SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Scott H. Rechler
---------------------------------
Scott H. Rechler
Chief Executive Officer
and President
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
its General Partner
By: /s/ Scott H. Rechler
---------------------------------
Scott H. Rechler
Chief Executive Officer
and President
Date: May 5, 2005
3
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
==============================================================================
FOR IMMEDIATE RELEASE
- ---------------------
Reckson Announces First Quarter 2005 Results
--------------------------------------------
Core Operations Reflect Strong Operating Performance with
Same Property NOI Increasing by 5.6%
(MELVILLE, NEW YORK, May 4, 2005) - Reckson Associates Realty Corp. (NYSE: RA)
today reported diluted funds from operations (FFO) of $46.4 million or $0.55
per share for the first quarter of 2005, as compared to diluted FFO of $42.6
million or $0.58 per share for the first quarter of 2004.
Reckson reported net income allocable to common shareholders of $17.4 million
or diluted earnings per share (EPS) of $0.21 for the first quarter of 2005, as
compared to $16.0 million, including $5.2 million related to gain on sales of
real estate, or EPS of $0.26 for the first quarter of 2004.
Commenting on the Company's performance, Scott Rechler, Reckson's President
and Chief Executive Officer, stated, "I am pleased with our first quarter
operating metrics as we continue to outperform the industry with office
occupancy climbing by 40 basis points to 94.5%, same property GAAP NOI
climbing 5.6% and average same space rents climbing 9.0%." Mr. Rechler
continued, "I am also pleased that we have successfully executed on our
investment strategy. With today's One Court Square announcement our year to
date investment activity totals approximately $576 million."
A reconciliation of net income allocable to common shareholders to FFO is in
the financial statements accompanying this press release. Net income allocable
to common shareholders is the GAAP measure the Company believes to be the most
directly comparable to FFO.
Michael Maturo, Reckson's Chief Financial Officer, noted, "Results for the
quarter were generally consistent with our internal forecasts but were
impacted by timing to reinvest
equity proceeds, lower other income and higher `dead deal' costs." Mr. Maturo
continued, "Based on our projections for our core operations for the remainder
of the year and our recent investment activity we are raising the low end of
our guidance to $2.36 per share. We are maintaining the high end of the range
at $2.40 per share, in anticipation of accelerating our disposition / joint
venture strategy relating to approximately $500 million of properties."
Summary Portfolio Performance
- -----------------------------
The Company reported office occupancy at March 31, 2005 of 94.5%. This
compares to 93.3% at March 31, 2004 and 94.1% at December 31, 2004. The
Company reported portfolio occupancy of 93.5% at March 31, 2005, as compared
to 92.6% at March 31, 2004 and 93.1% at December 31, 2004.
The Company also reported same property office occupancy at March 31, 2005 of
94.4%, as compared to 93.4% at March 31, 2004. The Company reported same
property portfolio occupancy of 93.4% at March 31, 2005, as compared to 92.6%
at March 31, 2004.
Net of minority interests in joint ventures, office same property NOI before
termination fees for the first quarter of 2005 increased 5.6% (on a
straight-line rent basis) and 3.9% (on a cash basis), compared to the first
quarter of 2004. Net of minority interests in joint ventures, portfolio same
property NOI before termination fees for the first quarter of 2005 increased
4.8% (on a straight-line rent basis) and 3.2% (on a cash basis), compared to
the first quarter of 2004.
Office same property net operating income (property operating revenues less
property operating expenses) (NOI) before termination fees for the first
quarter of 2005 increased 4.8% (on a straight-line rent basis) and 3.1% (on a
cash basis), compared to the first quarter of 2004. Portfolio same property
NOI before termination fees for the first quarter of 2005 increased 4.2% (on a
straight-line rent basis) and 2.5% (on a cash basis), compared to the first
quarter of 2004.
Rent performance on renewal and replacement space during the first quarter of
2005 increased 9.0% (on a straight-line rent basis) and decreased (8.0%) (on a
cash basis) in the office portfolio.
Other Highlights
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Leasing Activity
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- Executed 75 lease transactions totaling 660,055 square feet during the
first quarter of 2005
- Executed office leasing transactions during the first quarter of 2005
that resulted in a 50% renewal rate
Investment Activity
- -------------------
- Contracted to acquire a 1.4 million square foot, 50-story, Class A,
trophy office tower located at One Court Square, Long Island City, a
submarket of New York City, for a total investment of approximately
$470 million inclusive of transfer taxes and other transaction costs
- Acquired a 150,000 square foot, Class A office building located at One
Giralda Farms in Madison, New Jersey, for approximately $24.3 million
and acquired a 203,000 square foot, Class A office building located at
Seven Giralda Farms in Madison, New Jersey, for approximately $53.7
million
- Provided two separate mezzanine loans, totaling approximately $28.4
million, on a 32 property office portfolio, encompassing approximately
1.5 million square feet, which was part of the 43 property former
Tilles office portfolio located in Woodbury, Long Island
Miscellaneous
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- Received a "No Adjustments Letter" from the Internal Revenue Service
which closes its examination of the Reckson Operating Partnership 2001
tax return which had been selected for examination
Earnings Guidance
- -----------------
During the Company's quarterly earnings conference call on Thursday, May 5,
management will discuss guidance for 2005 diluted FFO in the range of $2.36 to
$2.40 per share.
