UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

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

                   For the fiscal year ended December 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: 0-5537

                        INVESTMENT PROPERTIES ASSOCIATES
             ------------------------------------------------------
             (Exact Name of Registrant as specified in its charter)

A New York Limited Partnership                           13-2647723
------------------------------              ------------------------------------
(State of organization)                     (I.R.S. Employer Identification No.)

                  60 East 42nd Street, New York, New York 10165
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (212) 687-6400

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

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

                 Participations of Limited Partnership Interests
                 -----------------------------------------------
                                (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 (ss.229.405 of this chapter) 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. [X]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of December 31, 2001 is not applicable.

The number of Participations of Limited Partnership Interests outstanding of the
Registrant as of December 31, 2001 was 820,000.

              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

      Indicate by check mark whether the  Registrant has filed all documents and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.                             Yes [ ]          No [ ]

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.


<PAGE>

                        Investment Properties Associates

                                    Form 10-K

                   For The Fiscal Year Ended December 31, 2001

                                      INDEX

                                                                            Page
                                                                            ----

Part I      ............................................................... 1
Item 1.     Business....................................................... 1
Item 2.     Properties..................................................... 4
Item 3.     Legal Proceedings.............................................. 4
Item 4.     Submission of Matters to a Vote of Security Holders............ 4

Part II     ............................................................... 5
Item 5.     Market for the Registrant's Participation Interests and
              Related Security Holder Matters.............................. 5
Item 6.     Selected Financial Data........................................ 8
Item 7.     Management's Discussion and Analysis of Financial
              Condition and Results of Operations.......................... 8
Item 7A.    Quantitative and Qualitative Disclosures about Market Risk..... 13
Item 8.     Financial Statements and Supplementary Data.................... 13
Item 9.     Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure.......................... 13

Part III    ............................................................... 14
Item 10.    General Partners of the Registrant............................. 14
Item 11.    Executive Compensation......................................... 15
Item 12.    Security Ownership of Certain Beneficial Owners
              and Management............................................... 16
Item 13.    Certain Relationships and Related Transactions................. 18

Part IV     ............................................................... 19
Item 14.    Exhibits, Financial Statement Schedules and
              Reports on Form 8-K.......................................... 19
            Signatures..................................................... 21


                                      -i-
<PAGE>

                                     PART I

      This report contains certain  forward-looking  statements.  Actual results
could differ materially from those projected in the  forward-looking  statements
as a result  of any  number  of  factors  discussed  herein  including,  without
limitation,   under  the  captions  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations" and "Business." When used in this
report, the words "anticipate,"  "estimate," "intend," "believe," "project," and
similar expressions are intended to identify  forward-looking  statements.  Such
statements are subject to certain risks,  uncertainties and assumptions.  Should
one or more of these risks or uncertainties  materialize,  or should  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
anticipated, expected, estimated, intended, believed or projected.

Item 1. Business.
------- ---------

      General.

      Investment  Properties  Associates  ("IPA" or  "Registrant")  is a limited
partnership  formed in accordance with the New York Revised Limited  Partnership
Act, and pursuant to a Limited Partnership Agreement,  dated as of May 15, 1969,
and as amended on October 2, 1969,  October 31,  1969,  December 3, 1969 and May
30, 1997 (the  "Partnership  Agreement").  The Registrant's sole business is the
ownership and operation of commercial real estate.

      Current Property.

      On October 22,  2001,  Registrant  signed a  contract,  subject to certain
closing  conditions,  to sell its only remaining  property,  a vacant commercial
office building located at 570 Broad Street,  Newark, New Jersey, for a purchase
price of  $11,500,000.  In  connection  with the contract,  Registrant  received
non-refundable  deposits from the buyer in the amount of $1,500,000.  In January
2002,  due to the  buyer's  inability  to satisfy the  closing  conditions,  the
contract expired and Registrant resumed marketing activities with respect to the
Property.  Registrant retained the non-refundable deposits from the buyer in the
amount of $1,500,000.

      Sales of Property.

      On  July  11,  2001,  Registrant  sold  its  interest  in two  parcels  of
undeveloped land in Houston,  Texas for a sales price of $100,000. In connection
with the sale,  Registrant  recognized a gain of  approximately  $95,000,  after
payment of closing costs and other commitments of approximately $5,000.

      Dividends.

      On June 25, 2001,  Registrant  declared a special  dividend of  $5,200,000
from its available cash to its General Partners and Special Limited Partners and
holders of record of the  Participations of Limited  Partnership  Interests (the
"PPIs") as of the close of  business  on July 6, 2001.  In  accordance  with the
Partnership  Agreement,  a  distribution  of $2,600,000  was paid to the General
Partners and Special Limited  Partners and $2,600,000 was paid to the holders of
PPIs.

      On December 21, 2001,  Registrant  declared a special dividend of $410,000
to its General Partners and Special Limited Partners and holders of record


                                       1
<PAGE>

of the PPI's as of the close of business on December 31, 2001 from its available
cash. In accordance with the Registrant's  Partnership Agreement,  $205,000 will
be distributed to the General Partners and Special Limited Partners and $205,000
will be distributed to the holders of its PPIs. In addition,  as of December 31,
2001, Registrant has accrued a distribution in the amount of $280,965 in respect
of 2001 net operating  revenues,  of which  $140,482 will be paid to its General
Partners and Special  Limited  Partners and $140,483 will be paid to the holders
of record of the PPIs. These dividends will be paid on March 31, 2002.

      Background.

      Harry B. Helmsley,  a General  Partner of  Registrant,  died on January 4,
1997. Upon his death, Mr. Helmsley's general partnership  interest in Registrant
was converted to a special limited partner interest,  which was inherited by his
spouse,  Leona M. Helmsley,  from Mr.  Helmsley's estate as of December 31, 1997
(the  "Converted  Special L.P.  Interest").  Under the terms of the  Partnership
Agreement as in effect on the date of Mr. Helmsley's death, the General Partners
were required to create a new limited  partnership  with the same  attributes as
Registrant and to convey all of the assets and liabilities of Registrant to such
entity.  Such action would have involved  substantial  transfer  tax,  insurance
premium  costs and other  related  expenses  and no benefit to the  partners  of
Registrant or to the holders of PPIs in the limited partnership  interest of the
limited partner of Registrant.  Accordingly, Registrant obtained the approval of
the  holders  of a  majority  of the PPIs to,  among  other  things,  amend  the
Agreement  to permit the  remaining  General  Partners to elect to continue  the
business  of  Registrant  in the event of the death of a General  Partner and to
make such election with respect to the death of Mr.  Helmsley.  Such  amendments
were  effective  on May 30,  1997 (the  "Amendments").  As  contemplated  by the
amended Partnership  Agreement,  effective July 3, 1997, H Associates L.L.C. ("H
Associates"),  an entity owned by Leona M.  Helmsley,  was admitted as a General
Partner of  Registrant.  H  Associates'  economic  interest  in  Registrant  was
acquired  from  Helmsley-Noyes   Company,   Inc.,  also  a  General  Partner  of
Registrant.

      On June  10,  1998,  ScogBell  Acquisition,  L.L.C.,  a  Delaware  limited
liability  company  ("ScogBell"),  purchased  from  Leona  Helmsley  all  of her
interests in  Registrant.  The  interests  from this sale that were  acquired by
ScogBell from Leona Helmsley included,  among other things,  general partnership
interests  (0.05%),  special  limited  partnership  interests  (33.29%)  and  an
aggregate of 282,377 PPIs. Also on June 10, 1998,  ScogBell acquired 28,550 PPIs
in the over-the-counter market. As a result, ScogBell


                                       2
<PAGE>

became a beneficial  owner of 310,927 PPIs in Registrant  which represents 37.9%
of the outstanding PPIs.

      (a) Financial  Information  About Segments.
          ---------------------------------------  Registrant's sole business is
the  ownership  and operation of  commercial  real estate.  All of  Registrant's
revenues,  operating  profit or loss and assets  relate  solely to such industry
segment.

      (b) Narrative  Description of Business.
          -----------------------------------  Registrant's only business is the
ownership and operation of commercial real properties.  During 2000,  Registrant
disposed of its remaining income producing properties and, at December 31, 2001,
Registrant's  remaining real property  consisted of one vacant commercial office
building,  which was held under  contract for sale,  subject to certain  closing
conditions. In January 2002, due to the buyer's inability to satisfy the closing
conditions,  the contract expired and Registrant  resumed  marketing  activities
with respect to the  Property.  The primary cost  associated  with  Registrant's
remaining  Property is real estate  taxes.  All of the real  property  owned and
operated by Registrant is set forth in Item 2.

      Registrant's  needs for working  capital are  satisfied  by existing  cash
balances which were generated primarily from previous sales of properties.

      Registrant  employs one person who handles  maintenance  of the  remaining
Property.  All of the  Registrant's  other  operating  functions,  which consist
primarily of property management and administrative  services,  are performed by
Helmsley-Spear,  Inc. ("HSI") or affiliates of HSI, which entities may be deemed
to be affiliates of Registrant.  Management fees and leasing commissions charged
by HSI aggregated  approximately  $0, $393,000 and $1,288,000  during the fiscal
years ended  December 31,  2001,  2000 and 1999,  respectively.  HSI also earned
$3,000,  $6,754,000  and $3,962,000 in brokerage  commissions in 2001,  2000 and
1999,  respectively,  in connection  with the sale of two parcels of undeveloped
land in Houston,  Texas in 2001,  the 50%  undivided  interest in the  Marbridge
Building and the 245 Fifth Avenue and 261 Fifth  Avenue  properties  in 2000 and
the Mojud and 1440 Broadway  properties in 1999.  Registrant  believes that such
services are supplied at prices that  approximate  those that would be available
from non-affiliates. See Item 13.


                                       3
<PAGE>

Item 2. Properties.
------- -----------

      General. At December 31, 2001, Registrant's Property included fee title to
one vacant  commercial  office  building.  The  Property is located at 570 Broad
Street, Newark, New Jersey.

