Mendik Real Estate Limited Partnership – ‘10-K’ for 12/31/98

As of:  Thursday, 4/15/99   ·   For:  12/31/98   ·   Accession #:  1073339-99-64   ·   File #:  0-15463

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report for 1998                                34    181K 
 2: EX-27       Financial Data Schedule for 1998 Form 10-K             1      5K 

10-K   —   Annual Report for 1998
Document Table of Contents

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-K

X             Annual Report Pursuant to Section 13 or 15(d) of              
-----                  the Securities Exchange Act of 1934                      

 For the fiscal year ended December 31, 1998
                           -----------------

OR

Transition Report Pursuant to Section 13 or 15(d) of
-----                  the Securities Exchange Act of 1934                      

For the transition period from to           to          
                                  ---------    ---------

 Commission file number: 0-15463
                         -------

MENDIK REAL ESTATE LIMITED PARTNERSHIP
--------------------------------------
Exact name of registrant as specified in its charter

     New York                                               11-2774249
     --------                                               ----------
State or other jurisdiction of                                 I.R.S. Employer  
incorporation or organization                                 Identification No.

Attn.:  Andre Anderson                                                          
3 World Financial Center, 29th Floor, New York, New York            10285       
--------------------------------------------------------            -----       
Address of principal executive offices                            Zip code      

Registrant's telephone number, including area code:  (212) 526-3183             
                                        --------------

Securities registered pursuant to Section 12(b) of the Act:  None               
                                              ----

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

 Units of Limited Partnership Interest
 -------------------------------------
Title of Class

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

Yes   X     No      
    -----      -----

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

State the aggregate market value of the voting stock held by non-affiliates of  
the registrant:  Not applicable.                                                

Documents Incorporated by Reference:  None                                      

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PART I

Item 1.  Business                                                               

General                                                                         
-------                                                                         
Mendik Real Estate Limited Partnership (the "Partnership" or "Registrant") is a 
New York limited partnership formed in October 1985 pursuant to an agreement of 
limited partnership (as amended, the "Partnership Agreement") for the purpose of
acquiring, maintaining and operating income-producing commercial office         
buildings in the Greater New York Metropolitan Area. NY Real Estate Services 1  
Inc., a Delaware corporation ("NYRES1") (formerly known as Hutton Real Estate   
Services XV, Inc.), and Mendik RELP Corporation (formerly known as Mendik       
Corporation), a New York corporation, are the general partners (together, the   
"General Partners") of the Registrant. (See Item 10.)                           

Commencing May 7, 1986, the Partnership began offering up to a maximum of       
1,000,000 units of limited partnership interest (the "Units") at $500 per Unit  
with a minimum required purchase of 10 Units or $5,000 (four Units for an       
Individual Retirement Account or Keogh Plan). The Partnership offered Class A   
Units to taxable investors and Class B Units to tax-exempt investors. The       
offering of Units was completed on September 18, 1987. The Partnership held     
closings on June 18, 1986, September 4, 1986, January 22, 1987, March 31, 1987, 
June 1, 1987 and September 18, 1987 at which time investors who purchased the   
Units ("Investor Limited Partners") were admitted to the Partnership. Investor  
Limited Partners are not required to make any further capital contributions to  
the Partnership. Upon completion of the offering on September 18, 1987 the      
Partnership had accepted subscriptions for 395,169 Units for gross aggregate    
cash proceeds to the Partnership of $197,584,500. Net proceeds to the           
Partnership after deducting selling commissions, organization expenses, and     
other expenses of the offering were approximately $172,766,598. These proceeds  
were used to: (i) repay the principal and interest of interim financing obtained
by the Partnership to fund the acquisition of a property located at 1351        
Washington Boulevard, Stamford, Connecticut (the "Stamford Property"); (ii)     
acquire the leasehold interests in a property located on Mamaroneck Avenue in   
Harrison, New York (the "Saxon Woods Corporate Center") and in a property       
located at 330 West 34th Street, New York, New York (the "34th Street Property")
and; (iii) acquire an approximate 60% interest in Two Park Company, the joint   
venture which owns a property located at Two Park Avenue, New York, New York    
(the "Park Avenue Property") (collectively, the "Properties"). The remaining 40%
interest in Two Park Company was owned by B&B Park Avenue L.P., of which Mendik 
RELP Corporation was the general partner. On April 15, 1997, FW/Mendik REIT LLC,
an affiliate of Mendik RELP Corporation, acquired substantially all of the      
interest in B&B Park Avenue L.P. Following this sale, FW/Mendik REIT LLC        
conveyed its interest in B&B Park Avenue L.P. to an affiliate of Vornado Realty 
Trust ("Vornado"), a real estate investment trust whose shares of stock are     
traded on the New York Stock Exchange. The conveyance to the affiliate of       
Vornado was in connection with the consolidation of Vornado and Mendik          
Management Company, Inc. and certain of its affiliates, which consolidation was 
also consummated on April 15, 1997. In connection with this transaction, Mendik 
Management Company Inc. ("Mendik Management") assumed all property management   
and leasing responsibilities at the Properties, which were formerly performed by
Mendik Realty Company, Inc. ("Mendik Realty"). On December 29, 1994, the        
Partnership transferred title to the Stamford Property to the mortgage holder in
lieu of foreclosure. See Note 4 to the Consolidated Financial Statements under  
Item 8 for a further discussion of the transfer of the Stamford Property.       

The Partnership's primary investment objectives with respect to the Properties  
(in no particular order of priority) are (i) capital appreciation, (ii)         
distributions of Net Cash From Operations (as defined in the Partnership        
Agreement), and (iii) preservation and protection of capital. The attainment of 
the Partnership's investment objectives had been adversely affected by the      
impact of the significant downturn in the commercial office real estate market  
in the Greater New York metropolitan area which occurred during the late 1980s  
and early 1990s.                                                                

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Property Sales                                                                  
--------------                                                                  
In consideration of an improvement in the real estate markets in which the      
Properties are located, as well as the high occupancy rates of each of the      
Properties, the General Partners commenced efforts in early 1998 to sell their  
interest in each of the three remaining Properties. On November 17, 1998, the   
Partnership completed the sale of its ownership interests in the Properties (the
"Sale") to affiliates of Vornado, an affiliate of Mendik RELP Corporation, a    
General Partner, for a selling price of $52,212,198, net of the Partnership's   
share of existing mortgage debt on Two Park Avenue and Saxon Woods, litigation  
settlement costs, and closing adjustments. The Sale was completed as part of the
settlement of three purported class action lawsuits that were brought in the    
Supreme Court of the State of New York for New York County (the "Court") against
the General Partners of the Partnership and certain affiliates of Mendik RELP   
Corporation by certain limited partners of the Partnership (the "Settlement").  
See Item 3 and Item 7 for discussions of the Settlement and Sale. The General   
Partners are currently in the process of winding up the Partnership's affairs,  
and expect to dissolve the Partnership during 1999.                             

Employees                                                                       
---------                                                                       
The Partnership has no employees. For a discussion of transactions with         
affiliates, see Item 13 and Note 7 to the Consolidated Financial Statements     
under Item 8.                                                                   

Item 2.  Properties                                                             

The Partnership completed the Sale of the Properties on November 17, 1998 and   
owned no real property at December 31, 1998. See Item 7 for discussions of the  
Sale.                                                                           

Item 3.  Legal Proceedings                                                      

The Partnership has previously disclosed the existence of three purported class 
action lawsuits that were brought in the Supreme Court of the State of New York 
for New York County (the "Court") against the General Partners of the           
Partnership and certain affiliates of Mendik RELP Corporation by certain limited
partners of the Partnership (the "Actions"). The parties to the Actions entered 
into a settlement of the Actions on June 24, 1998 (the "Settlement") that       
contemplated the sale of the Partnership's interests in its three remaining     
Properties (the "Sale"), the subsequent liquidation and dissolution of the      
Partnership and the distribution of the Partnership's remaining assets after the
payment of the Partnership's liabilities. On July 9, 1998, the Court issued an  
order preliminarily approving the settlement, certifying the proposed plaintiff 
class, and directing that notice of the Settlement be sent to members of the    
class, including to current limited partners. The Settlement was approved by the
Court on September 23, 1998 and that decision became final and subject to no    
further appeal on November 6, 1998. Accordingly, on November 17, 1998, the      
Partnership completed the Sale of the Properties. See Item 7 for a discussion of
the terms of the Sale. Under the terms of the Settlement, the Partnership       
incurred total litigation settlement costs of $2,957,843 for plaintiffs'        
attorneys' fees and expenses, and payment of claims of former limited partners. 
These costs were paid from the proceeds from the Sale in accordance with the    
Settlement.                                                                     

The General Partners are currently in the process of winding up the             
Partnership's affairs, and expect to dissolve the Partnership during 1999.      

Item 4.  Submission of Matters to a Vote of Security Holders                    

During the fourth quarter of 1998, no matter was submitted to a vote of security
holders through the solicitation of proxies or otherwise.                       

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 PART II

Item 5.  Market for the Partnership's Limited Partnership Units and Related     
Security Holder Matters                                       

As of December 31, 1998, there were 18,984 holders of Units. No established     
public trading market has developed for the Units, and it is not anticipated    
that such a market will develop in the future. The transfer of Units is subject 
to significant restrictions, including the requirement that an Investor Limited 
Partner may transfer his Units only with the consent of the General Partners,   
which consent may be withheld in the sole and absolute discretion of the General
Partners.                                                                       

For the years ended December 31, 1998 and 1997, no cash distributions were paid 
to the partners. As a result of the completion of the Sale in November 1998, the
Partnership paid a cash distribution to the Limited Partners on February 2,     
1999, in the amount of $82.45 per Class A Unit and $182.91 per Class B Unit.    
Certain funds have been set aside to provide for the Partnership's ongoing      
liabilities and expenses through dissolution. Any cash remaining after payment  
of these expenses will be distributed to the Limited Partners when the          
Partnership is dissolved.                                                       

In 1998, the Partnership distributed 36,971 shares of Vornado Realty Trust      
common stock valued at $33.90 per share at a total value of $1,253,347.         

Item 6.  Selected Financial Data                                                

The information set forth below should be read in conjunction with the          
Partnership's Consolidated Financial Statements and notes thereto included under
Item 7 and "Management's Discussion and Analysis of Financial Condition and     
Results of Operations," also included elsewhere herein.                         

