RECKSON ASSOCIATES REALTY CORP, 424B5, 1998-04-01

RECKSON ASSOCIATES REALTY CORP
424B5, 1998-04-01
REAL ESTATE INVESTMENT TRUSTS

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<PAGE>
As Filed Pursuant to Rule 424(b)(5)
Registration No. 333-46883

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS SUPPLEMENT, DATED MARCH 27, 1998

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 25, 1998)
8,000,000 SHARES
RECKSON ASSOCIATES REALTY CORP.
% SERIES A CONVERTIBLE CUMULATIVE PREFERRED STOCK
(LIQUIDATION PREFERENCE $25.00 PER SHARE)
------------------------

Reckson Associates Realty Corp. and its subsidiaries and affiliated entities
(collectively, the "Company") are engaged in the business of owning, developing,
re-positioning, acquiring, constructing, managing and leasing suburban office
and industrial properties in the New York City Tri-State area. Management
believes that the Company is one of the largest publicly-traded owners and
managers of Class A suburban office and industrial properties in the New York
City Tri-State area. As of March 20, 1998, the Company owned 182 properties
(including three joint venture properties) encompassing approximately 18 million
rentable square feet. In addition, the Company has entered into contracts or
letters of intent to acquire nine additional properties, encompassing
approximately 1.6 million square feet, for an aggregate purchase price of $248.3
million. The Company operates as a self-administered and self-managed real
estate investment trust (a "REIT").

Distributions on the % Series A Convertible Cumulative Preferred Stock of
the Company (the "Series A Preferred Stock") offered hereby will be cumulative
from the date of original issue and will be payable quarterly in arrears on or
about January 31, April 30, July 31 and October 31 of each year, commencing on
July 31, 1998, at the rate of % per annum of the liquidation preference per
share (equivalent to $ per annum per share of Series A Preferred Stock).
See "Description of Series A Preferred Stock--Distributions."

Shares of Series A Preferred Stock will be convertible at any time, unless
previously redeemed, in whole or in part, at the option of the holders thereof
into shares of common stock, par value $.01 per share, of the Company (the
"Common Stock") at a conversion price of $ per share of Common Stock
(equivalent to a conversion rate of shares of Common Stock for each share
of Series A Preferred Stock), subject to adjustment in certain circumstances.
The Company anticipates making a distribution of certain property to its common
stockholders following the offering of the Series A Preferred Stock, which will
result in an adjustment to the aforementioned conversion price. See "Description
of Series A Preferred Stock--Conversion" and "--Conversion Price Adjustments."

Shares of Series A Preferred Stock will not be redeemable prior to ,
2003, except to the extent necessary to preserve the Company's status as a REIT.
On or after , 2003, the shares of Series A Preferred Stock will be
redeemable, in whole or in part, at the option of the Company, at the redemption
prices specified herein, plus accumulated and unpaid distributions, if any;
provided, however, that the Company may exercise this option only if the
redemption price (other than the portion thereof consisting of accumulated and
unpaid distributions) is paid solely out of the sale proceeds of capital stock
of the Company. The Series A Preferred Stock will not have a stated maturity
date and will not be entitled to the benefit of any sinking fund or mandatory
redemption provisions. See "Description of Series A Preferred
Stock--Redemption."

To ensure that the Company qualifies as a REIT, the Series A Preferred Stock
may not be acquired or transferred if such acquisition or transfer will result
in the acquiror or transferee owning in excess of 15% of the number of shares or
value of the outstanding Series A Preferred Stock. The Series A Preferred Stock
will also be subject to an overall restriction that no holder thereof may own,
in the aggregate, as a result of the ownership of the Series A Preferred Stock
and other capital stock of the Company, in excess of 9.0% in value of all
outstanding capital stock of the Company. Furthermore, conversion of the Series
A Preferred Stock will be restricted to the extent that ownership of the Common
Stock would exceed the ownership limitation applicable to the Common Stock. See
"Description of Series A Preferred Stock--Ownership Limits and Restrictions on
Transfer" herein and "Restrictions on Ownership of Capital Stock" in the
accompanying Prospectus.

Application has been made to list the Series A Preferred Stock on the New
York Stock Exchange ("NYSE") under the symbol "RAPrA." On March 25, 1998, the
last reported sale price of the Common Stock, which is listed on the NYSE under
the symbol "RA", was $25.00 per share. See "Price Range of Common Stock and
Distribution History."

SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF CERTAIN MATERIAL FACTORS RELEVANT TO AN INVESTMENT IN THE SERIES A
PREFERRED STOCK.
---------------------
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 SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(3)
<S> <C> <C> <C>
Per Share....................................... $25.00 $ $
Total(4)........................................ $200,000,000 $ $
</TABLE>

(1) Plus accumulated distributions, if any, from the date of original issue.

(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(3) Before deducting estimated expenses of $ payable by the Company.

(4) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 1,200,000 shares of Series A Preferred Stock to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to Company will be
$230,000,000, $ and $ , respectively. See "Underwriting."
------------------------------

The shares of Series A Preferred Stock are offered by the Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, and
subject to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the Series A Preferred Stock will be made on or about ,
1998 in New York, New York.
------------------------------

JOINT LEAD MANAGERS

MERRILL LYNCH & CO. GOLDMAN, SACHS & CO.
------------------

THE DATE OF THIS PROSPECTUS SUPPLEMENT IS , 1998.
<PAGE>
[MAP, Pictures]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICES OF
THE SERIES A PREFERRED STOCK AND THE COMMON STOCK. SUCH TRANSACTIONS MAY INCLUDE
STABILIZING AND THE PURCHASE OF SHARES OF SERIES A PREFERRED STOCK TO COVER
SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

S-2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS
QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION WITH, THE
DETAILED INFORMATION APPEARING IN THE ACCOMPANYING PROSPECTUS OR INCORPORATED
THEREIN BY REFERENCE. CERTAIN TERMS USED BUT NOT DEFINED HEREIN ARE AS DEFINED
IN THE ACCOMPANYING PROSPECTUS. AS USED IN THIS PROSPECTUS SUPPLEMENT, THE TERM
"COMPANY" INCLUDES RECKSON ASSOCIATES REALTY CORP. AND ITS SUBSIDIARIES AND
AFFILIATED ENTITIES, INCLUDING RECKSON OPERATING PARTNERSHIP, L.P. (THE
"OPERATING PARTNERSHIP"), AND "RECKSON" INCLUDES THE PREDECESSOR ENTITIES
THROUGH WHICH THE COMPANY CONDUCTED ITS BUSINESS PRIOR TO ITS INITIAL PUBLIC
OFFERING ON JUNE 2, 1995 (THE "IPO"). THIS PROSPECTUS SUPPLEMENT CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET
FORTH IN THE FORWARD-LOOKING STATEMENTS. CERTAIN FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE ARE DISCUSSED IN THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON
PAGE 3 OF THE ACCOMPANYING PROSPECTUS.

THE COMPANY

Reckson Associates Realty Corp. commenced operations effective with the
completion of its IPO on June 2, 1995. The Company was formed for the purpose of
continuing the commercial real estate business of Reckson Associates, its
affiliated partnerships and other entities. For more than 40 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
Tri-State area of Long Island, Westchester, Northern New Jersey and Southern
Connecticut (the "Tri-State area"). Based on industry surveys, management
believes that the Company is one of the largest publicly-traded owners and
managers of Class A suburban office and industrial properties in the New York
Tri-State area. The Company's core growth strategy is currently focused on
suburban markets surrounding New York City. The Company operates as a
fully-integrated, self administered and self-managed REIT.

As of March 20, 1998, the Company owned 182 properties (the "Properties")
(including three joint venture properties) encompassing approximately 18 million
rentable square feet, consisting of 62 Class A suburban office properties (the
"Office Properties") encompassing approximately 8.5 million rentable square
feet, 118 industrial properties (the "Industrial Properties") encompassing
approximately 9.5 million rentable square feet and two 10,000 square foot retail
properties. As of March 20, 1998, the Properties were approximately 93% leased.
The Company also has entered into contracts or letters of intent to acquire nine
additional properties, encompassing approximately 1.6 million square feet, for
an aggregate purchase price of $248.3 million. In addition, as of March 20,
1998, the Company owned or had contracted to acquire approximately 847 acres of
land in 17 separate parcels that may present future development opportunities in
respect of 8.9 million square feet. Furthermore, as of March 20, 1998, the
Company had invested approximately $30.3 million in certain mortgage
indebtedness encumbering four Class A office properties on Long Island
encompassing approximately 577,000 square feet and a 400 acre parcel of land
located in New Jersey.

The Company's strategy has been, and continues to be, to develop a dominant
presence in each of its targeted submarkets with an entrepreneurial, local
management team. The Company emphasizes a value creation philosophy whereby it
acquires properties that are underperforming or undermanaged and seeks to create
value by applying its core real estate disciplines to redevelop and reposition
such properties. The Company also seeks "strategic acquisitions", purchasing
well-located, premier properties in its submarkets in order to enhance the
Company's franchise in each particular submarket, thereby creating operating and
leasing efficiencies for the Company. In addition, the Company is dedicated to
maintaining (or, if necessary, upgrading) the quality of its properties in order
to successfully compete and achieve high rents, occupancy and tenant retention
rates in each of its submarkets. Accordingly, the Office Properties are Class A
suburban office buildings, and the majority of the Office Properties are located
in planned office parks and are tenanted primarily by national service firms
such as "big six" accounting firms, securities

S-3
<PAGE>
brokerage houses, insurance companies and health care providers, while the
Industrial Properties are also primarily located in planned industrial parks or
in close proximity within the particular submarket.

From the IPO through March 20, 1998, the Company has implemented its core
business strategy, resulting in the acquisition of 52 Office Properties and 59
Industrial Properties, encompassing approximately 13.5 million square feet, for
an aggregate purchase price of approximately $946 million. On Long Island, the
Company has acquired 13 Office Properties and 32 Industrial Properties,
encompassing approximately 2.1 million and 2.5 million square feet,
respectively. In February 1996, the Company established its Westchester Division
with the acquisition of a 935,000 square foot office portfolio and associated
management and construction operations for approximately $83 million, or $89 per
square foot. In October 1996, the Company established its Connecticut Division
with the purchase of Landmark Square, a six building Class A office complex
encompassing approximately 800,000 square feet located in Stamford, Connecticut,
for approximately $77 million, or $96 per square foot. In addition, in May 1997,
the Company acquired four Office Properties in West Orange, New Jersey and one
Office Property in Montvale, New Jersey, encompassing approximately 500,000
square feet, for approximately $57 million, or $113 per square foot, and, in
connection with this acquisition, established its New Jersey Division. During
1997, the Company acquired 25 Office Properties and 20 Industrial Properties,
encompassing approximately 4.8 million square feet, for an aggregate purchase
price of approximately $420 million. For a discussion of certain property
acquisitions subsequent to December 31, 1997, see "Recent Developments."

All of the Company's interests in the Properties are held directly or
indirectly by, and substantially all of its operations relating to the
Properties are conducted through, the Operating Partnership. The Company
controls the Operating Partnership as the sole general partner and, as of March
20, 1998, owned approximately 84% of the Operating Partnership's outstanding
units of partnership interest.

SUMMARY OF PROPERTY PORTFOLIO
(AS OF MARCH 20, 1998)

<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
PROPERTIES SQUARE FEET % OF SQUARE FEET 1998 BASE RENT
--------------- ----------- ------------------- -------------------
<S> <C> <C> <C> <C>
Long Island
- Office............................................ 23 3,672,412 20.4% 33.6%
- Industrial........................................ 90 5,336,453 29.6% 14.9%
- Retail............................................ 2 20,000 0.1% 0.1%
Westchester
- Office............................................ 19 2,312,650 12.8% 19.0%
- Industrial........................................ 3 163,000 0.9% 0.7%
New Jersey
- Office............................................ 14 1,721,183 9.5% 13.9%
- Industrial........................................ 24 3,562,843 19.8% 8.5%
Connecticut...........................................
- Office............................................ 6 798,321 4.4% 7.7%
- Industrial........................................ 1 452,414 2.5% 1.6%
--- ----------- --- ---
Total............................................. 182 18,039,276 100% 100%
--- ----------- --- ---
--- ----------- --- ---
</TABLE>

S-4
<PAGE>
RECENT DEVELOPMENTS

OPERATING PERFORMANCE

Since its IPO in June 1995, the Company has consistently reported increases
in its Funds From Operations ("FFO"). The Company's FFO for the quarter ended
December 31, 1997 increased to $20.1 million, or 62.1% from $12.4 million for
the quarter ended December 31, 1996, which itself reflected an increase of 64.5%
from the quarter ended December 31, 1995. The Company's FFO for the year ended
December 31, 1997 increased to $69.5 million, or 69.1%, from $41.1 million for
the year ended December 31, 1996. The Company's positive financial performance
reflects the acquisition of additional properties and internally generated
growth in net operating income resulting from expiring leases being renewed or
replaced at rents that were on average 14.6% higher for the quarter ended
December 31, 1997 and 10.1% higher for the year ended December 31, 1997 and from
the realization of operating efficiencies due to operating a larger portfolio of
properties.

CORE ACQUISITIONS

LONG ISLAND. Since November 1997, the Company has acquired three Class A
office properties and three industrial properties on Long Island for
approximately $59 million. The three office property acquisitions include one
building located in Hauppauge and two adjacent buildings located in Mitchel
Field, where the Company now owns 1.5 million square feet, or approximately 55%
of the Mitchel Field Class A office submarket. The three industrial property
acquisitions include one building located within the Melville industrial market,
where the Company is now the largest landlord owning approximately 371,000
square feet, and two buildings located in the Hauppauge Industrial Park, where
the Company is the largest landlord owning 2.4 million square feet.

In addition, in February 1998, the Company acquired Triad V, a 351,000
square foot, four-story Class A office building located in Lake Success, Long
Island, for approximately $35 million. Eighteen months prior, the Company
acquired an approximate 70% interest in a non-performing first mortgage note
secured by the property. The Company finalized the transaction by obtaining
title to the property as the successful bidder at a bankruptcy auction. The
Company anticipates investing an additional $5 million in this property. The
Company believes its aggregate investment represents an approximate 40% discount
to replacement cost.

WESTCHESTER. In December 1997, the Company acquired eight Class A office
properties in Westchester County for a total investment of approximately $109
million. The acquisitions consist of a Class A office building located in
Tarrytown, New York, which is located in the western region of Westchester
County, where the Company now owns approximately 1.2 million square feet, or
approximately 55% of the Tarrytown Class A office submarket, a Class A office
building located in Elmsford, New York and a six building office park located in
Rye Brook, New York, which is located in the eastern region of Westchester
County, where the Company is the largest landlord owning 542,000 square feet. In
addition, the Company has acquired three standalone industrial properties for a
total investment of approximately $7.9 million. These acquisitions increased the
Company's portfolio in Westchester County to approximately 2.5 million square
feet.

NEW JERSEY. In December 1997, the Company entered the Princeton, New Jersey
office market with the acquisition of University Square, a three building,
131,000 square foot Class A office complex, for approximately $12 million and
the acquisition of 18 acres of adjacent developable land for approximately $5
million, or $16 per developable square foot.

In addition, in March 1998, the Company acquired 51 John F. Kennedy Parkway,
a five-story, 250,000 square foot Class A office building located in Short
Hills, New Jersey, for approximately $67 million. The property is fully leased
with a tenant roster that includes Prudential Insurance Company, Merrill Lynch

S-5
<PAGE>
and Franklin Mutual. The Company now owns 600,000 square feet in, or
approximately 50% of, the Short Hills Class A office submarket.

CONNECTICUT. In March 1998, the Company entered into a contract to acquire
Stamford Towers, a Class A office complex, consisting of two eleven story towers
totaling 317,000 square feet. The acquisition of this property will increase the
Company's holdings in Stamford, Connecticut by approximately 40% to
approximately 1.2 million square feet. The Company believes that rents at this
property are presently 30% below market. The Company also believes that the
acquisition price represents an approximate 40% discount to replacement cost.
There can be no assurance that this acquisition will be consummated.

OTHER PENDING ACQUISITIONS. The Company has also entered into contracts to
acquire two office properties (one of which is under development), encompassing
approximately 266,000 square feet, for an aggregate purchase price of
approximately $10 million and a non-binding letter of intent to acquire a
portfolio of five office properties, encompassing approximately 980,000 square
feet, for an aggregate purchase price of approximately $177 million. All of
these properties are located within the Company's established Tri-State area
submarkets or in new Tri-State area submarkets where it believes it has the
opportunity to establish a significant presence. There can be no assurance that
these acquisitions will be consummated.

ENTITY LEVEL INVESTMENT

Over the last two years, the Company has made investments in each of its
suburban markets in operating companies that included a well-located core group
of properties as well as an entrepreneurial, local management team. In each
case, the Company has successfully integrated these companies as operating
divisions by enhancing their operations with Reckson's proven operating
processes and indoctrinating them with Reckson's value creation philosophy.

The Company believes it has developed a core competency at identifying,
investing in and strategically guiding entrepreneurial operating companies as is
evidenced by the Company's success in acquiring and building its divisions. This
core competency has been integrated into the Company's business model for the
future.

Management believes that as the real estate industry continues to mature,
entrepreneurial management teams that traditionally have operated in a
transaction oriented manner will seek to transform their organizations into a
corporate-like cohesive operating company like Reckson. The Company will seek to
make entity level investments in companies that have strong entrepreneurial
management teams and a proven track record of creating value in their sectors.
The Company believes that such entity level investments will be a key component
of the next phase of the Company's growth.

Consistent with the Company's entity level investment strategy, the Company
recently made a $72 million investment in the Morris Companies, one of New
Jersey's premier "big-box" industrial developers with over 25 years of
development and operations experience. The Company acquired a 73% interest in
Reckson Morris Operating Partnership, L.P. ("RMI"), the successor to the Morris
Companies which owns a portfolio of 23 industrial properties comprising
approximately 4 million square feet. In addition, the Company has taken
initiatives to explore additional entity level real estate investments beyond
its traditional office and industrial sectors. In that regard, the Company will
invest with or in Reckson Strategic Venture Partners, LLC ("RSVP"), which has
been formed to serve as a "research and development" vehicle that will enable
the Company to identify and invest in operating companies in selected sectors.

FINANCING ACTIVITIES

The Company is negotiating to expand its three-year unsecured credit
facility arranged by The Chase Manhattan Bank ("Chase") and Union Bank of
Switzerland ("UBS") (the "Unsecured Credit Facility").

S-6
<PAGE>
The Unsecured Credit Facility currently provides for a maximum borrowing amount
of $250 million and the Company's ability to borrow thereunder is subject to the
satisfaction of certain financial covenants. The Company is seeking to expand
the maximum borrowing amount under the Unsecured Credit Facility to $500
million. In January 1998, the Company obtained a $200 million short term bridge
facility (the "Bridge Facility", and together with the Unsecured Credit
Facility, the "Credit Facilities") from Chase and UBS pending the expansion of
the Unsecured Credit Facility. There can be no assurance that the expansion to
the Unsecured Credit Facility will be obtained.

RSI DISTRIBUTION

Reckson Service Industries, Inc. ("RSI"), a subsidiary of the Operating
Partnership, has filed a registration statement with the Securities and Exchange
Commission to register shares of RSI's common stock in connection with the
distribution of such shares to stockholders of the Company and limited partners
in the Operating Partnership, as of a record date to be determined, and a
subscription rights offering to recipients of such shares. RSI has been formed
primarily to identify and acquire interests in operating companies that engage
in businesses that provide services for occupants of office, industrial and
other property types that Reckson has traditionally not performed and to
establish a real estate venture capital fund that will provide the Company with
opportunities to invest in alternative real estate sectors. The conversion price
of the Series A Preferred Stock will be reduced based upon the fair market value
of the RSI common stock at the time of the distribution, if consummated, as
determined by the Company's board of directors. This reduction is currently
anticipated to be less than 1% of the conversion price, although no assurance
can be given. The fair market value of the RSI common stock will be based upon
the fair market value of RSI's net assets at the time of the distribution, if
consummated, which fair market value the Company's board of directors has
determined to be equivalent to the book value of such net assets.

MARKET OVERVIEW

The Company operates in the New York Tri-State area, which encompasses
approximately 102 million square feet of Class A office space. This area is home
to a highly educated workforce and generally a high per capita income population
that is a major user of services provided by the Company's tenants. Management
believes that the economic fundamentals for the Tri-State area provide an
attractive environment for owning and operating Class A office and industrial
properties, a history of low unemployment rates and growing employment in the
broader service sectors, particularly in those sectors that are the largest
users of Class A office space.

S-7
<PAGE>
Since the Company's IPO, vacancy rates have declined and rental rates have
increased in each of the Company's Tri-State area office markets. The following
table provides certain information relating to Class A office space in the
Company's Tri-State area office markets:

[Charts for each area office showing the decline of direct vacancy rates and the
increase of average asking rates]

AVERAGE ASKING RENTAL RATES & DIRECT VACANCY BY MARKET

LONG ISLAND

<TABLE>
<CAPTION>
AVERAGE ASKING DIRECT
RENTAL RATES VACANCY
--------------- -----------
<S> <C> <C>
1994 $ 22.95 11.8
1995 24.54 14.0
1996 23.83 12.7
1997 26.14 8.7
</TABLE>

WESTCHESTER

<TABLE>
<CAPTION>
AVERAGE ASKING DIRECT
RENTAL RATES VACANCY
--------------- -----------
<S> <C> <C>
1994 $ 23.38 16.5
1995 23.87 16.2
1996 23.67 16.0
1997 25.14 13.3
</TABLE>

S-8
<PAGE>
NORTHERN NEW JERSEY

<TABLE>
<CAPTION>
AVERAGE ASKING DIRECT
RENTAL RATES VACANCY
--------------- -----------
<S> <C> <C>
1994 $ 23.23 14.1
1995 23.46 11.8
1996 24.55 9.1
1997 25.38 4.7
</TABLE>

SOUTHERN CONNECTICUT

<TABLE>
<CAPTION>
AVERAGE ASKING DIRECT
RENTAL RATES VACANCY
--------------- -----------
<S> <C> <C>
1994 $ 24.09 15.7
1995 24.91 12.7
1996 26.19 6.1
1997 28.96 4.2
</TABLE>

- ------------------------

The foregoing statistical data has been derived from the Long Island Office
Market Class A Statistical Summary (Year End 1997), the Westchester County
Office Market Report (Fourth Quarter 1997), the Fairfield County (Connecticut)
Office Market Report (Fourth Quarter 1997) and the New Jersey Office Market
Class A Statistical Summary (Year End 1997) of Cushman & Wakefield. Direct
vacancy rate is defined for purposes of these reports as landlord available
space divided by inventory. Weighted average rental rate is defined as gross
annual asking rates of existing buildings per square foot. The weighted average
rental rate represents an average rental rate which is weighted by the amount of
square footage available at each respective rental rate.

S-9
<PAGE>
As indicated above, the Company's suburban office markets have continued to
strengthen. In addition, there has been limited new development in these
markets. Set forth below is a table indicating the new space under development
in the top twenty-one Metropolitan Statistical Areas ("MSAs") in the United
States (measured by leasing square footage) as a percentage of total leasing
inventory, as of December 31, 1997. MSAs in which any of the Company's
Properties are located are italicized and highlighted in bold. Of the top
twenty-one MSAs, the Company's suburban office markets ranked as the first,
second, fourth and eighth lowest MSA with respect to new space under development
as a percentage of total leasing inventory.

<TABLE>
<CAPTION>
NEW SPACE UNDER DEVELOPMENT AS
METROPOLITAN STATISTICAL AREA A % OF TOTAL LEASING INVENTORY
- ------------------------------------------------------------- -----------------------------------
<S> <C>
STAMFORD..................................................... 0.3
WESTCHESTER.................................................. 0.5
New York City................................................ 0.5
LONG ISLAND.................................................. 0.9(1)
Houston...................................................... 1.1
Cleveland.................................................... 1.4
LA County.................................................... 1.5
NORTHERN NEW JERSEY.......................................... 2.3
Chicago...................................................... 2.7
Denver....................................................... 2.8
Orange County................................................ 3.0
Philadelphia................................................. 3.0
San Francisco................................................ 3.8
Washington, D.C. ............................................ 3.8
Oakland...................................................... 3.9
Dallas....................................................... 4.2
San Diego.................................................... 4.3
Boston....................................................... 4.4
Phoenix...................................................... 5.2
Seattle...................................................... 5.7
Atlanta...................................................... 6.1%
</TABLE>

(1) The Company's projects under development represent 48% of new space under
development.

- ------------------------

Sources: CoStar, Jamison Research, Grubb & Ellis, Cushman & Wakefield, CB
Commercial/Torto Wheaton Research and Merrill Lynch.

THE OFFERING

For a more complete description of the terms of the % Series A
Convertible Cumulative Preferred Stock (the "Series A Preferred Stock") offered
hereby (the "Offering"), see "Description of Series A Preferred Stock" herein
and "Description of Preferred Stock" in the accompanying Prospectus.

