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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
COMMISSION FILE NUMBER: 1-13762
RECKSON OPERATING PARTNERSHIP, L. P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3233647
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(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
225 BROADHOLLOW ROAD, MELVILLE, NY 11747
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(631) 694-6900
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
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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 ___.
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT).
YES _X_ NO __
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Explanatory Note
----------------
Reckson Operating Partnership, L.P. (the "Registrant") is amending its
Form 10-Q for the quarterly period ended September 30, 2002 in order to correct
a formatting error in which the line item captioned "Increase in contract
deposits and pre-acquisition costs" for the nine months ended September 30, 2002
under the heading "Cash Flows From Investing Activities" on the Consolidated
Statements of Cash Flows should have reflected no amount, and the amount
reflected in that line item should have been reflected in the line item
appearing three lines below it captioned "Additions to developments in progress"
which reflected no amount. The correction of this formatting error results in no
change to the "Net cash used in investing activities" line item on the
Consolidated Statements of Cash Flows.
The following indicates the corrected amounts of the line items for the
nine months ended September 30, 2002 on the Consolidated Statements of Cash
Flows under the heading "Cash Flows From Investing Activities":
- --------------------------------------------------------------------------------
As per As Amended
Initial in this
Filing Filing
------- ----------
Increase in contract deposits and
pre-acquisition costs ........................... (37,304) --
Additions to developments in progress ............. -- (37,304)
- --------------------------------------------------------------------------------
In accordance with the requirements of the Securities Exchange Act of
1934, this Form 10-Q/A sets forth in its entirety "Part I, Item 1. Financial
Statements." The correction of the formatting error noted above is the only
change from the "Part I, Item 1. Financial Statements" contained in the
Registrant's Form 10-Q for the quarterly period ended September 30, 2002 as
filed with the Securities and Exchange Commission on November 14, 2002.
In addition, "Part II, Item 6. Exhibits and Reports on Form 8-K" is
included in this Form 10-Q/A to reflect the filing as exhibits to this Form
10-Q/A of certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350 which is required for a filing of a Form 10-Q/A
which contains financial statements.
1
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT UNIT AMOUNTS)
SEPTEMBER 30, 2002 DECEMBER 31, 2001
ASSETS (UNAUDITED)
----------------- -----------------
Commercial real estate properties, at cost
Land ................................................................ $ 417,351 $ 408,837
Buildings and improvements .......................................... 2,400,577 2,328,374
Developments in progress:
Land ................................................................ 91,396 69,365
Development costs ................................................... 26,371 74,303
Furniture, fixtures and equipment ........................................ 7,811 7,725
----------- -----------
2,943,506 2,888,604
Less accumulated depreciation ....................................... (428,150) (361,960)
----------- -----------
2,515,356 2,526,644
Investments in real estate joint ventures ................................ 5,680 5,744
Investment in mortgage notes and notes receivable ........................ 55,695 56,234
Cash and cash equivalents ................................................ 32,285 121,773
Tenant receivables ....................................................... 9,321 9,633
Investments in service companies and affiliate loans and joint ventures .. 88,066 84,142
Deferred rents receivable ................................................ 100,755 81,089
Prepaid expenses and other assets ........................................ 30,506 45,303
Contract and land deposits and pre-acquisition costs ..................... 121 3,782
Deferred lease and loan costs ............................................ 68,295 64,438
----------- -----------
TOTAL ASSETS ........................................................ $ 2,906,080 $ 2,998,782
=========== ===========
LIABILITIES
Mortgage notes payable ................................................... $ 743,148 $ 751,077
Unsecured credit facility ................................................ 224,000 271,600
Senior unsecured notes ................................................... 499,272 449,463
Accrued expenses and other liabilities ................................... 76,683 84,651
Distributions payable .................................................... 32,234 32,988
----------- -----------
TOTAL LIABILITIES ................................................... 1,575,337 1,589,779
----------- -----------
Minority partners' interests in consolidated partnerships ................ 242,720 242,698
----------- -----------
Commitments and contingencies ............................................ -- --
PARTNERS' CAPITAL
Preferred Capital, 11,211,662 and 11,222,965 units issued and outstanding,
respectively ............................................................. 290,270 301,573
General Partners' Capital:
Class A common units, 49,152,033 and 49,982,377 units issued and
outstanding, respectively ................................................ 508,705 551,417
Class B common units, 9,915,313 and 10,283,513 units issued and
outstanding, respectively ................................................ 214,760 231,428
Limited Partners' Capital:
Class A common units, 7,276,224 and 7,487,218 units issued and
outstanding, respectively ................................................ 74,288 81,887
----------- -----------
TOTAL PARTNERS' CAPITAL ............................................... 1,088,023 1,166,305
----------- -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL ............................. $ 2,906,080 $ 2,998,782
=========== ===========
(see accompanying notes to financial statements)
2
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN THOUSANDS, EXCEPT UNIT DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
REVENUES:
Base rents ................................................ $ 111,175 $ 110,594 $ 326,424 $ 327,697
Tenant escalations and reimbursements ..................... 15,272 15,273 44,656 45,198
Equity in earnings of real estate joint ventures and
service companies ....................................... 104 505 598 1,704
Interest income on mortgage notes and notes receivable .... 1,589 1,584 4,710 4,651
Gain on sales of real estate .............................. -- 972 537 972
Investment and other income ............................... 642 3,244 1,456 13,448
------------ ------------ ------------ ------------
TOTAL REVENUES ....................................... 128,782 132,172 378,381 393,670
------------ ------------ ------------ ------------
EXPENSES:
Property operating expenses ............................... 46,135 43,844 129,461 125,047
Marketing, general and administrative ..................... 6,827 6,653 19,687 20,392
Interest .................................................. 22,648 23,505 65,757 70,691
Depreciation and amortization ............................. 29,147 26,318 82,913 76,601
------------ ------------ ------------ ------------
TOTAL EXPENSES ....................................... 104,757 100,320 297,818 292,731
