<PAGE>
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20459

                                   FORM 10-Q
(Mark One)

X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 
  EXCHANGE ACT OF 1934

                 For the quarterly period ended June 30, 1998
                                                --------------

                                      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 0-13500
                                               -------

                 1626 New York Associates Limited Partnership
                 --------------------------------------------
            (Exact name of Registrant as specified in its charter)

         Massachusetts                                   04-2808184
--------------------------------------     ------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
   incorporation or organization)

 Five Cambridge Center, Cambridge, MA                    02142-1493
--------------------------------------     ------------------------------------
(Address of principal executive office)                  (Zip Code)

       Registrant's telephone number, including area code (617) 234-3000
                                                          --------------

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
                                                  -----   -----


                                    1 of 15

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP       
                 --------------------------------------------
                            FORM 10-Q JUNE 30, 1998
                           ------------------------

                        PART 1 - FINANCIAL INFORMATION              
                        ------------------------------

<TABLE>
<CAPTION>

Item 1.  Consolidated Financial Statements                                                                                      
                                                                                                                                
Consolidated Balance Sheets (Unaudited)                                                                                         
                                                                                                                                
(In Thousands, Except Unit Data)                                                                                                
                                                                                       June 30,               December 31,      
                                                                                         1998                     1997          
                                                                                 ---------------------    --------------------- 
<S>                                                                             <C>                      <C>   
ASSETS                                                                                                                          
------

Real estate:                                                                                                                    
                                                                                                                                
     Land                                                                        $             20,142     $             24,440  
     Buildings and improvements, net of accumulated                                                                             
        depreciation of $106,483 and $141,658 as of                                                                             
        June 30, 1998 and December 31, 1997, respectively                                      88,493                  114,383  
                                                                                 ---------------------    --------------------- 
                                                                                                                                
                                                                                              108,635                  138,823  
                                                                                                                                
Other Assets:                                                                                                                   
                                                                                                                                
     Cash and cash equivalents                                                                    126                      221  
     Restricted cash                                                                            5,964                    3,354  
     Accounts receivable, net of reserves of $315 and $259                                                                      
         as of June 30, 1998 and December 31, 1997, respectively                                  369                      489  
     Prepaid expenses and other assets                                                          6,538                    8,617  
     Deferred rent receivable                                                                  11,178                   12,306  
     Deferred costs, net of accumulated amortization of                                                                         
         $17,831 and $23,749 as of June 30, 1998                                                                                
         and December 31, 1997, respectively                                                    7,486                    7,698  
                                                                                 ---------------------    --------------------- 
                                                                                                                                
Total Assets                                                                      $           140,296     $            171,508  
                                                                                 =====================    ===================== 
</TABLE>
                                                       
                                                       

                See notes to consolidated financial statements.
                                                     
                                    2 of 15
<PAGE>
                                                                     
                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP  
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998           
                            ----------------------
                                                              
<TABLE>
<CAPTION>
                                                              
                                                              
Consolidated Balance Sheets (Unaudited)                                                                                         
                                                                                                                                
(In Thousands, Except Unit Data)                                                                                                
                                                                                                                                
(Continued)                                                                                                                     
                                                                                                                                
LIABILITIES AND PARTNERS' DEFICIT                                                                                               
--------------------------------
                                                                                       June 30,               December 31,      
                                                                                         1998                     1997          
                                                                                 ---------------------    --------------------- 
<S>                                                                             <C>                      <C> 
Liabilities:                                                                                                                    
                                                                                                                                
     Mortgage notes payable to affiliates                                        $            159,266     $            166,536  
     Other mortgage notes payable                                                              24,000                   61,867  
     Notes payable and accrued interest                                                                                         
         to general partners and affiliates                                                    30,634                   24,739  
     Accounts payable, accrued expenses, security                                                                               
         deposits and other liabilities                                                         7,743                   10,085  
     Accrued interest on mortgage notes to affiliates                                          54,036                   52,135  
     Accrued interest on other mortgage notes                                                      83                       98  
     Deferred purchase price obligation                                                         1,289                    1,498  
                                                                                 ---------------------    --------------------- 
                                                                                                                                
