Mendik Real Estate Limited Partnership – ‘10-K’ for 12/31/95

As of:  Friday, 4/12/96   ·   For:  12/31/95   ·   Accession #:  928790-96-88   ·   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                                         51±   210K 
 2: EX-27       Mendik Financial Data Schedule for 1995 10K            1      5K 

10-K   —   Annual Report
Document Table of Contents

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 [Fee Required] For the fiscal year ended December 31, 1995  

or

Transition Report Pursuant to Section 13 or 15(d) of the Securities     
Exchange Act of 1934 [No Fee Required] For the transition period from   
__________________ 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                                           10285           
3 World Financial Center, 29th Floor, New York, New York      Zip Code          
Address of principal executive offices                                          

Registrant's telephone number, including area code: (212) 526-3237              

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                                      

PART I

Item 1. Business                                                                

General                                                                         
Mendik Real Estate Limited Partnership (the "Partnership" or "Registrant") is a 
New York limited partnership which was 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 Corporation, a New York corporation  
("Mendik 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 amount of and interest on 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").  On December 29, 1994, 
the Partnership transferred title to the Stamford Property to the mortgage      
holder in lieu of foreclosure.  See Notes 2, 5 and 6 to the Consolidated        
Financial Statements for a further discussion of the transfer of the Stamford   
Property.                                                                       

The Saxon Woods Corporate Center, 34th Street Property and Park Avenue Property 
are each referred to as a "Property" and collectively referred to as the        
"Properties."  See Item 2 of this Report and Note 5 to the Consolidated         
Financial Statements for a further description of the Properties.  The          
Partnership does not intend to acquire any additional properties.               

Following the acquisition of the Properties, a renovation program was           
undertaken by the Partnership to upgrade each of the Properties to maximize its 
investment potential.  As of December 31, 1990, these renovations, exclusive of 
ongoing tenant improvement work in connection with the leasing of space, were   
substantially complete at all the Properties.  See Item 2 of this Report.       

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 has been adversely affected by the   
significant difficulties in the commercial office real estate market in the     
Greater New York Metropolitan Area.  See Item 7 of this Report.  The attainment 
of such objectives in the future will depend on many factors, including an      
improvement in such market conditions.  There can be no assurance that such     
objectives will be met.                                                         

Overview -- Real Estate Market                                                  
Beginning in 1988 and into the early 1990s, the commercial real estate market   
in the Greater New York Metropolitan Area weakened considerably as the national 
and local economies slowed.  As a result of the downturn, businesses            
experienced varying degrees of financial and operating difficulties and many    
have downsized their operations, which has had an adverse impact on the demand  
for commercial office space.  One indication of the weakness in the region's    
economy relative to the rest of the United States has been the lack of          
employment growth.  Between the official end of the national recession in March 
1991 and December 1995, employment in the United States grew by 6.5 percent.    
In comparison, employment in New York City declined by 3.4 percent.  The        
unemployment rate in New York City in February 1996 was 8.5% as compared to     
5.0% in December 1987.  This compares to unemployment rates for the entire      
United States of 5.5% and 5.7% in February 1996 and December 1987,              
respectively.                                                                   

As businesses reduced personnel located in the Greater New York Metropolitan    
Area or relocated outside of the area, the demand for office space declined and 
vacancy rates rose.  In addition, the number of tenants attempting to sublease  
their commercial office space increased significantly, thereby exacerbating the 
oversupply of office space in the Greater New York Metropolitan Area.  The      
weakness in the marketplace heightened competition among landlords, resulting   
in generally lower rents and generous tenant concession packages in the form of 
tenant improvements and free-rent periods.  The significant rise in the cost of 
tenant improvements to be funded by landlords under both new and renewal leases 
sharply increased the demand for capital by landlords, including the            
Partnership.  This increased demand for capital came at a time when banks and   
other traditional sources of capital have sharply curtailed their lending and   
investment activities.  In addition, pressure from regulatory agencies has      
further eroded lending institutions' abilities to invest in real estate or      
finance real estate projects.                                                   

The lack of liquidity led to a dramatic decline in the volume of real estate    
sales and financings, reducing the ability of independent appraisers to use     
"comparable sales" to establish valuations.  In addition, the few sales that    
occurred were at significantly reduced prices.  Furthermore, generous           
concession packages for new and renewal leases, longer free rent periods and    
stagnant rental rates contributed to sharp declines in appraised values.        

More recently, conditions in Midtown Manhattan, where the Partnership's Two     
Park Avenue and 330 West 34th Street properties are located, and Westchester    
County, where the Saxon Woods Corporate Center is located, have exhibited       
limited signs of modest improvement.  Specifically, although landlords continue 
to offer concessions to existing and potential tenants, the level at which such 
concessions are being offered in comparison to recent years has decreased as    
the existing supply of office space continues to be absorbed.  In addition,     
vacancy rates in both of these markets have begun to decline, albeit gradually, 
and overall average rental rates have stopped declining.  Despite these signs   
of modest improvement, it is important to note that any future improvement is   
expected to be gradual and will be a function of the area's ability to sustain  
an economic recovery.                                                           

Over the past several years, a strategic plan was developed and implemented by  
the Partnership to enable each Property, to the extent possible, to meet        
expenses as they come due using operating revenues generated by that Property   
and loan proceeds from mortgages secured by that Property.  See Item 2 of this  
Report for a description of the Partnership's current leasing strategy at each  
of the Properties.                                                              

Competition                                                                     
Each of the Properties is subject to competition from similar types of          
properties located in the same vicinity.  The business of owning and operating  
commercial office buildings in the Greater New York Metropolitan Area is highly 
competitive, and the Partnership competes with a number of established          
companies, some of which have greater resources than the Partnership.  Current  
economic conditions have increased the competition for tenants.                 

Both of the General Partners and their respective affiliates participate        
directly or through other partnerships or investment vehicles in the            
acquisition, ownership, operation, and sale of properties which may be in       
direct competition with one or more of the Properties.                          

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

Item 2. Properties                                                              

Park Avenue Property                                                            

Valuation.  Two Park Company, the joint venture in which the Partnership has an 
approximate 60% interest, acquired the Park Avenue Property for $151,500,000.   
The Property's appraised value as of September 1, 1987 was $165,000,000.  The   
appraised value of the Property as of December 31, 1995 was $95,000,000,        
compared to appraised values of $105,000,000 as of December 31, 1994 and        
$115,000,000 as of December 31, 1993.  The decline in the appraised value from  
December 31, 1994 to December 31, 1995 is primarily  due to the lease           
prepayment received from a tenant in the amount of $13,839,000 (see Item 7).    
The Partnership's original investment in its interest in Two Park Company at    
acquisition was $95,965,732, including $35,820,000 which represented the        
Partnership's share of first mortgage debt to which the Property was subject    
when the Partnership acquired its interest and excluding $1,722,532 of          
acquisition expenses.  The appraised value of the Partnership's interest in the 
Property as of December 31, 1995 was $56,715,000, compared to appraised values  
of $62,685,000 as of December 31, 1994, $68,655,000 as of December 31, 1993 and 
$98,505,000 as of September 1, 1987.                                            

Location.  The Park Avenue Property is located at Two Park Avenue, New York,    
New York, on an approximately one-acre site that occupies the entire western    
frontage of Park Avenue between East 32nd and East 33rd Streets in midtown      
Manhattan.  The Park Avenue Property is located four blocks east of             
Pennsylvania Station and nine blocks south of Grand Central Station, New York   
City's largest transportation hubs.  Grand Central Station serves as the        
Manhattan terminal for the Metro North rail system.  In addition to a subway    
stop located below the building, several major arteries for the New York City   
subway system have stops in and around Grand Central Station and Pennsylvania   
Station, providing access to passengers from the New York City boroughs of      
Brooklyn, Queens and the Bronx.                                                 

Site and Improvements.  The improvements to the Park Avenue Property consist of 
a 28-story office building that contains approximately 948,000 net rentable     
square feet, based on current standards of measurement.  The building includes  
two lower levels consisting of a subway concourse, a small tenant garage        
containing approximately 43 spaces, rentable storage areas and mechanical       
facilities.                                                                     

Renovations.  During the period from 1987 through 1995, the Two Park Company    
expended approximately $46.7 million on capitalized renovations, including      
tenant improvement construction, funded from cash flow, Property and            
Partnership reserves, and borrowings.                                           

Financing.  Reference is made to Item 7 and Note 6 to the Consolidated          
Financial Statements for information regarding the non-recourse mortgages       
secured by the Park Avenue Property which aggregate $65 million.                

Leasing.  The Property's occupancy rates as of February 28, 1996, 1995 and      
1994, were 97%, 94% and 89%, respectively.  During 1996, the Partnership will   
continue to market the Property's available space to commercial office tenants. 
Based upon data provided by an unaffiliated real estate services firm, the      
vacancy rate for primary office space in the Murray Hill section of Midtown     
Manhattan, where the Park Avenue Property is located, totalled 17.1% at         
December 31, 1995.                                                              

Major tenants at the Park Avenue Property are The Times Mirror Company Inc.,    
which leases approximately 272,000 square feet (approximately 29% of the total  
leasable area in the Property) under a lease expiring on September 30, 2010     
(see Item 7) and National Benefit Life Insurance Company which leases           
approximately 99,800 square feet (approximately 11% of the total leasable area  
in the Property) under a lease expiring on May 30, 1998.  National Benefit Life 
Insurance Company has notified the Partnership that it will vacate its space    
once the current lease expires.  The base rental income under the leases with   
The Times Mirror Company Inc. and National Benefit Life Insurance Company       
represented approximately 20% and 9%, respectively, of the Partnership's        
consolidated rental income in 1995.                                             

34th Street Property                                                            

Valuation.  The Partnership's investment in the leasehold interest in the 34th  
Street Property at acquisition was $34,883,132, excluding acquisition expenses  
of $728,268.  The Property's appraised value as of November 1, 1986 was         
$39,000,000.  The appraised value of the leasehold interest as of December 31,  
1995 was $2,700,000 compared to appraised values of $5,700,000 at December 31,  
1994 and $9,800,000 as of December 31, 1993.  During the latter part of 1992,   
the General Partners concluded that the Partnership may be unable to hold the   
34th Street Property on a long-term basis.  As a result, the Partnership        
accounted for the Property as held for disposition.  Accordingly, the carrying  
value of the Property was reduced to the lower of its depreciated cost or       
estimated market value on December 31, 1994 and December 31, 1993.  In June     
1995, the Partnership completed a payoff of the nonrecourse first mortgage      
secured by the Partnership's leasehold interest in the 34th Street Property     
(the "34th Street Line of Credit").  See Financing below.  As a result, the     
Partnership intends to hold the Property and has again accounted for it as a    
real estate investment.                                                         

Location.  The 34th Street Property is located at 330 West 34th Street, New     
York, New York, which is between Eighth and Ninth Avenues in Manhattan's Penn   
Plaza district, five blocks west of the Empire State Building, one-half block   
west of Pennsylvania Station and three blocks east of the Jacob Javits          
Convention Center.                                                              

The Penn Plaza district is located in midtown Manhattan and comprises the       
seven-block area that surrounds Pennsylvania Station, New York City's largest   
transportation hub.  Pennsylvania Station serves as the western terminus for    
the Long Island Railroad, the Manhattan terminal for the Amtrak rail system and 
the eastern terminus for the New Jersey Transit rail system.  In addition,      
several major arteries of the New York City subway system have stops in and     
around Pennsylvania Station, providing access to passengers from the New York   
City boroughs of Brooklyn, Queens and the Bronx.  Madison Square Garden, New    
York City's largest spectator arena, is located above Pennsylvania Station.     

