UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event reported): September 9, 1997
Commission file number: 1-13762
RECKSON ASSOCIATES REALTY CORP.
(Exact name of registrant as specified in its charter)
Maryland 11-3233650
(State other jurisdiction of incorporation (IRS. Employer
of organization) Identification Number)
225 Broadhollow Road, Melville, NY 11747
(Address of principal executive office) (zip code)
(516) 694-6900
(Registrant's telephone number including area code)
ITEM 2. ACQUISITON OR DISPOSITION OF ASSETS
On August 1, 1997, the Company acquired a 176,000 square foot, class A
office complex for $24.1 million. The building is presently 95% leased
and is located in Garden City, New York. The asset acquisition was
financed with proceeds through a draw on the Company's credit facility.
ITEM 7. FINANCIAL STATEMENTS
Financial statements of properties acquired and pro forma financial
information.
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
ITEM 7
FINANCIAL STATEMENTS OF PROPERITIES ACQUIRED
AND PRO FORMA FINANCIAL INFORMATION
TABLE OF CONTENTS
DESCRIPTION
Pro Forma Condensed Combining Balance Sheet as of June 30,
1997 .......................................................
Pro Forma Condensed Combining Statement of Operations for
the Six Months ended June 30, 1997 .........................
Pro Forma Condensed Combining Statement of Operations for
the Year ended December 31, 1996 ...........................
Notes to Pro Forma Financial Statements ....................
Statement of Revenue and Certain Expenses of 400 Garden
City Plaza for the Six Months Ended June 30, 1997 and
for the Year Ended December 31, 1996 .......................
Notes to Statement of Revenue and Certain Expenses of 400
Garden City Plaza ..........................................
<PAGE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Balance Sheet
As of June 30, 1997
(Unaudited)
The following unaudited pro forma condensed combining balance sheet is presented
as if the The Company had acquired 400 Garden City Plaza on June 30, 1997.
This pro forma condensed combining balance sheet should be read in conjunction
with the pro forma condensed combining statement of operations of the Company
and the historical financial statements and notes thereto of the Company as
filed on Form 10-K for the year ended December 31, 1996 and on Form 10-Q for
the six months ended June 30, 1997.
The pro forma condensed combining balance sheet is unaudited and is not
necessarily indicative of what the actual financial position would have been
had the Company acquired 400 Garden City Plaza on June 30, 1997, nor does it
purport to represent the future financial position of the Company.
<PAGE>
<TABLE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Balance Sheet
As of June 30, 1997
(Unaudited)
<CAPTION>
June 30,
400 Garden 1997
Historical(a) City Plaza(b) Pro Forma
_________ ________ _________
Assets (Unaudited)
<S> <C> <C> <C>
Real Estate, net $ 608,194 $ 24,100 $ 632,294
Cash and cash equivalents 20,424 - 20,424
Tenants receivables 2,294 - 2,294
Affiliate receivables 5,701 - 5,701
Deferred rent receivable 13,585 - 13,585
Investment in mortgage note receivable 81,333 - 81,333
Contract and land deposits pre-acquisition
cost 7,613 - 7,613
Prepaid expenses and other assets 11,102 - 11,102
Investments in joint ventures 6,831 - 6,831
Deferred lease costs and loan costs, net 13,603 - 13,603
_________ _________ _________
Total Assets $ 770,680 $ 24,100 $ 794,780
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Mortgage notes payable $ 165,527 $ - $ 165,527
Credit Facility 113,000 24,100 137,100
Accrued expenses and other liabilities 18,025 - 18,025
Affiliate payables 731 - 731
Dividends and distributions payable 13,100 - 13,100
_________ _________ _________
Total Liabilities 310,383 24,100 $ 334,483
_________ _________ _________
Minority interest in consolidated
partnership 9,088 - 9,088
Limited partners' minority interest in
operating partnership 76,209 - 76,209
_________ _________ _________
85,297 - 85,297
_________ _________ _________
STOCKHOLDERS' EQUITY:
Common Stock $ 343 $ - $ 343
Additional paid in capital 374,657 - 374,657
_________ _________ _________
Total Stockholders' Equity $ 375,000 $ - $ 375,000
_________ _________ _________
Total Liabilities and Stockholders'
Equity $ 770,680 $ 24,100 $ 794,780
========= ========= =========
<FN>
See Accompanying Notes to Pro Forma Financial Statements
</TABLE>
<PAGE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Six Months Ended June 30, 1997
(Unaudited)
The following unaudited pro forma condensed combining Statement of
Operations is presented as if the Company had acquired 400 Garden City
Plaza as of January 1, 1997 and the Company qualified as a REIT,
distributed all its taxable income and, therefore, incurred no income
tax expense during the period.
This pro forma condensed combining Statement of Operations should be read
in conjunction with the pro forma condensed combining balance sheet of
the Company and the historical financial statements and notes thereto of
the Company as filed on Form 10-Q for the six months ended June 30, 1997.
