SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Michael Maturo
--------------------------------------
Michael Maturo
President, Chief Financial Officer and
Treasurer
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
its General Partner
By: /s/ Michael Maturo
--------------------------------------
Michael Maturo
President, Chief Financial Officer and
Treasurer
Date: August 4, 2006
3
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, President and CFO
FOR IMMEDIATE RELEASE
- ---------------------
Reckson Announces Second Quarter 2006 Results
---------------------------------------------
Record Level Leasing Activity with 1.1 Million Square Feet of
Lease Transactions Completed in Second Quarter
(MELVILLE, NEW YORK, August 3, 2006) - Reckson Associates Realty Corp. (NYSE:
RA) today reported diluted funds from operations (FFO) of $54.4 million, or
$0.63 per share for the second quarter of 2006 including approximately $11.5
million, or $0.13 per share of lease termination fees and a $2.2 million, or
$0.03 per share charge recognized in connection with Reckson's long-term
incentive compensation plan. When adjusted for the lease termination fees and
the charge the Company reported diluted FFO of $45.1 million, or $0.53 per share
for the second quarter of 2006. This compares to diluted FFO of $49.8 million,
or $0.59 per share for the second quarter of 2005.
Reckson reported net income of $19.9 million, or diluted earnings per share
(EPS) of $0.24 for the second quarter of 2006 including $11.3 million for the
aforementioned lease termination fees and a $2.2 million charge for the
aforementioned compensation plan, as compared to $17.8 million, or diluted EPS
of $0.22 for the second quarter of 2005.
Commenting on the Company's performance, Scott Rechler, Reckson's Chief
Executive Officer, stated, "I am extremely pleased with our second quarter
results. Our record level of leasing activity during the second quarter reflects
that the New York Tri-State area markets continue to gain strength as demand for
quality office space continues to outpace supply."
Reckson is canceling its conference call scheduled for August 3, 2006 at 11:00
a.m. ET.
A reconciliation of net income to FFO is in the financial statements
accompanying this press release. Net income is the GAAP measure the Company
believes to be the most directly comparable to FFO.
Summary Portfolio Performance
- -----------------------------
Occupancy Statistics:
Same Property Overall
-------------------------------------- --------------------------------
Quarter End Economic (1) Quarter End
----------- ------------ --------------------------------
6/30/06 3/31/06 2Q'06 1Q'06 6/30/06(2) 3/31/06(2) 6/30/05
------- ------- ----- ----- ---------- ---------- -------
Total Occupancy:
Stabilized Office 94.8% 94.3% 92.8% 93.2% 94.8% 94.2% 94.3%
Stabilized Portfolio 93.7% 93.3% 91.9% 92.2% 93.7% 93.3% 93.2%
Based on Pro Rata Ownership:
Stabilized Office 94.0% 93.3% 91.7% 92.1% 94.0% 93.4% 94.1%
Stabilized Portfolio 93.1% 92.7% 91.0% 91.3% 93.1% 92.2% 92.9%
(1) Economic occupancy calculated based on weighted average space generating
rental revenue on a straight-line basis.
(2) Includes Reckson Platinum Mile portfolio acquired on December 29, 2005.
Office same property net operating income (property operating revenues less
property operating expenses) (NOI), on a pro rata ownership basis, before
termination fees, for the second quarter of 2006 increased 5.5% (on a cash
basis) and decreased (0.3)% (on a straight-line rent basis) compared to the
second quarter of 2005. Excluding the effect of the 1185 Avenue of the Americas
ground rent expense, office same property NOI, on a pro rata ownership basis,
before termination fees, for the second quarter of 2006 increased 9.1% (on a
cash basis) compared to the second quarter of 2005. Portfolio same property NOI,
on a pro rata ownership basis, before termination fees, for the second quarter
of 2006 increased 5.4% (on a cash basis) and decreased (0.4)% (on a
straight-line rent basis) compared to the second quarter of 2005.
Office same property NOI, on an overall basis, before termination fees, for the
second quarter of 2006 increased 5.9% (on a cash basis) and 1.0% (on a
straight-line rent basis) compared to the second quarter of 2005. Portfolio same
property NOI, on an overall basis, before termination fees, for the second
quarter of 2006 increased 5.8% (on a cash basis) and 0.9% (on a straight-line
rent basis) compared to the second quarter of 2005.
