EXHIBIT INDEX
Exhibit Number Description
99.1 Reckson Associates Realty Corp. Earnings
Press Release dated May 5, 2004
4
Exhibit 99.1
PRESS RELEASE
- -------------
Reckson Associates Realty Corp.
225 Broadhollow Road
Melville, NY 11747
(631) 694-6900 (Phone)
(631) 622-6790 (Facsimile)
Contact: Scott Rechler, CEO
Michael Maturo, CFO
- ------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
Reckson Announces First Quarter 2004 Results
Completes Record Amount of Leasing
Improves Portfolio Occupancy by 2.4%
(MELVILLE, NEW YORK, May 5, 2004) - Reckson Associates Realty Corp. (NYSE: RA)
today reported diluted funds from operations ("FFO") of $42.6 million or $.58
per share for the first quarter of 2004, as compared to FFO of $44.5 million
or $.59 per share for the first quarter of 2003.
Commenting on the Company's performance, Scott Rechler, Reckson's President
and Chief Executive Officer, stated, "Our strong first quarter performance
reflects our continued focus on executing our business plan and capitalizing
on recovering market conditions. During the first quarter, we achieved a
record amount of office leasing, increasing our occupancy to 93.3%, including
a 75% tenant renewal rate. Additionally, we further strengthened our balance
sheet with a series of opportunistic capital market activities including the
issuance of $150 million of common equity and $150 million of seven-year
senior unsecured notes at an effective interest rate of 5.196%. Finally, we
continued to enhance our corporate governance with the appointment of four
additional, highly qualified, independent directors."
Net income allocable to common shareholders totaled $16.0 million in the first
quarter of 2004, including $5.2 million related to gain on sales of real
estate from discontinued operations, as compared to $8.7 million in the first
quarter of 2003. Diluted net income per common share, commonly referred to as
earnings per share ("EPS"), totaled $.26 per share in the first quarter of
2004, as compared to $.15 per share in the first quarter of 2003.
A reconciliation of FFO to net income allocable to common shareholders, the
GAAP measure the Company believes to be the most directly comparable, is in
the financial tables accompanying this press release.
Summary Portfolio Performance
- -----------------------------
The Company reported same property office occupancy at March 31, 2004 of
93.5%. This compares to 92.5% at December 31, 2003 and 92.9% at March 31,
2003. The Company reported same property portfolio occupancy of 92.7% at March
31, 2004, as compared to 91.1% at December 31, 2003 and 91.6% at March 31,
2003.
The Company also reported office occupancy at March 31, 2004 of 93.3%. This
compares to 91.5% at December 31, 2003 and 92.8% at March 31, 2003. The
Company reported portfolio occupancy of 92.6% at March 31, 2004, as compared
to 90.2% at December 31, 2003 and 91.4%, excluding the Long Island industrial
properties, at March 31, 2003.
Rent performance on renewal and replacement space during the first quarter of
2004 was (1.8%) (cash) and 6.0% (including straight-line rent) in the office
portfolio.
Portfolio same property net operating income (property operating revenues less
property operating expenses) ("NOI") before termination fees for the first
quarter of 2004 was 1.5% (cash) and 0.4% (including straight-line rent),
compared to the first quarter of 2003. Office same property NOI before
termination fees for the first quarter of 2004 was 1.1% (cash) and 0%
(including straight-line rent), compared to the first quarter of 2003.
Net of minority interests in joint ventures, portfolio same property NOI
before termination fees for the first quarter of 2004 was 2.3% (cash) and 1.1%
(including straight-line rent), compared to the first quarter of 2003. Net of
minority interests in joint ventures, office same property NOI before
termination fees for the first quarter of 2004 was 1.9% (cash) and 0.6%
(including straight-line rent), compared to the first quarter of 2003.
