FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission file number 0-827

EMPIRE STATE BUILDING ASSOCIATES

(Exact name of registrant as specified in its charter)

A New York Partnership	13-6084254

(State or other jurisdiction of 	(I.R.S. Employer

incorporation or organization)	Identification No.)

60 East 42nd Street, New York, New York

(Address of principal executive offices)

10165

(Zip Code) 

(212) 687-8700

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required tofile such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ X ].  No [   ].

 

An Exhibit Index is located on Page 14 of this Report.

Number of pages (including exhibits) in this filing: 14

 

					PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

Empire State Building Associates

Condensed Statement of Income

(Unaudited)

For the Three Months

Ended March 31,

	2001	2000

Income:

	Rent income, from a related 

		party (Note B)	$1,504,687	$1,504,687

	Dividend income	   157,165	    95,211

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

		Total income	 1,661,852	 1,599,898

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

Expenses:

	Leasehold rent	   492,500	   492,500

	Supervisory services, to a 

		related party (Note C)	    39,854	    39,854

	Amortization of leasehold	    52,117	    52,117

   Legal fees                                    972              -0-

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

		Total expenses	   585,443	   584,471

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

Net income		$1,076,409	$1,015,427

					==========	==========

Earnings per $10,000 participation

	unit, based on 3,300 

	participation units 

	outstanding during the period	$   326.18	$   307.71

					==========	==========

	Distributions per $10,000

		participation consisted 

		of the following:

	Income			$   326.18	$   307.71

	Return of capital	  3,972.06	  1,993.06

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

		Total distributions	$ 4,298.24	$ 2,300.77

					==========	==========

	At March 31, 2001 and 2000, there were $33,000,000 of participations outstanding.

	See notes to condensed financial statements.

 

Empire State Building Associates

Condensed Balance Sheet

(Unaudited)

Assets							 March 31, 2001   December 31, 2000

Current assets :

  Cash								$  491,712	$   325,529

  Fidelity U.S. Treasury Income Portfolio	 3,614,643	 15,408,212

  Prepaid rent							    23,831	     23,831

  Additional rent due from Empire State 

    Building Company, a related party 			  -0-	  2,583,762

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

		Total current assets			 4,130,186	 18,341,334

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

Real Estate	

  Leasehold on Empire State Building		39,000,000	 39,000,000

   Less, allowance for amortization		36,550,478 	 36,498,362

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

									 2,449,522	  2,501,638

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

		Total assets					$6,579,708	$20,842,972

									==========	===========

Current liabilities:

  Accrued legal fees, to a related 

    party								$1,542,393	$1,854,565

  Accrued supervisory services, 

    to a related party					       -0-	   843,310

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

		Total current liabilities		 1,542,393	 2,697,875

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

Capital:

  Capital January 1,					18,145,097	11,339,029

  Add, Net income:

   January 1, 2001 through March 31, 2001	 1,076,409	       -0-

   January 1, 2000 through December 31, 2000	       -0-	17,315,601

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

									19,221,506	28,654,630

  Less, Distributions: 

  Monthly distributions,

   January 1, 2001 through March 31, 2001	   972,333	       -0-

   January 1, 2000 through December 31, 2000	       -0-	 3,889,333

 

 

 

 

 

Empire State Building Associates

Condensed Balance Sheet

(Unaudited)

(CONTINUED)

 

Additional Distribution on 			 March 31, 2001   December 31, 2000

  March 2, 2001 of overage rent 

  for the lease year ended 

  December 31, 2000					    $13,211,858    $       -0-

Additional Distribution on

  February 29, 2000 of overage rent 

  for the lease year ended 

  December 31, 1999						       -0-	 6,620,200

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

									14,184,191	10,509,533

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

Capital:

  March 31, 2001						 5,037,315	       -0-

  December 31, 2000						       -0-	18,145,097

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

	Total liabilities and capital

 	  March 31, 2001				    $ 6,579,708

	  December 31, 2000					==========    $20,842,972

	==========

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed financial statements.

