MELVILLE, N.Y.--(BUSINESS WIRE)--Nov. 4, 2003--Reckson Associates
Realty Corp. (NYSE: RA) today reported diluted funds from operations
("FFO") of $41.2 million or $.56 per share for the third quarter of
2003, as compared to FFO of $45.5 million or $.59 per share for the
third quarter of 2002, representing a decrease of (5.1%) on a per
share basis.
Net income allocable to common shareholders totaled $10.0 million
in the third quarter of 2003, as compared to $16.1 million in the
third quarter of 2002. Diluted net income per Class A Common share,
commonly referred to as earnings per share ("EPS"), totaled $.16 per
share in the third quarter of 2003, as compared to $.25 per share in
the third quarter of 2002, representing a decrease of ($.09) per
share. Diluted EPS per Class B Common share totaled $.17 per share in
the third quarter of 2003, as compared to $.26 per share in the third
quarter of 2002, representing a decrease of ($.09) per share.
A reconciliation of FFO to net income allocable to common
shareholders, the GAAP measure the Company believes to be the most
directly comparable, is in the financial tables accompanying this
press release.
Commenting on the third quarter results, Scott Rechler, Reckson's
Co-Chief Executive Officer, stated, "While conditions remain
competitive, we are experiencing increased leasing activity in our
markets and believe we have reached market bottom. Effective leasing
strategies and our quality product enabled us to increase same
property office occupancy by 30 basis points in the third quarter and
increase rents on renewal and replacement space by 12.5%." Mr. Rechler
further commented, "I am very pleased with the progress on our
corporate restructuring. We announced proposed management changes,
identified our target G&A savings and are proceeding toward a fourth
quarter closing on the Long Island industrial sale."
Summary Portfolio Performance
The Company reported same property office occupancy at September
30, 2003 of 91.9%. This compares to 91.6% at June 30, 2003 and 95.0%
at September 30, 2002. The Company reported same property overall
portfolio occupancy of 92.1% at September 30, 2003, as compared to
92.1% at June 30, 2003 and 94.1% at September 30, 2002.
The Company also reported office occupancy at September 30, 2003
of 91.0%. This compares to 91.7% at June 30, 2003 and 95.1% at
September 30, 2002. The Company also reported overall portfolio
occupancy of 91.6% at September 30, 2003, as compared to 92.2% at June
30, 2003 and 94.2% at September 30, 2002.
Rent performance on renewal and replacement space during the third
quarter of 2003 increased 12.5% (cash) and 19.8% (including
straight-line rent) in the total portfolio and increased 13.1% (cash)
and 19.9% (including straight-line rent) in the office portfolio.
During the quarter, the Company executed 63 leases encompassing
646,070 square feet, representing 3.1% of the total portfolio. In the
office portfolio during the quarter, the Company executed 52 leases
encompassing 526,948 square feet.
Total portfolio core same property net operating income (property
operating revenues less property operating expenses) ("NOI") before
termination fees for the third quarter of 2003 decreased (1.0%) (cash)
and (2.9%) (including straight-line rent), compared to the third
quarter of 2002. Office core same property NOI before termination fees
for the third quarter of 2003 decreased (1.2%) (cash) and (3.2%)
(including straight-line rent), compared to the third quarter of 2002.
Net of minority interests in joint ventures, total portfolio core
same property NOI before termination fees for the third quarter of
2003 decreased (0.6%) (cash) and (3.0%) (including straight-line
rent), compared to the third quarter of 2002.
Other Highlights
Completed acquisition activity totaling approximately $60 million
which included 1055 Washington Blvd., a 181,800 square foot, 10-story
Class A office building, located in Stamford, Connecticut; a joint
venture partner's 49% interest in 275 Broadhollow Road, Melville, Long
Island; and a $15 million participating interest in a $30 million
junior mezzanine loan secured by a 1.1 million square foot Class A
office complex located on Long Island.
Executed contracts for dispositions totaling approximately $340
million which included the Company's 95 property, 5.9 million square
foot Long Island industrial portfolio and 538 Broadhollow Road, a
180,281 square foot, Class A office building located in Melville, Long
Island.
Executed two contracts for land dispositions with anticipated
aggregate proceeds up to $43 million for Eagle Rock III, 15 acres of
land located in East Hanover, New Jersey and Giralda Farms, up to 113
acres of land located in Chatham, New Jersey. Closing and ultimate
proceeds on both of these contracts are subject to zoning changes from
office to residential use and residential unit yield.
Completed the restructuring of RSVP's capital structure and
management agreements.
Elected to exchange all outstanding Class B Common Stock into
Class A Common Stock effective November 25, 2003.
