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/ Michael Maturo
------------------------------------
Michael Maturo
Executive Vice President
and Chief Financial Officer
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
its General Partner
By:/s/ Michael Maturo
------------------------------------
Michael Maturo
Executive Vice President
and Chief Financial Officer
Date: August 9, 2005
3
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 Second Quarter 2005 Results
---------------------------------------------
Strong Same Property NOI Growth Drives 13.5% FFO Growth
(MELVILLE, NEW YORK, August 8, 2005) - Reckson Associates Realty Corp. (NYSE:
RA) today reported diluted funds from operations (FFO) of $49.8 million or
$0.59 per share for the second quarter of 2005, as compared to diluted FFO of
$37.1 million or $0.52 per share for the second quarter of 2004, representing
a per share increase of 13.5%.
Reckson reported net income allocable to common shareholders of $17.8 million
or diluted earnings per share (EPS) of $0.22 for the second quarter of 2005,
as compared to $13.0 million, including $3.6 million related to gain on sales
of depreciable real estate, or diluted EPS of $0.19 for the second quarter of
2004.
Commenting on the Company's performance, Scott Rechler, Reckson's President
and Chief Executive Officer, stated, "I am extremely pleased with our team's
many accomplishments during this reporting period. In addition to strong
operating performance, we announced approximately $400 million of new
investments bringing the Company's year to date investment activity to
approximately $1 billion; initiated the recapitalization of One Court Square;
issued $287.5 million of exchangeable senior debentures; amended our credit
facility to provide greater financial flexibility; launched the marketing of a
Reckson-sponsored Australian listed property trust; and made significant
progress on executing on several projects in our value creation pipeline." Mr.
Rechler continued, "This quarter's operating, investment and capital market
achievements significantly advanced our progress toward executing our
strategic plan and positioning our company for continued growth."
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, "During this low
interest rate environment, we have been proactive in refinancing our balance
sheet. We have completed or have commitments on approximately $850 million of
long-term financing transactions, including $287.5 million of 4.00%
exchangeable senior debentures. The weighted average interest rate on these
financings is approximately 4.7% with a weighted average maturity of 6.9
years."
Summary Portfolio Performance
- -----------------------------
The Company reported office occupancy at June 30, 2005 of 93.1% (adjusting for
6 Landmark Square which is currently under re-development office occupancy
would have been 93.8%). This compares to 94.0% at June 30, 2004 and 94.5% at
March 31, 2005. The Company reported portfolio occupancy of 92.6% at June 30,
2005, as compared to 93.1% at June 30, 2004 and 93.5% at March 31, 2005.
The Company also reported same property office occupancy at June 30, 2005 of
93.5%, as compared to 93.9% at June 30, 2004. The Company reported same
property portfolio occupancy of 92.3% at June 30, 2005, as compared to 93.0%
at June 30, 2004.
Office same property net operating income (property operating revenues less
property operating expenses) (NOI), net of minority interests in joint
ventures, before termination fees for the second quarter of 2005 increased
6.1% (on a straight-line rent basis) and 4.3% (on a cash basis), compared to
the second quarter of 2004. Portfolio same property NOI, net of minority
interests in joint ventures, before termination fees for the second quarter of
2005 increased 6.3% (on a straight-line rent basis) and 4.6% (on a cash
basis), compared to the second quarter of 2004.
Office same property NOI, including consolidated joint ventures, before
termination fees for the second quarter of 2005 increased 4.9% (on a
straight-line rent basis) and 2.8% (on a cash basis), compared to the second
quarter of 2004. Portfolio same property NOI, including consolidated joint
ventures, before termination fees for the second quarter of 2005 increased
5.0% (on a straight-line rent basis) and 3.1% (on a cash basis), compared to
the second quarter of 2004.
Other Highlights
- ----------------
Leasing Activity
- ----------------
- Executed 69 lease transactions totaling 374,120 square feet during
the second quarter of 2005
- Rent performance on renewal and replacement space during the second
quarter of 2005 increased 10.3% (on a straight-line rent basis) and
1.3% (on a cash basis) in the office portfolio.
