FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

	[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 0-827 

EMPIRE STATE BUILDING ASSOCIATES L.L.C. 

(Exact name of registrant as specified in its charter)

New York	13-6084254

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

	incorporation or organization 		Identification No.)

60 East 42nd Street, New York, New York	10165

(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (212) 687-8700

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

None

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

$33,000,000 of Participations in LLC Member Interests

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 reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [x]  No [ ]

The aggregate market of the voting stock held by non-affiliates of the Registrant:  Not applicable, but see Items 5 and 10 of this report.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ___

An Exhibit Index is located on pages 27 through 28 of this report.

Number of pages (including exhibits) in this filing: 46

PART I

 

Item 1.	Business.

(a)	General

	Registrant was originally organized on July 11, 1961 as a general partnership. On October 1, 2001, Registrant converted from a general partnership to a limited liability company under New York law and is now known as Empire State Building Associates L.L.C. The conversion does not change any aspect of the assets and operations of Registrant other than to protect its investors from any future liability to a third party. Through April 16, 2002, Through April 16, 2002, Registrant owned the tenant's interest in a master operating leasehold (the "Master Lease") on the Empire State Building (the "Building"), located at 350 Fifth Avenue, New York, New York. On April 17, 2002, Registrant acquired, through a wholly-owned limited liability company (Empire State Land Associates L.L.C.), the fee title to the Building, and the land thereunder (the "Land") (together, the "Real Estate"), at a price of $57,500,000, and obtained a $60,500,000 first mortgage with North Fork Bank (the "Mortgage") to finance the acquisition and certain related costs. 

	The initial term of the Master Lease expired on January 5, 1992. On January 30, 1989, Registrant exercised its first of four 21-year renewal options contained in the Master Lease and extended the Master Lease through January 5, 2013. 

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

	Registrant's members are Peter L. Malkin, Anthony E. Malkin and Thomas N. Keltner, Jr. (collectively, the "Agents") each of whom also acts as an agent for holders of participations in his respective member interest in Registrant (the "Participants"). 

	Sublessee is a New York limited liability company in which Peter L. Malkin is a member and entities for Peter L. Malkin family members are beneficial owners.  All of the members in Registrant hold senior positions at Wien & Malkin LLP, 60 East 42nd Street, New York, New York, which provides supervisory and other services to Registrant and to Sublessee (the "Supervisor").  See Items 10, 11, 12 and 13 hereof for a description of the ongoing services rendered by, and compensation paid to, Supervisor and for a discussion of certain relationships which may pose potential conflicts of interest among Registrant, Sublessee and certain of their respective affiliates.

	As of December 31, 2004, the Building was 89% occupied by approximately 839 tenants who engage in various businesses, including the Boy Scouts, the YMCA, the practice of law and accounting, ladies' and men's apparel, and ladies' and men's shoes.  Registrant does not maintain a full-time staff.  See Item 2 hereof for additional information concerning the Real Estate.

 

	

(b)	The Lease and Sublease

	The annual rent payable by Registrant under the Master Lease is $1,970,000 from January 5, 1992 through January 5, 2013 and $1,723,750 annually during the term of each renewal period thereafter.

	Sublessee was required to pay annual basic rent (the "Basic Rent") equal to $6,018,750 from January 1, 1992 through January 4, 2013, and $5,895,625 from January 5, 2013 through the expiration of all renewal terms. See Item 2. Sublessee is also required to pay Registrant overage rent of 50% of Sublessee's net operating profit, as defined in the Sublease, in excess of $1,000,000 for each lease year ending December 31("Overage Rent").  

	Overage Rent income is recognized when earned from the Sublessee, at the close of the year ending December 31; such income is not determinable until the Sublessee, pursuant to the Sublease, renders to Registrant a certified report on the Sublessee's operation of the Real Estate.  The Sublease requires that this report be delivered to Registrant annually within 60 days after the end of each such fiscal year.  Accordingly, all Overage Rent income and certain supervisory services expense are reflected in the fourth quarter of each year.  The Sublease does not provide for the Sublessee to render interim reports to Registrant.  See Note 3 of Notes to Financial Statements filed under Item 8 hereof (the "Notes") regarding Overage Rent payments by Sublessee for the fiscal years ended December 31, 2004, 2003 and 2002. There was Overage Rent of $9,469,543 for the year ended December 31, 2004.