Empire State Building Associates

Condensed Statement of Cash Flows

(Unaudited)

							 January 1, 2001	 January 1, 2000

								through			through

						  March 31, 2001	  March 31, 2000

Cash flows from operating activities:

Net income						$1,076,409	   $  1,015,427

Adjustments to reconcile net income 

  to net cash provided by operating 

  activities:

Amortization of leasehold			    52,117		    52,117

Change in additional rent due			 2,583,762		   982,109

Change in accrued supervisory services	  (843,310)		  (422,566)

Chane in accrued legal fees               (312,172)                -0-

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

	Net cash provided by operating

	  activities					 2,556,806		 1,627,087

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

Cash flows from financing activities:

	Cash distributions			    (14,184,191)		(7,592,533)

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

	Net cash used in financing 

	  activities 				    (14,184,191)		(7,592,533)

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

	Net decrease in cash and 

       cash equivalents			    (11,627,385)		(5,965,446)

Cash and cash equivalents 

  beginning of period				15,733,740		 9,537,435

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

Cash and cash equivalents 

  end of period					$4,106,355		$3,571,989

								==========		==========

 

 

 

 

 

 

 

 

 

See notes to condensed financial statements.

Notes to Condensed Financial Statements (unaudited)

   Note A Organization and Basis of Presentation

		In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of Registrant as of March 31, 2001,its results of operations and cash flows for the three months ended March 31, 2001 and 2000 and its changes in Partners' capital for the three months ended March 31, 2001.  Information included in the condensed balance sheet as of December 31, 2000 hasbeen derived from the audited balance sheet included in Registrant's Form 10-K for the year ended December 31, 2000 (the "10-K") previously filed with the Securities and Exchange Commission (the "SEC").  Pursuant to rules and regulations of the SEC,certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these financial statements unlesssignificant changes have taken place since the end of the most recent fiscal year.  Accordingly, these unaudited condensed financial statements should be read in conjunction with the financial statements, notes to financial statements and the otherinformation in the 10-K.  The results of operations for the three months ended March 31, 2001 are not necessarily indicative of the results to be expected for the full year.

Note B Interim Period Reporting

 

		Registrant is a partnership which was organized on July 11, 1961.  Registrant owns the tenant's interest in a master operating leasehold (the "Master Lease") on the Empire State Building (the "Building") and the land thereunder, located at 350Fifth Avenue, New York, New York (the "Property").  The fee owner of the property is Trump Empire State Partners.

		Registrant's partners are Peter L. Malkin, Thomas N. Keltner, Jr. and Richard A. Shapiro (collectively, the "Partners"), each of whom also acts as an agent for holders of participations in his respective partnership interest in Registrant (the"Participants").  The Partners in Registrant are also members of Wien & Malkin LLP, 60 East 42nd Street, New York, New York, which provides supervisory and other services to Registrant and Sublessee (the "Supervisor").  See Note C below.

		The initial term of the Master Lease expired on January 5, 1992.  On January 30, 1989, Registrant exercised its first of four 21-year renewal options contained in the Master Lease and extended the Master Lease through January 5, 2013.  Theannual rent payable under the Master Lease is $1,970,000 through January 5, 2013 and $1,723,750 annually during the term of each renewal period thereafter.  

		The value of the Master Lease is stated at cost.  To reflect Registrant's exercise of the first renewal option under the Master Lease, the estimated useful life of the Master Lease has been revised to 25 years, effective January 1, 1988,through January 5, 2013.

		Registrant does not operate the Property.  It subleases the Property to Empire State Building Company ("Sublessee") pursuant to a net operating sublease (the "Sublease") with a term and renewal options essentially coextensive with thosecontained in the Master Lease.  On January 30, 1989, Sublessee elected to renew the Sublease for a term commencing January 4, 1992 to January 4, 2013.  

		Sublessee is required to pay annual basic rent ("Basic Rent") of $6,018,750 from January 1, 1992 through January 4, 2013 and $5,895,625 from January 5, 2013 through the expiration of all renewal terms.  Sublessee is also required to payRegistrant overage rent of 50% of Sublessee's net operating profit in excess of $1,000,000 for each lease year ending December 31 ("Overage Rent").