- Activity remains brisk with over 700,000 square feet of leases
currently under negotiation
Investment Activity
- -------------------
- Contracted to acquire EAB Plaza, a 1.1 million square foot, Class A,
trophy office complex, consisting of two-15 story office towers
located in Uniondale, Long Island for approximately $240 million,
over a 20% discount to replacement cost
- Acquired 225 High Ridge Road, Stamford, Connecticut, a 227,966
square foot, Class A office complex consisting of two interconnected
three-story buildings located in Stamford, Connecticut for
approximately $76.3 million, which Reckson intends to contribute to
the Reckson-sponsored Australian listed property trust
- Provided $55.3 million of a total $85 million 15-year loan secured
by an indirect ownership interest in a 550,000 square foot office
condominium in a Class A office tower located at 1166 Avenue of the
Americas, New York City. The loan refinances Reckson's $34 million
mezzanine loan made on December 20, 2004 to one of its partners who
owns an interest in the office condominium. Also acquired an
approximate 5% ownership interest in the office condominium for a
purchase price of $6.2 million. The property is 100% leased on a
long-term basis.
Ground-Up and Re-Development Activity
- -------------------------------------
- Leasing activity for a significant portion of 68 South Service Road,
Melville, Long Island, a four-story, Class A office ground-up
development which is anticipated to be completed on budget and on
schedule in the fourth quarter of 2005
- Completing the re-development of 6 Landmark Square, Stamford,
Connecticut, a 162,000 square foot Class A office building which is
part of Landmark Square, Reckson's 800,000 square foot Class A
office complex, by upgrading the building's interior, exterior and
connecting plaza
- Commenced the ground-up development of University Square, a 316,000
square foot, five-story, Class A office building located in
Princeton, one of New Jersey's strongest markets with occupancies at
their highest levels in five years, for an anticipated incremental
investment of $47 million to complete the building
- Commenced the ground-up development of 7 Landmark Square in
Stamford, Connecticut, a 36,900 square foot, two-story retail
building, representing the last
phase of the repositioning of Landmark Square, dramatically
impacting the street presence of this Class A office complex
Capital Market Activity
- -----------------------
- Refinanced the Company's recently acquired One Court Square, a 1.4
million square foot, 50-story, Class A trophy office tower located
in Long Island City, New York, for a total investment of
approximately $471 million with the closing on the secured debt
financing of a $315 million, ten-year, interest only fixed rate 4.9%
mortgage. Net proceeds were used to repay a substantial portion of
the Company's bridge loan facility. Reckson is also negotiating with
an institutional joint venture partner to sell between a 60% to 70%
interest in the asset.
- Issued $287.5 million aggregate principal amount of 4.00%
exchangeable senior debentures due June 15, 2025. Net proceeds from
the offering, after the underwriter's discounts and expenses, were
approximately $281.6 million. The Company used the net proceeds from
the offering for the repayment of amounts outstanding under its
credit facility.
- Amended the Company's $500 million unsecured revolving credit
facility to decrease the spread, beneficially modify financial
covenants and extend the term
Miscellaneous
- -------------
- Commenced the marketing of an offering in Australia of a
Reckson-sponsored Australian listed property trust for approximately
$203 million
- Completed the arbitration proceedings relating to the re-setting of
the rent under the ground lease at 1185 Avenue of the Americas to
approximately $6.50 per square foot fixed for the next 37 years at
the 1.1 million square foot building
Earnings Guidance
- -----------------
During the Company's quarterly earnings conference call on Tuesday, August 9,
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:
Third Quarter 2005 Full Year 2005
------------------ --------------
Low End High End Low End High End
------- -------- ------- --------
Net income allocable to common shareholders $0.18 $1.53 $2.17 $2.21
Add: Real estate depreciation and amortization 0.42 0.42 1.53 1.53
Less: Gain on sales of depreciable real estate 0.00 1.34 1.34 1.34
------- -------- ------- --------
Diluted FFO Per Share $0.60 $0.61 $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
- ---------------------------
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 18.9 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 second quarter
results on Tuesday, August 9, 2005 at 11:00 a.m. EST. The conference call may
be accessed by dialing (800) 230-1074 (internationally (612) 288-0340). 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