Total Liabilities                                                                             277,051                  316,958  
                                                                                 ---------------------    --------------------- 
                                                                                                                                
Commitments and Contingencies                                                                                                   
                                                                                                                                
Partners' Deficit:                                                                                                              
                                                                                                                                
     Limited Partners' Deficit - Units of Investor Limited Partnership                                                          
         Interest $250,000 stated value per unit; authorized, issued and                                                        
         outstanding -1,340 as of June 30, 1998 and                                                                             
         December 31, 1997                                                                   (140,962)                (149,968) 
     Less: investor notes                                                                         (68)                     (68) 
                                                                                 ---------------------    --------------------- 
                                                                                                                                
                                                                                             (141,030)                (150,036) 
                                                                                                                                
     General Partners' Equity                                                                   4,275                    4,586  
                                                                                 ---------------------    --------------------- 
                                                                                                                                
         Total Partners' Deficit                                                             (136,755)                (145,450) 
                                                                                 ---------------------    --------------------- 
                                                                                                                                
Total Liabilities and Partners' Deficit                                           $           140,296     $            171,508  
                                                                                 =====================    ===================== 
</TABLE>

                                                                       
                                                                       
                                                                       
                See notes to consolidated financial statements.
                                                                       
                                    3 of 15                            
                                                                       

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP      
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998                
                            -----------------------

<TABLE>
<CAPTION>
                                                                   
Consolidated Statements of Operations (Unaudited)                                                                       
                                                                                                                        
(In Thousands, Except Unit Data)                                                                                        
                                                                               For the Six Months Ended                 
                                                                             June 30,              June 30,             
                                                                              1998                   1997         
                                                                      --------------------   ---------------------      
<S>                                                                  <C>                    <C>
Revenues:                                                                                                               
     Rent and escalation income                                       $            18,246    $             18,719       
     Interest and other income                                                        224                     678       
     Gain on sale of property                                                      17,046                      --    
                                                                      --------------------   ---------------------      
                                                                                                                        
         Total revenues                                                            35,516                  19,397       
                                                                      --------------------   ---------------------      
                                                                                                                        
Expenses:                                                                                                               
     Interest on obligations to affiliates                                         11,429                  12,799       
     Interest                                                                       1,115                     710       
     Depreciation and amortization                                                  5,327                   6,803       
     Real estate and other taxes                                                    3,530                   4,697       
     Utilities                                                                      1,458                   2,066       
     Cleaning and security                                                          1,758                   2,000       
     Asset and property management fees                                               226                     267       
     Repairs and maintenance                                                          609                     681       
     Payroll                                                                          531                     645       
     General and administrative                                                       527                     639       
     Professional fees                                                                251                     302       
     Provision for doubtful accounts                                                   60                      50       
                                                                      --------------------   ---------------------      
                                                                                                                        
         Total expenses                                                            26,821                  31,659       
                                                                      --------------------   ---------------------      
                                                                                                                        
Net income (loss)                                                     $             8,695    $            (12,262)      
                                                                      ====================   =====================      
                                                                                                                        
                                                                                                                        
Net loss allocated to general partners                                $              (311)   $               (537)      
                                                                      ====================   =====================      
                                                                                                                        
Net income (loss) allocated to investor limited partners              $             9,006    $            (11,725)      
                                                                      ====================   =====================      
                                                                                                                        
Net income (loss) per unit of investor limited                                                                          
   partnership interest                                               $          6,720.90    $          (8,750.00)   
                                                                      ====================   =====================      

</TABLE>
                                                                    
                See notes to consolidated financial statements.
                                                                    
                                    4 of 15                         

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP       
                 -------------------------------------------

                            FORM 10-Q JUNE 30, 1998                 
                           ------------------------

<TABLE>
<CAPTION>

Consolidated Statements of Operations (Unaudited)                   
                                                               
