MELVILLE, N.Y., Mar 4, 2003 (BUSINESS WIRE) -- Reckson Associates Realty Corp.
(NYSE: RA) today reported fourth quarter diluted funds from operations ("FFO")
of $.59 per share, as compared to FFO of $.57 per share for the fourth quarter
of 2001, representing a per share increase of 3.5%.
Reckson also reported diluted FFO for the year ended December 31, 2002 of $2.36
per share on total revenues of $506.1 million, as compared to FFO of $2.61 per
share for the year-ended December 31, 2001, representing a per share decrease of
(9.6%).
The Company has also announced it has entered into a sale contract with an
affiliate of First Data Corp. for a 19.3 acre parcel of land located in
Melville, Long Island, along with a contract for the build-to-suit construction
of a 195,000 square foot office building, for an aggregate consideration of
approximately $47 million.
Commenting on the fourth quarter and year-end results, Scott Rechler, Reckson's
Co-Chief Executive Officer, said, "I am pleased with our performance in what has
been a difficult operating environment. While we ended 2002 by increasing our
portfolio occupancy to 95.4%, we remain cautious as we enter 2003 and expect to
face a challenging leasing market. I believe that we have positioned our
portfolio well for this environment with lease expiration exposure of only 7.6%
of GAAP revenue including the leases rejected to date by WorldCom/MCI."
Summary Portfolio Performance
Portfolio performance remained stable during the fourth quarter of 2002 with
overall portfolio occupancy of 95.4% at December 31, 2002, as compared to 94.2%
at September 30, 2002 and 94.6% at December 31, 2001. The Company reported
occupancies at December 31, 2002 of 95.7% for the office portfolio and 94.7% for
the industrial/R&D portfolio. This compares to 95.1% and 92.4%, respectively, at
September 30, 2002 and 96.1% and 91.7%, respectively, at December 31, 2001.
The Company also reported same property occupancy of 95.6% for the overall
portfolio at December 31, 2002, as compared to 94.2% at September 30, 2002 and
94.6% at December 31 2001. Reported same property occupancies at December 31,
2002 of 96.1% for the office portfolio and 94.6% for the industrial/R&D
portfolio. This compares to 95.6% and 91.6%, respectively, at September 30, 2002
and 96.2% and 91.6%, respectively, at December 31, 2001.
During the quarter, the Company executed 63 leases encompassing 699,328 square
feet, representing 3.4% of the total portfolio. For the year, the Company
executed 255 leases encompassing 2.8 million square feet, representing 13.7% of
the total portfolio. During the quarter and the year, the company renewed 45%
and 60% of expiring square feet, respectively. As of December 31, 2002, the
Company reduced total portfolio exposure to expiring leases to 7.6% in 2003 and
8.0% in 2004. This excludes the impact of the rejection of 191,972 square feet
of leases by WorldCom/MCI.
Core same property net operating income ("NOI") before termination fees for the
fourth quarter of 2002 increased 8.3% (cash) and 3.0% (GAAP), compared to the
fourth quarter of 2001. Core same property NOI before termination fees for the
year ended December 31, 2002 increased 7.7% (cash) and 0.7% (GAAP), compared to
year ended December 31, 2001.
Net of minority interests in joint ventures, core same property NOI before
termination fees for the fourth quarter of 2002 increased 3.9% (cash) and 2.0%
(GAAP), compared to the fourth quarter of 2001. Net of minority interests in
joint ventures, core same property NOI before termination fees for the year
ended December 31, 2002 increased 3.9% (cash) and decreased (0.3%) (GAAP),
compared to year ended December 31, 2001.
Rent performance on renewal and replacement space during the fourth quarter of
2002 increased 5.8% (cash) and 9.5% (GAAP) in the office properties and
decreased (8.3%) (cash) and increased 11.9% (GAAP) in the industrial/R&D
properties. Rent performance on renewal and replacement space during the year
ended December 31, 2002 increased 9.2% (cash) and 13.8% (GAAP) in the office
properties and 1.1% (cash) and 14.4% (GAAP) in the industrial/R&D properties.
Other Highlights
Subsequent to year-end, WorldCom/MCI announced the rejection of 191,972 square
feet of leases totaling approximately $5.3 million of annual GAAP revenues.
Closed on the refinancing of the Company's unsecured revolving credit facility,
scheduled to mature in September of 2003, with a group of 14 banks. The facility
bears interest at LIBOR plus a spread of 90 basis points, representing a
reduction of 15 basis points from the previous facility.
Consolidated Financial Results
The Company reported diluted earnings per Class A common share ("EPS") of $.14
for the fourth quarter of 2002, as compared to $.46 per Class A common share for
the comparable 2001 period.
The Company also reported diluted earnings per Class A common share ("EPS") of
$.83 for the twelve months ended December 31, 2002, as compared to a loss of
($.92) per Class A common share for the comparable 2001 period.
FFO Guidance
On Wednesday, March 5th, during the Company's quarterly earnings conference
call, management will discuss FFO guidance for 2003.
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 fourth quarter results on
Wednesday, March 5, 2003 at 2:00 p.m. EST. The conference call may be accessed
by dialing (800) 450-0785 (internationally (612) 332-0820). 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 fourth
quarter results.
A replay of the conference call will be available telephonically from March 5,
2003 at 8:00 p.m. EST through March 14, 2003 at 11:59 p.m. EST. The telephone
number for the replay is (800) 475-6701, passcode 669674. A replay of the
webcast of the conference call will also be available via the Company's web
site.
Financial Statements Attached
The supplemental materials on the Company's fourth quarter results will be
available on the Company's web site, sent by e-mail to those on the Company's
distribution list, as well as available by mail or fax, upon request. The
Company will provide its Supplemental Package and Slide Show Presentation prior
to its quarterly conference call. To be added to the Company's e-mail
distribution list or to receive a copy of the quarterly supplemental 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 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; credit of our tenants; changes in the supply of and
demand for office and industrial 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 and insurance costs;
repayment of debt owed to the Company by third parties (including FrontLine
Capital Group); risks associated with joint ventures; 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 Operations
(in thousands, except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
----------------- -----------------
2002 2001 2002 2001
-------- -------- -------- --------
Property Operating Revenues:
Base rents $110,969 $106,974 $437,393 $434,671
Tenant escalations and
reimbursements 16,033 14,340 60,689 59,538
-------- -------- -------- --------
Total property operating
revenues 127,002 121,314 498,082 494,209
-------- -------- -------- --------
Property Operating Expenses:
Operating expenses 25,756 25,041 101,165 98,069
Real estate taxes 19,824 17,203 73,876 69,222
-------- -------- -------- --------
Total property operating
expenses 45,580 42,244 175,041 167,291
-------- -------- -------- --------
Net Operating Income 81,422 79,070 323,041 326,918
-------- -------- -------- --------
Gross Margin percentage 64.1% 65.2% 64.9% 66.1%
Other Income:
Gain on sales of real estate --- 19,201 537 20,173
Other 2,356 2,706 9,123 22,524
-------- -------- -------- --------
Total other income 2,356 21,907 9,660 42,697
-------- -------- -------- --------
Other Expenses:
Interest expense 22,813 22,369 88,585 93,070
Marketing, general and
administrative 8,868 7,115 31,578 30,553
Valuation reserves on
investments in affiliate loans
and joint ventures --- 3,101 --- 166,101
Depreciation and amortization 29,428 25,507 112,341 102,108
-------- -------- -------- --------
Total other expenses 61,109 58,092 232,504 391,832
-------- -------- -------- --------
Income (loss) before minority
interests, preferred dividends
and distributions, discontinued
operations and extraordinary
loss 22,669 42,885 100,197 (22,217)
Minority partners' interests in
consolidated partnerships (4,351) (3,090) (18,730) (15,975)
Distributions to preferred unit
holders (274) (481) (1,288) (2,111)
Limited partners' minority
interest in the operating
partnership (1,442) (3,559) (6,238) 5,878
-------- -------- -------- --------
Income (loss) before
discontinued operations,
extraordinary loss and
preferred dividends 16,602 35,755 73,941 (34,425)
Discontinued operations (net of
limited partners' minority
interest)
Income from discontinued
operations (281) 338 495 1,019
Gain on sales of real estate --- --- 4,267 ---
-------- -------- -------- --------
Income (loss) before
extraordinary loss and
preferred dividends 16,321 36,093 78,703 (33,406)
Extraordinary loss on
extinguishment of debt (net of
limited partners' minority
interest) (2,335) --- (2,335) (2,595)
-------- -------- --------- --------
Net income (loss) 13,986 36,093 76,368 (36,001)
Dividends to preferred
shareholders (5,374) (5,487) (21,835) (21,866)
-------- -------- -------- --------
Net income (loss) allocable to
common shareholders $ 8,612 $ 30,606 $ 54,533 $(57,867)
======== ======== ======== ========
Basic weighted average common
shares outstanding:
Class A common 48,384 49,994 49,669 48,121
Class B common 9,915 10,284 10,122 10,284
Basic net income (loss) per
weighted average common share:
Class A common $ .18 $ .20 $ .79 $ (1.19)
Gain on sales of real estate --- .26 .01 .29
Discontinued operations --- .01 .07 .02
Extraordinary loss (.04) --- (.03) (.04)
-------- -------- -------- --------
Basic net income (loss) per
Class A common share $ .14 $ .47 $ .84 $ (.92)
======== ======== ======== ========
Class B common $ .27 $ .30 $ 1.21 $ (1.70)
Gain on sales of real estate --- .40 .01 .42
Discontinued operations --- .01 .11 .02
Extraordinary loss (.06) --- (.05) (.06)
-------- -------- -------- --------
Basic net income (loss) per
Class B common share $ .21 $ .71 $ 1.28 $ (1.32)
======== ======== ======== ========
Diluted weighted average common
shares outstanding:
Class A common 48,551 51,005 49,968 48,121
Class B common 9,915 10,284 10,122 10,284
Diluted net income (loss) per
weighted average common share:
Class A common $ .14 $ .46 $ .83 $ (.92)
Class B common $ .15 $ .50 $ .90 $ (1.32)
Reckson Associates Realty Corp. (NYSE:RA)
Consolidated Balance Sheets
(in thousands)
December December
31, 31,
2002 2001
---------- ----------
ASSETS
Commercial real estate properties, at cost:
Land $ 418,040 $ 408,837
Buildings and improvements 2,415,252 2,328,374
Developments in progress:
Land 92,924 69,365
Development costs 28,311 74,303
Furniture, fixtures and equipment 13,595 7,725
---------- ----------
2,968,122 2,888,604
Less accumulated depreciation (454,018) (361,960)
---------- ----------
2,514,104 2,526,644
Investments in real estate joint ventures 6,116 5,744
Investment in mortgage notes and notes
receivable 54,547 56,234
Cash and cash equivalents 30,827 121,975
Tenant receivables 14,050 9,633
Investments in service companies and affiliate
loans and joint ventures 73,332 79,184
Deferred rents receivable 107,366 81,089
Prepaid expenses and other assets 37,235 45,495
Contract and land deposits and pre-acquisition
costs 240 3,782
Deferred leasing and loan costs (net of
accumulated amortization) 70,103 64,438
---------- ----------
Total Assets $2,907,920 $2,994,218
========== ==========
LIABILITIES
Mortgage notes payable $ 740,012 $ 751,077
Unsecured credit facility 267,000 271,600
Senior unsecured notes 499,305 449,463
Accrued expenses and other liabilities 93,783 87,683
Dividends and distributions payable 31,575 32,988
---------- ----------
Total Liabilities 1,631,675 1,592,811
---------- ----------
Minority partners' interests in consolidated
partnerships 242,934 242,698
Preferred unit interest in the operating
partnership 19,662 30,965
Limited partners' minority interest in the
operating partnership 71,420 81,887
---------- ----------
334,016 355,550
---------- ----------
Commitments and contingencies --- ---
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value, 25,000,000
shares authorized
Series A preferred stock, 8,834,500 and
9,192,000 shares issued and outstanding,
respectively 88 92
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, 48,246,083 and
49,982,377 shares issued and outstanding,
respectively 482 500
Class B common stock, 9,915,313 and
10,283,513 shares issued and outstanding,
respectively 99 103
Treasury Stock, Class A common, 2,698,400 and
0 shares, respectively and Class B common,
368,200 and 0 shares, respectively (63,954) ---
Additional paid in capital 1,005,494 1,045,142
---------- ----------
Total Stockholders' Equity 942,229 1,045,857
---------- ----------
Total Liabilities and
Stockholders' Equity $2,907,920 $2,994,218
========== ==========
Total debt to total market capitalization (a): 44.9% 41.1%
========== ==========
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 Years Ended
December 31, December 31,
----------------- -----------------
2002 2001 2002 2001
-------- -------- -------- --------
Net income (loss) allocable to
common shareholders $ 8,612 $ 30,606 $ 54,533 $(57,867)
Adjustments for basic funds from
operations:
Add:
Limited partners' minority
interest in the operating
partnership 1,410 3,599 6,948 ---
Real estate depreciation and
amortization 28,336 24,911 108,906 100,967
Minority partners' interests
in consolidated partnerships 4,351 3,090 18,730 15,975
Extraordinary loss on
extinguishment of debt, net
of limited partners' minority
interest 2,335 --- 2,335 2,595
Valuation reserves on
investments in affiliate
loans and joint ventures --- --- --- 163,000
Less:
Limited partners' minority
interest in the operating
partnership --- --- --- 5,727
Gain on sales of real estate --- 19,201 5,433 20,173
Amounts distributable to
minority partners in
consolidated partnerships 6,053 4,072 24,996 19,083
-------- -------- -------- --------
Basic Funds From Operations
("FFO") 38,991 38,933 161,023 179,687
Add:
Dividends and distributions
on dilutive shares and units 5,647 4,862 23,123 26,601
-------- -------- -------- --------
Diluted FFO $ 44,638 $ 43,795 $184,146 $206,288
======== ======== ======== ========
Basic FFO calculations:
Weighted average common shares
outstanding 58,299 60,278 59,791 58,405
Weighted average units of
limited partnership interest
outstanding 7,276 7,505 7,389 7,652
-------- -------- -------- --------
Basic weighted average common
shares and units outstanding 65,575 67,783 67,180 66,057
======== ======== ======== ========
Basic FFO per weighted average
common share or unit $ .59 $ .57 $ 2.40 $ 2.72
Basic weighted average Class A
& B dividends per share or
unit $ .46 $ .46 $ 1.83 $ 1.80
Basic FFO payout ratio (Class
A & Class B combined) 77.1% 79.9% 76.5% 66.0%
Basic weighted average Class A
dividends per share $ .42 $ .42 $ 1.70 $ 1.66
Basic FFO payout ratio - Class
A 71.4% 73.9% 70.9% 61.0%
Basic weighted average Class B
dividends per share $ .65 $ .65 $ 2.59 $ 2.53
Basic FFO payout ratio - Class
B 108.8% 113.0% 108.1% 93.1%
Diluted FFO calculations:
Basic weighted average common
shares and units outstanding 65,575 67,783 67,180 66,057
Adjustments for dilutive FFO
weighted average shares and
units outstanding:
Add:
Weighted average common stock
equivalents 168 445 299 433
Weighted average shares of
Series A Preferred Stock 7,791 8,060 7,992 8,060
Weighted average shares of
Series B Preferred Stock 1,919 --- 1,919 1,919
Weighted average shares of
minority partners' preferred
interest --- --- --- 1,419
Weighted average units of
preferred limited partnership
interest 661 1,009 743 1,139
-------- -------- -------- --------
Dilutive FFO weighted average
shares and units outstanding 76,114 77,297 78,133 79,027
======== ======== ======== ========
Diluted FFO per weighted average
share or unit $ .59 $ .57 $ 2.36 $ 2.61
Diluted weighted average Class
A & B dividends per share or
unit $ .45 $ .45 $ 1.81 $ 1.77
Diluted FFO payout ratio
(Class A & Class B combined) 77.3% 80.2% 77.0% 67.9%
Diluted weighted average Class
A dividends per share $ .42 $ .42 $ 1.70 $ 1.66
Diluted FFO payout ratio -
Class A 72.4% 74.9% 72.1% 63.6%
Diluted weighted average Class
B dividends per share $ .65 $ .65 $ 2.59 $ 2.53
Diluted FFO payout ratio -
Class B 110.3% 114.6% 110.0% 97.0%
Reckson Associates Realty Corp. (NYSE:RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
----------------- -----------------
2002 2001 2002 2001
-------- -------- -------- --------
Basic Funds From Operations $ 38,991 $ 38,933 $161,023 $179,687
Adjustments for basic cash
available for distribution:
Less:
Straight line rents 6,529 9,550 26,247 41,293
Non-incremental capitalized
tenant improvements and
leasing costs (Note A) 6,230 4,432 33,407 14,281
Non-incremental capitalized
improvements 2,653 2,437 8,832 6,697
-------- -------- -------- --------
Basic Cash Available for
Distribution ("CAD") 23,579 22,514 92,537 117,416
Add:
Dividends and distributions on
dilutive shares and units --- --- --- ---
-------- -------- -------- --------
Diluted CAD $ 23,579 $ 22,514 $ 92,537 $117,416
======== ======== ======== ========
Basic CAD calculations:
Weighted average common shares
outstanding 58,299 60,278 59,791 58,405
Weighted average units of
limited partnership interest
outstanding 7,276 7,505 7,389 7,652
-------- -------- -------- --------
Basic weighted average common
shares and units outstanding 65,575 67,783 67,180 66,057
======== ======== ======== ========
Basic CAD per weighted average
common share or unit $ .36 $ .33 $ 1.38 $ 1.78
Basic weighted average Class A
& B dividends per share or
unit $ .46 $ .46 $ 1.83 $ 1.80
Basic CAD payout ratio (Class A
& Class B combined) (Note A) 127.4% 138.1% 133.1% 101.0%
Basic weighted average Class A
dividends per share $ .42 $ .42 $ 1.70 $ 1.66
Basic CAD payout ratio - Class
A (Note A) 118.1% 127.8% 123.3% 93.4%
Basic weighted average Class B
dividends per share $ .65 $ .65 $ 2.59 $ 2.53
Basic CAD payout ratio - Class
B (Note A) 180.0% 195.4% 188.1% 142.4%
Diluted CAD calculations:
Basic weighted average common
shares and units outstanding 65,575 67,783 67,180 66,057
Adjustments for dilutive CAD
weighted average shares and
units outstanding:
Add:
Weighted average common
stock equivalents 168 445 299 433
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 65,743 68,228 67,479 66,490
======== ======== ======== ========
Diluted CAD per weighted average
share or unit $ .36 $ .33 $ 1.37 $ 1.77
Diluted weighted average Class A
& B dividends per share or
unit $ .46 $ .46 $ 1.83 $ 1.79
Diluted CAD payout ratio (Class
A & Class B combined) (Note A) 127.7% 138.9% 133.6% 101.6%
Diluted weighted average Class A
dividends per share $ .42 $ .42 $ 1.70 $ 1.66
Diluted CAD payout ratio - Class
A (Note A) 118.4% 128.7% 123.9% 94.0%
Diluted weighted average Class B
dividends per share $ .65 $ .65 $ 2.59 $ 2.53
Diluted CAD payout ratio - Class
B (Note A) 180.4% 196.7% 189.0% 143.3%
Note (A):
For the year ended December 31, 2002 these amounts include
approximately $11.2 million of TI and leasing costs associated
with the Fuji Photo Film USA Inc., transaction. This
transaction encompasses nine tenants and approximately 239,000
square feet located in Westchester County. Diluted CAD payout
ratios would have been (Class A and B combined: 119.2%),
(Class A: 110.5%) and (Class B: 168.6%) for the year ended
December 31, 2002 had these costs not been included. Basic CAD
payout ratios would have been (Class A and B combined:
118.7%), (Class A: 110.0%) and (Class B: 167.8%) for the year
ended December 31, 2002 had these costs not been included.
CONTACT: Reckson Associates Realty Corp., Melville
Scott Rechler/Michael Maturo, 631/694-6900
Fax: 631/622-6790
URL: http://www.businesswire.com
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