-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PAU+qLUc5gjdKvwj89bDVOWU4KpnXni4/a4LET+ALrBioHj0QbdSOLhBMNReEHU0 ih9lhSJlVsk0UnpZMyuU6Q== 0001005150-00-000378.txt : 20000324 0001005150-00-000378.hdr.sgml : 20000324 ACCESSION NUMBER: 0001005150-00-000378 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RECKSON OPERATING PARTNERSHIP LP CENTRAL INDEX KEY: 0000930810 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 113233647 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-84580 FILM NUMBER: 576666 BUSINESS ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5166946900 MAIL ADDRESS: STREET 1: 225 BROADHOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 10-K 1 FORM 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission File Number 1-13762 --------------------- RECKSON OPERATING PARTNERSHIP, L. P. (Exact name of registrant as specified in its charter)
MARYLAND 11-3233647 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
225 BROADHOLLOW ROAD, MELVILLE, NY 11747 (Address of principal (Zip Code) executive offices)
Registrant's telephone number, including area code: (631) 694-6900 --------------------- Securities registered pursuant to Section 12(b) of the Act: None --------------------- Securities registered pursuant to Section 12(g) of the Act: None --------------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. [X] DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement of Reckson Associates Realty Corp. relating to its Annual Shareholder's Meeting to be held May 18, 2000 are incorporated by reference into Part III. As of March 22, 2000, 3,671,352 common units of limited partnership interest were held by non-affiliates of the Registrant. There is no established trading market for such units. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
ITEM NO. PAGE - ------- ------ PART I 1. Business .................................................................... I-1 2. Properties .................................................................. I-8 3. Legal Proceedings ........................................................... I-17 4. Submission of Matters to a Vote of Security Holders ......................... I-17 PART II 5. Market for Registrant's Common Equity and Related Security Matters .......... II-1 6. Selected Financial Data ..................................................... II-2 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ............................................................. ... II-3 7(a). Quantitative and Qualitative Disclosures about Market Risk .................. II-12 8. Financial Statements and Supplementary Data ................................. II-12 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................................................................. II-12 PART III 10. Directors and Executive Officers of the Registrant .......................... III-1 11. Executive Compensation ...................................................... III-1 12. Security Ownership of Certain Beneficial Owners and Management .............. III-1 13. Certain Relationships and Related Transactions .............................. III-1 PART IV 14. Financial Statements and Schedules, Exhibits and Reports on Form 8-K ........ IV-1
PART I ITEM 1. BUSINESS GENERAL Reckson Operating Partnership, L. P. (the "Operating Partnership") commenced operations on June 2, 1995. Reckson Associates Realty Corp. (the "Company"), which serves as the sole general partner of the Operating Partnership, is a fully integrated, self administered and self managed real estate investment trust ("REIT"). The Operating Partnership and the Company were formed for the purpose of continuing the commercial real estate business of Reckson Associates, its affiliated partnerships and other entities ("Reckson"). For more than 40 years, Reckson has been engaged in the business of owning, developing, acquiring, constructing, managing and leasing office and industrial properties in the New York tri-state area (the "Tri-State Area"). Based on industry surveys, management believes that the Operating Partnership is one of the largest owners and operators of Class A office properties and industrial properties in the Tri-State Area. As of December 31, 1999, the Operating Partnership owned 189 properties (the "Properties") (including two joint venture properties) in the Tri-State Area encompassing approximately 21.4 million rentable square feet, all of which are managed by the Operating Partnership. The Properties consist of 77 Class A office properties (the "Office Properties") encompassing approximately 13.1 million square feet, 110 industrial properties (the "Industrial Properties") encompassing approximately 8.3 million square feet and two 10,000 square foot retail properties. The Operating Partnership also owns a 357,000 square foot office building located in Orlando, Florida. In addition, as of December 31, 1999, the Operating Partnership had approximately $315.6 million invested in certain mortgage indebtedness encumbering three Class A Office Properties encompassing approximately 1.6 million square feet, approximately 472 acres of land located in New Jersey and in a note receivable secured by a partnership interest in Omni Partners, L. P., owner of the Omni, a 575,000 square foot Class A Office Property located in Uniondale, New York (the "Mortgage Note Investments"). As of December 31, 1999, the Operating Partnership also owned approximately 346 acres of land in 16 separate parcels of which the Operating Partnership can develop approximately 1.9 million square feet of office space and approximately 300,000 square feet of industrial space. During 1998 and 1999, the Operating Partnership made investments in joint ventures with Reckson Strategic Venture Partners, LLC ("RSVP"), a venture capital fund created as a research and development vehicle for the Operating Partnership to invest in alternative real estate sectors (see Corporate Strategies and Growth Opportunities). RSVP is managed by an affiliate of Reckson Service Industries, Inc. currently D/B/A FrontLine Capital Group ("FrontLine"). The Operating Partnership has committed up to $100 million for investments in the form of either (i) joint ventures with RSVP or (ii) loans to FrontLine for FrontLine's investment in RSVP. To date, the Operating Partnership has invested $24.8 million in RSVP joint venture investments. During 1998, the Operating Partnership spun off FrontLine, its commercial service business, to its shareholders and has provided FrontLine with a $100 million line of credit. As of December 31, 1999, $79.5 million had been drawn and is outstanding on this line. 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 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 twelve planned office parks and are tenanted by a diverse industry group of national firms which include consumer products, telecommunication, health care, insurance and professional service firms such as accounting firms and securities brokerage houses. 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 developed by Reckson. All of the interests in the Properties, the Mortgage Note Investments and land are held directly or indirectly by, and all of its operations are conducted through, the Operating Partnership. Reckson Associates Realty Corp. controls the Operating Partnership as the sole general partner and as of I-1 December 31, 1999, owned approximately 87% of the Operating Partnership's outstanding common units of limited partnership ("Units") and Class B common units of limited partnership ("Class B Common Units"). The Operating Partnership seeks to maintain cash reserves for normal repairs, replacements, improvements, working capital and other contingencies. The Operating Partnership has established an unsecured credit facility (the "Credit Facility") with a maximum borrowing amount of $500 million scheduled to mature on July 23, 2001 and an unsecured term loan ("the "Term Loan") with a maximum borrowing capacity of $75 million scheduled to mature on June 16, 2001. The Credit Facility and the Term Loan require the Operating Partnership to comply with a number of financial and other covenants on an ongoing basis. During 1999, the Operating Partnership issued $300 million of five year and ten year senior unsecured notes and in connection with the Company's issuance of Series B convertible cumulative preferred stock, the Operating Partnership issued six million Series E convertible cumulative preferred units of general partnership interest to the Company for proceeds of $150 million. The combined net proceeds of approximately $447.4 million were used to repay outstanding borrowings under the Credit Facility and as partial consideration in the acquisition of the first mortgage note secured by 919 Third Avenue located in New York City. On May 24, 1999, in conjunction with the Tower portfolio acquisition (see Corporate Strategies and Growth Opportunities below), the Operating Partnership issued 11,694,567 Class B Common Units to the Company which were valued for purposes under generally accepted accounting principals ("GAAP") at $26 per share for total consideration of approximately $304.1 million. There are numerous commercial properties that compete with the Operating Partnership in attracting tenants and numerous companies that compete in selecting land for development and properties for acquisition. The Operating Partnership's executive offices are located at 225 Broadhollow Road, Melville, New York 11747 and its telephone number at that location is (631) 694-6900. At December 31, 1999, the Operating Partnership had approximately 300 employees. RECENT DEVELOPMENTS Acquisition Activity. Set forth below is a brief description of the Operating Partnership's major acquisition activity during 1999. On May 24, 1999, the Tower portfolio acquisition was completed with the Operating Partnership obtaining title to all of Tower's real estate assets. Simultaneously with the closing of the Tower portfolio acquisition the Operating Partnership arranged for the sale of four of Tower's Class B New York City office properties. In addition, the Operating Partnership sold, with the exception of one Class A, 357,000 square foot office building located in Orlando, Florida, all of the assets located outside of the Tri-State Area. In addition to the aforementioned property in Orlando, Florida, the Operating Partnership's remaining assets from the Tower portfolio acquisition include three Class A New York City Office Properties encompassing approximately 1.6 million square feet and one Class A Office Property on Long Island encompassing approximately 101,000 square feet. On June 15, 1999, the Operating Partnership acquired the first mortgage note secured by 919 Third Avenue, a 47 story, 1.4 million square foot Class A Office Property located in New York City for approximately $277.5 million. The first mortgage note entitles the Operating Partnership to all the net cash flow of the property and to substantial rights regarding the operations of the property. In addition, as of December 31, 1999, the Operating Partnership has invested approximately $15.7 million in certain mortgage indebtedness encumbering one Class A Office Property encompassing approximately 177,000 square feet and approximately 472 acres of land located in New Jersey. The I-2 Operating Partnership has also loaned approximately $17 million to its minority partner in Omni, its 575,000 square foot flagship Long Island Office Property, and effectively increased its economic interest in the property owning partnership. On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the Americas, a 540,000 square foot, 35 story, Class A office property, located in New York City, for a purchase price of approximately $126.5 million. This acquisition was financed through a $70 million secured debt financing and a draw under the Operating Partnership's Credit Facility. On January 6, 1998, the Operating Partnership made an initial investment in the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse facilities. In connection with the transaction the Morris Companies contributed 100% of their interests in certain industrial properties to Reckson Morris Operating Partnership, L.P. ("RMI") in exchange for operating partnership units in RMI. During 1999, the Operating Partnership executed a contract for the sale, which will take place in three stages, of its interest in RMI which consisted of 28 properties, comprising approximately 6.1 million square feet and three other big box Industrial Properties. The combined total sale price is approximately $298 million (approximately $42 million of which is payable to the Morris Companies and its affiliates). During 1999, the first stage of the RMI closing occurred and stages two and three are scheduled for April 2000. Leasing Activity During the year ended December 31, 1999, the Operating Partnership leased 1.7 million square feet at the Office Properties at an average effective rent (i.e. base rent adjusted on a straight-line basis for free rent periods, tenant improvements and leasing commissions) of $24.14 per square foot and 1.3 million square feet at the Industrial Properties at an average effective rent of $6.71 per square foot. Included in this leasing data is 388,531 square feet at the Long Island Office Properties at an average effective rent of $24.87; 707,731 square feet at the Westchester Office Properties at an average effective rent of $22.04; 109,006 square feet at the Connecticut Office Properties at an average effective rent of $26.57; 413,072 square feet at the New Jersey Office Properties at an average effective rent of $22.63 and 86,476 square feet of the New York City Office Properties at an average effective rent of $42.27. Also included in this leasing data is 940,315 square feet at the Long Island Industrial Properties at an average effective rent of $7.16 and 373,497 square feet at the New Jersey Industrial Properties at an average effective rent of $5.60. Financing Activities On July 23, 1998, the Operating Partnership obtained its three year $500 million unsecured revolving Credit Facility from Chase Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the Credit Facility bank group. Interest rates on borrowings under the Credit Facility are priced off of LIBOR plus a sliding scale ranging from 65 basis points to 90 basis points based on the Operating Partnership's investment grade rating on its senior unsecured debt. On March 16, 1999, the Operating Partnership received its investment grade rating on its senior unsecured debt. As a result, the pricing under the Credit Facility was adjusted to LIBOR plus 90 basis points. The Operating Partnership utilizes the Credit Facility primarily to finance the acquisitions of Properties and other real estate investments, fund its development activities and for working capital purposes. At December 31, 1999, the Operating Partnership had availability under the Credit Facility to borrow an additional $150.1 million (net of $52.3 million of outstanding undrawn letters of credit). As of December 31, 1999, the Operating Partnership had outstanding its 18 month, $75 million unsecured Term Loan from Chase Manhattan Bank. Interest rates on borrowings under the Term Loan are priced off of LIBOR plus 150 basis points. The Term Loan replaced the Operating Partnership's previous term loan which matured on December 17, 1999. I-3 Other Financing Activities On March 26, 1999, the Operating Partnership issued $100 million of 7.4% senior unsecured notes due March 15, 2004 and $200 million of 7.75% senior unsecured notes due March 15, 2009. Net proceeds of approximately $297.4 million were used to repay outstanding borrowings under the Operating Partnership's Credit Facility. On May 24, 1999, in conjunction with the Tower portfolio acquisition, the Operating Partnership obtained a $130 million unsecured bridge facility (The "Bridge Facility") from USB AG. Interest rates on borrowings under the Bridge Facility were priced off of LIBOR plus approximately 214 basis points. On July 23, 1999, the Bridge Facility was repaid through a long term fixed rate secured borrowing and an advance under the Credit Facility. The new mortgage note, in the amount of $125 million, is secured by two Office Properties with an aggregate carrying value of approximately $261 million, is for a term of ten years and bears interest at the rate of 7.73% per annum. Unit Issuances On May 24, 1999, in conjunction with the Tower portfolio acquisition, the Operating Partnership issued 11,694,567 Class B Common Units to the Company which were valued for GAAP purposes at $26 per share for total consideration of approximately $304.1 million. The Class B Common Units are entitled to receive an initial annual distribution of $2.24 per share, which distribution is subject to adjustment annually commencing on July 1, 2000. The Class B Common Units are exchangeable at any time, at the option of the holder, into an equal number of Units of the Operating Partnership subject to customary antidilution adjustments. The Class B Common Units will be exchanged for an equal number of Units upon the exchange, if any, by the Company of common stock for Class B Common Stock at any time following the four year, six-month anniversary of the issuance of the Class B Common Stock. On June 2, 1999, the Operating Partnership issued six million Series E preferred units of general partnership interests to the Company in exchange for approximately $150 million. The Series E preferred units have a liquidation preference of $25 per unit, and an initial distribution rate of 7.85% per annum with such rate increasing to 8.35% per annum on April 30, 2000 and to 8.85% per annum from and after April 30, 2001. The Series E preferred units are convertible into common units at a price of $26.05 per unit and are redeemable by the Operating Partnership on or after March 2, 2002. Proceeds from the issuance of the Series E preferred units were used as partial consideration in the acquisition of the first mortgage note secured by 919 Third Avenue located in New York City. Operating Strategies and Growth Opportunities The Operating Partnership's primary business objectives are to maximize current return to its partners through increases in distributable cash flow and to increase partner's long-term total return through the appreciation in the value of its Units and Class B Common Units. The Operating Partnership plans to achieve these objectives by continuing Reckson's operating strategies