                                                        [Enlarge/Download Table]

                                                     At or for the Years Ended December 31,                      
                                         1998          1997          1996             1995           1994        
-----------------------------------------------------------------------------------------------------------------
                                                (Dollars in thousands, except for per Unit data)(1)              

                                                                                                                 
Total income(2)                      $ 34,520      $ 36,434      $ 36,549         $ 33,549       $ 39,571(8)     

Income (loss) before                                                                                             
other income                            3,910         5,113(7)    (47,092)(6)(7)    (4,635)        (6,174)(9)(10)

Other income                            3,039(3)         --            --           16,248             --        

Net income (loss)(4)                    6,949         5,113(7)    (47,092)(6)(7)    11,613(8)      (6,174)(9)(10)

Total assets                           51,804       152,141(2)    146,458(2)       213,013(2)     220,468(2)     

Total mortgages and                                                                                              
notes payable                              --        73,730(2)     73,730(2)        72,275(2)      95,161(2)     

Net cash provided by (used for)                                                                                  
operating activities(2)                (1,398)        7,628         4,348            15,247         4,279        

Net income (loss) per Unit(4)(5)        17.41         12.81(7)    (117.97)(6)(7)      24.43(8)     (15.47)(9)(10)

Cash distributions                                                                                               
per Unit(5)                                                                                                      
   Class A                              82.45            --            --                --            --        
   Class B                             182.91            --            --                --            --        
-----------------------------------------------------------------------------------------------------------------

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<FN>                                                                                                             
Notes:                                                                                                           

(1)  Selected Financial Data and the Consolidated Financial Statements include                                   
     the accounts of Two Park Company, a joint venture of which the Partnership                                  
     owned an approximate 60% interest. The joint venture interest was sold by                                   
     the Partnership in November 1998.                                                                           

(2)  Includes the approximate 40% interest in Two Park Company not owned by the                                  
     Partnership.                                                                                                

(3)  Represents the net gain from the sale of the Properties, consisting of a                                    
     gain on sale of real estate of $3,581,009 and a loss on sale of marketable                                  
     securities of $541,956.                                                                                     

(4)  Excludes the approximate 40% interest in Two Park Company not owned by the                                  
     Partnership.                                                                                                

(5)  395,169 Units outstanding.                                                                                  

(6)  Includes an unrealized loss on property held for disposition of $5,411,536                                  
     at December 31, 1996. See Item 7.                                                                           

(7)  Includes a write-down in 1996 of the carrying value of the Partnership's                                    
     Properties in the amount of $59,491,089 at December 31, 1996. In 1997,                                      
     includes a recovery of the valuation allowance on the Saxon Woods property                                  
     of $2,920,968. See Item 7.                                                                                  

(8)  Includes a $16,247,734 gain on retirement of debt resulting from the                                        
     discounted payoff of the 34th Street Line of Credit in June 1995.                                           

(9)  Includes a $5,564,391 gain on transfer in lieu of foreclosure resulting                                     
     from the transfer of the Stamford Property on December 29, 1994.                                            

(10) Includes an unrealized loss on properties held for disposition of                                           
     $4,010,962 at December 31, 1994.                                                                            
</FN>                                                                                                            

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

Liquidity and Capital Resources                                                 

In consideration of an improvement in the real estate markets in which the      
Properties are located, as well as the high occupancy rates of each of the      
Properties, the General Partners commenced efforts to sell their interest in    
each of the three remaining Properties. On November 17, 1998, the Partnership   
completed the sale of its ownership interests in the Properties (the "Sale") to 
affiliates of Vornado Realty Trust, a publicly-traded real estate investment    
trust ("Vornado") and an affiliate of Mendik RELP Corporation, a General        
Partner, for a selling price of $52,212,198, net of the Partnership's share of  
existing mortgage debt on Two Park Avenue and Saxon Woods, litigation settlement
costs, and closing adjustments. The Partnership's approximate 60% interest in   
Two Park Avenue was sold for approximately $34.6 million, after deducting $39   
million of existing mortgage debt. The sales proceeds were a combination of cash
and common stock of Vornado. The remaining 40% interest in the Park Avenue      
Property is owned by an affiliate of Vornado. Saxon Woods Corporate Center and  
330 West 34th Street were purchased for an aggregate price of $30 million in    
cash. The Sale resulted in a gain on sale of real estate of $3,581,009 which was
reflected in the Partnership's results of operations for the year ended December
31, 1998. Reference is made to the Definitive Purchase and Sale Agreement, filed
as an exhibit to the Registrant's Report on 8-K filed on October 9, 1998.       

The Sale was completed as part of the settlement of three purported class action
lawsuits that were brought in the Supreme Court of the State of New York for New
York County (the "Court") against the General Partners of the Partnership and   
certain affiliates of Mendik RELP Corporation by certain limited partners of the
Partnership (the "Settlement"). The Sale occurred following the Court's judgment
of approval of the Settlement, which became final on November 6, 1998. See Item 
3 for a discussion of the Settlement.                                           

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As a result of the completion of the Sale, the Partnership paid a cash          
distribution to the Limited Partners on February 2, 1999, in the amount of      
$82.45 per Class A Unit and $182.91 per Class B Unit. Certain funds have been   
set aside to provide for the Partnership's ongoing liabilities and expenses     
through dissolution. Any cash remaining after payment of these expenses will be 
distributed to the Limited Partners when the Partnership is dissolved. The      
General Partners are currently in the process of winding up the Partnership's   
affairs, and expect to dissolve the Partnership during 1999.                    

The Partnership's cash and cash equivalents totaled $50,641,931 at December 31, 
1998, compared with $4,786,697 at December 31, 1997. The increase in cash and   
cash equivalents is primarily due to net proceeds received from the Sale of the 
Properties on November 17, 1998 that were not distributed to Limited Partners   
until February 2, 1999.                                                         

As a result of the Sale, the following balance sheet categories decreased to    
$-0- at December 31, 1998: properties held for disposition, restricted cash,    
deferred rent receivable, deferred income, security deposits payable, accrued   
interest payable, mortgages payable and notes payable to affiliates.            

Rent and other receivables increased to $1,157,368 at December 31, 1998,        
compared to $903,270 at December 31, 1997. The increase is due to the timing    
difference of collections of rental payments. Other assets decreased from       
$8,426,941 at December 31, 1997 to $5,000 at December 31, 1998, primarily due to
the Sale.                                                                       

At December 31, 1998, the Partnership had a distribution payable totaling       
$47,456,352, which distribution was paid on February 2, 1999. A distribution of 
Vornado common shares was made to the limited partners in 1998 for those        
investors electing to receive Vornado common shares instead of cash. Such       
distribution represents net proceeds from the Sale and a portion of the         
Partnership's cash reserves. Certain funds have been set aside to provide for   
the Partnership's ongoing liabilities and expenses through dissolution. Any cash
remaining after payment of these expenses will be distributed to the Limited    
Partners when the Partnership is dissolved.                                     

Market Risk                                                                     
-----------                                                                     
The Partnership's principal market risk exposure is interest rate risk. The     
Partnership has no long-term debt, and as a result of the Sale, the Partnership 
no longer has any mortgage debt. Accordingly, the Partnership's interest risk   
exposure is primarily limited to interest earned on the Partnership's cash and  
cash equivalents which are invested at short-term rates. Such risk is not       
considered material to the Partnership's operations.                            

Year 2000 Initiatives                                                           
---------------------                                                           
The Year 2000 compliance issue concerns the ability of computerized information 
systems to accurately calculate, store or use a date after 1999. This could     
result in computer system failures or miscalculations causing disruptions of    
operations. The Year 2000 issue affects almost all companies and organizations. 

It is anticipated that the Partnership will be dissolved prior to December 31,  
1999. In the event that the Partnership is not dissolved prior to December 31,  
1999, potential Year 2000 issues relate to the outside vendors which provide the
Partnership's administrative services, including accounting, tax preparation and
transfer agent services. Such services are reliant on computer systems, software
products and equipment which are expected to be Year 2000 compliant by December 
31, 1999. The General Partners continue to discuss Year 2000 compliance with    
these outside vendors. It is anticipated that the cost of vendor compliance with
Year 2000 issues will be borne primarily by these vendors. Although it is not   
possible at the present time to estimate the cost of this remediation work based
on available information, the General Partners do not expect such costs to have 
a material adverse impact on the Partnership's business, results of operations  
or financial condition.                                                         

Due to the General Partners' intent to dissolve the Partnership before December 
31, 1999, the General Partners currently do not have Year 2000 contingency      
plans. In the event it appears that the Partnership will not be dissolved during
1999, the General Partners intend to develop and implement contingency plans in 
1999. However, there is no certainty such plans would fully mitigate any Year   
2000 problems.                                                                  

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Results of Operations                                                           

1998 vs. 1997                                                                   
-------------                                                                   
For the year ended December 31, 1998, net cash used for operating activities    
totaled $(1,398,312), compared to net cash provided of $7,627,599 for the year  
ended December 31, 1997. The reduced cash flow in 1998 is primarily attributable
to the Sale and the payment of various Partnership liabilities. The Partnership 
generated net income of $6,948,576 for the year ended December 31, 1998,        
compared to net income of $5,113,351 for the year ended December 31, 1997. Net  
income in 1998 includes a gain on the sale of real estate of $3,581,009 and a   
loss on the sale of marketable securities of $541,956. Income before other      
income totaled $3,909,523 in 1998 compared with $5,113,351 in 1997. The decrease
is primarily attributable to litigation settlement costs of $2,957,843 offset by
a decrease in depreciation and amortization expense as a result of the          
reclassification of the Two Park Avenue and 330 West 34th Street properties as  
"Properties held for disposition" as of September 30, 1997. In 1997 the         
Partnership recorded a recovery of valuation allowance on Saxon Woods which was 
then held for disposition of $2,920,968.                                        

Rental income decreased from $36,189,134 for the year ended December 31, 1997 to
$33,934,007 for the year ended December 31, 1998, primarily due to the Sale on  
November 17, 1998. Interest income totaled $585,704 for the year ended December 
31, 1998 compared to $245,160 in 1997. The increase is due to the Partnership's 
higher average cash balance, primarily as a result of the net proceeds from the 
Sale.                                                                           

Primarily as a result of the Sale, property operating expense and interest      
expense decreased from 1997 to 1998. General and administrative expenses totaled
$639,287 for the year ended December 31, 1998, compared with $636,071 for the   
year ended December 31, 1997. The slight increase primarily reflects increases  
in audit, transfer agent and postage expenses, which were largely offset by     
decreases in professional and administrative expenses.                          

1997 vs. 1996                                                                   
-------------                                                                   
For the year ended December 31, 1997, the Partnership generated net cash from   
operating activities of $7,627,599, compared to $4,347,586 for the year ended   
December 31, 1996. The higher balance in the 1997 period is primarily           
attributable to lower interest expense. The Partnership generated net income of 
$5,113,351 for the year ended December 31, 1997, compared to a net loss of      
$47,091,683 for the year ended December 31, 1996. In 1996 the Partnership       
recorded write-downs in the value of its real estate totaling $64,902,625.      
Rental income for the year ended December 31, 1997 totaled $36,189,134, compared
to $36,301,921 for the year ended December 31, 1996.                            

Property operating expenses totaled $20,827,352 for the year ended December 31, 
1997, compared to $20,118,066 for the year ended December 31, 1996. The increase
in property operating expenses is due to higher cleaning and utility expenses at
Two Park Avenue and Saxon Woods properties.                                     

Depreciation and amortization expense for the year ended December 31, 1997      
totaled $5,246,432, compared to $11,257,102 for the year ended December 31,     
1996. The $6,010,670 decrease is primarily due to the reclassification of the   
Saxon Woods Property as "Property held for disposition" effective December 31,  
1996, and the reclassification of Two Park Avenue and 34th Street as "Properties
held for disposition" effective September 30, 1997. The Partnership ceased      
depreciation of the respective properties on the dates they were reclassified to
held for disposition in accordance with FAS 121.                                

Interest expense for the year ended December 31, 1997 totaled $6,162,361,       
compared to $7,225,953 for the year ended December 31, 1996. The $1,063,592     
decrease was due primarily to the refinancing of the Park Avenue Property       
mortgage indebtedness in April 1997, which decreased the interest rate on the   
outstanding principal balances.                                                 

Item 8.  Financial Statements and Supplementary Data                            

See Index of the Consolidated Financial Statements and Financial Statement      
Schedules at Item 14, filed as part of this Report.                             

Item 9.  Changes in and Disagreements with Accountants                          
on Accounting and Financial Disclosure                        

None.                                                                           

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8                                                                               

PART III

Item 10.  Directors and Executive Officers of the Registrant                    

The Partnership has no officers or directors. Mendik RELP Corporation and       
NYRES1, as General Partners, jointly manage and control the affairs of the      
Partnership and have general responsibility and authority in all matters        
affecting its business.                                                         

Mendik RELP Corporation                                                         
-----------------------                                                         
Mendik RELP Corporation was incorporated under the laws of the State of New York
on November 13, 1985. On January 16, 1997, the Mendik General Partner changed   
its name from Mendik Corporation to Mendik RELP Corporation to avoid confusion  
with the names of other Mendik entities.                                        

All of the capital stock of Mendik RELP Corporation is owned by Bernard H.      
Mendik. Pursuant to Section 22(b) of the Partnership Agreement, Mr. Mendik has  
contributed to the capital of Mendik RELP Corporation $2.5 million in the form  
of a demand promissory note, which represents the only substantial asset of     
Mendik RELP Corporation. Mr. Mendik has a net worth in excess of such amount.   
Mendik RELP Corporation maintains its principal office at 330 Madison Avenue,   
New York, New York 10017.                                                       

The executive officers and sole director of Mendik RELP Corporation (none of    
whom has a family relationship with another) are:                               

Name                   Age     Office               
----                   ---     ------               
Bernard H. Mendik      69      Chairman and Director
David R. Greenbaum     47      President            
Michael M. Downey      57      Senior Vice President
David L. Sims          52      Senior Vice President
Kevin R. Wang          41      Senior Vice President

All officers and directors of Mendik RELP Corporation have been officers or     
directors of the corporation since its incorporation in November 1985. Prior to 
April 15, 1997 all officers of Mendik RELP Corporation held the same position in
Mendik Realty, which transferred its property management and leasing            
responsibilities to Mendik Management on that date (see Item 1).                

