UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event reported): June 12, 1997
Commission file number: 1-13762
RECKSON ASSOCIATES REALTY CORP.
(Exact name of registrant as specified in its charter)
Maryland 11-3233650
(State other jurisdiction of incorporation (IRS. Employer
of organization) Identification Number)
225 Broadhollow Road, Melville, NY 11747
(Address of principal executive office) (zip code)
(516) 694-6900
(Registrant's telephone number including area code)
ITEM 2. ACQUISITON OR DISPOSITION OF ASSETS
On May 1, 1997, the Company acquired a 308,000 square foot, two building,
class A office complex for $51.5 million. The buildings are presently 100%
leased to AT & T and are located in Short Hills, New Jersey. The asset
acquisition was financed with proceeds from the Company's March 1997 common
stock offering and through a draw on its credit facility.
On April 23, 1997, the Company acquired a 452,000 square foot office and
research and development complex located in Shelton, Connecticut for
approximately $27 million. The complex, which is currently 100% occupied by
Timex and Philips Medical Systems under long term leases, is comprised of a
three story office building and 320,000 square feet of back office and flex
space. The asset acquisition was financed with proceeds from the Company's
March 1997 common stock offering.
ITEM 7. FINANCIAL STATEMENTS
Financial statements of properties acquired and pro forma financial
information.
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
ITEM 7
FINANCIAL STATEMENTS OF PROPERITIES ACQUIRED
AND PRO FORMA FINANCIAL INFORMATION
TABLE OF CONTENTS
DESCRIPTION
Pro Forma Condensed Combining Balance Sheet as of March 31,
1997 .......................................................
Pro Forma Condensed Combining Statement of Operations for
the Three Months ended March 31, 1997.......................
Pro Forma Condensed Combining Statement of Operations for
the Year ended December 31, 1996 ...........................
Notes to Pro Forma Financial Statements ....................
Statement of Revenue and Certain Expenses of Short Hills
Office Center for the Three Months Ended March 31, 1997 and
for the Year Ended December 31, 1996 .......................
Notes to Statement of Revenue and Certain Expenses of Short
Hills Office Center ........................................
Statement of Revenue and Certain Expenses of 710 Bridgeport
Avenue for the Three Months Ended March 31, 1997 and for the
Year Ended December 31, 1996 ...............................
Notes to Statement of Revenue and Certain Expense of 710
Bridgeport Avenue ..........................................
<PAGE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Balance Sheet
As of March 31, 1997
(Unaudited)
The following unaudited pro forma condensed combining balance sheet is presented
as if the The Company had acquired (i) Short Hills Office Center and (ii) 710
Bridgeport Avenue on March 31, 1997.
This pro forma condensed combining balance sheet should be read in conjunction
with the pro forma condensed combining statement of operations of the Company
and the historical financial statements and notes thereto of the Company as
filed on Form 10-K for the year ended December 31, 1996 and on Form 10-Q for
the three months ended March 31, 1997.
The pro forma condensed combining balance sheet is unaudited and is not
necessarily indicative of what the actual financial position would have been
had the Company acquired the Short Hills Office Center and 710 Bridgeport
Avenue on March 31, 1997, nor does it purport to represent the future
financial position of the Company.
