EXHIBIT INDEX
Exhibit Number Description
99.1 Reckson Associates Realty Corp. Earnings Press
Release dated August 4, 2004
4
Exhibit 99.1
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, CEO
Michael Maturo, CFO
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FOR IMMEDIATE RELEASE
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Reckson Announces Second Quarter 2004 Results Reflecting
--------------------------------------------------------
Strong Operating Performance
----------------------------
Leased 764,397 Sq. Ft., Increased Office Occupancy to 94.0%,
Same Property Office Net Operating Income Increased by 5.1%
(MELVILLE, NEW YORK, August 4, 2004) - Reckson Associates Realty Corp. (NYSE:
RA) today reported diluted funds from operations ("FFO") of $37.1 million or
$0.52 per share for the second quarter of 2004, as compared to FFO of $35.4
million or $0.54 per share for the second quarter of 2003.
Commenting on the Company's performance, Scott Rechler, Reckson's President
and Chief Executive Officer, stated, "Our strong second quarter operating
performance reflects our team's ability to capitalize on the improved market
conditions by increasing portfolio occupancies and rents. During the first
half of the year we completed office leasing transactions totaling
approximately 1.6 million square feet, our two highest quarters on record and
approximately double our annual run rate for the previous three years." Mr.
Rechler continued, "Approximately 35% of second quarter leasing activity was
comprised of renewals of leases expiring in 2005 and beyond, reflecting
tenants' recognition of rapidly improving market conditions. We believe we are
well positioned to continue to capitalize on the New York Tri-State area's
market recovery."
The second quarter results are consistent with the Company's internal
forecasts. The Company is reaffirming its previous 2004 FFO guidance of $2.20
to $2.25 per share. This earnings guidance excludes post second quarter
accounting charges relating to the redemption of the Company's preferred
securities.
Michael Maturo, Reckson's Chief Financial Officer, stated, "Our second quarter
results reflect our strong portfolio performance, the effect of lower other
income and termination fees and a full quarter's dilution from our recent
equity offering."
Net income allocable to common shareholders totaled $13.0 million in the
second quarter of 2004, including $3.6 million related to gain on sales of
real estate, as compared to $7.6 million in the second quarter of 2003.
Diluted earnings per share ("EPS") totaled $0.19 in the second quarter of
2004, as compared to EPS of $0.13 in the second quarter of 2003.
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
this press release.
Summary Portfolio Performance
- -----------------------------
The Company reported office occupancy at June 30, 2004 of 94.0%. This compares
to 93.3% at March 31, 2004 and 91.7% at June 30, 2003. The Company reported
portfolio occupancy of 93.1% at June 30, 2004, as compared to 92.6% at March
31, 2004 and 90.6%, excluding the Long Island industrial properties, at June
30, 2003.
The Company also reported same property office occupancy at June 30, 2004 of
94.0%, as compared to 91.8% at June 30, 2003. The Company reported same
property portfolio occupancy of 93.1% at June 30, 2004, as compared to 90.5%
at June 30, 2003.
Office same property net operating income (property operating revenues less
property operating expenses) ("NOI") before termination fees for the second
quarter of 2004 increased 3.4% (cash) and 5.1% (including straight-line rent),
compared to the second quarter of 2003. Portfolio same property NOI before
termination fees for the second quarter of 2004 increased 3.1% (cash) and 4.8%
(including straight-line rent), compared to the second quarter of 2003.
Net of minority interests in joint ventures, office same property NOI before
termination fees for the second quarter of 2004 increased 3.5% (cash) and 5.0%
(including straight-line rent), compared to the second quarter of 2003. Net of
minority interests in joint ventures, portfolio same property NOI before
termination fees for the second quarter of 2004 increased 3.8% (cash) and 5.3%
(including straight-line rent), compared to the second quarter of 2003.
Rent performance on renewal and replacement space during the second quarter of
2004 increased 12.1% (cash) and 21.4% (including straight-line rent) in the
office portfolio. Rent performance office statistics include a one year early
renewal with WestPoint Stevens for 86,800 square feet at 1185 Avenue of the
Americas, which represents a material mark to market.