(In Thousands, Except Unit Data)                                                                                        
                                                                              For the Three Months Ended                
                                                                             June 30,              June 30,             
                                                                               1998                  1997                    
                                                                      --------------------   ---------------------      
<S>                                                                  <C>                    <C>
Revenues:                                                                                                               
     Rental and escalation income                                     $             8,221    $              8,892       
     Interest and other income                                                        115                     313       
                                                                      --------------------   ---------------------      
                                                                                                                        
         Total revenues                                                             8,336                   9,205       
                                                                      --------------------   ---------------------      
                                                                                                                        
Expenses:                                                                                                               
     Interest on obligations to affiliates                                          5,618                   6,443       
     Interest                                                                         563                     302       
     Depreciation and amortization                                                  2,646                   3,498       
     Real estate and other taxes                                                    1,780                   2,351       
     Utilities                                                                        755                     981       
     Cleaning and security                                                            899                     966       
     Asset and property management fees                                               119                     132       
     Repairs and maintenance                                                          354                     401       
     Payroll                                                                          274                     335       
     General and administrative                                                       300                     343       
     Professional fees                                                                135                     148       
     Provision for doubtful accounts                                                        -                  50       
                                                                      --------------------   ---------------------      
                                                                                                                        
         Total expenses                                                            13,443                  15,950       
                                                                      --------------------   ---------------------      
                                                                                                                        
Net loss                                                                           (5,107)                 (6,745)      
                                                                      ====================   =====================      
                                                                                                                        
Net loss allocated to general partners                                $              (221)   $               (307)      
                                                                      ====================   =====================      
                                                                                                                        
Net loss allocated to investor limited partners                       $            (4,886)   $             (6,438)      
                                                                      ====================   =====================      
                                                                                                                        
Net loss per unit of investor limited partnership                                                                       
     interest                                                         $         (3,646.27)   $          (4,804.48)   
                                                                      ====================   =====================      
</TABLE>

                See notes to consolidated financial statements.
                                                                         
                                    5 of 15                              

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP             
                 --------------------------------------------             
                                                                          
                            FORM 10-Q JUNE 30, 1998                       
                            -----------------------                       
                                                                          

<TABLE>
<CAPTION>

Consolidated Statement of Partners' Deficit (Unaudited)                                                                             
                                                                                                                                    
(In Thousands, Except Unit Data)                                                                                                    
                                                                                                                                    
                                                 Units of                                                                           
                                                 Investor             Investor                                                      
                                                  Limited              Limited                General                 Total         
                                                Partnership           Partners'              Partners'              Partners'       
                                                 Interest              Deficit                 Equity                Deficit        
                                             ------------------ ----------------------  ---------------------  ---------------------
                                                                                                                                    
                                                                                                                                    
<S>                                         <C>                <C>                     <C>                    <C>                  
Balance - December 31, 1997                              1,340  $            (150,036)  $              4,586   $           (145,450)
                                                                                                                                    
    Net income (loss)                                       --                  9,006                   (311)                 8,695 
                                             ------------------ ----------------------  ---------------------  ---------------------
                                                                                     .                                              
Balance - June 30, 1998                                  1,340  $            (141,030)  $              4,275   $           (136,755)
                                             ================== ======================  =====================  =====================
</TABLE>
                                                                
                See notes to consolidated financial statements. 
                                                                
                                    6 of 15                     

<PAGE>
                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP     
                 --------------------------------------------     
                                                                  
                            FORM 10-Q JUNE 30, 1998               
                            -----------------------               
                                                                  
<TABLE>
<CAPTION>

Consolidated Statement of Cash Flows (Unaudited)                                                                                
                                                                                          For the Six Months Ended              
(In Thousands)                                                                          June 30,               June 30,         
                                                                                          1998                  1997             
                                                                                ---------------------    ---------------------  
<S>                                                                            <C>                      <C>    
Cash Flows from Operating Activities:                                                                                           
                                                                                                                                
