EXHIBIT INDEX
Exhibit Number Description
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99.1 Reckson Associates Realty Corp. Earnings
Press Release dated August 5, 2003
4
Exhibit 99.1
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PRESS RELEASE
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Reckson Associates Realty Corp.
225 Broadhollow Road
Melville, NY 11747
(631) 694-6900 (Phone)
(631) 622-6790 (Facsimile)
Contact: Scott Rechler, Co-CEO
Michael Maturo, CFO
- ------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
- ---------------------
Reckson Associates Announces Second Quarter 2003 Results
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(MELVILLE, NEW YORK, August 5, 2003) - Reckson Associates Realty Corp. (NYSE:
RA) today reported diluted funds from operations ("FFO") of $35.4 million or
$.54 per share for the second quarter of 2003, as compared to FFO of $46.8
million or $.59 per share for the second quarter of 2002, representing a per
share decrease of (8.5%).
Net income allocable to common shareholders totaled $7.6 million in the second
quarter of 2003, as compared to $13.8 million in the second quarter of 2002.
Diluted net income per Class A Common share, commonly referred to as earnings
per share ("EPS"), totaled $.12 per share in the second quarter of 2003, as
compared to $.21 per share in the second quarter of 2002, representing a per
share decrease of ($.09). Diluted EPS per Class B Common share totaled $.13
per share in the second quarter of 2003, as compared to $.22 per share in the
second quarter of 2002, representing a per share decrease of ($.09).
A reconciliation of FFO to net income allocable to common shareholders, the
GAAP measure the Company believes to be the most directly comparable, is in
the financial tables accompanying this press release.
Commenting on the second quarter results, Scott Rechler, Reckson's Co-Chief
Executive Officer, said, "During the second quarter, we executed leases on
over 70% more office space than in the first quarter and have seen that pace
continue into the third quarter. We believe that the Company's recent leasing
activity indicates that the markets have bottomed and are starting to
stabilize. While the markets remain competitive, we are confident that we will
successfully meet our leasing targets including re-tenanting space vacated by
recent tenant defaults."
Summary Portfolio Performance
- -----------------------------
The Company reported overall portfolio occupancy of 92.2% at June 30, 2003, as
compared to 93.2% at March 31, 2003 and 94.2% at June 30, 2002. The Company
reported office and industrial/R&D occupancies at June 30, 2003 of 91.7% and
93.2%, respectively. This compares to 92.8% and 94.0%, respectively, at March
31, 2003 and 95.2% and 92.0%, respectively, at June 30, 2002. WorldCom/MCI and
HQ Global Workplaces, Inc. account for 91 basis points of the 110 basis point
decrease in office portfolio occupancy from March 31, 2003 to June 30, 2003.
During the quarter, the Company executed 57 leases encompassing 753,387 square
feet, representing 3.7% of the total portfolio. During the quarter, the
Company executed 45 office leases encompassing 532,549 square feet, which
resulted in a 58% renewal rate.
Core same property net operating income (property operating revenues less
property operating expenses) ("NOI") before termination fees for the second
quarter of 2003 decreased (6.7%) (cash) and (6.1%) (including straight-line
rent), compared to the second quarter of 2002.
Net of minority interests in joint ventures, core same property NOI before
termination fees for the second quarter of 2003 decreased (7.0%) (cash) and
(6.4%) (including straight-line rent), compared to the second quarter of 2002.
Rent performance on renewal and replacement space during the second quarter of
2003 decreased (7.7%) (cash) and increased 6.4% (including straight-line rent)
in the office properties and increased 0.7% (cash) and 3.0% (including
straight-line rent) in the industrial/R&D properties.
Other Highlights
- ----------------
Purchased two industrial redevelopment properties in Hauppauge, Long Island,
encompassing approximately 100,000 square feet.
Executed a lease for 100% of the recently completed 72,000 square foot
ground-up development at AIP 2001 in Islip, Long Island.
Earnings Guidance
- -----------------
On Wednesday, August 6th, during the Company's quarterly earnings conference
call, management will discuss earnings guidance for 2003.