and capitalizing on the internal and external growth opportunities as described below. Operating Strategies. Management believes that throughout its 40-year operating history, Reckson has created value in its properties through a variety of market cycles by implementing the operating strategies described below. These operating strategies include the implementation of: (i) a multidisciplinary leasing approach that involves architectural design and construction personnel as well as leasing professionals, (ii) innovative property marketing programs such as the broker frequent leasing points program which was established by the Operating Partnership to enhance relationships with the brokerage community and which allows brokers to accumulate points for leasing space in the Operating Partnership's portfolio which can be redeemed for luxurious prizes, (iii) a comprehensive tenant service program and property amenities designed to maximize tenant satisfaction and retention, (iv) cost control management and systems that take advantage of economies of scale that arise from the Operating Partnership's market position and efficiencies attributable to the state-of-the-art energy control systems at many of the Office Properties and (v) an acquisition and development strategy that is continuously adjusted in light of anticipated changes in market conditions and that seeks to capitalize on management's multidisciplinary expertise and market knowledge to modify, upgrade and reposition a property in its marketplace in order to maximize value. I-4 The Operating Partnership also intends to adhere to a policy of maintaining a debt ratio (defined as the total debt of the Operating Partnership as a percentage of the sum of the Operating Partnership's total debt and the value of its equity) of less than 50%. As of December 31, 1999, the Operating Partnership's debt ratio was approximately 42.3%. This calculation is net of minority partners' proportionate share of debt and including the Operating Partnership's share of unconsolidated joint venture debt. This debt ratio is intended to provide the Operating Partnership with financial flexibility to select the optimal source of capital (whether through debt or partners contributions) with which to finance external growth. Growth Opportunities. The Operating Partnership intends to achieve its primary business objectives by applying its operating strategies to the internal and external growth opportunities described below. Internal Growth. To the extent Long Island, Westchester, New Jersey and Southern Connecticut suburban office and industrial markets continue to improve, management believes the Operating Partnership is well positioned to benefit from rental revenue growth through: (i) contractual annual compounding 4% Base Rent increases (defined as fixed gross rental amounts that excludes payments on account of real estate tax, operating expense escalations and base electrical charges) on approximately 85% of existing leases at the Long Island Properties, (ii) periodic contractual increases in Base Rent on existing leases at the Westchester Properties, the New Jersey Properties and the Southern Connecticut Properties and (iii) the potential for increases to Base Rents as leases expire as a result of continued tightening of the office and industrial markets with limited new supply. In connection with the Operating Partnership's acquisition and merger transaction with Tower Realty Trust, Inc. (see External Growth below) the Operating Partnership entered the New York City office market. The Manhattan office market is currently experiencing favorable supply and demand characteristics similar to those currently in the Operating Partnership's suburban markets and also is characterized by its similar lack of available land supply and other barriers to entry that limit our competition. The Tower portfolio includes Manhattan office buildings that offer similar potential for increase in Base Rents as described in (iii) above. External Growth. The Operating Partnership seeks to acquire multi-tenant suburban Class A office and industrial properties located in the Tri-State Area. Management believes that the Tri-State Area presents opportunities to acquire or invest in properties at attractive yields. The Operating Partnership believes that its (i) capital structure, in particular its Credit Facility providing for a maximum borrowing amount of up to $500 million, (ii) ability to acquire a property for Units and thereby defer the seller's income tax on gain, (iii) operating economies of scale, (iv) relationships with financial institutions and private real estate owners, (v) fully integrated operations in its five existing divisions and (vi) its dominant position and franchise in the submarkets in which it owns properties will enhance the Company's ability to identify and capitalize on acquisition opportunities. The Operating Partnership also intends to selectively develop new Class A suburban office and industrial properties and to continue to redevelop existing Office and Industrial Properties as these opportunities arise. In the near future, the Operating Partnership will concentrate its development activities on industrial and Class A office properties within the Tri-State Area. The Operating Partnership's expansion into the Manhattan office market and the opening of its New York City division provides it with additional opportunities to acquire an interest in properties at attractive yields. The Operating Partnership also believes that the addition of its New York City division provides additional leasing and operational facilities and enhances its overall franchise value by being the only real estate operating company in the Tri-State Area with significant presence in both Manhattan and each of the surrounding sub-markets. During 1997, the Company formed FrontLine and RSVP. On June 11, 1998, the Operating Partnership distributed its 95% common stock interest in FrontLine of approximately $3 million to its owners, including the Company which, in turn, distributed the common stock of FrontLine received from the Operating Partnership to its stockholders. Additionally, during June 1998, the Operating Partnership established a credit facility with FrontLine (the "FrontLine Facility") in the amount of $100 million for FrontLine's e-commerce and e-services operations and other general corporate purposes. As of December 31, 1999, the Company had advanced $79.5 million under the FrontLine Facility. In addition, I-5 the Operating Partnership has approved the funding of investments of up to $100 million with or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint venture REIT-qualified investments or advances made to FrontLine under terms similar to the FrontLine Facility. As of December 31, 1999, approximately $67.2 million had been invested through the RSVP Commitment, of which $24.8 million represents RSVP-controlled joint venture REIT-qualified investments and $42.4 million represents advances to FrontLine under the RSVP Commitment. FrontLine identifies, acquires interests in and develops a network of business to business e-commerce and e-services companies that service small to medium sized enterprises, independent professionals and entrepreneurs and the mobile workforce of larger companies. FrontLine serves as the managing member of RSVP. RSVP was formed to provide the Company with a research and development vehicle to invest in alternative real estate sectors. RSVP invests primarily in real estate and real estate related operating companies generally outside of the Company's core office and industrial focus. RSVP's strategy is to identify and acquire interests in established entrepreneurial enterprises with experienced management teams in market sectors which are in the early stages of their growth cycle or offer unique circumstances for attractive investments as well as a platform for future growth. On August 27, 1998 the Operating Partnership announced the formation of a joint venture with RSVP and the Dominion Group, an Oklahoma-based, privately-owned group of companies that focuses on the development, acquisition and ownership of government occupied office buildings and correctional facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"), is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating Partnership. The Dominion Venture is primarily engaged in acquiring, developing and/or owning government-occupied office buildings and privately operated correctional facilities. Under the Dominion Venture's operating agreement, RSVP is to invest up to $100 million, some of which may be invested by the Operating Partnership (the "RSVP Capital"). The initial contribution of RSVP Capital was approximately $39 million of which approximately $10.1 million was invested by a subsidiary of the Operating Partnership. The Operating Partnership's investment was funded through the RSVP Commitment. In addition, the Operating Partnership advanced approximately $2.9 million to FrontLine through the RSVP Commitment for an investment in RSVP which was then invested on a joint venture basis with the Dominion Group in certain service business activities related to the real estate activities. As of December 31, 1999, the Operating Partnership had invested approximately $17.6 million in the Dominion Venture which had investments in 13 government office buildings and three correctional facilities. In 1999, the Operating Partnership invested approximately $7.2 million, through a subsidiary, in RAP Student Housing Properties, LLC ("RAP - SHP"), a company that engages primarily in the acquisition and development of off-campus student housing projects. The Operating Partnership's investment was funded through the RSVP Commitment. In addition, the Operating Partnership has advanced approximately $3.2 million to FrontLine through the RSVP Commitment for an additional investment in RSVP which was invested in certain service business activities related to student housing. As of December 31, 1999, RAP - SHP had investments in four off - campus student housing projects. In July 1998, the Company formed a joint venture, Metropolitan Partners LLC, a Delaware limited liability company ("Metropolitan"), with Crescent Real Estate Equities Company, a Texas real estate investment trust. On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc. ("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the "Merger") into Metropolitan, with Metropolitan surviving the Merger. Concurrently with the Merger, Tower Realty Operating Partnership, L.P. was merged with and into a subsidiary of Metropolitan. The consideration issued in the mergers was comprised of (i) 25% cash (approximately $107.2 million) and (ii) 75% of shares of Class B Common Stock (valued for GAAP purposes at approximately $304.1 million). The Company controls Metropolitan and owns 100% of the common equity; Crescent owns a $85 million preferred equity interest in Metropolitan. Crescent's interest accrues distributions at a rate of 7.5% per annum for a two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by Metropolitan at any time during that period for $85 million, plus an amount sufficient to provide a 9.5% I-6 internal rate of return. If Metropolitan does not redeem the preferred interest, upon the expiration of the two-year period, Crescent must convert its $85 million preferred interest into either (i) a common membership interest in Metropolitan or (ii) shares of the Company's common stock at a conversion price of $24.61 per share. The Tower portfolio acquired in the Merger consists of three Office Properties comprising approximately 1.6 million square feet located in New York City, one Office Property located on Long Island and certain office properties and other real estate assets located outside the Tri-State Area. Prior to the closing of the Merger, the Company arranged for the sale of four of Tower's Class B New York City properties, comprising approximately 701,000 square feet for approximately $84.5 million. Subsequent to the closing of the Merger, the Company has sold a real estate joint venture interest and all of the property located outside the Tri-State Area other than one office property located in Orlando, Florida for approximately $171.1 million. The combined consideration consisted of approximately $143.8 million in cash and approximately $27.3 million of debt relief. Net cash proceeds from the sales were used primarily to repay borrowings under the Credit Facility. As a result of incurring certain sales and closing costs in connection with the sale of the assets located outside the Tri-State Area, the Company has incurred a loss of approximately $4.4 million which has been included in gain on sales of real estate on the accompanying consolidated statements of income. ENVIRONMENTAL MATTERS 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 Operating Partnership 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 audit after April 1, 1994 (which involved general inspections without soil sampling, ground water analysis or radon testing and, for the Properties constructed in 1978 or earlier, survey inspections to ascertain the existence of ACMs were conducted) completed by independent environmental consultant companies (except for 35 Pinelawn Road which was originally developed by Reckson and subjected to a Phase 1 in April 1992). These environmental audits have not revealed any environmental liability that would have a material adverse effect on the Operating Partnership's business. I-7 ITEM 2. PROPERTIES GENERAL As of December 31, 1999, the Operating Partnership owned and operated 189 Properties (including two joint venture office properties but excluding the RSVP - -- controlled joint ventures) in the Tri-State Area encompassing approximately 21.4 million square feet. These properties consist of 77 Class A Office Properties encompassing approximately 13.1 million rentable square feet, 110 Industrial Properties encompassing approximately 8.3 million rentable square feet and two free-standing 10,000 square foot retail properties. The Operating Partnership also owns a 357,000 square foot Class A office building in Orlando, Florida. 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, as of December 31, 1999, the Operating Partnership owned approximately 346 acres of land in 16 separate parcels of which the Operating Partnership can develop approximately 1.9 million square feet of office space and approximately 300,000 square feet of industrial space. Reckson has historically emphasized the development and acquisition of properties that are part of large scale office and industrial parks and approximately 54% of the Office Properties and approximately 46% of the Industrial Properties are located in such parks (measured by rentable square footage). The Operating Partnership believes that owning properties in planned office and industrial parks provides certain strategic advantages, including the following: (i) certain tenants prefer being located in a park with other high quality companies to enhance their corporate image, (ii) parks 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, enabling them to centralize business functions and (iv) a park provides tenants with access to other tenants and may facilitate business relationships between tenants. Also, as of December 31, 1999, the Operating Partnership had invested approximately $298.6 million in certain mortgage indebtedness encumbering three Class A Office Properties encompassing approximately 1.6 million square feet and approximately 472 acres of land located in New Jersey. In addition, the Operating Partnership has loaned approximately $17 million to its minority partner in Omni, its flagship Long Island Office Property and effectively increased its economic interest in the property owning partnership. Set forth below is a summary of certain information relating to the Properties, categorized by Office and Industrial Properties, as of December 31, 1999. OFFICE PROPERTIES General As of December 31, 1999, the Operating Partnership owned or had an interest in 77 Tri-State Area Class A Office Properties encompassing approximately 13.1 million rentable square feet. As of December 31, 1999, these Office Properties were approximately 95% leased to approximately 1,000 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. Forty-nine of the 73 suburban Office Properties are located in the following twelve planned office parks: the North Shore Atrium, the Huntington Melville Corporate Center, the Nassau West Corporate Center, the Tarrytown Corporate Center, the Landmark Square Office Complex, the Executive Hill Office Park, the Reckson Executive Park, the University Square Office Complex, the Summit at Valhalla, the Mt. Pleasant Corporate Center, the Stamford Towers Office Center, and the Short Hills Office Complex. The buildings in these office parks offer a full array of amenities including health clubs, racquetball courts, sun decks, restaurants, computer controlled HVAC access systems and conference centers. Management believes that the location, quality of construction and amenities as well as the Operating Partnership's reputation I-8 for providing a high level of tenant service have enabled the Operating Partnership to attract and retain a national tenant base. The office tenants include national service companies, such as telecommunications firms, "Big Five" accounting firms, securities brokerage houses, insurance companies and health care providers. The Office Properties are leased to both national and local tenants. Leases on the Office Properties are typically written for terms ranging from five to ten years and require: (i) payment of a fixed gross rental amount that excludes payments on account of real estate tax, operating expense escalations and base electrical charges ("Base Rent"), (ii) payment of a base electrical charge, (iii) payment of real estate tax escalations over a base year, (iv) payment of compounded annual increases to Base Rent and/or payment of operating expense escalations over a base year, (v) payment of overtime HVAC and electric and (vi) payment of electric escalations over a base year. In virtually all leases, the landlord is responsible for structural repairs. Renewal provisions typically provide for renewal rates at market rates or a percentage thereof, provided that such rates are not less than the most recent renewal rates. The following table sets forth certain information as of December 31, 1999 for each of the Office Properties.