Other Highlights
- ----------------
Leasing Activity
- Executed 61 leases totaling 885,553 square feet during the first
quarter of 2004
- Executed office leasing transactions that resulted in a 75% renewal
rate during the first quarter of 2004
Investment/Disposition Activity
- Closed on 1185 Avenue of the Americas, NYC, for approximately $321
million
- Sold three operating properties for approximately $36.6 million,
representing a blended cap rate of 7.0% on forecasted 2004 NOI net
of joint venture partner's interest
- Sold one parcel of land for $1.8 million
- Purchased the remaining 50% interest in a junior mezzanine loan
secured by a 1.1 million square foot Class A office complex located
on Long Island for $15.5 million
Capital Market Activity
- Sold 5.5 million shares of common stock at an effective price of
$27.35 per share
- Redeemed $50 million outstanding 8.85% Series B preferred stock at
102% of par for shares of common stock valued at $26.05 per share
- Issued $150 million of 5.15% seven-year senior unsecured notes with
an effective interest rate of 5.196% - Repaid $100 million of 7.4%
senior unsecured notes at maturity on March 15, 2004 - Executed a
six-month treasury lock hedge agreement ($100 million notional
amount) on 10-year treasury at an effective rate of 3.94% including
carry cost yield
Corporate Governance
- Announced John ("Jack") Ruffle joined the Board of Directors and was
appointed Chairman of the Audit Committee
- Adopted policy which requires independent directors to own a minimum
equity stake in the Company of $100,000 of common stock
- Adopted policy which requires at least one independent director to
rotate off of the Board every three years
Earnings Guidance
- -----------------
On Thursday, May 6th, during the Company's quarterly earnings conference call,
management will discuss earnings guidance for 2004.
Non-GAAP Financial Measures
- ---------------------------
Funds from Operations ("FFO")
- -----------------------------
The Company believes that FFO is a widely recognized and appropriate measure
of performance of an equity REIT. Although FFO is a non-GAAP financial
measure, the Company believes it provides useful information to shareholders,
potential investors and management. The Company computes FFO in accordance
with standards established by the National Association of Real Estate
Investment Trusts ("NAREIT"). FFO is defined by NAREIT as net income or loss,
excluding gains or losses from sales of depreciable properties plus real
estate depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash generated from
operating activities in accordance with GAAP and is not indicative of cash
available to fund cash needs. FFO should not be considered as an alternative
to net income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity. Since all companies do not
calculate FFO in a similar fashion, the Company's calculation of FFO presented
herein may not be comparable to similarly titled measures as reported by other
companies.
Reckson Associates Realty Corp. is a self-administered and self-managed real
estate investment trust (REIT) specializing in the acquisition, leasing,
financing, management and development of Class A office properties.
Reckson's core growth strategy is focused on the markets surrounding and
including New York City. The Company is one of the largest publicly traded
owners, managers and developers of Class A office properties in the New York
Tri-State area, with 84 properties comprised of approximately 15.3 million
square feet either owned or controlled, or under contract. For additional
information on Reckson Associates Realty Corp., please visit the Company's web
site at www.reckson.com.
Conference Call and Webcast
- ---------------------------
The Company's executive management team, led by President and Chief Executive
Officer Scott Rechler, will host a conference call outlining first quarter
results on Thursday, May 6, 2004 at 2:00 p.m. EST. The conference call may be
accessed by dialing (800) 700-7860 (internationally (651) 291-0900). No
passcode is required. The live conference call will also be webcast in a
listen-only mode on the Company's web site at www.reckson.com, in the Investor
Relations section, with an accompanying slide show presentation outlining the
Company's first quarter results.
A replay of the conference call will be available telephonically from May 6,
2004 at 8:00 p.m. EST through May 14, 2004 at 11:59 p.m. EST. The telephone
number for the replay is (800) 475-6701, passcode 727014. A replay of the
webcast of the conference call will also be available via the Company's web
site.
Financial Statements Attached
- -----------------------------
The Supplemental Package and Slide Show Presentation outlining the Company's
first quarter 2004 results will be available prior to the Company's quarterly
conference call on the Company's web site at www.reckson.com in the Investor
Relations section, by e-mail to those on the Company's distribution list, as
well as by mail or fax, upon request. To be added to the Company's e-mail
distribution list or to receive a copy of the quarterly materials by mail or
fax, please contact Susan McGuire, Investor Relations, Reckson Associates
Realty Corp., 225 Broadhollow Road, Melville, New York 11747-4883,
investorrelations@reckson.com or (631) 622-6746.
