SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by the
undersigned 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: May 2, 2002
3
EXHIBIT 99.1
Slide 1
The New York Tri-State Area's Leading Real Estate Company
Reckson Associates Realty Corp.
RA
First Quarter 2002 Presentation
Earnings Results and Overview
May 2, 2002
Slide 2
SUMMARY OF HIGHLIGHTS
o Reported diluted FFO of $.60 per share for the first quarter of 2002, as
compared to $.69 per share for the comparable 2001 period, representing a
per share decrease of 13%. FFO attributable to core real estate operations
(deducting prior year income relating to the FrontLine Capital Group loans
and RSVP joint ventures) was $.62 per share, representing a per share
decrease of 3.2%.
o Generated same property NOI increases, net of termination fees, of 8.0%
(cash) and 1.9% (GAAP) for the first quarter of 2002, with the office
properties representing 10.0% (cash) and 3.0% (GAAP).
o Generated same space rent growth of 22.8% (GAAP) and 13.3% (cash) for
Office and 16.7% (GAAP) and 6.1% (cash) for Industrial/R&D for the first
quarter of 2002.
o Reported occupancy of 95.1% for the overall portfolio for the first
quarter of 2002, as compared to 94.6% for the fourth quarter of 2001. The
office and industrial portfolios reported occupancies of 96.2% and 92.9%,
respectively, as compared to 96.1% and 91.7%, respectively, for the fourth
quarter of 2001.
o Achieved significant lease-up in the Company's two active development
projects - leasing 100% of 103 JFK Parkway, Short Hills, NJ and increasing
occupancy to 61% at Reckson Executive Park, Melville, Long Island.
o Renewed 91.1% of expiring square footage.
o Reduced lease expiration exposure in 2002 to 4.7%.
o Appointed two new independent members to the Company's Board of Directors.
Slide 3
PORTFOLIO COMPOSITION - [GRAPHIC OMITTED]
NET OPERATING INCOME (A)
- ------------------------
Long Island 32%
Westchester 19%
New Jersey 15%
Connecticut 7%
New York City 27%
PRO FORMA PORTFOLIO STATS
- -------------------------
o 20.5 Million Square Feet
o 181 Properties
o 1,270 Tenants Representing a Diverse Industry Base
o Five Integrated Operating Divisions
NOI:
Office 86%
Industrial 14%
AVERAGE TENANT SIZE:
Office 12,000 sq. ft.
Industrial 26,000 sq. ft.
OCCUPANCY: (B)
Office 96.2%
Industrial 92.9%
(a) Pro forma for 919 Third Avenue free rent add back and pro rata share of
consolidated and unconsolidated joint ventures.
(b) Excluding properties under development
Slide 4
MARKET OVERVIEW - [GRAPHICS OMITTED]
SOUTHERN CONNECTICUT 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02
-------------------------------------------------
RA Portfolio Vacancy 8.8% 7.1% 4.6% 4.2% 4.6% 6.1%
Overall Vacancy 3.2% 5.1% 2.5% 10.9% 11.8% 13.7%
Direct Vacancy 3.1% 4.3% 2.1% 8.6% 7.8% 8.2%
WESTCHESTER 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02
-------------------------------------------------
RA Portfolio Vacancy 14.6% 8.8% 5.7% 4.7% 6.6% 4.0%
Overall Vacancy 17.6% 16.3% 15.1% 14.1% 17.8% 19.2%
Direct Vacancy 16.5% 14.2% 13.9% 12.5% 13.8% 15.1%
LONG ISLAND 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02
-------------------------------------------------
RA Portfolio Vacancy 5.9% 5.0% 6.0% 7.7% 6.5% 3.9%(a)
Overall Vacancy 5.2% 8.8% 5.9% 9.5% 10.3% 11.4%
Direct Vacancy 4.1% 7.4% 4.4% 7.6% 7.2% 7.1%
NORTHERN NEW JERSEY 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02
------------------------------------------------
RA Portfolio Vacancy 9.5% 5.6% 2.5% 1.1% 8.1% 4.0%
Overall Vacancy 8.4% 9.1% 6.5% 11.3% 11.6% 13.9%
Direct Vacancy 6.2% 6.9% 4.8% 7.3% 7.5% 8.0%
Source: Cushman & Wakefield Class A Statistics
(a) Excludes Reckson Executive Park, Melville, LI. Including this development
property, the 1Q02 vacancy percentage for LI is 6.4%.