Other Highlights
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Leasing Activity
- Executed 66 leases totaling 764,397 square feet during the second
quarter of 2004
- Renewed approximately 500,000 square feet of office leases during the
second quarter of 2004 resulting in an 83% renewal rate
Investment/Disposition Activity
- Acquired 3 Giralda Farms, a 141,000 square foot Class A office property,
located in Chatham Township, New Jersey, for approximately $22.7 million
- Commenced the ground-up development of 68 South Service Road, a 277,000
square foot Class A office building, for a total anticipated investment
of approximately $60 million, completing the final phase of the three
building, 681,000 square foot, Reckson Executive Park located in
Melville, Long Island
- Completed the sale of two operating properties for approximately $18.1
million, net of joint venture partner's interest, representing a blended
cap rate of 7.2% on forecasted 2004 NOI
- Executed a contract for the sale of a 92,000 square foot industrial
property located in Westchester, for approximately $7.5 million
Capital Market Activity
- Exchanged 1,350,000 shares of 7.625% Series A preferred stock with a
redemption value of $25.7625 per share for 1,304,602 shares of common
stock
- Purchased and retired 140,600 shares of 7.625% Series A preferred stock
for approximately $3.4 million, or $24.45 per share
- Announced the Company has re-set its common stock repurchase program for
5 million shares
Reconciliation of Earnings Guidance
- -----------------------------------
The Company's guidance for 2004 FFO of $2.20 to $2.25 per share is reconciled
from GAAP net income below:
Low End of High End of
Guidance for 2004 Guidance for 2004
(Per Common Share) (Per Common Share)
------------------ ------------------
Net income allocable to common shareholders $.70 $.78
Add:
Real estate depreciation and amortization 1.63 1.63
Less:
Gain on sales of depreciable real estate (0.13) (0.16)
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Funds from Operations $2.20 $2.25
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Non-GAAP Financial Measures
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Funds from Operations ("FFO")
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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 85 properties comprised of approximately 15.4 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
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The Company's executive management team, led by President and Chief Executive
Officer Scott Rechler, will host a conference call outlining second quarter
results on Thursday, August 5, 2004 at 9:30 a.m. EST. The conference call may
be accessed by dialing (800) 230-1092 (internationally (612) 332-0725). 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
5, 2004 at 3:00 p.m. EST through August 13, 2004 at 11:59 p.m. EST. The
telephone number for the replay is (800) 475-6701, passcode 571289. A replay
of the webcast of the conference call will also be available via the Company's
web site.
Financial Statements Attached
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The Supplemental Package and Slide Show Presentation outlining the Company's
second quarter 2004 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 (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 Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2004 2003 2004 2003
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Property Operating Revenues:
Base rents $ 109,765 $ 94,141 $ 220,800 $ 188,885
Tenant escalations and reimbursements 17,478 13,907 35,593 27,943
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Total property operating revenues 127,243 108,048 256,393 216,828
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Property Operating Expenses:
Operating expenses 30,532 25,351 61,406 51,789
Real estate taxes 20,094 17,087 40,685 34,029
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Total property operating expenses 50,626 42,438 102,091 85,818
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Net Operating Income 76,617 65,610 154,302 131,010
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Gross Margin percentage 60.2% 60.7% 60.2% 60.4%
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Other Income 3,617 4,618 9,394 11,983
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Other Expenses
Interest expense 24,607 20,145 50,268 40,242
Depreciation and amortization 29,617 26,983 58,738 55,763
Marketing, general and administrative 7,374 8,795 14,441 16,364
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Total other expenses 61,598 55,923 123,447 112,369
