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): October 7, 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 filed with the Securities and Exchange Commission on October 14, 2005 to provide the required financial information relating to the acquisition of EAB Plaza, now known as Reckson Plaza, 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, and the probable transfer of an additional eight properties to the RAOC JV in two separate tranches scheduled to close in January 2006 and October 2006, respectively; and (iv) the disposition of 100 Wall Street on December 20, 2005 (collectively, the “Acquisitions and Dispositions”).

Item 9.01. Financial Statements and Exhibits

  (a) Financial Statements of Property Acquired
     
    Report of Independent Auditors
     
    Statements of Revenues and Certain Expenses of EAB Plaza 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 EAB Plaza
     
  (b) Pro-Forma Financial Information
     
    Pro-Forma Balance Sheet at September 30, 2005
     
    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
     
  (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 EAB Plaza 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 EAB Plaza
   
Pro-Forma Financial Information
   
Pro-Forma Balance Sheet at September 30, 2005
   
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

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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 property known as EAB Plaza, Uniondale, 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
December 20, 2005

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EAB PLAZA, UNIONDALE, NEW YORK
Statements of Revenues and Certain Expenses

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




Revenues:              
  Rents (Note 3)   $ 29,562,565   $ 21,645,488  
  Tenant escalations and reimbursements     7,313,063     4,163,734  
         




Total revenues     36,875,628     25,809,222  




                 
Expenses:              
  Real estate taxes     9,969,135     7,780,666  
  Utilities     3,423,251     3,155,923  
  Cleaning     1,436,913     1,120,110  
  Insurance     615,383     272,278  
  Ground rent (Note 5)     785,609     589,207  
  Salaries and benefits     1,755,510     1,241,421  
  Repairs and maintenance     2,387,029     1,639,830  
  General and administrative     1,037,161     658,978  




Total certain expenses     21,409,991     16,458,413  
                 




Revenues in excess of certain expenses   $ 15,465,637   $ 9,350,809  




                 

See notes to the financial statement.

 

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EAB PLAZA, UNIONDALE, 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 known as EAB Plaza, which is located in Uniondale, New York (the “Property”). On October 7, 2005, a subsidiary of Reckson Associates Realty Corp. acquired the Property pursuant to a purchase agreement entered into on July 8, 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.

Three tenants individually, each occupy in excess of 10% and in the aggregate approximately 49% of the rentable space in the Property. Revenues therefrom aggregated approximately 43% of the Property’s annual base rent. These leases expire at various dates between January 31, 2005 and March 2016.

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   $ 24,968,888  
     2006     26,748,936  
     2007     22,697,659  
     2008     20,961,784  
     2009     19,764,218  
  Thereafter     76,922,001  
     

 
      $ 192,063,486  
     

 

 

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EAB PLAZA, UNIONDALE, NEW YORK

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

5. Land Lease

The Property is subject to a non-cancelable net operating lease with respect to the land under and surrounding the building for a term that expires on April 30, 2019. At the lessee’s option, the lease may be extended for five additional, ten year terms and one final fourteen year extension until April 30, 2083. Rent under the land lease is payable monthly.

Future minimum rental payments due from the lessee under the land lease as of December 31, 2004 are as follows:

  Year Ended        
 
       
     2005   $ 728,000  
     2006     728,000  
     2007     728,000  
     2008     728,000  
     2009     789,000  
  Thereafter     7,644,000  
     

 
      $ 11,345,000  
     

 
   
6. 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.        
       
 

 
 
       
    Reckson
Historical
(A)
    Pro-Forma
Adjustments
(B)
    Pro-Forma
Adjustments
(C)
    Pro-Forma
Adjustments
(J)
    Pro-Forma
Adjustments
(F)
    Pro-Forma
Adjustments
(I)
    Pro-Forma
Adjustments
(L)
    Pro-Forma
Condensed
 
 
 
 
 
 
 
 
 
 
Assets:                                                
Commercial real estate properties, at cost:
                                               
Land
$ 385,457   $   $   $   $   $   $   $ 385,457  
Building and improvements
  2,452,509             220,684                 2,673,193  
Developments in progress:
                                               