Other Highlights
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Leasing Activity
- ----------------
- Completed record level leasing activity, executing 109 lease
transactions encompassing 1,073,688 square feet, during the second
quarter of 2006, including the execution a long-term lease with the
National Hockey League (NHL) for 133,727 square feet at 1185 Avenue
of the Americas
- Rent performance on renewal and replacement space, on a consolidated
basis, during the second quarter of 2006 increased 24.7% (on a
straight-line rent basis) and 10.0% (on a cash basis) in the office
portfolio
- Office leasing transactions executed during the second quarter of
2006 resulted in a 79% renewal rate
Miscellaneous Corporate Activity
- --------------------------------
- Appointed Dr. Edward Casas to the Company's Board of Directors. Dr.
Casas brings a diverse background with varied industry experience to
Reckson's board. Dr. Casas is currently a Managing Director and
Practice Co-Head of Navigant Capital Advisors, where he oversees
activities for all practice areas including the Investment Banking,
Restructuring, Valuation and Lender Services advisory groups. Prior
to its acquisition by Navigant in 2005, Dr. Casas was the Founding
Member and Senior Managing Director of Casas, Benjamin & White, LLC
("CBW"), a leading mergers, acquisitions and financial restructuring
firm, where he supervised all aspects of CBW's restructuring
engagements. Dr. Casas has significant expertise in working with
large groups of creditors, boards of directors and company
managements and has led reorganizations in a breadth of industries
including business services, construction services, healthcare,
information technology, manufacturing and real estate. Dr. Casas'
previous positions include President and Chief Executive Officer of
PrimeCare International, Inc., Vice President of Mergers &
Acquisitions of Caremark International, Inc., Executive Vice
President of CES Corporation, Chairman of the Board of Mediq, Inc.
and Chairman of the Board of HQ Global.
- Announced Reckson's board of directors has authorized the
re-institution of the Company's common stock repurchase program,
which had been inactive since March 2003. Pursuant to the authority
granted by the board, the Company may repurchase up to an aggregate
of 5 million shares of its common stock.
- Relocating the Company's Long Island corporate headquarters on
August 14, 2006 to 625 Reckson Plaza, Uniondale, New York 11556,
telephone (516) 506-6000 and facsimile (516) 506-6800.
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. The Company presents FFO because it considers it
an important supplemental measure of the Company's operating performance and
believes it is frequently used by securities analysts, investors and other
interested parties in the evaluation of REITs, many of which present FFO when
reporting their results. FFO is intended to exclude GAAP historical cost
depreciation and amortization of real estate and related assets, which assumes
that the value of real estate diminishes ratably over time. Historically,
however, real estate values have risen or fallen with market conditions. As a
result, FFO provides a performance measure that, when compared year over year,
reflects the impact to operations from trends in occupancy rates, rental rates,
operating costs, development activities, interest costs and other matters
without the inclusion of depreciation and amortization, providing perspective
that may not necessarily be apparent
from net income. 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 and analysts 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 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 properties located in New York City
and the surrounding Tri-State area markets. 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, and wholly owns, has substantial interests in, or
has under contract, a total of 101 properties comprised of approximately 20.2
million square feet. For additional information on Reckson, please visit the
Company's web site at www.reckson.com.
Financial Statements Attached
- -----------------------------
The Supplemental Package and Slide Show Presentation outlining the Company's
second quarter 2006 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, Senior Vice President Investor Relations,
Reckson Associates Realty Corp., 225 Broadhollow Road, Melville, New York
11747-4883, investorrelations@reckson.com or (631) 622-6746.
