FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2000

OR

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

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission file number 0-2673

NAVARRE-500 BUILDING ASSOCIATES

(Exact name of registrant as specified in its charter)

A New York Co-Tenancy Formerly	13-6082674 

(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)

(212) 687-8700

(Registrant's telephone number, including area code)

N/A

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

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

Yes [ X ]. No [ ].

 

An Exhibit Index is located on Page 11 of this Report.

Number of pages (including exhibits) in this filing: 11

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Navarre-500 Building Associates

Condensed Statement of Income

(Unaudited)

For the Three Months	For the Six Months

Ended June 30,	Ended June 30,

2000	1999	2000	1999

Income:

Rent income, from a 

related party (Note B)	$ -0-	$ 291,875	$ -0-	$ 583,750

Dividend income 40,385 -0- 73,430 -0-

Interest income	 -0-	 -0-	 35,034 	 -0-

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

	Total income	$ 40,385	$ 291,875	$ 108,464	$ 583,750

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

Expenses:

Leasehold rent (Note B)	 -0-	 121,875	 -0-	 243,750

Supervisory services, to a 

related party (Note C)	 -0-	 10,000	 -0-	 20,000

Amortization of leasehold	 -0-	 1,631	 -0- 3,262

Professional fees 11,635 -0- 11,635 -0- 

Interest expense -0- -0- 9,542 -0- 

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

	Total expenses	$ 11,635	$ 133,506	$ 21,177	$ 267,012

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

Net income		$ 28,750	$ 158,369	$ 87,287	$ 316,738

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

Earnings per $5,000 

participation unit, 

based on 640 participation 

units outstanding 

during the year	$ 44.92	$ 247.45	$ 136.39 	$ 494.90

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

Distributions per $5,000

participation consisted

of the following:

Income			$ -0-	$ 247.45	$ 136.39	$ 494.90

Return of capital	 -0-	 2.55	73,483.74	 5.10

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

Total distributions	$ -0-	$ 250.00 $ 73,620.13	$ 500.00

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

	At June 30, 2000 and 1999, there were $3,200,000 of 

participations outstanding.

 

 

 

 

Navarre-500 Building Associates

Condensed Balance Sheet

(Unaudited)

Assets	June 30, 2000	December 31, 1999

Cash			$ -0-	$ 62,816

Purchase money note

	receivable	 -0-	 52,500,000

Accrued interest receivable	 -0-	 56,937

Escrow account held by

	Wien & Malkin LLP	 2,851,576	 -0-

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

Total assets		$ 2,851,576	$52,619,753

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

Current Liabilities	

Accrued expenses of sale

	of leasehold 	$ -0-	$ 212,647

Advances from partner,

	 a related party	 -0-	 2,525,935

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

Total current liabilities	$ -0-	$ 2,738,582

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

Capital

Capital January 1:	$49,881,171	$ 218,618

Add, Net income of Partnership	 -0-		 617,182

Add, Net income of co-tenancy:

January 1, 2000 through 

	June 30, 2000	 87,287	

January 1, 1999 through 

	December 31, 1999	 -0-	 49,685,371

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

				$49,968,458	$50,521,171

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

Distributions of partnership and

co-tenancy:

Cash distributions:

	to co-tenants,January 1, 2000

	thru June 30, 2000	 47,116,882

	

	to partners, January 1, 1999

	thru June 30, 1999 640,000

In-kind liquidating distributions

	to partners of their undivided

	interests of partnership assets

	on December 23, 1999, at cost	 -0-	 195,000

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

	 Total distributions	$47,116,882	$ 835,000

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

 

Navarre-500 Building Associates

Condensed Balance Sheet

(Unaudited)

(continued)

 

June 30, 2000 December 31, 1999

Contribution, on December 23, 1999

to capital of co-tenancy of cost 

basis of co-tenants' undivided 

interests in assets received on 

dissolution of partnership	 -0-	 195,000

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

Co-Tenants' Capital

June 30, 2000	$2,851,576	 

Co-Tenant Capital

December 31, 1999	 		$49,881,171

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

Total liabilities and

Co-Tenants' Capital:

	June 30, 2000	$2,851,576	

				==========	

	December 31, 1999			$52,619,753

						===========

 

 

Navarre-500 Building Associates

Condensed Statement of Cash Flows

(Unaudited)

 

 

	January 1, 2000	January 1, 1999

	through	through

	June 30, 2000	June 30, 1999

Cash flows from operating activities:

	Net income	$ 87,287	$ 316,738

	Adjustments to reconcile net income 

	 to cash provided by operating

	 activities:

Amortization of leasehold	 -0-	 3,262

Change in deferred credit 	 -0-	 82,292

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

	Net cash provided by operating

	 activities	$ 87,287	$ 402,292

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

Cash flows from investing activities:

	Purchase Money Note receivable	$52,500,000	$ -0-

	Accrued Interest receivable	 56,937	 -0-

	Accrued expenses of sale	 (212,647)	 -0-

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

	Net cash provided by investing

	 activities	$52,344,290	$ -0-

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

Cash flows from financing activities:

	Cash Distributions $(47,116,882)	$(320,000)

	Advances from Partner 	 (2,525,935)	 -0-

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

	Net cash used in financing

	 Activities $(49,642,817)	$(320,000)

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

	Increase in cash during period $ 2,788,760 	$ 82,292

Cash, beginning of period	 62,816	 53,333

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

Cash, end of period	$ 2,851,576	$ 135,625

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

 

 

 

Notes to Condensed Financial Statements (unaudited)

Note A Organization and basis of Presentation

		In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of Registrant as of June 30, 2000, itsresults of operations for the six and three months ended June 30, 2000 and 1999, its cash flows for the six months ended June 30, 2000 and 1999 and its changes in Partners' capital for the six months ended June 30, 2000. Information included in thecondensed balance sheet as of December 31, 1999 has been derived from the audited balance sheet included in Registrant's Form 10-K for the year ended December 31, 1999 (the "10-K") previously filed with the Securities and Exchange Commission (the "SEC").Pursuant to rules and regulations of the SEC, certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from these financial statementsunless significant changes have taken place since the end of the most recent fiscal year. Accordingly, these unaudited condensed financial statements should be read in conjunction with the financial statements, notes to financial statements and the otherinformation in the 10-K. The results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results to be expected for the full year.

 

Note B Interim Period Reporting

Registrant was organized as a partnership on March 21, 1958. Registrant owned the tenant's interest in the long-term ground lease (the "Lease") of the buildings located at 500 and 512 Seventh Avenue and 228 West 38th Street, New York, New York (the"Property") until Registrant sold the Lease on December 23, 1999 on the economic terms described in the accompanying financial statements. Registrant ceased to be a partnership on December 23, 1999 when the interests of its partner Agents were redeemed byconveyance to them of direct pro rata interests in the Property. The partnership's final tax return was filed for the period ending December 23, 1999. After December 23, 1999, such former partners (the "Agents") continued the ownership of the Lease asco-tenants for the benefit of the Participants, and the co-tenancy has conducted its business under the name "Navarre-500 Building Associates, a co-tenancy", all for the benefit of the Participants on all the same pre-existing economic and investmentterms through the date of such sale and thereafter. In accordance with the terms of the contract of sale, Seller is required to hold 5% of the gross sales price in reserve for one year for contingencies. At June 30, 2000 the balance in the escrow accountwas $2,851,576. Accordingly, reference herein to Registrant is a reference to Navarre-500 Building Associates, a co-tenancy. Registrant's Agents were Peter L. Malkin and Thomas N. Keltner, Jr. who are now the co-tenant Agents. The land underlying thebuildings was owned by an unaffiliated third party and was leased to 

Registrant under the Lease. The current term of the Lease as extended was to expire on May 1, 2024. The Lease provided for one 21-year renewal option. The annual rent payable by Registrant under the Lease was $487,500 during the current and renewal term.

