MELVILLE, N.Y., Nov 4, 2002 (BUSINESS WIRE) -- Reckson Associates Realty Corp.
(NYSE: RA) today reported third quarter diluted funds from operations ("FFO") of
$.59 per share as compared to FFO of $.66 per share for the third quarter of
2001, representing a per share decrease of 10.6%.
Reckson also reported diluted FFO for the nine months ended September 30, 2002
of $1.77 per share as compared to FFO of $2.04 per share for the nine months
ended September 30, 2001, representing a per share decrease of 13.2%.
Commenting on the third quarter results, Scott Rechler, Reckson's Co-Chief
Executive officer, said, "I continue to be pleased with our Company's core
operating performance in what is a challenging economic environment. We have
maintained office occupancies at approximately 95% by successfully competing for
market share. We have continued to generate positive same space rent growth,
although leasing costs have increased. This quarter we leased 612,000 square
feet of office space which is 50% higher than our last four quarter's average."
Mr. Rechler also noted, "While we have strengthened our balance sheet through
recent dispositions, we continue to maintain our investment discipline in what
we believe has been an `over-heated' investment market and have chosen to
allocate our capital toward our share repurchase program where we have invested
$75 million year to date."
Summary Portfolio Performance
Portfolio performance remained stable during the third quarter of 2002 with
overall portfolio occupancy of 94.2% at September 30, 2002, as compared to 94.2%
at June 30, 2002 and 96.8% at September 30, 2001. The Company reported
occupancies at September 30, 2002 of 95.1% for the office portfolio and 92.4%
for the industrial portfolio. This compares to 95.2% and 92.0%, respectively, at
June 30, 2002 and 96.7% and 97.5%, respectively, at September 30, 2001.
The Company also reported same property occupancy of 94.2% for the overall
portfolio at September 30, 2002, as compared to 94.6% at June 30, 2002 and 95.0%
at September 30 2001. Reported same property office portfolio occupancy of 95.6%
at September 30, 2002, as compared to 95.9% at June 30, 2002 and 96.4%, at
September 30, 2001.
During the quarter, the Company executed 66 leases encompassing 745,000 square
feet, which included 612,000 square feet of office space. This represents 3.7%
of the total portfolio. The Company also renewed 65% of expiring square feet. As
of September 30, 2002 the Company reduced total portfolio exposure to expiring
leases to 1.1% for 2002 and 8.6% in 2003.
Same property net operating income ("NOI") before termination fees for the third
quarter of 2002 increased 7.2% (cash) and decreased (0.4%) (GAAP) for the total
portfolio, compared to the third quarter of 2001.
Rents on same space leases executed during the third quarter of 2002 increased
7.9% (cash) and 11.1% (GAAP) in the office properties and 4.8% (cash) and 16.6%
(GAAP) in the industrial/R&D properties.
Other Highlights
Completed 239,000 square feet of leasing in Westchester related to Fuji Photo
Film U.S.A., Inc. and associated transactions.
During the third quarter, the Company 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.
Subsequent to September 30, 2002, the Company 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.
Total year to date aggregate repurchases of 3,424,100 shares of Class A common
stock, Class B common stock and Series A preferred stock amounts to
approximately $75 million.
Consolidated Financial Results
The Company reported diluted operating earnings per share ("OpEPS") of $.20 for
the third quarter of 2002, as compared to $.31 per share for the comparable 2001
period.
The Company reported diluted earnings per Class A common share ("EPS") of $.25
for the third quarter of 2002, as compared to ($1.97) per Class A common share
for the comparable 2001 period.
FFO Guidance
On Tuesday, November 5th, during the Company's quarterly earnings conference
call, management will discuss FFO guidance for the remainder of 2002 and for
2003 and the assumptions behind the guidance.
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 178 properties comprised of approximately 20.4
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 2002 results on
Tuesday, November 5, 2002 at 2:00 p.m. EST. The conference call may be accessed
by dialing (800) 553-5260 (internationally (612) 288-0337). 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, 2002 at 8:00 p.m. EST through November 15, 2002 at 11:59 p.m. EST. The
telephone number for the replay is (800) 475-6701, passcode 653722. A replay of
the webcast of the conference call will also be available via the Company's web
site.
Financial Statements Attached
The supplemental materials on the Company's third quarter results will be
available on the Company's web site, sent by e-mail to those on the Company's
distribution list, as well as available by mail or fax, upon request. The
Company will provide its Supplemental Package and Slide Show Presentation prior
to its quarterly conference call. To be added to the Company's e-mail
distribution list or to receive a copy of the third quarter supplemental
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 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 press release.
