-----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, Wr7B2n9rTgOxW+L1EwClHQdhzTpPlgm+wieHnXAcWBSieFmW23ydSFMph1iH3h7S AUOvGRrnEtFyz1Tx56VSRw== 0001005150-03-000574.txt : 20030305 0001005150-03-000574.hdr.sgml : 20030305 20030305162645 ACCESSION NUMBER: 0001005150-03-000574 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030305 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20030305 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: 03593409 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 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: 03593410 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 form8-k.txt 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: March 5, 2003 RECKSON ASSOCIATES REALTY CORP. and RECKSON OPERATING PARTNERSHIP, L.P. (Exact name of each Registrant as specified in its Charter) Reckson Associates Realty Corp. - Reckson Associates Realty Corp. - Maryland 11-3233650 Reckson Operating Partnership, L.P. - Delaware Reckson Operating Partnership, L.P. - (State or other jurisdiction of 11-3233647 incorporation or organization) (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. 4th Quarter Presentation, dated March 5, 2003 ITEM 9. REGULATION FD DISCLOSURE The Registrants are attaching the Fourth 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: March 5, 2003 EX-99.1 3 ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 Slide 1 THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY RECKSON ASSOCIATES REALTY CORP. FOURTH QUARTER 2002 PRESENTATION EARNINGS RESULTS AND OVERVIEW MARCH 5, 2003 Slide 2 SUMMARY OF HIGHLIGHTS o Reported diluted FFO of $.59 per share for the fourth quarter of 2002 as compared to $.57 per share for the comparable 2001 period, representing a per share increase of 3.5%. o Reported diluted FFO of $2.36 per share for the year ended December 31, 2002 as compared to $2.61 per share for the comparable 2001 period, representing a per share decrease of (9.6%). o Occupancy as of: 12/31/02 9/30/02 12/31/01 -------- ------- -------- Total: Overall Portfolio 95.4% 94.2% 94.6% Office 95.7% 95.1% 96.1% Industrial/R&D 94.7% 92.4% 91.7% Same Property: Overall Portfolio 95.6% 94.2% 94.6% Office 96.1% 95.6% 96.2% Industrial/R&D 94.6% 91.6% 91.6% The New York Tri-State Area's Leading Real Estate Company Slide 3 SUMMARY OF HIGHLIGHTS (continued) o Core Same Property NOI (before termination fees): Net of Minority Interests Consolidated in Joint Ventures ---------------- ------------------------- 4Q02 2002 4Q02 2002 ---- ---- ---- ---- Cash 8.3% 7.7% 3.9% 3.9% GAAP 3.0% 0.7% 2.0% (0.3%) o Rent performance on renewal and replacement space: Office Industrial/R&D ---------------- ------------------ 4Q02 2002 4Q02 2002 ---- ---- ---- ---- Cash 5.8% 9.2% (8.3%) 1.1% GAAP 9.5% 13.8% 11.9% 14.4% o Executed 255 leases encompassing 2.8 million square feet during 2002 and 63 leases encompassing 699,328 square feet during the fourth quarter of 2002. o Subsequent to year end, WorldCom/MCI announced the rejection of 191,972 square feet of leases totaling approximately $5.3 million of annual GAAP revenues. o Closed on the refinancing of the Company's unsecured revolving credit facility, scheduled to mature in September of 2003, with a group of 14 banks. The facility bears interest at LIBOR plus a spread of 90 basis points, representing a reduction of 15 basis points