Prepared and filed by St Ives Financial

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 22, 2005

RECKSON ASSOCIATES REALTY CORP.
and
RECKSON OPERATING PARTNERSHIP, L.P.
(Exact name of each Registrant as specified in its Charter)

Reckson Associates Realty Corp. – Maryland
Reckson Operating Partnership, L.P. – Delaware
(State or other jurisdiction of incorporation or organization)
Reckson Associates Realty Corp. -
11-3233650

Reckson Operating Partnership, L.P. -
11-3233647
(IRS Employer ID Number)
   
225 Broadhollow Road
Melville, New York
(Address of principal executive offices)
11747
(Zip Code)

1-13762
(Commission File Number)

(631) 694-6900
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):  

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Current Report on Form 8-K/A hereby amends the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on December 22, 2005 to provide the required financial information relating to the acquisition of a 1.6 million square foot suburban office portfolio, consisting of 14 buildings, concentrated within five business parks, located in Westchester County (the “Eastridge Portfolio”), by a subsidiary of Reckson Associates Realty Corp. (“Reckson” or the “Company”).

In addition, this Current Report on Form 8-K/A provides pro-forma financial information as of September 30, 2005, for the nine months ended September 30, 2005 and for the year ended December 31, 2004 to reflect: (i) the acquisition of Reckson Plaza on October 7, 2005; (ii) the acquisition of One Court Square on May 12, 2005 and the subsequent sale of a 70% interest therein on November 30, 2005; (iii) the transfer of 17 properties to a joint venture (the “RAOC JV”) formed between Reckson and Reckson New York Property Trust on September 21, 2005, the transfer of three additional properties to the RAOC JV on January 6, 2006, and the probable transfer of an additional five properties to the RAOC JV in October 2006; (iv) the disposition of 100 Wall Street on December 20, 2005; and (v) the acquisition of the Eastridge Portfolio on December 29, 2005 (collectively, the “Acquisitions and Dispositions”). The unaudited pro-forma financial information should be read in conjunction with the historical financial statements and notes thereto included in Reckson's quarterly report on Form 10-Q for the nine months ended September 30, 2005 and Reckson's annual report on Form 10-K for the year ended December 31, 2004.

Item 9.01. Financial Statements and Exhibits

  (a) Financial Statements of Property Acquired
     
    Report of Independent Auditors
     
    Statements of Revenues and Certain Expenses of the Eastridge Portfolio for the nine months ended September 30, 2005 and the year ended December 31, 2004
     
    Notes to the Statements of Revenues and Certain Expenses of the Eastridge Portfolio
     
  (b) Pro-Forma Financial Information
     
    Pro-Forma Balance Sheet at September 30, 2005
     
    Notes to Pro-Forma Balance Sheet at September 30, 2005
     
    Pro-Forma Statement of Income for the nine months ended September 30, 2005
     
    Notes to Pro-Forma Statement of Income for the nine months ended September 30, 2005
     
    Pro-Forma Statement of Income for the year ended December 31, 2004
     
    Notes to Pro-Forma Statement of Income for the year ended December 31, 2004
     
  (c) Exhibits
     
    23.1      Consent of Beck & Company, LLC

 


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INDEX TO FINANCIAL STATEMENTS

Report of Independent Auditors
   
Statements of Revenues and Certain Expenses of the Eastridge Portfolio for the nine months ended September 30, 2005 and the year ended December 31, 2004
   
Notes to the Statements of Revenues and Certain Expenses of the Eastridge Portfolio
   
Pro-Forma Financial Information
   
Pro-Forma Balance Sheet at September 30, 2005
   
Notes to Pro-Forma Balance Sheet at September 30, 2005
   
Pro-Forma Statement of Income for the nine months ended September 30, 2005
   
Notes to Pro-Forma Statement of Income for the nine months ended September 30, 2005
   
Pro-Forma Statement of Income for the year ended December 31, 2004
   
Notes to Pro-Forma Statement of Income for the year ended December 31, 2004

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BECK & COMPANY, LLC
120 WEST 45TH STREET
NEW YORK, NY 10036

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders of
Reckson Associates Realty Corp.

