Mendik Real Estate Limited Partnership – ‘10-K’ for 12/31/94

As of:  Thursday, 4/13/95   ·   For:  12/31/94   ·   Accession #:  928790-95-27   ·   File #:  0-15463

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Annual Report   —   Form 10-K
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 1: 10-K        Annual Report                                         51±   208K 
 2: EX-27       Mendik Real Estate Limited Partnership Financial       1      5K 
                          Data Schedule for 1994 Form 10-K                       

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K 

X  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange   
Act of 1934  [Fee Required]                                             
For the fiscal year ended December 31, 1994                                     

or                                                                              

Transition Report Pursuant to Section 13 or 15(d) of the Securities     
Exchange Act of 1934  [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 Identification No.   
incorporation                                                                   

3 World Financial Center, 29th Floor,                                           
New York, New York                                        10285                 
Address of principal executive offices                   Zip Code               

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

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 ]                                             

The aggregate market value of Units held by non-affiliates of the registrant at 
March 28, 1995 was $196,645,000, computed by reference to the price at which    
Units were originally sold by the registrant.                                   

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 P        
artnership 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 Item 2 and Item 7.                          

The Stamford Property, 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 downturn 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  - Over the past several years, 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 have experienced varying degrees of financial and          
operating difficulties and many have downsized their operations.  One           
indication of the weakness in the region's economy relative to the rest of the  
United States is the lack of employment growth.  Between the official end of    
the national recession in March 1991 and December 1994, employment in the       
United States grew by 6.3 percent.  In comparison, employment in New York City  
declined by 3.6 percent.  The unemployment rate in New York City in February    
1995 was 9.0% as compared to 5.0% in December 1987.  This compares to           
unemployment rates for the entire United States of 5.4% and 5.7% in February    
1995 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 in the area  
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 has 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 has sharply increased the demand    
for capital by landlords, including the Partnership.  This increased demand for 
capital comes 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 has 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 have occurred have been at significantly reduced prices.  As a result,     
appraisers have relied increasingly on conservative assumptions in order to     
assess a property's value.  Based on the assumptions of generous concession     
packages for new and renewal leases, longer free rent periods as well as        
stagnant rental rates, appraised values have declined sharply.                  

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 7 of this  
Report for a discussion of the Partnership's plan.  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.  See Item 13 of this Report.        

Item 2. Properties                                                              

Stamford Property                                                               

On December 29, 1994, the Partnership transferred title to the Property to New  
York Life Insurance Company ("New York Life"), the mortgage holder, in lieu of  
foreclosure.  See below for a description of events leading up to the transfer  
of the Stamford Property.                                                       

Description.  The Stamford Property is located at 1351 Washington Boulevard in  
the northwestern section of downtown Stamford, Connecticut.  The office         
building and adjacent parking garage are located on a 1.73 acre parcel of land. 
The ten-story office building contains approximately 220,000 net rentable       
square feet, based on current standards of measurement.  The Stamford Property  
was acquired by the Partnership for $31,250,000, excluding acquisition          
expenses.                                                                       

Financing and Transfer of Property.  The Partnership previously restructured    
the $12.5 million non-recourse first mortgage loan to which the Stamford        
Property was subject (the "Stamford Loan") 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 in the hope that the       
Stamford, Connecticut real estate market would recover and that, as leases at   
the property expired, the Partnership would be able to enter into new or        
renewal leases at rental rates in excess of the rates being paid by existing    
tenants under current leases.  However, the Stamford real estate market         
continued to deteriorate resulting in a further erosion of market lease rates.  
The cash flow from the Stamford Property, together with loans by Mendik         
Corporation and an affiliate of NYRES1 and management fee deferrals by Mendik   
Realty Company, Inc. ("Mendik Realty"), an affiliate of Mendik Corporation,     
were sufficient to cover the property's operating expenses and debt service     
obligations through 1993.  However, upon the expiration of a 43,100 square foot 
lease in December 1993 with the Property's largest tenant, D&B Computing        
Services Inc.'s ("D&B"), the Partnership entered into a new lease effective     
January 1, 1994 with D&B at a significantly reduced rental rate reflecting the  
deterioration in the market.  As a result, as expected, the Property's revenue  
declined significantly and the Partnership failed to make full payment of debt  
service beginning on February 10, 1994 with respect to the Stamford Loan.  A    
further reduction in the property's cash flow occurred when the Partnership's   
lease with  Automatic Data Processing Inc. ("ADP") for 34,700 square feet       
expired on June 30, 1994 and ADP signed a renewal lease for only 3,500 square   
feet.  The Partnership attempted to sell the Property at a price sufficient to  
pay off the outstanding mortgage debt, however, the property's value had        
declined so significantly below the Stamford Loan's balance that these efforts  
were unsuccessful.  Consequently, on December 29, 1994, the Partnership         
transferred title to the property to New York Life in lieu of foreclosure.  The 
transfer resulted in the loss of the Partnership's investment in the property;  
however, because the loan was nonrecourse, the Partnership was not liable for   
the principal balance of the mortgage or accrued interest thereon that was not  
otherwise satisfied by the transfer of the Property.                            

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, 1994 was $15,000,000, as compared to appraised values of $15,000,000 at     
December 31, 1993 and $14,000,000 at December 31, 1992.                         

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 110,000 net rentable square feet and the building at 600          
Mamaroneck Avenue contains approximately 115,000 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 1994, the Partnership         
expended approximately $9.1 million on capitalized renovations, including       
tenant improvement construction, funded from cash flow, Partnership reserves,   
and borrowings.                                                                 

Financing.  Through January 1995, the Partnership had borrowed approximately    
$4.7 million and made commitments to borrow an additional $364,000 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"). Reference is made to Note 6 to the Consolidated Financial Statements  
for additional information regarding the Saxon Woods Line of Credit.            

Leasing.  The Property's occupancy rates as of February 28, 1995, 1994 and 1993 
were 80%, 75% and 67%, respectively.  The vacancy rate in Westchester County,   
where the Saxon Woods Corporate Center is located, was 18.6% as of December 31, 
1994, as compared to a vacancy rate of 20.9% at December 31, 1993.  During      
1994, utilizing funds available under the Saxon Woods Line of Credit and cash   
flow, the Partnership entered into leasing transactions covering approximately  
27,000 square feet at the Property including lease extensions and expansions by 
existing tenants.  This activity is in addition to leases aggregating           
approximately 30,000 square feet and 65,000 square feet that were signed during 
1993 and 1992, respectively.  During 1995, 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.                                                             

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,  
1994 was $5,700,000 compared to appraised values of $9,800,000 at December 31,  
1993 and $12,500,000 as of December 31, 1992.  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 is     
accounting 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, December 31, 1993 and December 31, 
1992.                                                                           

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 627,000 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 from $1.25 million to $2.25       
million effective January 1, 1992.  Reference is made to Note 5 to the          
Consolidated Financial Statements for additional information on the ground      
lease.                                                                          

Renovations.  During the period from 1987 through 1994, the Partnership         
expended approximately $10.1 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 a modification   
of the terms of the nonrecourse first mortgage secured by the Partnership's     
leasehold interest in the 34th Street Property, which modification was          
subsequently amended twice, (the "34th Street Line of Credit") which will allow 
the Partnership to buy out the 34th Street Line of Credit at a substantial      
discount by payment of the sum of $6 million at any time through June 30, 1995  
(the "Forbearance Agreement").  Should the Partnership be unable to pay off the 
34th Street Line of Credit or obtain an extension, the Forbearance Agreement    
provides that the Partnership will assign its leasehold interest in the         
Property to the lender, at the lender's election, in lieu of a foreclosure.     
Reference is made to Item 7 and Note 6 to the Consolidated Financial Statements 
for additional information regarding the 34th Street Line of Credit.            

