-----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, Wbh59MCn7JVVnX0zwBh3x3KAoyZl43CxPyfbRM2z3yPIVdlmDfH/vwItVOn5S++b YwHYDcEbow8i1zriSGnLXQ== 0001005150-02-000907.txt : 20020808 0001005150-02-000907.hdr.sgml : 20020808 20020808091905 ACCESSION NUMBER: 0001005150-02-000907 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020808 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20020808 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: 02722321 BUSINESS ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 6316946900 MAIL ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RECKSON OPERATING PARTNERSHIP LP CENTRAL INDEX KEY: 0000930810 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 113233647 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-84580 FILM NUMBER: 02722322 BUSINESS ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 6316946900 MAIL ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 8-K 1 newform8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT ------------- Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: August 8, 2002 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 organization) Reckson Operating Partnership, L.P. - 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) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Reckson Associates Realty Corp. Second Quarter Presentation, dated August 7, 2002 ITEM 9. REGULATION FD DISCLOSURE The Registrants are attaching the Second Quarter Presentation as Exhibit 99.1 to this Current Report on Form 8-K. Note: the information in this report (including the exhibit) is furnished pursuant to Item 9 and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. This report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD. 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 thereunto duly authorized. RECKSON ASSOCIATES REALTY CORP. By: /s/ Michael Maturo ---------------------------------------- Michael Maturo Executive Vice President and Chief Financial Officer RECKSON OPERATING PARTNERSHIP, L.P. By: Reckson Associates Realty Corp., its General Partner By: /s/ Michael Maturo ---------------------------------------- Michael Maturo Executive Vice President and Chief Financial Officer Date: August 7, 2002 3 EX-99.1 3 ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 The New York Tri-State Area's Leading Real Estate Company Reckson Associates Realty Corp. Second Quarter 2002 Presentation Earnings Results and Overview August 7, 2002 SUMMARY OF HIGHLIGHTS Reported diluted FFO of $.59 per share for the second quarter of 2002 inclusive of $.02 per share of deferred rent reserves, as compared to $.70 per share for the comparable 2001 period, representing a per share decrease of 15.7%. Reported diluted CAD of $.45 per share for the second quarter of 2002 inclusive of $.02 per share of deferred rent reserves, as compared to $.48 per share for the comparable 2001 period, representing a per share decrease of 6.3%. Generated same property NOI increases, before termination fees and deferred rent reserves, of 12.0% (cash) and 2.1% (GAAP) for the second quarter of 2002. Generated same space rent growth on space leased during the period of 19.3% (GAAP) and 14.1% (cash) for Office and 12.4% (GAAP) and 9.0% (cash) for Industrial/R&D for the second quarter of 2002. Occupancy: June 30, 2002 March 31, 2002 June 30, 2001 ------------- -------------- ------------- Total: Overall 94.2% 95.1% 97.2% Office 95.2% 96.2% 97.0% Industrial 92.0% 92.9% 97.9% Same Property: Overall 94.9% 95.1% 97.5% Office 95.9% 96.2% 97.0% Industrial 92.0% 92.9% 97.9% SUMMARY OF HIGHLIGHTS (continued) Renewed 71% of expiring square footage during the first six months of 2002 and 57% during the second quarter of 2002. Completed 478,000 square feet of leasing transactions during the second quarter of 2002. Reduced total leased portfolio exposure to expiring leases to 3.1% in 2002 and 9.2% in 2003. Completed an offering of $50 million of 6.00% (6.13% effective rate) five-year senior unsecured notes due June 15, 2007. Repurchased 1,856,200 Class A common shares at a weighted average stock price of $21.98 per share and 