We have audited the statement of revenues and certain expenses of the 14 properties known as The Eastridge Portfolio, which are located in Westchester County, New York (the “Property”) for the year ended December 31, 2004. The financial statement is the responsibility of the Property’s owner. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for inclusion in Form 8-K of Reckson Associates Realty Corp., and is not intended to be a complete presentation of the Property’s revenues and expenses.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Property, as described in Note 1, for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States.

/s/ Beck & Company, LLC

New York, New York
February 28, 2006

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EASTRIDGE PORTFOLIO, WESTCHESTER COUNTY, NEW YORK
STATEMENTS OF REVENUES AND CERTAIN EXPENSES

    Year
Ended
12/31/04
  (Unaudited)
Nine Months
Ended
9/30/05
 




Revenues:              
Rents (Note 3)   $ 31,603,072   $ 22,482,509  
Tenant escalations and reimbursements     7,009,116     3,545,772  




Total revenues     38,612,188     26,028,281  




               
Expenses:              
Real estate taxes     6,542,416     4,668,663  
Utilities     4,208,020     3,729,094  
Cleaning     1,578,016     1,299,021  
Insurance     373,359     293,508  
Salaries and benefits     1,266,454     899,864  
Repairs and maintenance     4,065,097     2,847,221  
General and administrative     2,896,362     2,444,416  




Total certain expenses     20,929,724     16,181,787  
               




Revenues in excess of certain expenses   $ 17,682,464   $ 9,846,494  




               

See notes to the financial statement.

 

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EASTRIDGE PORTFOLIO, WESTCHESTER COUNTY, NEW YORK
NOTES TO THE STATEMENTS OF REVENUES AND CERTAIN EXPENSES

1. Organization and Significant Accounting Policies

Presented herein are the statements of revenues and certain expenses related to the operation of an office building portfolio known as the Eastridge Portfolio, which is comprised of 14 office buildings located in Westchester County, New York (the “Property”). On December 29, 2005, a subsidiary of Reckson Associates Realty Corp. acquired the Property pursuant to a purchase agreement entered into on December 7, 2005.

The accompanying statements of revenues and certain expenses have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate properties. Accordingly, the statements of revenues and certain expenses exclude certain expenses that may not be comparable to those expected to be incurred by the Property in the proposed future operations of the aforementioned property. Items excluded consist of interest, depreciation, amortization and other expenses not directly associated with the future operations.

2. Use of Estimates in the Preparation of Statements of Revenues and Certain Expenses

The preparation of the statements of revenues and certain expenses in conformity with accounting principles generally accepted in the United States requires the Property’s owner to make estimates and assumptions that affect the amounts reported in the statements of revenues and certain expenses and accompanying notes. Actual results could differ from those estimates.

3. Revenue Recognition

Minimum rental income is recognized on a straight-line basis over the term of the tenant leases. Space is leased to tenants under leases ranging from 1 to 11 years. The leases generally also require that the tenant reimburse the landlord for increases in certain operating costs, real estate taxes and ground rents above base year costs.

Ten tenants occupy in the aggregate approximately 28% of the rentable space in the Property. Revenues therefrom aggregated approximately 29% of the Property’s annual base rent. These leases expire at various dates between January 31, 2005 and August 31, 2015.

4. Future Rental Income

Future minimum rental payments due from tenants under non-cancelable operating leases as of December 31, 2004 are as follows:

  Year Ended        

   
  2005   $ 25,141,196  
  2006     23,796,470  
  2007     21,261,186  
  2008     18,416,162  
  2009     15,831,454  
  Thereafter     38,244,228  


      $ 142,690,696  


 

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EASTRIDGE PORTFOLIO, WESTCHESTER COUNTY, NEW YORK

NOTES TO THE STATEMENTS OF REVENUES AND CERTAIN EXPENSES (continued)

5. Unaudited Interim Financial Statement

The statement of revenues and certain expenses for the nine months ended September 30, 2005 is unaudited, however, in the opinion of the Property owner, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the statement of revenues and certain expenses for the interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.

