<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, 1997

                                       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)

  One International Place, Boston, MA                     02110
(Address of principal executive office)                (Zip Code)

        Registrant's telephone number, including area code (617) 330-8600

     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 16


<PAGE>
                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997
                         PART 1 - FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>

                                                                                       JUNE 30,               DECEMBER 31,
                                                                                         1997                     1996
                                                                                 ---------------------    ---------------------
<S>                                                                              <C>                      <C>
ASSETS

Real estate:

     Land                                                                        $             24,440     $             24,440
     Buildings and improvements, net of accumulated
        depreciation of $135,893 and $130,617 as of
        June 30, 1997 and December 31, 1996, respectively                                     110,198                  110,878
                                                                                 ---------------------    ---------------------

                                                                                              134,638                  135,318

Other Assets:

     Cash and cash equivalents                                                                    382                      125
     Restricted cash                                                                            7,062                    8,935
     Accounts receivable, net of reserves of $638 and $748
         as of June 30, 1997 and December 31, 1996, respectively                                  801                      751
     Prepaid expenses and other assets                                                          5,478                    5,267
     Deferred rent receivable                                                                   8,514                    8,424
     Deferred costs, net of accumulated amortization of
         $22,895 and $21,786 as of June 30, 1997
         and December 31, 1996, respectively                                                    6,117                    4,827
                                                                                 ---------------------    ---------------------

Total Assets                                                                      $           162,992     $            163,647
                                                                                 =====================    =====================

</TABLE>

                 See notes to consolidated financial statements.

                                     2 of 16


<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)

(CONTINUED)

LIABILITIES AND PARTNERS' DEFICIT

<TABLE>
<CAPTION>
                                                                                       JUNE 30,               DECEMBER 31,
                                                                                         1997                     1996
                                                                                 ---------------------    ---------------------
<S>                                                                              <C>                      <C> 
Liabilities:

     Mortgage notes payable to affiliates                                        $            204,690     $            205,171
     Other mortgage notes payable                                                              19,112                   19,171
     Notes payable and accrued interest
         to general partners and affiliates                                                    18,201                   13,695
     Accounts payable, accrued expenses, security
         deposits and other liabilities                                                         9,303                    8,826
     Accrued interest on mortgage notes to affiliates                                          45,272                   38,108
     Accrued interest on other mortgage notes                                                     960                      960
     Deferred purchase price obligation                                                         1,498                    1,498
                                                                                 ---------------------    ---------------------

Total Liabilities                                                                             299,036                  287,429
                                                                                 ---------------------    ---------------------

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, 1997 and
         December 31, 1996, respectively                                                     (140,873)                (129,148)
     Less: investor notes                                                                         (68)                     (68)
                                                                                 ---------------------    ---------------------

                                                                                             (140,941)                (129,216)

     General Partners Equity                                                                    4,897                    5,434
                                                                                 ---------------------    ---------------------

         Total Partners' Deficit                                                             (136,044)                (123,782)
                                                                                 ---------------------    ---------------------


Total Liabilities and Partners' Deficit                                           $           162,992     $            163,647
                                                                                 =====================    =====================
</TABLE>

                 See notes to consolidated financial statements.

                                     3 of 16


<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
                                                                                                 FOR THE SIX MONTHS ENDED
                                                                                                JUNE 30,            JUNE 30,
                                                                                                 1997                 1996
                                                                                          -------------------  -------------------
<S>                                                                                       <C>                  <C> 

Revenues:

     Rental and escalation income                                                         $           18,719   $           22,450
     Interest and other income                                                                           678                  169
                                                                                          -------------------  -------------------

        Total revenues                                                                                19,397               22,619
                                                                                          -------------------  -------------------

Expenses:

     Interest on obligations to affiliates                                                            12,799                6,485
     Interest                                                                                            710                3,990
     Depreciation and amortization                                                                     6,803                8,295
     Real estate and other taxes                                                                       4,697                4,847
     Utilities                                                                                         2,066                2,156
     Cleaning and security                                                                             2,000                1,902
     Asset and property management fees                                                                  267                  432
     Repairs and maintenance                                                                             681                  900
     Payroll                                                                                             645                  731
     General and administrative                                                                          639                  714
     Professional fees                                                                                   302                  252
     Provision for doubtful accounts                                                                      50                    -
                                                                                          -------------------  -------------------