Site and Improvements.  The 34th Street Property consists of an 18-story        
structure and a two-story attached annex containing in the aggregate            
approximately 637,000 net rentable square feet, based on current standards of   
measurement.  The 46,413 square foot site also includes an above-ground parking 
area containing 39 spaces that is currently leased to an independent garage     
operator.                                                                       

Ground Lease.  Per the terms of the ground lease agreement, the annual ground   
lease payment to the unaffiliated ground lessor for the parcel of land          
underlying the 34th Street Property increased to $2.25 million effective        
January 1, 1992 through December 31, 1999.  The ground lease may be renewed at  
the option of the Partnership for successive terms of 21, 30, 30, 30 and 39     
years at annual rentals, determined at the commencement of each renewal term,   
equal to 7% of the then-market value of the land considered as if vacant,       
unimproved and unencumbered, valued at the highest and best use under           
then-applicable zoning and other land use regulations as office, hotel or       
residential property, but in no event less than the higher of (i) $2.75 million 
or (ii) the base rent for any consecutive 12-month period during the            
then-preceding renewal term.                                                    

Renovations.  During the period from 1987 through 1995, the Partnership         
expended approximately $10.3 million on capitalized renovations, including      
tenant improvement construction, funded from cash flow, Partnership reserves,   
and borrowings.                                                                 

Financing.  On August 12, 1993, the Partnership entered into an agreement with  
The First National Bank of Chicago ("FNBC"), the Property's lender, which       
modified the 34th Street Line of Credit (the "Forbearance Agreement").  The     
Forbearance Agreement provided the Partnership with an opportunity to pay off   
the 34th Street Line of Credit at a substantial discount to the 34th Street     
Line of Credit's outstanding balance.                                           

In May 1995, the Partnership successfully negotiated an agreement with FNBC 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, since the Partnership   
was not able to obtain financing from a third party, an agreement was entered   
into with an affiliate of NYRES1 to lend the Partnership the $1.75 million      
unsecured loan needed to payoff the 34th Street Line of Credit (the "NYRES1     
Loan").  FNBC's agreement to accept only $1.75 million in full satisfaction of  
the 34th Street Line of Credit effectively meant that substantially all of the  
outstanding principal balance of the loan was forgiven by FNBC.  On June 26,    
1995, the Partnership completed the payoff of the 34th Street Line of Credit.   
Reference is made to Item 7 and Note 6 to the Consolidated Financial Statements 
for additional information regarding the payoff of the 34th Street Line of      
Credit and the terms of the NYRES1 Loan.                                        

In order further to supplement the Property's cash flow, beginning in January   
1992, Mendik Realty Company Inc. ("Mendik Realty"), an affiliate of Mendik      
Corporation, agreed to defer its management fees of approximately $170,000 a    
year that would otherwise have been payable with respect to the 34th Street     
Property, although it had no obligation to do so.  In connection with the       
NYRES1 Loan, these fees will continue to be deferred.  The Partnership's        
outstanding obligation to pay the management fees to Mendik Realty will bear    
interest at a rate per annum equal to the prime rate of Morgan Guaranty Trust   
Company of New York less 1.25%.  Principal and interest will be payable on      
December 31, 2025, or such earlier date on which the term of the Partnership    
terminates, subject to a mandatory prepayment from the net proceeds from the    
sale of any of the Properties, after repayment of all debt secured by the       
Property sold.  In addition, Mendik Realty agreed to defer its leasing          
commission with respect to the long-term lease with the City of New York and    
any further leasing commissions associated with additional leasing activity at  
the Property.  Reference is made to Note 8 to the Consolidated Financial        
Statements for additional information regarding the deferral of leasing         
commissions.                                                                    

Leasing.  On February 17, 1993, the Partnership signed a long-term lease with   
the City of New York effective August 1, 1992 for approximately 300,000 square
feet or approximately 47% of the Property's leasable area.  The term of the   
lease is for eight years and six months expiring on February 28, 2001.  As    
with substantially all New York City leases, the tenant has the right to      
terminate the lease on a floor by floor basis without penalty provided the    
City gives the Partnership one year's notice of its intent to terminate the   
lease.  To date, the Partnership has not received any indication that the City
intends to terminate any portion of the lease.  However, the City has retained
a real estate brokerage firm to evaluate its space needs at various locations 
in New York City, including the 34th Street Property.  The Partnership has had
preliminary discussions with the brokerage firm in connection with a long-term
extension of the City's lease.  The City makes annual base rental payments of 
approximately $5.4 million and will pay its proportionate share of increases  
in real estate taxes and operating expenses.  The base rental income under the
lease with the City represented approximately 18% of the Partnership's        
consolidated rental income in 1995.                                           

The Partnership has been marketing the Property's remaining available space to  
light-industrial type tenants on an "as is" basis.  While rental rates for      
light-industrial type tenants are generally less than the rental rates received 
from commercial office tenants, the Partnership does not have the resources to  
fund tenant improvement and other costs associated with signing commercial      
office leases.  In addition, because of continuing uncertainty surrounding the  
City's tenancy, the character of the City's tenancy and the nature of the       
services it provides, it is uncertain whether the Partnership could sign leases 
with traditional office tenants.  The Partnership believes that renting space   
substantially "as is" to light-industrial type tenants is an effective          
alternative means to generate additional cash flow from the Property without    
requiring a significant current investment in tenant improvements.  The         
Property's occupancy rates as of February 28, 1996, 1995 and 1994, were 90%,    
65% and 61%, respectively.  The increase in occupancy from 1994 to 1995 is the  
result of the signing of leases for approximately 205,000 square feet during    
1995 on a substantially "as is" basis.  Based upon data provided by an          
unaffiliated real estate services firm, the vacancy rate for secondary office   
space in the Penn Station section of Midtown Manhattan, where the 34th Street   
Property is located, totalled 22.9% at December 31, 1995.                       

Saxon Woods Corporate Center                                                    

Valuation.  The Partnership's investment in the leasehold interest in the Saxon 
Woods Corporate Center at acquisition was $20,664,379, excluding acquisition    
expenses of $536,454.  The Property's appraised value as of January 21, 1986    
was $22,000,000.  The appraised value of the leasehold interest as of December  
31, 1995 was $15,200,000, compared to $15,000,000 at December 31, 1994 and      
December 31, 1993.                                                              

Location.  Saxon Woods Corporate Center is located on Mamaroneck Avenue in      
Harrison, New York, approximately 18 miles north of New York City in            
Westchester County.  The office park is located near the Mamaroneck Avenue exit 
of Hutchinson River Parkway, approximately one mile north of Interstate 95,     
which is the major artery connecting New York City to Westchester County and    
Connecticut.  Westchester County Airport is located approximately three miles   
north of the site.                                                              

Site and Improvements.  Saxon Woods Corporate Center consists of two five-story 
office buildings.  The building at 550 Mamaroneck Avenue consists of            
approximately 109,000 net rentable square feet and the building at 600          
Mamaroneck Avenue contains approximately 123,000 net rentable square feet,      
based on current standards of measurement.  The buildings are situated on a     
15.28 acre site, which provides ground-level parking for more than 800 cars.    

Ground Lease.  The parcel of land underlying each building is leased from an    
unaffiliated ground lessor pursuant to a ground lease which terminates in       
September 2027 and provides the Partnership 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 in January 1996.                                                     

Renovations.  During the period from 1986 through 1995, the Partnership         
expended approximately $10.2 million on capitalized renovations, including      
tenant improvement construction, funded from cash flow, Partnership reserves,   
and borrowings.                                                                 

Financing.  Through December 1995, the Partnership had borrowed approximately   
$5 million and may borrow an additional $1 million under a $6.5 million         
non-recourse line of credit secured by the Partnership's leasehold interest in  
the Saxon Woods Corporate Center (the "Saxon Woods Line of Credit").  The Saxon 
Woods Line of Credit matures in September 1996.  The Partnership has commenced  
discussions with the lender in an effort to extend the maturity date of the     
mortgage.  In the event an agreement with the lender cannot be reached, the     
Partnership will pursue other options, including a refinancing with a new       
lender or a possible sale of the Property.  However, there can be no assurance  
that such efforts would be successful.  Reference is made to Note 6 to the      
Consolidated Financial Statements and Item 7 for additional information         
regarding the Saxon Woods Line of Credit.                                       

Leasing.  The Property's occupancy rates as of February 28, 1996, 1995 and 1994 
were 81%, 80% and 75%, respectively.  The vacancy rate in Westchester County,   
where the Saxon Woods Corporate Center is located, was 17.6% as of December 31, 
1995, as compared to a vacancy rate of 18.6% at December 31, 1994.  During      
1995, utilizing funds available under the Saxon Woods Line of Credit,           
Partnership reserves and cash flow, the Partnership entered into leasing        
transactions covering approximately 34,000 square feet at the Property          
including lease extensions and expansions by existing tenants.  During 1996,    
the General Partners will continue to market the Property's available space to  
commercial office tenants using cash flow and proceeds from the Saxon Woods     
Line of Credit to fund the costs of additional leasing.                         

Item 3. Legal Proceedings                                                       

On February 6, 1996, a purported class action, Sword v. Lehman Brothers         
Holdings, Inc., was commenced on behalf of, among others, all Unitholders in    
the Circuit Court for Baltimore, Maryland against the Partnership, Lehman       
Brothers Holdings, Inc., E.F. Hutton & Company, Inc. and others.  The complaint 
alleges that the Unitholders were induced to purchase Units based upon          
misrepresentations and/or omitted statements in the sales materials used in     
connection with the offering of Units in the Partnership.  The complaint        
alleges, inter alia, claims of fraud, negligent misrepresentation and breach of 
fiduciary duty.  The defendants intend to defend the action vigorously.         

On March 7, 1996, a purported class action, Ressner v. Lehman Brothers Inc.,    
was commenced on behalf of, among others, all Unitholders in the Court of       
Chancery for New Castle County, Delaware, against the NYRES1 general partner of 
the Partnership, Lehman Brothers Inc. and others.  The complaint alleges, among 
other things, that the Unitholders were induced to purchase Units based upon    
misrepresentation and/or omitted statements in the sales materials used in      
connection with the offering of Units in the Partnership.  The complaint        
purports to assert a claim for breach of fiduciary duty based on the foregoing. 
The defendants intend to defend the action vigorously.                          

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

During the fourth quarter of 1995, no matter was submitted to a vote of         
security holders through the solicitation of proxies or otherwise.              

PART II 

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

As of December 31, 1995, there were 19,695 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.                                                           

During the first quarter of 1989, distributions to the Partners were suspended  
following a decision made by the Partnership to establish reserves in the       
amount of what would otherwise be Net Cash From Operations to help meet         
anticipated Partnership requirements.  For the years ended December 31, 1995    
and 1994, no distributions were paid to the Partners, and the Partnership does  
not contemplate making any distributions during 1996.  See Item 7 of this       
Report.                                                                         

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 and           
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations," also included elsewhere herein.                                    

              At or For The Year Ended
            December 31  December 31    December 31   December 31  December 31
           1995         1994           1993          1992         1991
            (Dollars in thousands, except for per Unit data) (1)

Total                                                                           
income (2)   $ 33,634 (5) $ 39,571 (6)    $ 34,616      $ 34,437    $ 36,318    

Net                                                                             
income                                                                          
(Loss) (3)     11,613 (5)   (6,174) (6)(7) (11,407) (7)  (52,416) (7) (8,063)   

Total                                                                           
assets (2)    212,737      220,468         237,798       247,773     299,247    

Total                                                                           
mortgages                                                                       
and notes                                                                       
payable (2)    72,275       95,161         107,043       105,655     103,056    

Net cash                                                                        
provided by                                                                     
operating                                                                       
activities (2) 15,247        4,279           1,275         1,824         622    

Net income                                                                      
(Loss) per                                                                      
Unit (3)(4)     24.43 (5)   (15.47) (6)(7)  (28.58) (7)  (131.31) (7) (20.20)   

Cash                                                                            
distributions                                                                   
per Unit (4)       --           --              --            --          --    

Net asset                                                                       
value per                                                                       
Unit (3)(4)     $ 99 (8)     $ 82 (8)        $  99 (8)    $ 121 (8)   $ 162 (8) 

(1)  Selected Financial Data and the Consolidated Financial Statements include  
    the accounts of Two Park Company, a joint venture of which the Partnership
owns an approximate 60% interest.                                     

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

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

(4)  395,169 Units outstanding.                                                 

(5)  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.     

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

(7)  Includes an unrealized loss on properties held for disposition of          
$4,010,962, $4,240,608 and $43,166,559 at December 31, 1994, 1993 and 
1992, respectively.  See Item 7.                                      

(8)  The calculation of net asset value assumes a hypothetical sale of the      
Properties at their appraised values and the distribution of the net  
  proceeds of such sales, together with the Partnership's working capital,
to the Partners.  The net asset value represents an average per unit  
liquidation value and, consistent with prior practice, is computed by 
  dividing the total value of the Partnership's assets by the total number
of units outstanding.  Pursuant to the Partnership Agreement,         
  distributions to individual unit holders upon liquidation will vary from
  distributions upon sale or refinancing of individual Properties when the
   Partnership is not liquidating.  In a liquidation, distributions are made
in proportion to positive capital account balances which vary between 
  Class A and B units as a result of the annual allocation of depreciation
solely to Class A units, in accordance with the Partnership Agreement.
   With respect to the individual Class A units, there is a further variance
in capital accounts resulting from the six separate closings for the  
purchase of units.  Separately computed, assuming a hypothetical      
liquidation as of December 31, 1995, the amount distributable to an   
   average Class A unit would be approximately $78.83 per unit, with earlier
    issued units receiving less and later issued units receiving more, and the
   amount distributable to a Class B unit would be approximately $129.04 per
unit. The calculation of net asset value does not take into account   
    numerous other factors which would determine the actual value received for
    individual units, such as the timing of Property sales and distribution of
   related proceeds, as well as the actual values realized upon sales of the
  Properties.  In addition, as a result of these factors and the lack of a
public market for the resale of units, the price at which units may be
    resold is likely to be significantly different from the computed net asset
   value per unit.  The Times Mirror lease pre-payment, as discussed in Item
   7 below, has been treated as a capital transaction and, accordingly, this
 income was allocated to the Class A Limited Partners in accordance with
the Partnership Agreement.                                            

