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 [FEE REQUIRED]

                   For the Fiscal Year Ended December 31, 1997
                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
              THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

              For the transition period from ________ to __________

                           Commission File No.: 0-5537

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

A New York Limited Partnership                                  13-2647723
(State or other jurisdiction of                              (I.R.S. Employer 
incorporation or organization)                            Identification Number)

                  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:

             820,000 Participations in Limited Partnership Interest
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (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. [ ]

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
Registrant -- Not applicable.

              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 1 of __ Pages


<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.

      1. Business.

      (a) General  Development  of Business.  Investment  Properties  Associates
("IPA" or "Registrant") is a New York limited  partnership  formed pursuant to a
Limited Partnership Agreement dated as of May 15, 1969, as amended on October 2,
1969,  October 31, 1969,  December 3, 1969,  and May 30, 1997 (the  "Partnership
Agreement").

      Harry B. Helmsley,  a General  Partner of  Registrant,  died on January 4,
1997. Upon his death, Mr.  Helmsley's  general  partnership  interest in IPA 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


                                       -2-

<PAGE>

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 Participation Interests ("Participation Interests" and "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  LLC ("H  Associates"),  an entity  owned by Leona M.  Helmsley,  was
admitted as a General Partner of Registrant.  H Associate's economic interest in
Registrant  was  acquired  from  Helmsley-Noyes  Company,  Inc.,  also a General
Partner of Registrant.

      On  February  4,  1997,  Registrant  announced  that it was  offering  its
commercial  properties  for  sale.  No sale was  concluded.  On July  24,  1997,
Registrant announced that it would not pursue a sales effort at such time.

      At December 31, 1997, Registrant owned fee titles to, or leasehold estates
in, eleven commercial  properties,  a 50% interest in one commercial property, a
73-1/3% beneficial  interest in another commercial property and fee title to two
unimproved real properties (collectively,  the "Properties"). The Properties are
located in New York,  New York;  Chicago,  Illinois;  Midland,  Texas;  Houston,
Texas; and Newark, New Jersey.  Subsequent to December 31, 1997, Registrant sold
one of its properties.


                                       -3-

<PAGE>

      On  November  30,  1994,   Registrant   borrowed  $6,000,000  from  Irving
Schneider, a General Partner of Registrant, and $12,000,000 from an affiliate of
Harry B. Helmsley, also a General Partner (collectively, the "Affiliate Loans").
The Affiliate Loans,  which are due and payable on demand,  bear interest at the
rate  announced  from time to time by Chase Bank,  N.A.  ("Chase") as its "prime
rate." The proceeds of the Affiliate Loans were used by Registrant (i) to prepay
indebtedness  owed to Chase in the amount of  $10,750,000  (which  amount  Chase
subsequently  readvanced to  Registrant in connection  with the extension of the
mortgage loans relating to 1440  Broadway,  245 Fifth Avenue,  261 Fifth Avenue,
all in New York,  New York,  and One North  Dearborn  and One  LaSalle,  both in
Chicago,  Illinois,  and the cross  collateralization  and cross  defaults among
these properties); (ii) to pay the outstanding accrued interest on the Bonds due
on  December  1,  1994 in the  amount  of  $484,000;  (iii)  to pay  outstanding
distribution  obligations to the Special Limited Partners in respect of 1993 net
operating  revenues,  which were past due since  March 31, 1994 in the amount of
$5,317,000;  and (iv) to reduce a portion of  Registrant's  accounts  payable to
trade  creditors by  approximately  $1,449,000.  Registrant  paid $1,513,625 and
$1,540,750  in  interest  under  the  Affiliate  Loans  during  1996  and  1997,
respectively.
 
      On December 1, 1994, The Chase Manhattan Bank ("Chase") loaned $10,750,000
to  Registrant,  which  funds  were  used by  Registrant  to repay its 9% Junior
Mortgage  Bonds (the "Bonds") in full on such date.  Chase also agreed to extend
the final  maturity date of  Registrant's  mortgage  loans  relating to its 1440
Broadway,  245 Fifth Avenue and 261 Fifth  Avenue  properties  in New York,  New
York,  and to its One  North  Dearborn  and One  LaSalle  buildings  in  Chicago
(collectively,  the "Chase  Loans") from January 2, 1995 to January 2, 1997.  On
April 25, 1995, Registrant and Chase entered into a Note Modification  Agreement
providing  for the  extension  of the  maturity of the Chase Loans and the cross
collateralization and cross


                                       -4-

<PAGE>

defaults  among the  properties  that secure the Chase Loans.  In addition,  the
Registrant  was given the option of paying  interest on the Chase Loans based on
LIBOR plus 2.25% or prime plus .375%.  Pursuant  to a Second  Note  Modification
Agreement,  the maturity of the Chase Loans has been further extended to January
2, 1999.

      During 1997,  Registrant  made  principal  payments of  $3,025,816  in the
aggregate on its first  mortgage  loans  including a $3,000,000 net reduction of
the mortgage  loan held by Chase.  The aggregate  principal  amount of the Chase
Loans at December 31, 1997 was $32,847,488.

      On June 1, 1997,  Registrant  assigned  its ground  lease with the City of
Newark,  New Jersey on the  property  located  at 1180  Raymond  Boulevard  to a
newly-formed  corporation.  The  assignee  has agreed that such  assignment  was
received  by it as agent for  Registrant.  In  connection  with  this  transfer,
management had determined that, due to the recurring  operating losses sustained
by this property and the general  deterioration  of the  surrounding  area,  the
transferred  leasehold had no value, and recorded a reserve for impairment equal
to the book value of the leasehold of $711,522 at the transfer date. In December
1997, Registrant received from a third party an offer of $1,350,000 for its 1180
Raymond Blvd.  ground lease.  Upon receipt of the offer Registrant  reversed the
previously  recorded  reserve for impairment.  On January 22, 1998, the property
was sold for  $1,350,000.  In connection with such sale, past due property taxes
on the  property  totalling  $410,143  were  paid to the City of  Newark  with a
portion of the sale proceeds.

      On July 14,  1997,  as part of an  arrangement  with First Union  National
Bank,  the holder of the first  mortgage on the property  located at 24 Commerce
Street,  Newark,  N.J.,  Registrant  transferred  title  to the  property  to an
unrelated entity. By reason of such


                                       -5-

<PAGE>

arrangement, Registrant was relieved of liability for the outstanding balance of
the  mortgage  loan  ($441,254)  and  received  a full  release  from any future
liability with respect to such loan.

      (b) Financial  Information  About  Industry  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.

      (c) Narrative  Description of Business.  Registrant's only business is the
ownership and operation of commercial real properties which it leases to various
tenants.  Registrant's  principal  source of revenues is rent received from such
tenants.  The primary costs  associated with owning and leasing  commercial real
estate are real estate  taxes,  utilities,  interest on  indebtedness,  property
management  and  leasing  fees,   payroll  and  related  expenses,   repair  and
maintenance expenses and depreciation.  All of the properties owned and operated
by Registrant are set forth in Item 2.

      Registrant's  properties  taken as a whole are leased to large  numbers of
lessees and  Registrant is not  dependent  upon any single  lessee,  the loss of
which would have a material  adverse effect on Registrant.  Due to the nature of
the Registrant's  business,  Registrant has only one identifiable market segment
and has no new products,  uses no raw  materials,  owns no patents,  trademarks,
licenses,  franchises  or  concessions  and  expends  no sums for  research  and
development. No material portion of Registrant's business is seasonal in nature.

      Registrant's  needs for  working  capital  are  similar  to those of other
owners and operators of commercial  real property and,  generally,  are provided
for with cash generated from operations and, in some cases, borrowings.

      Each property owned by Registrant competes with real properties of similar
function and quality in its geographic area. Commercial rental properties within
a given geographic area tend to compete on the basis of location,  amenities and
price. Demand for


                                       -6-

<PAGE>

commercial rental space is also dependent upon economic conditions prevailing in
the  particular  geographical  area and the  quantity of suitable  space in such
area.

      Registrant employs  approximately 144 people who handle maintenance of its
properties.  All of the Registrant's  other operating  functions,  which consist
primarily of property leasing and property management services, are performed by
Helmsley-Spear,  Inc. or affiliates of Helmsley-Spear,  Inc., which entities may
be  deemed  to  be  affiliates  of  Registrant.   Management  fees  and  leasing
commissions charged by Helmsley-Spear,  Inc. aggregated approximately $2,098,300
in 1997,  $2,330,400 in 1996 and  $2,362,700 in 1995.  Additionally,  Registrant
purchases some of its  maintenance  supplies and materials from Deco  Purchasing
Co.,  Inc.  ("Deco"),  an  affiliate  of  one of its  partners.  Such  purchases
aggregated  approximately  $61,000 in 1997, $23,000 in 1996 and $13,000 in 1995.
Registrant  believes that such services and products are supplied at prices that
approximate those that would be available from non-affiliates. See Item 13.

      2. Properties.

      General.  At  December  31,  1997,  Registrant  owned  fee  titles  to, or
leasehold  estates  in,  eleven  commercial  properties,  a 50%  interest in one
commercial  property,  a  73-1/3%  beneficial  interest  in  another  commercial
property and fee title to two  unimproved  real  properties  (collectively,  the
"Properties").  The  Properties  are  located  in New York,  New York;  Chicago,
Illinois; Midland, Texas; Houston, Texas; and Newark, New Jersey. The Properties
have a total rentable area of approximately 4,726,000 square feet.

      Registrant  takes  a  depreciation  deduction  for  tax  purposes  on  the
buildings,  building improvements and tenant improvements on its properties. See
Schedule III of the Financial Statements included elsewhere herein.


                                       -7-

<PAGE>

      The table below sets forth a description of each of the  Properties  owned
by  Registrant  on December  31, 1997,  its  location,  types of  ownership  and
rentable area in square feet. 

