MELVILLE, N.Y.--(BUSINESS WIRE)--Aug. 8, 2005--Reckson Associates
Realty Corp. (NYSE: RA) today reported diluted funds from operations
(FFO) of $49.8 million or $0.59 per share for the second quarter of
2005, as compared to diluted FFO of $37.1 million or $0.52 per share
for the second quarter of 2004, representing a per share increase of
13.5%.
Reckson reported net income allocable to common shareholders of
$17.8 million or diluted earnings per share (EPS) of $0.22 for the
second quarter of 2005, as compared to $13.0 million, including $3.6
million related to gain on sales of depreciable real estate, or
diluted EPS of $0.19 for the second quarter of 2004.
Commenting on the Company's performance, Scott Rechler, Reckson's
President and Chief Executive Officer, stated, "I am extremely pleased
with our team's many accomplishments during this reporting period. In
addition to strong operating performance, we announced approximately
$400 million of new investments bringing the Company's year to date
investment activity to approximately $1 billion; initiated the
recapitalization of One Court Square; issued $287.5 million of
exchangeable senior debentures; amended our credit facility to provide
greater financial flexibility; launched the marketing of a
Reckson-sponsored Australian listed property trust; and made
significant progress on executing on several projects in our value
creation pipeline." Mr. Rechler continued, "This quarter's operating,
investment and capital market achievements significantly advanced our
progress toward executing our strategic plan and positioning our
company for continued growth."
A reconciliation of net income allocable to common shareholders to
FFO is in the financial statements accompanying this press release.
Net income allocable to common shareholders is the GAAP measure the
Company believes to be the most directly comparable to FFO.
Michael Maturo, Reckson's Chief Financial Officer, noted, "During
this low interest rate environment, we have been proactive in
refinancing our balance sheet. We have completed or have commitments
on approximately $850 million of long-term financing transactions,
including $287.5 million of 4.00% exchangeable senior debentures. The
weighted average interest rate on these financings is approximately
4.7% with a weighted average maturity of 6.9 years."
Summary Portfolio Performance
The Company reported office occupancy at June 30, 2005 of 93.1%
(adjusting for 6 Landmark Square which is currently under
re-development office occupancy would have been 93.8%). This compares
to 94.0% at June 30, 2004 and 94.5% at March 31, 2005. The Company
reported portfolio occupancy of 92.6% at June 30, 2005, as compared to
93.1% at June 30, 2004 and 93.5% at March 31, 2005.
The Company also reported same property office occupancy at June
30, 2005 of 93.5%, as compared to 93.9% at June 30, 2004. The Company
reported same property portfolio occupancy of 92.3% at June 30, 2005,
as compared to 93.0% at June 30, 2004.
Office same property net operating income (property operating
revenues less property operating expenses) (NOI), net of minority
interests in joint ventures, before termination fees for the second
quarter of 2005 increased 6.1% (on a straight-line rent basis) and
4.3% (on a cash basis), compared to the second quarter of 2004.
Portfolio same property NOI, net of minority interests in joint
ventures, before termination fees for the second quarter of 2005
increased 6.3% (on a straight-line rent basis) and 4.6% (on a cash
basis), compared to the second quarter of 2004.
Office same property NOI, including consolidated joint ventures,
before termination fees for the second quarter of 2005 increased 4.9%
(on a straight-line rent basis) and 2.8% (on a cash basis), compared
to the second quarter of 2004. Portfolio same property NOI, including
consolidated joint ventures, before termination fees for the second
quarter of 2005 increased 5.0% (on a straight-line rent basis) and
3.1% (on a cash basis), compared to the second quarter of 2004.
Other Highlights
Leasing Activity
-- Executed 69 lease transactions totaling 374,120 square feet
during the second quarter of 2005
-- Rent performance on renewal and replacement space during the
second quarter of 2005 increased 10.3% (on a straight-line
rent basis) and 1.3% (on a cash basis) in the office
portfolio.
-- Activity remains brisk with over 700,000 square feet of leases
currently under negotiation
Investment Activity
-- 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, over a 20% discount to replacement
cost
-- Acquired 225 High Ridge Road, Stamford, Connecticut, a 227,966
square foot, Class A office complex consisting of two
interconnected three-story buildings located in Stamford,
Connecticut for approximately $76.3 million, which Reckson
intends to contribute to the Reckson-sponsored Australian
listed property trust
-- Provided $55.3 million of a total $85 million 15-year loan
secured by an indirect ownership interest in a 550,000 square
foot office condominium in a Class A office tower located at
1166 Avenue of the Americas, New York City. The loan
refinances Reckson's $34 million mezzanine loan made on
December 20, 2004 to one of its partners who owns an interest
in the office condominium. Also acquired an approximate 5%
ownership interest in the office condominium for a purchase
price of $6.2 million. The property is 100% leased on a
long-term basis.