		Overage Rent and other accumulated interest and dividend income are distributed annually after payment of any additional payments for supervisory services to Supervisor (as described in Note C below).  For 2000, Sublessee reported netoperating profit of $30,167,523; therefore, there was Overage Rent of $14,583,762 for the year ended December 31, 2000.  Registrant paid Supervisor $902,727 as an additional payment for supervisory services.

		Sublessee is a New York partnership in which Peter L. Malkin is a partner and trusts created by Peter L. Malkin for family members are beneficial owners of an interest in the Sublessee.  

Note C - Supervisory Services

		Registrant pays Supervisor for special legal services at hourly rates and for supervisory services and disbursements.  The supervisory fees are $100,000 per annum (the "Basic Payment") plus an additional payment of 6% of all distributions toParticipants in any year in excess of the amount representing a return of 9% per annum on their remaining original cash investment in any year ("Additional Payment").  At March 31, 2001 such remaining cash investment was $33,000,000, representing theoriginal cash investment of the Participants in Registrant.

		No remuneration was paid during the three month period ended March 31, 2001 by Registrant to any of the Partners as such.  Pursuant to the Fee arrangements described herein, Registrant paid Supervisor $25,000 of the Basic Payment forsupervisory services for the three month period ended March 31, 2001 and $4,951 a month as the Additional Payment for supervisory services. 

The supervisory services provided to Registrant by Supervisor include real estate supervisory, legal, administrative and financial services.  The services include, but are not limited to providing or coordinating withcounsel to Registrant, maintaining all of its partnership and Participant records, performing physical inspections of the Building, reviewing insurance coverage and conducting annual partnership meetings.  Financial services include monthly receipt ofrent from Net Lessee, payment of monthly and additional distributions to the Participants, payment of all other disbursements, confirmation of the payment of real estate taxes, and active review of financial statements submitted to Registrant by NetLessee and financial statements audited by and tax information prepared by Registrant's independent certified public accountant, and distribution of such materials to the Participants.  Supervisor also prepares quarterly, annual and other periodic filingswith the Securities and Exchange Commission and applicable state authorities.
Reference is made to Note B of this Item 1 ("Note B") for a description of the terms of the Sublease between Registrant and Sublessee.  The respective interests of the Partners in Registrant and in Sublessee arise solely from ownership of theirrespective participations in Registrant and, in the case of Mr. Malkin, his family trusts' ownership of an interest in Sublessee.  The Partners receive no extra or special benefit not shared on a pro rata basis with all other Participants in Registrant orpartners in Sublessee.  However, each of the Partners, by reason of his respective interest in Supervisor, is entitled to receive his share of any fees or other remuneration paid to Supervisor for services rendered to Registrant and Sublessee.

		As of March 31, 2001 the Partners owned of record and beneficially an aggregate of $10,000 of participations in Registrant, representing less than 1% of the currently outstanding participations therein totaling $33,000,000.

		In addition, as of March 31, 2001 certain of the Partners (or their respective spouses) held additional Participations as follows:

Entities for the benefit of members of Peter L. Malkin's family owned of record and beneficially $546,250 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations, except that related Trusts are required to completescheduled payments to Mr. Malkin.

Peter L. Malkin owned of record as trustee or co-trustee, but not beneficially, $262,500 of Participations.  Mr. Malkin disclaims any beneficial ownership of such Participations.

Note D Accrued Legal Fees

	     During the three months ended March 31, 2001, legal fees, previously accrued, of $312,172 were paid to the firm of Wien & Malkin LLP, a related party. 

 

 

Item 2.	Management's Discussion and Analysis of

Financial Condition and Results of Operations

		As stated in Note B, Registrant was organized for the purpose of acquiring the Master Lease of the Property subject to the Sublease.  Basic Rent received by Registrant is used to pay annual rent due under the Master Lease, the Basic Paymentand the Additional Payment for supervisory services; the balance of such Basic Rent is distributed to the Participants.  Overage Rent and any interest and dividends accumulated thereon are distributed to the Participants after the Additional Payment ismade to Supervisor.  See Note C of Item 1 above.  Pursuant to the Sublease, Sublessee has assumed responsibility for the condition, operation, repair, maintenance and management of the Property.  Registrant is not required to maintain substantial reservesor otherwise maintain liquid assets to defray any operating expenses of the Property.

