MELVILLE, N.Y., Jul 08, 2005 (BUSINESS WIRE) -- Reckson Associates Realty Corp. (NYSE: RA) announced today that the Company has 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.

EAB Plaza is both the largest and most recognizable office complex on Long Island. With this strategic acquisition, Reckson has increased the Company's Long Island portfolio to approximately 5 million square feet, further enhancing Reckson's Class A office franchise on Long Island and throughout the New York Tri-State area. The addition of EAB Plaza to the Company's portfolio complements Reckson's nearby trophy Omni property and will further solidify Reckson's position as the leading provider of the highest quality office space and the "Landlord of Choice" in the Tri-State area.

This acquisition caps off a robust period of investment activity by Reckson. Including this acquisition, the Company has completed investments totaling approximately $954 million year to date, successfully acquiring Class A office properties in several of Reckson's targeted submarkets located in New York City, Connecticut, Northern New Jersey and Long Island, despite extremely competitive market conditions.

Reckson is purchasing EAB Plaza at an approximate 20% discount to replacement cost. The property is currently approximately 90% occupied and is leased to high quality credit tenants including Citibank, N.A, Washington Mutual and Dreyfus Service Corporation. This compares to an approximate 96% occupancy rate for Reckson's Long Island office portfolio. The Company believes that there will be strong demand for a building of EAB Plaza's quality, and views this acquisition as an opportunity to continue to capitalize on the solid fundamentals of the Long Island commercial real estate market. Upon contracting to acquire EAB Plaza, Reckson will immediately take over responsibility for all leasing activity at the property. Reckson expects to generate an initial GAAP net operating income (NOI) yield of approximately 6.5% on EAB Plaza.

Commenting on the transaction, Scott Rechler, Reckson's President and Chief Executive Officer, said, "Our acquisition of EAB Plaza reflects our focus on acquiring Class A office properties that offer us the opportunity to apply our expertise to create value as well as provide strategic benefits to our overall portfolio." Mr. Rechler continued, "We believe we are uniquely equipped to increase EAB Plaza's value by effectively addressing its near-term vacancies, increasing rents and leveraging our scale to generate significant operating expense efficiencies. For instance, operating expenses at EAB Plaza are running materially higher than expenses at our neighboring Omni property which offers the same high quality space and amenities. We anticipate that our operating initiatives will result in the property generating cumulative annual NOI growth in excess of 5.0%."

In September of 2003, Reckson initiated its investment in EAB Plaza in the form of a mezzanine loan to the current owners. Subsequently, Reckson increased its investment which today aggregates approximately $27.6 million. This investment is secured by a pledge of an indirect ownership interest of an entity which owns the ground leasehold estate under EAB Plaza. The mezzanine loan will be re-paid upon Reckson's closing on the acquisition of EAB Plaza.

Michael Maturo, Reckson's Executive Vice President and Chief Financial Officer, noted, "Over the last two years we have allocated a portion of our investment capital to structured finance investments collateralized by high-grade office properties within our markets. Our strategy has been to develop relationships by providing debt or preferred equity financing on assets we would otherwise own. Our 'off-market' purchase of EAB Plaza converts our current debt investment to an ownership position and validates our investment strategy."

Prior to closing on the acquisition of EAB Plaza, Reckson has the option to purchase the adjoining 8.2-acre development site. If Reckson does not exercise this option the Company will provide a two-year $10 million loan to the seller, secured by the development site and will be retained to provide development related consulting services for the site. Both EAB Plaza and the adjoining development site are subject to a long-term ground lease from the County of Nassau having a term, including extensions, in excess of 75-years with current annual ground rent of approximately $0.53 per square foot.

Built in 1984, EAB Plaza is a 1.1 million square foot, Class A office complex consisting of two 15-story office towers which are connected by a three-story mezzanine, lobby and concourse which contains various service retailers. The property is distinguished by a lobby with an atrium roof that reaches 75 feet at its highest point and features a dramatic indoor winter garden that contains a 60-foot waterfall and many full-height trees, including exotic tropical plantings. The complex is situated on 28 acres and has superior building finishes such as an exterior facade of green reflective glass and a lobby consisting of granite floors and walls.

The complex offers outstanding amenities which include a cafeteria, dry cleaner, sundry shop, daycare center, shoe shine/repair, jewelry store, florist, Citibank branch and ATM, U.S. Post Office, Federal Express/Kinkos, access and security provided 24 hours a day seven days a week, and a four-story parking garage with an enclosed walkway connected to the buildings as well as additional surface parking. A unique amenity at the property is the outdoor ice-skating rink which has helped to further establish the strong identity of EAB Plaza. The rink is frequented by many nearby residents and is the site of Long Island's best-known annual Christmas Tree Lighting.

Reckson anticipates closing on the acquisition of EAB Plaza early in the fourth quarter of 2005.

A slide show presentation outlining Reckson's acquisition of EAB Plaza can be found on the Company's web site at www.reckson.com, in the Investor Relations section in the Audio and Presentation Archives.

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 92 properties comprised of approximately 19.0 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.

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.

SOURCE: Reckson Associates Realty Corp.

Reckson Associates Realty Corp.
Scott Rechler, CEO
Michael Maturo, CFO
631-694-6900 (Phone)
631-622-6790 (Facsimile)
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Media Contact:
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