Forward-Looking Statements
- --------------------------
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; 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 Balance Sheets
(in thousands, except share amounts)
June 30, December 31,
2006 2005
------------ ------------
Assets:
Commercial real estate properties, at cost:
Land $ 428,357 $ 430,064
Buildings and improvements 2,886,834 2,823,020
Developments in progress:
Land 127,309 123,761
Development costs 137,138 99,570
Furniture, fixtures, and equipment 13,208 12,738
------------ ------------
3,592,846 3,489,153
Less: accumulated depreciation (587,317) (532,152)
------------ ------------
Investments in real estate, net of accumulated depreciation 3,005,529 2,957,001
Properties and related assets held for sale, net of accumulated depreciation 68,795 194,297
Investments in real estate joint ventures 46,816 61,526
Investments in mortgage motes and notes receivable 169,784 174,612
Investments in affiliate loans and joint ventures 59,435 59,324
Cash and cash equivalents 32,103 17,468
Tenant receivables 12,804 20,196
Deferred rents receivable 147,000 138,990
Prepaid expenses and other assets 88,982 109,381
Deferred leasing and loan costs (net of accumulated amortization) 81,308 78,411
------------ ------------
Total Assets $ 3,712,556 $ 3,811,206
============ ============
Liabilities:
Mortgage notes payable $ 464,110 $ 541,382
Unsecured credit facility 92,000 419,000
Senior unsecured notes 1,254,932 980,085
Mortgage notes payable and other liabilities associated with properties held for
sale 63,839 84,572
Accrued expenses and other liabilities 118,888 120,994
Deferred revenues and tenant security deposits 70,349 75,903
Dividends and distributions payable 36,582 36,398
------------ ------------
Total Liabilities 2,100,700 2,258,334
------------ ------------
Minority partners' interests in consolidated partnerships 263,475 217,705
Preferred unit interest in the operating partnership 1,200 1,200
Limited partners' minority interest in the operating partnership 34,800 33,498
------------ ------------
299,475 252,403
------------ ------------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized - -
Common Stock, $.01 par value, 200,000,000 shares authorized
83,217,550 and 82,995,931 shares issued and outstanding, respectively 832 830
Accumulated other comprehensive income 2,186 1,819
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Retained earnings 63,002 56,868
Additional paid in capital 1,314,853 1,309,444
------------ ------------
Total Stockholders' Equity 1,312,381 1,300,469
------------ ------------
Total Liabilities and Stockholders' Equity $ 3,712,556 $ 3,811,206
============ ============
Total debt to market capitalization (a): 35.2% 40.1%
============ ============
- ---------
(a) Total debt includes the Company's pro rata share of consolidated and
unconsolidated joint venture debt.
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Statements of Income
(in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
============================= =============================
2006 2005 2006 2005
----------------------------- -----------------------------
Property Operating Revenues:
Base rents $ 128,575 $ 118,048 $ 244,660 $ 230,458
Tenant escalations and reimbursements 19,235 17,324 38,303 35,102
----------------------------- -----------------------------
Total property operating revenues 147,810 135,372 282,963 265,560
----------------------------- -----------------------------
Property Operating Expenses:
Operating expenses 32,821 29,710 68,805 61,116
Real estate taxes 24,153 21,506 48,404 42,840
----------------------------- -----------------------------
Total property operating expenses 56,974 51,216 117,209 103,956
----------------------------- -----------------------------
Net Operating Income 90,836 84,156 165,754 161,604
----------------------------- -----------------------------
Gross Margin percentage 61.5% 62.2% 58.6% 60.9%
----------------------------- -----------------------------
Other Income:
Gains on sale of real estate - - 35,393 -
Interest income on mortgage notes and notes receivable 5,502 3,333 11,001 5,780
Interest, investment income and other 2,329 454 14,406 1,134
Equity in earnings of real estate joint ventures 1,815 83 2,211 234
----------------------------- -----------------------------
Total other income 9,646 3,870 63,011 7,148
----------------------------- -----------------------------
Other Expenses:
Interest:
Expense 27,216 27,259 55,205 50,825
Amortization of deferred financing costs 1,017 1,068 2,139 2,059
Depreciation and amortization 36,047 31,219 68,883 59,638
Marketing, general and administrative 9,475 8,241 18,957 16,236
Long-term incentive compensation expense 2,232 - 5,855 -
----------------------------- -----------------------------
Total other expenses 75,987 67,787 151,039 128,758
----------------------------- -----------------------------
Income from continuing operations before minority interests and
discontinued operations 24,495 20,239 77,726 39,994
Minority partners' interests in consolidated partnerships (3,850) (3,848) (7,946) (7,628)
Limited partners' minority interest in the operating partnership (693) (626) (2,242) (1,317)
----------------------------- -----------------------------
Income before discontinued operations 19,952 15,765 67,538 31,049