Non-GAAP Financial Measures
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Funds from Operations ("FFO")
- -----------------------------
The Company believes that FFO is a widely recognized and appropriate measure
of performance of an equity REIT. Although FFO is a non-GAAP financial
measure, the
Company believes it provides useful information to shareholders, potential
investors and management. The Company computes FFO in accordance with
standards established by the National Association of Real Estate Investment
Trusts ("NAREIT"). FFO is defined by NAREIT as net income or loss, excluding
gains or losses from debt restructuring and sales of depreciable properties
plus depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash generated from
operating activities in accordance with GAAP and is not indicative of cash
available to fund cash needs. FFO should not be considered as an alternative
to net income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity. Since all companies do not
calculate FFO in a similar fashion, the Company's calculation of FFO presented
herein may not be comparable to similarly titled measures as reported by other
companies.
Reckson Associates Realty Corp. is a self-administered and self-managed real
estate investment trust (REIT) specializing in the acquisition, leasing,
financing, management and development of office and industrial properties.
Reckson's core growth strategy is focused on the markets surrounding and
including New York City. The Company is one of the largest publicly traded
owners, managers and developers of Class A office and industrial properties in
the New York Tri-State area, with 181 properties comprised of approximately
20.5 million square feet either owned or controlled. For additional
information on Reckson Associates Realty Corp., please visit the Company's web
site at www.reckson.com.
Conference Call and Webcast
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The Company's executive management team, led by Co-Chief Executive Officer
Scott Rechler, will host a conference call outlining second quarter results on
Wednesday, August 6, 2003 at 2:00 p.m. EST. The conference call may be
accessed by dialing (800) 553-0272 (internationally (651) 291-0561). No
passcode is required. The live conference call will also be webcast in a
listen-only mode on the Company's web site at www.reckson.com, in the Investor
Relations section, with an accompanying slide show presentation outlining the
Company's second quarter results.
A replay of the conference call will be available telephonically from August
6, 2003 at 8:00 p.m. EST through August 15, 2003 at 11:59 p.m. EST. The
telephone number for the replay is (800) 475-6701, passcode 689079. A replay
of the webcast of the conference call will also be available via the Company's
web site.
Financial Statements Attached
- -----------------------------
The Supplemental Package and Slide Show Presentation outlining the Company's
second quarter 2003 results will be available prior to the Company's quarterly
conference call on the Company's web site at www.reckson.com in the Investor
Relations section, by e-mail to those on the Company's distribution list, as
well as by mail or fax, upon request. To be added to the Company's e-mail
distribution list or to
receive a copy of the quarterly materials by mail or fax, please contact Susan
McGuire, Investor Relations, Reckson Associates Realty Corp., 225 Broadhollow
Road, Melville, New York 11747-4883, investorrelations@reckson.com or
telephone number (631) 622-6746.
Certain matters discussed herein, including guidance concerning the Company's
future performance, are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Although the Company
believes the expectations reflected in such forward-looking statements are
based on reasonable assumptions, forward-looking statements are not guarantees
of results and no assurance can be given that the expected results will be
delivered. Such forward-looking statements are subject to certain risks,
trends and uncertainties that could cause actual results to differ materially
from those expected. Among those risks, trends and uncertainties are the
general economic climate, including the conditions affecting industries in
which our principal tenants compete; financial condition of our tenants;
changes in the supply of and demand for office and industrial/R&D 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, security and insurance costs; repayment of debt owed to the
Company by third parties (including FrontLine Capital Group); risks associated
with joint ventures; liability for uninsured losses or environmental matters;
and other risks associated with the development and acquisition of properties,
including risks that development may not be completed on schedule, that the
tenants will not take occupancy or pay rent, or that development or operating
costs may be greater than anticipated. For further information on factors that
could impact Reckson, reference is made to Reckson's filings with the
Securities and Exchange Commission. Reckson undertakes no responsibility to
update or supplement information contained in this press release.