		Registrant did not operate the Property, but subleased the Property to 500-512 Seventh Avenue Associates ("Sublessee") pursuant to a net operating sublease (the "Sublease"), of which the current renewal term was to expire on April 30, 2024. TheSublease provided for one renewal option co-extensive with the Lease. Peter L. Malkin, an Agent in Registrant, has also been a partner and now a co-tenant in Sublessee. The Agents in Registrant are also members of Wien & Malkin LLP, which providessupervisory and other services to Registrant and to Sublessee ("Supervisor"). See Note C of this Item 1 ("Note C"). 

		Under the Sublease, Sublessee must pay (i) annual basic rent of $1,167,500 during the current renewal term and the additional renewal term (the "Basic Rent") and (ii) additional rent to Registrant during the current term and the renewal termequal to 50% of Sublessee's net operating profit in excess of $620,000 for each lease year ending June 30 (the "Additional Rent"). 

		There was no Additional Rent paid by Sublessee for the lease year ended June 30, 1999. 

Note C Supervisory Services

		Registrant paid Supervisor for special services at hourly rates and for supervisory services and disbursements. The supervisory fees are $40,000 per annum (the "Basic Payment") plus 10% of all distributions to Participants in any year in excessof the amount representing a return at the rate of 23% per annum on their remaining cash investment in Registrant (the "Additional Payment"). At June 30, 2000, such remaining original cash investment was $3,200,000, representing the original cashinvestment of the Participants in Registrant.

		No remuneration was paid during the six month period ended June 30, 2000 by Registrant to any of the Agents as such. The supervisory services included, among other items, the preparation of certain reports required by the Securities andExchange Commission, the monitoring or coordination of certain other areas of legal compliance, the preparation of certain financial reports, as well as the supervision of accounting and 

other documentation related to the administration of Registrant's business. Out of its fees, Supervisor paid all disbursements and costs of regular accounting services.

		Reference is made to Note B of Item 1 (Note "B") for a description of the terms of the Sublease between Registrant and Sublessee. The respective interests, if any, of the Agents in Registrant and Sublessee arise solely from their respectiveownership of participations, if any, in Registrant and, in the case of Mr. Malkin, his ownership of a partnership or co-tenant interest in Sublessee. The Agents received no extra or special benefit not shared on a pro rata basis with all otherParticipants in Registrant or partners or co-tenants in Sublessee. However, each of the Agents, by reason of his respective interest in Supervisor, is entitled to receive his pro rata share of any fees or other remuneration paid to Supervisor for servicesrendered to Registrant and Sublessee.

		As of June 30, 2000, the Agents owned of record and beneficially $8,125 participations in Registrant, representing 0.25% of the currently outstanding participations therein.

		In addition, as of June 30, 2000, certain of the Agents in Registrant (or their respective spouses) held additional Participations as follows:

Entities for the benefit of members of Peter L. Malkin's family owned of record and beneficially $35,000 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations, except that related trusts are required to completescheduled payments to Mr. Malkin.

		Peter L. Malkin, Trustee of Mattee Saunders 1983 Trust, owned $7,500 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations.

	In accordance with the provisions of the respective participating agreements, Peter L. Malkin and Thomas N. Keltner, Jr., in their capacity as agent, purchased from non-consenting Participants an aggregate of $6,875 of participations for thebenefit of consenting Participants, all on the terms described in the Agents' Consent Solicitations dated July 15, 1999. Each such purchase may be revised at the discretion of the Agents upon receipt of the consent from the applicable non-consentingParticipant.

Item 2.	Management's Discussion and Analysis of

		Financial Condition and Results of Operations.

		Registrant was a partnership and is now a co-tenancy. As stated in Note B, Registrant was organized for the purpose of acquiring the Master Lease subject to the Sublease. Basic Rent received under the Sublease was used to pay annual rent dueunder the Master Lease and the Basic Payment to Supervisor for supervisory services. The balance of the Basic Rent was distributed to the Participants. Additional Rent was distributed to the Participants after the Additional Payment to Supervisor. SeeNote C above. Pursuant to the Sublease, Sublessee had assumed sole responsibility for the condition, operation, repair, maintenance and management of the Property. Registrant did not need to maintain substantial reserves or otherwise maintain liquidassets to defray any operating expenses of the Property.