 

	(c)	Competition

	Pursuant to tenant space leases at the Building, the average annual base rental payable to Sublessee is approximately $31.84 per square foot (exclusive of electricity charges and escalation). The asking rents for the building range from $33 to $37 per square foot.

	(d)	Tenant Leases

	Sublessee operates the Building free from any federal, state or local government restrictions involving rent control or other similar rent regulations which may be imposed upon residential real estate in Manhattan.  Any increase or decrease in the amount of rent payable by a tenant is governed by the provisions of the tenant's lease.

 

Item 2.	Property.

 

Through April 16, 2002,	On April 17, 2002, Registrant acquired, through a wholly owned limited liability company (Empire State Land Associates L.L.C.), the fee title to the Building, and the land thereunder, at a price of $57,500,000, and obtained a $60,500,000 first mortgage with North Fork Bank to finance the acquisition and certain related costs. The Building, erected in 1931 and containing 102 stories, a concourse and a lower lobby, occupies the entire blockfront from 33rd Street to 34th Street on Fifth Avenue.  The Building has 72 passenger elevators and 4 freight elevators and is equipped with air conditioning and individual air handling units.  The Building is subleased to Sublessee under the Sublease which expires on January 4, 2013 and contains three 21-year renewal options.  See Item 1 hereof for a description of the terms of the Lease and Sublease.

	The Real Estate is carried in the financial statements at a total cost of $60,484,389, consisting of $57,500,000 for the purchase price paid to the seller, $752,022 for acquisition costs, and $2,232,367 representing the unamortized balance of the cost of the Master Lease on the date the Real Estate was acquired. The cost of the Land is estimated to be 35.63% of the total cost of the Real Estate, and the Building, 64.37%. Under the terms of the contract of sale and, the deed, contains language to avoid the there is no merger of the fee estate and the leasehold, although on a consolidated financial statement basis the Registrant incurred no leasehold rent expense after acquiring the Real Estate.

	The mortgage matures on May 1, 2012. Monthly payments under the mortgage are interest only at a fixed rate of 6.5% through maturity. Payments commenced on June 1, 2002, except that short-term interest from the closing until April 30, 2002 was due on May 1, 2002. The mortgage may be prepaid at any time after 24 months with the payment of a premium equal to the greater of (a) 1% of the amount prepaid and (b) an amount calculated pursuant to a prepayment formula designed to preserve the bank's yield to maturity. The mortgage loan is secured by a lien on the Real Estate and Registrant's leasehold estate under the Master Lease of the Real Estate.

	The Building is being depreciated on a straight-line basis using an estimated life of 39 years from April 17, 2002. Mortgage financing costs, totaling $1,796,287, are being 

 

amortized ratably over the term of the mortgage. 

	Acquisition costs to acquire the Real Estate and mortgage financing costs include payments totaling $103,587 and $54,909, respectively, made to the firm of Wien & Malkin LLP, a related party.

 

Item 3.	Legal Proceedings.

	The Property of Registrant is the subject of the following pending litigation: 

Wien & Malkin and Peter L. Malkin, a member in Registrant, have been engaged in a proceeding with Sublessee's managing agent, Helmsley-Spear, Inc. commenced in 1997, concerning the management, leasing, and supervision of the property that is subject to the Sublease to the Sublessee.  In this connection, certain legal and professional fees and other expenses have been paid and incurred by Wien & Malkin and Mr. Malkin, and additional costs are expected to be incurred.  Wien & Malkin and Mr. Malkin have represented that such costs will be recovered only to the extent that (a) competent tribunal authorizes payment or (b) an investor voluntarily agrees that his or her proportionate share be paid.  Accordingly, Registrants' allocable share of such costs is as yet undetermined, and Registrant has not provided for the expense and related liability with respect to such costs in these consolidated financial statements.

The original action was commenced in June 1997 and was referred to arbitration.  The March 30, 2001 decision of the Arbitrators, which was confirmed by the court, (i) reaffirms the right of the investors in the Sublessee to vote to terminate Helmsley-Spear, Inc. without cause, (ii) dismisses Helmsley-Spear, Inc.'s claims against Wien & Malkin LLP and Peter L. Malkin, (iii) rejects the termination of Helmsley-Spear, Inc. for cause.  The parts of the decision under appeal were initially affirmed by the Appellate Division, and the New York Court of Appeals declined to review such ruling. On October 6, 2003, the United States Supreme Court granted Wien & Malkin's petition, vacated the judgment of the Appellate Division and remanded the case to the New York court for further consideration of the issues raised by Wien & Malkin's appeal.  