Net income (loss)                                                               $              8,695     $            (12,262)  
Adjustments to reconcile net income (loss) to net cash                                                                          
  used in operating activities:                                                                                                 
     Depreciation                                                                              4,527                    5,276   
     Amortization                                                                                800                    1,527   
     Change in deferred rent receivable                                                       (2,091)                    (508)  
     Gain on sale of property                                                                (17,046)                       -   
     Provision for doubtful accounts                                                              56                       50   
                                                                                                                                
Changes in operating assets and liabilities:                                                                                    
                                                                                                                                
     Decrease (increase) in accounts receivable, prepaid                                                                        
        expenses and other assets                                                              2,143                     (311)  
     (Decrease) increase in accounts payable, accrued expenses,                                                                 
        security deposits and other liabilities                                               (2,342)                     477   
                                                                                ---------------------    ---------------------  
                                                                                                                                
         Net cash used in operating activities                                                (5,258)                  (5,751)  
                                                                                ---------------------    ---------------------  
                                                                                                                                
Cash Flows from Investing Activities:                                                                                           
                                                                                                                                
     Net proceeds from sale of property                                                       50,389                       -- 
     Additions to buildings and improvements                                                  (3,293)                  (4,596)  
     Increase in deferred leasing costs                                                       (1,581)                  (2,399)  
                                                                                ---------------------    ---------------------  
                                                                                                                                
         Net cash provided by (used in) investing activities                                  45,515                   (6,995)  
                                                                                ---------------------    ---------------------  
                                                                                                                                
Cash Flows from Financing Activities:                                                                                           
                                                                                                                                
     Payment of accrued interest on mortgage notes to affiliates                              (5,252)                      --
     Increase in accrued mortgage interest                                                     7,138                    7,164   
     Principal payments on mortgage notes to affiliates                                       (7,270)                    (481)  
     Increase in notes payable and accrued interest to                                                                          
        general partners and affiliates                                                        5,895                    4,506   
     Principal payments on other mortgage notes                                              (37,867)                     (59)  
     (Increase) decrease in restricted cash                                                   (2,610)                   1,873   
     Payment of deferred financing costs                                                        (177)                      -- 
     Deferred purchase price obligation payment                                                 (209)                      -- 
                                                                                ---------------------    ---------------------  
                                                                                                                                
         Net cash (used in) provided by financing activities                                 (40,352)                  13,003   
                                                                                ---------------------    ---------------------  
                                                                                                                                
         Net (decrease) increase in cash and cash equivalents                                    (95)                     257   
                                                                                                                                
Cash and cash equivalents, beginning of year                                                     221                      125   
                                                                                ---------------------    ---------------------  
                                                                                                                                
Cash and cash equivalents, end of year                                          $                126     $                382   
                                                                                =====================    =====================  
                                                                                                                                
Supplemental Disclosure of  Cash Flow Information:                                                                              
------------------------------------------------
     Cash paid for interest                                                     $              9,254     $              5,876   
                                                                                =====================    =====================  
Supplemental Disclosure of  Non-Cash Investing Activities:           
--------------------------------------------------------

     Sale of property in 1998 - See Note 4              
     
</TABLE>                                                                     
                See notes to consolidated financial statements.      
                                                                     
                                    7 of 15                          

<PAGE>


                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998
                            -----------------------

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------

1.    General

      The accompanying consolidated financial statements, footnotes and
      discussions should be read in conjunction with the consolidated
      financial statements, related footnotes and discussions contained in the
      Partnership's Annual Report on Form 10-K for the year ended December 31,
      1997.

      The financial information contained herein is unaudited. In the opinion
      of management, all adjustments necessary for a fair presentation of such
      financial information have been included. All adjustments are of a
      normal recurring nature except as discussed in Notes 3 and 4. Certain
      amounts have been reclassified to conform to the June 30, 1998
      presentation. The balance sheet at December 31, 1997 was derived from
      audited financial statements at such date.