In order further to supplement the Property's cash flow, beginning in January   
1992, Mendik Realty 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.  Pursuant to the       
Forbearance Agreement, 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 48% 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 without penalty provided the City gives the Partnership one year's    
notice of its intent to terminate the lease.  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.  The City    
will make 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 1994.      
Approximately $1.25 million was spent by the Partnership for tenant improvement 
costs required under the terms of the lease.  Pursuant to an agreement with the 
ground lessor, the Partnership funded the cost of improvements utilizing a      
$1.25 million security deposit for the ground lease.  Reference is made to Note 
5 to the Consolidated Financial Statements for additional information regarding 
the ground lease.                                                               

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, 1995, 1994 and 1993, were 65%,    
61% and 57%, respectively.  Although not entirely comparable, the Midtown West  
District, where the 34th Street Property is located has seen the vacancy rate   
for secondary office space increase from 13.5% at December 31, 1987 to 18.5% at 
December 31, 1994.  Subsequent to the end of 1994, a tenant occupying the       
entire 15th floor or approximately 4% of the building abandoned its space in    
the Property in default of its lease and the lease was subsequently terminated  
by the Partnership.  The Partnership is currently attempting to re-lease this   
space.                                                                          

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, 1994 was $105,000,000,       
compared to appraised values of $115,000,000 as of December 31, 1993 and        
$125,000,000 as of December 31, 1992.  The Partnership's original investment in 
its interest in Two Park Company at acquisition was $95,965,732, including      
$35,820,000 which represents 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, 1994 was $62,685,000, 
compared to appraised values of $68,655,000 as of December 31, 1993,            
$74,625,000 as of December 31, 1992 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 956,000 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 1994, the Two Park Company    
expended approximately $42.5 million on capitalized renovations, including      
tenant improvement construction, funded from cash flow, property and            
Partnership reserves, and borrowings.                                           

Financing.  Reference is made to Note 6 to the Consolidated Financial           
Statements for information regarding the non-recourse first mortgage,           
non-recourse second mortgage and non-recourse third mortgage secured by the     
Park Avenue Property which aggregate $75 million.                               

Leasing.  The Property's occupancy rates as of February 28, 1995, 1994 and      
1993, were 94%, 89% and 90%, respectively.  The vacancy rate for primary office 
space in the Grand Central District of Midtown Manhattan, where the Park Avenue 
Property is located, had increased from 10.2% at December 31, 1987 to 18.4% at  
December 31, 1992.  At December 31, 1994, the vacancy rate in the Grand Central 
District had declined to 15.7%.  During 1995, the Partnership will continue to  
market the Property's available space to commercial office tenants.             

Major tenants at the Park Avenue Property are Times Mirror Magazines, Inc. and  
its affiliate Newsday, Inc. which, in the aggregate, lease 259,043 square feet  
(approximately 27% of the total leasable area in the Property) under two leases 
expiring on June 30, 2004 and National Benefit Life Insurance Company which     
leases 99,800 square feet (approximately 10% of the total leasable area in the  
Property) under a lease expiring on May 30, 1998.  The base rental income under 
the leases with Times Mirror Magazines, Inc. and Newsday, Inc., and National    
Benefit Life Insurance Company represented approximately 21% and 9%,            
respectively, of the Partnership's consolidated rental income in 1994.          

Item 3. Legal Proceedings                                                       

Neither the Partnership nor any of the Properties is currently subject to any   
material legal proceedings.                                                     

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

During the fourth quarter of 1994, 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, 1994, there were 19,791 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, 1994    
and 1993, no distributions were paid to the Partners, and the Partnership does  
not contemplate making any distributions during 1995.  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
                    1994           1993         1992        1991          1990
                   (Dollars in thousands,except for per Unit data) (1)

Total                                                                           
income (2)       $ 39,571 (6)   $ 34,616     $ 34,437     $ 36,318     $ 35,931 

Net Loss (3)        6,174 (6)(7)  11,407 (7)   52,416 (7)    8,063        5,755 

Total                                                                           
assets (2)        220,468        237,798      247,773      299,247      305,674 

Total Mortgage                                                                  
and Notes                                                                       
Payable (2)        94,681        107,043      105,655      103,056      100,000 

Net cash                                                                        
provided by                                                                     
operating                                                                       
activities (2)      4,650          1,375        1,824          622          410 

Net Loss                                                                        
per Unit (3)(4)     15.47 (6)(7)   28.58 (7)   131.31 (7)    20.20        14.42 

Cash                                                                            
distributions                                                                   
per Unit (2)(4)(5)     --             --           --           --           -- 

Net asset value                                                                 
per Unit (3)(4)       82 (8)        99 (8)       121 (8)     162 (8)     242 (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)     During the first quarter of 1989, a decision was made by the General    
Partners to establish reserves in the amount of what would otherwise be Net     
Cash From Operations to help meet anticipated Partnership requirements.         

(6)     Includes a $5,564,391 gain on 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 postive 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, 1994, the amount distributable to an average Class A unit would 
be approximately $50 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 $128 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        
realizable 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.                                              

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

Liquidity and Capital Resources                                                 
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 its 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.                                                                       

During the year ended December 31, 1994, 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) additional borrowings from the Saxon Woods Line 
of Credit secured by a first leasehold mortgage on the Partnership's leasehold  
interest in the Saxon Woods Corporate Center and (v) a portion of the $1.25     
million security deposit maintained by the unaffiliated ground lessor for the   
34th Street Property.  It is expected that funds from certain of these sources  
will be reduced or unavailable in the future.                                   

Park Avenue Property - Since January 1, 1994, the Partnership has signed new    
and renewal leases for approximately 104,000 square feet or approximately 11%   
of the leasable area in the property. The largest of the new leases are with    
Simplicity Patterns (41,200 square feet), K-III Magazine Corporation (29,500    
square feet) and Lila Wallace - Reader's Digest Fund and DeWitt Wallace -       
Reader's Digest Fund (25,100 square feet).  In addition, subsequent to the end  
of 1994, the Partnership signed a lease for approximately 33,000 square feet.   
Although the Partnership continues to lease space at the property, new and      
renewal leases generally have been signed at rental rates significantly less    
than the rental rates received on leases signed in the mid-1980s, due to the    
continuing softness in the real estate market.  The property's cash flow,       
however, is expected to remain stable over the near term because rental rate    
increases negotiated in leases signed in earlier years have offset the lower    
market rental rates reflected in the leases recently signed by the Partnership. 
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 1994 were approximately $4.5  
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).  The Partnership expects, as the maturity of the loan approaches, to   
commence negotiations to extend the existing loan, to seek refinancing or sell  
the property.  However, as a result of the current lack of liquidity in the     
financial marketplace, no assurances can be made that the Partnership will be   
able to obtain an extension with the existing lender or refinance with a new    
lender, on terms acceptable to the Partnership or at all.  Additionally, the    
lack of liquidity may hamper the Partnership's ability to secure a buyer for    
the property at a price acceptable to the Partnership.                          