On October 14, 2004, the Appellate Division issued a unanimous decision reversing the Arbitrators.  The Appellate Division decided (i) that there was a covert assignment without Sublessee's knowledge or consent and (ii) that the corporation controlled by Irving Schneider and now named "Helmsley-Spear," which has represented itself to be Sublessee's managing agent since September 1997, in fact never received a valid assignment to become Sublessee's managing agent. Sublessee's previously authorized managing agent, the original corporation named "Helmsley-Spear," was owned by Harry B. Helmsley and is no longer active.  Helmsley-Spear has requested leave to appeal the Appellate Division's decision.

In January 1998, Irving Schneider, who is one of the controlling principals of Helmsley-Spear and has no record or beneficial interest in the Sublessee, brought litigation against Sublessee's supervisor, Wien & Malkin, and member, Peter L. Malkin, claiming misconduct and seeking damages and disqualification from performing services for the Sublessee.  In March 2002, the court dismissed Mr. Schneider's claims.  Mr. Schneider has 

 

appealed this dismissal.  Wien & Malkin and Mr. Malkin are defending against these claims.

Item 4.	Submission of Matters to a Vote of Participants.

	No matters were submitted to the Participants during the period covered by this report.

PART II

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

	Registrant was originally organized as a general partnership pursuant to a partnership agreement dated as of July 11, 1961. On October 1, 2001, Registrant converted from a general partnership to a limited liability company under New York law.

	Registrant has not issued any common stock.  The securities registered by it under the Securities Exchange Act of 1934, as amended, consist of participations in the Members interests in Registrant (the "Participations") and are not shares of common stock nor their equivalent.  The Participations represent each Participant's fractional share in a Member's undivided interest in Registrant and are divided approximately equally among the Members.  A full unit of the Participations was offered originally at a purchase price of $10,000; fractional units were also offered at proportionate purchase prices.  Registrant has not repurchased Participations in the past and is not likely to change that policy in the future.

The Participations are neither traded on an established securities market nor are readily tradable on a secondary market or the substantial equivalent thereof.  Based on Registrant's transfer records, Participations are sold by the holders thereof from time to time in privately negotiated transactions and, in many instances, Registrant is not aware of the prices at which such transactions occur.  During the past year there were 135 transfers. In one instance, the indicated purchase price was equal to 4.5 times the face amount of the Participation transferred, i.e., $45,000 for a $10,000 Participation. In one instance, the indicated purchase price was equal to 3.3 times the face amount of the Participation transferred. In four instances, the indicated purchase price was equal to 3.0 times the face amount of the Participation transferred. In two instances, the indicated purchase price was equal to 2.77 times the face amount of the Participation transferred. In four instances, the indicated purchase price was equal to 2.5 times the face amount of the Participation transferred. In seven instances, the indicated purchase price was equal to 2.25 times the face amount of the Participation transferred. In two instances, the indicated purchase price was equal to two times the face amount of the Participation transferred. In five instances, the indicated purchase price was equal to 1.55 times the face amount of the Participation transferred. In three instances, the indicated purchase price was equal to 1.5 times the face amount of the Participation transferred. In all other cases, no consideration was indicated. 

As of December 31, 2004, there were 2,734 holders of Participations of record.

 
 
 
 
Registrant does not pay dividends.  During the year ended December 31, 2004, Registrant made regular monthly distributions of $98.21 for each $10,000 Participation.  There was Overage Rent earned of $9,469,543 for the year ended December 31, 2004 which enabled Registrant to make additional distributions for each $10,000 Participation of $2,139 on March 2, 2005.  See Item 1 hereof.  There are no restrictions on Registrant's present or future ability to make distributions; however, the amount of such distributions, particularly distributions of Overage Rent, depends solely on Sublessee's ability to make payments of Basic Rent and Overage Rent to Registrant.  See Item 1 hereof.  Registrant expects to make monthly distributions in the future so long as it receives the payments provided for under the Sublease.  See Item 7 hereof.

Item 6.

EMPIRE STATE BUILDING ASSOCIATES L.L.C.

(A Limited Liability Company)

SELECTED FINANCIAL DATA

(Unaudited)

The following table presents selected financial data for each of the last five years ended December 31, 2004.  This information is unaudited and has been prepared on the same basis as the audited consolidated financial statements included in this Annual Report on Form 10-K.  This data should be read together with the consolidated financial statements and the notes thereto included in this Annual Report on Form 10-K