-----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, S9rMMK+rNT2MFoPoAbWI/SsX9adL6nRDMKKMEPqjdJDGI91rTP9cgcBOk2J0Jq7w bLIigl9aG7m5gRLtYDCIow== 0000930548-98-000002.txt : 19980325 0000930548-98-000002.hdr.sgml : 19980325 ACCESSION NUMBER: 0000930548-98-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980324 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: SEC FILE NUMBER: 001-13762 FILM NUMBER: 98572008 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): March 23, 1998 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 March 13, 1998, the Company acquired 51 John F. Kennedy Parkway ("51 JFK") a 250,000 square foot, class A office complex for $67 million. 51 JFK is currently 100% occupied and is located in Short Hills, New Jersey. The asset acquisition was financed with proceeds from the Company's credit facility. On March 18, 1998, the Company entered into a contract to acquire Stamford Towers Office complex consisting of two eleven-story class A office towers totaling 318,000 square feet, for approximately $61 million. The building is currently 98% occupied and is located in Stamford, Connecticut. The asset acquisition is expectecd to be financed with proceeds from the Company's credit facility. 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 September 30, 1997 ................................................... Pro Forma Condensed Combining Statement of Operations for the Nine Months ended September 30, 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 51 JFK for the Nine Months Ended September 30, 1997 and for the Years Ended December 31, 1997 and 1996 ................................. Notes to Statement of Revenue and Certain Expenses of 51 JFK ........................................................ Statement of Revenue and Certain Expenses of Stamford Towers for the Nine Months Ended September 30, 1997 and for the Years Ended December 31, 1997 and 1996 ........................... Notes to Statement of Revenue and Certain Expenses of Stamford Towers ............................................ Reckson Associates Realty Corp. Pro Forma Condensed Combining Balance Sheet As of September 30, 1997 (Unaudited) The following unaudited pro forma condensed combining balance sheet is presented as if the Company had acquired 51 JFK and Stamford Towers on September 30, 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 nine months ended September 30, 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 51 JFK and Stamford Towers on September 30, 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 September 30, 1997 (Unaudited)
Stamford 51 JFK Towers September Parkway Office (c) 30, 1997 Historical(a) Property (b) Property Pro Forma ___________ ____________ _________ _________ Assets Real estate, net $ 690,053 $ 67,000 $ 61,300 $ 818,353 Cash and cash equivalents 10,211 - - 10,211 Tenant receivables 2,371 - - 2,371 Affiliate receivables 5,686 - - 5,686 Deferred rent receivable 15,358 - - 15,358 Investment in mortgage notes and notes receivable 85,853 - - 85,853 Contract and land deposits and other pre-acquisition costs 7,172 - - 7,172 Prepaid expenses and other assets 14,565 - - 14,565 Investments in real estate joint ventures 7,048 - - 7,048 Deferred lease and loan costs, net 15,440 - - 15,440 _________ ________ ________ _________ Total Assets $ 853,757 $ 67,000 $ 61,300 $ 982,057 ========= ======== ======== =========
Liabilities and Stockholders' Equity Mortgage notes payable $ 180,593 $ - $ - $ 180,593 Senior unsecured notes 150,000 - - 150,000 Credit facility 33,000 67,000 61,300 161,300 Accrued expenses and other liabilities 20,124 - - 20,124 Affiliate payables 718 - - 718 Dividends and distributions payable 13,046 - - 13,046 _________ ________ ________ _________ Total Liabilities 397,481 67,000 61,300 525,781 _________ ________ ________ _________ Minority interest in consolidated partnership 6,765 - - 6,765 Limited partners' interest in operating partnership 75,608 - - 75,608 _________ ________ ________ _________ 82,373 - - 82,373 _________ ________ ________ _________ Stockholders' Equity Common stock 345 - - 345 Additional paid-in capital 373,558 - - 373,558 _________ ________ ________ _________ Total Stockholders' Equity 373,903 - - 373,903 _________ ________ ________ _________ Total Liabilities and Stockholders' Equity $ 853,757 $ 67,000 $ 61,300 $ 982,057 ========= ======== ======== ========= See accompanying notes to pro forma financial statements.