OWNERSHIP INTEREST (GROUND LEASE LAND PERCENTAGE EXPIRATION YEAR AREA PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES) - ------------------------------------- ------------ ------------ --------------- --------- Office Properties: Huntington Melville Corporate Center, Melville, NY Leasehold 395 North Service Rd ................ 100% (2081) 1988 7.5 200 Broadhollow Rd. ................. 100% Fee 1981 4.6 48 South Service Rd. ................ 100% Fee 1986 7.3 35 Pinelawn Rd ...................... 100% Fee 1980 6.0 275 Broadhollow Rd .................. 100% Fee 1970 5.8 1305 Old Walt Whitman Rd (3) ........ 100% Fee 1998 (5) 18.1 ---- Total--Huntington Melville Corporate Center (4) ............... 49.3 ---- North Shore Atrium, Syosset, NY 6800 Jericho Turnpike (North Shore Atrium I) .................... 100% Fee 1977 13.0 6900 Jericho Turnpike (North Shore Atrium II) ................... 100% Fee 1982 5.0 ---- Total--North Shore Atrium ........... 18.0 ---- Nassau West Corporate Center, Mitchel Field, NY 50 Charles Lindbergh Blvd. (Nassau West Corporate Center Leasehold II) ................................ 100% (2082) 1984 9.1 60 Charles Lindbergh Blvd. (Nassau Leasehold West Corporate Center I) ........... 100% (2082) 1989 7.8 Leasehold 51 Charles Lindbergh Blvd. .......... 100% (2084) 1989 6.6 Leasehold 55 Charles Lindbergh Blvd. .......... 100% (2082) 1982 10.0 Leasehold 333 Earl Ovington Blvd. (The Omni) 60% (2088) 1991 30.6 Leasehold 90 Merrick Ave. ..................... 100% (2084) 1985 13.2 ---- Total--Nassau West Corporate Center ............................. 77.3 ---- Tarrytown Corporate Center Tarrytown, NY 505 White Plains Road ............... 100% Fee 1974 1.4 520 White Plains Road ............... 60% Fee (6) 1981 6.8 555 White Plains Road ............... 100% Fee 1972 4.2 560 White Plains Road ............... 100% Fee 1980 4.0 580 White Plains Road ............... 100% Fee 1977 6.1 660 White Plains Road ............... 100% Fee 1983 10.9 ---- Total--Tarrytown Corporate Center 33.4 ---- Reckson Executive Park Rye Brook, NY 1 International Dr. ................. 100% Fee 1983 N/A 2 International Dr. ................. 100% Fee 1983 N/A 3 International Dr. ................. 100% Fee 1983 N/A 4 International Dr. ................. 100% Fee 1986 N/A 5 International Dr. ................. 100% Fee 1986 N/A 6 International Dr. ................. 100% Fee 1986 N/A Total--Reckson Executive Park ....... 44.4 ----
ANNUAL BASE RENT NUMBER NUMBER RENTABLE PER OF OF SQUARE PERCENT ANNUAL BASE LEASED TENANT PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES - ------------------------------------- -------- ------------ ----------- ------------- ----------- ------- Office Properties: Huntington Melville Corporate Center, Melville, NY 395 North Service Rd ................ 4 187,393 100.0% $ 4,620,998 $ 24.66 5 200 Broadhollow Rd. ................. 4 67,432 88.8% $ 1,298,934 $ 21.68 11 48 South Service Rd. ................ 4 125,372 95.1% $ 2,850,902 $ 23.91 7 35 Pinelawn Rd ...................... 2 105,241 94.3% $ 2,088,736 $ 21.05 26 275 Broadhollow Rd .................. 4 124,441 100.0% $ 2,764,076 $ 21.39 17 1305 Old Walt Whitman Rd (3) ........ 3 167,400 92.7% $ 3,649,827 $ 23.52 5 ------- ----------- -- Total--Huntington Melville Corporate Center (4) ............... 777,279 96.5% $17,273,473 $ 23.03 71 ------- ----------- -- North Shore Atrium, Syosset, NY 6800 Jericho Turnpike (North Shore Atrium I) .................... 2 209,028 79.0% $ 3,355,388 $ 20.31 37 6900 Jericho Turnpike (North Shore Atrium II) ................... 4 101,036 92.2% $ 2,054,157 $ 22.05 13 ------- ----------- -- Total--North Shore Atrium ........... 310,064 83.3% $ 5,409,545 $ 20.94 50 ------- ----------- -- Nassau West Corporate Center, Mitchel Field, NY 50 Charles Lindbergh Blvd. (Nassau West Corporate Center II) ................................ 6 211,845 100.0% $ 4,831,982 $ 22.64 22 60 Charles Lindbergh Blvd. (Nassau West Corporate Center I) ........... 2 186,889 100.0% $ 4,004,079 $ 21.37 7 51 Charles Lindbergh Blvd. .......... 1 108,000 100.0% $ 2,167,285 $ 20.07 1 55 Charles Lindbergh Blvd. .......... 2 214,581 100.0% $ 2,535,051 $ 11,81 2 333 Earl Ovington Blvd. (The Omni) 10 575,000 87.8% $14,987,850 $ 29.68 28 90 Merrick Ave. ..................... 9 221,839 96.4% $ 4,859,277 $ 22.73 21 ------- ----------- -- Total--Nassau West Corporate Center ............................. 1,518,154 95.0% $33,385,524 $ 23.15 81 --------- ----------- -- Tarrytown Corporate Center Tarrytown, NY 505 White Plains Road ............... 2 26,468 91.5% $ 461,589 $ 19.05 20 520 White Plains Road ............... 6 171,761 100.0% $ 3,192,362 $ 18.59 1 555 White Plains Road ............... 5 121,585 86.5% $ 2,274,121 $ 21.62 6 560 White Plains Road ............... 6 126,471 100.0% $ 1,758,933 $ 13.89 16 580 White Plains Road ............... 6 170,726 100.0% $ 3,236,652 $ 18.92 19 660 White Plains Road ............... 6 258,715 94.7% $ 4,728,353 $ 19.29 45 --------- ----------- -- Total--Tarrytown Corporate Center 875,726 96.4% $15,652,010 $ 18.55 107 --------- ----------- --- Reckson Executive Park Rye Brook, NY 1 International Dr. ................. 3 90,000 100.0% $ 1,170,000 $ 13.00 1 2 International Dr. ................. 3 90,000 100.0% $ 1,170,000 $ 13.00 1 3 International Dr. ................. 3 91,174 100.0% $ 1,718,469 $ 18.84 5 4 International Dr. ................. 3 86,694 83.8% $ 1,572,288 $ 21.65 9 5 International Dr. ................. 3 90,000 100.0% $ 2,416,482 $ 26.85 1 6 International Dr. ................. 3 94,016 100.0% $ 1,423,951 $ 15.15 8 --------- ----------- --- Total--Reckson Executive Park ....... 541,884 97.4% $ 9,471,190 $ 17.94 25 --------- ----------- ---
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OWNERSHIP INTEREST (GROUND LEASE LAND PERCENTAGE EXPIRATION YEAR AREA PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES) - ------------------------------------ ------------ ------------ --------------- --------- Summit at Valhalla Valhalla, NY 100 Summit Dr. ..................... 100% Fee 1988 11.3 200 Summit Dr. ..................... 100% Fee 1990 18.0 500 Summit Dr. ..................... 100% Fee 1986 29.1 ---- Total--Summit at Valhalla .......... 58.4 ---- Mt. Pleasant Corporate Center 115/117 Stevens Ave. ............... 100% Fee 1984 5.0 ---- Total--Mt Pleasant Corporate Center ............................ 5.0 ---- Landmark Square Stamford, CT One Landmark Square ................ 100% Fee 1973 N/A Two Landmark Square ................ 100% Fee 1976 N/A Three Landmark Square .............. 100% Fee 1978 N/A Four Landmark Square ............... 100% Fee 1977 N/A Five Landmark Square ............... 100% Fee 1976 N/A Six Landmark Square ................ 100% Fee 1984 N/A Total--Landmark Square ............. 7.2 ----- Stamford Towers Stamford, CT 680 Washington Blvd. ............... 100% Fee 1989 1.3 750 Washington Blvd. ............... 100% Fee 1989 2.4 ----- Total--Stamford Towers ............. 3.7 ----- Stand-alone Long Island Properties 400 Garden City Plaza Garden City, NY ................... 100% Fee 1989 5.7 88 Duryea Rd. Melville, NY ...................... 100% Fee 1986 1.5 310 East Shore Rd. Great Neck, NY .................... 100% Fee 1981 1.5 333 East Shore Rd. Leasehold Great Neck, NY .................... 100% (2030) 1976 1.5 520 Broadhollow Rd Melville, NY ...................... 100% Fee 1978 7.0 1660 Walt Whitman Rd. Melville, NY ...................... 100% Fee 1980 6.5 125 Baylis Rd. Melville, NY ...................... 100% Fee 1980 8.2 150 Motor Parkway Hauppauge, NY ..................... 100% Fee 1984 11.3 1979 Marcus Ave. Lake Success, NY .................. 100% Fee 1987 8.6 120 Mineola Blvd Mineola, New York ................. 100% Fee 1989 0.7 ----- Total--Stand-alone Long Island Properties ........................ 52.5 ----- Stand-alone Westchester Properties ............ 155 White Plains Road, Tarrytown, NY ..................... 100% Fee 1963 13.2 235 Main Street, White Plains, NY .................. 100% Fee 1974 (5) .4 245 Main Street White Plains, NY .................. 100% Fee 1983 .4 120 White Plains Rd. Tarrytown, NY ..................... 100% Fee 1984 9.7 80 Grasslands Elmsford, NY ...................... 100% Fee 1989 4.9 360 Hamilton Avenue White Plains, NY (3) .............. 100% Fee 1977 1.5 140 Grand Street White Plains, NY .................. 100% Fee 1991 2.2 ----- Total--Stand-alone Westchester Properties(4) ..................... 32.3 ----- Executive Hill Office Park West Orange, NJ 100 Executive Dr ................... 100% Fee 1978 10.1 200 Executive Dr ................... 100% Fee 1980 8.2 300 Executive Dr ................... 100% Fee 1984 8.7 10 Rooney Circle ................... 100% Fee 1971 5.2 ----- Total--Executive Hill Office Park .. 32.2 -----
ANNUAL BASE RENT NUMBER NUMBER RENTABLE PER OF OF SQUARE PERCENT ANNUAL BASE LEASED TENANT PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES - ------------------------------------ -------- ------------ --------- ------------- --------- ------- Summit at Valhalla Valhalla, NY 100 Summit Dr. ..................... 4 249,551 72.0% $ 1,745,495 $ 9.72 8 200 Summit Dr. ..................... 4 240,834 84.9% $ 4,890,463 $ 23.92 12 500 Summit Dr. ..................... 4 208,660 100.0% $ 5,633,820 $ 27.00 1 ------- ----------- -- Total--Summit at Valhalla .......... 699,045 84.8% $12,269,778 $ 20.70 21 ------- ----------- -- Mt. Pleasant Corporate Center 115/117 Stevens Ave. ............... 3 162,004 97.7% $ 3,029,965 $ 19.14 17 ------- ----------- -- Total--Mt Pleasant Corporate Center ............................ 162,004 97.7% $ 3,029,965 $ 19.14 17 ------- ----------- -- Landmark Square Stamford, CT One Landmark Square ................ 22 296,716 85.5% $ 5,248,069 $ 20.69 62 Two Landmark Square ................ 3 39,701 69.4% $ 588,845 $ 21.38 7 Three Landmark Square .............. 6 128,286 96.5% $ 2,119,202 $ 17.12 22 Four Landmark Square ............... 5 104,446 91.5% $ 2,243,662 $ 23.48 15 Five Landmark Square ............... 3 57,273 92.9% $ 230,185 $ 4.32 2 Six Landmark Square ................ 10 171,899 91.3% $ 3,895,234 $ 24.81 6 ------- ----------- -- Total--Landmark Square ............. 798,321 89.0% $14,325,197 $ 20.15 114 ------- ----------- --- Stamford Towers Stamford, CT 680 Washington Blvd. ............... 11 132,759 99.5% $ 3,634,757 $ 27.52 6 750 Washington Blvd. ............... 11 192,108 99.6% $ 4,565,587 $ 23.87 11 ------- ----------- --- Total--Stamford Towers ............. 324,867 99.5% $ 8,200,344 $ 25.36 17 ------- ----------- --- Stand-alone Long Island Properties 400 Garden City Plaza Garden City, NY ................... 5 176,073 98.3% $ 3,805,459 $ 21.99 25 88 Duryea Rd. Melville, NY ...................... 2 25,061 96.2% $ 489,154 $ 20.29 4 310 East Shore Rd. Great Neck, NY .................... 4 50,000 100.0% $ 1,265,128 $ 25.25 21 333 East Shore Rd. Great Neck, NY .................... 2 17,715 99.6% $ 483,504 $ 27.39 9 520 Broadhollow Rd Melville, NY ...................... 1 83,176 87.3% $ 1,486,300 $ 20.48 3 1660 Walt Whitman Rd. Melville, NY ...................... 1 73,115 99.9% $ 1,420,754 $ 19.45 5 125 Baylis Rd. Melville, NY ...................... 2 98,329 68.5% $ 1,285,253 $ 19.08 11 150 Motor Parkway Hauppauge, NY ..................... 4 191,447 96.0% $ 4,028,593 $ 21.92 23 1979 Marcus Ave. Lake Success, NY .................. 4 326,612 98.0% $ 6,313,637 $ 19.73 28 120 Mineola Blvd Mineola, New York ................. 6 101,000 88.0% $ 1,826,277 $ 20.54 14 ------- ----------- --- Total--Stand-alone Long Island Properties ........................ 1,142,528 93.7% $22,404,059 $ 20.93 143 --------- ----------- --- Stand-alone Westchester Properties ............ 155 White Plains Road, Tarrytown, NY ..................... 2 60,909 99.6% $ 1,073,536 $ 17.70 5 235 Main Street, White Plains, NY .................. 6 83,237 89.2% $ 1,310,846 $ 17.66 28 245 Main Street White Plains, NY .................. 6 73,543 92.0% $ 1,275,897 $ 18.85 17 120 White Plains Rd. Tarrytown, NY ..................... 6 197,785 100.0% $ 4,404,079 $ 22.25 10 80 Grasslands Elmsford, NY ...................... 3 85,104 92.9% $ 1,649,669 $ 20.87 5 360 Hamilton Avenue White Plains, NY (3) .............. 12 382,000 120% $ 1,054,477 $ 22.96 2 140 Grand Street White Plains, NY .................. 9 130,136 90.9% $ 2,690,489 $ 22.74 16 --------- ----------- --- Total--Stand-alone Westchester Properties(4) ..................... 1,012,714 94.8% $13,458,993 $ 20.91 83 --------- ----------- --- Executive Hill Office Park West Orange, NJ 100 Executive Dr ................... 3 92,872 97.1% $ 1,609,173 $ 17.85 10 200 Executive Dr ................... 4 102,630 99.3% $ 1,974,468 $ 19.37 17 300 Executive Dr ................... 4 126,196 100.0% $ 2,409,573 $ 19.07 11 10 Rooney Circle ................... 3 69,684 100.0% $ 1,367,232 $ 19.62 2 --------- ----------- --- Total--Executive Hill Office Park .. 391,382 99.2% $ 7,360,446 $ 18.96 40 --------- ----------- ---
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OWNERSHIP INTEREST (GROUND LEASE LAND PERCENTAGE EXPIRATION YEAR AREA PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES) - -------------------------------------- ------------ ------------ ------------- --------- University Square Princeton, NJ 100 Campus Dr. ....................... 100% Fee 1987 N/A 104 Campus Dr. ....................... 100% Fee 1987 N/A 115 Campus Dr. ....................... 100% Fee 1987 N/A Total--University Square ............. 11.0 ----- Short Hills Office Complex Short Hills, NJ ..................... 101 West John F. Kennedy Parkway ............................. 100% Fee 1981 9.0 101 East John F. Kennedy Parkway 100% Fee 1981 6.0 51 John F Kennedy Parkway ............ 100% Fee 1988 11.0 ----- Total--Short Hills Office Complex 26.0 ----- Stand-alone New Jersey Properties 1 Paragon Drive Montvale, NJ ........................ 100% Fee 1980 11.0 99 Cherry Hill Road Parsippany, NJ ...................... 100% Fee 1982 8.8 119 Cherry Hill Road Parsippany, NJ ...................... 100% Fee 1982 9.3 One Eagle Rock Hanover, NJ ......................... 100% Fee 1986 10.4 155 Passaic Ave. Fairfield, NJ ....................... 100% Fee 1984 3.6 3 University Plaza Hackensack, NJ ...................... 100% Fee 1985 10.6 1255 Broad Street Clifton, NJ (3) ..................... 100% Fee 1968 11.1 ----- Total--Stand-alone New Jersey Properties (4) ...................... 64.8 ----- New York City Properties ............. 120 W. 45th Street New York, NY ........................ 100% Fee 1989 0.4 100 Wall Street New York, NY ........................ 100% Fee 1969 0.5 810 Seventh Avenue New York, NY ........................ 100% Fee 1970 0.6 919 Third Avenue New York, NY (7) .................... 100% Fee 1971 1.5 ----- Total--New York City Office Properties .......................... 3.0 ----- Total--Office Properties (4) ......... 518.5 =====
ANNUAL BASE RENT NUMBER NUMBER RENTABLE PER OF OF SQUARE PERCENT ANNUAL BASE LEASED TENANT PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES - -------------------------------------- -------- ------------ --------- --------------- ----------- ------- University Square Princeton, NJ 100 Campus Dr. ....................... 1 27,350 99.7% $ 416,230 $ 15.27 3 104 Campus Dr. ....................... 1 70,155 100.0% $ 1,110,829 $ 15.83 1 115 Campus Dr. ....................... 1 33,600 99.9% $ 574,589 $ 17.12 2 ------ ------------ -- Total--University Square ............. 131,105 99.9% $ 2,101,648 $ 16.05 6 ------- ------------ -- Short Hills Office Complex Short Hills, NJ ..................... 101 West John F. Kennedy Parkway ............................. 6 185,233 100.0% $ 2,963,700 $ 16.00 1 101 East John F. Kennedy Parkway 4 122,841 100.0% $ 1,965,482 $ 16.00 1 51 John F Kennedy Parkway ............ 5 248,962 96.3% $ 7,680,763 $ 32.04 19 ------- ------------ -- Total--Short Hills Office Complex 557,036 98.4% $ 12,609,945 $ 23.02 21 ------- ------------ -- Stand-alone New Jersey Properties 1 Paragon Drive Montvale, NJ ........................ 2 104,599 89.6% $ 1,547,948 $ 16.51 15 99 Cherry Hill Road Parsippany, NJ ...................... 3 93,250 99.0% $ 1,650,526 $ 17.88 16 119 Cherry Hill Road Parsippany, NJ ...................... 3 95,724 98.1% $ 1,547,521 $ 16.47 17 One Eagle Rock Hanover, NJ ......................... 3 140,000 68.2% $ 2,031,710 $ 21.28 7 155 Passaic Ave. Fairfield, NJ ....................... 4 84,500 29.4% $ 486,739 $ 19.57 3 3 University Plaza Hackensack, NJ ...................... 6 216,403 97.2% $ 3,495,272 $ 16.61 22 1255 Broad Street Clifton, NJ (3) ..................... 2 180,000 80.2% $ 4,070,161 $ 28.20 3 ------- ------------ -- Total--Stand-alone New Jersey Properties (4) ...................... 914,476 92.0% $ 14,829,877 $ 19.64 83 ------- ------------ -- New York City Properties ............. 120 W. 45th Street New York, NY ........................ 40 443,109 99.6% $ 16,734,846 $ 37.92 42 100 Wall Street New York, NY ........................ 29 458,626 97.7% $ 8,887,657 $ 19.84 31 810 Seventh Avenue New York, NY ........................ 42 692,060 95.4% $ 19,935,279 $ 30.20 35 919 Third Avenue New York, NY (7) .................... 47 1,374,966 99.1% $ 16,876,544 $ 12.38 23 --------- ------------ -- Total--New York City Office Properties .......................... 2,968,761 98.1% $ 62,434,326 $ 21.44 131 --------- ------------ --- Total--Office Properties (4) ......... 13,125,346 94.8% $254,216,320 $ 21.09 1,010 ========== ============ =====
- ------------------ (1) Ground lease expirations assume exercise of renewal options by the lessee. (2) Represents Base Rent of signed leases at December 31, 1999 adjusted for scheduled contractual increases during the 12 months ending December 31, 2000. Total Base Rent for these purposes reflects the effect of any lease expirations that occur during the 12-month period ending December 31, 2000. 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) Property is currently under redevelopment. (4) Percent leases excludes properties under development. (5) Year renovated. (6) 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 under certain loan agreements and annual basic installments are prepaid in full. (7) The Operating Partnership currently holds the first mortgage note secured by this property. There is a ground lease in place on a small portion of the land which expires in 2066. I-11 INDUSTRIAL PROPERTIES General. As of December 31, 1999, the Operating Partnership owned or had an interest in 110 Industrial Properties that encompass approximately 8.3 million rentable square feet. As of December 31, 1999, the Industrial Properties were approximately 98% leased to approximately 250 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 both national and local tenants. 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. Approximately 71% of the Industrial Properties measured by square footage are located on Long Island. Sixty five percent of these properties as measured by square footage were located in the following three Industrial Parks developed by Reckson: (i) Vanderbilt Industrial Park, (ii) Airport International Plaza and (iii) County Line Industrial Center. In addition to the Industrial Properties on Long Island, the Operating Partnership owns 15 Industrial Properties in the other suburban markets. These properties encompass approximately 2.4 million square feet and were approximately 97% leased (excluding properties under redevelopment) as of December 31, 1999. The following table sets forth certain information as of December 31, 1999 for each of the Industrial Properties.