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Income before minority interests, preferred dividends and
distributions, gain on sales of depreciable real estate and
discontinued operations 18,636 14,305 40,249 30,624
Minority partners' interests in consolidated partnerships (4,422) (4,062) (10,603) (8,463)
Distributions to preferred unitholders (227) (274) (500) (547)
Limited partners' minority interest in the operating partnership (506) (482) (1,100) (1,135)
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Income before discontinued operations and preferred dividends 13,481 9,487 28,046 20,479
Discontinued operations (net of limited partners' minority interest)
Gain on sales of real estate 3,639 - 8,841 -
Income from discontinued operations 95 3,415 552 6,403
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Net income 17,215 12,902 37,439 26,882
Dividends to preferred shareholders (4,172) (5,317) (8,432) (10,634)
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Net income allocable to common shareholders $ 13,043 $ 7,585 $ 29,007 $ 16,248
============================ ============================
Allocable to Class A common $ 13,043 $ 5,769 $ 29,007 $ 12,364
Allocable to Class B common - 1,816 - 3,884
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Net income allocable to common shareholders $ 13,043 $ 7,585 $ 29,007 $ 16,248
============================ ============================
Basic weighted average common shares outstanding:
Class A common 66,892,000 48,001,000 64,128,000 48,100,000
Class B common - 9,915,000 - 9,915,000
Basic net income per weighted average common share:
Class A common stock - income from continuing operations $0.13 $0.07 $0.30 $0.16
Discontinued operations 0.06 0.05 0.15 0.10
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Basic net income per Class A common $0.19 $0.12 $0.45 $0.26
============================ ============================
Class B common stock - income from continuing operations - $0.10 - $0.24
Discontinued operations - 0.08 - 0.15
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Basic net income per Class B common - $0.18 - $0.39
============================ ============================
Diluted weighted average common shares outstanding:
Class A common 67,327,000 48,118,000 64,522,000 48,219,000
Class B common - 9,915,000 - 9,915,000
Diluted net income per weighted average common share:
Class A common $0.19 $0.12 $0.45 $0.26
============================ ============================
Class B common - $0.13 - $0.28
============================ ============================
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2004 2003
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(unaudited)
Assets:
Commercial real estate properties, at cost:
Land $ 384,137 $ 378,479
Buildings and improvements 2,608,867 2,211,566
Developments in progress:
Land 95,600 90,706
Development costs 28,900 68,127
Furniture, fixtures, and equipment 11,625 11,338
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3,129,129 2,760,216
Less: accumulated depreciation (515,961) (464,382)
---------------- ---------------
Investment in real estate, net of accumulated depreciation 2,613,168 2,295,834
Properties and related assets held for sale, net of
accumulated depreciation 5,069 52,517
Investments in real estate joint ventures 6,462 5,904
Investments in mortgage notes and notes receivable 68,433 54,986
Investments in service companies and affiliate loans and joint ventures 70,563 71,614
Cash and cash equivalents 82,670 22,330
Tenant receivables 11,661 11,929
Deferred rents receivable 122,672 111,962
Prepaid expenses and other assets 82,523 35,371
Contract and land deposits and pre-acquisition costs 60 20,203
Deferred leasing and loan costs (net of accumulated amortization) 69,573 64,345
---------------- ---------------
Total Assets $ 3,132,854 $ 2,746,995
================ ===============
Liabilities:
Mortgage notes payable $ 965,561 $ 721,635
Unsecured credit facility 90,000 169,000
Senior unsecured notes 549,132 499,445
Liabilities associated with properties held for sale 311 881
Accrued expenses and other liabilities 120,498 93,885
Dividends and distributions payable 32,994 28,290
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Total Liabilities 1,758,496 1,513,136
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Minority partners' interests in consolidated partnerships 223,405 233,070
Preferred unit interest in the operating partnership 16,581 19,662
Limited partners' minority interest in the operating partnership 46,659 44,518
---------------- ---------------
286,645 297,250
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Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized
Series A - 8,693,900 and 8,834,500 shares issued and