      The  table  below  sets  forth a  description  of the  Property  owned  by
Registrant on December 31, 2001,  its  location,  type of ownership and rentable
area in square feet.

                                                                  Total Rentable
Property                 Description               Ownership      Area (Sq. Ft.)
--------                 -----------               ---------      --------------

570 Broad Street

Newark, New Jersey(1)    14-story office bldg.     Fee            190,000

(1) The  Property has been vacant  since 1996,  and was held under  contract for
sale, subject to certain closing conditions. In January 2002, due to the buyer's
inability to satisfy the closing conditions, the contract expired and Registrant
resumed marketing activities with respect to the Property.

Item 3. Legal Proceedings.
------- ------------------

      There are no material  pending legal  proceedings to which Registrant is a
party or of which any of Registrant's property is the subject.

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

      No  matters  were  submitted  to a vote of holders of PPIs at a meeting or
otherwise during the fourth quarter of 2001.


                                       4
<PAGE>

                                     PART II

Item 5. Market for the Registrant's Participation Interests and Related Security
------- ------------------------------------------------------------------------
        Holder Matters.
        ---------------

      Market Information.

      As discussed above,  Registrant is a limited  partnership.  PPIs represent
the beneficial  interest of the Registrant's sole Limited Partner.  On September
27, 2000,  PPI's ceased to be traded in the  over-the-counter  ("OTC") market on
the National  Association  of Securities  Dealers  Automated  Quotations  System
("NASDAQ") under the symbol "IVPA." After such date, the PPI's have continued to
trade in the non-OTC  market on the NASDAQ under the symbol  "IVPA."  During the
fiscal year of 2001, and at December 31, 2001,  there was no established  public
trading market for these securities and quotations are limited and sporadic.

      The following  quotations represent prices between dealers, do not include
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.  The range of high and low closing bid quotations for PPIs for the
two most recent fiscal years was as follows:

                            2001(1)                    2000(2)
                       -----------------         ------------------
                       High          Low         High          Low
                       ----         ----         ----          ----
      First Qtr.       2.50           1           150           50
      Second Qtr.      3.50         2.95          80           3.75
      Third Qtr.       3.50         0.10           9            6
      Fourth Qtr.        7          0.60           7            5

      (1)  Trading  volume  for  PPIs was low and  quotations  are  limited  and
      sporadic.

      (2)  Quotations  from January 1, 2000 through  September  26, 2000 are OTC
      NASDAQ market  quotations.  All quotations on and after September 27, 2000
      are non-OTC NASDAQ market quotations.  Trading volume for PPIs was low and
      quotations are limited and sporadic.

      Holders.

      As of December 31, 2001, there were 505 holders of record of PPIs.


                                       5
<PAGE>

      Dividends.

      Pursuant  to the  Partnership  Agreement,  Registrant  is required to make
certain cash  distributions to holders of PPIs. Net operating  revenues for each
calendar year are  distributable to the partners of Registrant  approximately as
follows:

      General Partners (as a group):                                       .55%
          Irving Schneider
          Minlyn, Inc.
          ScogBell AG, Inc. (formerly known as
          Helmsley-Noyes Company, Inc.)
          ScogBell

      Converted Special L.P. Interest:                                     .95%
          ScogBell

      Special Limited Partners (as a group):                             48.50%
          ScogBell
          Irving Schneider

      Limited Partner (nominee for holders of PPIs):                      50.0%

      The  Limited  Partner  is the  nominee  for the  holders  of PPIs  and all
distributions  to the Limited Partner are distributed  ratably to the holders of
820,000 Participations of Partnership Interests. If with respect to any calendar
year the Limited  Partner's  distributive  share  (computed on the same basis as
that used in preparing Registrant's Federal income tax return) of income (loss),
plus one-half of such partner's  distributive  share of long-term capital gains,
exceeds the net operating  revenue  allocated to the Limited Partner as referred
to in the preceding paragraph,  then Registrant must also distribute  additional
funds in an amount  equal to such excess to the holders of PPIs.  If  Registrant
does not have funds for such distribution (from cash on hand or borrowings), the
Partnership Agreement obligates the General Partners to lend or contribute funds
to Registrant for such purpose.

      In 2001,  Registrant  had "net operating  revenues" of $280,965,  of which
$140,483 in the aggregate (or $0.17132 per PPI) will be distributed on March 31,
2002 to the holders of PPI's and  $140,482  will be  distributed  to the Special
Limited  Partners and the General  Partners.  See  "Management's  Discussion and
Analysis of Financial Condition and Results of Operations."

      On July 18, 2001,  Registrant paid a special dividend of $5,200,000 to its
General  Partners and Special  Limited  Partners and holders of record as of the
close of business on July 6, 2001 of its PPIs from its available  cash, of which
$2,600,000  was paid to the General  Partners and Special  Limited  Partners and
$2,600,000 was paid to the holders of its PPIs.


                                       6
<PAGE>

      On December 21, 2001,  Registrant  declared a special dividend of $410,000
to its General  Partners and Special  Limited  Partners and holders of record of
its PPIs as of the close of business on December 31, 2001.  In  accordance  with
the  Registrant's  Partnership  Agreement,  $205,000 will be  distributed to the
General  Partners and Special Limited  Partners and $205,000 will be distributed
to the holders of its PPIs.  Such  distribution  will be paid on March 31, 2002,
together with the aforementioned 2001 net operating revenues.

      In 2000,  Registrant had "net operating revenues" of $3,908,231,  of which
$1,954,116 in the aggregate (or $2.38 per PPI) was distributed on March 31, 2001
to the holders of record of PPIs as of December  31,  2000 and an  aggregate  of
$1,954,116  was also  distributed  to the Special  Limited  Partners and General
Partners on that date.  See  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations."

      On January 18, 2000, Registrant declared a special dividend of $37,000,000
to its General  Partners and Special  Limited  Partners and holders of record of
its PPIs from its  available  cash in  connection  with the sale on such date of
Registrant's  50%  undivided  interest  in  the  Marbridge  Building,  of  which
$18,500,000  was paid to the General  Partners and Special  Limited  Partners in
January of 2000 and  $18,500,000 was paid to the holders of its PPIs in February
of 2000.

      On May 8, 2000,  Registrant declared a special dividend of $120,000,000 to
its General  Partners and Special Limited  Partners and holders of record of its
PPIs  from its  available  cash in  connection  with the sale of the 245 and 261
Fifth Avenue  properties,  of which $60,000,000 was paid to the General Partners
and  Special  Limited  Partners in May of 2000 and  $60,000,000  was paid to the
holders of its PPIs in June of 2000.

      "Net operating revenues" is defined in Registrant's  Partnership Agreement
as follows:  for any year, (i) net taxable income of the  Registrant,  plus (ii)
depreciation and amortization  expenses allowable for income tax purposes during
such  year  (but  only  to  the  extent  of  mortgage  repayments),  (iii)  plus
amortization  of Bond issuance  costs and Bond  discount  (which is not relevant
after 1994),  (iv) plus  amortization  of financing  costs,  (v) less  principal
repayments on mortgages.  In recent years,  cash  distributions  to Registrant's
partners have generally  exceeded the amount defined as net operating  revenues.
See Item 7 below.


                                       7
<PAGE>

Item 6. Selected Financial Data.
------- ------------------------

<TABLE>
<CAPTION>
                                    2001             2000               1999               1998              1997
                                    ----             ----               ----               ----              ----
<S>                             <C>              <C>                <C>                <C>                <C>
Income Statement Data
Gross revenues from real        $  143,887       $  5,969,098       $ 31,640,834       $ 43,454,081       $46,463,473
estate
Net Income transferred to       $  376,061       $153,829,678       $150,779,832       $112,747,733       $ 8,726,836
Partner's capital accounts
Net operating revenues, as      $  280,965       $  3,908,231       $ 12,606,987       $  9,803,570       $ 9,174,787
defined
Net income per PPI:             $   0.1713       $    65.3015       $    87.8823       $    60.4848       $    5.5280
Balance Sheet Data
Total assets                    $5,631,958       $ 12,959,799       $102,611,031       $ 49,762,234       $53,585,976
Mortgages payable               $       --       $         --       $  4,000,000       $ 23,847,488       $36,847,488
Affiliate Loans                 $       --       $         --       $         --       $         --       $18,000,000
</TABLE>

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

      Liquidity and Capital Resources

      Registrant  disposed of two unimproved  parcels of land in Houston,  Texas
during 2001. At December 31, 2001,  Registrant's remaining Property consisted of
one vacant commercial office building located in Newark,  New Jersey,  which was
under contract for sale,  subject to certain closing  conditions.  In connection
with this contract,  Registrant  received  non-refundable  deposits  aggregating
$1,500,000 from the prospective  buyer. In January 2002, due to the inability of
the buyer to satisfy the closing conditions, the contract expired and Registrant
resumed marketing activities with respect to the Property.  Registrant will seek
to consummate a sale of this property  during 2002,  after which the  Registrant
will initiate  steps to wind up its affairs,  but there can be no assurance that
such sale will be consummated.

      On July 11, 2001,  Registrant sold its undeveloped land in Houston,  Texas
for  $100,000.  The sale  proceeds  were  used to pay  closing  costs  and other
commitments of approximately  $5,000.  In connection with this sale,  Registrant
recognized a gain of approximately $95,000.

      On July 18, 2001,  Registrant paid a special dividend of $5,200,000 to its
General  Partners and Special  Limited  Partners and holders of record as of the
close of


                                       8
<PAGE>

business  on  July 6,  2001 of its  PPIs  from  its  available  cash,  of  which
$2,600,000  was paid to the General  Partners and Special  Limited  Partners and
$2,600,000 was paid to the holders of its PPIs.

      On December 21, 2001,  Registrant  declared a special dividend of $410,000
to its General  Partners and Special  Limited  Partners and holders of record of
its PPIs as of the close of business on December 31, 2001.  In  accordance  with
the  Registrant's  Partnership  Agreement,  $205,000 will be  distributed to the
General  Partners and Special Limited  Partners and $205,000 will be distributed
to the holders of its PPIs.