Bernard H. Mendik has been an owner/manager and developer of office and         
commercial properties since 1957. Mr. Mendik was named Chairman of Mendik Realty
in 1990.  Prior to his appointment as Chairman, Mr. Mendik had served as        
President of Mendik Realty since 1978. In April 1997, Mr. Mendik was named      
Chairman of Mendik Management Inc. and Co-Chairman of the Board of Trustees of  
Vornado.  Mr. Mendik resigned his position with Mendik Management and Vornado in
October 1998.                                                                   

David R. Greenbaum was appointed President of Mendik Realty in 1990. Prior to   
his appointment as President, Mr. Greenbaum had served as Executive Vice        
President of Mendik Realty since 1982. In April 1997, Mr. Greenbaum was         
appointed President of Mendik Management, and in October 1998, he was appointed 
Chief Executive Officer of Mendik Management.                                   

Michael M. Downey had been with Mendik Realty since 1978, and then was Senior   
Vice President of Operations. In April 1997, he was appointed Senior Vice       
President of Operations of Mendik Management.                                   

David L. Sims had been with Mendik Realty since 1984, and then was Senior Vice  
President of Leasing. In April 1997, he was appointed Senior Vice President of  
Leasing of Mendik Management.                                                   

Kevin R. Wang had been with Mendik Realty since 1985, and then was Senior Vice  
President of Leasing. In April 1997, he was appointed Senior Vice President of  
Leasing of Mendik Management.                                                   

NYRES1                                                                          
------                                                                          
NYRES1 is a Delaware Corporation formed on September 9, 1985, and is an         
affiliate of Lehman Brothers Inc. ("Lehman").                                   

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On July 31, 1993, Shearson Lehman Brothers, Inc. ("Shearson") sold certain of   
its domestic retail brokerage and asset management businesses to Smith Barney,  
Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to the sale,       
Shearson changed its name to Lehman Brothers Inc. The transaction did not affect
the ownership of the Partnership or the General Partners. However, the assets   
acquired by Smith Barney included the name "Hutton." Consequently, effective    
October 22, 1993, Hutton Real Estate Services XV, Inc. changed its name to NY   
Real Estate Services 1 Inc. to delete any references to "Hutton."               

Certain officers and directors of NYRES1 are now serving (or in the past have   
served) as officers or directors of entities which act as general partners of a 
number of real estate limited partnerships which have sought protection under   
the provisions of the Federal Bankruptcy Code. The partnerships which have filed
bankruptcy petitions own real estate which has been adversely affected by the   
economic conditions in the markets in which the real estate is located and,     
consequently, the partnerships sought the protection of the bankruptcy laws to  
protect the partnerships' assets from loss through foreclosure.                 

The executive officers and directors of NYRES1 (none of whom has a family       
relationship with another) are:                                                 

Name                   Age     Office               
----                   ---     ------               
Rocco F. Andriola      40      Director             
  Mark J. Marcucci       36      Director, President and
                                 Chief Financial Officer
Jaime Fuertes          32      Vice President       

Rocco F. Andriola, 40, is a Managing Director of Lehman Brothers Inc. in its    
Diversified Asset Group and has held such position since October 1996. Since    
joining Lehman in 1986, Mr. Andriola has been involved in a wide range of       
restructuring and asset management activities involving real estate and other   
direct investment transactions. From June 1991 through September 1996, Mr.      
Andriola held the position of Senior Vice President in Lehman's Diversified     
Asset Group. From June 1989 through May 1991, Mr. Andriola held the position of 
First Vice President in Lehman's Capital Preservation and Restructuring Group.  
From 1986-89, Mr. Andriola served as a Vice President in the Corporate          
Transactions Group of Shearson Lehman Brothers' office of the general counsel.  
Prior to joining Lehman, Mr. Andriola practiced corporate and securities law at 
Donovan Leisure Newton & Irvine in New York. Mr. Andriola received a B.A. from  
Fordham University, a J.D. from New York University School of Law, and an LL.M  
in Corporate Law from New York University's Graduate School of Law.             

Mark J. Marcucci, 36, is a Senior Vice President of Lehman Brothers Inc. in its 
Diversified Asset Group. Since joining Lehman Brothers in 1988, Mr. Marcucci's  
responsibilities have been concentrated in the restructuring, asset management, 
leasing, financing, refinancing and disposition of commercial office and        
residential real estate. Prior to joining Lehman Brothers, Mr. Marcucci was     
employed in a corporate lending capacity at Republic National Bank of New York. 
Mr. Marcucci received a B.B.A. in Finance from Hofstra University and a Master  
of Science in Real Estate from New York University. In addition, Mr. Marcucci   
holds both Series 7 and Series 63 securities licenses.                          

Jaime Fuertes, 32, is a Senior Associate at Lehman Brothers Inc. He joined      
Lehman in 1997 as the Controller of the Diversified Asset Group and since then  
has also been engaged in the analysis and negotiation of Lehman's worldwide     
lease commitments. Prior to joining Lehman, Mr. Fuertes held various positions  
in Finance and Treasury at Chase Manhattan Bank between 1990 and 1996 and at GE 
Capital Services between 1996 and 1997. Mr. Fuertes received Bachelor of Science
and Master of Science degrees in Finance from Fairfield University.             

Item 11.  Executive Compensation                                                

Neither of the General Partners nor any of their officers or directors received 
any compensation from the Partnership.                                          

The General Partners are entitled to varying percentages of Net Cash Flow       
distributed in any fiscal year and to varying percentages of the Net Proceeds of
capital transactions. See Note 3 "The Partnership Agreement" of the Notes to the
Consolidated Financial Statements, included in Item 8.                          

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Item 12.  Security Ownership of Certain Beneficial Owners and Management        

As of December 31, 1998, no person was known by the Partnership to be the       
beneficial owner of more than five percent of the Units.                        

Set forth below is a chart indicating, as of December 31, 1998, the name and the
amount and nature of beneficial ownership of Units held by the General Partners 
and officers and directors thereof. Only those General Partners and officers and
directors thereof which beneficially own any Units are listed. No General       
Partner or any officer or director thereof, or the officers and directors of the
General Partners as a group, beneficially owns in excess of 1% of the total     
number of Units outstanding.                                                    

                                                                [Download Table]

                          Beneficial Ownership of Units                       
                          -----------------------------                       
        Name of Beneficial                             Number of              
        Owner                                        Units Owned              
        ------------------                           -----------              
                                                                              
        Bernard H. Mendik                               1,276(1)              
        David R. Greenbaum                                525(2)              
        Kevin R. Wang                                      20(3)              
        Michael M. Downey                                  33                 
        David L. Sims                                      16                 
                                                        -----                 
        The General Partners and all officers and                             
        directors thereof as a group (10 persons)       1,870(1)(2)(3)        
                                                        -----                 

<FN>                                                                          
(1) Includes 1,027 Units owned by Mr. Mendik, 200 Units held in trust for Mr. 
    Mendik's children and 49 Units owned by Mendik Realty. Does not include 40
    Units owned by Mr. Mendik's wife, as to which he disclaims beneficial     
    ownership.                                                                

(2) Includes 325 Units owned by Mr. Greenbaum and 200 Units owned by Mr.      
    Greenbaum's wife.                                                         

(3) Does not include four Units owned by Mr. Wang's wife, as to which he      
    disclaims beneficial ownership.                                           
</FN>                                                                         

Item 13.  Certain Business Relationships and Related Transactions               

As a result of the suspension of cash distributions, neither NYRES1 nor Mendik  
RELP Corporation received net cash from operations with respect to the year     
ended December 31, 1998. On February 2, 1999, a cash distribution was paid to   
the Limited Partners, representing net sales proceeds from the Sale of the      
Properties. NYRES1 received $-0- and Mendik RELP Corporation received $-0-,     
representing their respective shares of such distribution pursuant to the terms 
of the Partnership Agreement. For the 1998 fiscal year, $69,486 of the          
Partnership's net income was allocated to NYRES1 and Mendik RELP Corporation.   
For a description of the shares of Net Cash From Operations and Sale or         
Refinancing Proceeds (as defined in the Partnership Agreement) and the          
allocation of items of income and loss to which the General Partners, the       
special limited partner, and the Investor Limited Partners are respectively     
entitled, see Note 3 of Notes to the Consolidated Financial Statements.         

Pursuant to Section 12 of the Partnership Agreement, Mendik Realty agreed to    
limit its payment of leasing commissions at any Property in any year to not more
than 3% of the gross operating revenues of that Property in such year less      
leasing commissions paid to other brokers in connection with that Property in   
such year. Any excess will be deferred but is payable only if and to the extent 
such limit is not exceeded in the year paid. On December 14, 1998, $402,803 was 
paid to Mendik Management and $2,737,966 was paid to Mendik Realty in payment of
all deferred management, deferred commissions, and contributions to escrow plus 
interest.                                                                       

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B&B Park Avenue L.P. ("B&B"), a limited partnership of which Mendik RELP        
Corporation was a general partner, owns the remaining 40% interest in Two Park  
Company, the joint venture that owns the Park Avenue Property. On December 13,  
1996, FW/Mendik REIT LLC, an affiliate of Mendik RELP Corporation, entered into 
a contract with the partners that owned substantially all of the interest in B&B
to acquire their interest in B&B. The closing under the contract took place on  
April 15, 1997. Following the closing, FW/Mendik REIT LLC conveyed its interest 
in B&B to an affiliate of Vornado Realty Trust ("Vornado"), a real estate       
investment trust whose shares of stock are traded on the New York Stock         
Exchange. The conveyance to the affiliate of Vornado was in connection with the 
consolidation of Vornado and Mendik Management Company Inc. and certain of its  
affiliates, which consolidation was also consummated on April 15, 1997.         

On November 17, 1998, the Partnership completed the sale of its ownership       
interests in the Properties to affiliates of Vornado, an affiliate of Mendik    
RELP Corporation, a General Partner, for a selling price of $52,212,198, net of 
the Partnership's share of existing mortgage debt on Two Park Avenue and Saxon  
Woods, litigation settlement costs, and closing adjustments. See Item 1,        
Property Sales.                                                                 

Mendik Management receives fees for the management of the Partnership's         
Properties and is reimbursed for the cost of on-site building management staff. 
During 1998, Mendik Management earned management fees from the Partnership      
totaling $785,829, and was reimbursed $528,699 for the cost of on-site building 
management salaries.                                                            

Building Maintenance Service LLC ("BMS"), an affiliate of Mendik RELP           
Corporation, performs cleaning and related services for the properties at cost  
(plus an allocable share of overhead expenses). As of January 1, 1993, Guard    
Management Service Corporation ("GMSC"), an affiliate of Mendik RELP            
Corporation, began providing security services at the Park Avenue Property and  
Saxon Woods Corporate Center, which services will be provided by GMSC at cost   
(plus an allocable share of overhead expenses). During 1998, GMSC and BMS       
received from the Partnership $4,040,392 for such services.                     

During 1998, certain expenses incurred by the NYRES1 general partner, its       
affiliates, and an unaffiliated third party service provider in servicing the   
Partnership were reimbursed in the amount of $251,323.                          

