SEC Filing | SL Green Realty Corp.

- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 COMMISSION FILE NUMBER: 1-13762 ---------------- RECKSON OPERATING PARTNERSHIP, L. P. (Exact name of registrant as specified in its charter) DELAWARE 11-3233647 (State other jurisdiction of incorporation (IRS. Employer Identification Number) of organization) 225 BROADHOLLOW ROAD, MELVILLE, NY 11747 (Address of principal executive office) (zip code) (631) 694-6900 (Registrant's telephone number including area code) ---------------- 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 such shorter period that the registrant was required to file such reports) Yes X No__, and (2) has been subject to such filing requirements for the past 90 days. Yes X No__. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

RECKSON OPERATING PARTNERSHIP, L.P. QUARTERLY REPORT FOR THE THREE MONTHS ENDED JUNE 30, 2000 TABLE OF CONTENTS INDEX PAGE - ------- ----- PART I. FINANCIAL INFORMATION Item 1. Financial Statements ................................................................. 2 Consolidated Balance Sheets as of June 30, 2000 (unaudited) and December 31, 1999 .... 2 Consolidated Statements of Income for the three and six months ended June 30, 2000 and 1999 (unaudited) ..................................................................... 3 Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and 1999 (unaudited) .......................................................................... 4 Notes to the Consolidated Financial Statements (unaudited) ........................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 11 Item 3. Quantitative and Qualitative Disclosures about Market Risk ........................... 21 PART II. OTHER INFORMATION Item 1. Legal Proceedings .................................................................... 22 Item 2. Changes in Securities and Use of Proceeds ............................................ 22 Item 3. Defaults Upon Senior Securities ...................................................... 22 Item 4. Submission of Matters to a Vote of Securities Holders ................................ 22 Item 5. Other Information .................................................................... 22 Item 6. Exhibits and Reports on Form 8-K ..................................................... 22 SIGNATURES ................................................................................. 22 1

PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS RECKSON OPERATING PARTNERSHIP, L. P. CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS EXCEPT UNIT AMOUNTS) JUNE 30, 2000 DECEMBER 31, (UNAUDITED) 1999 --------------- ------------- ASSETS: Commercial real estate properties, at cost: Land ....................................................................... $ 291,510 $ 276,204 Buildings and improvements ................................................. 1,916,027 1,802,611 Developments in progress: Land ....................................................................... 61,013 60,894 Development costs .......................................................... 93,719 68,690 Furniture, fixtures and equipment ........................................... 7,157 6,473 ---------- ---------- 2,369,426 2,214,872 Less accumulated depreciation ............................................... (254,595) (218,385) ---------- ---------- 2,114,831 1,996,487 Investments in real estate joint ventures ................................... 37,548 31,531 Investment in mortgage notes and notes receivable ........................... 356,642 352,466 Cash and cash equivalents ................................................... 26,514 21,122 Tenant receivables .......................................................... 3,340 5,117 Investments in and advances to affiliates ................................... 176,567 179,762 Deferred rent receivable .................................................... 44,666 32,132 Prepaid expenses and other assets ........................................... 70,800 66,855 Contract and land deposits and pre-acquisition costs ........................ 7,727 9,585 Deferred lease and loan costs ............................................... 47,137 39,520 ---------- ---------- TOTAL ASSETS ................................................................ $2,885,772 $2,734,577 ========== ========== LIABILITIES: Mortgage notes payable ...................................................... $ 527,466 $ 459,174 Unsecured credit facility ................................................... 373,600 297,600 Unsecured term loan ......................................................... 75,000 75,000 Senior unsecured notes ...................................................... 449,348 449,313 Accrued expenses and other liabilities ...................................... 89,536 81,265 Distributions payable ....................................................... 28,356 27,166 ---------- ---------- TOTAL LIABILITIES ........................................................... 1,543,306 1,389,518 ---------- ---------- Commitments and other comments .............................................. -- -- Minority interests' in consolidated partnerships ............................ 92,071 93,086 ---------- ---------- PARTNERS' CAPITAL Preferred Capital, 11,234,518 and 15,234,518 units outstanding, respectively 313,126 413,126 General Partner's Capital: Class A common units, 45,045,573 and 40,375,506 units outstanding, respectively ............................................................. 570,203 477,172 Class B common units, 10,283,513 and 10,283,763 units outstanding, respectively ............................................................. 269,762 270,689 Limited Partners' Capital, 7,695,142 and 7,701,142 units outstanding, respectively ............................................................... 97,304 90,986 ---------- ---------- Total Partners' Capital ..................................................... 1,250,395 1,251,973 ---------- ---------- TOTAL LIABILITIES AND PARTNERS' CAPITAL ..................................... $2,885,772 $2,734,577 ========== ========== (see accompanying notes to financial statements) 2

RECKSON OPERATING PARTNERSHIP, L. P. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED AND IN THOUSANDS, EXCEPT UNIT DATA) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 -------------- -------------- -------------- -------------- REVENUES: Base rents ............................................... $ 96,099 $ 77,192 $ 190,499 $ 139,285 Tenant escalations and reimbursements .................... 12,984 8,586 25,830 17,129 Equity in earnings of real estate joint ventures and service companies ....................................... 1,775 512 3,187 889 Interest income on mortgage notes and notes receivable .............................................. 2,190 1,910 4,476 4,718 Gain on sales of real estate ............................. 6,662 -- 6,662 -- Other .................................................... 5,738 2,646 12,451 4,932 ----------- ----------- ----------- ----------- Total Revenues .......................................... 125,448 90,846 243,105 166,953 ----------- ----------- ----------- ----------- EXPENSES: Property operating expenses .............................. 36,368 27,539 74,523 50,446 Marketing, general and administrative .................... 6,769 4,550 12,649 8,624 Interest ................................................. 24,176 18,902 48,016 32,846 Depreciation and amortization ............................ 22,426 19,127 43,437 34,218 ----------- ----------- ----------- ----------- Total Expenses .......................................... 89,739 70,118 178,625 126,134 ----------- ----------- ----------- ----------- Income before distributions to preferred unit holders and minority interestsinterests ......................... 35,709 20,728 64,480 40,819 Minority partners' interests in consolidated partnerships ............................................ (1,925) (1,615) (3,899) (2,783) ----------- ----------- ----------- ----------- Income before distributions to preferred unitholders ..... 33,784 19,113 60,581 38,036 Preferred unit distributions ............................. (7,857) (5,989) (15,842) (11,031) ----------- ----------- ----------- ----------- Net income available to common unit holders .............. $ 25,927 $ 13,124 $ 44,739 $ 27,005 =========== =========== =========== =========== Net Income available to: General Partner -- Class A common units ................. $ 16,563 $ 9,550 $ 28,508 $ 21,190 General Partner -- Class B common units ................. 6,281 1,747 10,870 1,747 Limited Partners' ....................................... 3,083 1,827 5,361 4,068 ----------- ----------- ----------- ----------- Total .................................................... $ 25,927 $ 13,124 $ 44,739 $ 27,005 =========== =========== =========== =========== Net income per weighted average units: Net income per weighted average Class A general partnership unit ...................................... $ .40 $ .24 $ .70 $ .53 =========== =========== =========== =========== Net income per weighted average Class B general partnership unit ...................................... $ .61 $ .36 $ 1.06 $ .71 =========== =========== =========== =========== Net income per weighted average limited partnership unit ...................................... $ .40 $ .24 $ .70 $ .53 =========== =========== =========== =========== Weighted average common units outstanding: General Partner -- Class A common units ................. 41,343,000 40,285,000 40,863,000 40,167,000 General Partner -- Class B common units ................. 10,284,000 4,883,000 10,284,000 2,455,000 Limited Partners ........................................ 7,695,000 7,705,000 7,697,000 7,708,000 (see accompanying notes to financial statements) 3

