EXHIBIT INDEX
Exhibit Number Description
99.1 Reckson Associates Realty Corp. Earnings Press
Release dated February 26, 2004
4
Exhibit 99.1
PRESS RELEASE
- -------------
Reckson Associates Realty Corp.
225 Broadhollow Road
Melville, NY 11747
(631) 694-6900 (Phone)
(631) 622-6790 (Facsimile)
Contact: Scott Rechler, CEO
Michael Maturo, CFO
- ------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
- ---------------------
Reckson Announces Fourth Quarter and Full Year 2003 Results
-----------------------------------------------------------
Announces Leasing Activity of Approximately 950,000 Square Feet From
End of 3Q Through YTD 2004 Including 177,000 Square Feet of
Space Previously Vacated by WorldCom/MCI
(MELVILLE, NEW YORK, February 26, 2004) - Reckson Associates Realty Corp.
(NYSE: RA) today reported diluted funds from operations ("FFO") of $24.2
million or $.38 per share for the fourth quarter of 2003, after deducting
$11.6 million or $.18 per share of non-recurring restructuring charges, as
compared to FFO of $40.9 million or $.55 per share for the fourth quarter of
2002, after deducting $2.6 million or $.04 per share as a result of the
Company's adoption of FAS 145 which addresses reporting for gains and losses
from extinguishment of debt.
Reckson also reported diluted FFO of $136.0 million or $2.07 per share for the
year ended December 31, 2003, after deducting $11.6 million or $.18 per share
of non-recurring restructuring charges, on total revenues of $470.3 million, as
compared to FFO of $ 181.5 million or $2.32 per share for the year ended
December 31, 2002, after deducting $2.6 million or $.03 per share as a result
of the Company's adoption of FAS 145.
Commenting on the Company's performance, Scott Rechler, Reckson's Chief
Executive Officer and President, stated, "I am extremely pleased with the
exceptional level of leasing activity that we have had since the end of the
third quarter and believe that it is a positive indicator that our markets
have gone from `bouncing along the bottom' to beginning their recovery. Our
ability to capture a large portion of the market activity demonstrates
Reckson's competitive advantage and the strength of our franchise." Mr.
Rechler continued, "I am proud of our newly appointed management team's
ability to execute so effectively on our core operations during a period when
the
Company experienced extensive organizational, investment and capital market
activity."
Net income allocable to common shareholders totaled $116.0 million in the
fourth quarter of 2003, including $115.8 million related to gain on sales of
real estate (primarily the sale of the Long Island industrial portfolio), as
compared to $8.6 million in the fourth quarter of 2002. Diluted net income per
Class A common share, commonly referred to as earnings per share ("EPS"),
totaled $2.00 per share in the fourth quarter of 2003, as compared to $.14 per
share in the fourth quarter of 2002. Diluted EPS per Class B common share
totaled $1.77 per share in the fourth quarter of 2003, as compared to $.15 per
share in the fourth quarter of 2002.
Net income allocable to common shareholders totaled $142.3 million for the
year ended December 31, 2003, including $115.8 million related to gain on
sales of real estate, as compared to $54.5 million, including $4.8 million
related to gain on sales of real estate, for the year ended December 31, 2002.
Diluted EPS per Class A common share totaled $2.54 per share for the year
ended December 31, 2003, as compared to $.83 per share for the year ended
December 31, 2002. Diluted EPS per Class B common share totaled $1.90 per
share for the year ended December 31, 2003, as compared to $.90 per share for
the year ended December 31, 2002.
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.
Summary Portfolio Performance
- -----------------------------
The Company reported same property office occupancy at December 31, 2003 of
92.4%. This compares to 91.9% at September 30, 2003 and 96.0% at December 31,
2002. The Company reported same property overall portfolio occupancy of 91.0%
at December 31, 2003, as compared to 90.7% at September 30, 2003 and 94.5% at
December 31, 2002.