The pro forma condensed combining Statement of Operations is unaudited
and is not necessarily indicative of what the actual financial position
would have been had the Company acquired 400 Garden City Plaza as of
January 1, 1997, nor does it purport to represent the operations of the
Company for future periods. (Amounts below are in thousands, except
per share data.)
<TABLE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Six Months Ended June 30, 1997
(Unaudited)
<CAPTION>
Pro June 30,
400 Garden Forma (e) 1997
Historical(c) City Plaza(d) Adjustments Pro Forma
_________ ________ _________ _________
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES
Base Rents $ 57,751 $ 1,839 $ - $ 59,590
Tenant escalations and reimbursements 6,585 171 - 6,756
Equity in earnings of real estate joint
ventures 201 - - 201
Equity in earnings of service companies 142 - - 142
Investment and other income 3,207 - - 3,207
_________ _________ _________ _________
Total Revenues 67,886 2,010 - 69,896
_________ _________ _________ _________
EXPENSES
Operating expenses
Property operating expenses 12,733 591 - 13,324
Real estate taxes 9,370 240 - 9,610
Ground Rent 609 - - 609
Marketing, general and administrative 3,838 - - 3,838
_________ _________ _________ _________
Total Operating Expenses 26,550 831 - 27,381
_________ _________ _________ _________
Interest 8,583 - 867 9,450
Depreciation and amortization 11,957 341 - 12,298
_________ _________ _________ _________
Total Expenses 47,090 1,172 867 49,129
_________ _________ _________ _________
Income before minority interests and
extraordinary item 20,796 838 (867) 20,767
Minority partners' interest in consolidated
partnership income (444) - - (444)
_________ _________ _________ _________
Income before limited partners' minority
interest in Operating Partnership income
and extraordinary items $ 20,352 $ 838 $ (867) 20,323
========= ========= =========
Limited partners' minority interest in
operating partnership income (3,766) (f)
Net Income before extraodinary item $ 16,557
=========
Net Income per common share before
extraordinary item $ .54 (g)
Weighted average common shares outstanding 30,455
=========
<FN>
See Accompanying Notes to Pro Forma Financial Statements
</TABLE>
<PAGE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Year Ended December 31, 1996
(Unaudited)
The following unaudited pro forma condensed combining Statement of
Operations is presented as if 400 Garden City Plaza was acquired as
of January 1, 1996 and the Company qualified as a REIT, distributed all
its taxable income and, therefore, incurred no income tax expense during
the period.
This pro forma condensed combining Statement of Operations should be read
in conjunction with the pro forma condensed combining balance sheet of
the Company and the historical financial statements and notes thereto of
the Company as filed on Form 10-K for the year ended December 31, 1996.
The pro forma condensed combining Statement of Operations is unaudited
and is not necessarily indicative of what the actual financial position
would have been had the Company acquired 400 Garden City Plaza on
January 1, 1996, nor does it purport to represent the operations of the
Company for future periods. (Amounts below are in thousands, except per
share data.)
<TABLE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Year Ended December 31, 1996
(Unaudited)
<CAPTION>
Pro December 31,
400 Garden Forma (j) 1996
Historical(h) City Plaza(i) Adjustments Pro Forma
_________ ________ _________ _________
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES
Base Rents $ 82,150 $ 3,462 $ - $ 85,612
Tenant escalations and reimbursements 10,628 427 - 11,055
Equity in earnings of real estate joint
ventures 266 - - 266
Equity in earnings of service companies 1,031 - - 1,031
Investment and other income 2,066 - - 2,066
_________ _________ _________ _________
Total Revenue 96,141 3,889 - 100,030
_________ _________ _________ _________
EXPENSES
Operating expenses
Property operating expenses 18,959 1,254 - 20,213
Real estate taxes 13,935 480 - 14,415
Ground Rent 1,107 - - 1,107
Marketing, general and administrative 5,949 - - 5,949
_________ _________ _________ _________
Total Operating Expenses 39,950 1,734 - 41,684
Interest 13,331 - 1,714 15,045
Depreciation and amortization 17,670 683 - 18,353
_________ _________ _________ _________
Total Expenses 70,951 2,417 1,714 75,082
_________ _________ _________ _________
Income before minority interests and
extraordinary item 25,190 1,472 (1,714) 24,948
Minority partners' interest in consolidated
partnership income (808) - - (808)
_________ _________ _________
Income before limited partners' minority
interest in Operating Partnership income
and extraordinary items $ 24,382 $ 1,472 $ (1,714) 24,140
========= ========= =========
Limited partners' minority interest in
operating partnership income (5,890) (k)
_________
Net Income before extraordinary item $ 18,250
=========
Net Income per common share before extraordinary item $ .92 (l)
=========
Weighted average common shares outstanding 19,928
=========
<FN>
See Accompanying Notes to Pro Forma Financial Statements
</TABLE>
<PAGE>
Reckson Associates Realty Corp.
Notes to Pro Forma Financial Statements
(Unaudited)
(in thousands, except shares and units)
Pro Forma Condensed Combining Balance Sheet
A. Reflects the Company's historical balance sheet as of June 30, 1997
(unaudited).
