MELVILLE, N.Y.--(BUSINESS WIRE)--Aug. 3, 2006--Reckson Associates
Realty Corp. (NYSE: RA) today reported diluted funds from operations
(FFO) of $54.4 million, or $0.63 per share for the second quarter of
2006 including approximately $11.5 million, or $0.13 per share of
lease termination fees and a $2.2 million, or $0.03 per share charge
recognized in connection with Reckson's long-term incentive
compensation plan. When adjusted for the lease termination fees and
the charge the Company reported diluted FFO of $45.1 million, or $0.53
per share for the second quarter of 2006. This compares to diluted FFO
of $49.8 million, or $0.59 per share for the second quarter of 2005.
Reckson reported net income of $19.9 million, or diluted earnings
per share (EPS) of $0.24 for the second quarter of 2006 including
$11.3 million for the aforementioned lease termination fees and a $2.2
million charge for the aforementioned compensation plan, as compared
to $17.8 million, or diluted EPS of $0.22 for the second quarter of
2005.
Commenting on the Company's performance, Scott Rechler, Reckson's
Chief Executive Officer, stated, "I am extremely pleased with our
second quarter results. Our record level of leasing activity during
the second quarter reflects that the New York Tri-State area markets
continue to gain strength as demand for quality office space continues
to outpace supply."
Reckson is canceling its conference call scheduled for August 3,
2006 at 11:00 a.m. ET.
A reconciliation of net income to FFO is in the financial
statements accompanying this press release. Net income is the GAAP
measure the Company believes to be the most directly comparable to
FFO.
Summary Portfolio Performance
Occupancy Statistics:
Same Property Overall
--------------------------- ------------------------------
Quarter End Economic(1) Quarter End
----------- ----------- ------------------------------
6/30/06 3/31/06 2Q'06 1Q'06 6/30/06(2) 3/31/06(2) 6/30/05
------- ------- ----- ----- ---------- ---------- --------
Total
Occupancy:
Stabilized
Office 94.8% 94.3% 92.8% 93.2% 94.8% 94.2% 94.3%
Stabilized
Portfolio 93.7% 93.3% 91.9% 92.2% 93.7% 93.3% 93.2%
Based on Pro
Rata Ownership:
Stabilized
Office 94.0% 93.3% 91.7% 92.1% 94.0% 93.4% 94.1%
Stabilized
Portfolio 93.1% 92.7% 91.0% 91.3% 93.1% 92.2% 92.9%
(1) Economic occupancy calculated based on weighted average space
generating rental revenue on a straight-line basis.
(2) Includes Reckson Platinum Mile portfolio acquired on December 29,
2005.
Office same property net operating income (property operating
revenues less property operating expenses) (NOI), on a pro rata
ownership basis, before termination fees, for the second quarter of
2006 increased 5.5% (on a cash basis) and decreased (0.3)% (on a
straight-line rent basis) compared to the second quarter of 2005.
Excluding the effect of the 1185 Avenue of the Americas ground rent
expense, office same property NOI, on a pro rata ownership basis,
before termination fees, for the second quarter of 2006 increased 9.1%
(on a cash basis) compared to the second quarter of 2005. Portfolio
same property NOI, on a pro rata ownership basis, before termination
fees, for the second quarter of 2006 increased 5.4% (on a cash basis)
and decreased (0.4)% (on a straight-line rent basis) compared to the
second quarter of 2005.
Office same property NOI, on an overall basis, before termination
fees, for the second quarter of 2006 increased 5.9% (on a cash basis)
and 1.0% (on a straight-line rent basis) compared to the second
quarter of 2005. Portfolio same property NOI, on an overall basis,
before termination fees, for the second quarter of 2006 increased 5.8%
(on a cash basis) and 0.9% (on a straight-line rent basis) compared to
the second quarter of 2005.