OWNERSHIP INTEREST (GROUND LEASE LAND CLEARANCE PERCENTAGE EXPIRATION YEAR AREA HEIGHT PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1) - ------------------------------ ------------ ------------ ------------- --------- ------------ Industrial Properties: Vanderbilt Industrial Park Hauppauge, NY 360 Vanderbilt Motor Parkway ..................... 100% Fee 1967 4.2 16 410 Vanderbilt Motor Parkway ..................... 100% Fee 1965 3.0 15 595 Old Willets Path ......... 100% Fee 1968 3.5 14 611 Old Willets Path ......... 100% Fee 1963 3.0 14 631/641 Old Willets Path ..... 100% Fee 1965 1.9 14 651/661 Old Willets Path ..... 100% Fee 1966 2.0 14 681 Old Willets Path ......... 100% Fee 1961 1.3 14 740 Old Willets Path ......... 100% Fee 1965 3.5 14 325 Rabro Dr. ................ 100% Fee 1967 2.7 14 250 Kennedy Dr. .............. 100% Fee 1979 7.0 16 90 Plant Ave. ................ 100% Fee 1972 4.3 16 110 Plant Ave. ............... 100% Fee 1974 6.8 18 55 Engineers Rd. ............. 100% Fee 1968 3.0 18 65 Engineers Rd. ............. 100% Fee 1969 1.8 22 85 Engineers Rd. ............. 100% Fee 1968 2.3 18 100 Engineers Rd. ............ 100% Fee 1968 5.0 14 150 Engineers Rd. ............ 100% Fee 1969 6.8 22 20 Oser Ave. ................. 100% Fee 1979 5.0 16 30 Oser Ave. ................. 100% Fee 1978 4.4 16 40 Oser Ave. ................. 100% Fee 1974 3.1 16 50 Oser Ave. ................. 100% Fee 1975 4.1 21 60 Oser Ave. ................. 100% Fee 1975 3.3 21 63 Oser Ave. ................. 100% Fee 1974 1.2 20
PERCENTAGE ANNUAL OFFICE/ BASE RESEARCH RENT NUMBER AND RENTABLE PER OF DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES - ------------------------------ ------------- ---------- ----------- ------------- --------- ------- Industrial Properties: Vanderbilt Industrial Park Hauppauge, NY 360 Vanderbilt Motor Parkway ..................... 62% 54,000 100.0% $500,580 $ 9.27 1 410 Vanderbilt Motor Parkway ..................... 7% 41,784 100.0% $207,672 $ 4.97 4 595 Old Willets Path ......... 14% 31,670 100.0% $162,100 $ 5.12 4 611 Old Willets Path ......... 11% 20,000 100.0% $147,601 $ 7.38 2 631/641 Old Willets Path ..... 31% 25,000 100.0% $161,405 $ 6.46 4 651/661 Old Willets Path ..... 45% 25,000 100.0% $156,243 $ 6.25 7 681 Old Willets Path ......... 10% 15,000 100.0% $ 98,475 $ 6.57 1 740 Old Willets Path ......... 5% 30,000 100.0% $ 2,473 $ 0.08 1 325 Rabro Dr. ................ 10% 35,000 100.0% $214,749 $ 6.05 2 250 Kennedy Dr. .............. 9% 127,980 100.0% $455,298 $ 3.56 1 90 Plant Ave. ................ 13% 75,000 99.9% $418,834 $ 5.59 3 110 Plant Ave. ............... 8% 125,000 100.0% $540,000 $ 4.32 1 55 Engineers Rd. ............. 8% 36,000 0% $ 0 $ 0.00 0 65 Engineers Rd. ............. 10% 23,000 100.0% $136,733 $ 5.94 1 85 Engineers Rd. ............. 5% 40,800 100.0% $202,785 $ 4.97 2 100 Engineers Rd. ............ 11% 88,000 100.0% $379,476 $ 4.31 1 150 Engineers Rd. ............ 11% 135,000 100.0% $407,883 $ 3.02 1 20 Oser Ave. ................. 18% 42,000 98.7% $347,517 $ 8.39 2 30 Oser Ave. ................. 21% 42,000 82.1% $221,289 $ 6.41 4 40 Oser Ave. ................. 33% 59,800 85.3% $342,103 $ 6.71 12 50 Oser Ave. ................. 15% 60,000 100.0% $240,000 $ 4.00 1 60 Oser Ave. ................. 19% 48,000 100.0% $192,000 $ 4.00 1 63 Oser Ave. ................. 9% 22,000 100.0% $112,846 $ 5.13 1
I-12
OWNERSHIP INTEREST (GROUND LEASE LAND CLEARANCE PERCENTAGE EXPIRATION YEAR AREA HEIGHT PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1) - ------------------------------ ------------ ------------ ------------- --------- ------------ 65 Oser Ave. .................. 100% Fee 1975 1.2 18 73 Oser Ave. .................. 100% Fee 1974 1.2 20 80 Oser Ave. .................. 100% Fee 1974 1.1 18 85 Nicon Ct. .................. 100% Fee 1978 6.1 30 90 Oser Ave. .................. 100% Fee 1973 1.1 16 104 Parkway Dr. ............... 100% Fee 1985 1.8 15 110 Ricefield Ln. ............. 100% Fee 1980 2.0 15 120 Ricefield Ln. ............. 100% Fee 1983 2.0 15 125 Ricefield Ln. ............. 100% Fee 1973 2.0 14 135 Ricefield Ln. ............. 100% Fee 1981 2.1 15 85 Adams Dr. .................. 100% Fee 1980 1.8 15 395 Oser Ave .................. 100% Fee 1980 6.1 14 185 Oser Ave .................. 100% Fee 1974 2.0 18 25 Davids Dr. ................. 100% Fee 1975 3.2 20 45 Adams Ave .................. 100% Fee 1979 2.1 18 225 Oser Ave .................. 100% Fee 1977 1.2 14 180 Oser Ave .................. 100% Fee 1978 3.4 16 360 Oser Ave .................. 100% Fee 1981 1.3 18 400 Oser Ave .................. 100% Fee 1982 9.5 16 375 Oser Ave .................. 100% Fee 1981 1.2 18 425 Rabro Drive ............... 100% Fee 1980 4.0 16 390 Motor Parkway (3) ......... 100% Fee 1980 10.0 14 600 Old Willets Path .......... 100% Fee 1965 4.5 14 400 Moreland Road(3) .......... 100% Fee 1967 6.3 17 ----- Total--Vanderbilt Industrial Park (4) .......... 160.4 ----- Airport International Plaza Islip, NY 20 Orville Dr. ................ 100% Fee 1978 1.0 16 25 Orville Dr. ................ 100% Fee 1970 2.2 16 50 Orville Dr. ................ 100% Fee 1976 1.6 15 65 Orville Dr. ................ 100% Fee 1971 2.2 14 70 Orville Dr. ................ 100% Fee 1975 2.3 22 80 Orville Dr. ................ 100% Fee 1988 6.5 16 85 Orville Dr. ................ 100% Fee 1974 1.9 14 95 Orville Dr. ................ 100% Fee 1974 1.8 14 110 Orville Dr. ............... 100% Fee 1979 6.4 24 180 Orville Dr. ............... 100% Fee 1982 2.3 16 1101 Lakeland Ave. ............ 100% Fee 1983 4.9 20 1385 Lakeland Ave. ............ 100% Fee 1973 2.4 16 125 Wilbur Place .............. 100% Fee 1977 4.0 16 140 Wilbur Place .............. 100% Fee 1973 3.1 20 160 Wilbur Place .............. 100% Fee 1978 3.9 16 170 Wilbur Place .............. 100% Fee 1979 4.9 16 4040 Veterans Highway ......... 100% Fee 1972 1.0 14 120 Wilbur Place .............. 100% Fee 1972 2.8 16 2004 Orville Dr ............... 100% Fee 1998 7.4 24 2005 Orville Drive ............ 100% Fee 1999 8.7 24 ----- Total--Airport International Plaza .......... 71.3 ----- County Line Industrial Center Melville, NY 5 Hub Dr. ..................... 100% Fee 1979 6.9 20 10 Hub Dr. .................... 100% Fee 1975 6.6 20 30 Hub Drive .................. 100% Fee 1976 5.1 20 265 Spagnoli Rd. .............. 100% Fee 1978 6.0 20 ----- Total--County Line Industrial Center ............ 24.6 ----- Standalone Long Island Properties 32 Windsor Pl. Islip, NY .................... 100% Fee 1971 2.5 18 42 Windsor Pl. Islip, NY .................... 100% Fee 1972 2.4 18 208 Blydenburgh Rd. Islandia, NY ................. 100% Fee 1969 2.4 14 210 Blydenburgh Rd. Islandia, NY ................. 100% Fee 1969 1.2 14 71 Hoffman Ln. Islandia, NY ................. 100% Fee 1970 5.8 16 135 Fell Ct. Islip, NY .................... 100% Fee 1965 3.2 16 ----- Subtotal Islip/Islandia ...... 17.5 -----
PERCENTAGE ANNUAL OFFICE/ BASE RESEARCH RENT NUMBER AND RENTABLE PER OF DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES - ------------------------------- ------------- ------------ ----------- ------------- ---------- ------- 65 Oser Ave. .................. 10% 20,000 100.0% $ 105,263 $ 5.26 1 73 Oser Ave. .................. 15% 20,000 100.0% $ 113,463 $ 5.67 1 80 Oser Ave. .................. 25% 19,500 100.0% $ 64,599 $ 3.31 1 85 Nicon Ct. .................. 10% 104,000 100.0% $ 500,189 $ 4.81 1 90 Oser Ave. .................. 26% 37,500 100.0% $ 125,160 $ 3.34 1 104 Parkway Dr. ............... 50% 27,600 100.0% $ 199,091 $ 7.21 1 110 Ricefield Ln. ............. 25% 32,264 100.0% $ 160,599 $ 4.98 1 120 Ricefield Ln. ............. 24% 33,060 100.0% $ 112,000 $ 3.39 1 125 Ricefield Ln. ............. 20% 30,495 100.0% $ 199,983 $ 6.56 1 135 Ricefield Ln. ............. 10% 32,340 100.0% $ 204,037 $ 6.31 1 85 Adams Dr. .................. 90% 20,000 100.0% $ 260,000 $ 13.00 1 395 Oser Ave .................. 100% 50,000 99.0% $ 429,165 $ 8.67 1 185 Oser Ave .................. 40% 30,000 100.0% $ 190,021 $ 6.33 1 25 Davids Dr. ................. 90% 40,000 100.0% $ 340,000 $ 8.50 1 45 Adams Ave .................. 90% 28,000 100.0% $ 212,333 $ 7.58 1 225 Oser Ave .................. 80% 10,000 99.6% $ 111,706 $ 11.22 1 180 Oser Ave .................. 35% 61,868 89.9% $ 379,208 $ 6.82 8 360 Oser Ave .................. 35% 23,000 100.0% $ 128,800 $ 5.60 1 400 Oser Ave .................. 30% 164,936 97.0% $ 1,090,261 $ 6.82 25 375 Oser Ave .................. 40% 20,000 100.0% $ 148,450 $ 7.42 1 425 Rabro Drive ............... 25% 65,641 99.2% $ 586,080 $ 9.00 1 390 Motor Parkway (3) ......... 4% 181,155 27.7% $ 173,916 $ 3.47 1 600 Old Willets Path .......... 25% 69,627 100.0% $ 394,590 $ 5.67 1 400 Moreland Road(3) .......... 10% 56,875 0.0% $ 0 $ 0.00 0 ------- ----------- -- Total--Vanderbilt Industrial Park (4) .......... 2,379,895 97.0% $11,876,976 $ 5.72 111 --------- ----------- --- Airport International Plaza Islip, NY 20 Orville Dr. ................ 50% 12,852 100.0% $ 174,731 $ 13.55 1 25 Orville Dr. ................ 100% 32,300 100.0% $ 475,065 $ 14.12 2 50 Orville Dr. ................ 20% 28,000 99.8% $ 244,538 $ 8.75 3 65 Orville Dr. ................ 13% 32,000 96.9% $ 145,018 $ 4.68 2 70 Orville Dr. ................ 7% 41,508 100.0% $ 301,684 $ 7.27 2 80 Orville Dr. ................ 21% 92,544 100.0% $ 678,929 $ 7.34 9 85 Orville Dr. ................ 20% 25,000 100.0% $ 154,393 $ 6.15 2 95 Orville Dr. ................ 10% 25,000 100.0% $ 120,875 $ 4.84 1 110 Orville Dr. ............... 15% 110,000 100.0% $ 627,733 $ 5.71 1 180 Orville Dr. ............... 18% 37,612 100.0% $ 233,291 $ 6.20 2 1101 Lakeland Ave. ............ 8% 90,411 100.0% $ 515,945 $ 5.71 1 1385 Lakeland Ave. ............ 18% 35,000 100.0% $ 178,398 $ 5.10 3 125 Wilbur Place .............. 31% 62,686 87.1% $ 279,880 $ 5.13 12 140 Wilbur Place .............. 37% 48,500 100.0% $ 290,747 $ 5.99 2 160 Wilbur Place .............. 30% 62,710 100.0% $ 501,034 $ 7.99 2 170 Wilbur Place .............. 28% 72,062 96.5% $ 230,971 $ 3.32 8 4040 Veterans Highway ......... 100% 2,800 100.0% $ 54,061 $ 19.31 1 120 Wilbur Place .............. 15% 35,000 100.0% $ 269,608 $ 7.70 4 2004 Orville Dr ............... 20% 106,515 100.0% $ 703,887 $ 6.61 1 2005 Orville Drive ............ 20% 130,010 100.0% $ 909,593 $ 7.00 1 --------- ----------- --- Total--Airport International Plaza .......... 1,082,510 99.1% $ 7,090,381 6.61 60 --------- ----------- --- County Line Industrial Center Melville, NY 5 Hub Dr. ..................... 20% 88,001 100.0% $ 403,596 $ 4.59 2 10 Hub Dr. .................... 15% 95,546 100.0% $ 585,288 $ 6.12 4 30 Hub Drive .................. 18% 73,127 100.0% $ 467,684 $ 6.40 2 265 Spagnoli Rd. .............. 28% 85,500 100.0% $ 647,702 $ 7.57 3 --------- ----------- --- Total--County Line Industrial Center ............ 342,174 100.0% $ 2,104,270 $ 6.15 11 --------- ----------- --- Standalone Long Island Properties 32 Windsor Pl. Islip, NY .................... 10% 43,000 100.0% $ 138,583 $ 3.22 1 42 Windsor Pl. Islip, NY .................... 8% 65,000 100.0% $ 230,315 $ 3.54 1 208 Blydenburgh Rd. Islandia, NY ................. 17% 24,000 100.0% $ 102,302 $ 4.26 4 210 Blydenburgh Rd. Islandia, NY ................. 16% 20,000 100.0% $ 110,922 $ 5.55 2 71 Hoffman Ln. Islandia, NY ................. 10% 30,400 100.0% $ 182,293 $ 6.00 1 135 Fell Ct. Islip, NY .................... 20% 30,000 100.0% $ 222,750 $ 7.43 1 --------- ----------- --- Subtotal Islip/Islandia ...... 212,400 100.0% $ 987,165 $ 4.65 10 --------- ----------- ---
