SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: March 5, 2001
RECKSON ASSOCIATES REALTY CORP.
and
RECKSON OPERATING PARTNERSHIP, L.P.
(Exact name of each Registrant as specified in its Charter)
Reckson Associates Realty Corp. - Maryland Reckson Associates Realty Corp. -
Reckson Operating Partnership, L.P. - Delaware 11-3233650
(State or other jurisdiction of incorporation or organization) Reckson Operating Partnership, L.P. -
11-3233647
(IRS Employer ID Number)
225 Broadhollow Road 11747
Melville, New York (Zip Code)
(Address of principal executive offices)
1-13762
(Commission File Number)
(631) 694-6900
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99 Reckson Associates Realty Corp. Fourth Quarter Presentation,
dated March 5, 2001
ITEM 9. REGULATION FD DISCLOSURE
The Registrants are attaching the Fourth Quarter Presentation as
Exhibit 99 to this Current Report on Form 8-K.
Note: the information in this report (including the exhibit) is
furnished pursuant to Item 9 and shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities of that section. This report will not be deemed an
admission as to the materiality of any information in the report that is
required to be disclosed solely by Regulation FD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Michael Maturo
-------------------------------------
Michael Maturo
Executive Vice President
and Chief Financial Officer
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
its General Partner
By: /s/ Michael Maturo
-------------------------------------
Michael Maturo
Executive Vice President
and Chief Financial Officer
Date: March 5, 2001
3
F0URTH QUARTER PRESENTATION
March 5, 2001
RECKSON
HIGHLIGHTS
o Reported diluted FFO of $.67 per share for the fourth quarter of 2000, as
compared to $.59 per share for the comparable 1999 period, representing an
increase of 13.6%.
o Reported diluted FFO of $2.59 per share for the year ended December 31,
2000, as compared to $2.31 per share for the comparable 1999 period,
representing an increase of 12.1%.
o Generated a 10.6% increase (cash) and 10.2% increase (GAAP) in same property
NOI for the fourth quarter of 2000. Generated a 5.2% increase (cash) and
6.7% increase (GAAP) in same property NOI for the 12 months ended December
31, 2000.
o Generated same space average rent growth of 24.0% for Office and 17.9% for
Industrial/R&D for the fourth quarter of 2000. Generated same space average
rent growth of 17.5% for Office and 18.7% for Industrial/R&D for the 12
months ended December 31, 2000.
o Executed 295 leases totaling 3,980,168 square feet during 2000.
o Reached realization on 2.9 million square feet of value creation projects
for a total investment of $528 million that are estimated to generate an
average NOI return of 12.2%.
o Withdrew offer to purchase the tract of land which is part of the Pilgrim
State property from New York State.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 1
FFO PER SHARE GROWTH
QUARTERLY FFO/SHARE GROWTH
4Q96 $0.41
4Q97 $0.47 14.6%
4Q98 $0.54 14.9%
4Q99 $0.59 9.3%
4Q00 $0.67 13.6%
ANNUALLY
1996 $1.54
1997 $1.73 12.3%
1998 $2.04 17.9%
1999 $2.31 13.2%
2000 $2.59 12.1%
13.9% DILUTED COMPOUNDED FFO ANNUAL GROWTH PER SHARE
(1) DILUTED PER SHARE AMOUNTS ARE CALCULATED IN ACCORDANCE WITH NAREIT
GUIDELINES WHICH ADJUST GAAP BY REPLACING NET INCOME WITH FFO. IF DILUTED PER
SHARE AMOUNTS WERE CALCULATED IN ACCORDANCE WITH GAAP, WEIGHTED AVERAGE DILUTED
SHARES WOULD APPROXIMATE WEIGHTED AVERAGE BASIC SHARES. 96% AND 97% OF THE
INCREMENTAL DILUTED SHARES ARE ATTRIBUTABLE TO THE ASSUMED CONVERSION OF
OUTSTANDING CONVERTIBLE PREFERRED SECURITIES WHICH ON A WEIGHTED AVERAGE BASIS
WERE APPROXIMATELY 10% AND 9% OUT OF THE MONEY AT THE QUARTER AND YEAR ENDED
DECEMBER 31, 2000, RESPECTIVELY.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 2
DILUTED CAD PER SHARE ANALYSIS
FOURTH QUARTER 2000
- -------------------
Diluted CAD Per Share Reported $0.43
Add Back 919 Third Avenue Straight-Line Rent 0.15
