-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vy8M2V+Wcb9W8/rxgsKFjTExB0G5pt8a/0T+Kz5tHnksLcrWE42iXswXZR6z/JQy MsvNbjdZPKQIrs7M+b1ICA== 0000930548-97-000003.txt : 19970613 0000930548-97-000003.hdr.sgml : 19970613 ACCESSION NUMBER: 0000930548-97-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970609 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19970612 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RECKSON ASSOCIATES REALTY CORP CENTRAL INDEX KEY: 0000930548 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 113233650 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13762 FILM NUMBER: 97623013 BUSINESS ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5166946900 MAIL ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Date of Report (Date of earliest event reported): June 12, 1997 Commission file number: 1-13762 RECKSON ASSOCIATES REALTY CORP. (Exact name of registrant as specified in its charter) Maryland 11-3233650 (State other jurisdiction of incorporation (IRS. Employer of organization) Identification Number) 225 Broadhollow Road, Melville, NY 11747 (Address of principal executive office) (zip code) (516) 694-6900 (Registrant's telephone number including area code) ITEM 2. ACQUISITON OR DISPOSITION OF ASSETS On May 1, 1997, the Company acquired a 308,000 square foot, two building, class A office complex for $51.5 million. The buildings are presently 100% leased to AT & T and are located in Short Hills, New Jersey. The asset acquisition was financed with proceeds from the Company's March 1997 common stock offering and through a draw on its credit facility. On April 23, 1997, the Company acquired a 452,000 square foot office and research and development complex located in Shelton, Connecticut for approximately $27 million. The complex, which is currently 100% occupied by Timex and Philips Medical Systems under long term leases, is comprised of a three story office building and 320,000 square feet of back office and flex space. The asset acquisition was financed with proceeds from the Company's March 1997 common stock offering. ITEM 7. FINANCIAL STATEMENTS Financial statements of properties acquired and pro forma financial information. RECKSON ASSOCIATES REALTY CORP. ITEM 7 FINANCIAL STATEMENTS OF PROPERITIES ACQUIRED AND PRO FORMA FINANCIAL INFORMATION TABLE OF CONTENTS DESCRIPTION Pro Forma Condensed Combining Balance Sheet as of March 31, 1997 ....................................................... Pro Forma Condensed Combining Statement of Operations for the Three Months ended March 31, 1997....................... Pro Forma Condensed Combining Statement of Operations for the Year ended December 31, 1996 ........................... Notes to Pro Forma Financial Statements .................... Statement of Revenue and Certain Expenses of Short Hills Office Center for the Three Months Ended March 31, 1997 and for the Year Ended December 31, 1996 ....................... Notes to Statement of Revenue and Certain Expenses of Short Hills Office Center ........................................ Statement of Revenue and Certain Expenses of 710 Bridgeport Avenue for the Three Months Ended March 31, 1997 and for the Year Ended December 31, 1996 ............................... Notes to Statement of Revenue and Certain Expense of 710 Bridgeport Avenue .......................................... Reckson Associates Realty Corp. Pro Forma Condensed Combining Balance Sheet As of March 31, 1997 (Unaudited) The following unaudited pro forma condensed combining balance sheet is presented as if the The Company had acquired (i) Short Hills Office Center and (ii) 710 Bridgeport Avenue on March 31, 1997. This pro forma condensed combining balance sheet should be read in conjunction with the pro forma condensed combining statement of operations of the Company and the historical financial statements and notes thereto of the Company as filed on Form 10-K for the year ended December 31, 1996 and on Form 10-Q for the three months ended March 31, 1997. The pro forma condensed combining balance sheet is unaudited and is not necessarily indicative of what the actual financial position would have been had the Company acquired the Short Hills Office Center and 710 Bridgeport Avenue on March 31, 1997, nor does it purport to represent the future financial position of the Company. Reckson Associates Realty Corp. Pro Forma Condensed Combining Balance Sheet As of March 31, 1997 (Unaudited)
