Reckson Associates Announces First Quarter 2003 Results
5/5/2003
MELVILLE, N.Y.--(BUSINESS WIRE)--May 5, 2003--Reckson Associates
Realty Corp. (NYSE:RA) today reported diluted funds from operations
("FFO") of $44.5 million or $.59 per share for the first quarter of
2003, as compared to FFO of $47.2 million or $.60 per share for the
first quarter of 2002, representing a per share decrease of (1.7%).
The first quarter 2003 FFO per share is impacted positively by
$.07 per share attributable to a land sale transaction and impacted
negatively by $.03 per share of excess costs attributable to severe
winter weather conditions.
Net income allocable to common shareholders totaled $8.7 million
in the first quarter of 2003, as compared to $16.0 million in the
first quarter of 2002. Diluted net income per Class A common share,
commonly referred to as earnings per share ("EPS"), totaled $.14 per
share in the first quarter of 2003, as compared to $.24 per share in
the first quarter of 2002, representing a per share decrease of
($.10). Diluted EPS per Class B common share totaled $.15 per share in
the first quarter of 2003, as compared to $.26 per share in the first
quarter of 2002, representing a per share decrease of ($.11).
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 the financial tables accompanying this
press release.
Commenting on the first quarter results, Scott Rechler, Reckson's
Co-Chief Executive Officer, said, "Our first quarter results are
consistent with both our internal forecasts and the guidance that we
provided to the market last quarter. As anticipated, we experienced a
drop in occupancy and operating margins as a result of the
WorldCom/MCI lease terminations, general weak market conditions and
increases in non-discretionary expenses. The impact of these
circumstances was partially offset by the successful closing of the
First Data build-to-suit and land sale. We also reaffirm our
previously stated earnings guidance for 2003."
Summary Portfolio Performance
The Company reported overall portfolio occupancy of 93.2% at March
31, 2003, as compared to 95.4% at December 31, 2002 and 95.1% at March
31, 2002. The Company reported occupancies at March 31, 2003 of 92.8%
for the office portfolio and 94.0% for the industrial/R&D portfolio.
This compares to 95.7% and 94.7%, respectively, at December 31, 2002
and 96.2% and 92.9%, respectively, at March 31, 2002.
During the quarter, the Company executed 48 leases encompassing
561,415 square feet, representing 2.8% of the total portfolio and
renewed 61% of expiring square feet.
Core same property net operating income (property operating
revenues less property operating expenses) ("NOI") before termination
fees for the first quarter of 2003 decreased (1.1%) (cash) and (6.1%)
(including straight-line rent), compared to the first quarter of 2002.
Net of minority interests in joint ventures, core same property
NOI before termination fees for the first quarter of 2003 decreased
(4.5%) (cash) and (7.0%) (including straight-line rent), compared to
the first quarter of 2002.
Rent performance on renewal and replacement space during the first
quarter of 2003 increased 1.2% (cash) and 9.8% (including
straight-line rent) in the office properties and increased 6.6% (cash)
and 16.1% (including straight-line rent) in the industrial/R&D
properties.
Earnings Guidance
On Tuesday, May 6th, during the Company's quarterly earnings
conference call, management will discuss earnings guidance for 2003.
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 debt restructuring and sales of depreciable properties plus
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 office
and industrial 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 and industrial properties in the New York Tri-State area, with
178 properties comprised of approximately 20.3 million square feet
either owned or controlled. 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 Co-Chief Executive
Officer Scott Rechler, will host a conference call outlining first
quarter results on Tuesday, May 6, 2003 at 2:00 p.m. EST. The
conference call may be accessed by dialing 800/230-1074
(internationally 612/288-0329). 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 6, 2003 at 8:00 p.m. EST through May 16, 2003 at 11:59 p.m.
EST. The telephone number for the replay is 800/475-6701, passcode
680101. 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 2003 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 telephone number 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 and
industrial/R&D properties in the New York Tri-State area; changes in
interest rate levels; 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, 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 Statements of Income
(in thousands, except per share amounts)
Three Months Ended
March 31,
-----------------------------
2003 2002
------------- -------------
Property Operating Revenues:
Base rents $ 107,478 $ 106,383
Tenant escalations and reimbursements 15,963 15,321
------------- -------------
Total property operating revenues 123,441 121,704
------------- -------------
Property Operating Expenses:
Operating expenses 28,365 24,074
Real estate taxes 19,469 17,821
------------- -------------
Total property operating expenses 47,834 41,895
------------- -------------
Net Operating Income 75,607 79,809
------------- -------------
Gross Margin percentage 61.2% 65.6%
Other income 7,425 2,425
------------- -------------
Other Expenses:
Interest expense 22,850 20,996
Marketing, general and administrative 8,259 7,095
Depreciation and amortization 31,984 25,930
------------- -------------
Total other expenses 63,093 54,021
------------- -------------
Income before minority interests,
preferred dividends and distributions,
gain on sales of depreciable real
estate assets and discontinued
operations 19,939 28,213
Minority partners' interests in
consolidated partnerships (4,690) (5,120)
Distributions to preferred unit holders (273) (461)
Limited partners' minority interest in
the operating partnership (996) (1,904)
Gain on sales of depreciable real estate
assets --- 537
------------- -------------
Income before discontinued operations
and preferred dividends 13,980 21,265
Discontinued operations (net of limited
partners' minority interest)
Income from discontinued operations --- 204
------------- -------------
Net income 13,980 21,469
Dividends to preferred shareholders (5,317) (5,487)
------------- -------------
Net income allocable to common
shareholders $ 8,663 $ 15,982
============= =============
Basic weighted average common shares
outstanding:
Class A common 48,200,946 50,013,140
Class B common 9,915,313 10,283,513
Basic net income per weighted average
common share:
Class A common $ .14 $ .23
Gain on sales of depreciable real
estate assets --- .01
Discontinued operations --- ---
------------- -------------
Basic net income per Class A common
share $ .14 $ .24
============= =============
Class B common $ .21 $ .36
Gain on sales of depreciable real
estate assets --- .01
Discontinued operations --- ---
------------- -------------
Basic net income per Class B common
share $ .21 $ .37
============= =============
Diluted weighted average common shares
outstanding:
Class A common 48,320,129 50,350,189
Class B common 9,915,313 10,283,513
Diluted net income per weighted average
common share:
Class A common $ .14 $ .24
Class B common $ .15 $ .26
Reckson Associates Realty Corp. (NYSE:RA)
Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2003 2002
------------- -------------
(unaudited)
ASSETS
Commercial real estate properties, at
cost:
Land $ 417,996 $ 418,040
Buildings and improvements 2,426,832 2,415,252
Developments in progress:
Land 84,851 92,924
Development costs 30,563 28,311
Furniture, fixtures and equipment 12,569 13,595
------------- -------------
2,972,811 2,968,122
Less accumulated depreciation (476,368) (454,018)
------------- -------------
2,496,443 2,514,104
Investments in real estate joint ventures 6,106 6,116
Investment in mortgage notes and notes
receivable 54,727 54,547
Cash and cash equivalents 31,129 30,827
Tenant receivables 11,579 14,050
Investments in service companies and
affiliate loans and joint ventures 72,770 73,332
Deferred rents receivable 111,467 107,366
Prepaid expenses and other assets 52,489 37,235
Contract and land deposits and pre-
acquisition costs 227 240
Deferred leasing and loan costs (net of
accumulated amortization) 65,248 70,103
------------- -------------
Total Assets $ 2,902,185 $ 2,907,920
============= =============
LIABILITIES
Mortgage notes payable 737,131 740,012
Unsecured credit facility 302,000 267,000
Senior unsecured notes 499,339 499,305
Accrued expenses and other liabilities 78,372 93,783
Dividends and distributions payable 31,472 31,575
------------- -------------
Total Liabilities 1,648,314 1,631,675
------------- -------------
Minority partners' interests in
consolidated partnerships 241,932 242,934
Preferred unit interest in the operating
partnership 19,662 19,662
Limited partners' minority interest in
the operating partnership 68,385 71,420
------------- -------------
329,979 334,016
------------- -------------
Commitments and contingencies --- ---
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value,
25,000,000 shares authorized
Series A preferred stock, 8,834,500
shares issued and outstanding 88 88
Series B preferred stock, 2,000,000
shares issued and outstanding 20 20
Common Stock, $.01 par value, 100,000,000
shares authorized
Class A common stock, 48,000,995 and
48,246,083 shares issued and
outstanding, respectively 480 482
Class B common stock, 9,915,313 shares
issued and outstanding 99 99
Treasury Stock, Class A common, 2,950,400
and 2,698,400 shares, respectively and
Class B common, 368,200 shares (68,493) (63,954)
Additional paid-in capital 991,698 1,005,494
------------- -------------
Total Stockholders' Equity 923,892 942,229
------------- -------------
Total Liabilities and
Stockholders' Equity $ 2,902,185 $ 2,907,920
============= =============
Total debt to total market
capitalization (a): 48.0% 39.0%
============= =============
Notes:
(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 Ended
March 31,
-----------------------------
2003 2002
------------- -------------
Net income allocable to common
shareholders $ 8,663 $ 15,982
Adjustments for basic funds from
operations:
Add:
Limited partners' minority interest
in the operating partnership 996 1,934
Real estate depreciation and
amortization 31,327 25,321
Minority partners' interests in
consolidated partnerships 4,690 5,120
Less:
Gain on sales of depreciable real
estate assets --- 537
Amounts distributable to minority
partners in consolidated
partnerships 6,807 6,563
------------- -------------
Basic Funds From Operations ("FFO") 38,869 41,257
Add:
Dividends and distributions on
dilutive shares and units 5,590 5,948
------------- -------------
Diluted FFO.........(Note A) $ 44,459 $ 47,205
============= =============
Basic FFO calculations:
Weighted average common shares
outstanding 58,116 60,297
Weighted average units of limited
partnership interest outstanding 7,276 7,507
------------- -------------
Basic weighted average common shares
and units outstanding 65,392 67,804
============= =============
Basic FFO per weighted average common
share or unit $ .59 $ .61
Basic weighted average Class A & B
dividends per share or unit $ .46 $ .46
Basic FFO payout ratio (Class A &
Class B combined) 77.1% 75.4%
Basic weighted average Class A
dividends per share $ .42 $ .42
Basic FFO payout ratio - Class A 71.4% 69.8%
Basic weighted average Class B
dividends per share $ .65 $ .65
Basic FFO payout ratio - Class B 108.9% 106.7%
Diluted FFO calculations:
Basic weighted average common shares
and units outstanding 65,392 67,804
Adjustments for dilutive FFO weighted
average shares and units
outstanding:
Add:
Weighted average common stock
equivalents 119 337
Weighted average shares of Series A
Preferred Stock 7,747 8,060
Weighted average shares of Series B
Preferred Stock 1,919 1,919
Weighted average units of preferred
limited partnership interest 661 993
------------- -------------
Dilutive FFO weighted average shares
and units outstanding 75,838 79,113
============= =============
Diluted FFO per weighted average share
or unit $ .59 $ .60
Diluted weighted average Class A & B
dividends per share or unit $ .45 $ .45
Diluted FFO payout ratio (Class A &
Class B combined) 77.4% 76.1%
Diluted weighted average Class A
dividends per share $ .42 $ .42
Diluted FFO payout ratio - Class A 72.4% 71.2%
Diluted weighted average Class B
dividends per share $ .65 $ .65
Diluted FFO payout ratio - Class B 110.4% 108.8%
(A) Includes $5.5 million for the three-month period ended March 31,
2003 attributable to the sale of land.
Reckson Associates Realty Corp. (NYSE:RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended
March 31,
-----------------------------
2003 2002
------------- -------------
Basic Funds From Operations $ 38,869 $ 41,257
Adjustments for basic cash available for
distribution:
Less:
Straight line rents 4,018 8,667
Non-incremental capitalized tenant
improvements and leasing costs 8,791 4,497
Non-incremental capitalized
improvements 2,126 1,434
------------- -------------
Basic Cash Available for Distribution
("CAD") 23,934 26,659
Add:
Dividends and distributions on
dilutive shares and units --- ---
------------- -------------
Diluted CAD..........(Note A) $ 23,934 $ 26,659
============= =============
Basic CAD calculations:
Weighted average common shares
outstanding 58,116 60,297
Weighted average units of limited
partnership interest outstanding 7,276 7,507
------------- -------------
Basic weighted average common shares
and units outstanding 65,392 67,804
============= =============
Basic CAD per weighted average common
share or unit $ .37 $ .39
Basic weighted average Class A & B
dividends per share or unit $ .46 $ .46
Basic CAD payout ratio (Class A &
Class B combined) 125.2% 116.7%
Basic weighted average Class A
dividends per share $ .42 $ .42
Basic CAD payout ratio - Class A 116.0% 108.0%
Basic weighted average Class B
dividends per share $ .65 $ .65
Basic CAD payout ratio - Class B 176.8% 165.1%
Diluted CAD calculations:
Basic weighted average common shares
and units outstanding 65,392 67,804
Adjustments for dilutive CAD weighted
average shares and units outstanding:
Add:
Weighted average common stock
equivalents 119 337
Weighted average shares of Series A
Preferred Stock --- ---
Weighted average shares of Series B
Preferred Stock --- ---
Weighted average units of preferred
limited partnership interest --- ---
------------- -------------
Dilutive CAD weighted average shares
and units outstanding 65,511 68,141
============= =============
Diluted CAD per weighted average share
or unit $ .37 $ .39
Diluted weighted average Class A & B
dividends per share or unit $ .46 $ .46
Diluted CAD payout ratio (Class A &
Class B combined) 125.4% 117.2%
Diluted weighted average Class A
dividends per share $ .42 $ .42
Diluted CAD payout ratio - Class A 116.2% 108.5%
Diluted weighted average Class B
dividends per share $ .65 $ .65
Diluted CAD payout ratio - Class B 177.1% 166.0%
(A) Includes $5.5 million for the three-month period ended March 31,
2003 attributable to the sale of land.
CONTACT: Reckson Associates Realty Corp., Melville
Scott Rechler, Co-CEO
Michael Maturo, CFO
Tel: 631/694-6900
Fax: 631/622-6790
SOURCE: Reckson Associates Realty Corp.
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