Adjusted CAD Per Share 0.58
------
CAD Prior Year Three Months $0.49
======
Adjusted Percent Increase 18.0%
======
YEAR-ENDED DECEMBER 31, 2000
- ----------------------------
Diluted CAD Per Share Reported $1.82
Add Back 919 Third Avenue Straight-line Rent 0.38
Adjusted CAD Per Share 2.20
------
CAD Prior Year 12 Months $2.02
======
Adjusted Percent Increase 8.9%
======
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 3
PORTFOLIO COMPOSITION
NET OPERATING INCOME
NEW YORK CITY LONG ISLAND CONNECTICUT NEW JERSEY WESTCHESTER
31% 34% 7% 11% 17%
PRO FORMA PORTFOLIO STATS
o 21.3 MILLION SQUARE FEET
o 188 PROPERTIES
o 1,350 TENANTS
o FIVE INTEGRATED OPERATING DIVISIONS
o NOI:
OFFICE 86%
INDUSTRIAL 14%
o 47% OF OFFICE REVENUE GENERATED FROM CBD MARKETS
o 70% OF SUBURBAN OFFICE PROPERTIES IN FULLY SERVICED OFFICE PARKS
o OCCUPANCY: (A)
OFFICE 97%
INDUSTRIAL 98%
(A) EXCLUDING PROPERTIES UNDER DEVELOPMENT
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 4
TENANT DIVERSIFICATION
OUR 30 LARGEST OFFICE TENANTS REPRESENT 32% OF REVENUE
CONSUMER TELECOM HEALTHCARE PROFESSIONAL INSURANCE PHARMACEUTICALS FINANCIAL
PRODUCTS 18% 4% SERVICES 9% 2% SERVICES
20% 28% 19%
o 1,350 TOTAL TENANTS
o 12,000 SQ. FT. AVERAGE
OFFICE LEASE SIZE
o 26,000 SQ. FT. AVERAGE
INDUSTRIAL LEASE SIZE
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 5
FAVORABLE MARKETS
SOUTHERN CONNECTICUT
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 6.1% 4.2% 3.6% 4.0% 7.2%
Average Asking Rental Rates $26.19 $28.96 $32.22 $31.78 $44.41
LONG ISLAND
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 12.7% 8.7% 6.1% 5.6% 6.3%
Average Asking Rental Rates $23.83 $26.14 $27.23 $27.69 $28.86
WESTCHESTER
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 16.0% 13.3% 16.4% 15.0% 10.7%
Average Asking Rental Rates $23.67 $25.14 $26.67 $27.23 $29.62
NORTHERN NEW JERSEY
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 9.1% 4.7% 5.3% 4.6% 6.5%
Average Asking Rental Rates $24.55 $25.38 $27.42 $28.52 $29.66
SOURCE: CUSHMAN & WAKEFIELD CLASS A STATISTICS
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 6
FAVORABLE MARKETS
NYC FINANCIAL EAST
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 16.0% 8.2% 6.6% 3.4% 1.4%
Average Asking Rental Rates $30.80 $29.77 $40.21 $37.64 $52.90
NYC MIDTOWN WEST SIDE
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 6.2% 3.7% 3.3% 4.6% 2.4%
Average Asking Rental Rates $31.92 $33.10 $43.36 $48.28 $60.89
NYC MIDTOWN EAST SIDE
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 7.6% 5.6% 6.0% 3.8% 1.9%
Average Asking Rental Rates $36.27 $39.33 $47.85 $51.18 $61.46
NYC SIXTH AVE./ROCKEFELLER CENTER
YE96 YE97 YE98 YE99 YE00
Direct Vacancy 4.8% 2.7% 2.2% 1.6% 0.9%
Average Asking Rental Rates $39.43 $43.62 $51.33 $53.12 $65.91
SOURCE: CUSHMAN & WAKEFIELD CLASS A STATISTICS
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 7
PORTFOLIO PERFORMANCE
SAME PROPERTY NOI
(for the periods ended 12/31/00 as compared to 12/31/99)
THREE MONTHS SIX MONTHS TWELVE MONTHS
CASH NOI 10.6% 9.5% 5.2%
GAAP NOI 10.2% 10.4% 6.7%
8.3% Cash Revenue Increase (a) 8.9% Cash Revenue Increase 6.0% Cash Revenue Increase
3.9% Expense Increase (a) 7.7% Expense Increase 7.4% Expense Increase
(a) Represents net of increase in tenant reimbursements. Excluding this
increase in reimbursements, revenues and expenses increased 11.0% and
11.9%, respectively.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 8
PORTFOLIO PERFORMANCE
SAME PROPERTY NOI (a)
CASH NOI GAAP NOI
Connecticut 10.6% 7.7%
Long Island 10.2% 11.5%
New Jersey 11.5% 15.2%
NYC 16.9% 8.8%
Westchester 1.6% 7.3%
(a) BASED ON COMPARISON PERIOD FOR THE SIX MONTHS ENDED DECEMBER 31, 2000
VERSUS THE SIX MONTHS ENDED DECEMBER 31, 1999
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 9
PORTFOLIO PERFORMANCE
FOURTH QUARTER SAME SPACE AVERAGE RENT GROWTH
EXPIRING LEASES NEW LEASES
OFFICE RENT GROWTH: 24% $22.58 $28.00
INDUSTRIAL/R&D RENT GROWTH: 18% $ 8.83 $10.42
o 59 LEASES EXECUTED TOTALING 984,733 SQ. FT.