B. Reflects the acquisition of 400 Garden City Plaza with borrowings
under the credit facility.
Pro Form Statements of Operations For the Year Ended December 31, 1996
and Six Months Ended June 30, 1997.
C. Reflects the historical operations of the Company for the six months
ended June 30 1997.
D. Reflects the revenues and certain expenses of 400 Garden City Plaza
for the six months ended June 30, 1997.
E. Reflects the increase in interest costs associated with additional
borrowings under the Credit Facility.
F. Represents the minority interest of the Limited Partners in the Operating
Partnership at an effective pro forma rate of approximately 18.5%.
G. Pro forma net income per share of common stock before extraordinary item is
based upon the weighted average number of shares outstanding during the six
months ended June 30, 1997 of 30,455,000. This reflects a two-for-one stock
split which was distributable on April 15, 1997.
H. Reflects the historical operations of the Company for the year ended
December 31, 1996.
I. Reflects the revenues and certain expenses of 400 Garden City Plaza for
the year ended December 31, 1996.
J. Reflects the increase in interest costs associated with additional
borrowings under the Credit Facility.
K. Represents the minority interest of the Limited Partners in the Operating
Partnership at an effective pro forma rate of approximately 24.4%.
L. Pro forma net income per share of common stock before extraordinary item is
based upon the weighted average number of shares outstanding during the year
ended December 31, 1996 of 19,928,000. This reflects a two-for-one stock
split distributable on April 15, 1997.
<PAGE>
Report Independent Auditors
Board of Directors and Stockholders
Reckson Associates Realty Corp.
We have audited the statement of revenues and certain expenses of the property
("400 Garden City Plaza") to be acquired from Crown 400 Garden City Plaza
Associates ("Crown") by Reckson Associates Realty Corp., as described in Note 1,
for the year ended December 31, 1996. The financial statement is the
responsibility of the 400 Garden City Plaza's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 the 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 the rules and regulations 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 400 Garden City Plaza'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 400 Garden City
Plaza as described in Note 1 for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
July 22, 1997
<PAGE>
400 Garden City Plaza
Statement of Revenues and Certain Expenses
(in thousands)
(Note 1)
Six months ended Year ended
June 30, 1997 December 31, 1996
________________ ______________
(Unaudited)
Revenues: (Notes 2)
Base rents $ 1,839 $ 3,462
Electric income 117 231
Tenant escalations 54 196
________________ ______________
Total revenues 2,010 3,889
________________ ______________
Certain Expenses:
Real estate taxes 240 480
Management fees (Note 3) 38 75
Property operating expenses
(Note 4) 553 1,179
________________ ______________
Total certain expenses 831 1,734
________________ ______________
Revenues in excess of
certain expenses $ 1,179 $ 2,155
________________ ______________
See accompanying notes to financial statement.
<PAGE>
400 Garden City Plaza
Notes to Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996
1. Basis of Presentation
Presented herein is the statement of revenues and certain expenses related to
the operation of 400 Garden City Plaza, owned by Crown 400 Garden City Plaza
Associates ("Crown"). The property is located in Garden City, New York.
The accompanying financial statement has been prepared in accordance with the
applicable rules and regulations of the Securities and Exchange Commission for
the acquisition of real estate property. Accordingly, the financial statement
excludes certain expenses that may not be comparable to those expected to be
incurred by Reckson Associates Realty Corp. in the proposed future operations
of the aforementioned property. Items excluded consist of interest,
depreciation and general and administrative expenses not directly related to
the future operations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statement and accompanying
notes. Actual results could differ from those estimates.
The statement of revenues and certain expenses for the six months ended
June 30, 1997 is unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the statement of revenues and certain expenses
for this interim period have been included. The results of interim periods
are not necessarily indicative of the results to be obtained for a full
fiscal year.
2. Lease and Revenue Recognition
400 Garden City Plaza is being leased to tenants under operating leases.
Minimum rental income is generally recognized on a straight-line basis over
the term of the leases. The excess of amounts so recognized over amounts
due pursuant to the underlying leases was approximately $40,000 for the
year ended December 31, 1996.
The Garden City Plaza is a multi-tenant office building whose leases expire
at various dates over the next ten years.
3. Management and Leasing Agreements
400 Garden City Plaza is managed and leased by Koll Management Services,
Inc. ("Koll").
4. Property Operating Expenses
Property operating expenses for the year ended December 31, 1996 include
approximately $40,000 for insurance and $591,000 for utilities, $120,000
for payroll and $428,000 in repair and maintenance costs. For the six
months ended June 30, 1997 (unaudited) property operating expenses
include approximately $7,000 for insurance, $282,000 for utilities, $68,000
for payroll and $196,000 for repairs and maintenance costs.
5. Significant Tenants
Three tenants, Margolin, Winer & Evans, Scully, Scott, Murphy & Presser and
Utica Mutual Insurance Company accounted for 19%, 18% and 16% of the 1996
straight line rents, respectively.