Discontinued operations, net of minority interests:
Gains on sales of real estate - 175 9,286 175
Income (loss) from discontinued operations (51) 1,826 819 3,896
----------------------------- -----------------------------
Net income $ 19,901 $ 17,766 $ 77,643 $ 35,120
============================= =============================
Basic net income per weighted average common share:
Common stock - income from continuing operations $ 0.24 $ 0.20 $ 0.40 $ 0.38
Gains on sales of real estate - - 0.41 -
Discontinued operations - 0.02 0.12 0.05
----------------------------- -----------------------------
Basic net income per common share $ 0.24 $ 0.22 $ 0.93 $ 0.43
============================= =============================
Basic weighted average common shares outstanding 83,212,000 81,882,000 83,140,000 81,493,000
============================= =============================
Diluted net income per weighted average common share $ 0.24 $ 0.22 $ 0.93 $ 0.43
============================= =============================
Diluted weighted average common shares outstanding 83,709,000 82,290,000 83,647,000 81,908,000
============================= =============================
Reckson Associates Realty Corp. (NYSE: RA)
Funds From Operations
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
============================ ===========================
2006 2005 2006 2005
---------------------------- ---------------------------
Net income $ 19,901 $ 17,766 $ 77,643 $ 35,120
Add: Real estate depreciation and amortization 33,505 30,175 65,656 57,488
Minority partners' interests in consolidated partnerships 7,382 6,791 14,616 13,503
Limited partners' minority interest in the operating
partnership 491 570 1,931 1,267
Less: Amounts distributable to minority partners in consolidated
partnerships 6,860 5,478 13,205 11,202
Gains on sales of depreciable real estate - - 44,669 -
---------------------------- ---------------------------
Basic and Diluted Funds From Operations ("FFO") $ 54,419 $ 49,824 $ 101,972 $ 96,176
============================ ===========================
Diluted FFO calculations:
Weighted average common shares outstanding 83,212 81,882 83,140 81,493
Weighted average units of limited partnership interest
outstanding 2,008 2,582 2,017 2,896
---------------------------- ---------------------------
Basic weighted average common shares and units outstanding 85,220 84,464 85,157 84,389
Adjustments for dilutive FFO weighted average shares and units
outstanding:
Common stock equivalents 497 408 507 415
Limited partners' preferred interest 41 41 41 41
---------------------------- ---------------------------
Total diluted weighted average shares and units outstanding 85,758 84,913 85,705 84,845
============================ ===========================
Diluted FFO per weighted average share or unit $ 0.63 $ 0.59 $ 1.19 $ 1.13
Diluted weighted average dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio 66.9% 72.4% 71.4% 75.0%
FFO Data excluding non recurring charges:
Diluted FFO per weighted average share or unit $ 0.66 $ 0.59 $ 1.26 $ 1.13
Diluted weighted average dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio 64.3% 72.4% 67.6% 75.0%
==================================================================================================================================
Reckson Associates Realty Corp. (NYSE: RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
============================ ============================
2006 2005 2006 2005
---------------------------- ----------------------------
Basic Funds From Operations $ 54,419 $ 49,824 $ 101,972 $ 96,176
Less: Straight line rents and other FAS 141 non-cash rent
adjustments 5,854 11,992 13,933 19,918
Committed non-incremental capitalized tenant improvements and
leasing costs 14,954 8,272 22,104 19,041
Actual non-incremental capitalized improvements 3,234 2,059 5,419 5,074
Add: Amortization of equity grants (a) 4,365 1,870 9,980 3,356
---------------------------- ----------------------------
Basic and Diluted Cash Available for Distribution ("CAD") $ 34,742 $ 29,371 $ 70,496 $ 55,499
============================ ============================
Diluted CAD calculations:
Weighted average common shares outstanding 83,212 81,882 83,140 81,493
Weighted average units of limited partnership interest
outstanding 2,008 2,582 2,017 2,896
---------------------------- ----------------------------
Basic weighted average common shares and units outstanding 85,220 84,464 85,157 84,389
Adjustments for dilutive CAD weighted average shares and units
outstanding:
Common stock equivalents 497 408 507 415
Limited partners' preferred interest 41 41 41 41
---------------------------- ----------------------------
Total diluted weighted average shares and units outstanding 85,758 84,913 85,705 84,845
============================ ============================
Diluted CAD per weighted average share or unit $ 0.41 $ 0.35 $ 0.82 $ 0.65
Diluted weighted average dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted CAD payout ratio 104.9% 122.8% 103.3% 129.9%
==================================================================================================================================
(a) - Includes estimated charges of $2.2 million and $5.9 million related to a
long-term incentive compensation plan for the three & six month periods ended
June 30, 2006.
