EXHIBIT 99.1
PRESS RELEASE
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RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NY 11747
(631) 694-6900 (PHONE)
(631) 622-6790 (FACSIMILE)
CONTACT: SCOTT RECHLER, CO-CEO
MICHAEL MATURO, CFO
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FOR IMMEDIATE RELEASE
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RECKSON ASSOCIATES ANNOUNCES STRATEGIC PLAN AND
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SALE OF LONG ISLAND INDUSTRIAL PORTFOLIO
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COMPANY TO FOCUS ON CLASS A OFFICE PROPERTIES WITH
STREAMLINED MANAGEMENT, REDUCED G&A COSTS AND
RECONSTITUTED BOARD COMPRISED OF 75% INDEPENDENT DIRECTORS
(MELVILLE, NEW YORK, SEPTEMBER 10, 2003) - RECKSON ASSOCIATES REALTY CORP.
(NYSE: RA) today announced that it is taking the next step in its evolution with
a strategic plan to focus on Class A office properties, reduce costs and
significantly improve its corporate governance. The Company will sell its Long
Island industrial portfolio to the Rechler family for approximately $315.5
million in cash and other consideration. Upon completion of the strategic plan,
Reckson will be an owner and manager of primarily Class A office real estate in
the New York Tri-State area with a significant presence in Manhattan and each of
the New York Tri-State area suburban markets. The Company will have
substantially reduced overhead and a reconstituted Board of Directors and
management team, to be led by current Co-Chief Executive Officer Scott Rechler.
Under the terms of the transaction, Reckson is disposing of its 95 property, 5.9
million square foot, Long Island industrial portfolio for approximately $225.1
million in cash and debt assumption and approximately $90.4 million in Reckson
Operating Partnership Units. In connection with the transaction it is
anticipated that approximately $164 million of the Company's unsecured revolving
credit facility will be repaid and $50 million of the Company's 8.85% Series B
preferred stock will be redeemed.
Commenting on the transaction, Donald Rechler, the Company's current Chairman
and one of its co-founders, stated, "This transaction represents a natural next
step in the Company's 45-year history. Since becoming a public company in 1995,
we have successfully grown the portfolio fourfold and transformed a Long Island
based family
partnership into a $3.1 billion New York Stock Exchange listed company
establishing the only Class A office portfolio with a significant presence in
New York City and each of the surrounding suburban markets. I am extremely proud
of what we have accomplished to date and believe that this next step will enable
the Company to achieve a higher level of success."
In conjunction with this transaction, Reckson announces its commitment to become
a leader in corporate governance by:
o Reconstituting its Board to consist of six independent directors and
two inside directors
o Proposing to de-stagger its Board of Directors at its next Annual
Shareholders Meeting
o Eliminating Operating Partnership Units conflict - no divergent tax
basis of insiders
o Opting out of State Anti-Takeover Provisions
o Authorizing modification of the ownership limit relating to "five or
fewer rule"
o Establishing an independent Lead Director and Chairman of the
Nominating/Governance Committee
o Maintaining Audit, Compensation and Nominating/Governance Committees
made up solely of independent directors
As a result of the transaction, Reckson's Board will consist of Donald Rechler,
who will become non-executive Chairman, Scott Rechler, who will serve as Chief
Executive Officer and President, and six independent directors. Additionally,
the Company will restructure its current management team with the resignations
of Donald Rechler, Co- Chief Executive Officer, Roger Rechler, Executive Vice
President of Development, Gregg Rechler, Co-President and Chief Operating
Officer, and Mitchell Rechler, Co- President and Chief Administrative Officer.
As part of this transaction and in settlement of their employment agreements,
these executives will receive accelerated vesting of certain equity based
awards and an assignment of certain loans to the Company. Additionally, these
exiting executives have agreed to provide two-year commitments to assist the
Company in this transition.