from the previous facility. The New York Tri-State Area's Leading Real Estate Company SUMMARY OF HIGHLIGHTS (continued) o Reached an agreement with an affiliate of First Data Corp. that provides for: - The sale of a 19.3 acre parcel of land in Melville, Long Island - The build-to-suit construction of a 195,000 square foot office building - Aggregate consideration of approximately $47 million - Ground breaking scheduled for Spring of 2003 Slide 4 PORTFOLIO COMPOSITION Net Operating Income (a) [GRAPHIC OMITTED] Long Island 33% New York City 31% Westchester/Connecticut 23% New Jersey 13% Portfolio Stats - --------------- o 20.3 Million Square Feet Office 13.6 million Sq. Ft. Industial 6.7 million Sq. Ft. o 178 Properties o 1,200 Leases with an Average Lease Size of: Office 13,000 Sq. Ft. Industrial 27,000 Sq. Ft. o Five Integrated Operating Divisions o NOI: Office 85% Industrial 15% o Occupancy: Office 95.7% Industrial 94.7% (a) PRO FORMA FOR PRO RATA SHARE OF CONSOLIDATED AND UNCONSOLIDATED JOINT VENTURES AND EXCLUDES ONE ORLANDO CENTRE, FL The New York Tri-State Area's Leading Real Estate Company Slide 5 TENANT DIVERSIFICATION TOTAL PORTFOLIO(A) 1,023 Tenants Representing a Diverse Industry Base - -------------------------------------------------- [GRAPHIC OMITTED] Accounting 1% Advertising 1% Commercial Banking 5% Consumer Products 14% Defense/Electronics 2% Financial Services 13% Government 2% Healthcare 4% Hospitality 1% Insurance 8% Legal Services 11% Manufacturing 3% Media/Entertainment 6% Other Professional Services 4% Pharmaceuticals 4% Real Estate 4% Research/Consulting 3% Retail/Wholesale 2% Technology 4% Telecom 7% Transportation 1% TOP 25 TENANTS - -------------- Debevoise & Plimpton 3.3% American Express 2.0% WorldCom/MCI 1.8% Bell Atlantic 1.6% Schulte Roth & Zabel 1.4% HQ Global 1.2% T.D. Waterhouse 1.1% United Distillers 1.1% Banque Nationale De Paris 0.9% Kramer Levin Nessen Kamin 0.9% Prudential 0.9% P.R. Newswire Associates 0.8% Vytra Healthcare 0.8% D.E. Shaw 0.7% Draft Worldwide Inc. 0.7% EMI Entertainment World 0.7% Estee Lauder 0.7% Heller Ehrman White 0.7% Hoffmann-La Roche Inc. 0.7% Laboratory Corp of America 0.7% Lockheed Martin Corp. 0.7% Practicing Law Institute 0.7% State Farm 0.7% Radianz (Reuters) 0.6% Towers Perrin Foster 0.6% (a) ANNUALIZED BASE RENTAL REVENUE ADJUSTED FOR PRO RATA SHARE OF JOINT VENTURE INTERESTS AND TO REFLECT WORLDCOM/MCI LEASES REJECTED TO DATE. TOP 25 TENANTS RANKED BY PRO RATA SHARE OF ANNUALIZED BASE RENTAL REVENUE. The New York Tri-State Area's Leading Real Estate Company Slide 6 MARKET TRENDS o Markets continue to be extremely competitive - "Tenants' Market" - Fighting to gain market share and maintain occupancy - Shadow space continues to cloud the market particularly as it relates to the financial services sector o Leasing costs remain elevated - Generally tenants do not want to outlay capital dollars - landlords are being forced to bear costs - Brokers actively soliciting tenants - reducing chance of tenant renewals o Leasing velocity remains erratic and varies market to market - Tenants are cautious about making leasing decisions in this uncertain environment - Tenants in market with larger requirements for '04 and '05 o Tenant stability remains a concern o Tri-State strategy provides significant advantages - Regional decentralization activity strong - Lack of