<PAGE>
<TABLE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Balance Sheet
As of March 31, 1997
(Unaudited)
<CAPTION>
710 March 31,
Short Hills Bridgeport 1997
Historical(a) Acquisition(b) Acquisition(c) Pro Forma
_________ ________ _________ _________
(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
Real Estate, net $ 469,420 $ 51,500 $ 27,000 $ 547,920
Cash and cash equivalents 111,822 (30,000) (27,000) 54,822
Tenants receivables 2,434 - - 2,434
Affiliate receivables 4,737 - - 4,737
Deferred rent receivable 12,708 - - 12,708
Investment in mortgage note receivable 69,435 - - 69,435
Contract and land deposits pre-acquisition
costs, 11,540 - - 11,540
Prepaid expenses and other assets 7,836 - - 7,836
Investments in joint ventures 6,336 - - 6,336
Deferred lease costs and loan costs, net 12,451 - - 12,451
_________ _________ _________ _________
Total Assets $ 708,719 $ 21,500 $ - $ 730,219
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Mortgage notes payable $ 165,852 $ - $ - $ 165,852
Credit Facility 55,000 21,500 - 76,500
Accrued expenses and other liabilities 13,723 - - 13,723
Affiliate payables 732 - - 732
Dividends and distributions payable 9,555 - - 9,555
_________ _________ _________ _________
Total Liabilities 244,862 21,500 - 266,362
_________ _________ _________ _________
Minority interest in consolidated partnership 9,419 - - 9,419
Limited partners' minority interest in
operating partnership 76,846 - - 76,846
_________ _________ _________ _________
86,265 - - 86,265
_________ _________ _________ _________
STOCKHOLDERS' EQUITY:
Common Stock 172 - - 172
Additional paid in capital 377,420 - - 377,420
_________ _________ _________ _________
Total Stockholders' Equity 377,592 - - 377,592
_________ _________ _________ _________
Total Liabilities and Stockholders'
Equity $ 708,719 $ 21,500 $ - $ 730,219
========= ========= ========= =========
<FN>
See Accompanying Notes to Pro Forma Financial Statements
</TABLE>
<PAGE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Three Months Ended March 31, 1997
(Unaudited)
The following unaudited pro forma condensed combining Statement of
Operations is presented as if (i) the Company had acquired the Short Hills
Office Center and (ii) the Company had acquired 710 Bridgeport Avenue as
of January 1, 1997 and the Company qualified as a REIT, distributed all
its taxable income and, therefore, incurred no income tax expense during
the period.
This pro forma condensed combining Statement of Operations should be read
in conjunction with the pro forma condensed combining balance sheet of
the Company and the historical financial statements and notes thereto of
the Company as filed on Form 10-Q for the three months ended March 31,
1997.
The pro forma condensed combining Statement of Operations is unaudited
and is not necessarily indicative of what the actual financial position
would have been had the Company acquired the Short Hills Office Center
and 710 Bridgeport Avenue as of January 1, 1997, nor does it purport to
represent the operations of the Company for future periods. (Amounts
below are in thousands, except per share data.)
<TABLE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Three Months Ended March 31, 1997
(Unaudited)
<CAPTION>
710 Pro March 31,
Short Hills Bridgeport Forma (g) 1997
Historical(d) Acquisition(e) Acquisition(f) Adjustments Pro Forma
_________ ________ _________ _________ _________
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Base Rents $ 26,590 $ 1,232 $ 719 $ - 28,541
Tenant escalations and reimbursements 3,245 - 212 - 3,457
Equity in earnings of real estate joint
ventures 97 - - - 97
Equity in earnings of service companies 142 - - - 142
Investment and other income 1,618 - - - 1,618
_________ _________ _________ _________ _________
Total Revenue 31,692 1,232 931 - 33,855
_________ _________ _________ _________ _________
EXPENSES
Operating expenses
Property operating expenses 5,664 6 85 - 5,755
Real estate taxes 4,564 - 73 - 4,637
Ground Rent 303 - - - 303
Marketing, general and administrative 1,980 - 62 - 2,042
_________ _________ _________ _________ _________
Total Operating Expenses 12,511 6 220 - 12,737
_________ _________ _________ _________ _________
Interest 4,736 - - 1,073 5,809
Depreciation and amortization 5,640 365 191 - 6,196
_________ _________ _________ _________ _________
Total Expenses 22,887 371 411 1,073 24,742
_________ _________ _________ _________ _________
Income before minority interests and
extraordinary item 8,805 861 520 (1,073) 9,113
Minority partners'interest in consolidated
partnership income (243) - - - (243)
_________ _________ _________ _________ _________
Income before limited partners' minority
interest in Operating Partnership income
and extraordinary items $ 8,562 $ 861 $ 520 $ (1,073) 8,870
========= ========= ========= =========
Limited partners' minority interest in
operating partnership income (1,842)(h)
Net Income $ 7,028
=========
Net Income per common share $ .27 (i)
=========
Weighted average common shares outstanding 26,569
=========
<FN>
See Accompanying Notes to Pro Forma Financial Statements
</TABLE>
<PAGE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Year Ended December 31, 1996
(Unaudited)
The following unaudited pro forma condensed combining Statement of
Operations is presented as if (i) the Company had acquired the Short Hills
Office Center and (ii) the Company had acquired 710 Bridgeport Avenue as
of January 1, 1996 and the Company qualified as a REIT, distributed all
its taxable income and, therefore, incurred no income tax expense during
the period.