      1626 New York Associates Limited Partnership (the "Registrant") was
      organized to acquire and own a 99% general partnership interest in and
      serve as a general partner of Nineteen New York Properties Limited
      Partnership (the "Operating Partnership"). The Registrant and the
      Operating Partnership are collectively referred to as the
      "Partnerships."

      The results of operations for the three and six months ended June 30,
      1998 and 1997, are not necessarily indicative of the results to be
      expected for the full year.

2.    Plan of Operation

      The Partnerships have maturing mortgage debt, totaling approximately
      $81,816,000 due in 1998. Based on the current value of the Properties,
      it is highly unlikely the Partnerships will be able to meet their 1998
      obligations. Accordingly, it appears there is a substantial likelihood
      that some or all of the Properties, if not sold, will be lost through
      foreclosure in 1998. In the event that Properties are sold, all proceeds
      would be used to satisfy any related outstanding indebtedness. This
      raises substantial doubt about the Partnerships' ability to continue as
      a going concern.

3.    Debt Modification with Related Parties

      The senior component of the Modified Loan consists of secured notes in
      the aggregate principal amount of $56,816,000 (the "Secured A Notes").
      These notes, which have an annual interest rate of 295 basis points over
      30-day LIBOR (8.61% at June 30, 1998), were scheduled to mature on
      February 28, 1998, but were extended to August 31, 1998. The junior
      component consists of secured notes in the aggregate principal amount of
      $102,450,000 (the "Secured B Notes"). These notes have a fixed annual
      interest rate of 14% through February 28, 1999 and then 16.75%
      thereafter, maturing on February 28, 2016. A mandatory prepayment of $25
      million against the Secured B Notes was scheduled to be made on March
      15, 1998, but was extended to August 31, 1998. A third component of the
      Modified Loan is an unsecured $19,550,000 note (the "Unsecured Note")
      representing the additional financing expected to be drawn upon by the
      Operating Partnership to fund capital improvements and tenant lease-up
      costs.

                                    8 of 15

<PAGE>


                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998
                            -----------------------

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------

3.    Debt Modification with Related Parties (Continued)

      However, any borrowings under this credit line are subject to the
      lender's discretion. Accordingly, it is possible that the Operating
      Partnership may not be able to borrow against this credit line each time
      it deems it necessary. The Unsecured Note was scheduled to mature on
      February 28, 1998, but was extended to August 31, 1998. The Unsecured
      Note, if outstanding, bears interest at a fixed annual rate of 14%
      through February 28, 1999 and then 16.75% thereafter. As of June 30,
      1998, the outstanding balance against the Unsecured Note was
      $17,040,000, which is included in notes payable and accrued interest to
      general partners and affiliates.

      In addition, the $10,000,000 Receivables Note has an annual base
      interest rate of 6% and an additional annual contingent interest rate of
      9%. Interest, to the extent that it cannot be paid currently, accrues
      until maturity. The Note is scheduled to mature on the earlier of August
      31, 1999, or such time that the loans encumbering the Partnership's 300
      Park Avenue South and 509 Fifth Avenue properties become due.

      In connection with the extension of the Modified Loan in February 1998,
      the Partnership paid $177,000 in financing fees.

4.    Sale of Property

      On January 13, 1998, the Partnership sold its 1372 Broadway property to
      an unaffiliated third party for $52,000,000. All of the proceeds were
      used to partially satisfy the approximately $94,000,000 allocated
      portion of the Modified Loan (including accrued and unpaid interest),
      with the unsatisfied portion of the Modified Loan being reallocated
      among the remaining Fuji Properties. For financial reporting purposes,
      the sale resulted in a gain of approximately $17,046,000.


