As filed with the Securities and Exchange Commission on June 11, 1997
Registration Statement No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________
RECKSON ASSOCIATES REALTY CORP.
(Exact name of registrant as specified in its charter)
MARYLAND 11-3233650
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
DONALD J. RECHLER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
___________________
Copy to:
DOUGLAS A. SGARRO, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER, 58TH FLOOR
NEW YORK, N.Y. 10048
___________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF PUBLIC:
From time to time after this Registration Statement becomes effective.
___________________
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box./ /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box./x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering./ /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box./ /
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
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<S> <C> <C> <C> <C>
Proposed
Maximum
Proposed Maximum Aggregate Amount of
Title of Class of Amount to be Offering Price Offering Registration
Securities to be Registered Registered Per Share(1) Price Fee
Common Stock, $.01 par value per share $170,559,894.30 7,774,810 $21.9375 $51,684.82
</TABLE>
(1) This estimate is based on the average of the high ($22 1/4) and low
($21 5/8) sales prices on the New York Stock Exchange of the Common Stock
of Reckson Associates Realty Corp. on June 5, 1997, pursuant to Rule
457(c) under the Securities Act of 1933, as amended, and is made solely
for purposes of determining the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 11, 1997
PROSPECTUS
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7,774,810 SHARES
RECKSON ASSOCIATES REALTY CORP.
COMMON STOCK
_________________
Reckson Associates Realty Corp. along with its subsidiaries (the
"Company") owns a portfolio of Class A office properties and other commercial
properties located primarily in the New York metropolitan area, as well as
commercial real estate development, construction, acquisition, leasing,
design and management businesses. The Company is a self-administered and
self-managed real estate investment trust (a "REIT").
This Prospectus relates to (i) the possible issuance by the Company of
up to 6,974,810 shares (the "Redemption Shares") of common stock, $.01 par
value per share ("Common Stock"), of the Company if and to the extent that
the Company elects to issue such Redemption Shares to holders of up to
6,974,810 units ("Outstanding OP Units") of limited partnership interest ("OP
Units") in Reckson Operating Partnership, L.P. (the "Operating Partnership"),
of which the Company is the sole general partner and owns a controlling
interest, upon the tender of such Outstanding OP Units for redemption; (ii)
the offer and sale from time to time of up to 800,000 shares of Common Stock
(the "Original Shares") by the holders thereof; and (iii) the offer and sale
from time to time of any Redemption Shares that may be issued to and held by
persons who may be affiliates of the Company (such persons, together with the
holders of the Original Shares, the "Selling Stockholders"). The Original
Shares and 5,517,920 of the Outstanding OP Units were issued in connection
with the series of transactions in which the Company and the Operating
Partnership were formed (the "Formation Transactions"). The other 1,456,890
Outstanding OP Units were issued by the Operating Partnership in connection
with its acquisition of interests in real property and related assets and in
connection with the hiring of two officers of the Company, subsequent to the
Formation Transactions. The Company has registered the issuance of the
Redemption Shares and the offer and sale of Redemption Shares and Original
Shares by affiliates of the Company (collectively, the "Registered Shares")
to permit the holders thereof to sell such shares without restriction in the
open market or otherwise, but the registration of the Registered Shares does
not necessarily mean that any of the Registered Shares will be issued by the
Company (with respect to the Redemption Shares) or be offered or sold by the
Selling Stockholders.
Pursuant to the amended and restated agreement of limited partnership of
the Operating Partnership (the "Partnership Agreement"), a Unitholder may
tender all or a portion of its Units to the Operating Partnership for
redemption for the cash equivalent of an equivalent number of shares of
Common Stock; provided, however, that the Company, in its sole and absolute
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discretion, may acquire any Units so tendered for an equivalent number of
shares of Common Stock or for the cash equivalent of an equivalent number of
shares of Common Stock. The Company anticipates that it generally will elect
to acquire directly Units tendered for redemption and to issue Common Stock
in exchange therefor rather than paying cash. As a result, the Company may
from time to time issue up to 6,974,810 Redemption Shares upon the
acquisition of Units tendered to the Operating Partnership for redemption.
Accordingly, the Company is registering the Redemption Shares to provide
Unitholders with freely tradeable securities upon redemption.
The Selling Stockholders from time to time may offer and sell the
Registered Shares held by them directly or through agents or broker-dealers
on terms to be determined at the time of sale. To the extent required, the
names of any agent or broker-dealer and applicable commissions or discounts
and any other required information with respect to any particular offer will
be set forth in the section of this Prospectus entitled "Plan of
Distribution" or in an accompanying Prospectus Supplement. Each of the
Selling Stockholders reserves the sole right to accept or reject, in whole or
in part, any proposed purchase of the Registered Shares to be made directly
or through agents.
The Company will not receive any of the proceeds from the sale of any
Registered Shares by the Selling Stockholders, but has agreed to bear certain
expenses of registration of the Registered Shares under Federal and state
securities laws. The Company will acquire Outstanding OP Units in the
Operating Partnership in connection with the redemption of any Redemption
Shares.
The aggregate proceeds to the Selling Stockholders from the sale of the
shares of Common Stock offered hereby (the "Offering") will be the purchase
price of the shares of Common Stock sold less the aggregate agents'
commissions and underwriters' discounts, if any, and other expenses of
issuance and distribution not borne by the Company. The Company will pay all
of the expenses of the Offering other than agents' commissions and
underwriters' discounts with respect to the shares of Common Stock offered
hereby, and transfer taxes, if any.
The Selling Stockholders and any agents, dealers or underwriters that
participate with the Selling Stockholders in the distribution of the shares
of Common Stock may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), in which case any
commissions received by such agents, dealers or underwrites and any profit on
the resale of the shares of Common Stock purchased by them may be deemed
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for indemnification arrangements between the Company and the
Registering Stockholders.
The Common Stock is listed on the New York Stock Exchange ("NYSE") under
the symbol "RA". To ensure that the Company maintains its qualification as a
Realty Estate Investment Trust (a "REIT"), ownership by any single person is
limited to 9.0% of the value of the outstanding capital stock of the Company.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A
DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE
SECURITIES.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_________________________
THE DATE OF THIS PROSPECTUS IS __________________, 1997.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports,
proxy statements and other information filed by the Company may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
regional offices of the Commission at 7 World Trade Center (13th Floor), New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such information can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
materials can also be inspected at the office of the New York Stock Exchange,
Inc. ("NYSE"), 20 Broad Street, New York, New York 10005. The Commission
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the
Securities, reference is made to the Registration Statement, including the
exhibits filed as a part thereof and otherwise incorporated therein.
Statements made in this Prospectus as to the contents of any contract,
agreement or other documents referred to are not necessarily complete; with
respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to such exhibit for
a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. Copies of the
Registration Statement and the exhibits may be inspected, without charge, at
the offices of the Commission, or obtained at prescribed rates from the
Public Reference Section of the Commission, or obtained at prescribed rates
from the Public Reference Section of the Commission at the address set forth
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
3. Current Reports on Form 8-K (including Form 8-K/A) and dated March
27, 1996, October 1, 1996, February 18, 1997 and May 15, 1997,
respectively.
4. The description of the Company's Common Stock which is contained in
Item 1 of the Company's registration statement on Form 8-A, as
amended, filed May 9, 1995 pursuant to Section 12 of the Exchange
Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities hereunder shall be
deemed to be incorporated by reference herein and to be a part hereof from
the date of the filing of such reports and documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for the
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide a copy of any or all of such documents
(exclusive of exhibits unless such exhibits are specifically incorporated by
reference therein), without charge, to each person to whom this Prospectus is
delivered, upon written or oral request to Reckson Associates Realty Corp.,
225 Broadhollow Road, Melville, New York 11747, Attn: Jason M. Barnett,
Senior Vice President and General Counsel, (516) 694-6900.
THE COMPANY
Reckson Associates Realty Corp. (including, as the context requires, its
subsidiaries, the "Company") was incorporated in September 1994 and commenced
operations effective with the completion of its initial public offering (the
"IPO") on June 2, 1995. The Company, together with Reckson Operating
Partnership, L.P. (the "Operating Partnership"), were formed for the purpose
of continuing the commercial real estate business of Reckson Associates, its
affiliated partnerships and other entities ("Reckson"). For more than 35
years, Reckson has been engaged in the business of owning, developing,
acquiring, constructing, managing and leasing suburban office and industrial
properties in the New York metropolitan area. Based on industry surveys,
management believes that the Company is one of the largest owners and
managers of Class A suburban office and industrial properties in the New York
City metropolitan Tri-State area of New York, New Jersey and Connecticut (the
"Tri-State area"). The Company's growth strategy is currently focused on
suburban markets within a 50-mile radius surrounding New York City. The
Company operates as a fully-integrated, self administered and self-managed
REIT. As of March 31, 1997, the Company owned 123 properties (the
"Properties") (including three joint venture properties) encompassing
approximately 9.6 million rentable square feet, all of which are managed by
the Company. The Properties consist of 32 Class A suburban office properties
(the "Office Properties") encompassing approximately 4.4 million rentable
square feet, 89 industrial properties (the "Industrial Properties")
encompassing approximately 5.2 million rentable square feet and two 10,000
square foot retail properties. In addition, as of March 31, 1997, the
Company owned or had contracted to acquire approximately 145 acres of land in
nine separate parcels that may present future development opportunities and
had invested approximately $50.9 million in certain mortgage indebtedness
encumbering four Class A office properties on Long Island and one Class A
office property in New Jersey encompassing an aggregate of approximately
881,000 square feet.
The Office Properties are Class A suburban office buildings and are
well-located, well-maintained and professionally managed. In addition, these
properties are modern with high finishes or have been modernized to
successfully compete with newer buildings and achieve among the highest rent,
occupancy and tenant retention rates within their markets. The majority of
the Office Properties are located in six planned office parks and are
tenanted primarily by national service firms such as "big six" accounting
firms, securities brokerage houses, insurance companies and health care
providers. The Industrial Properties are utilized for distribution,
warehousing, research and development and light manufacturing/assembly
activities and are located primarily in three planned industrial parks.
The Company's executive offices are located at 225 Broadhollow Road,
Melville, New York 11747 and its telephone number at that location is (516)
694-6900. At March 31, 1997, the Company had approximately 170 employees.
RISK FACTORS
This Prospectus contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those
discussed below. Unitholders and other prospective investors should
carefully consider the following information in conjunction with the other
information contained in this Prospectus before making an investment decision
regarding the Redemption Shares.
TAX CONSEQUENCES TO UNITHOLDERS OF EXCHANGE OF UNITS
Tax Consequences of Exchange of Units. In the event that the Company
exercises its right to acquire Units tendered for redemption in exchange for
cash or Redemption Shares, the Company's acquisition of such Units will be
treated for tax purposes as a sale of the Units by the Unitholder. Such a
sale will be fully taxable to the Unitholder and the Unitholder will be
treated as realizing for tax purposes an amount equal to the sum of the cash
received or the value of the Redemption Shares received in the exchange plus
the amount of any Operating Partnership liabilities allocable to the
exchanged Units at the time of the redemption or exchange. It is possible
that the amount of gain recognized or even the tax liability resulting from
such gain could exceed the amount of cash and the value of other property
(e.g., Redemption Shares) received upon such disposition. See "Description
of Units and Redemption of Units -- Tax Consequences of Redemption."
In addition, the ability of the Unitholder to sell a substantial number of
Redemption Shares in order to raise cash to pay tax liabilities associated
with the redemption of Units may be limited as a result of fluctuations in
the market price of the Common Stock, and the price the Unitholder receives
for such shares may not equal the value of its Units at the time of
redemption or exchange.