Non-GAAP Financial Measures
Funds from Operations ("FFO")
The Company believes that FFO is a widely recognized and
appropriate measure of performance of an equity REIT. Although FFO is
a non-GAAP financial measure, the Company believes it provides useful
information to shareholders, potential investors and management. The
Company computes FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts ("NAREIT"). FFO
is defined by NAREIT as net income or loss, excluding gains or losses
from debt restructuring and sales of depreciable properties plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. FFO does not represent
cash generated from operating activities in accordance with GAAP and
is not indicative of cash available to fund cash needs. FFO should not
be considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flow as a
measure of liquidity. Since all companies do not calculate FFO in a
similar fashion, the Company's calculation of FFO presented herein may
not be comparable to similarly titled measures as reported by other
companies.
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 office
and industrial 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 and industrial properties in the New York Tri-State area, with
182 properties comprised of approximately 20.7 million square feet
either owned or controlled. For additional information on Reckson
Associates Realty Corp., please visit the Company's web site at
www.reckson.com.
Conference Call and Webcast
The Company's executive management team, led by Co-Chief Executive
Officer Scott Rechler, will host a conference call outlining third
quarter results on Wednesday, November 5, 2003 at 2:00 p.m. EST. The
conference call may be accessed by dialing (800) 553-5275
(internationally (651) 291-5254). No passcode is required. The live
conference call will also be webcast in a listen-only mode on the
Company's web site at www.reckson.com, in the Investor Relations
section, with an accompanying slide show presentation outlining the
Company's third quarter results.
A replay of the conference call will be available telephonically
from November 5, 2003 at 8:00 p.m. EST through November 14, 2003 at
11:59 p.m. EST. The telephone number for the replay is (800) 475-6701,
passcode 701671. A replay of the webcast of the conference call will
also be available via the Company's web site.
Financial Statements Attached
The Supplemental Package and Slide Show Presentation outlining the
Company's third quarter 2003 results will be available prior to the
Company's quarterly conference call on the Company's web site at
www.reckson.com in the Investor Relations section, by e-mail to those
on the Company's distribution list, as well as by mail or fax, upon
request. To be added to the Company's e-mail distribution list or to
receive a copy of the quarterly materials by mail or fax, please
contact Susan McGuire, Investor Relations, Reckson Associates Realty
Corp., 225 Broadhollow Road, Melville, New York 11747-4883,
investorrelations@reckson.com or telephone number (631) 622-6746.
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 and
industrial/R&D 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, security and insurance costs; repayment of debt owed to the
Company by third parties (including FrontLine Capital Group); 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.
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Statements of Income
(in thousands, except share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2003 2002 2003 2002
------------ ----------- ------------ -----------
Property Operating
Revenues:
Base rents $ 95,239 $ 100,730 $ 288,202 $ 295,137
Tenant escalations
and reimbursements 16,466 13,994 44,817 40,794
------------ ----------- ------------ -----------
Total property
operating
revenues 111,705 114,724 333,019 335,931
------------ ----------- ------------ -----------
Property Operating
Expenses:
Operating expenses 28,065 26,589 80,788 72,630
Real estate taxes 19,145 16,500 53,999 47,973
------------ ----------- ------------ -----------
Total property
operating
expenses 47,210 43,089 134,787 120,603
------------ ----------- ------------ -----------
Net Operating Income 64,495 71,635 198,232 215,328
------------ ----------- ------------ -----------
Gross Margin
percentage 57.7% 62.4% 59.5% 64.1%
------------ ----------- ------------ -----------
Other Income 6,534 2,243 18,553 6,320
------------ ----------- ------------ -----------
Other Expenses
Interest expense 20,231 20,684 61,170 59,860
Depreciation and
amortization 26,273 26,690 82,845 75,654
Marketing, general
and administrative 8,239 7,402 24,755 20,923
------------ ----------- ------------ -----------
Total other
expenses 54,743 54,776 168,770 156,437
------------ ----------- ------------ -----------
Income before minority
interests, preferred
dividends and distributions,
gain on sales of depreciable
real estate and discontinued
operations 16,286 19,102 48,015 65,211
Minority partners'
interests in
consolidated
partnerships (4,379) (4,446) (13,404) (14,379)
Distributions to
preferred
unitholders (273) (273) (820) (1,014)
Limited partners'
minority interest
in the operating