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RECKSON ASSOCIATES REALTY CORP.
PRO FORMA FINANCIAL INFORMATION
(Unaudited)

The accompanying financial statements present the unaudited pro-forma balance sheet of Reckson Associates Realty Corp. (the “Company”) as of September 30, 2005, and the unaudited pro-forma statements of income for the year ended December 31, 2004 and the nine months ended September 30, 2005.

The unaudited pro-forma balance sheet as of September 30, 2005 is presented as if the Acquisitions and Dispositions had occurred on September 30, 2005. The unaudited pro-forma statements of income for the year ended December 31, 2004 and the nine months ended September 30, 2005 are presented as if the Acquisitions and Dispositions occurred on January 1, 2004 and carried forward through September 30, 2005.

The pro-forma information is unaudited and is not necessarily indicative of the results which actually would have occurred if the aforementioned transactions had been consummated at the beginning of the period presented, nor does it purport to represent the financial position and results of operations for future periods. The pro-forma information should be read in conjunction with the historical financial statements of the Company.

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Reckson Associates Realty Corp.
Pro-Forma Balance Sheet
September 30, 2005
(Unaudited and in thousands, except share amounts)

        One Court Square    
Reckson Plaza
  LPT Transaction   100 Wall St.   Eastridge
Portfolio
       
       
 

 
 
 
       
    Reckson
Historical
(A)
    Pro-Forma
Adjustments
(B)
    Pro-Forma
Adjustments
(E)
    Pro-Forma
Adjustments
(F)
    Pro-Forma
Adjustments
(H)
    Pro-Forma
Adjustments
(K)
    Pro-Forma
Adjustments
(L)
  Pro-Forma
Adjustments
(O)
    Pro-Forma
Condensed
 
 
 
 
 
 
 
 
 

 

 
Assets:                                                      
Commercial real estate properties, at cost:
                                                     
Land
$ 385,457   $   $   $   $   $   $   $ 53,481   $ 438,938  
Building and improvements
  2,452,509             220,684                 160,979     2,834,172  
Developments in progress:
                                                     
Land
  101,371                             1,743     103,114  
Development costs
  81,981             19,000                 2,692     103,673  
Furniture, fixtures and equipment
  12,391                                 12,391  
 
 
 
 
 
 
 
 

 

 
    3,033,709             239,684                 218,895     3,492,288  
Less accumulated depreciation
  (516,399 )                               (516,399 )
 
 
 
 
 
 
 
 

 

 
Investments in real estate, net of accumulated depreciation
  2,517,310             239,684                 218,895     2,975,889  
                                                       
Properties and related assets held for sale, net of accumulated depreciation
  669,596     (333,254 )   (142,823 )       (77,949 )   (25,983 )   (86,321 )   32,110 (Q)   35,376  
Investment in real estate joint ventures
  12,946         47,304         (9,860 )   4,075             54,465  
Investment in notes receivable
  166,219             (27,592 )(G)           30,000 (M)       168,627  
Investments in affiliate loans and joint ventures
  57,642                                 57,642  
Cash and cash equivalents
  32,799             (6,994 )           98,787 (M)   (100,571 )(P)   24,021  
Tenant receivables
  11,157                                 11,157  
Deferred rents receivable   135,399                                 135,399  
Prepaid expenses and other assets
  179,884             (85,098 )(G)               7,538 (P)   102,324  
Contract and land deposits and pre-acquisition costs
  2,898                                 2,898  
Deferred leasing and loan costs   77,282                         2,100 (M)       79,382  
 
 
 
 
 
 
 
 

 

 
Total Assets $ 3,863,132   $ (333,254 ) $ (95,519 ) $ 120,000   $ (87,809 ) $ (21,908 ) $ 44,566   $ 157,972   $ 3,647,180  
 
 
 
 
 
 
 
 

 

 
                                                       
Liabilities:                                                      
Mortgage notes payable $ 531,527   $   $   $   $   $   $   $   $ 531,527  
Unsecured credit facility   231,000     (116,277 ) (C)       120,000 (G)   (94,252 )(I)           150,000 (P)   290,471  
Senior unsecured notes   979,970                                 979,970  
Liabilities associated with properties held for sale
  407,841     (222,878 )   (95,519 )       (65,724 )   (21,908 )   (1,739 )   1,390 (Q)   1,463  
Accrued expenses and other liabilities
  77,245                             2,276     79,521  
Deferred revenues and tenant lease security deposits
  75,296                             4,306  (P)   79,602  
Dividends and distributions payable
  36,232                                 36,232  
 