new supply keeps markets in check o Reckson markets continue to be some of the best performing markets in the country and Reckson continues to outperform in its markets The New York Tri-State Area's Leading Real Estate Company Slide 7 OFFICE MARKET OVERVIEW At 95.0% Occupied Continue to Outperform Market [Graphics omitted] LONG ISLAND 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 4.8% 6.3% 7.7% 7.7% 5.6% 5.6% Overall Vacancy 5.8% 8.4% 10.4% 11.9% 13.0% 12.5% Direct Vacancy 3.6% 8.2% 6.5% 8.2% 8.5% 8.1% WESTCHESTER 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 7.6% 4.0% 4.7% 4.9% 6.5% 5.7% Overall Vacancy 15.1% 12.0% 13.7% 20.5% 19.7% 18.9% Direct Vacancy 13.8% 10.7% 11.6% 16.3% 14.2% 15.3% S. CONNECTICUT 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 1.9% 7.2% 9.4% 8.8% 5.1% 2.3% Overall Vacancy 2.6% 8.1% 12.4% 13.6% 19.0% 17.3% Direct Vacancy 6.3% 4.4% 3.9% 5.6% 10.9% 8.8% N. NEW JERSEY 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 8.4% 6.5% 6.2% 8.1% 5.2% 4.2% Overall Vacancy 9.4% 9.9% 11.1% 13.4% 13.7% 17.8% Direct Vacancy 3.4% 1.3% 7.3% 9.6% 7.7% 10.2% SOURCE: CUSHMAN & WAKEFIELD CLASS A OFFICE STATISTICS The New York Tri-State Area's Leading Real Estate Company Slide 8 OFFICE MARKET OVERVIEW At 97.8% Occupied Continue to Outperform Market [Graphics omitted] FINANCIAL EAST 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 8.3% 0.7% 1.0% 3.8% 3.2% 0.0% Overall Vacancy 2.3% 2.1% 6.6% 7.0% 14.1% 16.1% Direct Vacancy 1.6% 1.4% 3.4% 2.3% 9.1% 9.3% MIDTOWN EAST 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 5.5% 2.1% 2.6% 0.5% 0.0% 0.0% Overall Vacancy 3.9% 2.6% 4.5% 8.9% 10.3% 12.5% Direct Vacancy 3.1% 1.9% 2.5% 3.1% 4.7% 5.7% MIDTOWN WEST 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 0.0% 3.0% 2.1% 5.6% 4.0% 3.0% Overall vacancy 2.7% 2.7% 4.4% 6.2% 6.3% 8.3% Direct Vacancy 2.4% 2.4% 2.7% 4.0% 3.5% 5.8% 6TH AVE./ROCK. CNTR. 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 ---- ---- ---- ---- ---- ---- RA Portfolio Vacancy 5.6% 7.2% 6.5% 3.7% 3.5% 8.1% Overall Vacancy 1.2% 1.2% 3.3% 4.3% 7.0% 9.0% Direct Vacancy 0.6% 0.9% 1.5% 2.7% 3.5% 3.3% SOURCE: CUSHMAN & WAKEFIELD CLASS A OFFICE STATISTICS The New York Tri-State Area's Leading Real Estate Company Slide 9 PORTFOLIO PERFORMANCE Core Same Property NOI Performance TOTAL PORTFOLIO (a)(b)(c) - ------------------------- [Graphic omitted] Three Months Twelve Months ------------ ------------- Cash NOI 8.3% 7.7% GAAP NOI 3.0% 0.7% CASH RECONCILIATION ------------------- (in thousands) (in thousands) THREE MONTHS TWELVE MONTHS REVENUE ------------ ------------- - ------- Free Rent Burn Off $5,200 $17,700 Built-in Rent Increase 2,200 9,500 Same Space Rent Increase 800 3,400 Escalation Increase 800 3,300 NYC Incremental Revenue -- 4,200 Weighted Average Occupancy Decrease (100) (2,500) Bad Debt (Increase)/Decrease 200 (2,900) ------ ------- Total $9,100 8.5% $32,700 7.7% ====== ======= EXPENSES - -------- Operating Expenses $1,000 $ 6,000 Real Estate Taxes 2,500 6,000 ------ ------- Total $3,500 8.7% $12,000 7.7% ====== ======= ------ ------- NOI $5,600 8.3% $20,700 7.7% ====== ======= (a) EXCLUDES TERMINATION FEES (b) INCLUDING ONE ORLANDO CENTRE, FL, THREE MONTH SAME PROPERTY NOI PERFORMANCE WOULD BE 7.7% (CASH) AND 2.6% (GAAP) AND TWELVE MONTH SAME PROPERTY NOI PERFORMANCE WOULD BE 7.2% (CASH) AND 0.4% (GAAP) (c) NET OF MINORITY