o SAME SPACE FOURTH QUARTER CASH INCREASE OF 15.5% FOR OFFICE
AND 12.5% FOR INDUSTRIAL/R&D
o SAME SPACE YEAR END GAAP INCREASE OF 17.5% FOR OFFICE
AND 18.7% FOR INDUSTRIAL/R&D
o SAME SPACE YEAR END CASH INCREASE OF 8.4% FOR OFFICE
AND 8.3% FOR INDUSTRIAL/R&D
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 10
LEASE EXPIRATION COMPARISON
Expiring Rent vs. Market Rent
CBD Office Portfolio
EXPIRING RENT (A) MARKET RENT (B) DIFFERENCE
CONNECTICUT $24.71 $44.41 80%
NEW YORK CITY $33.25 $60.96 83%
As of December 31, 2000
(a) Represents average rent for leases expiring over the next 6 years
(b) Average asking rents as provided by Cushman & Wakefield
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 11
LEASE EXPIRATION COMPARISON
Expiring Rent vs. Market Rent
Suburban Office Portfolio
EXPIRING RENT (A) MARKET RENT (B) DIFFERENCE
LONG ISLAND $23.78 $28.86 21%
WESTCHESTER $21.71 $29.62 36%
NEW JERSEY $20.84 $29.60 42%
As of December 31, 2000
(a) Represents average rent for leases expiring over the next 6 years
(b) Average asking rents as provided by Cushman & Wakefield
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 12
INTERNAL GROWTH - OFFICE PORTFOLIO
Potential Future Increases in Cash Flow
As of December 31, 2000
SUBURBAN OFFICE PORTFOLIO
Market Rent: $31.91 (a)
In-Place Rent: $22.57
Cash Flow Increase
$59.8 million
$0.76/diluted share
6.4 million sq. ft. expiring over the next 6 years
Portfolio Rents 41% Below Market
NEW YORK CITY OFFICE PORTFOLIO
Market Rent: $60.96 (a)
In-Place Rent: $33.25
Cash Flow Increase
$38.8 million
$0.49/diluted share
1.4 million sq. ft. expiring over the next 6 years
Portfolio Rents 83% Below Market
(a) Average asking rents as provided by Cushman & Wakefield. Calculations based
on weighted average sq. ft. expiring in each of the respective sub-markets.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 13
VALUE CREATION ACTIVITY REPORT
INVESTMENTS THAT REACHED REALIZATION DURING 2000
SQ. FT. PERCENT LEASED TOTAL ANTICIPATED ESTIMATED
LONG ISLAND INVESTMENT NOI YIELD (a)
- ----------- ------- ------------- ----------------- ------------
538 Broadhollow Road, Melville 180,339 96% $ 26,100,000 12.0%
AIP 2002, Islip 206,000 100% 13,658,000 13.1%
300 Motor Parkway, Hauppauge 181,115 100% 6,602,000 14.3%
50 Marcus Drive, Melville 163,762 100% 21,961,000 14.0%
-------- --- ------------ ----
Subtotal/Weighted Average 731,216 99% $ 68,321,000 13.1%
-------- --- ------------ ----
NEW JERSEY
- ----------
492 River Road, Nutley 130,009 100% $ 12,900,000 16.4%
One Eagle Rock, Hanover 140,000 100% 12,000,000 14.0%
155 Passaic Avenue, Fairfield 87,986 100% 5,961,000 18.5%
--------- --- ------------ ----
Subtotal/Weighted Average 357,995 100% $ 30,861,000 15.9%
--------- --- ------------ ----
WESTCHESTER
- -----------
360 Hamilton Avenue, White Plains 382,000 96% $ 59,000,000 13.0%
100 Grasslands Road, Elmsford 47,700 83% 5,000,000 14.3%
--------- --- ------------ ----
Subtotal/Weighted Average 429,700 95% $ 64,000,000 13.1%
--------- --- ------------ ----
NEW YORK CITY
- -------------
919 Third Avenue 1,374,966 98% $365,000,000 11.5% (b)
--------- --- ------------ ----
TOTAL/WEIGHTED AVERAGE 2,893,877 98% $528,182,000 12.2%
- - INVESTMENTS REACHING REALIZATION --------- --- ------------ ----
PROJECTS UNDER DEVELOPMENT 720,378 $102,502,000 12.0%
OR REPOSITIONING DURING 2001 --------- ------------ ----
PROJECTS IN PLANNING 938,500 $151,957,000 12.5%
--------- ------------ ----
(a) Forward-looking statements based upon management's estimates. Actual results
may differ materially.