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

1440 Broadway                    25-story office    Fee                  690,000
                                 bldg.            
                                                  
261 Fifth Avenue                 25-story office    Fee                  402,000
                                 bldg.            
                                                  
245 Fifth Avenue                 26-story office    Fee                  287,000
                                 bldg.            
                                                  
Marbridge Building               11-story office    50% of Fee           357,000
(1328 Broadway)                  bldg.            
                                                  
Mojud Building                   5-story loft       Fee                  181,000
(Long Island City)               building         
                                                  
Chicago, Illinois                                 
                                                  
One LaSalle Bldg.                49-story office    Fee                  491,000
(1 N. LaSalle St.)               bldg.            
                                                  
360 No. Michigan Avenue Bldg.    21-story office    Leasehold (lease     259,000
(360 No. Michigan Ave.)          bldg.              expires 4/30/2058)
                                                  
One N. Dearborn Bldg.            17-story office    Fee and Leasehold    938,000
                                 bldg.              (2 leases expire
                                                    3/31/2020 and
                                                    3/31/2077)
                                                  
59 E. Van Buren Bldg.            27-story office    Fee                  182,000
                                 bldg.            
                                                  
                                                  
6 N. Michigan Ave.               21-story office    73-1/3% beneficial   223,000
                                 bldg.              interest

         
                                       -8-

<PAGE>

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

Midland Savings Bldg.            14-story office    Fee                 167,000
(Midland)(1)                     bldg. (currently
                                 vacant)

Edgewood Shopping Center         Unimproved         Fee                      --
(Houston)                        Land

Bellway Shopping Center          Unimproved         Fee                      --
(Houston)                        Land

New Jersey

Raymond Commerce Bldg.           37-story office    Leasehold (lease    359,000
(1180 Raymond Blvd.,             bldg.              expires 12/31/03)
Newark)(2)

570 Broad Street (Newark)(3)     14-story office    Fee                 190,000
                                 bldg.

Federal Trust Bldg. (24          20-story office    Fee                      --
Commerce St., Newark)(4)         bldg. and 7-story
                                 office bldg.

-----------
(1)   Registrant is not  attempting to rent space in such building since it does
      not believe  that the building can be operated  profitably  under  current
      market   conditions.   Such  property  is  not  material  to  Registrant's
      operations.

(2)   Registrant sold its leasehold on January 22, 1998.

(3)   Vacated by tenant during 1996.

(4)   Registrant  transferred  title to this property to an  unaffiliated  third
      party on July 14, 1997.


                                       -9-

<PAGE>

      Additional   Property   Information.   Four  of  Registrant's   properties
individually account for 10% or more of its total assets or revenues at December
31, 1997. Such properties are referred to above as 1440 Broadway,  New York, New
York;  261 Fifth  Avenue,  New  York,  New York;  One North  Dearborn,  Chicago,
Illinois and One North LaSalle, Chicago, Illinois.

      The estimated  occupancy rate for the Registrant's  1440 Broadway property
for 1997,  1996,  1995, 1994 and 1993 was  approximately  74%, 61%, 73%, 70% and
71%,  respectively.  The average annual base rent per leased square foot at such
property was  approximately  $26.91 in 1997,  $28.10 in 1996, $23.94 in 1995 and
$24.57 in 1994.

      The  estimated  occupancy  rate  for the  Registrant's  261  Fifth  Avenue
property for 1997,  1996, 1995, 1994 and 1993 was  approximately  80%, 80%, 78%,
72% and 74%,  respectively.  The average rental per square foot at such property
was  approximately  $22.61 in 1997, $21.28 in 1996, $21.25 in 1995 and $20.49 in
1994.

      The  estimated  occupancy  rate for the  Registrant's  One North  Dearborn
property for 1997,  1996, 1995, 1994 and 1993 was  approximately  39%, 47%, 54%,
62% and 68%,  respectively.  The average rental per square foot at such property
was  approximately  $18.59 in 1997, $16.25 in 1996, $16.44 in 1995 and $16.47 in
1994.

      The estimated  occupancy rate of Registrant's  One North LaSalle  property
for 1997,  1996,  1995, 1994 and 1993 was  approximately  54%, 58%, 54%, 56% and
56%,  respectively.  The  average  rental per square foot at such  property  was
approximately $16.32 in 1997, $14.74 in 1996, $13.80 in 1995 and $13.69 in 1994.

      Registrant's  1440  Broadway  property  is a 25  story  commercial  office
building in midtown, Manhattan. Two separate tenants, both of which are clothing
retailers,  occupy 10% or more of the rental area of such  building.  The rental
per annum of one  clothing  retailer  is  $4,458,000  and its lease  expires  on
December 31, 1999, subject to two consecutive five year


                                      -10-

<PAGE>

renewal options to 2004 and 2009 at then prevailing  market rentals.  The rental
per annum of the other  clothing  retailer is $1,889,000 per year and such lease
expires on December  31,  2002 with no renewal  options.  Effective  January 27,
1998,  approximately  92,950  square feet was rented to a new tenant whose lease
expires in 2013. The base annual rental through  January,  2003 under such lease
is $1,093,115. From 2003 to 2008 the annual base rental will be $2,323,800. From
2008 to 2013, the annual base rental will be $2,602,658.

      Registrant's  261 Fifth Avenue property is a 25 story building  located in
midtown Manhattan. No single tenant of such property occupies 10% or more of the
rentable area of such property.

      Registrant's One North Dearborn  property has one tenant that occupies 10%
or more of the rentable  area of such  property,  a commercial  bank.  Effective
January 31, 1997,  a portion of the space with an annual  rental of $425,000 was
vacated.  The remaining  portion of the bank's  space,  with an annual rental of
$4,636,000,  has a portion  expiring January 31, 2000 (with a renewal option for
such portion) to 2004 at the then escalated rental) and a portion expiring April
30, 2000 (without any renewal  options).  Effective  April 1, 1998,  this tenant
leased an additional  22,949 square feet through January 31, 2000 with an annual
rental of $321,286.

      Registrant's One North LaSalle property has one tenant, a commercial bank,
that leases 10% or more of the rentable  area of such  property.  Such  tenant's
annual rental is $1,480,000 per year and the lease expires on December 31, 2000,
without renewals.

      The  Chicago  and New York  commercial  real  estate  markets  are  highly
competitive.  In recent years,  this has resulted in reduced  occupancy rates at
certain of  Registrant's  properties  in these  cities.  In addition,  rents per
square foot have remained relatively constant. Although this trend may continue,


                                      -11-

<PAGE>

Registrant  believes  that rental  rates  remain  high  enough to operate  these
properties  profitably  for the  foreseeable  future,  although  there can be no
assurances in this regard.

      The  following  table  sets forth  certain  information  concerning  lease
expirations for the Registrant's principal properties at December 31, 1997:

                                  1440 Broadway

                   Number of       Total Leased                         % of
                 Tenants whose       Area in                        Gross Annual
    Year       lease will expire   Square Feet     Annual Rental       Rental
    ----       -----------------   -----------     -------------       ------
    1998              21              25,700        $   797,904          7.1%
    1999              13             188,098          4,725,984         41.9%
    2000               4               5,090            121,627          1.1%
    2001               3              26,470            888,167          7.9%
    2002               2              84,654          1,930,003         17.1%
    2003               1                 318             27,635          0.2%
    2004               1               2,000            238,604          2.1%
    2005               4              13,884            886,383          7.9%
    2006               2              72,762          1,659,457         14.7%
2007 or later          0                   0                  0          0.0%
                      --             -------        -----------        ------
    Totals            51             418,976        $11,275,765        100.0%
                      ==             =======        ===========        ======
                                                                   

                                      -12-
<PAGE>

                                261 Fifth Avenue

                      Number of        Total Leased                   % of Gross
                    Tenants whose         Area in                       Annual
    Year          lease will expire     Square Feet   Annual Rental     Rental
    ----          -----------------     -----------   -------------     ------
    1998                 18               58,906       $1,213,956        16.0%
    1999                 20               67,105        1,532,380        20.3%
    2000                 11               30,823          738,686         9.8%
    2001                 10               38,838          912,324        12.1%
    2002                 11               35,584          814,752        10.8%
    2003                  1                6,929          148,289         2.0%
    2004                  2               12,772          296,724         3.9%
    2005                  1               10,322          226,191         3.0%
    2006                  0                    0                0         0.0%
2007 or later             4               73,327        1,683,012        22.2%
                         --              -------       ----------       -----
   Totals                78              334,606       $7,566,314       100.0%
                         ==              =======       ==========       =====
                                                      
                               One North Dearborn   

                        Number of
                         Tenants    Total Leased
                          whose         Area                          % of Gross
                       lease will    in Square                          Annual
      Year               expire         Feet       Annual Rental        Rental
      ----               ------     ------------   -------------        ------
      1998                  8           56,526       $1,296,000          19.2%
      1999                  1              626           25,008           0.4%
      2000                  3          299,288        5,104,920          75.7%
      2001                  0                0                0           0.0%
      2002                  1            3,850          173,250           2.6%
      2003                  0                0                0           0.0%
      2004                  0                0                0           0.0%
      2005                  2            2,480          143,136           2.1%
 2006                       0                0                0           0.0%
 2007 or later              0                0                0           0.0%
                           --          -------        ---------          ----
     Totals                15          362,770       $6,742,314         100.0%
                           ==          =======       ==========         =====
                                                                      

                                      -13-
<PAGE>

                                One North LaSalle

                    Number of        Total Leased                    % of Gross
                  Tenants whose         Area in          Annual        Annual
    Year        lease will expire     Square Feet        Rental        Rental
    ----        -----------------     -----------        ------        ------
    1998               30                52,300       $  968,904       22.7%
    1999               14                35,822          697,008       16.3%
    2000                7               157,123        2,323,596       54.4%
    2001                2                 3,754           74,756        1.7%
    2002                2                 8,180          128,628        3.0%
    2003                0                     0                0        0.0%
    2004                0                     0                0        0.0%
     2005               0                     0                0        0.0%
    2006                1                 4,626           81,024        1.9%
2007 or later           0                     0                0        0.0%
                       --               -------       ----------      ------
    Totals             56               261,805       $4,273,916      100.0%
                       ==               =======       ==========      ======


                                      -14-
<PAGE>

      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.