      In addition,  Registrant is required to make certain cash distributions to
its partners  for each year (see Item 5).  Accordingly,  Registrant  has accrued
distributions  in the  amount  of  $280,965  in  respect  of 2001 net  operating
revenues, of which $140,482 will be paid to the Special Limited Partners and the
General  Partners,  and  $140,483  will be paid to the  holders of record of its
PPIs.

      The aforementioned  special dividend and 2001 net operating  revenues,  in
the combined  aggregate  amount of $690,965,  will be  distributed  on March 31,
2002.

      Registrant  anticipates  satisfying its working capital  requirements  for
fiscal year 2002  generally  through  existing cash  reserves.  Registrant  also
anticipates generating additional liquidity through the consummation of the sale
of its remaining  property;  however,  there can be no assurances that such sale
will be consummated.

      Net cash provided by operating  activities was approximately  $2.3 million
in 2001, as compared to $4.4 million in 2000. Such decrease was primarily due to
decreased  property operating income as a result of the sale of Registrant's New
York  properties  in  2000.  Net  cash  provided  by  investing  activities  was
approximately  $95,000 in 2001,  as  compared  to $164.4  million in 2000.  Such
decrease was primarily  attributable to a net decrease in the proceeds  received
from the  sales of  properties of $164.9 million.  Net  cash  used in  financing
activities was  approximately  $9.1 million in 2001, as compared to $239 million
in  2000.  Such  decrease  was  primarily  due  to  decreased  distributions  of
approximately  $226 million and repayment in 2000 of  Registrant's  50% share of
the  mortgage  on the  Marbridge  Building  in  connection  with the sale of its
undivided interest in that property.


                                       9
<PAGE>

      Results of Operations

2001 Compared to 2000
---------------------

      Gross  Revenues  from  real  estate  for  2001   decreased   approximately
$5,825,000  (approximately 98%) as compared to 2000, primarily due to the impact
of the sales of the 50% undivided  interest in the Marbridge  Building  (sold in
January of 2000), and the 245 Fifth Avenue and 261 Fifth Avenue properties (sold
in May of 2000),  representing  all of Registrant's  remaining  income producing
properties.  Total expenses decreased by approximately $2,311,000 (approximately
63%) as a result of the  aforementioned  property  sales.  Net  income  for 2001
decreased   approximately   $153,454,000   primarily   due  to  a  decrease   of
approximately  $150,405,000  in the  gain on sale of  real  estate  offset  by a
decline in property operating income of approximately  $3,083,000 as a result of
the aforementioned property sales.

      During 2001, gross revenue from real estate was generated primarily by the
final settlement of certain closing  adjustments and prorations  associated with
the sales of properties  which occurred during 2000.  During 2000,  Registrant's
rental income was generated by the  operations of its 50% undivided  interest in
the Marbridge Building and the 245 and 261 Fifth Avenue  properties,  which were
sold during 2000.

      Interest  and  other  income  in  2001  increased  approximately  $432,000
(approximately  37%)  primarily due to the receipt in 2001 of $1,293,000 in real
estate tax  refunds  relating to the  Marbridge  Building  and 261 Fifth  Avenue
Building (which were sold in 2000), and the 6 North Michigan  Avenue,  360 North
Michigan Avenue and One LaSalle properties (which were sold in 1998),  offset by
decreased interest income of approximately  $861,000 due to reduced  investments
in commercial  paper as a result of distributions in 2000 of the net proceeds of
sales of properties.

      For 2001,  Registrant incurred no interest expense due to the repayment in
2000 of Registrant's 50% share of the $8,000,000  mortgage loan on the Marbridge
Building in connection with the sale of Registrant's  50% undivided  interest in
such property.

      Registrant's  real  estate  tax  expense in 2001  decreased  approximately
$290,000  (approximately  53%), due to the sale of its 50% undivided interest in
the  Marbridge  Building  in January  2000 and the sale of the 261 and 245 Fifth
Avenue properties in May 2000.

      Management  fees  decreased   approximately   $110,000   (100%),   because
Registrant  had no income  producing  properties  during 2001,  and as a result,
incurred no management fees. In 2000, management fees were incurred with respect
to  Registrant's  50% undivided  interest in the Marbridge  Building,  245 Fifth
Avenue and 261 Fifth Avenue properties, all of which were sold in 2000.


                                       10
<PAGE>

      Payroll   and   related   expenses   decreased    approximately   $303,000
(approximately 70%), due to the sale of the aforementioned properties in 2000.

      Repairs and maintenance expenses decreased  approximately $239,000 (100%),
due to the sale of the aforementioned properties in 2000.

      Other property expenses decreased  approximately  $692,000  (approximately
84%), due to the sale of the aforementioned properties in 2000.

      Administrative  expenses increased  approximately $196,000  (approximately
31%),  primarily due to the payment in 2001 of a $250,000 settlement relating to
an escalation dispute with a former tenant.

      Depreciation and amortization  expenses decreased  approximately  $830,000
(100%), due to the sales of the aforementioned  properties in 2000. Registrant's
remaining property, a vacant office building, is classified as property held for
sale and depreciation is not recorded.

2000 Compared to 1999
---------------------

      Gross Revenues from rentals for 2000 decreased  approximately  $25,672,000
(approximately  81%) as  compared  to 1999,  primarily  due to the impact of the
sales of the 50% undivided  interest in the Marbridge  Building (sold in January
of 2000),  the 245 Fifth Avenue and 261 Fifth Avenue  properties (sold in May of
2000),  and the sale of the 1440 Broadway  property  (sold in December of 1999).
Total expenses decreased by approximately  $14,160,000  (approximately 79%) as a
result of the  aforementioned  property  sales.  Net income  for 2000  increased
approximately   $3,050,000   primarily  due  to  an  increase  of  approximately
$14,065,000  in the gain on sale of real estate  offset by a decline in property
operating income of approximately  $11,196,000 as a result of the aforementioned
property sales.

      During 2000, Registrant's rental income was generated by the operations of
its 50% undivided  interest in the Marbridge  Building and the 245 and 261 Fifth
Avenue properties, which were sold during 2000.

      For 2000, Registrant's interest expense decreased approximately $1,633,000
(approximately  97%),  due to the  repayment  of  Registrant's  50% share of the
$8,000,000  mortgage  loan on the  Marbridge  Building  on January  18,  2000 in
connection  with  the  sale  of  Registrant's  50%  undivided  interest  in such
property.

      Registrant's  real  estate  tax  expense in 2000  decreased  approximately
$4,086,000 (approximately 88%), due to the sale of its 50% undivided interest in
the Marbridge  Building in January of 2000 and the sale of the 261 and 245 Fifth
Avenue properties in May of 2000.  Registrant,  under certain commercial leases,
was able to pass


                                       11
<PAGE>

a  portion  of the  increases  in real  estate  taxes,  operating  expenses  and
increases in the consumer  price index to the tenants based on lease  escalation
clauses.

      Management fees decreased  approximately $407,000 (approximately 79%), due
to the sale of the aforementioned properties.

      Payroll   and  related   expenses   decreased   approximately   $1,467,000
(approximately 77%), due to the sale of the aforementioned properties.

      Repairs and maintenance expenses decreased approximately $1,544,000 (87%),
due to the sale of the aforementioned properties.

      Other property expenses decreased approximately $3,089,000  (approximately
79%), due to the sale of the aforementioned properties.

      Administrative  expenses increased  approximately  $44,000  (approximately
7%), due to the increased  professional fees associated with the  administration
of the partnership activities.

      Depreciation and amortization expenses decreased approximately  $1,978,000
(approximately 70%), due to the aforementioned sales.

      Recent Accounting Pronouncements.

      In October 2001, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 144,  Accounting  for the  Impairment or
Disposal of Long-Lived  Assets (FAS 144), which addresses  financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No.  121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30,  Reporting the Results of Operations  for a disposal of a
segment of a business.  FAS 144 is effective  for fiscal years  beginning  after
December 15, 2001, with earlier application  encouraged.  The Registrant expects
to adopt FAS 144 as of January 1, 2002 and it does not expect that the  adoption
of the Statement will have a significant  impact on the  Registrant's  financial
position or results of operations.


                                       12
<PAGE>

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
-------- -----------------------------------------------------------

      At December 31, 2001,  Registrant had no interest bearing indebtedness and
accordingly  was not exposed to market risk with  respect to changes in interest
rates, and does not anticipate a need to seek additional borrowing.

Item 8. Financial Statements and Supplementary Data.
------- --------------------------------------------

      The  response to this Item 8 is  submitted  in a separate  section of this
report.

Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
--------  ----------------------------------------------------------------------
          Financial Disclosure.
          ---------------------

      None.


                                       13
<PAGE>

                                    PART III

Item 10. General Partners of the Registrant.
-------- -----------------------------------

      Registrant is a limited partnership formed in accordance with the New York
Revised  Limited  Partnership  Act.  It does not  have  directors  or  executive
officers.  The  information  set forth  below is  provided  with  respect to the
General  Partners of the Registrant,  who may be considered to occupy  positions
equivalent  to  directors or executive  officers.  There is no specific  term of
office for any General Partner of the Registrant. Each General Partner, with the
exception of ScogBell, has served in such capacity since December 4, 1969.

      The names, ages, and business experience during the past five years of the
General  Partners of the Registrant,  including their principal  occupations and
employment  during  that  period  and the name  and  principal  business  of any
corporation or other  organization in which such occupations and employment were
carried on, is as follows:

      Irving  Schneider - 82; Executive Vice President of  Helmsley-Spear,  Inc.
Mr.  Schneider  has been in the real estate  business for over 50 years and owns
and  operates,  individually  or  through  partnerships,  numerous  real  estate
investments.

      Minlyn,  Inc.  was  formed  in  1968.  All of its  stock  is  owned by Mr.
Schneider.  Mr.  Schneider is a director of Reliance  Group  Holdings,  Inc. and
Reliance Insurance Company.