710 March 31, Short Hills Bridgeport 1997 Historical(a) Acquisition(b) Acquisition(c) Pro Forma _________ ________ _________ _________ (Unaudited) ASSETS Real Estate, net $ 469,420 $ 51,500 $ 27,000 $ 547,920 Cash and cash equivalents 111,822 (30,000) (27,000) 54,822 Tenants receivables 2,434 - - 2,434 Affiliate receivables 4,737 - - 4,737 Deferred rent receivable 12,708 - - 12,708 Investment in mortgage note receivable 69,435 - - 69,435 Contract and land deposits pre-acquisition costs, 11,540 - - 11,540 Prepaid expenses and other assets 7,836 - - 7,836 Investments in joint ventures 6,336 - - 6,336 Deferred lease costs and loan costs, net 12,451 - - 12,451 _________ _________ _________ _________ Total Assets $ 708,719 $ 21,500 $ - $ 730,219 ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY Mortgage notes payable $ 165,852 $ - $ - $ 165,852 Credit Facility 55,000 21,500 - 76,500 Accrued expenses and other liabilities 13,723 - - 13,723 Affiliate payables 732 - - 732 Dividends and distributions payable 9,555 - - 9,555 _________ _________ _________ _________ Total Liabilities 244,862 21,500 - 266,362 _________ _________ _________ _________ Minority interest in consolidated partnership 9,419 - - 9,419 Limited partners' minority interest in operating partnership 76,846 - - 76,846 _________ _________ _________ _________ 86,265 - - 86,265 _________ _________ _________ _________ STOCKHOLDERS' EQUITY: Common Stock 172 - - 172 Additional paid in capital 377,420 - - 377,420 _________ _________ _________ _________ Total Stockholders' Equity 377,592 - - 377,592 _________ _________ _________ _________ Total Liabilities and Stockholders' Equity $ 708,719 $ 21,500 $ - $ 730,219 ========= ========= ========= ========= See Accompanying Notes to Pro Forma Financial Statements
Reckson Associates Realty Corp. Pro Forma Condensed Combining Statement of Operations For the Three Months Ended March 31, 1997 (Unaudited) The following unaudited pro forma condensed combining Statement of Operations is presented as if (i) the Company had acquired the Short Hills Office Center and (ii) the Company had acquired 710 Bridgeport Avenue as of January 1, 1997 and the Company qualified as a REIT, distributed all its taxable income and, therefore, incurred no income tax expense during the period. This pro forma condensed combining Statement of Operations should be read in conjunction with the pro forma condensed combining balance sheet of the Company and the historical financial statements and notes thereto of the Company as filed on Form 10-Q for the three months ended March 31, 1997. The pro forma condensed combining Statement of Operations is unaudited and is not necessarily indicative of what the actual financial position would have been had the Company acquired the Short Hills Office Center and 710 Bridgeport Avenue as of January 1, 1997, nor does it purport to represent the operations of the Company for future periods. (Amounts below are in thousands, except per share data.) Reckson Associates Realty Corp. Pro Forma Condensed Combining Statement of Operations For the Three Months Ended March 31, 1997 (Unaudited)
710 Pro March 31, Short Hills Bridgeport Forma (g) 1997 Historical(d) Acquisition(e) Acquisition(f) Adjustments Pro Forma _________ ________ _________ _________ _________ (Unaudited) REVENUES Base Rents $ 26,590 $ 1,232 $ 719 $ - 28,541 Tenant escalations and reimbursements 3,245 - 212 - 3,457 Equity in earnings of real estate joint ventures 97 - - - 97 Equity in earnings of service companies 142 - - - 142 Investment and other income 1,618 - - - 1,618 _________ _________ _________ _________ _________ Total Revenue 31,692 1,232 931 - 33,855 _________ _________ _________ _________ _________ EXPENSES Operating expenses Property operating expenses 5,664 6 85 - 5,755 Real estate taxes 4,564 - 73 - 4,637 Ground Rent 303 - - - 303 Marketing, general and administrative 1,980 - 62 - 2,042 _________ _________ _________ _________ _________ Total Operating Expenses 12,511 6 220 - 12,737 _________ _________ _________ _________ _________ Interest 4,736 - - 1,073 5,809 Depreciation and amortization 5,640 365 191 - 6,196 _________ _________ _________ _________ _________ Total Expenses 22,887 371 411 1,073 24,742 _________ _________ _________ _________ _________ Income before minority interests and extraordinary item 8,805 861 520 (1,073) 9,113 Minority partners'interest in consolidated partnership income (243) - - - (243) _________ _________ _________ _________ _________ Income before limited partners' minority interest in Operating Partnership income and extraordinary items $ 8,562 $ 861 $ 520 $ (1,073) 8,870 ========= ========= ========= ========= Limited partners' minority interest in operating partnership income (1,842)(h) Net Income $ 7,028 ========= Net Income per common share $ .27 (i) ========= Weighted average common shares outstanding 26,569 ========= See Accompanying Notes to Pro Forma Financial Statements