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 1995.  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 million based on the most recent 
appraisal of the Saxon Woods Corporate Center which was $15 million as of       
December 31, 1994.  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       
General Partners expect that additional leasing activity, the costs of which    
will be funded in part by borrowing amounts remaining available under the Saxon 
Woods Line of Credit, may result in an 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 $6.5    
million.  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, 1994, the Partnership had borrowed $4,680,836 under  
the Saxon Woods Line of Credit.  The Partnership has made commitments to borrow 
an additional $364,000 which would increase the total borrowings on the Saxon   
Woods Line of Credit to $5,044,836.                                             

The indebtedness secured by the Saxon Woods Corporate Center currently matures  
in September 1996.  The Partnership expects, as the maturity of the loan        
approaches, to commence negotiations to extend the existing loan, seek          
refinancing, or sell the Property.  However, as a result of the current lack of 
liquidity in the financial marketplace, no assurances can be made that the      
Partnership will be able to sell the property, obtain an extension with the     
existing lender, or refinance with a new lender, on terms acceptable to the     
Partnership or at all.                                                          

34th Street Property - On February 17, 1993, the Partnership signed a long-term 
lease with the City of New York (the "City") effective August 1, 1992 for       
approximately 300,000 square feet (48% 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 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.  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 which would otherwise have been required in     
connection with the increase in the annual ground rent in 1992 to $2.25         
million.                                                                        

During 1992, the cash flow from the 34th Street Property did not cover its debt 
service obligations after payment of operating expenses, and it was not         
expected to meet its debt service obligations in 1993.  As a result, in order   
to conserve the Partnership's limited working capital reserves and induce The   
First National Bank of Chicago ("FNBC"), the Property's lender, to modify the   
mortgage's terms, the Partnership suspended its interest payments to FNBC       
beginning in September 1992.  On August 12, 1993, the Partnership entered into  
a Forbearance Agreement which modified 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's failure to pay interest.  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 allows 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 will be permitted to     
make interest payments to FNBC only to the extent of available cash flow from   
the 34th Street Property.  Since the Forbearance Agreement went into effect,    
the Partnership has not made any interest payments to FNBC.  As of December 31, 
1994, there was $15 million of principal and approximately $2.3 million of      
accrued interest outstanding on the 34th Street Line of Credit.                 

The Forbearance Agreement with FNBC provides the Partnership with an            
opportunity to pay off the 34th Street Line of Credit at a substantial discount 
while at the same time establishing a cost-effective means to ensure an orderly 
and efficient transfer of the property to FNBC in the event the 34th Street     
Line of Credit cannot be paid off or extended.  The Partnership has no          
assurances that it will be able to pay off the 34th Street Line of Credit and   
any such pay off will depend on numerous factors.  Chief among these is the     
fact that many traditional sources of real estate financing such as banks,      
insurance companies and pension funds have dramatically curtailed their         
investment in commercial office properties.  Consequently, only a limited       
number of investors is likely to be available.  As a result, the Partnership is 
seeking to obtain either debt or equity financing even if such financing would  
entail the Partnership's transferring all or a portion of its interest in the   
property to the party providing the financing.                                  

As an alternative to refinancing the debt, the Partnership would consider       
selling the property for a price sufficient to pay off the debt.  In the event  
the Partnership obtains from a third party an offer to purchase the property or 
provide financing of less than the $6 million required by FNBC, the Partnership 
would explore with FNBC a pay off at a further discount below the $6 million.   
Should the Partnership be unable to pay off the 34th Street Line of Credit      
through a sale of the property or a refinancing by June 30, 1995 or should a    
further extension of the Forbearance Agreement not be obtained, the Forbearance 
Agreement provides that the Partnership will assign its interest in the         
property and in the ground lease to the property to FNBC, at FNBC's election,   
in lieu of foreclosure.  Should this assignment occur, the Partnership will     
lose its investment in the property.                                            

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.  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.  Both of these provisions have     
remained in effect pursuant to the terms of the Forbearance Agreement with      
FNBC.  Through December 31, 1994, Mendik Realty had deferred approximately      
$906,000 in leasing commissions and management fees with respect to the 34th    
Street Property.                                                                

The Forbearance Agreement requires the Partnership to deposit all receipts from 
the Property into a lockbox at FNBC.  FNBC must approve all releases from the   
lockbox to fund property costs.  As of December 31, 1994, approximately         
$1,000,000 was in the lockbox account maintained at FNBC which was available to 
pay real estate taxes and ground rent due January 1, 1995.                      

Stamford Property - The Partnership previously restructured the nonrecourse     
loan secured by the Stamford Property in 1991.  As part of the terms of the     
restructured loan, Mendik Corporation and an affiliate of NY Real Estate        
Services 1 Inc. ("NYRES1") loaned $50,000 and $110,000, respectively, to the    
Partnership in each of 1991, 1992 and 1993.  The loans were required to be      
deposited in an escrow account.  During the first quarter of 1994, the balance  
of these funds totalling approximately $280,000 was transferred from restricted 
cash to operating cash to be used to pay costs and expenses related to the      
Stamford Property.  As part of the restructured agreement, Mendik Realty also   
agreed to defer its management fees of approximately $70,000 a year in          
connection with the Stamford Property in each of calendar years 1991, 1992 and  
1993; Mendik Realty continued to defer its management fees in 1994 although it  
had no obligation to do so.                                                     

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 in the hope that the Stamford real estate market would recover and     
that, as leases at the property expired, the Partnership would be able to enter 
into new or renewal leases at rental rates in excess of the rates being paid by 
existing tenants under current leases.  However, the Stamford real estate       
market continued to deteriorate resulting in a further erosion of market lease  
rates.  The cash flow from the Stamford Property, together with the loans by    
Mendik Corporation and an affiliate of NYRES1 and the management fee deferrals  
by Mendik Realty, were sufficient to cover the property's operating expenses    
and debt service obligations through 1993.  However, upon the expiration of a   
43,100 square foot lease in December 1993 with the Property's largest tenant,   
D&B Computing Services Inc.'s ("D&B"), the Partnership entered into a new lease 
effective January 1, 1994 with D&B at a significantly reduced rental rate       
reflecting the deterioration in the market.  As a result, as expected, the      
Property's revenue declined significantly and the Partnership failed to make    
full payment of debt service due February 10, 1994 through December 10, 1994    
with respect to the Stamford Loan.  A further reduction in the property's cash  
flow occurred when the Partnership's lease with ADP for 34,700 square feet      
expired on June 30, 1994 and ADP signed a renewal lease for only 3,500 square   
feet.  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 New York Life in  
lieu of foreclosure.  The transfer resulted in the loss of the Partn ership's   
investment in the property; however, the Partnership was not liable for the     
principal balance or accrued interest on the mortgage, that was not otherwise   
satisfied by the transfer of the Property.                                      

During the latter part of 1992, the General Partners concluded that the         
Partnership may be unable to hold the 34th Street Property and the Stamford     
Property on a long-term basis.  As a result, the Partnership accounted for each 
property as held for disposition.  Accordingly, the carrying value of these     
properties were reduced to the lower of their depreciated cost or estimated     
market value on December 31, 1994, December 31, 1993 and December 31, 1992.     

Cash Reserves - The Partnership's consolidated cash reserves decreased by       
$1,999,604 to $8,347,080 at December 31, 1994 from $10,346,684 at December 31,  
1993.  During the year ended December 31, 1994, approximately $6.8 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    
additional borrowings under the Saxon Woods Line of Credit and cash flow from   
operations generated during the year ended December 31, 1994.                   

As a result of the transfer of the Stamford Property, properties held for       
disposition, mortgage and notes payable and deferred interest payable all       
declined.                                                                       

Accounts payable and accrued expenses increased $1,446,083 to $2,781,817 at     
December 31, 1994 from $1,335,734 at December 31, 1993 primarily due to         
accruals for real estate additions and an increase in prepaid rents.  Accrued   
interest payable increased primarily due to 1994 interest on the 34th Street    
Property.                                                                       

Results of Operations                                                           

1994 vs. 1993                                                                   
For the year ended December 31, 1994, the Partnership generated net cash from   
operating activities of $4,649,552 as compared to $1,374,752 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          
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 were virtually 
unchanged 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 New    
York Life.  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 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.                                           

1993 vs. 1992                                                                   

During the year ended December 31, 1993, the Partnership generated net cash     
from operating activities of $1,374,752 as compared to $1,823,821 during 1992.  
As a result of the Partnership's 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 $4,240,608 and $43,166,559 for the years ended December 31, 1993 
and 1992, respectively.  Including the unrealized losses, the Partnership       
sustained a net loss after depreciation and amortization of $11,406,548 for the 
year ended December 31, 1993 as compared to $52,415,692, for 1992.  If the      
Partnership had not recorded the unrealized losses in 1993 and 1992, the        
Partnership would have recorded losses of $7,165,940 and $9,249,133 for the     
years ended December 31, 1993 and 1992, respectively.                           