Reckson Associates Realty Corp. (NYSE:RA)
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2002 2001 2002 2001
--------- ---------- --------- ---------
Property Operating Revenues:
Base rents $111,175 $110,594 $326,424 $327,697
Tenant escalations and
reimbursements 15,272 15,273 44,656 45,198
--------- ---------- --------- ---------
Total property
operating revenues 126,447 125,867 371,080 372,895
--------- ---------- --------- ---------
Property Operating Expenses:
Operating expenses 27,618 26,106 75,409 72,921
Real estate taxes 18,517 17,738 54,052 52,126
--------- ---------- --------- ---------
Total property
operating expenses 46,135 43,844 129,461 125,047
--------- ---------- --------- ---------
Net Operating Income 80,312 82,023 241,619 247,848
--------- ---------- --------- ---------
Gross Margin percentage 63.5% 65.2% 65.1% 66.5%
Other Income:
Gain on sales of real
estate --- 972 537 972
Other 2,335 5,333 6,767 19,818
--------- ---------- --------- ---------
Total other income 2,335 6,305 7,304 20,790
--------- ---------- --------- ---------
Other Expenses:
Interest expense 22,653 23,510 65,772 70,701
Marketing, general and
administrative 7,965 7,629 22,710 23,438
Depreciation and
amortization 29,147 26,318 82,913 76,601
--------- ---------- --------- ---------
Total other expenses 59,765 57,457 171,395 170,740
--------- ---------- --------- ---------
Income from continuing
operations before minority
interests, preferred
dividends and
distributions, valuation
reserves on
investments in affiliate
loans and joint ventures,
discontinued operations
and extraordinary loss 22,882 30,871 77,528 97,898
Minority partners' interests
in consolidated partnerships (4,446) (3,065) (14,379) (12,885)
Distributions to preferred
unit holders (273) (509) (1,014) (1,630)
Valuation reserves on
investments in affiliate
loans and joint ventures --- (163,000) --- (163,000)
Limited partners' minority
interest in the operating
partnership (1,249) 14,684 (4,796) 9,437
--------- ---------- --------- ---------
Income (loss) before
discontinued operations,
extraordinary loss and
preferred dividends 16,914 (121,019) 57,339 (70,180)
Discontinued operations (net
of limited partners'
minority interest)
Income from discontinued
operations 439 181 776 681
Gain on sales of real
estate 4,268 --- 4,267 ---
--------- ---------- --------- ---------
Income (loss) before
extraordinary loss and
preferred dividends 21,621 (120,838) 62,382 (69,499)
Extraordinary loss on
extinguishment of debt, net
of limited partners'
minority interest --- (2,595) --- (2,595)
--------- ---------- --------- ---------
Net income (loss) 21,621 (123,433) 62,382 (72,094)
Dividends to preferred
shareholders (5,487) (5,487) (16,461) (16,379)
--------- ---------- --------- ---------
Net income (loss) allocable
to common shareholders $16,134 $(128,920) $45,921 $(88,473)
========= ========== ========= =========
Basic weighted average common
shares outstanding:
Class A common 49,525 49,715 50,103 47,489
Class B common 10,010 10,284 10,191 10,284
Basic net income (loss) per
weighted average common
share before
extraordinary loss:
Class A common $.25 $(1.93) $.70 $(1.38)
Extraordinary loss per
Class A common share --- (.04) --- (.04)
--------- ---------- --------- ---------
Basic net income (loss)
per weighted average
Class A common
share $.25 $ (1.97) $.70 $(1.42)
========= ========== ========= =========
Class B common $.38 $(2.95) $1.07 $(1.98)
Extraordinary loss per
Class B common share --- (.06) --- (.06)
--------- ---------- --------- ---------
Basic net income (loss)
per weighted average
Class B common
share $.38 $ (3.01) $1.07 $(2.04)
========= ========== ========= =========
Diluted weighted average
common shares outstanding:
Class A common 49,825 49,715 50,445 47,489
Class B common 10,010 10,284 10,191 10,284
Diluted net income (loss) per
weighted average common
share:
Class A common $.25 $(1.97) $.69 $(1.42)
Class B common $.26 $(3.01) $.75 $(2.04)
Basic operating earnings per
share $.20 $.31 $.68 $1.03
Diluted operating earnings
per share $.20 $.31 $.68 $1.01
Reckson Associates Realty Corp. (NYSE:RA)
Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2002 2001
----------- -----------
ASSETS
Commercial real estate properties, at cost:
Land $417,351 $408,837
Buildings and improvements 2,400,577 2,328,374
Developments in progress:
Land 91,396 69,365
Development costs 26,371 74,303
Furniture, fixtures and equipment 7,811 7,725
----------- -----------
2,943,506 2,888,604
Less accumulated depreciation (428,150) (361,960)
----------- -----------
2,515,356 2,526,644
Investments in real estate joint ventures 5,680 5,744