Slide 5
MARKET OVERVIEW - [GRAPHICS OMITTED]
NYC FINANCIAL EAST 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02
-------------------------------------------------
RA Portfolio Vacancy 3.2% 16.0% 0.7% 1.3% 1.4% 3.8%
Overall Vacancy 6.3% 4.4% 2.1% 3.2% 5.0% 12.4%
Direct Vacancy 5.7% 3.2% 1.4% 2.5% 1.4% 8.5%
NYC MIDTOWN EAST SIDE 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02
-------------------------------------------------
RA Portfolio Vacancy 3.4% 3.8% 3.4% 2.1% 1.9% 0.0%
Overall Vacancy 6.7% 4.4% 2.7% 2.4% 6.3% 10.5%
Direct Vacancy 4.9% 3.4% 2.2% 1.5% 3.1% 4.3%
NYC MIDTOWN WEST SIDE 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02
-------------------------------------------------
RA Portfolio Vacancy 3.2% 0.4% 1.7% 1.8% 3.7% 4.7%
Overall Vacancy 5.8% 5.1% 2.3% 1.9% 6.0% 6.7%
Direct Vacancy 5.0% 3.8% 2.1% 1.5% 3.8% 4.2%
NYC SIXTH AVE./ROCKEFELLER CENTER 1Q00 3Q00 1Q01 3Q01 1Q02
----------------------------------------
RA Portfolio Vacancy 7.4% 5.0% 7.8% 4.5% 2.6%
Overall Vacancy 2.2% 0.9% 1.5% 3.9% 6.1%
Direct Vacancy 1.5% 0.4% 0.7% 1.8% 2.8%
Source: Cushman & Wakefield Class A Statistics
Slide 6
LIMITED NEW SUPPLY IN RECKSON'S MARKETS
MARKET RECKSON
% of % SF in %
Sub-Market Market SF New Supply Market Pre-leased Market Leased
- ---------- --------- --------------- ------ ---------- ---------- ------
LONG ISLAND 27,692,404 183,355 0.7% 0% 3,952,783 96%(a)
WESTCHESTER 30,337,854 0 0% - 3,232,474 96%
STAMFORD, CT 6,241,898 0 0% - 1,123,915 94%
NEW JERSEY
Northern 97,330,837 1,690,500 1.7% 52% 1,177,032 96%
Central 1,633,500 - 786,722 96%
NEW YORK CITY 386,562,512 6,104,646 1.6% 83% 3,498,393 98%
TOTAL/WGT. AVG. 483,242,279 6,756,001 79% 13,771,319 96%
Source: Merrill Lynch year end 2001 report
(a) Including Reckson Executive Park, Melville, LI, the percent leased is 90%
(b) Excludes 103 JFK Parkway, Short Hills, NJ for which a lease was signed for
100% of the property after the Merrill Lynch year end report
Slide 7
HISTORICAL PORTFOLIO OCCUPANCY
[GRAPHICS OMITTED]
1997 1998 1999 2000 2001 1Q02
----- ----- ----- ----- ----- -----
OFFICE 95.8% 96.4% 96.0% 97.2% 96.1% 96.2%
INDUSTRIAL 95.3% 96.8% 98.2% 97.5% 91.7% 92.9%
Note: Excludes properties under development
Note: Decrease in industrial occupancy reflects a 206,710 square foot lease that
expired in November 2001, decreasing occupancy 300 basis points.