      Registrant  has been  advised  that  ScogBell  was created in June 1998 to
acquire, hold, finance and sell interests in Registrant.  Control of ScogBell is
vested exclusively with ScogBell AG Manager, Inc. and ScogBell SB Manager, Inc.,
as managers.

      ScogBell AG, Inc.  (formerly known as Helmsley-Noyes  Company,  Inc.), was
incorporated  in 1926 and it is a real estate  management  firm in New York City
which was acquired by ScogBell on June 10, 1998.

      Harry B. Helmsley was a General  Partner of Registrant  until his death on
January 4, 1997.  He was succeeded by H Associates on July 3, 1997. H Associates
acquired a nominal general partner interest from  Helmsley-Noyes  Corporation in
connection  with  its  admission  as a  General  Partner.  On June 10,  1998,  H
Associates  ceased to be a General  Partner of  Registrant  and was  replaced by
ScogBell  as a  General  Partner  pursuant  to a sale of its  entire  beneficial
ownership position. See "Business."


                                       14
<PAGE>

Item 11. Executive Compensation.
-------- -----------------------

      Registrant is a limited partnership. It does not have officers,  executive
officers or directors.  The information set forth below is provided with respect
to the General Partners and the Special Limited Partners of the Registrant,  who
may  be  considered  to act in  capacities  similar  to  directors,  or  perform
policy-making  functions  similar to those of executive  officers or officers in
charge of a principal business unit, division or function.

      Paragraph  11A(3)  of  the  Partnership  Agreement  provides  for  certain
guaranteed  payments to be made to the  General  Partners  and  Special  Limited
Partners of Registrant  equal to 8-3/4% per annum of their  "Remaining  Original
Cash Contribution." The Remaining Original Cash Contribution is $1,500,000, less
the cumulative  amounts  distributed to the General Partners and Special Limited
Partners  from  time to time in  respect  of the net  proceeds  from the sale of
Registrant's  properties.  The Remaining Original Cash Contributions of December
31, 2001 was $1,160,000. For the fiscal year ended December 31, 2001, Registrant
paid or accrued,  pursuant to such paragraph 11A(3),  guaranteed payments to the
General Partners and Special Limited Partners in an aggregate amount of $101,500
as follows:  Irving Schneider - $33,732,  ScogBell - $67,576,  ScogBell AG, Inc.
(formerly known as Helmsley-Noyes Company, Inc.) - $91 and Minlyn, Inc. - $101.

      Under the terms of the Partnership  Agreement,  since January 1, 1973, the
General  Partners are entitled to receive an annual payment equal to 1/2% of the
gross revenue from real estate of the  Registrant.  During the fiscal year ended
December 31, 2001, the General Partners waived their right to such payment.  Mr.
Schneider  and ScogBell are entitled to receive  distributions  of net operating
revenues in each of their respective capacities as Special Limited Partners. See
"Item 5" above.

      The Registrant does not provide any  compensation to the General  Partners
or the other persons in the form of option or stock  appreciation  right grants,
long-term  incentive  plans,  or a  defined  benefit  or  actuarial  plans.  The
Registrant has no standard  arrangements for payment of fees to General Partners
(other than for their  interest as General  Partners,  as described  above),  or
employment contracts or change-of-control agreements.


                                       15
<PAGE>

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

      (a)  Registrant is a limited  partnership.  Except to the extent set forth
below, it does not have voting securities.  The right to control the business of
Registrant  is  vested  in the  General  Partners  of  Registrant  by  virtue of
provisions  of the  Partnership  Agreement  and the  New  York  Revised  Limited
Partnership Act.

      The Partnership  Agreement  provides for modification or amendments of the
Partnership  Agreement  upon  obtaining  the  consents or  affirmative  votes of
specified  percentages of the Special Limited Partners and the Limited Partners,
each  voting as a class.  The sole  limited  partner  votes as  directed  by the
holders of PPIs.

      To the extent that the Special Limited Partnership  Interests and PPIs are
considered  voting  securities,  the  following  information  is  provided as to
holders of 5% or more of each such class at December 31, 2001:

<TABLE>
<CAPTION>
                                Name and Address of                   Amount and Nature of     Percent
Title of Class                  Beneficial Owner                      Beneficial Ownership     of Class
--------------                  ----------------                      --------------------     --------
<S>                                                                                             <C>
Special Limited                 ScogBell                              Direct                    66.66%
Partnership Interest            660 Madison Ave.
                                New York, NY  10021

                                Irving Schneider                      Direct                    33.34%
                                880 Fifth Avenue
                                New York, NY

Converted Special Limited       ScogBell                              Direct                   100.00%
Partner Interest                660 Madison Ave.
                                New York, NY  10021

PPIs                            ScogBell                              310,927(1)                37.92%
                                660 Madison Ave.
                                New York, NY  10021

                                Long Island Jewish Medical Center     90,095                    10.99%
                                270-05 76th Avenue                    Direct
                                New Hyde Park, NY 11040
</TABLE>

----------

(1)   Includes PPIs purchased from the following: 258,877 PPIs owned directly by
      Leona M. Helmsley;  also 4,000 PPIs held by Helmsley-Noyes  Company,  Inc.
      (0.5%),  a company owned by Helmsley  Enterprises,  Inc., which in turn is
      wholly-owned  by the Harry B. Helmsley  Revocable  Trust,  under agreement
      dated December 13, 1989;  13,000 PPIs held by HBH Holdings  Corp.  (1.6%),
      6,500 PPIs held by Park Lane  Hotel,  Inc.  (0.8%) and 28,550  PPIs in the
      over-the-counter market.


                                       16
<PAGE>

      (b)  Registrant  is a limited  partnership  and, as such,  its affairs are
managed by its General  Partners.  The following table sets forth the amount and
nature  of the  beneficial  ownership  at  December  31,  2001 of each  class of
partnership interests by its General Partners individually and as a group:

<TABLE>
<CAPTION>
                              Name and Address of        Amount and Nature of
Title of Class                Beneficial Owner           Beneficial Ownership       Percent of Class
--------------                -------------------        --------------------       ----------------
<S>                                                            <C>                   <C>
General Partnership           Irving Schneider           Direct(1)                   90.91%
Interests                     880 Fifth Avenue
                              New York, NY

                              ScogBell                   Indirect                     9.09%
                              660 Madison Ave.
                              New York, NY  10021

                              As a group                                            100.00%

Special Limited               ScogBell                   Direct(2)                   66.66%
Partnership Interests         660 Madison Ave.
                              New York, NY  10021

                              Irving Schneider           Direct(2)                   33.34%
                              880 Fifth Avenue
                              New York, NY

                              As a group                                            100.00%

Converted Special Limited     ScogBell                   Direct(2)                  100.00%
Partner Interest              660 Madison Ave.
                              New York, NY  10021


Participation Interests       ScogBell                   310,927                     37.92%
                              660 Madison Ave.
                              New York, NY  10021        Direct(3)
</TABLE>

(1)   Mr. Irving Schneider owns  approximately 90% of such interest directly and
      10% indirectly through his ownership of Minlyn, Inc.; 60 East 42nd Street,
      New York, New York, which is also a General Partner of Registrant.

(2)   The Special Limited Partnership Interests have the rights set forth in the
      Partnership  Agreement and are not securities  issued by  Registrant.  The
      Converted  Special  L.P.  Interest  represents  the  economic  interest in
      Registrant  formerly  owned by  Harry B.  Helmsley  in his  capacity  as a
      General Partner. See "Business."

(3)   Includes PPIs purchased from the following: 258,877 PPIs owned directly by
      Leona M. Helmsley;  also 4,000 PPIs held by Helmsley-Noyes  Company,  Inc.
      (0.5%),  a company owned by Helmsley  Enterprises,  Inc., which in turn is
      wholly-owned  by the Harry B. Helmsley  Revocable  Trust,  under agreement
      dated December 13, 1989;  13,000 PPIs held by HBH Holdings  Corp.  (1.6%),
      6,500 PPIs held by Park Lane  Hotel,  Inc.  (0.8%) and 28,550  PPIs in the
      over-the-counter market.


                                       17
<PAGE>

Item 13. Certain Relationships and Related Transactions.
-------- -----------------------------------------------

      (a)   Transactions with Management and Others.

            None.

      (b)   Certain Business Relationships.

      As set forth in Item 11(a) above, during the year ended December 31, 2001,
Registrant  paid  certain  fees and certain  guaranteed  payments to each of its
corporate General Partners,  ScogBell AG, Inc. (formerly known as Helmsley-Noyes
Company, Inc.) and Minlyn, Inc., pursuant to the Partnership Agreement. See Item
10 hereof as to the ownership of said  corporations.  In 2001, HSI earned $3,000
in  brokerage  commissions  in  connection  with  the  sale  of two  parcels  of
undeveloped land in Houston,  Texas. The amount of the commissions paid for such
services  is  believed  by  Registrant  to be no  more  than  the  amount  which
Registrant  would  be  required  to pay to  unrelated  parties  performing  such
services.

      (c)   Indebtedness of Management.

            None.


                                       18
<PAGE>

                                     PART IV

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

      (a) (1) and (2) The  response to this portion of Item 14 is submitted as a
separate section of this report.

      (a) (3) Exhibits. Subject to Rule 12b-32 of the Securities Exchange Act of
1934 regarding  incorporation by reference,  listed below are the exhibits which
are  filed as part of this  report  and are  hereby  incorporated  by  reference
(according to the numbers assigned to them in Item 601 of Regulation S-K):

         (3)(i)   Registrant's Limited Partnership Agreement dated as of May 15,
                  1969,  as amended on October 2, 1969,  October 31,  1969,  and
                  December  3,  1969 is  hereby  incorporated  by  reference  to
                  Exhibits 3.1, 3.2, 3.3 and 3.4 to  Registration  Statement No.
                  2-33132 which was declared effective by the SEC on December 4,
                  1969.

            (ii)  Amendment to Agreement of Limited Partnership, dated as of May
                  30, 1997.