368,200 Class B common shares at a weighted average stock price of $22.90 per share. Total purchases of Class A common and Class B common shares amounted to approximately $49.2 million. These purchases were made subsequent to June 30, 2002. Announced that the Company will begin expensing the cost of stock options effective January 1, 2002. Standard & Poor's reaffirmed the Company's BBB- investment grade rating and maintained a stable outlook opinion. Provided enhanced disclosure in the supplemental package. PORTFOLIO COMPOSITION NET OPERATING INCOME (A) - ------------------------ [GRAPHIC OMITTED] Long Island 30% New York City 28% Westchester/Connecticut 29% New Jersey 13% PRO FORMA PORTFOLIO STATS - ------------------------- 20.5 Million Square Feet Office 13.8 million Sq.Ft. Industrial 6.7 million Sq.Ft. 181 Properties 1,275 Tenants Representing a Diverse Industry Base Five Integrated Operating Divisions NOI: Office 86% Industrial 14% Occupancy: Office (b) 95.2% Industrial 92.0% (a) Pro forma for 919 Third Avenue free rent add back and pro rata share of consolidated and unconsolidated joint ventures (b) Excluding 58 South Service Road, LI, an office development project placed in service during the quarter; office occupancy would be 95.9% TENANT DIVERSIFICATION Total Portfolio [Graphic Omitted] Accounting 2% Advertising 1% Commercial Banking 5% Consumer Products 12% Defense/Electronics 2% Financial Services 12% Government 2% Healthcare 4% Hospitality 1% Insurance 7% Legal Services 11% Manufacturing 3% Media/Entertainment 6% Other Professional Services 8% Pharmaceuticals 4% Real Estate 3% Retail/Wholesale 2% Technology 5% Telecom 9% Transportation 1% Note: Annualized base rental revenue adjusted for joint venture interests MARKET TRENDS New supply remains in check Sublease space remains a factor New tenant demand is limited - Focus is on tenant retention and gaining market share - Tenants who move do so for strategic reasons - consolidations, decentralization, cost savings - Few tenants are expanding - sectors where there is expansion include consumer products, pharmaceuticals, insurance, restructuring professionals and hedge funds Leasing costs increasing Cautious outlook on market due to general uncertainty surrounding corporate downsizing and credit risk High quality buildings and high quality landlords are competing more effectively for market share OFFICE MARKET OVERVIEW Suburban [Graphics omitted] LONG ISLAND 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 5.6% 4.8% 6.3% 7.7% 7.7% 5.6% Overall Vacancy 6.5% 5.8% 8.4% 10.4% 11.9% 13.0% Direct Vacancy 6.0% 3.6% 8.2% 6.5% 8.2% 8.5% WESTCHESTER 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 8.8% 7.6% 4.0% 4.7% 4.9% 6.5% Overall Vacancy 16.3% 15.1% 12.0% 13.7% 20.5% 19.7% Direct Vacancy 15.0% 13.8% 10.7% 11.6% 16.3% 14.2% S. CONNECTICUT 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 4.0% 1.9% 7.2% 9.4% 8.8% 5.1% Overall Vacancy 4.7% 2.6% 8.1% 12.4% 13.6% 19.0% Direct Vacancy 7.9% 6.3% 4.4% 3.9% 5.6% 10.9% N. NEW JERSEY 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 4.6% 8.4% 6.5% 6.2% 8.1% 5.2% Overall Vacancy 7.1% 9.4% 9.9% 11.1% 13.4% 13.7% Direct Vacancy 15.3% 3.4% 1.3% 7.3% 9.6% 7.7% Source: Cushman & Wakefield Class A Office Statistics OFFICE MARKET OVERVIEW New York City [Graphics omitted] FINANCIAL EAST 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 2.3% 8.3% 0.7% 1.0% 3.8% 3.2% Overall Vacancy 7.3% 2.3% 2.1% 6.6% 7.0% 14.1% Direct Vacancy 6.6% 1.6% 1.4% 3.4% 2.3% 9.1% MIDTOWN EAST 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 0.9% 5.5% 2.1% 2.6% 0.5% 0.0% Overall Vacancy 5.0% 3.9% 2.6% 4.5% 8.9% 10.3% Direct Vacancy 3.9% 3.1% 1.9% 2.5% 3.1% 4.7% MIDTOWN WEST 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 3.0% 0.0% 3.0% 2.1% 5.6% 4.0% Overall Vacancy 5.2% 2.7% 2.7% 4.4% 6.2% 6.3% Direct Vacancy 4.1% 2.4% 2.4% 2.7% 4.0% 3.5% 6TH AVE./ROCKEFELLER CENTER 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 10.7% 5.6% 7.2% 6.5% 3.7% 3.5% Overall Vacancy 2.7% 1.2% 1.2% 3.3% 4.3% 7.0% Direct Vacancy 1.7% 0.6% 0.9% 1.5% 2.7% 3.5% Source: Cushman & Wakefield Class A Office