In the event that the Company does not exercise its right to acquire
Units tendered for redemption in exchange for cash or Redemption Shares, and
such Units are redeemed by the Operating Partnership for cash, the tax
consequences may differ. See "Description of Units and Redemption of Units."
Potential Change in Investment Upon Redemption of Units. If a
Unitholder exercises its right to require the redemption of all or a portion
of its Units, the Unitholder may receive cash or, at the option of the
Company, Redemption Shares in exchange for its Units. If the Unitholder
receives cash from either the Operating Partnership or the Company, the
Unitholder will not have any interest in the Company or the Operating
Partnership (except to the extent that it retains Units) and will not benefit
from any subsequent increases in the value of Common Stock and will not
receive any future distributions from the Company or the Operating
Partnership (unless the Unitholder retains or acquires in the future
additional Common Stock or Units). If the Unitholder receives Common Stock,
the Unitholder will become a stockholder of the Company rather than a holder
of Units in the Operating Partnership. See "Description of Units and
Redemption of Units -- Comparison of Ownership of Units and Common Stock."
DEPENDENCE ON TRI-STATE AREA MARKET CONDITIONS DUE TO LIMITED GEOGRAPHIC
DIVERSIFICATION
Currently, all of the Properties are located in the Tri-State area.
Consequently, the Company is dependent upon the continued demand for office,
industrial and other commercial space in the Tri-State area. Like other real
estate markets, the commercial real estate markets have experienced periodic
economic fluctuations and a future decline in the Tri-State area economy or
in the market for commercial real estate could affect the Company's cash
available for distribution and its ability to make distributions to
shareholders.
CONFLICTS OF INTEREST IN THE BUSINESS OF THE COMPANY
Tax Consequences Upon Sale or Refinancing. Holders of units of limited
partnership of the Operating Partnership ("Units") or co-owners of properties
not owned entirely by the Company may suffer different and more adverse tax
consequences than the Company upon the sale or refinancing of the Properties
owned by the Operating Partnership and therefore such holders or co-owners
and the Company may have different objectives regarding the appropriate
pricing and timing of any sale or refinancing of such Properties. While the
Company, as the sole general partner of the Operating Partnership, has the
exclusive authority as to whether and on what terms to sell or refinance each
Property owned solely by the Operating Partnership, those Directors and
officers of the Company who hold Units may seek to influence the Company not
to sell or refinance the Properties, even though such a sale might otherwise
be financially advantageous to the Company, or may seek to influence the
Company to refinance a Property with a higher level of debt.
Policies With Respect to Conflicts of Interest. The Company has adopted
certain policies designed to eliminate or minimize conflicts of interest.
These policies include a requirement that all transactions in which officers
or Directors have a conflicting interest must be approved by a majority of
the Directors of the Company who are neither officers of the Company nor
affiliated with Reckson (the "Independent Directors"). However, there can be
no assurance that these policies will be successful in minimizing or
eliminating such conflicts and, if they are not successful, decisions could
be made that might fail to reflect fully the interests of all stockholders.
RISKS OF ADVERSE EFFECT ON COMPANY FROM DEBT SERVICING AND REFINANCING,
INCREASES IN INTEREST RATES, FINANCIAL COVENANTS AND ABSENCE OF LIMITATION ON
DEBT
Debt Financing. The Company is subject to the risks normally associated
with debt financing, including the risk that the Company's cash flow will be
insufficient to meet required payments of principal and interest, the risk
that existing indebtedness on the Properties (which in most cases will not
have been fully amortized at maturity) will not be able to be refinanced or
that the terms of such refinancing will not be as favorable as the terms of
the existing indebtedness. There can be no assurance that the Company will
be able to refinance any indebtedness the Company may incur or to otherwise
obtain funds by selling assets or raising equity to make required payments
on maturing indebtedness.
Existing Debt Maturities; Foreclosures. The Company anticipates that
only a portion of the principal of the Company's mortgage indebtedness
currently outstanding will be repaid prior to maturity. However, the Company
may not have on hand funds sufficient to repay such indebtedness at maturity;
it may therefore be necessary for the company to refinance debt through
additional debt financing or equity offerings. If the Company is unable to
refinance this indebtedness on acceptable terms, the Company may be forced to
dispose of properties upon disadvantageous terms, which could result in
losses to the Company and adversely affect the amount of cash available for
distribution to stockholders. Further, if a property or properties are
mortgaged to secure payment of indebtedness and the Company is unable to meet
mortgage payments, the property or properties could be foreclosed upon by or
otherwise transferred to the mortgagee with a consequent loss of income and
asset value to the Company. In addition, even with respect to non-recourse
indebtedness, the lender may have the rights to recover deficiencies from the
Company in certain circumstances, including fraud and environmental
liabilities.
Risk of Rising Interest Rates. Outstanding advances under the Credit
Facility (defined below) bear interest at a variable rate. In addition, the
Company may incur indebtedness in the future that also bears interest at a
variable rate or may be required to refinance its debt at higher rates.
Accordingly, increases in interest rates could increase the Company's
interest expense, which could adversely affect the Company's ability to pay
expected distributions to stockholders.
Credit Facility Requirements. The Company has obtained a three-year
unsecured credit facility from The Chase Manhattan Bank and Union Bank of
Switzerland, as co-arrangers. The Credit Facility provides for a maximum
borrowing amount of up to $175 million which, upon syndication, may be
increased. The Company's ability to borrow under the Credit Facility is
subject to the satisfaction of certain financial covenants, including
covenants relating to limitations on unsecured and secured borrowings,
minimum interest and fixed charge coverage ratios, a minimum equity value and
a maximum dividend payout ratio. In addition, borrowings under the Credit
Facility bear interest at a floating rate equal to one, two, three or six
month LIBOR (at the Company's election) plus a spread ranging from 1.125% to
1.5%, based on the Company's leverage ratio.
No Limitation on Debt. The Company currently has a policy of incurring
debt only if upon such incurrence the Company's Debt Ratio would be 50% or
less. For these purposes, Debt Ratio is defined as the total debt of the
Company as a percentage of the market value of outstanding shares of Common
Stock on a fully diluted basis plus total debt. However, the organizational
documents of the Company do not contain any limitation on the amount of
indebtedness the Company may incur. Accordingly, the Board of Directors
could alter or eliminate this policy and would do so, for example, if it were
necessary in order for the Company to continue to qualify as a REIT. If this
policy were changed, the Company could become more highly leveraged,
resulting in an increase in debt service that could adversely affect the
Company's cash available for distribution to stockholders and could increase
the risk of default on the Company's indebtedness.
LIMITS ON OWNERSHIP AND CHANGES IN CONTROL MAY DETER CHANGES IN MANAGEMENT
AND THIRD PARTY ACQUISITION PROPOSALS
Ownership Limit. In order to maintain its qualification as a REIT, not
more than 50% in value of the outstanding capital stock of the Company may be
owned, directly or indirectly, by five or fewer individuals (as defined in
the Internal Revenue Code of 1986, as amended (the "Code") to include certain
entities) during the last half of a taxable year (other than the first year).
In order to protect the Company against the risk of losing REIT status due to
a concentration of ownership among its stockholders, the Articles of
Incorporation of the Company limit ownership of the issued and outstanding
Common Stock by any single stockholder to 9.0% of the number or value of the
outstanding shares of Common Stock from time to time. See "Restrictions on
Ownership of Capital Stock." Such provision may have the effect of
precluding a change of control of the Company by a third party without the
consent of the Board of Directors even if a change of control were in the
best interests of stockholders.
Staggered Board. The Board of Directors of the Company is divided into
three classes of directors. The terms of the first, second and third classes
will expire in 1999, 2000 and 1998, respectively. Directors for each class
are chosen for a three-year term upon the expiration of the applicable prior
term.
Required Consent of Holders of Units for Certain Transactions. For the
five-year period following completion of the IPO (i.e. through June 2, 2000),
the Operating Partnership may not sell, transfer or otherwise dispose of all
or substantially all of its assets or engage in any other similar transaction
(regardless of the form of such transaction) without the consent of the
holders of 85% of all outstanding Units. This voting requirement could
delay, defer or prevent a change in control of the Company.
Future Issuances of Common Stock. The Articles of Incorporation
authorize the Board of Directors to issue additional shares of Common Stock
without stockholder approval. Any such issuance could have the effect of
diluting existing stockholders' interests in the Company.
Preferred Stock. The Articles of Incorporation authorize the Board of
Directors to issue up to 25 million shares of preferred stock, $.01 par value
per share (the "Preferred Stock" and, together with the Common Stock, the
"Stock"), to reclassify unissued shares of Stock, and to establish the
preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on ownership, limitations as to dividends or
other distributions, qualifications, and terms and conditions of redemption
for each such class or series of any Preferred Stock issued.
Limitations on Acquisition of and Changes in Control Pursuant to
Maryland Law. Certain provisions of the Maryland General Corporation Law
(the "MGCL") may have the effect of inhibiting a third party from making an
acquisition proposal for the Company or of impending a change in control of
the Company under circumstances that otherwise could provide the holders of
shares of Common Stock with the opportunity to realize a premium over the
then-prevailing market price of such shares.
RISKS OF ACQUISITION, DEVELOPMENT AND CONSTRUCTION ACTIVITIES
The Company intends to acquire existing office and industrial properties
to the extent that they can be acquired on advantageous terms and meet the
Company's investment criteria. Acquisitions of commercial properties entail
general investment risks associated with any real estate investment,
including the risk that investments will fail to perform as expected or that
estimates of the cost of improvements to bring an acquired property up to
standards established for the intended market position may prove inaccurate.
The Company also intends to continue the selective development and
construction of office and industrial properties in accordance with the
Company's development and underwriting policies as opportunities arise in the
future. Risks associated with the Company's development and construction
activities include the risks that: the Company may abandon development
opportunities after expending resources to determine feasibility;
construction costs of a project may exceed original estimates; occupancy
rates and rents at a newly completed property may not be sufficient to make
the property profitable; financing may not be available on favorable terms
for development of a property; and construction and lease-up may not be
completed on schedule, resulting in increased debt service expense and
construction costs. Development activities are also subject to risks
relating to the inability to obtain, or delays in obtaining, all necessary
zoning, land-use, building, occupancy and other required governmental permits
and authorizations. If any of the above occur, the Company's ability to make
expected distributions to stockholders could be adversely affected. In
addition, new development activities, regardless of whether or not they are
ultimately successful, typically require a substantial portion of
management's time and attention.
REAL ESTATE INVESTMENT RISKS
General Risks. Investments of the Company are subject to the risks
incident to the ownership and operation of commercial real estate generally.
The yields available from equity investments in real estate depend on the
amount of income generated and expenses incurred. If the Company's
properties do not generate revenues sufficient to meet operating expenses,
including debt service and capital expenditures, the Company's cash available
for distributions and ability to make distributions to its stockholders will
be adversely affected.
A commercial property's revenues and value may be adversely affected by
a number of factors, including the national, state and local economic climate
and real estate conditions (such as oversupply of or reduced demand for space
and changes in market rental rates); the perceptions of prospective tenants
of the safety, convenience and attractiveness of the properties; the ability
of the owner to provide adequate management, maintenance and insurance; the
ability to collect on a timely basis all rent from tenants; the expense of
periodically renovating, repairing and reletting spaces; and increasing
operating costs (including real estate taxes and utilities) which may not be
passed through to tenants. Certain significant expenditures associated with
investments in real estate (such as mortgage payments, real estate taxes,
insurance and maintenance costs) are generally not reduced when circumstances
cause a reduction in rental revenues from the property. If a property is
mortgaged to secure the payment of indebtedness and if the Company is unable
to meet its mortgage payments, a loss could be sustained as a result of
foreclosure on the property or the exercise of other remedies by the
mortgagee. In addition, real estate values and income from properties are
also affected by such factors as compliance with laws, including tax laws,
interest rate levels and the availability of financing. Also, the rentable
square feet of commercial property is often affected by market conditions and
may therefore fluctuate over time.