         (10.1)   Management    Agreement    dated   May   20,   1969    between
                  Helmsley-Spear,  Inc. and Registrant is hereby incorporated by
                  reference  to  Exhibit  12.1  to  Registration  Statement  No.
                  2-33132. The leasing commissions and management fees currently
                  being charged to the Registrant are consistent  with the rates
                  generally  charged  in the  areas  where  the  properties  are
                  located.

      (b) Reports on Form 8-K filed during the period covered by this Report:

            (i) On June 25, 2001,  Registrant filed a Current Report on Form 8-K
            relating to the special dividend of $5,200,000 paid on July 18, 2001
            to its General  Partners and Special Limited Partners and holders of
            its PPIs.

            (ii) On June 26,  2001,  Registrant  filed a Current  Report on Form
            8-K/A  relating to the special  dividend of $5,200,000  paid on July
            18, 2001 to its General  Partners and Special  Limited  Partners and
            holders of its PPIs.

            (iii) On October 24, 2001, Registrant filed a Current Report on Form
            8-K relating to the contract to sell 570 Broad Street,  Newark,  New
            Jersey for $11,500,000.


                                       19
<PAGE>

            (iv) On December 28, 2001, Registrant filed a Current Report on Form
            8-K  relating  to a special  dividend  of  $410,000  to its  General
            Partners  and Special  Limited  Partners and holders of record as of
            the close of business on December 31, 2001 of its PPIs.

      (c) Financial Statement Schedules. The response to this portion of Item 14
is submitted as a separate section of this report.


                                       20
<PAGE>

                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned;  thereunto duly authorized,  in the City of New York,
State of New York, on March 25, 2002.

                                        INVESTMENT PROPERTIES ASSOCIATES

                                        By: /s/ Irving Schneider
                                            -------------------------------
                                            Irving Schneider
                                            General Partner; Financial and
                                              Accounting Officer

      Pursuant to the  requirements  of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
Registrant and in the capacities indicated on March 25, 2002.

           Signature                             Title
           ---------                             -----

/s/ Irving Schneider                         General Partner,
------------------------------------         Principal Executive,
Irving Schneider                             Financial and
                                             Accounting Officer

MINLYN, INC.                                 General Partner

By: /s/ Irving Schneider
    --------------------------------
    Irving Schneider
    President

SCOGBELL AG, INC.                            General Partner

By: /s/ Craig Effron
    --------------------------------
    Craig Effron
    President

SCOGBELL ACQUISITION, L.L.C.                 General Partner

By: /s/ Craig Effron
    --------------------------------
    Craig Effron
    President
    ScogBell AG Manager, Inc.,
      Manager


                                       21
<PAGE>

                           Annual Report on Form 10-K

                      Item 14(A)(1) And (2) and Item 14(D)

          List of Financial Statements and Financial Statement Schedule

              Financial Statements and Financial Statement Schedule

                          Year Ended December 31, 2001

                        Investment Properties Associates
                        (A New York Limited Partnership)

                               New York, New York


<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

         Index Of Financial Statements And Financial Statement Schedule

                                                                            Page

Report of Independent Auditors...............................................S-1
Balance Sheets-December 31, 2001 and 2000....................................S-2
Statements of Income-Years Ended December 31, 2001,
  2000 and 1999......................................................S-3 and S-4
Statements of Changes in Partners' Capital (Deficiency)-
  Years Ended December 31, 2001, 2000 and 1999...............................S-5
Statements of Cash Flows-Years Ended December 31, 2001,
  2000 and 1999..............................................................S-6
Notes to Financial Statements........................................S-7 to S-18

The following financial statement schedule of Investment  Properties  Associates
is included in Item 14(d):

Schedule III-Real Estate and Accumulated Depreciation..............S-19 and S-20

All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related  instructions,  are inapplicable or have been otherwise  disclosed,  and
therefore have been omitted.


<PAGE>

                         Report of Independent Auditors

Investment Properties Associates

We have  audited  the  accompanying  balance  sheets  of  Investment  Properties
Associates  (a New York Limited  Partnership)  as of December 31, 2001 and 2000,
and the related statements of income,  changes in partners' capital (deficiency)
and cash flows for each of the three  years in the  period  ended  December  31,
2001. Our audits also included the financial  statement  schedule  listed in the
index at Item 14. These financial statements and schedule are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  Investment   Properties
Associates at December 31, 2001 and 2000,  and the results of its operations and
its cash flows for each of the three  years in the  period  ended  December  31,
2001, in conformity with accounting  principles generally accepted in the United
States.  Also, in our opinion,  the related financial statement  schedule,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth therein.

                                                           /s/ Ernst & Young LLP
New York, New York
January 23, 2002


                                      S-1
<PAGE>

                        Investment Properties Associates

                        (A New York Limited Partnership)

                                 Balance Sheets

                                                             December 31,
                                                         2001            2000
                                                     -----------     -----------
Assets
Real estate held for sale, at cost (Note 3)          $ 8,033,347     $ 8,033,347
   Less accumulated depreciation and
     amortization                                      5,880,040       5,880,040
                                                     -----------     -----------
                                                       2,153,307       2,153,307

Cash and cash equivalents                              2,788,292       9,514,349

Due from managing agent (Helmsley-
   Spear Inc.) (Note 5)                                  229,291         730,578

Receivables, principally for rentals                       3,553           8,215

Other assets,
   (Note 4)                                              457,515         553,350

                                                     -----------     -----------
Total assets                                         $ 5,631,958     $12,959,799
                                                     ===========     ===========

Liabilities and partners' capital
  (deficiency)
Accounts payable                                     $     7,903    $   113,368
Accrued real estate taxes                                     --         11,086
Distributions payable to General Partners,
   Special Limited Partners and Limited
   Partner (Note 8)                                      698,179      3,915,446
Guaranteed payments due to General
   Partners, Special Limited Partners and
   Limited Partner (Note 6)                              146,500        180,553

Due to managing agent (Helmsley-
   Spear, Inc.) (Note 5)                                  35,661         41,820
Sundry and accrued liabilities                           233,638        172,545
Deposits (Note 3)                                      1,500,000             --
                                                     -----------    -----------
Total liabilities                                      2,621,881      4,434,818
                                                     -----------    -----------

Commitments and contingencies (Note 12)

Partners' capital (deficiency)
(Notes 1, 6, 7 and 8):
     General Partners                                 (2,495,206)    (2,465,397)
     Special Limited Partners                          3,286,292      5,966,387
     Limited Partner (represented by
       the equivalent of 820,000
       Participation Interests)                        2,218,991      5,023,991
                                                     -----------    -----------
                                                       3,010,077      8,524,981
                                                     -----------    -----------
Total liabilities and partners'
   capital (deficiency)                              $ 5,631,958    $12,959,799
                                                     ===========    ===========

See accompanying notes.


                                      S-2
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                              Statements of Income

<TABLE>
<CAPTION>
                                                                           Years ended December 31,
                                                                     2001           2000           1999
                                                                ------------    ------------    ------------
<S>                                                             <C>             <C>             <C>
Revenues:
Gross revenues from real estate (Note 10)                       $    143,887    $  5,969,098    $ 31,640,834
Interest and other income                                          1,607,060       1,174,914         798,599
                                                                ------------    ------------    ------------
                                                                   1,750,947       7,144,012      32,439,433
                                                                ------------    ------------    ------------

Expenses:
  Real estate taxes                                                  258,100         547,845       4,633,769
  Interest                                                                --          43,584       1,676,492
  Management fees (Note 5)                                                --         109,737         517,005
  Payroll and related expenses                                       128,403         431,153       1,898,115
  Repairs and maintenance expenses                                        --         239,056       1,783,373
  Other property expenses                                            133,753         825,410       3,914,440
  Administrative expenses                                            833,226         636,900         592,736
  Depreciation and amortization of real estate                            --         598,174       1,974,245
  Amortization of leasing commissions                                     --         232,160         831,865
  Amortization of mortgage refinancing costs                              --              --           1,593
                                                                ------------    ------------    ------------
                                                                   1,353,482       3,664,019      17,823,633
                                                                ------------    ------------    ------------
Income before items shown below                                      397,465       3,479,993      14,615,800

Gain on sales of real estate (Note 3)                                 95,096     150,500,239     136,434,754
                                                                ------------    ------------    ------------
Income before guaranteed payments required under the
   Limited Partnership Agreement                                $    492,561    $153,980,232    $151,050,554
</TABLE>

See accompanying notes.


                                      S-3
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                        Statements of Income (continued)

<TABLE>
<CAPTION>
                                                              Years ended December 31,
                                                        2001            2000            1999
                                                     ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>
Guaranteed payments required under the
  Limited Partnership Agreement (Note 6):
     To the Limited Partner                          $     15,000    $     15,000    $     15,000
     To General and Special Limited Partners              101,500         101,500         101,500
     To General Partners                                       --          34,054         154,222
                                                     ------------    ------------    ------------
                                                          116,500         150,554         270,722
                                                     ------------    ------------    ------------

Net income                                           $    376,061    $153,829,678    $150,779,832
                                                     ============    ============    ============

Net income allocable as follows
   (Notes 7 and 13):

   General Partners                                  $      2,591    $  1,103,106    $    865,880

   Special Limited Partners                               232,987      99,179,316      77,850,455

   Limited Partner                                        140,483      53,547,256      72,063,497
                                                     ------------    ------------    ------------
                                                     $    376,061    $153,829,678    $150,779,832
                                                     ============    ============    ============

Net Income Per Limited Partner
   Participation Interest
   (820,000 units outstanding):                      $     0.1713    $    65.3015    $    87.8823
                                                     ============    ============    ============
</TABLE>

See accompanying notes.