Statistics MAINTAIN HIGH OCCUPANCY RATES [Graphics omitted] 1997 1998 1999 2000 2001 1Q02 2Q02 ---- ---- ---- ---- ---- ---- ----- Office 95.8% 96.4% 96.0% 97.2% 96.1% 96.2% 95.9%(a) 1997 1998 1999 2000 2001 1Q02 2Q02 ---- ---- ---- ---- ---- ---- ---- Industrial (b) 95.3% 96.8% 98.2% 97.5% 91.7% 92.9% 92.0% (a) Including 58 South Service Road, LI, an office development project placed in service during the quarter, office occupancy would be 95.2% (b) Decrease in industrial occupancy reflects a 206,710 square foot lease that expired in November 2001, decreasing occupancy 300 basis points PORTFOLIO PERFORMANCE Same Property NOI Growth Three Months (a) TOTAL PORTFOLIO (B) [Graphic omitted] Cash NOI 12.0% GAAP NOI 2.1% CASH RECONCILIATION - ------------------- REVENUE (in thousands) - ------- -------------- Free Rent Burn Off 5.1% $5,375 Built-in Rent Increases 2.1% $2,200 Same Space Rent Increases 1.6% $1,679 Escalation Increase 1.4% $1,500 NYC Incremental Revenue 1.1% $1,100 Other 0.5% $500 Suburban Occupancy Decrease (1.2%) ($1,231) Bad Debt Increase (b) (0.6%) ($600) Total 10.0% $10,523 EXPENSES - -------- Operating Expenses (c) 4.0% $1,543 Real Estate Taxes (d) 2.9% $1,097 Total 6.9% $2,640 NOI 12.0% $7,883 (a) Based on comparison period for the three month period ended June 30, 2002 versus the three month period ended June 30, 2001 (b) Excludes termination fees and reserves against deferred rent receivable (c) Operating expenses increased 7.1% which represented 58% of the total 6.9% expense increase (d) Real estate taxes increased 6.6% which represented 42% of the total 6.9% expense increase PORTFOLIO PERFORMANCE Second Quarter 2002 Same Space Average Rent Growth (a) [Graphics omitted] Office Rent Growth - ------------------ Expiring Leases $25.45 New Leases $30.36 Growth 19.3% Industrial/R&D Growth - --------------------- Expiring Leases $6.13 New Leases $6.89 Growth 12.4% - Renewed 57% of Expiring Square Footage - 64 Total Leases Executed Encompassing 478,000 Square Feet - Same Space Second Quarter Cash Increase of 14.1% for Office and 9.0% for Industrial/R&D (a) Represents leases executed during the second quarter DISTRIBUTION OF LEASING ACTIVITY For the Second Quarter of 2002 Percent of Sq. Ft. Leasing Activity ------- ---------------- New Leases 212,729 45% Renewed Leases 131,457 28% Early Renewals 63,775 13% Expansions 53,775 11% Renewal/Contractions 16,467 3% Total 478,203 100% OFFICE LEASING TRENDS (A) [Graphics Omitted] 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 ---- ---- ---- ---- ---- ---- Same Space Average Rent Growth 22.9% 23.2% 21.7% 16.3% 22.8% 19.4% Tenant Retention Rate 81% 54% 64% 60% 82% 51% Net Effective Rent Spread 6.6% 8.3% 7.3% 6.0% 8.2% 7.9% Average Lease Term (Years) 5.9 6.0 4.1 5.7 6.3 6.1 (a) Excludes projects under development LEASE EXPIRATIONS (A) 3.1% of Total Leased Portfolio Expiring in 2002 and 9.2% in 2003 [Graphic omitted] OFFICE 2002 2003 2004 2005 2006 2007 - ------ ---- ---- ---- ---- ---- ---- Square Feet Expiring 510 1,191 1,259 1,753 1,708 1,187 (in thousands) % Square Feet Expiring 3.9% 9.1% 9.6% 13.4% 13.0% 9.1% [Graphic omitted] INDUSTRIAL 2002 2003 2004 2005 2006 2007 - ---------- ---- ---- ---- ---- ---- ---- Square Feet Expiring 96 591 661 934 949 315 (in thousands) % Square Feet Expiring 1.6% 9.5% 10.6% 15.0% 15.3% 5.1% (a) 2002 Expirations are for the period 7/1/02-12/31/02 PRO FORMA OFFICE LEASE EXPIRATIONS 3.1% in 2002 and 7.9% in 2003 of Total Office Portfolio For the Period 8/1/02-12/31/03 Since 6/30/02, reduced near-term expirations by 180,000 sf - ------------------------------ BY DIVISION [Graphic Omitted] - ----------- Long Island 30% - 469,000 sf (12% of Division) New York City 15% - 222,000 sf (6% of Division) Connecticut 12% - 176,000 sf (16% of Division) Westchester 17% - 255,000 sf (8% of Division) New Jersey 26% - 398,000 sf (20% of Division) BY QUARTER [Graphic Omitted] - ---------- 3Q02 (a) 4Q02 1Q03 2Q03 3Q03 4Q03 - ---- ---- ---- ---- ---- ---- 211,000 215,000 260,000 200,000 370,000 264,000 (a) For August and September LEASE EXPIRATION COMPARISON 2002 and 2003 Office Portfolio As of June 