The Company also reported office occupancy at December 31, 2003 of 91.5%. This
compares to 91.0% at September 30, 2003 and 95.7% at December 31, 2002. The
Company also reported overall portfolio occupancy of 90.2% at December 30,
2003, as compared to 89.9% at September 30, 2003 and 95.4% at December 31,
2002.
Total portfolio core same property net operating income (property operating
revenues less property operating expenses) ("NOI") before termination fees for
the fourth quarter of 2003 was 2.7% (cash) and (1.5%) (including straight-line
rent), compared to the fourth quarter of 2002. Office core same property NOI
before termination fees for the fourth quarter of 2003 was 2.4% (cash) and
(1.9%) (including straight-line rent), compared to the fourth quarter of 2002.
Net of minority interests in joint ventures, total portfolio core same
property NOI before termination fees for the fourth quarter of 2003 was 2.8%
(cash) and (2.0%) (including straight-line rent), compared to the fourth
quarter of 2002. Net of minority interests in joint ventures, office portfolio
core same property NOI before termination fees for the fourth quarter of 2003
was 2.4% (cash) and (2.4%) (including straight-line rent), compared to the
fourth quarter of 2002.
Rent performance on renewal and replacement space during the fourth quarter of
2003 was (7.2)% (cash) and 1.8% (including straight-line rent) in the office
portfolio. Rent performance on renewal and replacement space during the year
ended December 31, 2003 was .4% (cash) and 10.7% (including straight-line
rent) in the office portfolio.
Other Highlights
- ----------------
Leasing Activity
- ----------------
- Executed leases totaling 304,000 square feet in the fourth quarter
of 2003 and an additional 646,000 square feet subsequent to the
fourth quarter resulting in an approximate 250 basis point net
increase to occupancy
- Executed a lease with Nassau County for the entire building and
concourse level at 60 Charles Lindbergh Blvd., Long Island,
comprising approximately 200,000 square feet, including 127,000
square feet previously vacated by WorldCom/MCI. 60 Charles Lindbergh
Blvd. will be repositioned to satisfy Nassau County's use, requiring
customary municipal approvals.
- Leased 50,000 square feet previously vacated by WorldCom/MCI at
Reckson Executive Park, Westchester
Investment/Disposition Activity
- -------------------------------
- Closed on the Long Island industrial portfolio disposition
- Acquired 1185 Avenue of the Americas, NYC
- Sold or contracted to sell three additional office buildings for $58
million (net of joint venture partner's interest) representing a
blended cap rate of 7.3% on forecasted 2004 NOI
Capital Market Activity
- -----------------------
- Issued $150 million of 5.15% seven-year senior unsecured notes
- Exchanged all outstanding Class B common stock into Class A common
stock on a one for one basis
- Redeemed 8.85% Series B Preferred stock at a 102% premium for shares
of Class A common stock valued at $26.05 per share
- Received an Investment Grade Rating on the Company's senior
unsecured debt from Fitch Ratings of BBB- with a Stable Outlook
Organizational Restructuring Activity
- -------------------------------------
- Completed organizational restructuring - management transition
completed
- Announced the addition of Douglas Crocker, Stanley Steinberg and
Elizabeth McCaul to the board of directors
Earnings Guidance
- -----------------
On Friday, February 27th, during the Company's quarterly earnings conference
call, management will discuss earnings guidance for 2004.
Non-GAAP Financial Measures
- ---------------------------
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 sales of depreciable properties plus real
estate 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 Class A office 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 properties in the New York
Tri-State area, with 86 properties comprised of approximately 15.5 million
square feet either owned or controlled, or under contract. For additional
information on Reckson Associates Realty Corp., please visit the Company's web
site at www.reckson.com.
Conference Call and Webcast
- ---------------------------
The Company's executive management team, led by Chief Executive Officer and
President Scott Rechler, will host a conference call outlining fourth quarter
results on Friday, February 27, 2004 at 2:00 p.m. EST. The conference call may
be accessed by dialing (800) 553-5260 (internationally (612) 332-0226). 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 fourth quarter results.