INTERESTS IN JOINT VENTURES, THREE MONTH CORE SAME PROPERTY NOI PERFORMANCE WOULD BE 3.9% (CASH) AND 2.0% (GAAP) AND TWELVE MONTH CORE SAME PROPERTY NOI PERFORMANCE WOULD BE 3.9% (CASH) AND (.3%) (GAAP) The New York Tri-State Area's Leading Real Estate Company Slide 10 PORTFOLIO PERFORMANCE Fourth Quarter 2002 [Graphics omitted] AVERAGE RENT PERFORMANCE ON RENEWAL & REPLACEMENT SPACE(a) Office Rent Growth Prior Leases $25.90 New Leases $28.37 Growth 9.5% Industrial/R&D Rent Growth Prior Leases $5.99 New Leases $6.70 Growth 11.9% o Fourth Quarter Cash Increase of 5.8% for Office and a decrease of (8.3%) for Industrial/R&D o Year End Cash Increase of 9.2% for Office and 1.1% for Industrial/R&D o Year End GAAP Increase of 13.8% for Office and 14.4% for Industrial/R&D o Renewed 45% of Expiring Square Footage During the Fourth Quarter and 60% During the Year (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 Fourth Quarter 2002 Annual 2002 -------------------------- --------------------------- Percent of Percent of Sq. Ft. Leasing Activity Sq. Ft. Leasing Activity ------- ---------------- ------- ---------------- New Leases 440,456 63% 1,589,004 57% Renewals at Expiration 145,602 21% 781,961 28% Early Renewals 74,342 11% 235,919 9% Net Expansions 38,928 5% 172,399 6% ------- ---- --------- ---- Total 699,328 100% 2,779,283 100% ======= ==== ========= ==== % of Total Portfolio 3.4% 13.7% 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 4Q02 ---- ---- ---- ---- ---- ---- ---- ---- Average Rent Performance on Renewal & Replacement 22.9% 23.2% 21.7% 16.3% 22.8% 19.4% 11.1% 9.5% Space - --------------------- Effective Rent Spread 6.6% 8.3% 7.3% 6.0% 8.2% 7.9% 13.6% 9.2% - --------------------- Office Leasing Activity 361 403 497 410 472 287 612 369 - -------------- (SF in thousands) Average Lease Term 5.9 6.0 4.1 5.7 6.3 6.1 8.4 5.1 - ------------------ (Years) NOTE: 3Q02 NUMBERS INCLUDE FUJI AND RELATED TRANSACTIONS ENCOMPASSING 239,000 SQUARE FEET The New York Tri-State Area's Leading Real Estate Company Slide 13 LEASE EXPIRATIONS 8.1% of Total Portfolio GAAP Revenue Expiring 2003 (a) Pro Forma for Anticipated WorldCom/MCI Lease Terminations [Graphic omitted]
OFFICE 2003 2004 2005 2006 2007 - ------ ---- ---- ---- ---- ---- (in thousands) Square Feet Expiring 1,065 1,013 1,805 1,647 1,255 1,361 (a) % of Total Office Portfolio 7.9% 7.5% 13.3% 12.2% 9.3% 10.0%(a)
[Graphic omitted] INDUSTRIAL/R&D 2003 2004 2005 2006 2007 - -------------- ---- ---- ---- ---- ---- (in thousands) Square Feet Expiring 469 610 655 1,002 364 % of Total Industrial/R&D Portfolio 7.0% 9.1% 9.7% 14.9% 5.4% (a) Includes 191,972 square feet rejected by WorldCom/MCI to date plus an additional 104,000 square feet anticipated to be rejected. The New York Tri-State Area's Leading Real Estate Company Slide 14 Pro Forma Office Lease Expirations (a) 1.4 Million Square Feet of Office Space to Lease in 2003 By Division: [Graphic omitted] Long Island Total Expirations - 525,527 sf WorldCom/MCI - 141,742 sf Other Expirations - 383,785 sf New York City Total Expirations - 198,954 sf WorldCom/MCI - 34,230 sf Other Expirations - 164,724 sf Connecticut Total Expirations - 93,783 Westchester Total Expirations - 258,339 sf WorldCom/MCI - 120,000 sf Other Expirations - 138,339 sf New Jersey (b) Total Expirations - 284,221 sf American Express - 195,000 sf Other