		Registrant does not pay dividends.  During the three month period ended March 31, 2001 Registrant made regular monthly distributions of $98.21 for each $10,000 participation ($1,178.52 per annum for each $10,000 participation).  There are norestrictions on Registrant's present or future ability to make distributions; however, the amount of such distributions, particularly distributions of Overage Rent, depends solely on the ability of Sublessee to make payments of Basic Rent and Overage Rentto Registrant in accordance with the terms of the Sublease.  Registrant expects to make distributions in the future so long as it receives the payments provided for under the Sublease.  See Note B.

		Registrant's results of operations are affected primarily by the amount of rent payable to it under the Sublease.  The amount of Overage Rent payable to Registrant is affected by (i) the cycles in the New York City economy and real estaterental market and (ii) the cost of the Property improvement program described herein under Other Information.  It is difficult for management to forecast the New York City economy and real estate market over the next few years.  

		Total income increased for the three month period ended March 31, 2001 as compared with the three month period ended March 31, 2000.  Such increase resulted from an increase in dividend income earned on funds temporarily invested in FidelityU.S. Treasury Income Portfolio.  

     Total expenses increased for the three month period ended March 31, 2001 as compared with the three month period ended March 31, 2000. Such increase is attributable to legal fees incurred during the three month period ended March 31, 2001.

		The State of New York has asserted utility tax deficiencies against Sublessee through December 31, 1992 in connection with water, steam and non-metered electricity rent inclusion charges to tenants, plus interest thereon.  The Supreme Court,New York County, granted summary judgment in favor of the State, which was affirmed by the Appellate Division, holding that the State utility tax applies to such inclusion charges. Pursuant to the terms of the settlement agreement, Sublessee agreed to paythe State's assessed tax in the sum of $979,109, plus interest of approximately $605,000 through July 31, 1996.  The State had agreed to payment of the aforesaid liability over a period of four years, commencing August, 1996, in equal monthly installmentsof $40,000, including interest on the unpaid balance at the statutory rate. Final payment was made in June 2000.

		Sublessee also is liable for New York State Utility Tax for periods after December 31, 1992. The state has proposed a tax assessment for the years 1993 through 1995 in the sum of $243,270 plus accrued interest of approximately $142,900 throughMarch 31, 2001. The foregoing proposed assessment has not yet been finalized.

		The City of New York had asserted a Utility Tax deficiency in the amount of $277,125 against Sublessee, through December 31, 1994, in connection with water, steam and non-metered electricity rent inclusion charges to tenants, plus accruedinterest of approximately $345,603 through April 30, 2000.  Sublessee was also liable for an undetermined amount of additional New York City Utility Tax for periods after December 31, 1994. Under a settlement proposed by New York City to all taxpayers,Sublessee agreed to settle utility taxes for all years by paying the tax only for the year 1997. The City reviewed the records of Sublessee for 1997 and determined that no additional utility tax is payable for periods prior to January 1, 1998.Accordingly, the prior proposed assessment of $277,125 plus interest thereon has been cancelled. New York City and New York State repealed the utility tax, as it applies to Company, effective January 1, 1998.

Liquidity and Capital Resources

		There has been no significant change in Registrant's liquidity for the three month period ended March 31, 2001, as compared with the three month period ended March 31, 2000.

		Assuming that the Building continues to generate an annual net profit in future years comparable to that in the current year, Registrant anticipates that the value of the Building and the Property will exceed the indicated balance sheet valueat March 31, 2000.

		Registrant anticipates that funds for working capital will be generated by operations of the Building by Sublessee, which entity in turn is required to make payments of Basic Rent and Overage Rent under the Sublease and, to the extentnecessary, from additional capital investment by the partners in Sublessee and/or external financing.  Registrant foresees no need to make material commitments for capital expenditures while the Sublease is in effect.

Inflation

		Registrant believes that there has been no material change in the impact of inflation on its operations since the filing of its report on Form 10-K for the year ended December 31, 2000, which report and all exhibits thereto are incorporatedherein by reference and made a part hereof.