Certain matters discussed herein, including guidance concerning the Company's
future performance, are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Although the Company
believes the expectations reflected in such forward-looking statements are
based on reasonable assumptions, forward-looking statements are not guarantees
of results and no assurance can be given that the expected results will be
delivered. Such forward-looking statements are subject to certain risks,
trends and uncertainties that could cause actual results to differ materially
from those expected. Among those risks, trends and uncertainties are the
general economic climate, including the conditions affecting industries in
which our principal tenants compete; financial condition of our tenants;
changes in the supply of and demand for office properties in the New York
Tri-State area; changes in interest rate levels; changes in the Company's
credit ratings; changes in the Company's cost of and
access to capital; downturns in rental rate levels in our markets and our
ability to lease or re-lease space in a timely manner at current or
anticipated rental rate levels; the availability of financing to us or our
tenants; changes in operating costs, including utility, real estate taxes,
security and insurance costs; repayment of debt owed to the Company by third
parties (including FrontLine Capital Group); risks associated with joint
ventures; liability for uninsured losses or environmental matters; and other
risks associated with the development and acquisition of properties, including
risks that development may not be completed on schedule, that the tenants will
not take occupancy or pay rent, or that development or operating costs may be
greater than anticipated. For further information on factors that could impact
Reckson, reference is made to Reckson's filings with the Securities and
Exchange Commission. Reckson undertakes no responsibility to update or
supplement information contained in this press release.
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Statements of Income
(in thousands, except share amounts)
Three Months Ended
March 31,
====================================
2004 2003
------------------------------------
Property Operating Revenues:
Base rents $ 111,210 $ 94,919
Tenant escalations and reimbursements 18,095 14,017
------------------------------------
Total property operating revenues 129,305 108,936
------------------------------------
Property Operating Expenses:
Operating expenses 30,879 26,442
Real estate taxes 20,605 16,954
------------------------------------
Total property operating expenses 51,484 43,396
------------------------------------
Net Operating Income 77,821 65,540
------------------------------------
Gross Margin percentage 60.2% 60.2%
------------------------------------
Other Income 5,777 7,365
------------------------------------
Other Expenses
Interest expense 25,661 20,097
Depreciation and amortization 29,166 28,825
Marketing, general and administrative 7,079 7,577
------------------------------------
Total other expenses 61,906 56,499
------------------------------------
Income before minority interests, preferred dividends
and distributions, gain on sales of depreciable real
estate and discontinued operations 21,692 16,406
Minority partners' interests in consolidated partnerships (6,181) (4,401)
Distributions to preferred unitholders (273) (273)
Limited partners' minority interest in the operating partnership (600) (661)
------------------------------------
Income before discontinued operations and preferred dividends 14,638 11,071
Discontinued operations (net of limited partners' minority interest)
Gain on sales of real estate 5,202 -
Income from discontinued operations 384 2,909
------------------------------------
Net income 20,224 13,980
Dividends to preferred shareholders (4,260) (5,317)
------------------------------------
Net income allocable to common shareholders $ 15,964 $ 8,663
====================================
Allocable to Class A common $ 15,964 $ 6,595
Allocable to Class B common - 2,068
------------------------------------
Net income allocable to common shareholders $ 15,964 $ 8,663
====================================
Basic weighted average common shares outstanding:
Class A common 61,363,000 48,201,000
Class B common - 9,915,000
Basic net income per weighted average common share:
Class A common stock - income (loss) from continuing operations $0.17 $0.09
Discontinued operations 0.09 0.05
------------------------------------
Basic net income per Class A common $0.26 $0.14
====================================
Class B common stock - income (loss) from continuing operations - $0.14
Discontinued operations - 0.07
------------------------------------
Basic net income per Class B common - $0.21
====================================
Diluted weighted average common shares outstanding:
Class A common 61,718,000 48,320,000
Class B common - 9,915,000
Diluted net income per weighted average common share:
Class A common $0.26 $0.14
Class B common ====================================
- $0.15
====================================
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2004 2003
----------------- --------------------
Assets: (unaudited)
Commercial real estate properties, at cost:
Land $ 380,660 $ 379,989
Buildings and improvements 2,562,883 2,215,200
Developments in progress:
Land 89,959 90,706
Development costs 71,664 68,127
Furniture, fixtures, and equipment 11,460 11,338
----------------- --------------------
3,116,626 2,765,360
Less: accumulated depreciation (490,308) (464,821)
----------------- --------------------