<TABLE>
<S> <C>
SECURITIES OFFERED...... 8,000,000 shares of % Series A Preferred Stock (9,200,000
shares if the Underwriters' over-allotment option is exercised in
full).
DISTRIBUTIONS........... Distributions on the Series A Preferred Stock will be cumulative
from the date of issue and will be payable quarterly in arrears
on or about January 31, April 30, July 31 and October 31 of each
year, commencing on July 31, 1998, at the rate of % per annum
of the liquidation preference per share (equivalent to $
per annum per share of Series A Preferred Stock). Distributions
on the Series A Preferred Stock will accumulate whether or not
the Company has earnings, whether or not there are funds legally
available for the payment of such distributions and whether or
not such distributions are authorized.
CONVERSION RIGHTS....... Shares of Series A Preferred Stock will be convertible, in whole
or in part, at the option of the holder at any time, unless
previously redeemed, into
</TABLE>

S-10
<PAGE>

<TABLE>
<S> <C>
Common Stock, at a conversion price of $ per share of
Common Stock (equivalent to a conversion rate of shares of
Common Stock for each share of Series A Preferred Stock), subject
to adjustment in the case of the RSI common stock distribution,
if consummated, and in certain other circumstances, as described
herein.
LIQUIDATION
PREFERENCE............ $25.00 per share, plus an amount equal to any accumulated and
unpaid distributions.
REDEMPTION.............. Shares of Series A Preferred Stock generally will not be
redeemable prior to , 2003, except to the extent
necessary to preserve the Company's status as a REIT. On and
after , 2003, shares of the Series A Preferred Stock
may be redeemed at the option of the Company, in whole or in
part, at the redemption prices specified herein, plus accumulated
and unpaid distributions, if any, to the redemption date;
provided, however, that the Company may exercise this option only
if the redemption price (other than the portion thereof
consisting of accumulated and unpaid distributions) is paid
solely out of the sale proceeds of capital stock of the Company.
VOTING RIGHTS........... If distributions on the Series A Preferred Stock are in arrears
for six or more quarterly periods, whether or not such quarterly
periods are consecutive, holders of Series A Preferred Stock
(voting separately as a class with all other series of Preferred
Stock upon which like voting rights have been conferred and are
exercisable) will be entitled to vote for the election of two
additional directors to serve on the Board of Directors of the
Company until all distribution arrearages have been paid. In
addition, certain changes that would be materially adverse to the
rights of holders of the Series A Preferred Stock may not be made
without the affirmative vote of two-thirds of the Series A
Preferred Stock .
RANKING................. The Series A Preferred Stock will rank senior to the Common Stock
with respect to payment of distributions or amounts upon a
liquidation, dissolution or winding up of the Company.
NYSE LISTING............ Application has been made to list the Series A Preferred Stock on
the NYSE under the symbol "RAPrA."
OWNERSHIP
RESTRICTIONS.......... To ensure that the Company qualifies as a REIT, the Series A
Preferred Stock may not be acquired or transferred if such
acquisition or transfer will result in the acquiror or transferee
owning in excess of 15% of the number of shares or value of the
outstanding Series A Preferred Stock. The Series A Preferred
Stock will also be subject to an overall restriction that no
holder thereof may own, in the aggregate, as a result of the
ownership of the Series A Preferred Stock and other captial stock
of the Company, in excess of 9.0% in value of all outstanding
capital stock of the Company. Furthermore, conversion of the
Series A Preferred Stock will be restricted to the extent that
ownership of the Common Stock would exceed the ownership
limitation applicable to the Common Stock.
USE OF PROCEEDS......... The net proceeds from the Offering will be used to reduce amounts
outstanding under the Credit Facilities and for general corporate
purposes.
</TABLE>

S-11
<PAGE>
SUMMARY SELECTED FINANCIAL INFORMATION

The following table sets forth summary selected financial and operating
information for the Company and on a combined historical basis for the Company's
predecessor entities (the "Reckson Group"). The selected operating and balance
sheet data of the Company at and for the years ended December 31, 1997 and
December 31, 1996 and at and for the period from June 3, 1995 to December 31,
1995 and the selected operating and balance sheet data of the Reckson Group at
and for the period from January 1, 1995 to June 2, 1995 have been derived from
the audited financial statements.
<TABLE>
<CAPTION>
RECKSON ASSOCIATES
REALTY CORP. RECKSON GROUP
------------------------------------------ --------------
JUNE 3, 1995 JANUARY 1,
YEAR ENDED YEAR ENDED TO 1995
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO JUNE 2,
1997 1996 1995 1995
------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Total revenues(1)................................. $ 152,668 $ 95,110 $ 38,355 $ 22,270
------------ ------------ -------------- --------------
Property operating expenses....................... 28,943 18,959 7,144 3,985
Real estate taxes................................. 20,579 13,935 5,755 3,390
Ground rents...................................... 1,269 1,107 579 234
Rent expense to an affiliate...................... -- -- -- 99
Construction costs and expenses................... -- -- -- 1,929
Interest.......................................... 21,585 13,331 5,331 7,622
Depreciation and amortization..................... 27,237 17,670 7,233 3,606
Marketing, general and administrative............. 8,292 5,949 1,859 1,759
------------ ------------ -------------- --------------
Total expenses.................................... 107,905 70,951 27,901 22,624
------------ ------------ -------------- --------------

Operating income (loss)........................... 44,763 24,159 10,454 (354)
Investment income................................. -- -- -- 210
Gain (loss) on sales of properties................ 672 -- -- 35
Equity in income (losses) of investees............ 55 1,031 100 303
Minority interests................................ (8,624) (6,768) (3,067) --
------------ ------------ -------------- --------------

Income (loss) before extraordinary item........... 36,866 18,422 7,487 194
Gain (loss) on extinguishment of debts............ (2,230) (895) (4,234) --
------------ ------------ -------------- --------------
Net income (loss)................................. $ 34,636 $ 17,527 $ 3,253 $ 194
------------ ------------ -------------- --------------
Basic net income per share........................ $ 1.06 $ .88(2) $ .22(2)
------------ ------------ --------------
Weighted average shares outstanding............... 32,727,000 19,928,000(2) 14,678,000(2)
------------ ------------ --------------
Diluted net income per share (4).................. $ 1.04 $ .87(2) $ .22(2)
------------ ------------ --------------
Diluted weighted average shares outstanding....... 33,260,000 20,190,000(2) 14,725,000(2)
------------ ------------ --------------

YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
------------ ------------ --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Commercial real estate, before
accumulated depreciation........................ $1,015,282 $ 519,504 $ 290,712
Total assets...................................... 1,113,257 543,758 242,728
Mortgages and notes payable....................... 180,023 161,513 98,126
Credit facility................................... 210,250 108,500 40,000
Senior Unsecured Notes............................ 150,000 --
Minority interests................................ 92,405 61,066 35,919
Shareholders' equity.............................. 448,665 186,867 61,759
</TABLE>

S-12
<PAGE>

<TABLE>
<CAPTION>
RECKSON ASSOCIATES
REALTY CORP. RECKSON GROUP
------------------------------------------ --------------
JUNE 3, 1995 JANUARY 1,
YEAR ENDED YEAR ENDED TO 1995
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO JUNE 2,
1997 1996 1995 1995
------------ ------------ -------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
OTHER DATA:
Funds from operations(3).......................... $ 69,548 $ 41,133 $ 17,246 $ 3,800
Net cash provided by operating activities......... 70,643 39,422 17,023 1,619
Net cash (used in) provided by investing
activities...................................... (546,951) (273,703) (78,315) (710)
Net cash (used in) provided by financing
activities...................................... 485,448 239,985 68,275 (5,092)
Gross leasable area at end of period
(square feet in thousands):
Office.......................................... 7,595 4,397 1,930 1,570
Industrial...................................... 6,050 4,403 3,500 2,959
</TABLE>

- ------------------------

(1) Historical total revenues include construction revenue of $2,361 (Reckson
Group January 1, 1995 to June 2, 1995).

(2) Adjusted to reflect a two-for-one stock split effective on April 15, 1997.

(3) Management considers funds from operations to be an appropriate measure of
the performance of an equity REIT. The White Paper on Funds from Operations
approved by the Board of Governors of the National Association of Real
Estate Investment Trusts ("NAREIT") in March 1995 defines funds from
operations as net income (loss) (computed in accordance with generally
accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures. The
Company computes funds from operations in accordance with the standards
established by NAREIT, which may not be comparable to funds from operations
reported by other REITS that do not define the term in accordance with the
current NAREIT definition or that interpret the current NAREIT definition
differently than the Company. Funds from operations does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and is not indicative of cash available to fund cash
needs. Funds from operations should not be considered as an alternative to
net income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity.

(4) The earnings per share amounts prior to 1997 have been restated as required
to comply with Statement of Financial Accounting Standards No. 128, EARNINGS
PER SHARE. For further discussion of earnings per share and the impact of
Statement No. 128, see the notes to the consolidated financial statements
which are incorporated by reference herein.

S-13
<PAGE>
THE COMPANY

GENERAL

Reckson Associates Realty Corp. commenced operations effective with the
completion of its IPO on June 2, 1995. The Company was formed for the purpose of
continuing the commercial real estate business of Reckson Associates, its
affiliated partnerships and other entities ("Reckson"). For more than 40 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 Tri-State area of Long Island, Westchester, Northern New Jersey and
Southern Connecticut (the "Tri-State area"). Based on industry surveys,
management believes that the Company is one of the largest publicly-traded
owners and managers of Class A suburban office and industrial properties in the
New York Tri-State area. The Company's core growth strategy is currently focused
on suburban markets surrounding New York City. The Company operates as a
fully-integrated, self administered and self-managed REIT.

As of March 20, 1998, the Company owned 182 properties (the "Properties")
(including three joint venture properties) encompassing 18 million rentable
square feet, consisting of 62 Class A suburban office properties (the "Office
Properties") encompassing approximately 8.5 million rentable square feet, 118
industrial properties (the "Industrial Properties") encompassing approximately
9.5 million rentable square feet and two 10,000 square foot retail properties.
The Company also has entered into contracts or letters of intent to acquire nine
additional properties, encompassing 1.6 million square feet, for an aggregate
purchase price of approximately $248.3 million. In addition, as of March 20,
1998, the Company owned or had contracted to acquire approximately 847 acres of
land in 17 separate parcels that may present future development opportunities in
respect of 8.9 million square feet. Furthermore, as of March 20, 1998, the
Company had invested approximately $30.3 million in certain mortgage
indebtedness encumbering four Class A office properties on Long Island
encompassing approximately 577,000 square feet and a 400 acre parcel of land
located in New Jersey.

The Company's strategy has been, and continues to be, to develop a dominant
presence in each of its targeted submarkets with an entrepreneurial, local
management team. The Company emphasizes a value creation philosophy whereby it
acquires properties that are underperforming or undermanaged and seeks to create
value by applying its core real estate disciplines to redevelop and reposition
such properties. The Company also seeks "strategic acquisitions", purchasing
well-located properties in its submarkets in order to enhance the Company's
franchise in each particular submarket, thereby creating operating and leasing
efficiencies for the Company. In addition, the Company is dedicated to
maintaining (or, if necessary, upgrading) the quality of its properties in order
to successfully compete and achieve high rents, occupancy and tenant retention
rates in each of its submarkets. Accordingly, the Office Properties are Class A
suburban office buildings, and the majority of the Office Properties are located
in 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, while the Industrial Properties are also
primarily located in planned industrial parks or in close proximity within the
particular submarket.

S-14
<PAGE>
located in Stamford, Connecticut, for approximately $77 million, or $96 per
square foot. Since the Company established its Connecticut Division, it has
acquired a 452,000 square foot Industrial Property located in Shelton,
Connecticut. In addition, in early 1997, the Company acquired four Office
Properties in West Orange, New Jersey and one Office Property in Montvale, New
Jersey, encompassing approximately 500,000 square feet, for approximately $57
million, or $113 per square foot, and, in connection with this acquisition,
established its New Jersey Division. Since the Company established its New
Jersey Division, it has acquired 14 Office Properties and 23 Industrial
Properties in New Jersey encompassing approximately 1.7 million and 3.4 million
square feet, respectively.

During 1997, the Company acquired 25 Office Properties and 20 Industrial
Properties, encompassing approximately 4.8 million square feet, for an aggregate
purchase price of approximately $420 million. For a discussion of certain
property acquisitions subsequent to December 31, 1997, see "Recent
Developments."

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 December 31, 1997, the Company had approximately 210 employees.

RECENT DEVELOPMENTS

OPERATING PERFORMANCE

Since its IPO in June 1995, the Company has consistently reported increases
in its Funds From Operations ("FFO"). The Company's FFO for the quarter ended
December 31, 1997 increased to $20.1 million, or 62.1%, from $12.4 million for
the quarter ended December 31, 1996 which itself reflected an increase of 64.5%
from the quarter ended December 31, 1995. The Company's FFO for the year ended
December 31, 1997 increased to $69.5 million, or 69.1%, from $41.1 million for
the year ended December 31, 1996. The Company's positive financial performance
reflects the acquisition of additional properties and internally generated
growth in net operating income resulting from expiring leases being renewed or
replaced at rents that were on average 14.6% higher for the quarter ended
December 31, 1997 and 10.1% higher for the year ended December 31, 1997 and from
the realization of operating efficiencies due to operating a larger portfolio of
properties.

CORE ACQUISITIONS

LONG ISLAND. Since November 1997, the Company has acquired three Class A
office properties and three industrial properties on Long Island for
approximately $59 million. The three office property acquisitions include one
building located in Hauppauge and two adjacent buildings located in Mitchel
Field, where the Company now owns 1.5 million square feet, or approximately 55%
of the Mitchel Field Class A office submarket. The three industrial property
acquisitions include one building located within the Melville Industrial market,
where the Company is the largest landlord owning approximately 371,000 square
feet, and two buildings located in the Hauppauge Industrial Park, where the
Company is the largest landlord owning 2.4 million square feet.

In addition, in February 1998, the Company acquired Triad V, a 351,000
square foot, four-story Class A office building located in Lake Success, Long
Island, for approximately $35 million, or approximately $100 per square foot.
Eighteen months prior, the Company acquired an approximate 70% interest in a
non-performing first mortgage note secured by the property. The Company
finalized the transaction by obtaining title to the property as the successful
bidder at a bankruptcy auction. The Company

S-15
<PAGE>
anticipates investing an additional $5 million in this property. The Company
believes its aggregate investment represents an approximate 40% discount to
replacement cost.

WESTCHESTER. In December 1997, the Company acquired eight Class A office
properties in Westchester County for a total investment of approximately $109
million. The acquisitions consist of a Class A office building located in
Tarrytown, New York, a Class A office building located in Elmsford, New York,
and a six building office park located in Rye Brook, New York. In addition, the
Company acquired three stand-alone industrial properties for a total investment
of approximately $7.9 million. These acquisitions increased the Company's
portfolio in Westchester County to approximately 2.5 million square feet.

One of the Class A office buildings is a 203,000 square foot, six story
building located in Tarrytown, New York. This building is the premier office
property in the Tarrytown submarket and was purchased for approximately $28
million, representing what the Company believes to be an approximate 40%
discount to replacement cost. With the acquisition of this building, the Company
now owns and operates over 1.2 million square feet, and controls approximately
55% of the Class A office space, in the Tarrytown -- Route 119 submarket. The
Company's portfolio on Tarrytown's Route 119 corridor is 98.54% leased.

The other Class A office building is an 85,000 square foot, three story
office building located in Elmsford, New York, which is currently approximately
93% leased.

The Company also acquired Royal Executive Park, a 542,000 square foot, six
building, Class A office park, for $73 million. This office park is located in
Rye Brook, New York in Westchester County's eastern region, has been renamed as
Reckson Executive Park and is occupied by such major tenants as MCI and the
Hitachi companies. In addition to its significant presence in the Tarrytown
submarket, the Company is now the largest landlord in the eastern submarket of
Westchester County. The Company acquired this office park at a purchase price it
believes represents a 25% discount to replacement cost. In addition to the
existing buildings, the Company also acquired a contiguous 32 acre development
parcel on which 345,000 square feet of Class A office space can be developed.
This parcel was acquired for approximately $8 million, or $23 per developable
square foot.

NEW JERSEY. In December 1997, the Company entered the Princeton, New Jersey
office market with the acquisition of University Square for approximately $12
million and the acquisition of 18 acres of adjacent developable land for
approximately $5 million, or $16 per developable square foot. The acquisition
was completed in a joint venture with Matrix Development Group.

University Square is a three building 131,000 square foot office complex
that is well located at the primary intersection of Route 1 and Alexander Road
in the heart of the Princeton office market. The buildings were designed by the
noted architectural firm of Gwathmey Siegel & Associates. This acquisition
marked the Company's entrance into the Princeton market, giving it a visible
presence in one of New Jersey's healthiest markets. The Company also acquired an
18 acre prime parcel of adjacent land on which an additional 310,000 square foot
Class A office building can be developed. The Company anticipates commencing
development of this project to take advantage of Princeton's low 2.7% Class A
vacancy rate. The Company projects total development costs of approximately $40
million.

In addition, in March 1998, the Company acquired 51 John F. Kennedy Parkway
("51 JFK Parkway"), a five-story, 250,000 square foot Class A office building
for approximately $67 million. 51 JFK Parkway is located in Short Hills, New
Jersey and is the premier building in the Short Hills submarket. The property is
fully leased with a tenant roster that includes Prudential Insurance Company,
Merrill Lynch and Franklin Mutual.

51 JFK Parkway is the third building acquired by the Company in the Short
Hills submarket and is contiguous to 101 JFK Parkway, a 308,000 square foot, two
building Class A office complex, which the Company acquired in 1997. With the 51
JFK Parkway acquisition, the Company now owns 600,000 square feet in, or
approximately 50% of the Class A office space of, the Short Hills Class A office
submarket.

S-16
<PAGE>
CONNECTICUT. In March 1998, the Company entered into a contract to acquire
Stamford Towers, a Class A office complex, consisting of two eleven story towers
totaling 317,000 square feet. The acquisition of this property will increase the
Company's holdings in Stamford, Connecticut by approximately 40% to
approximately 1.2 million square feet. The Company believes that rents at this
property are presently 30% below market. The Company also believes that the
acquisition price represents an approximate 40% discount to replacement cost.
There can be no assurance that this acquisition will be consummated.

OTHER PENDING ACQUISITIONS. The Company has also entered into contracts to
acquire two office properties (one of which is under development), encompassing
approximately 266,000 square feet, for an aggregate purchase price of
approximately $10 million, and a non-binding letter of intent to acquire a
portfolio of five office properties, encompassing approximately 980,000 square
feet, for an aggregate purchase price of $177 million. All of these properties
are located within the Company's established Tri-State area submarkets or in new
Tri-State area submarkets where it believes it has the opportunity to establish
a significant presence. There can be no assurance that these pending
acquisitions will be consummated since they are subject to due diligence and
other contingencies.

ENTITY LEVEL INVESTMENT

Consistent with the Company's entity level investment strategy, in January
1998, Reckson, through Reckson Morris Industrial Trust, a private real estate
investment trust ("RMIT"), acquired a controlling interest in Reckson Morris
Operating Partnership, L.P. ("RMI"), the successor to the Morris Companies. This
acquisition creates a platform for the acquisition and development of additional
"big box" industrial distribution facilities.

The RMI portfolio consists of 23 industrial properties, including two
projects under development, comprising approximately four million square feet
and contracts or options to acquire approximately 382 acres of developable land.
The portfolio is located throughout Northern and Central New Jersey and has a
weighted average age of less than 10 years and average ceiling heights of
approximately 28 feet. The Morris Companies, headquartered in Secaucus, New
Jersey, was founded by Robert Morris and Joseph Morris over 25 years ago and has
earned a reputation as one of New Jersey's largest and most respected developers
and operators of "big box" industrial space, having developed over 15 million
square feet for many national and regional tenants.

Reckson initially invested approximately $72 million in RMIT, which acquired
an approximately 73% interest in RMI, and has a commitment to invest up to an
aggregate of $150 million. Additional investments will be made as required to
finance RMI's future growth. Substantially all of the proceeds

S-17
<PAGE>
from Reckson's initial investment were utilized to repay outstanding mortgage
debt encumbering the RMI portfolio and to position RMI with a 12% debt to total
market capitalization. RMI has been formed with a conservative capital structure
to position it to pursue an aggressive growth strategy. In New Jersey, RMI will
target consolidation opportunities within the one billion square foot industrial
market, develop "big box" build to suits and source, redevelop and reposition
underperforming industrial properties. In addition, RMI will seek to establish a
platform for growth by acquiring and integrating local "big-box" developers with
entrepreneurial management teams in selected markets. To execute its growth
strategy, RMI plans to capitalize on Morris' reputation and existing
relationships with regional and national tenants.

In addition, the Company has taken initiatives to explore additional entity
level real estate investments beyond its traditional office and industrial
sectors. In that regard, the Company will invest with or in Reckson Strategic
Venture Partners, LLC ("RSVP"), which has been formed to serve as a "research
and development" vehicle that will enable the Company to identify and invest in
operating companies in selected sectors.

FINANCING ACTIVITIES

The Company is negotiating to expand its three-year unsecured credit
facility arranged by The Chase Manhattan Bank ("Chase") and Union Bank of
Switzerland ("UBS") (the "Unsecured Credit Facility"). The Unsecured Credit
Facility currently provides for a maximum borrowing amount of $250 million and
the Company's ability to borrow thereunder is subject to the satisfaction of
certain financial covenants. In addition, borrowings under the Unsecured 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 based on the Company's leverage
ratio. The Company is seeking to expand the maximum borrowing amount under the
Unsecured Credit Facility to $500 million. In January, 1998, the Company
obtained a $200 million short-term bridge facility (the "Bridge Facility", and
together with the Unsecured Credit Facility, the "Credit Facilities") from Chase
and UBS pending the expansion of the Unsecured Credit Facility. There can be no
assurance that the expansion of the Unsecured Credit Facility will be obtained.

RSI DISTRIBUTION

GENERAL. Reckson Service Industries, Inc. ("RSI"), a subsidiary of the
Operating Partnership, has filed a registration statement with the Securities
and Exchange Commission to register shares of RSI's common stock in connection
with the distribution of such shares to stockholders of the Company and limited
partners in the Operating Partnership and a subscription rights offering to
recipients of such shares, with a standby commitment from RSI management to
purchase all remaining shares in respect of which rights have not been
exercised. No assurance can be given that such distribution or subscription
rights offering will be consummated.

RSI has been formed primarily to identify and acquire interests in operating
companies that engage in businesses that provide services for occupants of
office, industrial and other property types that Reckson has traditionally not
performed (collectively, "Commercial Services"). RSI will focus on service
sectors that present opportunities to provide Commercial Services to the
Operating Partnership and its tenants, to the tenants and customers of RSVP and
RSI's other affiliates and to other third parties. RSI also has formed RSVP as a
real estate venture capital fund and "research and development" vehicle for
Reckson to explore and invest in real estate sectors outside of its traditional
office and industrial sectors, thereby providing the potential for Reckson to
incorporate one or more of these alternative real estate sectors into its core
business. Reckson will have the right to invest in all investments sourced by
RSVP that generate income of the type satisfying Federal tax laws applicable to
REITs ("REIT-Qualified Investments"). See "--The Intercompany Agreement."

ASSETS OF RSI. It is expected that RSI's initial assets will be comprised
of (i) an interest in a company providing advanced telecommunications systems
and services, (ii) options to acquire (a) a 9.9% equity

S-18
<PAGE>
interest in Reckson Executive Centers LLC, an executive office suites business
operated at Reckson's properties, and (b) a majority equity interest in a joint
venture that owns 100% of a privately-held national executive office suites
business and (iii) an indirect interest in the assets of RSVP, currently
representing minority interests in joint ventures owning majority equity
interests in a student housing enterprise and a student housing project. The
fair market value of RSI's net assets, as determined by Reckson's board of
directors, is equivalent to book value, which at December 31, 1997 was
approximately $4.2 million.

FUNDING SOURCES FOR RSI. RSI expects to establish a credit facility with
the Operating Partnership (the "RSI Facility") in the amount of $100 million for
RSI's service sector operations and other general corporate purposes. The RSI
Facility will have a term of five years. Interest will accrue on advances made
under the RSI Facility at a rate equal to the greater of (i) the prime rate plus
2% and (ii) 12% per annum, with the rate referred to in clause (ii) increasing
annually at a rate of 4% of the prior year's rate. Prior to maturity, interest
will be payable quarterly but only to the extent of net cash flow.

In addition, the Operating Partnership has approved the funding of
investments of up to $100 million with or in RSVP, through (i) the funding of
RSVP investments prior to the distribution of RSI common stock, (ii)
RSVP-controlled joint venture REIT-Qualified Investments, or (iii) advances made
to RSI under terms similar to the RSI Facility.

RSI is a newly formed enterprise with a limited operating history and
limited assets and access to capital. Accordingly, no assurance can be given
that RSI will have the funds necessary to pay interest on a timely basis or to
repay principal at maturity.

RSVP has obtained a $200 million preferred equity facility (the "PaineWebber
Equity Facility") from PaineWebber Real Estate Securities Inc.("PWRES"). The
PaineWebber Equity Facility provides that the preferred equity may be drawn over
a three year period, thereby entitling the preferred equity holder to a
preferred return in respect of distributions from RSVP's cash flow and from
capital events such as sales and refinancings. The PaineWebber Equity Facility
also requires the Operating Partnership's consent for RSVP to enter into any
office or industrial transaction that the Operating Partnership has chosen not
to pursue. Advances under the PaineWebber Equity Facility are expected to be
partially funded by an investment fund that is jointly sponsored by financier
George Soros and PWRES.

THE INTERCOMPANY AGREEMENT. The Operating Partnership and RSI will enter
into an Intercompany Agreement in order to limit conflicts of interest by
formalizing their relationship at the outset. It is anticipated that decisions
regarding such first opportunity rights of Reckson will be presented to the
executive committee of the board of directors of Reckson, which includes two
independent directors of Reckson's board of directors. Under the Intercompany
Agreement, RSI will grant the Operating Partnership a right of first opportunity
to make any REIT-Qualified Investment that becomes available to RSI. In
addition, in the event that any REIT-Qualified Investment opportunity becomes
available to an affiliate of RSI, including RSVP, such affiliate will be
required to allow the Operating Partnership to participate in such opportunity
to the extent of RSI's interest, if any, therein.

Under the Intercompany Agreement, the Operating Partnership will grant RSI a
right of first opportunity to provide Commercial Services to the Operating
Partnership and its tenants or that become available to the Operating
Partnership. Any services provided by RSI to the Operating Partnership will be
required to be at rates and on terms as attractive as the best available for
comparable services in the market or those offered by RSI to third parties. In
addition, the Operating Partnership will be required to give RSI access to its
tenants in respect of Commercial Services that may be provided to such tenants.

The Intercompany Agreement will also provide, subject to certain conditions,
that the Operating Partnership will provide RSI with a right of first refusal to
become the lessee of any real property acquired by the Operating Partnership if
the Operating Partnership determines that, consistent with Reckson's status as a
REIT, it is required to enter into a "master" lease arrangement.

S-19
<PAGE>
INTERESTS OF CERTAIN OFFICERS AND DIRECTORS OF RSI. Donald J. Rechler,
Scott H. Rechler and Michael Maturo will serve as executive officers of RSI and
each currently serves as an executive officer of Reckson. In addition, Roger
Rechler, Mitchell D. Rechler and Gregg M. Rechler will serve on RSI's management
advisory committee and each currently serves as an executive officer of Reckson.
Furthermore, Donald J. Rechler, Scott H. Rechler, Roger Rechler, Gregg M.
Rechler and Michael Maturo will serve on RSI's board of directors and each
(other than Michael Maturo and Gregg M. Rechler) currently serves on the board
of directors of Reckson. As a result, the aforementioned officers and directors
will have duties and responsibilities to each of RSI and Reckson and,
accordingly, conflicts of interest may arise.

USE OF PROCEEDS

The net cash proceeds to the Company from the Offering, after deducting the
estimated underwriting discount and estimated expenses, are estimated to be
$ million (or $ million if the Underwriters' over-allotment
option is exercised in full). Management intends to use approximately $191.75
million to repay borrowings under the Credit Facilities. As of March 20, 1998,
borrowings under the Credit Facilities aggregated approximately $385 million,
had a weighted average interest rate of 6.9% per annum and a weighted average
maturity of 1.3 years. The balance of the proceeds ($8.25 million) will be used
for general corporate purposes.

S-20
<PAGE>
PRICE RANGE OF COMMON STOCK AND DISTRIBUTION HISTORY

The Company's Common Stock commenced trading on the NYSE on May 25, 1995,
under the symbol "RA." The following table sets forth the quarterly high and low
closing sales prices per share of the Common Stock reported on the NYSE and the
distributions paid by the Company with respect to each such period. All
information provided in the following table has been adjusted to reflect the
two-for-one stock split effective on April 15, 1997.

<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW DISTRIBUTION
- ----------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
June 30, 1995 (from June 2, 1995).......................... $ 12.313 $ 12.000 $ 0.0900
September 30, 1995......................................... $ 13.938 $ 12.125 $ 0.2891
December 31, 1995.......................................... $ 14.750 $ 12.938 $ 0.2891
March 31, 1996............................................. $ 16.125 $ 14.563 $ 0.2891
June 30, 1996.............................................. $ 16.500 $ 14.625 $ 0.3000
September 30, 1996......................................... $ 18.563 $ 15.500 $ 0.3000
December 31, 1996.......................................... $ 21.313 $ 17.625 $ 0.3000
March 31, 1997............................................. $ 23.563 $ 20.438 $ 0.3000
June 30, 1997.............................................. $ 23.625 $ 20.875 $ 0.3125
September 30, 1997......................................... $ 27.000 $ 22.375 $ 0.3125(1)
December 31, 1997.......................................... $ 28.750 $ 24.063 $ 0.3125(1)
March 31, 1998 (through March 25, 1998).................... $ 26.438 $ 24.125 $ 0.3125(2)
</TABLE>

- ------------------------

(1) The Company paid the third quarter and fourth quarter distributions during
the quarter ending December 31, 1997.

(2) It is expected that this distribution will be paid April 17, 1998 to holders
of record on April 7, 1998.

On March 25, 1998, the reported closing sale price per share of Common Stock
on the NYSE was $25.00 and there were approximately 370 holders of record of the
Company's Common Stock.

Future distributions by the Company will be at the discretion of the Board
of Directors and will depend on the actual FFO of the Company, its financial
condition, its capital requirements, the annual distribution requirements under
the REIT provisions of the Code (see "Federal Income Tax Considerations" in the
accompanying Prospectus), and such other factors as the Board of Directors deems
relevant. There can be no assurance that any such distributions will be made by
the Company.

Distributions by the Company to the extent of its current and accumulated
earnings and profits for federal income tax purposes generally will be taxable
to stockholders as ordinary dividend income. Distributions in excess of current
and accumulated earnings and profits will be treated as a non-taxable reduction
of the stockholder's basis in its shares of capital stock to the extent thereof,
and thereafter as taxable gains. Distributions that are treated as a reduction
of the stockholder's basis in its shares of capital stock will have the effect
of deferring taxation until the sale of the stockholder's shares.