A replay of the conference call will be available telephonically from February
27, 2004 at 8:00 p.m. EST through March 5, 2004 at 11:59 p.m. EST. The
telephone number for the replay is (800) 475-6701, passcode 717617. 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
fourth 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 properties in the New York
Tri-State area; changes in interest rate levels; changes in the Company's
credit ratings; changes in the Company's cost of and access to capital;
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, real estate taxes, 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 Year Ended
December 31, December 31,
-------------------------- ---------------------------
2003 2002 2003 2002
-------------------------- ---------------------------
Property Operating Revenues:
Base rents $ 97,023 $ 100,171 $ 385,225 $ 395,308
Tenant escalations and reimbursements 15,739 14,647 60,556 55,441
-------------------------- ---------------------------
Total property operating revenues 112,762 114,818 445,781 450,749
-------------------------- ---------------------------
Property Operating Expenses:
Operating expenses 27,364 24,623 108,152 97,253
Real estate taxes 18,260 17,805 72,259 65,778
-------------------------- ---------------------------
Total property operating expenses 45,624 42,428 180,411 163,031
-------------------------- ---------------------------
Net Operating Income 67,138 72,390 265,370 287,718
-------------------------- ---------------------------
Gross Margin percentage 59.5% 63.0% 59.5% 63.8%
-------------------------- ---------------------------
Other Income 5,978 2,113 24,531 8,433
-------------------------- ---------------------------
Other Expenses
Interest expense 21,317 23,449 82,487 83,309
Restructuring charges - net 11,580 - 11,580 -
Depreciation and amortization 26,394 26,790 109,239 102,444
Marketing, general and administrative 7,991 8,291 32,746 29,214
-------------------------- ---------------------------
Total other expenses 67,282 58,530 236,052 214,967
-------------------------- ---------------------------
Income before minority interests, preferred dividends and distributions,
gain on sales of depreciable real estate and discontinued operations 5,834 15,973 53,849 81,184
Minority partners' interests in consolidated partnerships (4,568) (4,350) (17,972) (18,730)
Distributions to preferred unitholders (273) (274) (1,093) (1,288)
Limited partners' minority interest in the operating partnership 377 (695) (1,492) (4,223)
Gain on sales of depreciable real estate assets - - - 537
-------------------------- ---------------------------
Income before discontinued operations and preferred dividends 1,370 10,654 33,292 57,480
Discontinued operations (net of limited partners' minority interest)
Gain on sales of real estate 115,771 - 115,771 4,267
Income from discontinued operations 4,173 3,332 14,458 14,621
-------------------------- ---------------------------
Net income 121,314 13,986 163,521 76,368
Dividends to preferred shareholders (5,317) (5,374) (21,267) (21,835)
-------------------------- ---------------------------
Net income allocable to common shareholders $ 115,997 $ 8,612 $ 142,254 $ 54,533
========================== ===========================
Allocable to Class A common $ 104,989 $ 6,563 $ 124,966 $ 41,604
Allocable to Class B common 11,008 2,049 17,288 12,929
-------------------------- ---------------------------
Net income allocable to common shareholders $ 115,997 $ 8,612 $ 142,254 $ 54,533
========================== ===========================
Basic weighted average common shares outstanding:
Class A common 52,125,000 48,384,000 49,092,000 49,669,000
Class B common 5,928,000 9,915,000 8,910,000 10,122,000
Basic net income per weighted average common share:
Class A common stock - income (loss) from continuing operations ($0.07) $0.09 $0.18 $ 0.54
Gain on sales of depreciable real estate assets - - - 0.01
Discontinued operations 2.08 0.05 2.37 0.29
-------------------------- ---------------------------
Basic net income per Class A common $2.01 $ 0.14 $ 2.55 $ 0.84
-------------------------- ---------------------------