                                      S-4
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

             Statements of Changes in Partners' Capital (Deficiency)

<TABLE>
<CAPTION>
                                                                                               Special Limited
                                                          Total            General Partners       Partners           Limited Partner
                                                       -------------       ----------------    ---------------       ---------------
<S>                                                    <C>                  <C>                  <C>                  <C>
Partners' Capital (Deficiency) January
  1, 1999                                              $   6,721,813        $  (2,768,948)       $ (21,325,648)       $  30,816,409
Distribution to General Partners,
  Special Limited Partners and Limited
  Partner (Note 8)                                      (141,898,110)            (780,440)         (70,168,615)         (70,949,055)
Net income for the year ended December
  31, 1999 (Note 7)                                      150,779,832              865,880           77,850,455           72,063,497
                                                       -------------        -------------        -------------        -------------
Partners' Capital (Deficiency) December
  31, 1999                                             $  15,603,535        $  (2,683,508)       $ (13,643,808)       $  31,930,851
Distribution to General Partners,
  Special Limited Partners and Limited
  Partner (Note 8)                                      (160,908,232)            (884,995)         (79,569,121)         (80,454,116)
Net income for the year ended December
  31, 2000 (Note 7)                                      153,829,678            1,103,106           99,179,316           53,547,256
                                                       -------------        -------------        -------------        -------------
Partners' Capital (Deficiency) December
  31, 2000                                             $   8,524,981        $  (2,465,397)       $   5,966,387        $   5,023,991
Distribution to General Partners,
  Special Limited Partners and Limited
  Partner (Note 8)                                        (5,890,965)             (32,400)          (2,913,082)          (2,945,483)
Net income for the year ended December
  31, 2001 (Note 7)                                          376,061                2,591              232,987              140,483
                                                       -------------        -------------        -------------        -------------
Partners' Capital (Deficiency) December
  31, 2001                                             $   3,010,077        $  (2,495,206)       $   3,286,292        $   2,218,991
                                                       =============        =============        =============        =============
</TABLE>

See accompanying notes.


                                      S-5
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                               Years ended December 31,
                                                                     2001                2000                 1999
                                                                -------------        -------------        -------------
<S>                                                             <C>                  <C>                  <C>
Operating activities:
Net income                                                      $     376,061        $ 153,829,678        $ 150,779,832
Adjustments to reconcile net income to net cash
   provided by operating activities:
Depreciation and amortization                                              --              830,334            2,807,703
Deferred rent                                                              --                   --           (1,082,359)
Gain on sale of real estate                                           (95,096)        (150,500,239)        (136,434,754)
Changes in operating assets and liabilities:
Due from managing agent                                               501,287            2,091,590             (446,415)
Receivables                                                             4,662              459,017              139,042
Other assets                                                           95,835              676,101             (121,133)
Accounts payable                                                     (105,465)            (564,809)            (476,892)
Accrued real estate tax                                               (11,086)              11,088           (1,586,162)
Accrued interest                                                           --              (29,278)            (125,747)
Guaranteed payments due to General Partners,
   Special Limited Partners and Limited Partner                       (34,053)            (120,168)            (400,107)
Due to managing agent                                                  (6,159)            (189,293)             (60,292)
Sundry and accrued liabilities                                         61,093             (438,167)            (469,253)
Deposits and rents received in advance                                     --           (1,696,853)            (162,447)
Deposits                                                            1,500,000                   --                   --
                                                                -------------        -------------        -------------
Net cash provided by operating activities                           2,287,079            4,359,001           12,361,016
                                                                -------------        -------------        -------------

Investing activities:
Property improvements                                                      --             (595,995)          (1,371,534)
Net proceeds from sale of real estate                                  95,096          164,953,897          149,599,635
                                                                -------------        -------------        -------------
Net cash provided by investing activities                              95,096          164,357,902          148,228,101
                                                                -------------        -------------        -------------

Financing activities:
Distributions to General Partners, Special Limited
   Partners and Limited Partner                                    (9,108,232)        (234,972,567)         (74,802,647)
Principal payments on mortgages payable                                    --           (4,000,000)         (19,847,488)
                                                                -------------        -------------        -------------
Net cash used in financing activities                              (9,108,232)        (238,972,567)         (94,650,135)
                                                                -------------        -------------        -------------

(Decrease) increase in cash and cash equivalents                   (6,726,057)         (70,255,664)          65,938,982
Cash and cash equivalents at beginning of year                      9,514,349           79,770,013           13,831,031
                                                                -------------        -------------        -------------
Cash and cash equivalents at end of year                        $   2,788,292        $   9,514,349        $  79,770,013
                                                                =============        =============        =============

Supplemental disclosure of cash flow information
Cash paid during the year for interest                          $          --        $      72,862        $   1,802,239
                                                                =============        =============        =============

Supplemental disclosure of non-cash investing and
   financing activities:
   Deferred rent receivable charged to cost of sales            $          --        $          --        $   1,993,760
   Deferred leasing commissions charged to cost of sales                   --            2,350,881            1,703,931
</TABLE>

See accompanying notes.


                                      S-6
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                December 31, 2001

1. Description of Business

Investment  Properties Associates ("IPA") was formed as a limited partnership on
May 15, 1969 to acquire and operate  commercial  properties.  Through January 4,
1997,  the General  Partners of IPA were Mr. Harry B.  Helmsley  and Mr.  Irving
Schneider and two corporations  owned or controlled by them.  Collectively,  the
General Partners owned a 1.5% interest in IPA. Upon the death of Mr. Helmsley on
January 4, 1997, the general  partnership  interest  owned by him  automatically
converted to a Special Limited  Partnership  Interest owned by his estate.  As a
result of this  conversion,  the total  interests of the General  Partners  were
reduced to .55%. The Special  Limited  Partners are Mrs. Leona M. Helmsley,  Mr.
Irving  Schneider,  and the  Estate of Mr.  Harry B.  Helmsley  and the  Limited
Partner is Mr. John Bailey.  Undivided  interests in the limited partnership are
represented by 820,000 Participation  Interests ("PPI's").  Changes in ownership
subsequent to January 4, 1997, are described below.

Under  the  terms of the  Partnership  Agreement  in  effect  on the date of Mr.
Helmsley's  death,  the General  Partners  were required to create a new limited
partnership  with  the  same  attributes  as  IPA  and  convey  all  assets  and
liabilities  of IPA to that  entity.  Because such a course of action would have
resulted  in  substantial  expense  to IPA and no benefit  to the  partners  and
holders of PPI's,  the General Partners  obtained  approval of a majority of the
holders  of the PPI's to  continue  the  business  of IPA,  and the  Partnership
Agreement was amended to that effect effective May 30, 1997.

Effective July 3, 1997, the Partnership Agreement was further amended to admit a
newly formed  limited  liability  company  owned by Mrs.  Leona M. Helmsley as a
General  Partner of IPA.  This  entity was  allocated  a portion of the  general
partner interest owned by one of the corporate general partners.

On June 10, 1998, the General  Partner  interests of the corporation and limited
liability  company  owned by Mrs.  Leona M.  Helmsley,  and the Special  Limited
Partner  interests  owned by Mrs.  Leona M.  Helmsley and the Estate of Harry B.
Helmsley, were acquired by ScogBell Acquisition,  L.L.C.  ("ScogBell").  Also on
June 10, 1998,  ScogBell  acquired 282,377 PPI's from Mrs. Leona M. Helmsley and
28,550 PPI's in the over-the-counter market.


                                      S-7
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

2. Significant Accounting Policies

      a.    The   preparation  of  financial   statements  in  conformity   with
            accounting  principles  generally  accepted  in  the  United  States
            requires  management to make estimates and  assumptions  that affect
            the reported  amount of assets and  liabilities  and  disclosure  of
            contingent  assets  and  liabilities  at the  date of the  financial
            statements and the reported  amounts of revenues and expenses during
            the  reporting  period.  Actual  results  could  differ  from  those
            estimates.

      b.    Rental  revenue from tenant  leases is recognized on a straight line
            basis over the terms of the associated leases.

      c.    Depreciation of buildings and building  improvements is provided for
            by the straight-line  method over estimated useful lives of 19 to 39
            years.  Leaseholds,  leasehold improvements and tenants' alterations
            are  amortized  over  the  terms  of  the  related  leases.  Amounts
            applicable  to  tenants'  alterations  and the  related  accumulated
            amortization  are  eliminated  from  the  accounts  at the  time the
            related  lease  expires or, if the tenant should vacate the premises
            prior thereto,  unamortized  assets are charged to operations in the
            year the premises are vacated.

      d.    Costs in  connection  with  mortgage  refinancings  are  included in
            deferred  charges  and are  being  amortized  over the  terms of the
            related mortgages.

      e.    Leasing  commissions  are  amortized  over the terms of the  related
            leases.

      f.    IPA's   employees   are   covered   under   multi-employer   defined
            contribution  pension plans. All  contributions are funded currently
            based upon negotiated union  contracts.  Information from the plans'
            administrators is not available to permit IPA to determine its share
            of unfunded  vested  benefits.  During 2001, 2000 and 1999, IPA paid
            approximately  $18,000,  $93,000,  and $273,000,  respectively,  for
            employees to union plans for pension, welfare and other benefits.

      g.    For the purpose of determining cash  equivalents,  IPA considers all
            highly liquid  investments  with a maturity of three months or less,
            when purchased, to be cash equivalents.