partnership (678) (845) (1,869) (3,527)
Gain on sales of
depreciable real
estate assets - - - 537
------------ ----------- ------------ -----------
Income before
discontinued
operations and
preferred dividends 10,956 13,538 31,922 46,828
Discontinued
operations (net of
limited partners'
minority interest) 4,369 8,083 10,285 15,554
------------ ----------- ------------ -----------
Net income 15,325 21,621 42,207 62,382
Dividends to
preferred
shareholders (5,316) (5,487) (15,950) (16,461)
------------ ----------- ------------ -----------
Net income
allocable to
common
shareholders $ 10,009 $ 16,134 $ 26,257 $ 45,921
============ =========== ============ ===========
Allocable to
Class A common $ 7,613 $ 12,334 $ 19,977 $ 35,041
Allocable to
Class B common 2,396 3,800 6,280 10,880
------------ ----------- ------------ -----------
Net income
allocable to
common
shareholders $ 10,009 $ 16,134 $ 26,257 $ 45,921
============ =========== ============ ===========
Basic weighted
average common
shares
outstanding:
Class A common 48,009,000 49,525,000 48,070,000 50,103,000
Class B common 9,915,000 10,010,000 9,915,000 10,191,000
Basic net income per
weighted average
common share:
Class A common
stock - income
from continuing
operations $ 0.09 $ 0.13 $ 0.26 $ 0.46
Gain on sales of
depreciable
real estate
assets - - - -
Discontinued
operations 0.07 0.12 0.16 0.24
------------ ----------- ------------ -----------
Basic net
income per
Class A common $ 0.16 $ 0.25 $ 0.42 $ 0.70
============ =========== ============ ===========
Class B common
stock - income
from continuing
operations $ 0.13 $ 0.19 $ 0.38 $ 0.71
Gain on sales of
depreciable
real estate
assets - - - -
Discontinued
operations 0.11 0.19 0.25 0.36
------------ ----------- ------------ -----------
Basic net
income per
Class B common $ 0.24 $ 0.38 $ 0.63 $ 1.07
============ =========== ============ ===========
Diluted weighted
average common
shares outstanding:
Class A common 48,179,000 49,825,000 48,205,000 50,445,000
Class B common 9,915,000 10,010,000 9,915,000 10,191,000
Diluted net income
per weighted average
common share:
Class A common $ 0.16 $ 0.25 $ 0.41 $ 0.69
============ =========== ============ ===========
Class B common $ 0.17 $ 0.26 $ 0.45 $ 0.75
============ =========== ============ ===========
Reckson Associates Realty Corp. (NYSE: RA)
Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2003 2002
------------- ------------
Assets: (Unaudited)
Commercial real estate properties, at cost:
Land $ 386,512 $ 418,040
Buildings and improvements 2,241,511 2,415,252
Developments in progress:
Land 89,450 92,924
Development costs 61,372 28,311
Furniture, fixtures, and equipment 11,300 13,595
------------ -----------
2,790,145 2,968,122
Less: accumulated depreciation (446,522) (454,018)
------------ -----------
Investment in real estate, net of accumulated
depreciation 2,343,623 2,514,104
Properties and related assets held for sale,
net of accumulated depreciation 202,521 -
Investments in real estate joint ventures 5,844 6,116
Investments in mortgage notes and notes
receivable 70,425 54,547
Investments in service companies and affiliate
loans and joint ventures 72,054 73,332
Cash and cash equivalents 24,623 30,827
Tenant receivables 14,842 14,050
Deferred rents receivable 109,622 107,366
Prepaid expenses and other assets 33,773 37,235
Contract and land deposits and pre-
acquisition costs 128 240
Deferred leasing and loan costs (net of
accumulated amortization) 64,619 70,103
------------ -----------
Total Assets $2,942,074 $2,907,920
------------ -----------
Liabilities:
Mortgage notes payable $ 725,002 $ 740,012
Mortgage notes payable and other liabilities
associated with properties held for sale 9,107 -
Unsecured credit facility 374,000 267,000
Senior unsecured notes 499,409 499,305
Accrued expenses and other liabilities 84,860 93,783
Dividends and distributions payable 31,606 31,575
------------ -----------
Total Liabilities 1,723,984 1,631,675
------------ -----------
Minority partners' interests in consolidated
partnerships 234,377 242,934
Preferred unit interest in the operating
partnership 19,662 19,662
Limited partners' minority interest in the
operating partnership 69,410 71,420
------------ -----------
323,449 334,016
------------ -----------
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000
shares authorized
Series A - 8,834,500 shares issued and
outstanding 88 88
Series B - 2,000,000 shares issued and
outstanding 20 20
Common Stock, $.01 par value, 100,000,000
shares authorized
Class A - 48,012,988 and 48,246,083 shares
issued and outstanding, respectively 481 482
Class B - 9,915,313 shares issued and
outstanding 99 99
Treasury Stock, Class A common, 2,950,400 and
2,698,400 shares, respectively and Class B
common, 368,200 shares (63,954) (63,954)
Additional paid in capital 957,907 1,005,494
------------ -----------
Total Stockholders' Equity 894,641 942,229
------------ -----------
Total Liabilities and Stockholders'
Equity $2,942,074 $2,907,920
------------ -----------
Total debt to market capitalization (a): 44.9% 44.9%
------------ -----------
(a) Total debt includes the Company's pro rata share of consolidated
and unconsolidated joint venture debt.