In the future, the Company may implement a distribution reinvestment program
under which holders of Common Stock may elect automatically to reinvest
distributions in additional Common Stock. The Company may, from time to time,
repurchase Common Stock in the open market for purposes of fulfilling its
obligations under this dividend reinvestment program, if adopted, or may elect
to issue additional Common Stock.

S-21
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company on a
historical basis and on an as adjusted basis as of December 31, 1997, assuming
(i) the sale by the Company of the Series A Preferred Stock in the Offering and
(ii) the application of the net proceeds therefrom as if the Offering had
occurred on December 31, 1997. See "Use of Proceeds." The information set forth
in the table should be read in conjunction with the consolidated financial
statements of the Company and notes thereto, the pro forma financial information
and notes thereto incorporated by reference herein.

<TABLE>
<CAPTION>
HISTORICAL AS ADJUSTED
------------ ------------
<S> <C> <C>
(IN THOUSANDS,
EXCEPT SHARE DATA)
DEBT:
Mortgage notes payable.......................................... $ 180,023 166,958(1)
Senior unsecured notes.......................................... 150,000 150,000
Credit Facilities............................................... 210,250 193,000(2)
MINORITY INTEREST................................................. 85,750 92,390(3)

STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value per share; 25,000,000
authorized; none issued and outstanding; 8,000,000 issued and
outstanding on an as adjusted basis........................... -- 200,000
Common Stock, $.01 par value per share; 100,000,000 authorized;
37,770,158 issued and outstanding, 38,618,678 issued and
outstanding on an as adjusted basis(4)........................ 378 386
Additional paid in capital...................................... 448,287 464,461
Accumulated (deficit)/earnings.................................. 0 0
------------ ------------
Total stockholders' equity.................................... 448,665 464,847
------------ ------------
Total capitalization.......................................... $ 1,074,688 $ 1,267,195
</TABLE>

- ------------------------

(1) Includes the Operating Partnership's proportionate share of the mortgage
debt of three joint venture properties (two of which are unconsolidated).

(2) Reflects the net effect of $174,500 in borrowings incurred under the Credit
Facilities since December 31, 1997 and application of the net proceeds
hereof.

(3) Reflects the issuance in January 1998 of 513,259 Units in connection with a
property acquisition.

(4) Reflects the issuance in February 1998 of 791,152 shares of Common Stock in
a public offering. Does not include Common Stock reserved for issuance upon
(i) possible exchange of 7,674,575 Units and (ii) exercise of 2,798,564
options granted pursuant to the Company's Stock Option Plans on an as
adjusted basis.

S-22
<PAGE>
THE PROPERTIES

As of December 31, 1997, the Company owned 155 Properties (including three
joint venture properties) encompassing approximately 13.6 million rentable
square feet. These Properties consisted of 58 Class A Office Properties
encompassing approximately 7.6 million rentable square feet, 95 Industrial
Properties encompassing approximately 6.0 million rentable square feet and two
free-standing 10,000 square foot retail properties. The rentable square feet of
each Property has been determined for these purposes based on the aggregate
leased square footage specified in currently effective leases and, with respect
to vacant space, management's estimate. In addition, since December 31, 1997,
the Company has acquired 27 properties and entered into contracts or letters of
intent to acquire nine additional properties, encompassing approximately 6.0
million square feet in the aggregate. The Company also owned or had contracted
to acquire approximately 847 acres of land in 17 separate parcels as of December
31, 1997.

The Company has historically emphasized the development and acquisition of
properties located in large scale office and industrial parks, or in close
proximity within the particular submarket, and, as of December 31, 1997,
approximately 66% of the Office Properties and 58% of the Industrial Properties
were so located (measured by rentable square footage). The Company believes that
owning properties in such locations provides certain strategic advantages,
including the following: (i) certain tenants prefer being located in or near a
park with other high quality companies to enhance their corporate image, (ii)
park areas afford tenants certain aesthetic amenities such as a common
landscaping plan, standardization of signage and common dining and recreational
facilities, (iii) tenants may expand (or contract) their business within a park
area, enabling them to centralize business function, (iv) a park area provides
tenants with access to other tenants and may facilitate business relationships
between tenants and (v) a critical mass of properties in a park area promotes
operating and leasing efficiencies for the Company.

Also, as of December 31, 1997, the Company had invested approximately $72.5
million in certain mortgage indebtedness encumbering five Class A Office
Properties on Long Island encompassing approximately 927,000 square feet, a 400
acre parcel of land and a 586,000 square foot Industrial Property in New Jersey.

Set forth below is a summary of certain information relating to the
Company's Properties, categorized by office and industrial park, as of December
31, 1997.

OFFICE PROPERTIES

GENERAL. As of December 31, 1997, the Company owned or had an interest in
58 Class A Office Properties that encompass approximately 7.6 million square
feet. As of December 31, 1997, these Office Properties were approximately 92%
leased to approximately 696 tenants.

The Office Properties are Class A office buildings and are well-located,
well-maintained and professionally managed. In addition, these properties are
modern with high finishes and achieve among the highest rent, occupancy and
tenant retention rates within their sub-markets. Thirty-seven of the 58 Office
Properties are located in the following eight planned office parks: the 23 acre
North Shore Atrium, the 32 acre Huntington Melville Corporate Center, the 50
acre Nassau West Corporate Center, the 29.2 acre Tarrytown Corporate Center, the
seven acre Landmark Square, the 32 acre Executive Hill Office Park, the 76 acre
Reckson Executive Park and the 11 acre University Square. The buildings in these
office parks offer a full array of amenities including health clubs, racquetball
courts, sun decks, restaurants and computer controlled HVAC access systems and
conference centers. Management believes that the location, quality of
construction and amenities as well as the Company's reputation for providing a
high level of tenant service have enabled the Company to attract and retain a
national tenant base. The office tenants include national insurance companies,
"big six" accounting firms, "money center" commercial banks and health care
firms.

S-23
<PAGE>
A brief description of the eight office parks is set forth below.

THE NORTH SHORE ATRIUM. The North Shore Atrium is a 23 acre office park
that contains two office buildings and is located in Syosset, Long Island.
Reckson commenced development of this office park in 1977. Working closely with
the town of Oyster Bay, Long Island, Reckson proceeded to retrofit a 160,000
square foot vacant industrial property purchased from Grumman Corporation in
1977 into a Class A office building. Completed in 1978, North Shore Atrium I is
an approximately 210,000 square foot office building that offers tenants a
variety of amenities, including a health club, racquetball courts, conference
centers, and restaurants. In 1979, as a result of this project, Reckson received
the town of Oyster Bay's Economic Achievement Award. The project also earned
Reckson the American Institute of Architects' 1980 Archi Award for architectural
excellence and creativity. Shortly after completing North Shore Atrium I,
Reckson initiated Phase II of this project and completed development of North
Shore Atrium II, an approximately 100,000 square foot office building with
amenities comparable to those of Phase I. Major tenants of the North Shore
Atrium include CIGNA and New York Life.

THE HUNTINGTON MELVILLE CORPORATE CENTER. Development of this office park
was begun by Reckson in 1980. Built on 32 acres at the intersection of Route 110
and the Long Island Expressway, the Huntington Melville Corporate Center
currently contains six office buildings with approximately 750,000 rentable
square feet. Four of these buildings encompassing approximately 485,000 rentable
square feet are owned by the Company and the Company has been granted an option
to acquire a fifth building encompassing approximately 186,000 rentable square
feet (225 Broadhollow Road). Management believes that the office buildings in
this office park were among the first on Long Island to offer tenants a
sophisticated computer controlled HVAC access system. Other amenities include
health clubs, racquetball courts, a travel agency, an indoor track, outdoor
fitness trails, conference centers and a variety of restaurants. In 1983,
Reckson received its second Archi Award for architectural excellence in
connection with this project. Major tenants of this office park include
PaineWebber, Coopers & Lybrand, Vytra Healthcare, Chase Manhattan Bank and Ernst
& Young.

THE NASSAU WEST CORPORATE CENTER. The Nassau West Corporate Center is
Reckson's most recent large scale office park project. Reckson commenced this
project in 1982 when it agreed to ground lease 50 acres in Mitchel Field in
Uniondale, Long Island for 99 years from Nassau County. Today, the Nassau West
Corporate Center contains three buildings with approximately 1 million rentable
square feet and is situated in the heart of Long Island's financial district.
Nassau West Corporate Center I was the first building to be developed by Reckson
in this office park. The building opened for tenants in 1982 and offers tenants
various amenities, including conference centers and a health club. Shortly
thereafter, Reckson completed development of Nassau West Corporate Center II, an
approximately 210,000 square foot office building that offers tenants comparable
amenities as well as an indoor track, racquetball courts and an art gallery.
Major tenants of the Nassau West Corporate Center office park include First Card
Services, State Farm Insurance Company, Liberty Mutual Insurance Company, Bank
of America and Phoenix Mutual Life.

In 1991, Reckson completed development of the Omni office complex in this
park. The 575,000 square foot office complex is the centerpiece of the Nassau
West Corporate Center. The Omni office complex is the largest office property in
which the Company owns an interest. The Company owns through the Operating
Partnership a 60% managing general partner interest in the Omni Partnership, the
Property Partnership that owns the Omni. Through such partnership interest, the
Company has the sole authority to conduct the business and affairs of the Omni
Partnership subject to the limitations set forth in the Omni Partnership
Agreement.

THE TARRYTOWN CORPORATE CENTER. The Tarrytown Corporate Center is one of
Westchester's largest office parks with more than 1.2 million square feet of
office space and a 444-room Marriott Hotel. Completed in 1972, Tarrytown
Corporate Center was the first office development undertaken in the Route 119
corridor in Westchester County, an area that has developed into a prime
commercial location.

S-24
<PAGE>
Major tenants at the Center include Citibank, Ford Motor Credit, U.S. Philips,
Xerox and the Ciba-Geigy Corporation (which maintains its corporate headquarters
at the Center). Designed by the award-winning architectural firm of Warshauer,
Mellusi, and Warshauer, Tarrytown Corporate Center includes seven office
buildings encompassing approximately 991,000 square feet. The Company has
acquired six of such office buildings encompassing approximately 876,000 square
feet.

LANDMARK SQUARE. Landmark Square is a seven acre office complex that
contains six buildings and is located in Stamford, Connecticut. Landmark Square
was developed between 1973 and 1984 by F.D. Rich Company and contains an
aggregate of approximately 800,000 square feet. Landmark Square is contiguous to
Stamford Town Center, a 900,000 square foot upscale shopping mall, and offers
such amenities as a full service athletic facility and the Landmark Club, one of
Stamford's premier dining clubs. The Company has commenced an approximately
$11.5 million, five year capital improvement program at the complex. Tenants at
Landmark Square include Guiness PLC/United Distillers, Crown Theatre, McKinsey &
Co. and Fleet Bank.

EXECUTIVE HILL OFFICE PARK. Executive Hill is a 32 acre office park that
contains four buildings with approximately 392,000 square feet and is located in
West Orange, New Jersey, adjacent to Route 280, a major interstate highway.
Executive Hill was developed between 1971 and 1984 by various entities
associated with Robert Heller, a developer in Northern New Jersey. One of the
properties in the office park, 10 Rooney Circle, was purchased as a vacant
70,000 square foot building that has undergone a complete renovation including
the reskinning of its facade in granite, installation of two new lobbies and
development of a new entranceway. The property is now fully leased to two
tenants. Tenants at Executive Hill include Chase Manhattan Bank, International
Business Machines, Computer Science Corporation and State Farm Insurance
Company.

RECKSON EXECUTIVE PARK. The Reckson Executive Park is a 76 acre office park
located in Rye Brook, New York. Reckson Executive Park consists of six buildings
encompassing 541,881 square feet and a 31.6 acre development parcel with
approvals for 345,000 square feet of office space. MCI Telecommunications
Corporation is the largest tenant occupying 55% of the total rentable area.
Reckson Executive Park is situated in the eastern submarket of Westchester and
is 3.5 miles from Greenwich, Connecticut. Reckson Executive Center is in close
proximity to the Westchester County Airport as well as several major
thoroughfares.

UNIVERSITY SQUARE. University Square is a 32 acre office park located in
Princeton, New Jersey. University Square consists of three buildings
encompassing 131,105 square feet and an 18 acre parcel of land which will be
developed with 310,000 square feet of Class A office space. Major tenants
include Logic Works, Deloitte & Touche and Eastman Kodak.

LEASING ACTIVITY. For the three month period ended December 31, 1997, Base
Rent (defined as gross rent excluding payments by tenants on account of real
estate tax, operating expense calculations and base electrical charges) for
released or renewed office space increased by 7.6% on a cash basis and by 17.9%
on a straightline basis over the related expiring Base Rent.

S-25
<PAGE>
The following table sets forth a schedule of the lease expirations for the
Long Island Office Properties (excluding the Omni) for existing leases as of
December 31, 1997, assuming that none of the tenants exercises renewal options
or termination rights, if any.

<TABLE>
<CAPTION>
CUMULATIVE
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
LEASED LEASED RENT PER
SQUARE FEET SQUARE FEET SQUARE FEET RENT SQUARE FOOT
NUMBER OF SUBJECT TO REPRESENTED REPRESENTED UNDER UNDER
LEASES EXPIRING BY EXPIRING BY EXPIRING EXPIRING EXPIRING
YEAR OF LEASE EXPIRATION EXPIRING LEASES LEASES LEASES LEASES(1) LEASES(2)
- ------------------------------------------ ------------- ----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998...................................... 38 231,917 11.9% 11.9% $ 5,497,786 $ 23.71
1999...................................... 30 122,966 6.3% 18.2% $ 2,554,448 $ 20.77
2000...................................... 46 266,547 13.6% 31.8% $ 6,141,831 $ 23.04
2001...................................... 39 219,597 11.2% 43.0% $ 5,152,496 $ 23.46
2002...................................... 33 262,045 13.4% 56.4% $ 6,163,554 $ 23.52
2003...................................... 23 202,839 10.4% 66.8% $ 4,095,408 $ 20.19
2004 and Thereafter....................... 52 650,174 33.2% 100.0% -- --
--- ----------- -----
Total............................... 261 1,956,085 100.0%
--- ----------- -----
--- ----------- -----
</TABLE>

- ------------------------

(1) Represents annualized Base Rent as of the lease expiration date plus
non-recoverable operating expense pass-throughs attributable to leases
expiring during the referenced period.

(2) Total annual Base Rent of leases that expire during such period (calculated
as described in (1)) divided by total square footage under such leases.

The following chart provides lease expiration information for the Omni for
existing leases as of December 31, 1997, assuming that none of the tenants
exercise renewal options or termination rights, if any.

<TABLE>
<CAPTION>
CUMULATIVE
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
LEASED LEASED RENT PER
SQUARE FEET SQUARE FEET SQUARE FEET RENT SQUARE FOOT
NUMBER OF SUBJECT TO REPRESENTED REPRESENTED UNDER UNDER
LEASES EXPIRING BY EXPIRING BY EXPIRING EXPIRING EXPIRING
YEAR OF LEASE EXPIRATION EXPIRING LEASES LEASES LEASES LEASES(1) LEASES(2)
- ------------------------------------------ --------------- ----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998...................................... -- -- -- -- -- --
1999...................................... -- -- -- -- -- --
2000...................................... 5 66,131 12.0% 12.0% $ 2,240,601 $ 33.88
2001...................................... 4 32,680 5.9% 17.9% $ 1,078,520 $ 33.00
2002...................................... 5 136,804 24.7% 42.6% $ 3,807,359 $ 27.83
2003...................................... 4 55,077 10.0% 52.6% $ 1,622,269 $ 29.45
2004 and thereafter....................... 10 261,842 47.4% 100.0% -- --
--
----------- -----
Total............................... 28 552,534 100.0%
--
--
----------- -----
----------- -----
</TABLE>

- ------------------------

(1) Represents annualized Base Rent as of the lease expiration date plus
non-recoverable operating expense pass-throughs attributable to leases
expiring during the referenced period.

(2) Total annual Base Rent of leases that expire during such period (calculated
as described in (1)) divided by total square footage under such leases.

S-26
<PAGE>
The following table sets forth a schedule of new leases signed and the
average annual Base Rent per leased square foot for the Long Island Office
Properties for the years 1991 to 1997.

<TABLE>
<CAPTION>
AVERAGE ANNUAL BASE RENT PER
YEAR NUMBER OF LEASES LEASED SQUARE FOOT(1)
- ------------------------------------------------------------------ --------------------- -----------------------------
<S> <C> <C>
1997.............................................................. 36 $ 25.14
1996.............................................................. 44 $ 22.83
1995.............................................................. 34 $ 24.96
1994.............................................................. 55 $ 22.28
1993.............................................................. 40 $ 21.77
1992.............................................................. 35 $ 23.60
1991.............................................................. 29 $ 24.12
</TABLE>

- ------------------------

(1) Represents average annual Base Rent from signed leases over the term of such
leases divided by leased square feet.

The following table sets forth a schedule of the lease expirations for the
Westchester Properties for existing leases as of December 31, 1997, assuming
that none of the tenants exercise renewal options or termination rights, if any.

<TABLE>
<CAPTION>
CUMULATIVE
PERCENTAGE OF PERCENTAGE OF
TOTAL LEASED TOTAL LEASED RENT PER
SQUARE FEET SQUARE FEET SQUARE FEET SQUARE
NUMBER OF SUBJECT TO REPRESENTED BY REPRESENTED BY RENT UNDER FOOT UNDER
LEASES EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
YEAR OF LEASE EXPIRATION EXPIRING LEASES LEASES LEASES LEASES(1) LEASES(2)
- -------------------------------------- ------------- ----------- --------------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998.................................. 32 169,237 9.0% 9.0% $ 3,279,431 $ 19.38
1999.................................. 25 86,454 4.6% 13.6% $ 1,777,483 $ 20.56
2000.................................. 32 203,249 10.9% 24.5% $ 4,204,728 $ 20.69
2001.................................. 33 264,953 14.2% 38.7% $ 5,993,894 $ 22.62
2002.................................. 38 333,136 17.8% 56.5% $ 6,589,674 $ 19.78
2003.................................. 16 106,039 5.7% 62.2% $ 2,053,729 $ 19.37
2004 and thereafter................... 33 708,006 37.8% 100.0% -- --
--- ----------- -----
Total........................... 209 1,871,074 100.0%
--- ----------- -----
--- ----------- -----
</TABLE>

- ------------------------

(1) Represents annualized Base Rent as of the lease expiration date plus
non-recoverable operating expense pass-throughs attributable to leases
expiring during the referenced period.

(2) Total annual Base Rent of leases that expire during such period (calculated
as described in (1)) divided by total square footage under such leases.

S-27
<PAGE>
The following table sets forth a schedule of new leases signed and the
average annual Base Rent per leased square foot for the Westchester Properties
for the years 1996 and 1997.

- ------------------------

(1) Represents average annual Base Rent from signed leases over the term of such
leases divided by leased square feet.

(2) Excludes tenant improvement costs associated with leasing the Property
located at 555 White Plains Road, Tarrytown, New York. This Property was
acquired for $39 per square foot in April 1996 and was 37% leased at the
time of acquisition. The Company has renovated and repositioned this
Property and, at December 31, 1996, it was 100% leased. Average annual Base
Rent per leased square foot for the Westchester Office Properties for 1996
including this Property was $19.39.

The following table sets forth a schedule of the lease expirations for the
Connecticut Office Properties for existing leases as of December 31, 1997,
assuming that none of the tenants exercise renewal options or termination
rights, if any.

<TABLE>
<CAPTION>
CUMULATIVE
PERCENTAGE OF PERCENTAGE OF
TOTAL LEASED TOTAL LEASED RENT PER
SQUARE FEET SQUARE FEET SQUARE FEET SQUARE
NUMBER OF SUBJECT TO REPRESENTED BY REPRESENTED BY RENT UNDER FOOT UNDER
LEASES EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
YEAR OF LEASE EXPIRATION EXPIRING LEASES LEASES LEASES LEASES(1) LEASES(2)
- -------------------------------------- ------------- ----------- --------------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998.................................. 11 34,914 5.0% 5.0% $ 751,866 $ 21.53
1999.................................. 15 38,530 5.5% 10.5% $ 803,540 $ 20.86
2000.................................. 25 102,754 14.7% 25.2% $ 2,307,009 $ 22.45
2001.................................. 17 89,064 12.7% 37.9% $ 2,237,628 $ 25.12
2002.................................. 12 41,644 6.0% 43.9% $ 1,029,495 $ 24.72
2003.................................. 8 80,929 11.6% 55.5% $ 2,315,104 $ 28.61
2004 and thereafter................... 24 310,990 44.5% 100.0% -- --
--- ----------- -----
Total........................... 112 698,825 100.0%
--- ----------- -----
--- ----------- -----
</TABLE>

- ------------------------

(1) Represents annualized Base Rent as of the lease expiration date plus
non-recoverable operating expense pass-throughs attributable to leases
expiring during the referenced period.

(2) Total annual Base Rent of leases that expire during such period (calculated
as described in (1)) divided by total square footage under such leases.

The following table sets forth a schedule of new leases signed and the
average annual Base Rent per leased square foot for the Connecticut Office
Properties for the years 1996 and 1997.

- ------------------------

(1) Represents average annual Base Rent from signed leases over the term of such
leases divided by leased square feet.

S-28
<PAGE>
The following table sets forth a schedule of the lease expirations for the
New Jersey Properties for existing leases as of December 31, 1997, assuming that
none of the tenants exercise renewal options or termination rights, if any.

<TABLE>
<CAPTION>
CUMULATIVE
PERCENTAGE OF PERCENTAGE OF
TOTAL LEASED TOTAL LEASED RENT PER
SQUARE FEET SQUARE FEET SQUARE FEET SQUARE
SUBJECT TO REPRESENTED BY REPRESENTED BY RENT UNDER FOOT UNDER
NUMBER OF EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
YEAR OF LEASE EXPIRATION LEASES EXPIRING LEASES LEASES LEASES LEASES(1) LEASES(2)
- --------------------------------- ------------------- ----------- --------------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998............................. 13 202,869 16.0% 16.0% $ 4,153,594 $ 20.47
1999............................. 14 90,230 7.1% 23.1% $ 1,759,997 $ 19.51
2000............................. 18 176,432 14.0% 37.1% $ 3,318,673 $ 18.81
2001............................. 15 221,574 17.5% 54.6% $ 3,974,632 $ 17.94
2002............................. 15 150,357 11.9% 66.5% $ 3,039,976 $ 20.22
2003............................. 1 185,233 14.6% 81.1% $ 3,004,891 $ 16.22
2004 and thereafter.............. 11 238,665 18.9% 100.0% -- --
--
----------- -----
Total...................... 87 1,265,360 100.0%
--
--
----------- -----
----------- -----
</TABLE>

- ------------------------

(1) Represents annualized Base Rent as of the lease expiration date plus
non-recoverable operating expense pass-throughs attributable to leases
expiring during the referenced period.

(2) Total annual Base Rent of leases that expire during such period (calculated
as described in (1) divided by total square footage under such leases.

In 1997, the Company signed five new leases at the New Jersey Properties for
an average annual Base Rent per leased square foot of $19.88. Average annual
Base Rent per leased square foot represents annual Base Rent from signed leases
over the term of such leases divided by leased square feet.

S-29
<PAGE>
TENANT INFORMATION. The Office Properties are leased to approximately 696
tenants which engage in a wide variety of businesses including insurance
companies, accounting firms, brokerage firms, commercial banks and health care
providers. For the 12-month period ending December 31, 1997, the largest office
property tenant, MCI Telecommunications Corporation, accounted for approximately
3.52% of the Company's pro forma total annual Base Rent. The following table
sets forth the annual Base Rent at December 31, 1997 derived from the 30 largest
office tenants for the Office Properties.

<TABLE>
<CAPTION>
% OF
NUMBER SQUARE FEET ANNUAL BASE TOTAL ANNUAL
TENANTS(1) OF LEASES LEASED RENT(2)(3) BASE RENT
- ----------------------------------------------------------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
MCI Telecommunications..................................... 6 314,089 $ 5,432,735 3.52%
AT&T....................................................... 3 310,409 4,972,382 3.23
United Distillers.......................................... 5 118,197 3,262,974 2.11
Vytra Healthcare........................................... 2 145,530 3,247,017 2.11
Ciba Specialty Chemicals Corp.............................. 5 206,951 2,573,751 1.67
First Card Services Inc.................................... 1 108,000 2,253,649 1.46
Federal Insurance Co....................................... 1 71,855 1,993,976 1.29
First Unum Life Ins. Companies............................. 1 79,533 1,809,376 1.17
Episcopal Health Services.................................. 1 63,454 1,797,208 1.17
State Farm Insurance Co.................................... 4 74,458 1,765,773 1.15
Bank Of America............................................ 1 59,544 1,647,331 1.07
Liberty Mutual............................................. 4 76,938 1,632,844 1.06
Chase Manhattan Bank....................................... 3 58,512 1,391,018 .90
PaineWebber Inc............................................ 1 35,795 1,350,930 .88
North Fork Bank............................................ 4 57,004 1,175,141 .76
Dannon Company............................................. 2 52,335 1,146,576 .74
Logic Works................................................ 1 70,155 1,140,019 .74
McKinsey & Company Inc..................................... 4 46,952 1,120,799 .73
Amscan Inc................................................. 1 51,075 1,020,626 .66
U.S. Healthcare............................................ 1 33,314 920,466 .60
Connecticut General Life Ins. Co........................... 5 95,686 891,511 .58
International Business Machines Corp....................... 1 43,236 864,720 .56
Travelers Ins Co........................................... 1 41,432 855,914 .56
Allstate Insurance Co...................................... 2 40,460 827,438 .54
Patient Care Inc........................................... 2 43,145 824,614 .53
Certilman Balin Adler & Hyman, LLP......................... 1 36,766 816,205 .53
M & H Brokerage Inc........................................ 1 39,059 767,894 .50
Hartford Insurance Company................................. 1 33,464 730,296 .47
Ernst & Young, LLP......................................... 1 29,613 710,712 .46
Margolin Winer & Evens..................................... 1 35,904 691,152 .45
--
----------- ------------- -----
Total................................................ 67 2,472,865 $ 49,635,047 32.20%
--
--
----------- -------------
----------- -------------
AS A % OF TOTAL OFFICE LEASED.............................. 9.6% 39.1% 40.9%
</TABLE>

- ------------------------

(1) Excludes Executive Center tenants. Executive Center tenants account for
annual Base Rent of $1,977,542.

(2) Represents Base Rent of signed leases at December 31, 1997 adjusted for
scheduled contractual increases during the 12 months ending December 31,
1998. Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12-month period ending December 31, 1998.

(3) Includes the Company's proportionate share of unconsolidated joint venture
property.

S-30
<PAGE>
DISTRIBUTION OF LEASES BY LEASED SPACE. The following table sets forth
information relating to the diversity of the tenants at the Office Properties
based upon square feet under lease at December 31, 1997.

<TABLE>
<CAPTION>
ANNUAL
NUMBER PERCENT TOTAL PERCENT BASE RENT PERCENT
SQUARE FEET UNDER LEASE OF LEASES OF TOTAL SQUARE FEET OF TOTAL (THOUSANDS)(1) OF TOTAL
- -------------------------------------------- ------------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Less than 2,501............................. 253 36.3% 362,916 5.7% $ 6,754 5.5%
2,501-5,000................................. 153 22.0% 550,509 8.7% $ 10,535 8.7%
5,001-10,000................................ 130 18.7% 926,253 14.7% $ 18,179 15.0%
10,001-20,000............................... 83 11.9% 1,113,485 17.6% $ 21,432 17.6%
20,001-40,000............................... 55 7.9% 1,565,929 24.8% $ 30,673 25.3%
40,001+..................................... 22 3.2% 1,797,772 28.5% $ 33,875 27.9%
--- ----- ----------- ----- ------------- -----
696 100.0% 6,316,864 100.0% $ 121,448 100.0%
--- ----- ----------- ----- ------------- -----
--- ----- ----------- ----- ------------- -----
</TABLE>

- ------------------------

(1) Represents Base Rent of signed leases at December 31, 1997 adjusted for
scheduled contractual increases during the 12 months ending December 31,
1998 Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12-month period ending December 31, 1998.