Consolidated rental income for the year ended December 31, 1993 was $34,333,599 
as compared with $34,094,669 for the corresponding period in 1992.              
Consolidated rental income remained stable from 1992 to 1993 as the income from 
new leases signed in the Saxon Woods Corporate Center offset a decline in       
rental income from the Two Park Avenue Property that resulted from leases being 
renewed at the lower market rental rates.  Consolidated interest income for     
1993 was $282,740 as compared to $342,409 for the corresponding period in 1992. 
The decline was due to lower interest rates earned on the Partnership's cash    
balance and the Partnership's maintaining a lower average cash balance during   
1993.                                                                           

Consolidated property operating expenses for 1993 increased slightly from 1992. 
Depreciation and amortization decreased in 1993 primarily due to the reduction  
in the carrying value of the 34th Street Property and Stamford Property         
effective December 31, 1992.  Interest expense increased slightly during 1993   
from the corresponding period in 1992 due to the increase in the principal      
balance outstanding under the Saxon Woods Line of Credit.                       

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       65      Chairman and Director           
David R. Greenbaum      43      President                       
   Christopher G. Bonk     40      Senior Vice President and Treasurer
Michael M. Downey       53      Senior Vice President           
David L. Sims           48      Senior Vice President           
Kevin R. Wang           37      Senior Vice President           
   John J. Silberstein     34      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 and Treasurer.                                            

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        47      Director and President          
  Mark Sawicki            32      Vice President and Chief Financial
       Officer

Kenneth L. Zakin has been an officer of NYRES1 since 1989.  Mark Sawicki has    
been an officer of NYRES1 since October 1990.                                   

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 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.                                                       

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 30, 1995, 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 30, 1995, 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, 1994.  For the 1994 fiscal year, $10,813.50 of the Partnership's   
net loss 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, 1994,   
there was a contingent liability of approximately $871,484 to Mendik Realty as  
a result of leasing commissions earned in 1994 and prior periods from the 34th  
Street Property, Park Avenue Property and Saxon Woods Corporate Center.  During 
1994, 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 1995.                                                  

The Shareholder 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, an 
unaffiliated company.                                                           

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    
1994, Mendik Realty earned management fees including deferred fees of $773,700  
from the Partnership and was reimbursed $515,998 for the cost of on-site        
building management salaries.                                                   

During 1994, Mendik Realty deferred certain management fees payable to it by    
the Partnership in connection with the 34th Street Property and Stamford        
Property.  During 1995, 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 1994, GMSC and BMSC earned from  
the Partnership $4,451,039 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, 1994, 1993 and         
1992 and all balances unpaid at December 31, 1994.                              

PART IV 

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

(a)     (1),(2) See page 20.                                                    

(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 1994.                               

(c)             See Index to Exhibits contained herein.                         

(d)             See page 20.                                                    

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).

Form 10-K - Item 14 (a) (1) and (2)                                             

MENDIK REAL ESTATE LIMITED PARTNERSHIP                                          

INDEX OF THE CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT          
SCHEDULES                                                                       

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, 1994 and 1993                      F-2             

Consolidated Statements of Operations                           
for the years ended                                             
December 31, 1994, 1993 and 1992                F-3             

Consolidated Statements of Partners'                            
Capital (Deficit) for the years ended                           
December 31, 1994, 1993 and 1992                F-3             

Consolidated Statements of Cash Flows                           
for the years ended                                             
December 31, 1994, 1993 and 1992                F-4             

Notes to Consolidated Financial Statements      F-5             

Schedule III - Real Estate and                                  
accumulated depreciation                        F-18            

 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.          

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:  March 31, 1995   BY:     s/David R. Greenbaum/                           
Name:   David R. Greenbaum      
Title:  President               

      BY:     NY Real Estate Services 1 Inc.
General Partner 

Date:  March 31, 1995   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:  March 31, 1995   BY:     s/Kenneth L. Zakin/                             
Name:   Kenneth L. Zakin        
Title:  Director and President  

Date:  March 31, 1995   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:  March 31, 1995   BY:     s/Bernard H. Mendik/                            
Name:   Bernard H. Mendik       
Title:  Chairman and Director   

Date:  March 31, 1995   BY:     s/David R. Greenbaum/                           
Name:   David R. Greenbaum      
Title:  President               

Date:  March 31, 1995   BY:     s/Christopher G. Bonk/                          
Name:   Christopher G. Bonk     
           Title:  Senior Vice President 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 consolidated financial statements 
are free of material misstatement.  An audit includes examining, on a test      
basis, evidence supporting the amounts and disclosures in the consolidated      
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 at December 31, 1994 and 1993, and 
the results of their operations and their cash flows for each of the years in   
the three-year period ended December 31, 1994 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                                                           
February 15, 1995                                                               

Consolidated Balance Sheets                                                     
December 31, 1994 and 1993                                                      

Assets                                          1994                    1993    

Real estate investments, at cost:                                               
    Land                          $   27,137,084          $   27,137,084
    Buildings and improvements       203,335,698             200,255,154

                                     230,472,782             227,392,238
Less-accumulated depreciation            (49,536,517)            (44,575,753)   

                                     180,936,265             182,816,485

Properties held for disposition            5,700,000              18,950,000    

Cash and cash equivalents                  8,347,080              10,346,684    
Restricted cash                            2,111,117               2,390,734    
Rents and other receivables                                                     
(net of allowance for                                                           
doubtful accounts of $618,832                                                   
in 1994 and $211,291 in 1993)                774,028                 796,644    
Deferred rent receivable                  14,508,937              14,366,146    
Other assets, net of accumulated                                                
amortization of $5,038,398 in                                                   
1994 and $5,035,517 in 1993                8,090,275               8,131,577    

            Total Assets          $  220,467,702          $  237,798,270

Liabilities and Partners' Capital                                               

Liabilities:                                                                    
Accounts payable and                                            
    accrued expenses              $    2,781,817          $    1,335,734
    Due to affiliates                  2,263,552               1,349,919
    Security deposits payable          1,168,590               1,007,873
    Accrued interest payable           2,985,200               2,090,609
    Mortgage and notes payable        94,680,836             107,042,677
    Deferred interest payable                 --                 798,777

            Total Liabilities        103,879,995             113,625,589

Minority interest                         41,535,027              42,946,374    

Partners' Capital (Deficit):                                                    
     General Partners                  (1,487,096)             (1,425,360)
     Special Limited Partner             (471,998)               (471,998)
Limited Partners (395,169                                       
    units outstanding)                77,011,774              83,123,665

Total Partners'                                 
            Capital                   75,052,680              81,226,307

Total Liabilities                               
            and Partners' Capital $  220,467,702          $  237,798,270

Consolidated Statements of Operations                                           
For the years ended December 31, 1994, 1993 and 1992                            

Income                          1994                1993                1992    

Rent                    $ 33,708,412        $ 34,333,599        $ 34,094,669    
Gain on foreclosure        5,564,391                  --                  --    
Interest                     298,457             282,740             342,409    