------------ ------------ ------------ ------------
Income from continuing operations before distributions to
preferred unit holders, minority interests, valuation
reserves on investments in affiliate loans and joint
ventures, discontinued operations and extraordinary
loss .................................................... 24,025 31,852 80,563 100,939
Minority partners' interests in consolidated partnerships . (4,446) (3,065) (14,379) (12,885)
Valuation reserves on investments in affiliate loans and
joint ventures .......................................... -- (163,000) -- (163,000)
------------ ------------ ------------ ------------
Income (loss) before discontinued operations, extraordinary
loss and distributions to preferred unitholders ......... 19,579 (134,213) 66,184 (74,946)
Discontinued operations
Income from discontinued operations .................. 503 208 889 793
Gain on sales of real estate ......................... 4,896 -- 4,896 --
------------ ------------ ------------ ------------
Income (loss) before extraordinary loss and distributions
to preferred unit holders ............................... 24,978 (134,005) 71,969 (74,153)
Extraordinary loss on extinguishment of debts ............. -- (2,898) -- (2,898)
------------ ------------ ------------ ------------
Net income (loss) ......................................... 24,978 (136,903) 71,969 (77,051)
Preferred unit distributions .............................. (5,760) (5,996) (17,475) (18,009)
------------ ------------ ------------ ------------
Net income (loss) allocable to common unit holders ........ $ 19,218 $ (142,899) $ 54,494 $ (95,060)
============ ============ ============ ============
Net Income (loss) allocable to:
Class A common units ................................. $ 15,149 $ (112,159) $ 42,895 $ (74,859)
Class B common units ................................. 4,069 (30,740) 11,599 (20,201)
------------ ------------ ------------ ------------
Total ..................................................... $ 19,218 $ (142,899) $ 54,494 $ (95,060)
============ ============ ============ ============
Net income (loss) per weighted average common units:
Class A common unit before extraordinary loss ........ $ .27 $ (1.92) $ .75 $ (1.32)
Extraordinary loss per Class A common unit ........... -- (.04) -- (.04)
------------ ------------ ------------ ------------
Class A common unit .................................. $ .27 $ (1.96) $ .75 $ (1.36)
============ ============ ============ ============
Class B common unit before extraordinary loss ........ $ .41 $ (2.93) $ 1.14 $ (1.90)
Extraordinary loss per Class B common unit ........... -- (.06) -- (.06)
------------ ------------ ------------ ------------
Class B common unit .................................. $ .41 $ (2.99) $ 1.14 $ (1.96)
============ ============ ============ ============
Weighted average common units outstanding:
Class A common units ................................. 56,802,000 57,368,000 57,530,000 55,192,000
Class B common units ................................. 10,010,000 10,284,000 10,191,000 10,284,000
(see accompanying notes to financial statements)
3
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
2002 2001
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................................... $ 71,969 $ (77,051)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization ........................................... 82,913 77,221
Extraordinary loss on extinguishment of debts ........................... -- 2,898
Valuation reserves on investments in affiliate loans and joint ventures . -- 163,000
Gain on sales of real estate ............................................ (5,433) (972)
Minority partners' interests in consolidated partnerships ............... 14,379 12,885
Equity in earnings of real estate joint ventures and service companies .. (598) (1,704)
Changes in operating assets and liabilities:
Prepaid expenses and other assets ....................................... 14,205 13,166
Tenant receivables ...................................................... 312 1,446
Deferred rents receivable ............................................... (19,666) (28,843)
Real estate tax escrows ................................................. (2,774) (2,037)
Accrued expenses and other liabilities .................................. (6,698) (20,895)
--------- ---------
Net cash provided by operating activities ............................ 148,609 139,114
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in contract deposits and pre-acquisition costs ................. -- (2,897)
Proceeds from mortgage note receivable repayments ....................... 12 2,949
Additions to commercial real estate properties .......................... (31,029) (121,703)
Additions to developments in progress ................................... (37,304) (3,606)
Payment of leasing costs ................................................ (12,789) (6,264)
Additions to furniture, fixtures and equipment .......................... (71) (324)
Proceeds from sales of real estate and marketable securities ............ 22,385 109,250
Investments in affiliate joint ventures ................................. -- (25,056)
--------- ---------
Net cash used in investing activities ................................ (58,796) (47,651)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on secured borrowings ................................ (7,930) (291,445)
Payment of loan costs ................................................... (1,538) (5,944)
Increase in investments in affiliate loans and service companies ........ (2,978) (13,878)
Proceeds from issuance of senior unsecured notes ........................ 49,432 --
Proceeds from secured borrowings ........................................ -- 325,000
Proceeds from of unsecured credit facility .............................. 115,000 128,000
Repayment of unsecured credit facility .................................. (162,600) (98,000)
Distributions to minority partners in consolidated partnerships ......... (14,572) (13,390)
Purchases of general partner common units ............................... (49,227) --
Contributions ........................................................... 6,310 1,790
Distributions ........................................................... (111,198) (102,545)
--------- ---------
Net cash used in financing activities ................................ (179,301) (70,412)
--------- ---------
Net (decrease) increase in cash and cash equivalents ....................... (89,488) 21,051
Cash and cash equivalents at beginning of period ........................... 121,773 16,624
--------- ---------
Cash and cash equivalents at end of period ................................. $ 32,285 $ 37,675
========= =========
(see accompanying notes to financial statements)
4
RECKSON OPERATING PARTNERSHIP, L. P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(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").
The Operating Partnership 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 (collectively,
the "Properties") located in the New York tri-state area (the "Tri-State Area").
During June 1995, the Company contributed approximately $162 million in cash to
the Operating Partnership in exchange for an approximate 73% general partnership
interest. All Properties acquired by the Company are held by or through the
Operating Partnership. In addition, in connection with the formation of the
Operating Partnership, the Operating Partnership executed various option and
purchase agreements whereby it issued common units of limited partnership
interest 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 other business assets and 100% of the non-voting preferred stock
of the management and construction companies. At September 30, 2002, the
Company's ownership percentage in the Operating Partnership was approximately
89.7%.
2. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the consolidated
financial position of the Operating Partnership and its subsidiaries at
September 30, 2002 and December 31, 2001 and the results of their operations for
the three and nine months ended September 30, 2002 and 2001, respectively, and,
their cash flows for the nine months ended September 30, 2002 and 2001,
respectively. The Operating Partnership's investments in majority owned and/or
controlled real estate joint ventures are reflected in the accompanying
financial statements on a consolidated basis with a reduction for minority
partners' interest. The operating results of Reckson Management Group, Inc.,
RANY Management Group, Inc., Reckson Construction Group New York, Inc. and
Reckson Construction Group, Inc. (the "Service Companies"), in which the
Operating Partnership owns a 97% non-controlling interest, are reflected in the
accompanying financial statements on the equity method of accounting. On October
1, 2002, the Operating Partnership acquired the remaining 3% interests in the
Service Companies for an aggregate purchase price of approximately $122,000. As
a result, commencing on October 1, 2002, the Operating Partnership will
consolidate the operations of the Service Companies. The Operating Partnership
also invests in real 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 partners' interests in consolidated partnerships at September 30,
2002 represent a 49% non-affiliated interest in RT Tri-State LLC, owner of an
nine property suburban office portfolio, a 40% non-affiliated interest in Omni
Partners, L.P., owner of a 575,000 square foot suburban office property and
beginning December 21, 2001, a 49% non-affiliated interest in Metropolitan 919
Third Avenue, LLC, owner of the property located at 919 Third Avenue, New York,
NY.
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 accounting principles generally accepted in the United States ("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 September 30,
2002 and for the three and nine month periods ended September 30, 2002 and 2001
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, 2002. 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, 2001.
5
In October 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. Statement No. 144 provides accounting guidance for financial accounting
and reporting for the impairment or disposal of long-lived assets. Statement No.
144 supersedes Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of. It also supersedes the
accounting and reporting provisions of Accounting Principles Board Opinion No.
30, Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions related to the disposal of a segment of a business. The
Operating Partnership adopted Statement No. 144 on January 1, 2002. The adoption
of this statement did not have a material effect on the results of operations or
the financial position of the Operating Partnership. The adoption of Statement
No, 144 does not have an impact on net income (loss). Statement No. 144 only
impacts the presentation of the results of operations and gain (loss) on sales
of real estate for those properties sold during the period within the
consolidated statements of operations (see Note 6).
In April 2002, the FASB issued Statement No. 145, which rescinded Statement No.
4, Reporting Gains and Losses from Extinguishment of Debt. Statement No. 145 is
effective for fiscal years beginning after May 15, 2002. The Operating
Partnership will adopt Statement No. 145 on January 1, 2003.
Certain prior period amounts have been reclassified to conform to the current
period presentation.
3. MORTGAGE NOTES PAYABLE
As of September 30, 2002, the Operating Partnership had approximately $743.1
million of fixed rate mortgage notes which mature at various times between 2004
and 2027. The notes are secured by 21 properties with a net carrying value of
approximately $1.5 billion and have a weighted average interest rate of
approximately 7.26%.
The following table sets forth the Operating Partnership's mortgage notes
payable as of September 30, 2002, by scheduled maturity date (dollars in
thousands):
Principal Interest Maturity Amortization
Property Outstanding Rate Date Term (Years)
- ----------------------------------------------- -------------- ----------- --------------- --------------
80 Orville Dr, Islip, NY 2,616 10.10% February, 2004 Interest only
395 North Service Road, Melville, NY 19,811 6.45% October, 2005 $34 per month
200 Summit Lake Drive, Valhalla, NY 19,476 9.25% January, 2006 25
1350 Avenue of the Americas, NY, NY 74,824 6.52% June, 2006 30
Landmark Square, Stamford, CT (a) 45,342 8.02% October, 2006 25
100 Summit Lake Drive, Valhalla, NY 19,429 8.50% April, 2007 15
333 Earle Ovington Blvd, Mitchel Field, NY (b) 54,104 7.72% August, 2007 25
810 Seventh Avenue, NY, NY 83,223 7.73% August, 2009 25
100 Wall Street, NY, NY 36,063 7.73% August, 2009 25
6900 Jericho Turnpike, Syosset, NY 7,376 8.07% July, 2010 25
6800 Jericho Turnpike, Syosset, NY 13,976 8.07% July, 2010 25
580 White Plains Road, Tarrytown, NY 12,735 7.86% September, 2010 25
919 Third Ave, NY, NY (c) 247,464 6.867% August, 2011 30
110 Bi-County Blvd., Farmingdale, NY 3,690 9.125% November, 2012 20
One Orlando Center, Orlando, FL (d) 38,512 6.82% November, 2027 28
120 West 45th Street, NY, NY (d) 64,507 6.82% November, 2027 28
--------------
Total/Weighted Average $ 743,148 7.26%
==============
- ------------------------
(a) Encompasses six Class A office properties
(b) The Operating Partnership has a 60% general partnership interest
in this property and its proportionate share of the aggregate
principal amount is approximately $32.5 million
(c) The Operating Partnership has a 51% membership interest in this
property and its proportionate share of the aggregate principal amount
is approximately $126.2 million
(d) Subject to interest rate adjustment on November 1, 2004
In addition, the Operating Partnership has a 60% interest in an unconsolidated
joint venture property. The Operating Partnership's pro rata share of the
mortgage debt at September 30, 2002 is approximately $7.6 million.
6
4. SENIOR UNSECURED NOTES
As of September 30, 2002, the Operating Partnership had outstanding
approximately $499.3 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 by
scheduled maturity date (dollars in thousands):
FACE
ISSUANCE AMOUNT COUPON RATE TERM MATURITY
- ----------------------------- --------------------- ------------------- ----------------- -------------------
March 26, 1999 $100,000 7.40% 5 years March 15, 2004
June 17, 2002 $ 50,000 6.00% 5 years June 15, 2007
August 27, 1997 $150,000 7.20% 10 years August 28, 2007
March 26, 1999 $200,000 7.75% 10 years March 15, 2009
Interest on the Senior Unsecured Notes is payable semi-annually with principal
and unpaid interest due on the scheduled maturity dates. In addition, the Senior
Unsecured Notes issued on March 26, 1999 and June 17, 2002 were issued at
aggregate discounts of $738,000 and 267,500, respectively. Such discounts are
being amortized over the term of the Senior Unsecured Notes to which they
relate.
On June 17, 2002, the Operating Partnership issued $50 million of 6.00% (6.125%
effective rate) senior unsecured notes. Net proceeds of approximately $49.4
million received from this issuance were used to repay outstanding borrowings
under the Operating Partnership's unsecured credit facility.
