8-K 1 efc5-1226_5703876form8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 12, 2005 RECKSON ASSOCIATES REALTY CORP. and RECKSON OPERATING PARTNERSHIP, L.P. (Exact name of each Registrant as specified in its Charter)
Reckson Associates Realty Corp. - Maryland Reckson Associates Realty Corp. - Reckson Operating Partnership, L.P. - Delaware 11-3233650 (State or other jurisdiction of incorporation or Reckson Operating Partnership, L.P. - organization) 11-3233647 (IRS Employer ID Number) 225 Broadhollow Road 11747 Melville, New York (Zip Code) (Address of principal executive offices) 1-13762 (Commission File Number) (631) 694-6900 (Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. Item 2.01. Completion of Acquisition or Disposition of Assets. On May 12, 2005, we completed the acquisition of a 1.4 million square foot, 50-story, Class A office tower located at One Court Square, Long Island City, a sub-market of New York City, from Citibank, N.A. (the "Seller"). The purchase price for One Court Square was approximately $470 million, inclusive of transfer taxes and transactional costs. One Court Square is 100% leased to the Seller pursuant to a 15-year net lease. The lease contains partial cancellation options effective during years six and seven for up to an aggregate of 20% of the leased space and in years nine and ten for up to an additional 20% of the leased space, subject to notice and penalty. In addition, on May 12, 2005 we obtained an unsecured $470 million term loan agreement (the "Bridge Facility"), with Citicorp North America, Inc., as administrative agent ("Citicorp"), and Citigroup Global Markets Inc., as lead arranger and sole bookrunner. We have agreed to pay to Citicorp a one-time commitment fee equal to 7.5 basis points on the amount, if any, outstanding under the Bridge Facility on the first business day after the six month anniversary of the closing of the Bridge Facility. The Bridge Facility has terms including interest rates and financial covenants substantially similar to our existing revolving credit facility. The Bridge Facility matures on May 11, 2006. On May 12, 2005, we also amended our unsecured revolving credit facility to increase the percentage of Total Indebtedness to Total Value (as each term is defined in our revolving credit facility) that we may incur thereunder at any one time from 55% to 60%, which is consistent with the similar financial covenant contained in the Bridge Facility. Item 9.01. Financial Statements and Exhibits (b) Pro forma financial information The accompanying financial statements present the unaudited pro-forma balance sheet of Reckson Associates Realty Corp. as of March 31, 2005, and the unaudited pro-forma statements of income for the year ended December 31, 2004 and the three months ended March 31, 2005. The unaudited pro-forma balance sheet as of March 31, 2005 is presented as if the acquisition of One Court Square had occurred on March 31, 2005. The unaudited pro-forma statements of income for the year ended December 31, 2004 and the three months ended March 31, 2005 are presented as if the acquisition of One Court Square had occurred on January 1, 2004 and carried forward through March 31, 2005. The pro-forma information is unaudited and is not necessarily indicative of the results which actually would have occurred if the aforementioned transaction had been consummated at the beginning of the period presented, nor does it purport to represent the financial position and results of operations for future periods. The pro-forma information should be read in conjunction with the historical financial statements of Reckson Associates Realty Corp. 2
RECKSON ASSOCIATES REALTY CORP PRO-FORMA BALANCE SHEETS MARCH 31, 2005 (UNAUDITED AND IN THOUSANDS, EXCEPT SHARE AMOUNTS) Reckson Pro-Forma Pro-Forma Historical Adjustments Condensed (A) (B) ----------------- ------------------ ------------- Assets: Commercial real estate properties, at cost: Land $ 419,846 $ 119,138 $ 538,984 Building and improvements 2,755,580 303,434 3,059,014 Developments in progress: Land 98,176 - 98,176 Development costs 22,124 - 22,124 Furniture, fixtures and equipment 12,504 - 12,504 ----------------- ------------------ ------------- 3,308,230 422,572 3,730,802 Less accumulated depreciation (584,949) - (584,949) ----------------- ------------------ ------------- Investments in real estate, net of accumulated depreciation 2,723,281 422,572 3,145,853 Properties and related assets held for sale, net of accumulated depreciation 58,469 - 58,469 Investment in a real estate joint venture 6,808 - 6,808 Investment in notes receivable 113,254 - 113,254 Investments in affiliate loans and joint ventures 60,230 - 60,230 Cash and cash equivalents 25,537 1,143 26,680 Tenant receivables 10,427 - 10,427 Deferred rents receivable 139,348 - 139,348 Prepaid expenses and other assets 54,061 51,424 105,485 Contract and land deposits and pre-acquisition costs 256 - 256 Deferred leasing and loan costs 81,074 125 81,199 ----------------- ------------------ ------------- Total Assets $ 3,272,745 $ 475,264 $ 3,748,009 ================= ================== ============= Liabilities: Mortgage notes payable $ 606,723 $ - $ 606,723 Unsecured credit facility 357,500 - 357,500 Senior unsecured notes 698,039 - 698,039 Unsecured bridge facility - 470,000 470,000 Liabilities associated with properties held for sale 757 - 757 Accrued expenses and other liabilities 65,473 601 66,074 Deferred revenues and tenant security deposits 54,015 4,663 (C) 58,678 Dividends and distributions payable 36,137 - 36,137 ----------------- ------------------ ------------- Total Liablilities $ 1,818,644 $ 475,264 $ 2,293,908 ----------------- ------------------ ------------- Minority partners' interests in consolidated partnerships 213,297 - 213,297 Preferred unit interest in the operating partnership 1,200 - 1,200 Limited partners' minority interest in the operating partnership 42,147 - 42,147 ----------------- ------------------ ------------- Total Minority Interests $ 256,644 $ - $ 256,644 ----------------- ------------------ ------------- 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 816 - 816 81,629,693 shares issued and outstanding Additional paid in capital 1,265,133 - 1,265,133 Treasury stock, 3,318,600 shares (68,492) - (68,492) ----------------- ------------------ ------------- Total Stockholders' Equity 1,197,457 - 1,197,457 ----------------- ------------------ ------------- Total Liabilities and Stockholders' Equity $ 3,272,745 $ 475,264 $ 3,748,009 ================= ================== ============= (The accompanying notes and management's assumptions are an integral part of this statement)
3 RECKSON ASSOCIATES REALTY CORP. NOTES TO PRO-FORMA BALANCE SHEET MARCH 31, 2005 (UNAUDITED) A Represents the historical balance sheet of Reckson Associates Realty Corp. at March 31, 2005. B To record the acquisition of One Court Square had the acquisition occurred on March 31, 2005. Such acquisition is inclusive of an estimated purchase price allocation of approximately $119.1 million to land, approximately $51.4 million to real estate intangible assets and approximately $3.0 million of deferred revenues recorded in accordance with FAS 141 / 142. C Inclusive of approximately $1.7 million of cash rent received from the seller at closing. 4 RECKSON ASSOCIATES REALTY CORP PRO-FORMA STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED AND IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Reckson Pro-Forma Pro-Forma Historical Adjustments Condensed (A) (B) --------------- ---------------- ----------------- Revenues: Property Operating Revenues: Base rents $ 117,382 $ 8,022 $ 125,404 Tenant escalations and reimbursements 18,502 - 18,502 --------------- ---------------- ----------------- Total property operating revenues 135,884 8,022 143,906 Operating Expenses: Property operating expenses 55,088 - 55,088 Marketing, general and administrative 8,205 - 8,205 Depreciation and amortization 29,728 3,689 33,417 --------------- ---------------- ----------------- Total operating expenses 93,021 3,689 96,710 --------------- ---------------- ----------------- Operating income 42,863 4,333 47,196 --------------- ---------------- ----------------- Non-Operating Income & Expenses: Interest income on notes receivable 2,447 - 2,447 Investment income and other 747 - 747 Interest: Expense (23,568) (4,688)(C) (28,256) Amortization of deferred financing costs (1,038) - (1,038) --------------- ---------------- ----------------- Total Non-Operating Income & Expenses (21,412) (4,688) (26,100) --------------- ---------------- ----------------- Income (Loss) before minority interests, equity in earnings of a real estate joint venture and discontinued operations 21,451 (355) 21,096 Minority partners' interests in consolidated partnerships (3,779) - (3,779) Limited partners' minority interest in the operating partnership (772) 15 (757) Equity in earnings of a real estate joint venture 151 - 151 --------------- ---------------- ----------------- Income (Loss) before discontinued operations 17,051 (340) 16,711 Discontinued operations (net of minority interests): Income from discontinued operations 305 - 305 --------------- ---------------- ----------------- Net income (Loss) $ 17,356 $ (340) $ 17,016 =============== ================ ================= Basic net income per weighted average share: Common $ 0.21 $ 0.21 Discontinued operations - - --------------- ----------------- Basic net income per common share $ 0.21 $ 0.21 =============== ================= Basic weighted average common shares outstanding: 81,100,109 81,100,109 Diluted net income per weighted average common share $ 0.21 $ 0.21 Diluted weighted average common shares outstanding 81,520,971 81,520,971 (The accompanying notes and management's assumptions are an integral part of this statement)
5 RECKSON ASSOCIATES REALTY CORP. NOTES TO PRO-FORMA STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) A Represents the historical statement of income of Reckson Associates Realty Corp. for the year ended December 31, 2005. B Represents adjustments for the purchase of One Court Square had this acquisition occurred on January 1, 2004 to (i) add the results of operations, (ii) record depreciation expense on the building based on an estimated useful life of 30 years, (iii) record the FAS 141 / 142 amortization expense adjustment on the tenanting costs, (iv) record interest expense incurred on the Bridge Facility, and (v) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement. C Calculated using the 30 day LIBOR rate on May 12, 2005 of 3.09% + 90 basis points (3.99%) on amounts outstanding under the Bridge Facility of $470 million. 6