      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 1997. During 1997,  Registrant  solicited
written  consent from the holders  PPIs seeking the approval of the  Amendments.
The Amendments,  which were approved by written consent of the requisite holders
of PPIs, were effective as of May 30, 1997,  provided for (i) the ability of the
remaining  General Partners of Registrant to continue the business of Registrant
after certain events of  dissolution,  including the death of Harry B. Helmsley;
(ii) the  appointment  of a new  General  Partner  to  replace a former  General
Partner, and various minor amendments related to the foregoing.

                                     PART II

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

      As discussed above, Registrant is a limited partnership. Participations in
Limited Partnership  Interest or "PPIs", which represent the beneficial interest
of the  Registrant's  sole Limited Partner,  are traded in the  over-the-counter
market on the National  Association of Securities  Dealers Automated  Quotations
System  ("NASDAQ") under the symbol "IVPA." There is no regular market for these
securities and quotations are limited and sporadic.
          
      The  range  of  high  and  low  closing  bid  quotations  for  PPIs in the
over-the-counter market for the two most recent years were as follows:


                                      -15-
<PAGE>

                           1997                                 1996
                           ----                                 ----
                  High            Low                     High           Low
First Qtr.         60              38                      36             33
Second Qtr.        85              57                      46             32
Third Qtr.         86             65 1/2                   45            39 1/2
Fourth Qtr.        71              61                     45 1/4         36 1/2

      The  foregoing   over-the-counter   quotations  represent  prices  between
dealers,  do not include  retail  mark-up,  mark-down or commission  and may not
necessarily  represent actual transactions.  As of December 31, 1997, there were
610 holders of record of Participation Interests.

      Pursuant  to the  Partnership  Agreement,  Registrant  is required to make
certain cash distributions to holders of Participation  Interests. 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

                H Associates LLC*

                Helmsley-Noyes Company, Inc.

                Minlyn, Inc.

      Converted Special L.P. Interest

                Leona M. Helmsley                           .95%

      Special Limited Partners (as a group):               48.5%

                Leona M. Helmsley

                Irving Schneider

      Limited Partner (nominee for
      holders of Partnership
      Participation Interests):                            50.0%

------------
* Replaced Harry B. Helmsley as of July 3, 1997 pursuant to the Amendments.


                                      -16-
<PAGE>

      The  Limited  Partner is the  nominee  for the  holders  of  Participation
Interests and all  distributions to the Limited Partner are distributed  ratably
to the  holders  of  820,000  Participation  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
Participation Interests. If Registrant does not have funds for such distribution
(from cash on hand or borrowings),  the Agreement obligates the General Partners
to lend or contribute funds to Registrant for such purpose.

      In  1997,   Registrant  had  "net  operating  revenues"  (as  defined)  of
$9,174,787,  of which  $4,923,892 in the  aggregate (or $6.00 per  Participation
Interest,  $.48 of which, for financial reporting purposes,  represents a return
of  capital)  was  distributed  on March 31, 1998 to the holders of record as of
December 31, 1997 of  Participation  Interests.  An aggregate of  $4,923,892  in
respect of 1997 net  operating  revenues is required  to be  distributed  to the
Special Limited  Partners and General  Partners  identified  above.  The Special
Limited Partners also deferred receipt of their  distributions in respect of net
operating  revenues for 1994, 1995, 1996 and 1997. See  Management's  Discussion
and Analysis of Financial Condition and Results of Operations.

      In  1996,   Registrant  had  "net  operating  revenues"  (as  defined)  of
$8,342,911,  of which  $5,241,297 in the  aggregate (or $6.39 per  Participation
Interest,  $.53 of which, for financial reporting purposes,  represents a return
of capital) was  distributed to the holders of record as of December 31, 1996 of
Participation  Interests.  An  aggregate  of  $5,241,297  in respect of 1996 net
operating revenues is required to be distributed to the Special Limited


                                      -17-
<PAGE>

Partners and General  Partners  identified  above.  The Special Limited Partners
have  deferred  receipt  of their  distributions  in  respect  of net  operating
revenues for 1994,  1995 and 1996. See  Management's  Discussion and Analysis of
Financial Condition and Results of Operations.

      "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.  Net operating  revenues of Registrant in recent years
has exceeded cash available for  distribution  to  Registrant's  partners.  This
trend is  anticipated to continue.  Consequently,  Registrant may have to borrow
additional funds or sell properties to fund such  distributions of net operating
revenues in the future. In addition,  Registrant's  Special Limited Partners and
General  Partners have deferred  receipt of their portion of 1994, 1995 1996 and
1997 net operating revenues. See "Item 7 below."


                                      -18-
<PAGE>

      6. Selected Financial Data.

<TABLE>
<CAPTION>
                             1997           1996         1995          1994           1993
                             ----           ----         ----          ----           ----
<S>                       <C>           <C>           <C>           <C>           <C>        
Income Statement
Data

Gross revenues from       $46,463,473   $52,216,081   $53,879,055   $52,739,194   $55,663,069
real estate

Net Income transferred      8,726,836     8,452,069     9,331,341     8,702,453     9,369,900
to Partner's capital
accounts

Net operating               9,174,787     8,342,911     9,857,034    10,212,572    11,406,150
revenues, as defined

Net income per                 5.5280        5.8636        5.8446        5.4269        6.6122
Participation Interest:
Balance Sheet Data

Total assets              $53,585,976   $55,393,657   $55,061,349   $55,524,560   $54,562,430

Mortgages payable          36,847,488   $40,314,558   $43,363,342   $46,408,730   $43,656,775

9% Junior Mortgage               --            --            --            --     $10,750,000
Bonds

Chase Interim Loan               --            --            --            --     $ 6,000,000

Affiliate Loans           $18,000,000   $18,000,000   $18,000,000   $18,000,000          --

</TABLE>


                                      -19-
<PAGE>

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

      Liquidity and Capital Resources:

      Historically,  Registrant's  income for operations has been  sufficient to
provide for its expenses.  From time to time,  however,  Registrant has borrowed
funds to meet its short  term  liquidity  needs.  Registrant  believes  that its
properties are not overly leveraged and that, under normal market conditions, it
will be able to obtain additional financing as needed. Alternatively, Registrant
may sell assets to discharge its  obligations.  On February 4, 1997,  Registrant
announced that it was offering its  commercial  properties for sale. On July 24,
1997, Registrant announced that it had suspended its sales effort.

      Pursuant  to  a  Second  Note  Modification  Agreement,  the  maturity  of
Registrant's  Chase Loan was extended to January 2, 1999. See "Business"  above.
The  Registrant's  mortgage loan with Apple Bank pertaining to its 1328 Broadway
property in New York City is scheduled  to mature on April 24, 1998.  Registrant
anticipates that it will refinance this loan.

      Registrant is required to make certain cash  distributions to its partners
for each year. See "Item 5." Distributions to holders of Participation Interests
in respect of 1994,  through 1997 net operating  revenues were provided for with
cash from  operations.  The General and Special  Limited  Partners have deferred
receipt of their portion of  distributions  in respect of 1994,  1995,  1996 and
1997 net operating  revenues.  Registrant believes that distributions to holders
of Participation  Interests of net operating  revenues for 1997 will be provided
for with  cash  from  operations.  Registrant  also  believes  that the  General
Partners and Special Limited Partners will, if necessary, defer receipt of their
entitlement  to 1997 net  operating  revenues  to  accommodate  the  Registrants
liquidity needs. Registrant does not know, however, whether the General Partners
and the Special Limited Partners will make additional loans to the Registrant


                                      -20-
<PAGE>

to finance such  distributions.  Registrant  anticipates  satisfying its working
capital  requirements  for 1997  generally  through cash from the operations and
additional  short-term  borrowings or mortgage  refinancings  and/or the sale of
properties.

      Net cash provided by operating  activities was approximately  $7.7 million
in 1997 as  compared  to $12.9  million in 1996 and 11.2  million in 1995.  Such
lower levels in 1997 were  primarily  attributable  to prepayment of real estate
taxes due of  approximately  $2.0 million,  additions to leasing  commissions of
approximately $1.2 million, and reductions in accounts payable,  accrued leasing
commissions and sundry liabilities of approximately $2.0 million.  Net cash used
in financing  activities was approximately  $8.4 million in 1997, 1996 and 1995.
Net cash used in investing  activities was approximately $2.2 million in 1997 as
compared to $ 2.4 million in 1996 and $3.8  million in 1995.  Mortgages  payable
decreased to approximately $36.8 million in 1997 as compared to $40.3 million in
1996 primarily due to scheduled mortgage principal payments.

      On  November  30,  1994,   Registrant   borrowed  $6,000,000  from  Irving
Schneider, a General Partner of Registrant, and $12,000,000 from an affiliate of
Harry B. Helmsley, also then a General Partner, pursuant to the Affiliate Loans.
The  Affiliate  Loans bear interest at the rate  announced  from time to time by
Chase as its "prime rate" and are due and payable on demand. The proceeds of the
Affiliate Loans were used by Registrant (i) to prepay indebtedness owed to Chase
in the amount of  $10,750,000  (which  amount Chase  subsequently  readvanced to
Registrant in connection  with the Letter of Intent as defined  below);  (ii) to
pay the outstanding accrued interest on the Bonds due on December 1, 1994 in the
amount of $484,000;  (iii) to pay  outstanding  distribution  obligations to the
Special Limited Partners in respect of 1993 net operating  revenues,  which were
past due since March 31, 1994 in the amount of $5,317,000;


                                      -21-
<PAGE>

and (iv) to reduce a portion of Registrant's accounts payable to trade creditors
by approximately $1,449,000.