                                      S-8
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

      h.    Financial  Accounting  Standards  Board ("FASB")  Statement No. 107,
            "Disclosures  About Fair Value of  Financial  Investments",  defines
            fair  value of a  financial  instrument  as the  amount at which the
            instrument  could be  exchanged  in a  current  transaction  between
            willing  parties.  The methods and assumptions  used to estimate the
            fair value of  financial  instruments  at December 31, 2001 and 2000
            are as follows:

            (i)   The  carrying  value of cash and  cash  equivalents,  accounts
                  receivable,  accounts  payable  and  accrued  liabilities  and
                  deposits approximate fair value due to the short maturities of
                  these items.

      i.    Gains  on  sales  of  real  estate  are  recognized  at  closing  in
            accordance with FASB Statement No. 66, "Accounting for Sales of Real
            Estate".

      j.    FASB Statement No. 121, "Accounting for the Impairment of Long-Lived
            Assets  and for  Long-Lived  Assets  to be  Disposed  Of,"  requires
            impairment  losses  to be  recorded  on  long-lived  assets  used in
            operations  when  indicators  of  impairment  are  present  and  the
            undiscounted cash flow estimates to be generated by those assets are
            less than the assets'  carrying amount or on long-lived  assets held
            for sale when the assets'  carrying  amount is greater than the fair
            market  value less costs of disposal  for those assets on a property
            by  property  basis.  IPA  evaluates  each  of  its  properties  for
            indicators of impairment by reference to the undiscounted cash flows
            to be generated  from the operation and sale of the  properties.  No
            indicators  of  impairment   were  present,   and,   accordingly  no
            provisions for  impairment  have been recorded in any of the periods
            presented.

      k.    Basic  earnings  per share has been  calculated  by dividing the net
            income  allocated  to  the  Limited  Partner  by the  820,000  PPI's
            outstanding.  As IPA  has no  potentially  dilutive  securities,  no
            presentation of diluted earnings per share is required.

      l.    Effective  January 1, 1998,  IPA  adopted  FASB  Statement  No. 131,
            Disclosures about Segments of an Enterprise and Related  Information
            ("Statement  131"). IPA is engaged in the ownership and operation of
            commercial  office  properties and has one reportable  segment.  IPA
            evaluates real estate performance and allocates resources


                                      S-9
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

            based on net operating  income.  The primary  sources of revenue are
            generated  from  tenant  base  rents and  escalations  of  operating
            expenses and real estate taxes. Operating expenses primarily consist
            of common area  maintenance.  The commercial office property segment
            meets  the   quantitative   threshold  for  determining   reportable
            segments. IPA has no investment in foreign operations.

3. Real Estate

Real estate is held for sale and is summarized as follows:

      Classification                                  2001         2000
      --------------                               ----------   ----------
      Land                                         $  502,032   $  502,032
      Buildings and building improvements                  --           --
      Leaseholds and leasehold improvements         7,531,315    7,531,315
                                                   ----------   ----------
                                                   $8,033,347   $8,033,347
                                                   ==========   ==========

On October  22,  2001,  IPA entered  into a contract to sell its only  remaining
property,  a vacant  commercial  office building  located at 570 Broad Street in
Newark,  New Jersey for  $11,500,000.  In  connection  with this  contract,  IPA
received  non-refundable deposits from the buyer aggregating $1,500,000 which is
included in Deposits in the accompanying  balance sheet. In January 2002, due to
the buyer's  inability to satisfy the closing  conditions,  the contract expired
and IPA resumed marketing activities with respect to the property.

On July 11,  2001,  IPA sold its  undeveloped  land in Texas  for  $100,000.  In
connection  with  this  transaction,  IPA  recognized  a  gain  on the  sale  of
approximately $95,000.

On May 8,  2000,  IPA sold the 245 Fifth  Avenue and the 261 Fifth  Avenue,  New
York, New York, properties for $135,000,000. The sales proceeds were used to pay
closing costs of  approximately  $4,400,000 and a sales commission to one of the
general   partners  of  approximately   $5,110,000.   In  connection  with  this
transaction, IPA recognized a gain on the sale of approximately $113,570,000. In
addition,  distributions  of $60,000,000  were paid to the General  Partners and
Special Limited  Partners in May 2000 and $60,000,000 was paid to the holders of
Participation Interests in June 2000.


                                      S-10
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

3. Real Estate (continued)

On January 18, 2000,  IPA sold its 50% undivided  interest in the 1328 Broadway,
New York, New York,  property for  $43,500,000.  The sales proceeds were used to
repay IPA's 50% share of the $8,000,000  mortgage loan  encumbering its interest
in the  property,  pay closing  costs of  approximately  $1,400,000  and a sales
commission  to one of the  general  partners  of  approximately  $1,650,000.  In
connection with this transaction, IPA recognized a gain on sale of approximately
$36,930,000. In addition,  distributions of $18,500,000 were paid to the General
Partners and Special  Limited  Partners in January 2000 and $18,500,000 was paid
to the holders of Participation Interests in February 2000.

On December 16, 1999, IPA sold the 1440 Broadway property for $152,000,000.  The
sales  proceeds were used to repay mortgage debt of  approximately  $17,347,500,
sales  commissions  of  $3,800,000  paid to an  affiliate  of one of the General
Partners and other closing costs of approximately $5,047,000. In connection with
this transaction,  IPA recognized a gain on sale of approximately  $130,557,000.
In addition,  on December 16, 1999, IPA declared a special  distribution  to its
partners of  approximately  $128,000,000  of which  $64,000,000  was paid to the
General  Partners and Special Limited  Partners in December 1999 and $64,000,000
was paid to the holders of Participation Interests in January 2000.

On May 18, 1999, IPA sold the Midland Savings Building located in Midland, Texas
for a sales  price  of  $300,000.  In  connection  with  this  transaction,  IPA
recognized a gain of approximately $298,000.

On April 14, 1999, IPA sold the Mojud Building  located in Long Island City, New
York for a sales price of $6,500,000.  The sales proceeds were used to pay sales
commissions of $162,500 to an affiliate of one of the General Partners and other
closing costs of approximately  $239,000.  In connection with this  transaction,
IPA recognized a gain of approximately $5,580,000.


                                      S-11
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

4. Other Assets

Other assets  consist  principally of amounts held in escrow by the buyer of the
Partnership's Chicago properties, which were sold in 1998.

5. Management of Properties

The  properties  are managed by  Helmsley-Spear,  Inc. Mr.  Irving  Schneider is
co-chairman and Chief Operating Officer of Helmsley-Spear, Inc., and owns 50% of
its outstanding  stock.  In addition to providing  general  property  management
services,  Helmsley-Spear,  Inc.  locates tenants and negotiates  leases for its
properties.  Management fees are based upon  negotiated  percentages of revenues
for each property in the portfolio.

Leasing  commissions are based upon varying  percentages of the annual rent paid
by  tenants  obtained  by  Helmsley-Spear,  Inc.  Management  fees  and  leasing
commissions  charged  to IPA  by  Helmsley-Spear,  Inc.  aggregated  $0  (2001),
$393,447 (2000), and $1,287,902 (1999).

Tenants' security deposits for certain properties are held by the managing agent
principally in special bank accounts;  interest thereon accrues  principally for
the benefit of the tenants.

6. Guaranteed Payments Due to Partners

The Limited  Partnership  Agreement requires that certain guaranteed payments be
made to partners and deducted as expenses in determining net income. The General
Partners and Special  Limited  Partners  receive  guaranteed  payments  equal to
8-3/4% per annum of their "Remaining Original Cash Contribution"  ($1,160,000 at
December 31, 2001, 2000 and 1999).  In addition,  the General  Partners  receive
guaranteed payments equal to 1/2% of gross revenues, as defined, and the Limited
Partner receives $15,000 per annum.


                                      S-12
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

7. Allocations of Partnership Income

In accordance with the terms of the Limited Partnership  Agreement,  elements of
income for financial  reporting  purposes were credited (but not  distributed in
cash) to the  capital  accounts  of the  partners  through  January 3, 1997,  as
follows (see Note 8 for the basis on which cash distributions are determined):

<TABLE>
<CAPTION>
                                                                       Special
                                                          General      Limited     Limited
                                                          -------      -------     -------
<S>                                                          <C>        <C>          <C>
A. Net income before items C, D, E and F below               1.5%       48.5%        50.0%
B. Net losses, before items below                          100.0%        --           --
C. Depreciation and amortization of real estate:
       1.Equal to mortgage amortization (as defined)         1.5%       48.5%        50.0%
       2.Balance                                             3.0%       97.0%         --
D. Bond discount amortization                                --          --         100.0%
E. Gain on disposition of property:
       1.To the extent of the aggregate depreciation
           and amortization of such property included
           in C(2) above                                     3.0%       97.0%         --
       2.Balance                                             1.5%       48.5%        50.0%
F. Loss on disposition of property                         100.0%        --           --
</TABLE>


                                      S-13
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

7. Allocations of Partnership Income (continued)

Upon the death of Mr.  Helmsley on January 4, 1997,  and the  conversion  of his
General Partner interest into a Special Limited Partner  interest,  the elements
of income for  financial  reporting  purposes are  generally  credited  (but not
distributed in cash) to the capital accounts of the partners as follows:

<TABLE>
<CAPTION>
                                                                       Special
                                                           General     Limited     Limited
                                                           -------     -------     -------
<S>                                                          <C>        <C>          <C>
A. Net income before items C, D, E and F below               .55%       49.45%       50.0%
B. Net losses, before items below                          36.67%       63.33%        --
C. Depreciation and amortization of real estate:
       1.Equal to mortgage amortization (as defined)
                                                             .55%       49.45%       50.0%
       2.Balance                                            1.1%        98.9%         --
D. Bond discount amortization                               --           --         100.0%
E. Gain on disposition of property:
       1.To the extent of the aggregate depreciation
           and amortization of such property included
           in C(2) above                                    1.1%        98.9%         --
       2.Balance                                             .55%       49.45%       50.0%
F. Loss on disposition of property                         36.67%       63.33%        --
</TABLE>

8. Cash Distributions

Net Operating Revenues,  as defined,  are distributable at the discretion of the
General Partners, as follows:

                                                Through           From
                                            January 3, 1997   January 4, 1997
                                            ---------------   ---------------

      General Partners                            1.5%            .55%
      Special Limited Partners                   48.5%          49.45%
      Limited Partner                            50.0%          50.00%

Notwithstanding the foregoing,  if with respect to any calendar year the Limited
Partner's  distributive  share  (computed  on the  same  basis  as that  used in
preparing  IPA's  Federal  income tax return) of income  (loss) plus one-half of
such partner's  distributive  share of long-term  capital gains exceeds the cash
distributions  referred to above, IPA must distribute an additional amount equal
to such excess to the Holders of the Participation Interests.


                                      S-14
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

8. Cash Distributions (continued)

In 2001,  2000 and 1999,  Net  Operating  Revenues,  as defined  in the  Limited
Partnership  Agreement,   amounted  to  $280,965,  $3,908,231  and  $12,606,987,
respectively.  At  December  31,  2001,  2000 and  1999,  accrued  distributions
amounted to $698,179,  $3,915,446  and  $77,979,781,  respectively.  The accrued
distribution  at December  31, 2001  consists of $280,965 in respect of 2001 Net
Operating  Revenues and $410,000 in respect of the special  distribution  (which
was declared on December 21, 2001).