Tenant Defaults. Substantially all of the Company's income is derived
from rental income from real property and, consequently, the Company's
distributable cash flow and ability to make expected distributions to
stockholders would be adversely affected if a significant number of tenants
of its properties failed to meet their lease obligations. In the event of a
default by a lessee, the Company may experience delays in enforcing its
rights as lessor and may incur substantial costs in protecting its
investment.
Market Illiquidity. Equity real estate investments are relatively
illiquid. Such illiquidity will tend to limit the ability of the Company to
vary its portfolio promptly in response to changes in economic or other
conditions. In addition, provisions of the Code limit a REIT's ability to
sell properties held for fewer than four years, which may affect the
Company's ability to sell properties at a time when it is otherwise
economically advantageous to do so, thereby adversely affecting returns to
stockholders.
Operating Risks. The Properties are subject to operating risks common
to commercial real estate in general, any and all of which may adversely
affect occupancy or rental rates. The Properties are subject to increases in
operating expenses such as cleaning; electricity; heating, ventilation and
air conditioning ("HVAC"); elevator repair and maintenance; insurance and
administrative costs; and other general costs associated with security,
landscaping, repairs and maintenance. While the Company's tenants generally
are currently obligated to pay a portion of these escalating costs, there can
be no assurance that tenants will agree to pay such costs upon renewal or
that new tenants will agree to pay such costs. If operating expenses
increase, the local rental market may limit the extent to which rents may be
increased to meet increased expenses without decreasing occupancy rates.
While the Company implements costs saving incentive measures at each of its
Properties, if any of the above occurs, the Company's ability to make
distributions to stockholders could be adversely affected.
Competition. There are numerous commercial properties that compete with
the Company in attracting tenants and numerous companies that compete in
selecting land for development and properties for acquisition.
Third-Party Property Management and Construction. The Company pursues
actively (through its affiliated management company) the management of
properties which are owned by third parties. Risks associated with the
management of properties owned by third parties include the risk that
management contracts (which are typically cancelable without notice) will be
terminated by the entity controlling the property or in connection with the
sale of such property, that contracts may not be renewed upon expiration or
may not be renewed on terms consistent with current terms and that the rental
revenues upon which management fees are based will decline as a result of
general real estate market conditions or specific market factors affecting
properties managed by the Company, resulting in decreased management fee
income. The Company's third-party interior construction business (which is
conducted through its affiliated construction company) is subject to similar
risks.
Uninsured Loss. The Company carries comprehensive liability, fire,
extended coverage and rental loss insurance with respect to all of the
Properties, with policy specifications, insured limits and deductibles
customarily carried for similar properties. There are, however, certain
types of losses (such as losses arising from acts of war or relating to
pollution) that are not generally insured because they are either uninsurable
or not economically insurable. Should an uninsured loss or a loss in excess
of insured limits occur, the Company could lose its capital invested in a
property, as well as the anticipated future revenue from such property and
would continue to be obligated on any mortgage indebtedness or other
obligations related to the property. Any such loss would adversely affect
the business of the Company and its financial condition and results of
operations.
Investments in Mortgage Debt. From time to time, the Company may invest
in mortgages which are secured by office or industrial properties and, in
certain circumstances, may result in the acquisition of the related
properties through foreclosure proceedings or negotiated settlements. In
addition to the risks associated with investments in commercial properties,
investments in mortgage indebtedness present additional risks, including the
risk that the fee owners of such properties may default in payments of
interest on a current basis and that the Company may not realize its
anticipated return or sustain losses relating to such investments. In that
regard, as of March 31, 1997, the Company had invested approximately $50.9
million in mortgage indebtedness encumbering four Class A office properties
on Long Island and one Class A office property in New Jersey.
RISKS INVOLVED IN PROPERTY OWNERSHIP THROUGH PARTNERSHIPS AND JOINT VENTURES
The Company owns through the Operating Partnership a 60% general partner
interest in Omni Partners, L.P. (the "Omni Partnership"). Odyssey Partners,
L.P. and an affiliate of Odyssey (collectively, "Odyssey") own the remaining
40% interest. Through its partnership interest, the Company acts as managing
partner and has the sole authority to conduct the business and affairs of the
Omni Partnership subject to the limitations set forth in the amended and
restated agreement of limited partnership of Omni Partners, L.P. (the "Omni
Partnership Agreement"). These limitations include Odyssey's right to
negotiate under certain circumstances a refinancing of the mortgage debt
encumbering the Omni and the right to approve any sale of the Omni made on or
before March 13, 2007 (the "Acquisition Date"). The Operating Partnership
will continue to act as the sole managing partner of the Omni Partnership
unless certain conditions specified in the Omni Partnership Agreement shall
occur. Upon the occurrence of any of such conditions the Operating
Partnership's general partnership interest shall be converted to a limited
partnership interest (in which case an affiliate of Odyssey shall be the sole
managing partner), or at the option of Odyssey, the Operating Partnership
shall be a co-managing partner with an affiliate of Odyssey. In addition, on
the Acquisition Date, the Operating Partnership will have the right to
purchase Odyssey's interest in the Omni Partnership at a price (the "Option
Price") based on 90% of its fair market value. If the Operating Partnership
fails to exercise such option, Odyssey has the right to require the Operating
Partnership to purchase Odyssey's interest in the Omni Partnership on the
Acquisition Date at the Option Price. The Operating Partnership has the
right to extend the Acquisition Date until March 13, 2012. The Option Price
shall be applied to the payment of all sums due under a loan (the "Odyssey
Loan") made by the Operating Partnership in March 1997 to Odyssey in the
amount of approximately $17 million. The Odyssey Loan matures on the
Acquisition Date (subject to the Operating Partnership's right to extend the
Acquisition Date as set forth above) and is secured by a pledge of all of
Odyssey's right, title and interest in the Omni Partnership. All
distributions of net cash flow which Odyssey would otherwise be entitled to
shall be applied to all interest which is due under the Odyssey Loan. All
distributions from a sale or refinancing of the Omni which Odyssey would
otherwise be entitled to shall be applied to the interest and principal
outstanding under the Odyssey Loan.
In addition, the Company may in the future acquire either a limited
partnership interest in a property partnership without partnership management
responsibility or a co-venturer interest or co-general partnership interest
in a property partnership with shared responsibility for managing the affairs
of a property partnership or joint venture and, therefore, will not be in a
position to exercise sole decision-making authority regarding the property
partnership or joint venture. In that regard, the Company (through the
Operating Partnership) owns a 60% managing member interest in a limited
liability company that owns 520 White Plains Road, a 171,761 square foot
office building located in Tarrytown, New York. The remaining 40% member
interest is held by Tarrytown Corporate Center III, L.P., a partnership
affiliated with the Halpern organization ("TCC"). Pursuant to the member
agreement governing the joint venture arrangement, the Company will be
required to obtain the consent of TCC prior to engaging in certain
activities, including entering into or modifying a major lease (i.e., a lease
for more than 25,000 rentable square feet), financing or refinancing
indebtedness encumbering the property and selling or otherwise transferring
the property. The Company also owns (through the Operating Partnership) a
50% co-managing member interest in a limited liability company that owns 360
Hamilton Avenue, a 365,000 square foot office building located in White
Plains, New York. The remaining 50% co-managing member interest is held by
an unaffiliated corporation. Pursuant to the member agreement governing this
joint venture, decisions that affect the business and affairs of the joint
venture generally require the approval of both co-managing members and such
members are jointly responsible for the day-to-day operation of the property.
Partnership or joint venture investments may, under certain
circumstances, involve risks not otherwise present, including the possibility
that the Company's partners or co-venturer might become bankrupt, that such
partners or co-venturer might at any time have economic or other business
interests or goals which are inconsistent with the business interests or
goals of the Company, and that such partners or co-venturer may be in a
position to take action contrary to the instructions or the requests of the
Company and contrary to the Company's policies or objectives, including the
Company's policy with respect to maintaining its qualification as a REIT.
Such investments may also have the potential risk of impasse on decisions,
such as a sale, because neither the Company nor the partner or co-venturer
would have full control over the partnership or joint venture. Consequently,
actions by such partner or co-venturer might result in subjecting properties
owned by the partnership or joint venture to additional risk. The Company
will, however, seek to maintain sufficient control of such partnerships or
joint ventures to permit the Company's business objectives to be achieved.
There is no limitation under the Company's organizational documents as to the
amount of available funds that may be invested in partnerships or joint
ventures.
POTENTIAL ENVIRONMENTAL LIABILITY RELATED TO THE PROPERTIES
Under various Federal, state and local laws, ordinances and regulations,
an owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. These laws
often impose such liability without regard to whether the owner knew of, or
was responsible for, the presence of such hazardous or toxic substances. The
cost of any required remediation and the owner's liability therefore as to
any property is generally not limited under such enactments and could exceed
the value of the property and/or the aggregate assets of the owner. The
presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to borrow using such property as collateral. Persons who arrange
for the disposal or treatment of hazardous or toxic substances may also be
liable for the costs of removal or remediation of such substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by such person. Certain environmental laws govern the removal,
encapsulation or disturbance of asbestos-containing materials ("ACMs") when
such materials are in poor condition, or in the event of renovation or
demolition. Such laws impose liability for release of ACMs into the air and
third parties may seek recovery from owners or operators of real properties
for personal injury associated with ACMs. In connection with the ownership
(direct or indirect), operation, management and development of real
properties, the Company may be considered an owner or operator of such
properties or as having arranged for the disposal or treatment of hazardous
or toxic substances and, therefore, potentially liable for removal or
remediation costs, as well as certain other related costs, including
governmental fines and injuries to persons and property.
All of the Office Properties and all of the Industrial Properties have
been subjected to a Phase I or similar environmental site assessment after
April 1, 1994 (which involved general inspections without soil sampling,
ground water analysis or radon testing and, for the Properties constructed in
1978 or earlier, survey inspections to ascertain the existence of ACMs were
conducted) completed by independent environmental consultant companies
(except for 35 Pinelawn Road which was originally developed by Reckson and
subjected to a Phase I in April 1992). These environmental site assessments
have not revealed any environmental liability that would have a material
adverse effect on the Company's business.
RISKS OF FAILURE TO QUALIFY AS A REIT
The Company has operated so as to qualify as a REIT under the Code
commencing with its taxable year ended December 31, 1995. Although
management of the Company believes that the Company has been organized and
operates in such a manner, no assurance can be given that the Company will
qualify or remain qualified as a REIT. See "Federal Income Tax
Considerations."
EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK
One of the factors that influences the market price of the shares of
Common Stock in public markets is the annual yield on the price paid for
shares of Common Stock from distributions by the Company. An increase in
market interest rates may lead prospective purchasers of the Common Stock to
demand a higher annual yield from future distributions. Such an increase in
the required distribution yield may adversely affect the market price of the
Common Stock.