See Note 7 of the Notes to the Consolidated Financial Statements for additional 
information concerning amounts paid or accrued to the General Partners and their
affiliates during the years ended December 31, 1998, 1997 and 1996 and all      
balances unpaid at December 31, 1998.                                           

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 PART IV

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K        

                                                                            Page
                                                                            ----
(a)(1)    Financial Statements and Schedules                                    

         Independent Auditors' Report......................................F-1

         Consolidated Balance Sheets at December 31, 1998 and 1997.........F-2

Consolidated Statements of Operations for the years ended   
         December 31, 1998, 1997 and 1996..................................F-3

Consolidated Statements of Partners' Capital (Deficit) for  
         the years ended December 31, 1998, 1997 and 1996..................F-3

Consolidated Statements of Cash Flows for the years ended   
         December 31, 1998, 1997 and 1996..................................F-4

         Notes to the Consolidated Financial Statements....................F-6

(a)(2)    Financial Statement Schedule                                          
----------------------------                                

          Schedule III - Real Estate and Accumulated Depreciation...........F-15

     All other schedules for which provision is made in the applicable
         accounting regulations of the Securities and Exchange Commission have
       been omitted since (1) the information required is disclosed in the
    consolidated financial statements and the notes thereto; (2) the
         schedules are not required under the related instructions; or (3) the
schedules are inapplicable.                                 

(b)       Reports on Form 8-K.                                                  

          On June 24, 1998, the Partnership filed a Report on Form 8-K reporting
the settlement of the class action suit.                    

  On October 9, 1998, the Partnership filed a Report on Form 8-K
reporting the execution of a sale purchase agreement.       

   On December 2, 1998, the Partnership filed a Report on Form 8-K
reporting the consummation of the Sale.                     

(c)       Exhibits                                                              
--------                                                    

Subject to Rule 12b-32 of the Securities Exchange Act of 1934 regarding         
incorporation by reference, listed below are the exhibits which are filed as    
part of this report:                                                            

3   (a)   Amended and Restated Certificate and Agreement of Limited             
Partnership of the Partnership (included as Exhibit A to the
          Prospectus of Registrant dated April 7, 1986 included as Exhibit 28(b)
 to the 1986 Annual Report on Form 10-K of the Partnership and
incorporated herein by reference thereto).                  

(b)   Amendments to Amended and Restated Certificate and Agreement of   
        Limited Partnership of the Partnership (included as Exhibit A to the
       Prospectus Amendment of Registrant dated April 29, 1987 included as
Exhibit 29(c) to the 1989 Annual Report on Form 10-K of the 
Partnership and incorporated herein by reference thereto).  

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10  (a)   Form of Property Management Agreement between the Partnership and     
          Mendik Management Company Inc. (included as Exhibit 10(a) to Amendment
        No. 2 to the Registration Statement (Registration No. 33-01779) (the
  "Registration Statement") and incorporated herein by reference
thereto).                                                   

(b)   James Felt Realty Services appraisal of the Stamford Property     
(included as Exhibit 10(b) to the Registration Statement and
incorporated herein by reference thereto).                  

  (c)   Contract of Sale, dated June 25, 1985, between 1351 Washington Blvd.
          Limited Partnership, Bernard H. Mendik and Hutton Real Estate Services
  XV, Inc. and related assignments (included as Exhibit 10(f) to
         Amendment No. 1 to the Registration Statement and incorporated herein
by reference thereto).                                      

 (d)   Cushman & Wakefield, Inc. appraisal of Saxon Woods Corporate Center
     (included as Exhibit 10(g) to Amendment No. 2 to the Registration
Statement and incorporated herein by reference thereto).    

(e)   Copies of Ground Leases relating to Saxon Woods Corporate Center  
     (included as Exhibit 10(h) to Amendment No. 2 to the Registration
Statement and incorporated herein by reference thereto).    

(f)   Memorandum of Contract, dated December 24, 1985, between The      
          Prudential Insurance Company of America and 550/600 Mamaroneck Company
         relating to the acquisition of Saxon Woods Corporate Center (included
         as Exhibit 10(i) to Amendment No. 2 to the Registration Statement and
incorporated by reference thereto).                         

(g)   The Weitzman Group, Inc. appraisal of the 330 West 34th Street    
         property (included as Exhibit 10(j) to Post-Effective Amendment No. 2
      to the Registration Statement and incorporated herein by reference
thereto).                                                   

    (h)   Copy of Ground Lease relating to the 34th Street property (included as
       Exhibit 10(k) to Post-Effective Amendment No. 1 to the Registration
Statement and incorporated herein by reference thereto).    

    (i)   Agreement of Assignment of Contract of Sale, dated September 25, 1986,
          between 330 West 34th Street Associates and M/H 34th Street Associates
       (included as Exhibit 10(l) to Post-Effective Amendment No. 1 to the
         Registration Statement and incorporated herein by reference thereto).

 (j)   Agreement, dated December 5, 1986, between Park Fee Associates, The
       Mendik Company, Chase Investors Management Corporation New York and
          M/H Two Park Associates relating to the acquisition of the Park Avenue
         Property (included as Exhibit 10(m) to Post-Effective Amendment No. 1
         to the Registration Statement and incorporated by reference thereto).

(k)   James Felt Realty Services appraisal of the Park Avenue Property  
       (included as Exhibit 10(n) to Post-Effective Amendment No. 7 to the
         Registration Statement and incorporated herein by reference thereto).

(l)   Exhibits (l) through (aa) to the Partnership's Form 10-K for the  
  fiscal year ended December 31, 1990 are incorporated herein by
reference thereto.                                          

    (m)   Loan Agreement of $6,500,000 to Mendik Real Estate Limited Partnership
          from Friesch-Groningsche Hypotheekbank Realty Credit Corporation dated
  September 25, 1991 secured by the Saxon Woods Corporate Center
     (included as Exhibit 10(m) to the Partnership's Form 10-K for the
  fiscal year ended December 31, 1991 and incorporated herein by
reference thereto).                                         

   (n)   Appraisal of the 34th Street Property as of January 1992 by Cushman &
        Wakefield, Inc. (included as Exhibit 10(n) to the Partnership's Form
     10-K for the fiscal year ended December 31, 1991 and incorporated
herein by reference thereto).                               

    (o)   Letter Opinion of Value of the Park Avenue Property as of January 1992
  by Cushman & Wakefield, Inc. (included as Exhibit 10(o) to the
       Partnership's Form 10-K for the fiscal year ended December 31, 1991
and incorporated herein by reference thereto).              

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    (p)   Letter Opinion of Value of the Stamford Property as of January 1992 by
Cushman & Wakefield, Inc. (included as Exhibit 10(p) to the 
       Partnership's Form 10-K for the fiscal year ended December 31, 1991
and incorporated herein by reference thereto).              

(q)   Letter Opinion of Value of the Saxon Woods Corporate Center as of 
        January 1992 by Cushman & Wakefield, Inc. (included as Exhibit 10(q)
         to the Partnership's Form 10-K for the fiscal year ended December 31,
1991 and incorporated herein by reference thereto).         

(r)   Modification effective January 1, 1991 of the $12,500,000 first   
        mortgage loan secured by the Stamford Property between New York Life
       Insurance Company and the Partnership (included as Exhibit 10(r) to
      the Partnership's Form 10-K for the fiscal year ended December 31,
1991 and incorporated herein by reference thereto).         

(s)   Reimbursement Agreement dated as of January 1, 1991 among the     
   Partnership, Mendik Management, Mendik RELP Corporation and SLH
      Lending Corp. related to the deferral of management fees and loans
 made to the Partnership with respect to the Stamford Property
     (included as Exhibit 10(s) to the Partnership's Form 10-K for the
  fiscal year ended December 31, 1991 and incorporated herein by
reference thereto).                                         

 (t)   Agreement dated as of January 1, 1992 among the Partnership, Mendik
          Management, Mendik RELP Corporation and SLH Lending Corp. (included as
      Exhibit 10(a) to the Partnership's Form 10-Q for the quarter ended
June 30, 1992 and incorporated herein by reference thereto).

   (u)   Appraisal of the 34th Street Property as of January 1993 by Cushman &
        Wakefield, Inc. (included as Exhibit 10(u) to the Partnership's Form
     10-K for the fiscal year ended December 31, 1992 and incorporated
herein by reference thereto).                               

    (v)   Letter Opinion of Value of the Park Avenue Property as of January 1993
  by Cushman & Wakefield, Inc. (included as Exhibit 10(v) to the
       Partnership's Form 10-K for the fiscal year ended December 31, 1992
and incorporated herein by reference thereto).              

    (w)   Letter Opinion of Value of the Stamford Property as of January 1993 by
Cushman & Wakefield, Inc. (included as Exhibit 10(w) to the 
       Partnership's Form 10-K for the fiscal year ended December 31, 1992
and incorporated herein by reference thereto).              

(x)   Letter Opinion of Value of the Saxon Woods Corporate Center as of 
        January 1993 by Cushman & Wakefield, Inc. (included as Exhibit 10(x)
         to the Partnership's Form 10-K for the fiscal year ended December 31,
1992 and incorporated herein by reference thereto).         

(y)   Promissory Note and Loan Agreement Modification and Extension     
    Agreement between Mendik Real Estate Limited Partnership and FGH
          Realty Credit Corp. dated as of September 9, 1996 (included as Exhibit
        10(y) to the Partnership's Form 10-Q for the quarter ended September
30, 1996 and incorporated herein by reference thereto).     

    (z)   Leasehold Mortgage Modification and Extension Agreement between Mendik
        Real Estate Limited Partnership and FGH Realty Credit Corp. dated as
        of September 9, 1996 (included as Exhibit 10(z) to the Partnership's
       Form 10-Q for the quarter ended September 30, 1996 and incorporated
herein by reference thereto).                               

   (aa)  Copy of Ground Lease extension dated October 21, 1997 relating to the
         34th Street Property (included as Exhibit 10(aa) to the Partnership's
          Form 10-K for the fiscal year ended December 31, 1997 and incorporated
herein by reference thereto).                               

    (bb)  Notice of settlement of class action suit incorporated by reference to
Exhibit 10 to a Report on For 8-K filed on June 24, 1998.   

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(cc)  Sale Purchase Agreement by and between Mendik RELP and Vornado by 
       reference to Exhibit 10 to a Report on Form 8-K filed on October 9,
1998.                                                       

(dd)  Notice of closing of sale of properties to Vornado by reference to
  Exhibit 10 to a Report on Form 8-K filed on November 17, 1998.

27  Financial Data Schedule.                                                    

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act of 1934, the Registrant has duly caused this report to be signed on its     
behalf by the undersigned, thereunto duly authorized.                           

            MENDIK REAL ESTATE LIMITED PARTNERSHIP

 BY: Mendik RELP Corporation
General Partner   

Date:  April 15, 1999          BY:    /s/Bernard H. Mendik                      
                   -----------------------
      Name:  Bernard H. Mendik
          Title: Chairman and Director

        BY: NY Real Estate Services 1 Inc.
General Partner   

Date:  April 15, 1999          BY:    /s/Mark J. Marcucci                       
                   -----------------------
     Name:  Mark J. Marcucci
            Title: Director, President and
                   Chief Financial Officer

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SIGNATURES

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

    NY REAL ESTATE SERVICES 1 INC.
A General Partner         

Date:  April 15, 1999      BY:    /s/Rocco F. Andriola                          
           -----------------------
Name:  Rocco F. Andriola  
Title: Director           

Date:  April 15, 1999      BY:    /s/Mark J. Marcucci                           
           -----------------------
Name:  Mark J. Marcucci   
    Title: Director, President and
           Chief Financial Officer

Date:  April 15, 1999      BY:    /s/Jaime Fuertes                              
           -----------------------
Name:  Jaime Fuertes      
Title: Vice President     

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SIGNATURES

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

MENDIK RELP CORPORATION   
A General Partner         

Date:  April 15, 1999      BY:    /s/Bernard H. Mendik                          
             -------------------------
Name:  Bernard H. Mendik  
  Title: Chairman and Director

Date:  April 15, 1999      BY:    /s/David R. Greenbaum                         
             -------------------------
Name:  David R. Greenbaum 
Title: President          

Date:  April 15, 1999      BY:    /s/Michael M. Downey                          
             -------------------------
Name:  Michael M. Downey  
  Title: Senior Vice President

Date:  April 15, 1999      BY:    /s/David L. Sims                              
             -------------------------
Name:  David L. Sims      
  Title: Senior Vice President

Date:  April 15, 1999      BY:    /s/Kevin R. Wang                              
             -------------------------
Name:  Kevin R. Wang      
  Title: Senior Vice President

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F-1                                                                             

--------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------

The Partners                                                                    
Mendik Real Estate Limited Partnership:                                         

We have audited the consolidated financial statements of Mendik Real Estate     
Limited Partnership (a New York limited partnership) and consolidated venture as
listed in the accompanying index. In connection with our audits of the          
consolidated financial statements, we also have audited the financial statement 
schedule as listed in the accompanying index. These consolidated financial      
statements and financial statement schedule are the responsibility of the       
Partnership's management. Our responsibility is to express an opinion on these  
consolidated financial statements and the financial statement schedule based on 
our audits.                                                                     

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Mendik Real Estate  
Limited Partnership and consolidated venture as of December 31, 1998 and 1997,  
and the results of their operations and their cash flows for each of the years  
in the three-year period ended December 31, 1998, in conformity with generally  
accepted accounting principles. Also in our opinion, the related financial      
statement schedule, when considered in relation to the basic consolidated       
financial statements taken as a whole, presents fairly, in all material         
respects, the information set forth therein.                                    

