SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 6, 2001
RECKSON ASSOCIATES REALTY CORP.
and
RECKSON OPERATING PARTNERSHIP, L.P.
(Exact name of each Registrant as specified in its Charter)
Reckson Associates Realty Corp. - Maryland Reckson Associates Realty Corp. -
Reckson Operating Partnership, L.P. - Delaware 11-3233650
(State or other jurisdiction of incorporation or organization) Reckson Operating Partnership, L.P. -
11-3233647
(IRS Employer ID Number)
225 Broadhollow Road 11747
Melville, New York (Zip Code)
(Address of principal executive offices)
1-13762
(Commission File Number)
(631) 694-6900
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Reckson Associates Realty Corp. Third Quarter Presentation,
dated November 6, 2001
ITEM 9. REGULATION FD DISCLOSURE
The Registrants are attaching the Third Quarter Presentation as Exhibit
99.1 to this Current Report on Form 8-K.
Note: the information in this report (including the exhibit) is
furnished pursuant to Item 9 and shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities of that section. This report will not be deemed an
admission as to the materiality of any information in the report that is
required to be disclosed solely by Regulation FD.
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 thereunto 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: November 6, 2001
EXHIBIT 99.1
THIRD QUARTER PRESENTATION
November 6, 2001
RECKSON
THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED]
THIRD QUARTER 2001 PRESENTATION
EARNINGS RESULTS AND OVERVIEW
NOVEMBER 6, 2001
[GRAPHIC OMITTED]
[GRAPHIC OMITTED] SUMMARY OF HIGHLIGHTS
o Reported diluted FFO of $.66 per share for the third quarter of 2001, as
compared to $.65 per share for the comparable 2000 period, representing a
per share increase of 1.5%. Adjusting prior year FFO per share to exclude
interest income relating to the FrontLine Capital Group loans, FFO
attributable to core operations was $.59 per share, representing a per
share increase of 11.9%.
o Reported diluted FFO of $2.04 per share for nine months ended September
30, 2001, as compared to $1.92 per share for the comparable 2000 period,
representing a per share increase of 6.3%. Adjusting prior year FFO per
share to exclude interest income relating to the FrontLine Capital Group
loans, FFO attributable to core operations was $1.75 per share,
representing a per share increase of 16.6%.
o Generated same property NOI increases of 10.5% (cash) and 5.2% (GAAP) for
the third quarter of 2001.
o Generated same space rent growth of 21.7% (GAAP) and 15.4% (cash) for
Office and 18.3% (GAAP) and 2.0% (cash) for Industrial/R&D for the third
quarter of 2001.
o Sold convertible preferred securities in Keystone Property Trust for
$35.7 million.
o Completed dispositions of three non-core office assets totaling
approximately $53 million, bringing the aggregate proceeds from property
dispositions in the capital recycling program to approximately $85
million.
o Expect to close on the sale of a 49% interest in 919 Third Avenue to New
York State Teachers' Retirement System (NYSTRS) within 30 days.
o Converted Crescent's $85 million preferred equity investment in
Metropolitan into approximately 3.5 million shares of Reckson Class A
common stock, which were then successfully placed with major
institutional holders.
o Established a valuation reserve of $163 million against the investment in
the FrontLine loans and joint ventures with RSVP.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] PRO FORMA FFO - CORE OPERATIONS
11.9% INCREASE IN FFO PER SHARE FROM CORE OPERATIONS
2000 3Q FFO $.65
Interest Income on FrontLine Loans ($.06)
------
2000 3Q FFO Core Operations $.59
2001 3Q FFO $.66
----
Increase $.07
====
Percent Increase 11.9%
====
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] PORTFOLIO COMPOSITION
NET OPERATING INCOME (A)
New York City 30% Pro Forma Portfolio Stats
Long Island 30% -------------------------
Westchester 20% o 20.7 Million Square Feet (b)
New Jersey 13% o 183 Properties (b)
Connecticut 7% o 1,280 Tenants Representing a
Diverse Industry Base
o Five Integrated Operating Divisions
o NOI:
Office 87%
Industrial 13%
o Average Tenant Size:
Office 12,000 sq. ft.