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

Liquidity and Capital Resources                                                 
Beginning in 1988 and into the early 1990s, the commercial real estate market   
in the Greater New York Metropolitan Area weakened considerably as the          
national and local economies slowed.  As a result of the downturn, businesses   
experienced varying degrees of financial and operating difficulties and many    
have downsized their operations, which has had an adverse impact on the demand  
for commercial office space.  The weakness in the marketplace heightened        
competition among landlords, resulting in generally lower rents and generous    
tenant concession packages in the form of tenant improvements and free-rent     
periods.  The significant cost of tenant improvements required to be funded     
under both new and renewal leases sharply increased the demand for capital by   
landlords, including the Partnership.  Expenditures for tenant improvements     
have contributed to the Partnership's reduced liquidity.  In order to conserve  
its limited resources, the Partnership has pursued a strategy intended to       
position each of the Properties, to the extent possible, to meet its operating  
and other expenses as they come due using only the operating income generated   
by that Property, and, if necessary, proceeds from borrowings secured by such   
Property.                                                                       

During the year ended December 31, 1995, the Partnership funded operating       
costs, the cost of tenant improvements, leasing commissions, and building       
capital improvements from five sources: (i) cash flow generated by the          
Properties, (ii) Partnership reserves, (iii) the deferral of property           
management fees and leasing commissions by Mendik Realty with respect to        
certain of the Properties, (iv) proceeds from the Saxon Woods Line of Credit    
and (v) the prepayment of rent by The Times Mirror Company Inc., in connection  
with the lease restructuring at the Park Avenue Property in November 1995 as    
discussed below.  It is expected that funds from certain of these sources will  
be reduced or unavailable in the future.                                        

Park Avenue Property - For the year ended December 31, 1995, the Partnership    
signed new and renewal leases and amended leases for 408,732 square feet or     
approximately 43% of the leasable area in the Property.  The largest of the new 
leases was with The Times Mirror Company Inc.  During the fourth quarter of     
1995, the Partnership was successful in negotiating a six and one quarter year  
lease extension from June 30, 2004 through September 30, 2010 on substantially  
an "as is" basis with Times Mirror Magazines Inc. and its affiliate, Newsday    
Inc.  As part of the extension, The Times Mirror Company Inc., the parent       
company of Times Mirror Magazines Inc. and Newsday Inc., took over the leases,  
which total approximately 263,000 square feet.  The Times Mirror Company Inc.,  
whose financial condition is more secure than those of its subsidiaries, also   
leased an additional 9,000 square feet, bringing its total leased space to      
approximately 272,000 square feet or approximately 29% of the Property.  As     
part of the lease amendment, The Times Mirror Company Inc. pre-paid a portion   
of the rents due through the original lease expiration of June 30, 2004.  The   
lease prepayment was used by the Partnership to prepay, without penalty, $10    
million of the outstanding balance of the loans secured by the Property,        
reducing the principal balance of the loans to $65 million.  The balance of     
funds from the prepayment was used for tenant improvements, leasing commissions 
and other costs associated with the execution of the amended lease with The     
Times Mirror Company Inc.  Such prepayment was made in November 1995.  The      
Times Mirror pre-payment has been treated as a capital transaction and,         
accordingly, this income was allocated to the Class A Limited Partners in       
accordance with the Partnership Agreement.                                      

The Property's cash flow in 1996 is expected to remain stable.  The costs of    
leasing space at the Property are being funded with existing Property cash flow 
and reserves maintained by the joint venture that owns the Park Avenue          
Property.  In order to fund tenant improvements and leasing commissions for the 
new leases as well as certain other leases currently under negotiation, the     
Partnership utilized or committed to utilize substantially all of the           
Property's cash reserves which at year-end 1995 were approximately $3.5 million 
over and above a reserve for real estate taxes.  However, it is expected that   
these leases will increase the Property's cash flow, which cash flow will be    
available to re-establish reserves.                                             

The Park Avenue Property currently generates, and is expected to generate over  
the near term, sufficient cash flow to cover operating expenses and current     
debt service charges.  The indebtedness secured by the Park Avenue Property     
currently matures in December 1998 (or December 1996 at the option of the       
lender and with 180 days written notice).  The lender has, to date, given       
neither formal notice nor any indication that it will or intends to accelerate  
the maturity date of the loans.  If the maturity of the loans is accelerated,   
the Partnership will explore other options, including either a refinancing with 
a new lender or a possible sale of the Property.  However, no assurances can be 
given that the Partnership would be able to refinance or sell the Property on   
terms acceptable to the Partnership.                                            

Saxon Woods Corporate Center - During 1995, the Partnership executed leases for 
34,350 square feet.  The Partnership expects that cash flow from the Saxon      
Woods Corporate Center will cover operating expenses and debt service           
obligations in 1996.  The Saxon Woods Line of Credit is in the amount of up to  
$6.5 million.  As of December 31, 1995, the Partnership had borrowed $5,044,524 
under the Saxon Woods Line of Credit.  Pursuant to Section 13(d) (xviii) of the 
Partnership Agreement, which prohibits the Partnership from incurring           
indebtedness secured by a property in excess of 40% of the then-appraised value 
of such property (or 40% of the value of such property as determined by the     
lender as of the date of financing or refinancing, if such value is lower) (the 
"Borrowing Limitation"), the Partnership is currently permitted to borrow up to 
$6,080,000 based on the most recent appraisal of the Saxon Woods Corporate      
Center which was $15,200,000 as of December 31, 1995.  The loan agreement       
provides that all available cash flow from the Property will be used for        
expenses incurred at the Property prior to borrowing any additional funds under 
the Saxon Woods Line of Credit.                                                 

The indebtedness secured by the Saxon Woods Corporate Center currently matures  
in September 1996.  The Partnership has commenced discussions with the lender   
in an effort to extend the maturity date of the mortgage.  In the event an      
agreement with the lender cannot be reached, the Partnership will pursue other  
options, including a refinancing with a new lender or a possible sale of the    
Property.  However, there can be no assurance that such efforts would be        
successful.                                                                     

34th Street Property - During 1995, the Partnership entered into leasing        
transactions for 205,310 square feet on a substantially "as is" basis,          
resulting in a 25% increase in the Property's December 31, 1995 leased rate as  
compared to the leased rate at December 31, 1994.  The largest tenant in the    
Property is the City of New York Human Resources Administration occupying       
approximately 47% of the total leasable area under a lease which is scheduled   
to expire in February 2001.  The terms of the lease call for the City to make   
annual base rental payments of approximately $5.4 million and pay its           
proportionate share of increases in real estate taxes and operating expenses.   
As with most New York City leases, the tenant has the right to terminate its    
lease on a floor by floor basis upon one year's notice although it must         
reimburse the Partnership's unamortized costs of tenant improvements associated 
with the lease.  To date, the Partnership has not received any indication that  
the City intends to terminate any portion of the lease.  However, the City has  
retained a real estate brokerage firm to evaluate its space needs at various    
locations in New York City, including the 34th Street Property.  The            
Partnership has had preliminary discussions with the brokerage firm in          
connection with a long-term extension of the City's lease.                      

In May 1995, the Partnership successfully negotiated an agreement with FNBC 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 NY Real Estate Services 1 Inc. to lend the    
Partnership the $1.75 million unsecured loan needed to complete the payoff of   
the 34th Street Line of Credit prior to June 30, 1995.  FNBC's agreement to     
accept only $1.75 million in full satisfaction of the 34th Street Line of       
Credit effectively meant that substantially all of the outstanding principal    
balance was forgiven by FNBC.  On June 26, 1995, the Partnership completed the  
payoff of the 34th Street Line of Credit.  As a result of the successful        
payoff, the Partnership will be able to retain its interest in the Property and 
have the opportunity to benefit from a possible improvement in the market.      

The NYRES1 Loan bears interest at the prime rate less one and one-quarter       
percent.  Payments of accrued interest and principal will be payable on a       
current basis to the extent there is net cash flow available from the 34th      
Street Property.  To the extent that interest has not been paid on a current    
basis from the Property's cash flow, any net proceeds realized from the         
conveyance or refinancing of the 34th Street Property or any of the             
Partnership's other properties will be used to pay accrued interest and         
principal on the loan.  The NYRES1 Loan matures upon the earlier of December    
31, 2025 or the termination of the Partnership and is not secured by a mortgage 
on the Property, but remains an unsecured obligation of the Partnership.  In    
connection with the NYRES1 Loan, Mendik Realty, an affiliate of Mendik          
Corporation, agreed to continue to defer its management fees and leasing        
commissions associated with any additional leasing activity that would          
otherwise have been payable with respect to the Property.                       

During the latter part of 1992, the General Partners concluded that the         
Partnership may be unable to hold the 34th Street Property on a long-term       
basis.  As a result, the Partnership accounted for the Property as held for     
disposition.  Accordingly, the carrying value of the Property was reduced to    
the lower of its depreciated cost or estimated market value.  Now that the      
Partnership has replaced the first mortgage debt on the Property with the       
NYRES1 Loan, the Partnership intends to hold the Property and has again         
accounted for it as a real estate investment.                                   

In order to improve the 34th Street Property's cash flow, beginning in January  
1992, Mendik Realty voluntarily agreed to defer its management fees of          
approximately $170,000 a year that would otherwise have been payable with       
respect to the 34th Street Property, although it had no obligation to do so.    
In addition, Mendik Realty agreed to defer its leasing commission with respect  
to the signing of the long-term lease with the City of New York and any further 
leasing commissions associated with additional leasing activity at the          
Property.  As noted above, in connection with the NYRES1 Loan, these fees and   
commissions will continue to be deferred.  Through December 31, 1995, Mendik    
Realty had deferred approximately $1,367,413 in leasing commissions and         
management fees, including accrued interest, with respect to the 34th Street    
Property.                                                                       

Operating Cash Reserves                                                         
The Partnership's consolidated cash reserves decreased by $664,367 to           
$4,673,561 at December 31, 1995 from $5,337,928 at December 31, 1994 primarily  
as a result of payments for tenant improvements at the Park Avenue Property.    
The decrease was partially offset by cash flow generated by the 34th Street     
Property.  During the year ended December 31, 1995, approximately $5.6 million  
was expended for property improvements at the Park Avenue Property, Saxon Woods 
Corporate Center and the 34th Street Property in connection with leasing        
activity and other building improvements.  These expenditures were funded by    
cash flow from operations generated during 1995, proceeds from the Saxon Woods  
Line of Credit, Partnership cash reserves, the deferral of property management  
fees and leasing commissions by Mendik Realty with respect to certain of the    
Properties, and the prepayment of rent by The Times Mirror Company Inc. in      
connection with the lease restructuring at the Park Avenue Property in          
November 1995.                                                                  

The Partnership's restricted cash balance at December 31, 1995 decreased by     
$1,045,662 to $1,065,455 at December 31, 1995 from $2,111,117 at December 31,   
1994.  Prior to the payoff of the 34th Street Line of Credit, the Partnership   
was required to deposit all receipts from the 34th Street Property into a       
lockbox at FNBC.  As a result of the successful buy out of the 34th Street Line 
of Credit, funds maintained in the lockbox totalling approximately $943,000,    
and reflected under restricted cash, were released to the Partnership and were  
used to pay real estate taxes.                                                  

Other Unliquidated Assets                                                       
Deferred rent receivable totalled $9,597,899 at December 31, 1995 compared to   
$14,508,937 at December 31, 1994.  The $4,911,038 decrease is primarily         
attributable to the restructuring of the Times Mirror Magazine and Newsday      
leases at the Two Park Avenue Property in the fourth quarter of 1995.  The      
Times Mirror Company Inc., the parent company of Times Mirror Magazines Inc.    
and Newsday Inc., assumed the leases and extended the term for six and one      
quarter years through September 30, 2010.  As part of the lease amendment, The  
Times Mirror Company pre-paid a portion of the rents due through the original   
lease expiration of June 30, 2004 and effectively reduced their rental rate per 
square foot over the remaining lease term.                                      

Other assets increased from $8,090,275 at December 31, 1994 to $10,541,223 at   
December 31, 1995.  The increase is primarily attributable to additional        
unamortized leasing commissions in connection with leasing activity at the      
Partnership's Properties during 1995.                                           

Short- and Long-Term Liabilities                                                
Accounts payable and accrued expenses decreased by $1,107,940 from $2,647,703   
at December 31, 1994 to $1,539,763 at December 31, 1995.  The decrease is       
primarily attributable to the payments of tenant and building improvements and  
other property operating expenses primarily related to the Park Avenue          
Property.                                                                       

Deferred income increased from $134,114 at December 31, 1994 to $7,530,747 at   
December 31, 1995.  The increase is primarily attributable to the execution of  
the amended lease with The Times Mirror Company, Inc. in the fourth quarter of  
1995.                                                                           

Due to affiliates increased from $1,783,552 at December 31, 1994 to $2,650,348  
at December 31, 1995.  The $866,796 increase is primarily attributable to the   
continued deferral by Mendik Realty of management fees with respect to the 34th 
Street Property and cleaning and related service costs owed to an affiliate of  
Mendik Realty.                                                                  

Accrued interest payable totalled $621,854 at December 31, 1995 as compared to  
$2,985,200 at December 31, 1994.  The decrease is primarily attributable to the 
June 1995 discounted payoff of the 34th Street Line of Credit as discussed      
above.                                                                          

Mortgages payable decreased from $94,680,836 at December 31, 1994 to            
$70,044,524 at December 31, 1995.  The $24,636,312 decrease is primarily        
attributable to the $10 million paydown of the Two Park Avenue loans with funds 
received from the prepayment of rent by The Times Mirror Company as discussed   
above and the June 1995 discounted payoff of the 34th Street Line of Credit.    