DESCRIPTION OF UNITS AND REDEMPTION OF UNITS
GENERAL
Unitholders may, subject to certain limitations, require the Operating
Partnership to redeem all or a portion of their Units (the "Redemption
Right"). This Redemption Right may be exercised by Unitholders pursuant to a
notice of redemption delivered to the Operating Partnership, with a copy
delivered to the Company. Upon redemption, a Unitholder will receive for
each Unit redeemed cash in an amount equal to the market value (as defined
below) of a share of Common Stock (subject to certain adjustments in the
event of stock dividends and stock splits; provided, however, that the
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Company may, in its sole discretion, by notice to the Unitholder within five
business days after receipt of the notice of redemption, elect to acquire any
Unit presented to the Operating Partnership for redemption for cash or for
one share of Common Stock (subject to the same adjustments). The market
value of the Common Stock for purposes of redeeming Units will be equal to
the average of the closing trading price of the Common Stock for the ten
trading days prior to the day on which the redemption notice was received by
the Operating Partnership.
The Company anticipates that it generally will elect to acquire any
Units presented to the Operating Partnership for redemption by the issuance
of the Redemption Shares. Such an acquisition by the Company will be treated
as a sale of the Units by the Unitholder to the Company for Federal income
tax purposes. See "--Tax Consequences of Redemption." Upon a redemption for
cash, a Unitholder's right to receive distributions with respect to the Units
redeemed will cease. Upon the receipt of Redemption Shares, a Unitholder
will have rights as a stockholder of the Company, including the right to
receive dividends from the time of its acquisition of the Redemption Shares.
A Unitholder must notify the Company of its desire to require the
Operating Partnership to redeem Units. A Unitholder must request the
redemption of at least 1,000 Units, unless such Unitholder is requesting
redemption of all of its Units. No redemption can occur if the delivery of
Redemption Shares would be prohibited under the provisions of the Company's
Articles of Incorporation to protect the Company's qualification as a REIT.
TAX CONSEQUENCES OF REDEMPTION
The following discussion summarizes certain Federal income tax
considerations that may be relevant to a Unitholder should it exercise its
right to redeem its Units.
Tax Treatment of Exchange or Redemption of Units. If the Company elects
to purchase Units tendered for redemption, the Partnership Agreement provides
that each of the Unitholder, the Operating Partnership and the Company shall
treat the transaction between the Unitholder and the Company as a sale of
Units by the Unitholder at the time of such redemption. Such sale will be
fully taxable to the Unitholder and the Unitholder will be treated as
realizing for tax purposes an amount equal to the sum of the cash value or
the value of the Common Stock received in the exchange plus the amount of any
Operating Partnership liabilities allocable to the redeemed Units at the time
of the redemption. The determination of the amount of gain or loss is
discussed more fully below. If the Company does not elect to purchase a
Unitholder's Units tendered for redemption and the Operating Partnership
redeems such Units for cash that the Company contributes to the Operating
Partnership to effect such redemption, the redemption likely would be treated
for tax purposes as a sale of such Units to the Company in a fully taxable
transaction, although the matter is not free from doubt. In that event, the
Unitholder would be treated as realizing an amount equal to the sum of the
cash received in the exchange plus the amount of any Operating Partnership
liabilities allocable to the redeemed Units at the time of the redemption.
The determination of the amount and character of gain or loss in the event of
such a sale is discussed more fully below. See "--Tax Treatment of
Disposition of Units by a Limited Partner Generally."
If the Company does not elect to purchase Units tendered for redemption
and the Operating Partnership redeems a Unitholder's Units for cash that is
not contributed by the Company to effect the redemption, the tax consequences
would be the same as described in the previous paragraph, except that, if the
Operating Partnership redeems less than all of a Unitholder's Units, the
Unitholder would not be permitted to recognize any loss occurring on the
transaction and would recognize taxable gain only to the extent that the
cash, plus the amount of any Operating Partnership liabilities allocable to
the redeemed Units, exceeded the Unitholder's adjusted basis in all of its
Units immediately before the redemption.
If the Company contributes cash to the Operating Partnership to effect a
redemption, and in the unlikely event that the redemption transaction is
treated as the redemption of a Unitholder's Units by the Operating rather
than a sale of Units to the Company, the income tax consequences to the
Unitholder would be as described in the preceding paragraph.
Tax Treatment of Disposition of Units by a Limited Partner Generally.
If a Unit is disposed of in a manner that is treated as a sale of the Unit,
or a limited partner otherwise disposes of a Unit, the determination of gain
or loss from the sale or other disposition will be based on the difference
between the amount considered realized for tax purposes and the tax basis in
such Unit. See "--Basis of Units." Upon the sale of a Unit, the "amount
realized" will be measured by the sum of the cash and fair market value of
other property (e.g., Redemption Shares) received plus the amount of any
Operating Partnership liabilities allocable to the Units sold. To the extent
that the amount of cash or property received plus the allocable share of any
Operating Partnership liabilities exceeds the limited partner's basis for the
Units disposed of, such limited partner will recognize gain. It is possible
that the amount of gain recognized or event the tax liability resulting from
such gain could exceed the amount of cash and/or the value of any other
property (e.g., Redemption Shares) received upon such disposition.
Except as described below, any gain recognized upon a sale or other
disposition of Units will be treated as gain attributable to the sale or
disposition of a capital asset. To the extent, however, that the amount
realized upon the sale of a Unit attributable to a limited partner's share of
"unrealized receivables" of the Operating Partnership (as defined in Section
751 of the Code) exceeds the basis attributed to those assets, such excess
will be treated as ordinary income. Unrealized receivables include, to the
extent not previously included in Operating Partnership income, any rights to
payment for services rendered or to be rendered. Unrealized receivables also
include amounts that would be subject to recapture as ordinary income of the
Operating Partnership had sold its assets at their fair market value at the
time of the transfer of a Unit.
Basis of Units. Generally, a limited partner's initial tax basis
("Initial Basis") in his Units is increased by (i) such limited partner's
share of Operating Partnership taxable and tax-exempt income and (ii)
increases in such limited partner's allocable share of liabilities of the
Operating Partnership. Conversely, a limited partner's basis in his Units is
decreased (but not below zero) by (A) such limited partner's share of
Operating Partnership distributions, (B) decreases in such limited partner's
allocable share of liabilities of the Operating Partnership, (C) such limited
partner's share of losses of the Operating Partnership and (D) such limited
partner's share of nondeductible expenditures of the Operating Partnership
that are not chargeable to his capital account.
COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK
The information below highlights a number of significant differences
between the Operating Partnership and the Company relating to, among other
things, form of organization, permitted investments, policies and
restrictions, management structure, compensation and fees, investor rights
and Federal income taxation and compares certain legal rights associated with
the ownership of Units and Common Stock respectively. This discussion is
summary in nature and does not constitute a complete discussion of these
matters, and investors should carefully review the balance of this Prospectus
and the registration statement of which this Prospectus is a part for
additional important information about the Company.
Form of Organization and Assets Owned. The Operating Partnership is
organized as a Delaware limited partnership. Substantially all of the
Company's operations are conducted through the Operating Partnership.
The Company was organized under the laws of the State of Maryland in
September 1994. The Company maintains a general partner interest in the
Operating Partnership. As of June 6, 1997, the Company had an approximate
83.1% economic interest in the Operating Partnership, and such interest
will increase as Units are redeemed for cash or acquired by the Company.
Length of Investment. The Operating Partnership has a stated
termination date of December 31, 2093, although it may be terminated earlier
under certain circumstances. The Company has a perpetual term and intends to
continue its operations for an indefinite time period.
Purchase and Permitted Investments. The purpose of the Operating
Partnership includes the conduct of any business that may be lawfully
conducted by a limited partnership formed under Delaware law, except that the
Partnership Agreement requires the business of the Operating Partnership to
be conducted in such a manner that will permit the Company to be classified
as a REIT for Federal income tax purposes. The Operating Partnership may,
subject to the foregoing limitation, invest or enter into partnerships, joint
ventures or similar arrangements and may own interests in any other entity.
Under its Articles of Incorporation, the Company may engage in any
lawful activity permitted under the Maryland General Corporation Law.
However, under the Partnership Agreement, the Company, as the general partner
of the Operating Partnership, may not, directly or indirectly, enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of interests in the Operating Partnership or the management
of the business thereof.
Additional Equity. The Operating Partnership is authorized to issue
Units and other partnership interests to its partners or to other persons for
such consideration and on such terms and conditions as the Company, as
general partner, in its sole discretion, may deem appropriate.
The Board of Directors of the Company may authorize the issuance of
shares of capital stock of any class, whether now or hereafter authorized, or
securities or rights, convertible into shares of capital stock, for such
consideration as the Board of Directors may deem advisable, subject to such
restrictions or limitations as may be set forth in the Company's Bylaws. As
long as the Operating Partnership is in existence, the proceeds of all equity
capital raised by the Company will be contributed to the Operating
Partnership in exchange for Units or other interests in the Operating
Partnership.
Borrowing Policies. The Operating Partnership has no restrictions on
borrowings, and the Company as general partner, has full power and authority
to cause the Operating Partnership to borrow money.
The Company is not restricted under its governing instruments from
incurring borrowings. The Company has, however, adopted a policy that
currently limits total borrowings to 50% of the total market capitalization
of the Company. See "Risk Factors--Real Estate Financing Risks." The
foregoing reflects the Company's general policy over time and is not intended
to operate in a manner that inappropriately restricts the Company's ability
to raise additional capital, including additional debt, to implement its
planned growth, to pursue attractive acquisition opportunities that may arise
or to otherwise act in a manner that the Board of Directors believes to be in
the best interests of the Company and its stockholders. The Board of
Directors, with the assistance of management of the Company, may reevaluate
from time to time its debt and other capitalization policies in light of then
current economic conditions, including the relative costs of debt and equity
capital, the market value of its Properties, growth and acquisition
opportunities, the market value of its equity securities in relation to the
Company's view of the market value of its Properties, and other factors, and
may modify its debt policy. Such modification may include increasing or
decreasing its ratio of debt to total market capitalization or substituting
another measuring standard.
Other Investment Restrictions. Other than restrictions precluding
investments by the Operating Partnership that would adversely affect the
qualification of the Company as a REIT, there are no restrictions upon the
Operating Partnership's authority to enter into certain transactions,
including, among others, making investments, lending Operating Partnerships
funds, or reinvesting the Operating Partnership's cash flow and net sale or
refinancing proceeds.
Neither the Company's Articles of Incorporation nor its Bylaws impose
any restrictions upon the types of investments that may be made by the
Company.
Management Control. All management powers over the business and affairs
of the Operating Partnership are vested in the Company, as general partner,
and no limited partner of the Operating Partnership has any right to
participate in or exercise control or management power over the business and
affairs of the Operating Partnership. The Company may not be removed as
general partner by the limited partners with or without cause.
The Board of Directors has exclusive control over the Company's business
and affairs subject only to the restrictions in the Articles of Incorporation
and the Bylaws. The Board of Directors is classified into three classes. At
each annual meeting of the stockholders, the successors of the class of
directors whose terms expire at that meeting of the stockholders, the
successors of the class of directors whose terms expire at that meeting will
be elected. The policies adopted by the Board of Directors may be altered or
eliminated without advice of the stockholders. Accordingly, except for their
vote in the elections of trustees, stockholders have no control over the
ordinary business policies of the Company.
Management Liability and Indemnification. The Partnership Agreement
generally provides that the Company, as general partner, will incur no
liability to the Operating Partnership or any limited partner for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the Company acted in good faith. In addition, the Company
is not responsible for any misconduct or negligence on the part of its agents
provided the Company appointed such agents in good faith. The Company may
consult with legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisors, and any action it
takes or omits to take in reliance upon the opinion of such persons, as to
matters which the Company, reasonably believes to be within their
professional or expert competence, shall be conclusively presumed to have
been done or omitted in good faith and in accordance with such opinion. The
Partnership Agreement also provides for indemnification of the Company the
Directors and officers of the Company, and such other persons as the Company
may from time to time designate, against any and all losses, claims, damages,
liabilities, expenses, judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits or proceedings that
relate to the operations of the Operations Partnership in which such person
may be involved.