Other Highlights
Leasing Activity
- Completed record level leasing activity, executing 109 lease
transactions encompassing 1,073,688 square feet, during the
second quarter of 2006, including the execution a long-term
lease with the National Hockey League (NHL) for 133,727 square
feet at 1185 Avenue of the Americas
- Rent performance on renewal and replacement space, on a
consolidated basis, during the second quarter of 2006
increased 24.7% (on a straight-line rent basis) and 10.0% (on
a cash basis) in the office portfolio
- Office leasing transactions executed during the second quarter
of 2006 resulted in a 79% renewal rate
Miscellaneous Corporate Activity
- Appointed Dr. Edward Casas to the Company's Board of
Directors. Dr. Casas brings a diverse background with varied
industry experience to Reckson's board. Dr. Casas is currently
a Managing Director and Practice Co-Head of Navigant Capital
Advisors, where he oversees activities for all practice areas
including the Investment Banking, Restructuring, Valuation and
Lender Services advisory groups. Prior to its acquisition by
Navigant in 2005, Dr. Casas was the Founding Member and Senior
Managing Director of Casas, Benjamin & White, LLC ("CBW"), a
leading mergers, acquisitions and financial restructuring
firm, where he supervised all aspects of CBW's restructuring
engagements. Dr. Casas has significant expertise in working
with large groups of creditors, boards of directors and
company managements and has led reorganizations in a breadth
of industries including business services, construction
services, healthcare, information technology, manufacturing
and real estate. Dr. Casas' previous positions include
President and Chief Executive Officer of PrimeCare
International, Inc., Vice President of Mergers & Acquisitions
of Caremark International, Inc., Executive Vice President of
CES Corporation, Chairman of the Board of Mediq, Inc. and
Chairman of the Board of HQ Global.
- Announced Reckson's board of directors has authorized the
re-institution of the Company's common stock repurchase
program, which had been inactive since March 2003. Pursuant to
the authority granted by the board, the Company may repurchase
up to an aggregate of 5 million shares of its common stock.
- Relocating the Company's Long Island corporate headquarters on
August 14, 2006 to 625 Reckson Plaza, Uniondale, New York
11556, telephone (516) 506-6000 and facsimile (516) 506-6800.
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 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 properties located in
New York City and the surrounding Tri-State area markets. 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, and
wholly owns, has substantial interests in, or has under contract, a
total of 101 properties comprised of approximately 20.2 million square
feet. For additional information on Reckson, please visit the
Company's web site at www.reckson.com.
Financial Statements Attached
The Supplemental Package and Slide Show Presentation outlining the
Company's second quarter 2006 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 Balance Sheets
(in thousands, except share amounts)
June 30, December 31,
2006 2005
---------- ------------
Assets:
Commercial real estate properties, at cost:
Land $ 428,357 $ 430,064
Buildings and improvements 2,886,834 2,823,020
Developments in progress:
Land 127,309 123,761
Development costs 137,138 99,570
Furniture, fixtures, and equipment 13,208 12,738
------------ -----------
3,592,846 3,489,153
Less: accumulated depreciation (587,317) (532,152)
------------ -----------
Investments in real estate, net of accumulated
depreciation 3,005,529 2,957,001
Properties and related assets held for sale,
net of accumulated depreciation 68,795 194,297
Investments in real estate joint ventures 46,816 61,526
Investments in mortgage motes and notes
receivable 169,784 174,612
Investments in affiliate loans and joint
ventures 59,435 59,324
Cash and cash equivalents 32,103 17,468
Tenant receivables 12,804 20,196
Deferred rents receivable 147,000 138,990
Prepaid expenses and other assets 88,982 109,381
Deferred leasing and loan costs (net of
accumulated amortization) 81,308 78,411
------------ -----------
Total Assets $3,712,556 $3,811,206
------------ -----------
Liabilities:
Mortgage notes payable $ 464,110 $ 541,382
Unsecured credit facility 92,000 419,000
Senior unsecured notes 1,254,932 980,085
Mortgage notes payable and other liabilities
associated with properties held for sale 63,839 84,572
Accrued expenses and other liabilities 118,888 120,994
Deferred revenues and tenant security deposits 70,349 75,903
Dividends and distributions payable 36,582 36,398
------------ -----------
Total Liabilities 2,100,700 2,258,334
------------ -----------
Minority partners' interests in consolidated
partnerships 263,475 217,705
Preferred unit interest in the operating
partnership 1,200 1,200
Limited partners' minority interest in the
operating partnership 34,800 33,498
------------ -----------
299,475 252,403
------------ -----------
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
83,217,550 and 82,995,931 shares issued and
outstanding, respectively 832 830
Accumulated other comprehensive income 2,186 1,819
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Retained earnings 63,002 56,868
Additional paid in capital 1,314,853 1,309,444
------------ -----------
Total Stockholders' Equity 1,312,381 1,300,469
------------ -----------
Total Liabilities and Stockholders'
Equity $3,712,556 $3,811,206
------------ -----------
Total debt to market capitalization (a): 35.2% 40.1%
------------ -----------
------------
(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,
--------------------- ----------------------
2006 2005 2006 2005
---------------------- ----------------------
Property Operating
Revenues:
Base rents $128,575 $118,048 $244,660 $230,458
Tenant escalations and
reimbursements 19,235 17,324 38,303 35,102
---------------------- ----------------------
Total property
operating revenues 147,810 135,372 282,963 265,560
---------------------- ----------------------
Property Operating
Expenses:
Operating expenses 32,821 29,710 68,805 61,116
Real estate taxes 24,153 21,506 48,404 42,840
---------------------- ----------------------
Total property
operating expenses 56,974 51,216 117,209 103,956
---------------------- ----------------------
Net Operating Income 90,836 84,156 165,754 161,604
---------------------- ----------------------
Gross Margin percentage 61.5% 62.2% 58.6% 60.9%
---------------------- ----------------------
Other Income:
Gains on sale of real estate - - 35,393 -
Interest income on mortgage
notes and notes receivable 5,502 3,333 11,001 5,780
Interest, investment
income and other 2,329 454 14,406 1,134
Equity in earnings of real
estate joint ventures 1,815 83 2,211 234
---------------------- ----------------------
Total other income 9,646 3,870 63,011 7,148
---------------------- ----------------------
Other Expenses:
Interest:
Expense 27,216 27,259 55,205 50,825
Amortization of deferred
financing costs 1,017 1,068 2,139 2,059
Depreciation and
amortization 36,047 31,219 68,883 59,638
Marketing, general and
administrative 9,475 8,241 18,957 16,236
Long-term incentive
compensation expense 2,232 - 5,855 -
---------------------- ----------------------
Total other expenses 75,987 67,787 151,039 128,758
---------------------- ----------------------
Income from continuing
operations before
minority interests and
discontinued operations 24,495 20,239 77,726 39,994
Minority partners'
interests in consolidated
partnerships (3,850) (3,848) (7,946) (7,628)
Limited partners' minority
interest in the operating
partnership (693) (626) (2,242) (1,317)
---------------------- ----------------------
Income before
discontinued operations 19,952 15,765 67,538 31,049
Discontinued operations,
net of minority interests:
Gains on sales of
real estate - 175 9,286 175
Income (loss) from
discontinued
operations (51) 1,826 819 3,896
---------------------- ----------------------
Net income $ 19,901 $ 17,766 $ 77,643 $ 35,120
====================== ======================
Basic net income per
weighted average common
share:
Common stock - income
from continuing
operations $ 0.24 $ 0.20 $ 0.40 $ 0.38
Gains on sales of real
estate - - 0.41 -
Discontinued operations - 0.02 0.12 0.05
----------------------- ---------------------
Basic net income per
common share $ 0.24 $ 0.22 $ 0.93 $ 0.43
======================= =====================
Basic weighted average
common shares
outstanding 83,212,000 81,882,000 83,140,000 81,493,000