OFFICE PROPERTY CHART. The following table sets forth certain information
as of December 31, 1997 for each of the Office Properties owned by the Company
at such time.
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
COMPANY'S (GROUND LEASE LAND NUMBER
PERCENTAGE EXPIRATION YEAR AREA OF SQUARE
PROPERTY OWNERSHIP DATE)(1) CONSTRUCTED (ACRES) FLOORS FEET
- ------------------------------------------- ------------- -------------- --------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Huntington Melville
Corporate Center
Melville, NY
200 Broadhollow Rd....................... 100% Fee 1981 4.6 4 67,432
48 South Service Rd...................... 100% Fee 1986 7.3 4 125,372
395 North Service Rd..................... 100% Leasehold
(2081) 1988 7.5 4 187,393
35 Pinelawn Rd........................... 100% Fee 1980 6.0 2 105,241
275 Broadhollow Road....................... 100% Fee 1970 5.8 4 124,441
1305 Walt Whitman Road (4)................. 100% Fee 1950 18.1 3 167,400
----- ----------
Total Huntington Melville
Corporate Center (5)..................... 49.3 777,279
----- ----------
----- ----------
North Shore Atrium
Syosset, NY
6800 Jericho Turnpike
(North Shore Atrium I)................... 100% Fee 1977(6) 13.0 2 209,028
6900 Jericho Turnpike
(North Shore Atrium II).................. 100% Fee 1982 5.0 4 101,036
----- ----------
Total North Shore Atrium................... 18.0 310,064
----- ----------
----- ----------
Nassau West Corporate Center
Mitchel Field, NY
50 Charles Lindbergh Blvd................
(Nassau West Corporate Center II)........ 100% Leasehold
(2082) 1984 9.1 6 211,845
60 Charles Lindbergh Blvd.
(Nassau West Corporate Center I)......... 100% Leasehold
(2082) 1989 7.8 2 186,889
333 Earl Ovington Blvd. (The Omni)....... 60% Leasehold
(2088) 1991 30.6 10 575,000
90 Merrick Road.......................... 100% Leasehold
(2084) 1985 13.2 9 221,839
----- ----------
Total--Nassau West Corporate Center........ 60.7 1,195,573
----- ----------
----- ----------

S-31
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
COMPANY'S (GROUND LEASE LAND NUMBER
PERCENTAGE EXPIRATION YEAR AREA OF SQUARE
PROPERTY OWNERSHIP DATE)(1) CONSTRUCTED (ACRES) FLOORS FEET
- ------------------------------------------- ------------- -------------- --------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road.................... 100% Fee 1974 1.4 2 26,468
520 White Plains Road.................... 60% Fee (7) 1981 6.8 6 171,761
555 White Plains Road.................... 100% Fee 1972 4.2 5 121,585
560 White Plains Road.................... 100% Fee 1980 4.0 6 126,471
580 White Plains Road.................... 100% Fee 1977 6.1 6 170,726
660 White Plains Road.................... 100% Fee 1983 10.9 6 258,715
----- ----------
Total-Tarrytown Corporate Center 33.4 875,726
----- ----------
----- ----------
Royal Executive Park
Rye book, NY
1 International Dr....................... 100% Fee 1983 N/A 3 90,000
2 International Dr....................... 100% Fee 1983 N/A 3 90,000
3 International Dr....................... 100% Fee 1983 N/A 3 91,174
4 International Dr....................... 100% Fee 1986 N/A 3 86,694
5 International Dr....................... 100% Fee 1986 N/A 3 90,000
6 International Dr....................... 100% Fee 1986 N/A 3 94,016
----- ----------
Total Royal Executive Park................. 44.4 541,884
----- ----------
----- ----------
Landmark Square
Stamford, CT
One Landmark Square...................... 100% Fee 1973 N/A 22 296,716
Two Landmark Square...................... 100% Fee 1976 N/A 3 39,701
Three Landmark Square.................... 100% Fee 1978 N/A 6 128,286
Four Landmark Square..................... 100% Fee 1977 N/A 5 104,446
Five Landmark Square..................... 100% Fee 1976 N/A 3 57,273
Six Landmark Square...................... 100% Fee 1984 N/A 10 171,899
----- ----------
Total-Landmark Square...................... 7.2 798,321
----- ----------
----- ----------
Stand-alone Long Island
Properties
88 Duryea Rd.
Melville, NY............................. 100% Fee 1986 1.5 2 25,061
310 East Shore Rd.
Great Neck, NY........................... 100% Fee 1981 1.5 4 50,000
333 East Shore Rd.
Great Neck, NY........................... 100% Fee 1976 1.5 2 17,715
520 Broadhollow Rd.
Melville, New York....................... 100% Fee 1978 7.0 1 83,176
1660 Walt Whitman Rd.
Melville, New York....................... 100% Fee 1980 6.5 1 73,115
125 Baylis Road
Melville, New York....................... 100% Fee 1980 8.2 2 98,329
400 Garden City Plaza
Garden City, NY.......................... 100% Fee 1989 5.7 5 176,073
150 Motor Parkway
Hauppauge, NY............................ 100% Fee 1984 11.3 4 191,447
----- ----------
Total Stand-alone Long
Island Properties........................ 43.2 714,916
----- ----------
----- ----------

<CAPTION>
ANNUAL
BASE NUMBER
ANNUAL RENT PER OF
PERCENT BASE LEASED TENANT
PROPERTY LEASED RENT(2)(3) SQ. FT. LEASES
- ------------------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road.................... 96.2% $ 473,430 $ 18.59 18
520 White Plains Road.................... 100.0% $ 3,192,362 $ 18.59 1
555 White Plains Road.................... 96.8% $ 1,802,001 $ 15.31 8
560 White Plains Road.................... 100.0% $ 2,378,519 $ 18.61 19
580 White Plains Road.................... 97.5% $ 2,775,832 $ 16.67 23
660 White Plains Road.................... 98.9% $ 4,802,073 $ 18.76 52
----------- ---
Total-Tarrytown Corporate Center 98.8% $15,424,217 $ 17.83 121
----------- ---
----------- ---
Royal Executive Park
Rye book, NY
1 International Dr....................... 100.0% $ 1,125,000 $ 12.50 1
2 International Dr....................... 100.0% $ 1,125,000 $ 12.50 1
3 International Dr....................... 93.3% $ 1,553,377 $ 18.27 5
4 International Dr....................... 95.6% $ 1,790,042 $ 21.60 9
5 International Dr....................... 100.0% $ 2,416,500 $ 26.85 1
6 International Dr....................... 98.0% $ 1,391,926 $ 15.11 7
----------- ---
Total Royal Executive Park................. 97.8% $ 9,401,845 $ 20.04 24
----------- ---
----------- ---
Landmark Square
Stamford, CT
One Landmark Square...................... 84.4% $ 5,229,935 $ 20.87 58
Two Landmark Square...................... 81.8% $ 701,190 $ 21.58 9
Three Landmark Square.................... 79.7% $ 2,432,326 $ 23.79 18
Four Landmark Square..................... 96.4% $ 1,827,791 $ 18.14 18
Five Landmark Square..................... 87.7% $ 175,000 $ 3.48 1
Six Landmark Square...................... 94.6% $ 3,633,757 $ 22.35 8
----------- ---
Total-Landmark Square...................... 87.5% $13,999,999 $ 20.04 112
----------- ---
----------- ---
Stand-alone Long Island
Properties
88 Duryea Rd.
Melville, NY............................. 79.6% $ 308,404 $ 15.46 3
310 East Shore Rd.
Great Neck, NY........................... 100.0% $ 1,148,590 $ 22.92 21
333 East Shore Rd.
Great Neck, NY........................... 99.6% $ 434,960 $ 24.64 9
520 Broadhollow Rd.
Melville, New York....................... 100.0% $ 1,514,193 $ 18.20 5
1660 Walt Whitman Rd.
Melville, New York....................... 99.7% $ 1,224,483 $ 16.79 5
125 Baylis Road
Melville, New York....................... 88.8% $ 1,183,658 $ 13.56 10
400 Garden City Plaza
Garden City, NY.......................... 95.3% $ 3,491,953 $ 20.82 23
150 Motor Parkway
Hauppauge, NY............................ 70.4% $ 2,310,756 $ 17.14 19
----------- ---
Total Stand-alone Long
Island Properties........................ 88.6% $11,616,997 $ 18.33 95
----------- ---
----------- ---
</TABLE>

S-32
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
COMPANY'S (GROUND LEASE LAND NUMBER
PERCENTAGE EXPIRATION YEAR AREA OF SQUARE
PROPERTY OWNERSHIP DATE)(1) CONSTRUCTED (ACRES) FLOORS FEET
- ------------------------------------------- ------------- -------------- --------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stand-alone Westchester
Properties
155 White Plains Road
Tarrytown, NY............................ 100% Fee 1963 13.2 2 60,909
235 Main Street
White Plains, NY......................... 100% Fee 1974(8) .4 6 83,237
245 Main Street
White Plains, NY......................... 100% Fee 1983 .4 6 73,543
2 Church Street
Ossining, NY............................. 100% Fee 1979 1.1 2 24,250
120 White Plains Road
Tarrytown, NY............................ 100% Fee 1984 9.7 6 203,000
80 Grasslands
Elmsford, NY............................. 100% Fee 1989 4.9 3 85,104
360 Hamilton Ave.
White Plains, NY (5)..................... 50% Fee 1977 1.5 12 365,000
----- ----------
Total--Stand-alone
Westchester Properties (6)............... 31.2 895,043
----- ----------
----- ----------
Executive Hill Office Park
West Orange, NJ..........................
100 Executive Dr......................... 100% Fee 1978 10.1 3 92,872
200 Executive Dr......................... 100% Fee 1980 8.2 4 102,630
300 Executive Dr......................... 100% Fee 1984 8.7 4 126,196
10 Rooney Circle......................... 100% Fee 1971 5.2 3 69,684
----- ----------
Total--Executive Hill Office
Park..................................... 32.2 391,382
----- ----------
----- ----------
University Square
Princeton, NJ............................
100 Campus Dr............................ 100% Fee 1987 N/A 1 27,350
104 Campus Dr............................ 100% Fee 1987 N/A 1 70,155
115 Campus Dr............................ 100% Fee 1987 N/A 1 33,600
----- ----------
Total--University Square 11.0 131,105
----- ----------
----- ----------
Stand-alone New Jersey
Properties
1 Paragon Dr.
Montvale, NJ............................. 100% Fee 1980 11.0 2 104,599
101 West John F.
Kennedy Pkwy.
Short Hills, NJ.......................... 100% Fee 1981 9.0 6 185,233
101 East John F.
Kennedy Pkwy.
Short Hills, NJ.......................... 100% Fee 1981 6.0 4 122,841
One Eagle Rock
Hanover, NJ.............................. 100% Fee 1986 10.4 6 140,000
3 University Plaza
Hackensack, NJ........................... 100% Fee 1985 10.6 6 216,403
1255 Broad Street
Clifton, NJ (4).......................... 100% Fee 1968 11.1 2 180,000
----- ----------
----- ----------
Total--Stand-alone New Jersey
Properties (5)........................... 58.1 949,076
----- ----------
----- ----------
Total--Office Properties (5)............... 388.7 7,580,369
----- ----------
----- ----------

<CAPTION>
ANNUAL
BASE NUMBER
ANNUAL RENT PER OF
PERCENT BASE LEASED TENANT
PROPERTY LEASED RENT(2)(3) SQ. FT. LEASES
- ------------------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Stand-alone Westchester
Properties
155 White Plains Road
Tarrytown, NY............................ 90.6% $ 1,021,179 $ 18.50 5
235 Main Street
White Plains, NY......................... 79.0% $ 1,156,248 $ 17.58 23
245 Main Street
White Plains, NY......................... 87.3% $ 1,298,363 $ 20.22 15
2 Church Street
Ossining, NY............................. 60.6% $ 214,463 $ 14.59 4
120 White Plains Road
Tarrytown, NY............................ 99.4% $ 4,388,428 $ 22.33 11
80 Grasslands
Elmsford, NY............................. 93.4% $ 1,509,382 $ 18.99 6
360 Hamilton Ave.
White Plains, NY (5)..................... -- -- -- --
----------- ---
Total--Stand-alone
Westchester Properties (6)............... 90.7% $ 9,588,063 $ 20.14 64
----------- ---
----------- ---
Executive Hill Office Park
West Orange, NJ..........................
100 Executive Dr......................... 100.0% $ 1,700,804 $ 18.31 12
200 Executive Dr......................... 88.9% $ 1,760,392 $ 19.29 16
300 Executive Dr......................... 99.0% $ 2,532,643 $ 20.28 12
10 Rooney Circle......................... 100.0% $ 1,406,904 $ 20.19 2
----------- ---
Total--Executive Hill Office
Park..................................... 96.8% $ 7,400,743 $ 19.53 42
----------- ---
----------- ---
University Square
Princeton, NJ............................
100 Campus Dr............................ 100.0% $ 339,125 $ 12.40 2
104 Campus Dr............................ 100.0% $ 1,140,019 $ 16.25 1
115 Campus Dr............................ 100.0% $ 602,144 $ 17.92 2
----------- ---
Total--University Square 100.0% $2,081,288, $ 15.87 5
----------- ---
----------- ---
Stand-alone New Jersey
Properties
1 Paragon Dr.
Montvale, NJ............................. 95.6% $ 1,138,187 $ 11.38 12
101 West John F.
Kennedy Pkwy.
Short Hills, NJ.......................... 100.0% $ 2,963,728 $ 16.00 1
101 East John F.
Kennedy Pkwy.
Short Hills, NJ.......................... 100.0% $ 1,965,456 $ 16.00 1
One Eagle Rock
Hanover, NJ.............................. 96.8% $ 609,525 $ 4.50 2
3 University Plaza
Hackensack, NJ........................... 97.9% $ 3,258,186 $ 15.37 24
1255 Broad Street
Clifton, NJ (4).......................... -- -- -- --
----------- ---
----------- ---
Total--Stand-alone New Jersey
Properties (5)........................... 98.2% $ 9,935,082 $ 13.15 40
----------- ---
----------- ---
Total--Office Properties (5)............... 92.1% $121,447,588 $ 19.21 696
-----------
----------- -----------
----------- ---
---
</TABLE>

- ------------------------
(1) Ground lease expirations assume exercise of renewal options by the lessee.

S-33
<PAGE>
(2) Represents Base Rent of signed leases at December 31, 1997 adjusted for
scheduled contractual increases during the 12 months ending December 31,
1998. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12-month period ending December 31, 1998.
Amounts included in rental revenue for financial reporting purposes have
been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.

(3) Base Rents differ from Effective Rents in that Effective Rents have been
adjusted on a straight-line basis for free rent periods, tenant improvements
and leasing commissions. Information regarding the Company's historical
tenant improvement and leasing commission costs is set forth under "The
Properties--Historical Non-Incremental Revenue-Generating Capital
Expenditures, Tenant Improvement Costs and Leasing Commissions."

(4) Property under re-development.

(5) Percent leased data excludes the properties under re-development.

(6) Year acquired; renovated in 1978.

(7) The actual fee interest in 520 White Plains Road is held by the County of
Westchester Industrial Development Agency. The fee interest in 520 White
Plains Road may be acquired if the outstanding principal balance under
certain loan agreements and annual basis installments are prepaid in full.

(8) Year renovated.

INDUSTRIAL PROPERTIES

GENERAL. As of December 31, 1997, the Company owned or had an interest in
95 Industrial Properties that encompass approximately 6.0 million rentable
square feet. All but six of the Industrial Properties are located on Long
Island. As of December 31, 1997, the Industrial Properties were 93.7% leased to
approximately 230 tenants. Many of the Industrial Properties have been
constructed with high ceiling heights (I.E., above 18 feet), upscale office
building facades, parking in excess of zoning requirements, drive-in and/or
loading dock facilities, and other features which permit them to be leased for
industrial and/or office purposes.

The Industrial Properties are leased to national tenants as well as to local
companies. These tenants utilize the Industrial Properties for distribution,
warehousing, research and development and light manufacturing/assembly
activities. Leases on the Industrial Properties are typically written for terms
ranging from three to seven years and require (i) payment of a Base Rent, (ii)
payments of real estate tax escalations over a base year, (iii) payments of
compounded annual increases to Base Rent and (iv) reimbursement of all operating
expenses. Electric costs are borne and paid directly by the tenant. Certain
leases are "triple net" (i.e., the tenant is required to pay in addition to
annual Base Rent, all operating expenses and real estate taxes). In virtually
all leases, the landlord is responsible for structural repairs. Renewal
provisions typically provide for renewal rents at market rates, provided that
such rates are not less than the most recent rental rates.

As of December 31, 1997, approximately 58% of the Industrial Properties,
measured by rentable square footage, were located in three large scale planned
industrial parks that were developed by Reckson. The following is a description
of these parks.

VANDERBILT INDUSTRIAL PARK. Developed by Reckson between 1961 and 1979,
Vanderbilt Industrial Park was the first planned industrial park on Long Island
and encompasses 50 buildings with approximately 3.6 million rentable square feet
on more than 400 acres. According to Cushman & Wakefield, Vanderbilt Industrial
Park is the second largest industrial park on Long Island (based on rentable
square feet). In developing this and other parks, Reckson attracted numerous
companies desiring to lease or own properties located within a Reckson park. For
certain companies desiring to own properties, Reckson provided construction and
other services throughout the building process. The Company owns or has an
interest in 47 Properties in this industrial park encompassing approximately 2.4
million rentable square feet which were 92.8% leased to approximately 112
tenants as of December 31, 1997. The average occupancy rates for these
Properties during the years 1993 through 1997 were 94.6%, 100%, 98.6%, 97.6% and
92.8%, respectively.

AIRPORT INTERNATIONAL PLAZA. This park is a 200 acre industrial park
containing 32 buildings with approximately 1.4 million rentable square feet and,
according to Cushman & Wakefield, is one of the 10

S-34
<PAGE>
largest industrial parks on Long Island (based on rentable square footage). The
Airport International Plaza project was developed by Reckson between 1969 and
1988 primarily to accommodate industrial research and development tenants and
was the first high-technology industrial park built in New York State. In 1973,
the project received an Archi Award for landscaping. The Company owns or has an
interest in 17 Properties in this industrial park encompassing approximately
811,000 rentable square feet that were 93.2% leased to approximately 52 tenants
as of December 31, 1997.

THE COUNTY LINE INDUSTRIAL CENTER. This industrial park was developed by
Reckson between 1972 and 1986 and encompasses six buildings with approximately
one million rentable square feet on more than 28 acres located in proximity to
the well-traveled "Route 110 corridor." The Company owns four Properties in this
industrial park encompassing approximately 342,000 rentable square feet that
were 100% leased to approximately 12 tenants as of December 31, 1997. The park
currently serves as the corporate headquarters for Liuski International and
Chyron Corporation.

In addition to its industrial parks, as of December 31, 1997, the Company
owned 27 stand-alone Industrial Properties (including one Property currently
under redevelopment). As of December 31, 1997, these Properties (excluding the
Property under redevelopment) were 93.8% leased to approximately 54 tenants.
These Properties are primarily tenanted by "high technology" firms and have
higher office finishes and Base Rental rates than the Properties located in the
industrial parks. In addition, the Company has been granted an option to acquire
one other standalone industrial property, encompassing approximately 39,500
square feet (593 Acorn Street).

LEASING ACTIVITY. For the three months ended December 31, 1997, Base Rent
for released or renewed industrial space increased by 6.8% on a cash basis and
by 13.3% on a straightline basis over the related expiring Base Rent.

The following table sets forth a schedule of the lease expirations for the
Industrial Properties for leases in place as of December 31, 1997, assuming that
none of the tenants exercises renewal options or termination rights, if any.

<TABLE>
<CAPTION>
PERCENTAGE OF CUMULATIVE
TOTAL LEASED PERCENTAGE OF RENT PER
SQUARE FEET SQUARE FEET TOTAL LEASED SQUARE FOOT
NUMBER OF SUBJECT TO REPRESENTED SQUARE FEET RENT UNDER UNDER
LEASES EXPIRING BY EXPIRING REPRESENTED BY EXPIRING EXPIRING
YEAR OF LEASE EXPIRATION EXPIRING LEASES LEASES EXPIRING LEASES LEASES(1) LEASES(2)
- -------------------------------------- ------------- ----------- --------------- ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
1998.................................. 44 538,095 9.9% 9.9% $ 4,321,971 $ 8.03
1999.................................. 43 694,496 12.8% 22.7% $ 4,466,392 $ 6.43
2000.................................. 35 599,423 11.0% 33.7% $ 3,628,471 $ 6.05
2001.................................. 35 958,831 17.7% 51.4% $ 6,434,417 $ 6.71
2002.................................. 24 203,663 3.8% 55.2% $ 1,724,969 $ 8.47
2003.................................. 15 719,661 13.2% 68.4% $ 3,482,658 $ 4.84
2004 and thereafter................... 34 1,715,191 31.6% 100.0% -- --
--- ----------- -----
Total........................... 230 5,429,360 100.0%
--- ----------- -----
--- ----------- -----
</TABLE>

- ------------------------

(1) Represents annualized Base Rent as of the lease expiration date plus
non-recoverable operating expense pass-throughs attributable to leases
expiring during the referenced period.

(2) Total annual Base Rent of leases that expire during such period (calculated
as described in (1)) divided by total square footage under such leases.

S-35
<PAGE>
The following table sets forth a schedule of new leases signed and the
average annual Base Rent per leased square foot for the Industrial Properties
for the years 1991 to 1997.

<TABLE>
<CAPTION>
AVERAGE ANNUAL BASE
NUMBER OF RENT PER LEASEDSQUARE
YEAR LEASES FOOT(1)
- --------------------------------------------------------- --------------- -------------------------
<S> <C> <C>
1997..................................................... 48 $ 6.70
1996..................................................... 41 $ 6.39
1995..................................................... 35 $ 5.99
1994..................................................... 59 $ 5.43
1993..................................................... 41 $ 5.28
1992..................................................... 46 $ 4.87
1991..................................................... 36 $ 4.21
</TABLE>

- ------------------------

(1) Represents average annual Base Rent from signed leases over the term of such
leases divided by leased square feet.

TENANT INFORMATION. The Industrial Properties are leased to approximately
230 tenants which utilize the Properties for distribution, warehousing, research
and development and light manufacturing/assembly activities. For the 12-month
period ending December 31, 1997, the largest industrial tenant, North American
Philips Corp., accounted for approximately 1.3% of the Company's pro forma total
annual Base Rent. The following table sets forth the annual Base Rent at
December 31, 1997 derived from the 15 largest industrial tenants for the
Industrial Properties:

<TABLE>
<CAPTION>
% OF TOTAL
ANNUAL BASE
TENANTS(1) NUMBER OF LEASES SQUARE FEET LEASED ANNUAL BASE RENT(2) RENT
- --------------------------------------- ------------------- ------------------ ------------------- ---------------
<S> <C> <C> <C> <C>
North American Philips Corp............ 1 245,704 $ 2,032,509 1.3%
Estee Lauder........................... 2 285,000 1,744,926 1.1
Symbol Technologies Inc................ 3 223,023 1,333,800 .9
New Breed Leasing Corporation.......... 1 297,000 1,308,808 .9
Enzon Inc.............................. 1 87,890 1,113,364 .7
American Tissue........................ 2 229,000 989,713 .6
Regent Sheffield Limited............... 1 76,312 893,860 .6
Timex Corp............................. 1 206,710 816,504 .5
Starads Inc............................ 1 92,000 772,800 .5
Petroleum Heat and Power Co., Inc...... 1 35,000 653,987 .4
Excel Importing Corp................... 1 110,654 645,539 .4
Nu Horizons Electronics Corp........... 1 78,000 622,578 .4
Fonar Corp............................. 1 78,240 596,903 .4
Robotic Vision Systems Inc............. 1 65,641 577,940 .4
Northrop Grumman....................... 1 60,000 546,075 .4
--
----- ---------- -------------------
Total................................ 19 2,170,174 $ 14,649,306 9.5%
--
--
----- ---------- -------------------
----- ---------- -------------------
AS A % OF TOTAL INDUSTRIAL LEASED...... 8.3% 40.0% 45.2%
</TABLE>

- ------------------------

(1) Excludes Executive Center tenants. Executive Center tenants account for
annual Base Rent of $376,853.

S-36
<PAGE>
DISTRIBUTION OF LEASES BY LEASED SPACE. The following table sets forth
information relating to the diversity of the Company's tenants at the Industrial
Properties under lease at December 31, 1997.

<TABLE>
<CAPTION>
ANNUAL BASE
NUMBER OF PERCENT OF TOTAL PERCENT OF RENT PERCENT OF
SQUARE FEET UNDER LEASE LEASES TOTAL SQUARE FEET TOTAL (THOUSANDS)(1) TOTAL
- ------------------------------------- ------------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Less than 2,501...................... 18 7.8% 35,959 .7% $ 248 .8%
2,501-5,000.......................... 48 20.9% 195,788 3.6% $ 1,210 3.7%
5,001-10,000......................... 54 23.5% 416,021 7.7% $ 3,192 9.8%
10,001-20,000........................ 39 16.9% 583,003 10.7% $ 3,241 10.0%
20,001-40,000........................ 37 16.1% 1,025,979 18.9% $ 6,568 20.3%
40,001+.............................. 34 14.8% 3,172,610 58.4% $ 17,957 55.4%
--- ----- ----------- ----- ------------- -----
230 100.0% 5,429,360 100.0% $ 32,416 100.0%
--- ----- ----------- ----- ------------- -----
--- ----- ----------- ----- ------------- -----
</TABLE>

- ------------------------

(1) Represents Base Rent of signed leases at December 31, 1997 adjusted for
scheduled contractual increases during the 12 months ending December 31,
1998. Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12-month period ending December 31, 1998.