      On December 1, 1994, Chase loaned  $10,750,000 to Registrant,  which funds
were used by  Registrant  to repay the Bonds in full on such  date.  Chase  also
agreed to extend the final maturity date of Registrant's mortgage loans relating
to  three of its New  York  properties  and to its One  North  Dearborn  and One
LaSalle buildings in Chicago  (collectively,  the "Chase Loans") from January 2,
1995 to January 2, 1997.  On April 25, 1995,  Registrant  and Chase entered into
definitive  agreements  providing for the extension of the maturity of the Chase
Loans and the cross collateralization and the defaults among the properties that
secure the Chase Loans.  The maturity of the Chase Loans was extended to January
2, 1998 and, subsequently, to January 2, 1999.

      Pursuant  to an  agreement  with  Chase,  Registrant  has agreed to invest
$1,000,000 at its 1440 Broadway  property in New York. See  "Business".  Through
December 31, 1997,  Registrant  has  invested  approximately  $860,000 on tenant
improvements  and  leasing  commissions.  Registrant  has  no  present  material
commitments  for any other  capital  expenditures  in excess of normal  business
requirements  and does not  anticipate  incurring any such  commitments  through
1997.

      The charges to operations  for  depreciation  represent the  allocation of
historical  costs and are  significantly  less  than if they  were  based on the
current cost to replace the Registrant's  properties.  Registrant,  however,  is
prohibited by the Partnership Agreement from replacing its properties.

      Six of Registrant's  properties are encumbered by first mortgages,  all of
which require payments of interest at variable rates. Consequently,  if interest
rates on such variable


                                      -22-
<PAGE>

rate mortgages were to increase,  Registrant could have less funds available for
distribution to holders of Participation Interests.

      Until recently, computer programs were written to store only two digits of
date- related  information in order to more  efficiently  handle and store data.
Thus the programs were unable to properly  distinguish between the year 1900 and
the year  2000.  This is  frequently  referred  to as the "Year  2000  Problem."
Registrant is primarily  dependent on its Managing Agent,  Helmsley-Spear,  Inc.
("HSI"), for maintaining and processing financial  information  concerning IPA's
properties  and for its billing  processes  and  accounting  functions.  HSI has
advised IPA that, although it has not fully assessed the impact of the Year 2000
on its computer  systems and data bases,  it will  probably  need to replace its
computer systems to effectively deal with the Year 2000 problem. HSI has advised
IPA that it intends to resolve  its Year 2000 issues in a timely  manner.  There
can be no assurances,  however,  that HSI will be able to replace or upgrade its
computer system in a timely manner so as to avoid all  inconvenience or problems
for IPA, or that a portion of the cost of such system upgrade will not be passed
on  to  IPA.  Such  problems  could  include  temporary   inability  to  process
transactions,  send  invoices or engage in similar  activities.  These  problems
could be substantially  alleviated with manual processing on a delayed basis but
there can be no assurances in this regard.

      Results of Operations:

1997 Compared to 1996

      Gross revenues from rentals for 1997 decreased  approximately $5.7 million
(approximately 11%) as compared to 1996, primarily due to the vacancy of the 570
Broad Street property in Newark,  New Jersey since December 31, 1996, as well as
the  disposition  of  two  other  properties  in  Newark.  In  addition,   lease
termination fees decreased in 1997 as


                                      -23-
<PAGE>

compared  to  1996.  Net  income  for  1997  increased   approximately  $274,000
(approximately  3.2%) primarily due to an increase in other revenues relating to
real estate tax refunds and  insurance  proceeds.  Total  expenses  decreased by
approximately  $4.2  million  (approximately  9.8%)  primarily  as a  result  of
decreases  in  leasehold  rentals,  interest,  real  estate  taxes,  repairs and
maintenance and other property operating expenses.

      During  1997  approximately  14  tenants  in  various  properties  with an
aggregate  annualized  rental of  approximately  $262,000 vacated their premises
prior to the  expiration  of their leases.  While leasing  activity has recently
been more active in New York, it remains  relatively flat in Chicago and down in
Newark.  Tenants of  Registrant  have been able to negotiate  lease  renewals at
rates lower than prior levels.  Although Registrant  anticipates  continuing its
practice of negotiating new leases and renewing others, Registrant believes more
of its space may become  vacant as a result of  additional  tenants going out of
business,  reducing their space  requirements or relocating.  In the competitive
markets in which the Registrant's  properties are located, it is often difficult
to find acceptable  replacement tenants,  even at lower rents. These trends have
adversely affected  Registrant's results in 1997 and could continue to adversely
affect  Registrant's  results in 1998. At December 31, 1997,  Registrant did not
have any receivables associated with such vacancies.

      For  1997   Registrant's   interest  expense  decreased  to  $4.7  million
(approximately  3.9%),  primarily  due to lower  levels of  average  outstanding
indebtedness.

      Registrant's real estate tax expense in 1997 totalled $9.4 million,  which
represents a decrease of approximately  4.7% over amounts expensed in 1996. This
decrease  is  attributable   primarily  to  decreases  in  certain  real  estate
assessments and the disposition of certain properties. Registrant, under certain
commercial leases, is able to pass a portion of the increases in real


                                      -24-
<PAGE>

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

      Management fees decreased  approximately 6.0% in 1997 as compared to 1996,
primarily  due to lower  gross  revenues  from  rentals.  Depreciation  expenses
decreased  approximately 2.8% in 1997 as compared to 1996,  primarily due to the
fact that certain of Registrant's  properties  became fully  depreciated by 1996
and the disposition of certain  properties.  Other operating  expenses decreased
approximately 10.6% in 1997,  primarily due to lower property taxes and interest
expense and reduced property operating expenses and repair and maintenance.

      On June 1, 1997,  Registrant  assigned  its ground  lease with the City of
Newark,  New Jersey on the  property  located  at 1180  Raymond  Boulevard  to a
newly-formed  corporation.  The  assignee  has agreed that such  assignment  was
received  by it as agent for  Registrant.  In  connection  with  this  transfer,
management had determined that, due to the recurring  operating losses sustained
by this property and the general  deterioration  of the  surrounding  area,  the
transferred  leasehold had no value, and recorded a reserve for impairment equal
to the book value of the leasehold of $711,522 at the transfer date. In December
1997, Registrant received from a third party an offer of $1,350,000 for its 1180
Raymond Blvd.  ground lease.  Upon receipt of the offer registrant  reversed the
previously  recorded  reserve for impairment.  On January 22, 1998, the property
was sold for  $1,350,000.  In connection with such sale, past due property taxes
on the  property  totalling  $410,143  were  paid to the City of  Newark  with a
portion of the sale proceeds.


                                      -25-
<PAGE>

1996 Compared to 1995

      Gross revenues from rentals (which  included a $1 million lump sum payment
from  a  tenant  for  early   termination  of  its  lease)  for  1996  decreased
approximately 3.2% as compared to 1995,  primarily due to the following factors.
Firstly, decreased occupancy rates at Registrant's Chicago and Newark properties
have had an adverse  affect on revenues.  Secondly,  Registrant  terminated  the
ground  lease at 744 Broad  Street  effective  July 1, 1996 which  resulted in a
decline  in  revenue.  Net  income  for 1996  decreased  approximately  $879,000
(approximately  9.4%) primarily due to the decrease in gross revenues  mentioned
above and a one time charge for loss on  abandonment of real estate at 744 Broad
Street,   Newark,   New  Jersey.   Total  expenses  decreased  by  approximately
$1,578,000,  primarily as a result of a decrease in real estate taxes, leasehold
rentals and lower interest on indebtedness.

      During 1996 approximately  seventeen tenants in various properties with an
aggregate  annualized  rental of  approximately  $255,964 vacated their premises
prior to the  expiration of their  leases.  In February  1996,  the tenant which
occupied 92% of the building  located at 570 Broad  Street,  Newark,  New Jersey
notified  management  of its  intention  not to renew  its lease  which  expired
December 31, 1996.  While leasing  activity has recently been more active in New
York,  it  remains  relatively  flat in Chicago  and down in Newark.  Tenants of
Registrant  have been able to negotiate lease renewals at rates lower than prior
levels.  Although Registrant  anticipates continuing its practice of negotiating
new leases and renewing others, Registrant believes more of its space may become
vacant as a result of additional  tenants going out of business,  reducing their
space  requirements  or  relocating.


                                      -26-
<PAGE>

      For  1996   Registrant's   interest   expense   decreased  to   $4,879,233
(approximately  10%),  primarily  due to lower  levels  of  average  outstanding
indebtedness.

      Registrant's  real estate tax expense in 1996 totalled  $9,883,375,  which
represents a decrease of  approximately  6% over amounts  expensed in 1995. This
decrease is attributable  primarily to decreases in real estate  assessments for
certain of the properties.  Registrant, under certain commercial leases, is able
to pass 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  3% in 1996 as compared to 1995,
primarily  due to lower  gross  revenues  from  rentals.  Depreciation  expenses
decreased  approximately  1% in 1996 as compared to 1995,  primarily  due to the
fact that certain of Registrant's  properties  became fully depreciated by 1995.

      8.  Financial Statements and Supplementary Data.

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

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

      None.

                                    PART III

      10. General Partners of the Registrant.

            (a) (b) Identification of General Partners.



                                      -27-
<PAGE>

      Registrant  is a  limited  partnership.  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 H Associates,  has served in such capacity  since December
4, 1969.

      The names, ages, and business experience during the past five years of the
two individual  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 - 78; 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.

      H  Associates  - A  limited  liability  company  created  in  July,  1997,
wholly-owned  by Leona M. Helmsley,  which was admitted as a General  Partner of
Registrant on July 3, 1997 to succeed Harry B. Helmsley.

      Helmsley-Noyes  Company,  Inc. (formerly Charles F. Noyes Company,  Inc.),
was incorporated in 1926. It is a real estate  management firm in New York City,
managing approximately 25 properties. It is owned by Helmsley Enterprises, Inc.,
which in turn is wholly-owned by the Harry B. Helmsley Revocable Trust, of which
Leona M. Helmsley is the beneficiary.

      Minlyn,  Inc.  was  formed  in  1968.  All of its  stock  is  owned by Mr.
Schneider.  There is no family  relationship  between the two individual General
Partners.  Mr.  Schneider  is a director of Reliance  Group  Holdings,  Inc. and
Reliance Insurance Company.