9, 2005 at 4:30 p.m. EST through August 17, 2005 at 11:59 p.m. EST. The
telephone number for the replay is (800) 475-6701, passcode 786496. 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 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
- --------------------------
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; 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,
------------------------- -------------------------
2005 2004 2005 2004
========================= =========================
Property Operating Revenues:
Base rents $ 123,804 $ 109,265 $ 242,095 $ 219,801
Tenant escalations and reimbursements 17,998 17,452 36,576 35,537
------------------------- -------------------------
Total property operating revenues 141,802 126,717 278,671 255,338
------------------------- -------------------------
Property Operating Expenses:
Operating expenses 31,430 30,401 64,522 61,142
Real estate taxes 22,565 19,968 44,958 40,432
------------------------- -------------------------
Total property operating expenses 53,995 50,369 109,480 101,574
------------------------- -------------------------
Net Operating Income 87,807 76,348 169,191 153,764
------------------------- -------------------------
Gross Margin percentage 61.9% 60.3% 60.7% 60.2%
------------------------- -------------------------
Other Income 3,902 3,612 7,232 9,389
------------------------- -------------------------
Other Expenses
Interest
Expense 27,257 24,607 50,825 50,268
Amortization of deferred financing costs 1,021 899 2,059 1,826
Depreciation and amortization 32,994 28,621 63,069 56,719
Marketing, general and administrative 8,477 7,354 16,692 14,401
------------------------- -------------------------
Total other expenses 69,749 61,481 132,645 123,214
------------------------- -------------------------
Income before minority interests, preferred dividends
and distributions and discontinued operations 21,960 18,479 43,778 39,939
Minority partners' interests in consolidated partnerships (3,848) (4,422) (7,628) (10,603)
Distributions to preferred unit holders - (227) - (500)
Limited partners' minority interest in the operating partnership (694) (492) (1,475) (1,084)
------------------------- -------------------------
Income before discontinued operations and preferred dividends 17,418 13,338 34,675 27,752
Discontinued operations (net of minority interests)
Gain on sales of real estate 175 3,639 175 8,841
Income from discontinued operations 173 238 270 846
------------------------- -------------------------
Net income 17,766 17,215 35,120 37,439
Dividends to preferred shareholders - (4,172) - (8,432)
------------------------- -------------------------
Net income allocable to common shareholders $ 17,766 $ 13,043 $ 35,120 $ 29,007
========================= =========================
Basic weighted average common shares outstanding: 81,882,000 66,892,000 81,493,000 64,128,000
Basic net income per weighted average common share:
Common stock - income from continuing operations $0.22 $0.13 $0.42 $0.30
Discontinued operations 0.00 0.06 0.01 0.15
------------------------- -------------------------
Basic net income per common share $0.22 $0.19 $0.43 $0.45
========================= =========================
Diluted weighted average common shares outstanding: 82,290,000 67,327,000 81,908,000 64,522,000
========================= =========================
Diluted net income per weighted average common share: $0.22 $0.19 $0.43 $0.45
========================= =========================
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands, except share amounts)
June 30, December 31,
2005 2004
----------------- -----------------
Assets: (Unaudited)
Commercial real estate properties, at cost:
Land $ 551,269 $ 409,034
Buildings and improvements 3,111,512 2,706,406
Developments in progress:
Land 126,375 103,986
Development costs 48,950 29,159
Furniture, fixtures, and equipment 12,622 11,935
----------------- -----------------
3,850,728 3,260,520
Less: accumulated depreciation (623,134) (563,706)
----------------- -----------------
Investment in real estate, net of accumulated depreciation 3,227,594 2,696,814
Properties and related assets held for sale, net of accumulated depreciation 3,650 4,651
Investment in real estate joint ventures 6,308 6,657
Investment in notes receivable 135,449 85,855
Investments in affiliate loans and joint ventures 59,778 60,951
Cash and cash equivalents 23,672 25,137
Tenant receivables 10,483 9,470
Deferred rents receivable 151,034 133,012
Prepaid expenses and other assets 104,828 64,025
Contract and land deposits and pre-acquisition costs 5,206 121
Deferred leasing and loan costs (net of accumulated amortization) 85,162 80,915
----------------- -----------------
Total Assets $ 3,813,164 $ 3,167,608
================= =================
Liabilities:
Mortgage notes payable $ 614,834 $ 609,518
Unsecured credit facility 128,000 235,500
Unsecured bridge facility 470,000 -
Senior unsecured notes 979,857 697,974