Class B common stock - income (loss) from continuing operations ($0.06) $ 0.13 $ 0.39 $ 0.83
Gain on sales of depreciable real estate assets - - - 0.01
Discontinued operations 1.92 0.08 1.55 0.44
-------------------------- ---------------------------
Basic net income per Class B common $1.86 $ 0.21 $ 1.94 $ 1.28
========================== ===========================
Diluted weighted average common shares outstanding:
Class A common 52,400,000 48,551,000 49,262,000 49,968,000
Class B common 5,928,000 9,915,000 8,910,000 10,122,000
Diluted net income per weighted average common share:
Class A common $2.00 $ 0.14 $ 2.54 $ 0.83
========================== ===========================
Class B common $1.77 $ 0.15 $ 1.90 $ 0.90
========================== ===========================
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands, except share amounts)
December 31, December 31,
2003 2002
------------ ------------
Assets:
Commercial real estate properties, at cost:
Land $ 386,501 $ 386,747
Buildings and improvements 2,251,455 2,199,896
Developments in progress:
Land 90,706 92,924
Development costs 68,127 28,311
Furniture, fixtures, and equipment 11,338 12,203
------------ ------------
2,808,127 2,720,081
Less: accumulated depreciation (469,642) (382,022)
------------ ------------
Investment in real estate, net of accumulated depreciation 2,338,485 2,338,059
Properties and related assets held for sale, net of accumulated depreciation 6,920 196,954
Investments in real estate joint ventures 5,904 6,116
Investments in mortgage notes and notes receivable 54,986 54,547
Investments in service companies and affiliate loans and joint ventures 71,614 73,332
Cash and cash equivalents 22,887 30,827
Tenant receivables 12,034 12,529
Deferred rents receivable 113,601 97,145
Prepaid expenses and other assets 35,501 32,966
Contract and land deposits and pre-acquisition costs 20,203 240
Deferred leasing and loan costs (net of accumulated amortization) 64,860 65,205
------------ ------------
Total Assets $ 2,746,995 $ 2,907,920
------------ ------------
Liabilities:
Mortgage notes payable $ 721,635 $ 733,761
Mortgage notes payable and other liabilities associated with properties held for sale 333 10,722
Unsecured credit facility 169,000 267,000
Senior unsecured notes 499,445 499,305
Accrued expenses and other liabilities 94,433 89,312
Dividends and distributions payable 28,290 31,575
------------ ------------
Total Liabilities 1,513,136 1,631,675
------------ ------------
Minority partners' interests in consolidated partnerships 233,070 242,934
Preferred unit interest in the operating partnership 19,662 19,662
Limited partners' minority interest in the operating partnership 44,518 71,420
------------ ------------
297,250 334,016
------------ ------------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized outstanding
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 - 58,275,367 and 48,246,083 shares issued and outstanding, respectively 583 482
Class B - 0 and 9,915,313 shares issued and outstanding, respectively - 99
Treasury Stock, 3,318,600 shares (63,954) (63,954)
Additional paid in capital 999,872 1,005,494
------------ ------------
Total Stockholders' Equity 936,609 942,229
------------ ------------
Total Liabilities and Stockholders' Equity $ 2,746,995 $ 2,907,920
------------ ------------
Total debt to market capitalization (a): 41.2% 44.9%
------------ ------------
------------
(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 Year Ended
December 31, December 31,
----------------------- -----------------------
2003 2002 2003 2002
----------------------- -----------------------
Net income allocable to common shareholders $ 115,997 $ 8,612 $ 142,254 $ 54,533
Add: Real estate depreciation and amortization 26,021 28,336 113,940 108,906
Minority partners' interests in consolidated partnerships 4,568 4,350 17,972 18,730
Limited partners' minority interest in the operating partnership 11,038 1,142 14,110 6,680
Less: Gain on sales of depreciable real estate assets 126,789 - 126,789 5,433
Amounts distributable to minority partners in consolidated partnerships 6,684 6,053 26,598 24,996
