EX-99.1 3 new99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 Slide 1 The New York Tri-State Area's Leading Real Estate Company Reckson Associates Realty Corp. THIRD QUARTER 2002 PRESENTATION Earnings Results and Overview November 5, 2002 Slide 2 SUMMARY OF HIGHLIGHTS Reported diluted FFO of $.59 per share for the third quarter of 2002 as compared to $.66 per share for the comparable 2001 period, representing a per share decrease of 10.6%. Generated same property NOI performance before termination fees of 7.2% (cash) and (0.4%) (GAAP) for the third quarter of 2002. Generated same space rent growth on space leased during the period of 7.9% (cash) and 11.1% (GAAP) for Office and 4.8% (cash) and 16.6% (GAAP) for Industrial/R&D for the third quarter of 2002. Occupancy: Sept. 30, 2002 June 30, 2002 Sept. 30, 2001 -------------- ------------- -------------- Total: Overall 94.2% 94.2% 96.8% Office 95.1% 95.2% 96.7% Industrial 92.4% 92.0% 97.5% Same Property: Overall 94.2% 94.6% 95.0% Office 95.6% 95.9% 96.4% Industrial 91.6% 91.9% 92.3% Renewed 65% of expiring square footage during the third quarter of 2002. Completed 745,000 square feet of leasing transactions, including 612,000 square feet of office space, during the third quarter of 2002. Completed 239,000 square feet of leasing in Westchester related to Fuji and associated transactions. Repurchased 842,200 Class A Common shares at a weighted average stock price of $20.77 per share and 357,500 Series A Preferred shares at a weighted average stock price of $22.29 per share, subsequent to September 30, 2002. Total year to date purchases of Class A Common, Class B Common and Series A Preferred shares amounts to approximately $75 million. The New York Tri-State Area's Leading Real Estate Company Slide 3 PORTFOLIO COMPOSITION NET OPERATING INCOME (a) [GRAPHIC OMITTED] Long Island 32% New York City 29% Westchester/Connecticut 27% New Jersey 12% Pro Forma Portfolio Stats ------------------------- 20.4 Million Square Feet Office 13.7 million Sq. Ft. Industial 6.7 million Sq. Ft. 178 Properties 1,170 Tenants Representing a Diverse Industry Base Five Integrated Operating Divisions NOI: Office 85% Industrial 15% Occupancy: Office 95.1% Industrial 92.4% (a) PRO FORMA FOR PRO RATA SHARE OF CONSOLIDATED AND UNCONSOLIDATED JOINT VENTURES The New York Tri-State Area's Leading Real Estate Company Slide 4 TENANT DIVERSIFICATION Total Portfolio Tenant Diversification (a) ---------------------- [Graphic Omitted] Accounting 2% Advertising 1% Commercial Banking 5% Consumer Products 13% Defense/Electronics 2% Financial Services 12% Government 2% Healthcare 4% Hospitality 1% Insurance 8% Legal Services 11% Manufacturing 3% Media/Entertainment 6% Other Professional Services 8% Pharmaceuticals 3% Real Estate 3% Retail/Wholesale 2% Technology 4% Telecom 9% Transportation 1% Top 25 Tenants (b) -------------- Debevoise & Plimpton 3.3% WorldCom/MCI 3.2% American Express 2.0% Bell Atlantic 1.5% Schulte Roth & Zabel 1.4% HQ Global 1.2% United Distillers 1.1% T.D. Waterhouse Securities 1.1% Banque Nationale De Paris 0.9% Kramer Levin Nessen Kamin 0.9% Vytra Healthcare 0.8% D.E. Shaw 0.7% P.R. Newswire Associates 0.7% Hoffmann-La Roche Inc. 0.7% EMI Entertainment World 0.7% State Farm 0.7% Heller Ehrman White 0.7% Laboratory Corp. of America 0.7% Estee Lauder 0.7% Draft Worldwide Inc. 0.7% Practicing Law Institute 0.7% Lockheed Martin Corp. 0.7% Radianz U.S. (Reuters) 0.6% Towers