    Total Income      39,571,260          34,616,339          34,437,078

Expenses                                                                        

Property operating        21,097,441          22,408,960          21,426,266    
Depreciation and                                                                
amortization              10,706,220          10,498,610          12,730,570    
Interest                  10,977,325          10,194,343          10,090,564    
General and                                                                     
administrative               364,286             472,146             466,505    
Unrealized loss on                                                              
properties held                                                                 
for disposition            4,010,962           4,240,608          43,166,559    

    Total Expenses    47,156,234          47,814,667          87,880,464

Loss before minority                                                            
interest                  (7,584,974)        (13,198,328)        (53,443,386)   
Minority interest in                                                            
loss of consolidated                                                            
venture                    1,411,347           1,791,780           1,027,694    

 Net Loss            $ (6,173,627)       $(11,406,548)       $(52,415,692)

Net Loss Allocated:                                                             

To the General                                                                  
Partners                $    (61,736)       $   (114,065)       $   (524,156)   
To the Limited Partners   (6,111,891)        (11,292,483)        (51,891,536)   

                     $ (6,173,627)       $(11,406,548)       $(52,415,692)

Per limited                                                                     
partnership unit                                                                
(395,169) outstanding    $    (15.47)       $     (28.58)       $    (131.31)   

Consolidated Statements of Partners' Capital (Deficit)                          
For the years ended December 31, 1994, 1993 and 1992                            

                                   Special
                  Limited        General        Limited        Total
                      Partners'      Partners'      Partner's      Partners'

Balance at                                                                      
December 31, 1991 $ 146,307,684     $   (787,139)   $  (471,998) $ 145,048,547  
Net loss            (51,891,536)        (524,156)            --    (52,415,692) 

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  

Consolidated Statements of Cash Flows                                           
For the years ended December 31, 1994, 1993 and 1992                            

Cash Flows from                                                                 
Operating Activities:           1994                1993                1992    

Net loss               $  (6,173,627)      $ (11,406,548)      $ (52,415,692)   
Adjustments to                                                                  
reconcile net loss to                                                           
net cash provided by                                                            
operating activities:                                                           
Depreciation and                                                          
amortization           10,706,220          10,498,610          12,730,570 
Gain on foreclosure    (5,564,391)                 --                  -- 
Minority interest in                                                      
loss of consolidated                                                      
venture                (1,411,347)         (1,791,780)         (1,027,694)
Provision for losses                                                      
on rents and                                                              
receivables               426,994                  --                  -- 
Unrealized loss on                                                        
properties held for                                                       
disposition             4,010,962           4,240,608          43,166,559 
Increase (decrease)                                                       
in cash arising from                                                      
changes in operating                                                      
assets and liabilities:                                                   
   Restricted cash       279,617            (475,920)            509,771
Rent and other                                                    
    receivables          (440,311)          1,010,411            (105,439)
Deferred rent                                                     
    receivable           (344,889)           (729,445)           (908,816)
   Prepaid expenses           --                  --             333,021
    Other assets       (1,866,041)         (1,806,549)         (1,141,102)
Accounts payable                                                  
and accrued                                                       
   expenses            1,269,494            (563,977)             59,024
   Due to affiliates     913,633             843,132             196,493
Accrued interest                                                  
   payable             2,682,521           1,040,181             279,400
Security deposits                                                 
   payable               160,717             440,238             115,741
Deferred interest                                                 
   payable                    --              75,791              31,985

Net cash provided by                                                            
operating activities       4,649,552           1,374,752           1,823,821    

Cash Flows from Investing Activities:                                           

Additions to real                                                           
estate investments      (6,787,315)         (2,845,613)         (3,408,765) 

Net cash used for                                                               
investing activities      (6,787,315)         (2,845,613)         (3,408,765)   

Cash Flows from Financing Activities:                                           

Minority interest -                                                         
cash distribution               --                  --          (1,311,337) 
Proceeds from mortgage                                                      
note payable               138,159           1,388,175           2,598,075  

Net cash provided by                                                            
financing activities         138,159           1,388,175           1,286,738    

Net decrease in cash                                                            
and cash equivalents      (1,999,604)            (82,686)           (298,206)   
Cash and cash equivalents                                                       
at beginning of period    10,346,684          10,429,370          10,727,576    

Cash and cash equivalents                                                       
at end of period       $   8,347,080        $ 10,346,684        $ 10,429,370    

Supplemental Disclosure of Cash Flow Information:                               

Cash paid during the                                                            
period for interest    $   8,294,804        $  9,154,162        $  9,779,179    

Non-Cash Disclosure of Financing Activity:                                      

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

Notes to Consolidated Financial Statements                                      
December 31, 1994, 1993, and 1992                                               

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 18, 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 for the foreseeable 
future because rental rate increases negotiated in leases signed in earlier     
years have offset the lower market rental rates reflected in the leases         
recently signed by the Partnership.  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           
property's cash reserves which at year-end 1994 were approximately $4.5 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.                                              

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 loan.  The indebtedness secured by the Park      
Avenue Property currently matures in December 1998 (or December 1996 at the     
option of the lender).  The Partnership expects, as the maturity of the loan    
approaches, to commence negotiations to extend the existing loan, to seek       
refinancing or sell the property.  However, as a result of the current lack of  
liquidity in the financial marketplace, no assurances can be made that the      
Partnership will be able to extend with the existing lender or refinance with a 
new lender, on terms acceptable to the Partnership or at all.  Additionally,    
the lack of liquidity may hamper the Partnership's ability to secure a buyer    
for the property at a price acceptable to the Partnership.                      

The property was 92% and 89% leased at December 31, 1994 and 1993,              
respectively.  During the first quarter of 1995, the Partnership executed a     
lease for 33,000 square feet, bringing the property's leased rate to 94%.       

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 1995.  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 million based upon the most      
recent appraisal of the Saxon Woods Corporate Center which as of December 31,   
1994 was $15 million.  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, 1994, the Partnership had borrowed        
$4,680,836 under the Saxon Woods Line of Credit.  The Partnership has made      
commitments to borrow an additional $364,000 which would increase the total     
borrowings on the Saxon Woods Line of Credit to $5,044,836.                     

The indebtedness secured by the Saxon Woods Corporate Center currently matures  
in September 1996.  The Partnership expects, as the maturity of the loan        
approaches, to commence negotiations to extend the existing loan, to seek       
refinancing or sell the property.  However, as a result of the current lack of  
liquidity in the financial marketplace, no assurances can be made that the      
Partnership will be able to sell the property or extend with the existing       
lender or refinance with a new lender, on terms acceptable to the Partnership   
or at all.                                                                      

The property was 78% and 72% occupied at December 31, 1994 and 1993,            
respectively.                                                                   

34th Street Property - 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 (48% 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 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.  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 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.  Both of these provisions will     
remain in effect pursuant to the terms of the forbearance agreement with FNBC.  
Through December 31, 1994, Mendik Realty has deferred approximately $906,000 in 
leasing commissions and management fees with respect to the 34th Street         
Property.  Additionally, the forbearance agreement requires the Partnership to  
deposit all receipts from the Property in a lockbox at FNBC.  FNBC must approve 
all releases from the lockbox to fund property costs.  As of December 31, 1994, 
approximately $1 million was in the lockbox account maintained at FNBC and      
available to pay ground rent and real estate taxes on January 1, 1995.          