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Statements of Income
(in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
2003 2002 2003 2002
-------------------- ---------------------
Property Operating Revenues:
Base rents $107,127 $108,867 $214,605 $215,250
Tenant escalations and reimbursements 15,377 14,062 31,340 29,383
Total property operating revenues 122,504 122,929 245,945 244,633
-------------------- ---------------------
Property Operating Expenses:
Operating expenses 26,929 23,718 55,294 47,792
Real estate taxes 19,639 17,713 39,108 35,534
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Total property operating expenses 46,568 41,431 94,402 83,326
-------------------- ---------------------
Net Operating Income 75,936 81,498 151,543 161,307
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Gross Margin percentage 62.0% 66.3% 61.6% 65.9%
-------------------- ---------------------
Other Income 4,638 2,008 12,063 4,433
-------------------- ---------------------
Other Expenses
Interest expense 22,896 22,124 45,746 43,120
Depreciation and amortization 29,903 27,836 61,887 53,766
Marketing, general and administrative 9,390 7,650 17,649 14,745
-------------------- ---------------------
Total other expenses 62,189 57,610 125,282 111,631
-------------------- ---------------------
Income before minority interests, preferred dividends
and distributions, gain on sales of depreciable
real estate and discontinued operations 18,385 25,896 38,324 54,109
Minority partners' interests in consolidated partnerships (4,335) (4,813) (9,025) (9,933)
Distributions to preferred unitholders (274) (280) (547) (741)
Limited partners' minority interest in the operating
partnership (874) (1,643) (1,870) (3,547)
Gain on sales of depreciable real estate assets - - - 537
-------------------- ---------------------
Income before discontinued operations and preferred
dividends 12,902 19,160 26,882 40,425
Discontinued operations (net of limited partners'
minority interest) - 132 - 336
-------------------- ---------------------
Net income 12,902 19,292 26,882 40,761
Dividends to preferred shareholders (5,317) (5,487) (10,634) (10,974)
-------------------- ---------------------
Net income allocable to common shareholders $7,585 $13,805 $16,248 $29,787
==================== =====================
Allocable to Class A common $5,769 $10,548 $12,364 $22,707
Allocable to Class B common 1,816 3,257 3,884 7,080
-------------------- ---------------------
Net income allocable to common shareholders $7,585 $13,805 $16,248 $29,787
==================== =====================
Basic weighted average common shares outstanding:
Class A common 48,001,000 50,775,000 48,100,000 50,396,000
Class B common 9,915,000 10,284,000 9,915,000 10,284,000
Basic net income per weighted average common share:
Class A common stock $0.12 $0.21 $0.26 $0.44
Gain on sales of depreciable real estate assets - - - 0.01
Discontinued operations - - - -
-------------------- ---------------------
Basic net income per Class A common $0.12 $0.21 $0.26 $0.45
==================== =====================
Class B common stock $0.18 $0.32 $0.39 $0.67
Gain on sales of depreciable real estate assets - - - 0.01
Discontinued operations - - - 0.01
-------------------- ---------------------
Basic net income per Class B common $0.18 $0.32 $0.39 $0.69
==================== =====================
Diluted weighted average common shares outstanding:
Class A common 48,118,000 51,165,000 48,219,000 50,760,000
Class B common 9,915,000 10,284,000 9,915,000 10,284,000
Diluted net income per weighted average common share:
Class A common $0.12 $0.21 $0.26 $0.45
==================== =====================
Class B common $0.13 $0.22 $0.28 $0.49
==================== =====================
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2003 2002
-------------------- ---------------------
Assets: (Unaudited)
Commercial real estate properties, at cost:
Land $ 423,036 $ 418,040
Buildings and improvements 2,448,379 2,415,252
Developments in progress:
Land 88,388 92,924
Development costs 23,743 28,311
Furniture, fixtures, and equipment 12,572 13,595
-------------------- ---------------------
2,996,118 2,968,122
Less: accumulated depreciation (501,122) (454,018)
-------------------- ---------------------
Investment in real estate, net of accumulated depreciation 2,494,996 2,514,104
Investments in real estate joint ventures 5,709 6,116
Investments in mortgage notes and notes receivable 54,600 54,547
Investments in service companies and affiliate loans and joint
ventures 72,440 73,332
Cash and cash equivalents 23,996 30,827
Tenant receivables 7,724 14,050
Deferred rents receivable 116,573 107,366
Prepaid expenses and other assets 56,021 37,235
Contract and land deposits and pre-acquisition costs 208 240
Deferred leasing and loan costs (net of accumulated amortization) 68,727 70,103
-------------------- ---------------------
Total Assets $ 2,900,994 $ 2,907,920
==================== =====================
Liabilities:
Mortgage notes payable $ 734,134 $ 740,012
Unsecured credit facility 322,000 267,000
Senior unsecured notes 499,374 499,305
Accrued expenses and other liabilities 82,357 93,783
Dividends and distributions payable 31,471 31,575
-------------------- ---------------------
Total Liabilities 1,669,336 1,631,675
-------------------- ---------------------
Minority partners' interests in consolidated partnerships 240,452 242,934
Preferred unit interest in the operating partnership 19,662 19,662
Limited partners' minority interest in the operating partnership 66,261 71,420
-------------------- ---------------------
326,375 334,016
-------------------- ---------------------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized
Series A - 8,834,500 shares issued and outstanding 88 88
Series B - 2,000,000 shares issued and outstanding 20 20
Common Stock, $.01 par value, 100,000,000 shares authorized
Class A - 48,000,995 and 48,246,083 shares issued and
outstanding, respectively 480 482
Class B - 9,915,313 shares issued and outstanding 99 99
Treasury Stock, Class A common, 2,950,400 and 2,698,400 shares,
respectively and Class B common, 368,200 shares (68,493) (63,954)
Additional paid in capital 973,089 1,005,494
-------------------- ---------------------
Total Stockholders' Equity 905,283 942,229
-------------------- ---------------------
Total Liabilities and Stockholders' Equity $ 2,900,994 $ 2,907,920
==================== =====================
Total debt to market capitalization (a): 46.2% 44.9%
==================== =====================
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(a) Total debt includes the Company's pro rata share of consolidated and
unconsolidated joint venture debt.
Reckson Associates Realty Corp. (NYSE: RA)
Funds From Operations
(in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
2003 2002 2003 2002
------------------------ -------------------------
Net income allocable to common shareholders $ 7,585 $ 13,805 $ 16,248 $ 29,787
Add: Real estate depreciation and amortization 29,127 27,041 60,454 52,362
Minority partners' interests in consolidated
partnerships 4,335 4,813 9,025 9,933
Limited partners' minority interest in the
operating partnership 874 1,663 1,870 3,597
Less: Gain on sales of depreciable real estate assets - - - 537
Amounts distributable to minority partners in
consolidated partnerships 6,769 6,329 13,576 12,893
------------------------ -------------------------
Basic Funds From Operations ("FFO") 35,152 40,993 74,021 82,249
Add: Dividends and distributions on dilutive shares
and units 273 5,767 8,968 11,715
------------------------ -------------------------
Diluted FFO (Note - a) $ 35,425 $ 46,760 $ 82,989 $ 93,964
======================== =========================
Basic FFO calculations:
Weighted average common shares outstanding 57,916 61,059 58,016 60,680
Weighted average units of limited partnership
interest outstanding 7,276 7,500 7,276 7,504
------------------------ -------------------------
Basic weighted average common shares and units
outstanding 65,192 68,559 65,292 68,184
======================== =========================
Basic FFO per weighted average share or unit $ 0.54 $ 0.60 $ 1.13 $ 1.21
Basic weighted average Class A & B dividends
per share or unit $ 0.46 $ 0.46 $ 0.92 $ 0.92
Basic FFO payout ratio (Class A & B combined) 85.0% 76.6% 80.9% 76.0%
Basic weighted average Class A dividends per
share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Basic FFO payout ratio - Class A 78.8% 71.0% 74.9% 70.4%
Basic weighted average Class B dividends per
share $ 0.65 $ 0.65 $ 1.29 $ 1.30
Basic FFO payout ratio - Class B 120.0% 108.3% 114.2% 107.5%
Diluted FFO calculations:
Basic weighted average common shares and units
outstanding 65,192 68,559 65,292 68,184
Adjustments for dilutive FFO weighted average
shares and units outstanding:
Common stock equivalents 117 390 118 363
Series A preferred stock - 8,060 7,747 8,060
Series B preferred stock - 1,919 - 1,919
Limited partners' preferred interest 661 661 661 834
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Total diluted weighted average shares and units
outstanding 65,970 79,589 73,818 79,360
======================== =========================
Diluted FFO per weighted average share or unit $ 0.54 $ 0.59 $ 1.12 $ 1.18
Diluted weighted average Class A & B dividends per share
or unit $ 0.46 $ 0.45 $ 0.91 $ 0.91
Diluted FFO payout ratio (Class A & B combined) 85.3% 77.2% 80.9% 76.6%
Diluted weighted average Class A dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio - Class A 79.1% 72.3% 75.5% 71.7%
Diluted weighted average Class B dividends per share $ 0.65 $ 0.65 $ 1.29 $ 1.30
Diluted FFO payout ratio - Class B 120.5% 110.3% 115.1% 109.5%
================================================================================================================
Notes:
a - Includes $2.2 million and $7.7 million for the three and six month
periods ended June 30, 2003, respectively attributable to the sale
of land.