====================== ======================
Diluted net income per
weighted average common
share $ 0.24 $ 0.22 $ 0.93 $ 0.43
====================== ======================
Diluted weighted average
common shares
outstanding 83,709,000 82,290,000 83,647,000 81,908,000
====================== ======================
Reckson Associates Realty Corp. (NYSE: RA)
Funds From Operations
(in thousands, except per share amounts)
Three Months Six Months
Ended Ended
June 30, June 30,
----------------- ----------------
2006 2005 2006 2005
----------------- ----------------
Net income $19,901 $17,766 $77,643 $35,120
Add: Real estate depreciation and
amortization 33,505 30,175 65,656 57,488
Minority partners' interests
in consolidated partnerships 7,382 6,791 14,616 13,503
Limited partners' minority
interest in the operating
partnership 491 570 1,931 1,267
Less:Amounts distributable to
minority partners in
consolidated partnerships 6,860 5,478 13,205 11,202
Gains on sales of depreciable
real estate - - 44,669 -
---------------- -----------------
Basic and Diluted Funds From
Operations ("FFO") $54,419 $49,824 $101,972 $96,176
================ =================
Diluted FFO calculations:
Weighted average common
shares outstanding 83,212 81,882 83,140 81,493
Weighted average units of
limited partnership interest
outstanding 2,008 2,582 2,017 2,896
---------------- -----------------
Basic weighted average
common shares and units
outstanding 85,220 84,464 85,157 84,389
Adjustments for dilutive FFO
weighted average shares and
units outstanding:
Common stock equivalents 497 408 507 415
Limited partners'
preferred interest 41 41 41 41
---------------- -----------------
Total diluted weighted average
shares and units outstanding 85,758 84,913 85,705 84,845
================ =================
Diluted FFO per weighted average
share or unit $ 0.63 $ 0.59 $ 1.19 $ 1.13
Diluted weighted average dividends
per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio 66.9% 72.4% 71.4% 75.0%
FFO Data excluding non recurring
charges:
Diluted FFO per weighted average
share or unit $ 0.66 $ 0.59 $ 1.26 $ 1.13
Diluted weighted average dividends
per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio 64.3% 72.4% 67.6% 75.0%
Reckson Associates Realty Corp. (NYSE: RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Six Months
Ended Ended
June 30, June 30,
---------------- -----------------------
2006 2005 2006 2005
---------------- -----------------------
Basic Funds From Operations $54,419 $49,824 $101,972 $96,176
Less: Straight line rents
and other FAS 141
non-cash rent
adjustments 5,854 11,992 13,933 19,918
Committed non-
incremental
capitalized tenant
improvements and
leasing costs 14,954 8,272 22,104 19,041
Actual non-incremental
capitalized
improvements 3,234 2,059 5,419 5,074
Add: Amortization of equity
grants (a) 4,365 1,870 9,980 3,356
----------------- ----------------------
Basic and Diluted Cash
Available for Distribution
("CAD") $34,742 $29,371 $70,496 $55,499
================= ======================
Diluted CAD calculations:
Weighted average common
shares outstanding 83,212 81,882 83,140 81,493
Weighted average units
of limited partnership
interest outstanding 2,008 2,582 2,017 2,896
----------------- ----------------------
Basic weighted average
common shares and
units outstanding 85,220 84,464 85,157 84,389
Adjustments for dilutive
CAD weighted average
shares and units
outstanding:
Common stock
equivalents 497 408 507 415
Limited partners'
preferred interest 41 41 41 41
----------------- ----------------------
Total diluted weighted average
shares and units outstanding 85,758 84,913 85,705 84,845
================= ======================
Diluted CAD per weighted
average share or unit $ 0.41 $ 0.35 $ 0.82 $ 0.65
Diluted weighted average
dividends per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted CAD payout ratio 104.9% 122.8% 103.3% 129.9%
----------------------------------------------------------------------
(a) - Includes estimated charges of $2.2 million and $5.9 million
related to a long-term incentive compensation plan for the three
& six month periods ended June 30, 2006.
CONTACT:
Reckson Associates Realty Corp.
Scott Rechler, CEO
Michael Maturo, President and CFO
631-694-6900
Fax: 631-622-6790
SOURCE: Reckson Associates Realty Corp.