(b) Yield projected to grow to 11.5% by the end of 2005.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 14
VALUE CREATION
(in millions)
1995 1996 1997 1998 1999 2000
---------------------------------------------------
INVESTED $71 $258 $164 $69 $370 $167
REALIZED $63 $63 $133 $73 $76 $671
NOI YIELD 12.5% 14.4% 12.8% 12.1% 12.0% 11.9%
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 15
FINANCIAL RATIOS & CAPITAL STRUCTURE
(in millions except ratios)
RATIOS DECEMBER 31, 2000 (HISTORICAL)
- ---------------------------------------------------------
Total Debt (a) $1,381
Total Equity $2,016
Total Market Cap $3,397
Interest Coverage Ratio 3.22X
Fixed Charge Coverage Ratio 2.55X
Debt to Total Market Cap 40.6%
Flexible Capital Structure
o Maintain conservative debt levels and ready access to capital
o Execute value creation strategy increasing cash flow and monetizing value
created to reduce debt
o Execute on capital recycling program
o Target debt-to-total asset value of 35% to 45%
o Maintain investment grade rating - access long term unsecured fixed rate debt
(a) Including pro-rata share of joint venture debt and net of minority partners'
interests
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 16
CAPITAL RECYCLING PROGRAM
$532 million of assets identified for recycling program
919 Third Avenue $225,000,000
Non-Core Office Assets 200,000,000
(9 buildings totaling approximately 1.8 million sq. ft. in multiple markets)
FrontLine Capital Group 107,000,000
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TOTAL $532,000,000
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 17
UPDATE ON RSVP AND
FRONTLINE CAPITAL GROUP
STATUS OF RSVP COMMITMENT (in thousands)
AS OF DECMBER 31, 2000 RSVP
------------------------------------------------
Direct Investments $41,018
Investments in Loans $42,138
STATUS OF FRONTLINE FACILITY (in thousands)
AS OF DECEMBER 31, 2000 FRONTLINE
------------------------------------------------
Loan Balance $93,387
Accrued Interest $13,440
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 18
2001 OBJECTIVES
o Stabilize Development Properties
o Manage Operating Expense Pressure
o Execute Capital Recycling Program
o Execute Exit Strategy of Non-Core Holdings
o Opportunistic Replenishment of the Development Pipeline
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 19
THIS INFORMATION CONTAINS FORWARD-LOOKING INFORMATION THAT IS SUBJECT TO CERTAIN
RISKS, TRENDS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE PROJECTED. AMONG THOSE RISKS, TRENDS AND UNCERTAINTIES ARE
THE GENERAL ECONOMIC CLIMATE; THE SUPPLY OF AND DEMAND FOR OFFICE AND INDUSTRIAL
PROPERTIES IN THE NEW YORK TRI-STATE AREA; INTEREST RATE LEVELS; DOWNTURNS IN
RENTAL RATE LEVELS IN THE COMPANY'S MARKETS; THE AVAILABILITY OF FINANCING; 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 IS SUBJECT TO THE REPORTING REQUIREMENTS OF THE
SECURITIES AND EXCHANGE COMMISSION AND UNDERTAKES NO RESPONSIBILITY TO UPDATE
INFORMATION CONTAINED IN THIS SLIDE SHOW PRESENTATION.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 20
THE NEW YORK TRI-STATE AREA'S
LEADING REAL ESTATE COMPANY
RECKSON