During 1992, the cash flow from the 34th Street Property did not cover its debt 
service obligations after payment of operating expenses, and it was not         
expected to meet its debt service obligations in 1993.  As a result, in order   
to conserve the Partnership's limited working capital reserves and induce The   
First National Bank of Chicago ("FNBC"), the Property's lender, to modify the   
mortgage's terms, the Partnership suspended its interest payments to FNBC       
beginning in September 1992.  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's failure to pay interest.  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 allows 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 will be permitted to make 
interest payments to FNBC only to the extent of available cash flow from the    
34th Street Property.  Since the forbearance agreement went into effect, the    
Partnership has not made any interest payments to FNBC.  As of December 31,     
1994, there was $15 million of principal and approximately $2.3 million of      
accrued interest outstanding on the 34th Street Line of Credit. The forbearance 
agreement with FNBC provides the Partnership with an opportunity to pay off the 
34th Street Line of Credit at a substantial discount while at th e same time    
establishing a cost-effective means to ensure an orderly and efficient transfer 
of the Property to FNBC in the event the 34th Street Line of Credit cannot be   
paid off.  The Partnership has no assurances that it will be able to pay off    
the 34th Street Line of Credit and any such pay off will depend on numerous     
factors.  Chief among these is the fact that many traditional sources of real   
estate financing such as banks, insurance companies and pension funds have      
dramatically curtailed their investment in commercial office properties.        
Consequently, only a limited number of investors is likely to be available.  As 
a result, the General Partners are seeking to obtain either debt or equity      
financing even if such financing would entail the Partnership's transferring    
all or a portion of its interest in the property to the party providing the     
financing.                                                                      

As an alternative to refinancing the debt, the General Partners would consider  
selling the property for a price sufficient to pay off the debt.  In the event  
the Partnership obtains from a third party an offer to purchase the property or 
provide financing of less than the $6 million required by FNBC, the Partnership 
would explore with FNBC a pay off at a further discount below the $6 million.   
Should the Partnership be unable to pay off the 34th Street Line of Credit      
through a sale of the property or a refinancing by June 30, 1995 or should a    
further extension of the forbearance agreement not be obtained, the forbearance 
agreement provides that the Partnership will assign its interest in the         
property and in the ground lease to the property to FNBC, at FNBC's election,   
in lieu of foreclosure.  Should this assignment occur, the Partnership will     
lose its investment in the property.                                            

The property was 65% and 64% occupied at December 31, 1994 and 1993,            
respectively.  Subsequent to the end of 1994, a tenant occupying the entire     
15th floor, or approximately 4% of the building, abandoned its space in the     
property in default of its lease and the lease was subsequently terminated by   
the Partnership.  The Partnership is currently attempting to re-lease this      
space.                                                                          

Stamford Property - The Partnership previously restructured the non-recourse    
loan secured by the Stamford Property in 1991.  As part of the terms of the     
restructured loan, Mendik Corporation and an affiliate of NYRES1 loaned in each 
of 1991, 1992 and 1993 $50,000 and $110,000, respectively, to the Partnership.  
The loans were required to be deposited in an escrow account.  During the first 
quarter of 1994, the balance of these funds totalling approximately $280,000    
was transferred from restricted cash to operating cash and used to pay costs    
and expenses related to the Stamford Property.  As part of the restructured     
agreement, Mendik Realty also agreed to defer its management fees of            
approximately $70,000 a year in connection with the Stamford Property in each   
of calendar years 1991, 1992 and 1993.  Mendik Realty continued to defer its    
management fees in 1994, although it had no obligation to do so.                

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 in the hope that the Stamford real estate market would recover and     
that, as leases at the Property expired, the Partnership would be able to enter 
into new or renewal leases at rental rates in excess of the rates being paid by 
existing tenants under current leases.  However, the Stamford real estate       
market continued to deteriorate resulting in a further erosion of market lease  
rates.  The cash flow from the Stamford Property, together with the loans by    
Mendik Corporation and an affiliate of NYRES1 and the management fee deferrals  
by Mendik Realty, were sufficient to cover the Property's operating expenses    
and debt service obligations through 1993.  However, upon the expiration of a   
43,100 square foot lease in December 1993 with the property's largest tenant    
D&B, the Partnership entered into a new lease effective January 1, 1994 with    
D&B at a significantly reduced rental rate reflecting the deterioration in the  
market.  As a result, as expected, 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.   A further reduction in the property's cash flow occurred when the       
Partnership's lease with ADP for 34,700 square feet expired on June 30, 1994    
and ADP signed a renewal lease for only 3,500 square feet.  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 New York Life in lieu of          
foreclosure.  The transfer resulted in the loss of the Partnership's investment 
in the prop erty; 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 as compared to 60% occupied at December 31, 1993.             

3. Summary of Significant Accounting Policies                                   

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% 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 25 to 35 years.       
Depreciation of personal property is computed under the straight-line method    
over an estimated useful life ranging from 5 to 10 years. Tenant improvements   
are amortized over the respective lease terms.                                  

During the latter part of 1992 certain events occurred which caused the General 
Partners to conclude that the Partnership may be unable to hold the 34th Street 
and Stamford properties on a long term basis.  As a result, the Partnership     
accounted for each of these properties as held for disposition.  Accordingly,   
as of December 31, 1993, these properties were carried at the lower of their    
depreciated cost or estimated market value. On December 29, 1994, the deed to   
the Stamford property was transferred to New York Life in lieu of a foreclosure 
sale.  As of December 31, 1994, the carrying value of the 34th Street Property  
was further reduced to reflect the lower of its depreciated cost or estimated   
market value.                                                                   

Reclassifications - Certain 1993 and 1992 amounts have been reclassified to     
conform with the financial statement presentation used in 1994.                 

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 Commissions - Leasing commissions are capitalized and amortized over    
the respective lease terms.                                                     

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.                                           

Cash and Cash Equivalents - For the purposes of the statements of cash flows,   
cash and cash equivalents consist of short-term, highly liquid investments      
which have maturities of three months or less from the date of issuance.        

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

4. The Partnership Agreement                                                    
Taxable income and all depreciation for any fiscal year shall be allocated in   
substantially the same manner as net cash from operations except that           
depreciation allocated to the limited partners will be allocated solely to the  
Class A units (for taxable investors). 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 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 51% of the Partnership's rental   
income in 1994.  See Note 2 for leasing activity.                               

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.                      

The Saxon Woods Corporate Center In 1986, the Partnership acquired Saxon Woods  
Corporate Center, two office buildings located in Harrison, New York containing 
an aggregate of approximately 225,000 net rentable square feet (based on        
current standards of measurement), from an affiliate of 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 $15,000,000 at December 31, 1994 and December 31, 
1993.                                                                           

Major tenants at the Saxon Woods Corporate Center are Commodity Quotations      
which leases 24,540 square feet (10% 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 (12% of   
the total leasable area) under a lease expiring November 30, 2004.  Commodity   
Quotations and Icon Capital Corp represented approximately 14% and 16%,         
respectively, of the property's rental income in 1994.                          

The 34th Street Property In 1987, the Partnership acquired the 34th Street      
Property, an eighteen-story office building containing approximately 627,000    
net rentable square feet (based on current standards of measurement) from an    
affiliate of the Partnership. The building was purchased by 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 $5,700,000 at December 31, 1994. The appraised value  
at December 31, 1993 was $9,800,000.                                            

The major tenant at the 34th Street property is the City which leases 300,000   
square feet (48% 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.  The City represented approximately  
89% of the property's total revenue in 1994.                                    

The Park Avenue Property - In 1987, the Partnership indirectly acquired from an 
affiliate an approximate 60% 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 956,000 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., an affiliate of Mendik Corporation. 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.   At December 31, 1993,  
the property was appraised at $115,000,000, and the appraised value of the      
property net of the minority interest was $68,655,000.                          