S-37
<PAGE>
INDUSTRIAL PROPERTY CHART. The following table sets forth certain
information as of December 31, 1997 for each of the Industrial Properties owned
by the Company at such time.
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST PERCENTAGE
(GROUND OFFICE/
COMPANY'S LEASE LAND CLEARANCE RESEARCH AND
PERCENTAGE EXPIRATION YEAR AREA HEIGHT DEVELOPMENT SQUARE
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET)(1) FINISH FEET
- ---------------------------- ------------- ---------- --------------- ----------- --------------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park
Hauppauge, NY
360 Vanderbilt Motor
Parkway................... 100% Fee 1967 4.2 16 62% 54,000
410 Vanderbilt Motor
Parkway................... 100% Fee 1965 3.0 15 7% 41,784
595 Old Willets Path........ 100% Fee 1968 3.5 14 14% 31,670
611 Old Willets Path........ 100% Fee 1963 3.0 14 11% 20,000
631/641 Old Willets Path.... 100% Fee 1965 1.9 14 31% 25,000
651/661 Old Willets Path.... 100% Fee 1966 2.0 14 45% 25,000
681 Old Willets Path........ 100% Fee 1961 1.3 14 10% 15,000
740 Old Willets Path........ 100% Fee 1965 3.5 14 5% 30,000
325 Rabro Dr................ 100% Fee 1967 2.7 14 10% 35,000
250 Kennedy Dr.............. 100% Fee 1979 7.0 16 9% 127,980
90 Plant Ave................ 100% Fee 1972 4.3 16 13% 75,000
110 Plant Ave............... 100% Fee 1974 6.8 18 8% 125,000
55 Engineers Rd............. 100% Fee 1968 3.0 18 8% 36,000
65 Engineers Rd............. 100% Fee 1969 1.8 22 10% 23,000
85 Engineers Rd............. 100% Fee 1968 2.3 18 5% 40,800
100 Engineers Rd............ 100% Fee 1968 5.0 14 11% 88,000
150 Engineers Rd............ 100% Fee 1969 6.8 22 11% 135,000
20 Oser Ave................. 100% Fee 1979 5.0 16 18% 42,000
30 Oser Ave................. 100% Fee 1978 4.4 16 21% 42,000
40 Oser Ave................. 100% Fee 1974 3.1 16 33% 59,800
50 Oser Ave................. 100% Fee 1975 4.1 21 15% 60,000
60 Oser Ave................. 100% Fee 1975 3.3 21 19% 48,000
63 Oser Ave................. 100% Fee 1974 1.2 20 9% 22,000
65 Oser Ave................. 100% Fee 1975 1.2 18 10% 20,000
73 Oser Ave................. 100% Fee 1974 1.2 20 15% 20,000
80 Oser Ave................. 100% Fee 1974 1.1 18 25% 19,500
85 Nicon Ct................. 100% Fee 1978 (5) 6.1 30 10% 104,000
90 Oser Ave................. 100% Fee 1973 1.1 16 26% 37,500
104 Parkway Dr.............. 100% Fee 1985 (9) 1.8 15 50% 27,600
110 Ricefeld Ln............. 100% Fee 1980 (9) 2.0 15 25% 32,264
120 Ricefeld Ln............. 100% Fee 1983 (9) 2.0 15 24% 33,060
125 Ricefeld Ln............. 100% Fee 1973 (9) 2.0 14 20% 30,495
135 Ricefeld Ln............. 100% Fee 1981 (9) 2.1 15 10% 32,340
85 Adams Dr................. 100% Fee 1980 1.8 15 90% 20,000
395 Oser Ave................ 100% Fee 1980 6.1 14 100% 50,000
Leasehold
185 Oser Ave................ 100% (1999) 1974 2.0 18 40% 30,000
25 Davids Dr................ 100% Fee 1975 3.2 20 90% 40,000
45 Adams Ave................ 100% Fee 1979 2.1 18 90% 28,000
225 Oser Ave................ 100% Fee 1977 1.2 14 80% 10,000
180 Oser Ave................ 100% Fee 1978 3.4 16 35% 61,868
360 Oser Ave................ 100% Fee 1981 1.3 18 35% 23,000
400 Oser Ave................ 100% Fee 1982 9.5 16 30% 164,936
375 Oser Ave................ 100% Fee 1981 1.2 18 40% 20,000
425 Rabro Drive............. 100% Fee 1980 4.0 16 25% 65,641
390 Motor Parkway........... 100% Fee 1980 10.0 14 4% 181,155
600 Old Willets Path(6)..... 100% Fee 1965 4.5 14 25% 69,627
400 Moreland Road(6)........ 100% Fee 1967 6.3 17 10% 56,875
----- ---------
Total--Vanderbilt
Industrial Park......... 160.4 2,379,895
----- ---------
----- ---------
Airport International Plaza
Islip, NY
20 Orville Dr............... 100% Fee 1978 1.0 16 50% 12,852
25 Orville Dr............... 100% Fee 1970 2.2 16 100% 32,300
50 Orville Dr............... 100% Fee 1976 1.6 15 20% 28,000
65 Orville Dr............... 100% Fee 1971 2.2 14 13% 32,000
70 Orville Dr............... 100% Fee 1975 2.3 22 7% 41,508
80 Orville Dr............... 100% Fee 1988 6.5 16 21% 92,544
85 Orville Dr............... 100% Fee 1974 1.9 14 20% 25,000
95 Orville Dr............... 100% Fee 1974 1.8 14 10% 25,000
110 Orville Dr.............. 100% Fee 1979 6.4 24 15% 110,000
180 Orville Dr.............. 100% Fee 1982 2.3 16 18% 37,612
1101 Lakeland Ave........... 100% Fee 1983 4.9 20 8% 90,411
1385 Lakeland Ave........... 100% Fee 1973 2.4 16 18% 35,000
125 Wilbur Place............ 100% Fee 1977 4.0 16 31% 62,686
140 Wilbur Place............ 100% Fee 1973 3.1 20 37% 48,500
160 Wilbur Place............ 100% Fee 1978 3.9 16 30% 62,710
170 Wilbur Place............ 100% Fee 1979 4.9 16 28% 72,062
4040 Veterans Highway....... 100% Fee 1972 1.0 14 100% 2,800
----- ---------
Total--Airport
International Plaza..... 52.4 810,985
----- ---------
----- ---------

<CAPTION>
ANNUAL
BASE
RENT NUMBER
ANNUAL PER OF
PERCENT BASE LEASED SQ. TENANT
PROPERTY LEASED RENT(2)(3) FT. LEASES
- ---------------------------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Vanderbilt Industrial Park
Hauppauge, NY
360 Vanderbilt Motor
Parkway................... 100.0% $ 35,910 $ .67 1
410 Vanderbilt Motor
Parkway................... 100.0% $ 192,246 $ 4.60 4
595 Old Willets Path........ 100.0% $ 144,433 $ 4.56 4
611 Old Willets Path........ 100.0% $ 137,698 $ 6.88 2
631/641 Old Willets Path.... 56.0% $ 91,877 $ 6.56 2
651/661 Old Willets Path.... 100.0% $ 141,431 $ 5.66 7
681 Old Willets Path........ 100.0% $ 12,594 $ .84 1
740 Old Willets Path........ 100.0% $ 29,676 $ .99 1
325 Rabro Dr................ 100.0% $ 193,078 $ 5.44 2
250 Kennedy Dr.............. 100.0% $ 379,894 $ 2.97 1
90 Plant Ave................ 100.0% $ 193,035 $ 2.57 3
110 Plant Ave............... 100.0% $ 517,087 $ 4.14 1
55 Engineers Rd............. 100.0% $ 290,916 $ 8.08 1
65 Engineers Rd............. 100.0% $ 126,417 $ 5.50 1
85 Engineers Rd............. 100.0% $ 198,984 $ 4.88 2
100 Engineers Rd............ 100.0% $ 353,088 $ 4.01 1
150 Engineers Rd............ 100.0% $ 232,505 $ 1.72 1
20 Oser Ave................. 98.7% $ 323,107 $ 7.80 2
30 Oser Ave................. 100.0% $ 307,347 $ 7.32 5
40 Oser Ave................. 100.0% $ 310,555 $ 5.18 13
50 Oser Ave................. 100.0% $ 240,000 $ 4.00 1
60 Oser Ave................. 100.0% $ 192,000 $ 4.00 1
63 Oser Ave................. 100.0% $ 104,676 $ 4.76 1
65 Oser Ave................. 100.0% $ 113,628 $ 5.68 1
73 Oser Ave................. 100.0% $ 12,951 $ .65 1
80 Oser Ave................. 100.0% $ 62,114 $ 3.19 1
85 Nicon Ct................. 100.0% $ 472,626 $ 4.54 1
90 Oser Ave................. 100.0% $ 120,381 $ 3.21 1
104 Parkway Dr.............. 100.0% $ 91,000 $ 3.30 1
110 Ricefeld Ln............. 100.0% $ 149,921 $ 4.65 1
120 Ricefeld Ln............. 100.0% $ 160,000 $ 4.84 1
125 Ricefeld Ln............. 100.0% $ 187,299 $ 6.14 1
135 Ricefeld Ln............. 100.0% $ 193,164 $ 5.97 1
85 Adams Dr................. 100.0% $ 260,000 $ 13.00 1
395 Oser Ave................ 100.0% $ 400,000 $ 8.00 1

185 Oser Ave................ 100.0% $ 13,750 $ 8.46 1
25 Davids Dr................ 100.0% $ 293,495 $ 7.34 1
45 Adams Ave................ 100.0% $ 147,525 $ 6.27 1
225 Oser Ave................ 100.0% $ 66,250 $ 6.62 2
180 Oser Ave................ 72.2% $ 298,120 $ 6.33 9
360 Oser Ave................ 100.0% $ 128,800 $ 5.60 1
400 Oser Ave................ 76.5% $ 758,761 $ 6.02 23
375 Oser Ave................ 100.0% $ 137,250 $ 6.85 1
425 Rabro Drive............. 100.0% $ 577,940 $ 8.80 1
390 Motor Parkway........... 45.5% $ 300,947 $ 3.65 2
600 Old Willets Path(6)..... -- -- -- --
400 Moreland Road(6)........ -- -- -- --

Total--Vanderbilt
Industrial Park......... 92.8% $9,694,476 $ 4.64 112
----------
----------
Airport International Plaza
Islip, NY
20 Orville Dr............... 100.0% $ 96,697 $ 7.52 1
25 Orville Dr............... 72.4% $ 445,550 $ 13.24 2
50 Orville Dr............... 50.0% $ 129,099 $ 9.22 1
65 Orville Dr............... 100.0% $ 158,524 $ 4.95 2
70 Orville Dr............... 100.0% $ 219,020 $ 5.28 2
80 Orville Dr............... 100.0% $ 643,027 $ 6.95 9
85 Orville Dr............... 0.0% $ 0 $ 0 0
95 Orville Dr............... 100.0% $ 125,750 $ 5.03 1
110 Orville Dr.............. 100.0% $ 629,933 $ 5.73 1
180 Orville Dr.............. 100.0% $ 214,228 $ 5.70 2
1101 Lakeland Ave........... 100.0% $ 573,999 $ 6.35 1
1385 Lakeland Ave........... 100.0% $ 171,574 $ 4.90 3
125 Wilbur Place............ 100.0% $ 232,168 $ 4.86 10
140 Wilbur Place............ 100.0% $ 270,377 $ 5.57 2
160 Wilbur Place............ 100.0% $ 263,986 $ 4.21 6
170 Wilbur Place............ 96.5% $ 350,222 $ 5.03 8
4040 Veterans Highway....... 100.0% $ 54,061 $ 19.31 1
---------- ---
Total--Airport
International Plaza..... 94.2% $4,578,215 $ 6.06 52
---------- ---
---------- ---
</TABLE>

S-38
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST PERCENTAGE
(GROUND OFFICE/
COMPANY'S LEASE LAND CLEARANCE RESEARCH AND
PERCENTAGE EXPIRATION YEAR AREA HEIGHT DEVELOPMENT SQUARE
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET)(1) FINISH FEET
- ---------------------------- ------------- ---------- --------------- ----------- --------------- ----------------- ---------
County Line Industrial
Center Melville, NY
<S> <C> <C> <C> <C> <C> <C> <C>
5 Hub Dr.................... 100% Fee 1979 6.9 20 20% 88,001
10 Hub Dr................... 100% Fee 1975 6.6 20 15% 95,546
30 Hub Dr................... 100% Fee 1976 (9) 5.1 20 18% 73,127
265 Spagnoli Rd............. 100% Fee 1978 6.0 20 28% 85,500
----- ---------
Total--County Line
Industrial Center....... 24.6 342,174
----- ---------
----- ---------
Standalone Industrial
Properties
32 Windsor Pl. Islip, NY.... 100% Fee 1971 2.5 18 10% 43,000
42 Windsor Pl. Islip, NY.... 100% Fee 1972 2.4 18 8% 65,000
208 Blydenburgh Rd.
Islandia, NY.............. 100% Fee 1969 2.4 14 17% 24,000
210 Blydenburgh Rd.
Islandia, NY.............. 100% Fee 1969 1.2 14 16% 20,000
71 Hoffman Ln. Islandia,
NY........................ 100% Fee 1970 5.8 16 10% 30,400
135 Fell Ct. Islip, NY...... 100% Fee 1965 3.2 16 20% 30,000
----- ---------
Subtotal
Islip/Islandia........ 17.5 212,400
----- ---------
70 Schmitt Boulevard
Farmingdale, NY........... 100% Fee 1975 4.4 18 10% 76,312
105 Price Parkway
Farmingdale, NY........... 100% Fee 1969 12.0 26 8.5% 297,000
110 BiCounty Blvd
Farmingdale, NY........... 100% Fee 1984 9.5 19 45% 147,303
----- ---------
Subtotal Farmingdale.... 25.9 520,615
----- ---------
70 Maxess Rd. Melville,
NY........................ 100% Fee 1969 9.3 15 38% 78,000
20 Melville Road Melville,
NY........................ 100% Fee 1985 4.0 25 66% 67,922
65 Marcus Dr. Melville,
NY........................ 100% Fee 1988 5.0 18 50% 60,000
----- ---------
Subtotal Melville....... 18.3 -- 205,922
----- ---------

300 Motor Parkway Hauppauge,
NY........................ 100% Fee 1979 4.2 14 100% 55,942
1516 Motor Parkway
Hauppauge, NY............. 100% Fee 1981 7.9 24 5% 140,000
----- ---------
Subtotal Hauppauge...... 12.1 195,942
----- ---------

933 Motor Parkway Smithtown,
NY........................ 100% Fee 1973 5.6 20 26% 48,000
65 S. Service Rd.(4)
Plainview, NY............. 100% Fee 1961 1.6 14 10% 10,000
85 S. Service Rd. Plainview,
NY........................ 100% Fee 1961 1.6 14 60% 20,000
19 Nicholas Drive(5)
Yaphank, NY............... 100% Fee 1989 29.6 24 5% 145,000
48 Harbor Park Dr. Port
Washington, NY............ 100% Fee 1976 2.7 16 100% 35,000
110 Marcus Drive Huntington,
NY........................ 100% Fee 1980 6.1 20 39% 78,240
100 Andrews Road Hicksville,
NY........................ 100% Fee 1954 11.7 25 12% 167,500
----- ---------
Total--Standalone
Industrial Properties... 132.7 1,638,619
----- ---------
----- ---------
Standalone Westchester
Industrial Properties
100 Grasslands
Westchester............... 100% Fee 1964 3.6 16 100% 45,000
2 Macy Westchester.......... 100% Fee 1982 5.7 16 100% 26,000
500 Saw Mill Rd.
Westchester............... 100% Fee 1958 7.3 22 17% 92,000
----- ---------
Total--Standalone
Westchester Industrial
Properties.............. 16.6 163,000
----- ---------
----- ---------
Standalone New Jersey
Industrial Properties
40 Cragwood Rd. South
Plainfiled, NJ............ 100% Fee 1965 13.5 16 49% 135,000
492 River Rd.(6) Nutley,
NJ........................ 100% Fee 1952 17.3 13 100% 128,000
----- ---------
Total New Jersey
Standalone Industrial
Properties (7).......... 30.8 263,000
----- ---------
----- ---------

<CAPTION>
ANNUAL
BASE
RENT NUMBER
ANNUAL PER OF
PERCENT BASE LEASED SQ. TENANT
PROPERTY LEASED RENT(2)(3) FT. LEASES
- ---------------------------- ----------- ---------- ----------- -------------
County Line Industrial
Center Melville, NY
<S> <C> <C> <C> <C>
5 Hub Dr.................... 100.0% $ 479,106 $ 5.44 2
10 Hub Dr................... 100.0% $ 545,612 $ 5.71 5
30 Hub Dr................... 100.0% $ 374,454 $ 5.12 2
265 Spagnoli Rd............. 100.0% $ 585,012 $ 6.84 3
---------- ---
Total--County Line
Industrial Center....... 100.0% $1,984,184 $ 5.80 12
---------- ---
---------- ---
Standalone Industrial
Properties
32 Windsor Pl. Islip, NY.... 100.0% $ 128,128 $ 2.98 1
42 Windsor Pl. Islip, NY.... 100.0% $ 221,963 $ 3.41 1
208 Blydenburgh Rd.
Islandia, NY.............. 100.0% $ 97,190 $ 4.05 4
210 Blydenburgh Rd.
Islandia, NY.............. 100.0% $ 102,183 $ 5.11 2
71 Hoffman Ln. Islandia,
NY........................ 100.0% $ 167,641 $ 5.51 1
135 Fell Ct. Islip, NY...... 100.0% $ 222,756 $ 7.43 1
---------- ---
Subtotal
Islip/Islandia........ 100.0% $ 939,861 $ 4.43 10
---------- ---
70 Schmitt Boulevard
Farmingdale, NY........... 100.0% $ 893,860 $ 11.71 1
105 Price Parkway
Farmingdale, NY........... 100.0% $1,308,808 $ 4.41 1
110 BiCounty Blvd
Farmingdale, NY........... 88.2% 1,199,857 $ 9.24 13
---------- ---
Subtotal Farmingdale.... 96.7% $3,402,525 $ 6.76 15
----------
70 Maxess Rd. Melville,
NY........................ 100.0% $ 622,578 $ 7.98 1
20 Melville Road Melville,
NY........................ 100.0% $ 370,650 $ 5.46 1
65 Marcus Dr. Melville,
NY........................ 100.0% $ 546,075 $ 9.10 1
---
Subtotal Melville....... 100.0% $1,539,303 $ 7.48 3
---------- ---
300 Motor Parkway Hauppauge,
NY........................ 82.4% $ 750,016 $ 16.26 10
1516 Motor Parkway
Hauppauge, NY............. 100.0% $ 837,200 $ 5.00 1
---------- ---
Subtotal Hauppauge...... 95.0% $1,587,216 $ 8.63 11
---------- ---
933 Motor Parkway Smithtown,
NY........................ 100.0% $ 321,884 $ 6.71 1
65 S. Service Rd.(4)
Plainview, NY............. 100.0% $ 65,498 $ 6.55 1
85 S. Service Rd. Plainview,
NY........................ 100.0% $ 128,280 $ 7.43 2
19 Nicholas Drive(5)
Yaphank, NY............... 100.0% $ 907,726 $ 6.26 1
48 Harbor Park Dr. Port
Washington, NY............ 100.0% $ 653,987 $ 18.69 1
110 Marcus Drive Huntington,
NY........................ 100.0% $ 596,903 $ 7.63 1
100 Andrews Road Hicksville,
NY........................ 66.1% $ 645,539 $ 5.83 1
---------- ---
Total--Standalone
Industrial Properties... 94.9% $10,788,722 $ 6.94 47
---------- ---
---------- ---
Standalone Westchester
Industrial Properties
100 Grasslands
Westchester............... 36.1% $ 82,999 $ 5.10 1
2 Macy Westchester.......... 100.0% $ 422,500 $ 16.25 1
500 Saw Mill Rd.
Westchester............... 100.0% $ 772,800 $ 8.40 1
---------- ---
Total--Standalone
Westchester Industrial
Properties.............. 82.4% $1,278,299 9.52 3
---------- ---
---------- ---
Standalone New Jersey
Industrial Properties
40 Cragwood Rd. South
Plainfiled, NJ............ 74.0% $1,242,514 $ 12.43 2
492 River Rd.(6) Nutley,
NJ........................ -- -- -- --
---
Total New Jersey
Standalone Industrial
Properties (7).......... 74.0% $1,242,514 $ 12.43 2
---------- ---
---------- ---
</TABLE>

S-39
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST PERCENTAGE
(GROUND OFFICE/
COMPANY'S LEASE LAND CLEARANCE RESEARCH AND
PERCENTAGE EXPIRATION YEAR AREA HEIGHT DEVELOPMENT SQUARE
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET)(1) FINISH FEET
- ---------------------------- ------------- ---------- --------------- ----------- --------------- ----------------- ---------
Standalone Connecticut
Industrial Property.......
<S> <C> <C> <C> <C> <C> <C> <C>
701 Bridgeport Shelton, 1971 -
CT........................ 100% Fee 1979 36.1 22 30% 452,414
----- ---------
Total Connecticut
Standalone Industrial
Property................ 36.1 452,414
----- ---------
----- ---------
Total--Industrial
Properties(7)........... 453.6 6,050,087
----- ---------
----- ---------

<CAPTION>
ANNUAL
BASE
RENT NUMBER
ANNUAL PER OF
PERCENT BASE LEASED SQ. TENANT
PROPERTY LEASED RENT(2)(3) FT. LEASES
- ---------------------------- ----------- ---------- ----------- -------------
Standalone Connecticut
Industrial Property.......
<S> <C> <C> <C> <C>
701 Bridgeport Shelton,
CT........................ 100.0% $2,849,007 $ 6.30 2
---------- ---
Total Connecticut
Standalone Industrial
Property................ 100.0% $2,849,007 $ 6.30 2
---------- ---
---------- ---
Total--Industrial
Properties(7)........... 93.7% $32,415,417 $ 5.97 230
---------- ---
---------- ---
</TABLE>

- ------------------------
(1) Calculated as the distance from the lowest beam to floor.

(2) Represents Base Rent of signed leases at December 31, 1997 adjusted for
scheduled contractual increases during the 12 months ending December 31,
1998. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12 month period ending December 31, 1998.
Amounts included in rental revenue for financial reporting purposes have
been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.

(3) Base Rents differ from Effective Rents in that Effective Rents have been
adjusted on a straight-line basis for free rent periods, tenant improvements
and leasing commissions. Information regarding the Company's historical
tenant improvement and leasing commission costs is set forth under
"--Historical Non-Incremental Revenue-Generating Capital Expenditures,
Tenant Improvement Costs and leasing Commissions."

(4) A tenant has been granted an option exercisable after April 30, 1997 and
prior to October 31, 2002 to purchase this property for $600,000.

(5) The actual fee interest in 19 Nicholas Drive is currently held by the Town
of Brookhaven Industrial Development Agency. The Company may acquire such
fee interest on or after April 30, 1999 by making an nominal payment to the
Town of Brookhaven Industrial Development Agency.

(6) Property under redevelopment.

(7) Percent leased data excludes the Properties under redevelopment.

LAND HOLDINGS

As of December 31, 1997, the Company owned or had under contract
approximately 847 acres of land in 17 separate parcels, 10 of which are located
on Long Island, two of which are located in Westchester, five of which are
located in New Jersey. The parcels have been zoned for potential industrial and
retail development. The Company plans to seek development opportunities as
market conditions permit. The Company had invested approximately $29.3 million
in land costs and approximately $25.2 million in additional development costs at
December 31, 1997.

RETAIL PROPERTIES

As of December 31, 1997, the Company owned two free-standing 10,000 square
foot retail properties. These properties were 100% leased to single tenants as
of December 31, 1997. The retail properties are located in Great Neck, New York
and Huntington, New York.

S-40
<PAGE>
HISTORICAL NON-INCREMENTAL REVENUE-GENERATING CAPITAL EXPENDITURES, TENANT
IMPROVEMENT COSTS AND LEASING COMMISSIONS

The following table sets forth annual and per square foot recurring,
non-incremental revenue-generating capital expenditures and non-incremental
revenue-generating tenant improvement costs and leasing commissions to retain
revenues attributable to existing leased space for the period 1993 through 1997
for the Long Island Office Properties, the Westchester Office Properties, the
Connecticut Office Properties and the Industrial Properties. As noted,
revenue-generating tenant improvement costs and leasing commissions are excluded
from the table set forth immediately below. The historical capital expenditures,
tenant improvement costs and leasing commissions set forth below are not
necessarily indicative of future recurring, non-incremental revenue-generating
capital expenditures or non-incremental revenue-generating tenant improvement
costs and leasing commissions.

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
CAPITAL EXPENDITURES
OFFICE PROPERTIES
Annual......................................... $ 227,996 $ 158,340 $ 364,545 $ 375,026 $ 1,108,675
Per square foot................................ .15 .10 .19 .13 .22
INDUSTRIAL PROPERTIES
Annual......................................... $ 276,052 $ 524,369 $ 290,457 $ 670,751 $ 733,233
Per square foot................................ .09 .18 .08 .18 .15
NON-INCREMENTAL REVENUE-GENERATING TENANT
IMPROVEMENT
COSTS AND LEASING COMMISSIONS
LONG ISLAND OFFICE PROPERTIES
Annual Tenant Improvement Costs................ $ 406,602 $ 902,312 $ 452,057 $ 523,574 $ 784,044
Per square foot improved....................... 1.93 5.13 4.44 4.28 7.00
Annual Leasing Commissions..................... 670,736 341,253 144,925 119,047 415,822
Per square foot leased......................... 3.18 1.94 1.42 .97 4.83
Total per square foot.......................... $ 5.11 $ 7.07 $ 5.86 $ 5.25 $ 11.83
WESTCHESTER OFFICE PROPERTIES
Annual Tenant Improvement Costs................ $ 834,764 $ 1,211,665
Per square foot improved....................... 6.33 8.90
Annual Leasing Commissions..................... 264,388 366,257
Per square foot leased......................... 2.00 2.69
Total per square foot.......................... $ 8.33 $ 11.59
CONNECTICUT OFFICE PROPERTIES
Annual Tenant Improvement Costs................ $ 58,000 $ 1,022,421
Per square foot improved....................... 12.45 13.39
Annual Leasing Commissions..................... 0 256,615
Per square foot leased......................... 0 3.36
Total per square foot.......................... $ 12.45 $ 16.75
INDUSTRIAL PROPERTIES
Annual Tenant Improvement Costs................ $ 186,761 $ 585,891 $ 210,496 $ 380,334 $ 230,466
Per square foot improved....................... .33 .88 .90 .72 .55
Annual Leasing Commissions..................... 278,905 176,040 107,351 436,213 81,013
Per square foot leased......................... .49 .27 .46 .82 .19
Total per square foot.......................... $ .82 $ 1.15 $ 1.36 $ 1.54 $ .74
</TABLE>

S-41
<PAGE>
MORTGAGE INDEBTEDNESS

The following table sets forth certain information as of December 31, 1997
regarding the mortgage debt of the Company.

<TABLE>
<CAPTION>
ESTIMATED PRINCIPAL
AMOUNT AFTER PROJECTED ANNUAL MATURITY PREPAYMENT
PROPERTY OFFERING INTEREST RATE DEBT SERVICE DATE PREMIUM
- ------------------------------ -------------------- --------------- ---------------- --------- -------------
<S> <C> <C> <C> <C> <C>
6800 Jericho Turnpike......... $ 15,001,000 7 1/4% $ 1,087,500 6/10/00 (1)
(North Shore Atrium I)
6900 Jericho Turnpike......... $ 5,279,000 7 1/4% $ 382,700 6/10/00 (1)
(North Shore Atrium II)
200 Broadhollow Road.......... $ 6,649,000 7 3/4% $ 515,300 6/02/02 (2)
395 North Service Rd.......... $ 9,917,000 6.82% $ 682,000 6/02/00 None
50 Charles Lindbergh Blvd..... $ 15,479,000 7 1/4% $ 1,122,200 7/10/01 (3)
333 Earl Ovington Blvd........ $ 57,839,000(5) 7.72% $ 4,465,171 8/14/07 None
(The Omni)(4)
310 East Shore Rd............. $ 2,322,000 8% $ 185,800 7/01/02 (5)
80 Orville Dr................. $ 2,616,000 7 1/2%(6) $ 196,200 2/01/04 (1)
70 Maxess Road................ $ 1,863,000 8 3/4% $ 163,013 12/21/00 None
70 Schmitt Boulevard.......... $ 425,000 9 1/4% $ 39,313 8/01/99 None
580 White Plains Rd........... $ 8,811,000 7 3/8% $ 649,811 9/01/00 (1)
Landmark Square............... $ 49,291,000 8.02% $ 3,953,138 10/07/06 (7)
110 Bi-County Blvd............ $ 4,531,000 9 1/8% $ 413,454 11/30/12 (1)
-------------------- ----------------
TOTAL................... $ 180,023,000 $ 13,855,600
-------------------- ----------------
-------------------- ----------------
</TABLE>

- ------------------------

(1) Yield maintenance.

(2) Not prepayable, in whole or in part, on or before five years from the date
of the closing of the IPO. Thereafter, the entire loan may be prepaid
without any prepayment premium on 60 days' notice.

(3) Currently 3.5% of outstanding principal; to decline 1/2 of 1% per year.

(4) The Company has a 60% general partnership interest in the Omni Partnership.
The Company's proportionate share of the aggregate principal amount of
mortgage debt on the Omni is $34.7 million.

(5) Not prepayable for two years; thereafter 5% of the amount being prepaid;
reduced by 1% each year thereafter but not less than 1%. Interest rate
increases to 10.1% after the first five years of the loan.

(6) Interest rate increases to 10.1% after the first five years of the loan.

(7) Not prepayable for the first five years.