SLIDE 8
PORTFOLIO PERFORMANCE
SAME PROPERTY NOI GROWTH
[GRAPHICS OMITTED]
THREE MONTHS (A)
----------------
TOTAL PORTFOLIO (B) OFFICE PORTFOLIO (B)
------------------- ---------------------
CASH NOI 8.0% 10.0%
GAAP NOI 1.9% 3.0%
TOTAL PORTFOLIO
- ---------------
6.4% CASH REVENUE INCREASE
2.6% OPERATING EXPENSE INCREASE
5.3% REAL ESTATE TAX INCREASE
(2.5%) OCCUPANCY DECREASE
OFFICE PORTFOLIO
- ----------------
7.7% CASH REVENUE INCREASE
3.5% OPERATING EXPENSE INCREASE
5.2% REAL ESTATE TAX INCREASE
(0.9%) OCCUPANCY DECREASE
(a) Based on comparison period for the three month period ended March 31, 2002
versus the three month period ended March 31, 2001
(b) Excludes termination fees
Slide 9
PORTFOLIO PERFORMANCE
[GRAPHICS OMITTED]
FIRST QUARTER 2002 SAME SPACE AVERAGE RENT GROWTH (A)
OFFICE RENT GROWTH: 22.8%
-------------------------
EXPIRING LEASES - $23.96
NEW LEASES - $29.42
INDUSTRIAL/R&D RENT GROWTH: 16.7%
----------------------------------
EXPIRING LEASES - $5.80
NEW LEASES - $6.77
o RENEWED 91.1% OF EXPIRING SQUARE FOOTAGE
o 62 TOTAL LEASES EXECUTED ENCOMPASSING 857,000 SQ. FT.
o SAME SPACE FIRST QUARTER CASH INCREASE OF 13.3% FOR OFFICE AND 6.1% FOR
INDUSTRIAL/R&D
(a) Represents leases executed during the first quarter
Slide 10
OFFICE LEASING TRENDS (a) - [GRAPHICS OMITTED]
SAME SPACE AVERAGE RENT GROWTH:
1Q01 2Q01 3Q01 4Q01 1Q02
- ----------------------------------------------------------------------------
22.9% 23.2% 21.7% 16.3% 22.8%
NET EFFECTIVE RENT SPREAD:
1Q01 2Q01 3Q01 4Q01 1Q02
- ----------------------------------------------------------------------------
6.6% 8.3% 7.3% 6.0% 8.2%
TENANT RETENTION RATE:
1Q01 2Q01 3Q01 4Q01 1Q02
- ----------------------------------------------------------------------------
81% 54% 64% 60% 82%
AVERAGE LEASE TERM (YEARS):
1Q01 2Q01 3Q01 4Q01 1Q02
- ----------------------------------------------------------------------------
5.9% 6.0% 4.1% 5.7% 6.3%
(a) Excludes projects under development
Slide 11
LEASE EXPIRATIONS
4.7% of Portfolio Square Feet Expiring in 2002
[GRAPHICS OMITTED]
OFFICE 2002 2003 2004 2005 2006 2007
- ------ ---- ----- ----- ----- ----- -----
Square Feet Expiring (in thousands) 718 1,195 1,258 1,759 1,713 1,144
% Square Feet Expiring 5.5% 9.2% 9.7% 13.5% 13.1% 8.8%
INDUSTRIAL 2002 2003 2004 2005 2006 2007
- ---------- ---- ----- ----- ----- ----- ----
Square Feet Expiring (in thousands) 197 671 661 919 942 306
% Square Feet Expiring 3.2% 10.8% 10.6% 14.8% 15.1% 4.9%
Slide 12
LEASE EXPIRATIONS
2002 Office Expirations - 5.5% of Total Portfolio
[GRAPHICS OMITTED]
FULL YEAR
- ---------
% SQ. FT. EXPIRING SF EXPIRING % OF DIVISION
------------------ ----------- -------------
LONG ISLAND 16% 112,310 3%
WESTCHESTER 38% 275,301 9%
CONNECTICUT 6% 45,536 4%
NEW JERSEY 17% 123,058 7%
NEW YORK CITY 23% 161,496 5%
QUARTERLY
- ---------
2Q02 3Q02 4Q02
---- ---- ----
TOTAL SQUARE FEET EXPIRING 230 271 217
(IN THOUSANDS)
SLIDE 13
LEASE EXPIRATION COMPARISON
2002 AND 2003 OFFICE PORTFOLIO
[GRAPHICS OMITTED]
AS OF MARCH 31, 2002
EXPIRING RENTS VS. RECKSON FORECAST RENTS
TOTAL CBD SUBURBAN
PORTFOLIO OFFICE PORTFOLIO OFFICE PORTFOLIO
1.9 MILLION SF EXPIRING 460,000 SF EXPIRING 1.4 MILLION SF EXPIRING
----------------------- ------------------- -----------------------
CASH
- ----
EXPIRING RENT $26.65 $31.34 $25.12
FORECASTED RENT (A) $29.32 $41.71 $25.33
INCREASE 10% 33% 1%
GAAP
- ----
EXPIRING RENT $25.88 $31.95 $23.84
FORECASTED RENT (A) $30.16 $42.32 $25.98
INCREASE 17% 32% 10%
(a) Company's forecast rent for space to be re-leased. There can be no
assurance that the Company's properties can achieve such rents.