Major tenants at Two Park Avenue are Times Mirror Magazines, Inc. and its       
affiliate Newsday, Inc. which lease 262,774 square feet (28% of total leasable  
area in the property) under two leases expiring June 30, 2004 and National      
Benefit Life Insurance Company which leases 99,800 square feet (11% of total    
leasable area in the property) under a lease expiring May 30, 1998.  Times      
Mirror Magazines, Inc. and its affiliate Newsday, Inc. and National Benefit     
Life Insurance Company represented 32% and 14%, respectively, of the property's 
total rental income in 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 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 (See below) (the  Stamford Loan ).      
While the $12,500,000 principal amount exceeded the Borrowing Limitation, it    
did not exceed the Borrowing Limitation when the loan was incurred.  The loan   
was modified effective January 1, 1991 whereby one-half of the monthly interest 
payments due under the loan from January 10, 1991 to December 10, 1991 were     
deferred until July 10, 1996, the loan s maturity date, and bore interest at    
the rate of 10% per annum (collectively, the "Deferred Interest"). During the   
period from December 10, 1991 to December 10, 1993, monthly payments of         
interest only were due at the rate of 10% per annum on the principal balance of 
the note. In addition, principal amortization payments previously required to   
be paid commencing August 10, 1991 were deferred until the maturity of the      
loan. Commencing December 10, 1993 through the maturity date of the loan,       
interest was payable on the principal balance of the loan and the Deferred      
Interest at the rate of 10.3% per annum.                                        

The loan modification required that in each of calendar years 1991, 1992 and    
1993, (i) Mendik Corporation lend the Partnership $50,000, (ii) an affiliate of 
NYRES1 lend the Partnership $110,000, and (iii) Mendik Realty Company, Inc.     
defer management fees of approximately $70,000 a year payable to it in          
connection with services performed at the Stamford Property.  Mendik Realty     
continued to defer its management fees in 1994.                                 

The loans by Mendik Corporation and the affiliate of NYRES1 were required to be 
deposited in an escrow account and used only to pay building improvement costs, 
lease-up costs and operating expenses related to the Stamford Property.  During 
the first quarter of 1994, the property utilized the remaining loan funds.  The 
loans and management fee deferral by Mendik Corporation, Mendik Realty and the  
affiliate of NYRES1 are on a non-recourse basis and bear interest at the prime  
rate less 1.25%. 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 of the properties, after  
repayment of all debt secured by the property sold.                             

The Partnership failed to make full payment of debt service due commencing      
February 10, 1994 with respect to the Stamford Loan due to a decline in the     
property's revenue following the extension of D&B's lease in January 1994 at a  
rate significantly less than the rate paid previously.  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.    

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 the London Interbank Offered Rate       
("LIBOR"). The interest rate was 8.125% at December 31, 1994.  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       
million 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 and anticipated operating shortfalls. As of December 31,  
1994, the Partnership had borrowed $4,680,836 under the Saxon Woods line of     
credit and committed to borrow an additional $364,000.  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 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 is 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 shall be due and payable.  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 first, second and third mortgage loans (collectively the  Park Avenue       
Loans) to a date not earlier than December 19, 1996 upon at least 180 days      
prior notice.                                                                   

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 all of the 
loans to make a non-recourse first mortgage loan in the principal amount of     
$75,000,000.  While the $75,000,000 principal outstanding currently exceeds the 
Borrowing Limitation, it did not exceed the Borrowing Limitation when the loans 
were incurred.                                                                  

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  
matures on May 31, 1997 and provided the Partnership with the flexibility to    
draw funds at 110 basis points over 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 is  
currently prevented from borrowing any additional funds. While the $15,000,000  
principal amount outstanding currently exceeds the Borrowing Limitation and the 
appraised value, it did not exceed the Borrowing Limitation when the loan was   
incurred.                                                                       

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, under which $15 million of principal and approximately $2.3   
million of accrued interest is outstanding at December 31, 1994.  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 allows 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 will be permitted to make interest payments, based upon the         
Corporate Base Rate or the prime rate beginning March 19, 1993, to FNBC only to 
the extent of available cash flow from the 34th Street Property.  No interest   
payments have been made by the Partnership since entering into the forbearance  
agreement.  If the Partnership is not successful in obtaining the financing     
necessary to pay off the 34th Street Line of Credit by June 30, 1995, or        
obtaining a further extension, the Partnership has agreed to assign its         
interest in the property and in the ground lease to the Property to FNBC, at    
FNBC's election, in lieu of foreclosure.  This agreement provides the           
Partnership with an opportunity to pay off the 34th Street Line of Credit at a  
substantial discount while at the same time establishing a cost-effective       
means to ensure an orderly and efficient transfer of the Property to FNBC in    
the event the 34th Street Line of Credit cannot be paid off.  The Partnership   
has no assurances that it will be able to obtain the financing necessary to     
pay off the 34th Street Line of Credit and any such pay off will depend on      
numerous factors including general market conditions.  Should the Partnership   
be unable to complete a refinancing, it might result in the loss of the         
Partnership's investment in the Property.                                       

The deferral of management fees and leasing commissions by Mendik Realty will   
remain in effect pursuant to the terms of the forbearance agreement.            
Additionally, the forbearance agreement gives FNBC control of the property's    
cash flow by requiring the Partnership to maintain a lockbox at FNBC.  FNBC     
will approve all releases of funds from the lockbox.  As of December 31, 1994,  
approximately $1 million was in the lockbox account maintained by FNBC,         
available to pay real estate taxes and ground rent due on January 1, 1995.      

Mortgage and notes payable at December 31, 1994 and 1993 are summarized as      
follows:                                                                        

                                                1994                1993

    Secured by Stamford Property         $        --        $ 12,500,000

Secured by Saxon Wood Corporate                                 
Center, bearing interest at                                     
    a blended rate of 7.139%               4,680,836           4,542,677

Secured by Park Avenue Property,                                
bearing interest at a blended                                   
    rate of 10.159%                       75,000,000          75,000,000

Secured by 34th Street Property,                                
bearing interest at a blended                                   
rate of 7.245%.  The loan is                                    
    currently in default.                 15,000,000          15,000,000

                                         $94,680,836        $107,042,677

The following summarizes the scheduled maturities of the Partnership's mortgage 
and notes payable.  The mortgage and notes payable secured by the 34th Street   
property are presented as maturing in 1995 due to its default status.           

Year            Amount                                          

1995         $ 15,000,000                                       
1996            4,680,836                                       
1997            -                                               
1998           75,000,000                                       

$ 94,680,836                          

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 $79,680,836.           

7. Rental Income Under Operating Leases                                         
Based upon the leases currently in effect, future minimum rental income from    
operating leases of the Partnership's properties (which are not cancellable by  
their terms) as of December 31, 1994 is as follows:                             

Year            Amount                                          

1995         $  29,499,583                                      
1996            24,635,930                                      
1997            23,562,798                                      
1998            20,794,640                                      
1999            17,912,550                                      
Thereafter      73,118,403                                      

$ 189,523,904                         

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, 1994, 1993, and 1992,  
these amounts were $3,282,904, $3,524,411, and $4,390,234, respectively, which  
amounts are included in rental income.                                          

8. Transactions With General Partners and Affiliates                            

Cash reflected on the Partnership's balance sheet at December 31, 1994 was on   
deposit with an affiliate of a general partner.  Cash reflected on the          
Partnership's balance sheet at December 31, 1993 was on deposit with a          
non-affiliate.                                                                  

The following is a summary of the amounts paid or accrued to the general        
partners and their affiliates during the years ended December 31, 1994, 1993    
and 1992 and all balances unpaid at December 31, 1994:                          

Due To/(From)     
Affiliates    
                    at December 31,            Paid or Accrued
                                   1994       1994       1993       1992

out of pocket expenses (A)      $        -- $       -- $      981 $    5,803    

administrative salaries                                                         
and expenses (B)                     47,490     86,021     65,254     66,160    

management fees and building                                                    
personnel salaries (C)              957,403  1,289,698  1,227,744  1,383,430    

cleaning and related                                                            
services (D)(E)                     (92,825) 4,072,233  4,166,977  3,607,725    

security (F)                             --    378,806    414,219         --    

leasing commissions (G)             871,484    555,147    770,710     61,932    

loans (H)                           480,000         --         --         --    

                             $2,263,552 $6,381,905 $6,645,885 $5,125,050

(A)     The Shareholder 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.                                  

