NEW YORK--(BUSINESS WIRE)--May 4, 2005--Reckson Associates Realty Corp. (NYSE:RA) announced today that the Company has contracted to acquire a 1.4 million square foot, 50-story, Class A, trophy office tower located at One Court Square, Long Island City, a submarket of New York City, for a total investment of approximately $470 million inclusive of transfer taxes and other transaction costs.

One Court Square will be 100% leased to the seller, Citibank, N.A. (Citibank), under a 15-year net lease. Reckson expects to generate an initial unleveraged cash flow yield of approximately 6.5% and a GAAP NOI yield of approximately 6.8% on the total anticipated investment, while Citibank's net lease is in effect. The Citibank lease contains partial cancellation options effective during years six and seven for up to 20% of the leased space and in years nine and ten for up to an additional 20% of the leased space, subject to notice and penalty.

Citibank's continued commitment to Long Island City is demonstrated by its recent announcement to develop a 475,000 square foot, $200 million office expansion adjacent to One Court Square.

One Court Square is strategically located directly across the East River from the heart of Midtown Manhattan with direct access to New York City via one subway stop. In addition to its premier location, the Company believes the Long Island City submarket will benefit from the strength of Midtown Manhattan's Class A office market, the continuing trend of regional decentralization in the New York Tri-State area and the significant infrastructure and zoning upgrades planned for Long Island City.

Commenting on the transaction, Scott Rechler, Reckson's President and Chief Executive Officer, said, "With this transaction, we are acquiring the highest quality asset in one of the last remaining underdeveloped New York City submarkets. One Court Square's attractive price per square foot offers the potential for material asset value appreciation as the surrounding market continues to develop. It is our intention to capitalize on this acquisition to pursue additional value-added opportunities in the Long Island City submarket." Mr. Rechler continued, "Our belief in the continued strength of Midtown Manhattan reinforces our view on the potential of the Long Island City office market."

Michael Maturo, Reckson's Executive Vice President and Chief Financial Officer, noted, "The One Court Square investment provides us with a very competitive risk adjusted return. It also allows us to efficiently reallocate capital in advance of an anticipated sale of interests in certain non-strategic suburban assets into a joint venture structure."

Long Island City has been targeted by New York City as a priority for future economic development, as evidenced by its rezoning of a 37 block area to encourage high density commercial development and the recent housing developments in the Queens West waterfront area. The Long Island City submarket offers a lower cost alternative to Midtown Manhattan and is well located to attract a skilled workforce from Queens, Brooklyn and Long Island.

In addition, the economic incentives programs affecting the Long Island City market, including the Relocation Employment Assistance Program, commonly known as "REAP", offer considerable tax abatements to employers who move to Long Island City that can result in a reduction of effective rents by approximately $10.00 per square foot.

Tod Waterman, Executive Vice President and Managing Director of Reckson's New York City division, said, "The addition of this asset to our portfolio, and future plans to act opportunistically in the Long Island City submarket is complementary to our Manhattan platform and will further enhance our ability to accommodate our large institutional tenant base throughout the New York Tri-State area."

Built in 1989, One Court Square also includes a five-story low-rise building that offers a wide range of amenities that include a fitness center, dining facilities, a branch of the New York City Public Library and a branch of Citibank along with eight retail tenants.

The Company anticipates closing on the acquisition of One Court Square during May of 2005. Reckson has obtained a $470 million unsecured bridge loan facility.

Joseph Sprouls, Managing Director of Citigroup Realty Services, stated, "We are pleased that after a conscientious bid process we were able to conclude negotiations to sell this asset to one of the premier owner/operators of Class A office product in the New York metropolitan area."

Reckson Associates Realty Corp. is a self-administered and self-managed real estate investment trust (REIT) specializing in the acquisition, leasing, financing, management and development of Class A office properties.

Reckson's core growth strategy is focused on the markets surrounding and including New York City. The Company is one of the largest publicly traded owners, managers and developers of Class A office properties in the New York Tri-State area, with 90 properties comprised of approximately 17.7 million square feet either owned or controlled, or under contract. For additional information on Reckson Associates Realty Corp., please visit the Company's web site at www.reckson.com.

Citigroup (NYSE: C), the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management. Major brand names under Citigroup's trademark red umbrella include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Travelers Life and Annuity. Additional information may be found at www.citigroup.com.

Certain matters discussed herein, including guidance concerning the Company's future performance, 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; financial condition of our tenants; changes in the supply of and demand for office properties in the New York Tri-State area; changes in interest rate levels; changes in the Company's credit ratings; changes in the Company's cost of and access to capital; 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, real estate taxes, security and insurance costs; repayment of debt owed to the Company by third parties; risks associated with joint ventures; liability for uninsured losses or environmental matters; 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 press release.

CONTACT: Reckson Associates Realty Corp.
Scott Rechler, CEO or Michael Maturo, CFO
Phone: 631-694-6900
Facsimile: 631-622-6790
or
Media:
Rubenstein Communications
Rick Matthews, 212-843-8267
SOURCE: Reckson Associates Realty Corp.