This pro forma condensed combining Statement of Operations should be read
in conjunction with the pro forma condensed combining balance sheet of
the Company and the historical financial statements and notes thereto of
the Company as filed on Form 10-K for the year ended December 31, 1996.
The pro forma condensed combining Statement of Operations is unaudited
and is not necessarily indicative of what the actual financial position
would have been had the Company acquired the Short Hills Office Center
and 710 Bridgeport Avenue on January 1, 1996, nor does it purport to
represent the operations of the Company for future periods. (Amounts
below are in thousands, except per share data.)
<TABLE>
Reckson Associates Realty Corp.
Pro Forma Condensed Combining Statement of Operations
For the Year Ended December 31, 1996
(Unaudited)
<CAPTION>
710 Pro December 31,
Short Hills Bridgeport Forma (m) 1996
Historical(j) Acquisition(k) Acquisition(l) Adjustments Pro Forma
_________ ________ _________ _________ _________
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Base Rents $ 82,150 $ 4,517 $ 2 768 $ - 89,435
Tenant escalations and reimbursements 10,628 - 764 - 11,392
Equity in earnings of real estate joint
ventures 266 - - - 266
Equity in earnings of service companies 1,031 - - - 1,031
Investment and other income 2,066 - - - 2,066
_________ _________ _________ _________ _________
Total Revenue 96,141 4,517 3,532 - 104,190
_________ _________ _________ _________ _________
EXPENSES
Operating expenses
Property operating expenses 18,959 30 541 - 19,530
Real estate taxes 13,935 - 298 - 14,233
Ground Rent 1,107 - - - 1,107
Marketing, general and administrative 5,949 - 221 - 6,170
_________ _________ _________ _________ _________
Total Operating Expenses 39,950 30 1,060 - 41,040
Interest 13,331 - - 5,580 18,911
Depreciation and amortization 17,670 1,459 765 - 19,894
_________ _________ _________ _________ _________
Total Expenses 70,951 1,489 1,825 5,580 79,845
_________ _________ _________ _________ _________
Income before minority interests and
extraordinary item 25,190 3,028 1,707 (5,580) 24,345
Minority partners'interest in consolidated
partnership income (808) - - - (808)
_________ _________ _________ _________ _________
Income before limited partners' minority
interest in Operating Partnership income
and extraordinary items $ 24,382 $ 3,028 $ 1,707 $ (5,580) 23,537
========= ========= ========= =========
Limited partners' minority interest in
operating partnership income (5,743)(n)
Net Income before extraordinary item $ 17,794
=========
Net Income per common share before extraordinary item $ .89 (o)
=========
Weighted average common shares outstanding 19,928
=========
<FN>
See Accompanying Notes to Pro Forma Financial Statements
</TABLE>
<PAGE>
Reckson Associates Realty Corp.
Notes to Pro Forma Financial Statements
(Unaudited)
(in thousands, except shares and units)
Pro Forma Condensed Combining Balance Sheet
A. Reflects the Company's historical balance sheet as of March 31, 1997
(unaudited).
B. Reflects the acquisition of Short Hills Office Center with proceeds
from the March 1997 common equity offering and borrowings under the credit
facility.
C. Reflects the acquisition of 710 Bridgeport Avenue with proceeds from
the March 1997 common equity offering.
Pro Forma Statements of Operations For the Year Ended December 31, 1996 and
Three Months Ended March 31, 1997.
D. Reflects the historical operations of the Company for the three months
ended March 31, 1997.
E. Reflects the revenues and certain expenses of the Short Hills Office Center
for the three months ended March 31, 1997.
F. Reflects the revenues and certain expenses of 710 Bridgeport Avenue for the
three months ended March 31, 1997.