                                      -28-
<PAGE>

      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.

      11. Executive Compensation.

      (a) General, (b) Summary Compensation Table, (c) Options/SAR Grants Table,
(d) Aggregate  Option/SAR  Exercises and Fiscal Year-End Option/SAR Value Table,
(e) Long-Term  Incentive  Plan ("LTIP")  Awards  Table,  (f) Defined  Benefit or
Actuarial  Plan  Disclosure,  (g)  Compensation  of  Directors,  (h)  Employment
Contracts and Termination of Employment and Change-in-Control  Arrangements, (i)
Additional  Information  with Respect to Compensation  Committee  Interlocks and
Insider Participation in Compensation Decisions.

      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  of the  sale of
Registrant's properties. The Remaining Original Cash Contribution as of December
31,  1997 was  $1,160,000.  For the fiscal  years  ended  December  31, 1997 and
December  31,  1996,  Registrant  paid or accrued,  pursuant  to such  paragraph
11A(3), guaranteed payments to the


                                      -29-
<PAGE>

General  and Special  Limited  Partners  in an  aggregate  amount of $101,500 as
follows: Harry B. Helmsley - $67,566 (payable to Leona M. Helmsley in respect of
the Converted Special L.P. interest), Irving Schneider - $33,732, Helmsley-Noyes
Company, Inc. - $91, H Associates - $10, 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 operating income of Registrant.  During the fiscal year ended December 31,
1997, Registrant accrued in connection with such annual payments an aggregate of
$238,125 as follows:  Harry B. Helmsley - $150,814 (payable to Leona M. Helmsley
in respect of the Converted Special L.P. Interest),  Irving Schneider - $71,437,
Helmsley-Noyes  Company,  Inc. - $7,145, H Associates - $792, and Minlyn, Inc. -
$7,937.  During the fiscal year ended December 31, 1996,  Registrant  accrued in
connection with such annual payments an aggregate amount of $261,499 as follows:
Harry B.  Helmsley  -  $165,618,  Irving  Schneider  -  $78,449,  Helmsley-Noyes
Company,  Inc. - $8,716 and  Minlyn,  Inc.  - $8,716.  The total  accrual to the
General  Partners  and their  affiliates  in 1997 and 1996 in  respect  of their
Original Cash  Contribution  and right to 1/2% of gross operating income were as
follows:  Leona M.  Helmsley  and Harry B.  Helmsley  - $226,418  and  $242,001,
respectively;  Irving  Schneider  and his  affiliates - $113,207  and  $120,998,
respectively.  Mr.  Schneider also is entitled to receive  distributions  of net
operating  revenues in his capacity 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 General  Partners
(other than for their  interest as General  Partners,  as described  above),  or
employment contracts or change-in-control arrangements.


                                      -30-
<PAGE>

      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  Article  8A of  the  New  York
Partnership Law.

      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, 1997:

                                                   Amount and
                                                   Nature of
                        Name and Address of        Beneficial           Percent
Title of Class          Beneficial Owner           Ownership            of Class
--------------          ----------------           ---------            --------
Special Limited         Leona M. Helmsley                       -        66.66
Partnership Interest                               Direct

                        Irving Schneider                        -        33.34
                                                   Direct (2)


                                      -31-
<PAGE>

                                                   Amount and
                                                   Nature of
                        Name and Address of        Beneficial           Percent
Title of Class          Beneficial Owner           Ownership            of Class
--------------          ----------------           ---------            --------
Converted Special L.P.  Leona M. Helmsley          Direct                100.00%
Interest                                                                
                                                                        
Participation           Leona M. Helmsley          282,377(1)             34.44%
Interests                                                               
                                                                        
                        Irving Schneider           90,095                 10.99
                                                   Direct (2)           
                                                                        
                        John D. and Catherine T.   87,000                 10.61
                        MacArthur Foundation c/o   Direct               
                        Cyrus Smith                                   
                        Chief Financial Officer
                        Foundation Land Company
                        4176 Burns Road
                        Palm Beach Garden, FL
                        33410-4653

---------------
(1)   Includes: 258,877 PPIs owned directly by Mrs. Helmsley; 4,000 PPIs held by
      Helmsley-Noyes   Company,   Inc.   (.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%) and 6,500 PPIs held by Park Lane Hotel, Inc.
      (.8%).  See Item 10 hereof as to H ownership  of  Helmsley-Noyes  Company,
      Inc. HBH Holdings  Corp.  and Park Lane Hotel,  Inc. are  wholly-owned  by
      Helmsley Enterprises,  Inc. Mrs. Helmsley is the executor of the estate of
      Harry  B.  Helmsley  and  is  the  beneficiary  of  the  Revocable  Trust.
      Consequently,  Mrs.  Helmsley may be deemed to be the beneficial  owner of
      such securities.

(2)   Does not include 31,960  Participation  Interests owned by Mr. Schneider's
      daughters (3.9%).

      (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,  1997 of each  class of
partnership interests by its General Partners individually and as a group:


                                      -32-
<PAGE>

                                                  Amount and
                                                   nature of
                           Name and Address of     Beneficial         Percent
Title of Class             Beneficial Owner        Ownership          of Class
--------------             ----------------        ---------          --------
General Partnership        Irving Schneider
Interests                  880 Fifth Avenue
                           New York, NY            (1)                90.91

                           Leona M. Helmsley       Indirect(2)         9.09

                           As a group                                100.00 (2)

Special Limited            Leona M. Helmsley       Direct (3)         66.66
Partnership Interests

                           Irving Schneider        Direct (3)         33.34

                           As a group                                100.00


Converted Special          Leona M. Helmsley       Direct            100.00%
Limited Partner Interests

Participation Interests    Leona M. Helmsley       282,377(4)(5)      34.44

                           Irving Schneider        90,095             10.99
                                                   Direct (5)

                           As a group              372,472(4)(5)      45.42


-------------
(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)   Leona M.  Helmsley is the sole owner of H  Associates,  which is a General
      Partner  of  Registrant  and,  indirectly,  is  the  beneficial  owner  of
      Helmsley-Noyes, Company, Inc., also a General Partner of Registrant.

(3)   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."

(4)   Includes:  258,877 PPIs owned  directly by Leona M.  Helmsley;  also 4,000
      PPIs held by  Helmsley-Noyes  Company,  Inc.  (.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%) and 6,500 PPIs held by Park Lane
      Hotel, Inc. (.8%). HBH Holdings Corp. and Park


                                      -33-
<PAGE>

      Lane Hotel,  Inc. are  wholly-owned  by Helmsley  Enterprises,  Inc.  Mrs.
      Helmsley  is the  executor of the estate of Harry B.  Helmsley  and is the
      beneficiary of the Revocable  Trust.  Consequently,  Mrs.  Helmsley may be
      deemed to be the beneficial owner of such securities.

(5)   Does not include 31,960  Participation  Interests owned by Mr. Schneider's
      daughters (3.9%).



      13. Certain Relationships and Related Transactions.

      (a) Transactions with Management and Others.

      (b) Certain Business Relationships.

      As set forth in Item 11(a) above,  during the year ended December 31, 1997
Registrant  paid  certain  fees and certain  guaranteed  payments to each of its
corporate  General  Partners,  Helmsley-Noyes  Company,  Inc. and Minlyn,  Inc.,
pursuant to the Partnership Agreement. See Item 10 hereof as to the ownership of
said corporations.

      Helmsley-Spear,  Inc.,  either directly or through  various  subsidiaries,
acts as  managing  agent of the  Properties.  For such  management  and  leasing
brokerage services, Helmsley-Spear, Inc. charged Registrant the aggregate sum of
approximately $2,098,318 during the fiscal year ended December 31, 1997. Leasing
commissions  charged by Helmsley-Spear,  Inc. are based upon varying percentages
of the annual rent paid by tenants  obtained by  Helmsley-Spear,  Inc.  Property
management  fees  charged by  Helmsley-Spear,  Inc.  are based  upon  negotiated
amounts  that are  believed to be below  market  rate.  Leasing  fees charged by
Helmsley-Spear,  Inc.  to  Registrant  are  believed  to be,  from  Registrant's
perspective,  on a basis  that  approximate  those that  would be  available  to
Registrant from non-affiliates at arm's-length. Prior to September 24, 1997, Mr.
Helmsley or his  estate,  was the  indirect  owner of  substantially  all of the
capital stock of Helmsley-Spear, Inc. and Mr.


                                      -34-
<PAGE>

Schneider was a stockholder of Helmsley-Spear, Inc. and Executive Vice President
of that company. On September 24, 1997, Mr. Schneider became a principal owner
of Helmsley-Spear, Inc. which, previously, had been owned by Harry B. Helmsley
or his estate. 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.

      Registrant  purchases some of its maintenance  supplies and materials from
Deco  Purchasing  Co. Inc.,  an affiliate of one of its  partners.  During 1994,
Registrant  also borrowed $18 million from Irving  Schneider and an affiliate of
Harry Helmsley pursuant to the Affiliate Loans. See Item 1(a) above.

      (c) Indebtedness of Management.

      None.

                                     PART IV

      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  Act of 1934
regarding  incorporation  by reference,  listed below are the exhibits which are
filed as part of this report  (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.


                                      -35-
<PAGE>

            (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.

            (10.2)Forms of Promissory Notes, dated November 30, 1994, evidencing
                  the  Affiliate  Loans is hereby  incorporated  by reference to
                  Exhibit  10.2 of  Registrant's  Report  on Form  10-K  for the
                  fiscal year ended December 31, 1994.

            (b)   Reports on Form 8-K filed  during  the period  covered by this
                  Report: None.

            (c)   Exhibits -- None.