RECKSON OPERATING PARTNERSHIP, L. P. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED AND IN THOUSANDS) SIX MONTHS ENDED JUNE 30, ---------------------------- 2000 1999 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Income before distributions to preferred unitholders ........................ $ 60,581 $ 38,036 Adjustments to reconcile income before distributions to preferred unitholders to net cash provided by operating activities: Depreciation and amortization .............................................. 43,437 34,218 Gain on sales of real estate ............................................... (6,662) -- Minority partners' interests in consolidated partnerships .................. 3,899 2,783 Loss reserve on real estate held for sale .................................. -- 4,450 Gain on mortgage redemption ................................................ -- (4,492) Equity in earnings of real estate joint ventures and service companies ..... (3,187) (889) Changes in operating assets and liabilities: Prepaid expenses and other assets .......................................... (3,872) (15,254) Tenant receivables ......................................................... 1,777 2,181 Deferred rents receivable .................................................. (12,534) (2,429) Real estate tax escrows .................................................... 3,387 (618) Accrued expenses and other liabilities ..................................... 7,073 11,201 ---------- ---------- Net cash provided by operating activities .................................. 93,899 69,187 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of commercial real estate properties ............................. (154,573) (194,871) Increase in real estate held for sale ...................................... -- (57,095) Increase in deposits and pre-acquisition costs ............................. (6,079) (1,889) Investment in mortgage notes and notes receivable .......................... -- (262,643) Proceeds from mortgage note repayments ..................................... 2,157 -- Proceeds from sales of property and mortgage redemption .................... 42,595 25,929 Additions to commercial real estate properties ............................. (22,108) (16,389) Increase in developments in progress ....................................... (15,923) (8,073) Payment of leasing costs ................................................... (9,379) (7,377) Purchase of furniture, fixtures and equipment .............................. (676) (447) Distribution from a real estate joint venture .............................. 226 173 Investments in real estate joint ventures .................................. (4,770) (6,223) ---------- ---------- Net cash used in investing activities ...................................... (168,530) (528,905) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on secured borrowings ................................... (23,708) (1,495) Proceeds from issuance of senior unsecured notes net of issuance costs ..... -- 299,262 Payment of loan costs ...................................................... (2,399) (5,368) (Increase) decrease in investments in and advances to affiliates ........... 4,880 (41,304) Proceeds from secured borrowings ........................................... 92,000 -- Proceeds from unsecured credit facility .................................... 125,000 299,000 Principal payments on unsecured credit facility ............................ (49,000) (230,750) Contributions of minority partner in consolidated partnership .............. -- 75,000 Contributions .............................................................. 1,486 149,300 Distributions .............................................................. (63,322) (42,416) Distributions to minority partners' in consolidated partnerships ........... (4,914) (2,450) ---------- ---------- Net cash provided by financing activities ................................... 80,023 498,779 ---------- ---------- Net increase in cash and cash equivalents ................................... 5,392 39,061 Cash and cash equivalents at beginning of period ............................ 21,122 2,228 ---------- ---------- Cash and cash equivalents at end of period .................................. $ 26,514 $ 41,289 ========== ========== (see accompanying notes to financial statements) 4

RECKSON OPERATING PARTNERSHIP, L. P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (UNAUDITED) 1. ORGANIZATION AND FORMATION OF THE OPERATING PARTNERSHIP Reckson Operating Partnership, L. P. (the "Operating Partnership") commenced operations on June 2, 1995. The sole general partner in the Operating Partnership, Reckson Associates Realty Corp. (the "Company") is a self-administered and self-managed Real Estate Investment Trust ("REIT"). During June 1995, the Company contributed approximately $162 million in cash to the Operating Partnership in exchange for an approximate 73% general partnership interest. The Operating Partnership executed various option and purchase agreements whereby it issued units in the Operating Partnership ("Units") to the continuing investors and assumed certain indebtedness in exchange for interests in certain property partnerships, fee simple and leasehold interests in properties and development land, certain business assets of the executive center entities and 100% of the non-voting preferred stock of the management and construction companies. As of June 30, 2000, the Operating Partnership owned and operated 78 office properties comprising approximately 13.7 million square feet, 105 industrial properties comprising approximately 6.9 million square feet and two retail properties comprising approximately 20,000 square feet, located in the New York tri-state area (the "Tri-State Area"). The Operating Partnership also owns a 357,000 square foot office building located in Orlando, Florida and approximately 346 acres of land in 16 separate parcels of which the Operating Partnership can develop approximately 1.9 million square feet of office space and approximately 350,000 square feet of industrial space. The Operating Partnership also has invested approximately $301.5 million in mortgage notes encumbering two Class A office properties encompassing approximately 1.6 million square feet, approximately 403 acres of land located in New Jersey and approximately $17.1 million in a note receivable secured by a partnership interest in Omni Partner's, L.P., owner of the Omni, a 575,000 square foot Class A office property located in Uniondale, New York. During July 1998, the Company formed Metropolitan Partners, LLC ("Metropolitan") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower"). On May 24, 1999 the Company completed the merger with Tower and acquired three Class A office properties located in New York City totaling 1.6 million square feet and one office property located on Long Island totaling approximately 101,000 square feet. In addition, pursuant to the merger, the Company also acquired certain office properties, a property under development and land located outside of the Tri-State Area. All of the assets acquired in the merger located outside of the Tri-State Area, other than a 357,000 square foot office property located in Orlando, Florida, have been sold. 2. BASIS OF PRESENTATION The accompanying consolidated financial statements include the consolidated financial position of the Operating Partnership and its subsidiaries at June 30, 2000 and December 31, 1999 and the results of their operations for the three and six months ended June 30, 2000 and 1999, respectively, and, their cash flows for the six months ended June 30, 2000 and 1999, respectively. The Operating Partnership's investments in Metropolitan, Omni Partners, L. P. ("Omni") and certain industrial joint venture properties formerly owned by Reckson Morris Operating Partnership, L. P. ("RMI") are reflected in the accompanying financial statements on a consolidated basis with a reduction for minority partners' interest. The Operating Partnership's investment in RMI was reflected in the accompanying financial statements on a consolidated basis with a reduction for minority partner's interest through September 26, 1999. On September 27, 1999, the Operating Partnership sold its interest in RMI to Keystone Property Trust ("KTR"). The operating results of the service businesses currently conducted by Reckson Management Group, Inc., and Reckson Construction Group, Inc., are reflected in the accompanying financial statements on the equity method of accounting. The Operating Partnership also invests in real 5

estate joint ventures where it may own less than a controlling interest, such investments are also reflected in the accompanying financial statements on the equity method of accounting. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. The minority interests at June 30, 2000 represent a convertible preferred interest in Metropolitan and a 40% interest in Omni. The accompanying interim unaudited financial statements have been prepared by the Operating Partnership's management pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosure normally included in the financial statements prepared in accordance with generally accepted accounting principles ("GAAP") may have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. The unaudited financial statements as of June 30, 2000 and for the three and six month periods ended June 30, 2000 and 1999 include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial information set forth herein. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. These financial statements should be read in conjunction with the Operating Partnership's audited financial statements and notes thereto included in the Operating Partnership's Form 10-K for the year ended December 31, 1999. In June 1999, the Financial Accounting Standards Board issued Statement No. 137, amending Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities", which extended the required date of adoption to the years beginning after June 15, 2000. The Statement permits early adoption as of the beginning of any fiscal quarter after its issuance. The Operating Partnership expects to adopt the new Statement effective January 1, 2001. The Operating Partnership does not anticipate that the adoption of this Statement will have any effect on its results of operations or financial position. Certain prior year amounts have been reclassified to conform to the current year presentation. 3. MORTGAGE NOTES PAYABLE As of June 30, 2000, the Operating Partnership had approximately $457.5 million of fixed rate mortgage notes which mature at various times between 2000 and 2027. The notes are secured by 22 properties and have a weighted average interest rate of approximately 7.6%. In addition, the Operating Partnership had a $70 million variable rate mortgage note which matures in August 2001. The note is secured by one property and bears interest at LIBOR plus 165 basis points. 4. SENIOR UNSECURED NOTES As of June 30, 2000, the Operating Partnership had outstanding approximately $449.3 million (net of issuance discounts) of senior unsecured notes (the "Senior Unsecured Notes"). The following table sets forth the Operating Partnership's Senior Unsecured Notes and other related disclosures (dollars in thousands): FACE ISSUANCE AMOUNT COUPON RATE TERM MATURITY - ------------------- ----------- ------------- ---------- ---------------- August 27, 1997 $150,000 7.20% 10 years August 28, 2007 March 26, 1999 $100,000 7.40% 5 years March 15, 2004 March 26, 1999 $200,000 7.75% 10 years March 15, 2009 Interest on the Senior Unsecured Notes is payable semiannually with principal and unpaid interest due on the scheduled maturity dates. In addition, the Senior Unsecured Notes issued on March 26, 1999 were issued at an aggregate discount of $738,000. 5. UNSECURED CREDIT FACILITIES AND UNSECURED TERM LOAN As of June 30, 2000, the Operating Partnership had a three year $500 million unsecured revolving credit facility (the "Credit Facility") from Chase Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the Credit Facility bank group which matures in July, 2001. Interest rates on borrowings under the Credit Facility are priced off of LIBOR plus 90 basis points. 6