G. Reflects the increase in interest costs associated with additional
borrowings under the Credit Facility.
H. Represents the minority interest of the Limited Partners in the Operating
Partnership at an effective pro forma rate of approximately 20.8%.
I. Pro forma net income per share of common stock before extraordinary item is
based upon the weighted average number of shares outstanding during the three
months ended March 31, 1997 of 26,569,000. This reflects a two-for-one stock
split which was distributable on April 15, 1997.
J. Reflects the historical operations of the Company for the year ended
December 31, 1996.
K. Reflects the revenues and certain expenses of Short Hills Office Center for
the year ended December 31, 1996.
L. Reflects the revenues and certain expenses of 710 Bridgeport Avenue for the
year ended December 31, 1996.
M. Reflects the increase in interest costs associated with additional
borrowings under the Credit Facility.
N. Represents the minority interest of the Limited Partners in the Operating
Partnership at an effective pro forma rate of approximately 24.4%.
O. Pro forma net income per share of common stock before extraordinary item is
based upon the weighted average number of shares outstanding during the year
ended December 31, 1996 of 19,928,000. This reflects a two-for-one stock
split distributable on April 15, 1997.
<PAGE>
Report Independent Auditors
Board of Directors and Stockholders
Reckson Associates Realty Corp.
We have audited the statement of revenues and certain expenses of the property
("710 Bridgeport Avenue") to be acquired from 710 Bridgeport Avenue Associates
L.P., ("Bridgeport") by Reckson Associates Realty Corp., as described in Note 1,
for the year ended December 31, 1996. The financial statement is the
responsibility of 710 Bridgeport Avenue's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Reckson Associates Realty Corp.
and is not intended to be a complete presentation of 710 Bridgeport Avenue's
revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of 710 Bridgeport
Avenue as described in Note 1 for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
May 23, 1997
<PAGE>
710 Bridgeport Avenue
Statement of Revenues and Certain Expenses
(in thousands)
(Note 1)
Three months ended Year ended
March 31, 1997 December 31, 1996
________________ ______________
(Unaudited)
Revenues: (Notes 2 and 5)
Base rents $ 719 $ 2,768
Tenant escalations 212 764
________________ ______________
Total revenues 931 3,532
________________ ______________
Certain Expenses:
Property operating expenses
(Note 4) 85 541
Real estate taxes 73 298
Management fees (Note 3) 62 221
________________ ______________
Total certain expenses 220 1,060
________________ ______________
Revenues in excess of
certain expenses $ 711 $ 2,472
________________ ______________
See accompanying notes to financial statement.
<PAGE>
710 Bridgeport Avenue
Notes to Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996
1. Basis of Presentation
Presented herein is the statement of revenues and certain expenses related to
the operation of an industrial building, 710 Bridgeport Avenue, owned by 710
Bridgeport Avenue Associates, L.P. The property is located in Shelton,
Connecticut.
710 Bridgeport Avenue is not a legal entity but rather certain real estate
subject to a purchase contract by Reckson Associates Realty Corp. (the
"Company"). The accompanying statement of revenues and certain expenses
includes the accounts of 710 Bridgeport Avenue.
The accompanying financial statement has been prepared in accordance with
the applicable rules and regulations of the Securities and Exchange Commission
for the acquisition of real estate property. Accordingly, the financial
statement excludes certain expenses that may not be comparable to those
expected to be incurred by Reckson Associates Realty Corp. in the proposed
future operations of the aforementioned property. Items excluded consist of
interest, depreciation and general and administrative expenses not directly
related to the future operations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statement and accompanying
notes. Actual results could differ from those estimates.
2. Lease and Revenue Recognition
710 Bridgeport Avenue is being leased to tenants under operating leases.
Minimum rental income is generally recognized on a straight-line basis over
the term of the lease. The excess of amounts so recognized over amounts due
pursuant to the underlying leases amounted to approximately $195,000 and
$6,000 for the year ended December 31, 1996 and the three months ended March
31, 1997 (unaudited), respectively. The lease agreements generally contain
provisions for reimbursement of real estate taxes and operating expenses, as
well as fixed increases in rent.
