MELVILLE, N.Y.--(BUSINESS WIRE)--Dec. 24, 2001--Reckson Associates Realty Corp. (NYSE: RA) has announced today that the Company has sold a 49% interest in 919 Third Avenue to New York State Teachers' Retirement System ("NYSTRS"), for approximately $221 million. NYSTRS was advised by JPMorgan Fleming Asset Management ("JPMorgan Fleming") and acquired the joint venture interest based on a property valuation of $450 million.

The Company received approximately $98 million of net cash proceeds from the sale.

This transaction was completed as part of the Company's capital recycling program, in which the Company has raised a total of approximately $342 million during 2001. The sale of the 49% stake in 919 Third Avenue is consistent with Reckson's strategy to purchase distressed or under-performing assets in its core markets, then create value through redevelopment and repositioning. Reckson will seek opportunities to reinvest the capital realized in the sale back into value-added assets in the Company's core New York Tri-State area Class A office and industrial markets, as well as pursue the Company's stock repurchase program.

Commenting on this transaction, Scott Rechler, Reckson's Co-Chief Executive Officer, said, "We are extremely pleased to have established a relationship with NYSTRS and continue our relationship with JPMorgan Fleming through this joint venture transaction." Mr. Rechler continued, "We initially created value at 919 Third Avenue by opportunistically acquiring the first mortgage note, then by obtaining title and repositioning the property, and now by successfully accessing the market which exists for joint venture equity partners."

In November 2000, Reckson obtained title to 919 Third Avenue, a 1.4 million square foot Class A office building located in Manhattan, after previously acquiring the first mortgage note secured by the property for approximately $278 million, or approximately $200 per square foot. The Company completed an extensive repositioning and capital improvement program, that included over 800,000 square feet of leasing, and building and tenant improvement costs aggregating approximately $87 million. In July 2001, Reckson obtained a $250 million first mortgage loan on the property. As a result of the sale of the joint venture interest, Reckson anticipates receiving a stabilized unleveraged NOI yield of 12.7% on its remaining investment in 919 Third Avenue. The Company realized an unleveraged internal rate of return of 16% on its invested capital on the sale of the 49% interest.

"This transaction further strengthens our balance sheet and positions us to capitalize on attractive investment opportunities in our core markets," said Michael Maturo, Reckson's Chief Financial Officer. Mr. Maturo continued, "As a result of the capital recycling initiatives completed in 2001 we now have over $600 million of capacity to allocate to value-added investments and stock repurchases."

Reckson will continue to be the majority owner of the property and manage the day-to-day operations and leasing at 919 Third Avenue. Maintaining an operating and ownership position allows the Company to strengthen its franchise value in Manhattan and strategic advantage of owning and operating Class A office assets in all the New York Tri-State area markets

Philip Waterman III ("Tod"), Managing Director of Reckson's New York City Division, stated, "Our new relationship with NYSTRS is consistent with our investment strategy in the New York City market. We look forward to delivering outstanding service and investment returns to our new partner and expanding the relationship in the future."

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 office and industrial 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 and industrial properties in the New York Tri-State area, with 182 properties comprised of approximately 20.6 million square feet either owned or controlled. For additional information on Reckson Associates Realty Corp., please visit the Company's web site at www.reckson.com.

As a part of J.P. Morgan Chase & Co., JPMorgan Fleming Asset Management is a global asset management leader providing world-class investment solutions to corporations, governments, institutions, endowments, foundations and individuals. With over $600 billion in global assets under management, JPMorgan Fleming offers global reach, local presence, and product leadership in every asset class for defined benefit and defined contribution pension plans, segregated accounts, proprietary and third party mutual funds, and high net worth individuals. Its 30-year history of successful investing and more than 100 real estate professionals who manage both private and public real estate portfolios evidence JPMorgan Fleming's commitment to real estate. JPMorgan Fleming's broad investment capabilities and framework for analyzing opportunities in today's complex real estate markets provides critical insights for its institutional clients. Real estate research at JPMorgan Fleming draws on the work of economists, capital markets researchers, equity analysts, and fixed income specialists with strategic investment decisions being derived from all inputs. Certain 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 press release that subsequently becomes untrue.