        Total expenses                                                                                31,659               30,704
                                                                                          -------------------  -------------------

Loss before extraordinary gain                                                                       (12,262)              (8,085)

     Extraordinary gain on transfer of 227 East 45th Street                                                -               13,688
                                                                                          -------------------  -------------------

Net (loss) income                                                                         $          (12,262)  $            5,603
                                                                                          ===================  ===================



Net (loss) income allocated to general partners                                           $             (537)  $              747
                                                                                          ===================  ===================

Net loss before extraordinary item allocated to
   investor limited partners                                                              $          (11,725)  $           (7,882)

Extraordinary gain allocated to investor limited partners                                                  -               12,738
                                                                                          -------------------  -------------------

Net (loss) income allocated to investor limited partners                                  $          (11,725)  $            4,856
                                                                                          ===================  ===================

Net loss per unit of investor limited partnership
     interest before extraordinary gain                                                   $        (8,750.00)  $        (5,882.09)

Extraordinary gain per unit of investor limited
   partnership interest                                                                                    -             9,505.97
                                                                                          -------------------  -------------------

Net (loss) income per unit of investor limited
   partnership interest                                                                   $        (8,750.00)  $         3,623.88
                                                                                          ===================  ===================

</TABLE>

                 See notes to consolidated financial statements.

                                     4 of 16


<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
                                                                                                FOR THE THREE MONTHS ENDED
                                                                                                JUNE 30,            JUNE 30,
                                                                                                 1997                 1996
                                                                                          -------------------  -------------------
<S>                                                                                       <C>                  <C> 

Revenues:

     Rental and escalation income                                                         $            8,892   $           10,628
     Interest and other income                                                                           313                   27
                                                                                          -------------------  -------------------

        Total revenues                                                                                 9,205               10,655
                                                                                          -------------------  -------------------

Expenses:

     Interest on obligations to affiliates                                                             6,443                4,179
     Interest                                                                                            302                  975
     Depreciation and amortization                                                                     3,498                4,686
     Real estate and other taxes                                                                       2,351                2,417
     Utilities                                                                                           981                1,047
     Cleaning and security                                                                               966                  951
     Asset and property management fees                                                                  132                   88
     Repairs and maintenance                                                                             401                  635
     Payroll                                                                                             335                  243
     General and administrative                                                                          343                  444
     Professional fees                                                                                   148                  172
     Provision for doubtful accounts                                                                      50                    -
                                                                                          -------------------  -------------------

        Total expenses                                                                                15,950               15,837
                                                                                          -------------------  -------------------

Net loss                                                                                              (6,745)              (5,182)
                                                                                          ===================  ===================

Net loss allocated to general partners                                                    $             (307)  $             (165)
                                                                                          ===================  ===================

Net loss allocated to investor limited partners                                           $           (6,438)  $           (5,017)
                                                                                          ===================  ===================


Net loss per unit of investor limited partnership
     interest                                                                             $        (4,804.48)  $        (3,744.03)
                                                                                          ===================  ===================

</TABLE>

                 See notes to consolidated financial statements.

                                     5 of 16

<PAGE>

                             1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
                                                 UNITS OF
                                                 INVESTOR             INVESTOR
                                                  LIMITED              LIMITED                GENERAL                 TOTAL
                                                PARTNERSHIP           PARTNERS'              PARTNERS'              PARTNERS'
                                                 INTEREST             (DEFICIT)                EQUITY                DEFICIT
                                             ------------------ ----------------------  ---------------------  ---------------------

<S>                                          <C>                <C>                     <C>                    <C>                  

Balance - December 31, 1996                              1,340  $            (129,216)  $              5,434   $           (123,782)

    Net Loss                                                 -                (11,725)                  (537)               (12,262)
                                             ------------------ ----------------------  ---------------------  ---------------------

Balance - June 30, 1997                                  1,340  $            (140,941)  $              4,897   $           (136,044)
                                             ================== ======================  =====================  =====================

</TABLE>

                 See notes to consolidated financial statements.