Perrin Foster 0.6% Merrill Lynch 0.6% (a) ANNUALIZED BASE RENTAL REVENUE ADJUSTED FOR PRO RATA SHARE OF JOINT VENTURE INTERESTS (b) RANKED BY PRO RATA SHARE OF ANNUALIZED BASE RENTAL REVENUE The New York Tri-State Area's Leading Real Estate Company Slide 5 MARKET TRENDS o Markets continue to be competitive o This is not like the early nineties - there is reasonable activity o Deals are still getting done o Large strategic deals are active throughout region o Early renewals are being pursued by larger tenants o Reasonable activity of the smaller size tenants o Tenant stability remains a concern o Leasing costs increasing o Tenants are more capital sensitive than rent sensitive o Costing more to keep tenants o Brokerage costs are increasing o While sublet space remains a factor, high quality buildings with quality landlords are competing more effectively o Geographic concentration provides significant advantage o Flexibility to relocate tenants throughout sub-markets o Regional relationships provide edge o Focus on gaining market share and maintaining occupancies The New York Tri-State Area's Leading Real Estate Company Slide 6 OFFICE MARKET OVERVIEW Suburban - Continue to Outperform Market [Graphics omitted] LONG ISLAND 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 5.0% 6.0% 7.7% 6.5% 6.4% 5.8% Overall Vacancy 8.8% 5.9% 9.5% 10.3% 11.4% 12.5% Direct Vacancy 7.4% 4.4% 7.6% 7.2% 7.1% 8.6% WESTCHESTER 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 8.8% 5.7% 4.7% 6.6% 4.0% 5.9% Overall Vacany 16.3% 15.1% 14.1% 17.8% 19.2% 19.5% Direct Vacancy 14.2% 13.9% 12.5% 13.8% 15.1% 15.0% S. CONNECTICUT 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 7.1% 4.6% 4.2% 4.6% 6.1% 5.2% Overall Vacancy 5.1% 2.5% 10.9% 11.8% 13.7% 16.6% Direct Vacancy 4.3% 2.1% 8.6% 7.8% 8.2% 7.3% N. NEW JERSEY 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 5.6% 2.5% 1.1% 8.1% 4.0% 7.1% Overall Vacancy 9.1% 6.5% 11.3% 11.6% 13.9% 16.7% Direct Vacancy 6.9% 4.8% 7.3% 7.5% 8.0% 10.1% SOURCE: CUSHMAN & WAKEFIELD CLASS A OFFICE STATISTICS The New York Tri-State Area's Leading Real Estate Company Slide 7 OFFICE MARKET OVERVIEW New York City - Continue to Outperform Market [Graphics omitted] FINANCIAL EAST 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 16.0% 0.7% 1.3% 1.4% 3.8% 0.8% Overall Vacancy 4.4% 2.1% 3.2% 5.0% 12.4% 15.1% Direct Vacancy 3.2% 1.4% 2.5% 1.4% 8.5% 9.3% MIDTOWN EAST 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 3.8% 3.4% 2.1% 1.9% 0.0% 0.0% Overall Vacancy 4.4% 2.7% 2.4% 6.3% 10.5% 11.2% Direct Vacancy 3.4% 2.2% 1.5% 3.1% 4.3% 5.3% MIDTOWN WEST 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 0.4% 1.7% 1.8% 3.7% 4.7% 4.3% Overall Vacancy 5.1% 2.3% 1.9% 6.0% 6.7% 6.3% Direct Vacancy 3.8% 2.1% 1.5% 3.8% 4.2% 3.9% 6TH AVE./ROCKEFELLER CENTER 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 7.4% 5.0% 7.8% 4.5% 2.6% 0.7% Overall Vacancy 2.2% 0.9% 1.5% 3.9% 6.1% 8.4% Direct Vacancy 1.5% 0.4% 0.7% 1.8% 2.8% 3.1% SOURCE: CUSHMAN & WAKEFIELD CLASS A OFFICE STATISTICS The New York Tri-State Area's Leading Real Estate Company Slide 8 MAINTAIN HIGH OCCUPANCY RATES [Graphics omitted] 1997 1998 1999 2000 2001 1Q02 2Q02 3Q02 ---- ---- ---- ---- ---- ----- ---- ---- OFFICE 95.8% 96.4% 96.0% 97.2% 96.1% 96.2% 95.2% 95.1% ------ 1997 1998 1999 2000 2001 1Q02 2Q02 3Q02 ---- ---- ---- ---- ---- ---- ---- ---- INDUSTRIAL (a) 95.3% 96.8% 98.2% 97.5% 91.7% 92.9% 92.0% 92.4% ---------- (a) DECREASE