3. Management Agreements
710 Bridgeport Avenue is managed by an affiliate of the owner which provides
property management services at the rate of 5% of gross cash receipts. A
tenant of the building also receives a management fee for services rendered
at the property.
4. Property Operating Expenses
Property operating expenses for the year ended December 31, 1996 include
approximately $52,000 for insurance, $105,000 for utilities, $214,000 in
contract service costs and $170,000 in repair and maintenance costs. For the
three months ended March 31, 1997 (unaudited), property operating expenses
include approximately $13,000 for insurance, $28,000 for utilities, $18,000
for contract service costs and $26,000 for repair and maintenance costs.
5. Significant Tenants
Timex Inc. and North American Philips Corp. are the tenants in this building
whose leases expire on February 28, 2003 and July 10, 2005, respectively.
<PAGE>
Report Independent Auditors
Board of Directors and Stockholders
Reckson Associates Realty Corp.
We have audited the statement of revenues and certain expenses of the property
("Short Hills Office Center") to be acquired from Short Hills NJ, Inc.
("Short Hills") by Reckson Associates Realty Corp., as described in Note 1, for
the year ended December 31, 1996. The financial statement is the responsibility
of the Short Hills Office Center 's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Reckson Associates Realty Corp.
and is not intended to be a complete presentation of the Short Hills Office
Center's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of the Short Hills
Office Center as described in Note 1 for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
May 16, 1997
<PAGE>
Short Hills Office Center
Statement of Revenues and Certain Expenses
(in thousands)
(Note 1)
Three months ended Year ended
March 31, 1997 December 31, 1996
________________ ______________
(Unaudited)
Revenues: (Notes 2)
Base rents $ 1,232 $ 4,517
________________ ______________
Total revenues 1,232 4,517
________________ ______________
Certain Expenses:
Property operating expenses
(Note 4) 6 30
________________ ______________
Total certain expenses 6 30
________________ ______________
Revenues in excess of
certain expenses $ 1,226 $ 4,487
________________ ______________
See accompanying notes to financial statement.
<PAGE>
Short Hills Office Center
Notes to Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996
1. Basis of Presentation
Presented herein is the statement of revenues and certain expenses related to
the operation of two office buildings, Short Hills Office Center, owned by
Short Hills NJ, Inc. ("Short Hills"). The property is located in Short Hills,
New Jersey.
The accompanying financial statement has been prepared in accordance with the
applicable rules and regulations of the Securities and Exchange Commission for
the acquisition of real estate property. Accordingly, the financial statement
excludes certain expenses that may not be comparable to those expected to be
incurred by Reckson Associates Realty Corp. in the proposed future operations
of the aforementioned property. Items excluded consist of interest,
depreciation and general and administrative expenses not directly related to
the future operations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statement and accompanying
notes. Actual results could differ from those estimates.
The statement of revenues and certain expenses for the three months ended
March 31, 1997 is unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the statement of revenues and certain expenses
for this interim period have been included. The results of interim periods
are not necessarily indicative of the results to be obtained for a full
fiscal year.
2. Lease and Revenue Recognition
The Short Hills Office Center is being leased to one tenant under an operating
lease. The lease is a net lease that provides that certain operating expenses
such as property taxes and utilities are to be paid directly by the tenant and
accordingly are not reflected in the statement. Minimum rental income is
generally recognized on a straight-line basis over the term of the lease. The
excess of amounts due pursuant to the underlying leases over amounts so
recognized was approximately $284,000 for the year ended December 31, 1996.
The Short Hills Office Center is comprised of two office buildings leased to a
single tenant, the lease on the east building expires on April 30, 2001 and
the west building April 30, 2003.
3. Management and Leasing Agreements
The Short Hills Office Center is managed and leased by Short Hills NJ, Inc.
("Short Hills").
4. Property Operating Expenses
Property operating expenses for the year ended December 31, 1996 include
approximately $19,000 for insurance and $11,000 in repair and maintenance
costs. For the three months ended March 31, 1997 (unaudited) property
operating expenses include approximately $4,000 for insurance and $2,000 for
repairs and maintenance costs.