S-42
<PAGE>
MANAGEMENT

DIRECTORS AND SENIOR OFFICERS

The Directors and the senior officers of the Company, and their respective
positions, are as follows:

<TABLE>
<CAPTION>
NAME POSITION AND OFFICES HELD
- ------------------------------------ -------------------------------------------------------
<S> <C>
Donald J. Rechler................... Chairman of the Board, Chief Executive Officer and
Director of the Company (term as director expires in
2000)

Roger M. Rechler.................... Vice-Chairman of the Board, Executive Vice President of
Development and Director of the Company (term as
director expires in 1998)

Scott H. Rechler.................... President, Chief Operating Officer, and Director of the
Company (term as director expires in 1999)

J. Michael Maturo................... Executive Vice President, Chief Financial Officer and
Treasurer of the Company

Mitchell D. Rechler................. Executive Vice President and Director of the Company
and President of the Management Company (term as
director expires in 2000)

Gregg M. Rechler.................... Executive Vice President and Secretary of the Company
and President of the Construction Company

Jason M. Barnett.................... Senior Vice President and General Counsel of the
Company

Salvatore Campofranco............... Senior Vice President of the Company and Managing
Director of the Westchester Division

F.D. Rich III....................... Senior Vice President of the Company and Managing
Director of the Southern Connecticut Division

Mark Schaevitz...................... Senior Vice President of the Company and Managing
Director of the Northern New Jersey Division

Norman Berlin....................... Senior Vice President of Industrial Leasing of the
Company

Edward J. D'Orazio.................. Senior Vice President of Architectural Services of the
Company and Vice President of the Construction Company

Kathleen M. Giamo................... Senior Vice President of Office Leasing and Director of
Marketing of the Company

Richard Conniff..................... Senior Vice President of Acquisitions of the Company

Donald E. Miller.................... Senior Vice President of Development of the Company

Mark V. Rechler..................... Senior Vice President of Development and Design of the
Company and Vice President of the Construction Company
</TABLE>

S-43
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION AND OFFICES HELD
- ------------------------------------ -------------------------------------------------------
<S> <C>
Arnold M. Widder.................... Senior Vice President of Leasing of the Company

Jon L. Halpern...................... Director (term as director expires in 2000)(1)

Harvey R. Blau...................... Independent Director (term as director expires in 1998)

Leonard Feinstein................... Independent Director (term as director expires in 2000)

Herve A. Kevenides.................. Independent Director (term as director expires in 1999)

John V. N. Klein.................... Independent Director (term as director expires in 1998)

Lewis S. Ranieri.................... Independent Director (term as director expires in 1999)

Conrad D. Stephenson................ Independent Director (term as director expires in 1999)
</TABLE>

- ------------------------

(1) Mr. Halpern has agreed that he will discontinue serving as a member of the
Board of Directors of Reckson at the request of the Board of Directors of
Reckson at any time after July 1998.

The following is a biographical summary of the experience of the
above-mentioned persons:

DONALD J. RECHLER, age 63, serves as Chairman of the Board, Chief
Executive Officer and Director of the Company. Prior to the IPO, Mr. Rechler
was a Co-Founder and General Partner of Reckson Associates. As President and
Chief Executive Officer, he coordinates and directs all of the Company's
primary functions including acquisitions, leasing and property management as
well as establishing policy for the Company. He is a founder and former
President and Chairman of the Association For A Better Long Island, a
founder of the Long Island Commercial & Industrial Development Association,
a member of the Board of Directors of the Development Division of North
Shore Hospital, a member of the Board of Directors of the Long Island
Philharmonic and a member of the Council of Overseers of Long Island
University, C. W. Post College. Mr. Rechler is a graduate of the University
of Miami. Mr. Rechler is the father of Mitchell Rechler and Mark Rechler and
the brother of Roger Rechler.

ROGER M. RECHLER, age 56, serves as the Vice-Chairman of the Board, an
Executive Vice President and a Director of the Company. Prior to the IPO,
Mr. Rechler was a Co-Founder and General Partner of Reckson Associates. Mr.
Rechler's responsibilities include supervision of property development and
construction, architectural and design-services, interior construction and
property management. Mr. Rechler attended the University of Miami. Mr.
Rechler is the father of Scott Rechler and Gregg Rechler and the brother of
Donald Rechler.

SCOTT H. RECHLER, age 30, serves as an President, Chief Operating
Officer, and a Director of the Company. Mr. Rechler has been employed at
Reckson since 1989. He is responsible for the day-to-day operations and
directing corporate policy for the Company. Prior to the IPO, he directed
the financing of approximately $200 million of mortgage debt and the
acquisition of property having a value in excess of $100 million for
Reckson. He is a member of the Board of Directors of the Long Island
Childrens Museum. Mr. Rechler is a graduate of Clark University and received
a Masters Degree in Finance with a specialization in real estate from New
York University. He is the son of Roger Rechler and the brother of Gregg
Rechler.

J. MICHAEL MATURO, age 36, serves as an Executive Vice President, Chief
Financial Officer and Treasurer of the Company. He is responsible for the
supervision of all financial, treasury and reporting functions as well as
banking and capital market activities and investor relations. Prior to
joining the Company, Mr. Maturo was a Senior Manager at E&Y Kenneth
Leventhal Real Estate Group

S-44
<PAGE>
(formerly Kenneth Leventhal & Company), a public accounting and consulting
firm. He specialized in diverse phases of real estate finance including
corporate and property debt financings and recapitalization transactions.
Mr. Maturo is a graduate of Seton Hall University with a degree in
accounting and finance and is a certified public accountant.

MITCHELL D. RECHLER, age 38, serves as an Executive Vice President and a
Director of the Company and also serves as the President of the Management
Company. From 1981 to 1985, he was employed by Reckson in various
non-supervisory roles including positions in property management,
construction, acquisitions and space leasing. Since 1986, Mr. Rechler has
served as an Executive Vice President of Reckson, responsible for all
leasing activities including the coordination of leasing and marketing
strategies and overseeing tenant relations. During his career at Reckson,
Mr. Rechler has completed over 300 leasing transactions encompassing in
excess of 3 million square feet of office and industrial space. Mr. Rechler
has served as President of the Management Company, since its organization in
1991. Mr. Rechler serves on the Executive Committee of the Children's
Medical Fund of Schneider Children's Hospital of Long Island Jewish Medical
Center and as a member of the Board of Directors of the Long Island Friends
of the Arts. He is a graduate of Emory University. He is the son of Donald
Rechler and the brother of Mark Rechler.

GREGG M. RECHLER, age 31, serves as an Executive Vice President and
Secretary of the Company and as President of the Construction Company. Mr.
Rechler is responsible for the construction, architectural and property
management activities of the Company. Since 1985, he has been employed by
Reckson and certain affiliates. From 1985 to 1988, Mr. Rechler held
non-supervisory roles in the construction and property management areas.
Beginning in 1989, as an Executive Vice President of Reckson, he served as
the person responsible for the construction of the Omni and supervised all
construction aspects of this project. In 1991, he organized the Construction
Company and has been responsible for its significant growth. Mr. Rechler is
a member of the Board of Directors of the Long Island chapter of the
Building Owners and Managers Association ("BOMA"). Mr. Rechler attended the
New York Institute of Technology. He is the son of Roger Rechler and the
brother of Scott Rechler.

JASON M. BARNETT, age 29, serves as a Senior Vice President and General
Counsel of the Company. Mr. Barnett joined the Company in 1996. He is
responsible for the coordination of all legal and compliance matters for the
Company. Prior to joining Reckson, Mr. Barnett practiced law as an associate
in the REIT practice area of Brown & Wood LLP. While at Brown & Wood LLP,
Mr. Barnett participated in numerous corporate and real estate transactions
involving publicly held REITs, including initial public offerings, joint
ventures and corporate and real estate acquisitions. Mr. Barnett holds a
Bachelor of Arts degree from Clark University and Law Degree from Emory
University School of Law. Mr. Barnett is admitted to the Bar of the State of
New York.

SALVATORE CAMPOFRANCO, age 40, serves as Senior Vice President of the
Company and Managing Director of the Westchester Division. As managing
director Mr. Campofranco is in charge of all leasing, construction and
property management activity in the Westchester Division. He also is
responsible for the acquisition program and overall performance of the
Westchester portfolio. Prior to joining Reckson in 1996, Mr. Campofranco was
Senior Vice President for Towermarc Corporation. Towermarc is a full service
real estate company that developed and operated over two million square feet
of suburban office buildings for its own account in Boston, Memphis and
Tampa. Mr. Campofranco was part of the executive management team involved in
overseeing the finance and operations of the properties. Most recently he
was instrumental in the planning and execution of an $80 million transaction
whereby a portion of the Towermarc portfolio was transferred to a REIT.
Prior to Towermarc he was with Kenneth Leventhal Real Estate Group in New
York. He is a Certified Public Account and a graduate of Saint John's
University, New York with a Bachelor of Science Degree in Accounting. He is
a member of National Association of Industrial and Office Parks and the Real
Estate Finance Association. He is also involved in many community and
charitable organizations.

S-45
<PAGE>
MARK SCHAEVITZ, age 43, serves as Senior Vice President of the Company
and is the Managing Director of the Northern New Jersey Division. Mr.
Schaevitz is responsible for the general business operations of the Company
in the Northern NJ area. Prior to joining the Company in January, 1997, Mr.
Schaevitz had been the Chief Operating Officer of Paragon, which developed,
owned, leased and managed in excess of 1.3 million square feet of office
properties. Mr. Schaevitz is a trustee of the NJ Chapter of the National
Association of Industrial and Office Parks and the Office Developers
Association. He is a registered architect in the states of New York and New
Jersey and is a graduate of Cornell University.

FD RICH, III, age 42, joined the Company in October, 1996 and serves as
a Senior Vice President and is Managing Director of the Southern Connecticut
Division and is responsible for all aspects of the operations for the
regional office. Prior to joining the Company, Mr. Rich was a Senior Vice
President of the F.D. Rich Company and President of both Rich Realty
Services, Inc. and GRM Management Inc. Mr. Rich has over twenty years of
experience in all facets of real estate development, leasing, finance and
management and has played a significant role in the City of Stamford's
successful urban renewal effort. During his career at F.D. Rich Company, Mr.
Rich was primarily responsible for the construction of over 1,000,000 square
feet of Class A office space, 800 units of housing, property management
services for over 3,000,000 square feet of office space, and the successful
restructuring of over $600 million in property debt financing. Mr. Rich
attended Marquette University, Utica College of Syracuse University and
Loyola College majoring in Business Administration and has been a licensed
Real Estate Salesperson in the State of Connecticut. Mr. Rich serves on many
community organizations in Stamford, Connecticut. Currently, Mr. Rich is
Vice Chairman of the Stamford Downtown Special Services District, a member
of the Urban Land Institute and is on the Board of Governors of the Landmark
Club.

NORMAN BERLIN, age 67, serves as a Senior Vice President of Industrial
Leasing of the Company. Since joining Reckson as Senior Vice President of
Industrial Leasing in 1977, Mr. Berlin has been responsible for the leasing
of industrial properties. While at Reckson, Mr. Berlin has been responsible
for more than 500 leasing transactions encompassing more than seven million
square feet of industrial space. Prior to joining Reckson, Mr. Berlin spent
fifteen years in various positions with investment banks, including Lobe
Rhodes & Co., where he worked with the Corporate Syndicate and Institutional
Sales groups. Mr. Berlin holds a Bachelor of Science from New York
University and a Master of Business Administration with a concentration in
finance from the Stern School at New York University.

EDWARD J. D'ORAZIO, age 43, serves as a Senior Vice President of
Architectural Services of the Company and as a Vice President of the
Construction Company. Since joining Reckson in 1979, Mr. D'Orazio has been
employed as Senior Vice President of Architectural Services and has been
involved in all aspects of the architectural design activities of Reckson
including building design, interior space design and supervision of the
architectural and design group. He has designed and participated in the
lease negotiations of over 500 tenant installations totaling in excess of 12
million square feet. He is a registered architect in the State of New York
and Minnesota. He is certified by the National Council of Architectural
registration Boards and is a member of the American Institute of Architects.
He is a graduate of the New York Institute of Technology.

KATHLEEN M. GIAMO, age 48, serves as a Senior Vice President of Office
Leasing and Director of Marketing of the Company. In these capacities, she
is responsible for lease negotiations and lease executions, coordinating
interior construction with tenants, coordinating follow-up tenant services
and formulating promotional, advertising and public relations for the
Company's real estate portfolio. Ms. Giamo has served as Senior Vice
President and Director of Marketing for Reckson since joining Reckson in
1980. Ms. Giamo has been responsible for approximately 400 leasing
transactions encompassing approximately 4 million square feet of office
space. She is a member of the Board of Trustees of the Long Island Business
Development Council, a member of the Long Island University/

S-46
<PAGE>
CW Post Real Estate Advisory Board and a member of the Women Economic
Developers of Long Island.

RICHARD J. CONNIFF, age 32, serves as Senior Vice President of
Acquisitions for the Company. Since joining Reckson as a Vice President in
August, 1994, he has been responsible for overseeing the Acquisition
Department where his responsibilities include financial analysis, diligence
and closings of property acquisitions and certain other investment
opportunities. From 1992 to 1994, Mr. Conniff was employed by Cushman &
Wakefield as a financial manager as well as a portfolio manager. Mr. Conniff
was employed by VMS Realty Partners as Vice President of Asset Management
from 1989 to 1992. Mr. Conniff holds a bachelor's degree in finance from the
City University of New York.

DONALD E. MILLER, age 41, serves as Senior Vice President of Development
of the Company. Since joining Reckson as a Senior Vice President in February
1996, he has been responsible for the leasing of new development and
acquisition properties. Prior to joining Reckson, Mr. Miller was employed by
Muss Development Company for five years as Vice President and Director of
Leasing. From 1986 to 1991, Mr. Miller was employed by Cushman & Wakefield
as an Office Leasing and Sales Broker. Mr. Miller is a member of the Real
Estate Board of New York.

MARK V. RECHLER, age 32, serves as a Senior Vice President of
Development and Design of the Company. Since joining Reckson in 1989, Mr.
Rechler has focused his services as part of the in-house architectural team
involved with the design of the amenities at the Omni. Mr. Rechler has
served as a Vice President of Architectural Services of Reckson since 1993.
He also handles certain property management functions and is involved in
maintaining tenant relationships. He is a graduate of Tulane University, and
is the son of Donald Rechler and the brother of Mitchell Rechler.

ARNOLD M. WIDDER, age 66, serves as a Senior Vice President of Leasing
for the Company. In addition, he has primary responsibility for the
operations of the Executive Centers. Since joining Reckson in 1982 as Senior
Vice President of Leasing, he has been actively involved in the leasing of
office and industrial space as well as overseeing the operations of the
Executive Centers. Mr. Widder is a licensed real estate broker and a member
of the Executive Suite Association and the Alliance Business Centers
Network. He is a graduate of the University of Miami.

JON L. HALPERN, age 35, is a Director of the Company. Prior to becoming
a director of the Company, Mr. Halpern served as an Executive Vice President
and President of the Westchester Division. In such capacity, Mr. Halpern is
responsible for the general business operations of the Company in the
Westchester Area. Prior to joining the Company in February 1996, Mr. Halpern
has been the President and Chief Operating Officer of Halpern Enterprises,
Inc., which owned, operated, leased and managed in excess of 1.7 million
square feet of office and mixed-use properties and has developed and
constructed (through affiliates) in excess of 3.8 million square feet of
construction. Mr. Halpern is a member of the Board of Westchester County
Medical Center, the Executive Board of the Greyston Family Inn, a
not-for-profit organization working to provide housing for homeless
families, and the Board of the Westchester Land Trust. Mr. Halpern is a
founding member and is currently Vice President of the Westchester Business
Partnership, a public/private partnership working to promote and encourage
business within Westchester County. Mr. Halpern is a graduate of University
of Colorado School of Business where he earned a Bachelor of Science degree.

HARVEY R. BLAU, age 62, is a Director of the Company. Mr. Blau is a
Senior Partner of the law firm of Blau, Kramer, Wactlar & Lieberman, P.C.
and has been associated with such firm (including its predecessors) since
1966. Mr. Blau has served as the Chairman of the Board of Aeroflex,
Incorporated since 1991, the Chairman of the Board of the Griffon
Corporation and a Director of Nu Horizons Electronics Corp. since 1984. Mr.
Blau serves as a Trustee of Benjamin N. Cardozo School of Law and as a
Trustee of the Incorporated Village of Old Westbury, New York. Mr. Blau
holds a bachelor's degree from New York University, a law degree from
Columbia University School of Law and an advanced law degree from New York
University Graduate School of Law.

S-47
<PAGE>
LEONARD FEINSTEIN, age 60, is a Director of the Company. Mr. Feinstein
is the Co-Founder and the President and Co-Chief Executive Officer of Bed
Bath & Beyond Inc., a New York Stock Exchange listed company. Mr. Feinstein
has served in such capacity since 1992. Mr. Feinstein served as Co-Chief
Executive Officer, Treasurer and Secretary of Bed Bath & Beyond Inc. from
1971 to 1992.

HERVE A. KEVENIDES, age 59, is a Director of the Company. Mr. Kevenides
is the director of the Real Estate Products Group for Ceres Financial
Concepts, N.A. Mr. Kevenides is the President and Director of research of
Metropolitan Analysis & Forecasting Corporation, an international real
estate economics and market research firm. Mr. Kevenides has served in this
position since 1988. Mr. Kevenides has served as an Adjunct Associate
Professor of the Masters in Real Estate Program of New York University since
1989. Mr. Kevenides was a vice president and Director of Real Estate
Economics and Market Research for Chemical Bank from 1981 to 1988, and a
vice president and Manager of Real Estate Market Research for Chase
Manhattan Bank from 1972 to 1981. Mr. Kevenides holds a Masters of Business
Administration from New York University.

JOHN V. N. KLEIN, age 66, is a Director of the Company. Mr. Klein has
been the Managing Attorney of the law firm of Meyer, Suozzi, English &
Klein, P.C. since 1984. Mr. Klein has served as a Director of Fleet Bank
from 1980 to 1994 and is currently on the Advisory Board of Fleet Bank. Mr.
Klein has also been a member of the advisory board of St. Joseph's College,
Patchogue, New York since 1980. Mr. Klein has served in various government
positions on Long Island, including County Executive of Suffolk County, New
York from 1972 to 1979. Mr. Klein holds a bachelor's degree and a law degree
from the University of Virginia.

LEWIS S. RANIERI, age 51, has served as a director of the Company since
1997. Mr. Ranieri is the chairman of Bank United Corp., a position he has
held since 1988. He is also the chairman and chief executive officer of
Ranieri & Co., Inc., positions he has held since founding Ranieri & Co. in
1988. Mr. Ranieri is the founder of Hyperion Partners L.P. and Hyperion
Partners II L.P. He is also Chairman of Hyperion Capital Management, Inc.
and The Hyperion Total Return Fund, Inc. He is director of Transworld
HealthCare, Inc., the Hyperion 1999 Term Trust, Inc. the Hyperion 2002 Term
Trust, Inc. and Hyperion 2005 Investment Grade Opportunity Trust, Inc. Mr.
Ranieri is also chairman and president of various other indirect
subsidiaries of Hyperion. He is a director of Delphi Financial Group, Inc.
and Delphi International Ltd. Prior to forming Hyperion, Mr. Ranieri had
been vice chairman of Salomon Brothers, Inc. Mr. Ranieri helped develop the
capital markets as a source of funds for housing and commercial real estate,
established Salomon's leadership position in the mortgage-backed securities
area, and also led the effort to obtain Federal legislation to support and
build the market. Mr. Ranieri has served on the National Association of Home
Builders Mortgage Roundtable continuously since 1986. He was inducted into
the National Housing Hall of Fame in 1997. Mr. Ranieri also acts as a
trustee or director of various environmental and religious institutions such
as the Environmental Defense Fund and Shrine of Elizabeth Ann Seton/Our Lady
of the Rosary Church.

CONRAD D. STEPHENSON, age 70, is a Director of the Company. Since 1993,
Mr. Stephenson has served as the Chief Executive Officer of Pan Am Equities
Inc., a property ownership and management company. Mr. Stephenson was
employed by The Comras Company, a real estate company, from 1990 to 1993,
and served as the Vice President in the Tri-State and northeast real estate
lending division of the First National Bank of Chicago from 1987 to 1990.
Mr. Stephenson was the Vice President in charge of all commercial real
estate lending activities of The Bowery Savings Bank from 1985 to 1987, and
was a Vice President of The Chase Manhattan Bank from 1975 to 1985. Mr.
Stephenson has served as a Governor, Vice President and a member of the
executive committee, of the Real Estate Board of New York. Mr. Stephenson
holds a bachelor's degree from Fordham University and a Masters of Business
Administration from New York University. Mr. Stephenson is a retired colonel
of the U.S. Army Reserves, with which he served for 35 years.

S-48
<PAGE>
DESCRIPTION OF SERIES A PREFERRED STOCK

This description of the particular terms of the Series A Preferred Stock
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Preferred Stock set
forth in the accompanying Prospectus, to which description reference is hereby
made.

GENERAL

The Company is authorized to issue up to 25,000,000 shares of Preferred
Stock, in one or more series, without any further vote or action by the
stockholders, but prior to issuance of shares of a series of Preferred Stock,
the Board of Directors is required by the Maryland General Corporation Law and
the charter of the Company to set, subject to the provisions of the charter
regarding the restrictions on transfer of stock, the terms, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications and terms or conditions of
redemption for each such series.

An Articles Supplementary to the Company's charter setting forth the terms
of a series of Preferred Stock consisting of up to shares, designated %
Series A Convertible Cumulative Preferred Stock, will be filed with the State
Department of Assessments and Taxation of Maryland prior to the issuance of such
shares. When issued, the shares of Series A Preferred Stock will be validly
issued, fully paid and nonassessable and will not be entitled to any preemptive
or similar rights.

The following summary of the terms and provisions of the Series A Preferred
Stock does not purport to be complete and is qualified in its entirety by
reference to the pertinent sections of the Company's charter and the Articles
Supplementary classifying and designating the Series A Preferred Stock, each of
which is available from the Company.

The registrar, transfer agent, distributions disbursing agent and conversion
agent for the Series A Preferred Stock will be American Stock Transfer & Trust
Company (the "Transfer Agent").

Application has been made to list the Series A Preferred Stock on the NYSE
under the symbol "RAPrA". The issued and outstanding shares of Common Stock of
the Company are listed on the NYSE under the symbol "RA," and application also
has been made to list the Common Stock issuable upon conversion of the Series A
Preferred Stock on the NYSE.

RANKING

The Series A Preferred Stock will rank senior to the Common Stock with
respect to payment of distributions or amounts upon a liquidation, dissolution
or winding up of the Company.

DISTRIBUTIONS

Holders of Series A Preferred Stock shall be entitled to receive, when and
as authorized by the Board of Directors, out of funds legally available for the
payment of distributions, cumulative cash distributions at the rate of % per
annum of the liquidation preference per share (equivalent to $ per annum
per share of Series A Preferred Stock). Distributions on the Series A Preferred
Stock offered hereby shall accrue and be cumulative from the date of original
issue and shall be payable quarterly in arrears on January 31, April 30, July 31
and October 31 of each year or, if not a business day, the next succeeding
business day, commencing July 31, 1998 (each, a "Distribution Payment Date").
Any distribution payable on the Series A Preferred Stock for a partial
distribution period will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Distributions will be payable to holders of record as
they appear in the share records of the Company at the close of business on the
applicable record date, which shall be such date designated by the Board of
Directors of the Company for the payment of distributions that is not more than
30 nor less than 10 days prior to such Distribution Payment Date (each, a
"Distribution Payment Record Date").

No distributions on the Series A Preferred Stock shall be authorized by the
Board of Directors of the Company or be paid or set apart for payment by the
Company at such time as the terms and provisions of

S-49
<PAGE>
any agreement of the Company, including any agreement relating to its
indebtedness, prohibits such authorization, payment or setting apart for payment
or provides that such authorization, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such authorization or
payment shall be restricted or prohibited by law.

Notwithstanding the foregoing, distributions on the Series A Preferred Stock
will accumulate whether or not the Company has earnings, whether or not there
are funds legally available for the payment of such distributions and whether or
not such distributions are authorized. Accumulated but unpaid distributions on
the Series A Preferred Stock will not bear interest and holders of the Series A
Preferred Stock will not be entitled to any distributions in excess of full
cumulative distributions as described above.

The Company intends to contribute or otherwise transfer the net proceeds of
the sale of the Series A Preferred Stock to Reckson Operating Partnership in
exchange for % Series A Preferred Units in Reckson Operating Partnership (the
"Series A Preferred Units"), the economic terms of which will be substantially
identical to those of the Series A Preferred Stock. Reckson Operating
Partnership will be required to make all required distributions on the Series A
Preferred Units (which will mirror the payments of distributions, including
accumulated and unpaid distributions upon redemption, and of the liquidation
preference amount on the shares of Series A Preferred Stock) prior to any
distribution of cash or assets to the holders of the Units or to the holders of
any other interests in Reckson Operating Partnership, except for any other
series of preferred units ranking on a parity with the Series A Preferred Units
with respect to the payment of distributions or amounts upon a liquidation,
dissolution or winding up of the Company, and except for distributions required
to enable the Company to maintain its qualification as a REIT.

Any distribution payment made on the Series A Preferred Stock shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such shares which remains payable.

For further information regarding the rights of the holders of the Series A
Preferred Stock to receive distributions, see "Description of Preferred
Stock--Dividends" in the accompanying Prospectus.

LIQUIDATION PREFERENCE

Upon any liquidation, dissolution or winding up of the Company, the holders
of the Series A Preferred Stock will be entitled to be paid out of the assets of
the Company legally available for distribution to its stockholders liquidating
distributions, in cash or property at its fair market value as determined by the
Company's Board of Directors, in the amount of a liquidation preference of
$25.00 per share, plus an amount equal to any accumulated and unpaid
distributions to the date of such liquidation, dissolution or winding up, before
any distribution or payment is made to holders of Common Stock or any other
class or series of capital stock ranking junior to the Series A Preferred Stock
as to the distribution of assets upon a liquidation, dissolution or winding up
of the Company. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series A Preferred
Stock will have no right or claim to any of the remaining assets of the Company.

The liquidation preference of the outstanding shares of Series A Preferred
Stock will not be added to the liabilities of the Company for the purpose of
determining whether under the MGCL a distribution may be made to stockholders of
the Company whose preferential rights upon dissolution of the Company are junior
to those of holders of shares of Series A Preferred Stock.

For further information regarding the rights of the holders of the Series A
Preferred Stock upon the liquidation, dissolution or winding up of the Company,
see "Description of Preferred Stock--Liquidation Preference" in the accompanying
Prospectus.

REDEMPTION

Shares of Series A Preferred Stock will not be redeemable prior to
, 2003, except under the circumstances described below. On and after
, 2003, shares of Series A Preferred Stock may be redeemed at the
option of the Company, in whole or in part, from time to time, at the following

S-50
<PAGE>
redemption prices per share if redeemed during the twelve-month period beginning
of the applicable year, plus all accumulated and unpaid
distributions on the Series A Preferred Stock to the date of such redemption,
upon not less than 30 nor more than 60 days' prior written notice in the manner
and to the effect described below and under "Description of Preferred
Stock-Redemption" in the accompanying Prospectus.

<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE PER SHARE
- ---------------------------------------------- ---------------------------
<S> <C>
2003.......................................... $
2004..........................................
2005..........................................
2006..........................................
2007..........................................
2008 and thereafter........................... $ 25.00
</TABLE>

The Company may not exercise its option to redeem shares of Series A
Preferred Stock unless the redemption price (other than the portion thereof
consisting of accumulated and unpaid distributions) is paid solely out of the
sale proceeds of capital stock of the Company, and from no other source.

If fewer than all of the outstanding shares of Series A Preferred Stock are
to be redeemed, the shares to be redeemed will be determined pro rata or by lot
or in such other manner as prescribed by the Board of Directors of the Company.
In the event that such redemption is to be by lot, if as a result of such
redemption any holder of Series A Preferred Stock would own, or be deemed by
virtue of certain attribution provisions of the Code to own, in excess of 15% of
the issued and outstanding shares of Series A Preferred Stock or 9.0% in value
of all outstanding capital stock of the Company, as the case may be, because
such holder's shares were not redeemed, or were only redeemed in part, then,
except in certain instances, the Company will redeem the requisite number of
shares of Series A Preferred Stock of such stockholder such that such
stockholder will not own, or be deemed by virtue of certain attribution
provisions of the Code to own, in excess of 15% of the shares of Series A
Preferred Stock or 9.0% in value of all outstanding capital stock of the
Company, as the case may be, issued and outstanding subsequent to such
redemption.