Industrial 27,000 sq. ft.
o Occupancy: (c)
Office 96.7%
Industrial 97.5%
(a) Pro forma for 919 Third Avenue free rent add back and pro rata share of
consolidated and unconsolidated joint ventures
(b) One property sold after reporting period encompassing 99,000 square feet
(c) Excluding properties under development
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] OUTPERFORMING MARKETS
[GRAPHICS OMITTED]
YE97 YE98 YE99 YE00 3Q01
---- ----- ---- ---- ----
Southern Connecticut
Overall Vacancy 5.7% 4.2% 4.7% 8.1% 11.8%
Direct Vacancy 4.2% 3.6% 4.0% 7.2% 7.8%
RA Portfolio Vacancy 12.5% 9.9% 7.9% 4.4% 5.6%
Westchester
Overall Vacancy 15.6% 19.2% 16.3% 12.0% 17.8%
Direct Vacancy 13.3% 16.4% 15.0% 10.7% 13.8%
RA Portfolio Vacancy 18.9% 16.5% 17.4% 4.0% 6.6%
Long Island
Overall Vacancy 9.7% 6.7% 6.5% 8.4% 10.3%
Direct Vacancy 8.7% 6.1% 5.6% 6.3% 7.2%
RA Portfolio Vacancy 17.2% 8.3% 6.0% 8.2% 6.7%
Northern New Jersey
Overall Vacancy 7.3% 7.5% 7.1% 9.9% 11.6%
Direct Vacancy 4.7% 5.3% 4.6% 6.5% 7.5%
RA Portfolio Vacancy 14.0% 10.8% 4.5% 1.3% 7.8%
Source: Cushman & Wakefield Class A Statistics
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] OUTPERFORMING MARKETS
[GRAPHICS OMITTED]
YE99 YE00 3Q01
---- ---- ----
NYC Financial East
Overall Vacancy 4.1% 2.1% 5.0%
Direct Vacancy 3.4% 1.4% 1.4%
RA Portfolio Vacancy 2.3% 0.7% 1.4%
NYC Midtown East Side
Overall Vacancy 5.0% 2.6% 6.3%
Direct Vacancy 3.8% 1.9% 3.1%
RA Portfolio Vacancy 0.9% 2.1% 1.9%
NYC Midtown West Side
Overall Vacancy 6.0% 2.7% 6.0%
Direct Vacancy 4.6% 2.4% 3.8%
RA Portfolio Vacancy 3.0% 3.0% 3.7%
NYC Sixth Ave./Rockefeller Center
Overall Vacancy 2.6% 1.2% 3.9%
Direct Vacancy 1.6% 0.9% 1.8%
RA Portfolio Vacancy 10.7% 7.2% 4.5%
Source: Cushman & Wakefield Class A Statistics
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] HISTORICAL PORTFOLIO OCCUPANCY
LAST FIVE QUARTERS
[GRAPHIC OMITTED]
Office
97.0% 97.2% 97.1% 97.0% 96.7%
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Sept 2000 Dec 2000 Mar 2001 June 2001 Sept 2001
Industrial
98.0% 97.5% 97.8% 97.9% 97.5%
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Sept 2000 Dec 2000 Mar 2001 June 2001 Sept 2001
Note: Excludes properties under development
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] LIMITED NEW SUPPLY
NEW SPACE UNDER DEVELOPMENT AS A % OF INVENTORY
[GRAPHIC OMITTED]
Westchester 0.0%
Stamford 0.8%
Long Island 0.9%
Cleveland 1.3%
New York City 1.9%
Houston 2.3%
LA County 2.8%
Denver 3.0%
Orange County 3.0%
San Diego 3.2%
Dallas 3.6%
Philadelphia 3.8%
Atlanta 4.0%
No. New Jersey (a) 4.6%
Chicago 4.6%
Oakland 5.6%
Phoenix 5.6%
Washington, DC 6.0%
Minneapolis 7.3%
San Francisco 7.4%
Boston 8.2%
Source: Merrill Lynch mid-year 2001 report
(a) Excluding Jersey City the new space under development is 2.8%
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] PORTFOLIO PERFORMANCE