----------------------- -----------------------
Basic Funds From Operations ("FFO") 24,151 36,387 134,889 158,420
Add: Dividends and distributions on dilutive shares and units - 4,541 1,093 23,123
----------------------- -----------------------
Diluted FFO (Note - a) $ 24,151 $ 40,928 $ 135,982 $ 181,543
======================= =======================
Diluted FFO calculations:
Weighted average common shares outstanding 58,053 58,299 58,002 59,791
Weighted average units of limited partnership interest outstanding 5,434 7,276 6,882 7,389
----------------------- -----------------------
Basic weighted average common shares and units outstanding 63,487 65,575 64,884 67,180
Adjustments for dilutive FFO weighted average shares and units outstanding:
Common stock equivalents 275 168 171 299
Series A preferred stock - 7,791 - 7,992
Series B preferred stock - - - 1,919
Limited partners' preferred interest - 661 661 743
----------------------- -----------------------
Total diluted weighted average shares and units outstanding 63,762 74,195 65,716 78,133
======================= =======================
Diluted FFO per weighted average share or unit $ 0.38 $ 0.55 $ 2.07 $ 2.32
Diluted weighted average Class A dividends per share $ 0.42 $ 0.42 $ 1.70 $ 1.70
Diluted FFO payout ratio - Class A 112.2% 77.0% 81.9% 73.1%
Diluted weighted average Class A & B dividends per share or unit $ 0.42 $ 0.45 $ 1.78 $ 1.81
Diluted FFO payout ratio (Class A & B combined) 111.4% 82.4% 86.1% 78.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Notes:
a - Includes $5.4 million and $18.8 million for the three months and year ended December 31, 2003, respectively
attributable to the sale of land.
Reckson Associates Realty Corp. (NYSE: RA)
Cash Available for Distribution
(in thousands, except share amounts)
Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2003 2002 2003 2002
----------------------- -----------------------
Basic Funds From Operations $ 24,151 $ 36,387 $ 134,889 $ 158,420
Adjustments for basic cash available for distribution:
Less: Straight line rents 3,878 6,529 17,267 26,247
Committed non-incremental capitalized tenant improvements and
leasing costs 4,989 6,230 27,634 33,407
Actual non-incremental capitalized improvements 3,263 2,653 10,388 8,832
Add: Restructuring charges - net 11,580 - 11,580 -
----------------------- -----------------------
Basic Cash Available for Distribution ("CAD") 23,601 20,975 91,180 89,934
Add: Dividends and distributions on dilutive shares and units - - - -
----------------------- -----------------------
Diluted CAD (Notes - a, b) $ 23,601 $ 20,975 $ 91,180 $ 89,934
======================= =======================
Diluted CAD calculations:
Weighted average common shares outstanding 58,053 58,299 58,002 59,791
Weighted average units of limited partnership interest outstanding 5,434 7,276 6,882 7,389
----------------------- -----------------------
Basic weighted average common shares and units outstanding 63,487 65,575 64,884 67,180
Adjustments for dilutive CAD weighted average shares and units outstanding:
Common stock equivalents 275 168 171 299
Series A preferred stock - - - -
Series B preferred stock - - - -
Limited partners' preferred interest - - - -
----------------------- -----------------------
Total diluted weighted average shares and units outstanding 63,762 65,743 65,055 67,479
======================= =======================
Diluted CAD per weighted average share or unit $ 0.37 $ 0.32 $ 1.40 $ 1.33
Diluted weighted average Class A dividends per share $ 0.42 $ 0.42 $ 1.70 $ 1.70
Diluted CAD payout ratio - Class A 114.8% 133.1% 120.9% 127.4%
Diluted weighted average Class A & B dividends per share or unit $ 0.42 $ 0.46 $ 1.78 $ 1.83
Diluted CAD payout ratio (Class A & B combined) 114.0% 143.6% 127.2% 137.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Notes:
a - Includes $5.4 million and $18.8 million for the three months and year ended December 31, 2003, respectively attributable
to the sale of land.
b - Excludes net restructuring charges of $11.6 million for the three months and year ended December 31, 2003 attributable
to the Industrial portfolio transaction.