                                    9 of 15

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998
                            -----------------------

Item 2.    Management's Discussion and Analysis of Financial Condition and 
           ---------------------------------------------------------------
           Results of Operations
           ---------------------

           The matters discussed in this Form 10-Q contain certain
           forward-looking statements and involve risks and uncertainties
           (including changing market conditions, competitive and regulatory
           matters, etc.) detailed in the disclosure contained in this Form
           10-Q and the other filings with the Securities and Exchange
           Commission made by the Registrant from time to time. The discussion
           of the Registrant's liquidity, capital resources and results of
           operations, including forward-looking statements pertaining to such
           matters, does not take into account the effects of any changes to
           the Registrant's operations. Accordingly, actual results could
           differ materially from those projected in the forward-looking
           statements as a result of a number of factors, including those
           identified herein.

           This Item should be read in conjunction with the Consolidated
           Financial Statements and other items contained elsewhere in this
           Report.

           Liquidity and Capital Resources
           -------------------------------

           The Registrant serves as the general partner of Nineteen New York
           Properties Limited Partnership (the "Partnership"). All of the
           Partnership's five remaining properties (the "Properties") are
           office buildings located in New York City. The Registrant's sole
           source of revenue is from distributions from the Partnership and
           interest income on cash reserves. The Registrant is responsible for
           its operating expenses. The Partnership receives rental revenue
           from tenants and is responsible for operating expenses,
           administrative expenses, capital improvements and debt service
           payments.

           The Registrant has maturing mortgage debt, totaling approximately
           $81,816,000 due in 1998. On February 15, 1998, the lender extended
           the maturity date of the Secured A Notes and the $25 million
           prepayment against the Secured B Notes until March 31, 1998, and
           further extended the maturity date until August 31, 1998. Although
           there can be no assurance the lender will do so, it is anticipated
           that the lender will continue to extend the maturity date on a
           month to month basis for the near future. Based on the current
           value of the Properties, it is highly unlikely the Registrant will
           be able to meet its 1998 obligations. Accordingly, there is a
           substantial likelihood that some or all of the Properties will be
           sold or lost through foreclosure in 1998. This raises substantial
           doubt about the Registrant's ability to continue as a going
           concern. In the event that Properties are sold, all proceeds would
           be used to satisfy any related outstanding indebtedness.

           The Registrant's original objective of capital appreciation will
           not be achieved and it is anticipated that the Registrant's
           partners will not receive any future distributions. Accordingly,
           the Registrant's partners will not receive a return of their
           original investment.

           The Registrant and the Partnership had $126,000 of cash and cash
           equivalents and $5,964,000 of restricted cash at June 30, 1998, as
           compared to $221,000 and $3,354,000 respectively, at December 31,
           1997. Restricted cash primarily includes amounts held in mortgage
           collateral accounts. The $95,000 decrease in cash and cash
           equivalents at June 30, 1998, as compared to December 31, 1997, was
           due to $45,515,000 of cash provided by investing activities, which
           was offset by $40,352,000 of cash used in financing activities and
           $5,258,000 of cash used in operating

                                   10 of 15

<PAGE>


                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998
                            -----------------------

Item 2.    Management's Discussion and Analysis of Financial Condition and 
           ---------------------------------------------------------------
           Results of Operations (Continued)
           ---------------------------------

           Liquidity and Capital Resources (Continued)
           ------------------------------------------
           activities. Cash provided by investing activities included
           $50,389,000 of net proceeds received from the sale of the
           Registrant's 1372 Broadway property, which was partially offset by
           $3,293,000 of improvements to real estate, the majority of which
           were tenant improvements, and $1,581,000 of cash expended on
           leasing activities. Cash used in financing activities included
           $37,867,000 of cash used for the partial principal repayment and
           $5,252,000 of cash used for the partial repayment of accrued
           interest on the allocated portion of the loan encumbering the
           Registrant's 1372 Broadway property. Cash used in financing
           activities also included a $7,270,000 principal payment on mortgage
           notes payable to affiliates, which was offset by a $7,138,000
           increase in accrued interest and a $5,895,000 increase in notes
           payable and accrued interest to general partners and affiliates. In
           addition, Registrant's restricted cash increased by $2,610,000, due
           to an increase in restricted cash operating accounts. All other
           increases (decreases) in certain assets and liabilities are the
           result of the timing of receipt and payment of various activities.