Slide 14
VALUE CREATION ACTIVITY UPDATE
REDEVELOPMENT
103 JFK Parkway [PICTURE OMITTED]
Short Hills, New Jersey
EXECUTED LEASE WITH DUN & BRADSTREET FOR 100% OF PROPERTY
o 123,000 Square Feet
o 10 Year Lease Term
o Total Anticipated Investment - $32.8 Million (a)
o Anticipated Stabilized NOI Yield of 10% (a)
(a) Forward-looking statements based upon management's estimates. Actual
results may differ materially.
Slide 15
VALUE CREATION ACTIVITY UPDATE
Reckson Executive Park - Melville, Long Island
GROUND-UP DEVELOPMENT: [PICTURE OMITTED]
Property 61% Leased
Leases Signed or Under Negotiation Total 75%
Anticipated Return On Investment - 11% (a)
Projected Occupancy at End of 2002 - 220,000 s.f. (a)
STACKING PLAN - 277,500 SQ. FT.
LEASES SIGNED LEASES OUT PROPOSALS
------------- ---------- ---------
4TH FLOOR 38,000 s.f. 25,000 s.f.
3RD FLOOR Zurich American Insurance Co.
70,000 s.f.
2ND FLOOR Hain Celestial Group, Inc 7,500 s.f.
34,988 s.f.
Transamerica Corp.
24,099 s.f.
1ST FLOOR OSI Pharmaceutical, Inc. 18,000 s.f.
36,309 s.f.
Drake Beam Morin
4,870 s.f.
TOTALS 170,266 S.F. 38,000 S.F. 50,500 S.F.
(a) Forward-looking statements based upon management's estimates. Actual
results may differ materially.
SLIDE 16
CORE REAL ESTATE OPERATIONS
FIRST QUARTER 2002 FIRST QUARTER 2001
------------------ ------------------
FFO Per Share $.60 $.69
Income on FLCG Loans and RSVP JVs .00 .07
Core Real Estate Operations $.60 $.62
Analysis of First Quarter 2002 vs. 2001 Results
Decreased Termination Fees -$.01
Investment Dilution -$.05
Excess Bad Debt -$.01
Increase in NOI Plus Reduced Debt Service +$.05
Slide 17
FINANCIAL RATIOS
(in millions except ratios)
MARCH 31, 2002
RATIOS HISTORICAL
- ------ ----------
Total Debt (a) $1,279
Total Equity $2,001
Total Market Cap $3,280
Interest Coverage Ratio 3.60x
Fixed Charge Coverage Ratio 2.72x
Debt to Total Market Cap 39.0%
(a) Including pro-rata share of joint venture debt and net of minority
partners' interests
Slide 18
DEBT SCHEDULE
(in millions)
PRINCIPAL AMOUNT WEIGHTED AVERAGE AVERAGE TERM
OUTSTANDING INTEREST RATE TO MATURITY
----------- ------------- -----------
DEBT SCHEDULE
- -------------
Fixed Rate
- ----------
Mortgage Notes Payable $ 748.6 7.3% 9.7 yrs.