Notes payable to affiliates increased from $480,000 at December 31, 1994 to     
$2,230,000 at December 31, 1995.  The increase is primarily attributable to the 
NYRES1 Loan to the Partnership in connection with the payoff of the 34th Street 
Line of Credit in June 1995.                                                    

Results of Operations                                                           

1995 vs. 1994                                                                   
For the year ended December 31, 1995, the Partnership generated net cash from   
operating activities of $15,247,357 compared to $4,279,060 for the year ended   
December 31, 1994.  The increase is primarily attributable to the prepayment of 
rent by The Times Mirror Company Inc. in connection with the lease              
restructuring at the Park Avenue Property in November 1995.  The Partnership    
generated net income of $11,613,040 for the year ended December 31, 1995        
compared to a net loss of $6,173,627 for the year ended December 31, 1994.  The 
change from net loss to net income is primarily attributable to a $16,247,734   
extraordinary gain recognized on the retirement of the 34th Street Line of      
Credit.  Without the gain, the Partnership generated a loss before              
extraordinary item of $4,634,694 for the year ended December 31, 1995.  The     
lower operating loss in 1995 is primarily attributable to decreases in property 
operating expenses, depreciation and amortization, and interest expense.        

Rental income for the year ended December 31, 1995 totalled $33,420,387,        
largely unchanged from $33,708,412 for the year ended December 31, 1994.  While 
the transfer of the Stamford Property in December 1994 was the primary reason   
for the slight decrease in rental income during 1995, this was largely offset   
by increased rental income at Two Park Avenue and Saxon Woods Corporate Center  
as a result of new and renewal leases executed at these Properties during the   
prior year.                                                                     

Property operating expenses for the year ended December 31, 1995 totalled       
$20,024,041 compared to $21,097,441 for the year ended December 31, 1994.  The  
decrease is primarily attributable to the transfer of the Stamford Property to  
the lender in December 1994 in lieu of foreclosure.  The transfer of the        
Stamford Property was also the primary reason for the $2,180,466 and $506,543   
decreases in interest expense and depreciation and amortization, respectively,  
during 1995 as compared to 1994.                                                

1994 vs. 1993                                                                   
For the year ended December 31, 1994, the Partnership generated net cash from   
operating activities of $4,279,060 as compared to $1,275,101 during 1993.  The  
increase is primarily attributable to the increase in accrued interest payable  
primarily related to the Stamford Loan.  See below.  The Partnership sustained  
net losses of approximately $6.2 million for the year ended December 31, 1994   
as compared to approximately $11.4 million for the year ended December 31,      
1993.  The change in net loss is primarily due to a $5,564,391 gain on transfer 
in lieu of foreclosure under generally accepted accounting principles resulting 
from the transfer of the Stamford Property in 1994.                             

Rental income for the year ended December 31, 1994 was $33,708,412 compared to  
$34,333,599 for the year ended December 31, 1993.  Rental income declined       
primarily due to the reduction in income at the Stamford Property as a result   
of lease expirations.                                                           

Property operating expenses for the year ended December 31, 1994 slightly       
decreased from the year ended December 31, 1993 due primarily to reduced real   
estate taxes resulting from decreases in assessed property values on the Park   
Avenue Property, the 34th Street Property and the Saxon Woods Corporate Center. 
Additionally, decreases in contract services at the Park Avenue and 34th Street 
Properties resulted in decreases in property operating expenses.  These         
reductions were offset by increases in utilities at the Park Avenue Property,   
and professional fees and contract services at the Stamford Property.           

Interest expense increased primarily due to the default on the Stamford Loan    
which resulted in an increase in the interest rate from 10.3% per annum to 15%  
per annum.  As the Stamford Loan was nonrecourse, the Partnership was not       
liable for this additional interest when the property was transferred to the    
lender.  To a lesser extent, additional borrowings on the Saxon Woods Line of   
Credit and increases in the interest rates on the Saxon Woods Line of Credit    
and 34th Street Line of Credit contributed to the increase.                     

As a result of the Partnership's previous decision to carry the 34th Street     
Property and Stamford Property at the lower of their depreciated cost or        
estimated market value, the Partnership recorded an unrealized loss on          
properties held for disposition of $4,010,962 for the year ended December 31,   
1994 and $4,240,608 for the year ended December 31, 1993.                       

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.                                                                           

PART III

Item 10.  Directors and Executive Officers of the Registrant                    

The Partnership has no officers or directors.  Mendik 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 Corporation                                                              
Mendik Corporation was incorporated under the laws of the State of New York on  
November 13, 1985.  All of the capital stock of Mendik 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 Corporation $2.5 million in the 
form of a demand promissory note, which represents the only substantial asset   
of Mendik Corporation.  Mr. Mendik has a net worth in excess of such amount.    
Mendik Corporation maintains its principal office at 330 Madison Avenue, New    
York, New York 10017.                                                           

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

Name                   Age      Office                          

Bernard H. Mendik       66      Chairman and Director           
David R. Greenbaum      44      President                       
Christopher G. Bonk     41      Senior Vice President, Treasurer
                           and Chief Financial Officer
Michael M. Downey       54      Senior Vice President           
David L. Sims           49      Senior Vice President           
Kevin R. Wang           38      Senior Vice President           
   John J. Silberstein     35      Senior Vice President and Secretary

All officers and directors of Mendik Corporation, except for John J.            
Silberstein, have been officers or directors of the corporation since its       
incorporation in November 1985.  All officers of Mendik Corporation hold the    
same position in Mendik Realty.                                                 

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.                                          

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.                                          

Christopher G. Bonk has been with Mendik Realty since 1981, most recently as    
Senior Vice President, Treasurer and Chief Financial Officer.                   

Michael M. Downey has been with Mendik Realty since 1978, most recently as      
Senior Vice President of Operations.                                            

David L. Sims has been with Mendik Realty since 1984, most recently as Senior   
Vice President of Leasing.                                                      

Kevin R. Wang has been with Mendik Realty since 1985, most recently as Senior   
Vice President of Leasing.                                                      

John J. Silberstein has been with Mendik Realty since 1989, most recently as    
Senior Vice President and Secretary.                                            

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

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."    

Pursuant to Section 22(b) of the Partnership Agreement, an affiliate of Lehman  
has contributed to the capital of NYRES1 $2.5 million in the form of a demand   
promissory note, which represents the only substantial asset of NYRES1.  Such   
affiliate has a net worth in excess of such amount.                             

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 sole director of NYRES1 (none of whom has a family   
relationship with another) are:                                                 

Name                   Age     Office                           

Kenneth L. Zakin        48      Director and President          
Mark Sawicki            33      Vice President and Chief        
                 Financial Officer
Lawrence M. Ostow       28      Vice President                  

Kenneth L. Zakin has been an officer of NYRES1 since 1989.  Mark Sawicki has    
been an officer of NYRES1 since October 1990.  Lawrence M. Ostow has been an    
officer of NYRES1 since September 1995.                                         

Kenneth L. Zakin is a Senior Vice President of Lehman Brothers and has held     
such title since November 1988.  He is currently a senior manager in Lehman     
Brothers' Diversified Asset Group and was formerly group head of the Commercial 
Property Division of Shearson Lehman Brothers' Direct Investment Management     
Group responsible for the management and restructuring of limited partnerships  
owning commercial properties throughout the United States.  From January 1985   
through November 1988, Mr. Zakin was a Vice President of Shearson Lehman        
Brothers Inc.  Mr. Zakin is a director of Lexington Corporate Properties, Inc.  
He is a member of the Bar of the State of New York and previously practiced as  
an attorney in New York City from 1973 to 1984 specializing in the financing,   
acquisition, disposition, and restructuring of real estate transactions.  Mr.   
Zakin is a member of the Real Estate Lender's Association and is currently an   
associate member of the Urban Land Institute and a member of the New York       
District Council Advisory Services Committee.  He received a Juris Doctor       
degree from St. John's University School of Law in 1973 and a B.A. degree from  
Syracuse University in 1969.                                                    

Mark Sawicki is a Vice President of Lehman Brothers.  Mr. Sawicki joined Lehman 
Brothers in 1988 and has been involved primarily in the management and          
restructuring of real estate limited partnerships with investments in           
residential, commercial office, and industrial properties.  He has had          
extensive experience in property management oversight and selection, budgeting  
and forecasting, financial analysis, debt and equity financing and              
restructurings, dispositions, bankruptcies and related legal issues, and        
investor communications.  Prior to joining Lehman, Mr. Sawicki was a senior     
credit analyst with Republic National Bank of New York and prior to that, an    
auditor and consultant in the London office of Arthur Young, a public           
accounting firm.  Mr. Sawicki has a B.S in Finance and a Diploma in Real Estate 
from New York University.                                                       

Lawrence M. Ostow is an Assistant Vice President of Lehman Brothers and is      
responsible for the management of commercial real estate in the Diversified     
Asset Group.  Mr. Ostow joined Lehman Brothers in September 1992.  Prior to     
that, Mr. Ostow was a Senior Consultant with Arthur Andersen & Co. in the Real  
Estate Services Group, beginning in July 1990.  Mr. Ostow is a candidate for an 
M.B.A. from the Stern School of Business in 1997 and earned a B.A. degree in    
Economics from the University of Michigan in 1990.                              

Item 11.  Executive Compensation                                                

Neither of the General Partners nor any of their officers or directors received 
any compensation from the Partnership.  See Item 13 below of this Report with   
respect to certain transactions of the General Partners and their affiliates    
with the Partnership.                                                           

Item 12.  Security Ownership of Certain Beneficial Owners and Management        

As of March 29, 1996, 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 March 29, 1996, 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.                                                    

Beneficial Ownership of Units 

Name of Beneficial                         Number of    
   Owner                               Units Owned

Bernard H. Mendik                           1,276 (1)   
David R. Greenbaum                            485 (2)   
Kevin R. Wang                                  20 (3)   
Christopher G. Bonk                            49       
Michael M. Downey                              33       
David L. Sims                                  16       

The General Partners and all officers and                       
directors thereof as a group (10 persons)       1,879 (1)(2)(3) 
_________________________                                                       

(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 285 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.                                                 

Item 13.  Certain Business Relationships and Related Transactions               

As a result of the suspension of cash distributions, neither NYRES1 nor Mendik  
Corporation received Net Cash from Operations with respect to the year ended    
December 31, 1995.  For the 1995 fiscal year, $743,548 of the Partnership's net 
income was allocated to each of NYRES1 and Mendik 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 4 of      
Notes to Consolidated Financial Statements.                                     

Pursuant to Section 12 of the Partnership Agreement, Mendik Realty has 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.  As of December 31, 1995,   
there was a liability of approximately $1,218,972 to Mendik Realty as a result  
of leasing commissions earned in 1995 and prior periods from the 34th Street    
Property, Park Avenue Property and Saxon Woods Corporate Center.  During 1995,  
Mendik Realty deferred its leasing commissions earned in connection with the    
leasing of space at the 34th Street Property and will continue to defer these   
commissions during 1996.                                                        

First Data Investor Services Group provides partnership accounting and investor 
relations services for the Registrant.  Prior to May 1993, these services were  
provided by an affiliate of a general partner.  The Registrant's transfer agent 
and certain tax reporting services are provided by Service Data Corporation.    
Both First Data Investor Services Group and Service Data Corporation are        
unaffiliated companies.                                                         

B&B Park Avenue L.P., a limited partnership of which Mendik Corporation is a    
general partner, owns the remaining 40% interest in Two Park Company, the joint 
venture that owns the Park Avenue Property.                                     

Mendik Realty receives fees for the management of the Partnership's Properties  
and is reimbursed for the cost of on-site building management staff.  During    
1995, Mendik Realty earned management fees including deferred fees of $732,389  
from the Partnership and was reimbursed $438,616 for the cost of on-site        
building management salaries.                                                   

During 1995, Mendik Realty deferred certain management fees payable to it by    
the Partnership in connection with the 34th Street Property.  During 1996,      
Mendik Realty has agreed to continue to defer management fees in connection     
with the 34th Street Property.  See the information under the caption "34th     
Street Property" in Item 2 of this Report.  See Note 8 of Notes to the          
Consolidated Financial Statements.                                              

Building Management Service Corporation ("BMSC"), an affiliate of Mendik        
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 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 1995, GMSC and BMSC earned from  
the Partnership $4,493,393 for such services.                                   

See Note 8 of Notes to Consolidated Financial Statements for additional         
information concerning amounts paid or accrued to the General Partners and      
their affiliates during the years ended December 31, 1995, 1994 and 1993 and    
all balances unpaid at December 31, 1995.                                       

PART IV 

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

(a) The following consolidated financial statements of Mendik Real Estate       
Limited Partnership and Consolidated Venture are included in Item 8:    

Independent Auditors' Report                                  F-1           

Consolidated Balance Sheets at December 31, 1995 and 1994     F-2           

Consolidated Statements of Operations for the years ended                   
December 31, 1995, 1994 and 1993                            F-3         

Consolidated Statements of Partners' Capital (Deficit) for                  
the years ended December 31, 1995, 1994 and 1993            F-4         

Consolidated Statements of Cash Flows for the years ended                   
December 31, 1995, 1994 and 1993                            F-5         

Notes to the Consolidated Financial Statements                F-6           

Schedule III - Real Estate and Accumulated Depreciation       F-19          

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.                    