outstanding, respectively 87 88
Series B - 0 and 2,000,000 shares issued and outstanding, respectively - 20
Common Stock, $.01 par value, 100,000,000 shares authorized
Class A - 67,256,850 and 58,275,367 shares issued and
outstanding, respectively 673 583
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Retained earnings 7,412 35,757
Accumulated other comprehensive income 5,201 -
Additional paid in capital 1,142,832 968,653
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Total Stockholders' Equity 1,087,713 936,609
---------------- ---------------
Total Liabilities and Stockholders' Equity $ 3,132,854 $ 2,746,995
================ ===============
Total debt to market capitalization (a): 40.3% 41.2%
================ ===============
________________
(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 per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
2004 2003 2004 2003
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Net income allocable to common shareholders $ 13,043 $ 7,585 $ 29,007 $ 16,248
Add: Real estate depreciation and amortization 28,854 29,127 57,411 60,454
Minority partners' interests in consolidated
partnerships 6,811 4,335 13,136 9,025
Limited partners' minority interest in the
operating partnership 701 874 1,637 1,870
Less: Amounts distributable to minority partners in
consolidated partnerships 6,411 6,769 14,915 13,576
Gain on sales of depreciable real estate 6,174 - 11,330 -
----------------------------- -----------------------------
Basic Funds From Operations ("FFO") 36,824 35,152 74,946 74,021
Add: Dividends and distributions on dilutive
shares and units 227 273 500 8,968
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Diluted FFO $ 37,051 $ 35,425 $ 75,446 $ 82,989
============================= =============================
Diluted FFO calculations:
Weighted average common shares outstanding 66,892 57,916 64,128 58,016
Weighted average units of limited partnership
interest outstanding 3,551 7,276 3,551 7,276
----------------------------- -----------------------------
Basic weighted average common shares and units
outstanding 70,443 65,192 67,679 65,292
Adjustments for dilutive FFO weighted average shares and units
outstanding:
Common stock equivalents 435 117 394 118
Series A preferred stock - - - 7,747
Limited partners' preferred interest 581 661 635 661
----------------------------- -----------------------------
Total diluted weighted average shares and units outstanding 71,459 65,970 68,708 73,818
============================= =============================
Diluted FFO per weighted average share or unit $ 0.52 $ 0.54 $ 1.10 $ 1.12
Diluted weighted average dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio 81.9% 79.1% 77.4% 75.5%
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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,
----------------------------- -----------------------------
2004 2003 2004 2003
----------------------------- -----------------------------
Basic Funds From Operations $ 36,824 $ 35,152 $ 74,946 $ 74,021
Adjustments for basic cash available for distribution:
Less: Straight line rents and other FAS 141 non-cash
rent adjustments 6,982 4,659 12,014 8,677
Committed non-incremental capitalized tenant
improvements and leasing costs 9,430 6,805 18,527 15,596
Actual non-incremental capitalized improvements 1,915 1,929 3,855 4,055
----------------------------- -----------------------------
Basic Cash Available for Distribution ("CAD") 18,497 21,759 40,550 45,693
Add: Dividends and distributions on dilutive
shares and units - - - -
----------------------------- -----------------------------
Diluted CAD $ 18,497 $ 21,759 $ 40,550 $ 45,693
============================= =============================
Diluted CAD calculations:
Weighted average common shares outstanding 66,892 57,916 64,128 58,016
Weighted average units of limited partnership
interest outstanding 3,551 7,276 3,551 7,276
----------------------------- -----------------------------
Basic weighted average common shares and units
outstanding 70,443 65,192 67,679 65,292
Adjustments for dilutive CAD weighted average
shares and units outstanding:
Common stock equivalents 435 117 394 118
Series A preferred stock - - - -
Limited partners' preferred interest - - - -
----------------------------- -----------------------------
Total diluted weighted average shares and units
outstanding 70,878 65,309 68,073 65,410
============================= =============================
Diluted CAD per weighted average share or unit $ 0.26 $ 0.33 $ 0.60 $ 0.70
Diluted weighted average dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted CAD payout ratio 162.8% 127.5% 142.7% 121.6%
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