion, and were not qualified or modified
as to uncertainty, audit scope or accounting principles. The decision to
change Independent Auditors was approved by the Partnership managing general
partner's directors. During calendar year ended 1995 and through September 19,
1996, there were no disagreements between the Registrant and Arthur Andersen
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure which disagreements if not resolved
to the satisfaction of Arthur Andersen, would have caused it to make reference
to the subject matter of the disagreements in connection with its reports.

         Effective September 19, 1996, the Partnership engaged Imowitz Koenig
as its Independent Auditors. The Partnership did not consult Imowitz Koenig
regarding any of the matters or events set forth in Item 304(a)(2) of
Regulation S-K prior to September 19, 1996.

                                      49

<PAGE>

                                   PART III

Item 10. Directors and Executive Officers of Registrant.

         The Partnership has no officers or directors. Two Winthrop manages
and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters effective its business.
As of March 1, 1998, the names of the directors and executive officers of Two
Winthrop and the position held by each of them, are as follows:

                                                         Has Served as
                            Position Held with the       a Director or
Name                       Managing General Partner      Officer Since
----                       ------------------------      -------------

Michael L. Ashner          Chief Executive Officer            1-96
                           and Director

Edward Williams            Chief Financial Officer            4-96
                           Vice President and
                           Treasurer

Peter Braverman            Senior Vice President              1-96
                           and Director

Carroll Vinson             Vice President - Residential      10-97
                           and Director

Carolyn Tiffany            Vice President and Clerk          10-95

         Michael L. Ashner, age 46, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until
January 1996. In addition, since 1981 Mr. Ashner has been President of Exeter
Capital Corporation, a firm which has organized and administered real estate
limited partnerships.

         Edward V. Williams, age 57, has been the Chief Financial Officer of
WFA since April 1996. From June 1991 through March 1996, Mr. Williams was
Controller of NPI and NPI Management. Prior to 1991, Mr. Williams held other
real estate related positions including Treasurer of Johnstown American
Companies and Senior Manager at Price Waterhouse.

         Peter Braverman, age 46, has been a Senior Vice President of WFA
since January 1996. From June 1995 until January 1996, Mr.


                                      50


<PAGE>

Braverman was a Vice President of NPI and NPI Management. From June 1991 until
March 1994, Mr. Braverman was President of the Braverman Group, a firm
specializing in management consulting for the real estate and construction
industries. From 1988 to 1991, Mr. Braverman was a Vice President and
Assistant Secretary of Fischbach Corporation, a publicly traded, international
real estate and construction firm.

         Carroll D. Vinson, age 57, has been Vice President - Residential and
a Director of Two Winthrop since October 1997. He has acted as Chief Operating
Officer of Insignia Properties Trust since May 1997. During 1993 to August
1994, Mr. Vinson was affiliated with Crisp, Hughes & Co. (regional CPA firm)
and engaged in various other investment and consulting activities which
included portfolio acquisitions, asset dispositions, debt restructurings and
financial reporting. Briefly, in early 1993, Mr. Vinson served as President
and Chief Executive Officer of Angeles Corporation, a real estate investment
firm.

         Carolyn Tiffany, age 31, has been employed with WFA since January
1993. From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and
Associate in WFA's accounting and asset management departments. From October
1995 to present Ms. Tiffany has been a Vice President in the asset management
and investor relations departments of WFA.

         One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered
pursuant to Section 12(g) of the Securities and Exchange Act of 1934, or are
subject to the reporting requirements of Section 15(d) of such Act: Winthrop
Partners 79 Limited Partnership; Winthrop Partners 80 Limited Partnership;
Winthrop Partners 81 Limited Partnership; Winthrop Residential Associates I, A
Limited Partnership; Winthrop Residential Associates II, A Limited
Partnership; Winthrop Residential Associates III, A Limited Partnership; 1999
Broadway Associates Limited Partnership; Nantucket Island Associates Limited
Partnership; One Financial Place Limited Partnership; Presidential Associates
I Limited Partnership; Riverside Park Associates Limited Partnership;
Springhill Lake Investors Limited Partnership; Twelve AMH Associates Limited
Partnership; Winthrop California Investors Limited Partnership; Winthrop
Growth Investors I Limited Partnership; Winthrop Interim Partners I, A Limited
Partnership; Southeastern Income Properties Limited Partnership; Southeastern
Income Properties II Limited Partnership; and Winthrop Miami Associates
Limited Partnership.