SAME PROPERTY NOI
TOTAL PORTFOLIO (a)
THREE MONTHS
[GRAPHIC OMITTED]
10.5% 5.2%
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Cash NOI GAAP NOI
8.2% Cash Revenue Increase
4.5% Expense Increase
(0.7%) Occupancy Decrease
(a) Based on comparison period for the three month period ended September 30,
2001 versus the three month period ended September 30, 2000
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] PORTFOLIO PERFORMANCE
SAME PROPERTY NOI
[Graphics Omitted]
TREND ANALYSIS
3Q00 4Q00 1Q01 2Q01 3Q01
----- ---- ---- ----- ----
Cash NOI 7.4% 10.6% 14.9% 8.5% 10.5%
GAAP NOI 9.1% 10.2% 13.4% 9.6% 5.2%
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] PORTFOLIO PERFORMANCE
THIRD QUARTER SAME SPACE AVERAGE RENT GROWTH (a)
Office Rent Growth: 22% Industrial/R&D Rent Growth: 18%
[GRAPHICS OMITTED]
Expiring Leases - $22.77 Expiring Leases - $6.08
New Leases - $27.71 New Leases - $7.19
o Renewed 70% of Expiring Square Footage
o 62 Total Leases Executed Encompassing 746,387 Sq. Ft.
o Same Space Third Quarter Cash Increase of 15% for Office and 2% for
Industrial/R&D
(a) Represents leases executed during the third quarter
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] LEASE EXPIRATIONS
SQUARE FEET EXPIRING THROUGHOUT NEW YORK TRI-STATE PORTFOLIO
[Graphics Omitted]
OFFICE
------
2001 2002 2003 2004 2005 2006
---- ---- ---- ----- ----- ----
Square Feet Expiring
(in thousands) 154 1,062 1,177 1,179 1,699 1,691
%Square Feet Expiring 1.2% 8.3% 9.2% 9.2% 13.2% 13.2%
INDUSTRIAL
----------
2001 2002 2003 2004 2005 2006
---- ---- ---- ----- ----- ----
Square Feet Expiring
(in thousands) 337 371 771 720 785 1,014
%Square Feet Expiring 5.3% 5.9% 12.2% 11.3% 12.4% 16.0%
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] LEASE EXPIRATION COMPARISON
EXPIRING RENTS VS. MARKET ASKING RENTS
CBD Office Portfolio
[GRAPHIC OMITTED]
As of September 30, 2001
Connecticut New York City
------------------ -------------
Expiring Rent (a) $25.76 $34.95
Market Rent (b) $37.73 $59.76
Increase 46% 71%
(a) Represents average rents for leases expiring over the next 5.25 years
(b) Average asking rents as provided by Cushman & Wakefield. There can be no
assurance the Company's properties can achieve such rents.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] LEASE EXPIRATION COMPARISON
EXPIRING RENTS VS. MARKET ASKING RENTS
SUBURBAN OFFICE PORTFOLIO
[GRAPHIC OMITTED]
Long Island Westchester New Jersey
------------------ ----------- ----------
Expiring Rent (a) $24.85 $22.77 $24.10
Market Rent (b) $30.04 $29.13 $30.56
Increase 21% 28% 27%
AS OF SEPTEMBER 30, 2001
(a) Represents average rents for leases expiring over the next 5.25 years
(b) Average asking rents as provided by Cushman & Wakefield. There can be no
assurance the Company's properties can achieve such rents.