The Operating Partnership utilizes the Credit Facility primarily to finance the acquisitions of properties and other real estate investments, fund its development activities and for working capital purposes. At June 30, 2000, the Operating Partnership had availability under the Credit Facility to borrow an additional $126.4 million (of which, $49.1 million has been reserved for outstanding undrawn letters of credit). As of June 30, 2000, the Operating Partnership had an 18-month, $75 million unsecured term loan (the "Term Loan") from Chase Manhattan Bank which matures in June, 2001. Interest rates on borrowings under the Term Loan are priced off of LIBOR plus 150 basis points. 6. COMMERCIAL REAL ESTATE INVESTMENTS On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the Americas, a 540,000 square foot, 35 story, Class A office property, located in New York City, for a purchase price of approximately $126.5 million. This acquisition was financed through a $70 million secured debt financing and a draw under the Credit Facility. On June 15, 1999, the Operating Partnership acquired the first mortgage note secured by a 47 story, 1.4 million square foot Class A office property located at 919 Third Avenue in New York City for approximately $277.5 million. The first mortgage note entitles the Operating Partnership to all the net cash flow of the property and to substantial rights regarding the operations of the property, with the Operating Partnership anticipating to ultimately obtain title to the property. This acquisition was financed with proceeds from the issuance of six million Series E preferred units of general partnership interest and through draws under the Credit Facility. Current financial accounting guidelines provide that where a lender has virtually the same risks and potential rewards as those of a real estate owner it should recognize the full economics associated with the operations of the property. As such, the Operating Partnership has recognized the real estate operations of the 919 Third Avenue in the accompanying consolidated statement of income for the period from the date of acquisition. On July 28, 2000, the Operating Partnership consented to the filing of a consensual, pre-packaged bankruptcy plan with the current fee owner and expects to take title to this property by November 30, 2000. On August 9, 1999, the Operating Partnership executed a contract for the sale of its interest in RMI, which consisted of 28 properties, comprising approximately 6.1 million square feet and three other big box industrial properties to KTR. In addition, the Operating Partnership also entered into a sale agreement with Matrix relating to a first mortgage note and certain industrial land holdings (the "Matrix Sale"). The combined total sale price is $310 million ($41.6 million of which is payable to, and of which $10.4 million of debt relief is attributable to the Morris Companies and its affiliates) and will consist of a combination of (i) cash, (ii) convertible preferred and common stock of KTR, (iii) preferred units of KTR's operating partnership, (iv) relief of debt and (v) a purchase money mortgage note secured by certain land that is being sold to Matrix. As of June 30, 2000, the Matrix Sale and the sale of the Operating Partnership's interest in RMI was completed for a combined sales price of approximately $258 million (net of minority partner's interest). The combined consideration consisted of approximately (i) $159.7 million in cash, (ii) $60 million of preferred stock and operating partnership units of KTR, (iii) $1.5 million in common stock of KTR, (iv) approximately $26.7 million of debt relief and (v) approximately $10.1 million in purchase money mortgages. As a result, the Operating Partnership incurred a gain of approximately $16.7 million of which approximately $6.7 million was recognized during the three months ended June 30, 2000. Cash proceeds from the sales were used primarily to repay borrowings under the Credit Facility. During July 2000, the Operating Partnership redeemed approximately $20 million of the preferred stock of KTR. In July 1998, the Company formed a joint venture, Metropolitan Partners LLC ("Metropolitan"), with Crescent Real Estate Equities Company, a Texas REIT ("Crescent") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower"). On May 24, 1999 the Company completed the merger with Tower and acquired three Class A office properties located in New York City totaling 1.6 million square feet and one office property located on Long Island totaling approximately 101,000 square feet. In addition, 7

pursuant to the merger, the Company also acquired certain office properties, a property under development and land located outside of the Tri-State Area. All of the assets acquired in the merger located outside of the Tri-State Area, other than a 357,000 square foot office property located in Orlando, Florida, have been sold. The Company controls Metropolitan and owns 100% of the common equity; Crescent owns a $85 million preferred equity investment in Metropolitan. Crescent's investment accrues distributions at a rate of 7.5% per annum for a two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by Metropolitan at any time during that period for $85 million, plus an amount sufficient to provide a 9.5% internal rate of return. If Metropolitan does not redeem the preferred interest, upon the expiration of the two-year period, Crescent must convert its $85 million preferred interest into either (i) a common membership interest in Metropolitan or (ii) shares of the Company's Class A common stock at a conversion price of $24.61 per share. 7. PARTNERS' CAPITAL On May 24, 1999, the Operating Partnership issued 11,694,567 Class B common units of general partnership interest to the Company which were valued for GAAP purposes at $26 per unit for total consideration of approximately $304.1 million. The Class B common units were entitled to receive an initial annual distribution of $2.24 per unit which distribution is subject to adjustment annually. On July 1, 2000, the annual distribution on the Class B common units was increased to $2.40 per unit. The Class B common units are exchangeable at any time, at the option of the holder, into an equal number of Class A common units subject to customary antidilution adjustments. The Operating Partnership, at its option, may redeem any or all of the Class B common units in exchange for an equal number of Class A common units at any time following the four year, six-month anniversary of the issuance of the Class B common units. On June 14, 2000, the Operating Partnership declared the following distributions: RECORD PAYMENT THREE MONTHS ANNUALIZED SECURITY DISTRIBUTION DATE DATE ENDED DISTRIBUTION - ------------------------- ------------------ --------------- --------------- --------------- ----------------- Class A common unit $ .38600 July 10, 2000 July 21, 2000 June 30, 2000 $ 1.544 Class B common unit $ .59400 (a) July 14, 2000 July 31, 2000 July 31, 2000 $ 2.377 (a) Series A preferred unit $ .47660 July 14, 2000 July 31, 2000 July 31, 2000 $ 1.906 Series E preferred unit $ .52188 July 14, 2000 July 31, 2000 July 31, 2000 $ 2.088 - ---------------- (a) adjusted to $.60 per unit quarterly and $2.40 per unit annually on July 1, 2000. On June 20, 2000, the Operating Partnership issued 4,181,818 Class A common units in exchange for four million Series E preferred units of general partnership interest with a liquidation preference value of $100 million. As of June 30, 2000, in conjunction with the Company's Class B common stock buy back program, the Operating Partnership had purchased and retired 1,410,804 Class B common units for approximately $30.3 million. Net income per common partnership unit is determined by allocating net income after preferred distributions and minority partners' interest in consolidated partnerships income to the general and limited partners' based on their weighted average distribution per common partnership units outstanding during the respective periods presented. Holders of preferred units of limited and general partnership interest are entitled to distributions based on the stated rates of return (subject to adjustment) for those units. 8

8. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION (IN THOUSANDS) SIX MONTHS ENDED JUNE 30, ----------------------- 2000 1999 ---------- ---------- Cash paid during the period for interest ......... $52,135 $30,062 ======= ======= Interest capitalized during the period ........... $ 5,173 $ 4,440 ======= ======= On June 20, 2000, the Operating Partnership issued 4,181,818 Class A common units in exchange for four million Series E preferred units of general partnership interest with a liquidation preference value of $100 million. 9. SEGMENT DISCLOSURE The Operating Partnership's portfolio consists of Class A office properties located within the New York City metropolitan area and Class A suburban office and industrial properties located and operated within the Tri-State Area (the "Core Portfolio"). In addition the Operating Partnership's portfolio also includes one office property located in Orlando, Florida, and certain industrial joint venture properties formerly owned by RMI and for the period commencing January 6, 1998 and ending September 26, 1999, industrial properties which were owned by RMI and subsequently sold to KTR. The Operating Partnership has managing directors who report directly to the Chief Operating Officer and Chief Financial Officer who have been identified as the Chief Operating Decision Makers because of their final authority over resource allocation decisions and performance assessment. In addition, as the Operating Partnership expects to meet its short-term liquidity requirements in part through the Credit Facility and Term Loan, interest incurred on borrowings under the Credit Facility and Term Loan is not considered as part of property operating performance. Further, the Operating Partnership does not consider the property operating performance of the office property located in Orlando, Florida as a part of its Core Portfolio. Additionally, commencing January 1, 2000, the Operating Partnership does not consider the operating performance of the industrial joint venture properties formerly owned by RMI as part of its Core Portfolio. The following table sets forth the components of the Operating Partnership's revenues and expenses and other related disclosures for the three months ended June 30, 2000 and 1999 (in thousands): THREE MONTHS ENDED ------------------------------------------- JUNE 30, 2000 ------------------------------------------- CORE CONSOLIDATED PORTFOLIO OTHER TOTALS -------------- ------------- -------------- REVENUES: Base rents, tenant escalations and reimbursements ........................ $ 106,852 $ 2,231 $ 109,083 Equity in earnings of real estate joint ventures and service companies ........ -- 1,775 1,775 Interest and other income .............. 257 14,333 14,590 ----------- --------- ----------- Total Revenues ......................... 107,109 18,339 125,448 ----------- --------- ----------- EXPENSES: Property operating expenses ............ 35,810 558 36,368 Marketing, general and administrative .. 4,928 1,841 6,769 Interest ............................... 9,403 14,773 24,176 Depreciation and amortization .......... 20,055 2,371 22,426 ----------- --------- ----------- Total Expenses ......................... 70,196 19,543 89,739 ----------- --------- ----------- Income (loss) before distributions to preferred unitholders and minority interests' ............................ $ 36,913 $ (1,204) $ 35,709 =========== ========= =========== Total Assets ........................... $ 2,054,183 $ 831,589 $ 2,885,772 =========== ========= =========== THREE MONTHS ENDED ----------------------------------------------------- JUNE 30, 1999 ----------------------------------------------------- CORE CONSOLIDATED PORTFOLIO RMI OTHER TOTALS -------------- ---------- ------------- ------------- REVENUES: Base rents, tenant escalations and reimbursements ........................ $ 76,943 $ 5,287 $ 3,548 $ 85,778 Equity in earnings of real estate joint ventures and service companies ........ -- -- 512 512 Interest and other income .............. 144 -- 4,412 4,556 ----------- -------- --------- ----------- Total Revenues ......................... 77,087 5,287 8,472 90,846 ----------- -------- --------- ----------- EXPENSES: Property operating expenses ............ 25,554 816 1,169 27,539 Marketing, general and administrative .. 3,858 167 525 4,550 Interest ............................... 5,191 940 12,771 18,902 Depreciation and amortization .......... 16,212 1,287 1,628 19,127 ----------- -------- --------- ----------- Total Expenses ......................... 50,815 3,210 16,093 70,118 ----------- -------- --------- ----------- Income (loss) before distributions to preferred unitholders and minority interests' ............................ $ 26,272 $ 2,077 $ (7,621) $ 20,728 =========== ======== ========= =========== Total Assets ........................... $ 2,082,784 $194,898 $ 615,692 $ 2,893,374 =========== ======== ========= =========== 9