         Except as indicated above, neither the Partnership nor Two Winthrop
has any significant employees within the meaning of Item

                                      51

<PAGE>

401(b) of Regulation S-K. There are no family relationships among the officers
and directors of Two Winthrop.


         Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Partnership under Rule 16a-3(e) during the Partnership's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Partnership with respect to its most recent fiscal year, the Partnership is
not aware of any director, officer or beneficial owner of more than ten
percent of the units of limited partnership interest in the Partnership that
failed to file on a timely basis, as disclosed in the above Forms, reports
required by section 16(a) of the Exchange Act during the most recent fiscal
year or prior fiscal years.


Item 11. Executive Compensation.

         The Partnership is not required to and did not pay any compensation
to the officers or directors of Two Winthrop. Two Winthrop does not presently
pay any compensation to any of its officers or directors. (See Item 13,
"Certain Relationships and Related Transactions.")


Item 12. Security Ownership of Certain Beneficial Owners and
         Management.

         (a)      Security Ownership of Certain Beneficial Owners.

                  Two Winthrop, WIPI and Linnaeus-Lexington own all the
outstanding general partnership interests in the Partnership. No other person
or group is known by the Partnership to be the beneficial owner of more than
5% of the outstanding partnership interests as of December 31, 1997.

         (b)      Security Ownership of Management.

         No officers, directors or partners of Linnaeus-Lexington and First
Winthrop and none of the other officers, directors or general partners of WIPI
beneficially own any Units. Affiliates of First Winthrop, however, own in the
aggregate, 19 units which represents less than one percent of the total
outstanding units.

         (c)      Changes in Control.

         There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the
Partnership.

                                      52

<PAGE>

Item 13. Certain Relationships and Related Transactions.

         The General Partners and their affiliates are entitled to receive
certain cash distributions and allocations of taxable income or loss. In
addition, the General Partners and their affiliates have earned various fees
in connection with the formation and operation of the Partnership and
Operating Partnership. Further, subsequent to the offering of units, the

General Partners and their affiliates entered into contracts to perform
various services for the Operating Partnership.

         In February 1996, certain affiliates of the General Partners (the
"Affiliates") entered into an agreement with the Operating Partnership, the
Partnership and an affiliate of Zeus with regard to amounts owed to the
Affiliates by the Operating Partnership and the Partnership (the "Winthrop
Debt Agreement"). Prior to the entering into of this agreement, the Affiliates
were owed in the aggregate approximately $46.6 million by the Operating
Partnership and the Partnership. This amount was comprised of cash advances
made to the Partnership and the Operating Partnership in order to fund
operating deficits and also includes accrued interest on outstanding balances
as well as unpaid deferred fees related to the on-site management of the
properties, asset management and syndication. Under the Winthrop Debt
Agreement, the Affiliates contributed approximately $36.6 million of the $46.6
million to the Operating Partnership. The remaining $10 million receivable has
been evidenced by a promissory note (the "Receivables Note") issued by the
Operating Partnership which is secured by a pledge of the excess cash flow
from 509 Fifth Avenue and 300 Park Avenue South and is payable only from those
properties. Upon receiving consent of The Dime Savings Bank, the holder of the
first mortgage on these properties, the Affiliate Note is to be secured by a
second mortgage on 509 Fifth Avenue and 300 Park Avenue South. The Receivables
Note was then sold to an affiliated of Apollo Real Estate Advisors, L.P.
("Apollo"), an affiliate of the Partnership, for a payment of $6,000,000. The
Receivables Note has an annual base interest rate of 6% and an additional
annual contingent interest rate of 9%. Interest is payable only from available
cash flow after payment of debt service on the Dime Loan. Interest, to the
extent it cannot be paid currently, accrues until the maturity of the
Receivables Note on July 31, 1997.

         As a result of the sale of the Receivables Note and the purchase by
Zeus of the Fuji Loan, these loans are held by affiliates of the Partnership.

         Prior to the consummation of the transactions contemplated by the
Winthrop Debt Agreement, the Affiliates performed management, cleaning,
construction and leasing services for the properties and advanced certain
amounts to the Partnership or the

                                      53

<PAGE>

Operating Partnership to fund operating deficits and loan guarantees. All of
these amounts were either contributed to the Partnership or included in the
Receivables Note. Accordingly, subsequent to the closing of the transactions
contemplated by the Winthrop Debt Agreement and the sale of the Receivables
Note, the Partnership and the Operating Partnership had no amounts due to the
Affiliates and the property management, cleaning, leasing and construction
services are being performed by unaffiliated third parties.