5. UNSECURED CREDIT FACILITY
As of September 30, 2002, the Operating Partnership had a three year $575
million unsecured revolving credit facility (the "Credit Facility") from The
JPMorgan Chase Bank as administrative agent, UBS Warburg LLC as syndication
agent and Deutsche Bank as documentation agent. The outstanding borrowings under
the Credit Facility was $224 million at September 30, 2002. The Credit Facility
matures in September 2003 and borrowings under the Credit Facility are currently
priced off LIBOR plus 105 basis points.
The Operating Partnership utilizes the Credit Facility primarily to finance real
estate investments, fund its real estate development activities and for working
capital purposes. At September 30, 2002, the Operating Partnership had
availability under the Credit Facility to borrow approximately an additional
$351 million, subject to compliance with certain financial covenants.
6. COMMERCIAL REAL ESTATE INVESTMENTS
As of September 30, 2002, the Operating Partnership owned and operated 75 office
properties (inclusive of eleven office properties owned through joint ventures)
comprising approximately 13.6 million square feet, 101 industrial properties
comprising approximately 6.7 million square feet and two retail properties
comprising approximately 20,000 square feet located in the Tri-State Area.
The Operating Partnership also owns approximately 338 acres of land in 14
separate parcels of which the Operating Partnership can develop approximately
3.2 million square feet of office space and approximately 470,000 square feet of
industrial space. The Operating Partnership is currently evaluating alternative
land uses for certain of the land holdings to realize the highest economic
value. These alternatives may include rezoning certain land parcels from
commercial to residential for potential disposition. As of September 30, 2002,
the Operating Partnership had invested approximately $117 million in these
development projects. Management has made subjective assessments as to the value
and recoverability of these investments based on current and proposed
development plans market comparable land values and alternative use values. The
Operating Partnership has capitalized approximately $8.1 million for the nine
months ended September 30, 2002 related to real estate taxes, interest and other
carrying costs related to these development projects.
7
The Operating Partnership holds a $17.0 million interest in a note receivable
secured by a partnership interest in Omni Partners, L.P., owner of the Omni, a
575,000 square foot Class A office property located in Uniondale, NY and three
other notes receivable aggregating $36.5 million which bear interest at rates
ranging from 10.5% to 12% per annum and are secured by a minority partner's
preferred unit interest in the Operating Partnership and certain real property.
As of September 30, 2002, management has made subjective assessments as to the
underlying security value on the Operating Partnership's note receivable
investments. These assessments indicated an excess of market value over carrying
value related to the Operating Partnership's note receivable investments. The
Operating Partnership also owns a 357,000 square foot office building in
Orlando, Florida. This non-core real estate holding was acquired in May 1999 in
connection with the Operating Partnership's initial New York City portfolio
acquisition. This property is cross collateralized under a $103 million mortgage
note along with one of the Operating Partnership's New York City buildings.
The Operating Partnership also owns a 60% non-controlling interest in a 172,000
square foot office building located at 520 White Plains Road in White Plains,
New York (the "520JV"), which it manages. The remaining 40% interest is owned by
JAH Realties L.P. John Halpern, the CEO and a director of HQ Global Workplaces,
is a partner in JAH Realties, L.P. As of September 30, 2002, the 520JV had total
assets of $21.3 million, a mortgage note payable of $12.7 million and other
liabilities of $1.0 million. The Operating Partnership's allocable share of the
520JV mortgage note payable is approximately $7.6 million. In addition, the
520JV had total revenues of $2.6 million and total expenses of $2.5 million for
the nine months ended September 30, 2002. The Operating Partnership accounts for
the 520JV under the equity method of accounting. The 520JV contributed
approximately $133,000 and $316,000 to the Operating Partnership's equity in
earnings of real estate joint ventures for the nine months ended September 30,
2002 and 2001, respectively.
On December 21, 2001, the Operating Partnership formed a joint venture with the
New York State Teachers' Retirement System ("NYSTRS") whereby NYSTRS acquired a
49% indirect interest in the property located at 919 Third Avenue, New York, NY
for $220.5 million which included $122.1 million of its proportionate share of
secured mortgage debt and approximately $98.4 million of cash which was then
distributed to the Operating Partnership. On January 4, 2002, net proceeds from
this transition were used primarily to repay borrowings under the Credit
Facility and for working capital purposes.
On August 7, 2002, the Operating Partnership sold an industrial property on Long
Island aggregating approximately 32,000 square feet for approximately $1.8
million. This property was sold to the sole tenant of the property through an
option contained in the tenant's lease. On August 8, 2002, the Operating
Partnership sold two Class A office properties located in Westchester County, NY
aggregating approximately 157,000 square feet for approximately $18.5 million.
Net proceeds from these sales were used to repay borrowings under the Credit
Facility and for general operating purposes. The Operating Partnership recorded
an aggregate net gain of approximately $4.9 million as a result of these sales.
In addition, in accordance with FASB Statement No. 144, the operating results of
these properties and the resulting gain on sales of real estate have been
reflected as discontinued operations for all periods presented on the
accompanying statements of operations.
7. PARTNERS' CAPITAL
On September 30, 2002, the Operating Partnership had issued and outstanding
9,915,313 Class B common units, all of which are held by the Company. The
distribution on the Class B units is subject to adjustment annually based on a
formula which measures increases or decreases in the Company's Funds From
Operations, as defined, over a base year. The Class B common units currently
receive an annual distribution of $2.5884 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 November 23, 2003.
8
During August 2002, the Operating Partnership declared the following
distributions:
RECORD PAYMENT THREE MONTHS ANNUALIZED
SECURITY DISTRIBUTION DATE DATE ENDED DISTRIBUTION
-------- ------------ ---- ---- ----- ------------
Class A common unit $.4246 October 7, 2002 October 18, 2002 September 30, 2002 $1.6984
Class B common unit $.6471 October 15, 2002 October 31, 2002 October 31, 2002 $2.5884
Series A preferred unit $.476563 October 15, 2002 October 31, 2002 October 31, 2002 $1.9063
Series E preferred unit $.553125 October 15, 2002 October 31, 2002 October 31, 2002 $2.2125
The Board of Directors of the Company has authorized the purchase of up to five
million shares of the Company's Class A common stock and/or its Class B common
stock. During the three months ended September 30, 2002, under this buy-back
program, the Operating Partnership purchased 368,200 Class B common units at an
average price of $22.90 per Class B unit and 1,856,200 Class A common units at
an average price of $21.98 per Class A unit for an aggregate purchase price for
both the Class A and Class B common units of approximately $49.2 million. In
addition, subsequent to September 30, 2002, the Operating Partnership purchased
842,200 Class A common units at $20.77 per unit. As a result of these purchases,
annual common unit distributions will decrease by approximately $5.5 million.