                                     6 of 16


<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                            FOR THE SIX MONTHS ENDED
(IN THOUSANDS)                                                                             JUNE 30,           JUNE 30,
                                                                                             1997                1996
                                                                                      -----------------   -----------------
<S>                                                                                   <C>                 <C>  
Cash Flows from Operating Activities:

Net (loss) income                                                                     $        (12,262)   $          5,603
Adjustments to reconcile net (loss) income to net cash
  (used in) provided by operating activities:

     Depreciation                                                                                5,276               8,295
     Amortization                                                                                1,527                   -
     Change in deferred rent receivable                                                           (508)                 28
     Gain on transfer of 227 East 45th Street                                                        -             (13,688)
     Provision for doubtful accounts                                                                50                   -

Changes in operating assets and liabilities:

     Increase in accounts receivable, prepaid
        expenses and other assets                                                                 (311)                899
     Decrease in accounts payable, accrued expenses,
        security deposits and other liabilities                                                    477                 987
                                                                                      -----------------   -----------------

       Net cash (used in) provided by operating activities                                      (5,751)              2,124
                                                                                      -----------------   -----------------

Cash Flows from Investing Activities:

     Additions to buildings and improvements                                                    (4,596)             (3,265)
     Increase in deferred costs                                                                 (2,399)               (108)
                                                                                      -----------------   -----------------

       Cash used in investing activities                                                        (6,995)             (3,373)
                                                                                      -----------------   -----------------

Cash Flows from Financing Activities:

     Increase in accrued mortgage interest                                                       7,164                   -
     Principal payments on mortgage notes to affiliates                                           (481)                  -
     Increase in notes payable and accrued interest to

        general partners and affiliates                                                          4,506              (1,104)

     Principal payments on other mortgage notes                                                    (59)                (55)
     Decrease in restricted cash                                                                 1,873               2,443
                                                                                      -----------------   -----------------

       Net cash provided by financing activities                                                13,003               1,284
                                                                                      -----------------   -----------------

       Net increase in cash and cash equivalents                                                   257                  35

Cash and cash equivalents, beginning of period                                                     125                 267
                                                                                      -----------------   -----------------

Cash and cash equivalents, end of period                                              $            382    $            302
                                                                                      =================   =================

Supplemental Disclosure of Cash Flow Information:

     Cash paid for interest                                                           $          5,876    $          7,221
                                                                                      =================   =================
</TABLE>

Supplemental Disclosure of Non-Cash Investing
   and Financing Activities:

     Deed in lieu of foreclosure - See Note 4 
     Related party debt forgiveness and
     modification - See Note 2

                 See notes to consolidated financial statements.

                                     7 of 16


<PAGE>
                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

                   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,
      1996.

      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 2, 3 and 4. Certain amounts
      have been reclassified to conform to the June 30, 1997 presentation. The
      balance sheet at December 31, 1996 was derived from audited financial
      statements at such date.

      The results of operations for the three and six months ended June 30, 1997
      and 1996 are not necessarily indicative of the results to be expected for
      the full year.

2.    Related Parties

      The Partnership incurred approximately $329,000 of property and asset
      management fees and approximately $135,000 of leasing and construction
      fees through February 28, 1996, payable to an affiliate of the general
      partner. As part of the sale of the Fuji Loan, (described in Note 3), the
      Partnership agreed to retain new, unaffiliated management and leasing
      agents for all of its properties.

      In connection with the sale of the Fuji Loan, Winthrop Financial
      Associates ("WFA") and certain of its affiliates entered into an agreement
      with the Investor Partnership, the Operating Partnership and an affiliate
      of Zeus Property LLC ("Zeus") with regard to amounts owed to WFA and its
      affiliates by the Investor Partnership and the Operating Partnership (the
      "Winthrop Debt Agreement"). Prior to this agreement, Winthrop and its
      affiliates were owed, in the aggregate, $47,162,000 by the Investor
      Partnership and the Operating Partnership. This amount was comprised of
      cash advances made by Winthrop to the Operating Partnership, as well as
      unpaid deferred fees related to the on-site management of the properties,
      asset management and syndication. This amount also included accrued
      interest on these outstanding balances.