PART II.  OTHER INFORMATION

Item 1.	Legal Proceedings.
**		The Property of Registrant is the subject of the following pending litigation: 
****
		Studley v. Empire State Building Associates: On October 21, 1991, in an action entitled Studley v. Empire State Building Associates et al., the holder of a $20,000 original participation in Registrant brought suit in New York SupremeCourt, New York County against the Agents for Registrant (Peter L. Malkin, Donald A. Bettex and Alvin Silverman), in their individual capacities and Wien, Malkin & Bettex (currently "Wien & Malkin LLP") Supervisor to Registrant.  The suit claimedthat the defendants had engaged in breaches of fiduciary duty and acts of self-dealing in relation to the Agents' solicitation of consents and authorizations from the participants in Registrant in September 1991 and in relation to other unrelated acts ofthe Agents and the sublessee. By order dated July 14, 1997, and entered July 29, 1997, the Supreme Court granted defendants' motion for summary judgment and dismissal of the action.  The Plaintiff filed an appeal with respect to the foregoing order. Bydecision and order entered April 2, 1998, the Appellate Division of the Supreme Court unanimously affirmed the order dismissing the action.  The plaintiff was denied permission to appeal the Appellate Division's ruling to the New York Court of Appeals. InOctober 1997, the plaintiff has filed a further Complaint in New York Supreme Court alleging similar claims, purportedly as a class action.  Defendants' counsel filed a motion to dismiss the new complaint based upon the courts' prior rulings and on othergrounds.  The Court granted the motion to dismiss the new complaint in its entirety. By order dated October 17, 2000, the Appellate Division affirmed dismissal of the new complaint. By order dated January 23, 2001, the Appellate Division denied plaintiffpermission to appeal to the New York Court of Appeals. By order dated April 26, 2001, the New York Court of Appeals denied plaintiff permission to appeal, thereby finally concluding the action.

	Proceedings involving Trump Empire State Partners:  In December 1994, Registrant received a notice of default from Trump.  The Trump default notice to Registrant claimed that Registrant was in violation of its master lease because of extensivework which Sublessee had undertaken as part of an improvement program that commenced before Trump reportedly acquired its interest in the property in 1994.  Trump's notice also complained that the Building was in need of repairs.  On February 14, 1995,Registrant and Sublessee filed an action ("Action No. 1") in New York State Supreme Court against Trump for a declaratory judgment that none of the matters set forth in the notice of default constitutes a violation of the master lease or sublease and thatthe notice of default is entirely without merit.  Registrant's and Sublessee's suit also seeks an injunction to prevent Trump from implementing the notice of default.  On March 24, 1995, the Court granted Registrant a preliminary injunction against Trump. In 1996 the Court granted two additional preliminary injunctions against Trump with respect to two additional default notices.  The preliminary injunctions prohibit Trump from acting on its notices of default to Registrant at any time, pending theprosecution of claims by Registrant and Sublessee for a final declaratory judgment and an injunction and other relief against the Trump defendants.  The Appellate Court has upheld and affirmed the granting of such preliminary injunctions against the Trumpdefendants.  

		On February 15, 1995, Trump filed an action ("Action No. 2") against Registrant, Sublessee, Supervisor, Harry B. Helmsley, a partner in Sublessee, Helmsley-Spear, Inc. (the management company of the Empire State Building), and the Agents forRegistrant in New York State Supreme Court, alleging that the notice of default is valid and seeking damages and related relief based thereon.  On October 24, 1996 the Court dismissed all of Trump's claims in their entirety against all defendants inAction No. 2.  Trump appealed this Order.  The Appellate Court has unanimously affirmed the dismissal of Trump's claims.  

		In May, 1995, Registrant and Sublessee filed a separate legal action ("Action No. 3") against Trump and various affiliated persons for breach of the master lease and sublease and disparagement of the property in violation of Registrant' andSublessee's leasehold rights.  The action was amended to include additional claims by Registrant and Sublessee (the "Ownership Claim") seeking a declaratory judgment that they may act as an owner of the Property for purposes of making applications andrelated activities pursuant to the New York City Building Code.  By decision and order dated October 24, 1996, the Court sustained Registrant's and Sublessee's claims concerning the parties who may act as owner of the Property under the Building Code, butdismissed Registrant's and Sublessee's claims against Trump and co-defendants for money damages.  Registrant and Sublessee appealed that portion of the Court's order dismissing their claims for money damages.  The Appellate Court has affirmed that part ofthe Court's order dismissing the claims for money damages. 

