Leased 764,397 Sq. Ft., Increased Office Occupancy to 94.0%, Same
Property Office Net Operating Income Increased by 5.1%
MELVILLE, N.Y.--(BUSINESS WIRE)--Aug. 4, 2004-- Reckson Associates Realty Corp. (NYSE: RA) today reported diluted
funds from operations ("FFO") of $37.1 million or $0.52 per share for
the second quarter of 2004, as compared to FFO of $35.4 million or
$0.54 per share for the second quarter of 2003.
Commenting on the Company's performance, Scott Rechler, Reckson's
President and Chief Executive Officer, stated, "Our strong second
quarter operating performance reflects our team's ability to
capitalize on the improved market conditions by increasing portfolio
occupancies and rents. During the first half of the year we completed
office leasing transactions totaling approximately 1.6 million square
feet, our two highest quarters on record and approximately double our
annual run rate for the previous three years." Mr. Rechler continued,
"Approximately 35% of second quarter leasing activity was comprised of
renewals of leases expiring in 2005 and beyond, reflecting tenants'
recognition of rapidly improving market conditions. We believe we are
well positioned to continue to capitalize on the New York Tri-State
area's market recovery."
The second quarter results are consistent with the Company's
internal forecasts. The Company is reaffirming its previous 2004 FFO
guidance of $2.20 to $2.25 per share. This earnings guidance excludes
post second quarter accounting charges relating to the redemption of
the Company's preferred securities.
Michael Maturo, Reckson's Chief Financial Officer, stated, "Our
second quarter results reflect our strong portfolio performance, the
effect of lower other income and termination fees and a full quarter's
dilution from our recent equity offering."
Net income allocable to common shareholders totaled $13.0 million
in the second quarter of 2004, including $3.6 million related to gain
on sales of real estate, as compared to $7.6 million in the second
quarter of 2003. Diluted earnings per share ("EPS") totaled $0.19 in
the second quarter of 2004, as compared to EPS of $0.13 in the second
quarter of 2003.
A reconciliation of FFO to net income allocable to common
shareholders, the GAAP measure the Company believes to be the most
directly comparable, is in this press release.
Summary Portfolio Performance
The Company reported office occupancy at June 30, 2004 of 94.0%.
This compares to 93.3% at March 31, 2004 and 91.7% at June 30, 2003.
The Company reported portfolio occupancy of 93.1% at June 30, 2004, as
compared to 92.6% at March 31, 2004 and 90.6%, excluding the Long
Island industrial properties, at June 30, 2003.
The Company also reported same property office occupancy at June
30, 2004 of 94.0%, as compared to 91.8% at June 30, 2003. The Company
reported same property portfolio occupancy of 93.1% at June 30, 2004,
as compared to 90.5% at June 30, 2003.
Office same property net operating income (property operating
revenues less property operating expenses) ("NOI") before termination
fees for the second quarter of 2004 increased 3.4% (cash) and 5.1%
(including straight-line rent), compared to the second quarter of
2003. Portfolio same property NOI before termination fees for the
second quarter of 2004 increased 3.1% (cash) and 4.8% (including
straight-line rent), compared to the second quarter of 2003.
Net of minority interests in joint ventures, office same property
NOI before termination fees for the second quarter of 2004 increased
3.5% (cash) and 5.0% (including straight-line rent), compared to the
second quarter of 2003. Net of minority interests in joint ventures,
portfolio same property NOI before termination fees for the second
quarter of 2004 increased 3.8% (cash) and 5.3% (including
straight-line rent), compared to the second quarter of 2003.
Rent performance on renewal and replacement space during the
second quarter of 2004 increased 12.1% (cash) and 21.4% (including
straight-line rent) in the office portfolio. Rent performance office
statistics include a one year early renewal with WestPoint Stevens for
86,800 square feet at 1185 Avenue of the Americas, which represents a
material mark to market.