      Under the Winthrop Debt Agreement, Winthrop and its affiliates contributed
      approximately $37,162,000 of the $47,162,000 to the Operating Partnership.
      The remaining $10,000,000 receivable has been evidenced by a promissory
      note issued by the Operating Partnership (the "Receivables Note") and is
      payable from the excess cash flow, as defined, from 509 Fifth Avenue and

      300 Park Avenue South. WFA then sold the Receivables Note to an affiliate
      of Zeus for a payment of $6 million in cash. The Receivables Note has an
      annual base interest rate of 6% and an additional annual contingent
      interest rate of 9% and was scheduled to mature on July 31, 1997. Interest
      is payable only from available cash flow after payment of debt service on
      the Dime loans. Interest, to the extent that it cannot be paid currently,
      accrues until the repayment of this Note. However, the holder of the
      Receivables Note previously entered into a forbearance agreement which
      prohibits it from exercising its remedies if the Receivables Note is not
      satisfied at maturity. The Note was not satisfied on July 31, 1997. The
      Partnership is currently negotiating to extend the Receivables Note.

                                     8 of 16


<PAGE>
                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.    Related Parties (Continued)

      As of June 30, 1997, the outstanding balance against the Unsecured Note
      was $6,929,000 and is included in notes payable and accrued interest to
      general partners and affiliates.

3.    Debt Modification

      On February 28, 1996, Zeus purchased the existing debt held by The Fuji
      Bank, Ltd. for $115 million. The Operating Partnership obtained a
      reduction in the current interest required to be paid under the modified
      loan which, based on current projections, will greatly reduce the
      likelihood of monetary default under the loan prior to February 28, 1998,
      the new maturity date for a portion of the loan. As part of the
      restructuring of the Fuji loan, each of the Operating Partnership's 535
      and 545 Fifth Avenue, 1372 Broadway and 757 Third Avenue properties (the
      "Fuji Properties") were conveyed by the Operating Partnership to
      newly-created limited liability companies which are wholly-owned,
      indirectly, by the Operating Partnership and its partners.

      The modified Fuji loan (the "Modified Loan") is comprised of several
      component non-recourse loans, all held by Zeus and its affiliates. The
      senior loan component consists of a series of secured notes in the
      aggregate principal amount of $102,240,000 at June 30, 1997. These notes
      have an annual interest rate of 295 basis points over 30-day LIBOR (8.64%
      at June 30, 1997), maturing on February 28, 1998 unless extended at Zeus'
      option (the "Secured A Notes").

      A junior component consists of secured notes in the aggregate principal
      amount of $102,450,000, each having a fixed annual interest rate of 14%
      for the next three years and then 16.75% thereafter, maturing on February
      28, 2016 (the "Secured B Notes"). The Secured A Notes and Secured B Notes

      are collectively secured by first mortgages on the Fuji Properties. A
      third component is the 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 with respect to the Fuji Properties. The Unsecured Note bears
      interest at a fixed annual rate of 14% for the next three years and then
      16.75% thereafter and matures on February 28, 1998, unless extended at
      Zeus' option.

      The Partnership has maturing mortgage debt, totaling approximately
      $29,000,000, plus accrued interest, due between July 31, 1997 and December
      31, 1997, approximately $102,000,000 due February 28, 1998 and a
      $25,000,000 mandatory principal payment due March 15, 1998. The
      Partnership is currently negotiating to refinance or restructure the 1997
      liabilities. It is anticipated that loans, representing $19,000,000 of the
      $29,000,000 due in 1997, will be refinanced with a new lender. However,
      based on the current value of the Properties it is highly unlikely the
      Partnership will be able to meet its 1998 obligations. Accordingly, it
      appears there is a substantial likelihood that some or all of the
      Properties will be lost through foreclosure in 1998. This raises
      substantial doubt about the Partnerships' ability to continue as a going
      concern.