I-13
OWNERSHIP INTEREST (GROUND LEASE LAND CLEARANCE PERCENTAGE EXPIRATION YEAR AREA HEIGHT PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1) - ------------------------------ ------------ -------------- ------------- --------- ------------ 70 Schmitt Boulevard, Farmingdale, NY ............. 100% Fee 1975 4.4 18 105 Price Parkway, Farmingdale, NY ............. 100% Fee 1969 12.0 26 110 Bi County Blvd. Farmingdale, L.I, ........... 100% Fee 1984 9.5 19 ----- Subtotal Farmingdale ........ 25.9 ----- 70 Maxess Rd, Melville, NY ................ 100% Fee 1969 9.3 15 20 Melville Park Rd, Melville, NY ................ 100% Fee 1965 4.0 23 45 Melville Park Drive, Melville, NY ................ 100% Fee 1998 4.2 24 65 Marcus Drive. Melville, L.I., ............. 100% Fee 1968 5.0 16 50 Marcus Drive, (3) Melville, NY ................ 100% Fee 1967 7.1 22 ----- Subtotal Melville(4) ........ 29.6 ----- 300 Motor Parkway, Hauppauge, NY ............... 100% Fee 1979 4.2 14 1516 Motor Parkway, Hauppauge, NY ............... 100% Fee 1981 7.9 24 ----- Subtotal Hauppauge .......... 12.1 ----- 933 Motor Parkway Smithtown, NY ............... 100% Fee 1973 5.6 20 65 S. Service Rd. , Plainview, NY(5) ............ 100% Fee 1961 1.6 14 85 S. Service Rd. Plainview, NY ............... 100% Fee 1961 1.6 14 19 Nicholas Dr., Yaphank, NY (6) ............. 100% Fee 1989 29.6 24 48 Harbor Park Dr., Port Washington, NY ......... 100% Fee 1976 2.7 16 110 Marcus Dr., Huntington, NY .............. 100% Fee 1980 6.1 20 35 Engle St., (3) Hicksville, NY .............. 100% Leasehold(7) 1966 4.0 24 100 Andrews Rd., Hicksville, L.I.,(1) ........ 100% Fee 1954 11.7 25 ----- Subtotal other (4) .......... 62.9 ----- Total Standalone Long Island Properties (4) ...... 148.0 ----- Standalone Westchester Properties .................. 100 Grasslands Rd., (3) Elmsford, NY ................ 100% Fee 1964 3.6 16 2 Macy Rd., Harrison, NY ................ 100% Fee 1962 5.7 16 500 Saw Mill Rd., Elmsford, NY ................ 100% Fee 1968 7.3 22 ----- Total--Standalone Westchester Industrial Properties (4) .............. 16.6 ----- Standalone New Jersey Industrial Properties 40 Cragwood Rd, South Plainfield, NJ ........ 100% Fee 1965 13.5 16 400 Cabot Dr., Hamilton Township, NJ........ 100% Fee 1989 44.8 30 100 Forge Way, Rockaway, NJ ................ 100% Fee 1986 3.5 24 200 Forge Way, Rockaway, NJ ................ 100% Fee 1989 12.7 28 300 Forge Way, Rockaway, NJ ................ 100% Fee 1989 4.2 24 400 Forge Way, Rockaway, NJ ................ 100% Fee 1989 12.8 28 5 Henderson Dr.,, West Caldwell, NJ ........... 100% Fee 1967 15.2 14 492 River Rd, Nutley, NJ (3) .............. 100% Fee 1952 17.3 13 4 Applegate Drive Robbinsville, New Jersey 100% Fee 1999 10.0 30 30 Stultz Rd So. Brunswick, NJ ........... 71.8% Fee 1978 12.6 18 6 Johanna Ct.,(3) East Brunswick, NJ .......... 71.8% Fee 1978 18.4 18 ----- Total New Jersey Standalone Industrial Properties (4) .............. 165.0 -----
PERCENTAGE ANNUAL OFFICE/ BASE RESEARCH RENT NUMBER AND RENTABLE PER OF DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES - ------------------------------ ------------- ------------ ----------- ------------- --------- ------- 70 Schmitt Boulevard, Farmingdale, NY ............. 10% 76,312 100.0% $ 538,147 $ 7.05 1 105 Price Parkway, Farmingdale, NY ............. 8.5% 297,000 100.0% $ 1,388,515 $ 4.68 1 110 Bi County Blvd. Farmingdale, L.I, ........... 45% 147,303 96.3% $ 1,285,683 $ 9.07 11 ------- ----------- -- Subtotal Farmingdale ........ 520,615 98.9% $ 3,212,345 $ 6.24 13 ------- ----------- -- 70 Maxess Rd, Melville, NY ................ 38% 78,000 100.0% $ 666,214 $ 8.48 1 20 Melville Park Rd, Melville, NY ................ 66% 67,922 100.0% $ 385,625 $ 5.68 1 45 Melville Park Drive, Melville, NY ................ 22% 40,247 100.0% $ 540,442 $ 13.43 1 65 Marcus Drive. Melville, L.I., ............. 50% 60,000 100.0% $ 596,328 $ 9.94 1 50 Marcus Drive, (3) Melville, NY ................ 95% 165,000 0.0% $ 0 $ 0 0 ------- ----------- -- Subtotal Melville(4) ........ 411,169 100.0% $ 2,188,609 $ 8.87 4 ------- ----------- -- 300 Motor Parkway, Hauppauge, NY ............... 100% 55,942 96.9% $ 856,895 $ 15.81 10 1516 Motor Parkway, Hauppauge, NY ............... 5% 140,000 100.0% $ 863,800 $ 6.17 1 ------- ----------- -- Subtotal Hauppauge .......... 195,942 99.1% $ 1,720,695 $ 8.86 11 ------- ----------- -- 933 Motor Parkway Smithtown, NY ............... 26% 48,000 100.0% $ 32,153 $ 0.67 1 65 S. Service Rd. , Plainview, NY(5) ............ 10% 10,000 100.0% $ 69,911 $ 6.99 1 85 S. Service Rd. Plainview, NY ............... 60% 20,000 100.0% $ 79,526 $ 3.98 2 19 Nicholas Dr., Yaphank, NY (6) ............. 5% 230,000 100.0% $ 1,222,649 $ 5.32 1 48 Harbor Park Dr., Port Washington, NY ......... 100% 35,000 100.0% $ 707,352 $ 20.21 1 110 Marcus Dr., Huntington, NY .............. 39% 78,240 100.0% $ 486,653 $ 6.22 1 35 Engle St., (3) Hicksville, NY .............. 8% 120,000 0.0% $ 0 $ 0.00 0 100 Andrews Rd., Hicksville, L.I.,(1) ........ 12% 167,500 100.0% $ 1,105,727 $ 6.59 2 ------- ----------- -- Subtotal other (4) .......... 708,740 100.0% $ 3,703,971 $ 6.29 9 ------- ----------- -- Total Standalone Long Island Properties (4) ...... 2,048,866 99.6% $11,812,785 $ 6.29 47 --------- ----------- -- Standalone Westchester Properties .................. 100 Grasslands Rd., (3) Elmsford, NY ................ 100% 45,000 0.0% $ 0 $ 0.00 0 2 Macy Rd., Harrison, NY ................ 100% 26,000 100.0% $ 422,500 $ 16.25 1 500 Saw Mill Rd., Elmsford, NY ................ 17% 92,000 100.0% $ 846,400 $ 9.20 1 --------- ----------- -- Total--Standalone Westchester Industrial Properties (4) .............. 163,000 100.0% $ 1,268,900 $ 10.75 2 --------- ----------- -- Standalone New Jersey Industrial Properties 40 Cragwood Rd, South Plainfield, NJ ........ 49% 135,000 57.5% $ 1,265,304 $ 16.30 3 400 Cabot Dr., Hamilton Township, NJ........ 10% 585,510 100.0% $ 2,739,377 $ 4.68 1 100 Forge Way, Rockaway, NJ ................ 12% 20,136 100.0% $ 166,775 $ 8.28 5 200 Forge Way, Rockaway, NJ ................ 23% 72,118 100.0% $ 453,367 $ 6.29 2 300 Forge Way, Rockaway, NJ ................ 37% 24,000 100.0% $ 180,050 $ 7.44 2 400 Forge Way, Rockaway, NJ ................ 20% 73,000 100.0% $ 407,666 $ 5.58 2 5 Henderson Dr.,, West Caldwell, NJ ........... 10% 210,000 100.0% $ 1,324,234 $ 6.29 1 492 River Rd, Nutley, NJ (3) .............. 100% 128,000 0.00% $ 0 $ 0 0 4 Applegate Drive Robbinsville, New Jersey 10% 265,000 100.0% $ 1,364,750 $ 5.15 1 30 Stultz Rd So. Brunswick, NJ ........... 10% 60,617 100.0% $ 200,248 $ 3.12 1 6 Johanna Ct.,(3) East Brunswick, NJ .......... 10% 214,000 0.0% $ 0 $ 0.00 0 --------- ----------- -- Total New Jersey Standalone Industrial Properties (4) .............. 1,787,381 94.9% $ 8,101,771 $ 5.95 18 --------- ----------- --
I-14
OWNERSHIP INTEREST (GROUND LEASE LAND CLEARANCE PERCENTAGE EXPIRATION YEAR AREA HEIGHT PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1) - -------------------------- ------------ ------------ ------------- --------- ------------ Standalone Connecticut Industrial Property 710 Bridgeport Shelton, CT ............. 100% Fee 1971-1979 36.1 22 ----- Total Connecticut Standalone Industrial Property ................ 36.1 ----- Total-Industrial Properties (4) .......... 622.0 =====
PERCENTAGE ANNUAL OFFICE/ BASE RESEARCH RENT NUMBER AND RENTABLE PER OF DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES - -------------------------- ------------- ------------ ----------- ------------- --------- ------- Standalone Connecticut Industrial Property 710 Bridgeport Shelton, CT ............. 30% 452,414 100.0% $ 2,911,020 $ 6.43 2 ------- ----------- -- Total Connecticut Standalone Industrial Property ................ 452,414 100.0% $ 2,911,020 $ 6.43 2 ------- ----------- -- Total-Industrial Properties (4) .......... 8,256,240 98.2% $45,166,103 $ 6.26 251 ========= =========== ===
- ---------------- (1) Calculated as the difference from the lowest beam to floor. (2) Represents Base Rent of signed leases at December 31, 1999 adjusted for scheduled contractual increases during the 12 months ending December 31, 2000. Total Base Rent for these purposes reflects the effect of any lease expirations that occur during the 12 month period ending December 31, 2000. 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) Property under redevelopment. (4) Percent leased excludes properties under redevelopment. (5) 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. (6) The actual fee interest in 19 Nicholas Drive is currently held by the Town of Brookhaven Industrial Development Agency. The Operating Partnership may acquire such fee interest by making a nominal payment to the Town of Brookhaven Industrial Development Agency. (7) The Operating Partnership has entered into a 20 year lease agreement in which it has the right to sublease the premises. RETAIL PROPERTIES As of December 31, 1999, the Operating Partnership owned two free-standing 10,000 square foot retail properties located in Great Neck and Huntington, New York and were 100% leased as of December 31, 1999. DEVELOPMENTS IN PROGRESS As of December 31, 1999, the Operating Partnership had invested approximately $130 million in developments in progress. This amount includes approximately $64 million relating to existing buildings encompassing approximately 1.1 million square feet. The Operating Partnership estimates that if these projects were to be completed, total additional development costs would be approximately $25.3 million. In addition, the Operating Partnership has also invested approximately $66 million relating to approximately 346 acres of land which it can develop approximately 2.2 million square feet. The Operating Partnership estimates that if these projects were to be completed, total additional development costs would be approximately $270 million. THE OPTION PROPERTIES In connection with the IPO, the Operating Partnership was granted a ten year option to acquire ten properties (the "Option Properties") which were not contributed to the Operating Partnership and are either owned by Reckson or in which Reckson owns a non controlling minority interest. As of December 31, 1999, the Operating Partnership has acquired four of the Option Properties for an aggregate purchase price of approximately $35 million and the issuance of approximately 475,000 Units. In addition, during 1998, one of the Option Properties was sold by Reckson to a third party. The remaining Option Properties consist of three Class A office properties encompassing approximately 311,000 square feet and two industrial properties encompassing approximately 69,000 square feet. I-15 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 incurred by the Operating Partnership to retain revenues attributable to existing leased space for the period 1995 through 1999 for the Office Properties and the Industrial Properties. As noted, incremental 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.