Other Highlights
Leasing Activity
- Executed 66 leases totaling 764,397 square feet during the
second quarter of 2004
- Renewed approximately 500,000 square feet of office leases
during the second quarter of 2004 resulting in an 83% renewal
rate
Investment/Disposition Activity
- Acquired 3 Giralda Farms, a 141,000 square foot Class A office
property, located in Chatham Township, New Jersey, for
approximately $22.7 million
- Commenced the ground-up development of 68 South Service Road,
a 277,000 square foot Class A office building, for a total
anticipated investment of approximately $60 million,
completing the final phase of the three building, 681,000
square foot, Reckson Executive Park located in Melville, Long
Island
- Completed the sale of two operating properties for
approximately $18.1 million, net of joint venture partner's
interest, representing a blended cap rate of 7.2% on
forecasted 2004 NOI
- Executed a contract for the sale of a 92,000 square foot
industrial property located in Westchester, for approximately
$7.5 million
Capital Market Activity
- Exchanged 1,350,000 shares of 7.625% Series A preferred stock
with a redemption value of $25.7625 per share for 1,304,602
shares of common stock
- Purchased and retired 140,600 shares of 7.625% Series A
preferred stock for approximately $3.4 million, or $24.45 per
share
- Announced the Company has re-set its common stock repurchase
program for 5 million shares
Reconciliation of Earnings Guidance
The Company's guidance for 2004 FFO of $2.20 to $2.25 per share is
reconciled from GAAP net income below:
Low End of High End of
Guidance for 2004 Guidance for 2004
(Per Common Share) (Per Common Share)
------------------ ------------------
Net income allocable to common
shareholders $.70 $.78
Add:
Real estate depreciation and
amortization 1.63 1.63
Less:
Gain on sales of depreciable
real estate (0.13) (0.16)
------ ------
Funds from Operations $2.20 $2.25
====== ======
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. Although FFO is
a non-GAAP financial measure, the Company believes it provides useful
information to shareholders, potential investors and management. 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 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 85 properties
comprised of approximately 15.4 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 Thursday, August 5, 2004 at 9:30
a.m. EST. The conference call may be accessed by dialing (800)
230-1092 (internationally (612) 332-0725). 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 5, 2004 at 3:00 p.m. EST through August 13, 2004 at 11:59
p.m. EST. The telephone number for the replay is (800) 475-6701,
passcode 571289. 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 2004 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, Investor Relations, Reckson Associates Realty
Corp., 225 Broadhollow Road, Melville, New York 11747-4883,
investorrelations@reckson.com or (631) 622-6746.
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
(including FrontLine Capital Group); 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 Balance Sheets
(in thousands)
June 30, December 31,
2004 2003
----------- -----------
Assets: (unaudited)
Commercial real estate properties, at cost:
Land $384,137 $378,479
Buildings and improvements 2,608,867 2,211,566
Developments in progress:
Land 95,600 90,706
Development costs 28,900 68,127
Furniture, fixtures, and equipment 11,625 11,338
----------- -----------
3,129,129 2,760,216
Less: accumulated depreciation (515,961) (464,382)
----------- -----------
Investment in real estate, net of accumulated
depreciation 2,613,168 2,295,834
Properties and related assets held for sale,
net of accumulated depreciation 5,069 52,517
Investments in real estate joint ventures 6,462 5,904
Investments in mortgage notes and notes
receivable 68,433 54,986
Investments in service companies and affiliate
loans and joint ventures 70,563 71,614
Cash and cash equivalents 82,670 22,330
Tenant receivables 11,661 11,929
Deferred rents receivable 122,672 111,962
Prepaid expenses and other assets 82,523 35,371
Contract and land deposits and pre-acquisition
costs 60 20,203
Deferred leasing and loan costs (net of
accumulated amortization) 69,573 64,345
----------- -----------
Total Assets $3,132,854 $2,746,995
----------- -----------
Liabilities:
Mortgage notes payable $965,561 $721,635
Unsecured credit facility 90,000 169,000
Senior unsecured notes 549,132 499,445
Liabilities associated with properties held
for sale 311 881
Accrued expenses and other liabilities 120,498 93,885
Dividends and distributions payable 32,994 28,290
----------- -----------
Total Liabilities 1,758,496 1,513,136
----------- -----------
Minority partners' interests in consolidated
partnerships 223,405 233,070
Preferred unit interest in the operating
partnership 16,581 19,662
Limited partners' minority interest in the
operating partnership 46,659 44,518
----------- -----------
286,645 297,250
----------- -----------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000
shares authorized
Series A - 8,693,900 and 8,834,500 shares
issued and outstanding, respectively 87 88
Series B - 0 and 2,000,000 shares issued and
outstanding, respectively - 20
Common Stock, $.01 par value, 100,000,000
shares authorized
Class A - 67,256,850 and 58,275,367 shares
issued and outstanding, respectively 673 583
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Retained earnings 7,412 35,757
Accumulated other comprehensive income 5,201 -
Additional paid in capital 1,142,832 968,653
----------- -----------
Total Stockholders' Equity 1,087,713 936,609
----------- -----------
Total Liabilities and Stockholders'
Equity $3,132,854 $2,746,995
----------- -----------
Total debt to market capitalization (a): 40.3% 41.2%
----------- -----------
--------------------
(a) Total debt includes the Company's pro rata share of consolidated
and unconsolidated joint venture debt.