Previously, in conjunction with the Company's prior common stock buy-back
program, the Operating Partnership purchased and retired 1,410,804 Class B
common units at an average price of $21.48 per unit and 61,704 Class A common
units at an average price of $23.03 per unit for an aggregate purchase price of
approximately $31.7 million.
The Board of Directors of the Company has formed a pricing committee to consider
purchases of up to $75 million of the Company's outstanding preferred
securities. On September 30, 2002, the Company had 9,192,000 shares of its Class
A preferred stock outstanding and on October 14, 2002, purchased and retired
357,500 shares at $22.29 per share for approximately $8.0 million. As a result,
the Operating Partnership purchased and retired an equal number of preferred
units of general partnership interest from the Company and reduced annual
preferred distributions by approximately $682,000.
Net income (loss) per common partnership unit is determined by allocating net
income (loss) 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. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION (in thousands)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------
2002 2001
------- -------
Cash paid during the period for interest...... $79,456 $87,932
======= =======
Interest capitalized during the period ....... $ 6,354 $ 7,764
======= =======
9
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 includes
one office property located in Orlando, Florida. The Operating Partnership has
managing directors who report directly to the Co-Presidents and Chief Financial
Officer of the Company who have been identified as the Chief Operating Decision
Makers due to their final authority over resource allocation decisions and
performance assessment.
The Operating Partnership does not consider (i) interest incurred on its Credit
Facility and Senior Unsecured Notes, (ii) the operating performance of the
office property located in Orlando, Florida and (iii) the operating performance
of those properties reflected as discontinued operations on the Operating
Partnership's consolidated statements of operations as part of its Core
Portfolio's property operating performance for purposes of its component
disclosure set forth below.
The following table sets forth the components of the Operating Partnership's
revenues and expenses and other related disclosures for the three and nine
months ended September 30, 2002 and 2001 (in thousands):
Three months ended
------------------------------------------------------------------------------------------------------
September 30, 2002 September 30, 2001
-------------------------------------------------- ---------------------------------------------
Core CONSOLIDATED Core CONSOLIDATED
Portfolio Other TOTALS Portfolio Other TOTALS
---------- ---------- ------------ ----------- ---------- ------------
REVENUES:
Base rents, tenant
escalations and
reimbursements ......... $ 124,289 $ 2,158 $ 126,447 $ 123,689 $ 2,178 $ 125,867
Equity in earnings of real
estate joint ventures
and service companies .. -- 104 104 -- 505 505
Other income (loss) ...... 331 1,900 2,231 6,714 (914) 5,800
---------- ---------- ---------- ---------- ---------- ----------
Total Revenues ......... 124,620 4,162 128,782 130,403 1,769 132,172
---------- ---------- ---------- ---------- ---------- ----------
EXPENSES:
Property operating
expenses ............... 45,011 1,124 46,135 42,933 911 43,844
Marketing, general
and administrative ..... 4,807 2,020 6,827 5,533 1,120 6,653
Interest ................. 13,003 9,645 22,648 13,033 10,472 23,505
Depreciation and
amortization ........... 26,730 2,417 29,147 24,183 2,135 26,318
---------- ---------- ---------- ---------- ---------- ----------
Total Expenses ......... 89,551 15,206 104,757 85,682 14,638 100,320
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before distributions to
preferred unitholders,
minority interests,
valuation reserves,
discontinued operations
and extraordinary loss . $ 35,069 $ (11,044) $ 24,025 $ 44,721 $ (12,869) $ 31,852
========== ========== ========== ========== ========== ==========
Total Assets ............. $2,679,679 $ 226,401 $2,906,080 $2,631,077 $ 234,124 $2,865,201
========== ========== ========== ========== ========== ==========
10
Nine months ended
------------------------------------------------------------------------------------------------------
September 30, 2002 September 30, 2001
-------------------------------------------------- ---------------------------------------------
Core CONSOLIDATED Core CONSOLIDATED
Portfolio Other TOTALS Portfolio Other TOTALS
---------- ---------- ------------ ----------- ---------- ------------
REVENUES:
Base rents, tenant
escalations and
reimbursements ........... $ 364,505 $ 6,575 $ 371,080 $ 365,681 $ 7,214 $ 372,895
Equity in earnings of
real estate joint ventures
and service companies .... -- 598 598 -- 1,704 1,704
Other income ............... 1,383 5,320 6,703 9,192 9,879 19,071
---------- ---------- ---------- ---------- ---------- ----------
Total Revenues ........... 365,888 12,493 378,381 374,873 18,797 393,670
---------- ---------- ---------- ---------- ---------- ----------
EXPENSES:
Property operating
expenses ................. 125,996 3,465 129,461 122,702 2,345 125,047
Marketing, general
and administrative ....... 13,994 5,693 19,687 15,505 4,887 20,392
Interest ................... 38,956 26,801 65,757 38,086 32,605 70,691
Depreciation and
amortization ............. 76,757 6,156 82,913 70,404 6,197 76,601
---------- ---------- ---------- ---------- ---------- ----------
Total Expenses ........... 255,703 42,115 297,818 246,697 46,034 292,731
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before distributions to
preferred unitholders,
minority interests,
valuation reserves,
discontinued operations
and extraordinary loss ... $ 110,185 $ (29,622) $ 80,563 $ 128,176 $ (27,237) $ 100,939
========== ========== ========== ========== ========== ==========
11
10. RELATED PARTY TRANSACTIONS
As part of the Company's REIT structure it is provided management, leasing and
construction related services through taxable REIT subsidiaries as defined by
the Internal Revenue Code of 1986, as amended (the "Code"). These services are
currently provided by the Service Companies in which, as of September 30, 2002,
the Operating Partnership owns a 97% non-controlling interest. An entity which
is substantially owned by certain Rechler family members who are also executive
officers of the Company own a 3% controlling interest in the Service Companies.