         The following table sets forth the amounts of fees, commissions and
cash distributions which the Partnership and the Operating Partnership accrued
for the account of the General Partners and their affiliates for the years
ended December 31, 1997, 1996 and 1995. As described above, these fees have

either been contributed to the Partnership or are evidenced by the Receivables
Note.

Receiving
Entity            Type of Compensation     1997         1996          1995
------            --------------------     ----         ----          ----
Winthrop          Asset Management Fee         --           --     $1,377,000
  Management
Winthrop          Property Management          --     $329,000     $1,184,662
  Management
Winthrop          Leasing Commissions          --     $ 63,000     $  475,868
  Management
The Cleaning      Cleaning Fees                --           --     $  220,491
  Force
Winthrop          Construction                 --     $ 72,000     $  609,205
  Financial       Supervision Fee
Winthrop          Accounting and
  Management        Administrative        $24,000           --             --
                     Service

        WFA was entitled to nonrecurring fees for organizing the Operating
Partnership, providing services for tax consultation, and acquisition and
financing of the Properties. The total fees for these services were
$44,911,000, of which $9,020,000 was outstanding at February 28, 1996 and
December 31, 1995.

        The Operating Partnership accrues on any unpaid fees or advances due
to First Winthrop and its affiliates at an interest rate of prime plus .75%.
The total interest incurred during 1996 and 1995 was $694,000 and $3,765,000,
respectively. All unpaid fees, advances and accrued and unpaid interest were
included in the Winthrop Debt Agreement.

         For the years ended December 31, 1995, 1996 and 1997, the Partnership
allocated $2,172, $10,478 and $(2,445), respectively, of taxable income
(losses) to Two Winthrop in accordance with its interest in the Partnership.
For the years ended December 31, 1995, 1996, and 1997 the Partnership
allocated $34,023, $232,300

                                      54
<PAGE>

and $(38,323), respectively, of taxable income (losses) to Linnaeus-Lexington
in accordance with its interest in the Partnership. For the years ended
December 31, 1995, 1996 and 1997, the Partnership allocated $235,268,
$1,887,389 and $(265,000), respectively, of taxable income (losses) to WIPI in
accordance with its interest in the Partnership.

         The directors, officers and partners of First Winthrop and
Linnaeus-Lexington and the directors, officers and general partners of WIPI
receive no remuneration or other compensation from the Partnership, the
Operating Partnership or the Joint Ventures.

                                      55

<PAGE>

                                    PART IV

Item 14. Exhibits, Financial Statements, Schedules and Reports
                  on Form 8-K.

         (a)      The following documents are filed as a part of this report:

                  1. Financial Statements - The Consolidated Financial
Statements listed on the accompanying Index to Consolidated Financial
Statements are filed as a part of this Annual Report.

                  2. Financial Statement Schedules - The Consolidated
Financial Statement Schedules listed on the accompanying Index to Consolidated
Financial Statements are filed as a part of this Annual Report.

                  3. Exhibits - The Exhibits listed on the accompanying
Exhibit Index are filed as a part of this Annual Report.

         (b)      Reports on Form 8-K - None


                                      56

<PAGE>

                                  SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                           1626 NEW YORK ASSOCIATES LIMITED
                                           PARTNERSHIP

                                           By: TWO WINTHROP PROPERTIES, INC.
                                               Managing General Partner


                                               By: /s/ Michael L. Ashner
                                                   ---------------------------
                                                       Michael Ashner
                                                       Chief Executive Officer

                                               Date: March 31, 1998

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature/Name              Title                      Date
--------------              -----                      ----

/s/ Michael Ashner          Chief Executive            March 31, 1998
----------------------      Officer and Director
Michael Ashner


/s/ Edward V. Williams      Chief Financial            March 31, 1998
----------------------      Officer
Edward V. Williams


/s/ Peter Braverman         Senior Vice President      March 31, 1998
----------------------      and Director
Peter Braverman

                                      57

<PAGE>

                                EXHIBITS INDEX

         Exhibit                                                          Page
         -------                                                          ----

3,4      Amended and Restated Limited Partnership Agreement of 1626        (1)
         New York Associates Limited Partnership (the "Partnership")

3(a)     Amendment to Amended and Restated Limited Partnership             (2)
         Agreement dated August 23, 1995

10(a)    Third Amended and Restated Limited Partnership Agreement of       (3)
         Nineteen New York Properties Limited Partnership ("19 NY")
         dated as of September 20, 1990