(3) See Index to Exhibits contained herein.                                 

(b) Reports on Form 8-K.                                                        

No reports on Form 8-K were filed in the fourth quarter of fiscal year  
1995.                                                                   

INDEX TO EXHIBITS 

Exhibit No.                                                                     

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).                        

10 (a) Form of Property Management Agreement between the Partnership and Mendik 
   Realty 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).                        

(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 Realty, Mendik 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   
   Realty, Mendik 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).                    

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 Corporation
   General Partner

Date: April 12, 1996          BY:  /s/David R. Greenbaum                        
      Name:   David R. Greenbaum
Title:  President   

              BY: NY Real Estate Services 1 Inc.
   General Partner

Date: April 12, 1996          BY:  /s/Kenneth L. Zakin                          
    Name:   Kenneth L. Zakin
          Title:  Director and President

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 12, 1996          BY:  /s/Kenneth L. Zakin                          
    Name:   Kenneth L. Zakin
          Title:  Director and President

Date: April 12, 1996          BY:  /s/Mark Sawicki                              
Name:   Mark Sawicki
      Title:  Vice President and
                   Chief Financial Officer

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 CORPORATION  
A General Partner   

Date: April 12, 1996          BY:  /s/Bernard H. Mendik                         
     Name:   Bernard H. Mendik
         Title:  Chairman and Director

Date: April 12, 1996          BY:  /s/David R. Greenbaum                        
      Name:   David R. Greenbaum
Title:  President   

Date: April 12, 1996          BY:  /s/Christopher G. Bonk                       
       Name:   Christopher G. Bonk
                Title:  Senior Vice President, Chief
                           Financial Officer and Treasurer

Independent Auditors' Report

The Partners                                                                    
Mendik Real Estate Limited Partnership:                                         

We have audited the consolidated financial statements of Mendik Real Estate     
Limited Partnership and Consolidated Venture (a New York Limited Partnership)   
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 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, 1995 and 1994,  
and the results of their operations and their cash flows for each of the years  
in the three-year period ended December 31, 1995 in conformity with generally   
accepted accounting principles.  Also in our opinion, the related financial     
statement schedule, when considered in relation to the consolidated financial   
statements taken as a whole, presents fairly, in all material respects, the     
information set forth therein.                                                  

     KPMG PEAT MARWICK LLP

Boston, Massachusetts                                                           
March 21, 1996                                                                  

Consolidated Balance Sheets                                                     
December 31, 1995 and 1994                                                      

Assets                                               1995              1994     

Real estate investments:                                                        
Land                                       $ 27,137,084      $ 27,137,084   
Buildings and improvements                  214,497,059       209,035,698   

                                         241,634,143       236,172,782
Less-accumulated depreciation                 (58,172,619)      (49,536,517)    

                                         183,461,524       186,636,265

Cash and cash equivalents                       4,673,561         5,337,928     
Restricted cash                                 1,065,455         2,111,117     
U.S. Treasuries and Agencies                    2,458,794         3,009,152     
Rents and other receivables (net                                                
of allowance for doubtful accounts of                                       
$150,880 in 1995 and $618,832 in 1994)          938,101           774,028   
Deferred rent receivable                        9,597,899        14,508,937     
Other assets, net of accumulated                                                
amortization of $6,513,970 in 1995                                          
and $5,038,398 in 1994                       10,541,223         8,090,275   

Total Assets                             $212,736,557      $220,467,702 

Liabilities and Partners' Capital                                               

Liabilities:                                                                    
Accounts payable and accrued expenses      $  1,539,763      $  2,647,703   
Deferred income                               7,530,747           134,114   
Due to affiliates                             2,650,348         1,783,552   
Security deposits payable                     1,065,455         1,168,590   
Accrued interest payable                        621,854         2,985,200   
Mortgages payable                            70,044,524        94,680,836   
Notes payable to affiliates                   2,230,000           480,000   

Total Liabilities                          85,682,691       103,879,995 

Minority interest                              40,388,146        41,535,027     

Partners' Capital (Deficit):                                                    
General Partners                                    ---        (1,487,096)  
Special Limited Partner                             ---          (471,998)  
Limited Partners (395,169 units outstanding) 86,665,720        77,011,774   

Total Partners' Capital                    86,665,720        75,052,680 

Total Liabilities and Partners' Capital  $212,736,557      $220,467,702 

Consolidated Statements of Operations                                           
For the years ended December 31, 1995, 1994 and 1993                            

Income                                  1995            1994            1993    

Rent                             $33,420,387     $33,708,412    $ 34,333,599    
Gain on transfer                                                                
in lieu of foreclosure                  ---       5,564,391             ---   
Interest                             214,049         298,457         282,740    

Total Income                    33,634,436      39,571,260      34,616,339  

Expenses                                                                        

Property operating                20,024,041      21,097,441      22,408,960    
Depreciation and amortization     10,199,677      10,706,220      10,498,610    
Interest                           8,796,859      10,977,325      10,194,343    
General and administrative           395,434         364,286         472,146    
Unrealized losses on                                                            
property held for disposition           ---       4,010,962       4,240,608   

Total Expenses                  39,416,011      47,156,234      47,814,667  

Loss before minority interest                                               
and extraordinary item          (5,781,575)     (7,584,974)    (13,198,328) 

Minority interest in loss of                                                    
consolidated venture              1,146,881       1,411,347       1,791,780   

Loss before extraordinary item   (4,634,694)     (6,173,627)    (11,406,548)  

Extraordinary Item                                                              

Gain on retirement of debt        16,247,734             ---             ---    

Net Income (Loss)                $11,613,040     $(6,173,627)   $(11,406,548)   

Net Income (Loss) Allocated:                                                    

To the General Partners          $ 1,487,096     $   (61,736)   $   (114,065)   
To the Limited Partners            9,653,946      (6,111,891)    (11,292,483)   
To the Special Limited Partner       471,998             ---             ---    

                              $11,613,040     $(6,173,627)   $(11,406,548)

Per limited partnership                                                         
unit (395,169) outstanding:                                                     

Net loss before extraordinary item   $(11.61)        $(15.47)        $(28.58)   

Net Income (Loss)                    $ 24.43         $(15.47)        $(28.58)   

Consolidated Statements of Partners' Capital (Deficit)                          
For the years ended December 31, 1995, 1994 and 1993                            

                                   Special
      Limited       General        Limited
                     Partners      Partners        Partner           Total
Balance at                                                                      
December 31, 1992  $ 94,416,148   $(1,311,295)     $(471,998)   $ 92,632,855  
Net loss             (11,292,483)     (114,065)           ---     (11,406,548)  

Balance at                                                                      
December 31, 1993    83,123,665    (1,425,360)      (471,998)     81,226,307  
Net loss              (6,111,891)      (61,736)           ---      (6,173,627)  

Balance at                                                                      
December 31, 1994    77,011,774    (1,487,096)      (471,998)     75,052,680  
Net Income             9,653,946     1,487,096        471,998      11,613,040   

Balance at                                                                      
December 31, 1995   $86,665,720   $       ---      $     ---    $ 86,665,720  

Consolidated Statements of Cash Flows                                           
For the years ended December 31, 1995, 1994 and 1993                            

Cash Flows from Operating Activities:         1995          1994          1993  

Net income (loss)                      $11,613,040   $(6,173,627) $(11,406,548) 
Adjustments to reconcile net                                                    
income (loss) to net cash                                                     
provided by operating activities:                                             
Depreciation and amortization         10,199,677    10,706,220    10,498,610
Gain on transfer in lieu of foreclosure      ---    (5,564,391)          ---
Gain on retirement of debt           (16,247,734)          ---           ---
Minority interest in loss of                                                
  consolidated venture                 (1,146,881)   (1,411,347)   (1,791,780)
Provision for losses on rents                                               
 and receivables                             ---       426,994           ---
Unrealized loss on properties                                               
 held for disposition                        ---     4,010,962     4,240,608
Net premium (discount) amortization -                                       
  U.S. Treasuries and Agencies             50,092       (32,175)      (99,651)
Increase (decrease) in cash arising                                         
from changes in operating assets                                            
and liabilities:                                                            
   Restricted cash                      1,045,662       279,617      (475,920)
  Rents and other receivables           (164,073)     (440,311)    1,010,411
   Deferred rent receivable             4,911,038      (344,889)     (729,445)
   Other assets                        (3,856,650)   (1,866,041)   (1,806,549)
   Accounts payable and accrued expenses   48,504       879,384      (594,809)
  Deferred income                      7,396,633        51,793        30,832
  Due to affiliates                      866,796       913,633       843,132
  Accrued interest payable               634,388     2,682,521     1,040,181
  Security deposits payable             (103,135)      160,717       440,238
  Deferred interest payable                  ---           ---        75,791

Net cash provided by                                                            
operating activities                   15,247,357     4,279,060     1,275,101 

Cash Flows from Investing Activities:                                           

Additions to real estate investments   (5,619,234)   (6,787,315)   (2,845,613)
Accounts payable - real estate assets  (1,156,444)      338,317           --- 
Acquisition of U.S. Treasuries                                                
  and Agencies                         (3,574,183)   (4,659,415)   (5,744,971)
Redemption of U.S. Treasuries                                                 
and Agencies                           4,074,449     4,565,357     5,780,013

Net cash used for investing activities  (6,275,412)   (6,543,056)   (2,810,571) 

Cash Flows from Financing Activities:                                           

Payments of principal on                                                      
mortgage notes payable               (11,750,000)          ---           ---
Proceeds from mortgage                                                        
and notes payable                      2,113,688       138,159     1,388,175

Net cash provided by (used for)                                                 
financing activities                   (9,636,312)      138,159     1,388,175 

Net decrease in cash                                                            
and cash equivalents                     (664,367)   (2,125,837)     (147,295)
Cash and cash equivalents                                                       
at beginning of year                    5,337,928     7,463,765     7,611,060 

Cash and cash equivalents                                                       
at end of year                        $ 4,673,561   $ 5,337,928   $ 7,463,765 

Supplemental Disclosure of Cash Flow Information:                               

Cash paid during the year for interest $ 8,015,003   $ 8,294,804   $ 9,154,162  

Supplemental Disclosure of Non-Cash Investing and Financing Activities:         

On June 26, 1995 the Partnership completed the payoff of the nonrecourse first
mortgage secured by the Partnership's leasehold interest in the 34th Street   
property for $1.75 million.  As of that date, there was $15 million of        
principal outstanding and accrued interest of $2,997,734.  To complete the    
discounted payoff the Partnership received a loan from an affiliate of NY     
Real Estate Services 1 Inc., in the amount of $1.75 million.                  

On December 29, 1994, the Partnership transferred title to the 1351 Washington
Boulevard property to the mortgage holder, in lieu of foreclosure.  The       
transfer resulted in full satisfaction of the property's debt.                

Supplemental Disclosure of Non-Cash Operating Activities:                       

During the year ended December 31, 1995, the Partnership wrote-off $227,741 of
fully amortized assets.                                                       

Notes to the Consolidated Financial Statements                                  
December 31, 1995, 1994, and 1993                                               

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 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."                                                                       

2. Liquidity                                                                    
The commercial real estate market in the Greater New York Metropolitan Area has 
shown some limited signs of improvement.  However, the significant cost of      
tenant improvements required to be funded under both new and renewal leases has 
sharply increased the demand for capital by landlords, including the            
Partnership.  Expenditures for tenant improvements have contributed to the      
Partnership's reduced liquidity.  In order to conserve the Partnership's        
limited resources, the Partnership has pursued a strategy intended to position  
each of the Partnership's properties, to the extent possible, to meet its       
operating and other expenses as they come due using only the operating income   
generated by that property, and if necessary, proceeds from borrowings secured  
by such property.                                                               

Park Avenue Property - Although the Partnership continues to lease space at the 
Property, with the continuing softness in the real estate market, new and       
renewal leases generally have been signed at rental rates significantly less    
than the rental rates received on leases signed in the mid-1980's.  The         
Property's cash flow, however, is expected to remain stable in 1996.  The costs 
of leasing space at the property are being funded with existing property cash   
flow and reserves maintained by the joint venture that owns the Park Avenue     
Property.  With the signing of the new leases as well as certain other leases   
currently under negotiation, the Partnership utilized or committed to utilize   
substantially all of the joint venture's cash reserves which at year-end 1995   
were approximately $3.5 million over and above a reserve for real estate taxes. 
However, it is expected that these leases will increase the property's cash     
flow, which cash flow will be available to reestablish reserves.                