Ground-Up and Re-Development Activity
-- Leasing activity for a significant portion of 68 South Service
Road, Melville, Long Island, a four-story, Class A office
ground-up development which is anticipated to be completed on
budget and on schedule in the fourth quarter of 2005
-- Completing the re-development of 6 Landmark Square, Stamford,
Connecticut, a 162,000 square foot Class A office building
which is part of Landmark Square, Reckson's 800,000 square
foot Class A office complex, by upgrading the building's
interior, exterior and connecting plaza
-- Commenced the ground-up development of University Square, a
316,000 square foot, five-story, Class A office building
located in Princeton, one of New Jersey's strongest markets
with occupancies at their highest levels in five years, for an
anticipated incremental investment of $47 million to complete
the building
-- Commenced the ground-up development of 7 Landmark Square in
Stamford, Connecticut, a 36,900 square foot, two-story retail
building, representing the last phase of the repositioning of
Landmark Square, dramatically impacting the street presence of
this Class A office complex
Capital Market Activity
-- Refinanced the Company's recently acquired One Court Square, a
1.4 million square foot, 50-story, Class A trophy office tower
located in Long Island City, New York, for a total investment
of approximately $471 million with the closing on the secured
debt financing of a $315 million, ten-year, interest only
fixed rate 4.9% mortgage. Net proceeds were used to repay a
substantial portion of the Company's bridge loan facility.
Reckson is also negotiating with an institutional joint
venture partner to sell between a 60% to 70% interest in the
asset.
-- Issued $287.5 million aggregate principal amount of 4.00%
exchangeable senior debentures due June 15, 2025. Net proceeds
from the offering, after the underwriter's discounts and
expenses, were approximately $281.6 million. The Company used
the net proceeds from the offering for the repayment of
amounts outstanding under its credit facility.
-- Amended the Company's $500 million unsecured revolving credit
facility to decrease the spread, beneficially modify financial
covenants and extend the term
Miscellaneous
-- Commenced the marketing of an offering in Australia of a
Reckson-sponsored Australian listed property trust for
approximately $203 million
-- Completed the arbitration proceedings relating to the
re-setting of the rent under the ground lease at 1185 Avenue
of the Americas to approximately $6.50 per square foot fixed
for the next 37 years at the 1.1 million square foot building
Earnings Guidance
During the Company's quarterly earnings conference call on
Tuesday, August 9, management will discuss guidance for 2005 diluted
FFO in the range of $2.36 to $2.40 per share.
Reconciliation of Earnings Guidance
The Company's guidance for diluted FFO is reconciled from GAAP net
income below:
Third Quarter 2005 Full Year 2005
------------------- -------------------
Low End High End Low End High End
--------- --------- --------- ---------
Net income allocable to common
shareholders $ 0.18 $ 1.53 $ 2.17 $ 2.21
Add: Real estate depreciation
and amortization 0.42 0.42 1.53 1.53
Less: Gain on sales of
depreciable real estate 0.00 1.34 1.34 1.34
--------- --------- --------- ---------
Diluted FFO Per Share $ 0.60 $ 0.61 $ 2.36 $ 2.40
========= ========= ========= =========
This guidance is based upon management's current estimates. Actual
results may differ materially. This information involves
forward-looking statements which are subject to uncertainties noted
below under Forward-Looking Statements.
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 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 90 properties
comprised of approximately 18.9 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 Tuesday, August 9, 2005 at 11:00
a.m. EST. The conference call may be accessed by dialing (800)
230-1074 (internationally (612) 288-0340). 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 9, 2005 at 4:30 p.m. EST through August 17, 2005 at 11:59
p.m. EST. The telephone number for the replay is (800) 475-6701,
passcode 786496. 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 2005 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 Statements of Income
(in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
------------------------ ------------------------
Property Operating
Revenues:
Base rents $ 123,804 $ 109,265 $ 242,095 $ 219,801
Tenant escalations
and reimbursements 17,998 17,452 36,576 35,537
----------------------- -----------------------
Total property
operating
revenues 141,802 126,717 278,671 255,338
----------------------- -----------------------
Property Operating
Expenses:
Operating expenses 31,430 30,401 64,522 61,142
Real estate taxes 22,565 19,968 44,958 40,432
----------------------- -----------------------
Total property
operating
expenses 53,995 50,369 109,480 101,574
----------------------- -----------------------
Net Operating Income 87,807 76,348 169,191 153,764
----------------------- -----------------------
Gross Margin
percentage 61.9% 60.3% 60.7% 60.2%
----------------------- -----------------------
Other Income 3,902 3,612 7,232 9,389
----------------------- -----------------------
Other Expenses
Interest
Expense 27,257 24,607 50,825 50,268
Amortization of
deferred
financing costs 1,021 899 2,059 1,826
Depreciation and
amortization 32,994 28,621 63,069 56,719
Marketing, general
and administrative 8,477 7,354 16,692 14,401
----------------------- -----------------------
Total other
expenses 69,749 61,481 132,645 123,214
----------------------- -----------------------
Income before
minority interests,
preferred dividends
and distributions
and discontinued
operations 21,960 18,479 43,778 39,939
Minority partners'
interests in
consolidated
partnerships (3,848) (4,422) (7,628) (10,603)
Distributions to
preferred unit
holders - (227) - (500)
Limited partners'
minority interest
in the operating
partnership (694) (492) (1,475) (1,084)
----------- ----------- ----------- -----------
Income before
discontinued
operations and
preferred dividends 17,418 13,338 34,675 27,752
Discontinued
operations (net of
minority interests)
Gain on sales of
real estate 175 3,639 175 8,841
Income from
discontinued
operations 173 238 270 846
----------------------- -----------------------
Net income 17,766 17,215 35,120 37,439
Dividends to
preferred
shareholders - (4,172) - (8,432)
----------------------- -----------------------
Net income allocable
to common
shareholders $ 17,766 $ 13,043 $ 35,120 $ 29,007
======================= =======================
Basic weighted
average common
shares outstanding: 81,882,000 66,892,000 81,493,000 64,128,000
Basic net income per
weighted average
common share:
Common stock -
income from
continuing
operations $ 0.22 $ 0.13 $ 0.42 $ 0.30
Discontinued
operations 0.00 0.06 0.01 0.15
----------------------- -----------------------
Basic net income
per common share $ 0.22 $ 0.19 $ 0.43 $ 0.45
======================= =======================
Diluted weighted
average common
shares outstanding: 82,290,000 67,327,000 81,908,000 64,522,000
======================= =======================
Diluted net income
per weighted
average common
share: $ 0.22 $ 0.19 $ 0.43 $ 0.45
=========== =========== =========== ===========
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands, except share amounts)
June 30, December 31,
2005 2004
----------- -----------
Assets: (Unaudited)
Commercial real estate properties, at cost:
Land $ 551,269 $ 409,034
Buildings and improvements 3,111,512 2,706,406
Developments in progress:
Land 126,375 103,986
Development costs 48,950 29,159
Furniture, fixtures, and equipment 12,622 11,935
----------- -----------
3,850,728 3,260,520
Less: accumulated depreciation (623,134) (563,706)
----------- -----------
Investment in real estate, net of
accumulated depreciation 3,227,594 2,696,814
Properties and related assets held for sale,
net of accumulated depreciation 3,650 4,651
Investment in real estate joint ventures 6,308 6,657
Investment in notes receivable 135,449 85,855
Investments in affiliate loans and joint
ventures 59,778 60,951
Cash and cash equivalents 23,672 25,137
Tenant receivables 10,483 9,470
Deferred rents receivable 151,034 133,012
Prepaid expenses and other assets 104,828 64,025
Contract and land deposits and pre-
acquisition costs 5,206 121
Deferred leasing and loan costs (net of
accumulated amortization) 85,162 80,915
----------- -----------
Total Assets $ 3,813,164 $ 3,167,608
----------- -----------
Liabilities:
Mortgage notes payable $ 614,834 $ 609,518
Unsecured credit facility 128,000 235,500
Unsecured bridge facility 470,000 -
Senior unsecured notes 979,857 697,974
Liabilities associated with properties held
for sale 124 82
Accrued expenses and other liabilities 90,357 73,767
Deferred revenues and tenant security
deposits 53,942 50,373
Dividends and distributions payable 36,175 35,924
----------- -----------
Total Liabilities 2,373,289 1,703,138
----------- -----------
Minority partners' interests in
consolidated partnerships 213,371 211,178
Preferred unit interest in the operating
partnership 1,200 1,200
Limited partners' minority interest in the
operating partnership 31,088 53,231
----------- -----------
245,659 265,609
----------- -----------
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 - -
82,533,774 and 80,618,339 shares issued
and outstanding, respectively 825 806
Accumulated other comprehensive loss (3,447) -
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Additional paid in capital 1,265,330 1,266,547
----------- -----------
Total Stockholders' Equity 1,194,216 1,198,861
----------- -----------
Total Liabilities and Stockholders'
Equity $ 3,813,164 $ 3,167,608
----------- -----------
Total debt to market capitalization (a): 42.0% 33.8%
----------- -----------
---------
(a) Total debt includes the Company's pro rata share of consolidated
and unconsolidated joint venture debt.
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,
---------------- ----------------
2005 2004 2005 2004
---------------- ----------------
Net income allocable to common
shareholders $17,766 $13,043 $35,120 $29,007
Add: Real estate depreciation and
amortization 30,175 28,854 57,488 57,411
Minority partners' interests
in consolidated partnerships 6,791 6,811 13,503 13,136
Limited partners' minority
interest in the operating
partnership 570 701 1,267 1,637
Less: Amounts distributable to
minority partners in
consolidated partnerships 5,478 6,411 11,202 14,915
Gain on sales of depreciable
real estate - 6,174 - 11,330
---------------- ----------------
Basic Funds From Operations ("FFO") 49,824 36,824 96,176 74,946
Add: Dividends and distributions
on dilutive shares and units - 227 - 500
---------------- ----------------
Diluted FFO $49,824 $37,051 $96,176 $75,446
=============== ===============
Diluted FFO calculations:
Weighted average common
shares outstanding 81,882 66,892 81,493 64,128
Weighted average units of
limited partnership interest
outstanding 2,582 3,551 2,896 3,551
---------------- ----------------
Basic weighted average common
shares and units outstanding 84,464 70,443 84,389 67,679
Adjustments for dilutive FFO
weighted average shares and
units outstanding:
Common stock equivalents 408 435 415 394
Limited partners' preferred
interest 41 581 41 635
---------------- ----------------
Total diluted weighted average
shares and units outstanding 84,913 71,459 84,845 68,708
=============== ===============
Diluted FFO per weighted average
share or unit $ 0.59 $ 0.52 $ 1.13 $ 1.10
Diluted weighted average dividends
per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted FFO payout ratio 72.4% 81.9% 75.0% 77.4%
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,
---------------- ----------------
2005 2004 2005 2004
--------------- ---------------
Basic Funds From Operations $49,824 $36,824 $96,176 $74,946
Adjustments for basic cash available
for distribution:
Less:Straight line rents and other
FAS 141 non-cash rent
adjustments 11,992 6,982 19,918 12,014
Committed non-incremental
capitalized tenant
improvements and
leasing costs 8,272 9,430 19,041 18,527
Actual non-incremental
capitalized improvements 2,059 1,915 5,074 3,855
---------------- ----------------
Basic Cash Available for
Distribution ("CAD") 27,501 18,497 52,143 40,550
Add:Dividends and distributions on
dilutive shares and units - - - -
---------------- ----------------
Diluted CAD $27,501 $18,497 $52,143 $40,550
=======-======= =======-=======
Diluted CAD calculations:
Weighted average common shares
outstanding 81,882 66,892 81,493 64,128
Weighted average units of
limited partnership interest
outstanding 2,582 3,551 2,896 3,551
---------------- ----------------
Basic weighted average common
shares and units outstanding 84,464 70,443 84,389 67,679
Adjustments for dilutive CAD
weighted average shares and
units outstanding:
Common stock equivalents 408 435 415 394
Limited partners' preferred
interest 41 - 41 -
---------------- ----------------
Total diluted weighted average
shares and units outstanding 84,913 70,878 84,845 68,073
=======-======= =======-=======
Diluted CAD per weighted average
share or unit $ 0.32 $ 0.26 $ 0.61 $ 0.60
Diluted weighted average dividends
per share $ 0.42 $ 0.42 $ 0.85 $ 0.85
Diluted CAD payout ratio 131.2% 162.8% 138.3% 142.7%
CONTACT: Reckson Associates Realty Corp.
Scott Rechler, CEO or Michael Maturo, CFO
631-694-6900
Facsimile: 631-622-6790
SOURCE: Reckson Associates Realty Corp.