Reckson Associates Realty Corp. Pro Forma Condensed Combining Statement of Operations For the Year Ended December 31, 1996 (Unaudited) The following unaudited pro forma condensed combining Statement of Operations is presented as if (i) the Company had acquired the Short Hills Office Center and (ii) the Company had acquired 710 Bridgeport Avenue as of January 1, 1996 and the Company qualified as a REIT, distributed all its taxable income and, therefore, incurred no income tax expense during the period. This pro forma condensed combining Statement of Operations should be read in conjunction with the pro forma condensed combining balance sheet of the Company and the historical financial statements and notes thereto of the Company as filed on Form 10-K for the year ended December 31, 1996. The pro forma condensed combining Statement of Operations is unaudited and is not necessarily indicative of what the actual financial position would have been had the Company acquired the Short Hills Office Center and 710 Bridgeport Avenue on January 1, 1996, nor does it purport to represent the operations of the Company for future periods. (Amounts below are in thousands, except per share data.) Reckson Associates Realty Corp. Pro Forma Condensed Combining Statement of Operations For the Year Ended December 31, 1996 (Unaudited)
710 Pro December 31, Short Hills Bridgeport Forma (m) 1996 Historical(j) Acquisition(k) Acquisition(l) Adjustments Pro Forma _________ ________ _________ _________ _________ (Unaudited) REVENUES Base Rents $ 82,150 $ 4,517 $ 2 768 $ - 89,435 Tenant escalations and reimbursements 10,628 - 764 - 11,392 Equity in earnings of real estate joint ventures 266 - - - 266 Equity in earnings of service companies 1,031 - - - 1,031 Investment and other income 2,066 - - - 2,066 _________ _________ _________ _________ _________ Total Revenue 96,141 4,517 3,532 - 104,190 _________ _________ _________ _________ _________ EXPENSES Operating expenses Property operating expenses 18,959 30 541 - 19,530 Real estate taxes 13,935 - 298 - 14,233 Ground Rent 1,107 - - - 1,107 Marketing, general and administrative 5,949 - 221 - 6,170 _________ _________ _________ _________ _________ Total Operating Expenses 39,950 30 1,060 - 41,040 Interest 13,331 - - 5,580 18,911 Depreciation and amortization 17,670 1,459 765 - 19,894 _________ _________ _________ _________ _________ Total Expenses 70,951 1,489 1,825 5,580 79,845 _________ _________ _________ _________ _________ Income before minority interests and extraordinary item 25,190 3,028 1,707 (5,580) 24,345 Minority partners'interest in consolidated partnership income (808) - - - (808) _________ _________ _________ _________ _________ Income before limited partners' minority interest in Operating Partnership income and extraordinary items $ 24,382 $ 3,028 $ 1,707 $ (5,580) 23,537 ========= ========= ========= ========= Limited partners' minority interest in operating partnership income (5,743)(n) Net Income before extraordinary item $ 17,794 ========= Net Income per common share before extraordinary item $ .89 (o) ========= Weighted average common shares outstanding 19,928 ========= See Accompanying Notes to Pro Forma Financial Statements
Reckson Associates Realty Corp. Notes to Pro Forma Financial Statements (Unaudited) (in thousands, except shares and units) Pro Forma Condensed Combining Balance Sheet A. Reflects the Company's historical balance sheet as of March 31, 1997 (unaudited). B. Reflects the acquisition of Short Hills Office Center with proceeds from the March 1997 common equity offering and borrowings under the credit facility. C. Reflects the acquisition of 710 Bridgeport Avenue with proceeds from the March 1997 common equity offering. Pro Forma Statements of Operations For the Year Ended December 31, 1996 and Three Months Ended March 31, 1997. D. Reflects the historical operations of the Company for the three months ended March 31, 1997. E. Reflects the revenues and certain expenses of the Short Hills Office Center for the three months ended March 31, 1997. F. Reflects the revenues and certain expenses of 710 Bridgeport Avenue for the three months ended March 31, 1997. G. Reflects the increase in interest costs associated with additional borrowings under the Credit Facility. H. Represents the minority interest of the Limited Partners in the Operating Partnership at an effective pro forma rate of approximately 20.8%. I. Pro forma net income per share of common stock before