The following table sets forth the components of the Operating Partnership's revenues and expenses and other related disclosures for the six months ended June 30, 2000 and 1999 (in thousands): SIX MONTHS ENDED ---------------------------------------- JUNE 30, 2000 ---------------------------------------- CORE CONSOLIDATED PORTFOLIO OTHER TOTALS ----------- ------------- -------------- REVENUES: Base rents, tenant escalations and reimbursements ............................... $ 211,672 $ 4,657 $ 216,329 Equity in earnings of real estate joint ventures and service companies ............... -- 3,187 3,187 Interest and other income ..................... 664 22,925 23,589 --------- --------- --------- Total Revenues ................................ 212,336 30,769 243,105 --------- --------- --------- EXPENSES: Property operating expenses ................... 73,297 1,226 74,523 Marketing, general and administrative ......... 10,029 2,620 12,649 Interest ...................................... 18,595 29,421 48,016 Depreciation and amortization ................. 39,388 4,049 43,437 --------- --------- --------- Total Expenses ................................ 141,309 37,316 178,625 --------- --------- --------- Income (loss) before distributions to preferred unitholders and minority interests' ................................... $ 71,027 $ (6,547) $ 64,480 ========= ========= ========= SIX MONTHS ENDED --------------------------------------------------- JUNE 30, 1999 --------------------------------------------------- CORE CONSOLIDATED PORTFOLIO RMI OTHER TOTALS ----------- ---------- -------------- ------------- REVENUES: Base rents, tenant escalations and reimbursements ............................... $ 142,966 $ 9,900 $ 3,548 $ 156,414 Equity in earnings of real estate joint ventures and service companies ............... -- -- 889 889 Interest and other income ..................... 213 2 9,435 9,650 --------- ------- ---------- --------- Total Revenues ................................ 143,179 9,902 13,872 166,953 --------- ------- ---------- --------- EXPENSES: Property operating expenses ................... 47,710 1,567 1,169 50,446 Marketing, general and administrative ......... 7,800 298 526 8,624 Interest ...................................... 9,751 1,217 21,878 32,846 Depreciation and amortization ................. 28,993 2,367 2,858 34,218 --------- ------- ---------- --------- Total Expenses ................................ 94,254 5,449 26,431 126,134 --------- ------- ---------- --------- Income (loss) before distributions to preferred unitholders and minority interests' ................................... $ 48,925 $ 4,453 $ (12,559) $ 40,819 ========= ======= ========== ========= 10. OTHER INVESTMENTS AND ADVANCES During 1997, the Company formed FrontLine Capital Group ("FrontLine") (formerly Reckson Service Industries, Inc.) and Reckson Strategic Venture Partners, LLC ("RSVP"). In connection with the formation of FrontLine, the Operating Partnership established a credit facility with FrontLine (the "FrontLine Facility") in the amount of $100 million for FrontLine's e-commerce and e-services operations and other general corporate purposes. As of June 30, 2000, the Company had advanced approximately $92.7 million under the FrontLine Facility. In addition, the Operating Partnership has approved the funding of investments of up to $100 million with or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint venture REIT-qualified investments or advances made to FrontLine under terms similar to the FrontLine Facility. As of June 30, 2000, approximately $67.9 million had been invested through the RSVP Commitment, of which $29.4 million represents RSVP-controlled joint venture REIT-qualified investments and $38.5 million represents advances to FrontLine under the RSVP Commitment. Both the FrontLine Facility and the RSVP Commitment have a term of five years and advances under each are recourse obligations of FrontLine. Interest accrues on advances made under the credit facilities at a rate equal to the greater of (a) the prime rate plus two percent and (b) 12% per annum, with the rate on amounts that are outstanding for more than one year increasing annually at a rate of four percent of the prior year's rate. Prior to maturity, interest is payable quarterly but only to the extent of net cash flow and on an interest-only basis. During November 1999, the Board of Directors of the Company approved an amendment to the FrontLine Facility and the RSVP Commitment to permit FrontLine to incur secured debt and to pay interest thereon and to issue preferred stock and to pay dividends thereon. In consideration of the amendments, FrontLine paid the Operating Partnership a fee of approximately $3.6 million in the form of shares of FrontLine common stock. Such fee is being recognized in income over an estimated nine month benefit period. FrontLine identifies, acquires interests in and develops a network of e-commerce and e-services companies that service small to medium sized enterprises, independent professionals and entrepreneurs and the mobile workforce of larger companies. FrontLine serves as the managing member of RSVP. RSVP was formed to provide the Company with a research and development vehicle to invest in alternative real estate sectors. RSVP invests primarily in real estate and real estate related operating companies generally outside of the Company's core office and industrial focus. RSVP's strategy is to identify and acquire interests in established entrepreneurial enterprises with experienced management teams in market sectors which are in the early stages of their growth cycle or offer unique circumstances for attractive investments as well as a platform for future growth. 10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the historical financial statements of Reckson Operating Partnership, L. P. (the "Operating Partnership") and related notes. The Operating Partnership considers certain statements set forth herein to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the Operating Partnership's expectations for future periods. Certain forward-looking statements, including, without limitation, statements relating to the timing and success of acquisitions, the financing of the Operating Partnership's operations, the ability to lease vacant space and the ability to renew or relet space under expiring leases, involve certain risks and uncertainties. Although the Operating Partnership believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the actual results may differ materially from those set forth in the forward-looking statements and the Operating Partnership can give no assurance that its expectation will be achieved. Certain factors that might cause the results of the Operating Partnership to differ materially from those indicated by such forward-looking statements include, among other factors, general economic conditions, general real estate industry risks, tenant default and bankruptcies, loss of major tenants, the impact of competition and acquisition, redevelopment and development risks, the ability to finance business opportunities and local real estate risks such as an oversupply of space or a reduction in demand for real estate in the Operating Partnership's real estate markets. Consequently, such forward-looking statements should be regarded solely as reflections of the Operating Partnership's current operating and development plans and estimates. These plans and estimates are subject to revisions from time to time as additional information becomes available, and actual results may differ from those indicated in the referenced statements. OVERVIEW AND BACKGROUND The Operating Partnership, which commenced operations on June 2 1995, is engaged in the ownership, management, operation, leasing and development of commercial real estate properties, principally office and industrial buildings, and also owns certain undeveloped land located in the New York tri-state area (the "Tri-State Area"). Reckson Associates Realty Corp. (the "Company"), is a self-administered and self-managed Real Estate Investment Trust ("REIT"), and serves as the sole general partner in the Operating Partnership. As of June 30, 2000, the Operating Partnership owned and operated 78 office properties comprising approximately 13.7 million square feet, 105 industrial properties comprising approximately 6.9 million square feet and two retail properties comprising approximately 20,000 square feet, located in the Tri-State Area. The Operating Partnership also owns a 357,000 square foot office building located in Orlando, Florida and approximately 346 acres of land in 16 separate parcels of which the Operating Partnership can develop approximately 1.9 million square feet of office space and approximately 350,000 square feet of industrial space. The Operating Partnership also has invested approximately $301.5 million in mortgage notes encumbering two Class A office properties encompassing approximately 1.6 million square feet, approximately 403 acres of land located in New Jersey and approximately $17.1 million in a note receivable secured by a partnership interest in Omni Partner's, L.P., owner of the Omni, a 575,000 square foot Class A office property located in Uniondale, New York. During 1997, the Company formed FrontLine Capital Group ("FrontLine") (formerly Reckson Service Industries, Inc.) and Reckson Strategic Venture Partners, LLC ("RSVP"). In connection with the formation of FrontLine, the Operating Partnership established a credit facility with FrontLine (the "FrontLine Facility") in the amount of $100 million for FrontLine's e-commerce and e-services operations and other general corporate purposes. As of June 30, 2000, the Company had advanced approximately $92.7 million under the FrontLine Facility. In addition, the Operating Partnership has approved the funding of investments of up to $100 million with or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint venture REIT-qualified investments or advances made to FrontLine under terms similar to the FrontLine Facility. As of June 30, 2000, approximately $67.9 million had been invested through the RSVP Commitment, of which $29.4 million represents RSVP-controlled joint 11