Reckson Associates Realty Corp. (NYSE: RA)
Funds From Operations
(in thousands, except per share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------- ------------------
2003 2002 2003 2002
---------------- ------------------
Net income allocable to common
shareholders $10,009 $16,134 $ 26,257 $ 45,921
Add: Real estate depreciation
and amortization 27,465 28,208 87,919 80,570
Minority partners'
interests in consolidated
partnerships 4,379 4,446 13,404 14,379
Limited partners' minority
interest in the operating
partnership 1,202 1,941 3,072 5,538
Less:Gain on sales of
depreciable real estate
assets - 4,896 - 5,433
Amounts distributable to
minority partners in
consolidated partnerships 6,339 6,050 19,914 18,943
---------------- ------------------
Basic Funds From Operations
("FFO") 36,716 39,783 110,738 122,032
Add: Dividends and distributions
on dilutive shares and
units 4,485 5,761 13,452 17,476
---------------- ------------------
Diluted FFO (Note - a) $41,201 $45,544 $124,190 $139,508
================ ==================
Diluted FFO calculations:
Weighted average common
shares outstanding 57,924 59,535 57,985 60,294
Weighted average units of
limited partnership
interest outstanding 7,554 7,276 7,370 7,427
---------------- ------------------
Basic weighted average
common shares and units
outstanding 65,478 66,811 65,355 67,721
Adjustments for dilutive FFO
weighted average shares and units
outstanding:
Common stock equivalents 170 300 136 342
Series A preferred stock 7,747 8,060 7,747 8,060
Series B preferred stock - 1,919 - 1,919
Limited partners'
preferred interest 661 661 661 770
---------------- ------------------
Total diluted weighted average
shares and units outstanding 74,056 77,751 73,899 78,812
================ ==================
Diluted FFO per weighted average
share or unit $ 0.56 $ 0.59 $ 1.68 $ 1.77
Diluted weighted average Class A
dividends per share $ 0.42 $ 0.42 $ 1.27 $ 1.27
Diluted FFO payout ratio -
Class A 76.4% 72.5% 75.8% 72.0%
Diluted weighted average Class A &
B dividends per share or unit $ 0.45 $ 0.45 $ 1.36 $ 1.36
Diluted FFO payout ratio (Class A
& B combined) 81.7% 77.4% 81.1% 76.9%
Notes:
a - Includes $3.3 million and $13.4 million for the three and nine
month periods ended September 30, 2003, respectively attributable
to the sale of land.
Reckson Associates Realty Corp. (NYSE: RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------- ------------------
2003 2002 2003 2002
---------------- ------------------
Basic Funds From Operations $36,716 $39,783 $110,738 $122,032
Adjustments for basic cash
available for distribution:
Less: Straight line rents 4,712 6,683 13,389 19,718
Committed non-incremental
capitalized tenant
improvements and
leasing costs 7,049 19,274 22,645 27,177
Actual non-incremental
capitalized improvements 3,070 2,738 7,125 6,179
---------------- ------------------
Basic Cash Available for
Distribution ("CAD") 21,885 11,088 67,579 68,958
Add: Dividends and
distributions on dilutive
shares and units - - - -
---------------- ------------------
Diluted CAD (Note - a) $21,885 $11,088 $ 67,579 $ 68,958
================ ==================
Diluted CAD calculations:
Weighted average common
shares outstanding 57,924 59,535 57,985 60,294
Weighted average units of
limited partnership
interest outstanding 7,554 7,276 7,370 7,427
---------------- ------------------
Basic weighted average
common shares and units
outstanding 65,478 66,811 65,355 67,721
Adjustments for dilutive CAD
weighted average shares and units
outstanding:
Common stock
equivalents 170 300 136 342
Series A preferred
stock - - - -
Series B preferred
stock - - - -
Limited partners'
preferred interest - - - -
---------------- ------------------
Total diluted weighted average
shares and units outstanding 65,648 67,111 65,491 68,063
================ ==================
Diluted CAD per weighted average
share or unit $ 0.33 $ 0.17 $ 1.03 $ 1.01
Diluted weighted average Class A
dividends per share $ 0.42 $ 0.42 $ 1.27 $ 1.27
Diluted CAD payout ratio -
Class A 127.4% 257.0% 123.5% 125.7%
Diluted weighted average Class A &
B dividends per share or unit $ 0.46 $ 0.46 $ 1.37 $ 1.37
Diluted CAD payout ratio (Class A
& B combined) 137.5% 277.1% 133.3% 135.6%
Notes:
a - Includes $3.3 million and $13.4 million for the three and nine
month periods ended September 30, 2003, respectively attributable
to the sale of land.
CONTACT: Reckson Associates Realty Corp., Melville
Scott Rechler, Co-CEO
Michael Maturo, CFO
631-694-6900 (Phone)
631-622-6790 (Facsimile)
SOURCE: Reckson Associates Realty Corp.