Investment in mortgage notes and notes
receivable 55,695 56,234
Cash and cash equivalents 32,631 121,975
Tenant receivables 9,321 9,633
Investments in service companies and affiliate
loans and joint ventures 80,130 79,184
Deferred rents receivable 100,755 81,089
Prepaid expenses and other assets 30,964 45,495
Contract and land deposits and pre-acquisition
costs 121 3,782
Deferred leasing and loan costs 68,295 64,438
----------- -----------
Total Assets $2,898,948 $2,994,218
=========== ===========
LIABILITIES
Mortgage notes payable $743,148 $751,077
Unsecured credit facility 224,000 271,600
Senior unsecured notes 499,272 449,463
Accrued expenses and other liabilities 80,181 87,683
Dividends and distributions payable 32,234 32,988
----------- -----------
Total Liabilities 1,578,835 1,592,811
----------- -----------
Minority partners' interests in consolidated
partnerships 242,720 242,698
Preferred unit interest in the operating
partnership 19,662 30,965
Limited partners' minority interest in the
operating partnership 74,288 81,887
----------- -----------
336,670 355,550
----------- -----------
Commitments and contingencies --- ---
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value, 25,000,000
shares authorized
Series A preferred stock, 9,192,000 shares
issued and outstanding 92 92
Series B preferred stock, 2,000,000 shares
issued and outstanding 20 20
Common Stock, $.01 par value, 100,000,000
shares authorized
Class A common stock, 49,152,033 and
49,982,377 shares issued and outstanding,
respectively 492 500
Class B common stock, 9,915,313 and
10,283,513 shares issued and outstanding,
respectively 99 103
Additional paid in capital 982,740 1,045,142
----------- -----------
Total Stockholders' Equity 983,443 1,045,857
----------- -----------
Total Liabilities and
Stockholders' Equity $2,898,948 $2,994,218
=========== ===========
Total debt to total market capitalization (a): 42.2% 41.1%
=========== ===========
Notes: (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 Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2002 2001 2002 2001
-------- ---------- --------- ---------
Net income (loss) allocable to
common shareholders $16,134 $(128,920) $45,921 $(88,473)
Adjustments for basic funds
from operations:
Add:
Limited partners' minority
interest in the operating
partnership 1,941 --- 5,538 ---
Real estate depreciation
and amortization 28,208 26,340 80,570 76,055
Minority partners'
interests in consolidated
partnerships 4,446 3,065 14,379 12,885
Extraordinary loss on
extinguishment of debt,
net of limited partners'
minority interest --- 2,595 --- 2,595
Valuation reserves on
investments in affiliate
loans and joint ventures --- 163,000 --- 163,000
Less:
Limited partners' minority
interest in the operating
partnership --- 14,657 --- 9,326
Gain on sales of real
estate 4,896 972 5,433 972
Amounts distributable to
minority partners in
consolidated partnerships 6,050 4,206 18,943 15,010
-------- ---------- --------- ---------
Basic Funds From Operations
("FFO") 39,783 46,245 122,032 140,754
Add:
Dividends and
distributions on
dilutive shares and
units 5,761 5,996 17,476 20,633
-------- ---------- --------- ---------
Diluted FFO $45,544 $52,241 $139,508 $161,387
======== ========== ========= =========
Basic FFO calculations:
Weighted average common
shares outstanding 59,536 59,999 60,294 57,773
Weighted average units of
limited partnership
interest outstanding 7,276 7,652 7,427 7,703
-------- ---------- --------- ---------
Basic weighted average
common shares and units
outstanding 66,812 67,651 67,721 65,476
======== ========== ========= =========
Basic FFO per weighted
average common share or
unit $.60 $.68 $1.80 $2.15
Basic weighted average
Class A & B dividends per
share or unit $.46 $.46 $1.37 $1.34
Basic FFO payout ratio
(Class A & Class B
combined) 76.9% 67.1% 76.3% 62.2%
Basic weighted average
Class A dividends per
share $.42 $.42 $1.27 $1.24
Basic FFO payout ratio -
Class A 71.3% 62.1% 70.7% 57.5%
Basic weighted average
Class B dividends per
share $.65 $.65 $1.94 $1.88
Basic FFO payout ratio -
Class B 108.7% 95.0% 107.9% 87.6%
Diluted FFO calculations:
Basic weighted average
common shares and units
outstanding 66,812 67,651 67,721 65,476
Adjustments for dilutive
FFO weighted average
shares and units
outstanding:
Add:
Weighted average common
stock equivalents 300 441 342 429
Weighted average shares
of Series A Preferred
Stock 8,060 8,060 8,060 8,060
Weighted average shares
of Series B Preferred
Stock 1,919 1,919 1,919 1,919
Weighted average shares
of minority partners'
preferred interest --- --- --- 1,898
Weighted average units
of preferred limited