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

            (27)  Financial Data Schedule


                                      -36-
<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, 1997

                        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

The following financial statements of Investment Properties Associates are
included in Item 8:

                                                                            Page

Report of Independent Auditors...............................................S-1
Balance Sheets-December 31, 1997 and 1996....................................S-2
Statements of Income-Years Ended December 31, 1997,
1996 and 1995........................................................S-3 and S-4
Statements of Changes in Partners' Capital (Deficiency)-
Years Ended December 31, 1997, 1996 and 1995.................................S-5
Statements of Cash Flows-Years Ended December 31, 1997,
1996 and 1995................................................................S-6
Notes to Financial Statements........................................S-7 to S-19


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

Schedule III-Real Estate and Accumulated Depreciation..............S-20 and S-21

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, 1997 and 1996,
and the related statements of income,  changes in partners' capital (deficiency)
and cash flows for each of the years in the three year period ended December 31,
1997. Our audits also included the financial  statement  schedule  listed in the
index  at  Item  14(a).   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  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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, 1997 and 1996,  and the results of its operations and
its cash flows for each of the years in the three year period ended December 31,
1997, in conformity with generally accepted accounting principles.  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.
                                                      
                                                        ERNST & YOUNG LLP

New York, New York
April 2, 1998


                                      S-1
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                                 Balance Sheets

                                                        1997           1996 
                                                    ----------------------------
Assets                                                                          
Real estate, at cost (Notes 3, 5 and 14)           $136,524,047    $138,214,361 
   Less accumulated depreciation and                                            
   amortization                                      95,613,778      95,710,079 
                                                   -----------------------------
                                                     40,910,269      42,504,282 
                                                                                
Cash and cash equivalents                             2,240,190       5,187,591 
                                                                                
Due from managing agent (Helmsley-                                              
   Spear Inc.) including tenants'                                               
   security deposit of $1,595,372 (1997) 
   and $1,587,384 (1996) (Note 6)                     2,712,979       2,081,585

Receivables, principally for rentals                  1,459,925       1,443,576

Deferred charges, including deferred leasing
   commissions of $3,329,055 (1997) 
   and $3,225,134 (1996)(Note 6)                      6,262,613       4,176,623
                                                   -----------------------------
Total assets                                       $ 53,585,976   $  55,393,657 
                                                   =============================

Liabilities and partners' capital (deficiency)                                  
Accounts payable                                   $  2,210,354   $   2,755,221 
Accrued real estate taxes                             4,884,856       4,630,585 
Accrued interest                                        393,144         396,153 
Distributions payable to General Partners,                                      
   Special Limited Partners and Limited                                         
   Partner (Note 9)                                  25,234,597      20,761,396 
Guaranteed payments due to General                                              
   Partners, Special Limited Partners and                                       
   Limited Partner (Note 7)                             384,625         393,000 
Accrued leasing commissions and                                                 
   management fees due to Helmsley-                                             
   Spear, Inc. (Note 6)                                 772,348       1,216,015 
Sundry and accrued liabilities                          847,668       1,830,035 
Notes payable to related parties(Note 4)             18,000,000      18,000,000 
Mortgages payable (Note 5)                           36,847,488      40,314,558 
Deposits and rents received in advance of                                       
   $119,174 (1997) and $96,613 (1996)                 1,981,789       1,946,639 
                                                   -----------------------------
Total liabilities                                    91,556,869      92,243,602 
                                                   -----------------------------
Commitments and contingencies (Notes 11, 12                                     
and 13)                                                                         

Partners' capital (deficiency)
  (Notes 1, 7, 8 and 9):                                                        
     General Partners                                (3,089,297)     (8,388,913)
     Special Limited Partners                       (50,128,009)    (44,098,397)
     Limited Partner (represented by                                            
       the equivalent of 820,000                                                
       Participation Interests)                      15,246,413      15,637,365 
                                                   -----------------------------
                                                    (37,970,893)    (36,849,945)
                                                   -----------------------------
Total liabilities and partners'                                                 
   capital (deficiency)                            $ 53,585,976    $ 55,393,657 
                                                   =============================
See accompanying notes.


                                      S-2
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                              Statements of Income

                                                  Year ended December 31,
                                             1997          1996          1995
                                         ---------------------------------------
Revenues:
Gross revenues from
 real estate (Note 12)                   $46,463,473   $52,216,081   $53,879,055
Interest and other income                  1,144,284        74,663       109,309
                                         ---------------------------------------
                                         $47,607,757    52,290,744    53,988,364
                                         ---------------------------------------

Expenses:
  Leasehold rentals (Note 11)                563,446       929,787     1,258,903
  Real estate taxes                        9,418,042     9,883,375    10,496,407
  Interest (Notes 4 and 5)                 4,690,344     4,879,233     5,394,017
  Management fees (Note 6)                 1,373,436     1,460,004     1,506,896
  Payroll and related expenses             5,026,993     5,208,172     5,379,123
  Repairs and maintenance expenses         2,928,374     3,530,972     2,964,873
  Other property expenses                  9,645,887    11,753,758    12,198,128
  Administrative expenses                    239,602       236,072       195,661
  Co-owners' share of
   (expense) income                           60,817        53,766        75,638
  Depreciation and
   amortization of real estate             3,349,946     3,447,071     3,487,384
  Amortization of leasing
   commissions                             1,122,721     1,128,228     1,127,422
  Amortization of mortgage
   refinancing costs                          91,775       184,266       188,152
                                         ---------------------------------------
                                          38,511,383    42,694,704    44,272,604
                                         ---------------------------------------
Income before items shown below            9,096,374     9,596,040     9,715,760

Loss on abandonment of real 
 estate (Note 3)                                --         765,972          --

Loss on sale of real 
 estate (Note 3)                              14,913          --            --
                                         ---------------------------------------

Income before guaranteed payments 
 required under the Limited 
 Partnership agreement (Note 7)          $ 9,081,461   $ 8,830,068   $ 9,715,760

See accompanying notes.


                                      S-3
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                        Statements of Income (continued)

                                                    Year ended December 31,
                                             1997           1996           1995
                                         ---------------------------------------
Guaranteed payments required 
 under the Limited Partnership 
 agreement (Note 7):
   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                     238,125        261,499        267,919
                                         ---------------------------------------
                                           354,625        377,999        384,419
                                         ---------------------------------------
Net income                               $8,726,836    $8,452,069     $9,331,341
                                         =======================================
Net income allocable
 as follows: (Note 8)

General Partners                         $   40,829    $ (633,678)    $  136,162

Special Limited Partners                  4,153,067     4,277,582      4,402,586

Limited Partner                           4,532,940     4,808,165      4,792,593
                                         ---------------------------------------
                                         $8,726,836    $8,452,069     $9,331,341
                                         =======================================
Net Income Per Limited
 Partner Participation Interest
  (820,000 units outstanding):           $   5.5280    $   5.8636     $   5.8446
                                         =======================================
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)
   December 31, 1994                           $(33,744,329)       $(7,578,062)       $(42,647,387)       $16,481,120

Distribution to General Partners,
  Special Limited Partners and Limited
  Partner (Note 9)                              (10,406,432)          (156,096)         (5,047,120)        (5,203,216)
Net income for the year ended 
  December 31, 1995                               9,331,341            136,162           4,402,586          4,792,593
                                               -----------------------------------------------------------------------
Partners' Capital (Deficiency)
   December 31, 1995                            (34,819,420)        (7,597,996)        (43,291,921)        16,070,497

Distribution to General Partners,
  Special Limited Partners and Limited
  Partner (Note 9)                              (10,482,594)          (157,239)         (5,084,058)        (5,241,297)
Net income for the year ended 
  December 31, 1996                               8,452,069           (633,678)          4,277,582          4,808,165
                                               -----------------------------------------------------------------------
Partners' Capital (Deficiency) 
  December 31, 1996                             (36,849,945)        (8,388,913)        (44,098,397)        15,637,365

Reclassification of General Partner
  interest (Note 1)                                       -          5,312,950          (5,312,950)                 -
Distribution to General Partners,
  Special Limited Partners and Limited
  Partner (Note 9)
                                                 (9,847,784)           (54,163)         (4,869,729)        (4,923,892)
Net income for the year ended 
  December 31, 1997                               8,726,836             40,829           4,153,067          4,532,940
                                               -----------------------------------------------------------------------
Partners' Capital (Deficiency) 
  December 31, 1997                            $(37,970,893)       $(3,089,297)       $(50,128,009)       $15,246,413
                                               =======================================================================
</TABLE>

See accompanying notes.


                                      S-5
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                            Statements of Cash Flows

                                              Year ended December 31,
                                        1997           1996             1995
                                   ---------------------------------------------
Operating activities:
Net income                         $  8,726,836    $  8,452,069    $  9,331,341
Adjustments to reconcile
 net income to net cash
 provided by operating
 activities:
Depreciation and amortization         4,564,442       4,759,565       4,802,958
Loss on abandonment
 of real estate                            --           765,972            --
Loss on sale of real estate              14,913            --              --
Changes in operating assets
 and liabilities:
Due from managing agent                (631,394)        659,072        (501,119)
Receivables                             (16,349)       (160,659)         29,618
Deferred charges, net                (3,304,107)     (1,820,797)     (1,089,557)
Accounts payable                       (544,867)        225,737        (594,366)
Accrued real estate tax                 254,271          66,315        (449,205)
Accrued interest                         (3,009)        (38,373)       (100,058)
Guaranteed payments due
 to General Partners
 Special Limited Partners
 and Limited Partner                     (8,375)          8,580           8,672
Accrued leasing commissions
 and management fees                   (443,667)        701,176         (29,374)
Sundry and accrued liabilities         (982,367)       (929,238)       (224,877)
Deposits and rents
 received in advance                     35,150         225,743           6,561
                                   ---------------------------------------------
Net cash provided by
 operating activities                 7,661,477      12,915,162      11,190,594
                                   ---------------------------------------------
Investing activities:
Property improvements                (2,208,474)     (2,438,279)     (3,827,196)
                                   ---------------------------------------------
Net cash used in investing
 activities                          (2,208,474)     (2,438,279)     (3,827,196)
                                   ---------------------------------------------
Financing activities:
Distributions of net operating
 revenues to General Partners,
 Special Limited Partners
 and Limited Partner                 (5,374,588)     (5,330,917)     (5,366,517)

Principal payments
 on mortgages payable                (3,025,816)     (3,048,784)     (3,045,388)
                                   ---------------------------------------------
Net cash used in
 financing activities                (8,400,404)     (8,379,701)     (8,411,905)
                                   ---------------------------------------------
(Decrease) increase in
 cash and cash equivalents           (2,947,401)      2,097,182      (1,048,507)

Cash and cash equivalents
 at beginning of year                 5,187,591       3,090,409       4,138,916
                                   ---------------------------------------------
Cash and cash equivalents
 at end of year                    $  2,240,190    $  5,187,591    $  3,090,409
                                   =============================================

Supplemental disclosure of
 cash flow information
Cash paid during the year
 for interest                      $  4,693,353    $  4,917,606    $  5,494,075
                                   =============================================
See accompanying notes.