RECKSON ASSOCIATES REALTY CORP PRO-FORMA STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2004 (UNAUDITED AND IN THOUSANDS, EXCEPT SHARE AMOUNTS) Reckson Pro-Forma Pro-Forma Historical Adjustments Condensed (A) (B) ------------------ --------------- -------------- Revenues: Property operating revenues: Base rents $ 440,953 $ 32,090 $ 473,043 Tenant escalations and reimbursements 73,862 - 73,862 ------------------ --------------- -------------- Total property operating revenues 514,815 32,090 546,905 Operating Expenses: Property operating expenses 208,754 - 208,754 Marketing, general and administrative 30,879 - 30,879 Depreciation and amortization 116,480 14,756 131,236 ------------------ --------------- -------------- Total operating expenses 356,113 14,756 370,869 ------------------ --------------- -------------- Operating income 158,702 17,334 176,036 ------------------ --------------- -------------- Non-Operating Income & Expenses: Interest income on notes receivable 7,129 - 7,129 Investment income and other 12,157 - 12,157 Interest: - Expense (98,050) (18,753)(C) (116,803) Amortization of deferred financing costs (3,822) (478)(D) (4,300) ------------------ --------------- -------------- Total Non-Operating Income & Expenses (82,586) (19,231) (101,817) ------------------ --------------- -------------- Income (Loss) before minority interests, preferred dividends and distributions, equity in earnings of a real estate joint venture and discontinued operations 76,116 (1,897) 74,219 Minority partners' interests in consolidated partnerships (18,507) - (18,507) Limited partners' minority interest in the operating partnership (1,517) 95 (1,422) Distributions to preferred unit holders (541) - (541) Equity in earnings of a real estate joint venture 603 - 603 ------------------ --------------- -------------- Income (Loss) before discontinued operations and dividends to preferred shareholders 56,154 (1,802) 54,352 Discontinued operations (net of minority interests): Income from discontinued operations 2,498 - 2,498 Gain on sales of real estate 11,776 - 11,776 ------------------ --------------- -------------- Net income 70,428 (1,802) 68,626 Dividends to preferred shareholders (12,236) - (12,236) Redemption charges on Series A preferred stock (15,812) - (15,812) ------------------ --------------- -------------- Net income allocable to common shareholders $ 42,380 $ (1,802) $ 40,578 ================== =============== ============== Basic net income per weighted average share: Common $ 0.41 $ 0.38 Discontinued operations 0.21 0.21 ------------------ -------------- Basic net income per common share $ 0.62 $ 0.59 ================== ============== Basic weighted average common shares outstanding: 68,871,000 68,871,000 Diluted net income per weighted average common share $ 0.61 $ 0.59 Diluted weighted average common shares outstanding 69,235,000 69,235,000 (The accompanying notes and management's assumptions are an integral part of this statement)
7 RECKSON ASSOCIATES REALTY CORP. NOTES TO PRO-FORMA STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2004 (UNAUDITED) A Represents the historical audited statement of income of Reckson Associates Realty Corp. for the year ended December 31, 2004. B Represents adjustments for the purchase of One Court Square had this acquisition occurred on January 1, 2004 to (i) add the results of operations, (ii) record depreciation expense on the building based on an estimated useful life of 30 years, (iii) record the FAS 141 / 142 amortization expense adjustment on the tenanting costs, (iv) record interest expense incurred on the Bridge Facility, and (v) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement. C Calculated using the 30 day LIBOR rate on May 12, 2005 of 3.09% + 90 basis points (3.99%) on amounts outstanding under the Bridge Facility of $470 million. D Estimated deferred financing costs of $125,000 to place the Bridge Facility and a one-time commitment fee equal to 7.5 basis points on the amount outstanding under the Bridge Facility. 8 (c) Exhibits 10.1 Purchase and Sale Agreement, dated as of May 4, 2005, by and between Citibank, N.A. and Reckson Court Square, LLC (Incorporated herein by reference to Exhibit 10.1 of Reckson Associates Realty Corp.'s quarterly report on Form 10-Q, filed on May 9, 2005.) 10.2 Lease Agreement between Reckson Court Square, LLC and Citibank, N.A. (Citibank), dated May 12, 2005 10.3 Term Loan Agreement, dated as of May 12, 2005, among Reckson Operating Partnership, L.P., the institution from time to time party thereto as lenders, Citicorp North America, Inc., as administrative agent, and Citigroup Global Markets Inc., as lead arranger and sole bookrunner 10.4 Amendment No.1 to Third Amended and Restated Credit Agreement, dated as of May 12, 2005, by and among Reckson Operating Partnership, L.P., the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RECKSON ASSOCIATES REALTY CORP. By: /s/ Michael Maturo ------------------------------------- Michael Maturo Chief Financial Officer RECKSON OPERATING PARTNERSHIP, L.P. By: Reckson Associates Realty Corp., its General Partner By: /s/ Michael Maturo ------------------------------------- Michael Maturo Chief Financial Officer Date: May 18, 2005