partnership interest 661 1,056 770 1,182
-------- ---------- --------- ---------
Dilutive FFO weighted
average shares and units
outstanding 77,752 79,127 78,812 78,964
======== ========== ========= =========
Diluted FFO per weighted
average share or unit $.59 $.66 $1.77 $2.04
Diluted weighted average
Class A & B dividends per
share or unit $.45 $.45 $1.36 $1.32
Diluted FFO payout ratio
(Class A & Class B
combined) 77.4% 68.7% 76.9% 64.6%
Diluted weighted average
Class A dividends per
share $.42 $.42 $1.27 $1.24
Diluted FFO payout ratio -
Class A 72.5% 64.3% 72.0% 60.4%
Diluted weighted average
Class B dividends per
share $.65 $.65 $1.94 $1.88
Diluted FFO payout ratio -
Class B 110.5% 98.3% 109.8% 92.1%
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,
----------------------------------
2002 2001 2002 2001
----------------------------------
Basic Funds From Operations $39,783 $46,245 $122,032 $140,754
Adjustments for basic cash
available for
distribution:
Less:
Straight line rents 6,683 9,730 19,718 31,743
Non-incremental capitalized
tenant improvements and leasing
costs (Note A) 19,274 3,105 27,177 9,849
Non-incremental capitalized
improvements 2,738 1,996 6,179 4,260
----------------------------------
Basic Cash Available for
Distribution ("CAD") 11,088 31,414 68,958 94,902
Add:
Dividends and distributions on
dilutive shares and units --- 260 --- 4,254
----------------------------------
Diluted CAD $11,088 $31,674 $68,958 $99,156
==================================
Basic CAD calculations:
Weighted average common shares
outstanding 59,536 59,999 60,294 57,773
Weighted average units of limited
partnership interest outstanding 7,276 7,652 7,427 7,703
----------------------------------
Basic weighted average common
shares and units outstanding 66,812 67,651 67,721 65,476
==================================
Basic CAD per weighted average
common share or unit $.17 $.46 $1.02 $1.45
Basic weighted average Class A
& B dividends per share or unit $.46 $.46 $1.37 $1.34
Basic CAD payout ratio (Class A &
Class B combined)..........
(Note A) 275.9% 98.8% 135.0% 92.2%
Basic weighted average Class A
dividends per share $.42 $.42 $1.27 $1.24
Basic CAD payout ratio -
Class A....................
(Note A) 255.9% 91.4% 125.1% 85.2%
Basic weighted average Class B
dividends per share $.65 $.65 $1.94 $1.88
Basic CAD payout ratio -
Class B....................
(Note A) 389.9% 139.8% 190.9% 129.9%
Diluted CAD calculations:
Basic weighted average common
shares and units outstanding 66,812 67,651 67,721 65,476
Adjustments for dilutive CAD
weighted average shares and
units outstanding:
Add:
Weighted average common
stock equivalents 300 441 342 429
Weighted average shares
of Series A Preferred
Stock --- --- --- ---
Weighted average shares of
Series B Preferred Stock --- --- --- ---
Weighted average shares
of minority partners'
preferred interest --- --- --- 1,898
Weighted average units of
preferred limited
partnership interest --- 566 --- 1,182
----------------------------------
Dilutive CAD weighted average
shares and units outstanding 67,112 68,658 68,063 68,985
==================================
Diluted CAD per weighted average
share or unit $.17 $.46 $1.01 $1.44
Diluted weighted average Class
A & B dividends per share
or unit $.46 $.46 $1.37 $1.33
Diluted CAD payout ratio
(Class A & Class B
combined).......(Note A) 277.1% 99.3% 135.6% 92.6%
Diluted weighted average Class
A dividends per share $.42 $.42 $1.27 $1.24
Diluted CAD payout ratio -
Class A.......................
(Note A) 257.0% 92.1% 125.7% 85.9%
Diluted weighted average
Class B dividends per share $.65 $.65 $1.94 $1.88
Diluted CAD payout ratio
- Class B.....................
(Note A) 391.7% 140.7% 191.9% 130.9%
Note (A):
For the three months ended September 30, 2002 these amounts
include approximately $11.2 million of TI and leasing costs associated
with the Fuji Photo Film USA Inc., transaction. This transaction
encompasses nine tenants and approximately 239,000 square feet located
in Westchester County. Diluted CAD payout ratios would have been
(Class A and B combined: 137.8%), (Class A: 127.8%) and (Class B:
194.8%) for the three months ended September 30, 2002 had these costs
not been included. Basic CAD payout ratios would have been (Class A
and B combined: 137.2%), (Class A: 127.6%) and (Class B: 193.9%) for
the three months ended September 30, 2002 had these costs not been
included.
CONTACT:
Reckson Associates Realty Corp., Melville
Scott Rechler, Co-CEO
Michael Maturo, CFO
Phone: 631/694-6900
Facsimile: 631/622-6790
URL: http://www.businesswire.com
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