		By orders dated March 10 and December 16, 1999, the New York Supreme Court granted partial and then final summary judgement in Action Nos. 1 and 3 in favor of Registrant and the Sublessee and against the Trump defendants, rejecting all of theclaims of default asserted by Trump and declaring that Registrant and the Sublessee were entitled to act as owner for Buildings Department purposes.

On June 6, 2000, the Appellate Division affirmed the lower

court's summary judgement orders.

		New York Skyline Inc.:  Registrant is a defendant in an action instituted in the Supreme Court of the State of New York, County of New York, entitled New York Skyline Inc. v. Empire State Building Company, Empire State Building Associates,Nell H. Kessner, Helmsley-Spear, Inc. and Stephen A. Tole.  This lawsuit, which was brought by a tenant in the Building and was filed on December 23, 1997, seeks at least $205,000,000 in damages.  In its complaint, plaintiff-tenant asserts thirteen causesof action (twelve of which are against Sublessee) in connection with its leases and license agreements of space in the Building and alleges that it is entitled to, among other things, specific performance as to its alleged rights under its leases andlicensing agreements with Sublessee, a declaratory judgment as to the rights of the parties under the leases and licensing agreements, any monies allegedly due plaintiff under those agreements, as well as injunctive relief and additional money damages.While the complaint includes Registrant as a named defendant, it does not allege or identify any agreement between plaintiff and Registrant or any other basis of liability on Registrant's part to plaintiff.  On or about February 5, 1998, plaintiff servedan amended complaint which, among other things, added Kessner & Cyruli, f/k/a Nell H. Kessner & Associates, former landlord-tenant counsel for the Building, and Eileen Aluska, a former Helmsley-Spear, Inc. employee, as party defendants.  Theamended complaint asserts eleven causes of action, similar to those asserted in the original complaint.  On March 16, 1998, Registrant filed an answer to the amended complaint denying all allegations of liability.  On December 30, 1999 the action wassettled and discontinued without any payment or other contribution by Registrant to the settlement.

		Wien & Malkin LLP, et. al. v. Helmsley-Spear, Inc., et. al.  On June 19, 1997 Wien & Malkin LLP and Peter L. Malkin filed an action in the Supreme Court of the State of New York, against Helmsley-Spear,Inc. and Leona Helmsley concerning various partnerships which own, lease or operate buildings managed by Helmsley-Spear, Inc., including Registrant's property.  In their complaint, plaintiffs sought the removal of Helmsley-Spear, Inc. as managing andleasing agent for all of the buildings.  Plaintiffs also sought an order precluding Leona Helmsley from exercising any partner management powers in the partnerships.  In August, 1997, the Supreme Court directed that the foregoing claims proceed toarbitration.  As a result, Mr. Malkin and Wien & Malkin LLP filed an arbitration complaint against Helmsley-Spear, Inc. and Mrs. Helmsley before the American Arbitration Association.  Helmsley-Spear, Inc. and Mrs. Helmsley served answers denyingliability and asserting various affirmative defenses and counterclaims; and Mr. Malkin and Wien & Malkin LLP filed a reply denying the counterclaims.  By agreement dated December 16, 1997, Mr. Malkin and Wien & Malkin LLP (each for their ownaccount and not in any representative capacity) reached a settlement with Mrs. Helmsley of the claims and counterclaims in the arbitration and litigation between them.  Mr. Malkin and Wien & Malkin LLP then continued their prosecution of claims in thearbitration for relief against Helmsley-Spear, Inc., including its termination as the leasing and managing agent for various entities and properties, including the Registrant's Lessee. The arbitration hearings were concluded in June 2000, and thearbitrators issued their decision on March 30, 2001, ordering that the termination of Helmsley-Spear, Inc. would require a new vote by the partners in the Lessee, setting forth procedures for such a vote, and denying the other claims of all parties.Following the decision, Helmsley-Spear, Inc. applied to the court for confirmation of the decision, and Mr. Malkin and Wien & Malkin LLP applied to the court for an order setting aside that part of the decision regarding the procedure for partnershipvoting to terminate Helmsley-Spear, Inc. and various other parts of the decision on legal grounds. The parties' applications to the court are pending.
Item 5.	Other Information

		Sublessee is to maintain the Building as a high-class office building as required by the terms of the Sublease.  