(B)     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.                                        

(C)     Mendik Realty Company, Inc. ("Mendik Realty"), an affiliate of Mendik   
Corporation, 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, 1994, 1993 and 1992 totalled    
$515,998, $527,019 and $583,571, respectively.  Management fees paid or payable 
to Mendik Realty totalled $773,700, $700,725 and $799,859 for the years ended   
December 31, 1994, 1993 and 1992, respectively.  These amounts are included in  
the table.  Certain management fees included in the above amounts are being     
deferred as discussed in Note 6.                                                

(D)     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 $3,278,621, $3,500,062 and $2,910,428 for the years ended      
December 31, 1994, 1993 and 1992, respectively.  The indicated amounts above    
include salaries and benefits of the property engineering staff, which was      
transferred from the payroll of Mendik Realty to BMSC's payroll during the      
first quarter of 1992.  The salaries and benefits for these employees were      
$687,948, $584,942 and $581,112 in 1994, 1993 and 1992, 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.                                                              

(E)     BMSC provides metal and marble cleaning services to the Partnership at  
its cost (plus an allocable share of overhead expenses), which were $105,664,   
$81,973 and $116,185 in 1994, 1993 and 1992, respectively. These amounts are    
included in the table.                                                          

(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 1994 and 1993 totalled $378,806 and $414,219, respectively.  This      
amount is included in the table. Security services paid to unaffiliated third   
parties for the years ended December 31, 1993 and 1992 were $61,609 and         
$545,365, respectively.  These amounts are not included in the table.           

(G)     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, 1994, there were deferred        
commissions, on a consolidated basis, of approximately $871,484 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.               

(H)     Mendik Corporation loaned the Partnership $150,000, and an affiliate of 
NYRES1 loaned the Partnership $330,000 pursuant to the Stamford loan            
modification discussed in Note 6.                                               

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

                   Year ended December 31,

                            1994                1993                1992

Financial statement                                                             
consolidated net loss    $ 6,173,627         $11,406,548         $52,415,692    

Financial statement                                                             
write down of real                                                              
estate over tax basis                                                           
write down of                                                                   
real estate               (4,010,962)         (4,240,608)        (43,166,559)   

Tax basis depreciation                                                          
over (under) financial                                                          
statement depreciation     1,115,277             971,960          (1,302,679)   

Tax basis rental income                                                         
(over) under financial                                                          
statement rental income     (132,615)            612,639             (63,668)   

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

Tax basis recognition of                                                        
loss of consolidated                                                            
venture over (under)                                                            
financial statement                                                             
recognition of loss of                                                          
consolidated venture        (272,346)            677,456             685,810    

Tax basis expenses over                                                         
(under) financial                                                               
statement expenses            78,807             (14,086)             28,067    

Interest expense                                                                
capitalized for Federal                                                         
income tax purposes          (13,507)            (38,850)            (76,561)   

Other                             --              57,584              21,569    

Federal income tax                                                              
basis net loss           $23,871,752         $ 9,432,643         $ 8,541,671    

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

             Year ended December 31,
                            1994                1993                1992

Financial statement                                                             
basis partners'                                                                 
capital                 $ 75,052,680        $ 81,226,307        $ 92,632,855    

Current year financial                                                          
statement net loss                                                              
over (under) Federal                                                            
income tax basis net                                                            
loss                     (17,698,122)          1,973,905          43,874,021    

Cumulative financial                                                            
statement net loss                                                              
over Federal income                                                             
tax basis net loss        59,078,187          57,104,282          13,230,261    

Federal income tax                                                              
basis partners'                                                                 
capital                 $116,432,745        $140,304,494        $149,737,137    

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, 1994 

                                             Initial Cost to Partnership

                                                           Buildings and
Description                  Encumbrances           Land        Improvements    

Commercial Properties:                                                          
Partnership owned:                                                              

500/600 Mamaroneck Ave.                                                         
Harrison, NY                $   4,680,836   $         --      $   21,282,805    

Consolidated Venture:                                                           

Two Park Avenue                                                                 
New York, NY                   75,000,000     27,140,745         130,411,744    

                        $  79,680,836   $ 27,140,745      $  151,694,549

Commercial Property                                                             
held for disposition:                                                           
Partnership owned:                                                              

330 West 34th Street                                                            
New York, NY                $  15,000,000   $         --      $   35,611,400    

MENDIK REAL ESTATE LIMITED PARTNERSHIP
and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 
(continued) 

December 31, 1994 

                Cost Capitalized
                      Subsequent
                  To Acquisition

                                       Buildings and          Write-down
Description                          Land   Improvements          Adjustment    

Commercial Properties:                                                          
Partnership owned:                                                              

500/600 Mamaroneck Ave.                                                         
Harrison, NY                $          --   $  9,122,562      $           --    

Consolidated Venture:                                                           

Two Park Avenue                                                                 
New York, NY                       (3,661)    42,518,587                  --    

                        $      (3,661)  $ 51,641,149      $           --

Commercial Property                                                             
held for disposition:                                                           
Partnership owned:                                                              

330 West 34th Street                                                            
New York, NY                $          --   $ 10,063,369      $  (39,974,769)   

MENDIK REAL ESTATE LIMITED PARTNERSHIP
and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 
(continued) 

December 31, 1994 

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         $         --   $ 30,405,367   $ 30,405,367  $  9,976,851   

Consolidated Venture:                                                           

Two Park Avenue                                                                 
New York, NY           27,137,084    172,930,331    200,067,415    39,559,666   

                  $ 27,137,084   $203,335,698   $230,472,782  $ 49,536,517

Commercial Property                                                             
held for disposition:                                                           
Partnership owned:                                                              

330 West 34th Street                                                            
New York, NY         $         --   $  5,700,000   $  5,700,000  $         --   

MENDIK REALESTATE LIMITED PARTNERSHIP 
and Consolidated Venture

Schedule III - Real Estate and Accumulated Depreciation 
(continued) 

December 31, 1994 

                                                           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    

Consolidated Venture:                                                           

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

Commercial Property                                                             
held for disposition:                                                           
Partnership owned:                                                              

330 West 34th Street                                                            
New York, NY                     1925          04/23/87             25 years    

For Federal income tax purposes, the basis of land, building and improvements   
wholly owned by the partnership at December 31, 1994 and 1993 is $77,192,928    
and $117,291,806, respectively.                                                 

A reconciliation of the carrying amount of real estate and accumulated          
depreciation for the years ended December 31, 1994, 1993 and 1992:              

Real Estate investments:          1994               1993             1992      

Beginning of year         $227,392,238       $227,087,155     $308,743,581      
Additions                    6,235,648          1,491,115        3,408,765      
Deletions                   (3,155,104)        (1,186,032)     (85,065,191)     

End of year               $230,472,782       $227,392,238     $227,087,155      

Accumulated Depreciation:                                                       

Beginning of year         $ 44,575,753       $ 37,519,673     $ 44,749,922      
Depreciation expense         8,115,868          8,242,112       11,668,383      
Deletions                   (3,155,104)        (1,186,032)     (18,898,632)     

End of year               $ 49,536,517       $ 44,575,753     $ 37,519,673      

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