		Registrant did not pay dividends. On January 1, 2000, a regular distribution of $36,882 was made to participants and a distribution of sales proceeds of $47,080,000 was made on January 14, 2000. There were no restrictions on Registrant'sability to make distributions; however, the amount of such distributions, particularly distributions of Additional Rent, depended solely on the ability of Sublessee to make payments of Basic Rent and Additional Rent to Registrant. Registrant expected tomake distributions so long as it received the payments provided for under the Sublease. See Note B of Item 1 above.

		Registrant's results of operations were affected primarily by the amount of rent payable to it under the Sublease. 

 

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings.

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

		Wien & Malkin LLP, et. al. v. Helmsley-Spear, Inc., et. al. On June 19, 1997 Wien & Malkin LLP and Peter L. Malkin filed an action in the Supreme Court of the State of New York, against Helmsley-Spear, Inc. and Leona Helmsley concerningvarious partnerships which own, lease or operate buildings managed by Helmsley-Spear, Inc., including Registrant's property. In their complaint, plaintiffs sought the removal of Helmsley-Spear, Inc. as managing and leasing agent for all of the buildings.Plaintiffs also sought an order precluding Leona Helmsley from exercising any partner management powers in the partnerships. In August, 1997, the Supreme Court directed that the foregoing claims proceed to arbitration. As a result, Mr. Malkin and Wien& Malkin LLP filed an arbitration complaint against Helmsley-Spear, Inc. and Mrs. Helmsley before the American Arbitration Association. Helmsley-Spear, Inc. and Mrs. Helmsley served answers denying liability and asserting various affirmative defensesand counterclaims; and Mr. Malkin and Wien & Malkin LLP filed a reply denying the counterclaims. By agreement dated December 16, 1997, Mr. Malkin and Wien & Malkin LLP (each for their own account and not in any representative capacity) reached asettlement with Mrs. Helmsley of the claims and counterclaims in the arbitration and litigation between them. Mr. Malkin and Wien & Malkin LLP are continuing their prosecution of claims in the arbitration for relief against Helmsley-Spear, Inc.,including its termination as the leasing and managing agent for various entities and properties, including the Registrant's Sublessee.

Item 6.	Exhibits and Report on Form 8-K

		(a)	The exhibits hereto are incorporated by reference.

		(b) Registrant has not filed any report on Form 

8-K during the quarter for which this report is being filed.

SIGNATURES

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

		The individual signing this report on behalf of Registrant is Attorney-in-Fact for Registrant and each of the Partners in Registrant, pursuant to Powers of Attorney, dated August 6, 1996 and May 14, 1998 (collectively, the "Power").

 

NAVARRE-500 BUILDING ASSOCIATES 

(Registrant)

 

 

By /s/ Stanley Katzman

Stanley Katzman, Attorney-in-Fact*

 

Date: August 14, 2000

 

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

 

 

By /s/ Stanley Katzman

Stanley Katzman, Attorney-in-Fact*

 

Date: August 14, 2000

 

 

 

 

 

 

 

__________________________

*	Mr. Katzman supervises accounting functions for Registrant.

 

EXHIBIT INDEX

 

 

Number				Document					Page*

 

3(a)		Partnership Agreement, dated March 21, 1958, which was filed as Exhibit 1 to Registrant's S-1, as amended, by letter dated April 3, 1958 and assigned File No. 2-14019, is incorporated herein by reference.

3(b)		Amended Business Certificate of Registrant which was filed as Exhibit 3(b) to Registrant's Annual Report on 10-K for the fiscal year ended December 31, 1996 and is incorporated herein by reference.

4		Form of Participation Agreement, which was filed as Exhibit 4 to Registrant's S-1 by letter dated April 3, 1958 and assigned File No. 2-14019, is incorporated herein by reference. 

 

24		Powers of Attorney dated August 6, 1996 and May 14, 1998 between Peter L. Malkin and Thomas N. Keltner, Jr., as Partners in Registrant, and Stanley Katzman and Richard Shapiro, which was filed as Exhibit 24 to Registrant's 10-Q for thequarter ended March 31, 1998 and is incorporated herein by reference.

 

 

 

 

 

 

 

 

 

 

__________________________

*	Page references are based on sequential numbering system.