extraordinary item is based upon the weighted average number of shares outstanding during the three months ended March 31, 1997 of 26,569,000. This reflects a two-for-one stock split which was distributable on April 15, 1997. J. Reflects the historical operations of the Company for the year ended December 31, 1996. K. Reflects the revenues and certain expenses of Short Hills Office Center for the year ended December 31, 1996. L. Reflects the revenues and certain expenses of 710 Bridgeport Avenue for the year ended December 31, 1996. M. Reflects the increase in interest costs associated with additional borrowings under the Credit Facility. N. Represents the minority interest of the Limited Partners in the Operating Partnership at an effective pro forma rate of approximately 24.4%. O. Pro forma net income per share of common stock before extraordinary item is based upon the weighted average number of shares outstanding during the year ended December 31, 1996 of 19,928,000. This reflects a two-for-one stock split distributable on April 15, 1997. Report Independent Auditors Board of Directors and Stockholders Reckson Associates Realty Corp. We have audited the statement of revenues and certain expenses of the property ("710 Bridgeport Avenue") to be acquired from 710 Bridgeport Avenue Associates L.P., ("Bridgeport") by Reckson Associates Realty Corp., as described in Note 1, for the year ended December 31, 1996. The financial statement is the responsibility of 710 Bridgeport Avenue's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K of Reckson Associates Realty Corp. and is not intended to be a complete presentation of 710 Bridgeport Avenue's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of 710 Bridgeport Avenue as described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. Ernst & Young LLP New York, New York May 23, 1997 710 Bridgeport Avenue Statement of Revenues and Certain Expenses (in thousands) (Note 1) Three months ended Year ended March 31, 1997 December 31, 1996 ________________ ______________ (Unaudited) Revenues: (Notes 2 and 5) Base rents $ 719 $ 2,768 Tenant escalations 212 764 ________________ ______________ Total revenues 931 3,532 ________________ ______________ Certain Expenses: Property operating expenses (Note 4) 85 541 Real estate taxes 73 298 Management fees (Note 3) 62 221 ________________ ______________ Total certain expenses 220 1,060 ________________ ______________ Revenues in excess of certain expenses $ 711 $ 2,472 ________________ ______________ See accompanying notes to financial statement. 710 Bridgeport Avenue Notes to Statement of Revenues and Certain Expenses For the Year Ended December 31, 1996 1. Basis of Presentation Presented herein is the statement of revenues and certain expenses related to the operation of an industrial building, 710 Bridgeport Avenue, owned by 710 Bridgeport Avenue Associates, L.P. The property is located in Shelton, Connecticut. 710 Bridgeport Avenue is not a legal entity but rather certain real estate subject to a purchase contract by Reckson Associates Realty Corp. (the "Company"). The accompanying statement of revenues and certain expenses includes the accounts of 710 Bridgeport Avenue. The accompanying financial statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate property. Accordingly, the financial statement excludes certain expenses that may not be comparable to those expected to be incurred by Reckson Associates Realty Corp. in the proposed future operations of the aforementioned property. Items excluded consist of interest, depreciation and general and administrative expenses not directly related to the future operations. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statement and accompanying notes. Actual results could differ from those estimates. 2. Lease and Revenue Recognition 710 Bridgeport Avenue is being leased to tenants under operating leases. Minimum rental income is generally recognized on a straight-line basis over the term of the lease. The excess of amounts so recognized over amounts due pursuant to the underlying leases amounted to approximately $195,000 and $6,000 for the year ended December 31, 1996 and the three months ended March 31, 1997 (unaudited), respectively. The lease agreements generally contain provisions for reimbursement of real estate taxes and operating expenses, as well as fixed increases in rent. 3. Management Agreements 710 Bridgeport Avenue is managed by an affiliate of the owner which provides property management services at the rate of 5% of gross cash receipts. A tenant of the building also receives a management fee for services rendered at the property. 