Land
  101,371                             101,371  
Development costs
  81,981             19,000                 100,981  
Furniture, fixtures and equipment
  12,391                             12,391  
 
 
 
 
 
 
 
 
 
    3,033,709             239,684                 3,273,393  
Less accumulated depreciation
  (516,399 )                           (516,399 )
 
 
 
 
 
 
 
 
 
Investments in real estate, net of accumulated depreciation
  2,517,310             239,684                 2,756,994  
                                                 
Properties and related assets held for sale, net of accumulated depreciation
  669,596     (333,254 )   (142,823 )       (77,949 )   (25,983 )   (86,321 )   3,266  
Investment in real estate joint ventures
  12,946         47,304         (9,860 )   4,075         54,465  
Investment in notes receivable
  166,219             (27,592 )(K)           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)   124,592  
Tenant receivables
  11,157                             11,157  
Deferred rents receivable   135,399                             135,399  
Prepaid expenses and other assets
  179,884             (85,098 )(K)               94,786  
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   $ 3,489,208  
 
 
 
 
 
 
 
 
 
                                                 
Liabilities:                                                
Mortgage notes payable $ 531,527   $   $   $   $   $   $   $ 531,527  
Unsecured credit facility   231,000     (116,277 ) (E)       120,000 (K)   (94,252 )(G)           140,471  
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 )   73  
Accrued expenses and other liabilities
  77,245                             77,245  
Deferred revenues and tenant lease security deposits
  75,296                             75,296  
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 )   1,840,814  
 
 
 
 
 
 
 
 
 
                                                 
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 (H)       46,305 (N)   1,466,452  
Accumulated other comprehensive (loss)/income
  (477 )   831 (D)           (273 )(H)           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   $ 3,489,208  
 
 
 
 
 
 
 
 
 

(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 assumptions of $220.5 million of debt, and to repay outstanding borrowings under our unsecured credit facility with funds primarily received from the sale.
   
C Represents the adjustment related to the Company’s 30% interest in the Court Square JV under the equity method of accounting.
   
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 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.
   
F 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.
   
G 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.
   
H 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.
   
I Represents the adjustment related to the Company’s 25% interest in the RAOC JV under the equity method of accounting.
   
J 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.
   
K 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.
   
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.

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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.        
       


 

 



 
       
  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
Condensed
 
 
 
 
 
 
 
 
 
 
Revenues:
                                               
Property Operating Revenues:
                                               
Base rents
$ 358,181   $ (12,496 ) $   $ 21,266   $ (43,789 ) $   $   $ 323,162  
Tenant escalations and reimbursements
  56,370             4,164     (5,185 )           55,349  
 
 
 
 
 
 
 
 
 
Total property operating revenues
  414,551     (12,496 )       25,430     (48,974 )           378,511  
 
 
 
 
 
 
 
 
 
                                                 
Operating Expenses:
                                               
Property operating expenses
  164,450             15,845     (20,435 )           159,860  
Marketing, general and administrative
  24,597     (6 )       659     (1,916 )           23,334  
Depreciation and amortization
  96,546     (6,148 )       6,659     (11,164 )           85,893  
 
 
 
 
 
 
 
 
 
Total operating expenses
  285,593     (6,154 )       23,163     (33,515 )           269,087  
 
 
 
 
 
 
 
 
 
Operating income
  128,958     (6,342 )       2,267     (15,459 )           109,424  
 
 
 
 
 
 
 
 
 
                                                 
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         (4,651 )(F)   2,918             (76,863 )
Amortization of deferred financing costs
  (3,177 )   186             39         (357 )   (3,309 )
 
 
 
 
 
 
 
 
 
Total Non-Operating Income & Expenses
  16,785     7,866         (7,614 )   2,507     404     2,749     22,697  
 
 
 
 
 
 
 
 
 
                                                 
                                                 
Income before minority interests, equity in earnings of real estate joint ventures and discontinued operations
  145,743     1,524         (5,347 )   (12,952 )   404     2,749     132,121  
Minority partners’ interests in consolidated partnerships
  (11,368 )                           (11,368 )
Limited partners' minority interest in the Operating Partnership
  (4,646 )   (49 )   (32 )   173     420     (92 )   (18 )   (4,244 )
Equity in earnings of real estate joint ventures
  482         975             2,436         3,893  
 