1995 1996 1997 1998 1999 ------------- ------------- --------------- --------------- --------------- CAPITAL EXPENDITURES Office Properties Total .................................... $ 364,545 $ 375,026 $ 1,108,675 $ 2,004,976 $ 2,298,899 Per square foot .......................... $ .19 $ .13 $ .22 $ .23 $ .23 Industrial Properties Total .................................... $ 290,457 $ 670,751 $ 733,233 $ 1,205,266 $ 1,048,688 Per square foot .......................... $ .08 $ .18 $ .15 $ .12 $ .11 NON-INCREMENTAL REVENUE-GENERATING TENANT IMPROVEMENT COSTS AND LEASING COMMISSIONS Long Island Office Properties Annual Tenant Improvement Costs ......... $ 452,057 $ 523,574 $ 784,044 $ 1,140,251 $ 1,009,357 Per square foot improved ................ 4.44 4.28 7.00 3.98 4.73 Annual Leasing Commissions .............. 144,925 119,047 415,822 418,191 551,762 Per square foot leased .................. 1.42 .97 4.83 1.46 2.59 Total per square foot ................... $ 5.86 $ 5.25 $ 11.83 $ 5.44 $ 7.32 Westchester Office Properties Annual Tenant Improvement Costs ......... N/A $ 834,764 $ 1,211,665 $ 711,160 $ 1,316,611 Per square foot improved ................ N/A 6.33 8.90 4.45 5.62 Annual Leasing Commissions .............. N/A 264,388 366,257 286,150 457,730 Per square foot leased .................. N/A 2.00 2.69 1.79 1.96 Total per square foot ................... N/A $ 8.33 $ 11.59 $ 6.24 $ 7.58 Connecticut Office Properties Annual Tenant Improvement Costs ......... N/A $ 58,000 $ 1,022,421 $ 202,880 $ 179,043 Per square foot improved ................ N/A 12.45 13.39 5.92 4.88 Annual Leasing Commissions .............. N/A 0 256,615 151,063 110,252 Per square foot leased .................. N/A 0 3.36 4.41 3.00 Total per square foot ................... N/A $ 12.45 $ 16.75 $ 10.33 $ 7.88 New Jersey Office Properties Annual Tenant Improvement Costs ......... N/A N/A N/A $ 654,877 $ 454,054 Per square foot improved ................ N/A N/A N/A 3.78 2.29 Annual Leasing Commissions .............. N/A N/A N/A 396,127 787,065 Per square foot leased .................. N/A N/A N/A 2.08 3.96 Total per square foot ................... N/A N/A N/A $ 5.86 $ 6.25 Industrial Properties Annual Tenant Improvement Costs ......... $ 210,496 $ 380,334 $ 230,466 $ 283,842 $ 375,646 Per square foot improved ................ .90 .72 .55 .76 .25 Annual Leasing Commissions .............. 107,351 436,213 81,013 200,154 835,108 Per square foot leased .................. .46 .82 .19 .44 .56 Total per square foot ................... $ 1.36 $ 1.54 $ .74 $ 1.20 $ .81
I-16 MORTGAGE INDEBTEDNESS The following table sets forth certain information regarding the mortgage debt of the Operating Partnership, as of December 31, 1999.
PRINCIPAL AMOUNT AMORTIZATION PROPERTY OUTSTANDING INTEREST RATE MATURITY DATE SCHEDULE - ----------------------------------- ------------------ --------------- --------------- ------------- (IN THOUSANDS) 6800 Jericho Turnpike (North Shore Atrium I) ........... $ 15,001 7.25% 6/10/00 -- 6900 Jericho Turnpike (North Shore Atrium II) .......... 5,279 7.25% 6/10/00 -- 200 Broadhollow Road. ............. 6,560 7.75% 6/02/02 30 year 395 North Service Road ............ 20,933 6.45% 10/26/05 (3) 50 Charles Lindbergh Blvd ......... 15,479 7.50% 7/10/01 -- 333 Earl Ovington Blvd. (The Omni) (1) ................... 56,367 7.72% 08/14/07 25 year 310 East Shore Road ............... 2,322 8.00% 7/01/02 -- 80 Orville Drive .................. 2,616 7.50%(2) 2/01/04 -- 580 White Plains Road ............. 8,172 7.375% 9/01/00 20 year Landmark Square ................... 47,809 8.02% 10/07/06 25 year 110 Bi-County Blvd. ............... 4,221 9.125% 11/30/12 20 year 100 Summit Lake Drive ............. 22,614 8.50% 4/01/07 15 year 200 Summit Lake Drive ............. 20,463 9.25% 1/01/06 25 year 120 West 45th Street .............. 66,933 6.82% 11/01/27 28 year 810 7th Avenue .................... 86,822 7.73% 8/1/09 25 year 100 Wall Street ................... 37,623 7.73% 8/1/09 25 year One Orlando Center ................ 39,960 6.82% 11/01/27 28 year --------- TOTAL ............................. $ 459,174 =========
- ---------- (1) The Operating Partnership has a 60% general partnership interest in the Omni Partnership. The Operating Partnership's proportionate share of the aggregate principal amount of the mortgage debt on the Omni is approximately $33.8 million. (2) Interest rate increases to 10.1% at June 2000. (3) Principal payments of $34,000 per month. ITEM 3. LEGAL PROCEEDINGS The Operating Partnership is not presently subject to any material litigation nor, to the Operating Partnership's knowledge, is any litigation threatened against the Operating Partnership, other than routine actions for negligence or other claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance and all of which collectively are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Operating Partnership. ITEM 4. SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS None. I-17 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY MATTERS There is no established trading market for the Registrant's common equity. As of March 22, 2000, there were 95 holders of the Registrant's common equity. The following tables set forth, for the periods indicated, the distributions declared on the common units and the Class B Common Units. COMMON UNITS
QUARTER ENDED DISTRIBUTION - ------------------------------------ ------------------ March 31, 1998 .............. $ 0.3125 June 30, 1998 ............... $ 0.4199 (1) September 30, 1998 .......... $ 0.3375 December 31, 1998 ........... $ 0.3375 March 31, 1999 .............. $ .33750 June 30, 1999 ............... $ .37125 (2) September 30, 1999 .......... $ .37125 December 31, 1999 ........... $ .37125
- ---------- (1) Commencing with the distribution for the quarter ending June 30, 1998, the Operating Partnership increased the quarterly distribution to $.3375 per unit, which is equivalent to an annual distribution of $1.35 per unit. In addition, on June 11, 1998, the Operating Partnership paid a stock dividend equivalent to $.0824 per unit relating to the Operating Partnership's distribution of its common stock interest in Reckson Service Industries, Inc. currently D/B/A FrontLine Capital Group to the Company. (2) Commencing with the distribution for the quarter ending June 30, 1999, the Operating Partnership increased the quarterly distribution to $.37125 per unit, which is equivalent to an annual distribution of $1.485 per unit. CLASS B COMMON UNITS
QUARTER ENDED DISTRIBUTION - ------------------------------------ ----------------- March 31, 1999 .............. N/A June 30, 1999 ............... $ .2364 (1) September 30, 1999 .......... $ .5600 December 31, 1999 ........... $ .5600
- ---------- (1) Represents the period May 24, 1999 through June 30, 1999 UNREGISTERED SALES OF EQUITY SECURITIES On May 24, 1999, in conjunction with the Tower portfolio acquisition, the Operating Partnership issued 11,694,567 Class B Common Units to the Company which were valued for GAAP purposes at $26 per share for total consideration of approximately $304.1 million. The Class B Common Units are entitled to receive an initial annual distribution of $2.24 per share, which distribution is subject to adjustment annually commencing on July 1, 2000. The Class B Common Units are exchangeable at any time, at the option of the holder, into an equal number of Units of the Operating Partnership subject to customary antidilution adjustments. The Class B Common Units will be exchanged for an equal number of Units upon the exchange, if any, by the Company of common stock for Class B Common Stock at any time following the four year, six-month anniversary of the issuance of the Class B Common Stock. II-1 On June 2, 1999, the Operating Partnership issued six million Series E preferred units of general partnership interests to the Company in exchange for approximately $150 million. The Series E preferred units have a liquidation preference of $25 per unit, and an initial distribution rate of 7.85% per annum with such rate increasing to 8.35% per annum on April 30, 2000 and to 8.85% per annum from and after April 30, 2001. The Series E preferred units are convertible into common units at a price of $26.05 per unit and are redeemable by the Operating Partnership on or after March 2, 2002. Proceeds from the issuance of the Series E preferred units were used as partial consideration in the acquisition of the first mortgage note secured by 919 Third Avenue located in New York City. ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS EXCEPT UNIT AND PROPERTIES DATA)
RECKSON OPERATING PARTNERSHIP, L. P. ----------------------------------------------------------- FOR THE YEAR ENDED ----------------------------------------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1999 1998 1997 1996 -------------- -------------- -------------- -------------- OPERATING DATA: Revenues ................................................. $ 403,142 $ 266,312 $ 153,348 $ 96,030 Total expenses ........................................... 297,476 201,003 107,639 70,935 Income before distribution to preferred unit holders, minority interests and extraordinary loss ............... 105,666 65,309 45,709 25,095 Minority interests ....................................... 6,802 2,819 920 915 Extraordinary items -- loss .............................. (629) (1,993) (2,808) (1,259) Preferred distributions .................................. 27,001 14,244 -- --- Net income available to common unitholders ............... 71,234 46,253 41,981 22,921 Per Unit Data: (2) Net income per common unit: General Partner -- common units .......................... $ 1.21 $ .98 $ 1.06 $ .87 General Partner -- Class B Common Units .................. $ 1.94 $ -- $ -- $ -- Limited Partners' ........................................ $ 1.21 $ .98 $ 1.03 $ .86 Weighted average common units outstanding: General Partner -- common units 40,270,000 39,473,000 32,727,000 19,928,000 General Partner -- Class B Common Units .................. 6,744,000 -- -- -- Limited Partners' ........................................ 7,705,000 7,728,000 7,016,000 6,503,000 BALANCE SHEET DATA: (PERIOD END) Real estate, before accumulated depreciation ............. $ 2,214,872 $ 1,743,223 $ 1,015,282 $ 519,504 Total assets ............................................. 2,724,934 1,854,520 1,113,105 543,391 Mortgage notes payable ................................... 459,174 253,463 180,023 161,513 Unsecured credit facility ................................ 297,600 465,850 210,250 108,500 Unsecured term loan ...................................... 75,000 20,000 -- -- Senior unsecured notes ................................... 449,313 150,000 150,000 -- Market value of equity (3) ............................... 1,726,845 1,332,882 1,141,592 653,606 Total market capitalization including debt (3 and 4) ..... 2,993,756 2,119,936 1,668,800 921,423 OTHER DATA: Funds from operations (5) ................................ $ 132,444 $ 98,501 $ 69,619 $ 40,938 Total square feet (at end of period) ..................... 21,385 21,000 13,645 8,800 Number of properties (at end of period) .................. 189 204 155 110
RECKSON OPERATING PARTNERSHIP, L. P. RECKSON GROUP ----------------- ----------------- FOR THE PERIOD JUNE 3, 1995 TO FOR THE PERIOD DECEMBER 31, JUNE 1, 1995 TO 1995 (1) JUNE 2, 1995 (1) ----------------- ----------------- OPERATING DATA: Revenues ................................................. $ 38,455 $ 20,889 Total expenses ........................................... 27,892 20,695 Income before distribution to preferred unit holders, minority interests and extraordinary loss ............... 10,563 194 Minority interests ....................................... 246 -- Extraordinary items -- loss .............................. (6,022) -- Preferred distributions .................................. -- -- Net income available to common unitholders ............... 4,295 194 Per Unit Data: (2) Net income per common unit: General Partner -- common units .......................... $ .22 -- General Partner -- Class B Common Units .................. $ -- -- Limited Partners' ........................................ $ .19 -- Weighted average common units outstanding: General Partner -- common units 14,678,000 -- General Partner -- Class B Common Units .................. -- -- Limited Partners' ........................................ 5,648,000 -- BALANCE SHEET DATA: (PERIOD END) Real estate, before accumulated depreciation ............. $ 290,712 -- Total assets ............................................. 242,540 -- Mortgage notes payable ................................... 98,126 -- Unsecured credit facility ................................ 40,000 -- Unsecured term loan ...................................... -- -- Senior unsecured notes ................................... -- -- Market value of equity (3) ............................... 303,943 -- Total market capitalization including debt (3 and 4) ..... 426,798 -- OTHER DATA: Funds from operations (5) ................................ $ 17,190 -- Total square feet (at end of period) ..................... 5,430 4,529 Number of properties (at end of period) .................. 81 72
- ---------- (1) Represents certain financial information on a consolidated historical basis for Reckson Operating Partnership, L. P., and on a combined historical basis for the Reckson Group. (2) Based on the weighted average units outstanding for the period then ended. (3) Based on the market value of the Operating Partnership's common units, the stated value of the Operating Partnership's preferred units and the number of units outstanding at the end of the period. (4) Debt amount is net of minority partners' proportionate share of Omni debt plus the Company's share of joint venture debt. (5) See "Management's Discussion and Analysis" for a discussion of funds from operations. II-2 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the historical financial statements of Reckson Operating Partnership, L.P. (the "Operating Partnership") and related notes. The Operating Partnership considers certain statements set forth herein to be 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, with respect to the Operating Partnership's expectations for future periods. Certain forward-looking statements, including, without limitation, statements relating to the timing and success of acquisitions, the financing of the Operating Partnership's operations, the ability to lease vacant space and the ability to renew or relet space under expiring leases, involve certain risks and uncertainties. Although the Operating Partnership believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the actual results may differ materially from those set forth in the forward-looking statements and the Operating Partnership can give no assurance that its expectation will be achieved. Certain factors that might cause the results of the Operating Partnership to differ materially from those indicated by such forward-looking statements include, among other factors, general economic conditions, general real estate industry risks, tenant default and bankruptcies, loss of major tenants, the impact of competition and acquisition, redevelopment and development risks, the ability to finance business opportunities and local real estate risks such as an oversupply of space or a reduction in demand for real estate in the Operating Partnership's real estate markets. Consequently, such forward-looking statements should be regarded solely as reflections of the Operating Partnership's current operating and development plans and estimates. These plans and estimates are subject to revisions from time to time as additional information becomes available, and actual results may differ from those indicated in the referenced statements. OVERVIEW AND BACKGROUND The Operating Partnership, which commenced operations on June 2 1995, is engaged in the ownership, management, operation, leasing and development of commercial real estate properties, principally office and industrial buildings, and also owns certain undeveloped land located in the New York tri-state area (the "Tri-State Area"). Reckson Associates Realty Corp. (the "Company"), is a self administered and self managed real estate investment trust ("REIT"), and serves as the sole general partner in the Operating Partnership. The Operating Partnership owns all of the interests in its real estate properties. At December 31, 1999, the Operating Partnership owned and operated 189 properties (the "Properties"), (including two joint venture properties) encompassing approximately 21.4 million square feet in the Tri-State Area. The Properties include 77 office properties (the "Office Properties") containing approximately 13.1 million square feet, 110 industrial properties (the "Industrial Properties") containing approximately 8.3 million square feet and two retail properties containing approximately 20,000 square feet. The Operating Partnership also owns and operates a 357,000 square foot office property located in Orlando Florida. In addition, the Operating Partnership owned approximately 346 acres of land in 16 separate parcels of which the Operating Partnership can develop approximately 1.9 million square feet of office space and approximately 300,000 square feet of industrial space. The Operating Partnership also has invested approximately $315.6 million in mortgage notes encumbering three Class A Office Properties encompassing approximately 1.6 million square feet, approximately 472 acres of land located in New Jersey and in a note receivable secured by a partnership interest in Omni Partners, L.P., owner of the Omni, a 575,000 square foot Class A Office Property located in Uniondale, New York. On January 6, 1998, the Operating Partnership made its initial investment in the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse facilities. In connection with the transaction the Morris Companies contributed 100% of their interests in certain industrial properties to Reckson Morris Operating Partnership, L. P. ("RMI") in exchange for operating partnership units in RMI. On August 9, 1999, the Operating Partnership executed a contract for the sale, which will take place in three stages, of its interest in RMI which consisted of 28 properties, comprising approximately 6.1 million square feet and three other big box industrial properties to Keystone Property Trust ("KTR") II-3 (formerly American Real Estate Investment Corporation). In addition, the Operating Partnership also entered into a sale agreement with the Matrix Development Group ("Matrix") relating to a first mortgage note and certain industrial land holdings (the "Matrix Sale"). The combined total sale price is $310 million (approximately $42 million of which is payable to the Morris Companies and its affiliates) and consists of a combination of (i) cash, (ii) convertible preferred and common stock of KTR, (iii) preferred units of KTR's operating partnership, (iv) relief of debt and (v) a purchase money mortgage note secured by certain land that is being sold to Matrix. During September 1999, the Matrix Sale and the first stage of the RMI closing occurred whereby the Operating Partnership sold its interest in RMI to KTR for a combined sales price of approximately $164.7 million (net of minority partner's interest). The combined consideration consisted of approximately (i) $86.3 million in cash, (ii) $40 million of preferred stock of KTR, (iii) $1.5 million in common stock of KTR, (iv) approximately $26.7 million of debt relief and (v) approximately $10.2 million in purchase