Liabilities associated with properties held for sale 124 82
Accrued expenses and other liabilities 90,357 73,767
Deferred revenues and tenant security deposits 53,942 50,373
Dividends and distributions payable 36,175 35,924
----------------- -----------------
Total Liabilities 2,373,289 1,703,138
----------------- -----------------
Minority partners' interests in consolidated partnerships 213,371 211,178
Preferred unit interest in the operating partnership 1,200 1,200
Limited partners' minority interest in the operating partnership 31,088 53,231
----------------- -----------------
245,659 265,609
----------------- -----------------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized - -
Common Stock, $.01 par value, 200,000,000 shares authorized - -
82,533,774 and 80,618,339 shares issued and outstanding, respectively 825 806
Accumulated other comprehensive loss (3,447) -
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Additional paid in capital 1,265,330 1,266,547
----------------- -----------------
Total Stockholders' Equity 1,194,216 1,198,861
----------------- -----------------
Total Liabilities and Stockholders' Equity $ 3,813,164 $ 3,167,608
================= =================
Total debt to market capitalization (a): 42.0% 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 Six Months Ended
June 30, June 30,
==================== ===================
2005 2004 2005 2004
-------------------- -------------------
Net income allocable to common shareholders $ 17,766 $ 13,043 $ 35,120 $ 29,007
Add: Real estate depreciation and amortization 30,175 28,854 57,488 57,411
Minority partners' interests in consolidated partnerships 6,791 6,811 13,503 13,136
Limited partners' minority interest in the operating partnership 570 701 1,267 1,637
Less: Amounts distributable to minority partners in consolidated partnerships 5,478 6,411 11,202 14,915
Gain on sales of depreciable real estate - 6,174 - 11,330
-------------------- -------------------
Basic Funds From Operations ("FFO") 49,824 36,824 96,176 74,946
Add: Dividends and distributions on dilutive shares and units - 227 - 500
-------------------- -------------------
Diluted FFO $ 49,824 $ 37,051 $ 96,176 $ 75,446
==================== ===================
Diluted FFO calculations:
Weighted average common shares outstanding 81,882 66,892 81,493 64,128
Weighted average units of limited partnership interest outstanding 2,582 3,551 2,896 3,551
-------------------- -------------------
Basic weighted average common shares and units outstanding 84,464 70,443 84,389 67,679
Adjustments for dilutive FFO weighted average shares and units outstanding:
Common stock equivalents 408 435 415 394
Limited partners' preferred interest 41 581 41 635
-------------------- -------------------
Total diluted weighted average shares and units outstanding 84,913 71,459 84,845 68,708
==================== ===================
Diluted FFO per weighted average share or unit $ 0.59 $ 0.52 $ 1.13 $ 1.10
Diluted weighted average dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio 72.4% 81.9% 75.0% 77.4%
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,
======================= =======================
2005 2004 2005 2004
----------------------- -----------------------
Basic Funds From Operations $ 49,824 $ 36,824 $ 96,176 $ 74,946
Adjustments for basic cash available for distribution:
Less: Straight line rents and other FAS 141 non-cash rent adjustments 11,992 6,982 19,918 12,014
Committed non-incremental capitalized tenant improvements and
leasing costs 8,272 9,430 19,041 18,527
Actual non-incremental capitalized improvements 2,059 1,915 5,074 3,855
---------------------- -----------------------
Basic Cash Available for Distribution ("CAD") 27,501 18,497 52,143 40,550
Add: Dividends and distributions on dilutive shares and units - - - -
---------------------- -----------------------
Diluted CAD $ 27,501 $ 18,497 $ 52,143 $ 40,550
======================= =======================
Diluted CAD calculations:
Weighted average common shares outstanding 81,882 66,892 81,493 64,128
Weighted average units of limited partnership interest outstanding 2,582 3,551 2,896 3,551
----------------------- -----------------------
Basic weighted average common shares and units outstanding 84,464 70,443 84,389 67,679
Adjustments for dilutive CAD weighted average
shares and units outstanding:
Common stock equivalents 408 435 415 394
Limited partners' preferred interest 41 - 41 -
----------------------- -----------------------
Total diluted weighted average shares and units outstanding 84,913 70,878 84,845 68,073
======================= =======================
Diluted CAD per weighted average share or unit $ 0.32 $ 0.26 $ 0.61 $ 0.60
Diluted weighted average dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted CAD payout ratio 131.2% 162.8% 138.3% 142.7%
===================================================================================================================================