The Company's Articles of Incorporation and Bylaws provide certain
limitations on the liability of the Company's Directors and officers for
monetary damages to the Company. The Articles of Incorporation, and the
Bylaws obligate the Company to indemnify its Directors and officers, and
permit the Company to indemnify its employees and other agents, against
certain liabilities incurred in connection with their service in such
capacities. These provisions could reduce the legal remedies available to
the Company and the stockholders against these individuals.
The Company's Bylaws require it to indemnify its officers, Directors and
certain other parties to the fullest extent permitted from time to time by
Maryland law. The Maryland General Corporation Law permits a corporation to
indemnify (a) any present or former Director or officer who has been
successful, on the merits or otherwise, in the defense of a proceeding to
which he was made a party by reason of his service in that capacity, against
reasonable expenses incurred by him in connection with the proceeding and (b)
any present or former Director or officer against any claim or liability
unless it is established that (i) his act or omission was committed in bad
faith or was the result of active or deliberate dishonesty, (ii) he actually
received an improper personal benefit in money, property or services or (iii)
in the case of a criminal proceeding, he had reasonable cause to believe that
his act or omission was unlawful. The Maryland General Corporation Law also
permits the Company to provide indemnification and advance expenses to a
present or former Director or Officer who served a predecessor of the Company
in such capacity, and to any employer or agent of the Company or a
predecessor of the Company.
The Company has entered into indemnification agreements with each of its
executive officers and Directors. The indemnification agreements require,
among other things, that the Company indemnify its officers and Directors to
the fullest extent permitted by law and advance to the officers and Directors
all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Under these agreements,
the Company must also indemnify and advance all expense incurred by officers
and Directors seeking to enforce their rights under the indemnification
agreements and may cover officers and Directors under the Company's
Directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by law, it provides additional assurance to Directors and officers
that indemnification will be available because, as a contract, it cannot be
modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights it provides. It is the position of the
SEC that indemnification of directors and officers for liabilities under
the Securities Act is against public policy and unenforceable pursuant
to Section 14 of the Securities Act.
Anti-takeover Provisions. Except in limited circumstances, the Company,
as general partner, has exclusive management power over the business and
affairs of the Operating Partnership. The Company may not be removed as
general partner by the limited partners with or without cause.
The Articles of Incorporation and Bylaws of the Company and Maryland law
contain a number of provisions that may have the effect of delaying or
discouraging an unsolicited proposal for the acquisition of the Company or
the removal of incumbent management.
Voting Rights. Under the Partnership Agreement, the limited partners do
not have voting rights relating to the operation and management of the
Operating Partnership except in connection with matters, as described more
fully below, involving certain amendments to the Partnership Agreement,
dissolution of the Operating Partnership and the sale or exchange of all or
substantially all of the Operating Partnership's assets, including mergers or
other combinations.
Stockholders of the Company have the right to vote, among other things,
on a merger or sale of substantially all of the assets of the Company,
certain amendments to the Articles of Incorporation and dissolution of the
Company. The Company is managed and controlled by a Board of Directors
consisting of three classes having staggered terms of office. Each class is
to be elected by the stockholders at annual meetings of the Company. Each
share of Common Stock has one vote, and the Articles of Incorporation permit
the Board of Directors to classify and issue Preferred Stock in one or more
series having voting power which may differ from that of the Common Stock.
Amendment of the Partnership Agreement or the Company's Articles of
Incorporation. Amendments to the Partnership Agreement may be proposed by
the Company, as general partner, or by limited partners holding 20% or more
of the partnership interests and generally require approval of limited
partners (including the Company) holding a majority of the outstanding
limited partner interests. The Company may make certain amendments to the
Partnership Agreement without the consent of Limited Partners. Certain
amendments that would, among other things, convert a limited partner's
interest into a general partner's interest, modify the limited liability of
any limited partner, alter the interest of any limited partner in profits,
losses or distributions, alter or modify the redemption right described
herein, or cause the termination of the Operating Partnership at a time
inconsistent with the terms of the Partnership Agreement must be approved by
the Company, as general partner, and each limited partner that would be
adversely affected by any such amendment.
Amendments to the Company's Articles of Incorporation must be approved
by affirmative vote of the holders of not less than two-thirds of all votes
entitled to be cast on the matter.
Vote Required to Dissolve the Operating Partnership or the Company.
Under Delaware law, the Operating Partnership may be dissolved, other than in
accordance with the terms of the Partnership Agreement, only upon the
unanimous vote of the limited partners. Under Maryland law, the Board of
Directors must obtain the approval of holders of not less than two-thirds of
all outstanding shares of capital stock of the Company in order to dissolve
the Company.
Vote Required to Sell Assets or Merge. Under the Partnership Agreement,
for the five year period following completion of the IPO (i.e., through June
2, 2000) the Operating Partnership may not sell, exchange, transfer or
otherwise dispose of all or substantially all of its assets, including by way
of merger or consolidation or other combination of the Operating Partnership,
without the consent of the limited partners (including the Company) holding
85% or more of the limited partner interests of the Operating Partnership.
Under Maryland law and the Company's Articles of Incorporation, the sale
of all or substantially all of the assets of the Company or any merger or
consolidation of the Company requires the approval of the Board of Directors
and the affirmative vote of two-thirds of all the votes entitled to be cast
on the matter. No approval of the stockholders is required for the sale of
less than all or substantially all of the Company's assets.
Compensation, Fees and Distributions. The Company does not receive any
compensation for its services as general partner of the Operating
Partnership. As a partner in the Operating Partnership, however, the Company
has the same right to allocations and distributions as other partners of
Operating Partnership. In addition, the Operating Partnership will reimburse
the Company, as general partner, for all expenses incurred relating to the
ownership and operation of, or for the benefit of, the Operating Partnership.
The Directors and Officers of the Company receive compensation for their
services.
Liability of Investors. Under the Partnership Agreement and applicable
Delaware law, the liability of the limited partners for the Operating
Partnership's debts and obligations is generally limited to the amount of
their investment in the Operating Partnership.
Under Maryland law, stockholders generally are not personally liable for
the debts or obligations of the Company. See "Description of Common Stock--
General."
Nature of Investment. The Units constitute equity interests entitling
holders thereof to their pro rata share of cash distributions made to the
--- ----
limited partners of the Operating Partnership. The Company is entitled to
receive its pro rata share of distributions made by the Operating Partnership
--- ----
with respect to its interest in the Operating Partnership.
Shares of Common Stock constitute equity interests in the Company. Each
stockholder will be entitled to his pro rata share of any dividends or
--- ----
distributions paid with respect to Common Stock. The dividends payable to
the stockholders are not fixed in amount and are paid only if, when and as
declared by the Board of Directors. In order to qualify as a REIT, the
Company must distribute at least 95% of its taxable income (excluding capital
gains), and any taxable income (including capital gains) not distributed will
be subject to corporate income tax.
Potential Dilution of Rights. The Company as general partner, is
authorized, in its sole discretion and without limited partner approval, to
cause the Operating Partnership to issue additional limited partnership
interests and other equity securities for any partnership purpose at any time
to the limited partners or to other persons on terms established by the
Company.
The Board of Directors of the Company may issue, in its discretion,
additional shares of Common Stock and has the authority to issue from the
authorized capital stock a variety of other equity securities of the Company
with such powers, preferences and rights as the Board of Directors may
designate at the time. The issuance of additional shares of Common Stock or
other similar equity securities may result in the dilution of interests of
the stockholders.
Liquidity. Subject to certain exceptions, the Registering Stockholders
may transfer all or any portion of their Units with or without the consent of
the Company. However, the Company, as general partner, in its sole and
absolute discretion, may or may not consent to the admission as a substituted
limited partner of any transferee of such Units. If the Company does not
consent to the admission of a transferee as a substituted limited partner,
the transferee shall be considered an assignee of an economic interest in the
Operating Partnership but will not be a holder of Units for any other
purpose; accordingly, the assignee will not be permitted to vote on any
affairs or issues on which a limited partner may vote.
The Common Stock is listed on the NYSE. The breadth and strength of
this market will depend, among other things, upon the number of shares
outstanding, the Company's financial results and prospects, the general
interest in the Company's real estate investments and the Company's dividend
yield compared to that of other debt and equity securities.
REGISTRATION RIGHTS
The registration of the Redemption Shares pursuant to this Registration
Statement of which this Prospectus is a part will discharge the Company's
obligations with respect to such Redemption Shares under the terms of
registration rights agreements (the "Registration Rights Agreements") with
each of the holders of Outstanding OP Units and the Original Shares (the
"Registering Stockholders"), which the Company entered into in connection
with the issuance of such securities. The following summary does not purport
to be complete and is qualified in its entirety by reference to the
Registration Rights Agreements.
Under each Registration Rights Agreement, at any time after June 2, 1997
until the date on which all the Redemption Shares issued to the respective
Registering Stockholder have become eligible for sale pursuant to Rule 144(k)
promulgated under the Securities Act (or, in the case of Redemption Shares
issued to holders of Outstanding OP Units issued in connection with the
Formation Transactions, the earlier of (i) such date and (ii) the tenth
anniversary of the closing of the IPO (i.e., June 2, 2005)), such Registering
Stockholder may request that the Company cause to be filed a "shelf
registration statement" (a "Shelf Registration") covering the Redemption
Shares; provided, however, that such Registering Stockholder may not make
-------- -------
such a request with respect to Redemption Shares (A) disposed of under an
effective Shelf Registration relating thereto, (B) sold pursuant to Rule 144
under the Securities Act or (C) eligible for sale pursuant to Rule 144 under
the Securities Act. Each Registration Rights Agreement requires the Company
to use reasonable efforts to keep such Shelf Registration effective until the
earliest of (a) the date on which the respective Registering Stockholder no
longer holds any Redemption Shares registered under such Shelf Registration,
(b) the date on which the Redemption Shares may be sold by such Registering
Stockholder pursuant to Rule 144(k) promulgated under the Securities Act or
(c) the date that is six months from the effective date of such Shelf
Registration. As long as the Registration Statement of which this Prospectus
is a part remains effective, the Redemption Shares held by the respective
Registering Stockholder when issued by the Company pursuant to this
Prospectus will no longer be entitled to the benefits of the applicable
Registration Rights Agreement.
Pursuant to each Registration Rights Agreement, the Company has agreed
to pay all expenses incurred in the registration of the Redemption Shares
(other than underwriting discounts, commissions and transfer taxes
thereunder). The Company also has agreed to indemnify the respective
Registering Stockholder under each Registration Rights Agreement and its
officers, directors and other affiliated persons and any person who controls
the respective Registering Stockholder against any and all losses, claims,
damages and expenses arising under the securities laws in connection with the
Registration Statement or this Prospectus, subject to certain limitations.
In addition, each Registering Stockholder has agreed to indemnify the Company
and its Directors, officers and any person who controls the Company against
all losses, claims, damages and expenses arising under the securities laws
insofar as such loss, claim, damage or expense relates to written information
furnished to the Company by such Registering Stockholder for use in this
Prospectus or an amendment or supplement hereto or in the Registration
Statement of which this Prospectus is a part or the failure by such
Registering Stockholder to deliver or cause to be delivered this Prospectus
or any amendment or supplement hereto to any purchaser from such Registering
Stockholder of shares covered by the Registration Statement.
SELLING STOCKHOLDERS
The Selling Stockholders are comprised of (i) the holders of Original
Shares issued in connection with the Formation Transactions and (ii) those
persons who receive Redemption Shares upon the redemption of Outstanding OP
Units and who may be deemed affiliates of the Company. Resales of Redemption
Shares issued pursuant to this Prospectus by persons who are not affiliates
of the Company will not be restricted under the Securities Act. Holders of
Outstanding OP Units who are not affiliates of the Company are therefore not
included herein as Selling Stockholders.