30, 2002 Expiring Rents vs. Reckson Forecast Rents [Graphics omitted] Total Portfolio - 1.7 million sq. ft. expiring - ---------------------------------------------- Cash GAAP Expiring $27.03 $26.36 Forecasted $28.88 $29.50 Increase 7% 12% CBD Portfolio - 400,000 sq. ft. expiring - ---------------------------------------- Cash GAAP Expiring $32.16 $33.25 Forecasted $40.13 $40.14 Increase 25% 21% Suburban Portfolio - 1.3 million sq. ft. expiring - ------------------------------------------------- Cash GAAP Expiring $25.45 $24.24 Forecasted $25.42 $26.22 Increase 0% 8% (a) Forward-looking statements based upon management's estimates. Actual results may differ materially FUJI TRANSACTION Westchester Leasing Activity - -Fuji Photo Film U.S.A., Inc. leased 163,880 square feet at Reckson Summit, Valhalla for a 10 year period - -Transaction encompassed seven tenants, in four buildings, totaling 243,946 square feet - -Includes 65,097 square feet expiring through 2003 - -Includes 96,334 square feet of vacant or expired space - -Extended term on 48,928 square feet from 2.25 years to 5 years Net Effective Rent Fuji Other - ------------------ ---- ----- Square Feet 163,880 48,928 Average Rent $25.73 $25.96 Annualized Cost PSF ($5.30) ($5.77) Net Effective Rent $20.43 $20.19 [Photo omitted] VALUE CREATION ACTIVITY UPDATE Ground-Up Development Reckson Executive Park - Melville, LI [Photo omitted] Stacking Plan - 277,500 SF 4th Floor Proposal - 40,000 SF Proposal - 25,000 SF Salomon Smith Barney - 38,191 SF 3rd Floor Zurich American Insurance Co. - 70,000 SF 2nd Floor Hain Celestial Group - 34,988 SF Transamerica Corp. - 24,099 SF 1st Floor OSI Pharmaceuticals - 36,309 SF Drake Bean Morin - 4,870 SF Proposal - 18,000 SF Total Leases Signed - 208,457 SF Total Proposals - 83,000 SF Property 75% Leased Anticipated Return on Investment - 11% (a) Projected Occupancy at End of 2002 - 220,000 SF (a) (a) Forward-looking statements based upon management's estimates. Actual results may differ materially INVESTMENT ENVIRONMENT - - Tale of two investment markets o Extremely competitive investment environment for stable assets o Inactive market for assets with rollover exposure - - Actively bid on approximately $1.75 billion of CBD and suburban properties in 2Q02 - - Pricing is not yet appropriately addressing market risks o CBD assets anticipated to trade at an average price in excess of $450 psf and average ROI of 6.5%-7.0% o Suburban assets anticipated to either trade in the 8.0%-8.5% range (in excess of $260 psf) or be pulled off the market - - Expect greater market activity over next six months o Owners attempting to take advantage of current pricing - - May identify but most likely will not close any acquisitions in 2002 o Will continue to maintain discipline with respect to investment underwriting - - Evaluating additional dispositions/joint ventures to capitalize on investor demand CORE REAL ESTATE OPERATIONS 2Q02 2Q01 ---- ---- FFO Per Share $.59 $.70 Income on FLCG Loans and RSVP JVs .00 .03 Core Real Estate Operations $.59 $.67 Analysis of Second Quarter 2002 vs. Second Quarter 2001 Results Decreased Termination Fees ($.01) Other Income ($.04) Disposition Dilution ($.07) Excess Bad Debt ($.03) Increase in NOI Plus Reduced Debt Service $.07 OPERATING DATA (in thousands) 2Q02 1Q02 2Q01 ---- ---- ---- Property Operating Revenues $123,627 $122,505 $125,349 Property Operating Expenses 41,739 42,212 40,874 Property Operating Margin $81,888 $80,293 $84,475 Margin Percentage 66.2% 65.5% 67.4% Marketing, General & Administrative $7,693 $7,139 $8,411 Other Income $2,008 $2,425 $7,038 Receivables Reserves $2,500 $1,000 $100 CREDIT RISK Significant Tenant Watch List HQ GLOBAL WORKPLACES, INC. - - Voluntarily filed for Chapter 11 in March 2002 - - Leases approximately 202,000 square feet at nine of the Company's properties - - Leases expire between 2008 and 2011 - - 2002 total annualized base rent is approximately $6.1 million - - Three leases to be restructured - - Six leases were unadjusted - - Reckson expects HQ to affirm all nine leases METROMEDIA FIBER NETWORK SERVICES, INC. - - Voluntarily