money mortgages. As a result, the Operating Partnership incurred a gain of approximately $10.1 million which has been included in gain on sales of real estate on the Operating Partnership's consolidated statements of income. Cash proceeds from the sales were used primarily to repay borrowings under the Credit Facility. The second and third stages of the RMI closing are scheduled to be completed in April 2000. The remaining stages consist of six industrial buildings and are being sold for total consideration of approximately $98 million. In July 1998, the Company formed a joint venture, Metropolitan Partners LLC, a Delaware limited liability company ("Metropolitan"), with Crescent Real Estate Equities Company, a Texas real estate investment trust. On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc. ("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the "Merger") into Metropolitan, with Metropolitan surviving the Merger. Concurrently with the Merger, Tower Realty Operating Partnership, L.P. was merged with and into a subsidiary of Metropolitan. The consideration issued in the mergers was comprised of (i) 25% cash (approximately $107.2 million) and (ii) 75% of shares of Class B Exchangeable Common Stock, par value $.01 per share, of the Company (the "Class B Common Stock") (valued for generally accepted accounting principles ("GAAP") purposes at approximately $304.1 million). The Tower portfolio acquired in the Merger consists of three Office Properties comprising approximately 1.6 million square feet located in New York City, one Office Property located on Long Island and certain office properties and other real estate assets located outside the Tri-State Area. Prior to the closing of the Merger, the Company arranged for the sale of four of Tower's Class B New York City properties, comprising approximately 701,000 square feet for approximately $84.5 million. Subsequent to the closing of the Merger, the Company has sold a real estate joint venture interest and all of the property located outside the Tri-State Area other than one office property located in Orlando, Florida for approximately $171.1 million. The combined consideration consisted of approximately $143.8 million in cash and approximately $27.3 million of debt relief. Net cash proceeds from the sales were used primarily to repay borrowings under the Operating Partnership's unsecured credit facility. As a result of incurring certain sales and closing costs in connection with the sale of the assets located outside the Tri-State Area, the Company has incurred a loss of approximately $4.4 million which has been included in gain on sales of real estate on the Operating Partnership's consolidated statements of income. During 1997, the Company formed Reckson Service Industries, Inc. currently D/B/A FrontLine Capital Group ("FrontLine") and Reckson Strategic Venture Partners, LLC ("RSVP"). On June 11, 1998, the Operating Partnership distributed its 95% common stock interest in FrontLine of approximately $3 million to its owners, including the Company which, in turn, distributed the common stock of FrontLine received from the Operating Partnership to its stockholders. Additionally, during June 1998, the Operating Partnership established a credit facility with FrontLine (the "FrontLine Facility") in the amount of $100 million for FrontLine's e-commerce and e-services operations and other general II-4 corporate purposes. As of December 31, 1999, the Company had advanced $79.5 million under the FrontLine Facility. In addition, the Operating Partnership has approved the funding of investments of up to $100 million with or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint venture REIT-qualified investments or advances made to FrontLine under terms similar to the FrontLine Facility. As of December 31, 1999, approximately $67.2 million had been invested through the RSVP Commitment, of which $24.8 million represents RSVP-controlled joint venture REIT-qualified investments and $42.4 million represents advances to FrontLine under the RSVP Commitment. During November 1999, the Board of Directors of FrontLine and the Operating Partnership approved an amendment to the FrontLine Facility and the RSVP Commitment to permit FrontLine to incur secured debt and to pay interest thereon. In consideration of the amendments, FrontLine has paid the Operating Partnership a fee of approximately $3.6 million in the form of shares of FrontLine common stock. Such fee is being amortized in income over an estimated nine month benefit period. FrontLine identifies, acquires interests in and develops a network of business to business e-commerce and e-services companies that service small to medium sized enterprises, independent professionals and entrepreneurs and the mobile workforce of larger companies. FrontLine serves as the managing member of RSVP. RSVP was formed to provide the Operating Partnership with a research and development vehicle to invest in alternative real estate sectors. RSVP invests primarily in real estate and real estate related operating companies generally outside of the Operating Partnership's core office and industrial focus. RSVP's strategy is to identify and acquire interests in established entrepreneurial enterprises with experienced management teams in market sectors which are in the early stages of their growth cycle or offer unique circumstances for attractive investments as well as a platform for future growth. The Operating Partnership and FrontLine have entered into an intercompany agreement (the "Reckson Intercompany Agreement") to formalize their relationship and to limit conflicts of interest. Under the Reckson Intercompany Agreement, FrontLine granted the Operating Partnership a right of first opportunity to make any REIT -qualified investment that becomes available to FrontLine. In addition, if a REIT-qualified investment opportunity becomes available to an affiliate of FrontLine, including RSVP, the Reckson Intercompany Agreement requires such affiliate to allow the Operating Partnership to participate in such opportunity to the extent of FrontLine's interest. Under the Reckson Intercompany Agreement, the Operating Partnership granted FrontLine a right of first opportunity to provide commercial services to the Operating Partnership and its tenants. FrontLine will provide services to the Operating Partnership at rates and on terms as attractive as either the best available for comparable services in the market or those offered by FrontLine to third parties. In addition, the Operating Partnership will give FrontLine access to its tenants with respect to commercial services that may be provided to such tenants and, under the Reckson Intercompany Agreement, subject to certain conditions, the Operating Partnership granted FrontLine 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 the Company's status as a REIT, it is required to enter into a "master" lease agreement. On August 27, 1998 the Operating Partnership announced the formation of a joint venture with RSVP and the Dominion Group, an Oklahoma-based, privately-owned group of companies that focuses on the development, acquisition and ownership of government occupied office buildings and correctional facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"), is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating Partnership. The Dominion Venture is primarily engaged in acquiring, developing and/or owning government-occupied office buildings and privately operated correctional facilities. Under the Dominion Venture's operating agreement, RSVP is to invest up to $100 million, some of which may be invested by the Operating Partnership ( the "RSVP Capital"). The initial contribution of RSVP Capital was approximately $39 million of which approximately $10.1 million was invested by a subsidiary of the Operating Partnership. The Operating Partnership's investment was funded through the RSVP Commitment. In addition, the Operating Partnership advanced approximately $2.9 million to FrontLine through the RSVP II-5 Commitment for an investment in RSVP which was then invested on a joint venture basis with the Dominion Group in certain service business activities related to the real estate activities. As of December 31, 1999, the Operating Partnership had invested approximately $17.6 million in the Dominion Venture which had investments in 13 government office buildings and three correctional facilities. In 1999, the Operating Partnership invested approximately $7.2 million, through a subsidiary, in RAP Student Housing Properties, LLC ("RAP - SHP"), a company that engages primarily in the acquisition and development of off-campus student housing projects. The Operating Partnership investment was funded through the RSVP Commitment. In addition, the Operating Partnership has advanced approximately $3.2 million to FrontLine through the RSVP Commitment for an additional investment in RSVP which was invested in certain service business activities related to student housing. As of December 31, 1999, RAP - SHP had investments in four off - campus student housing projects The market capitalization of the Operating Partnership at December 31, 1999 was approximately $3 billion. The Operating Partnership's market capitalization is calculated based on the sum of (i) the value of the Operating Partnership's common units and Class B Common Units (which, for this purpose, is assumed to be the same per unit as the value of a share of the Company's common stock and Class B Common Stock), (ii) the liquidation preference values of the Operating Partnership's preferred units, (iii) the contributed value of Metropolitan's preferred interest of $85 million and (iv) the $1.3 billion (including its share of joint venture debt and net of minority partners' interest) of debt outstanding at December 31, 1999. As a result, the Operating Partnership's total debt to total market capitalization ratio at December 31, 1999 equaled approximately 42.3%. RESULTS OF OPERATIONS The Operating Partnership's total revenues increased by $136.8 million or 51.4% from 1998 to 1999 and $113 million or 73.7% from 1997 to 1998. Property operating revenues, which include base rents and tenant escalations and reimbursements ("Property Operating Revenues") increased by $116.7 million or 46.2% from 1998 to 1999 and $108.7 million or 75.6% from 1997 to 1998. The 1999 increase in Property Operating Revenues is substantially attributable to the Tower portfolio acquisition on May 24, 1999. The revenue generated from these assets generated approximately $47.5 million of revenue in 1999. Additionally, approximately $29.1 million of revenue was generated from the Operating Partnership's acquisition of the first mortgage note secured by 919 Third Avenue. Property Operating Revenues were also positively effected by approximately $9.9 million from increases in occupancies and rental rates in our "same store" properties and approximately $27.2 million in additional revenue generated from properties acquired during 1998 and new development activity. The remaining balance of the increase in total revenues in 1999 is primarily attributable to the gain on sales of real estate of $10.1 million and approximately $8.7 million in other income related to interest earned on advances made to FrontLine through the FrontLine Facility and to RSVP through the RSVP Commitment. The 1998 increase in Property Operating Revenues is comprised of $2.1 million attributable to increases in rental rates and changes in occupancies and $106.6 million attributable to acquisitions of properties. The remaining balance of the increase in total revenues in 1998 is primarily attributable to increases in interest income on the Operating Partnership's investments in mortgage notes and notes receivable and income related to the Operating Partnership's interest in its service companies. The Operating Partnership's base rent reflects the positive impact of the straight-line rent adjustment of $ 10.7 million in 1999, $7.7 million in 1998 and $4.5 million in 1997. Property operating expenses, real estate taxes and ground rents ("Property Expenses") increased by $41.7 million or 49.5% from 1998 to 1999 and by $34.0 million or 67.5% from 1997 to 1998. These increases are primarily due to the acquisition of the properties included in the Tower portfolio acquisition on May 24, 1999 and the acquisition of the first mortgage note secured by 919 Third Avenue. Gross operating margins (defined as Property Operating Revenues less Property Expenses, taken as a percentage of Property Operating Revenues) for 1999, 1998 and 1997 were 65.9%, 66.6% and 65.0%, respectively. The slight decrease in the gross operating margin percentage from 1998 to 1999 resulted from a larger proportionate share of gross operating margin derived from office properties, which has a lower gross margin percentage, in 1999 compared to 1998. The higher proportionate share of the gross II-6 operating margin attributable to the office properties was a result of the office properties acquired in the Tower portfolio acquisition and the disposition of net leased industrial properties in the "Big Box" industrial transaction. This shift in the composition of the portfolio was offset by increases in rental rates and operating efficiencies realized as a result of operating a larger portfolio of properties with concentration on properties in office and industrial parks or in its established sub-markets. The increase from 1997 to 1998 in the gross operating margin percentage resulted from increases realized in rental rates, the Operating Partnership's ability to realize certain operating efficiencies as a result of operating a larger portfolio of properties with concentrations of properties in office and industrial parks or in its established sub-markets, a stable operating cost environment and the increased ownership of net leased properties. Marketing, general and administrative expenses were $22.3 million in 1999, $16.0 million in 1998 and $8.5 million in 1997. The increase in marketing, general and administrative expenses is due to the increased costs of opening and maintaining the Company's New York City division and the increase in corporate management and administrative costs associated with the growth of the Operating Partnership. The Operating Partnership's business strategy has been to expand further into the Tri-State Area suburban markets and the New York City market by applying its standards for high quality office and industrial space and premier tenant service to its New Jersey, Westchester, Southern Connecticut and New York City divisions. In doing this, the Operating Partnership seeks to create a superior franchise value that it enjoys in its home base of Long Island. Over the past three years the Operating Partnership has supported this effort by increasing the marketing programs in the other divisions and strengthening the resources and operating systems in these divisions. The cost of these efforts are reflected in both marketing, general and administrative expenses as well as the revenue growth of the Operating Partnership. Marketing, general and administrative expense as a percentage of total revenues were 5.5% in 1999, 6.0% in 1998 and 5.5% in 1997. Interest expense was $74.7 million in 1999, $47.8 million in 1998 and $21.6 million in 1997. The increase of $26.9 million from 1998 to 1999 is attributable to (i)an increase in mortgage debt including approximately $232 million relating to the Tower portfolio acquisition (ii) the issuance of $300 million of senior unsecured notes in March 1999 and (iii) an increased average balance on the Operating Partnership's credit facilities and term loan. The weighted average balance outstanding on the Operating Partnership's credit facilities and term loan was $423.8 million for 1999, $377.9 million for 1998 and $103.2 million for 1997. Included in amortization expense is amortized financing costs of $3.4 million in 1999, $1.6 million in 1998 and $.8 million in 1997. The increase of $1.8 million from 1998 to 1999 is primarily attributable to the increased loan costs incurred in connection with the Operating Partnership increasing its unsecured term loan in January 1999 to $75 million, the issuance of $300 million of senior unsecured notes in March 1999 and the Operating Partnership's $130 million unsecured bridge facility obtained in connection with the Tower portfolio acquisition in May 1999. The increase of $.8 million from 1997 to 1998 is primarily attributable to loan costs incurred in connection with the Operating Partnership's obtaining a $500 million unsecured credit facility and a $50 million unsecured term loan. Extraordinary losses resulted in a $629,000 loss in 1999, $2.0 million loss in 1998 and a $2.8 million loss in 1997. The extraordinary losses were all attributed to the write-offs of certain deferred loan costs incurred in connection with the Operating Partnership's restructuring of its credit facilities. LIQUIDITY AND CAPITAL RESOURCES Summary of Cash Flows Net cash provided by operating activities totaled $155.7 million in 1999, $118.5 million in 1998 and $75.8 million in 1997. Increases for each year were primarily attributable to the growth in cash flow provided by the acquisition of properties and to a lesser extent from interest income from mortgage notes and notes receivable. Net cash used in investing activities totaled $392.9 million in 1999, $612.6 million in 1998 and $549.3 million in 1997. Cash used in investing activities related primarily to investments in real estate properties II-7 including development costs and investments in mortgage notes and notes receivable. In addition, during 1998, the Operating Partnership purchased $40 million of preferred stock of Tower Realty Trust, Inc. in connection with the Tower portfolio acquisition. Net cash provided by financing activities totaled $256.1 million in 1999, $474.6 million in 1998 and $482.9 million in 1997. Cash provided by financing activities during 1999, 1998 and 1997 was primarily attributable to proceeds from partner contributions, the issuance of senior unsecured notes and advances under the Company's credit facilities and term loan. Additionally, during 1999, approximately $126 million in proceeds from secured borrowings was provided by financing activities. Investing Activities On May 24, 1999, the Tower portfolio acquisition was completed with the Operating Partnership obtaining title to all of Tower's real estate assets. Simultaneously with the closing of the Tower acquisition the Operating Partnership arranged for the sale of four of Tower's Class B New York City office properties. In addition, the Operating Partnership sold, with the exception of one Class A, 357,000 square foot office building located in Orlando, Florida, all of the assets located outside of the Tri-State Area. In addition to the aforementioned property in Orlando, Florida, the Operating Partnership's remaining assets from the Tower acquisition include three Class A New York City office properties encompassing approximately 1.6 million square feet and one Class A office property on Long Island encompassing approximately 101,000 square feet. On June 15, 1999, the Operating Partnership acquired the first mortgage note secured by 919 Third Avenue, a 47 story, 1.4 million square foot Class A office property located in New York City. The first mortgage note entitles the Operating Partnership to all the net cash flow of the property and to substantial rights regarding the operations of the property. On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the Americas, a 540,000 square foot, 35 story, Class A office property, located