Reckson Associates Realty Corp. Pro Forma Condensed Combining Statement of Operations For the Nine Months Ended September 30, 1997 (Unaudited) The following unaudited pro forma condensed combining Statement of Operations is presented as if the Company had acquired 51 JFK and Stamford Towers 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 nine months ended September 30, 1997. The pro forma condensed combining Statement of Operations is unaudited and is not necessarily indicative of what the actual results of operations would have been had the Company acquired 51 JFK and Stamford Towers 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 Nine Months Ended September 30, 1997 (Unaudited) (Dollars in thousands)
Stamford 51 JFK Towers Pro September Parkway Office Forma (g) 30, 1997 Historical(d) Property (e) Property (f) Adjustments Pro Forma ___________ ____________ _________ _________ _________ Revenues: Base Rents $ 91,179 $ 6,268 $ 3,876 $ - $ 101,323 Tenant escalations and reimbursements 10,737 238 304 - 11,279 Equity in earnings of real estate joint ventures 326 - - - 326 Equity in earnings of service companies 208 - - - 208 Interest income on mortgage notes and notes receivable 3,675 - - - 3,675 Other 2,104 - - - 2,104 _________ ________ ________ _________ _________ Total Revenues 108,229 6,506 4,180 - 118,915 _________ ________ ________ _________ _________ Expenses: Operating Expenses: Property operating expenses 20,857 1,295 1,333 - 23,485 Real Estate Taxes 14,569 564 531 - 15,664 Ground Rents 918 - - - 918 Marketing, general and administrative 6,158 - - - 6,158 ________ ________ ________ _________ _________ Total Operating Expenses 42,502 1,859 1,864 - 46,225 Interest 14,471 - - 6,843 21,314 Depreciation and amortization 18,991 1,424 1,303 - 21,718 ________ ________ ________ _________ _________ Total Expenses 75,964 3,283 3,167 6,843 89,257 ________ ________ ________ _________ _________ Income before minority interest and extraordinary items 32,265 3,223 1,013 (6,843) 29,658 Minority Partners' Interest in Consolidated partnership (income) (645) - - - (645) ________ ________ ________ _________ _________ Income before limited partners' minority interest in Operating Partnership income and extraordinary items $ 31,620 $ 3,223 $ 1,013 $ (6,843) 29,013 ======== ======== ======== ========= Limited Partners' minority interest in operating partnership income (5,164)(h) _________ Net income before extraordinary item $ 23,849 ========= Net income per share before extraordinary item $ 0.75 (i) ========= Weighted average common shares outstanding 31,810 ========= 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 the Company had acquired 51 JFK and Stamford Towers 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 results of operations would have been had the Company acquired 51 JFK and Stamford Towers 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) (Dollars in thousands)
Stamford 51 JFK Towers Pro December Parkway Office Forma (m) 31, 1996 Historical(j) Property (k) Property (l) Adjustments Pro Forma ___________ ____________ _________ _________ _________ Revenues: Base Rents $ 82,150 $ 8,319 $ 4,245 $ - $ 94,714 Tenant escalations and reimbursements 10,628 408 469 - 11,505 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 Revenues 96,141 8,727 4,714 - 109,582 ________ ________ ________ _________ _________ Expenses: Operating Expenses: Property operating expenses 18,959 1,615 1,849 - 22,423 Real Estate Taxes 13,935 657 736 - 15,328 Ground Rents 1,107 - - - 1,107 Marketing, general and administrative 5,949 - - - 5,949 ________ ________ ________ _________ _________ Total Operating Expenses 39,950 2,272 2,585 - 44,807 Interest 13,331 - - 9,122 22,453 Depreciation and amortization 17,670 1,898 1,737 - 21,305 ________ ________ ________ _________ _________ Total Expenses 70,951 4,170 4,322 9,122 88,565 ________ ________ ________ _________ _________ Income before minority interest and extraordinary items 25,190 4,557 392 (9,122) 21,017 Minority Partners' Interest in Consolidated partnership income (808) - - - (808) ________ ________ ________ _________ _________ Income before limited partners' minority interest in Operating Partnership income and extraordinary items $ 24,382 $ 4,557 $ 392 $ (9,122) 20,209 ======== ======== ======== ========= Limited Partners' minority interest in operating partnership income (4,931) (n) _________ Net income before extraordinary item $ 15,278 ========= Net income per share before extraordinary item $ 0.77 (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 September 30, 1997 (unaudited). B. Reflects the acquisition of the 51 JFK Parkway Property with borrowings under the Credit Facility. C. Reflects the acquisition of the Stamford Towers Office Property with borrowings under the Credit Facility. Pro Forma Condensed Combining Statements of Operations For the Year Ended December 31, 1996 and Nine Months Ended September 30, 1997 D. Reflects the historical operations of the Company for the nine months ended September 30, 1997 (unaudited). E. Reflects the revenues and certain expenses of the 51 JFK Parkway Property for the nine months ended September 30, 1997. F. Reflects the revenues and certain expenses of the Stamford Towers Office Property for the nine months ended September 30, 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 17.8%. 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 nine months ended September 30, 1997 of 31,810,000. 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 the 51 JFK Parkway Property for the year ended December 31, 1996. L. Reflects the revenues and certain expenses of the Stamford Towers Office Property 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 which was distributable on April 15, 1997. Independent Auditors's Report To the Board of Directors of Reckson Associates Realty Corp. We have audited the statement of revenues and certain expenses of the property located 51 JFK Parkway, Short Hills, New Jersey (the "Property") to be acquired from entities controlled by Prudential Insurance Company ("Prudential")by Reckson Associates Realty Corp., as described in Note 1, for the years ended December 31, 1997 and 1996. The financial statements is the responsibility of management. Our responsibility is to express an opinion on the 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 basis of accounting 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 were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Form 8-K of Reckson Associates Realty Corp. and is not intended to be a complete presentation of the Property'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 51 JFK Parkway, as described in Note 1 for the years ended December 31, 1997 and 1996, in conformity with generally accepted accounting principles. KINSEY, BECK & COMPANY New York, New York February 10, 1998 Office Center At Short Hills - 51 JFK Parkway Statement of Revenues and Certain Operating Expenses For The Years Ended December 31, ____________________________ 1997 1996 ___________ ___________ Revenues: Rental income $ 7,827,382 $ 7,707,057 Other income 487,159 408,100 ___________ ___________ Total revenues 8,314,541 8,115,157 Certain operating expenses: Real estate taxes 751,663 657,112 Utilities 803,753 793,466 Repairs and maintenance 253,689 233,425 Cleaning & Security 422,946 392,084 Administrative 137,568 102,400 Insurance 32,765 33,211 Management fee 88,320 60,000 ___________ ___________ Total certain operating expenses 2,490,704 2,271,698 ___________ ___________ Revenues in excess of certain operating expenses $ 5,823,837 $ 5,843,459 =========== =========== The accompanying notes are an integral part of these statements of revenues and certain operating expenses. 51 JFK Parkway Notes to the Statements of Revenues and Certain Operating Expenses 1. Organization and Significant Accounting Policies The accompanying statements of revenues and certain operating expenses of 51 JFK Parkway have been presented on a historical cost basis because the assets and liabilities are expected to be the subject of a combination with Reckson Associates Realty Corp. (the "Company"). In management's opinion, these statements of revenues and certain operating expenses include the revenues and expenses associated with the operations of the property intended to be sold to the Company. The accompanying historical statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and are not representative of the actual operations of the property for the periods presented. The statements exclude certain expenses, such as interest, depreciation and amortization and other costs not directly related to the future operations of the property that may not be comparable to the expenses expected to be incurred in the proposed future operations of the property. 2. Revenue Recognition Prudential, as a lessor, has retained substantially all the risks and benefits of ownership of the rental property and accounts for its leases as operating leases. Space is leased to tenants under leases ranging from 1 to 15 years. Rental income is recognized over the terms of the leases as it is earned. 