In order to minimize the potential for corporate conflicts of interests, the
Independent Directors of the Company approved the purchase by the Operating
Partnership of the remaining 3% interest in the Service Companies. On October 1,
2002, the Operating Partnership acquired such 3% interests in the Service
Companies for an aggregate purchase price of approximately $122,000. Such amount
was less than the total amount of capital contributed by the Rechler family
members. As a result, commencing on October 1, 2002, the Operating Partnership
will consolidate the operations of the Service Companies. During the nine months
ended September 30, 2002, Reckson Construction Group, Inc. billed approximately
$134,000 of market rate services and Reckson Management Group, Inc. billed
approximately $232,000 of market rate management fees to certain properties in
which certain Rechler family members who are also executive officers of the
Company maintain an equity interest. These properties consist of five properties
in which these officers had acquired their interests prior to the initial public
offering, but were not contributed to the Company as part of the initial public
offering (the "Option Properties"). At the initial public offering the Operating
Partnership was granted ten year options to acquire these interests at a price
based upon an agreed upon formula. Such options provide the Company the right to
acquire fee interest in two of the Option Properties and the Rechler's minority
interests in the remaining properties. The Independent Directors are currently
reviewing whether the Company should exercise one or more of these options. In
addition, for the nine months ended September 30, 2002, Reckson Construction
Group, Inc. performed market rate services, aggregating approximately $299,000
for a property in which certain executive officers maintain an equity interest.
The Operating Partnership leases 43,713 square feet of office and storage space
at an Option Property for its management offices located in Melville, New York
at an annual base rent of approximately $1.1 million. The Operating Partnership
also leases 10,722 square feet of warehouse space used for equipment, materials
and inventory storage at an Option Property located in Deer Park, New York at an
annual base rent of approximately $72,000.
A company affiliated with an Independent Director of the Company, leases 15,566
square feet in a property owned by the Operating Partnership at an annual base
rent of approximately $431,500. In addition, Reckson Strategic Venture Partners,
LLC ("RSVP") leases 5,144 square feet in one of the Operating Partnership's
joint venture properties at an annual base rent of approximately $176,000.
During 1997, the Company formed FrontLine Capital Group, formerly Reckson
Service Industries, Inc., ("FrontLine") and RSVP. RSVP is a real estate venture
capital fund which invests primarily in real estate and real estate operating
companies outside the Operating Partnership's core office and industrial focus
and whose common equity is held indirectly by FrontLine. In connection with the
formation and spin-off of FrontLine, the Operating Partnership established an
unsecured credit facility with FrontLine (the "FrontLine Facility") in the
amount of $100 million for FrontLine to use in its investment activities,
operations and other general corporate purposes. The Company has advanced
approximately $93.4 million under the FrontLine Facility. The Operating
Partnership also approved the funding of investments of up to $100 million
relating to RSVP (the "RSVP Commitment"), through RSVP-controlled joint ventures
(for REIT-qualified investments) or advances made to FrontLine under an
unsecured loan facility (the "RSVP Facility") having terms similar to the
FrontLine Facility (advances made under the RSVP Facility and the FrontLine
Facility hereafter, the "FrontLine Loans"). During March 2001, the Company
increased the RSVP Commitment to $110 million and as of September 30, 2002,
approximately $109.1 million had been funded through the RSVP Commitment, of
which $59.8 million represents investments by the Company in RSVP-controlled
(REIT-qualified) joint ventures and $49.3 million represents loans made to
FrontLine under the RSVP Facility. As of September 30, 2002, interest accrued
(net of reserves) under the FrontLine Facility and the RSVP Facility was
approximately $19.6 million. RSVP retained the services of two managing
directors to manage RSVP's day to day operations. Prior to the spin off of
Frontline, the Company guaranteed certain salary provisions of their employment
agreements with RSVP Holdings, LLC, RSVP's common member. The term of these
employment agreements is seven years commencing March 5, 1998 provided however,
the term may be earlier terminated after five years upon certain circumstances.
The salary for each managing director is $1 million in the first five years and
$1.6 million in years six and seven.
12
At June 30, 2001, the Company assessed the recoverability of the FrontLine Loans
and reserved approximately $3.5 million of the interest accrued during the
three-month period then ended. In addition, the Company formed a committee of
its Board of Directors, comprised solely of independent directors, to consider
any actions to be taken by the Company in connection with the FrontLine Loans
and its investments in joint ventures with RSVP. During the third quarter of
2001, the Company noted a significant deterioration in FrontLine's operations
and financial condition and, based on its assessment of value and recoverability
and considering the findings and recommendations of the committee and its
financial advisor, the Company recorded a $163 million valuation reserve charge,
inclusive of anticipated costs, in its consolidated statements of operations
relating to its investments in the FrontLine Loans and joint ventures with RSVP.
The Operating Partnership has discontinued the accrual of interest income with
respect to the FrontLine Loans. The Operating Partnership has also reserved
against its share of GAAP equity in earnings from the RSVP controlled joint
ventures funded through the RSVP Commitment until such income is realized
through cash distributions.
At December 31, 2001, the Company, pursuant to Section 166 of the Code charged
off for tax purposes $70 million of the aforementioned reserve directly related
to the FrontLine Facility, including accrued interest. On February 14, 2002, the
Company charged off for tax purposes an additional $38 million of the reserve
directly related to the FrontLine Facility, including accrued interest and $47
million of the reserve directly related to the RSVP Facility, including accrued
interest.
FrontLine is in default under the FrontLine Loans from the Operating Partnership
and on June 12, 2002, filed a voluntary petition for relief under Chapter 11 of
the United States Bankruptcy Code.
As a result of the foregoing, the net carrying value of the Operating
Partnership's investments in the FrontLine Loans and joint venture investments
with RSVP, inclusive of the Operating Partnership's share of previously accrued
GAAP equity in earnings on those investments, is approximately $65 million which
was reassessed with no change by management as of September 30, 2002. Such
amount has been reflected in investments in service companies and affiliate
loans and joint ventures on the Operating Partnership's consolidated balance
sheet. The common and preferred members of RSVP are currently in dispute over
certain provisions of the RSVP operating agreement. The members are currently
negotiating to restructure the RSVP operating agreement to settle the dispute.
There can be no assurances that the members will successfully negotiate a
settlement.