Reckson Associates Realty Corp.
(NYSE: RA) Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
2003 2002 2003 2002
------------------------ -------------------------
Basic Funds From Operations $ 35,152 $ 40,993 $ 74,021 $ 82,249
Adjustments for basic cash available for distribution:
Less: Straight line rents 4,659 4,368 8,677 13,035
Committed non-incremental capitalized tenant
improvements and leasing costs 6,805 3,406 15,596 7,903
Actual non-incremental capitalized improvements 1,929 2,007 4,055 3,441
------------------------ -------------------------
Basic Cash Available for Distribution ("CAD") 21,759 31,212 45,693 57,870
Add: Dividends and distributions on dilutive shares
and units - 236 - 310
------------------------ -------------------------
Diluted CAD (Note - a) $ 21,759 $ 31,448 $ 45,693 $ 58,180
======================== =========================
Basic CAD calculations:
Weighted average common shares outstanding 57,916 61,059 58,016 60,680
Weighted average units of limited partnership
interest outstanding 7,276 7,500 7,276 7,504
------------------------ -------------------------
Basic weighted average common shares and units
outstanding 65,192 68,559 65,292 68,184
======================== =========================
Basic CAD per weighted average share or unit $ 0.33 $ 0.46 $ 0.70 $ 0.85
Basic weighted average Class A & B dividends
per share or unit $ 0.46 $ 0.46 $ 0.92 $ 0.92
Basic CAD payout ratio (Class A & B combined) 137.4% 100.6% 131.0% 108.0%
Basic weighted average Class A dividends per
share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Basic CAD payout ratio - Class A 127.2% 93.3% 121.3% 100.1%
Basic weighted average Class B dividends per
share $ 0.65 $ 0.65 $ 1.29 $ 1.30
Basic CAD payout ratio - Class B 193.9% 142.3% 184.9% 152.8%
Diluted CAD calculations:
Basic weighted average common shares and units
outstanding 65,192 68,559 65,292 68,184
Adjustments for dilutive CAD weighted average
shares and units outstanding:
Common stock equivalents 117 390 118 363
Series A preferred stock - - - -
Series B preferred stock - - - -
Limited partners' preferred interest - 566 - 368
------------------------ -------------------------
Total diluted weighted average shares and units
outstanding 65,309 69,515 65,410 68,915
======================== =========================
Diluted CAD per weighted average share or unit $ 0.33 $ 0.45 $ 0.70 $ 0.84
Diluted weighted average Class A & B dividends per share
or unit $ 0.46 $ 0.46 $ 0.92 $ 0.92
Diluted CAD payout ratio (Class A & B combined) 137.6% 101.2% 131.2% 108.5%
Diluted weighted average Class A dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted CAD payout ratio - Class A 127.5% 93.9% 121.6% 100.6%
Diluted weighted average Class B dividends per share $ 0.65 $ 0.65 $ 1.29 $ 1.30
Diluted CAD payout ratio - Class B 194.2% 143.2% 185.3% 153.6%
================================================================================================================
Notes:
a - Includes $2.2 million and $7.7 million for the three and six month
periods ended June 30, 2003, respectively attributable to the sale
of land.