The following table provides the name of each Selling Stockholder, the
number of Common Shares owned by each Selling Stockholder (including the
number of Redemption Shares which may be acquired by each Selling Stockholder
upon redemption of Outstanding OP Units and the number of Original Shares, if
any, owned by each Selling Stockholder).
The Company has been informed that none of the Selling Stockholders has
the current intention to redeem any Outstanding OP Units or to sell any
Registered Shares.
NUMBER OF SHARES BENEFICIALLY
NAME OWNED AND OFFERED HEREBY
Donald J. Rechler 393,826/(1)/
Roger M. Rechler 388,576/(1)/
Scott H. Rechler 210,352/(2)/
Mitchell D. Rechler 230,576/(3)/
Gregg A. Rechler 210,352/(2)/
Mark V. Rechler 212,352/(2)/
The Glenn Michael Rechler Trust 32,672/(4)/
The Todd Rechler Trust 32,672/(4)/
Melville Executive Center, Inc. 53,356
Nassau West Executive Center, Inc. 16,494
Expressway Executive Center, Inc. 16,494
Hauppauge Executive Center, Inc. 20,120
Atrium Executive Center, Inc. 16,494
Vanderbilt Industrial Park, Inc. 78,524
Wildoro Associates 354,418
The Scott Rechler Trust 18,672
The Mitchell Dean Rechler Trust 18,672
The Mark Victor Rechler Trust 18,672
The Gregg Rechler Trust 18,672
HMCC Associates 937,792
Reckom, Inc. 10,662
Reckson Associates 1,239,926
Vanderbilt Generation, L.P. 208,294
J. Michael Maturo 40,988
Tarrytown Corporate Center 15,600
Tarrytown Corporate Center IV, L.P. 23,598
Tarrytown Corporate Center II 219,840
Colonel Realties 231,998
Church Street Associates 26,978
Halpern Enterprises, Inc. 25,900
Halpern Building Corporation 66,596
JAH Realties, L.P. 59,922
F.D. Rich III 8,000
Gresco Partners 3,142
Glenn Michael Rechler 24,000
Todd Rechler 24,000
Jon L. Halpern 2,000
Total $5,511,202
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/(1)/ Includes 348,000 Original Shares.
/(2)/ Includes 16,000 Original Shares.
/(3)/ Includes 28,000 Original Shares.
/(4)/ Includes 14,000 Original Shares.
DESCRIPTION OF COMMON STOCK
GENERAL
The Company's Articles of Amendment and Restatement (the "Articles of
Incorporation") provide that the Company may issue up to 100 million shares
of Common Stock, $.01 par value per share. Each outstanding share of Common
Stock will entitle the holder to one vote on all matters presented to
stockholders for a vote and cumulative voting is not permitted. Holders of
the Common Stock do not have preemptive rights. At June 6, 1997, there were
34,302,279 shares of Common Stock outstanding.
All shares of Common Stock offered hereby have been duly authorized, and
will be fully paid and nonassessable. Subject to the preferential rights of
any other shares or series of stock and to the provisions of the Articles of
Incorporation regarding Excess Stock (as defined under "Restrictions on
Ownership of Capital Stock"), holders of shares of Common Stock are entitled
to receive dividends on such stock if, as and when authorized and declared by
the Board of Directors of the Company out of assets legally available
therefor and to share ratably in the assets of the Company legally available
for distribution to its stockholders in the event of its liquidation,
dissolution or winding up after payment of or adequate provision for all
known debts and liabilities of the Company.
Subject to the provisions of the Articles of Incorporation regarding
Excess Stock, each outstanding share of Common Stock entitles the holder to
one vote on all matters submitted to a vote of stockholders, including the
election of directors, and, except as provided with respect to any other
class or series of stock, the holders of such shares will possess the
exclusive voting power. There is no cumulative voting in the election of
directors, which means that the holders of a majority of the outstanding
shares of Common Stock can elect all of the directors then standing for
election and the holders of the remaining shares will not be able to elect
any directors.
Holders of shares of Common Stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any securities of the Company. Subject to the
provisions of the Articles of Incorporation regarding Excess Stock, shares of
Common Stock will have equal dividend, liquidation and other rights.
CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION
Under the Maryland General Corporation Law, as amended (the "MGCL"), a
Maryland corporation generally cannot dissolve, amend its charter, merge,
sell all or substantially all of its assets, engage in a share exchange or
engage in similar transactions outside the ordinary course of business unless
approved by the affirmative vote of stockholders holding at least two-thirds
of the shares entitled to vote on the matter unless a lesser percentage (but
not less than a majority of all of the votes entitled to be cast on the
matter) is set forth in the corporation's charter. The Articles of
Incorporation do not provide for a lesser percentage in such situations. In
addition, the Operating Partnership Agreement provides that for the five-year
period following the completion of the IPO (i.e. through June 2, 2000), the
Operating Partnership may not sell, transfer or otherwise dispose of all or
substantially all of its assets or engage in any other similar transaction
(regardless of the form of such transaction) without the consent of the
holders of 85% of all outstanding Units.
The Articles of Incorporation authorize the Board of Directors to
reclassify any unissued shares of Common Stock into other classes or series
of classes of stock and to establish the number of shares in each class or
series and to set the preferences, conversion and other rights, voting
powers, restrictions, limitations and restrictions on ownership, limitations
as to dividends or other distributions, qualifications and terms or
conditions of redemption for each such class or series.
The Company's Board of Directors is divided into three classes of
directors, each class constituting approximately one-third of the total
number of directors, with the classes serving staggered terms. At each
annual meeting of stockholders, the class of directors to be elected at such
meeting will be elected for a three-year term and the directors in the other
two classes will continue in office. The Company believes that classified
directors will help to assure the continuity and stability of the Board of
Directors and the Company's business strategies and policies as determined by
the Board. The use of a staggered board may render more difficult a change
in control of the Company or removal of incumbent management.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding Common Stock may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code) during the
last half of a taxable year and the Common Stock must be beneficially owned
by 100 or more persons during at least 335 days of a taxable year of 12
months (or during a proportionate part of a shorter taxable year). To
satisfy the above ownership requirements and certain other requirements for
qualification as a REIT, the Board of Directors has adopted, and the
stockholders prior to the IPO approved, a provision in the Articles of
Incorporation restricting the ownership or acquisition of shares of Common
Stock. See "Restrictions on Ownership of Capital Stock."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
EXCESS STOCK
The Articles of Incorporation provide that the Company may issue up to
75 million shares of excess stock, par value $.01 per share ("Excess Stock").
For a description of Excess Stock, see "--Restrictions on Ownership" below.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year (other than
the first year) (the "Five or Fewer Requirement"), and such shares of capital
stock must be beneficially owned by 100 or more persons during at least 335
days of a taxable year of 12 months (other than the first year) or during a
proportionate part of a shorter taxable year. Pursuant to the Code, Common
Stock held by certain types of entities, such as pension trusts qualifying
under Section 401(a) of the Code, United States investment companies
registered under the Investment Company Act of 1940, partnerships, trusts and
corporations, will be attributed to the beneficial owners of such entities
for purposes of the Five or Fewer Requirement (i.e., the beneficial owners of
such entities will be counted as shareholders of the Company). In order to
protect the Company against the risk of losing its status as a REIT due to a
concentration of ownership among its stockholders, the Articles of
Incorporation, subject to certain exceptions, provide that no stockholder may
own, or be deemed to own by virtue of the attribution provisions of the Code,
more than 9.0% (the "Ownership Limit") of the aggregate number or value of
the Company's outstanding shares of Common Stock. In the event the Company
issues Preferred Stock, it may, in the Designating Amendment, determine a
limit on the ownership of such stock. Any direct or indirect ownership of
shares of stock in excess of the Ownership Limit or that would result in the
disqualification of the Company as a REIT, including any transfer that
results in shares of capital stock being owned by fewer than 100 persons or
results in the Company being "closely held" within the meaning of Section
856(h) of the Code, shall be null and void, and the intended transferee will
acquire no rights to the shares of capital stock. The foregoing restrictions
on transferability and ownership will not apply if the Board of Directors
determines that it is no longer in the best interests of the Company to
attempt to qualify, or to continue to qualify, as a REIT. The Board of
Directors may, in its sole discretion, waive the Ownership Limit if evidence
satisfactory to the Board of Directors and the Company's tax counsel is
presented that the changes in ownership will not then or in the future
jeopardize the Company's REIT status and the Board of Directors otherwise
decides that such action is in the best interest of the Company.
Shares of capital stock owned, or deemed to be owned, or transferred to
a stockholder in excess of the Ownership Limit will automatically be
converted into shares of Excess Stock that will be transferred, by operation
of law, to the trustee of a trust for the exclusive benefit of one or more
charitable organizations described in Section 170(b)(1)(A) and 170(c) of the
Code (the "Charitable Beneficiary"). The trustee of the trust will be deemed
to own the Excess Stock for the benefit of the Charitable Beneficiary on the
date of the violative transfer to the original transferee-stockholder. Any
dividend or distribution paid to the original transferee-stockholder of
Excess Stock prior to the discovery by the Company that capital stock has
been transferred in violation of the provisions of the Company's Articles of
Incorporation shall be repaid to the trustee upon demand. Any dividend or
distribution authorized and declared but unpaid shall be rescinded as void ab
initio with respect to the original transferee-stockholder and shall instead
be paid to the trustee of the trust for the benefit of the Charitable
Beneficiary. Any vote cast by an original transferee-stockholder of shares
of capital stock constituting Excess Stock prior to the discovery by the
Company that shares of capital stock have been transferred in violation of
the provisions of the Company's Articles of Incorporation shall be rescinded
as void ab initio. While the Excess Stock is held in trust, the original
transferee-stockholder will be deemed to have given an irrevocable proxy to
the trustee to vote the capital stock for the benefit of the Charitable
Beneficiary. The trustee of the trust may transfer the interest in the trust
representing the Excess Stock to any person whose ownership of the shares of
capital stock converted into such Excess Stock would be permitted under the
Ownership Limit. If such transfer is made, the interest of the Charitable
Beneficiary shall terminate and the proceeds of the sale shall be payable to
the original transferee-stockholder and to the Charitable Beneficiary as
described herein. The original transferee-stockholder shall receive the
lesser of (i) the price paid by the original transferee-stockholder for the
shares of capital stock that were converted into Excess Stock or, if the
original transferee-stockholder did not give value for such shares (e.g., the
stock was received through a gift, devise or other transaction), the average
closing price for the class of shares from which such shares of capital stock
were converted for the ten trading days immediately preceding such sale or
gift, and (ii) the price received by the trustee from the sale or other
disposition of the Excess Stock held in trust. The trustee may reduce the
amount payable to the original transferee-stockholder by the amount of
dividends and distributions relating to the shares of Excess Stock which have
been paid to the original transferee-stockholder and are owed by the original
transferee-stockholder to the trustee. Any proceeds in excess of the amount
payable to the original transferee-stockholder shall be paid by the trustee
to the Charitable Beneficiary. Any liquidation distributions relating to
Excess Stock shall be distributed in the same manner as proceeds of a sale of
Excess Stock. If the foregoing transfer restrictions are determined to be
void or invalid by virtue of any legal decision, statute, rule or
regulations, then the original transferee-stockholder of any shares of Excess
Stock may be deemed, at the option of the Company, to have acted as an agent
on behalf of the Company in acquiring the shares of Excess Stock and to hold
the shares of Excess Stock on behalf of the Company.