                                      S-6
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                December 31, 1997

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").

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,  which  entity was  allocated  a portion of the general
partner interest owned by one of the corporate general partners.

Following  Mr.  Helmsley's  death,  IPA  announced  that  all of the  properties
included  in the  portfolio  were  available  for sale.  On July 24,  1997,  IPA
announced that it was no longer pursuing a sales effort at that time.

2. Significant Accounting Policies

      a.    The preparation of financial statements in conformity with generally
            accepted accounting principals requires management to make estimates
            and  assumptions  that  affect  the  reported  amount of assets  and
            liabilities and disclosure of contingent assets and liabilities


                                       S-7
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

            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 as earned.

      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 1997,  1996 and 1995 IPA paid
            approximately $673,000,  $750,000, and $820,000,  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.

      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 are as follows:


                                      S-8
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

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

            (ii)  The  carrying  value  of  notes  payable  to  related  parties
                  approximates  fair value as such notes are variable  rate debt
                  which re-prices monthly.

            (iii) The carrying  value of  mortgages  payable  approximates  fair
                  value due to the short term maturities of the notes.

      i.    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 asset's  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.  No indicators of impairment  were present,  and,
            accordingly no provisions  for impairment  have been recorded in any
            of the periods presented.

      j.    In 1997,  the  Financial  Accounting  Standards  Board  issued  FASB
            Statement No. 128, "Earnings Per Share".  Statement 128 replaced the
            calculation  of primary and fully  diluted  earnings  per share with
            basic and diluted  earnings per share.  Unlike primary  earnings per
            share,  basic  earnings per share  excludes any dilutive  effects of
            options, warrants, and convertible securities.  Diluted earnings per
            share is very  similar to fully  diluted  earnings  per  share.  All
            earnings per share amounts for all periods have been presented,  and
            where  appropriate,   restated  to  conform  to  the  Statement  128
            requirements.

            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.

      k.    Certain balances in the 1996 and 1995 financial statements have been
            reclassified to conform to the current year presentation.


                                      S-9
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

3. Real Estate

Real estate  excludes  co-owners'  shares in two properties and is summarized as
follows:

                  Classification                       1997             1996
  ------------------------------------------------------------------------------

  Land                                             $ 21,349,575     $ 21,748,439
  Buildings and building improvements                79,852,946       81,424,292
  Leaseholds and leasehold improvements              22,008,106       22,010,223
  Tenants' alterations                               13,313,420       13,031,407
                                                   -----------------------------
                                                   $136,524,047     $138,214,361
                                                   =============================
                                             
On July 14, 1997, as part of a settlement  with the mortgagee of the 24 Commerce
Street property, IPA transferred title to this property to a third party and was
relieved of liability for the then  outstanding  balance of the mortgage loan of
$441,254. In connection with this transaction, IPA recognized a loss of $14,913.

On July 1, 1996 IPA terminated  the ground lease at the property  located at 744
Broad Street in Newark, New Jersey in accordance with the terms of the lease. In
connection  therewith,  IPA surrendered the  improvements on the property to the
lessor  incurring a loss on  abandonment of real estate of $765,972 for the year
ended December 31, 1996.

4. Notes Payable

On November 30, 1994, affiliates of the General Partners loaned IPA $18,000,000,
evidenced by two promissory  notes (the "Notes") in the amount of $6,000,000 and
$12,000,000.

The  affiliate  notes bear  interest at a variable rate based on the Chase prime
rate and are payable on demand. Interest expense for the year ended December 31,
1997 and  1996,  with  respect  to the  Notes  was  $1,540,750  and  $1,513,625,
respectively.


                                      S-10
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

5. Mortgages Payable

As of December 31, 1997 and 1996 mortgages payable consist of the following:

                                   Interest               Balance      Balance
                                   Rate at              Outstanding  Outstanding
                                   December   Maturity    December     December
Description                        31, 1997     Date     31, 1997      31, 1996
--------------------------------------------------------------------------------
Chase Manhattan Bank (1) (4):
Mortgage loans with
 variable interest rates
 collateralized by:
1440 Broadway, N.Y., N.Y              8.05%   01/02/99  $15,062,428  $16,442,428
261 Fifth Avenue, N.Y., N.Y           8.05%   01/02/99    9,467,810   10,307,810
245 Fifth Avenue, N.Y., N.Y           8.05%   01/02/99    8,317,250    9,097,250

Apple Bank for Savings (2) (4):
Mortgage loan in the amount
 of $8,000,000 with fixed
  interest payments collateralized
  by 1328 Broadway Building
  N.Y., N.Y. (in which IPA has a
  50% tenancy in common interest)     8.50%   4/24/98     4,000,000    4,000,000

First Union National Bank (3)(4):
Mortgage loans with fixed interest
  collateralized by the Federal
  Trust Building in Newark, N.J      7.375%  11/24/97          --        467,070
                                                        ------------------------
                  Total                                 $36,847,488  $40,314,558
                                                        ========================


                                      S-11
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

5. Mortgages Payable (continued)

(1)   IPA executed a Note Modification  Agreement (the "Agreement") on April 25,
      1996  with  Chase   Manhattan  Bank  ("Chase")   whereby   mortgage  loans
      collateralized  by five of IPA's  properties;  1440 Broadway,  NY, NY, 261
      Fifth  Avenue,  NY, NY,  245 Fifth  Avenue,  NY,  NY, One North  Dearborn,
      Chicago, IL and One North LaSalle,  Chicago, IL were generally modified to
      provide for: (a) an extension of the maturity  date until  January 2, 1997
      at which time all outstanding  principal and interest was due and payable,
      (b) interest based on LIBOR plus 2.25% or Prime plus .375% at IPA's option
      subject to certain  limitations  as  defined in the  Agreement,  (c) cross
      default and cross  collateralization  provisions for the five  properties,
      (d) IPA's guaranty of $6,000,000 of the outstanding principal balance, and
      (e) principal  payments  with respect to the mortgage  loans of $3,000,000
      during 1996.

      On December 20, 1996 IPA accepted an early  surrender of space  located at
      1440 Broadway,  New York,  New York, in exchange for an early  termination
      payment of  $1,000,000  which was recorded as income at December 31, 1996.
      In consideration of Chase consenting to the early termination,  IPA agreed
      to invest  $1,000,000 for leasing costs and capital  improvements  at 1440
      Broadway.

      On March 28, 1997 a first  modification  to the Agreement was made between
      IPA and Chase which  extended the maturity  date of the loan to January 2,
      1998 and  provided  for  principal  payments  with respect to the mortgage
      loans of $3,000,000 during 1997.

      On March 23, 1998 a Second  Modification to the Agreement was made between
      IPA and Chase.  The maturity date was extended  through the earlier of (a)
      January  2,  1999,  or (b) the  first  date on which  IPA  fails to make a
      scheduled  principal  payment.  The  scheduled  principal  payments of the
      mortgage  loans are to be made as  follows;  March 15,  1998 -  $1,000,000
      (which payment was made), June 15, 1998 - $1,000,000, September 15, 1998 -
      $500,000, and December 15, 1998 - $500,000.

(2)   The loan with Apple Bank for Savings  ("Apple")  matured on  November  24,
      1997,  and  the  loan  is  in  monetary  default.   Apple  has  granted  a
      forebearance  period on the loan  through  April 24,  1998,  during  which
      period  interest is payable at Apple's  prime rate (8.5% at  December  31,
      1997). IPA is currently negotiating refinancing alternatives with Apple.

(3)   IPA was released from its  obligation  under the First Union National Bank
      loan in  connection  with the sale of the  property  on July 14, 1997 (See
      Note 3).


                                      S-12
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

5. Mortgages Payable (continued)

(4)   The carrying amounts of IPA's borrowings under mortgages and notes payable
      approximate their fair value.

6. 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  $2,098,318  (1997),   $2,330,424,   (1996)  and  $2,362,700  (1995).
Additionally,  IPA purchases some of its maintenance supplies and materials from
Deco Supplies Co. ("Deco"), an affiliate of one of its partners.  Such purchases
aggregated approximately $61,000 (1997) $23,000, (1996) and $13,000 (1995).

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.

7. 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, 1997,  1996, and 1995). 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-13
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

8. 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 9 for the basis on which cash distributions are determined):

                                                            Special
                                                 General    Limited     Limited
                                                 -------------------------------
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%       --          --


                                      S-14
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

8. 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 credited (but not distributed in
cash) to the capital accounts of the partners as follows:

                                                            Special
                                                 General    Limited     Limited
                                                 -------------------------------
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%      --

9. 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%                      50.0%

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


                                      S-15
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

9. Cash Distributions (continued)

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.

In 1997,  1996 and 1995,  Net  Operating  Revenues,  as defined  in the  Limited
Partnership  Agreement,  amounted  to  $9,174,787,  $8,342,911  and  $9,857,034,
respectively.  At December 31, 1997,  1996 and 1995,  IPA accrued  distributions
amounting to $9,847,784,  $10,482,594,  and  $10,406,432,  respectively of which
$4,923,892,  $5,241,297 and $5,203,216,  respectively,  are distributable to the
Holders of Participation  Interests. At December 31, 1997, distributions payable
include the 1997, 1996 and 1995 accrued distributions payable to the General and
Special Limited Partners.