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,
---------------------- ----------------------
2004 2003 2004 2003
---------------------- ----------------------
Property Operating
Revenues:
Base rents $109,765 $94,141 $220,800 $188,885
Tenant escalations and
reimbursements 17,478 13,907 35,593 27,943
---------------------- ----------------------
Total property
operating revenues 127,243 108,048 256,393 216,828
---------------------- ----------------------
Property Operating
Expenses:
Operating expenses 30,532 25,351 61,406 51,789
Real estate taxes 20,094 17,087 40,685 34,029
---------------------- ----------------------
Total property
operating expenses 50,626 42,438 102,091 85,818
---------------------- ----------------------
Net Operating Income 76,617 65,610 154,302 131,010
---------------------- ----------------------
Gross Margin percentage 60.2% 60.7% 60.2% 60.4%
---------------------- ----------------------
Other Income 3,617 4,618 9,394 11,983
---------------------- ----------------------
Other Expenses
Interest expense 24,607 20,145 50,268 40,242
Depreciation and
amortization 29,617 26,983 58,738 55,763
Marketing, general and
administrative 7,374 8,795 14,441 16,364
---------------------- ----------------------
Total other expenses 61,598 55,923 123,447 112,369
---------------------- ----------------------
Income before minority
interests, preferred
dividends and
distributions, gain on
sales of depreciable
real estate and
discontinued operations 18,636 14,305 40,249 30,624
Minority partners'
interests in
consolidated
partnerships (4,422) (4,062) (10,603) (8,463)
Distributions to
preferred unitholders (227) (274) (500) (547)
Limited partners'
minority interest in the
operating partnership (506) (482) (1,100) (1,135)
---------------------- ----------------------
Income before
discontinued operations
and preferred dividends 13,481 9,487 28,046 20,479
Discontinued operations
(net of limited
partners' minority
interest)
Gain on sales of real
estate 3,639 - 8,841 -
Income from
discontinued
operations 95 3,415 552 6,403
---------------------- ----------------------
Net income 17,215 12,902 37,439 26,882
Dividends to preferred
shareholders (4,172) (5,317) (8,432) (10,634)
---------------------- ----------------------
Net income allocable to
common shareholders $13,043 $7,585 $29,007 $16,248
====================== ======================
Allocable to Class A
common $13,043 $5,769 $29,007 $12,364
Allocable to Class B
common - 1,816 - 3,884
---------------------- ----------------------
Net income allocable to
common shareholders $13,043 $7,585 $29,007 $16,248
====================== ======================
Basic weighted average
common shares
outstanding:
Class A common 66,892,000 48,001,000 64,128,000 48,100,000
Class B common - 9,915,000 - 9,915,000
Basic net income per
weighted average common
share:
Class A common stock -
income from continuing
operations $0.13 $0.07 $0.30 $0.16
Discontinued operations 0.06 0.05 0.15 0.10
---------------------- ----------------------
Basic net income per
Class A common $0.19 $0.12 $0.45 $0.26
====================== ======================
Class B common stock -
income from
continuing operations - $0.10 - $0.24
Discontinued
operations - 0.08 - 0.15
---------------------- ----------------------
Basic net income per
Class B common - $0.18 - $0.39
====================== ======================
Diluted weighted average
common shares
outstanding:
Class A common 67,327,000 48,118,000 64,522,000 48,219,000
Class B common - 9,915,000 - 9,915,000
Diluted net income per
weighted average common
share:
Class A common $0.19 $0.12 $0.45 $0.26
====================== ======================
Class B common - $0.13 - $0.28
====================== ======================