                                     9 of 16
<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.    Deed in Lieu of Foreclosure

      In early January 1996, a deed in lieu of foreclosure agreement was reached
      between the Operating Partnership and Sanwa Business Credit Corporation
      ("Sanwa"). Pursuant to the deed in lieu of foreclosure agreement, the
      Operating Partnership transferred title to the property located at 227
      East 45th St. to Sanwa on January 24, 1996. In exchange, Sanwa released,
      as of the closing date, the Operating Partnership from all claims,
      demands, liabilities, obligations, actions and causes of any kind with
      regard to Sanwa.

      As of December 31, 1995, the related indebtedness to Sanwa was
      approximately $24,409,000. As a result of the above described
      transactions, the Operating Partnership has recognized an extraordinary
      gain of approximately $13,688,000. The property was stated at its fair
      value as of December 31, 1995 as a result of a recorded write-down.

5.    Contract for Sale of Property

      In May 1997, the Partnership contracted to sell its 1372 Broadway property
      to an unaffiliated third party for $52,000,000. The sale is expected to
      close in January 1998. All of the proceeds from such sale will be required

      to be used to partially satisfy the Modified Loan. For financial statement
      purposes, the Partnership will recognize a substantial gain on the sale.

6.    Subsequent Event

      In August 1997, Zeus sold the portion of the Modified Loan allocated to
      1372 Broadway to the ultimate purchaser of the property. The terms of the
      loan remain unchanged.

                                    10 of 16


<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q JUNE 30, 1997

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

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

           The Registrant and the Operating Partnership had $382,000 of cash and
           cash equivalents and $7,062,000 of restricted cash at June 30, 1997,
           as compared to $125,000 and $8,935,000 respectively, at December 31,
           1996. Restricted cash primarily includes amounts held in mortgage
           collateral accounts. The $257,000 increase in cash and cash
           equivalents at June 30, 1997, as compared to December 31, 1996, was
           due to $13,003,000 of cash provided by financing activities, which
           was substantially offset by $6,995,000 of cash used in investing
           activities and $5,751,000 of cash used in operating activities. Cash
           used in investing activities consisted primarily of $4,596,000 of
           improvements to real estate, the majority of which were building
           improvements, and $2,399,000 of cash expended on leasing activities.
           Cash provided by financing activities consisted primarily of the
           accrual of $7,164,000 of interest on mortgage notes payable,
           $4,037,000 in borrowings against the unsecured line of credit, and
           $368,000 of accrued and unpaid interest on the Receivables Note. In

           addition, Registrant used $481,000 of cash provided by financing
           activities for principal payments on mortgage notes to affiliates.
           All other increases (decreases) in certain assets and liabilities are
           the result of the timing of receipt and payment of various
           activities.

           The Operating Partnership's only other source of liquidity is a
           $19,550,000 unsecured credit line provided by Zeus Property LLC
           ("Zeus"). This credit line can be used by the Operating 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. As of June 30, 1997, the
           outstanding borrowings against the unsecured credit line were
           $6,929,000.

                                   11 of 16

<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q-JUNE 30, 1997

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

           Liquidity and Capital Resources (Continued)

           The Registrant has maturing mortgage debt, totaling approximately
           $29,000,000, plus accrued interest, due between July 31, 1997 and
           December 31, 1997, approximately $102,000,000 due February 28, 1998
           and a $25,000,000 mandatory principal payment due March 15, 1998. The
           Registrant is currently negotiating to refinance, extend, or
           restructure the 1997 maturing liabilities. It is anticipated that
           loans, representing $19,000,000 of the $29,000,000 due in 1997, will
           be refinanced with a new lender. The $10,000,000 Receivables Note,
           which was scheduled to mature July 31, 1997, was not satisfied at
           maturity. The holder of the Receivables Note previously entered into
           a forbearance agreement which prohibits it from exercising its
           remedies if the Receivables Note was not satisfied at maturity.
           However, based on the current value of the Properties it is highly
           unlikely the Registrant will be able to meet its 1998 maturing debt
           obligations. Accordingly, some or all of the Properties will be lost
           through foreclosure in 1998. This raises substantial doubt about the
           Partnerships' ability to continue as a going concern.

           In May 1997, the Registrant entered into an agreement to sell its
           1372 Broadway property for $52,000,000. All of the proceeds from such
           sale will be required to be used to partially satisfy the Modified
           Loan. The sale is expected to close in January 1998.