venture REIT-qualified investments and $38.5 million represents advances to FrontLine under the RSVP Commitment. Both the FrontLine Facility and the RSVP Commitment have a term of five years and advances under each are recourse obligations of FrontLine. Interest accrues on advances made under the credit facilities at a rate equal to the greater of (a) the prime rate plus two percent and (b) 12% per annum, with the rate on amounts that are outstanding for more than one year increasing annually at a rate of four percent of the prior year's rate. Prior to maturity, interest is payable quarterly but only to the extent of net cash flow and on an interest-only basis. During November 1999, the Board of Directors of the Company approved an amendment to the FrontLine Facility and the RSVP Commitment to permit FrontLine to incur secured debt and to pay interest thereon and to issue preferred stock and to pay dividends thereon. In consideration of the amendments, FrontLine paid the Operating Partnership a fee of approximately $3.6 million in the form of shares of FrontLine common stock. Such fee is being recognized in income over an estimated nine month benefit period. FrontLine identifies, acquires interests in and develops a network of e-commerce and e-services companies that service small to medium sized enterprises, independent professionals and entrepreneurs and the mobile workforce of larger companies. FrontLine serves as the managing member of RSVP. RSVP was formed to provide the Company with a research and development vehicle to invest in alternative real estate sectors. RSVP invests primarily in real estate and real estate related operating companies generally outside of the Company's core office and industrial focus. RSVP's strategy is to identify and acquire interests in established entrepreneurial enterprises with experienced management teams in market sectors which are in the early stages of their growth cycle or offer unique circumstances for attractive investments as well as a platform for future growth. On August 9, 1999, the Operating Partnership executed a contract for the sale of its interest in Reckson Morris Operating Partnership, L. P., ("RMI") which consisted of 28 properties, comprising approximately 6.1 million square feet and three other big box industrial properties to Keystone Property Trust ("KTR"). In addition, the Operating Partnership also entered into a sale agreement with Matrix relating to a first mortgage note and certain industrial land holdings (the "Matrix Sale"). The combined total sale price is $310 million ($41.6 million of which is payable to, and of which $10.4 million of debt relief is attributable to the Morris Companies and its affiliates) and will consist of a combination of (i) cash, (ii) convertible preferred and common stock of KTR, (iii) preferred units of KTR's operating partnership, (iv) relief of debt and (v) a purchase money mortgage note secured by certain land that is being sold to Matrix. As of June 30, 2000, the Matrix Sale and the sale of the Operating Partnership's interest in RMI was completed for a combined sales price of approximately $258 million (net of minority partner's interest). The combined consideration consisted of approximately (i) 159.7 million in cash, (ii) 60 million of preferred stock and operating partnership units of KTR, (iii) $1.5 million in comon stock of KTR, (iv) approximately $26.7 million of debt relief and (v) approximately $10.1 million in purchase money mortgages. As a result, the Operating Partnership incurred a gain of approximately $16.7 million of which approximately $6.7 million was recognized during the three months ended June 30, 2000. Cash proceeds from the sales were used primarily to repay borrowings under the Credit Facility. During July 2000, the Operating Partnership redeemed approximately $20 million of the preferred stock of KTR. In July 1998, the Company formed a joint venture, Metropolitan Partners LLC ("Metropolitan"), with Crescent Real Estate Equities Company, a Texas REIT ("Crescent") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower"). On May 24, 1999 the Company completed the merger with Tower and acquired three Class A office properties located in New York City totaling 1.6 million square feet and one office property located on Long Island totaling approximately 101,000 square feet. In addition, 12

pursuant to the merger, the Company also acquired certain office properties, a property under development and land located outside of the Tri-State Area. All of the assets acquired in the merger located outside of the Tri-State Area, other than a 357,000 square foot office property located in Orlando, Florida, have been sold. The Company controls Metropolitan and owns 100% of the common equity; Crescent owns a $85 million preferred equity investment in Metropolitan. Crescent's investment accrues distributions at a rate of 7.5% per annum for a two-year period (May 24, 1999 - May 24, 2001) and may be redeemed by Metropolitan at any time during that period for $85 million, plus an amount sufficient to provide a 9.5% internal rate of return. If Metropolitan does not redeem the preferred interest, upon the expiration of the two-year period, Crescent must convert its $85 million preferred interest into either (i) a common membership interest in Metropolitan or (ii) shares of the Company's Class A common stock at a conversion price of $24.61 per share. The market capitalization of the Operating Partnership at June 30, 2000 was approximately $3.33 billion. The Operating Partnership's market capitalization is calculated based on the sum of (i) the value of the Operating Partnership's Class A common units and Class B common units (which, for this purpose, is assumed to be the same per unit as the market value of a share of the Company's Class A common stock and Class B common stock), (ii) the liquidation preference values of the Operating Partnership's preferred units, (iii) the contributed value of Metropolitan's preferred interest and (iv) the approximately $1.41 billion (including its share of joint venture debt and net of minority partners' interest) of debt outstanding at June 30, 2000. As a result, the Operating Partnership's total debt to total market capitalization ratio at June 30, 2000 equaled approximately 42.3%. RESULT OF OPERATIONS The Operating Partnership's total revenues increased by $34.6 million or 38.1% for the three months ended June 30, 2000 as compared to the 1999 period. Property operating revenues, which include base rents and tenant escalations and reimbursements ("Property Operating Revenues") increased by $23.3 million or 27.2% for the three months ended June 30, 2000 as compared to the 1999 period. The increase in Property Operating Revenues is substantially attributable to the Tower portfolio acquisition in May 1999, the acquisition of the first mortgage note secured by 919 Third Avenue (which revenue was reflected in Property Operating Revenues) in June 1999 and the acquisition of 1350 Avenue of the Americas in January 2000. In addition, Property Operating Revenues were also positively impacted by approximately $3.6 million from increases in occupancies and rental rates in our "same store" properties. The Operating Partnership's base rent reflects the positive impact of the straight-line rent adjustment of $8.3 million for the three months ended June 30, 2000 as compared to $3.2 million for the 1999 period. The remaining balance of the increase in total revenues is attributable to the gain on sales of real estate, interest income and fees relating to the FrontLine Facility and the RSVP Commitment and earnings generated by RSVP-controlled joint venture REIT-qualified investments. Property operating expenses, real estate taxes and ground rents ("Property Expenses") increased by $8.8 million or 32.1% for the three months ended June 30, 2000 as compared to the 1999 period. These increases are primarily due to the acquisition of the Tower portfolio in May 1999, the acquisition of the first mortgage note secured by 919 Third Avenue in June 1999, (which operations were reflected in Property Expenses) and the acquisition of 1350 Avenue of the Americas in January 2000. Gross operating margins (defined as Property Operating Revenues less Property Expenses, taken as a percentage of Property Operating Revenues) for the three months ended June 30 , 2000 and 1999 were 66.7% and 67.9% respectively. The decrease in gross operating margins is primarily attributable to a larger proportionate share of gross operating margin derived from office properties, which has a lower gross margin percentage, in 2000 compared to 1999. The higher proportionate share of the gross operating margins is attributable to the office properties acquired during the period May 1999 through January 2000 and the disposition of net leased industrial properties in September 1999 and April 2000. This shift in the composition of the portfolio was offset by increases in rental rates and operating efficiencies realized. Marketing, general and administrative expenses increased by $2.2 million for the three months ended June 30, 2000 as compared to the 1999 period. The increase is due to the increased costs of managing the acquisition properties and the increase in corporate management and administrative costs associated with 13