10. 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 for federal tax purposes  for the years ended  December 31,
1997, 1996 and 1995 was $9,782,211,  $8,914,979 and $10,406,032 respectively, as
compared  with  the  net  income  of  $8,726,836,  $8,452,069,  and  $9,331,341,
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-16
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

10. Income Taxes (continued)
                                                      December 31,
                                           1997           1996           1995
                                      ------------------------------------------

Net income per statements of income   $ 8,726,856     $8,452,069    $ 9,331,341

Depreciation and amortization           1,083,904      1,149,617      1,179,550

Loss on sale of property                  (50,660)            --             --

Loss on abandonment of property                --       (801,642)            --

Other, net                                 22,111        114,935       (104,459)
                                      ------------------------------------------
Income for federal tax purposes       $ 9,782,211     $8,914,979    $10,406,432
                                      ==========================================

11. Lease Obligations

IPA is obligated  under  certain non  cancelable  ground  leases  which  require
minimum  rentals  and in most  instances,  payments  for real  estate  taxes and
certain other expenses.  Certain of the leases contain renewal options.  Minimum
annual rentals exclusive of renewal options under such leases are:

       Years ending December 31:
            1998                                          $   532,000
            1999                                              532,000
            2000                                              532,000
            2001                                              532,000
            2002                                              532,000
            Thereafter                                     23,435,000
                                                          -----------
                                                          $26,095,000
                                                          ===========


                                      S-17
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

12. 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 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 1997, 1996 and 1995 are $1,089,301,  $1,745,212,
and  $1,946,428,   respectively,   representing  revenue  from  escalations  and
percentage  rentals,  and for the year ended 1997, 1996 and 1995,  approximately
$256,000,  $1,400,000 and $950,000,  respectively,  received in connection  with
lease cancellations with former tenants.

The following is a schedule by years of minimum future rentals on  noncancelable
operating leases as of December 31, 1997, exclusive of amounts due as percentage
rent,  expense  escalations  or amounts that would be due from new leases or the
exercise of renewal options under existing leases:

       Years ending December 31:
            1998                                             $ 37,403,000
            1999                                               32,462,000
            2000                                               22,045,000
            2001                                               16,204,000
            2002                                               12,506,000
            Thereafter                                         32,521,000
                                                             ------------
                 Total minimum future rentals                $153,141,000
                                                             ============


                                      S-18
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                   Notes to Financial Statements (continued)

13.  Recently Issued Accounting Pronouncement

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  131,  "Disclosures  about  Segments of an
Enterprise and Related  Information"  (Statement 131). Statement 131 establishes
standards for public business  enterprises to report information about operating
segments in annual  financial  statements  and requires  that those  enterprises
report  selected  information  about  operating  segments  in interim  financial
reports.  It also establishes  standards for related  disclosures about products
and services, geographic areas, and major customers.  Statement 131 is effective
for financial statements for fiscal years beginning after December 15, 1997. and
therefore  IPA will  adopt  the new  requirements  in 1998.  Management  has not
completed its review of Statement 131, but does not anticipate that the adoption
of  this  Statement  will  have a  significant  effect  on the  IPA's  financial
statements.

14. 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.

15. Subsequent Events

On January 22, 1998 IPA closed escrow on the sale of the 1180 Raymond  Boulevard
ground  lease for a sales price of  $1,350,000.  The sale  resulted in a gain of
approximately $648,000.


                                      S-19
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

             Schedule III - Real Estate and Accumulated Depreciation

                                December 31, 1997

<TABLE>
<CAPTION>

            Co. 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>     
Raymond Commerce Building,
   (leasehold) Newark, New                                 $ 7,220,632     $   683,048               $  7,903,680  $ 7,903,680 
   Jersey                                                                                                         
59 East Van Buren Building,                                                                                       
   Chicago, Illinois                         $   692,284     1,780,158         610,638  $   692,284     2,390,796    3,083,080 
Midland Savings Building,                                                                                         
   Midland, Texas                                593,787     4,354,441         286,307      349,087     2,717,362    3,066,449 
One La Salle Building,                                                                                            
   Chicago, Illinois                           2,968,499    13,359,878       2,977,825    2,968,499    16,337,703   19,306,202 
360 No. Michigan Building                                                                                         
   (leasehold), Chicago,                                     5,442,873       1,930,803                  7,373,676    7,373,676 
   Illinois                                                                                                       
73-1/3% Interest in 6 North                                                                                       
   Michigan Avenue Building,                                                                                      
   Chicago, Illinois                           1,830,012     2,521,979       1,244,934    1,830,012     3,766,913    5,596,925 
1440 Broadway, Building                                                                                           
   New York, New York         $  15,062,428    4,938,421    10,864,525       6,336,200    4,938,421    17,530,840   22,469,261 
One North Dearborn                                                                                                
   Building*, Chicago,                         5,289,594    13,359,927       6,024,123    5,289,594    19,384,050   24,673,644 
   Illinois                                                                                                       
261 Fifth Avenue, Building                                                                                        
   New York, New York             9,467,810      987,731     8,695,910       8,186,504      987,731    16,882,414   17,870,145 
Marbridge Building, New                                                                                           
   York, New York (a)             4,000,000    2,765,881     1,877,196       1,289,420    2,765,881     3,166,616    5,932,497 
Mojud Building, Long Island                                                                                       
   City, New York                                346,514       643,526         459,575      346,514     1,103,101    1,449,615 
Edgewood and Bellway                                                                                              
   Shopping Centers,                             447,893                                         --                         -- 
   Houston, Texas                                                                                                 
570 Broad Street Building                                                                                         
   Newark, New Jersey                            502,032     5,937,404       1,549,324      502,032     7,368,812    7,870,844 
245 Fifth Avenue Building,                                                                                        
   New York, New York             8,317,250      679,520     2,080,700       7,167,809      679,520     9,248,509    9,928,029 
                              -------------------------------------------------------------------------------------------------
Totals                        $  36,847,488  $22,042,168   $78,139,149     $38,746,510  $21,349,575  $115,174,472  $136,524,047
                              =================================================================================================
* Formerly State-Madison Building.
</TABLE>
                                                      

            Co. A                Col. F        Col. G        Col. H
------------------------------------------------------------------------
                                                          Life on which
                                                         Depreciation in
                                                         Latest Income
                               Accumulated    Date of     Statements is
         Description          Depreciation  Construction    Computed
-------------------------------------------------------------------------
Raymond Commerce Building,
   (leasehold) Newark, New    $   7,217,544     1930          29.3
   Jersey
59 East Van Buren Building,
   Chicago, Illinois              2,224,485     1931          24.3
Midland Savings Building,
   Midland, Texas                 3,066,449     1959          34.3
One La Salle Building,
   Chicago, Illinois             14,685,253     1930          29.3
360 No. Michigan Building
   (leasehold), Chicago,          6,868,319     1923          24.3
   Illinois
73-1/3% Interest in 6 North
   Michigan Avenue Building,
   Chicago, Illinois              3,192,283     1893          19.3
1440 Broadway, Building
   New York, New York            13,849,604     1925          24.3
One North Dearborn
   Building*, Chicago,           17,203,739     1903          19.3
   Illinois
261 Fifth Avenue, Building
   New York, New York            12,440,900     1928          24.3
Marbridge Building, New
   York, New York (a)             2,588,000     1907          19.3
Mojud Building, Long Island
   City, New York                   906,369     1916          19.3
Edgewood and Bellway
   Shopping Centers,                     --     1957          24.3
   Houston, Texas
570 Broad Street Building
   Newark, New Jersey             5,158,015     1962          34.3
245 Fifth Avenue Building,
   New York, New York             6,212,818     1923          24.3
                              -------------
Totals                        $  95,613,778
                              =============


                                      S-20
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

       Schedule III - Real Estate and Accumulated Depreciation (continued)

                                December 31, 1997


(a)   Amounts shown represent 50% of amounts  applicable to a tenancy in common,
      in which IPA has an undivided one-half interest.

(b)   Reconciliation of "Real Estate and Accumulated Depreciation":

                                             Year ended December 31,
                                ------------------------------------------------
                                       1997            1996             1995
                                ------------------------------------------------
Investment in Real Estate
Balance at beginning of year    $ 138,214,361    $ 141,282,613    $ 138,759,013
Sale of real estate                (2,606,881)            --               --
Abandonment of real estate          2,208,474       (4,183,692)            --
Improvements and additions          2,438,279        3,827,196
Fully depreciated assets
 written off during
 the year                          (1,291,907)      (1,322,839)      (1,303,596)
                                ------------------------------------------------
Balance at end of year          $ 136,524,047    $ 138,214,361    $ 141,282,613
                                ================================================
Accumulated Depreciation
Balance at beginning of
 year                           $  95,710,079    $  97,003,567    $  94,819,779
Depreciation charged to
 costs and expenses                 3,349,946        3,447,071        3,487,384
Less amounts applicable
 to sale of real estate            (2,154,340)            --               --
Less amounts applicable
 to abandonment of real
 estate                                  --         (3,417,720)            --
Less amounts applicable to
 fully depreciated
 assets written off
 during the year                   (1,291,907)      (1,322,839)      (1,303,596)
                                ------------------------------------------------
Balance at end of year          $  95,613,778    $  95,710,079    $  97,003,567
                                ================================================

The  aggregate  cost of real  estate  assets for  Federal  income  tax  purposes
amounted to $132,029,646 (1997), $132,590,090 (1996), and $134,841,652 (1995).


                                      S-21
<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.

                                          INVESTMENT PROPERTIES ASSOCIATES

                                          By: /s/ Irving Schneider
                                             --------------------------------
                                               Irving Schneider
                                               General Partner

Dated:  April 15, 1997

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

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


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



HELMSLEY-NOYES COMPANY, INC.                       General Partner


By: /s/ John Trainor
   -----------------------
    John Trainor
    Senior Vice President


<PAGE>

H ASSOCIATES LLC                                   General Partner



By:_______________________
_________________, Manager