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,
---------------- ----------------
2004 2003 2004 2003
---------------- ----------------
Net income allocable to common
shareholders $13,043 $7,585 $29,007 $16,248
Add: Real estate depreciation
and amortization 28,854 29,127 57,411 60,454
Minority partners'
interests in consolidated
partnerships 6,811 4,335 13,136 9,025
Limited partners' minority
interest in the operating
partnership 701 874 1,637 1,870
Less: Amounts distributable to
minority partners in
consolidated partnerships 6,411 6,769 14,915 13,576
Gain on sales of
depreciable real estate 6,174 - 11,330 -
---------------- ----------------
Basic Funds From Operations ("FFO") 36,824 35,152 74,946 74,021
Add: Dividends and distributions
on dilutive shares and
units 227 273 500 8,968
---------------- ----------------
Diluted FFO $37,051 $35,425 $75,446 $82,989
================ ================
Diluted FFO calculations:
Weighted average common
shares outstanding 66,892 57,916 64,128 58,016
Weighted average units of
limited partnership
interest outstanding 3,551 7,276 3,551 7,276
---------------- ----------------
Basic weighted average
common shares and units
outstanding 70,443 65,192 67,679 65,292
Adjustments for dilutive
FFO weighted average
shares and units
outstanding:
Common stock equivalents 435 117 394 118
Series A preferred stock - - - 7,747
Limited partners'
preferred interest 581 661 635 661
---------------- ----------------
Total diluted weighted average
shares and units outstanding 71,459 65,970 68,708 73,818
================ ================
Diluted FFO per weighted average
share or unit $0.52 $0.54 $1.10 $1.12
Diluted weighted average dividends
per share $0.42 $0.42 $0.85 $0.85
Diluted FFO payout ratio 81.9% 79.1% 77.4% 75.5%
----------------------------------------------------------------------
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,
---------------- ----------------
2004 2003 2004 2003
---------------- ----------------
Basic Funds From Operations $36,824 $35,152 $74,946 $74,021
Adjustments for basic cash
available for distribution:
Less: Straight line rents and
other FAS 141 non-cash
rent adjustments 6,982 4,659 12,014 8,677
Committed non-incremental
capitalized tenant
improvements and leasing
costs 9,430 6,805 18,527 15,596
Actual non-incremental
capitalized improvements 1,915 1,929 3,855 4,055
---------------- ----------------
Basic Cash Available for
Distribution ("CAD") 18,497 21,759 40,550 45,693
Add: Dividends and distributions
on dilutive shares and
units - - - -
---------------- ----------------
Diluted CAD $18,497 $21,759 $40,550 $45,693
================ ================
Diluted CAD calculations:
Weighted average common
shares outstanding 66,892 57,916 64,128 58,016
Weighted average units of
limited partnership
interest outstanding 3,551 7,276 3,551 7,276
---------------- ----------------
Basic weighted average
common shares and units
outstanding 70,443 65,192 67,679 65,292
Adjustments for dilutive
CAD weighted average
shares and units
outstanding:
Common stock equivalents 435 117 394 118
Series A preferred stock - - - -
Limited partners'
preferred interest - - - -
---------------- ----------------
Total diluted weighted average
shares and units outstanding 70,878 65,309 68,073 65,410
================ ================
Diluted CAD per weighted average
share or unit $0.26 $0.33 $0.60 $0.70
Diluted weighted average dividends
per share $0.42 $0.42 $0.85 $0.85
Diluted CAD payout ratio 162.8% 127.5% 142.7% 121.6%
----------------------------------------------------------------------
CONTACT: Reckson Associates Realty Corp.
Scott Rechler, CEO, 631-694-6900
OR
Michael Maturo, CFO, 631-694-6900
631-622-6790 (Facsimile)
SOURCE: Reckson Associates Realty Corp.