During the fourth quarter of 1995, the Partnership was successful in            
negotiating a six and one quarter year lease extension from June 30, 2004       
through September 30, 2010 on substantially an "as is" basis with Times Mirror  
Magazines Inc. and its affiliate, Newsday Inc.  As part of the extension, The   
Times Mirror Company Inc., the parent company of Times Mirror Magazines Inc.    
and Newsday Inc., took over the leases, which total approximately 263,000       
square feet.  The Times Mirror Company Inc., whose financial condition is more  
secure than those of its subsidiaries, also leased an additional 9,000 square   
feet, bringing its total leased space to approximately 272,000 square feet or   
approximately 29% of the Property.  As part of the lease amendment, The Times   
Mirror Company pre-paid a portion of the rents due through the original lease   
expiration of June 30, 2004.  The lease prepayment was used by the Partnership  
to prepay, without penalty, $10 million of the outstanding balance of the loans 
secured by the Property, reducing the principal balance of the loans to $65     
million.  Such prepayment was made in November 1995.                            

The Park Avenue Property currently generates, and is expected to generate over  
the near term, sufficient cash flow to cover operating expenses and current     
debt service charges under the loans.  The indebtedness secured by the Park     
Avenue Property currently matures in December 1998, or December 1996 at the     
option of the lender, (See Note 6 for further information).  The lender has, to 
date, given neither formal notice nor any indication that it will or intends to 
accelerate the maturity date of the loans.  If the maturity of the loans is     
accelerated, the Partnership will explore other options, including either a     
refinancing with a new lender or a possible sale of the property.  However, no  
assurances can be given that the Partnership would be able to refinance or sell 
the property on terms acceptable to the Partnership.                            

The property was 97% and 92% leased at December 31, 1995 and 1994,              
respectively.                                                                   

The 34th Street Property - The parcel of land underlying the 34th Street        
Property is leased from an unaffiliated third party pursuant to a ground lease  
with an initial term ending on December 31, 1999 that provides for annual lease 
payments of $2.25 million through December 31, 1999.  The ground lease may be   
renewed in 1999 and thereafter at the option of the Partnership for successive  
terms of 21, 30, 30, 30 and 39 years at annual rentals, determined at the       
commencement of each renewal term, equal to 7% of the then-market value of the  
land considered as if vacant, unimproved and unencumbered, valued at the        
highest and best use under then-applicable zoning and other land use            
regulations as office, hotel or residential property, but in no event less than 
the higher of (i) $2.75 million or (ii) the base rent for any consecutive       
12-month period during the then-preceding renewal term.                         

In 1993, the Partnership signed a long-term lease with the City of New York for 
approximately 47% of the Property's total leasable space in the 34th Street     
Property.  The City has the right to terminate the lease on a floor by floor    
basis provided the City gives the Partnership one year's prior notice and to    
reimburse the Partnership for certain improvement costs as defined in the       
lease.  The terms of the lease call for the City to make annual base rental     
payments of approximately $5.4 million and pay its proportionate share of       
increases in real estate taxes and operating expenses.  Per the terms of the    
lease, approximately $1.25 million was spent by the Partnership for required    
tenant improvements.  In order to fund the tenant improvements required by the  
City lease, the Partnership negotiated an agreement with the unaffiliated       
ground lessor pursuant to which the ground lessor agreed to make available the  
$1.25 million that was being held as security under the ground lease.  The      
ground lessor also agreed to waive the lease requirement that the Partnership   
deposit an additional $1 million as security with the ground lessor in          
connection with the increase in the annual ground rent in 1992 to $2.25         
million.                                                                        

In order to improve the 34th Street Property's cash flow, beginning in January  
1992, Mendik Realty Company, Inc. ("Mendik Realty"), an affiliate of Mendik     
Corporation, voluntarily agreed to defer its management fees of approximately   
$170,000 a year that would otherwise have been payable with respect to the 34th 
Street Property.  In addition, Mendik Realty agreed to defer its leasing        
commission with respect to the signing of the long-term lease with the City of  
New York and any further leasing commissions associated with additional leasing 
activity at the Property.  Through December 31, 1995, Mendik Realty has         
deferred approximately $1,367,413 in leasing commissions and management fees    
with respect to the 34th Street Property.                                       

On August 12, 1993, the Partnership entered into a forbearance agreement which  
modified the terms of the 34th Street Line of Credit.  Pursuant to the          
forbearance agreement, FNBC agreed to forbear through June 30, 1994 from        
exercising its remedies under the loan agreement as a result of the Partnership 
suspending its interest payments to FNBC beginning in September 1992.  On       
August 15, 1994, an extension of the forbearance agreement was entered into     
with FNBC extending the forbearance period from June 30, 1994 to December 31,   
1994.  At the end of 1994, the Partnership obtained a further extension of the  
forbearance period to June 30, 1995.  The forbearance agreement allowed the     
Partnership to pay off the 34th Street Line of Credit for $6 million at any     
time through June 30, 1995, a substantial discount to the 34th Street Line of   
Credit's current outstanding balance.                                           

In May 1995, the Partnership successfully negotiated an agreement with FNBC to  
reduce the amount needed to pay off the nonrecourse first mortgage secured by   
the Partnership's leasehold interest in the 34th Street Property (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 NY Real Estate 
Services 1 Inc. to lend the Partnership the $1.75 million needed to complete    
the payoff of the 34th Street Line of Credit prior to June 30, 1995 (the        
"NYRES1 Loan").  FNBC's agreement to accept only $1.75 million in full          
satisfaction of the 34th Street Line of Credit effectively meant that           
substantially all of the outstanding principal balance of the loan was forgiven 
by FNBC.  On June 26, 1995, the Partnership completed the payoff of the 34th    
Street Line of Credit.  As a result, the Partnership will be able to retain its 
interest in the property and will have the opportunity to benefit from any      
improvement in the market.                                                      

The NYRES1 Loan bears interest at the prime rate less one and one-quarter       
percent.  Payments of accrued interest and principal will be payable on a       
current basis to the extent there is net cash flow available from the 34th      
Street property.  To the extent that interest has not been paid on a current    
basis from the property's cash flow, any net proceeds realized from the         
conveyance or refinancing of the 34th Street Property or any of the             
Partnership's other properties will be used to pay accrued interest and         
principal on the loan.  The NYRES1 Loan matures upon the earlier of December    
31, 2025 or the termination of the Partnership and is not secured by a mortgage 
on the property, but remains an unsecured obligation of the Partnership.  In    
connection with the NYRES1 Loan, Mendik Realty agreed to continue to defer its  
management fees and leasing commissions associated with any additional leasing  
activity that would otherwise have been payable with respect to the property.   

The property was 90% and 65% occupied at December 31, 1995 and 1994,            
respectively.                                                                   

Saxon Woods Corporate Center - The Partnership expects that cash flow from the  
Saxon Woods Corporate Center will cover operating expenses and debt service     
obligations in 1996.  Although the Saxon Woods Line of Credit is in the amount  
of up to $6.5 million, as a result of Section 13(d) (xviii) of the Partnership  
Agreement which prohibits the Partnership from incurring indebtedness secured   
by a Property in excess of 40% of the then-appraised value of such Property (or 
40% of the value of such Property as determined by the lender as of the date of 
financing or refinancing, if such value is lower) (the "Borrowing Limitation"), 
the Partnership is permitted to borrow only $6,080,000 based upon the most      
recent appraisal of the Saxon Woods Corporate Center which as of December 31,   
1995 was $15,200,000.  The loan agreement provides that all available cash flow 
from the Saxon Woods Corporate Center will be used for expenses incurred at the 
Saxon Woods Corporate Center prior to borrowing additional funds under the      
Saxon Woods Line of Credit.  The Partnership believes that additional leasing   
activity, the costs of which will be funded to the extent of borrowings         
permitted under the Saxon Woods Line of Credit and operating cash flow, may     
result in an increase in the appraised value of the Property thereby enabling   
the Partnership to borrow additional amounts available under the Saxon Woods    
Line of Credit.  There can be no assurance that the property's appraised value  
will increase in the future which would enable the Partnership to borrow        
additional funds.  As of December 31, 1995, the Partnership had borrowed        
$5,044,524 under the Saxon Woods Line of Credit.                                

The indebtedness secured by the Saxon Woods Corporate Center currently matures  
in September 1996. The Partnership has commenced discussions with the lender in 
an effort to extend the maturity date of the mortgage.  In the event an         
agreement with the lender cannot be reached, the Partnership will pursue other  
options, including a refinancing with a new lender or a possible sale of the    
Property.  However, there can be no assurance that such efforts would be        
successful.                                                                     

The property was 81% and 78% occupied at December 31, 1995 and 1994,            
respectively.                                                                   

Stamford Property - The Partnership restructured the nonrecourse loan secured   
by the Stamford Property in 1991.  The restructuring was intended to enable the 
Stamford Property to generate sufficient cash flow to meet its operating        
expenses and debt service obligations through 1993 without utilizing the        
Partnership's working capital reserves.  However, the Stamford real estate      
market continued to deteriorate resulting in a further erosion of market lease  
rates.  During 1994 two leases totaling 77,800 square feet expired and,         
although the Partnership was able to negotiate a new lease for 46,600 square    
feet with one of the tenants, it was at a significantly reduced rental rate. As 
a result, the property's revenue declined significantly and the Partnership     
failed to make full payment of debt service due on February 10, 1994 through    
December 10, 1994 with respect to the Stamford Loan.  The Partnership was       
unsuccessful in its attempts to sell the property at a price sufficient to pay  
off the mortgage.  As a result, on December 29, 1994, the Partnership           
transferred title to the Stamford Property to the lender in lieu of             
foreclosure.  The transfer resulted in the loss of the Partnership's investment 
in the property; however, the Partnership was not liable for accrued interest   
or the principal balance of the mortgage not otherwise satisfied by transfer of 
the property.                                                                   

The property was 47% occupied at the date of transfer of the property on        
December 29, 1994.                                                              

3. 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.  Revenues are 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 owns an approximate 60% general partnership interest. 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.  Real estate investments which consist of buildings,   
are recorded at cost, less accumulated depreciation. Cost includes the initial  
purchase price of the properties plus closing costs, acquisition and legal      
fees, and capital improvements. Depreciation of the buildings is computed using 
the straight-line method over an estimated useful life of 20 to 35 years.       
Depreciation of personal property is computed using the straight-line method    
over an estimated useful life ranging from 5 to 10 years.  Tenant improvements  
are amortized using the straight-line method over the respective lease terms.   

During the latter part of 1992, the General Partners concluded that the         
Partnership may be unable to hold the 34th Street Property on a long-term       
basis.  As a result, the Partnership accounted for the property as held for     
disposition.  Accordingly, the carrying value of the property was reduced to    
the lower of its depreciated cost or estimated market value.  Now that the      
Partnership has replaced the first mortgage debt on the property with the NYRES 
1 Loan, management intends to hold the property and has again accounted for it  
as a real estate investment.                                                    

Accounting for Impairment.  In March 1995, the Financial Accounting Standards   
Board issued Statement of Financial Accounting Standards No. 121, "Accounting   
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be         
Disposed Of" ("FAS 121"), which requires impairment losses to be recorded on    
long-lived assets used in operations when indicators of impairment are present  
and the undiscounted cash flows estimated to be generated by those assets are   
less than the assets' carrying amount.  FAS 121 also addresses the accounting   
for long-lived assets that are expected to be disposed of.  The Partnership     
adopted FAS 121 in the fourth quarter of 1995.                                  

The Partnership completed a review of recoverability of the carrying amount of  
each property based upon an estimate of undiscounted cash flows expected to     
result from each property's use and eventual disposition.  Based on current     
estimates, the adoption of FAS 121 had no impact on the financial statements.   
However, if long-term financing cannot be arranged for the Two Park and Saxon   
Woods properties and the 34th Street Property ground lease is not extended, it  
is reasonably possible that a change in the Partnership's assessment of         
recoverability could occur.                                                     

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 consists of security deposits.                

Marketable Securities.  Marketable securities, which consist of United States   
Treasury securities and Agencies, are carried at amortized cost, which          
approximates market.                                                            

Concentration of Credit Risk.  Financial instruments which potentially subject  
the Partnership to a concentration of credit risk principally consist of cash   
in excess of the financial institutions' insurance limits.  The Partnership     
invests available cash with high credit quality financial institutions.         

Lease Revenue.  Rental income is recognized as earned under the leases.         
Accordingly, as certain leases of the Partnership provide 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 has determined that all leases associated with the rental of    
space at the investment properties are operating leases.                        

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

Mortgage Costs.  Mortgage costs are capitalized and amortized over the term of  
the mortgages 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.              

Fair value estimates are subjective and are dependent on a number of            
significant assumptions based on management's judgement regarding future        
expected loss experience, current economic conditions, risk characteristics of  
various financial instruments and other factors.  In addition, FAS 107 allows a 
wide range of valuation techniques, therefore, comparisons between entities,    
however similar, may be difficult.                                              

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 revenues and expenses during the         
reporting period.  Actual results could differ from those estimates.            

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.                         

Reclassification.  Certain 1994 and 1993 amounts have been reclassified to      
conform with the financial statement presentation used in 1995.                 