           In August 1997, Zeus sold the portion of the Modified Loan allocated
           to 1372 Broadway to the ultimate purchaser of the property. This
           transaction is not expected to have any effect on the Registrant.

           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.

           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
           Operating Partnership are subject to factor's 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.

                                    12 of 16

<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q-JUNE 30, 1997

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

           Results of Operations

           Six Months ended June 30, 1997 vs.  June 30, 1996

           The Partnership generated a net loss of approximately $12.3 million
           for the six months ended June 30, 1997, as compared to a net loss
           before extraordinary gain of approximately $8.1 million for the six
           months ended June 30, 1996. The increase in net loss before the
           extraordinary gain was due to a decrease in revenues and an increase
           in expenses.

           Base rent and rent escalations (collectively "rental and escalation
           income") decreased to approximately $18.7 million for the six months
           ended June 30, 1997 as compared to approximately $22.5 million for
           the six months ended June 30, 1996. Rental and escalation income
           declined due to a decrease in rental revenues at 757 Third Avenue,
           1372 Broadway, 535 Fifth Avenue and 300 Park Avenue South for the six

           months ended June 30, 1997, as compared to 1996. The lower rental
           revenues were primarily the result of lower effective rental rates.
           Rental and escalation income at the other properties remained
           relatively constant.

           Expenses increased by $955,000 for the six months ended June 30,
           1997, as compared to 1996. The increase in interest expense was
           partially offset by decreases in overall operating expenses (i.e.,
           real estate and other taxes, payroll, utilities, repairs and
           maintenance, and cleaning and security) asset and property management
           fees and depreciation and amortization expense.

           Interest expense increased due to the Modified Loan incurring
           interest at an overall higher interest rate than on the prior loan.
           Asset and property management fees declined due to the elimination of
           the asset management fee payable to a related party and the new
           management agreement (which changed the previous fee of 2.5% of cash
           receipts to a fixed fee). Depreciation and amortization expenses
           declined due to fixed assets and intangible assets becoming fully
           amortized during 1996, which was only partially offset by the current
           years fixed asset additions. All other expenses remained relatively
           constant.

           On May 27, 1997, approximately 90,000 square feet of unoccupied space
           at the Partnerships 757 Third Avenue Property was re-leased,
           representing approximately 20% of the building. As of June 30, 1997
           and 1996, the current portfolio's occupancy was 86% and 82%,
           respectively. During the first six months of 1997, the Operating
           Partnership signed new, renewal, extension, and expansion leases
           totaling 380,742 square feet at rental terms comparable to buildings
           of similar quality in the market.

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<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q-JUNE 30, 1997

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

           Results of Operations

           Three Months ended June 30, 1997 vs.  June 30, 1996

           The Partnership generated a net loss of approximately $6.7 million
           for the three months ended June 30, 1997, as compared to a net loss
           before extraordinary gain of approximately $5.2 million for the three
           months ended June 30, 1996. The increase in net loss was due to a
           decrease in revenues and an increase in expenses.

           Rental and escalation income decreased to approximately $8.9 million

           for the three months ended June 30, 1997 as compared to approximately
           $10.6 million for the three months ended June 30, 1996. Rental and
           escalation income declined due to a decrease in rental revenues at
           757 Third Avenue, 1372 Broadway, 535 Fifth Avenue and 300 Park Avenue
           South for the three months ended June 30, 1997, as compared to 1996.
           The lower rental revenues were primarily the result of lower
           effective rental rates. Rental and escalation income at the other
           properties remained relatively constant.

           Expenses increased by $113,000 for the three months ended June 30,
           1997, as compared to 1996. The increase in interest expense was
           partially offset by decreases in overall operating expenses (i.e.,
           real estate and other taxes, payroll, utilities, repairs and
           maintenance, and cleaning and security) and depreciation and
           amortization expense.

                                    14 of 16


<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q-JUNE 30, 1997

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.

                                    15 of 16


<PAGE>

                  1626 NEW YORK ASSOCIATES LIMITED PARTNERSHIP

                             FORM 10-Q-JUNE 30, 1997

                                   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, 1997

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