 
 
 
 
 
 
 
 
Income before discontinued operations
  130,211     1,475     943     (5,174  )   (12,532 )   2,748     2,731     120,402  
                                                 
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   $ (5,174 ) $ (12,532 ) $ 2,748   $ 547   $ 136,679  
 
 
 
 
 
 
 
 
 
                                                 
                                                 
Basic net income per weighted average share:
                                               
Common $ 1.59                                       $ 1.47  
Discontinued operations
  0.23                                         0.20  
 
                         
 
Basic net income per common share
$ 1.82                                       $ 1.67  
 
                         
 
                                                 
                                                 
Basic weighted average common shares outstanding:
  81,847,595                                         81,847,595  
                                                 
Diluted net income per weighted average common share
$ 1.81                                       $ 1.66  
                                                 
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, and (vi) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement.
   
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 December 12, 2005 of 4.3675% + 80 basis points (5.1675%) 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.

 

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.    
         
 
 
     
   
    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
Condensed
 
   
 
 
 
 
 
 
 
 
                                                   
Revenues:                                                  
Property operating revenues:
                                                 
Base rents
  $ 440,953   $   $ 28,679   $ (58,498 ) $   $ 4,113   $ (15,189 ) $ 400,058  
Tenant escalations and reimbursements
    73,862         7,313     (5,905 )       293     (2,547 )   73,016  
   
 
 
 
 
 
 
 
 
Total property operating revenues
    514,815         35,992     (64,403 )       4,406     (17,736 )   473,074  
   
 
 
 
 
 
 
 
 
                                                   
Operating Expenses:
                                                 
Property operating expenses
    208,754         20,433     (26,337 )       1,429     (7,833 )   196,446  
Marketing, general and administrative
    30,879         1,037     (2,590 )       15     (530 )   28,811  
Depreciation and amortization
    116,480         8,956     (14,465 )       1,566     (3,513 )   109,024  
   
 
 
 

 

 

 

 

Total operating expenses
    356,113         30,426     (43,392 )       3,010   $  (11,876 )   334,281  
   
 
 
 

 

 

 

 

Operating income
    158,702         5,566     (21,011 )       1,396   $  (5,860 )   138,793  
   
 
 
 

 

 

 

 

                                                   
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 )       (6,201 )(E)   2,649             1     (101,601 )
Amortization of deferred financing costs
    (3,822 )           33             (476 )   (4,265 )
   
 
 
 

 

 

 

 

Total Non-Operating Income & Expenses
    (82,586 )       (9,425 )   (603 )   2,512     (8 )   3,433     (86,677 )
   
 
 
 

 

 

 

 

                                                   
Income (loss) before minority interests, preferred dividends and distributions, equity in earnings of real estate joint ventures and discontinued operations
    76,116         (3,859 )   (21,614 )   2,512     1,388     (2,427 )   52,116  
Minority partners' interests in consolidated partnerships
    (18,507 )                           (18,507 )
Limited partners' minority interest in the Operating Partnership
    (1,517 )   (65 )   193     1,082     (351 )   (69 )   121     (606 )
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     (3,666 )   (20,532 )   6,667     1,319     (2,306 )   38,871  
                                                   
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     (3,666 )   (20,532 )   6,667     (0 )   (2,306 )   51,826  
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   $ (3,666 ) $ (20,532 ) $ 6,667   $ (0 ) $ (2,306 ) $ 23,778  
   
 
 
 

 

 

 

 

                                                   
Basic net income per weighted average share:
                                                 
Common
  $ 0.41                                       $ 0.16  
Discontinued operations
    0.21                                         0.19  
   
                         
 
Basic net income per common share
  $ 0.62                                       $ 0.35  
   
                         
 
                                                   
                                                   
Basic weighted average common shares outstanding:
    68,871,000                                         68,871,000  
                                                   
Diluted net income per weighted average common share
  $ 0.61                                       $ 0.34  
                                                   
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, and (vi) adjust the allocation of income between the general partner and limited partners under the limited partnership agreement.
   
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 December 12, 2005 of 4.3675% + 80 basis points (5.1675%) 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.

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: December 22, 2005