IN INDUSTRIAL OCCUPANCY REFLECTS A 206,710 SQUARE FOOT LEASE THAT EXPIRED IN NOVEMBER 2001, DECREASING OCCUPANCY 300 BASIS POINTS The New York Tri-State Area's Leading Real Estate Company Slide 9 PORTFOLIO PERFORMANCE Same Property NOI Performance THREE MONTHS (a) Total Portfolio (b)(e) [Graphic omitted] ---------------- Cash NOI 7.2% GAAP NOI (0.4%) Cash Reconciliation ------------------- Revenue (in thousands) ------- Free Rent Burn Off 4.8% $5,100 Built-in Rent Increases 2.0% 2,100 Same Space Rent Increases 0.9% 1,000 Escalation Decrease (0.3%) (325) NYC Incremental Revenue 0.6% 682 Suburban Occupancy Decrease (0.6%) (700) Bad Debt Decrease (0.3%) (350) ----- ------ Total 7.1% $7,507 ===== ====== Expenses -------- Operating Expenses (c) 4.2% $1,767 Real Estate Taxes (d) 2.6% 1,061 --- ------ Total 6.8% $2,828 === ====== NOI 7.2% $4,679 === ====== (a) BASED ON COMPARISON FOR THE PERIOD ENDED SEPTEMBER 30, 2002 VERSUS THE PERIOD ENDED SEPTEMBER 30, 2001 (b) INCLUDING ONE ORLANDO CENTRE, FLORIDA, SAME PROPERTY NOI PERFORMANCE WOULD BE 6.5% (CASH) AND (0.9%) (GAAP) (c) OPERATING EXPENSES INCREASED 7.3% WHICH REPRESENTED 62% OF THE TOTAL 6.8% EXPENSE INCREASE (d) REAL ESTATE TAXES INCREASED 6.2% WHICH REPRESENTED 38% OF THE TOTAL 6.8% EXPENSE INCREASE (e) EXCLUDES TERMINATION FEES The New York Tri-State Area's Leading Real Estate Company Slide 10 PORTFOLIO PERFORMANCE THIRD QUARTER 2002 SAME SPACE AVERAGE RENT GROWTH (a) [Graphics omitted] Office Rent Growth Expiring Leases $25.11 New Leases $27.89 Growth 11.1% Industrial/R&D Growth Expiring Leases $5.78 New Leases $6.74 Growth 16.6% o Renewed 65% of Expiring Square Footage o 66 Total Leases Executed Encompassing 745,000 Square Feet o Same Space Third Quarter Cash Increase of 7.9% for Office and 4.8% for Industrial/R&D (a) REPRESENTS LEASES EXECUTED DURING THE THIRD QUARTER The New York Tri-State Area's Leading Real Estate Company Slide 11 DISTRIBUTION OF LEASING ACTIVITY For the Third Quarter of 2002 PERCENT OF SQUARE FEET LEASING ACTIVITY ----------- ---------------- New Leases 459,602 62% Renewals at Expiration 170,897 23% Early Renewals 70,287 9% Expansions 44,206 6% ----------- ---------------- Total 744,992 100% =========== ================ The New York Tri-State Area's Leading Real Estate Company Slide 12 OFFICE LEASING TRENDS [Graphics Omitted] 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 ---- ---- ---- ---- ---- ---- ---- SAME SPACE AVERAGE RENT GROWTH 22.9% 23.2% 21.7% 16.3% 22.8% 19.4% 11.1% ------------------- 15.6%(a) NET EFFECTIVE RENT SPREAD 6.6% 8.3% 7.3% 6.0% 8.2% 7.9% 13.6% ------------- 8.8%(a) OFFICE LEASING ACTIVITY 361 403 497 410 472 287 612(b) -------------- (SF in thousands) AVERAGE LEASE TERM 5.9 6.0 4.1 5.7 6.3 6.1 8.4 ------------------ (Years) 8.2(a) (a) EXCLUDES FUJI AND RELATED TRANSACTIONS (b) INCLUDES 239,000 SQUARE FEET OF FUJI AND RELATED TRANSACTIONS The New York Tri-State Area's Leading Real Estate Company Slide 13 LEASING COST TRENDS Average YTD 1998-2001 2001 2002 ----------- ---------- ---------- Long Island Office $9.42 $12.96 $10.33 Connecticut Office $7.55 $2.89 $10.37 New Jersey Office $7.57 $7.00 $11.91 New York City Office $25.42 $37.55 $30.24 Westchester Office $7.84 $8.80 $20.54 (a) Industrial $1.42 $2.08 $2.02 (a) EXCLUDES TI/LC COSTS RELATED TO THE LEASING TRANSACTION WITH FUJI The New York Tri-State Area's Leading Real Estate Company Slide 14 NORMALIZED COVERAGE ANALYSIS(a) AVERAGE YTD