4. 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.                                        

The Times Mirror Lease Prepayment and the gain on retirement of the 34th Street 
Property debt have been treated as capital transactions for purposes of         
allocation under the Partnership Agreement.  Accordingly, only the Class A      
limited partners, the special limited partner and the general partners have     
received an allocation of income; Class B limited partners received no          
allocation from these transactions.                                             

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 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 sales or refinancing 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 sale or refinancing    
will be distributed 99% to the special limited partner and 1% to the Mendik     
Corporation until the special limited partner has received any shortfall on his 
special cumulative return (as defined). Third, the net proceeds will be         
distributed to the general partners until the general partners have received    
their deferred incentive shares (as defined).  Thereafter, net proceeds will be 
distributed 75% to the limited partners, 20.33% to the special limited partner  
and 4.67% to the general partners.  Liquidating proceeds will be distributed to 
the Partners in proportion to and to the extent of the positive capital account 
balances of the Partners.                                                       

5. Real Estate Investments                                                      
The major tenants described below represented 50% of the Partnership's rental   
income in 1995.  See Note 2 for leasing activity.                               

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 948,000 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 approximate 40% interest in Two Park Company is owned by B & B Park   
Avenue L.P., of which Mendik Corporation is a general partner.  The sole        
stockholder of the other general partner is also the lender of the mortgages    
secured by the Park Avenue Property.  At December 31, 1995, the property was    
appraised at $95,000,000, and the appraised value of the property net of the    
minority interest was $56,715,000.  At December 31, 1994, the property was      
appraised at $105,000,000, and the appraised value of the property net of the   
minority interest was $62,685,000.  The reduction in the appraised value from   
December 31, 1994 to December 31, 1995 is primarily due to the lease prepayment 
received from a tenant in the amount of $13,839,000.  (See Notes 2 and 6).      

Major tenants at Two Park Avenue are Times Mirror Magazines, Inc. and its       
affiliate Newsday, Inc. both of whom assigned their leases to Times Mirror      
Company Inc. as of October 1, 1995.  The Times Mirror Company Inc. leases       
271,850 square feet (29% of total leasable area in the property) under a new    
lease which expires on September 30, 2010 and National Benefit Life Insurance   
Company which leases 99,839 square feet (11% of total leasable area in the      
property) under a lease expiring May 30, 1998.  National Benefit Life Insurance 
Company has notified the Partnership that it will vacate its space once the     
current lease expires.  Times Mirror Company and National Benefit Life          
Insurance Company represented 29% and 13%, respectively, of the property's      
total rental income in 1995.                                                    

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.                                                                           

The parcel of land underlying the 34th Street Property is leased from an        
unaffiliated third party pursuant to a ground lease with an initial term ending 
on December 31, 1999 that provided for annual lease payments of $1.25 million   
through December 31, 1991 and requires annual lease payments of $2.25 million   
for the remaining eight years. The ground lease may be renewed at the option of 
the Partnership for successive terms of 21, 30, 30, 30 and 39 years at annual   
rentals, determined at the commencement of each renewal term, equal to 7% of    
the then-market value of the land considered as if vacant, unimproved and       
unencumbered, valued at the highest and best use under then-applicable zoning   
and other land use regulations as office, hotel or residential property, but in 
no event less than the higher of (i) $2.75 million or (ii) the base rent for    
any consecutive 12-month period during the then-preceding renewal term.  The    
property was appraised at $2,700,000 at December 31, 1995. The appraised value  
at December 31, 1994 was $5,700,000.                                            

The major tenant at the 34th Street property is the City of New York which      
leases 300,000 square feet (47% of the total leasable area in the property)     
under a lease expiring February 28, 2001.  As with substantially all leases     
with New York City, the tenant has the right to terminate the lease on a floor  
by floor basis without penalty provided the City gives the Partnership one      
year's prior notice.  However, should it terminate the lease with respect to    
one or more floors, the City would be required to pay the Partnership for       
certain improvement costs as defined in the lease.  To date, the Partnership    
has not received any indication that the City intends to terminate any portion  
of the lease.  However, the City has retained a real estate brokerage firm to   
evaluate its space needs at various locations in New York City, including the   
34th Street Property.  The Partnership has had preliminary discussions with the 
brokerage firm in connection with a long-term lease extension of the City's     
lease.  The City represented approximately 90% of the property's total revenue  
in 1995.                                                                        

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 property was purchased by 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 1996. 
The property was appraised at $15,200,000 at December 31, 1995, compared to     
$15,000,000 at December 31, 1994.                                               

Major tenants at the Saxon Woods Corporate Center are Commodity Quotations      
which leases 24,540 square feet (11% of the total leasable area) under leases   
expiring October 31, 2001 and October 31, 1998. Commodity Quotations has the    
option to cancel the lease expiring October 31, 2001 at the end of the seventh  
year, October 23, 1998.  Icon Capital Corp. leases 29,040 square feet (13% of   
the total leasable area) under a lease expiring November 30, 2004.  Commodity   
Quotations and Icon Capital Corp represented approximately 13% and 14%,         
respectively, of the property's rental income in 1995.                          

The Stamford Property.  In 1985, the Partnership acquired the Stamford          
Property, a ten-story office building containing approximately 220,000 net      
rentable square feet (based on current standards of measurement) and an         
attached parking garage located on 1351 Washington Blvd. in Stamford,           
Connecticut. The purchase price of the property was $31,250,000. The property   
was transferred to the lender in lieu of a foreclosure sale on December 29,     
1994.                                                                           

6. Mortgage and Notes Payable                                                   
The Partnership is currently only able to incur additional indebtedness secured 
by the Saxon Woods Property, as a result of the Borrowing Limitation in the     
Partnership Agreement. (See Note 2).                                            

The Park Avenue Property.  The $60,000,000 first mortgage is for a term of      
twelve years and accrues interest at the rate of 9.75% per annum. Interest only 
is payable in monthly installments until the maturity date (December 19, 1998)  
at which time the full amount of principal and any accrued interest shall be    
due and payable. 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 from proceeds received from the lease extension     
with The Times Mirror Company Inc.  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 is payable in 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 shall be due and payable.  The     
lender has the right to accelerate the maturity date of the mortgages           
(collectively the "Park Avenue Loans") to a date not earlier than December 19,  
1996 upon at least 180 days prior notice (June 19, 1996).                       

The Park Avenue Loans are being treated as one loan and at any time upon        
request of Two Park Company, the lender will combine and consolidate both loans 
to make a non-recourse first mortgage loan in the principal amount of           
$65,000,000.                                                                    

The 34th Street Property.  On December 12, 1989, the Partnership entered into a 
loan agreement with First National Bank of Chicago ("FNBC"). The loan provided  
for 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"). 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 and provided the Partnership with the   
flexibility to draw funds at 110 basis points over the London Interbank offered 
rate ("LIBOR"), or 110 basis points over FNBC's C.D. rate or at FNBC's prime    
rate.  If the net operating income (as defined) for the property is less than   
115% of the projected debt service for the property for any six month period,   
the lender may increase the interest rate to 125 basis points over LIBOR or 125 
basis points over FNBC's C.D. rate.  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 (See Note 2) and the decline in the appraised value of the 34th     
Street Property, the Partnership was prevented from borrowing any additional    
funds.                                                                          

The Partnership suspended its interest payments to the lender beginning with    
the September 1992 payment. On August 12, 1993, the Partnership entered into a  
forbearance agreement which modified the terms of the 34th Street Line of       
Credit with FNBC.  Pursuant to the forbearance agreement, FNBC agreed to        
forbear through June 30, 1994 from exercising its remedies under the loan       
agreement as a result of the Partnership's failure to pay interest.  The        
forbearance period was subsequently extended through June 30, 1995.  The        
forbearance agreement allowed the Partnership to pay off the 34th Street Line   
of Credit for $6 million at any time through June 30, 1995, a substantial       
discount to the 34th Street Line of Credit's current outstanding balance.  Also 
through June 30, 1995, the Partnership was permitted to make interest payments  
to FNBC, based upon the Corporate Base Rate or the prime rate beginning March   
19, 1993, only to the extent of available cash flow from the 34th Street        
Property.  No interest payments were made by the Partnership during the         
forbearance periods.                                                            

In May 1995, the Partnership successfully negotiated an agreement with the      
FNBC, the property's lender, to reduce the amount needed to pay off the         
nonrecourse first mortgage secured by the Partnership's leasehold interest in   
the 34th Street Property (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  
prior to June 30, 1995 (the "NYRES1 Loan").  FNBC's agreement to accept only    
$1.75 million in full satisfaction of the 34th Street Line of Credit            
effectively meant that substantially all of the outstanding principal balance   
of the loan was forgiven by FNBC.  On June 26, 1995, the Partnership completed  
the payoff of the 34th Street Line of Credit.  As a result of the payoff, the   
Partnership retained its interest in the property and will have the opportunity 
to benefit from any improvement in the market.                                  

The NYRES1 Loan bears interest at the prime rate less one and one-quarter       
percent.  Payments of accrued interest and principal will be payable on a       
current basis to the extent there is net cash flow available from the 34th      
Street property.  To the extent that interest has not been paid on a current    
basis from the property's cash flow, any net proceeds realized from the         
conveyance or refinancing of the 34th Street Property or any of the             
Partnership's other properties will be used to pay accrued interest and         
principal on the loan.  The NYRES1 Loan matures upon the earlier of December    
31, 2025 or the termination of the Partnership.  In connection with the NYRES1  
Loan, Mendik Realty Company, Inc., an affiliate of Mendik Corporation, agreed   
to continue to defer its management fees and leasing commissions associated     
with any additional leasing activity that would otherwise have been payable     
with respect to the property.                                                   

The Saxon Woods Corporate Center.  In September 1991, the Partnership           
established a non-recourse line of credit of $6,500,000 (the "Saxon Woods line  
of credit") secured by the Partnership s leasehold interest in the property     
located at 550/600 Mamaroneck Avenue, Harrison, New York (the "Saxon Woods      
Property"). The Saxon Woods line of credit has a term of five (5) years, is     
secured by a first leasehold mortgage on the Saxon Woods Property and generally 
bears interest at the rate of 2.5% per annum in excess of LIBOR.  The average   
interest rate for 1995 was 8.4375% at December 31, 1995.  In addition, the      
Partnership is 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 Saxon Woods line of     
credit provides the Partnership with a source of funds to pay for those         
improvements necessary to lease additional space at the property.  In order to  
reduce the need for additional borrowings under the Saxon Woods line of credit, 
the Partnership has agreed to use all available cash flow from the Saxon Woods  
Property (which cash flow has been pledged to the lender) for all expenses      
incurred at the Saxon Woods Property prior to borrowing any additional funds    
under the Saxon Woods line of credit.                                           

Based on the current appraised value of the Saxon Woods Property, only          
$6,080,000 of the Saxon Woods line of credit is available to the Partnership    
due to the Borrowing Limitation. The Partnership believes that the Saxon Woods  
line of credit will provide the Partnership with a source of funds which should 
be sufficient to pay for those improvements necessary to lease certain          
additional space at the property.  As of December 31, 1995, the Partnership had 
borrowed $5,044,524 under the Saxon Woods line of credit.  The Partnership      
expects that additional leasing activity, the costs of which will be covered by 
borrowings from the Saxon Woods Line of Credit and operating cash flow, may     
result in a further increase in the appraised value of the property thereby     
enabling the Partnership to borrow the additional amounts available under the   
Saxon Woods Line of Credit up to the full amount of $6,500,000. The Partnership 
has the option to request an updated appraisal at any time; however, there can  
be no assurance that subsequent appraised values for the Property will continue 
to increase.                                                                    

The Stamford Property.  The $12,500,000 non-recourse first mortgage loan was for
a term of ten years and accrued interest at the rate of 10% per annum through   
December 10, 1993 and 10.3% thereafter.                                         

The Partnership failed to make full payment of debt service due commencing      
February 10, 1994 with respect to the Stamford Loan as discussed in Note 2.  As 
a result, the Partnership was in default under the terms of the Stamford Loan.  
The Partnership was unable to secure a loan modification, and title to the      
property was transferred to the lender on December 29, 1994 in lieu of a        
foreclosure sale, resulting in the loss of the Partnership's investment in the  
property.                                                                       

Pursuant to a loan modification agreement on the Stamford Property, Mendik      
Corporation and NYRES1 agreed to lend the Partnership $50,000 and $110,000,     
respectively, in each of calendar years 1991, 1992 and 1993.  Principal and     
interest is payable on December 31, 2025, or upon termination of the            
Partnership if earlier, subject to a mandatory prepayment from the net proceeds 
from the sale of any properties, after repayment of all debt secured by the     
property sold.                                                                  

Mortgages payable at December 31, 1995 and 1994 are summarized as follows:      

                                                     1995             1994
Secured by Park Avenue Property, bearing                                        
interest at a blended rate of 10.02% in 1995                                  
and 10.159% in 1994                             $65,000,000      $75,000,000  

Secured by 34th Street Property, bearing                                        
interest at a blended rate of 7.245% in 1994.           ---       15,000,000  

Secured by Saxon Wood Corporate Center,                                         
bearing interest at a blended rate of 8.87%                                   
in 1995 and 7.139% in 1994                        5,044,524        4,680,836  

                                              $70,044,524      $94,680,836

Notes payable at December 31, 1995 and 1994 are summarized as follows:          

                                                     1995             1994
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          330,000  

Note payable to Mendik Corporation, unsecured,                                  
bearing interest at prime rate less 1.25%           150,000          150,000  

                                               $2,230,000         $480,000

The following summarizes the scheduled maturities of the Partnership's          
mortgages and notes payable:                                                    

Year                      Amount                                

1996                    $5,044,524                              
1997                           ---                              
1998                    65,000,000                              
Thereafter               2,230,000                              

$72,274,524       

In November 1995, the Partnership prepaid, without penalty, $10,000,000 of the  
outstanding mortgages on the Two Park Avenue property from proceeds received    
from the lease extension with Times Mirror Magazines Inc. and its affiliate,    
Newsday, Inc.  The remaining mortgages mature on December 19, 1998 and require  
monthly payments of interest only, with the entire principal due at maturity.   
If the Park Avenue Lender were to exercise its option to accelerate the         
scheduled maturity date of its loans to the earliest possible permitted date,   
then the amounts due in 1996 in the above table would be $70,044,524.           