           The Partnership's only other source of liquidity is a $19,550,000
           unsecured credit line provided by Zeus Property LLC ("Zeus"), that
           had an outstanding balance of $17,040,000 at June 30, 1998. This
           credit line can be used by the Partnership to fund capital
           improvements and tenant lease-up costs at the Fuji Properties.
           However, any borrowings under this credit line are subject to Zeus'
           discretion. Accordingly, it is possible that the Operating
           Partnership may not be able to borrow against this credit line each
           time it deems it necessary.

           On January 13, 1998, the Partnership sold its 1372 Broadway
           property to an unaffiliated third party for $52,000,000. All of the
           proceeds were used to partially satisfy the $94,000,000 allocated
           portion of the Modified Loan (including accrued and unpaid
           interest), with the unsatisfied portion of the Modified Loan being
           reallocated among the remaining Fuji Properties. For financial
           reporting purposes, the sale resulted in a gain of approximately
           $17,046,000. For tax reporting purposes, the Registrant's partners
           will be allocated a substantial gain in 1998 due to recapture of
           tax benefits received in prior years.

           There have been, and it is possible there may be other Federal,
           state and local legislation and regulations enacted relating to the
           protection of the environment and individual rights (such as the
           American with Disabilities Act). The Registrant is unable to
           predict the extent, if any, to which such new legislation or
           regulation might occur and the degree to which such existing or new
           legislation or regulations might adversely affect the Registrant?s
           liquidity and capital resources.

           Real Estate Market
           ------------------

           The income and expenses of operating the Properties owned by the
           Partnership are subject to factors outside its control, such as the
           over-supply of similar properties, increases in unemployment,
           population shifts, or changes in patterns or needs of users.
           Expenses, such as local real estate taxes and miscellaneous
           expenses, are subject to change and cannot always be reflected in
           rental rate increases due to market conditions. In addition, there
           are risks inherent in owning and operating office buildings because
           such properties are labor intensive and are susceptible to the
           impact of economic and other conditions outside the control of the
           Registrant.

                                   11 of 15

<PAGE>


                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------
                            FORM 10-Q JUNE 30, 1998
                            -----------------------

Item 2.    Management's Discussion and Analysis of Financial Condition and 
           ---------------------------------------------------------------
           Results of Operations (Continued)
           ---------------------------------

           Results of Operations
           ---------------------

           Six Months ended June 30, 1998 vs. June 30, 1997

           The Partnership generated net income of approximately $8.7 million
           for the six months ended June 30, 1998, as compared to a net loss
           of approximately $12.3 million for the six months ended June 30,
           1997. Net income for the six months ended June 30, 1998 increased
           primarily due to the $17.0 million gain on sale of the
           Partnership's 1372 Broadway property.

           Rent and escalation income decreased to approximately $18.2 million
           for the six months ended June 30, 1998, as compared to
           approximately $18.7 million for the six months ended June 30, 1997.
           With respect to the remaining properties, rent and escalation
           income increased to approximately $16.7 million for the six months
           ended June 30, 1998, as compared to approximately $14.0 million for
           the six months ended June 30, 1997. Rent and escalation income
           increased due to an increase in rental revenues at 757 Third
           Avenue, 545 Fifth Avenue and 300 Park Avenue South for the six
           months ended June 30, 1998, as compared to 1997. The higher rental
           revenues were the result of higher effective rental rates and an
           increase in occupancy. The increases in rent and escalation income
           were slightly offset by a decrease in rental revenues at 535 Fifth
           Avenue, primarily due to a decline in occupancy. Rent and
           escalation income at 509 Fifth Avenue remained relatively constant.