 
 
 
 
 
 
 

 

 
Total Liablilities   2,339,111     (339,155 )   (95,519 )   120,000     (159,976 )   (21,908 )   (1,739 )   157,972     1,998,786  
 
 
 
 
 
 
 
 

 

 
                                                       
Minority partners’ interests in consolidated partnerships
  214,608                                 214,608  
Preferred unit interest in the Operating Partnership
  1,200                                 1,200  
Limited partners' minority interest in the Operating Partnership
  33,719                                 33,719  
 
 
 
 
 
 
 
 

 

 
Total Minority Interests   249,527                                 249,527  
 
 
 
 
 
 
 
 

 

 
Commitments and contingencies                                    
                                                       
Stockholders’ Equity:                                                      
Preferred stock, $.01 par value, 25,000,000 shares authorized
                                   
Common Stock, $.01 par value, 200,000,000 shares authorized
                                                     
82,556,273 shares issued and outstanding
  826                                 826  
Additional paid in capital
  1,342,637     5,070 (D)           72,440 (J)       46,305 (N)       1,466,452  
Accumulated other comprehensive (loss)/income
  (477 )   831 (D)           (273 )(J)             81
Treasury stock, 3,318,600 shares
  (68,492 )                               (68,492 )
 
 
 
 
 
 
 
 

 

 
Total Stockholders’ Equity
  1,274,494     5,901             72,167         46,305         1,398,867  
 
 
 
 
 
 
 
 

 

 
                                                       
Total Liabilities and Stockholders’ Equity
$ 3,863,132   $ (333,254 ) $ (95,519 ) $ 120,000   $ (87,809 ) $ (21,908 ) $ 44,566   $ 157,972   $ 3,647,180  
 
 
 
 
 
 
 
 

 

 

(The accompanying notes and management’s assumptions are an integral part of this statement)

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Reckson Associates Realty Corp.
Notes to Pro-Forma Balance Sheet
September 30, 2005
(Unaudited)

A Represents the historical balance sheet of the Company at September 30, 2005.
   
B Represents adjustments to remove 70% of the assets and liabilities of the property located at One Court Square, Long Island City, New York (the “Court Square Property”) resulting from the sale of a 70% interest in the Court Square Property to a joint venture (the “Court Square JV”) for approximately $329.7 million, including the assumption of $220.5 million of debt, and to repay outstanding borrowings under our unsecured credit facility with funds primarily received from the sale.
   
C Consists of approximately $109.2 million of net sales proceeds and approximately $7.1 million of financing costs reimbursed by a group of institutional investors led by JPMorgan Investment Management.
   
D Represents the gain related to the sale of a 70% interest in the Court Square Property and the reclassification of the proportionate share of loss from accumulated other comprehensive (loss)/income to earnings.
   
E Represents the adjustment related to the Company’s 30% interest in the Court Square JV under the equity method of accounting.
   
F To record the acquisition of Reckson Plaza, formerly known as EAB Plaza, for approximately $240 million, and an adjoining 82-acre development site for approximately $19 million, as if the acquisition occurred on September 30, 2005.
   
G Includes the funding of the Reckson Plaza acquisition through borrowings under our unsecured credit facility of $120 million, the satisfaction of a $27.6 million mezzanine loan, cash of approximately $106 million that was being held in an escrow account with a qualified intermediary pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, approximately $16 million of real estate intangibles and approximately $4.6 million of intangible lease assets recorded in accordance with FAS 141/142.
   
H Represents adjustments to remove 75% of the assets and liabilities of eight properties intended to be contributed to a newly-formed joint venture, Reckson Australia Operating Company, LLC (the “RAOC JV”) as if such transaction had occurred on September 30, 2005.
   
I Represents net cash sales proceeds to be received by the Company related to the transfer of a 75% interest in 8 of our properties to the RAOC JV.
   