10(b)    Commercial Brokerage Agreements between 19 NY and First           (3)
         Winthrop Realty Co., Inc., as amended

10(c)    Commercial Management Agreements between 19 NY and Winthrop       (3)
         Management, as amended

10(d)    Agreements for building cleaning services between 19 NY and       (3)
         Venture Services, as amended

10(e)    Pledge and Security Agreement by Winthrop Interim Partners I,     (1)
         A Limited Partnership ("WIPI") and Winthrop Financial Co.,
         Inc. ("WFC") in favor of Chemical Bank

10(f)    Investor Note Loan Agreement dated September 17, 1984 between     (1)
         the Partnership and Chemical Bank as agent of The First
         National Bank of Boston, Citibank, N.A., Bank of Montreal,
         Bankers Trust Company and Manufacturers Hanover Trust Company

10(g)    Intercreditor Agreement dated as of September 17, 1984 by and     (1)
         between Continental Casualty Company and Chemical Bank acting
         on behalf of itself and The First National Bank of Boston,
         Bankers Trust Company, Citibank, N.A., Bank of Montreal and
         Manufacturers Hanover Trust Company

10(h)    Form of Investor Bond issued to the Investor Partnership by       (1)
         Continental Casualty Company

10(i)    Mortgage made by 19 NY Limited Partnership to The Fuji Bank       (3)
         ("Fuji") relating to a $250 million

                                  58
<PAGE>

         Mortgage Loan on 757 Third Avenue, 410 Park Avenue, 535 Fifth
         Avenue, 545 Fifth Avenue and 1372 Broadway, dated as of
         January 18, 1990, and related Mortgage Note Consolidation,
         Modification and Restatement Agreement


10(j)    Fuji Loan Mortgage Modification and Restatement Agreement         (3)
         between Fuji and 19 NY, dated as of September 18, 1990, and
         related Mortgage Note Modification and Restatement Agreement,
         dated September 18, 1990

10(k)    Second Amended and Restated Mortgage Note, Second Amended and     (3)
         Restated Mortgage, and Renovation Agreement between Fuji and
         19 NY, relating to The Fuji Bank Loan Restructuring, dated as
         of September 30, 1992

10(l)    Restructuring Agreement, dated February 28, 1996 among Fuji,      (4)
         19 NY and 535 Fifth Avenue LLC, 545 Fifth Avenue LLC, 757
         Third Avenue LLC and 1372 Broadway LLC (collectively, the
         "LLCs"), Four New York Properties Holdings LLC ("Holdings")
         and Zeus Property LLC ("Zeus") and Westhill Equities LLC

10(m)    Debt Modification and Purchase Agreement dated February 28,       (4)
         1996 among 19 NY, the Partnership, Isaac Asset LLC, WFC,
         First Winthrop Corporation, Winthrop Financial Associates, A
         Limited Partnership, Winthrop Management, The Cleaning Force,
         A Limited Partnership and First Winthrop Properties, Inc.

10(n)    Second Amended and Restated Deposit, Disbursement and             (4)
         Security Agreement dated February 28, 1996, between the LLCs
         and Fuji

10(o)    Splitter Note A1, dated as of February 28, 1996, between Fuji     (4)
         and the LLCs

10(p)    Form of Splitter Note A2-A29, dated as of February 28, 1996,      (4)
         between Fuji and the LLCs

10(q)    Form of Splitter Note B1 and B2, dated as of February 28,         (4)
         1996, between Fuji and the LLCs

10(r)    Unsecured Promissory Note, dated as February 28, 1996,            (4)
         between Zeus and the LLCs

10(s)    Unsecured Loan Agreement, dated February 28, 1996                 (4)

                                  59

<PAGE>

         between the LLCs and Zeus.

16.      Letter dated September 19, 1996 from Arthur Andersen LLP.         (5)

27.      Financial Date Schedule                                           61

(1) Incorporated by reference the Partnership's Registration Statement on Form
10, File No. 0-13500 as filed on April 30, 1985 and thereafter amended


(2) Incorporated by reference to the Partnership's Current Report on Form 8-K
filed on September 6, 1995

(3) Incorporated by reference to the Partnership's Annual Report filed on Form
10-K for the year ended December 31, 1991.

(4) Incorporated by reference to the Partnership's Annual Report filed on Form
10-K for the year ended December 31, 1995

(5) Incorporated by reference to the Partnership's Current Report on Form 8-K
dated September 19, 1996.

                                      60