Expirations - 89,221 sf By Quarter: [Graphic omitted] 1Q03 - 487,052 sf 2Q03 - 294,991 sf 3Q03 - 366,062 sf 4Q03 - 212,719 sf (a) Includes 191,972 square feet rejected by WorldCom/MCI to date plus an additional 104,000 square feet anticipated to be rejected (b) 101 JFK Parkway expected to commence redevelopment in 3Q03 The New York Tri-State Area's Leading Real Estate Company Slide 15 LEASE EXPIRATION COMPARISON 2003 and 2004 Office Portfolio As of December 31, 2002 Expiring Rents vs. Reckson Forecast Rents [Graphics omitted] Total Office Portfolio - 2.1 million sq. ft. expiring Cash GAAP ---- ---- Expiring $27.46 $26.31 Forecasted (a) $30.10 $30.66 Increase 9.6% 16.5% CBD Office Portfolio - 636,282 sq. ft. expiring Cash GAAP ---- ---- Expiring $29.84 $29.25 Forecasted (a) $37.94 $38.62 Increase 27.1% 32.0% Suburban Office Portfolio - 1.4 million sq. ft. expiring Cash GAAP ---- ---- Expiring $26.41 $25.01 Forecasted (a) $26.64 $27.15 Increase 0.9% 8.6% (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 16 OPERATING DATA (IN THOUSANDS) THREE MONTHS ENDED -------------------------------------------- DECEMBER 31, SEPTEMBER 30, DECEMBER 31, 2002 2002 2001 ------------ ------------- ------------ Property Operating Revenues (a) $127,002 $126,447 $121,314 Property Operating Expenses 45,580 46,135 42,244 -------- -------- -------- Property Operating Margin $ 81,422 $ 80,312 $ 79,070 Margin Percentage 64.1% 63.5% 65.2% Marketing, General & Administrative $ 8,868 $ 7,965 $ 7,115 Other Income $ 2,356 $ 2,335 $ 2,706 (excluding gain on sales of real estate) Tenant Receivable Reserves $ 1,740 $ 1,060 $ 1,097 Termination Fees $ 2,276 $ 3,227 $ 2,712 The New York Tri-State Area's Leading Real Estate Company Slide 17 PAYOUT RATIO ANALYSIS CLASS A CLASS A & B COMMON STOCK COMMON STOCK THREE MONTHS ENDED THREE MONTHS ENDED ------------------ ------------------ DILUTED CAD PAYOUT RATIOS 12/31/02 9/30/02 12/31/02 9/30/02 - ------------------------- -------- ------- -------- ------- Committed non-incremental TI/LC on 118.4% 257.0% 127.7% 277.1% signed leases and actual non- incremental capital improvements Committed non-incremental TI/LC on 113.2% 243.1% 122.2% 262.1% signed leases, excluding early renewals and including actual non- incremental capital improvements Actual paid or accrued for non- 142.5% 133.6% 153.8% 144.0% incremental TI/LC and actual non- incremental capital improvements The New York Tri-State Area's Leading Real Estate Company Slide 18 NORMALIZED PAYMENT COVERAGE o Expect coverage shortfall for 2003 based on market conditions. o Factors impacting coverage recovery: - Reinvestment of asset sales proceeds - Sales of non-income producing assets for share repurchases -- land & RSVP - Adjustment to normalized tenant costs -- currently 20% over 5 year average - Normalized NOI growth o Expect normalization 85% - 90% CAD Payment Ratio The New York Tri-State Area's Leading Real Estate Company Slide 19 CREDIT RISK Significant Tenant Watch List WORLDCOM/MCI - Voluntarily filed for Chapter 11 in July 2002 - Previously leased approximately 527,000 square feet at 13 of the Company's properties - Base rent paid current on all non-rejected leases through March 2003 - Rejected 191,972 square feet, subsequent to year end, in three locations (base rent paid current through January 2003) - Wrote off approximately $1.1 million of deferred rent