J Represents the gain related to the transfer of a 75% interest in 8 of our properties to the RAOC JV and the reclassification of the proportionate share of gain from accumulated other comprehensive (loss)/income to earnings.
   
K Represents the adjustment related to the Company’s 25% interest in the RAOC JV under the equity method of accounting.
   
L Represents adjustments to reflect the sale of the property located at 100 Wall Street, New York, NY for approximately $134 million, as if such sale had occurred on September 30, 2005.
   
M Represents $2.1 million of financing costs related to the transfer of the mortgage debt at 100 Wall Street, New York, NY to two other of our properties as replacement collateral, the receipt of $104 million in cash proceeds and the issuance of a $30 million mezzanine loan to the purchaser.
   
N Represents the gain related to the sale of 100 Wall Street, New York, NY.
   
O To record the acquisition of the Eastridge Portfolio for approximately $255 million, as if the acquisition occurred on September 30, 2005.
   
P Includes the funding of the Eastridge Portfolio through borrowings under our unsecured credit liability of $150 million, cash of approximately $101 million, approximately $7.5 million of real estate intangibles and approximately $1.1 million of intangible lease liabilities recorded in accordance with FAS 141/142.
   
Q Represents the assets and liabilities of one of the buildings acquired in the transaction that is held for sale.

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Reckson Associates Realty Corp.
Pro-Forma Statement of Income
For the nine months ended September 30, 2005
(Unaudited and in thousands, except share amounts)

        One Court Square    Reckson Plaza    LPT Transaction   100 Wall St.   Eastridge
Portfolio
       
       


 

 



 
 
       
  Reckson
Historical
(A)
  Pro-Forma
Adjustments
(B)
  Pro-Forma
Adjustments
(C)
  Pro-Forma
Adjustments
(D)
  Pro-Forma
Adjustments
(G)
  Pro-Forma
Adjustments
(H)
  Pro-Forma
Adjustments
(I)
  Pro-Forma
Adjustments
(K)
  Pro-Forma
Condensed
 
 
 
 
 
 
 
 
 

 

 
Revenues:
                                                     
Property Operating Revenues:
                                                     
Base rents
$ 358,181   $ (12,496 ) $   $ 21,266   $ (43,789 ) $   $   $ 22,585   $ 345,747  
Tenant escalations and reimbursements
  56,370             4,164     (5,185 )           3,546     58,895  
 
 
 
 
 
 
 
 

 

 
Total property operating revenues
  414,551     (12,496 )       25,430     (48,974 )           26,131     404,642  
 
 
 
 
 
 
 
 

 

 
                                                       
Operating Expenses:
                                                     
Property operating expenses
  164,450             15,845     (20,435 )           13,737     173,597  
Marketing, general and administrative
  24,597     (6 )       659     (1,916 )           2,444     25,778  
Depreciation and amortization
  96,546     (6,148 )       6,659     (11,164 )           5,421     91,314  
 
 
 
 
 
 
 
 

 

 
Total operating expenses
  285,593     (6,154 )       23,163     (33,515 )           21,602     290,689  
 
 
 
 
 
 
 
 

 

 
Operating income
  128,958     (6,342 )       2,267     (15,459 )           4,529     113,953  
 
 
 
 
 
 
 
 

 

 
                                                       
Non-Operating Income & Expenses:
                                                     
Gains on sales of real estate
  85,512                                 85,512  
Interest income on notes receivable
  9,613             (2,963 )(E)           3,375 (J)       10,025  
Investment income and other
  7,647                 (450 )   404     (269 )       7,332  
Interest:
                                                     
Expense
  (82,810 )   7,680         (4,833 )(F)   2,918             (6,041 )(L)   (83,086 )
Amortization of deferred financing costs
  (3,177 )   186             39         (357 )       (3,309 )
 
 
 
 
 
 
 
 

 

 
Total Non-Operating Income & Expenses
  16,785     7,866         (7,796 )   2,507     404     2,749     (6,041 )   16,474  
 
 
 
 
 
 
 
 

 

 
                                                       