           Expenses decreased by approximately $4.8 million for the six months
           ended June 30, 1998, as compared to 1997. With respect to the
           remaining properties, expenses increased by approximately $1.2
           million for the six months ended June 30, 1998, as compared to
           1997. The increase in interest, depreciation and amortization
           expenses were only slightly offset by a decrease in overall
           operating expenses (i.e., real estate and other taxes, payroll,
           utilities, repairs and maintenance, and cleaning and security).

           Interest expense increased primarily due to an increase in the
           principal indebtedness on the Unsecured Note and the Modified Loan
           incurring interest at an overall higher interest rate, due to an
           increase in interest rates. Depreciation and amortization expenses
           increased due to the effect of the current and prior years
           additions to fixed assets, primarily tenant improvements, and an
           increase in the amortization of leasing costs.

           As of June 30, 1998 and 1997, the current portfolio's occupancy was
           91% and 86%, respectively. During the first six months of 1998, the
           Partnership signed new, renewal, extension, and expansion leases
           totaling approximately 148,000 square feet at rental terms
           comparable to buildings of similar quality in the market. The
           increase in occupancy and the ability to retain tenants is a direct
           result of the improved economy.


                                   12 of 15

<PAGE>


                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998
                            -----------------------

Item 2.    Management's Discussion and Analysis of Financial Condition and 
           ---------------------------------------------------------------
           Results of Operations (Continued)
           --------------------------------

           Results of Operations
           ---------------------

           Three Months ended June 30, 1998 vs. June 30, 1997

           The Partnership generated a net loss of approximately $5.1 million
           for the three months ended June 30, 1998, as compared to a net loss
           of approximately $6.7 million for the three months ended June 30,
           1997.

           Rental and escalation income decreased to approximately $8.2
           million for the three months ended June 30, 1998 as compared to
           approximately $8.9 million for the three months ended June 30,
           1997. With respect to the remaining properties, rent and escalation
           income increased to approximately $8.2 million for the three months
           ended June 30, 1998, as compared to approximately $6.5 million for
           the three months ended June 30, 1997. Rent and escalation income
           increased due to an increase in rental revenues at 757 Third
           Avenue, 545 Fifth Avenue and 300 Park Avenue South for the three
           months ended June 30, 1998, as compared to 1997. The higher rental
           revenues were the result of higher effective rental rates and an
           increase in occupancy. The increases in rent and escalation income
           were slightly offset by a decrease in rental revenues at 535 Fifth
           Avenue, primarily due to a decline in occupancy. Rent and
           escalation income at 509 Fifth Avenue remained relatively constant.

           Expenses decreased by approximately $2.5 million for the three
           months ended June 30, 1998, as compared to 1997. With respect to
           the remaining properties, expenses increased by approximately
           $400,000 for the three months ended June 30, 1998, as compared to
           1997. The increase in interest, depreciation and amortization
           expenses were only slightly offset by a decrease in overall
           operating expenses (i.e., real estate and other taxes, payroll,
           utilities, repairs and maintenance, and cleaning and security).

                                   13 of 15

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------
                            FORM 10-Q JUNE 30, 1998
                            -----------------------

Part II - Other Information
---------------------------

Item 6.          Exhibits and Reports on Form 8-K
                 --------------------------------

           a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to
              this report.

           b) Reports on Form 8K:

              No report on Form 8-K was filed during the period.

                                   14 of 15

<PAGE>

                 1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                 --------------------------------------------

                            FORM 10-Q JUNE 30, 1998
                            -----------------------


                                  SIGNATURES
                                  ----------

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

                                   1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP
                                   --------------------------------------------

                                   BY:   TWO WINTHROP PROPERTIES, INC.
                                         MANAGING GENERAL PARTNER


                                         BY:     /s/ Michael L. Ashner
                                                 Michael L. Ashner
                                                 Chief Executive Officer

                                         BY:     /s/ Edward V. Williams
                                                 Edward V. Williams
                                                 Chief Financial Officer

                                   DATED:        August 14, 1998



                                   15 of 15