Based on the borrowing rates currently available to the Partnership for         
mortgage loans with similar average maturities, the fair value of long-term     
debt approximates carrying value.                                               

7. Rental Income Under Operating Leases                                         
Based upon the leases currently in effect, future minimum rental payments from  
operating leases of the Partnership's properties (which are not cancellable by  
their terms) as of December 31, 1995 are as follows:                            

Year                       Amount                               

1996                    $ 24,711,418                            
1997                      25,356,634                            
1998                      23,368,812                            
1999                      20,417,722                            
2000                      19,222,107                            
Thereafter               133,515,351                            

$246,592,044    

In addition to the minimum rental amounts, substantially all of the leases      
provide for escalation charges to tenants for operating costs, real estate      
taxes and electricity.  For the years ended December 31, 1995, 1994, and 1993,  
these amounts were $2,712,976, $3,282,904, and $3,524,411, respectively, which  
amounts are included in rental income.                                          

8. Transactions With General Partners and Affiliates                            
Certain cash and cash equivalents reflected on the Partnership's consolidated   
balance sheets at December 31, 1995 and 1994 were on deposit with an affiliate  
of a general partner.                                                           

The following is a summary of the amounts paid or accrued to the general        
partners and their affiliates during the years ended December 31, 1995, 1994    
and 1993 and all balances unpaid at December 31, 1995:                          

Due To/(From) Affiliates                    
                  at December 31,           ------Paid or Accrued-----
                          1995              1995          1994          1993
Management fees and                                                             
building personnel                                                            
salaries (A)           $1,244,725      $1,171,005    $1,289,698    $1,227,744 

Leasing commissions (B)  1,218,972         347,488       555,147       770,710  

Cleaning and related                                                            
services (C)(D)           166,651       4,127,071     4,072,233     4,166,977 

Administrative salaries                                                         
and expenses (E)           20,000          73,163        86,021        65,254 

Security (F)                   ---         366,322       378,806       414,219  

Out of pocket                                                                   
expenses (G)                  ---             ---           ---           981 

                      $2,650,348      $6,085,049    $6,381,905    $6,645,885

(A) Mendik Realty receives 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 has remained under the      
payroll of Mendik Realty, for the years ended December 31, 1995, 1994 and 1993  
totalled $438,616, $515,998 and $527,019, respectively.  Management fees paid   
or payable to Mendik Realty totalled $732,389, $773,700 and $700,725 for the    
years ended December 31, 1995, 1994 and 1993, respectively.  These amounts are  
included in the table.  Certain management fees included in the above amounts   
are being deferred as discussed in Note 6.                                      

(B) Mendik Realty has agreed to limit the payment of its 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 will be deferred but is 
payable only if and to the extent such limit is not exceeded in the year paid.  
As of December 31, 1995, there were unpaid commissions, on a consolidated       
basis, of approximately $1,218,972 as a result of deferred leasing commissions  
from the 34th Street property, the Saxon Woods Corporate Center and the Park    
Avenue property.  Certain leasing commissions are being deferred as per the     
loan modifications discussed in Note 6.                                         

(C) Building Maintenance Service Corporation ("BMSC"), an affiliate of Mendik   
Corporation, performs cleaning and related services at the properties.  Such    
cleaning and related services are provided by BMSC at its cost plus an          
allocable share of overhead expenses.  Cleaning and related services payable to 
BMSC totalled $3,230,148, $3,278,621 and $3,500,062 for the years ended         
December 31, 1995, 1994 and 1993, respectively.  The salaries and benefits for  
these employees were $759,415, $687,948 and $584,942 in 1995, 1994 and 1993,    
respectively.  These amounts are included in the table.  Included in the 1993   
amounts are certain amounts related to 1992 due to a difference between         
estimates and actual costs incurred for 1992.                                   

(D) BMSC provides metal and marble cleaning services to the Partnership at its  
cost plus an allocable share of overhead expenses, which were $137,508,         
$105,664 and $81,973 in 1995, 1994 and 1993, respectively.  These amounts are   
included in the table.                                                          

(E) NYRES1, a general partner, is reimbursed for certain administrative         
salaries and expenses for services rendered by a non-affiliate in connection    
with maintaining Partnership operations.                                        

(F) Effective January 1, 1993, Guard Maintenance Service Corporation ("GMSC"),  
an affiliate of Mendik Corporation, began providing security services to the    
Partnership at its cost plus an allocable share of overhead expenses, which in  
1995, 1994 and 1993 totalled $366,322, $378,806 and $414,219, respectively.     
These amounts are included in the table. Security services paid to unaffiliated 
third parties for the year ended December 31, 1993 were $61,609.  This amount   
is not included in the table.                                                   

(G) First Data Investor Services Group provides partnership accounting and      
investor relations to the Partnership.  Prior to May 1993, these services were  
provided by an affiliate of a general partner.                                  

9. Litigation                                                                   

On February 6, 1996, a purported class action, Sword v. Lehman Brothers         
Holdings, Inc., was commenced on behalf of, among others, all Unitholders in    
the Circuit Court for Baltimore, Maryland against the Partnership, Lehman       
Brothers Holdings, Inc., E.F. Hutton & Company, Inc. and others.  The complaint 
alleges that the Unitholders were induced to purchase Units based upon          
misrepresentations and/or omitted statements in the sales materials used in     
connection with the offering of Units in the Partnership.  The complaint        
alleges, inter alia, claims of fraud, negligent misrepresentation and breach of 
fiduciary duty.  The defendants intend to defend the action vigorously.         

On March 7, 1996, a purported class action, Ressner v. Lehman Brothers Inc.,    
was commenced on behalf of, among others, all Unitholders in the Court of       
Chancery for New Castle County, Delaware, against the NYRES1 general partner of 
the Partnership, Lehman Brothers Inc. and others.  The complaint alleges, among 
other things, that the Unitholders were induced to purchase Units based upon    
misrepresentation and/or omitted statements in the sales materials used in      
connection with the offering of Units in the Partnership.  The complaint        
purports to assert a claim for breach of fiduciary duty based on the foregoing. 
The defendants intend to defend the action vigorously.                          

10. 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):                                     

                                       Year ended December 31,

                                      1995            1994            1993

Financial statement                                                             
consolidated net income (loss)   $11,613,040     ($6,173,627)   ($11,406,548) 

Financial statement write                                                       
down of real estate                      ---       4,010,962       4,240,608  

Tax basis depreciation over                                                     
financial statement depreciation    (355,352)     (1,115,277)       (971,960) 

Tax basis rental income over (under)                                            
financial statement rental income    (89,674)        132,615        (612,639) 

Tax loss on foreclosure over                                                    
financial statement gain on                                                   
foreclosure                              ---     (20,933,471)            ---  

Tax basis recognition of net income                                             
(loss) of consolidated venture (over)                                         
under financial statement recognition                                         
of loss of consolidated venture    7,986,697         272,346        (677,456) 

Other                                 (95,214)        (65,300)         (4,648)  

Federal income tax basis net                                                    
income (loss)                    $19,059,497    ($23,871,752)    ($9,432,643) 

Reconciliation of financial statement partners' capital to federal income tax   
basis partners' capital:                                                        
                                       Year ended December 31,

                                      1995            1994            1993
Financial statement basis                                                       
partners' capital               $ 86,665,720    $ 75,052,680     $81,226,307  

Current year financial statement                                                
net income (loss) over (under)                                                
Federal income tax basis net                                                  
income (loss)                      7,446,457     (17,698,122)      1,973,905  

Cumulative financial statement net                                              
income (loss) over cumulative                                                 
Federal income tax basis net                                                  
income (loss)                     41,380,065      59,078,187      57,104,282  

Federal income tax basis                                                        
partners' capital               $135,492,242    $116,432,745    $140,304,494  

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.                                                                    

MENDIK REAL ESTATE LIMITED
PARTNERSHIP and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 

December 31, 1995 

                                               Initial Cost to Partnership

                                                             Buildings and
Description              Encumbrances              Land          Improvements   

Commercial Properties:                                                          
Partnership owned:                                                              

500/600 Mamaroneck Ave.                                                         
Harrison, NY             $  5,044,524         $     ---          $ 21,282,805   

330 West 34th Street                                                            
New York, NY                      ---               ---            35,611,400   

Consolidated Venture:                                                           

Two Park Avenue                                                                 
New York, NY               65,000,000        27,140,745           130,411,744   

                      $ 70,044,524      $ 27,140,745          $187,305,949

MENDIK REAL ESTATE LIMITED PARTNERSHIP
and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 

December 31, 1995 

                    Cost Capitalized
           Subsequent to Acquisition

                                         Buildings and        Write-down
Description                    Land           Improvements        Adjustment    

Commercial Properties:                                                          
Partnership owned:                                                              

500/600 Mamaroneck Ave.                                                         
Harrison, NY            $       ---           $ 10,175,492      $        ---    

330 West 34th Street                                                            
New York, NY                    ---             10,286,057       (39,974,769)   

Consolidated Venture:                                                           

Two Park Avenue                                                                 
New York, NY                 (3,661)            46,704,330               ---    

                     $    (3,661)          $ 67,165,879      $(39,974,769)

MENDIK REAL ESTATE LIMITED PARTNERSHIP
and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 

December 31, 1995 

         Gross Amount at Which
          Carried at Close of Period

                                   Buildings and                 Accumulated
Description                 Land      Improvements      Total(1)  Depreciation  

Commercial Properties:                                                          
Partnership owned:                                                              

500/600 Mamaroneck Ave.                                                         
Harrison, NY         $       ---     $ 31,458,297  $ 31,458,297   $ 11,638,738  

330 West 34th Street                                                            
New York, NY                 ---        5,922,688     5,922,688        286,193  

Consolidated Venture:                                                           

Two Park Avenue                                                                 
New York, NY          27,137,084      177,116,074   204,253,158     46,247,688  

                   $27,137,084     $214,497,059  $241,634,143   $ 58,172,619

MENDIK REAL ESTATE LIMITED PARTNERSHIP
and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 

December 31, 1995 

                                                         Life on which
                                                          Depreciation
                                                         in Latest
                          Date of            Date          Income Statements
Description               Construction       Acquired           is Computed     

Commercial Properties:                                                          
Partnership owned:                                                              

500/600 Mamaroneck Ave.                                                         
Harrison, NY               1969/1972         09/04/86            25 years       

330 West 34th Street                                                            
New York, NY                 1925            04/23/87            20 years       

Consolidated Venture:                                                           

Two Park Avenue                                                                 
New York, NY                 1930            09/18/87            35 years       

For Federal income tax purposes, the basis of land, building and improvements   
wholly owned by the partnership at December 31, 1995 and 1994 is $77,051,988    
and $77,192,928, respectively.                                                  

A reconciliation of the carrying amount of real estate and accumulated          
depreciation for the years ended December 31, 1995, 1994 and 1993:              

Real Estate investments:          1995              1994              1993      

Beginning of year         $236,172,782      $227,392,238      $227,087,155      
Additions                    5,619,234         6,235,648         1,491,115      
Deletions                     (157,873)       (3,155,104)       (1,186,032)     

End of year               $241,634,143      $230,472,782      $227,392,238      
Properties held                                                                 
for disposition (Note 1)         ---         5,700,000               ---    

Total                $241,634,143      $236,172,782      $227,392,238 

Accumulated Depreciation:                                                       

Beginning of year         $ 49,536,517      $ 44,575,753      $ 37,519,673      
Depreciation expense         8,793,975         8,115,868         8,242,112      
Less Retirements              (157,873)       (3,155,104)       (1,186,032)     

End of year               $ 58,172,619      $ 49,536,517      $ 44,575,753      

MENDIK REAL ESTATE LIMITED PARTNERSHIP
and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 

December 31, 1995 

Note 1: At December 31, 1994, the Partnership accounted for the 330 West 34th   
Street Property as held for disposition.  In 1995, as a result of the           
partnership's replacement of the first mortgage debt on that property, the      
Partnership has again accounted for the property as a real estate investment.   

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-K’ Filing		Date		Other Filings
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