14
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] INTERNAL GROWTH - OFFICE PORTFOLIO
MARKED TO MARKET ANALYSIS ASSUMING 10% DISCOUNT ON ASKING RENTS
[GRAPHICS OMITTED]
As of September 30, 2001
SUBURBAN OFFICE PORTFOLIO
-------------------------
Market Rent (a): $28.02
In-place Rent: $24.10
Cash Flow Increase:
$22.0 million
$0.28 per diluted share
5.6 Million Sq.Ft. Expiring Over the Next 5.25 Years
Portfolio Rents 16% Below Market
NEW YORK CITY OFFICE PORTFOLIO
------------------------------
Market Rent (a): $53.78
In-place Rent: $34.95
Cash Flow Increase:
$24.5 million
$0.31 per diluted share
1.3 Million Sq.Ft. Expiring Over the Next 5.25 Years
Portfolio Rents 54% Below Market
(a) Average asking rents as provided by Cushman & Wakefield discounted by 10%.
There can be no assurance the Company's properties can achieve such rents.
Calculations based on weighted average sq. ft. expiring in each of the
respective sub-markets.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] VALUE CREATION ACTIVITY REPORT
Square Percent Total Anticipated Total Investment
PROJECTS IN STABILIZATION PERIOD Feet Leased Investment(a) To Date NOI Yield(a)
------------------------------------ ---------- ------ ----------------- ---------------- -----------
Melville Expressway Corporate Center,
Melville, NY (Phase I) 277,500 31.0% $43,446,000 $44,143,409 12.0%
PROJECTS UNDER DEVELOPMENT OR REPOSITIONING
-------------------------------------------
103 JFK Expressway, Short Hills, NJ 129,508 $30,000,000
400 Moreland Road, Commack, NY 56,875 $2,967,000
Projects Under Development or Repositioning 186,383 0.0% $32,967,000 $26,621,818 10.2%
PROJECTS IN PLANNING
--------------------
AIP 2001, Islip, NY 71,000 $5,692,000
University Square, Princeton, NJ 315,000 $50,397,000
Melville Square Corporate Center II, Melville, NY 255,000 $33,660,000
Melville Expressway Corporate Center,
Melville, NY (Phase II) 277,500 $49,290,000
Reckson Executive Park, Rye Brook, NY 345,000 $55,799,000
Landmark 7, Stamford, CT 61,000 $13,208,000
Giralda Farms, Morris County, NJ 430,000 $80,091,000
Projects in Planning 1,754,500 0.0% $288,137,000 $63,400,123 12.0%
(a) Forward-looking statements based upon management's estimates. Actual
results may differ materially.
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED]
FINANCIAL OVERVIEW
PRESENTED BY MICHAEL MATURO
17
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] FRONTLINE CAPITAL GROUP UPDATE
o At September 30, 2001, Reckson had investments of $142.7 million (plus
accrued interest of $19.6 million) in two outstanding loans to FrontLine
Capital Group and $59.8 million in real estate joint ventures with RSVP.
o The Company established a valuation reserve of $163 million.
o Accrued interest income on the outstanding loans has been discontinued
inclusive of the third quarter.
o Allows future performance measurements to be based on the Company's core real
estate operations.
18
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] FINANCIAL RATIOS
(in millions except ratios)
SEPTEMBER 30, 2001
RATIOS HISTORICAL
------ ---------------------------
Total Debt (a) $1,444
Total Equity $1,960
Total Market Cap $3,404
Interest Coverage Ratio 3.27x
Fixed Charge Coverage Ratio 2.60x
Debt to Total Market Cap 42.4%
Debt to Total Value of Assets 40.8%
(a) Including pro-rata share of joint venture debt and net of minority partners'
interests
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] NET ASSET VALUE ANALYSIS
(in thousands, except percentages and per share amounts)
NAV Calculation September 30, 2001
--------------- ------------------
Q3 2001 Consolidated NOI (1) $ 85,003
Adjustments
Termination Fees (2,831)
919 Third Avenue GAAP NOI (10,476)
NOI from Disposed Properties (565)
Straightline (2) (3,791)
Amounts Distributable to Minority Partners (4,206)
Leasing Activity Effecting Post 3rd Quarter 586
----------
Adjusted Q3 2001 NOI $ 63,720
Annualized Adjusted NOI (3) $ 261,252
Capitalization Rate 9.25%
----------
Value of Operating Properties $2,824,341
Development Pipeline at 110% of cost 157,225