Notwithstanding any other provision relating to redemption of the Series A
Preferred Stock to the contrary, the Company may redeem shares of Series A
Preferred Stock at any time, whether or not prior to , 2003, if the
Board of Directors of the Company determines that such redemption is (i)
necessary or advisable to preserve the Company's status as a REIT or (ii)
reasonable or appropriate in order to comply with any laws, rules or regulations
of any governmental authority.

On or after the date fixed for redemption (the "Series A Preferred Stock
Redemption Date"), each holder of Series A Preferred Stock to be redeemed must
present and surrender the certificates representing the Series A Preferred Stock
to the Company at the place designated in the notice of redemption and thereupon
the redemption price of such shares will be paid to or on the order of the
person whose name appears on such certificates as the owner thereof and each
surrendered certificate will be canceled. In the event that fewer than all the
Series A Preferred Stock is to be redeemed, a new certificate will be issued
representing the unredeemed shares. From and after the Series A Preferred Stock
Redemption Date (unless the Company defaults in payment of the redemption
price), all distributions on the Series A Preferred Stock called for redemption
will cease to accumulate and all rights of the holders thereof, except the right
to receive the redemption price thereof (including all accumulated and unpaid
distributions to the Series A Preferred Stock Redemption Date), will cease and
terminate and such shares will not thereafter be transferred (except with the
consent of the Company) on the Company's books, and such shares shall not be
deemed to be outstanding for any purpose whatsoever. At its election, the
Company, prior to the Series A Preferred Stock Redemption Date, may irrevocably
deposit the redemption price (including accumulated and unpaid distributions) of
the Series A Preferred Stock so called for redemption in trust for the holders
thereof with a bank or trust company, in which case the notice of redemption to
holders of the Series A Preferred Stock to be redeemed will (i) state the date
of such deposit, (ii) specify the office of

S-51
<PAGE>
such bank or trust company as the place of payment of the redemption price and
(iii) require such holders to surrender the certificates representing such
Series A Preferred Stock at such place on or about the date fixed in such
redemption notice (which may not be later than the Series A Preferred Stock
Redemption Date) against payment of the redemption price (including all
accumulated and unpaid distributions to the Series A Preferred Stock Redemption
Date). Any moneys so deposited which remain unclaimed by the holders of the
Series A Preferred Stock at the end of two years after the Series A Preferred
Stock Redemption Date will be returned by such bank or trust company to the
Company.

The Series A Preferred Stock will not have a stated maturity date and will
not be subject to any sinking fund or mandatory redemption provisions.

For further information regarding redemption of the Series A Preferred
Stock, see "Description of Preferred Stock Redemption" in the accompanying
Prospectus.

VOTING RIGHTS

Holders of the Series A Preferred Stock will not have any voting rights,
except as set forth in the accompanying Prospectus. In any matter in which the
Series A Preferred Stock is entitled to vote, including any action by written
consent, each share of Series A Preferred Stock shall be entitled to one vote.

For further information regarding the voting rights of the holders of the
Series A Preferred Stock, see "Description of Preferred Stock--Voting Rights" in
the accompanying Prospectus.

CONVERSION RIGHTS

Subject to the restrictions on transfer and ownership described below in "
- --Ownership Limits and Restrictions on Transfer" and in "Description of
Common--Stock Restrictions on Ownership" in the accompanying Prospectus, shares
of Series A Preferred Stock will be convertible at any time, at the option of
the holders thereof, into Common Stock at a conversion price of $ per
share of Common Stock (equivalent to a conversion rate of shares of Common
Stock for each share of Series A Preferred Stock), subject to adjustment as
described below (the "Conversion Price"). The right to convert Series A
Preferred Stock called for redemption will terminate at the close of business on
the fifth business day prior to the Series A Preferred Stock Redemption Date.

Conversion of shares of Series A Preferred Stock, may be effected by
delivering certificates representing the shares to be converted, together with a
written notice of conversion and a proper assignment of such shares, to the
office of the Transfer Agent. Currently, such office is the principal corporate
trust office of the Transfer Agent at 40 Wall Street, New York, New York 10005.

Each conversion will be deemed to have been effected immediately prior to
the close of business on the date on which the certificates were surrendered and
notice was received by the Company (and if applicable, payment of any amount
equal to the distribution payable on the related shares of Series A Preferred
Stock surrendered for conversion shall have been received by the Company as
described below) and the conversion shall be at the Conversion Price in effect
at such time and on such date.

Holders of shares of Series A Preferred Stock at the close of business on a
Distribution Payment Record Date will be entitled to receive the distribution
payable on such shares on the corresponding Distribution Payment Date
notwithstanding the conversion of such shares following such Distribution
Payment Record Date and prior to such Distribution Payment Date. However,
certificates representing Series A Preferred Stock surrendered for conversion
during the period between the close of business on any Distribution Payment
Record Date and the opening of business on the corresponding Distribution
Payment Date (except shares converted after the issuance of a notice of
redemption with respect to a Series A Preferred Stock Redemption Date during
such period or coinciding with such Distribution Payment Date) must be
accompanied by payment of an amount equal to the distribution payable on the
related shares of Series A Preferred Stock on such Distribution Payment Date. A
holder of Series A Preferred Stock on a Distribution Payment Record Date who (or
whose transferee) tenders shares for conversion into Common Stock on such
Distribution Payment Date will receive the distribution payable by

S-52
<PAGE>
the Company on such Series A Preferred Stock on such date, and the converting
holder need not include payment of the amount of such distribution upon
surrender of certificates for conversion. Except as provided above, the Company
will make no payment or allowance for unpaid distributions, whether or not in
arrears, on converted shares or for distributions on the Common Stock that are
issued upon such conversion.

Fractional shares of Common Stock will not be issued upon conversion but, in
lieu thereof, the Company will pay a cash adjustment based on the current market
price of the Common Stock on the trading day immediately prior to the conversion
date.

For a discussion of the Common Stock to be received upon conversion of
Series A Preferred Stock, see "Description of Common Stock" in the accompanying
Prospectus.

CONVERSION PRICE ADJUSTMENTS

The Conversion Price is subject to adjustment upon certain events, including
(i) the payment of distributions payable in Common Stock on any class of shares
of the Company, (ii) the issuance to all holders of Common Stock of certain
rights, options or warrants entitling them to subscribe for or purchase Common
Stock at a price per share less than the fair market value per share of Common
Stock, (iii) subdivisions, combinations and reclassifications of Common Stock,
and (iv) distributions to all holders of Common Stock of the Company of
evidences of indebtedness of the Company or assets (excluding those rights,
options, warrants and distributions referred to above and excluding Permitted
Common Stock Cash Distributions (as defined below)). "Permitted Common Stock
Cash Distributions" are those cumulative cash distributions paid with respect to
the Common Stock after March 31, 1998, which are not in excess of the following:
the sum of (i) the Company's cumulative undistributed FFO at March 31, 1998,
plus (ii) the cumulative amount of FFO, as determined by the Board of Directors,
after March 31, 1998, minus (iii) the cumulative amount of distributions
accumulated or paid on any other class of preferred shares after the date of
original issue of the Series A Preferred Shares. In addition to the foregoing
adjustments, the Company will be permitted to make such reductions in the
Conversion Price as it considers to be advisable in order that any event treated
for federal income tax purposes as a dividend of stock or stock rights will not
be taxable to the holders of the Common Stock. The conversion price of the
Series A Preferred Stock will be reduced based upon the fair market value of the
RSI common stock at the time of the distribution, if consummated, as determined
by the Company's board of directors. This reduction is currently anticipated to
be less than 1% of the conversion price, although no assurance can be given. The
fair market value of the RSI common stock will be based upon the fair market
value of RSI's net assets at the time of the distribution, if consummated, which
fair market value the Company's board of directors has determined to be
equivalent to the book value of such net assets.

Except as otherwise described in the preceding paragraph, in case the
Company shall be a party to any transaction (including, without limitation, a
merger, consolidation, statutory share exchange, tender offer for all or
substantially all of the Common Stock or sale of all or substantially all of the
Company's assets), in each case as a result of which Common Stock will be
converted into the right to receive securities or other property (including cash
or any combination thereof), each share of Series A Preferred Stock, if
convertible after the consummation of the transaction, will thereafter be
convertible into the kind and amount of shares of stock and other securities and
property receivable (including cash or any combination thereof) upon the
consummation of such transaction by a holder of that number of shares of Common
Stock or fraction thereof into which one share of Series A Preferred Stock was
convertible immediately prior to such transaction, assuming such holder of
Common Stock failed to exercise any rights of election (provided that if the
kind and amount of stock or beneficial interest, securities and other property
so receivable is not the same for each non-electing share, the kind and amount
so receivable by each non-electing share shall be deemed to be the kind and
amount received per share by a plurality of non-electing shares). The Company
may not become a party to any such transaction unless the terms thereof are
consistent with the foregoing.

S-53
<PAGE>
Except with respect to any distribution of RSI common stock currently
contemplated by the Company, no adjustment of the Conversion Price is required
to be made in any case until cumulative adjustments amount to 1% or more of the
Conversion Price. Any adjustments not so required to be made will be carried
forward and taken into account in subsequent adjustments.

OWNERSHIP LIMITS AND RESTRICTIONS ON TRANSFER

In order to maintain the Company's qualification as a REIT for federal
income tax purposes, ownership by any person of the Company's outstanding shares
is restricted in the Company's Amended and Restated Articles of Incorporation.
See "Restrictions on Ownership of Capital Stock" in the accompanying Prospectus.

The Company's charter provides certain restrictions with respect to the
ownership, transfer and conversion of shares of the Series A Preferred Stock, as
well as the ownership and transfer of the Common Stock . Specifically, as more
fully set forth in the Articles Supplementary of the Company relating to the
Series A Preferred Stock, Series A Preferred Stock may not be acquired or
transferred if such acquisition or transfer will result in the acquiror or
transferee owning in excess of 15% of the number of shares or value of the
outstanding Series A Preferred Stock. The Series A Preferred Stock will also be
subject to an overall restriction that no holder thereof may own, in the
aggregate, as a result of the ownership of the Series A Preferred Stock and
other capital stock of the Company, in excess of 9.0% in value of all
outstanding capital stock of the Company. Furthermore, conversion of the Series
A Preferred Stock will be restricted to the extent that ownership of the Common
Stock exceeds the ownership limitation applicable to the Common Stock.

FEDERAL INCOME TAX CONSIDERATIONS

TAXATION OF SERIES A PREFERRED STOCK

DISTRIBUTIONS. If, for any taxable year, the Company elects to designate as
capital gain dividends any portion (the "Capital Gains Amount") of the
distributions paid or made available for the year to the holders of all classes
of shares, the portion of the Capital Gains Amount that will be allocable to the
holders of Series A Preferred Stock will be the Capital Gains Amount multiplied
by a fraction, the numerator of which will be the total dividends (within the
meaning of the Code) (the "Total Dividends") paid or made available to the
holders of the Series A Preferred Stock for the year and the denominator of
which WILL be the Total Dividends.

CONVERSION OF SERIES A PREFERRED STOCK TO COMMON STOCK. Assuming that
Series A Preferred Stock will not be converted at a time when there are
distributions in arrears, in general, no gain or loss will be recognized for
federal income tax purposes upon the redemption or conversion of the Series A
Preferred Stock at the option of the holder solely into Common Stock. The basis
that a holder will have for tax purposes in the Common Stock received will be
equal to the adjusted basis the holder had in the Series A Preferred Stock so
converted and, provided that the Series A Preferred Stock were held as a capital
asset, the holding period for the Common Stock received will include the holding
period for the Series A

S-54
<PAGE>
Preferred Stock redeemed or converted. A holder, however, will generally
recognize gain or loss on the receipt of cash in lieu of a fractional share of
Common Stock in an amount equal to the difference between the amount of cash
received and the holder's adjusted basis in such fractional share.

If a conversion occurs when there is a dividend arrearage on the Series A
Preferred Stock and the fair market value of the Common Stock exceeds the issue
price of the Series A Preferred Stock, a portion of the Common Stock received
may be treated as a dividend distribution taxable as ordinary income.

ADJUSTMENTS TO CONVERSION PRICE. Section 305(c) of the Code treats certain
actual or constructive distributions of stock with respect to stock or
convertible stock, such as the Series A Preferred Stock, as a distribution
taxable as a dividend to the extent of the issuing corporation's current and
accumulated earnings and profits. Treasury regulations treat holders of
convertible preferred stock as having received such a constructive distribution
when the conversion price of such preferred stock is adjusted to reflect certain
taxable distributions with respect to the stock into which such preferred stock
is convertible. Thus, under certain circumstances, an adjustment to the
conversion price of the Series A Preferred Stock may give rise to a deemed
taxable stock dividend to the stockholders thereof, whether or not such
stockholders exercise their conversion privilege. This may occur in the event
that the distribution of RSI common stock (as more fully described under "Recent
Developments--RSI Distribution") is consummated and the conversion price of the
Series A Preferred Stock is reduced in connection therewith.

REDEMPTION OF SERIES A PREFERRED STOCK. The Company may redeem the Series A
Preferred Stock at its option, in whole or in part, and from time to time,
beginning on 2003, at prices reflecting a premium over the
Liquidation Preference for redemptions occurring before , 2008, all
as more fully set forth under "Description of Series A Preferred
Stock--Redemption". A redemption of Series A Preferred Stock will be treated
under Section 302 of the Code as a distribution taxable as a dividend (to the
extent of the Company current and accumulated earnings and profits) at ordinary
income rates unless the redemption satisfies one of the tests set forth in
Section 302(b) of the Code and is therefore treated as a sale or exchange of the
redeemed shares. The redemption will be treated as a sale or exchange if it (i)
is "substantially disproportionate" with respect to the holder, (ii) results in
a "complete termination" of the holder's share interest in the Company, or (iii)
is "not essentially equivalent to a dividend" with respect to the holder, all
within the meaning of Section 302(b) of the Code. In determining whether any of
these tests have been met, stock considered to be owned by the holder by reason
of certain constructive ownership rules set forth in the Code, as well as stock
actually owned by the holder, must generally be taken into account. If a
particular holder of Series A Preferred Stock owns (actually or constructively)
no Common Stock, or an insubstantial percentage of the outstanding Common Stock
(including Common Stock owned constructively as a result of the conversion
feature of the Series A Preferred Stock), a redemption of Series A Preferred
Stock of that holder is likely to qualify for sale or exchange treatment because
the redemption would not be "essentially equivalent to a dividend." However,
because the determination as to whether any of the alternative tests of Section
302(b) of the Code will be satisfied with respect to any particular holder of
Series A Preferred Stock depends upon the facts and circumstances at the time
that the determination must be made, prospective holders of Series A Preferred
Stock are advised to consult their own tax advisors to determine such tax
treatment.

If a redemption of Series A Preferred Stock is not treated as a distribution
taxable as a dividend to a particular holder, it will be treated as to that
holder as a taxable sale or exchange. As a result, such holder will recognize
gain or loss for federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and the fair market value of any
property received (less any portion thereof attributable to accumulated and
declared but unpaid dividends, which will be taxable as a dividend to the extent
of the Company's current and accumulated earnings and profits), and (ii) the
holder's adjusted tax basis in the Series A Preferred Stock. Such gain or loss
will be capital gain or loss if the Series A Preferred Stock has been held as a
capital asset, and will be long-term gain or loss if such shares have been held
for more than one year.

S-55
<PAGE>
The Taxpayer Relief Act of 1997 (the "Act") reduces the maximum rates on
long-term capital gains recognized on capital assets held by individual
taxpayers for more than eighteen months as of the date of disposition (and
further reduces the maximum rates on such gains in the year 2001 and thereafter
for certain individual taxpayers who meet specified conditions). The capital
gains rate for capital assets held by individual taxpayers for more than twelve
months but not more than eighteen months was not changed by the Act. The Act
does not change the capital gains rates for corporations. Prospective investors
should consult their own tax advisors concerning these tax law changes.

If a redemption of Series A Preferred Stock is treated as a distribution
taxable as a dividend, the amount of the distribution will be measured by the
amount of cash and the fair market value of any property received by the holder.
The holder's adjusted tax basis in the redeemed Series A Preferred Stock will be
transferred to the holder's remaining shares of stock of the Company. If the
holder owns no other shares of stock of the Company, such basis may, under
certain circumstances, be transferred to a related person or it may be lost
entirely.

REDEMPTION PREMIUM. Section 305(c) of the Code and the regulations
thereunder provide in certain cases for the accrual of a redemption premium on
preferred stock on a constant yield-to-maturity basis and for the treatment of
such accrual as a distribution with respect to such preferred stock. For such
accrual to apply to a redemption premium on the Series A Preferred Stock, there
would be required a determination of the existence of a "maturity date," I.E., a
date (occurring before , 2008) at which it would be considered, as of
the issuance of the Series A Preferred Stock, to be more likely than not that
the Company would exercise its redemption option. The regulations, however,
provide a safe harbor under which an issuer will not be considered to be more
likely than not to exercise its redemption option. In addition to certain other
requirements, the safe harbor requires that the exercise of the redemption
option will not reduce the yield of the stock. Based upon certain
representations of the Company and the terms of the Series A Preferred Stock,
the safe harbor will be satisfied. Accordingly, the redemption premium on the
Series A Preferred Stock should not be subject to accrual under Section 305(c).

RECENT DEVELOPMENTS. On February 2, 1998, the Clinton Administration
released a summary of its proposed budget plan which contained several proposals
affecting REITs. One such proposal, if enacted in its present form, would
prohibit a REIT from holding securities representing more than 10% of the value
of all classes of stock of a corporation, other than a qualified REIT subsidiary
or another REIT. Although current stock interests in existing subsidiaries, such
as Reckson Management Group, Inc. and Reckson Construction Group, Inc.
(together, the "Subsidiary Corporations"), would be grandfathered under such
proposal, the Subsidiary Corporations would be prohibited from acquiring
substantial new assets or engaging in a new trade or business. If enacted in its
present form, the proposal may limit the future activities and growth of the
Subsidiary Corporations. No prediction can be made as to whether such proposal
or any other proposal affecting REITs will be enacted into legislation and the
impact of any such legislation on the Company.

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<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in a terms agreement and
related underwriting agreement (the "Underwriting Agreement"), the Company has
agreed to sell to Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") and Goldman, Sachs & Co. ("Goldman Sachs") (collectively, the
"Underwriters"), and each Underwriter has severally agreed to purchase from the
Company, the number of shares of the Series A Preferred Stock set forth below
opposite their respective names.

<TABLE>
<S> <C>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................................................
Goldman, Sachs & Co. ............................................................
----------
Total.................................................................. 8,000,000
----------
----------
</TABLE>

In the Underwriting Agreement, the several Underwriters have agreed,
respectively, subject to the terms and conditions of the Underwriting Agreement,
to purchase all of the shares of the Series A Preferred Stock being sold
pursuant to the Underwriting Agreement if any of such shares of the Series A
Preferred Stock are purchased. Under certain circumstances, the commitments of
non-defaulting Underwriters may be increased.

The Underwriters have advised the Company that the Underwriters propose
initially to offer the shares of the Series A Preferred Stock to the public at
the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession not in excess
of $. per share. The Underwriters may allow, and such dealers may re-allow,
a discount not in excess of $. per share on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.

In the Underwriting Agreement, the Company has agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, or contribute to payments the Underwriters may be
required to make in respect thereof.

The Company has granted to the Underwriters an option exercisable for 30
days after the date of this Prospectus Supplement to purchase up to 1,200,000
additional shares of the Series A Preferred Stock to cover over-allotments, if
any, at the initial public offering price less the underwriting discount set
forth on the cover page of this Prospectus Supplement. If the Underwriters
exercise this option, each Underwriter will have a firm commitment, subject to
certain conditions, to purchase approximately the same percentage thereof which
the number of shares of the Series A Preferred Stock to be purchased by it shown
in the foregoing table bears to the total number of shares of the Series A
Preferred Stock initially offered hereby.

The Company has agreed, subject to certain exceptions, not to, directly or
indirectly, offer, sell, transfer, hypothecate, grant any option for the sale
of, or otherwise dispose of any shares of its preferred stock convertible into
Common Stock ranking on a parity with the Series A Preferred Stock, any shares
of Common Stock or any security convertible into Common Stock for a period of 90
days after the date of this Prospectus Supplement, without the prior written
consent of Merrill Lynch and Goldman Sachs.

In connection with the Offering, the rules of the Securities and Exchange
Commission permit Merrill Lynch to engage in certain transactions that stabilize
the price of the Series A Preferred Stock and/or the Common Stock. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Series A Preferred Stock and/or the Common
Stock.

If the Underwriters create a short position in the Series A Preferred Stock
in connection with the Offering (i.e. if they sell more shares of Series A
Preferred Stock than are set forth on the cover page of this Prospectus
Supplement), Merrill Lynch may reduce that short position by purchasing Series A

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Preferred Stock in the open market. Merrill Lynch also may elect to reduce any
short position through the exercise of all or part of the over-allotment option
described herein.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Series A Preferred Stock or the
Common Stock. In addition, neither the Company nor any of the Underwriters makes
any representation that Merrill Lynch will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.

Certain of the Underwriters and their affiliates, from time to time, engage
in transactions with, and have performed and will perform services for, the
Company in the ordinary course of business.

Application has been made to list the Series A Preferred Stock on the NYSE
under the symbol "RAPrA." The issued and outstanding shares of Common Stock of
the Company are listed on the NYSE under the symbol "RA", and application also
has been made to list the Common Stock issuable upon conversion of the Series A
Preferred Stock on the NYSE.

LEGAL MATTERS

The legality of the Series A Preferred Stock offered hereby and certain
federal tax matters will be passed upon for the Company by Brown & Wood LLP, New
York, New York. In addition, certain legal matters will be passed upon for the
Underwriters by Rogers & Wells LLP, New York, New York. Brown & Wood LLP and
Rogers & Wells LLP will rely on Ballard Spahr Andrews & Ingersoll LLP,
Baltimore, Maryland, as to certain matters of Maryland law.

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PROSPECTUS

$1,000,000,000
RECKSON ASSOCIATES REALTY CORP.
COMMON STOCK, COMMON STOCK WARRANTS,
PREFERRED STOCK, DEPOSITARY SHARES AND PREFERRED STOCK WARRANTS

---------------------

Reckson Associates Realty Corp. (the "Company") may offer and issue from
time to time (i) shares of its common stock, $.01 par value per share (the
"Common Stock"), (ii) shares of its preferred stock, $.01 par value, per share
(the "Preferred Stock"), (iii) Depositary Shares representing interests in
Preferred Stock, and (iv) warrants to purchase Common Stock or Preferred Stock
with an aggregate initial public offering price of up to $1,000,000,000 on terms
to be determined at the time of offering. The Common Stock, Warrants, Preferred
Stock and Depositary Shares (collectively, the "Securities") may be offered at
prices and on terms to be set forth in one or more supplements to this
Prospectus (each a "Prospectus Supplement").

The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Common Stock, any initial
public offering price, (ii) in the case of Preferred Stock, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price, (iii) in the case of
Warrants, the Securities as to which such Warrants may be exercised, the
duration, offering price, exercise price and detachability features and (iv) in
the case of Depositary Shares, the interests in Preferred Stock represented by
each such Depositary Share. In addition, such specific terms may include
limitations on direct or beneficial ownership and restrictions on transfer of
the Securities, in each case as may be appropriate to preserve the status of the
Company as a real estate investment trust ("REIT") for United States federal
income tax purposes. See "Restrictions on Ownership of Capital Stock."

The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.

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.

The Securities may be offered directly or through agents designated from
time to time by the Company or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the Securities, their
names, and any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be calculable from
the information set forth, in an accompanying Prospectus Supplement. No
Securities may be sold by the Company through agents, underwriters or dealers
without delivery of a Prospectus Supplement describing the method and terms of
the offering of such Securities. See "Plan of Distribution."
------------------------
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 MARCH 25, 1998.
<PAGE>
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 document 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 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, 1997.

2. Current Reports on Form 8-K (including Form 8-K/A) dated February
18, 1997, June 12, 1997, September 9, 1997, January 6, 1998, January 26,
1998, February 10, 1998, February 12, 1998 and March 24, 1998, respectively.

3. 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 applicable Securities 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.

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THE COMPANY

Reckson Associates Realty Corp. and its subsidiaries and affiliated entities
(collectively, 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"), was formed for the purpose of
continuing the commercial real estate business of Reckson Associates, its
affiliated partnerships and other entities ("Reckson"). For more than 40 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 Tri-State area of Long Island, Westchester, Northern New Jersey and
Southern Connecticut (the "Tri-State 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 Tri-State
area. The Company's growth strategy is currently focused on suburban markets
surrounding New York City. The Company operates as a fully-integrated, self
administered and self-managed REIT.

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 eight 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 February 23, 1998, the Company had approximately 210 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. An
investment in the Securities involves various risks. Prospective investors
should carefully consider the following information in conjunction with the
other information contained in this Prospectus before purchasing Securities
offered pursuant to the applicable Prospectus Supplement and this Prospectus
(the "Offering").

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

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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 OF
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 ("Chase") and Union Bank
of Switzerland ("UBS"), as co-arrangers. Such Credit Facility provides for a
maximum borrowing amount of up to $250 million. The Company has obtained an
additional facility providing for a maximum borrowing amount of up to $200
million from Chase and UBS (together, the "Facilities"). The Company's ability
to borrow under the Facilities 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 Facilities bear interest at a floating rate

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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. Certain of the Company's indebtedness contains
limitations on the ability of the Operating Partnership to incur additional
indebtedness. 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 Charter of the Company
limits ownership of the issued and outstanding Common Stock by any single
stockholder to 9.0% of the lesser of the number or value of the outstanding
shares of Common Stock from time to time. Limitations on the ownership of issued
and outstanding Preferred Stock may also be imposed by the Company. See
"Restrictions on Ownership of Capital Stock" and "Description of Preferred
Stock-Restrictions on Ownership." Such provisions may have the effect of
delaying, deferring or preventing a change of control of the Company or other
transaction 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 Class I, Class II and Class III
directors 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 Charter authorizes the Board of
Directors to issue additional shares of Common Stock without shareholder
approval. The Company may issue shares of common stock from time to time in
exchange for limited partnership units pursuant to the Operating Partnership
agreement. Any such issuance could have the effect of diluting existing
shareholders' interests in the Company.

PREFERRED STOCK. The Charter authorizes 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. Although the Board of Directors has no
such intention at the present time, it

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<PAGE>
could establish a series of Preferred Stock that could, depending on the terms
of such series, delay, defer or prevent a transaction or a change in control of
the Company that might involve a premium price for the Common Stock or otherwise
be in the best interest of the stockholders.

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 delaying, deferring or preventing 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. However, as permitted by the
MGCL, the Bylaws of the Company contain a provision exempting from the control
share acquisition statute any and all acquisitions by any person of the
Company's shares of stock. In addition, the board of directors has adopted a
resolution exempting the Company from the provisions of the business combination
statute. There can be no assurance that such provisions will not be amended or
eliminated at any time in the future.

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

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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

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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.

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"), the partnership that
owns the Omni, a 575,000 square foot office building located in the Company's
Nassau West Corporate Center office park. 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 Odyssey 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

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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 for investments made solely by the Company,
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

9
<PAGE>
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 (and intends to operate) 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.

If the Company were to fail to qualify as a REIT in any taxable year, the
Company would be subject to federal income tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates.
Moreover, unless entitled to relief under certain statutory provisions, the
Company also would be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification was lost. This treatment
would significantly reduce the net earnings of the Company available for
investment or distribution to shareholders because of the additional tax
liability to the Company for the years involved. In addition, distributions to
shareholders would no longer be required to be made.