In addition, the Company will have the right, for a period of 90 days
during the time any shares of Excess Stock are held in trust, to purchase all
or any portion of the shares of Excess Stock at the lesser of (i) the price
initially paid for such shares by the original transferee-stockholder, or if
the original transferee-stockholder did not give value for such shares (e.g.,
the shares were received through a gift, devise or other transaction), the
average closing price for the class of stock from which such shares of Excess
Stock were converted for the ten trading days immediately preceding such sale
or gift, and (ii) the average closing price for the class of stock from which
such shares of Excess Stock were converted for the ten trading days
immediately preceding the date the Company elects to purchase such shares.
The Company may reduce the amount payable to the original transferee-
stockholder by the amount of dividends and distributions relating to the
shares of Excess Stock which have been paid to the original transferee-
stockholder and are owned by the original transferee-stockholder to the
trustee. The Company may pay the amount of such reductions to the trustee
for the benefit of the Charitable Beneficiary. The 90-day period begins on
the later date of which notice is received of the violative transfer if the
original transferee-stockholder gives notice to the Company of the transfer
or, if no such notice is given, the date the Board of Directors determines
that a violative transfer has been made.
These restrictions will not preclude settlement of transactions through
the New York Stock Exchange.
All certificates representing shares of capital stock will bear a legend
referring to the restrictions described above.
Each stockholder shall upon demand be required to disclose to the
Company in writing any information with respect to the direct, indirect and
constructive ownership of capital stock of the Company as the Board of
Directors deems necessary to comply with the provisions of the Code
applicable to REITs, to comply with the requirements of any taxing authority
or governmental agency or to determine any such compliance.
The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control of the Company unless the Board of Directors
determines that maintenance of REIT status is no longer in the best interest
of the Company.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to
continue to operate, in such a manner as to qualify as a REIT under the Code,
but no assurance can be given that it will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions
that currently govern the federal income tax treatment of the Company and its
stockholders. For the particular provisions that govern the federal income
tax treatment of the Company and its stockholders, reference is made to
Sections 856 through 860 of the Code and the regulations thereunder. The
following summary is qualified in its entirety by such reference.
Under the Code, if certain requirements are met in a taxable year, a
REIT generally will not be subject to federal income tax with respect to
income that it distributes to its stockholders. If the Company fails to
qualify during any taxable year as a REIT, unless certain relief provisions
are available, it will be subject to tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates,
which could have a material adverse effect upon its stockholders.
In any year in which the Company qualifies to be taxed as a REIT,
distributions made to its stockholders out of current or accumulated earnings
and profits will be taxed to stockholders as ordinary income except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term capital gain income to the stockholders.
To the extent that distributions exceed current or accumulated earnings and
profits, they will constitute a return of capital, rather than dividend or
capital gain income, and will reduce the basis for the stockholder's Common
Stock or Preferred Stock, with respect to which the distribution is paid or,
to the extent that they exceed such basis, will be taxed in the same manner
as gain from the sale of that Common Stock or Preferred Stock.
Unitholders are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the Redemption Shares registered
hereby and with respect to the tax consequences arising under federal law and
the laws of any state, municipality or other taxing jurisdiction, including
tax consequences resulting from such Unitholder's own tax characteristics.
In particular, foreign investors should consult their own tax advisors
concerning the tax consequences of an investment in the Company, including
the possibility of United States income tax withholding on Company
distributions.
PLAN OF DISTRIBUTION
This Prospectus relates to (i) the possible issuance by the Company of
up to 6,974,810 Redemption Shares of the Company if and to the extent that
the Company elects to issue such Redemption Shares to holders of up to
6,974,810 Outstanding OP Units, upon the tender of such Outstanding OP Units
for redemption; (ii) the offer and sale from time to time of up to 800,000
Original Shares by the holders thereof; and (iii) the offer and sale from
time to time of any Redemption Shares that may be issued to and held by
persons who may be affiliates of the Company. The Original Shares and the
Outstanding OP Units were issued in connection with the Initial Transactions
or subsequent transactions involving property transfers to the Operating
Partnership and the hiring of two officers of the Company. The Company has
registered the issuance of the Redemption Shares and the offer and sale of
Redemption Shares and Original Shares by the Selling Stockholders to permit
the holders thereof to sell such shares without restriction in the open
market or otherwise, but the registration of the Registered Shares does not
necessarily mean that any of the Registered Shares will be issued by the
Company (with respect to the Redemption Shares) or be offered or sold by the
Selling Stockholders.
The Company will not receive any proceeds from the offering by the
Selling Stockholders.
The distribution of Registered Shares may be affected from time to time
in one or more underwritten transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Any such
underwritten offering may be on a "best efforts" or a "firm commitment"
basis. In connection with any such underwritten offering, underwriters or
agents may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or from purchasers of Registered
Shares for whom they may act as agents. Underwriters may sell Registered
Shares to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents.
Under agreements that may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Registered Shares
may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such underwriters, dealers or
agents may be required to make in respect thereof.
The Selling Stockholder and any underwriters, dealers or agents that
participate in the distribution of Registered Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on
the sale of Registered Shares by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
At a time a particular offer of Registered Shares is made, a Prospectus
Supplement, if required, will be distributed that will set forth the name and
names of any underwriters, dealers or agents and any discounts, commissions
and other terms constituting compensation from the Selling Stockholders and
any other required information.
The sale of the Registered Shares by the Selling Stockholder may also be
affected from time to time by selling Registered Shares directly to
purchasers or to or through broker-dealers. In connection with any such
sale, any such broker-dealer may act as agent for the Selling Stockholder or
may purchase from the Selling Stockholder all or a portion of the Registered
Shares as principal, and may be made pursuant to any of the methods described
below. Such sales may be made on the NYSE or other exchanges on which the
Common Stock is then traded, in the over-the-counter market, in negotiated
transactions or otherwise at prices and at terms then prevailing or at prices
related to the then-current market prices or at prices otherwise negotiated.
The Registered Shares may also be sold in one or more of the following
transactions: (a) block transactions in which a broker-dealer may sell all
or a portion of such shares as agent but may position and resell all or a
portion of the block as principal to facilitate the transaction; (b)
purchases by any such broker-dealer as principal and resale by such broker-
dealer for its own account pursuant to a Prospectus Supplement; (c) a special
offering, an exchange distribution or a secondary distribution in accordance
with applicable NYSE or other stock exchange rules; (d) ordinary brokerage
transactions and transactions in which any such broker-dealer solicits
purchasers; (e) sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such shares; and
(f) sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers. In affecting sales, broker-
dealers engaged by the Selling Stockholders may arrange for other broker-
dealers to participate. Broker-dealers will receive commissions or other
compensation from the Selling Stockholder in amounts to be negotiated
immediately prior to the sale that will not exceed those customary in the
types of transactions involved. Broker-dealers may also receive compensation
from purchasers of the Registered Shares which is not expected to exceed that
customary in the types of transactions involved.
In order to comply with the securities laws of certain states, if
applicable, the Registered Shares may be sold only through registered or
licensed brokers or dealers. In addition, in certain states, the Registered
Shares may not be sold unless they have been registered or qualified for sale
in such state or an exemption from such registration or qualification
requirement is available and is complied with.
The Company may from time to time issue up to 6,974,810 Redemption
Shares upon the acquisition of an equivalent number of the Outstanding OP
Units tendered for redemption. The Company will acquire Outstanding OP Units
for Redemption Shares that the Company issues in connection with these
acquisitions. Consequently, with each redemption, the Company's interest
in the Operating Partnership will increase.
All expenses incident to the offering and sale of Registered Shares,
other than commissions, discounts and fees of underwriters, broker-dealers or
agents, shall be paid by the Company. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act. See
"Registration Rights."
LEGAL MATTERS
The legality of the Common Stock offered hereby and certain legal
matters described under "Federal Income Tax Considerations" will be passed
upon for the Company by Brown & Wood LLP, New York, New York. Brown & Wood
LLP may rely on Ballard Spahr Andrews & Ingersoll, Baltimore, Maryland, as to
certain matters of Maryland law.
EXPERTS
The consolidated balance sheet of Reckson Associates Realty Corp. as of
December 31, 1996 and December 31, 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year
ended December 31, 1996 and for the period from June 3, 1995 to December 31,
1995 and the related combined statements of operations, owners' deficit and
cash flows of the Reckson Group for the period from January 1, 1995 to June
2, 1995 and for the year ended December 31, 1994 appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996; the combined
statement of revenues and certain expenses of the Westchester Properties (as
defined therein) for the year ended December 31, 1995, appearing in the
Company's Form 8-K/A, dated March 27, 1996; the combined statement of
revenues and certain expenses of Landmark Square Properties (as defined
therein) for the year ended December 31, 1995 and combined statements of
revenues and certain expenses of Certain Option Properties (as defined
therein), for the years ended December 31, 1995, 1994 and 1993 appearing in
the Company's Form 8-K, dated October 1, 1996; and the combined statement of
revenues and certain expenses of the New Jersey Portfolio (as defined
therein) for the year ended December 31, 1996, the combined statement of
revenues and certain expenses for the Hauppauge Portfolio (as defined
therein) for the year ended December 31, 1996 and the statement of revenues
and certain expenses of the Uniondale Office Property (as defined therein),
for the year ended December 31, 1996, appearing in the Company's Form 8-K,
dated February 18, 1997, have in each case been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon, included therein
and incorporated herein by reference. Such consolidated and combined
financial statements are incorporated herein by reference in reliance upon
such reports given upon the authority of such firm as experts in accounting
and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated fees and expenses in connection
with the issuance and distribution of the Registrant's securities being
registered hereby, other than underwriting discounts and commissions, all of
which will be borne by the Registrant:
Securities and Exchange Commission registration fee . . . . . . $51,685
Printing and duplicating expenses . . . . . . . . . . . . . . . . 2,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . 20,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . 2,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . 4,315
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Maryland General Corporation Law, as amended from time to time (the
"MGCL"), permits a Maryland corporation to include in its charter a provision
limiting the liability of its directors and officers to the corporation and
its stockholders for money damages except for liability resulting from (a)
actual receipt of an improper benefit or profit in money, property or
services or (b) active and deliberate dishonesty established by a final
judgment as being material to the cause of action. The Amended and Restated
Articles of Incorporation contain such a provision which eliminates such
liability to the maximum extent permitted by Maryland law.
The Amended and Restated Articles of Incorporation authorize the
Company, to the maximum extent permitted by Maryland law, to obligate itself
to indemnify and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any present or former director or officer
or (b) any individual who, while a director of the Company and at the request
of the Company, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. The Bylaws of the Company
obligate it, to the maximum extent permitted by Maryland law, to indemnify
and to pay or reimburse reasonable expenses in advance of final disposition
of a proceeding to (a) any present or former director or officer who is made
a party to the proceeding by reason of his service in that capacity or
(b) any individual who, while a director of the Company and at the request of
the Company, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise and who is made a party to
the proceeding by reason of his service in that capacity. The Amended and
Restated Articles of Incorporation and Bylaws also permit the Company to
indemnify and advance expenses to any person who served a predecessor of the
Company in any of the capacities described above and to any employee or agent
of the Company or a predecessor of the Company.