the growth of the Operating Partnership including the opening of its New York City division. Marketing, general and administrative expenses as a percentage of total revenues were 5.4% for the three months ended June 30, 2000 as compared to 5.0% for the 1999 period. Interest expense increased by $5.3 million for the three months ended June 30, 2000 as compared to the 1999 period. The increase is due to secured borrowings assumed in the Tower acquisition as well as new debt incurred with the Tower and 1350 Avenue of the Americas acquisitions. Additionally, the increase is due to an increase cost attributable to an increased balance on the Operating Partnership's credit facility and term loan. The weighted average balance outstanding on the Operating Partnership's credit facility and term loan was $464.1 million for the three months ended June 30, 2000 as compared to $352.1 million for the three months ended June 30, 1999. The Operating Partnership's total revenues increased by $76.2 million or 45.6% for the six months ended June 30, 2000 as compared to the 1999 period. Property Operating Revenues, which include base rents and tenant escalations and reimbursements increased by $59.9 million or 38.3% for the six months ended June 30, 2000 as compared to the 1999 period. The increase in Property Operating Revenues is substantially attributable to the Tower portfolio acquisition in May 1999, the acquisition of the first mortgage note secured by 919 Third Avenue (which revenue was reflected in Property Operating Revenues) in June 1999 and the acquisition of 1350 Avenue of the Americas in January 2000. In addition, Property Operating Revenues were also positively impacted by approximately $5.4 million from increases in occupancies and rental rates in our "same store" properties. The Operating Partnership's base rent reflects the positive impact of the straight-line rent adjustment of $12.8 million for the six months ended June 30, 2000 as compared to $4.6 million for the 1999 period. The remaining balance of the increase in total revenues is attributable to the gain on sales of real estate, interest income and fees relating to the FrontLine Facility and the RSVP Commitment and earnings generated by RSVP-controlled joint venture REIT-qualified investments. Property Expenses increased by $24.1 million or 47.7% for the six months ended June 30, 2000 as compared to the 1999 period. These increases are primarily due to the acquisition of the Tower portfolio in May 1999, the acquisition of the first mortgage note secured by 919 Third Avenue in June 1999, (which operations were reflected in Property Expenses) and the acquisition of 1350 Avenue of the Americas in January 2000. Gross Operating Margins for the six months ended June 30 , 2000 and 1999 were 65.6% and 67.8% respectively. The decrease in gross operating margins is primarily attributable to a larger proportionate share of gross operating margin derived from office properties, which has a lower gross margin percentage, in 2000 compared to 1999. The higher proportionate share of the gross operating margins is attributable to the office properties acquired during the period May 1999 through January 2000 and the disposition of net leased industrial properties in September 1999. This shift in the composition of the portfolio was offset by increases in rental rates and operating efficiencies realized. Marketing, general and administrative expenses increased by $4.0 million for the six months ended June 30, 2000 as compared to the 1999 period. The increase is due to the increased costs of managing the acquisition properties and the increase in corporate management and administrative costs associated with the growth of the Operating Partnership including the opening of its New York City division. Marketing, general and administrative expenses as a percentage of total revenues were 5.2% for the six month periods ended June 30, 2000 and June 30, 1999. Interest expense increased by $15.2 million for the six months ended June 30, 2000 as compared to the 1999 period. The increase is primarily due to secured borrowings assumed in the Tower acquisition as well as new debt incurred with the Tower and 1350 Avenue of the Americas acquisitions. Additionally, the increase is also due to $300 million of Senior Unsecured Notes issued on March 26, 1999 and an increased cost attributable to an increased average balance on the Operating Partnership's credit facility and term loan. The weighted average balance on the Operating Partnership's credit facility and term loan was $464.8 million for the six months ended June 30, 2000 as compared to $429.0 million for the six months ended June 30, 1999. 14

LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2000, the Operating Partnership had a three year $500 million unsecured revolving credit facility (the "Credit Facility") from Chase Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the Credit Facility bank group which matures in July, 2001. Interest rates on borrowings under the Credit Facility are priced off of LIBOR plus 90 basis points. The Operating Partnership utilizes the Credit Facility primarily to finance the acquisitions of properties and other real estate investments, fund its development activities and for working capital purposes. At June 30, 2000, the Operating Partnership had availability under the Credit Facility to borrow an additional $126.4 million (of which, $49.1 million has been reserved for outstanding undrawn letters of credit). As of June 30, 2000, the Operating Partnership had an 18-month, $75 million unsecured term loan (the "Term Loan") from Chase Manhattan Bank which matures in June, 2001. Interest rates on borrowings under the Term Loan are priced off of LIBOR plus 150 basis points. On May 24, 1999, the Operating Partnership issued 11,694,567 Class B common units of general partnership interest to the Company which were valued for GAAP purposes at $26 per unit for total consideration of approximately $304.1 million. The Class B common units were entitled to receive an initial annual distribution of $2.24 per unit, which distribution is subject to adjustment annually. On July 1, 2000, the annual distribution on the Class B common units was increased to $2.40 per unit. The Class B common units are exchangeable at any time, at the option of the holder, into an equal number of Class A common units subject to customary antidilution adjustments. The Operating Partnership, at its option, may redeem any or all of the Class B common units in exchange for an equal number of Class A common units at any time following the four year, six-month anniversary of the issuance of the Class B common units. On June 20, 2000, the Operating Partnership issued 4,181,818 Class A common units in exchange for four million Series E preferred units of general partnership interest with a liquidation preference value of $100 million. As of June 30, 2000, in conjunction with the Company's Class B common stock buy back program, the Operating Partnership had purchased and retired 1,410,804 Class B common units for approximately $30.3 million. The Operating Partnership's indebtedness at June 30, 2000 totaled approximately $1.41 billion (including its share of joint venture debt and net of the minority partners' interests) and was comprised of $373.6 million outstanding under the Credit Facility, $75 million outstanding under the Term Loan, approximately $449.3 million of senior unsecured notes and approximately $513.3 million of mortgage indebtedness. Based on the Operating Partnership's total market capitalization of approximately $3.33 billion at June 30, 2000 (calculated based on the sum of (i) the value of the Operating Partnership's Class A common units and Class B common units (which, for this purpose, is assumed to be the same per unit as the market value of a share of the Company's Class A common stock and Class B common stock), (ii) the liquidation preference value of the Operating Partnership's preferred units, (iii) the contributed value of Metropolitan's preferred interest and (iv) the $1.41 billion of debt), the Operating Partnership's debt represented approximately 42.3% of its total market capitalization. Historically, rental revenue has been the principal source of funds to pay operating expenses, debt service and capital expenditures, excluding non-recurring capital expenditures of the Operating Partnership. The Operating Partnership expects to meet its short-term liquidity requirements generally through its net cash provided by operating activities along with the Credit Facility previously discussed. The Operating Partnership expects to meet certain of its financing requirements through long-term secured and unsecured borrowings and the issuance of debt and equity securities of the Operating Partnership. In addition, the Operating Partnership also believes that it will, from time to time, generate funds from the sale of certain of its real estate properties or interests therein. The Operating Partnership will refinance existing mortgage indebtedness or indebtedness under the Credit Facility at maturity or 15

retire such debt through the issuance of additional debt securities or additional equity securities. The Operating Partnership anticipates that the current balance of cash and cash equivalents and cash flows from operating activities, together with cash available from borrowings and debt and equity offerings, will be adequate to meet the capital and liquidity requirements of the Operating Partnership in both the short and long-term. INFLATION The office leases generally provide for fixed base rent increases or indexed escalations. In addition, the office leases provide for separate escalations of real estate taxes and electric costs over a base amount. The industrial leases also generally provide for fixed base rent increases, direct pass through of certain operating expenses and separate real estate tax escalations over a base amount. The Operating Partnership believes that inflationary increases in expenses will generally be offset by contractual rent increases and expense escalations described above. The Credit Facility and Term Loan bear interest at a variable rate, which will be influenced by changes in short-term interest rates, and are sensitive to inflation. FUNDS FROM OPERATIONS Management believes that funds from operations ("FFO") is an appropriate measure of performance of an operating partnership which is a general partner of an equity REIT. FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as net income or loss, excluding gains or losses from debt restructurings and sales of properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles 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 Operating Partnership's operating performance or as an alternative to cash flow as a measure of liquidity. In November 1999, NAREIT issued a "White Paper" analysis to address certain interpretive issues under its definition of FFO. The White Paper provides that FFO should include both recurring and non-recurring operating results, except those results defined as "extraordinary items" under GAAP. This revised definition is effective for all periods beginning on or after January 1, 2000. Since all companies and analysts do not calculate FFO in a similar fashion, the Operating Partnership's calculation of FFO presented herein may not be comparable to similarly titled measures as reported by other companies. The following table presents the Operating Partnership's FFO calculation (in thousands): THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------ ------------------------ 2000 1999 2000 1999 ---------- ----------- ---------- ----------- Net Income available to common unit holders ......... $25,927 $ 13,124 $44,739 $ 27,005 Adjustment for Funds From Operations: Add: Real estate depreciation and amortization .......... 21,937 18,406 42,552 33,094 Minority partners' interests in consolidated partnerships ..................................... 1,925 1,615 3,899 2,783 Less: Gain on sales of real estate ....................... 6,662 -- 6,662 -- Amount distributed to minority partners in consolidated partnerships ........................ 2,136 1,980 4,517 3,424 ------- -------- ------- -------- Funds From Operations ............................... $40,991 $ 31,165 $80,011 $ 59,458 ======= ======== ======= ======== Weighted average units outstanding .................. 59,322 52,873 58,843 50,330 ======= ======== ======= ======== 16

SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES, TENANT IMPROVEMENTS AND LEASING COMMISSIONS The following table summarizes the expenditures incurred for non-incremental capital expenditures, tenant improvements and leasing commissions for the Operating Partnership's office and industrial properties for the six month period ended June 30, 2000 and the historical average of such non-incremental capital expenditures, tenant improvements and leasing commissions for the years 1996 through 1999. NON-INCREMENTAL REVENUE GENERATING CAPITAL EXPENDITURES SIX MONTHS 1996-1999 ENDED 1996 1997 1998 1999 AVERAGE JUNE 30, 2000 ------------- --------------- --------------- --------------- --------------- -------------- SUBURBAN OFFICE PROPERTIES Total ................... $ 375,026 $ 1,108,675 $ 2,004,976 $ 2,298,899 $ 1,446,894 $ 1,698,839 Per Square Foot ......... 0.13 0.22 0.23 0.23 0.20 0.17 CBD OFFICE PROPERTIES Total ................... N/A N/A N/A N/A N/A $ 746,275 Per Square Foot ......... N/A N/A N/A N/A N/A 0.35 INDUSTRIAL PROPERTIES Total ................... $ 670,751 $ 733,233 $ 1,205,266 $ 1,048,688 $ 914,485 $ 431,699 Per Square Foot ......... 0.18 0.15 0.12 0.11 0.14 0.05 NON-INCREMENTAL REVENUE GENERATING TENANT IMPROVEMENTS AND LEASING COMMISSIONS SIX MONTHS 1996-1999 ENDED 1996 1997 1998 1999 AVERAGE JUNE 30, 2000 ------------- -------------- --------------- --------------- -------------- -------------- LONG ISLAND OFFICE PROPERTIES Tenant Improvements .............. $ 523,574 $ 784,044 $ 1,140,251 $ 1,009,357 $ 864,307 $ 778,333 Per Square Foot Improved ......... 4.28 7.00 3.98 4.73 5.00 5.06 Leasing Commissions .............. $ 119,047 $ 415,822 $ 418,191 $ 551,762 $ 376,206 $ 936,595 Per Square Foot Leased ........... 0.97 4.83 1.46 2.59 2.46 4.92 --------- ---------- ----------- ----------- ---------- --------- Total Per Square Foot ............ $ 5.25 $ 11.83 $ 5.44 $ 7.32 $ 7.46 $ 9.98 ========= ========== =========== =========== ========== ========= WESTCHESTER OFFICE PROPERTIES Tenant Improvements .............. $ 834,764 $1,211,665 $ 711,160 $ 1,316,611 $1,018,550 $ 712,852 Per Square Foot Improved ......... 6.33 8.90 4.45 5.62 6.33 7.33 Leasing Commissions .............. $ 264,388 $ 366,257 $ 286,150 $ 457,730 $ 343,631 $ 131,402 Per Square Foot Leased ........... 2.00 2.69 1.79 1.96 2.11 3.00 --------- ---------- ----------- ----------- ---------- --------- Total Per Square Foot ............ $ 8.33 $ 11.59 $ 6.24 $ 7.58 $ 8.44 $ 10.33 ========= ========== =========== =========== ========== ========= CONNECTICUT OFFICE PROPERTIES (A) Tenant Improvements .............. $ 58,000 $1,022,421 $ 202,880 $ 179,043 $ 449,952 $ 230,365 Per Square Foot Improved ......... 12.45 13.39 5.92 4.88 9.16 5.44 Leasing Commissions .............. $ 0 $ 256,615 $ 151,063 $ 110,252 $ 159,363 $ 113,263 Per Square Foot Leased ........... 0.00 3.36 4.41 3.00 2.69 2.67 --------- ---------- ----------- ----------- ---------- --------- Total Per Square Foot ............ $ 12.45 $ 16.75 $ 10.33 $ 7.88 $ 11.85 $ 8.11 ========= ========== =========== =========== ========== ========= NEW JERSEY OFFICE PROPERTIES Tenant Improvements .............. N/A N/A $ 654,877 $ 454,054 $ 554,466 $ 914,789 Per Square Foot Improved ......... N/A N/A 3.78 2.29 3.04 7.03 Leasing Commissions .............. N/A N/A $ 396,127 $ 787,065 $ 591,596 $ 739,594 Per Square Foot Leased ........... N/A N/A 2.08 3.96 3.02 5.83 --------- ---------- ----------- ----------- ---------- --------- Total Per Square Foot ............ N/A N/A $ 5.86 $ 6.25 $ 6.06 $ 12.86 ========= ========== =========== =========== ========== ========= NEW YORK OFFICE PROPERTIES Tenant Improvements .............. N/A N/A N/A N/A N/A $ 11,977 Per Square Foot Improved ......... N/A N/A N/A N/A N/A 1.18 Leasing Commissions .............. N/A N/A N/A N/A N/A $ 21,031 Per Square Foot Leased ........... N/A N/A N/A N/A N/A 2.07 --------- ---------- ----------- ----------- ---------- --------- Total Per Square Foot ............ N/A N/A N/A N/A N/A $ 3.25 ========= ========== =========== =========== ========== ========= INDUSTRIAL PROPERTIES Tenant Improvements .............. $ 380,334 $ 230,466 $ 283,842 $ 375,646 $ 317,572 $ 263,746 Per Square Foot Improved ......... 0.72 0.55 0.76 0.25 0.57 0.50 Leasing Commissions .............. $ 436,213 $ 81,013 $ 200,154 $ 835,108 $ 388,122 $ 115,590 Per Square Foot Leased ........... 0.82 0.19 0.44 0.56 0.50 0.22 --------- ---------- ----------- ----------- ---------- --------- Total Per Square Foot ............ $ 1.54 $ 0.74 $ 1.20 $ 0.81 $ 1.07 $ 0.72 ========= ========== =========== =========== ========== ========= - ---------- (A) 1996 -- 1999 average weighted to reflect October 1996 acquisition date 17

LEASE EXPIRATIONS The following table sets forth scheduled lease expirations for executed leases as of June 30, 2000: LONG ISLAND OFFICE PROPERTIES (EXCLUDING OMNI): YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ 21 57,738 1.9% $ 20.43 $ 22.65 2001 ........................ 42 193,716 6.3% $ 22.44 $ 24.45 2002 ........................ 35 287,016 9.3% $ 21.86 $ 24.21 2003 ........................ 50 310,620 10.1% $ 22.17 $ 25.08 2004 ........................ 45 275,654 9.0% $ 23.04 $ 25.73 2005 ........................ 56 557,431 18.2% $ 22.87 $ 25.16 2006 AND THEREAFTER ......... 78 1,389,520 45.2% -- -- -- --------- ----- TOTAL ....................... 327 3,071,695 100.0% === ========= ===== OMNI: YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ -- -- -- -- -- 2001 ........................ 4 32,680 5.8% $ 27.39 $ 32.92 2002 ........................ 4 129,351 22.8% $ 30.00 $ 38.62 2003 ........................ 6 81,809 14.4% $ 29.60 $ 33.87 2004 ........................ 4 112,414 19.8% $ 26.05 $ 33.44 2005 ........................ 6 59,115 10.4% $ 27.91 $ 34.38 2006 AND THEREAFTER ......... 6 152,411 26.8% -- -- -- ------- ----- TOTAL ....................... 30 567,780 100.0% == ======= ===== INDUSTRIAL PROPERTIES: YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ 18 276,554 5.6% $ 5.43 $ 6.10 2001 ........................ 30 624,759 12.6% $ 5.79 $ 7.00 2002 ........................ 26 240,344 4.8% $ 6.43 $ 7.19 2003 ........................ 29 728,234 14.6% $ 5.29 $ 6.10 2004 ........................ 34 634,085 12.8% $ 6.40 $ 7.07 2005 ........................ 15 368,464 7.4% $ 5.65 $ 7.91 2006 AND THEREAFTER ......... 44 2,097,360 42.2% -- -- -- --------- ----- TOTAL ....................... 196 4,969,800 100.0% === ========= ===== 18