filed for Chapter 11 in May 2002 - - Leased 112,075 square feet at Reckson Metro Center, 360 Hamilton Avenue, White Plains, NY - - Lease expires in May 2010 - - Annual base rent was $25 per square foot - - Reckson has restructured the lease with MetroMedia - - MetroMedia will keep 31,718 square feet of space at an annual base rent of $25 per square foot - - Reckson received termination fees of $1.8 million - - Reckson is in lease negotiations with a tenant for 48,842 square feet of the 80,357 square feet given up by MetroMedia - - All receivables relating to MetroMedia for terminated space have been written off ARTHUR ANDERSEN - - Leases 37,636 square feet at 1350 Avenue of the Americas - - Lease expires 4/30/04 - - Annual base rent was $53 per square foot - - Rent has been paid current through August - - 100% of deferred rent receivable has been reserved ******** CREDIT RISK WorldCom/MCI Major Occupancies
LI NYC WC CT Other Total ---------------------------------------------------------------------------------------------- 90 60 Charles 100 Reckson Merrick Lindbergh Wall Tower Executive Landmark Ave. Blvd. St. 45 Park Square ----------------------------------------------------------------- WorldCom/MCI Leased Sq.Ft. 37,200 127,800 34,900 10,000 300,000 16,600 20,500 547,000 Total Building Sq. Ft. 225,597 195,998 466,226 443,109 541,903 799,048 WorldCom/MCI Current Base Rent $985,000 $3,199,000 $829,000 $426,000 $5,565,000 $409,000 $408,000 $11,821,000 (annualized) WorldCom/MCI Average Base Rent $997,000 $3,621,000 $848,000 $410,000 $5,616,000 $430,000 $412,000 $12,334,000 (annualized) WorldCom/MCI Current Base Rent 0.2% 0.8% 0.2% 0.1% 1.4% 0.1% 0.1% 2.9% (as a percentage of total portfolio base rent)
STATUS UPDATE - ------------- Rent paid current on all space through July 50% of deferred rent receivable has been reserved Deferred straightline rent on 50% of leases will be reserved prospectively FINANCIAL RATIOS (in millions except ratios) Ratios June 30, 2002 Historical - ------ -------------------------- Total Debt (a) $1,286 Total Equity $2,012 Total Market Cap $3,298 Interest Coverage Ratio 3.44x Fixed Charge Coverage Ratio 2.66x Debt to Total Market Cap 39% (a) Including pro-rata share of joint venture debt and net of minority partners' interests DEBT SCHEDULE DEBT SCHEDULE PRINCIPAL AMOUNT WEIGHTED AVERAGE AVERAGE TERM - ------------- OUTSTANDING INTEREST RATE TO MATURITY ---------------- ---------------- ------------ Fixed Rate Mortgage Notes Payable $746.0 (a) 7.3% 9.5 yrs. Senior Unsecured Notes $500.0 7.4% 5.1 yrs. Subtotal./Weighted Average $1,246.0 7.3% 7.7 yrs. Floating Rate Corporate Unsecured LIBOR+105 bps Credit Facility $176.0 (b) LOW FLOATING RATE DEBT LEVELS Floating Rate 12% Fixed Rate 88% NO SIGNIFICANT NEAR-TERM REFINANCING NEEDS LONG-TERM STAGGERED DEBT MATURITY SCHEDULE 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Mortgage Debt $0 $0 $3 $19 $130 $60 $0 $100 $28 $218 Unsecured Notes $100 $200 $200 (a) Includes $159.1 million of pro rata debt related to consolidated joint venture properties. In addition, the Company has a 60% interest in an unconsolidated joint venture property. The pro rata share of this debt is approximately $7.7 million. (b) Unsecured corporate credit facility matures in September 2003 PAYOUT RATIO ANALYSIS Class A Common Stock Class B Common Stock -------------------- -------------------- Three Months Three Months 3/31/02 6/30/02 3/31/02 6/30/02 ------- ------- ------- ------- CAD Payout Ratio - 93.9% 108.5% 101.2% 117.2% Committed non-incremental TI/LC on signed leases and actual non-incremental capital improvements CAD Payout Ratio - 99.2% 114.7% 106.9% 123.8% Actual paid or accrued for non-incremental TI/LC and actual non-incremental capital improvements CAD Payout Ratio - 90.7% 103.8% 97.7% 112.1% Committed non-incremental TI/LC on signed leases excluding leases scheduled to expire in future periods and actual non-incremental capital improvements CAPITAL RECYCLING PROGRAM