MGCL requires a corporation (unless its charter provides otherwise,
which the Amended and Restated Articles of Incorporation do not) to indemnify
a director or officer who has been successful, on the merits or otherwise, in
the defense of any proceeding to which he is made a party by reason of his
service in that capacity. MGCL permits a corporation to indemnify its
present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by
them in connection with any proceeding to which they may be made a party by
reason of their service in those or other capacities unless it is established
that (a) the act or omission of the director or officer was material to the
matter giving rise to the proceeding and (i) was committed in bad faith or
(ii) was the result of active and deliberate dishonesty, (b) the director or
officer actually received an improper personal benefit in money, property or
services or (c) in the case of any criminal proceeding, the director or
officer had reasonable cause to believe that the act or omission was
unlawful. However, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation. In addition, the
MGCL requires the Company, as a condition to advancing expenses, to obtain
(a) a written affirmation by the director or officer of his good faith belief
that he has met the standard of conduct necessary for indemnification by the
Company as authorized by the Bylaws and (b) a written statement by or on his
behalf to repay the amount paid or reimbursed by the Company if it shall
ultimately be determined that the standard of conduct was not met.
The Company has entered into indemnification agreements with each of its
executive officers and directors. The indemnification agreements require,
among other matters, that the Company indemnify its executive officers and
directors to the fullest extent permitted by law and advance to the executive
officers and directors all related expenses, subject to reimbursement if it
is subsequently determined that indemnification is not permitted. Under
these agreements, the Company must also indemnify and advance all expenses
incurred by executive officers and directors seeking to enforce their rights
under the indemnification agreements and may cover executive officers and
directors under the Company's directors' and officers' liability insurance.
Although indemnification agreements offer substantially the same scope of
coverage afforded the Bylaws, they provide greater assurance to directors and
executive officers that indemnification will be available, because, as
contracts, they cannot be modified unilaterally in the future by the Board of
Directors or the stockholders to eliminate the rights they provide.
ITEM 16. EXHIBITS.
4.1 -- Form of Common Stock Certificate.(1)
5 -- Opinion of Brown & Wood LLP as to the legality of the Common
Stock being registered.
8.1 -- Opinion of Brown & Wood LLP as to tax matters.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5).
23.2 -- Consent of Ernst & Young LLP.
24 -- Power of attorney (included on signature page of this
Registration Statement).
_______________
(1) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding ) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Reckson
Associates Realty Corp. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Huntington, State
of New York, on June 11, 1997.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Donald J. Rechler
------------------------------------
Donald J. Rechler
Chairman
KNOWN ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Reckson Associates Realty Corp. hereby severally constitute
Scott H. Rechler, Mitchell D. Rechler and J. Michael Maturo, and each of them
singly, our true and lawful attorneys with full power to them, and each of
them singly, to sign for us and in our names in the capacities indicated
below, the Registration Statement filed herewith and any and all amendments
to said Registration Statement, and generally to do all such things in our
names and in our capacities as officers and directors to enable Reckson
Associates Realty Corp. to comply with the provisions of the Securities Act
of 1933, and all requirements of the Securities and Exchange Commission,
hereby ratifying and confirming our signatures as they may be signed by our
said attorneys, or any of them, to said Registration Statement and any all
amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
Chairman of the Board, Chief Executive
/s/ Donald J. Rechler Officer and Director (Principal Executive June 11, 1997
Donald J. Rechler Officer)
/s/ Scott H. Rechler President, Chief Operating Officer and June 11, 1997
Scott H. Rechler Director
Executive Vice President, Treasurer and
/s/ J. Michael Maturo Chief Financial Officer (Principal June 11, 1997
J. Michael Maturo Financial Officer and Principal
Accounting Officer)
/s/ Roger M. Rechler Vice-Chairman of the Board and Director June 11, 1997
Roger M. Rechler
/s/ Mitchell D. Rechler Executive Vice President and Director June 11, 1997
Mitchell D. Rechler
/s/ Harvey R. Blau Director June 11, 1997
Harvey R. Blau
/s/ Leonard Feinstein Director June 11, 1997
Leonard Feinstein
/s/ Herve A. Kevenides Director June 11, 1997
Herve A. Kevenides
/s/ John V.N. Klein Director June 11, 1997
John V.N. Klein
/s/ Conrad D. Stephenson Director June 11, 1997
Conrad D. Stephenson
</TABLE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
EXHIBITS DESCRIPTION PAGE
4.1 -- Form of Common Stock Certificate.(1)
5 -- Opinion of Brown & Wood LLP as to the legality of the
Common Stock being registered.
8.1 -- Opinion of Brown & Wood LLP as to tax matters.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5).
23.2 -- Consent of Ernst & Young LLP.
24 -- Power of attorney (included on signature page of this
Registration Statement).
</TABLE>
_________________
(1) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
Exhibit 5
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
TELEPHONE: 212-839-5300
FACSIMILE: 212-839-5599
June 11, 1997
Reckson Associates Realty Corp.
225 Broadhollow Road
Melville, New York 11747
Ladies and Gentlemen:
This opinion is furnished in connection with the registration statement
on Form S-3 (the "Registration Statement"), pursuant to the Securities Act of
1933, as amended (the "Securities Act"), relating to 7,774,810 shares of
common stock, par value $.01 per share ("Common Stock"), of Reckson
Associates Realty Corp., a Maryland corporation (the "Company"), authorized
for issuance under the Company's Amended and Restated Articles of
Incorporation (the "Articles of Incorporation"). The Common Stock registered
pursuant to the Registration Statement relates to (i) the possible issuance
by the Company of up to 6,974,810 shares of Common Stock (the "Redemption
Shares"), if and to the extent that the Company elects to issue such
Redemption Shares to holders of limited partner interests ("OP Units") of
Reckson Operating Partnership, L.P. (the "Operating Partnership"),
upon the tender of such Outstanding OP Units for redemption pursuant to
Section 8.6 of the Partnership Agreement (defined below); (ii) the offer and
sale from time to time of up to 800,000 shares of Common Stock (the "Original
Shares") by the holders thereof; and (iii) the offer and sale from time to
time of any Redemption Shares that may be issued to and held by persons who
may be affiliates of the Company.
In connection with rendering this opinion, we have examined the Articles
of Incorporation and the Bylaws, as amended, of the Company; the Amended
and Restated Agreement of Limited Partnership of the Operating Partnership (the
"Partnership Agreement"); such records of the corporate proceedings of the
Company as we deemed appropriate; the Registration Statement, and such other
certificates, receipts, records and documents as we considered necessary for
the purposes of this opinion. In our examination, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as certified, photostatic or
facsimile copies, the authenticity of the originals of such copies and
the authenticity of telephonic confirmations of public officials and
others. As to facts material to our opinion, we have relied upon
certificates or telephonic confirmations of public officials and certificates,
documents, statements and other information of the Company or representatives
or officers thereof.
We are attorneys admitted to practice in the State of New York. We
express no opinion concerning the laws of any jurisdictions other than the
laws of the United States of America, the State of Maryland and the State of
New York.
Based upon the foregoing, we are of the opinion that:
(1) When the Registration Statement relating to the Redemption
Shares has become effective under the Securities Act and the Redemption
Shares have been duly issued and exchanged for Units tendered to the
Operating Partnership for redemption in accordance with the provisions of the
Partnership Agreement as described in the Registration Statement, such
Redemption Shares will be validly issued, fully paid and nonassessable.
(2) The Original Shares have been validly issued, and are fully
paid and nonassessable.
The foregoing assumes that all requisite steps will be taken to comply
with the requirements of the Securities Act and applicable requirements of
state laws regulating the offer and sale of securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ Brown & Wood LLP
Exhibit 8.1
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
TELEPHONE: 212-839-5300
FACSIMILE: 212-839-5599
June 11, 1997
Reckson Associates Realty Corp.
225 Broadhollow Road
Melville, New York 11747
Re: Certain Federal Income Tax Matters
----------------------------------
Ladies and Gentlemen:
You have requested our opinion concerning certain federal income tax
matters with respect to Reckson Associates Realty Corp. (the "Company") in
connection with the Form S-3 Registration Statement of the Company filed by
the Company with the Securities and Exchange Commission on or about June 11,
1997 (the "Registration Statement").
This opinion is based, in part, upon various assumptions and
representations, including representations made by the Company as to factual
matters set forth in the Registration Statement, in registration statements
on Form S-11 previously filed by the Company with the Securities and Exchange
Commission and in a letter delivered to us by the Company today. This
opinion is also based upon the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury Regulations promulgated thereunder and existing
administrative and judicial interpretations thereof, all as they exist at the
date of this letter. All of the foregoing statutes, regulations and
interpretations are subject to change, in some circumstances with retroactive
effect. Any changes to the foregoing authorities might result in
modifications of our opinions contained herein.
Based on the foregoing, we are of the opinion that, commencing with the
Company's taxable year ended December 31, 1995, the Company has been
organized in conformity with the requirements for qualification as a real
estate investment trust (a "REIT") under the Code, and the proposed method of
operation of the Company will enable the Company to meet the requirements for
qualification and taxation as a REIT.
We express no opinion with respect to the transactions described herein
and in the Registration Statement other than those expressly set forth
herein. Furthermore, the Company's qualification as a REIT will depend upon
the Company's meeting, in its actual operations, the applicable asset
composition, source of income, shareholder diversification, distribution,
recordkeeping and other requirements of the Code and Treasury Regulations
necessary for a corporation to qualify as a REIT. We will not review these
operations, and no assurance can be given that the actual operations of the
Company and its affiliates will meet these requirements or the
representations made to us with respect thereto.
This opinion is furnished to you solely for your use in connection with
the Registration Statement. We hereby consent to the filing of this opinion
as Exhibit 8.1 to the Registration Statement and to the use of our name in
connection with the material discussed therein under the caption "Federal
Income Tax Considerations."
Very truly yours,
/s/ Brown & Wood LLP
EXHIBIT 23.2
Consent of Independent Accountants
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of Reckson
Associates Realty Corp. (the "Company") for the registration of 7,774,810
shares of common stock and to the incorporation by reference therein of our
report dated February 25, 1997, except for Note 14, as to which the date is
March 12, 1997, with respect to the consolidated financial statements and
schedule of the Company included in its Annual Report (Form 10-K) for year
ended December 31, 1996 and the period June 3, 1995 to December 31, 1995 and
the combined financial statements of the Reckson Group for the period
January 1, 1995 to June 2, 1995 and for the year ended December 31, 1994,
filed with the Securities and Exchange Commission. We also consent to the
incorporation by reference therein of: (i) our report dated February 23,
1996, with respect to the combined statement of revenues and certain expenses
of the Westchester Properties for the year ended December 31, 1995, included
in the Company's Form 8-K/A filed with the Securities and Exchange Commission
on March 27, 1996, (ii) our report dated September 20, 1996, with respect to
the combined statement of revenues and certain expenses of the Landmark
Square Properties for the year ended December 31, 1995, included in the
company's Form 8-K filed with the Securities and Exchange Commission on
October 1, 1996, (iii) our report dated September 16, 1996, with respect to
the combined statements of revenues and certain expenses of the Certain
Option Properties for the years ended December 31, 1995, 1994 and 1993,
included in the Company's Form 8-K filed with the Securities and Exchange
Commission on October 1, 1996, (iv) our report dated February 4, 1997, with
respect to the combined statements of revenues and certain expenses of the
New Jersey Portfolio for the year ended December 31, 1996, included in the
Company's Form 8-K filed with the Securities and Exchange Commission on
February 19, 1997, (v) our report dated January 16, 1997, with respect to the
statement of revenues and certain expenses of the Uniondale Office Property
for the year ended December 31, 1996, included in the Company's Form 8-K
filed with the Securities and Exchange Commission on February 19, 1997,
(vi) our report dated January 17, 1997, with respect to the combined
statement of revenues and certain expenses of the Hauppauge Portfolio for the
year ended December 31, 1996, included in the Company's Form 8-K filed with
the Securities and Exchange Commission on February 19, 1997.
/s/ Ernst & Young LLP
New York, New York
June 11, 1997