FACTORS AFFECTING MARKET VALUE OF COMMON STOCK AND PREFERRED STOCK

EFFECT OF MARKET CONDITIONS. As with other publicly traded equity
securities, the value of the Common Stock depends, and, in the event that a
trading market for the Preferred Stock develops, the value of the Preferred
Stock will depend, upon various market conditions, which may change from time to
time. Among the market conditions that may affect the value of the Common Stock
and the Preferred Stock are the following: the extent of institutional investor
interest in the Company; the reputation of REITs and office and industrial REITs
generally and the attractiveness of their equity securities in comparison to
other equity securities (including securities issued by other real estate-based
companies); the Company's financial condition and results of operations; and
general financial market conditions.

EFFECT OF EARNINGS AND CASH DISTRIBUTIONS. It is generally believed that
the market value of the equity securities of a REIT is based primarily upon the
market's perception of the REIT's growth potential and its current and potential
future cash distributions, whether from operations, sales or refinancings, and
is secondarily based upon the real estate market value of the underlying assets.
For that reason, the Common Stock may trade at prices that are higher or lower
than the net asset value per share of Common Stock. To the extent the Company
retains operating cash flow for investment purposes, working capital reserves or
other purposes, these retained funds, while increasing the value of the
Company's underlying assets, may not correspondingly increase the market price
of the Common Stock. The failure of the company to meet the market's expectation
with regard to future earnings and cash distributions likely would adversely
affect the market price of the Common Stock and, if a market develops for the
Preferred Stock, may adversely affect the market price of the Preferred Stock.

EFFECT OF MARKET INTEREST RATES. One of the factors that influences the
price of the Common Stock and the value of the Preferred Stock is the
distribution rate on such shares (as a percentage of the price of such shares)
relative to market interest rates. Thus, an increase in market interest rates
may lead prospective purchasers of shares to expect a higher distribution rate,
which would adversely affect the market price of the Common Stock and, if a
market develops for the Preferred Stock, may adversely affect the market price
of the Preferred Stock.

USE OF PROCEEDS

Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds to the Company from the sale of the Securities will be used for general
corporate purposes, which may include the repayment of existing indebtedness,
the development or acquisition of additional properties as suitable
opportunities arise and the renovation, expansion and improvement of the
Company's existing properties.

10
<PAGE>
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES

The following table sets forth the Company's consolidated ratios of earnings
to fixed charges for the periods shown:

<TABLE>
<CAPTION>
JANUARY 1, YEAR ENDED
JUNE 3, 1995 1995 DECEMBER 31,
YEAR ENDED YEAR ENDED TO TO --------------------
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 JUNE 2, 1995 1994 1993
- ------------------- ------------------- ------------------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
2.77x 2.72x 2.71x 0.96x(1) 0.97x(1) 0.65x(1)
</TABLE>

- ------------------------

(1) Prior to completion of the IPO on June 2, 1995, the Company's predecessors
operated in a manner as to minimize net taxable income to the owners. The
IPO and the related formation transactions permitted the Company to
deleverage its properties significantly, resulting in a significantly
improved ratio of earnings to fixed charges.

The ratios of earnings to combined fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings consist of income from
continuing operations before minority interest and fixed charges. Fixed charges
consist of interest expense (including interest costs capitalized) and the
amortization of debt issuance costs. To date, the Company has not issued any
preferred stock; therefore, the ratios of earnings to combined fixed charges and
preferred stock dividends are unchanged from the ratios specified above.

DESCRIPTION OF COMMON STOCK

GENERAL

The Company's Charter (the "Charter") provides 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. On March
20, 1998, there were 38,632,335 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 Charter 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 Charter 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
Charter regarding Excess Stock, shares of Common Stock will have equal dividend,
liquidation and other rights.

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<PAGE>
CERTAIN PROVISIONS OF THE COMPANY'S CHARTER

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 Company's Charter does 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 Company's Charter authorizes 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 delay or defer 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 Charter 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.

DESCRIPTION OF WARRANTS

The Company may issue Warrants for the purchase of Common Stock or Preferred
Stock. Warrants may be issued independently or together with any Securities and
may be attached to or separate from such Securities. Each series of Warrants
will be issued under a separate warrant agreement (each, a "Warrant Agreement")
to be entered into between the Company and a warrant agent specified therein
("Warrant Agent"). The Warrant Agent will act solely as an agent of the Company
in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants.

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<PAGE>
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (1) the title of such Warrants; (2) the aggregate number of such
Warrants; (3) the price or prices at which such Warrants will be issued; (4) the
currencies in which the price or prices of such Warrants may be payable; (5) the
designation, amount and terms of the Securities purchasable upon exercise of
such Warrants; (6) the designation and terms of the other Securities, if any,
with which such Warrants are issued and the number of such Warrants issued with
each such security; (7) if applicable, the date on and after which such Warrants
and the Securities purchasable upon exercise of such Warrants will be separately
transferable; (8) the price or prices at which and currency or currencies in
which the Securities purchasable upon exercise of such Warrants may be
purchased; (9) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire; (10) the minimum or
maximum amount of such Warrants which may be exercised at any one time; (11)
information with respect to book-entry procedures, if any; (12) a discussion of
certain federal income tax considerations; and (13) any other material terms of
such Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Warrants.

DESCRIPTION OF PREFERRED STOCK

GENERAL

The Charter of the Company provides that the Company may issue up to 25
million shares of preferred stock, $.01 par value per share, of which no
preferred stock was outstanding at the date hereof.

The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Charter and Bylaws of the Company and any
applicable articles supplementary to the Charter designating terms of a series
of Preferred Stock (a "Designating Amendment").

The issuance of Preferred Stock could adversely affect the voting power,
dividend rights and other rights of holders of Common Stock. Although the Board
of Directors has no such intention at the present time, it could establish a
series of Preferred Stock that could, depending on the terms of such series,
delay, defer or prevent a transaction or a change in control of the Company that
might involve a premium price for the Common Stock or otherwise be in the best
interest of the holders thereof. Management believes that the availability of
Preferred Stock will provide the Company with increased flexibility in
structuring possible future financing and acquisitions and in meeting other
needs that might arise.

TERMS

Subject to the limitations prescribed by the Charter, the Board of Directors
is authorized to fix the number of shares constituting each series of Preferred
Stock and the designations and powers, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, including such provisions as may be desired concerning voting,
redemption, dividends, dissolution or the distribution of assets, conversion or
exchange, and such other subjects or matters as may be fixed by resolution of
the Board of Directors. The Preferred Stock will, when issued, be fully paid and
nonassessable by the Company and will have no preemptive rights.

Reference is made to the Prospectus Supplement relating to the series of
Preferred Stock offered thereby for the specific terms thereof, including:

(1) The title of such Preferred Stock;

(2) The number of shares of such Preferred Stock, the liquidation
preference per share of such Preferred Stock and the offering price of such
Preferred Stock;

13
<PAGE>
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Stock;

(4) The date from which dividends on such Preferred Stock shall
accumulate, if applicable;

(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;

(6) The provision for a sinking fund, if any, for such Preferred Stock;

(7) The provision for redemption, if applicable, of such Preferred
Stock;

(8) Any listing of such Preferred Stock on any securities exchange;

(9) The terms and conditions, if applicable, upon which such Preferred
Stock may or will be convertible into Common Stock of the Company, including
the conversion price (or manner of calculation thereof);

(10) The relative ranking and preferences of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;

(11) Any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT;

(12) A discussion of federal income tax considerations applicable to
such Preferred Stock; and

(13) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.

RANK

Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank: (i) senior to all
classes or series of Common Stock of the Company and to all equity securities
issued by the Company the terms of which provide that such equity securities
shall rank junior to such Preferred Stock; (ii) on a parity with all equity
securities issued by the Company other than those referred to in clauses (i) and
(iii); and (iii) junior to all equity securities issued by the Company which the
terms of such Preferred Stock provide will rank senior to it. The term "equity
securities" does not include convertible debt securities.

DIVIDENDS

Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will have the rights with respect to payment of dividends set
forth below.

Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of assets
of the Company legally available for payment, cash dividends in such amounts and
on such dates as will be set forth in, or pursuant to, the applicable Prospectus
Supplement. Each such dividend shall be payable to holders of record as they
appear on the share transfer books of the Company on such record dates as shall
be fixed by the Board of Directors of the Company.

Dividends on any series of Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of Preferred Stock will have no right to receive a dividend in respect of
the related dividend period and the Company will have no obligation to pay the
dividend

14
<PAGE>
accrued for such period, whether or not dividends on such series of Preferred
Stock are declared payable on any future dividend payment date.

If Preferred Stock of any series is outstanding, no full dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment for all past dividend periods and
the then current dividend period or (ii) if such series of Preferred Stock does
not have a cumulative dividend, full dividends for the then current dividend
period have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
Preferred Stock of such series. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon Preferred Stock of
any series and the shares of any other series of Preferred Stock ranking on a
parity as to dividends with the Preferred Stock of such series, all dividends
declared upon Preferred Stock of such series and any other series of Preferred
Stock ranking on a parity as to dividends with such Preferred Stock shall be
declared pro rata so that the amount of dividends declared per share of
Preferred Stock of such series and such other series of Preferred Stock shall in
all cases bear to each other the same ratio that accrued dividends per share on
the Preferred Stock of such series and such other series of Preferred Stock
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such Preferred Stock does not have a cumulative
dividend) bear to each other. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on Preferred
Stock of such series which may be in arrears.

Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, no dividends (other than in shares of Common Stock or other capital
stock ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation) shall be declared or paid or set aside for payment or other
distribution shall be declared or made upon the Common Stock, or any other
capital stock of the Company ranking junior to or on a parity with the Preferred
Stock of such series as to dividends or upon liquidation, nor shall any shares
of Common Stock, or any other capital stock of the Company ranking junior to or
on a parity with the Preferred Stock of such series as to dividends or upon
liquidation, be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any such shares) by the Company (except (1) by conversion into or
exchange for other capital stock of the Company ranking junior to the Preferred
Stock of such series as to dividends and upon liquidation or (2) redemptions for
the purpose of preserving the Company's status as a REIT).

REDEMPTION

If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.

The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accumulated and unpaid dividends thereon
(which shall not, if such Preferred Stock does not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be

15
<PAGE>
payable in cash or other property, as specified in the applicable Prospectus
Supplement. If the redemption price for Preferred Stock of any series is payable
only from the net proceeds of the issuance of capital stock of the Company, the
terms of such Preferred Stock may provide that, if no such capital stock shall
have been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due, such
Preferred Stock shall automatically and mandatorily be converted into the
applicable capital stock of the Company pursuant to conversion provisions
specified in the applicable Prospectus Supplement.

Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period, and (ii) if such
series of Preferred Stock does not have a cumulative dividend, full dividends on
the Preferred Stock of any series have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, no shares of any series of
Preferred Stock shall be redeemed unless all outstanding Preferred Stock of such
series is simultaneously redeemed; provided, however, that the foregoing shall
not prevent the purchase or acquisition of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series. In addition, unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on all outstanding shares of any
series of Preferred Stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past dividend periods and the then current dividend period, and (ii) if
such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, the Company shall
not purchase or otherwise acquire, directly or indirectly, any shares of
Preferred Stock of such series (except by conversion into or exchange for
capital stock of the Company ranking junior to the Preferred Stock of such
series as to dividends and upon liquidation); provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred Stock of
such series to preserve the REIT status of the Company or pursuant to a purchase
or exchange offer made on the same terms to holders of all outstanding Preferred
Stock of such series.

If fewer than all of the outstanding shares of Preferred Stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by
the Company and such shares may be redeemed pro rata from the holders of record
of such shares in proportion to the number of such shares held or for which
redemption is requested by such holder (with adjustments to avoid redemption of
fractional shares) or by lot in a manner determined by the Company.

Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the share transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accumulate on such redemption date; and (vi)
the date upon which the holder's conversion rights, if any, as to such shares
shall terminate. If fewer than all the shares of Preferred Stock of any series
are to be redeemed, the notice mailed to each such holder thereof shall also
specify the number of shares of Preferred Stock to be redeemed from each such
holder. If notice of redemption of any Preferred Stock has been given and if the
funds necessary for such redemption have been set aside by the Company in trust
for the benefit of the holders of any Preferred Stock so called for redemption,
then from and after the redemption date dividends will cease to accumulate on
such Preferred Stock, and all rights of the holders of such Preferred Stock will
terminate, except the right to receive the redemption price.

16
<PAGE>
LIQUIDATION PREFERENCE

Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company (referred to herein as a "liquidation"), then, before
any distribution or payment shall be made to the holders of any Common Stock or
any other class or series of capital stock of the Company ranking junior to the
Preferred Stock of such series in the distribution of assets upon any
liquidation, dissolution or winding up of the Company, the holders of such
Preferred Stock shall be entitled to receive out of assets of the Company
legally available for distribution to shareholders liquidating distributions in
the amount of the liquidation preference per share (set forth in the applicable
Prospectus Supplement), plus an amount equal to all dividends accumulated and
unpaid thereon (which shall not include any accumulation in respect of unpaid
dividends for prior dividend periods if such Preferred Stock does not have a
cumulative dividend). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Preferred Stock will
have no rights or claim to any of the remaining assets of the Company. In the
event that, upon any such voluntary or involuntary liquidation, dissolution or
winding up, the available assets of the Company are insufficient to pay the
amount of the liquidating distributions on all outstanding Preferred Stock of
such series and the corresponding amounts payable on all shares of other classes
or series of capital stock of the Company ranking on a parity with such
Preferred Stock in the distribution of assets, then the holders of such
Preferred Stock and all other such classes or series of capital stock shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.

The consolidation or merger of the Company with or into any other entity, or
the merger of another entity with or into the Company, or a statutory share
exchange by the Company, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.

VOTING RIGHTS

Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as indicated in the applicable Prospectus Supplement.

Whenever dividends on any series of Preferred Stock shall be in arrears for
six or more quarterly periods, the holders of such Preferred Stock (voting
separately as a class with all other series of Preferred Stock upon which like
voting rights have been conferred and are exercisable) will be entitled to vote
for the election of two additional directors of the Company at a special meeting
called by the holders of record of at least ten percent (10%) of any series of
Preferred Stock so in arrears (unless such request is received less than 90 days
before the date fixed for the next annual or special meeting of the
stockholders) or at the next annual meeting of stockholders, and at each
subsequent annual meeting until (i) if such series of Preferred Stock has a
cumulative dividend, all dividends accumulated on such shares of Preferred Stock
for the past dividend periods and the then current dividend period shall have
been fully paid or declared and a sum sufficient for the payment thereof set
aside for payment or (ii) if such series of Preferred Stock does not have a
cumulative dividend, four quarterly dividends shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
such cases, the entire Board of Directors of the Company will be increased by
two directors.

Unless provided otherwise for any series of Preferred Stock, so long as any
shares of such Preferred Stock remain outstanding, the Company will not, without
the affirmative vote or consent of the holders of at least two-thirds of the
shares of such series of Preferred Stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any class or series of capital stock ranking senior to such
Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up of the Company, or reclassify
any authorized capital stock of the Company into such stock, or create,
authorize or issue any obligation or security convertible into or evidencing the
right

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to purchase any such stock; or (ii) amend, alter or repeal the provisions of the
Company's Charter or the Designating Amendment for such series of Preferred
Stock, whether by merger, consolidation or otherwise (an "Event"), so as to
materially and adversely affect any right, preference, privilege or voting power
of such series of Preferred Stock or the holders thereof; provided, however,
with respect to the occurrence of any of the Events set forth in (ii) above, so
long as such series of Preferred Stock remains outstanding with the terms
thereof materially unchanged, taking into account that upon the occurrence of an
Event the Company may not be the surviving entity, the occurrence of any such
Event shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers of holders of such series of Preferred
Stock; and provided, further, that (x) any increase in the amount of the
authorized Preferred Stock or the creation or issuance of any other series of
Preferred Stock, or (y) any increase in the amount of authorized shares of such
series of Preferred Stock or any other series of Preferred Stock, in each case
ranking on a parity with or junior to the Preferred Stock of such series with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Company, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.

The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote or consent would otherwise be
required shall be effected, all outstanding shares of such series of Preferred
Stock shall have been converted, redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect such redemption.

CONVERSION RIGHTS

The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into shares of Common Stock will be set forth in the applicable
Prospectus Supplement. Such terms will include the number of shares of Common
Stock into which the shares of Preferred Stock are convertible, the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the holders of the Preferred
Stock or the Company, the events requiring an adjustment of the conversion price
and provisions affecting conversion in the event of the redemption of the
Preferred Stock.

SHAREHOLDER LIABILITY

As discussed below under "Description of Common Stock -- General,"
applicable Maryland law provides that no shareholder, including holders of
Preferred Stock, shall be personally liable for the acts and obligations of the
Company and that the funds and property of the Company shall be the only
recourse for such acts or obligations.

RESTRICTIONS ON OWNERSHIP

As discussed below under "Restrictions on Ownership of Capital Stock," for
the Company to qualify as a REIT under the Code, not more than 50% in value of
its outstanding capital stock may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year. Therefore, the Designating Amendment for each
series of Preferred Stock may contain provisions restricting the ownership and
transfer of such Preferred Stock. The applicable Prospectus Supplement will
specify any additional ownership limitation relating to a series of Preferred
Stock.

REGISTRAR AND TRANSFER AGENT

The Registrar and Transfer Agent for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.

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DESCRIPTION OF DEPOSITARY SHARES

GENERAL

The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest or a share of a
particular series of a class of Preferred Shares, as specified in the applicable
Prospectus Supplement. Preferred Shares of each series of each class represented
by Depositary Shares will be deposited under a separate Deposit Agreement (each,
a "Deposit Agreement") among the Company, the depositary named therein (such
depositary or its successor, the "Preferred Shares Depositary") and the holders
from time to time of the Depositary Receipts. Subject to the terms of the
Deposit Agreement, each owner of a Depositary Receipt will be entitled, in
proportion to the fractional interest of a share of the particular series of a
class of Preferred Shares represented by the Depositary Shares evidenced by such
Depositary Receipt, to all the rights and preferences of the Preferred Shares
represented by such Depositary Shares (including dividend, voting, conversion,
redemption and liquidation rights).

The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Shares by the Company to the Preferred Shares
Depositary, the Company will cause the Preferred Shares Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request.

DIVIDENDS AND OTHER DISTRIBUTIONS

The Preferred Shares Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Shares to the record
holders of the Depositary Receipts evidencing the related Depositary Shares in
proportion to the number of such Depositary Receipts owned by such holder,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to the Preferred Shares
Depositary.

In the event of a distribution other than in cash, the Preferred Shares
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Shares Depositary, unless the Preferred Shares
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Shares Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.

WITHDRAWAL OF SHARES

Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Shares Depositary (unless the related Depositary Shares have
previously been called for redemption), the holders thereof will be entitled to
delivery at such office, to or upon such holder's order, of the number of whole
or fractional Preferred Shares and any money or other property represented by
the Depositary Shares evidenced by such Depositary Receipts. Holders of
Depositary Receipts will be entitled to receive whole or fractional shares of
the related Preferred Shares on the basis of the proportion of Preferred Shares
represented by each Depositary Share as specified in the applicable Prospectus
Supplement, but holders of such Preferred Shares will not thereafter be entitled
to receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of Preferred Shares to be withdrawn,
the Preferred Shares Depositary will deliver to such holder at the same time a
new Depositary Receipt evidencing such excess number of Depositary Shares.

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REDEMPTION OF DEPOSITARY SHARES

Whenever the Company redeems Preferred Shares held by the Preferred Shares
Depositary, the Preferred Shares Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the Preferred
Shares so redeemed, provided the Company shall have paid in full to the
Preferred Shares Depositary the redemption price of the Preferred Shares to be
redeemed plus an amount equal to any accrued and unpaid dividends thereon to the
date fixed for redemption. The redemption price per Depositary Share will be
equal to the redemption price and any other amounts per share payable with
respect to the Preferred Shares. If less than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected by the
Preferred Shares Depositary by lot.

After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any moneys payable upon
such redemption and any money or other property to which the holders of such
Depositary Receipts were entitled upon such redemption upon surrender thereof to
the Preferred Shares Depositary.

VOTING OF THE UNDERLYING PREFERRED SHARES

Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Preferred Shares Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Shares) will be entitled to instruct the Preferred Shares
Depositary as to the exercise of the voting rights pertaining to the amount of
Preferred Shares represented by such holder's Depositary Shares. The Preferred
Shares Depositary will vote the amount of Preferred Shares represented by such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all reasonable action which may be deemed necessary by the
Preferred Shares Depositary in order to enable the Preferred Shares Depositary
to do so. The Preferred Shares Depositary will abstain from voting the amount of
Preferred Shares represented by such Depositary Shares to the extent it does not
receive specific instructions from the holders of Depositary Receipts evidencing
such Depositary Shares.

LIQUIDATION PREFERENCE

In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, each holder of a Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each Preferred
Share represented by the Depositary Share evidenced by such Depositary Receipt,
as set forth in the applicable Prospectus Supplement.

CONVERSION OF PREFERRED SHARES

The Depositary Shares, as such, are not convertible into Common Shares or
any other securities or property of the Company. Nevertheless, if so specified
in the applicable Prospectus Supplement relating to an offering of Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
Preferred Shares Depositary with written instructions to the Preferred Shares
Depositary to instruct the Company to cause conversion of the Preferred Shares
represented by the Depositary Shares evidenced by such Depositary Receipts into
whole Common Shares, other Preferred Shares of the Company or other shares of
capital stock, and the Company has agreed that upon receipt of such instructions
and any amounts payable in respect thereof, it will cause the conversion thereof
utilizing the same procedures as those provided for delivery of Preferred Shares
to effect such conversion. If the Depositary Shares evidenced by a Depositary
Receipt are to be converted in part only, one or more new Depositary Receipts
will be issued for any Depositary Shares not to be converted. No fractional
Common Shares will be issued

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upon conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Shares on the
last business day prior to the conversion.

AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT

The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Shares
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts will not be effective unless such
amendment has been approved by the existing holders of at least a majority of
the Depositary Shares evidenced by the Depositary Receipts then outstanding.

The Deposit Agreement may be terminated by the Company upon not less than 30
days' prior written notice to the Preferred Shares Depositary if (i) such
termination is to preserve the Company's status as a REIT or (ii) a majority of
each class of Preferred Shares affected by such termination consents to such
termination, whereupon the Preferred Shares Depositary shall deliver or make
available to each holder of Depositary Receipts, upon surrender of the
Depositary Receipts held by such holder, such number of whole or fractional
Preferred Shares as are represented by the Depositary Shares evidenced by such
Depositary Receipts. In addition, the Deposit Agreement will automatically
terminate if (i) all outstanding Depositary Shares shall have been redeemed,
(ii) there shall have been a final distribution in respect of the related
Preferred Shares in connection with any liquidation, dissolution or winding up
of the Company and such distribution shall have been distributed to the holders
of Depositary Receipts evidencing the Depositary Shares representing such
Preferred Shares or (iii) each related Preferred Share shall have been converted
into capital stock of the Company not so represented by Depositary Shares.

CHARGES OF PREFERRED SHARES DEPOSITARY

The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Shares Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Shares Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.

RESIGNATION AND REMOVAL OF DEPOSITARY

The Preferred Shares Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Shares Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Shares Depositary. A successor
Preferred Shares Depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.

MISCELLANEOUS

The Preferred Shares Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Shares Depositary with respect to the related Preferred Shares.

Neither the Preferred Shares Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Shares Depositary under the Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence,

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<PAGE>
gross negligence or willful misconduct, and the Company and the Preferred Shares
Depositary will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts, Depositary Shares or Preferred Shares
represented thereby unless satisfactory indemnity is furnished. The Company and
the Preferred Shares Depositary may rely on written advice of counsel or
accountants, or information provided by persons presenting Preferred Shares
represented thereby for deposit, holders of Depositary Receipts or other persons
believed to be competent to give such information, and on documents believed to
be genuine and signed by a proper party.

If the Preferred Shares Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and the Company, on the other hand, the Preferred Shares Depositary shall
be entitled to act on such claims, requests or instructions received from the
Company.

RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK

EXCESS STOCK

The Charter provides 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 Charter,
subject to certain exceptions, provides 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. Limitations on the ownership of Preferred
Stock may also be imposed by the Company. See "Description of Preferred Stock
- -Restrictions on Ownership." 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

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<PAGE>
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 Charter 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 Charter 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 owed 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.

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All certificates representing shares of 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. See "Risk Factors-Risks of Failure to Qualify as a
REIT."

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. Beginning in 1998, the
Company may elect to retain long-term capital gains and pay corporate-level
income tax on them and treat the retained gains as if they had been distributed
to stockholders. In such case, each stockholder would include in income, as
long-term capital gain, its proportionate share of the undistributed gains and
would be deemed to have paid its proportionate share of the tax paid by the
Company with respect thereto. In addition, the basis for a stockholder's Common
Stock or Preferred Stock would be increased by the amount of the undistributed
long-term capital gain included in its income, less the amount of the tax it is
deemed to have paid with respect thereto.

Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the Securities offered 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 investor'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.

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PLAN OF DISTRIBUTION

The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Securities will be named in the applicable Prospectus Supplement.

Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell the
Securities upon the terms and conditions as are set forth in the applicable
Prospectus Supplement. In connection with the sale of Securities, underwriters
may be deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Securities for whom they may act as agent. Underwriters may sell
Securities 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 agent.

Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions
for commissions allowed by underwriters to participating dealers, are set forth
in the applicable Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters, dealers and
agents may be entitled, under agreements entered into with the Company, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.

If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
that the purchase by an institution of the Securities covered by its Contracts
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject.

Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Company and its subsidiaries
in the ordinary course of business.

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 LLP, Baltimore, Maryland, as to certain
matters of Maryland law.

EXPERTS

The consolidated balance sheets of Reckson Associates Realty Corp. as of
December 31, 1997 and December 31, 1996, and the related consolidated statements
of operations, stockholders' equity and cash flows for the years ended December
31, 1997 and 1996 and 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 appearing in
the Company's Annual Report on

25
<PAGE>
Form 10-K for the year ended December 31, 1997; 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; and the
statement of revenues and certain expenses of 710 Bridgeport Avenue (as defined
therein), for the year ended December 31, 1996 and the statement of revenues and
certain expenses of the Shorthills Office Center (as defined therein), for the
year ended December 31, 1996 appearing in the Company's Form 8-K dated June 12,
1997; and the statement of revenues and certain expenses of Garden City Plaza
for the year ended December 31, 1996, appearing in the Company's Form 8-K dated
September 9, 1997, and the statement of revenues and certain expenses of the
Christiana Office Property (as defined therein) for the year ended June 30,
1997, appearing in the Company's Form 8-K dated February 10, 1998, and the
statement of revenues and certain expenses of the Stamford Office Towers
Property (as defined therein) for the year ended December 31, 1997, appearing in
the Company's Form 8-K dated March 24, 1998, 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.

26
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SHARES
OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary............................. S-3
The Company.................................... S-14
Recent Developments............................ S-15
Use of Proceeds................................ S-20
Price Range of Common Stock and
Distribution History......................... S-21
Capitalization................................. S-22
The Properties................................. S-23
Management..................................... S-43
Description of Series A Preferred Stock........ S-49
Federal Income Tax Considerations.............. S-54
Underwriting................................... S-57
Legal Matters.................................. S-58

PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company.................................... 3
Risk Factors................................... 3
Use of Proceeds................................ 10
Ratios of Earnings to Combined Fixed Charges... 11
Description of Common Stock.................... 11
Description of Warrants........................ 12
Description of Preferred Stock................. 13
Description of Depository Shares............... 19
Restrictions on Ownership of Capital Stock..... 22
Federal Income Tax Considerations.............. 24
Plan of Distribution........................... 25
Legal Matters.................................. 25
Experts........................................ 25
</TABLE>

8,000,000 SHARES

RECKSON ASSOCIATES
REALTY CORP.

% SERIES A CONVERTIBLE
CUMULATIVE REDEEMABLE
PREFERRED STOCK
(LIQUIDATION PREFERENCE
$25.00 PER SHARE)

---------------------

PROSPECTUS SUPPLEMENT

---------------------

JOINT LEAD MANAGERS

MERRILL LYNCH & CO.

GOLDMAN, SACHS & CO.

, 1998

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