                                                       
Income before minority interests, equity in earnings of real estate joint ventures and discontinued operations
  145,743     1,524         (5,529 )   (12,952 )   404     2,749     (1,512 )   130,422  
Minority partners’ interests in consolidated partnerships
  (11,368 )                               (11,368 )
Limited partners' minority interest in the Operating Partnership
  (4,646 )   (49 )   (32 )   179     420     (92 )   (18 )   49     (4,189 )
Equity in earnings of real estate joint ventures
  482         975             2,436             3,893  
 
 
 
 
 
 
 
 

 

 
Income before discontinued operations
  130,211     1,475     943     (5,350  )   (12,532 )   2,748     2,731     (1,463 )   118,763  
                                                       
Discontinued operations (net of minority interests):
                                                     
Income from discontinued operations
  4,671                         (2,184 )       2,487  
Gains on sales of real estate
  13,790                                 13,790  
 
 
 
 
 
 
 
 

 

 
Net income
$ 148,672   $ 1,475   $ 943   $ (5,350 ) $ (12,532 ) $ 2,748   $ 547   $ (1,463 ) $ 135,040  
 
 
 
 
 
 
 
 

 

 
                                                       
                                                       
Basic net income per weighted average share:
                                                     
Common $ 1.59                                             $ 1.45  
Discontinued operations
  0.23                                               0.20  
 
                               

 
Basic net income per common share
$ 1.82                                             $ 1.65  
 
                               

 
                                                       
                                                       
Basic weighted average common shares outstanding:
  81,847,595                                               81,847,595  
                                                       
Diluted net income per weighted average common share
$ 1.81                                             $ 1.64  
                                                       
Diluted weighted average common shares outstanding
  82,284,475                                               82,284,475  

(The accompanying notes and management’s assumptions are an integral part of this statement)

F-9


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Reckson Associates Realty Corp.
Notes to Pro-Forma Statement of Income
For the nine months ended September 30, 2005
(Unaudited)

   
A Represents the historical statement of income of the Company for the nine months ended September 30, 2005.
   
B Represents adjustments to remove the results of operations of the Court Square Property resulting from the sale of a 70% interest in the Court Square Property as if such sale occurred on January 1, 2004.
   
C Represents the pro-forma equity in earnings of the Court Square JV for the nine months ended September 30, 2005.
   
D Represents adjustments for the purchase of Reckson Plaza as if this acquisition occurred on January 1, 2004 to (i) record the FAS 141 / 142 amortization expense adjustment on the tenanting costs, (ii) reflect ground rent recorded on a straight-line basis, (iii) record depreciation expense on the building based on an estimated useful life of 30 years, (iv) reduce interest income related to the $27.6 million mezzanine loan that was satisfied as part of the acquisition, (v) record additional interest expense on $120 million of borrowings made under our unsecured credit facility, (vi) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement, and (vii) record the property’s operations.
   
E To remove interest income earned under a $27.6 million mezzanine loan which is included in the historical balance.
   
F Calculated using the 30-day LIBOR rate on February 23, 2006 of 4.57% + 80 basis points (5.37%) on borrowings made under our unsecured credit facility of $120 million.
   
G Represents adjustments to remove the results of operations of the properties contributed, or intended to be contributed, to the RAOC JV as if such transaction occurred on January 1, 2004.
   
H Represents adjustments to reflect the decrease in management fees to be earned from the properties transferred to the RAOC JV, additional recurring fees and the pro-forma equity in earnings of the RAOC JV for the nine months ended September 30, 2005.
   
I Represents adjustments to remove (i) the results of operations of the property located at 100 Wall Street, New York, NY, which was reflected as discontinued operations in the historical balance and (ii) management fee income earned by one of our service companies during 2005, as if such sale occurred on January 1, 2004.
   
J Represents interest income on a $30 million mezzanine loan made to the purchaser of 100 Wall Street, New York, NY and is calculated at 15% per annum, as if such sale occurred on January 1, 2004.
   
K Represents adjustments for the purchase of the Eastridge Portfolio as if this acquisition occurred on January 1, 2004 to (i) record the FAS 141/142 amortization expense adjustment on the tenanting costs, (ii) record depreciation expense on the building based on an estimated useful life of 30 years, (iii) record additional interest expense on $150 million of borrowings made under our unsecured credit facility, (iv) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement, and (v) record the operations of the properties.
   