Both the FrontLine Facility and the RSVP Facility have terms of five years, are
unsecured and advances thereunder are recourse obligations of FrontLine.
Notwithstanding the valuation reserve, under the terms of the credit facilities,
interest accrued on the FrontLine Loans 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 were outstanding for more than one year increasing annually at a rate of
four percent of the prior year's rate. In March 2001, the credit facilities were
amended to provide that (i) interest is payable only at maturity and (ii) the
Company may transfer all or any portion of its rights or obligations under the
credit facilities to its affiliates. The Company requested these changes as a
result of changes in REIT tax laws. As a result of FrontLine's default under the
FrontLine Loans, interest on borrowings thereunder accrue at default rates
ranging between 13% and 14.5% per annum.
Scott H. Rechler, who serves as Co-Chief Executive Officer and a director of the
Company, serves as CEO and Chairman of the Board of Directors of FrontLine. As
of December 31, 2001, the Company's directors and officers owned approximately
15.9% of FrontLine's outstanding common stock.
In November 1999, the Company received 176,186 shares of the common stock of
FrontLine as fees in connection with the FrontLine Loans. As a result of certain
tax rule provisions included in the REIT Modernization Act, it was determined
that the Company could no longer maintain any equity position in FrontLine. As
part of a compensation program, the Company distributed these shares to certain
non-executive employees, subject to recourse loans. The loans were scheduled to
be forgiven over time based on continued employment with the Company. Based on
the current value of FrontLine's common stock, the Operating Partnership has
established a valuation reserve charge relating to the outstanding balance of
these loans in the amount of $2.4 million.
13
11. COMMITMENTS AND CONTINGENCIES
HQ Global Workplaces, Inc. ("HQ"), one of the largest providers of flexible
officing solutions in the world and which is controlled by FrontLine, currently
operates nine (formerly eleven) executive office centers in the Operating
Partnership's properties, three of which are held through joint ventures. The
leases under which these office centers operate expire between 2008 and 2011,
encompass approximately 202,000 square feet and have current contractual annual
base rents of approximately $6.1 million. On March 13, 2002, as a result of
experiencing financial difficulties, HQ voluntarily filed a petition for relief
under Chapter 11 of the U.S. Bankruptcy Code. As of June 30, 2002, HQ's leases
with the Operating Partnership were in default. Further, effective March 13,
2002, the Bankruptcy Court granted HQ's petition to reject two of its leases
with the Operating Partnership. The two rejected leases aggregated approximately
23,900 square feet and provided for contractual base rents of approximately
$548,000 for the 2002 calendar year. Commencing April 1, 2002 and pursuant to
the bankruptcy filing, HQ has been paying current rental charges under its
leases with the Operating Partnership, other than under the two rejected leases.
The Operating Partnership is in negotiation to restructure three of the leases
and leave the terms of the remaining six leases unchanged. All negotiations with
HQ are conducted by a committee designated by the Company's Board and chaired by
an independent director. There can be no assurance as to whether any deal will
be consummated with HQ or if HQ will affirm or reject any or all of its
remaining leases with the Operating Partnership. As a result of the foregoing,
the Operating Partnership has reserved approximately $550,000 (net of minority
partners' interests and including the Operating Partnership's share of
unconsolidated joint venture interest), or 74%, of the amounts due from HQ as of
September 30, 2002. Scott H. Rechler serves as the non-Executive Chairman of the
Board and Jon Halpern is the Chief Executive Officer and a director of HQ.
WorldCom/MCI and its affiliates ("WorldCom"), a telecommunications company,
which leases as of September 30, 2002 approximately 527,000 square feet in
thirteen of the Operating Partnership's properties located throughout the
Tri-State Area voluntarily filed a petition for relief under Chapter 11 of the
U.S. Bankruptcy Code on July 21, 2002. The total annualized base rental revenue
from these leases amounts to approximately $12.0 million, or 2.9% of the
Operating Partnership's total 2002 annualized rental revenue, making it the
Operating Partnership's second largest tenant based on base rental revenue
earned on a consolidated basis. All of WorldCom's leases are current on base
rental charges through November 30, 2002 and the Operating Partnership currently
holds approximately $300,000 in security deposits relating to these leases.
There can be no assurance as to whether WorldCom will affirm or reject any or
all of its leases with the Operating Partnership. As a result of the foregoing,
the Operating Partnership has increased its reserve against the deferred rent
receivable on its balance sheet in an amount equal to $1.1 million representing
approximately 51% of the outstanding deferred rent receivable attributable to
WorldCom.
MetroMedia Fiber Network Services, Inc. ("MetroMedia"), which leased
approximately 112,000 square feet in one property from the Operating
Partnership, voluntarily filed a petition for relief under Chapter 11 of the
U.S. Bankruptcy Code in May 2002. MetroMedia's lease with the Operating
Partnership provided for contractual base rent of approximately $25 per square
foot amounting to $2.8 million per calendar year and expired in May 2010. In
July 2002, the Bankruptcy Court granted MetroMedia's petition to restructure and
reduce space under its existing lease. As a result, the lease was amended to
reduce MetroMedia's space by 80,357 square feet to 31,718 square feet. Annual
base rent on the 31,718 square feet MetroMedia will continue to lease is $25 per
square foot amounting to approximately $793,000 per annum. Further, pursuant to
the Bankruptcy Court order MetroMedia is required to pay to the Operating
Partnership a surrender fee of approximately $1.8 million. As a result of the
foregoing, the Operating Partnership has written off approximately $388,000 of
deferred rent receivable relating to this lease and recognized the
aforementioned surrender fee.
Arthur Andersen, LLP ("AA") leased approximately 38,000 square feet in one of
the Operating Partnership's New York City buildings. AA's lease with the
Operating Partnership provided for base rent of approximately $2 million on an
annualized basis and expired in April 2004. AA has experienced significant
financial difficulties with its business and as a result has entered into a
lease termination agreement with the Operating Partnership effective November
30, 2002. In October 2002, AA paid the Operating Partnership for all base rental
and other charges through November 30, 2002 and a lease termination fee of
approximately $144,000. As of September 30, 2002, the Operating Partnership has
reserved 100% of the deferred rent receivable related to this lease which is
approximately $130,000.