LEASE EXPIRATIONS -- (CONTINUED) RESEARCH AND DEVELOPMENT PROPERTIES: YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ 3 22,501 1.8% $ 12.49 $ 11.06 2001 ........................ 7 96,120 7.5% $ 11.61 $ 13.21 2002 ........................ 3 118,620 9.3% $ 10.19 $ 11.80 2003 ........................ 6 301,064 23.5% $ 5.72 $ 6.71 2004 ........................ 10 129,218 10.1% $ 11.98 $ 13.43 2005 ........................ 3 293,704 23.0% $ 8.08 $ 8.86 2006 AND THEREAFTER ......... 13 317,457 24.8% -- -- -- ------- ----- TOTAL ....................... 45 1,278,684 100.0% == ========= ===== WESTCHESTER OFFICE PROPERTIES: YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ 22 118,125 3.9% $ 20.53 $ 21.07 2001 ........................ 38 253,217 8.3% $ 20.79 $ 21.07 2002 ........................ 48 459,216 15.1% $ 20.12 $ 20.37 2003 ........................ 42 259,105 8.5% $ 21.90 $ 23.14 2004 ........................ 26 164,609 5.4% $ 21.27 $ 22.01 2005 ........................ 29 302,342 9.9% $ 22.52 $ 23.57 2006 AND THEREAFTER ......... 40 1,483,874 48.9% -- -- -- --------- ----- TOTAL ....................... 245 3,040,488 100.0% === ========= ===== STAMFORD OFFICE PROPERTIES: YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ 18 83,909 8.0% $ 21.52 $ 22.39 2001 ........................ 23 112,738 10.7% $ 24.46 $ 24.16 2002 ........................ 19 100,029 9.5% $ 27.15 $ 28.31 2003 ........................ 13 94,448 9.0% $ 31.61 $ 32.41 2004 ........................ 21 224,424 21.3% $ 22.85 $ 23.71 2005 ........................ 12 80,132 7.6% $ 26.79 $ 29.02 2006 AND THEREAFTER ......... 19 357,199 33.9% -- -- -- ------- ----- TOTAL ....................... 125 1,052,879 100.0% === ========= ===== 19

LEASE EXPIRATIONS -- (CONTINUED) NEW JERSEY OFFICE PROPERTIES: YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ 7 29,478 1.5% $ 17.20 $ 17.68 2001 ........................ 21 247,144 12.8% $ 17.68 $ 17.95 2002 ........................ 21 180,187 9.4% $ 19.92 $ 20.41 2003 ........................ 21 337,598 17.5% $ 20.02 $ 20.21 2004 ........................ 35 248,891 12.9% $ 22.69 $ 23.13 2005 ........................ 28 343,777 17.9% $ 22.47 $ 23.12 2006 AND THEREAFTER ......... 17 539,228 28.0% -- -- -- ------- ----- TOTAL ....................... 150 1,926,303 100.0% === ========= ===== NEW YORK CITY OFFICE YEAR OF TOTAL RENTABLE % OF TOTAL PER PER LEASE NUMBER SQUARE FEET RENTABLE SQUARE SQUARE FOOT SQUARE FOOT EXPIRATION OF LEASES EXPIRING FEET EXPIRING S/L RENT (1) RENT (2) - ----------------------------- ----------- ---------------- ----------------- -------------- ------------ 2000 ........................ 8 85,054 2.6% $ 30.12 $ 31.68 2001 ........................ 21 172,930 5.3% $ 37.24 $ 35.12 2002 ........................ 18 184,130 5.6% $ 31.98 $ 32.83 2003 ........................ 7 115,726 3.5% $ 31.89 $ 32.34 2004 ........................ 18 215,648 6.6% $ 35.83 $ 36.97 2005 ........................ 30 437,437 13.3% $ 34.63 $ 35.94 2006 AND THEREAFTER ......... 110 2,072,808 63.1% -- -- --- --------- ----- TOTAL ....................... 212 3,283,733 100.0% === ========= ===== (1) Per square foot rental rate represents annualized straight line rent as of the lease expiration date. (2) Per square foot rental rate represents annualized base rent as of the lease expiration date plus non-recoverable operating expense pass-throughs. 20

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The primary market risk facing the Operating Partnership is interest rate risk on its long-term debt, mortgage notes and notes receivable. The Operating Partnership does not hedge interest rate risk using financial instrument nor is the Operating Partnership subject to foreign currency risk. The Operating Partnership manages its exposure to interest rate risk on its variable rate indebtedness by borrowing on a short-term basis under its Credit Facility or Term Loan until such time as it is able to retire the short-term variable rate debt with a long-term fixed rate debt offering on terms that are advantageous to the Operating Partnership or through general partner contributions. The following table sets forth the Operating Partnership's long term debt obligations by scheduled principal cash flow payments and maturity date, weighted average interest rates and estimated fair market value ("FMV") at June 30, 2000 (dollars in thousands): FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------------------ 2000 2001 2002 2003 2004 ------------ ------------- ------------- ----------- ------------- Long term debt: Fixed rate ............................. $ 11,577 $ 23,048 $ 16,820 $ 8,698 $ 112,146 Weighted average interest rate ......... 7.49% 7.59% 7.80% 7.78% 7.50% Variable rate .......................... $ -- $ 518,600 $ -- $ -- $ -- Weighted average interest rate ......... -- 7.62% -- -- -- THEREAFTER TOTAL(1) FMV ------------ ------------- ----------- Long term debt: Fixed rate ............................. $ 735,177 $ 907,466 $ 907,466 Weighted average interest rate ......... 7.56% 7.56% Variable rate .......................... $ -- $ 518,600 $ 518,600 Weighted average interest rate ......... -- 7.62% - ------------------ (1) Includes unamortized issuance discounts of $652,000 on the 5 and 10-year senior unsecured notes issued on March 26, 1999, which are due at maturity. In addition, the Operating Partnership has assessed the market risk for its variable rate debt, which is based upon LIBOR, and believes that a one percent increase in the LIBOR rate would have an approximate $5.2 million annual increase in interest expense based on approximately $518.6 million outstanding at June 30, 2000. The following table sets forth the Operating Partnership's mortgage notes and note receivables by scheduled maturity date, weighted average interest rates and estimated FMV at June 30, 2000 (dollars in thousands): FOR THE YEAR ENDED DECEMBER 31, --------------------------------------------------------- 2000 2001 2002 2003 2004 -------------- ---------- ----------- ------ ------------ Mortgage notes and notes receivable: Fixed rate ............................. $ 283,116 $ 15 $ 9,361 $ -- $ 36,500 Weighted average interest rate ......... 9.42% 9.00% 10.31% -- 10.23% THEREAFTER TOTAL (2) FMV ------------ -------------- ----------- Mortgage notes and notes receivable: Fixed rate ............................. $ 16,990 $ 345,982 $345,982 Weighted average interest rate ......... 11.65% 9.64% The fair value of the Operating Partnership's long term debt, mortgage notes and notes receivable is estimated based on discounting future cash flows at interest rates that management believes reflects the risks associated with long term debt, mortgage notes and notes receivable of similar risk and duration. - ------------------ (2) Excludes mortgage note receivable acquisition costs and interest receivables aggregating approximately $10.7 million. 21

PART II -- OTHER INFORMATION Item 1. Legal Proceedings -- None Item 2. Changes in Securities and use of proceeds On June 20, 2000, the Operating Partnership issued 4,181,818 Class A common units in exchange for four million Series E preferred units of general partnership interest with a liquidation preference value of $100 million. This transaction was exempt from registration pursuant to section 4(2) of the Securities Act of 1933. Item 3. Defaults Upon Senior Securities -- None Item 4. Submission of Matters to a Vote of Securities Holders -- None Item 5. Other information -- None Item 6. Exhibits and Reports on Form 8-K a) Exhibits: NUMBER - ----------- 27.0 Financial Data Schedule b) During the three months ended June 30, 2000 the Registrant did not file any reports on Form 8K. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RECKSON OPERATING PARTNERSHIP, L.P. BY: RECKSON ASSOCIATES REALTY CORP., ITS GENERAL PARTNER By: \s\ Scott H. Rechler \s\ Michael Maturo -------------------------------- ----------------------------------- Scott H. Rechler, Co-Chief Executive Officer Michael Maturo, Executive Vice President, and President Treasurer and Chief Financial Officer DATE: August 10, 2000 22

5 (Replace this text with the legend) 0000930810 RECKSON OPERATING PARTNERSHIP, L.P. 1,000 US DOLLARS 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 1 26,514 0 224,573 0 0 251,087 2,369,426 (254,595) 2,885,772 117,892 1,425,414 0 313,126 937,269 0 2,885,772 216,329 243,105 0 87,172 0 0 48,016 64,480 0 64,480 0 0 0 44,739 .70 0