in New York City, for a purchase price of approximately $126.5 million. This acquisition was financed through a $70 million secured debt financing and a draw under the Operating Partnership's unsecured credit facility. In June 1998, the Operating Partnership established the FrontLine Facility in the amount of $100 million for FrontLine's e-commerce and e-services operations and for other general corporate purposes. As of December 31, 1999, approximately $79.5 million had been advanced to FrontLine under this facility. In addition, the Operating Partnership approved the commitment to fund investments of up to $100 million with or in RSVP. As of December 31, 1999, the Company has invested approximately $67.2 million under this commitment, of which $24.8 million represents RSVP - controlled joint venture REIT - qualified investments and $42.4 million represents advances to FrontLine under the RSVP Commitment. Financing Activities On March 26, 1999, the Operating Partnership issued $100 million of 7.4% senior unsecured notes due March 15, 2004 and $200 million of 7.75% senior unsecured notes due March 15, 2009. Net proceeds of approximately $297.4 million were used to repay outstanding borrowings under the Operating Partnership's unsecured credit facility. On May 24, 1999, in conjunction with the Tower acquisition, the Operating Partnership issued 11,694,567 Class B Common Units of general partnership interest to the Company which were valued for GAAP purposes at $26 per unit for total consideration of approximately $304.1 million. The Class B Common Units are entitled to receive an initial annual distribution of $2.24 per unit, which distribution is subject to adjustment annually. The Class B Common Units are exchangeable at any time, at the option of the holder, into an equal number of common units subject to customary antidilution adjustments. The Class B Common Units will be exchanged for an equal number of common units upon exchange, if any, by the Company of common stock for Class B Common Stock at any time following the four year, six-month anniversary of the issuance of the Class B Common Stock. II-8 As of December 31, 1999, in conjunction with the Company's Class B Common Stock buy back program, the Operating Partnership purchased and retired 1,410,804 Class B Common Units for approximately $30.3 million. On June 2, 1999, in connection with the Company's issuance of Series B convertible cumulative preferred stock, the Operating Partnership issued six million Series E convertible cumulative preferred units of general partnership interests to the Company in exchange for approximately $150 million. The Series E preferred units have a liquidation preference of $25 per unit, and an initial distribution rate of 7.85% per annum with such rate increasing to 8.35% per annum on April 30, 2000 and to 8.85% per annum from and after April 30, 2001. The Series E preferred units are convertible into common units at a price of $26.05 per unit and are redeemable by the Operating Partnership on or after March 2, 2002. Proceeds from the issuance of the Series E preferred units were used as partial consideration in the acquisition of the first mortgage note secured by 919 Third Avenue located in New York City. As of December 31, 1999 the Operating Partnership had a three year $500 million unsecured revolving credit facility (the "Credit Facility") with Chase Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the Credit Facility bank group. Interest rates on borrowings under the Credit Facility are priced off of LIBOR plus a sliding scale ranging from 65 basis points to 90 basis points based on the Operating Partnership's investment grade rating on its senior unsecured debt. On March 16, 1999, the Operating Partnership received its investment grade rating on its senior unsecured debt. As a result, the pricing under the Credit Facility was adjusted to LIBOR plus 90 basis points. The Operating Partnership utilizes the Credit Facility primarily to finance the acquisitions of properties and other real estate investments, fund its development activities and for working capital purposes. At December 31, 1999, the Operating Partnership had availability under the Credit Facility to borrow an additional $150.1 million (net of $52.3 million of outstanding undrawn letters of credit). As of December 31, 1999, the Operating Partnership had outstanding an 18 month, $75 million unsecured term loan (the "Term Loan') from Chase Manhattan Bank. Interest rates on borrowings under the Term Loan are priced off of LIBOR plus 150 basis points. The Term Loan replaced the Operating Partnership's previous term loan which matured on December 17, 1999. On May 24, 1999, in conjunction with the Tower portfolio acquisition, the Operating Partnership obtained a $130 million unsecured bridge facility (The "Bridge Facility") from UBS AG. Interest rates on borrowings under the Bridge Facility were priced off of LIBOR plus approximately 214 basis points. On July 23, 1999, the Bridge Facility was repaid through a long term fixed rate secured borrowing and an advance under the Credit Facility. As a result, certain deferred loan costs incurred in connection with the Bridge Facility were written off. Such amount is reflected as an extraordinary loss in the Operating Partnership's consolidated statements of income. The new mortgage note, in the amount of $125 million, is secured by two office properties with an aggregate carrying value of approximately $261 million, is for a term of ten years and bears interest at the rate of 7.73% per annum. Capitalization The Operating Partnership's indebtedness at December 31, 1999 totaled $1.3 billion (including its share of joint venture debt and net of the minority partners' interests) and was comprised of $297.6 million outstanding under the Credit Facility, $75 million outstanding under the Term Loan, approximately $449.3 million of Senior Unsecured Notes and approximately $445 million of mortgage indebtedness. Based on the Operating Partnership's total market capitalization of approximately $3 billion at December 31, 1999, (calculated based on the value of the Operating Partnership's common units and Class B Common Units (which, for this purpose, is assumed to be the same per unit as the value of a share of the Company's common stock and Class B Common Stock), the liquidation preference value of the Operating Partnership's preferred units, the contributed value of Metropolitan's preferred interest of $85 million and the $1.3 billion of debt), the Operating Partnership's debt represented approximately 42.3% of its total market capitalization. Historically, rental revenue has been the principal source of funds to pay operating expenses, debt service and capital expenditures, excluding non-recurring capital expenditures of the Operating Partnership. The Operating Partnership's investments in mortgage notes, RSVP and advances under the II-9 FrontLine Facility are expected to produce cash flows. The Operating Partnership expects to meet its short term liquidity requirements generally through its net cash provided by operating activities along with the Credit Facility and Term Loan previously discussed. The Operating Partnership expects to meet certain of its financing requirements through long-term secured and unsecured borrowings and the issuance of debt securities and additional equity securities of the Operating Partnership. The Operating Partnership also expects certain strategic dispositions of assets or interests in assets to generate cash flows. The Operating Partnership will refinance existing mortgage indebtedness or indebtedness under the Credit Facility at maturity or retire such debt through the issuance of additional debt securities or additional equity securities. The Operating Partnership anticipates that the current balance of cash and cash equivalents and cash flows from operating activities, together with cash available from borrowings and debt and equity offerings, will be adequate to meet the capital and liquidity requirements of the Operating Partnership in both the short and long-term. INFLATION Certain office leases provide for fixed base rent increases or indexed escalations. In addition, certain office leases provide for separate escalations of real estate taxes and electric costs over a base amount. The industrial leases also generally provide for fixed base rent increases, direct pass through of certain operating expenses and separate real estate tax escalation over a base amount. The Operating Partnership believes that inflationary increases in expenses will generally be offset by contractual rent increases and expense escalations described above. The Credit Facility and the Term Loan bear interest at a variable rate, which will be influenced by changes in short-term interest rates, and are sensitive to inflation. IMPACT OF YEAR 2000 During 1999, the Operating Partnership discussed the nature and progress of its plans to become Year 2000 ready. In that regard, the Operating Partnership has completed its assessment, remediation and testing of its systems in order for those systems to function properly with respect to dates occurring in the Year 2000 and thereafter. As a result of those efforts, the Operating Partnership experienced no significant disruptions in connection with its building management, mechanical and computer systems and believes that those systems successfully responded to the Year 2000 date change. The Operating Partnership has expended approximately one million dollars with upgrading, replacing or remediating its systems and is not aware of any material problems resulting from Year 2000 issues. Further, the Operating Partnership will continue to monitor its critical building management, mechanical and computer systems throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. II-10 FUNDS FROM OPERATIONS Management believes that funds from operations ("FFO") is an appropriate measure of performance of an operating partnership which is a general partner of an equity REIT. FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) as net income or loss, excluding gains or losses from debt restructurings and sales of properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of the Operating Partnership's operating performance or as an alternative to cash flow as a measure of liquidity. (See Selected Financial Data). In March 1995, NAREIT issued a "White Paper" analysis to address certain interpretive issues under its definition of FFO. The White Paper provides that amortization of deferred financing costs and depreciation of non-rental real estate assets are no longer to be added back to net income to arrive at FFO. In October 1999, NAREIT revised the definition of FFO to include gains and losses from sales of properties and non-recurring events. This revised definition is effective for all periods beginning on or after January 1, 2000. Since all companies and analysts do not calculate FFO in a similar fashion, the Operating Partnership's calculation of FFO presented herein may not be comparable to similarly titled measures as reported by other companies. The following table presents the Operating Partnership's FFO calculation (in thousands):
YEAR ENDED DECEMBER 31, --------------------------------------- 1999 1998 1997 ----------- ----------- ----------- Income before extraordinary loss ..................................... $ 71,863 $ 48,246 $ 44,789 Less: Extraordinary loss .................................................. 629 1,993 2,808 --------- -------- -------- Net Income ........................................................... 71,234 46,253 41,981 Adjustment for Funds From Operations: Add: Real estate depreciation and amortization ........................... 72,124 51,424 26,834 Minority interests' in consolidated partnerships .................... 6,802 2,819 920 Extraordinary loss .................................................. 629 1,993 2,808 Less: Gain on sales of real estate ........................................ 10,052 -- 672 Amount distributed to minority partners in consolidated partnerships 8,293 3,988 2,252 --------- -------- -------- Funds From Operations ................................................ $ 132,444 $ 98,501 $ 69,619 ========= ======== ======== Weighted average units outstanding ................................... 54,719 47,201 39,743 ========= ======== ========
II-11 ITEM 7 (A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The primary market risk facing the Operating Partnership is interest rate risk on its long term debt, mortgage notes and notes receivable. The Operating Partnership does not hedge interest rate risk using financial instruments nor is the Operating Partnership subject to foreign currency risk. The Operating Partnership manages its exposure to interest rate risk on its variable rate indebtedness by borrowing on a short-term basis under its Credit Facility until such time as it is able to retire the short-term variable rate debt with a long-term fixed rate debt offering on terms that are advantages to the Operating Partnership or through general partner contributions. The following table sets forth the Operating Partnership's long term debt obligations by scheduled principal cash flow payments and maturity date, weighted average interest rates and estimated fair market value ("FMV") at December 31, 1999 (dollars in thousands):
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------------------------------- 2000 2001 2002 2003 2004 ------------- ------------- ------------- ------------ ------------- Long term debt: Fixed rate .............. $ 35,145 $ 22,751 $ 16,499 $ 8,350 $ 11,769 Weighted average interest rate ................... 7.37% 7.58% 7.79% 7.77% 7.73% Variable rate ........... $ -- $ 372,600 $ -- $ -- $ -- Weighted average interest rate ................... -- 7.27% -- -- --
THEREAFTER TOTAL (1) FMV -------------- -------------- ------------ Long term debt: Fixed rate .............. $ 814,660 $ 909,174 $ 909,174 Weighted average interest rate ................... 7.53% 7.53% -- Variable rate ........... $ -- $ 372,600 $ 372,600 Weighted average interest rate ................... -- 7.27% --
- ---------- (1) Includes unamortized issuance discounts of $687,000 on the 5 and 10 year senior unsecured notes issued on March 26, 1999 which are due at maturity. In addition, the Operating Partnership has assessed the market risk for its variable rate debt, which is based upon LIBOR, and believes that a one percent increase in the LIBOR rate would have an approximate $3.7 million annual increase in interest expense based on approximately $372.6 million outstanding at December 31, 1999. The following table sets forth the Operating Partnership's mortgage notes and note receivables by scheduled maturity date, weighted average interest rates and estimated FMV at December 31, 1999 (dollars in thousands):
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------------ 2000 2001 2002 2003 2004 THEREAFTER TOTAL (2) FMV -------------- ---------- ------------- ------ ------------- ------------ -------------- ------------ Mortgage notes and notes receivable: Fixed rate .............. $ 282,857 $ 15 $ 11,306 $ -- $ 36,500 $ 16,990 $ 347,668 $ 347,668 Weighted average interest rate ................... 9.42% 9.00% 10.35% $ -- 10.23% 11.65% 9.64% --
- ---------- (2) Excludes mortgage note receivable acquisition costs and interest receivables aggregating approximately $4.8 million. The fair value of the Operating Partnership's long term debt, mortgage notes and notes receivable is estimated based on discounting future cash flows at interest rates that management believes reflects the risks associated with long term debt, mortgage notes and notes receivable of similar risk and duration. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this item is included in a separate section of this Form 10-K ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. II-12 PART III ITEMS 10, 11, 12, AND 13. The Company is the sole managing general partner of the Operating Partnership. All of the Company's business is conducted through the Operating Partnership. As a result, the information required by items 10, 11, 12, and 13 is identical to the information contained in Items 10, 11, 12 and 13 of the Company's Form 10-K, which incorporates by reference information appearing in the Company's Proxy Statement furnished to shareholders in connection with the Company's 2000 Annual Meeting. Such information is incorporated by reference in this Form 10-K. III-1 PART IV ITEM 14. FINANCIAL STATEMENTS AND SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K (a)(1 and 2) Financial Statements and Schedules The following consolidated financial information is included as a separate section of this annual report on Form 10-K:
PAGE ------ RECKSON OPERATING PARTNERSHIP, L. P. Report of Independent Auditors ........................................... IV-5 Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998 IV-6 Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997 ....................................... IV-7 Consolidated Statement of Partners' Capital for the years ended December 31, 1999, 1998 and 1997. ...................................... IV-8 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 ....................................... IV-9 Notes to Financial Statements ............................................ IV-10 Schedule III- Real Estate and Accumulated Depreciation ................... IV-26
IV-1 All other schedules are omitted since the required information is not present in amounts sufficient to require submission of the schedule or because the information required is included in the financial statements and notes thereto. (3) Exhibits
EXHIBIT FILING NUMBER REFERENCE DESCRIPTION - --------- --------- ----------- 3.1 a Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P. 3.2 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P. Establishing Series A Preferred Units of Limited Partnership Interest 3.3 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P. Establishing Series B Preferred Units of Limited Partnership Interest 3.4 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P. Establishing Series C Preferred Units of LimitedPartnership Interest 3.5 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P. Establishing Series D Preferred Units of Limited Partnership Interest 3.6 o Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P. Establishing Series B Common Units of Limited Partnership Interest 3.7 o Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P. Establishing Series E Preferred Partnership Units of Limited Partnership 4.1 i Form of 7.40% Notes due 2004 of Reckson Operating Partnership, L.P. 4.2 i Form of 7.75% Notes due 2009 of Reckson Operating Partnership, L.P. 4.3 i Indenture, dated March 26, 1999, among Reckson Operating Partnership, L.P., the Company, and The Bank of New York, as trustee 10.1 e Third Amended and Restated Agreement of Limited Partnership of Omni Partners, L.P. 10.2 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson Associates Realty Corp. and Donald Rechler 10.3 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson Associates Realty Corp. and Scott Rechler 10.4 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson Associates Realty Corp. and Mitchell Rechler 10.5 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson Associates Realty Corp. and Gregg Rechler 10.6 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson Associates Realty Corp. and Roger Rechler 10.7 h Amendmentand Restatement of Employment and Non-Competition Agreement between Reckson Associates Realty Corp. and J. