MELVILLE, N.Y., Aug 5, 2003 (BUSINESS WIRE) -- Reckson Associates
Realty Corp. (NYSE: RA) today reported diluted funds from operations
("FFO") of $35.4 million or $.54 per share for the second quarter of
2003, as compared to FFO of $46.8 million or $.59 per share for the
second quarter of 2002, representing a per share decrease of (8.5%).
Net income allocable to common shareholders totaled $7.6 million
in the second quarter of 2003, as compared to $13.8 million in the
second quarter of 2002. Diluted net income per Class A Common share,
commonly referred to as earnings per share ("EPS"), totaled $.12 per
share in the second quarter of 2003, as compared to $.21 per share in
the second quarter of 2002, representing a per share decrease of
($.09). Diluted EPS per Class B Common share totaled $.13 per share in
the second quarter of 2003, as compared to $.22 per share in the
second quarter of 2002, representing a per share decrease of ($.09).
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 second quarter results, Scott Rechler, Reckson's
Co-Chief Executive Officer, said, "During the second quarter, we
executed leases on over 70% more office space than in the first
quarter and have seen that pace continue into the third quarter. We
believe that the Company's recent leasing activity indicates that the
markets have bottomed and are starting to stabilize. While the markets
remain competitive, we are confident that we will successfully meet
our leasing targets including re-tenanting space vacated by recent
tenant defaults."
Summary Portfolio Performance
The Company reported overall portfolio occupancy of 92.2% at June
30, 2003, as compared to 93.2% at March 31, 2003 and 94.2% at June 30,
2002. The Company reported office and industrial/R&D occupancies at
June 30, 2003 of 91.7% and 93.2%, respectively. This compares to 92.8%
and 94.0%, respectively, at March 31, 2003 and 95.2% and 92.0%,
respectively, at June 30, 2002. WorldCom/MCI and HQ Global Workplaces,
Inc. account for 91 basis points of the 110 basis point decrease in
office portfolio occupancy from March 31, 2003 to June 30, 2003.
During the quarter, the Company executed 57 leases encompassing
753,387 square feet, representing 3.7% of the total portfolio. During
the quarter, the Company executed 45 office leases encompassing
532,549 square feet, which resulted in a 58% renewal rate.
Core same property net operating income (property operating
revenues less property operating expenses) ("NOI") before termination
fees for the second quarter of 2003 decreased (6.7%) (cash) and (6.1%)
(including straight-line rent), compared to the second quarter of
2002.
Net of minority interests in joint ventures, core same property
NOI before termination fees for the second quarter of 2003 decreased
(7.0%) (cash) and (6.4%) (including straight-line rent), compared to
the second quarter of 2002.
Rent performance on renewal and replacement space during the
second quarter of 2003 decreased (7.7%) (cash) and increased 6.4%
(including straight-line rent) in the office properties and increased
0.7% (cash) and 3.0% (including straight-line rent) in the
industrial/R&D properties.
Other Highlights
Purchased two industrial redevelopment properties in Hauppauge,
Long Island, encompassing approximately 100,000 square feet.
Executed a lease for 100% of the recently completed 72,000 square
foot ground-up development at AIP 2001 in Islip, Long Island.
Earnings Guidance
On Wednesday, August 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
181 properties comprised of approximately 20.5 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 second
quarter results on Wednesday, August 6, 2003 at 2:00 p.m. EST. The
conference call may be accessed by dialing (800) 553-0272
(internationally (651) 291-0561). 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 6, 2003 at 8:00 p.m. EST through August 15, 2003 at 11:59
p.m. EST. The telephone number for the replay is (800) 475-6701,
passcode 689079. 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 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 share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2003 2002 2003 2002
---------------------- ----------------------
Property Operating
Revenues:
Base rents $107,127 $108,867 $214,605 $215,250
Tenant escalations
and reimbursements 15,377 14,062 31,340 29,383
---------------------- ----------------------
Total property
operating revenues 122,504 122,929 245,945 244,633
Property Operating
Expenses:
Operating expenses 26,929 23,718 55,294 47,792
Real estate taxes 19,639 17,713 39,108 35,534
---------------------- ----------------------
Total property
operating expenses 46,568 41,431 94,402 83,326
---------------------- ----------------------
Net Operating Income 75,936 81,498 151,543 161,307
---------------------- ----------------------
Gross Margin percentage 62.0% 66.3% 61.6% 65.9%
---------------------- ----------------------
Other Income 4,638 2,008 12,063 4,433
---------------------- ----------------------
Other Expenses
Interest expense 22,896 22,124 45,746 43,120
Depreciation and
amortization 29,903 27,836 61,887 53,766
Marketing, general
and administrative 9,390 7,650 17,649 14,745
---------------------- ----------------------
Total other expenses 62,189 57,610 125,282 111,631
---------------------- ----------------------
Income before minority
interests, preferred
dividends and distributions,
gain on sales of depreciable
real estate and discontinued
operations 18,385 25,896 38,324 54,109
Minority partners'
interests in consolidated
partnerships (4,335) (4,813) (9,025) (9,933)
Distributions to
preferred unitholders (274) (280) (547) (741)
Limited partners'
minority interest in
the operating partnership (874) (1,643) (1,870) (3,547)
Gain on sales of
depreciable real
estate assets - - - 537
---------------------- ----------------------
Income before
discontinued operations
and preferred dividends 12,902 19,160 26,882 40,425
Discontinued operations
(net of limited partners'
minority interest) - 132 - 336
---------------------- ----------------------
Net income 12,902 19,292 26,882 40,761
Dividends to preferred
shareholders (5,317) (5,487) (10,634) (10,974)
---------------------- ----------------------
Net income allocable to
common shareholders $7,585 $13,805 $16,248 $29,787
====================== ======================
Allocable to
Class A common $5,769 $10,548 $12,364 $22,707
Allocable to
Class B common 1,816 3,257 3,884 7,080
---------------------- ----------------------
Net income allocable to
common shareholders $7,585 $13,805 $16,248 $29,787
====================== ======================
Basic weighted average
common shares outstanding:
Class A common 48,001,000 50,775,000 48,100,000 50,396,000
Class B common 9,915,000 10,284,000 9,915,000 10,284,000
Basic net income per
weighted average common share:
Class A common stock $0.12 $0.21 $0.26 $0.44
Gain on sales of
depreciable real
estate assets - - - 0.01
Discontinued operations - - - -
---------------------- ----------------------
Basic net income
per Class A common $0.12 $0.21 $0.26 $0.45
====================== ======================
Class B common stock $0.18 $0.32 $0.39 $0.67
Gain on sales of
depreciable real
estate assets - - - 0.01
Discontinued operations - - - 0.01
---------------------- ----------------------
Basic net income
per Class B common $0.18 $0.32 $0.39 $0.69
====================== ======================
Diluted weighted
average common shares
outstanding:
Class A common 48,118,000 51,165,000 48,219,000 50,760,000
Class B common 9,915,000 10,284,000 9,915,000 10,284,000
Diluted net income per
weighted average common
share:
Class A common $0.12 $0.21 $0.26 $0.45
====================== ======================