3. Future Rental Revenue The future minimum rental payments due from tenants under non-cancelable operating leases as of December 31, 1997, are as follows: Year Ended ------------ 1998 $ 7,618,841 1999 6,577,259 2000 5,099,750 2001 3,534,784 2002 3,319,690 Thereafter 17,459,345 _____________ $ 43,609,669 ============= Approxiamately 110,622 sq. ft. and 109,765 sq. ft. of the 251,455 sq. ft. was leased to affiliates of Prudential during the years ended December 31, 1997 and 1996, respectively. Rental revenue earned from these affiliates amounted to approximately $3,662,000 and $3,594,000 in 1997 and 1996, respectively. Rental rates paid by affiliates are comparable to those paid by non-affiliates. 4. Use of Estimates in the Preparation of Financial Statements The preparation of statements of revenues and certain operating expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of revenues and certain operating expenses during the year. Actual results could differ from those estimates. Report of Independent Auditors Board of Directors and Stockholders Reckson Associates Realty Corp. We have audited the statement of revenues and certain expenses of the property ("Stamford Towers Office Property") to be acquired from Stamford Towers Limited Partnership by Reckson Associates Realty Corp., as described in Note 1, for the year ended December 31, 1997. The financial statement is the responsibility of the Stamford Towers Office Property'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 a Form 8-K of Reckson Associates Realty Corp. and is not intended to be a complete presentation of the Stamford Towers Office Property'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 Stamford Towers Office Property as described in Note 1 for the year ended December 31, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Boston, Massachusetts February 17, 1998 Stamford Towers Office Property Statement of Revenues and Certain Expenses (Note 1) For the Year Ended December 31, 1997 Revenues: (Notes 2 and 5) Base rents $ 5,074,594 Tenant reimbursable income 379,827 ____________ Total revenues 5,454,421 ____________ Certain expenses: Property operating expenses 1,691,376 Real estate taxes 710,188 Management fees (Note 3) 83,982 ____________ Total certain expenses 2,485,546 ____________ Revenues in excess of certain expenses $ 2,968,875 ============ See accompanying notes to financial statement. Stamford Towers Office Property Notes to Statement of Revenues and Certain Expenses For the Year Ended December 31, 1997 1. Basis of Presentation Presented herein is the statement of revenues and certain expenses related to the operation of an office building, Stamford Towers Office Property, owned by Stamford Towers Limited Partnership. The property is located in Stamford Connecticut. The Stamford Towers Office Property 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 the Stamford Towers Office Property. 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 The Stamford Towers Office Property 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 lease agreements generally contain provisions for reimbursement of real estate taxes and operating expenses over base year amounts, as well as fixed increases in rent. The Stamford Towers Office Property is a multi-tenant office building whose leases expire at various dates over the next sixteen years. 3. Management and Leasing Agreements The Stamford Towers Office Property is managed and leased by Insignia/ESG. Insignia/ESG provides property management services to the Stamford Towers Office Property at the rate of 1.5% of total base rents plus total operating expense escalations. 4. Property Operating Expenses Property operating expenses for the year ended December 31, 1997 include approximately $54,900 for insurance, $613,000 for utilites, $180,500 in payroll costs and $25,500 in repair and maintenance costs. 5. Significant Tenants One tenant, Citicorp POS Information Services, accounted for 67% of the 1997 rents on a straight line basis. 6. Future Minimum Lease Rental Payments Future minimum lease rental payments (excluding cancellation penalties) to be received under the non-cancelable portion of the existing operating leases as of December 31, 1997 are as follows: 1998 $ 6,701,599 1999 6,661,300 2000 6,653,240 2001 6,653,240 2002 6,388,462 Thereafter 17,343,100 _____________ $ 50,400,941 ============= Terms of the non-cancelable portion of the existing operating leases range from five to ten years. The leases allow for increases in certain property operating expenses to be passed on to the tenants. -----END PRIVACY-ENHANCED MESSAGE-----