As discussed in Note 1 to the consolidated financial statements, the            
Partnership's properties were sold in 1998. As a result of the sale, the General
Partners intend to distribute the Partnership's remaining cash reserves, after  
payment of liabilities and establishment of a reserve for contingencies, if any,
and dissolve the Partnership.                                                   

                                     KPMG PEAT MARWICK LLP

Boston, Massachusetts                                                           
March 24, 1999                                                                  

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F-2                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------- 
CONSOLIDATED BALANCE SHEETS                                                            
                                                     At December 31,    At December 31,
                                                               1998               1997 
-------------------------------------------------------------------------------------- 
                                                                                       
Assets                                                                                 
Properties held for disposition                        $         --       $119,791,043 
Cash and cash equivalents                                50,641,931          4,786,697 
Restricted cash                                                  --          7,041,844 
Rent and other receivables                                                             
  net of allowance for doubtful accounts of                                            
  $-0- in 1998 and $118,611 in 1997                       1,157,368            903,270 
Deferred rent receivable                                         --         11,191,096 
Other assets, net of accumulated amortization of                                       
  $-0- in 1998 and $4,941,591 in 1997                         5,000          8,426,941 
-------------------------------------------------------------------------------------- 
      Total Assets                                     $ 51,804,299       $152,140,891 
====================================================================================== 
Liabilities and Partners' Capital                                                      
Liabilities:                                                                           
  Accounts payable and accrued expenses                $    941,067       $  1,572,939 
  Deferred income                                                --          5,904,654 
  Due to affiliates                                         480,615          2,956,140 
  Security deposits payable                                      --          1,116,249 
  Accrued interest payable                                       --            727,944 
  Distribution payable                                   47,456,352                 -- 
  Mortgages payable                                              --         71,500,000 
  Notes payable to affiliates                                    --          2,230,000 
                                                       ------------------------------- 
      Total Liabilities                                  48,878,034         86,007,926 
                                                       ------------------------------- 
Minority interest                                                --         21,445,577 
                                                       ------------------------------- 
Partners' Capital (Deficit):                                                           
  General Partners                                         (350,297)          (419,783)
  Limited Partners (395,169 units outstanding)            3,276,562         45,107,171 
                                                       ------------------------------- 
      Total Partners' Capital                             2,926,265         44,687,388 
-------------------------------------------------------------------------------------- 
      Total Liabilities and Partners' Capital          $ 51,804,299       $152,140,891 
====================================================================================== 

See accompanying notes to the consolidated financial statements.                

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F-3                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------- 
CONSOLIDATED STATEMENTS OF OPERATIONS                                                  
For the years ended December 31,                                                       
                                                 1998             1997            1996 
-------------------------------------------------------------------------------------- 
                                                                                       
Income                                                                                 
Rental                                    $ 33,934,007    $ 36,189,134    $ 36,301,921 
Interest                                       585,704         245,160         247,094 
                                          -------------------------------------------- 
      Total Income                          34,519,711      36,434,294      36,549,015 
-------------------------------------------------------------------------------------- 
Expenses                                                                               
Property operating                          18,212,496      20,827,352      20,118,066 
Depreciation and amortization                  172,142       5,246,432      11,257,102 
Interest                                     4,954,042       6,162,361       7,225,953 
General and administrative                     639,287         636,071         449,216 
(Recovery of) provision for valuation                                                  
  allowance on property held for                                                       
  disposition                                       --      (2,920,968)      5,411,536 
Loss on write-down of real estate                                                      
  investments                                       --              --      59,491,089 
Litigation settlement costs                  2,957,843              --              -- 
                                          -------------------------------------------- 
      Total Expenses                        26,935,810      29,951,248     103,952,962 
-------------------------------------------------------------------------------------- 
Income (loss) before minority interest       7,583,901       6,483,046     (67,403,947)
Minority interest share of (income)                                                    
  loss in consolidated venture              (3,674,378)     (1,369,695)     20,312,264 
                                          -------------------------------------------- 
      Income (loss) before other income      3,909,523       5,113,351     (47,091,683)
-------------------------------------------------------------------------------------- 
Other Income                                                                           
Gain on sale of real estate                  3,581,009              --              -- 
Loss on sale of marketable securities         (541,956)             --              -- 
-------------------------------------------------------------------------------------- 
      Net Income (Loss)                   $  6,948,576    $  5,113,351    $(47,091,683)
====================================================================================== 
Net Income (Loss) Allocated:                                                           
To the General Partners                   $     69,486    $     51,134    $   (470,917)
To the Special Limited Partner                      --              --              -- 
To the Limited Partners                      6,879,090       5,062,217     (46,620,766)
-------------------------------------------------------------------------------------- 
                                          $  6,948,576    $  5,113,351    $(47,091,683)
====================================================================================== 
Net income (loss) per limited                                                          
partnership unit (395,169 outstanding)         $ 17.41         $ 12.81       $ (117.97)
-------------------------------------------------------------------------------------- 

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--------------------------------------------------------------------------------------                 
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)                                                 
For the years ended December 31, 1998, 1997 and 1996                                                   
                                                                               Special                 
                                               Limited         General         Limited                 
                                              Partners        Partners         Partner           Total 
------------------------------------------------------------------------------------------------------ 
                                                                                                       
Balance at December 31, 1995              $ 86,665,720    $         --    $         --    $ 86,665,720 
Net loss                                   (46,620,766)       (470,917)             --     (47,091,683)
------------------------------------------------------------------------------------------------------ 
Balance at December 31, 1996                40,044,954        (470,917)             --      39,574,037 
Net income                                   5,062,217          51,134              --       5,113,351 
------------------------------------------------------------------------------------------------------ 
Balance at December 31, 1997                45,107,171        (419,783)             --      44,687,388 
Net income                                   6,879,090          69,486              --       6,948,576 
Distributions                              (48,709,699)             --              --     (48,709,699)
------------------------------------------------------------------------------------------------------ 
Balance at December 31, 1998              $  3,276,562    $   (350,297)   $         --    $  2,926,265 
====================================================================================================== 

See accompanying notes to the consolidated financial statements.                

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F-4                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

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-------------------------------------------------------------------------------------- 
CONSOLIDATED STATEMENTS OF CASH FLOWS                                                  
For the years ended December 31,                                                       
                                                  1998            1997            1996 
-------------------------------------------------------------------------------------- 
                                                                                       
Cash Flows From Operating Activities                                                   
Net Income (loss)                         $  6,948,576    $  5,113,351    $(47,091,683)
Adjustments to reconcile net income                                                    
  (loss) to net cash provided by                                                       
  (used for) operating activities:                                                     
  Loss on write-down of real                                                           
    estate investments                              --              --      59,491,089 
  Depreciation                                      --       3,913,361       9,602,450 
  Amortization                                 172,142       1,333,071       1,654,652 
  Gain on sale of property                  (3,581,009)             --              -- 
  Loss on sale of marketable securities        541,956              --              -- 
  Minority interest share of income                                                    
    (loss) in consolidated venture           3,674,378       1,369,695     (20,312,264)
  (Recovery of) provision for valuation                                                
    allowance on property held for                                                     
    disposition                                     --      (2,920,968)      5,411,536 
  Net premium (discount) amortization -                                                
    U.S. Treasuries and Agencies                    --          53,777         (25,350)
  Increase (decrease) in cash arising                                                  
  from changes in operating assets                                                     
  and liabilities:                                                                     
    Restricted cash                          1,116,248        (155,760)        104,966 
    Rent and other receivables                (528,028)        288,844        (254,013)
    Deferred rent receivable                (2,007,783)       (737,894)     (2,750,852)
    Other assets                              (918,943)     (1,199,438)       (872,529)
    Accounts payable and accrued expenses     (643,234)      1,082,764          19,797 
    Deferred income                         (1,852,888)       (645,996)       (980,097)
    Due to affiliates                       (2,475,535)         48,403         277,389 
    Security deposits payable               (1,116,248)        155,760        (104,966)
    Accrued interest payable                  (727,944)        (71,371)        177,461 
                                          -------------------------------------------- 
Net cash provided by (used for)                                                        
operating activities                        (1,398,312)      7,627,599       4,347,586 
-------------------------------------------------------------------------------------- 
Cash Flows From Investing Activities                                                   
Restricted cash - replacement reserve        3,525,595      (5,925,595)             -- 
Additions to real estate                    (6,254,247)     (1,775,765)     (6,391,539)
Cash proceeds from sale of stock            27,297,264              --              -- 
Cash proceeds from sale of real                                                        
  estate, net                               24,914,934              --              -- 
Accounts payable - real estate assets               --      (1,369,786)        280,402 
Acquisition of U.S. Treasuries                                                         
  and Agencies                                      --        (492,602)     (3,021,038)
Redemption of U.S. Treasuries                                                          
  and Agencies                                      --       2,560,735       3,383,272 
                                          -------------------------------------------- 
Net cash provided by (used for)                                                        
investing activities                        49,483,546      (7,003,013)     (5,748,903)
-------------------------------------------------------------------------------------- 
Cash Flows From Financing Activities                                                   
Proceeds from mortgage and notes payable            --      65,000,000       1,455,476 
Payments of principal on mortgage and                                                  
  notes payable                             (2,230,000)    (65,000,000)             -- 
Mortgage refinancing costs                          --        (565,609)             -- 
                                          -------------------------------------------- 
Net cash provided by (used for)                                                        
financing activities                        (2,230,000)       (565,609)      1,455,476 
-------------------------------------------------------------------------------------- 
Net increase in cash and                                                               
cash equivalents                            45,855,234          58,977          54,159 
Cash and cash equivalents,                                                             
  beginning of period                        4,786,697       4,727,720       4,673,561 
                                          -------------------------------------------- 
Cash and cash equivalents,                                                             
  end of period                           $ 50,641,931    $  4,786,697    $  4,727,720 
====================================================================================== 

 (Continued)

See accompanying notes to the consolidated financial statements.                