		In 1990, the Sublessee commenced its latest improvement program which is estimated to be completed at a total cost of approximately $68,000,000.  Under this program, approximately 6,400 windows are being replaced and this portion of theprogram is completed.  In addition, the elevators have been upgraded through installation of a computerized control system and the replacement of all electrical and mechanical equipment.  The elevator modernization program has increased elevator speedfrom 800 to 950 feet per minute to 1200 feet per minute.  Also included is waterproofing the Building's exterior, resetting and repairing the limestone facade, upgrading the Building's security system, upgrading and replacing the Building's fire safetysystem and making substantial further improvement to the air-conditioning, domestic pump and water systems, waterproofing the mooring mast and installing a new observation deck ticket office. 

		The Sublessee anticipates that the costs of improvements to be incurred will reduce Overage Rent during the year 2001 but should have no effect on the payment of Basic Rent. 

		Under Sublessee's management, the Building during this decade has won six awards from the Building Owners and Management Association ("BOMA") (BOMA/NY Award 1989; BOMA Middle Atlantic Region Award 1991/92 & 2000/01 and the BOMAInternational Award for excellence 1992/93).  The New York Landmarks Conservancy awarded a Merit Citation to the Building.  In 1994, Metaloptics recognized the Building for excellence in lighting efficiency.  In December 1994, Energy User News, a nationalpublication, awarded a Certificate of Merit in the lighting category for excellence and innovation in energy efficiency and management of the Building.  

Item 6.	Exhibits and Reports on Form 8-K

		(a)  See exhibit index.

		(b)  Registrant did not file any report on Form 8-K for the period for which this report is being filed.  

 

SIGNATURES

		Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  

		The individual signing this report on behalf of Registrant is Attorney-in-Fact for Registrant and each of the Partners in Registrant, pursuant to Powers of Attorney, dated August 6, 1996 and May 14, 1999 (collectively, the "Power").  

 

 

EMPIRE STATE BUILDING ASSOCIATES

(Registrant)

 

 

By:  /s/ Richard A. Shapiro

	Richard A. Shapiro, Attorney-in-Fact*

 

Date: May 21, 2001

 

		Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned as Attorney-in-Fact for each of the Partners in Registrant, pursuant to the Power, on behalf of Registrant on the dateindicated.  

 

 

By:  /s/ Richard A. Shapiro

	Richard A. Shapiro, Attorney-in-Fact*

 

 

 

Date: May 21, 2001

 

 

 

 

 

 

__________________________

*	Mr. Shapiro supervises accounting functions for Registrant.

 

EXHIBIT INDEX

 

Number				Document					Page*

 

3(a)   	Registrant's Partnership Agreement dated July 11, 1961, filed as Exhibit No. 1 to Registrant's Registration Statement on Form S-1 as amended (the "Registration Statement") by letter dated August 8, 1962 and assigned File No. 2-18741, isincorporated by reference as an exhibit hereto.

3(b)		Amended Business Certificate of  

		Registrant filed with the Clerk of New  

		York County on August 19, 1996 reflecting 

		a change in the Partners of Registrant 

		which was filed as Exhibit 3(b) to 

		Registrant's Annual Report on 10-K for the 

		fiscal year ended December 31, 1996 and is 

		incorporated by reference as an exhibit 

		hereto.  

4   		Registrant's form of Participating 			Agreement, filed as Exhibit No. 6 to 		the Registration Statement by letter 		dated August 8, 1962 and assigned File 		No. 2-18741, is incorporated by 				reference as an exhibit hereto.

24  		Powers of Attorney dated August 6, 1996 and May 14, 1999 between the Partners of Registrant and Stanley Katzman and Richard A. Shapiro which was filed as Exhibit 24 to Registrant's 10-Q for the quarter ended June 30, 1999 and isincorporated herein by reference.  

 

 

 

 

 

 

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*	Page references are based on sequential numbering system.**