Investments in Affiliated Loans, Joint
Ventures and Subsidiaries 80,569
Other Assets (4) 145,560
919 Third Avenue (5) 450,000
----------
Total Value of Assets $3,657,695
Liabilities + Preferred Stock + Preferred Units(6) 1,863,774
----------
Net Asset Value $1,793,921
Outstanding Shares and Units 68,169
Net Asset Value Per Share $ 26.32
----------
(1) Adjusted for seasonality to reflect an annualized
number
(2) Net of $5.9 million adjustment for 919 Third Avenue
(3) Includes a 4% annualized growth factor, adjusted to account for timing
(4) Consists of the following (in millions): Prepaid Expenses $32.2; Inv. in R/E
joint ventures $5.7; Mtg Notes $55.7; Cash $38.5; Tenant Receivables $10.0;
Contract Deposits $3.5
(5) Market value of asset
(6) Includes pro rata share of consolidated joint venture debt and additional
costs to develop 919 Third Avenue
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] DEBT SCHEDULE
(IN MILLIONS)
PRINCIPAL AMOUNT WEIGHTED AVERAGE AVERAGE TERM
DEBT SCHEDULE OUTSTANDING INTEREST RATE TO MATURITY
------------- ---------------- ---------------- ------------
FIXED RATE
----------
Mortgage Notes Payable $762.5 7.3% 10.1 yrs.
Senior Unsecured Notes $450.0 7.5% 5.8 yrs.
---------------
Subtotal/Weighted Average $1,212.5 7.4% 8.5 yrs.
===============
Floating Rate
-------------
Corporate Unsecured Credit
Facility $ 246.6 LIBOR + 105bps
NO SIGNIFICANT NEAR-TERM REFINANCING NEEDS
LONG-TERM STAGGERED DEBT MATURITY SCHEDULE
[GRAPHIC OMITTED]
(maturities in millions)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
---------------------------------------------------------------------------------------------
Mortgage Debt $0 $9 $0 $3 $19 $130 $60 $0 $100 $28 $214
Unsecured Notes $100 $150 $200
LOW FLOATING RATE DEBT LEVELS
[GRAPHIC OMITTED]
Floating Rate - 17%
Fixed Rate - 83%
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] CAPITAL RECYCLING PROGRAM
$457 MILLION SLATED FOR PROGRAM
(in thousands)
2001 2002
---- ----
DISPOSITIONS - COMPLETED OR UNDER CONTRACT
------------------------------------------
Closed (6 non-core office assets) $ 85,000
Keystone Preferred Stock $ 36,000
--------
Subtotal $121,000
--------
DISPOSITIONS - ANTICIPATED
--------------------------
919 Third Avenue - Sale of JV Interest $221,000
Remaining Non-Core Office Assets $115,000
---------
Subtotal $221,000 $115,000
--------- ---------
Total $ 342,000 $115,000
========= =========
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] SUMMARY
o Well positioned for present economic climate
* Strong balance sheet
* Relatively low lease expiration exposure
* Portfolio rents well below market
* Maintaining high tenant retention rates
* Minimum development exposure
o Recent events have validated Tri-State area strategy
* Portfolio located within one hour proximity to Manhattan
* Regional dominance
o Actively seeking to capitalize on creative opportunities in core
markets
o Taken appropriate action to remove distractions from non-core
activities
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED] FORWARD-LOOKING STATEMENTS
Estimates of future FFO per share and certain other matters discussed herein 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; changes in the supply of and demand for office and industrial
properties in the New York Tri-State area; changes in interest rate levels;
downturns in rental rate levels in our markets and our ability to lease or
re-lease space in a timely manner at current or anticipated rental rate levels;
the availability of financing to us or our tenants; changes in operating costs,
including utility costs; repayment of debt owed to the Company by third parties
(including FrontLine Capital Group); risks associated with joint ventures; 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 is subject to the reporting requirements of the
Securities and Exchange Commission and undertakes no responsibility to update or
supplement information contained in this presentation that subsequently becomes
untrue.
24
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]