Investment in real estate, net of accumulated depreciation 2,626,318 2,300,539
Properties and related assets held for sale, net of accumulated
depreciation 35,099 47,590
Investments in real estate joint ventures 5,950 5,904
Investments in mortgage notes and notes receivable 55,484 54,986
Investments in service companies and affiliate loans and joint ventures 71,005 71,614
Cash and cash equivalents 86,498 22,330
Tenant receivables 8,803 11,959
Deferred rents receivable 116,760 112,133
Prepaid expenses and other assets 63,094 35,338
Contract and land deposits and pre-acquisition costs 60 20,203
Deferred leasing and loan costs (net of accumulated amortization) 68,083 64,399
-------------------- --------------------
Total Assets $ 3,137,154 $ 2,746,995
==================== ====================
Liabilities:
Mortgage notes payable $ 968,726 $ 721,635
Liabilities associated with properties held for sale 557 778
Unsecured credit facility 90,000 169,000
Senior unsecured notes 549,093 499,445
Accrued expenses and other liabilities 107,125 93,988
Dividends and distributions payable 32,870 28,290
-------------------- --------------------
Total Liabilities 1,748,371 1,513,136
-------------------- --------------------
Minority partners' interests in consolidated partnerships 234,301 233,070
Preferred unit interest in the operating partnership 19,662 19,662
Limited partners' minority interest in the operating partnership 50,471 44,518
-------------------- --------------------
304,434 297,250
-------------------- --------------------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized
Series A - 8,834,500 shares issued and outstanding 88 88
Series B - 0 and 2,000,000 shares issued and outstanding, respectively - 20
Common Stock, $.01 par value, 100,000,000 shares authorized
Class A - 66,630,805 and 58,275,367 shares issued and outstanding,
respectively 666 583
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Retained earnings 22,924 35,757
Additional paid in capital 1,129,163 968,653
-------------------- --------------------
Total Stockholders' Equity 1,084,349 936,609
-------------------- --------------------
Total Liabilities and Stockholders' Equity $ 3,137,154 $ 2,746,995
==================== ====================
Total debt to market capitalization (a): 40.0% 41.2%
==================== ====================
---------------
(a) Total debt includes the Company's pro rata share of consolidated and unconsolidated joint venture debt.
Reckson Associates Realty Corp. (NYSE: RA)
Funds From Operations
(in thousands, except per share amounts)
Three Months Ended
March 31,
===============================
2004 2003
-------------------------------
Net income allocable to common shareholders $ 15,964 $ 8,663
Add: Real estate depreciation and amortization 28,557 31,327
Minority partners' interests in consolidated partnerships 6,325 4,690
Limited partners' minority interest in the operating partnership 936 996
Less: Amounts distributable to minority partners in consolidated partnerships 8,504 6,807
Gain on sales of depreciable real estate 5,156 -
-------------------------------
Basic Funds From Operations ("FFO") 38,122 38,869
Add: Dividends and distributions on dilutive shares and units 4,484 5,590
-------------------------------
Diluted FFO $ 42,606 $ 44,459
===============================
Diluted FFO calculations:
Weighted average common shares outstanding 61,363 58,116
Weighted average units of limited partnership interest outstanding 3,551 7,276
-------------------------------
Basic weighted average common shares and units outstanding 64,914 65,392
Adjustments for dilutive FFO weighted average shares and units
outstanding:
Common stock equivalents 355 119
Series A preferred stock 7,747 7,747
Series B preferred stock - 1,919
Limited partners' preferred interest 689 661
-------------------------------
Total diluted weighted average shares and units outstanding 73,705 75,838
===============================
Diluted FFO per weighted average share or unit $ 0.58 $ 0.59
Diluted weighted average dividends per share $ 0.42 $ 0.42
Diluted FFO payout ratio 73.5% 72.4%
Reckson Associates Realty Corp. (NYSE: RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended
March 31,
==================================
2004 2003
----------------------------------
Basic Funds From Operations $ 38,122 $ 38,869
Adjustments for basic cash available for distribution:
Less: Straight line rents and other FAS 141 non-cash rent adjustments 5,032 4,018
Committed non-incremental capitalized tenant improvements and
leasing costs 9,097 8,791
Actual non-incremental capitalized improvements 1,940 2,126
----------------------------------
Basic Cash Available for Distribution ("CAD") 22,053 23,934
Add: Dividends and distributions on dilutive shares and units - -
----------------------------------
Diluted CAD $ 22,053 $ 23,934
==================================
Diluted CAD calculations:
Weighted average common shares outstanding 61,363 58,116
Weighted average units of limited partnership interest outstanding 3,551 7,276
----------------------------------
Basic weighted average common shares and units outstanding 64,914 65,392
Adjustments for dilutive CAD weighted average shares and units outstanding:
Common stock equivalents 355 119
Series A preferred stock - -
Series B preferred stock - -
Limited partners' preferred interest - -
----------------------------------
Total diluted weighted average shares and units outstanding 65,269 65,511
==================================
Diluted CAD per weighted average share or unit $ 0.34 $ 0.37
Diluted weighted average dividends per share $ 0.42 $ 0.42
Diluted CAD payout ratio 125.8% 116.2%