HIGHEST CONSERVATIVE 1998-2001 2001 2002 HISTORICAL FORECAST --------- ---- ---- ---------- -------- Market ------ Suburban $8.38 $9.82 $17.17 $17.17 $20.00 New York City $25.42 $37.55 $30.24 $37.55 $40.00 Long Island Industrial $1.42 $2.08 $2.02 $2.08 $2.00 CAD $1.89 $1.84 $1.76 $1.75 $1.71 Dividend Payout at $2.40: Class A Common 90% 92% 96% 97% 99% Wgtd. Avg. Class A & B Common 97% 99% 103% 104% 107% Assuming $100 million of sales of non-income producing assets in share repurchases: Class A Common 84% 86% 90% 91% 93% Wgtd. Avg. Class A & B Common 91% 93% 97% 98% 100% (a) FORWARD-LOOKING STATEMENTS BASED UPON MANAGEMENT'S ESTIMATES. ACTUAL RESULTS MAY DIFFER MATERIALLY The New York Tri-State Area's Leading Real Estate Company Slide 15 LEASE EXPIRATIONS (a) 1.1% of Total Portfolio Expiring in 2002 and 8.6% in 2003 [Graphic omitted] Office 2002 2003 2004 2005 2006 2007 ------ ---- ---- ---- ---- ---- ---- (in thousands) Square Feet Expiring 197 1,154 1,159 1,764 1,623 1,198 % of Total Portfolio 1.5% 8.5% 8.5% 13.0% 11.9% 8.8% [Graphic omitted] Industrial 2002 2003 2004 2005 2006 2007 ---------- ---- ---- ---- ---- ---- ---- Square Feet Expiring 25 588 661 682 970 338 (in thousands) % of Total Portfolio 0.4% 8.7% 9.8% 10.1% 14.4% 5.0% (a) 2002 EXPIRATIONS ARE FOR THE PERIOD 10/1/02-12/31/02 The New York Tri-State Area's Leading Real Estate Company Slide 16 PRO FORMA OFFICE LEASE EXPIRATIONS 1.5% in 2002 and 8.5% in 2003 of Total Office Portfolio FOR THE PERIOD 10/1/02-12/31/03 ------------------------------- BY DIVISION [Graphic Omitted] ----------- Long Island 433,746 sf (11% of Division) New York City 198,378 sf (6% of Division) Connecticut 168,582 sf (15% of Division) Westchester 227,018 sf (7% of Division) New Jersey 324,159 sf (17% of Division) BY QUARTER [Graphic Omitted] ---------- 4Q02 1Q03 2Q03 3Q03 4Q03 ---- ---- ---- ---- ---- 197,457 282,034 195,568 387,167 289,657 The New York Tri-State Area's Leading Real Estate Company Slide 17 LEASE EXPIRATION COMPARISON 2002 and 2003 Office Portfolio As of September 30, 2002 Expiring Rents vs. Reckson Forecast Rents [Graphics omitted] Total Portfolio - 1.4 million sq. ft. expiring Cash GAAP ---- ---- Expiring $20.99 $20.60 Forecasted $22.31 $22.57 Increase 6.3% 9.6% CBD Portfolio - 367,000 sq. ft. expiring Cash GAAP ---- ---- Expiring $31.18 $32.10 Forecasted $38.32 $38.60 Increase 22.9% 20.3% Suburban Portfolio - 1.0 million sq. ft. expiring Cash GAAP ---- ---- Expiring $26.06 $25.05 Forecasted $25.95 $26.21 Increase (0.4%) 4.6% (a) FORWARD-LOOKING STATEMENTS BASED UPON MANAGEMENT'S ESTIMATES. ACTUAL RESULTS MAY DIFFER MATERIALLY. The New York Tri-State Area's Leading Real Estate Company Slide 18 CORE REAL ESTATE OPERATIONS Analysis of Third Quarter 2002 vs. Third Quarter 2001 Results ------------------------------------------------------------- Third Quarter 2001 Diluted FFO $.66 Income on RSVP JVs ($.01) Same Property NOI Performance ($.00) Decreased Termination Fees ($.01) Other Income ($.03) Disposition Dilution ($.04) Excess Bad Debt ($.01) Share Repurchase Accretion and Reduction in Debt Service $.03 ---- Third Quarter 2002 Diluted FFO $.59 ==== The New York Tri-State Area's Leading Real Estate Company Slide 19 OPERATING DATA (in thousands) THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30, 2002 JUNE 30, 2002 SEPTEMBER 30, 2001 ------------------ ------------- ------------------ Property Operating Revenues $127,031 $123,627 $126,722 