Class B common $0.13 $0.22 $0.28 $0.49
====================== ======================
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2003 2002
----------- -----------
Assets: (Unaudited)
Commercial real estate properties, at cost:
Land $423,036 $418,040
Buildings and improvements 2,448,379 2,415,252
Developments in progress:
Land 88,388 92,924
Development costs 23,743 28,311
Furniture, fixtures, and equipment 12,572 13,595
----------- -----------
2,996,118 2,968,122
Less: accumulated depreciation (501,122) (454,018)
----------- -----------
Investment in real estate, net of accumulated
depreciation 2,494,996 2,514,104
Investments in real estate joint ventures 5,709 6,116
Investments in mortgage notes and notes
receivable 54,600 54,547
Investments in service companies and affiliate
loans and joint ventures 72,440 73,332
Cash and cash equivalents 23,996 30,827
Tenant receivables 7,724 14,050
Deferred rents receivable 116,573 107,366
Prepaid expenses and other assets 56,021 37,235
Contract and land deposits and pre-
acquisition costs 208 240
Deferred leasing and loan costs (net of
accumulated amortization) 68,727 70,103
----------- -----------
Total Assets $2,900,994 $2,907,920
----------- -----------
Liabilities:
Mortgage notes payable $734,134 $740,012
Unsecured credit facility 322,000 267,000
Senior unsecured notes 499,374 499,305
Accrued expenses and other liabilities 82,357 93,783
Dividends and distributions payable 31,471 31,575
----------- -----------
Total Liabilities 1,669,336 1,631,675
----------- -----------
Minority partners' interests in consolidated
partnerships 240,452 242,934
Preferred unit interest in the operating
partnership 19,662 19,662
Limited partners' minority interest in the
operating partnership 66,261 71,420
----------- -----------
326,375 334,016
----------- -----------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000
shares authorized
Series A - 8,834,500 shares issued and
outstanding 88 88
Series B - 2,000,000 shares issued and
outstanding 20 20
Common Stock, $.01 par value, 100,000,000 shares
authorized
Class A - 48,000,995 and 48,246,083 shares issued
and outstanding, respectively 480 482
Class B - 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 973,089 1,005,494
----------- -----------
Total Stockholders' Equity 905,283 942,229
----------- -----------
Total Liabilities and
Stockholders' Equity $2,900,994 $2,907,920
----------- -----------
Total debt to market capitalization (a): 46.2% 44.9%
----------- -----------
(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 Six Months Ended
June 30, June 30,
------------------- ----------------
2003 2002 2003 2002
------------------- ----------------
Net income allocable to common
shareholders $7,585 $13,805 $16,248 $29,787
Add: Real estate depreciation and
amortization 29,127 27,041 60,454 52,362
Minority partners' interests
in consolidated partnerships 4,335 4,813 9,025 9,933
Limited partners' minority
interest in the operating
partnership 874 1,663 1,870 3,597
Less: Gain on sales of depreciable
real estate assets - - - 537
Amounts distributable to
minority partners in
consolidated partnerships 6,769 6,329 13,576 12,893
---------------- ----------------
Basic Funds From Operations
("FFO") 35,152 40,993 74,021 82,249
Add: Dividends and distributions
on dilutive shares and units 273 5,767 8,968 11,715
---------------- ----------------
Diluted FFO (Note - a) $35,425 $46,760 $82,989 $93,964
================ ================
Basic FFO calculations:
Weighted average common
shares outstanding 57,916 61,059 58,016 60,680
Weighted average units of
limited partnership interest
outstanding 7,276 7,500 7,276 7,504
---------------- ----------------
Basic weighted average common
shares and units outstanding 65,192 68,559 65,292 68,184
================ ================
Basic FFO per weighted
average share or unit $0.54 $0.60 $1.13 $1.21
Basic weighted average Class A
& B dividends per share or
unit $0.46 $0.46 $0.92 $0.92
Basic FFO payout ratio
(Class A & B combined) 85.0% 76.6% 80.9% 76.0%
Basic weighted average Class
A dividends per share $0.42 $0.42 $0.85 $0.85
Basic FFO payout ratio -
Class A 78.8% 71.0% 74.9% 70.4%
Basic weighted average Class
B dividends per share $0.65 $0.65 $1.29 $1.30
Basic FFO payout ratio -
Class B 120.0% 108.3% 114.2% 107.5%
Diluted FFO calculations:
Basic weighted average common
shares and units outstanding 65,192 68,559 65,292 68,184
Adjustments for dilutive FFO
weighted average shares and
units outstanding:
Common stock equivalents 117 390 118 363
Series A preferred stock - 8,060 7,747 8,060
Series B preferred stock - 1,919 - 1,919
Limited partners' preferred
interest 661 661 661 834
---------------- ----------------
Total diluted weighted average
shares and units outstanding 65,970 79,589 73,818 79,360
================ ================
Diluted FFO per weighted average
share or unit $0.54 $0.59 $1.12 $1.18
Diluted weighted average Class A & B
dividends per share or unit $0.46 $0.45 $0.91 $0.91
Diluted FFO payout ratio (Class A &
B combined) 85.3% 77.2% 80.9% 76.6%
Diluted weighted average Class A
dividends per share $0.42 $0.42 $0.85 $0.85
Diluted FFO payout ratio -
Class A 79.1% 72.3% 75.5% 71.7%
Diluted weighted average Class B
dividends per share $0.65 $0.65 $1.29 $1.30
Diluted FFO payout ratio -
Class B 120.5% 110.3% 115.1% 109.5%
----------------------------------------------------------------------
Notes:
a - Includes $2.2 million and $7.7 million for the three and six
month periods ended June 30, 2003, respectively 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 Six Months Ended
June 30, June 30,
------------------ ----------------
2003 2002 2003 2002
------------------ ----------------
Basic Funds From Operations $35,152 $40,993 $74,021 $82,249
Adjustments for basic cash
available for distribution:
Less:Straight line rents 4,659 4,368 8,677 13,035
Committed non-incremental
capitalized tenant
improvements and
leasing costs 6,805 3,406 15,596 7,903
Actual non-incremental
capitalized improvements 1,929 2,007 4,055 3,441
---------------- ----------------
Basic Cash Available for
Distribution ("CAD") 21,759 31,212 45,693 57,870
Add: Dividends and distributions
on dilutive shares and units - 236 - 310
---------------- ----------------
Diluted CAD (Note - a) $21,759 $31,448 $45,693 $58,180
================ ================
Basic CAD calculations:
Weighted average common
shares outstanding 57,916 61,059 58,016 60,680
Weighted average units of
limited partnership interest
outstanding 7,276 7,500 7,276 7,504
---------------- ----------------
Basic weighted average common
shares and units outstanding 65,192 68,559 65,292 68,184
================ ================
Basic CAD per weighted
average share or unit $0.33 $0.46 $0.70 $0.85
Basic weighted average Class A
& B dividends per share or
unit $0.46 $0.46 $0.92 $0.92
Basic CAD payout ratio
(Class A & B combined) 137.4% 100.6% 131.0% 108.0%
Basic weighted average Class
A dividends per share $0.42 $0.42 $0.85 $0.85
Basic CAD payout ratio -
Class A 127.2% 93.3% 121.3% 100.1%
Basic weighted average Class
B dividends per share $0.65 $0.65 $1.29 $1.30
Basic CAD payout ratio -
Class B 193.9% 142.3% 184.9% 152.8%
Diluted CAD calculations:
Basic weighted average common
shares and units outstanding 65,192 68,559 65,292 68,184
Adjustments for dilutive CAD
weighted average shares and
units outstanding:
Common stock equivalents 117 390 118 363
Series A preferred stock - - - -
Series B preferred stock - - - -
Limited partners' preferred
interest - 566 - 368
---------------- ----------------
Total diluted weighted average
shares and units outstanding 65,309 69,515 65,410 68,915
================ ================
Diluted CAD per weighted average
share or unit $0.33 $0.45 $0.70 $0.84
Diluted weighted average Class A & B
dividends per share or unit $0.46 $0.46 $0.92 $0.92
Diluted CAD payout ratio (Class A &
B combined) 137.6% 101.2% 131.2% 108.5%
Diluted weighted average Class A
dividends per share $0.42 $0.42 $0.85 $0.85
Diluted CAD payout ratio - Class
A 127.5% 93.9% 121.6% 100.6%
Diluted weighted average Class B
dividends per share $0.65 $0.65 $1.29 $1.30
Diluted CAD payout ratio - Class
B 194.2% 143.2% 185.3% 153.6%
----------------------------------------------------------------------
Notes:
a - Includes $2.2 million and $7.7 million for the three and six
month periods ended June 30, 2003, respectively attributable
to the sale of land.
SOURCE: Reckson Associates Realty Corp.
Reckson Associates Realty Corp.
Scott Rechler, Co-CEO
Michael Maturo, CFO
631-694-6900 (Phone)
631-622-6790 (Facsimilie)
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