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F-5                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

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-------------------------------------------------------------------------------------- 
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)                                      
For the years ended December 31,                                                       
                                                  1998            1997            1996 
-------------------------------------------------------------------------------------- 
                                                                                       
Supplemental Disclosure of                                                             
Cash Flow Information                                                                  
Cash paid during the period for interest  $  5,681,986    $  6,233,732    $  7,048,492 
-------------------------------------------------------------------------------------- 
Supplemental Disclosure of Non-Cash Activities:                                        
The Partnership sold its interest in Two Park Avenue, New York, New York, 330          
West 34th Street, New York, New York and 550/600 Mamaroneck Avenue, Harrison,          
New York for a selling price of $52,212,198, net of the Partnership's share of         
existing mortgage debt on Two Park Avenue and Saxon Woods, litigation settlement       
costs, and closing adjustments. In conjunction with the sale, a distribution of        
shares received from the buyer to limited partners, as part of the proceeds of         
the sale, was accounted for as follows:                                                
Distribution of 36,971 shares of Vornado common                                        
stock to limited partners                                                 $  1,277,137 
  Loss on valuation of stock (Valuation of stock                                       
  was established by the selling price received                                        
  for other stock sold on the open market at                                           
  $33.90 per share.)                                                           (23,790)
-------------------------------------------------------------------------------------- 
Fair value of stock distributed                                           $  1,253,347 
====================================================================================== 

In connection with the sale of the Partnership's interest in the Properties,           
deferred rent receivable and prepaid leasing commissions in the amounts of             
$7,879,731 and $5,239,177, respectively, were netted against the gain on sale of       
real estate.                                                                           
-------------------------------------------------------------------------------------- 

In connection with the sale of the Partnership's interest in the Properties,           
$2,150,142 was assumed by the buyer from sales proceeds to pay for additions to        
real estate.                                                                           
-------------------------------------------------------------------------------------- 

In connection with the sale of the Partnership's interest in the Properties, the       
$65,000,000 mortgage obligation of Two Park Avenue and the $6,500,000 mortgage         
obligation of Saxon Woods were assumed by the buyers.                                  
-------------------------------------------------------------------------------------- 

See accompanying notes to the consolidated financial statements.                

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F-6                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                  
December 31, 1998, 1997 and 1996                                                

1.  Organization                                                                
Mendik Real Estate Limited Partnership (the "Partnership") was organized as a   
limited partnership under the laws of the State of New York pursuant to a       
Certificate and Agreement of Limited Partnership dated and filed October 30,    
1985 (the "Partnership Agreement"), as amended, and subsequently amended and    
restated on February 25, 1986. The Partnership was formed for the purpose of    
acquiring, maintaining and operating income producing commercial office         
buildings in the Greater New York metropolitan area. The general partners of the
Partnership are Mendik RELP Corporation and NYRES1 (see below). The Partnership 
will continue until December 31, 2025, unless sooner terminated in accordance   
with the terms of the Partnership Agreement. The Partnership offered Class A    
units to taxable investors and Class B units to tax exempt investors.           

On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic    
retail brokerage and asset management businesses to Smith Barney, Harris Upham &
Co. Incorporated ("Smith Barney"). Subsequent to the sale, Shearson Lehman      
Brothers Inc. changed its name to Lehman Brothers Inc. The transaction did not  
affect the ownership of the general partners. However, the assets acquired by   
Smith Barney included the name "Hutton." Consequently, effective October 22,    
1993, Hutton Real Estate Services XV, Inc., a general partner, changed its name 
to NY Real Estate Services 1 Inc. ("NYRES1") to delete any reference to         
"Hutton." On January 16, 1997, Mendik Corporation, a general partner, was       
renamed Mendik RELP Corporation.                                                

On November 17, 1998, the Partnership completed the sale of its ownership       
interests in the Partnership's Properties. As a result of the sale, the General 
Partners distributed $47,456,352 of the net proceeds therefrom to Limited       
Partners in 1999. The General Partners intend to distribute the Partnership's   
remaining cash reserves (after payment of or provision for the Partnership's    
liabilities and expenses, and establishment of a reserve for contingencies, if  
any) and dissolve the Partnership in 1999.                                      

2.  Summary of Significant Accounting Policies                                  

Basis of Accounting  The accompanying financial statements have been prepared on
the accrual basis of accounting in accordance with generally accepted accounting
principles. Income is recognized as earned and expenses are recorded as         
obligations are incurred.                                                       

Consolidation  The consolidated financial statements include the accounts of the
Partnership and of Two Park Company, a joint venture in which the Partnership   
owned an approximate 60% general partnership interest through November 17, 1998.
The joint venture was formed to own and operate a commercial office building.   
Intercompany accounts and transactions between the Partnership and the venture  
have been eliminated in consolidation.                                          

Real Estate Investments  Prior to September 30, 1997, real estate investments   
which consist of buildings, were recorded at cost, less accumulated depreciation
and impairment writedowns. Cost included the initial purchase price of the      
properties plus closing costs, acquisition and legal fees, and capital          
improvements. Depreciation of the buildings was computed using the straight-line
method over an estimated useful life of 20 to 35 years. Depreciation of personal
property was computed using the straight-line method over an estimated useful   
life ranging from 5 to 10 years. Tenant improvements were amortized using the   
straight-line method over the respective lease terms.                           

At December 31, 1997 and 1996, the Partnership completed reviews of             
recoverability of the carrying amount of each property and related accounts     
based upon an estimate of undiscounted cash flows expected to result from each  
property's use and eventual disposition. Based upon the reviews completed at    
December 31, 1996, the Partnership wrote down the value of its real estate      
investments and related assets in accordance with FAS 121.                      

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F-7                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

Property Held for Disposition  The Saxon Woods property, Two Park Avenue        
property, and 330 West 34th Street property were reclassified as "properties    
held for disposition" following the decision to pursue negotiations for a       
potential sale of these properties. The properties are recorded at the lower of 
amortized cost or their estimated fair value less costs to sell at December 31, 
1997. Based upon the reviews completed at December 31, 1997, the Partnership    
recovered part of the previously established provision for valuation allowance  
on the property held for disposition (Saxon Woods). (See Note 4.)               

Since all of the properties were reclassified as "Properties held for           
disposition" effective September 30, 1997, the Partnership ceased depreciation  
as required by Statement of Financial Accounting Standards No. 121.             

Cash Equivalents  Cash equivalents consist of short-term, highly liquid         
investments which have maturities of three months or less from the date of      
issuance. The carrying amount approximates fair value because of the short      
maturity of these instruments.                                                  

Restricted Cash  Restricted cash consisted of a reserve to fund certain Two Park
Avenue property leasing costs and tenant security deposits pursuant to its      
mortgage loan on the Two Park Avenue property. The restricted cash and security 
deposits were transferred to the buyer on November 17, 1998.                    

Rental Income  Rental income was recognized as earned under the leases.         
Accordingly, as certain leases of the Partnership provided for tenant occupancy 
during periods for which no rent or reduced rent is due, the Partnership accrues
rental income for the full period of occupancy on a straight-line basis over the
related lease terms.                                                            

The Partnership determined that all leases associated with the rental of space  
at the investment properties were operating leases.                             

Leasing Costs  Leasing costs were capitalized and amortized using the straight  
line-method over the respective lease terms.                                    

Mortgage Costs  Mortgage costs were capitalized and amortized over the term of  
the mortgage notes payable.                                                     

Fair Value of Financial Instruments  Statement of Financial Accounting Standards
No. 107, "Disclosures about Fair Value of Financial Instruments" ("FAS 107"),   
requires that the Partnership disclose the estimated fair values of its         
financial instruments. Fair values generally represent estimates of amounts at  
which a financial instrument could be exchanged between willing parties in a    
current transaction other than in forced liquidation.                           

The carrying amount of cash and cash equivalents, rent and other receivables,   
other assets, accounts payable and accrued expenses, due to affiliates and      
distribution payable are estimates of their fair value due to the short-term    
nature of those instruments.                                                    

Income Taxes  The Partnership allocates all profits, losses and other taxable   
items to the individual partners. No provision for income taxes is made in the  
financial statements as the liabilities for such taxes are those of the partners
rather than the Partnership.                                                    

Use of Estimates  The preparation of financial statements in conformity with    
generally accepted accounting principles requires management to make estimates  
and assumptions that affect the reported amounts of assets and liabilities and  
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of income and expenses during the reporting 
period. Management's review of recoverability of the carrying amounts of real   
estate investments and related accounts is one such estimate. Actual results    
could differ from those estimates.                                              

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F-8                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

Net Income (Loss) Per Limited Partnership Unit  Net income (loss) per limited   
partnership unit is based upon the limited partnership units outstanding during 
the year and the net income (loss) allocated to the limited partners in         
accordance with the terms of the Partnership Agreement.                         

3.  The Partnership Agreement                                                   
Taxable income for any fiscal year shall be generally allocated in substantially
the same manner as net cash from operations then 85% to the limited partners,   
14% to the special limited partner and 1% to the general partners, except that  
depreciation allocated to the limited partners will be allocated solely to the  
Class A units. Tax losses for any fiscal year will generally be allocated to the
limited partners and special limited partner to the extent of their positive    
capital accounts and then 99% to the limited partners and 1% to the general     
partners.                                                                       

Losses on the sale of the Properties have been allocated pro-rata to the        
positive capital accounts of the partners in accordance with the Partnership    
Agreement. The Partnership Agreement provides that the net cash from operations,
as defined, for each fiscal year will be distributed on a quarterly basis, 99%  
to the limited partners and 1% to the general partners (as defined) until each  
limited partner has received an amount equal to an 8% annual preferred return.  
The net cash from operations will then be distributed, 99% to the special       
limited partner, Bernard H. Mendik, and 1% to Mendik RELP Corporation until the 
special limited partner has received his special preferred return (as defined). 
Thereafter, net cash from operations will be distributed 85% to the limited     
partners, 14% to the special limited partner and 1% to the general partners.    

Net proceeds from the Sale will be distributed first to the limited partners    
until each limited partner has received an 8% cumulative annual return (as      
defined) and then an additional amount equal to his adjusted capital            
contribution (as defined). Second, the net proceeds from the Sale will be       
distributed 99% to the special limited partner and 1% to the Mendik RELP        
Corporation until the special limited partner has received any shortfall on his 
special cumulative return (as defined). It is currently anticipated that no     
sales proceeds will be distributed to the general partners or the special       
limited partner.                                                                

As a result of the sale of the Properties, the Partnership paid a partial       
distribution of $82.45 to Class A Unitholders and $182.91 to Class B Unitholders
on February 2, 1999.                                                            

Upon dissolution of the Partnership, it is anticipated that the general partners
will have a negative capital account, and shall be required to make a deficit   
restoration contribution no more than 1.01% of the total capital contributed by 
the limited partners less all prior contributions by the general partners.      

4.  Real Estate Investments                                                     

The Park Avenue Property  In 1987, the Partnership indirectly acquired from an  
affiliate an approximate 60% general partnership interest in a joint venture,   
Two Park Company, formed in 1986 for the purpose of acquiring and operating a   
parcel of land located at Two Park Avenue, New York, New York, together with the
28-story office building and related improvements located thereon containing    
approximately 947,000 net rentable square feet (based on current standards of   
measurement). The affiliate acquired such interest to facilitate the acquisition
by the Partnership. Two Park Company acquired the Park Avenue Property in 1986  
from an unaffiliated seller for approximately $151.5 million, $60 million of    
which was financed by a first mortgage loan. The Partnership acquired its       
interest by contributing $61,868,264 in cash, and assuming its share of the $60 
million loan secured by a first mortgage on the property. The remaining 40%     
interest in Two Park Company is currently owned by B & B Park Avenue L.P., of   
which Mendik RELP Corporation was a general partner. The sole stockholder of the
other general partner was also the lender of the mortgages secured by the Park  
Avenue Property. Pursuant to the partnership agreement of Two Park Company, each
partner has the right to implement "buy-sell" provisions. If either one of the  
partners in Two Park Company exercises its buy-sell rights, then the other      
partner could be compelled either to sell its interest in Two Park Company to   
such other partner, for the purchase price set forth in the partnership         
agreement of Two Park Company. In addition, under the partnership agreement of  
Two Park Company, if either partner receives a bona fide offer to purchase its  
interest in Two Park Company (which such partner is willing to accept), such    
partner must give the other partner a right of first refusal to purchase its    
partnership interest on the same terms and conditions as the bona fide offer.   

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F-9                                                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

On December 13, 1996, FW/Mendik REIT LLC, an affiliate of Mendik RELP           
Corporation, entered into a contract with the partners that own substantially   
all of the interest in B & B Park Avenue L.P. to acquire their interest in B & B
Park Avenue L.P. The closing under the contract took place on April 15, 1997.   
Following the closing, FW/Mendik REIT LLC conveyed its interest in B&B Park     
Avenue L.P. to an affiliate of Vornado Realty Trust ("Vornado"), a real estate  
investment trust whose shares of stock are traded on the New York Stock         
Exchange. The conveyance to the affiliate of Vornado was in connection with the 
consolidation of Vornado and Mendik Realty Company Inc. and certain of its      
affiliates, which consolidation was also consummated on April 15, 1997.         