14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1* Each member of Reckson Associates Realty Corp.'s Board
of Directors and each Executive Officer of Reckson
Associates Realty Corp. has entered into an
Indemnification Agreement with Reckson Associates Realty
Corp. These Indemnification Agreements are identical in
all material respects. The schedule below sets forth the
terms of each Indemnification Agreement not filed which
differ from the copy of the example Indemnification
Agreement (between Reckson Associates Realty Corp. and
Donald J. Rechler, dated as of May 23, 2002), which is
filed as Exhibit 10.1 hereto:
Name Dated As Of
---- -----------
Scott H. Rechler May 23, 2002
Mitchell D. Rechler May 23, 2002
Gregg M. Rechler May 23, 2002
Michael Maturo May 23, 2002
Roger M. Rechler May 23, 2002
Jason Barnett May 23, 2002
Herve A. Kevenides May 23, 2002
John V. N. Klein May 23, 2002
Ronald H. Menaker May 1, 2002
Peter Quick May 1, 2002
Lewis S. Ranieri May 23, 2002
99.1 Certification of Donald Rechler, Co-CEO of Reckson
Associates Realty Corp., the sole general partner of
Reckson Operating Partnership, L.P., pursuant to Section
1350 of Chapter 63 of title 18 of the United States Code
99.2 Certification of Scott H. Rechler, Co-CEO of Reckson
Associates Realty Corp., the sole general partner of
Reckson Operating Partnership, L.P., pursuant to Section
1350 of Chapter 63 of title 18 of the United States Code
99.3 Certification of Michael Maturo, Executive Vice
President, Treasurer and CFO of Reckson Associates
Realty Corp., the sole general partner of Reckson
Operating Partnership, L.P., pursuant to Section 1350 of
Chapter 63 of title 18 of the United States Code
- ------------------
*Previously filed as an Exhibit to the Form 10-Q filed on November 14, 2002.
15
PART II - OTHER INFORMATION (CONTINUED)
b) During the three months ended September 30, 2002 the Registrant
filed the following reports on Form 8K:
On August 8, 2002, the Registrant submitted a report on Form 8-K
under Item 9 thereof in order to submit its second quarter
presentation in satisfaction of the requirements of Regulation FD.
On August 8, 2002, the Registrant submitted a report on Form 8-K
under Item 9 thereof in order to submit supplemental operating and
financial data for the quarter ended June 30, 2002 in satisfaction
of the requirements of 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 hereunto duly authorized.
RECKSON OPERATING PARTNERSHIP, L. P.
BY: RECKSON ASSOCIATES REALTY CORP., its sole general partner
By: /s/ Scott H. Rechler By: /s/ Michael Maturo
- -------------------------- ------------------------------------------------
Scott H. Rechler, Michael Maturo, Executive Vice President,
Co-Chief Executive Officer Treasurer and Chief Financial Officer
By: /s/ Donald Rechler
- --------------------------
Donald Rechler, Co-Chief
Executive Officer
DATE: December 16, 2002
16
CERTIFICATION
I, Donald J. Rechler, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of Reckson
Operating Partnership, L.P.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: December 16, 2002
/s/ Donald J. Rechler
--------------------------------
Donald J. Rechler
Co-Chief Executive Officer,
Reckson Associates Realty Corp.,
the sole general partner of
the Registrant
17
CERTIFICATION
I, Scott H. Rechler, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of Reckson
Operating Partnership, L.P.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: December 16, 2002
/s/ Scott H. Rechler
-------------------------
Scott H. Rechler
Co-Chief Executive Officer,
Reckson Associates Realty Corp.,
the sole general partner of
the Registrant
18
CERTIFICATION
I, Michael Maturo, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of Reckson
Operating Partnership, L.P.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: December 16, 2002
/s/ Michael Maturo
-----------------------------------
Michael Maturo
Executive Vice President, Treasurer
and Chief Financial Officer,
Reckson Associates Realty Corp.,
the sole general partner of
the Registrant
19
EXHIBIT 99.1
RECKSON OPERATING PARTNERSHIP, L.P.
EXHIBIT 99.1
CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63
OF TITLE 18 OF THE UNITED STATES CODE
I, Donald J. Rechler, Co-Chief Executive Officer of Reckson Associates Realty
Corp., the sole general partner of Reckson Operating Partnership, L.P. (the
"Company"), certify pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350, that:
1) The Quarterly Report on Form 10-Q/A of the Company for the
quarterly period ended September 30, 2002 (the "Report") fully
complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));
and
2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
Dated: December 16, 2002
Reckson Operating Partnership, L.P.
By: Reckson Associates Realty Corp.,
its sole general partner
By /s/ Donald J. Rechler
---------------------------------------------
Donald J. Rechler, Co-Chief Executive Officer
EXHIBIT 99.2
RECKSON OPERATING PARTNERSHIP, L.P.
EXHIBIT 99.2
CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63
OF TITLE 18 OF THE UNITED STATES CODE
I, Scott H. Rechler, Co-Chief Executive Officer of Reckson Associates Realty
Corp., the sole general partner of Reckson Operating Partnership, L.P. (the
"Company"), certify pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350, that:
1) The Quarterly Report on Form 10-Q/A of the Company for the
quarterly period ended September 30, 2002 (the "Report") fully
complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));
and
2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
Dated: December 16, 2002
Reckson Operating Partnership, L.P.
By: Reckson Associates Realty Corp.,
its sole general partner
By /s/ Scott H. Rechler
--------------------------------------------
Scott H. Rechler, Co-Chief Executive Officer
EXHIBIT 99.3
RECKSON OPERATING PARTNERSHIP, L.P.
EXHIBIT 99.3
CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63
OF TITLE 18 OF THE UNITED STATES CODE
I, Michael Maturo, Executive Vice President, Treasurer and Chief Financial
Officer of Reckson Associates Realty Corp., the sole general partner of Reckson
Operating Partnership, L.P. (the "Company"), certify pursuant to section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1) The Quarterly Report on Form 10-Q/A of the Company for the
quarterly period ended September 30, 2002 (the "Report") fully
complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));
and
2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
Dated: December 16, 2002
Reckson Operating Partnership, L.P.
By: Reckson Associates Realty Corp.,
its sole general partner
By /s/ Michael Maturo
-----------------------------------------
Michael Maturo, Executive Vice President,
Treasurer and Chief Financial Officer
