MELVILLE, N.Y., May 04, 2005 (BUSINESS WIRE) -- Reckson Associates Realty Corp. (NYSE:RA) today reported
diluted funds from operations (FFO) of $46.4 million or $0.55 per
share for the first quarter of 2005, as compared to diluted FFO of
$42.6 million or $0.58 per share for the first quarter of 2004.
Reckson reported net income allocable to common shareholders of
$17.4 million or diluted earnings per share (EPS) of $0.21 for the
first quarter of 2005, as compared to $16.0 million, including $5.2
million related to gain on sales of real estate, or EPS of $0.26 for
the first quarter of 2004.
Commenting on the Company's performance, Scott Rechler, Reckson's
President and Chief Executive Officer, stated, "I am pleased with our
first quarter operating metrics as we continue to outperform the
industry with office occupancy climbing by 40 basis points to 94.5%,
same property GAAP NOI climbing 5.6% and average same space rents
climbing 9.0%." Mr. Rechler continued, "I am also pleased that we have
successfully executed on our investment strategy. With today's One
Court Square announcement our year to date investment activity totals
approximately $576 million."
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, "Results
for the quarter were generally consistent with our internal forecasts
but were impacted by timing to reinvest equity proceeds, lower other
income and higher 'dead deal' costs." Mr. Maturo continued, "Based on
our projections for our core operations for the remainder of the year
and our recent investment activity we are raising the low end of our
guidance to $2.36 per share. We are maintaining the high end of the
range at $2.40 per share, in anticipation of accelerating our
disposition / joint venture strategy relating to approximately $500
million of properties."
Summary Portfolio Performance
The Company reported office occupancy at March 31, 2005 of 94.5%.
This compares to 93.3% at March 31, 2004 and 94.1% at December 31,
2004. The Company reported portfolio occupancy of 93.5% at March 31,
2005, as compared to 92.6% at March 31, 2004 and 93.1% at December 31,
2004.
The Company also reported same property office occupancy at March
31, 2005 of 94.4%, as compared to 93.4% at March 31, 2004. The Company
reported same property portfolio occupancy of 93.4% at March 31, 2005,
as compared to 92.6% at March 31, 2004.
Net of minority interests in joint ventures, office same property
NOI before termination fees for the first quarter of 2005 increased
5.6% (on a straight-line rent basis) and 3.9% (on a cash basis),
compared to the first quarter of 2004. Net of minority interests in
joint ventures, portfolio same property NOI before termination fees
for the first quarter of 2005 increased 4.8% (on a straight-line rent
basis) and 3.2% (on a cash basis), compared to the first quarter of
2004.
Office same property net operating income (property operating
revenues less property operating expenses) (NOI) before termination
fees for the first quarter of 2005 increased 4.8% (on a straight-line
rent basis) and 3.1% (on a cash basis), compared to the first quarter
of 2004. Portfolio same property NOI before termination fees for the
first quarter of 2005 increased 4.2% (on a straight-line rent basis)
and 2.5% (on a cash basis), compared to the first quarter of 2004.
Rent performance on renewal and replacement space during the first
quarter of 2005 increased 9.0% (on a straight-line rent basis) and
decreased (8.0%) (on a cash basis) in the office portfolio.
Other Highlights
Leasing Activity
-- Executed 75 lease transactions totaling 660,055 square feet
during the first quarter of 2005
-- Executed office leasing transactions during the first quarter
of 2005 that resulted in a 50% renewal rate
Investment Activity
-- Contracted to acquire a 1.4 million square foot, 50-story,
Class A, trophy office tower located at One Court Square, Long
Island City, a submarket of New York City, for a total
investment of approximately $470 million inclusive of transfer
taxes and other transaction costs
-- Acquired a 150,000 square foot, Class A office building
located at One Giralda Farms in Madison, New Jersey, for
approximately $24.3 million and acquired a 203,000 square
foot, Class A office building located at Seven Giralda Farms
in Madison, New Jersey, for approximately $53.7 million
-- Provided two separate mezzanine loans, totaling approximately
$28.4 million, on a 32 property office portfolio, encompassing
approximately 1.5 million square feet, which was part of the
43 property former Tilles office portfolio located in
Woodbury, Long Island
Miscellaneous
-- Received a "No Adjustments Letter" from the Internal Revenue
Service which closes its examination of the Reckson Operating
Partnership 2001 tax return which had been selected for
examination
Earnings Guidance
During the Company's quarterly earnings conference call on
Thursday, May 5, 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:
Second Quarter 2005 Full Year 2005
--------------------- ---------------------
Low End High End Low End High End
---------- ---------- ---------- ----------
Net income allocable to
common shareholders $ 0.26 $ 0.27 $ 0.89 $ 0.93
Add: Real estate
depreciation and
amortization 0.38 0.38 1.53 1.53
Less: Gain on sales of
depreciable real estate 0.06 0.06 0.06 0.06
---------- ---------- ---------- ----------
Diluted FFO Per Share $ 0.58 $ 0.59 $ 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 17.7 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 first quarter results on Thursday, May 5, 2005 at 2:00 p.m.
EST. The conference call may be accessed by dialing (800) 553-0327
(internationally (612) 288-0318). 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 first quarter results.
A replay of the conference call will be available telephonically
from May 5, 2005 at 7:30 p.m. EST through May 13, 2005 at 11:59 p.m.
EST. The telephone number for the replay is (800) 475-6701, passcode
776049. 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 first 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; our ability to execute our
disposition/joint venture strategy; 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)
March 31, December 31,
2005 2004
-------- ------------
Assets: (Unaudited)
Commercial real estate properties, at cost:
Land $ 419,846 $ 401,350
Buildings and improvements 2,755,580 2,681,742
Developments in progress:
Land 98,176 88,606
Development costs 22,124 21,363
Furniture, fixtures, and equipment 12,504 12,083
---------- ----------
3,308,230 3,205,144
Less: accumulated depreciation (584,949) (560,307)
---------- ----------
Investment in real estate, net of
accumulated depreciation 2,723,281 2,644,837
Properties and related assets held for sale,
net of accumulated depreciation 58,469 58,215
Investment in real estate joint venture 6,808 6,657
Investment in notes receivable 113,254 85,855
Investments in affiliate loans and joint
ventures 60,230 60,951
Cash and cash equivalents 25,537 25,137
Tenant receivables 10,427 9,532
Deferred rents receivable 139,348 132,251
Prepaid expenses and other assets 54,061 64,006
Contract and land deposits and pre-acquisition
costs 256 121
Deferred leasing and loan costs (net of
accumulated amortization) 81,074 80,046
---------- ----------
Total Assets $3,272,745 $3,167,608
---------- ----------
Liabilities:
Mortgage notes payable $ 606,723 $ 609,518
Unsecured credit facility 357,500 235,500
Senior unsecured notes 698,039 697,974
Liabilities associated with properties held
for sale 757 784
Accrued expenses and other liabilities 65,473 73,565
Deferred revenues and tenant security
deposits 54,015 50,373
Dividends and distributions payable 36,137 35,924
---------- ----------
Total Liabilities 1,818,644 1,703,638
---------- ----------
Minority partners' interests in
consolidated partnerships 213,297 210,678
Preferred unit interest in the operating
partnership 1,200 1,200
Limited partners' minority interest in the
operating partnership 42,147 53,231
---------- ----------
256,644 265,109
---------- ----------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000
shares authorized - -
Common Stock, $.01 par value, 100,000,000
shares authorized - -
81,629,693 and 80,618,339 shares issued
and outstanding, respectively 816 806
Treasury Stock, 3,318,600 shares (68,492) (68,492)
Additional paid in capital 1,265,133 1,266,547
---------- ----------
Total Stockholders' Equity 1,197,457 1,198,861
---------- ----------
Total Liabilities and Stockholders'
Equity $3,272,745 $3,167,608
---------- ----------
Total debt to market capitalization (a): 37.1% 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)
Consolidated Statements of Income
(in thousands, except share amounts)
Three Months Ended
March 31,
-----------------------
2005 2004
----------- -----------
Property Operating Revenues:
Base rents $ 117,382 $ 109,408
Tenant escalations and reimbursements 18,502 17,978
----------- -----------
Total property operating revenues 135,884 127,386
----------- -----------
Property Operating Expenses:
Operating expenses 32,806 30,389
Real estate taxes 22,282 20,350
----------- -----------
Total property operating expenses 55,088 50,739
----------- -----------
Net Operating Income 80,796 76,647
----------- -----------
Gross Margin percentage 59.5% 60.2%
----------- -----------
Other Income 3,345 5,776
----------- -----------
Other Expenses
Interest
Expense 23,568 25,661
Amortization of deferred financing costs 1,038 927
Depreciation and amortization 29,728 27,729
Marketing, general and administrative 8,205 7,046
----------- -----------
Total other expenses 62,539 61,363
----------- -----------
Income before minority interests, preferred
dividends and distributions and discontinued
operations 21,602 21,060
Minority partners' interests in
consolidated partnerships (3,779) (6,181)
Distributions to preferred unitholders - (273)
Limited partners' minority interest in the
operating partnership (772) (573)
----------- -----------
Income before discontinued operations and
preferred dividends 17,051 14,033
Discontinued operations (net of minority
interests)
Gain on sales of real estate - 5,202
Income from discontinued operations 305 989
----------- -----------
Net income 17,356 20,224
Dividends to preferred shareholders - (4,260)
----------- -----------
Net income allocable to common shareholders $ 17,356 $ 15,964
=========== ===========
Basic weighted average common shares
outstanding: 81,100,000 61,363,000
Basic net income per weighted average
common share:
Common stock - income from continuing
operations $ 0.21 $ 0.16
Discontinued operations - 0.10
----------- -----------
Basic net income per common share $ 0.21 $ 0.26
=========== ===========
Diluted weighted average common shares
outstanding: 81,521,000 61,718,000
=========== ===========
Diluted net income per weighted average
common share: $ 0.21 $ 0.26
=========== ===========
Reckson Associates Realty Corp. (NYSE: RA)
Funds From Operations
(in thousands, except per share amounts)
Three Months Ended
March 31,
----------------------
2005 2004
----------------------
Net income allocable to common shareholders $ 17,356 $ 15,964
Add: Real estate depreciation and
amortization 27,313 25,561
Minority partners' interests in
consolidated partnerships 6,712 9,321
Limited partners' minority interest in
the operating partnership 697 936
Less: Amounts distributable to minority
partners in consolidated partnerships 5,724 8,504
Gain on sales of depreciable real estate - 5,156
----------------------
Basic Funds From Operations ("FFO") 46,354 38,122
Add: Dividends and distributions on dilutive
shares and units - 4,484
----------------------
Diluted FFO $ 46,354 $ 42,606
======================
Diluted FFO calculations:
Weighted average common shares
outstanding 81,100 61,363
Weighted average units of limited
partnership interest outstanding 3,213 3,551
----------------------
Basic weighted average common shares
and units outstanding 84,313 64,914
Adjustments for dilutive FFO weighted
average shares and units outstanding:
Common stock equivalents 421 355
Series A preferred stock - 7,747
Limited partners' preferred interest 41 689
----------------------
Total diluted weighted average shares and units
outstanding 84,775 73,705
======================
Diluted FFO per weighted average share or unit $ 0.55 $ 0.58
Diluted weighted average dividends per share $ 0.42 $ 0.42
Diluted FFO payout ratio 77.7% 73.5%
Reckson Associates Realty Corp. (NYSE: RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended
March 31,
----------------------
2005 2004
----------------------
Basic Funds From Operations $ 46,354 $ 38,122
Adjustments for basic cash available for
distribution:
Less: Straight line rents and other FAS 141
non-cash rent adjustments 7,926 5,032
Committed non-incremental capitalized
tenant improvements and leasing costs 10,769 9,097
Actual non-incremental capitalized
improvements 3,015 1,940
----------------------
Basic Cash Available for Distribution ("CAD") 24,644 22,053
Add: Dividends and distributions on
dilutive shares and units - -
----------------------
Diluted CAD $ 24,644 $ 22,053
======================
Diluted CAD calculations:
Weighted average common shares
outstanding 81,100 61,363
Weighted average units of limited
partnership interest outstanding 3,213 3,551
----------------------
Basic weighted average common shares
and units outstanding 84,313 64,914
Adjustments for dilutive CAD weighted
average shares and units outstanding:
Common stock equivalents 421 355
Limited partners' preferred interest 41 -
----------------------
Total diluted weighted average shares and units
outstanding 84,775 65,269
======================
Diluted CAD per weighted average share or unit $ 0.29 $ 0.34
Diluted weighted average dividends per share $ 0.42 $ 0.42
Diluted CAD payout ratio 146.2% 125.8%
SOURCE: Reckson Associates Realty Corp.
Reckson Associates Realty Corp.
Scott Rechler, CEO or Michael Maturo, CFO
Phone: 631-694-6900
Facsimile: 631-622-6790