receivable attributable to the rejected leases which had previously been reserved - Reserved an additional $475,000 of remaining deferred rents receivable - Active discussions pending - outcome remains uncertain 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 $6.1 million - Four leases to be restructured - Reserved $200,000 of deferred rents receivable - Five leases remain unadjusted - Hopeful to finalize this quarter The New York Tri-State Area's Leading Real Estate Company Slide 20 FINANCIAL RATIOS
(in millions except ratios) Ratios December 31, 2002 December 31, 2001 - ------ ----------------- ----------------- Total Debt (a) $1,371 $1,336 Total Equity $1,681 $1,916 Total Market Cap $3,052 $3,252 Interest Coverage Ratio (b) 3.26x 3.11x Fixed Charge Coverage Ratio (b) 2.55x 2.44x Debt to Total Market Cap 44.9% 41.1% (a) INCLUDING PRO-RATA SHARE OF JOINT VENTURE DEBT AND NET OF MINORITY PARTNERS' INTERESTS SHARE OF JOINT VENTURE DEBT (B) FOR THE THREE MONTH PERIOD ENDED DECEMBER 31
The New York Tri-State Area's Leading Real Estate Company Slide 21 DEBT SCHEDULE (IN MILLIONS) PRINCIPAL AMOUNT WEIGHTED AVERAGE AVERAGE TERM DEBT SCHEDULE OUTSTANDING INTEREST RATE TO MATURITY - ------------- ----------- ------------- ----------- Fixed Rate Mortgage Notes Payable $ 740.0 (a) 7.3% 9.0 yrs. Senior Unsecured Notes $ 500.0 7.4% 4.6 yrs. -------- Subtotal/Weighted Average $1,240.0 7.3% 7.2 yrs. ======== Floating Rate Corporate Unsecured -------- Credit Facility $ 267.0 (b) LIBOR+90 bps ======== - -------------------------------------------------------------------------------- LOW FLOATING RATE DEBT LEVELS [graphic omitted] Floating Rate 18% Fixed Rate 82% LONG-TERM STAGGERED DEBT MATURITY SCHEDULE
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Mortgage Debt $0 $ 3 $19 $130 $ 60 $0 $100 $28 $218 $4 Unsecured Notes $100 $200 $200
(a) INCLUDES $300.5 MILLION OF DEBT RELATED TO CONSOLIDATED JOINT VENTURE PROPERTIES - THE COMPANY'S PRO RATA SHARE IS APPROXIMATELY $158.1 MILLION. THE COMPANY ALSO HAS A 60% INTEREST IN AN UNCONSOLIDATED JOINT VENTURE PROPERTY - THE COMPANY'S PRO RATA SHARE IS APPROXIMATELY $7.5 MILLION. (b) CORPORATE UNSECURED CREDIT FACILITY MATURES IN DECEMBER 2005. The New York Tri-State Area's Leading Real Estate Company Slide 22 2003 OUTLOOK o Remain Uncertain about the Markets - Geopolitical and economic uncertainty remain an issue - Impact of WorldCom/MCI exposure - Shadow space may become more visible if financial services sector remains weak - Do not anticipate significant office market recovery until some point in 2004 o Investment Markets Remain Competitive - Hopeful that pricing will rationalize - Will maintain investment discipline - Will seek to sell non-core assets and pursue selective joint ventures to capitalize on investor appetite o Will Harvest Non-Income Producing Assets - 14 land sites encompassing 338 acres - Re-zonings - Build to Suits - RSVP o Continue to Opportunistically Repurchase Reckson Equity - Will do this in conjunction with dispositions so that they are leverage neutral to ensure that we maintain financial flexibility The New York Tri-State Area's Leading Real Estate Company Slide 23 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 24 RECKSON ASSOCIATES REALTY CORP. 225 BROADHOLLOW ROAD MELVILLE, NY 11747 888.RECKSON www.reckson.com -----END PRIVACY-ENHANCED MESSAGE-----