Senior Unsecured Notes $ 450.0 7.5% 5.3 yrs.
--------
Subtotal/Weighted Average $1,198.6 7.4% 8.0 yrs.
Floating Rate
- -------------
Corporate Unsecured Credit Facility $217.0 (a) LIBOR + 105bps
NO SIGNIFICANT NEAR-TERM REFINANCING NEEDS
LONG-TERM STAGGERED DEBT MATURITY SCHEDULE
[GRAPHIC OMITTED]
(maturities in millions)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
--------------------------------------------------------------
MORTGAGE DEBT $0 $0 $3 $19 $130 $60 $0 $100 $28 $218
UNSECURED NOTES $100 $150 $200
LOW FLOATING RATE DEBT LEVELS
[GRAPHIC OMITTED]
Floating Rate - 15%
Fixed Rate - 85%
(a) UNSECURED CORPORATE CREDIT FACILITY MATURES IN SEPTEMBER OF 2003
Slide 19
PREFERRED SECURITIES
As of March 31, 2002
LIQUIDATION CURRENT CONVERSION PRICE ISSUANCE
PREFERENCE VALUE YIELD PER SHARE DATE
(in thousands)
- -----------------------------------------------------------------------------------------------------------------------
SECURITY
7 5/8 % SERIES A CONVERTIBLE CUMULATIVE PREFERRED STOCK $229,800 7.625% $28.51 APRIL 1998
SERIES B CONVERTIBLE CUMULATIVE PREFERRED STOCK 50,000 8.850% $26.05 JUNE 1999
SERIES B PREFERRED UNITS OF LIMITED PARTNERSHIP INTEREST 3,080 5.560% $32.51 APRIL 1998
SERIES C PREFERRED UNITS OF LIMITED PARTNERSHIP INTEREST 10,581 5.560% $29.39 APRIL 1998
SERIES D PREFERRED UNITS OF LIMITED PARTNERSHIP INTEREST 6,000 5.560% $29.12 JULY 1998
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $299,461
SLIDE 20
2002 OUTLOOK
o Core portfolio performing well in challenging environment
- Increasing occupancies
- High renewal rates
- Maintaining High Net Effective Rents
o Lease-up of development projects tracking ahead of schedule
o Cautious near-term outlook on market
- Sublet space still having large impact on markets
- Tenant stability remains a concern
o Positive long-term outlook on markets
- No new supply
- Sublet space should dissipate more quickly then direct space
- Potential for strong market recovery when job growth resumes ('04)
o Challenging investment environment
- Significant capital availability and limited product has created an
overheated investment market
- Aggressively pursuing opportunities but maintaining discipline
- Continue to pursue strategic dispositions to capitalize on strength
of investment market
- Positive stock performance has impacted ability to opportunistically
repurchase shares
o Reaffirm previously issued guidance of $2.45 - $2.55 (a)
(a) Forward-looking statements based on management's estimates. Actual results
may differ materially.
Slide 21
FORWARD-LOOKING STATEMENTS
Estimates of future FFO per share and certain other matters discussed herein are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Company believes the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, forward-looking statements are not guarantees of results and no
assurance can be given that the expected results will be delivered. Such
forward-looking statements are subject to certain risks, trends and
uncertainties that could cause actual results to differ materially from those
expected. Among those risks, trends and uncertainties are the general economic
climate, including the conditions affecting industries in which our principal
tenants compete; changes in the supply of and demand for office and industrial
properties in the New York Tri-State area; changes in interest rate levels;
downturns in rental rate levels in our markets and our ability to lease or
re-lease space in a timely manner at current or anticipated rental rate levels;
the availability of financing to us or our tenants; changes in operating costs,
including utility costs; repayment of debt owed to the Company by third parties
(including FrontLine Capital Group); risks associated with joint ventures; 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 or
supplement information contained in this presentation that subsequently becomes
untrue.