$680 Million Slated for Program to Date (in thousands) 2000 2001 2002 2003 ---- ---- ---- ---- Dispositions - Completed - ------------------------ Eight Suburban Office Assets - Sale of JV Interest $136,000 Six Non-Core Office Assets $ 85,000 919 Third Avenue - Sale of JV Interest $221,000 Keystone Stock $ 36,000 $1,500 Dispositions - Anticipated (a) - -------------------------- Two Non-Core Office Assets under Contract $18,500 Remaining Non-Core Assets $30,000 $87,000 RSVP $65,000 Total $136,000 $342,000 $50,000 $152,000
(a) Forward-looking statements based upon management's estimates. Actual results may differ materially. STOCK BUYBACK PROGRAM Stock Repurchase Activity Subsequent to June 30, 2002 CLASS A COMMON STOCK PURCHASES: Shares Purchased 1,856,200 Weighted Average Price $21.98 Total Class A Common Stock Purchases $40,800,000 CLASS B COMMON STOCK PURCHASES: Shares Purchased 368,200 Weighted Average Price $22.90 Total Class B Common Stock Purchases $8,430,000 Total Shares Purchased 2,224,400 Total Stock Purchases $49,230,000 Remaining shares authorized under stock buyback program - 2,775,600 EXPANDED DISCLOSURE Expanded Disclosure and Accounting Policy Adjustment - Earlier distribution of supplemental package - New disclosures provided in supplemental package: - Additional CapEx Schedule - Unconsolidated Joint Venture Disclosure - Top Tenants List - Tenant Industry Breakdown - Distribution of Leasing Activity - Expanded Payout Ratio Analysis Stock Option Expensing - Announced that the Company will begin expensing the cost of stock options effective January 1, 2002 GUIDANCE - 2002 FFO ESTIMATES Previous Guidance $2.45-$2.55 Current Guidance $2.40-$2.45(a) Reconciliation $2.45 NOI Increase (2%-3%) Before Term. Fees and Bad Debt N/C Termination Fees N/C Net Other Income ($.02) Net Bad Debt ($.02) Acquisition Accretion ($.03) Reduction in Debt Service - Lower Interest Rates $.02 TOTAL $2.40 - $2.45 Investment Assumptions: Real Estate Investments $0 Stock Repurchases $50M - $100M (a) Forward-looking statements based upon management's estimates. Actual results may differ materially. CONCLUSION Continue to successfully navigate through a challenging market environment - Focus on tenant retention and gaining market share - Core portfolio continues to perform well and remains well positioned Maintaining cautious stance due to uncertain economic environment Hopeful that appropriately priced investment opportunities will come to market in near terms - We believe we are seeing signs of this happening Evaluating additional dispositions and joint venture opportunities to capitalize on investor demand Will continue to pursue opportunistic share repurchases Continued emphasis on shareholder communications FORWARD-LOOKING STATEMENTS Certain matters discussed herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of results and no assurance can be given that the expected results will be delivered. Such forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those expected. Among those risks, trends and uncertainties are the general economic climate, including the conditions affecting industries in which our principal tenants compete; credit of our tenants; changes in the supply of and demand for office and industrial properties in the New York Tri-State area; changes in interest rate levels; downturns in rental rate levels in our markets and our ability to lease or re-lease space in a timely manner at current or anticipated rental rate levels; the availability of financing to us or our tenants; changes in operating costs, including utility and insurance costs; repayment of debt owed to the Company by third parties (including FrontLine Capital Group); risks associated with joint ventures; and other risks associated with the development and acquisition of properties, including risks that development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated. For further information on factors that could impact Reckson, reference is made to Reckson's filings with the Securities and Exchange Commission. Reckson undertakes no responsibility to update or supplement information contained in this presentation. RECKSON ASSOCIATES REALTY CORP. 225 BROADHOLLOW ROAD MELVILLE, NY 11747 (631) 694-6900 -----END PRIVACY-ENHANCED MESSAGE-----