Reconciliation of Earnings Guidance
- -----------------------------------
The Company's guidance for diluted FFO is reconciled from GAAP net income
below:
Second Quarter 2005 Full Year 2005
------------------- --------------
Low End High End Low End High End
------- -------- ------- --------
Net income allocable to common shareholders $0.26 $0.27 $0.89 $0.93
Add: Real estate depreciation and amortization 0.38 0.38 1.53 1.53
Less: Gain on sales of depreciable real estate 0.06 0.06 0.06 0.06
------- ------- ------- --------
Diluted FFO Per Share $0.58 $0.59. $2.36 $2.40
======= ======= ======== ========
This guidance is based upon management's current estimates. Actual results may
differ materially. This information involves forward-looking statements which
are subject to uncertainties noted below under Forward-Looking Statements.
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. The Company presents FFO because it
considers it an important supplemental measure of the Company's operating
performance and believes it is frequently used by securities analysts,
investors and other interested parties in the evaluation of REITs, many of
which present FFO when reporting their results. FFO is intended to exclude
GAAP historical cost depreciation and amortization of real estate and related
assets, which assumes that the value of real estate diminishes ratably over
time. Historically, however, real estate values have risen or fallen with
market conditions. As a result, FFO provides a performance measure that, when
compared year over year, reflects the impact to operations from trends in
occupancy rates, rental rates, operating costs, development activities,
interest costs and other matters without the inclusion of depreciation and
amortization, providing perspective that may not necessarily be apparent from
net income. 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 and analysts 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 90 properties comprised of approximately 17.7 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 President and Chief Executive
Officer Scott Rechler, will host a conference call outlining first quarter
results on
Thursday, May 5, 2005 at 2:00 p.m. EST. The conference call may be accessed by
dialing (800) 553-0327 (internationally (612) 288-0318). 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
first quarter results.
A replay of the conference call will be available telephonically from May 5,
2005 at 7:30 p.m. EST through May 13, 2005 at 11:59 p.m. EST. The telephone
number for the replay is (800) 475-6701, passcode 776049. 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
first quarter 2005 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, Senior Vice President Investor Relations,
Reckson Associates Realty Corp., 225 Broadhollow Road, Melville, New York
11747-4883, investorrelations@reckson.com or (631) 622-6746.
Forward-Looking Statements
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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; risks
associated with joint ventures; our ability to execute our disposition/joint
venture strategy; 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
March 31,
------------------------
2005 2004
------------------------
Property Operating Revenues:
Base rents $ 117,382 $ 109,408$
Tenant escalations and reimbursements 18,502 17,978
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Total property operating revenues 135,884 127,386
------------------------
Property Operating Expenses:
Operating expenses 32,806 30,389
Real estate taxes 22,282 20,350
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Total property operating expenses 55,088 50,739
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Net Operating Income 80,796 76,647
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Gross Margin percentage 59.5% 60.2%
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Other Income 3,345 5,776
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Other Expenses
Interest
Expense 23,568 25,661
Amortization of deferred financing costs 1,038 927
Depreciation and amortization 29,728 27,729
Marketing, general and administrative 8,205 7,046
------------------------
Total other expenses 62,539 61,363
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Income before minority interests, preferred dividends and distributions and
discontinued operations 21,602 21,060
Minority partners' interests in consolidated partnerships (3,779) (6,181)
Distributions to preferred unitholders - (273)
Limited partners' minority interest in the operating partnership (772) (573)
Income before discontinued operations and preferred dividends 17,051 14,033
Discontinued operations (net of minority interests)
Gain on sales of real estate - 5,202
Income from discontinued operations 305 989
------------------------
Net income 17,356 20,224
Dividends to preferred shareholders - (4,260)
------------------------
Net income allocable to common shareholders $ 17,356 $ 15,964
========================
Basic weighted average common shares outstanding: 81,100,000 61,363,000
Basic net income per weighted average common share:
Common stock - income from continuing operations $0.21 $0.16
Discontinued operations - 0.10
------------------------
Basic net income per common share $0.21 $0.26
========================
Diluted weighted average common shares outstanding: 81,521,000 61,718,000
========================
Diluted net income per weighted average common share: $0.21 $0.26
========================
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands, except share amounts)
March 31, December 31,