9. Income Taxes

IPA has  obtained a ruling from the  Internal  Revenue  Service that IPA will be
classified as a partnership for Federal income tax purposes, and has received an
opinion of tax counsel  that IPA, as a  partnership,  will not be subject to any
Federal income taxes,  and that each holder of  Participation  Interests will be
treated for Federal  income tax purposes as if he were a limited  partner of IPA
to the extent of his proportionate interest in the Limited Partnership Interest.
Each  partner  of IPA and each  holder of  Participation  Interests  at any time
during the taxable year of IPA must take into account his distributive  share of
all items of IPA's income,  gain, loss,  deduction or credit,  without regard to
whether such partner or holder of  Participation  Interests has received or will
receive any distributions from IPA.  Accordingly,  no provision for income taxes
has been made in the accompanying statements of income.

The  amount of income  (loss)  for  federal  tax  purposes  for the years  ended
December  31,  2001,   2000,  and  1999,  was  $(452,532),   $146,534,487,   and
$150,375,301,  respectively,  as  compared  with  the net  income  of  $376,061,
$153,829,678, and $150,779,832, respectively, shown in the statements of income.
A  reconciliation  of  the  differences  between  income  as  reflected  in  the
accompanying  statements  of income  and the amount of income  for  federal  tax
purposes is as follows:


                                      S-15
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

9. Income Taxes (continued)

<TABLE>
<CAPTION>
                                                          December 31,
                                               2001           2000              1999
                                             ---------    -------------    -------------
<S>                                         <C>           <C>              <C>
Net income per statements of income         $  376,061    $ 153,829,678    $ 150,779,832
Depreciation and amortization                 (229,480)         153,124          762,866
Gain on sale of property                            --       (7,414,167)          42,439
Loss on sale of property                      (599,113)              --               --
Deferred rental income                              --               --       (1,082,359)
Other, net                                          --          (34,148)        (127,477)
                                             ---------    -------------    -------------
Income (loss) for federal tax purposes       ($452,532)   $ 146,534,487    $ 150,375,301
                                             =========    =============    =============
</TABLE>

10. Gross Revenue From Real Estate

IPA earns rental income under leases principally with commercial tenants located
in its office  buildings.  Such leases  generally  provide for the tenant to pay
minimum  rentals  plus,  in certain  instances,  a portion of  increases in real
estate taxes,  operating  expenses and/or  increases in the consumer price index
based on lease escalation clauses. Office leases generally range from 5 years to
15 years and contain  various  renewal  options.  In addition,  IPA earns rental
income from retail stores.  Such leases  generally  provide for minimum  rentals
plus percentage rentals based on the store sales.  Retail store leases generally
range  from  1 to 5  years  and  contain  various  renewal  options.  All of the
aforementioned  leases are accounted for as operating leases.  Included in Gross
Revenues  from Real  Estate for the years  ended  2001,  2000 and 1999,  are $0,
$1,839, and $536,325,  respectively,  representing  revenue from escalations and
percentage rentals.  For the years ended 2001, 2000 and 1999,  approximately $0,
$259,290,  and  $17,000,  respectively,  was received in  connection  with lease
cancellations with former tenants.

Since disposing of its remaining  income  producing  properties  during the year
ended December 31, 2000, IPA has no minimum future rentals due on  noncancelable
operating  leases as its remaining  properties  included  vacant land located in
Houston,  Texas, which was sold during 2001, and a vacant office property at 570
Broad Street, Newark, New Jersey (see note 3).


                                      S-16
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

11. Recently Issued Accounting Pronouncement

In October 2001, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  No.  144,  Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets (FAS 144), which addresses  financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No.  121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30,  Reporting the Results of Operations  for a disposal of a
segment of a business.  FAS 144 is effective  for fiscal years  beginning  after
December 15, 2001, with earlier application  encouraged.  The Company expects to
adopt FAS 144 as of January 1, 2002 and it does not expect that the  adoption of
the Statement will have a significant impact on the Company's financial position
and results of operations.

12. Contingencies

IPA is involved in various  legal  matters  and  disputes  arising in the normal
course of  operations,  the ultimate  outcome of which is not expected to have a
material effect on the financial statements.


                                      S-17
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

13. Summary of Quarterly Financial Information (Unaudited)

The separate  results of operations of IPA for the years ended December 31, 2001
and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                                              2001
                                                                 -------------------------------------------------------------------
                                                                                        Three Months Ended
                                                                 -------------------------------------------------------------------
                                                                  March 31           June 30         September 30        December 31
                                                                 ----------         ---------        ------------        -----------
<S>                                                              <C>                <C>                <C>                <C>
Gross revenue from real estate                                   $   3,232          $   8,020          $  51,536          $  81,099
Net income (loss)                                                  415,103           (123,590)           451,852           (367,304)
Net income (loss) credited to the
   partners' capital accounts:
General Partners                                                     2,283               (680)             2,485             (1,497)
Special Limited Partners                                           205,268            (61,115)           223,441           (134,607)
Limited Partner                                                    207,552            (61,795)           225,926           (231,200)
                                                                 ---------          ---------          ---------          ---------
                                                                 $ 415,103          $(123,590)         $ 451,852          $(367,304)
                                                                 =========          =========          =========          =========

Net income (loss) per Limited Partner
   Participation Interest                                        $  0.2531          $ (0.0753)         $  0.2755          $ (0.2819)
                                                                 =========          =========          =========          =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                              2000
                                                             -----------------------------------------------------------------------
                                                                                        Three Months Ended
                                                             -----------------------------------------------------------------------
                                                                  March 31           June 30         September 30        December 31
                                                             -------------       -------------    -------------          -----------
<S>                                                          <C>                 <C>              <C>                    <C>
Gross revenue from real estate                               $   4,057,422       $   1,797,052    $    (128,103)         $ 242,727
Net income (loss)                                               39,557,263         115,100,658         (969,346)           141,103
Net income (loss) credited to the
   partners' capital accounts:
General Partners                                                   233,163             874,499           (5,331)               776
Special Limited Partners                                        20,963,468          78,625,414         (479,342)            69,775
Limited Partner                                                 18,360,632          35,600,745         (484,673)            70,552
                                                             -------------       -------------    -------------          ---------
                                                             $  39,557,263       $ 115,100,658    $    (969,346)         $ 141,103
                                                             =============       =============    =============          =========

Net income (loss) per Limited Partner
   Participation Interest                                    $     22.3910       $     43.4155    $     (0.5911)         $  0.0860
                                                             =============       =============    =============          =========

</TABLE>


                                      S-18
<PAGE>

                        Investment Properties Associates

                        (A New York Limited Partnership)

             Schedule III - Real Estate and Accumulated Depreciation

                                December 31, 2001

<TABLE>
<CAPTION>
            Col. A                 Col. B               Col. C              Col. D                 Col. E
            ------                 ------               ------              ------                 ------
                                                                                                  Gross Amount
                                               Initial Cost of Company                    at Which Carried Close of Period
                                               -----------------------   Improvements     --------------------------------
                                                                          Capitalized                Buildings
                                                          Buildings and  Subsequent to                  and
         Description            Encumbrances     Land      Improvements   Acquisition      Land     Improvements    Total
         -----------            ------------     ----      ------------  -------------     ----     ------------    -----
<S>                            <C>             <C>         <C>            <C>            <C>         <C>          <C>
570 Broad Street Building
   Newark, New Jersey          $     --        $502,032    $5,937,404     $1,593,911     $502,032    $7,531,315   $8,033,347
                               --------        --------    ----------     ----------     --------    ----------   ----------
Totals                         $     --        $502,032    $5,937,404     $1,593,911     $502,032    $7,531,315   $8,033,347
                               ========        ========    ==========     ==========     ========    ==========   ==========

                                    Col. F          Col. G           Col. H
                                    ------          ------           ------
                                                                  Life on which
                                                                 Depreciation in
                                                                  Latest Income
                                 Accumulated        Date of       Statements is
                                 Depreciation    Construction     Computed (1)
                                 ------------    ------------     ------------
570 Broad Street Building
   Newark, New Jersey             $5,880,040         1962             34.3
                                  ----------         ----             ----
Totals                            $5,880,040
                                  ==========

(1)   At  December  31,  2001,  the  property  is  classified  as held for sale.
      Accordingly depreciation has not been recorded in 2001.
</TABLE>


                                      S-19
<PAGE>

                        Investment Properties Associates

                        (A New York Limited Partnership)

             Schedule III - Real Estate and Accumulated Depreciation

                                December 31, 2001

      Reconciliation of Real Estate and Accumulated Depreciation:

<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                     --------------------------------------------------------
                                                         2001                  2000                  1999
                                                     ------------          ------------          ------------
<S>                                                  <C>                   <C>                   <C>
Investment in Real Estate
Balance at beginning of year                         $  8,033,347          $ 40,649,960          $ 68,589,793
Sale of real estate                                            --           (33,212,608)          (29,311,368)
Abandonment of real estate
Improvements and additions                                     --               595,995             1,371,535

                                                     ------------          ------------          ------------
Balance at end of year                               $  8,033,347          $  8,033,347          $ 40,649,960
                                                     ============          ============          ============

Accumulated Depreciation
Balance at beginning of year                         $  5,880,040          $ 26,391,697          $ 44,261,629
Depreciation charged to costs and expenses
                                                               --               598,174             1,974,245
Less amounts applicable to sale of real estate
                                                               --           (21,109,831)          (19,844,177)
                                                     ------------          ------------          ------------
Balance at end of year                               $  5,880,040          $  5,880,040          $ 26,391,697
                                                     ============          ============          ============
</TABLE>

The  aggregate  basis of real  estate  assets for  Federal  income tax  purposes
amounted to $7,298,926 (2001), $7,898,039 (2000), and $44,822,622 (1999).


                                      S-20