4. Property Operating Expenses Property operating expenses for the year ended December 31, 1996 include approximately $52,000 for insurance, $105,000 for utilities, $214,000 in contract service costs and $170,000 in repair and maintenance costs. For the three months ended March 31, 1997 (unaudited), property operating expenses include approximately $13,000 for insurance, $28,000 for utilities, $18,000 for contract service costs and $26,000 for repair and maintenance costs. 5. Significant Tenants Timex Inc. and North American Philips Corp. are the tenants in this building whose leases expire on February 28, 2003 and July 10, 2005, respectively. Report Independent Auditors Board of Directors and Stockholders Reckson Associates Realty Corp. We have audited the statement of revenues and certain expenses of the property ("Short Hills Office Center") to be acquired from Short Hills NJ, Inc. ("Short Hills") by Reckson Associates Realty Corp., as described in Note 1, for the year ended December 31, 1996. The financial statement is the responsibility of the Short Hills Office Center 's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K of Reckson Associates Realty Corp. and is not intended to be a complete presentation of the Short Hills Office Center's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Short Hills Office Center as described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. Ernst & Young LLP New York, New York May 16, 1997 Short Hills Office Center Statement of Revenues and Certain Expenses (in thousands) (Note 1) Three months ended Year ended March 31, 1997 December 31, 1996 ________________ ______________ (Unaudited) Revenues: (Notes 2) Base rents $ 1,232 $ 4,517 ________________ ______________ Total revenues 1,232 4,517 ________________ ______________ Certain Expenses: Property operating expenses (Note 4) 6 30 ________________ ______________ Total certain expenses 6 30 ________________ ______________ Revenues in excess of certain expenses $ 1,226 $ 4,487 ________________ ______________ See accompanying notes to financial statement. Short Hills Office Center Notes to Statement of Revenues and Certain Expenses For the Year Ended December 31, 1996 1. Basis of Presentation Presented herein is the statement of revenues and certain expenses related to the operation of two office buildings, Short Hills Office Center, owned by Short Hills NJ, Inc. ("Short Hills"). The property is located in Short Hills, New Jersey. The accompanying financial statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate property. Accordingly, the financial statement excludes certain expenses that may not be comparable to those expected to be incurred by Reckson Associates Realty Corp. in the proposed future operations of the aforementioned property. Items excluded consist of interest, depreciation and general and administrative expenses not directly related to the future operations. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statement and accompanying notes. Actual results could differ from those estimates. The statement of revenues and certain expenses for the three months ended March 31, 1997 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the statement of revenues and certain expenses for this interim period have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. 2. Lease and Revenue Recognition The Short Hills Office Center is being leased to one tenant under an operating lease. The lease is a net lease that provides that certain operating expenses such as property taxes and utilities are to be paid directly by the tenant and accordingly are not reflected in the statement. Minimum rental income is generally recognized on a straight-line basis over the term of the lease. The excess of amounts due pursuant to the underlying leases over amounts so recognized was approximately $284,000 for the year ended December 31, 1996. The Short Hills Office Center is comprised of two office buildings leased to a single tenant, the lease on the east building expires on April 30, 2001 and the west building April 30, 2003. 3. Management and Leasing Agreements The Short Hills Office Center is managed and leased by Short Hills NJ, Inc. ("Short Hills"). 4. Property Operating Expenses Property operating expenses for the year ended December 31, 1996 include approximately $19,000 for insurance and $11,000 in repair and maintenance costs. For the three months ended March 31, 1997 (unaudited) property operating expenses include approximately $4,000 for insurance and $2,000 for repairs and maintenance costs. -----END PRIVACY-ENHANCED MESSAGE-----