At December 31, 1997 and 1996, the Partnership completed reviews of             
recoverability of the carrying amount of the Park Avenue Property and related   
accounts based upon estimated undiscounted cash flows expected to result from   
the property's use and eventual disposition. As of December 31, 1995, it was    
management's intention to hold the property for long-term investment and,       
therefore, management concluded that the sum of the undiscounted future cash    
flow estimated to be generated over the investment's holding period was greater 
than its carrying value. In light of the continued improvements in the Midtown  
Manhattan commercial real estate market during 1996, management anticipated     
positioning the property for sale over the next 12 to 24 months, and concluded  
that the sum of the undiscounted future cash flow estimated to be generated by  
the property over this shorter holding period was less than its carrying value. 
As a result, the Partnership recorded a write-down in 1996, before consideration
of the minority interest's share of the write-down, of approximately $54,800,000
to reduce the property's carrying value to its 1996 estimated fair value of     
$110,000,000. The fair value was obtained from an appraisal report prepared by  
an independent appraiser.                                                       

Due to the Partnership's intention to market the Park Avenue Property for sale, 
the Property was reclassified as "Property held for disposition," effective     
September 30, 1997, in accordance with the provisions of Statement of Financial 
Accounting Standards No. 121.                                                   

The 34th Street Property  In 1987, the Partnership acquired the leasehold       
interest in the 34th Street Property, an eighteen-story structure containing    
approximately 637,000 net rentable square feet (based on current standards of   
measurement) from an affiliate of the Partnership. The building was purchased   
from the affiliate for the purpose of facilitating the acquisition by the       
Partnership. The purchase price of $35,611,400 consisted of the purchase price  
to the affiliate plus the acquisition and closing costs and costs associated    
with carrying the property. The building is situated on a 46,413 square foot    
site.                                                                           

At December 31, 1997 and 1996, the Partnership completed reviews of             
recoverability of the carrying amount of the 34th Street Property and related   
accounts based upon estimated undiscounted cash flows expected to result from   
the property's use and eventual disposition. As of December 31, 1995, it was    
management's intention to hold the property for long-term investment and,       
therefore, management concluded that the sum of the undiscounted future cash    
flow estimated to be generated over the investment's holding period was greater 
than its carrying value. In 1996, management anticipated holding the property   
for 12 to 24 months and concluded that the sum of the undiscounted future cash  
flow estimated to be generated by the property over this shorter holding period 
was less than its carrying value. As a result, the Partnership recorded a       
write-down of approximately $4,700,000 to reduce the property's carrying value  
to its estimated value of $4,000,000, which represents the property's appraised 
value as of December 31, 1996. The value was obtained from an appraisal report  
prepared by an independent appraiser.                                           

Due to the Partnership' s intention to market the 34th Street Property for sale,
the Property was reclassified as "Property held for disposition," effective     
September 30, 1997, in accordance with the provisions of Statement of Financial 
Accounting Standards No. 121.                                                   

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F-10                                                                            

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

The Saxon Woods Corporate Center  In 1986, the Partnership acquired the         
leasehold interest in Saxon Woods Corporate Center, two office buildings located
in Harrison, New York containing an aggregate of approximately 232,000 net      
rentable square feet (based on current standards of measurement) from an        
affiliate of the Partnership. The building was purchased from the affiliate for 
the purpose of facilitating the acquisition by the Partnership. The purchase    
price of $21,282,805 was paid from the proceeds of the Partnership's offering   
and consisted of the purchase price to the affiliate plus the acquisition and   
closing costs and costs associated with carrying the property. The buildings are
situated on a 15.28 acre site which is subject to two ground leases, each of    
which terminates in September 2027 and provides the lessee with the option to   
renew for two 25-year periods and one 39-year period. Each ground lease provides
for an annual net rental of $170,000 with an increase of $20,000 every five     
years, commencing January 2001.                                                 

At December 31, 1997 and 1996, the Partnership completed reviews of             
recoverability of the carrying amount of the property and related accounts based
upon estimated undiscounted cash flows expected to result from the property's   
use and eventual disposition. As of December 31, 1995, it was management's      
intention to hold the property for long-term investment and therefore management
concluded that the sum of the undiscounted future cash flow estimated to be     
generated over the investment's holding period was greater than its carrying    
value. As a result of the Partnership's intention to pursue a sale of the       
property during 1997 and in accordance with FAS 121, the Partnership            
reclassified the property on the Partnership's balance sheet as property held   
for disposition at December 31, 1996. The carrying value of the property was    
reduced as of December 31, 1996 from the prior carrying value of approximately  
$21,600,000 to $16,200,000. The valuation allowance was based on management's   
assessment of the estimated fair market value of the property as of December 31,
1996. The determination of fair market value of the property as of that date was
based upon the most recent independent appraisal of the property, less estimated
costs to sell. As of December 31, 1997, the Partnership recorded a recovery of  
the provision for valuation allowance to increase the carrying value of the     
property held for disposition to $20,000,000, the property's appraised value    
less estimated costs to sell at December 31, 1997.                              

5.  Mortgage and Notes Payable                                                  

The Park Avenue Property  On September 18, 1987, the Partnership acquired its   
interest in the Park Avenue Property by contributing $61,868,264 in cash, and   
assuming its share of the $60 million loan secured by a first mortgage on the   
property. On June 15, 1989, Two Park Company placed a second mortgage on the    
Park Avenue Property in the amount of $10,000,000. Interest only was payable in 
monthly installments at a rate of 10.791% through June 15, 1992 and thereafter  
at the rate of 10.625% through December 19, 1998 at which time the full amount  
of principal and any accrued interest would have been due and payable. In       
November 1995, the Partnership prepaid, without penalty, the $10,000,000 second 
mortgage. On December 26, 1990, Two Park Company placed a third mortgage on the 
Park Avenue Property in the amount of $5,000,000. Interest only was payable in  
full monthly installments at a rate of 11.5% through its maturity date of       
December 19, 1998 at which time the full amount of principal and any accrued    
interest was due and payable. In April 1997, Two Park Company refinanced the    
existing mortgage loans. Under the new mortgage, which matures on March 1, 2000,
interest is payable at a floating rate (LIBOR plus 150 basis points). These     
loans were assumed by the buyer upon the sale of the interest in the Park Avenue
Property.                                                                       

The 34th Street Property  The Partnership had a $30,000,000 credit facility in  
the form of a first mortgage secured by the Partnership's leasehold interest on 
the 34th Street Property (the "34th Street Line of Credit") with the First      
National Bank of Chicago ("FNBC"). The lender agreed to advance amounts under   
the credit facility up to 40% of the lesser of the appraised value of the 34th  
Street Property or the value thereof as determined by the lender. The credit    
facility was scheduled to mature on May 31, 1997. As of December 31, 1992,      
$15,000,000 had been advanced under the 34th Street Line of Credit. As a result 
of the default on the loan and the decline in the appraised value of the 34th   
Street Property, the Partnership was prevented from borrowing any additional    
funds.                                                                          

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F-11                                                                            

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

On June 26, 1995, the Partnership completed the payoff of the 34th Street Line  
of Credit and the Partnership retained its interest in the property. FNBC agreed
to reduce the amount needed to pay off the 34th Street Line of Credit to $1.75  
million compared to the property's outstanding debt balance of approximately $18
million, including accrued interest. Concurrently, an agreement was entered into
with an affiliate of NYRES1 to lend the Partnership the $1.75 million unsecured 
loan needed to complete the payoff of the 34th Street Line of Credit (the       
"NYRES1 Loan"). FNBC agreed to accept only $1.75 million in full satisfaction of
the 34th Street Line of Credit.                                                 

The NYRES1 Loan bore interest at the prime rate less one and one-quarter        
percent. Payments of accrued interest and principal were payable to the extent  
there was current net cash flow available from the 34th Street property or net  
proceeds realized from the conveyance or refinancing of the 34th Street Property
or any of the Partnership's other properties. No cash flow payments have been   
made on the NYRES1 Loan during the term of the loan. The NYRES1 Loan was        
scheduled to mature upon the earlier of December 31, 2025 or the termination of 
the Partnership. In connection with the NYRES1 Loan, Mendik Realty agreed to    
defer collection of its management fees and leasing commissions associated with 
any additional leasing activity that would otherwise have been payable with     
respect to the property. The loan principal, accrued interest, and deferred fees
thereon were repaid from proceeds from the sale.                                

The Saxon Woods Corporate Center  In September 1991, the Partnership established
a non-recourse line of credit of $6,500,000 secured by a first leasehold        
mortgage on the property located at 550/600 Mamaroneck Avenue, Harrison, New    
York (the "Saxon Woods Property"). The Saxon Woods Line of Credit had an        
original term of five years at the rate of 2.5% per annum in excess of LIBOR.   
The Partnership obtained from the lender extensions of the maturity of the      
mortgage to the sale date. In addition, the Partnership was required to pay 1/2%
per annum on the undrawn balance of the Saxon Woods Line of Credit. As          
additional security for the repayment of the Saxon Woods Line of Credit, the    
Partnership deposited $500,000 with the lender, which deposit was used by the   
Partnership to pay operating expenses in connection with the Saxon Woods        
Property prior to borrowing any sums under the Saxon Woods Line of Credit for   
operating expenses. The loan principal was assumed by the buyer upon the sale of
the Saxon Woods Property.                                                       

Mortgage and notes payable at December 31, 1997 are summarized as follows:      

                                                                [Download Table]

--------------------------------------------------------------------------------
                                                                                
Secured by Park Avenue Property, bearing interest at a blended                  
  rate of 8.16% in 1997                                              $65,000,000

Secured by Saxon Wood Corporate Center, bearing interest at                     
  a blended rate of 8.72% in 1997                                      6,500,000
--------------------------------------------------------------------------------
                                                                     $71,500,000
                                                                     ===========

Notes payable at December 31, 1997 are summarized as follows:                   

                                                                [Download Table]

--------------------------------------------------------------------------------
                                                                                
Note payable to an affiliate of NYRES1, unsecured, bearing                      
  interest at prime rate less 1.25%                                  $ 1,750,000

Note payable to NYRES1, unsecured, bearing interest at                          
  prime rate less 1.25%                                                  330,000

Note payable to Mendik RELP Corporation, unsecured,                             
  bearing interest at prime rate less 1.25%                              150,000
--------------------------------------------------------------------------------
                                                                     $ 2,230,000
                                                                     ===========

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F-12                                                                            

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

6.  Rental Income under Operating Leases                                        
Substantially all of the operating leases of the Partnership's properties       
provided for escalation charges to tenants for operating costs, real estate     
taxes and electricity. For the years ended December 31, 1998, 1997 and 1996,    
these amounts were $2,462,158, $2,790,259 and $2,793,437, respectively, which   
amounts are included in rental income.                                          

7.  Transactions with General Partners and Affiliates                           
As of December 31, 1996 and throughout 1997, no cash and cash equivalents were  
on deposit with an affiliate of a general partner or the Partnership. For the   
fiscal year ended December 31, 1998, cash and cash equivalents were on deposit  
with an affiliate of a General Partner of the Partnership in the amount of      
$49,771,573.                                                                    

The following is a summary of the amounts paid or accrued to the general        
partners and their affiliates during the years ended December 31, 1998, 1997 and
1996:                                                                           

                                                                [Download Table]

                                                      Paid or Accrued           
                                          --------------------------------------
                                                1998          1997          1996
--------------------------------------------------------------------------------
                                                                                
Management fees and building                                                    
  personnel salaries (A)                  $1,314,528    $1,459,012    $1,279,660

Leasing commissions (B)                           --       310,557       170,981

Cleaning and related services (C)(D)       3,711,102     4,660,182     4,106,631

Security (E)                                 329,290       389,606       425,855

Administrative salaries and expenses (F)     251,323       206,431            --
--------------------------------------------------------------------------------
                                          $5,606,243    $7,025,788    $5,983,127
================================================================================

<FN>                                                                            
(A) Mendik Realty and subsequent to April 15, 1997 Mendik Management ("Mendik") 
    received fees for the management of the Partnership's Properties and is     
    reimbursed for the cost of on-site building management staff. Salaries and  
    benefits for building personnel, which have remained under the payroll of   
    Mendik, for the years ended December 31, 1998, 1997 and 1996 totaled        
    $528,699, $498,232 and $487,796, respectively. Management fees paid or      
    payable to Mendik totaled $785,829, $960,780 and $791,864 for the years     
    ended December 31, 1998, 1997 and 1996, respectively. These amounts are     
    included in the table. Certain management fees included in the above amounts
    were being deferred as discussed in Note 5.                                 

(B) Mendik had agreed to limit the payment of leasing commissions at any        
    property in any year to not more than 3% of the gross operating revenues of 
    the property in such year less leasing commissions paid to other brokers in 
    connection with that property in such year. Any excess was deferred and     
    payable only if and to the extent such limit is not exceeded in the year    
    paid. As of December 31, 1998 all unpaid commissions and accrued interest   
    were paid.                                                                  

(C) Building Maintenance Service LLC ("BMS"), an affiliate of Mendik RELP       
    Corporation, performed cleaning and related services at the properties. Such
    cleaning and related services were provided by BMS at its cost plus an      
    allocable share of overhead expenses. Cleaning and related services payable 
    to BMS totaled $3,072,520, $3,625,689, and $3,185,018 for the years ended   
    December 31, 1998, 1997 and 1996, respectively. The salaries and benefits   
    for the property engineering staff were $495,886, $847,191 and $778,884 in  
    1998, 1997 and 1996, respectively. These amounts are included in the table. 

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F-13                                                                            

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

(D) BMS provides metal and marble cleaning services to the Partnership at its   
    cost plus an allocable share of overhead expenses, which were $142,696,     
    $187,302 and $142,729 in 1998, 1997 and 1996, respectively. These amounts   
    are included in the table.                                                  

(E) Guard Management Service Corporation, an affiliate of Mendik Corporation,   
    provided security services to the Partnership at its cost plus an allocable 
    share of overhead expenses, which in 1998, 1997 and 1996 totaled $329,290,  
    $389,606 and $425,855, respectively. These amounts are included in the      
    table.                                                                      

(F) Commencing January 1, 1997, NYRES1, a general partner, was reimbursed for   
    certain administrative salaries and expenses, which in 1998 and 1997 totaled
    $251,323 and $206,431, respectively. These amounts are included in the      
    table. NYRES1 prior to January 1, 1997 voluntarily absorbed these expenses. 

(G) In conjunction with the sale of the Properties Mendik Realty/Management and 
    Lehman received payments of all deferred fees, reimbursements, escrow, loans
    and accrued interest in the amount of $5,871,467.                           

(H) The Partnership owed to the General Partners $480,615 and $2,956,140 for the
    years ended December 31, 1998 and 1997, respectively.                       
</FN>                                                                           

8.  Litigation                                                                  
Three purported class action lawsuits had been brought in the Supreme Court of  
the State of New York for New York County (the "Court") against the General     
Partners of the Partnership and certain affiliates of Mendik RELP Corporation by
certain limited partners of the Partnership (the "Actions"). The parties to the 
Actions entered into a settlement of the Actions on June 24, 1998 that          
contemplated the sale of the Partnership's interests in Saxon Woods Corporate   
Center, Two Park Avenue and 330 West 34th Street (collectively, the             
"Properties"; the sale transaction is referred to herein as the "Transaction"), 
the subsequent liquidation and dissolution of the Partnership and the           
distribution of the Partnership's remaining assets after the payment of the     
Partnership's liabilities. On July 9, 1998, the Court issued an order           
preliminarily approving the settlement, certifying the proposed plaintiff class,
and directing that notice of the settlement be sent to members of the class,    
including to current limited partners. The settlement was approved by the Court 
on September 23, 1998 and that decision became final and subject to no further  
appeal on November 6, 1998. The Transaction closed on November 17, 1998.        

Under the terms of the Settlement, the Partnership sold the Properties for      
approximately $64.5 million, net of existing mortgage debt on Two Park Avenue.  
The Partnership's approximate 60% interest in Two Park Avenue was purchased by  
an affiliate of Vornado Realty Trust for approximately $34.6 million, after     
deducting $39 million of existing mortgage debt, paid in common stock of Vornado
Realty Trust. Saxon Woods Corporate Center and 330 West 34th Street were sold   
for an aggregate price of $30 million in cash. The Partnership realized a gain  
on sale of the Properties of $3,581,009.                                        

Under the terms of the Settlement, the Partnership incurred total litigation    
settlement costs of $2,957,843 for plaintiffs' attorneys' fees and expenses, and
payment of claims of former limited partners. These costs were paid from the    
proceeds from the Sale in accordance with the Settlement.                       

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F-14                                                                            

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

9.  Reconciliation of Consolidated Financial Statement Net Income (Loss) and    
Partners' Capital to Federal Income Tax Basis Net Income (Loss) and Partners'   
Capital                                                                         

Reconciliation of consolidated financial statement net income (loss) to federal 
income tax basis net income (loss) follows:                                     

                                                        [Enlarge/Download Table]

                                                                      Years ended December 31,      
                                                                      ------------------------      
                                                                1998            1997           1996 
--------------------------------------------------------------------------------------------------- 
                                                                                                    
Financial statement consolidated                                                                    
  net income (loss)                                     $  6,948,576    $  5,113,351   $(47,091,683)

Financial statement writedown (recovery) adjustments                                                
to real estate                                                    --      (2,920,968)    42,988,230 

Tax basis depreciation over                                                                         
  financial statement depreciation                        (2,263,322)     (1,830,341)       (72,357)

Tax basis rental income over (under)                                                                
  financial statement rental income                        2,230,916       2,055,349       (819,983)

Tax basis recognition of net income (loss) of                                                       
  consolidated venture (under) over                                                                 
  financial statement recognition of income (loss) of                                               
  consolidated venture                                    (3,447,520)     (2,568,478)     1,033,441 

Tax basis recognition of loss on property sale                                                      
  over financial statement gain on sale                  (34,990,924)             --             -- 

Tax basis recognition of loss on sale of joint                                                      
  venture over financial statement gain on sale          (25,367,259)             --             -- 

Other                                                         23,797              --             -- 
--------------------------------------------------------------------------------------------------- 
Federal income tax basis net income (loss)              $(56,865,736)   $   (151,087)  $ (3,962,352)
=================================================================================================== 

Reconciliation of financial statement partners' capital to federal income tax   
basis partners' capital:                                                        

                                                        [Enlarge/Download Table]

                                                                      As of December 31,           
                                                                      ------------------           
                                                                1998            1997           1996
---------------------------------------------------------------------------------------------------
                                                                                                   
Financial statement basis partners' capital             $  2,926,265    $ 44,687,388   $ 39,574,037

Current year financial statement net                                                               
  income (loss) over (under) Federal income                                                        
  tax basis net income (loss)                            (63,814,312)     (5,264,438)    43,129,331

Cumulative financial statement                                                                     
  net income (loss) over cumulative Federal                                                        
  income tax basis net income (loss)                      86,691,415      91,955,853     48,826,522
---------------------------------------------------------------------------------------------------
Federal income tax basis partners' capital              $ 25,803,368    $131,378,803   $131,529,890
===================================================================================================

Because many types of transactions are susceptible to varying interpretations   
under Federal and state tax laws and regulations, the amounts reported above may
be subject to change at a later date upon final determination by the taxing     
authorities.                                                                    

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F-15                                                                            

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

Schedule III - Real Estate and Accumulated Depreciation                         
December 31, 1998                                                               

                                                        [Enlarge/Download Table]

                                                                            Consolidated                  
                                                                                 Venture:                 
                                               500/600        330 West          Two Park                  
Description:                            Mamaroneck Ave     34th Street            Avenue            Total 
--------------------------------------------------------------------------------------------------------- 
                                                                                                          
Location                                 Harrison, NY    New York, NY      New York, NY                na 

Construction date                           1969-1972            1925              1930                na 
Acquisition date                             09-04-86        04-23-87          09-18-87                na 
Life on which depreciation in latest                                                                      
income statements is computed                 25 yrs.         20 yrs.           35 yrs.                na 
Encumbrances                             $         --    $         --     $          --     $          -- 
                                         ---------------------------------------------------------------- 
Initial cost to Partnership:                                                                              
  Land                                   $         --    $         --     $  27,140,745     $  27,140,745 
  Buildings and improvements               21,282,805      35,611,400       130,411,744       187,305,949 
                                         ---------------------------------------------------------------- 
Costs capitalized subsequent to acquisition:                                                              
  Land                                             --              --            (3,661)           (3,661)
  Buildings and improvements               12,353,260      11,609,330        50,638,485        74,601,075 
Accumulated depreciation                  (13,508,629)     (1,478,857)      (55,968,836)      (70,956,322)
  Write-down adjustments:                                                                                 
    Land                                           --              --        (9,608,921)       (9,608,921)
    Buildings and improvements               (127,436)    (43,401,058)      (45,159,328)      (88,687,822)
                                         ---------------------------------------------------------------- 
Gross amount at which                                                                                     
carried at close of period:                                                                               
Adjusted Basis of Properties                                                                              
held for disposition at 12/31/97         $ 20,000,000    $  2,340,815     $  97,450,228     $ 119,791,043 
  1998 Improvements                           197,598         260,977         7,945,814         8,404,389 
  1998 Deletions                          (20,197,598)     (2,601,792)     (105,396,042)     (128,195,432)
                                         ---------------------------------------------------------------- 

Property held for disposition                                                                             
at 12/31/98                              $         --    $         --     $          --     $          -- 
--------------------------------------------------------------------------------------------------------- 

For Federal income tax purposes, the basis of land, building and improvements   
wholly owned by the Partnership at December 31, 1997 is $80,159,059.            

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F-16                                                                            

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          
AND CONSOLIDATED VENTURE                                                        

A reconciliation of the carrying amount of real estate and accumulated          
depreciation for the years ended December 31, 1998, 1997, and 1996 follows:     

                                                        [Enlarge/Download Table]

                                                                1998            1997             1996 
----------------------------------------------------------------------------------------------------- 
                                                                                                      
Real estate investments:                                                                              
Beginning of year                                      $          --    $102,807,671    $ 241,634,143 
Additions                                                         --         896,733        6,391,539 
Deletions                                                         --         (71,238)        (660,870)
Write down adjustment                                             --              --     (128,357,141)
Accumulated depreciation                                          --      (3,842,123)              -- 
Reclass to held for disposition                                   --     (99,791,043)     (16,200,000)
                                                       ---------------------------------------------- 
End of year                                            $          --    $         --    $ 102,807,671 
                                                       ---------------------------------------------- 

Properties held for disposition (1)                                                                   
Beginning of year                                      $ 119,791,043    $ 16,200,000    $          -- 
Additions                                                  8,404,389         879,032               -- 
Recovery of provision for valuation allowance                     --       2,920,968               -- 
Cost of properties sold                                 (128,195,432)            --                -- 
Reclass to held for disposition                                   --      99,791,043       16,200,000 
                                                       ---------------------------------------------- 
      Total                                            $          --    $119,791,043    $  16,200,000 
                                                       ---------------------------------------------- 
Accumulated depreciation:                                                                             
Beginning of year                                      $          --    $         --    $  58,172,619 
Depreciation expense                                              --       3,913,361        9,602,450 
Deletions                                                         --         (71,238)        (660,870)
Write down adjustment                                             --      (3,842,123)     (67,114,199)
                                                       ---------------------------------------------- 
End of year                                            $          --    $         --    $          -- 
----------------------------------------------------------------------------------------------------- 
<FN>                                                                                                  

(1): As of December 31, 1996, the Partnership accounted for the Saxon Woods                           
Property as held for disposition. Additionally, as of September 30, 1997, the                         
Partnership accounted for the Park Avenue Property and the 330 West 34th Street                       
Property as held for disposition.                                                                     
</FN>                                                                                                 

Dates Referenced Herein   and   Documents Incorporated by Reference

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