L Calculated using the 30-day LIBOR rate on February 23, 2006 of 4.57% + 80 basis points (5.37%) on additional borrowings made under the unsecured credit facility of $150 million.

 

F-10


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Reckson Associates Realty Corp.
Pro-Forma Statement of Income
For the year ended December 31, 2004
(Unaudited and in thousands, except share amounts)


          One Court Square    Reckson Plaza   LPT Transaction          100 Wall St.   Eastridge
Portfolio
       
         
 
 
     
 
     
    Reckson
Historical
(A)
  Pro-Forma
Adjustments
(B)
  Pro-Forma
Adjustments
(C)
  Pro-Forma
Adjustments
(F)
  Pro-Forma
Adjustments
(G)
  Pro-Forma
Adjustments
(H)
  Pro-Forma
Adjustments
(I)
  Pro-Forma
Adjustments
(K)
    Pro-Forma
Condensed
 
   
 
 
 
 
 
 
 

 

 
                                                         
Revenues:                                                        
Property operating revenues:
                                                       
Base rents
  $ 440,953   $   $ 28,679   $ (58,498 ) $   $ 4,113   $ (15,189 ) $ 31,778   $ 431,836  
Tenant escalations and reimbursements
    73,862         7,313     (5,905 )       293     (2,547 )   7,009     80,025  
   
 
 
 
 
 
 
 

 

 
Total property operating revenues
    514,815         35,992     (64,403 )       4,406     (17,736 )   38,787     511,861  
   
 
 
 
 
 
 
 

 

 
                                                         
Operating Expenses:
                                                       
Property operating expenses
    208,754         20,433     (26,337 )       1,429     (7,833 )   18,033     214,479  
Marketing, general and administrative
    30,879         1,037     (2,590 )       15     (530 )   2,896     31,707  
Depreciation and amortization
    116,480         8,956     (14,465 )       1,566     (3,513 )   7,390     116,414  
   
 
 
 

 

 

 

 

 

 
Total operating expenses
    356,113         30,426     (43,392 )       3,010   $  (11,876 )   28,319     362,600  
   
 
 
 

 

 

 

 

 

 
Operating income
    158,702         5,566     (21,011 )       1,396   $  (5,860 )   10,468     149,261  
   
 
 
 

 

 

 

 

 

 
                                                         
Non-Operating Income & Expenses:
                                                       
Interest income on notes receivable
    7,129         (3,224 )(D)               4,500 (J)       8,405  
Investment income and other
    12,157             (3,285 )   2,512     (8 )   (592 )       10,784  
Interest:
                                                       
Expense
    (98,050 )       (6,444 )(E)   2,649             1     (8,055 )(L)   (109,899 )
Amortization of deferred financing costs
    (3,822 )           33             (476 )       (4,265 )
   
 
 
 

 

 

 

 

 

 
Total Non-Operating Income & Expenses
    (82,586 )       (9,668 )   (603 )   2,512     (8 )   3,433     (8,055 )   (94,975 )
   
 
 
 

 

 

 

 

 

 
                                                         
Income (loss) before minority interests, preferred dividends and distributions, equity in earnings of real estate joint ventures and discontinued operations
    76,116         (4,102 )   (21,614 )   2,512     1,388     (2,427 )   2,413     54,286  
Minority partners' interests in consolidated partnerships
    (18,507 )                               (18,507 )
Limited partners' minority interest in the Operating Partnership
    (1,517 )   (65 )   205     1,082     (351 )   (69 )   121     (121 )   (715 )
Distributions to preferred unitholders
    (541 )                               (541 )
Equity in earnings of real estate joint ventures
    603     1,300             4,506                 6,409  
   
 
 
 

 
 

 

 

 

 
Income (loss) before discontinued operations and dividends to preferred shareholders
    56,154     1,235     (3,897 )   (20,532 )   6,667     1,319     (2,306 )   2,292     40,932  
                                                         
Discontinued operations (net of minority interests):
                                                       
Income from discontinued operations
    2,498                     (1,319 )           1,179  
Gain on sales of real estate
    11,776                                 11,776  
   
 
 
 

 

 

 

 

 