The Company intends to promote from within its talented management pool to fill
the management vacancies resulting from this transaction and announces the
appointment of Michael Maturo to serve as Chairman of the newly created
Investment Committee, in addition to his current role as Chief Financial
Officer and Executive Vice President; Salvatore Campofranco, currently Managing
Director of the Company's Westchester/Connecticut Division, as Chief Operating
Officer and Executive Vice President; F.D. Rich III, currently Chief
Information Officer, as Chief Administrative Officer and Executive Vice
President; and Philip Waterman III ("Tod") as Chief Development Officer and
Executive Vice President, in addition to continuing his role as Managing
Director of the Company's New York City Division.
Michael Maturo, Reckson's Chief Financial Officer, commented, "The immediate
financial impact of this transaction will be to substantially reduce the
Company's debt. Over time, the restructuring will better position the Company
to further strengthen its balance sheet and provide greater financial
flexibility to fund future growth opportunities. In addition, as a result of
the reduction in G&A associated with the disposition of the Long Island
industrial portfolio, the management restructuring and certain other savings,
the Company expects to realize a reduction in its annual corporate G&A and
other overhead costs of approximately $9.5 million."
Commenting on this transaction, Scott Rechler, Reckson's Co-Chief Executive
Officer, stated, "I am personally excited to lead Reckson into this next phase
of its development and am confident we are taking the right steps to best
position the Company for the future. This transaction will allow Reckson to
focus on building the premier office company in the New York Tri-State area and
better align the Company with its shareholders by maintaining the highest
corporate governance standards." Mr. Rechler further commented, "We are
fortunate to have built a talented team that is capable of filling the key
roles in the restructured management of the Company."
As a sign of confidence in the future of the Company, Scott Rechler has
committed to purchasing $2.5 million of the Reckson's Class A common stock in
the open market.
The Company will provide additional commentary on the impact of this
transaction to its earnings during its conference call on September 11, 2003.
The transaction, which is subject to customary closing conditions, is expected
to close in the fourth quarter 2003. Reckson's independent directors were
advised on the transaction by Citigroup and Wachtell, Lipton, Rosen & Katz, LLP
and the Rechler family was advised on the transaction by Fried, Frank, Harris,
Shriver, & Jacobson.
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.
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CONFERENCE CALL AND WEBCAST
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The Company will host a conference call on Thursday, September 11, 2003 at
10:45 a.m. EST outlining this strategic plan. The conference call may be
accessed by dialing (800) 230-1096 (internationally (612) 332-0226). 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.
A replay of the conference call will be available telephonically from September
11, 2003 at 4:00 p.m. EST through September 19, 2003 at 11:59 p.m. EST. The
telephone number for the replay is (800) 475-6701, passcode 698244. A replay of
the webcast of the conference call will also be available via the Company's web
site.
A Slide Show Presentation will be made available prior to the Company's
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 slide show 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.
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[Reckson Associates Logo] ESTIMATED EARNINGS IMPACT/GUIDANCE(a)
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2003
o Fourth Quarter Estimated Restructuring Charges (in millions)
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- Settlement of Employment Contracts $10.3
- Other Restructure Costs 0.7
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Total $11.0
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2004
o Overhead Savings
- Corporate G&A Savings $7.5(b)
- Other Company Overhead 2.0
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Total Anticipated Overhead Savings $9.5
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o Preliminary 2004 Earnings Guidance
- $2.20 - $2.30 FFO per share (c)
o No change to dividend policy expected as a result of this transaction
(a) Forward-looking statements based upon management's estimates. Actual
results may differ materially.
(b) Includes cost of equity compensation programs
(c) 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 appendix to this presentation
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 1
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[Reckson Associates Logo] APPENDIX
NON-GAAP FINANCIAL MEASURES -- RECONCILIATION TO GAAP
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Low End of High End of
Guidance for 2004 Guidance for 2004
(Per Common Share) (Per Common Share)
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Net income allocable to common shareholders $ .71 $ .81
Add:
Real Estate Depreciation and Amortization 1.49 1.49
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Funds From Operations $2.20 $2.30
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THE NEW YORK TRI-STATE AREA'S LEADING REAL ESTATE COMPANY 2
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