Property Operating Expenses 46,112 41,739 44,231 -------- -------- -------- Property Operating Margin $80,919 $81,888 $82,491 Margin Percentage 63.7% 66.2% 65.1% Marketing, General & Administrative $7,995 $7,693 $7,679 Other Income $2,335 $2,008 $5,333 (excluding gain on sales of real estate) Tenant Receivable Reserves $1,060 $2,500 $470 The New York Tri-State Area's Leading Real Estate Company Slide 20 PAYOUT RATIO ANALYSIS DILUTED CAD PAYOUT RATIOS Class A Class A&B Common Stock Common Stock Three Months Ended Three Months Ended ------------------ ------------------ Diluted CAD Payout Ratios 9/30/02 6/30/02 9/30/02 6/30/02 ------------------------- ------- ------- ------- ------- Actual paid or accrued for 133.6% 99.2% 144.0% 106.9% non-incremental TI/LC and actual non-incremental capital improvements Committed non-incremental TI/LC on 257.0% 93.9% 277.1% 101.2% signed leases and actual non-incremental capital improvements Excluding Fuji and related 127.8% -- 137.8% -- transactions Committed non-incremental TI/LC 243.1% 90.7% 262.1% 97.7% on signed leases, excluding leases scheduled to expire in future periods and actual non-incremental capital improvements Excluding Fuji and related 124.3% -- 134.0% -- transactions The New York Tri-State Area's Leading Real Estate Company Slide 21 CREDIT RISK Significant Tenant Watch List WORLDCOM/MCI - Voluntarily filed for Chapter 11 in July 2002 - Leases approximately 527,000 square feet at 13 of the Company's properties - Rent paid current on all space through November - 50% of deferred rent receivable has been reserved 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 - 2002 total annualized base rent is approximately $6.7 million - Three leases to be restructured - Six leases were unadjusted - Reckson expects HQ to affirm most or all of the 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 - Reckson has restructured the lease with MetroMedia - MetroMedia kept 31,718 square feet of space at an annual base rent of $25 per square foot - Skadden, Arps, Slate, Meagher & Flom LLP has signed a lease for 48,842 square feet of the 80,357 square feet given up by MetroMedia ARTHUR ANDERSEN - Leases 37,636 square feet at 1350 Avenue of the Americas, NYC - Lease was to expire in April 2004 - Agreement reached - Arthur Andersen has paid off all rent through September and a final payment equal to rent due through December 31, 2002 The New York Tri-State Area's Leading Real Estate Company Slide 22 STOCK BUYBACK PROGRAM 2002 Stock Repurchase Activity DURING SUBSEQUENT TO TOTAL CLASS A COMMON STOCK PURCHASES 3Q02 SEPTEMBER 30, 2002 YEAR-TO-DATE ------------------------------ ------ ------------------ ------------ Shares Purchased 1,856,200 842,200 2,698,400 Weighted Average Price Per Share $21.98 $20.77 $21.60 CLASS B COMMON STOCK PURCHASES ------------------------------ Shares Purchased 368,200 -- 368,200 Weighted Average Price Per Share $22.90 -- $22.90 ----------- ----------- ----------- Total Common Shares Purchased 2,224,400 842,200 3,066,600 =========== =========== =========== SERIES A PREFERRED STOCK PURCHASES ---------------------------------- Shares Purchased -- 357,500 357,500 Weighted Average Price Per Share -- $22.29 $22.29 ----------- ----------- ----------- Total Stock Purchases $49,230,000 $25,460,000 $74,690,000 =========== =========== =========== Total Annualized Dividend Savings $4,106,000 $2,112,000 $6,218,000 =========== =========== =========== Remaining