 
Net income (loss)
    70,428     1,235     (3,897 )   (20,532 )   6,667     (0 )   (2,306 )   2,292     53,887  
Dividends to preferred shareholders
    (12,236 )                               (12,236 )
Redemption charges on Series A preferred stock
    (15,812 )                               (15,812 )
   
 
 
 

 

 

 

 

 

 
Net income (loss) allocable to common shareholders   $ 42,380   $ 1,235   $ (3,897 ) $ (20,532 ) $ 6,667   $ (0 ) $ (2,306 ) $ 2,292   $ 25,839  
   
 
 
 

 

 

 

 

 

 
                                                         
Basic net income per weighted average share:
                                                       
Common
  $ 0.41                                             $ 0.19  
Discontinued operations
    0.21                                               0.19  
   
                               

 
Basic net income per common share
  $ 0.62                                             $ 0.38  
   
                               

 
                                                         
                                                         
Basic weighted average common shares outstanding:
    68,871,000                                               68,871,000  
                                                         
Diluted net income per weighted average common share
  $ 0.61                                             $ 0.37  
                                                         
Diluted weighted average common shares outstanding
    69,235,000                                               69,235,000  

(The accompanying notes and management’s assumptions are an integral part of this statement)

F-11


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Reckson Associates Realty Corp.
Notes to Pro-Forma Statement of Income
For the year ended December 31, 2004
(Unaudited)

A Represents the historical audited statement of income of the Company for the year ended December 31, 2004.
   
B Represents the pro-forma equity in earnings of the Court Square JV for the year ended December 31, 2004 as if such transaction occurred on January 1, 2004. There are no further adjustments to the historical audited statement of income for the year ended December 31, 2004 related to the Court Square Property as it was acquired during 2005.
   
C Represents adjustments for the purchase of Reckson Plaza as if this acquisition occurred on January 1, 2004 to (i) record the FAS 141 / 142 amortization expense adjustment on the tenanting costs, (ii) reflect ground rent recorded on a straight-line basis, (iii) record depreciation expense on the building based on an estimated useful life of 30 years, (iv) reduce interest income related to the $27.6 million mezzanine loan that was satisfied as part of the acquisition, (v) record additional interest expense on $120 million of borrowings made under our unsecured credit facility, (vi) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement, and (vii) record the property’s operations.
   
D To remove interest income earned under a $27.6 million mezzanine loan that is included in the historical balance.
   
E Calculated using the 30-day LIBOR rate on February 23, 2006 of 4.57% + 80 basis points (5.37%) on borrowings made under our unsecured credit facility of $120 million.
   
F Represents adjustments to remove the results of operations of the properties contributed, or intended to be contributed, to the RAOC JV as if such transaction occurred on January 1, 2004.
   
G Represents adjustments to reflect the decrease in management fees to be earned from the properties transferred to the RAOC JV, additional recurring fees and one-time transactional fees and the pro-forma equity in earnings of the RAOC JV for the year ended December 31, 2004.
   
H Represents adjustments to the historical balances for the year ended December 31, 2004 to reflect changes to discontinued operations subsequent to December 31, 2004.
   
I Represents adjustments to (i) remove the results of operations of the property located at 100 Wall Street, New York, NY and (ii) management fee income earned by one of our service companies during 2004, as if such sale occurred on January 1, 2004.
   
J Represents interest income on a $30 million mezzanine loan made to the purchaser of 100 Wall Street, New York, NY and is calculated at 15% per annum, as if such sale occurred on January 1, 2004.
   
K Represents adjustments for the purchase of the Eastridge Portfolio as if this acquisition occurred on January 1, 2004 to (i) record the FAS 141/142 amortization expense adjustment on the tenanting costs, (ii) record depreciation expense on the building based on an estimated useful life of 30 years, (iii) record additional interest expense on $150 million of borrowings made under our unsecured credit facility, (iv) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement, and (v) record the operations of the properties.
   
L Calculated using the 30-day LIBOR rate on February 23, 2006 of 4.57% + 80 basis points (5.37%) on additional borrowings made under the unsecured credit facility of $150 million.

F-12


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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 hereunto 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: February 28, 2006