2005 2004
-------------- --------------
Assets: (Unaudited)
Commercial real estate properties, at cost:
Land $ 419,846 $ 401,350
Buildings and improvements 2,755,580 2,681,742
Developments in progress:
Land 98,176 88,606
Development costs 22,124 21,363
Furniture, fixtures, and equipment 12,504 12,083
-------------- --------------
3,308,230 3,205,144
Less: accumulated depreciation (584,949) (560,307)
-------------- --------------
Investment in real estate, net of accumulated depreciation 2,723,281 2,644,837
Properties and related assets held for sale, net of accumulated depreciation 58,469 58,215
Investment in real estate joint venture 6,808 6,657
Investment in notes receivable 113,254 85,855
Investments in affiliate loans and joint ventures 60,230 60,951
Cash and cash equivalents 25,537 25,137
Tenant receivables 10,427 9,532
Deferred rents receivable 139,348 132,251
Prepaid expenses and other assets 54,061 64,006
Contract and land deposits and pre-acquisition costs 256 121
Deferred leasing and loan costs (net of accumulated amortization) 81,074 80,046
-------------- --------------
Total Assets $ 3,272,745 $ 3,167,608
============== ==============
Liabilities:
Mortgage notes payable $ 606,723 $ 609,518
Unsecured credit facility 357,500 235,500
Senior unsecured notes 698,039 697,974
Liabilities associated with properties held for sale 757 784
Accrued expenses and other liabilities 65,473 73,565
Deferred revenues and tenant security deposits 54,015 50,373
Dividends and distributions payable 36,137 35,924
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Total Liabilities 1,818,644 1,703,638
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Minority partners' interests in consolidated partnerships 213,297 210,678
Preferred unit interest in the operating partnership 1,200 1,200
Limited partners' minority interest in the operating partnership 42,147 53,231
-------------- --------------
256,644 265,109
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Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized - -
Common Stock, $.01 par value, 100,000,000 shares authorized - -
81,629,693 and 80,618,339 shares issued and outstanding, respectively 816 806
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Additional paid in capital 1,265,133 1,266,547
-------------- --------------
Total Stockholders' Equity 1,197,457 1,198,861
-------------- --------------
Total Liabilities and Stockholders' Equity $ 3,272,745 $ 3,167,608
============== ==============
Total debt to market capitalization (a): 37.1% 33.8%
============== ==============
- -----------------
(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
March 31,
--------------------------
2005 2004
--------------------------
Net income allocable to common shareholders $ 17,356 $ 15,964
Add: Real estate depreciation and amortization 27,313 25,561
Minority partners' interests in consolidated partnerships 6,712 9,321
Limited partners' minority interest in the operating partnership 697 936
Less: Amounts distributable to minority partners in consolidated partnerships 5,724 8,504
Gain on sales of depreciable real estate - 5,156
--------------------------
Basic Funds From Operations ("FFO") 46,354 38,122
Add: Dividends and distributions on dilutive shares and units - 4,484
--------------------------
Diluted FFO $ 46,354 $ 42,606
==========================
Diluted FFO calculations:
Weighted average common shares outstanding 81,100 61,363
Weighted average units of limited partnership interest outstanding 3,213 3,551
---------------------------
Basic weighted average common shares and units outstanding 84,313 64,914
Adjustments for dilutive FFO weighted average shares and units outstanding:
Common stock equivalents 421 355
Series A preferred stock - 7,747
Limited partners' preferred interest 41 689
---------------------------
Total diluted weighted average shares and units outstanding 84,775 73,705
==========================
Diluted FFO per weighted average share or unit $ 0.55 $ 0.58
Diluted weighted average dividends per share $ 0.42 $ 0.42
Diluted FFO payout ratio 77.7% 73.5%
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Reckson Associates Realty Corp. (NYSE: RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended
March 31,
--------------------------
2005 2004
--------------------------
Basic Funds From Operations $ 46,354 $ 38,122
Adjustments for basic cash available for distribution:
Less: Straight line rents and other FAS 141 non-cash rent adjustments 7,926 5,032
Committed non-incremental capitalized tenant improvements and
leasing costs 10,769 9,097
Actual non-incremental capitalized improvements 3,015 1,940
--------------------------
Basic Cash Available for Distribution ("CAD") 24,644 22,053
Add: Dividends and distributions on dilutive shares and units - -
--------------------------
Diluted CAD $ 24,644 $ 22,053
==========================
Diluted CAD calculations:
Weighted average common shares outstanding 81,100 61,363
Weighted average units of limited partnership interest outstanding 3,213 3,551
--------------------------
Basic weighted average common shares and units outstanding 84,313 64,914
Adjustments for dilutive CAD weighted average shares and units outstanding:
Common stock equivalents 421 355
Limited partners' preferred interest 41 -
--------------------------
Total diluted weighted average shares and units outstanding 84,775 65,269
==========================
Diluted CAD per weighted average share or unit $ 0.29 $ 0.34
Diluted weighted average dividends per share $ 0.42 $ 0.42
Diluted CAD payout ratio 146.2% 125.8%
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