shares authorized under common stock buyback program - 1,933,400 The New York Tri-State Area's Leading Real Estate Company Slide 23 FINANCIAL RATIOS Ratios (in millions except ratios) ------ Pro Forma September 30, 2002 September 30, 2002 (b) ------------------ ------------------ Total Debt (a) $1,331 $1,357 Total Equity $1,820 $1,792 Total Market Cap $3,151 $3,149 Interest Coverage Ratio 3.32x 3.29x Fixed Charge Coverage Ratio 2.58x 2.58x Debt to Total Market Cap 42.2% 43.1% (a) INCLUDING PRO-RATA SHARE OF JOINT VENTURE DEBT AND NET OF MINORITY PARTNERS' INTERESTS SHARE OF JOINT VENTURE DEBT (b) PRO FORMA FOR OCTOBER 2002 STOCK REPURCHASES The New York Tri-State Area's Leading Real Estate Company Slide 24 DEBT SCHEDULE (in millions) PRINCIPAL AMOUNT WEIGHTED AVERAGE AVERAGE TERM DEBT SCHEDULE OUTSTANDING INTEREST RATE TO MATURITY ------------- ----------- ------------- ----------- FIXED RATE Mortgage Notes Payable $743.0 (a) 7.3% 9.2 yrs. Senior Unsecured Notes $500.0 7.4% 4.8 yrs. -------- Subtotal/Weighted Average $1,243.0 7.3% 7.5 yrs. ======== FLOATING RATE Corporate Unsecured Credit -------- Facility $224.0 (b) LIBOR+105 bps ======== -------------------------------------------------------------------------------- Low Floating Rate Debt Levels [graphic omitted] Floating Rate 15% Fixed Rate 85% 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 $301.6 MILLION OF DEBT RELATED TO CONSOLIDATED JOINT VENTURE PROPERTIES - THE COMPANY'S PRO RATA SHARE IS APPROXIMATELY $158.7. THE COMPANY ALSO HAS A 60% INTEREST IN AN UNCONSOLIDATED JOINT VENTURE PROPERTY - THE COMPANY'S PRO RATA SHARE IS APPROXIMATELY $7.6 MILLION. (b) UNSECURED CORPORATE CREDIT FACILITY MATURES IN SEPTEMBER 2003 The New York Tri-State Area's Leading Real Estate Company Slide 25 STRATEGIC DIRECTIVES o Continue to maintain investment discipline in competitive market - Activity has remained brisk but priced too high - Current recognition of weaker fundamentals may create opportunities o Monetize non-income producing assets - RSVP - Certain land holdings o Pursue leverage neutral share repurchase program o Focus on early renewals where mark to market opportunity is not available o Leverage tenant relationships to capitalize on build to suit and sale lease back opportunities The New York Tri-State Area's Leading Real Estate Company Slide 26 GUIDANCE - 2002 & 2003(a) FFO Estimates Current 2002 Guidance $2.37 - $2.39 -------------------------------------------------------------------------------- Current 2003 Guidance $2.35 - $2.45 OPERATING ASSUMPTIONS Same Property NOI Performance 0% WorldCom/MCI Assumption Rejects 30%-50% of its leases during `03 Stabilize Development Properties $2.5 million of incremental leasing Termination Fees $2 million Other Income $2 million Revenue Lost to Non-Performing Tenants .05% - 1% of Revenue INVESTMENT/DISPOSITION ASSUMPTIONS Real Estate Investments $0 Exercise Option Properties $0 - $28 million Leverage Neutral Share Repurchase $0 - $80 million RSVP Liquidity $0 - $30 million Dispositions $0 - $50 million (a) FORWARD-LOOKING STATEMENTS BASED UPON MANAGEMENT'S ESTIMATES. ACTUAL RESULTS MAY DIFFER MATERIALLY. The New York Tri-State Area's Leading Real Estate Company Slide 27 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. The New York Tri-State Area's Leading Real Estate Company Slide 28 RECKSON ASSOCIATES REALTY CORP. 225 BROADHOLLOW ROAD MELVILLE, NY 11747 888.RECKSON WWW.RECKSON.COM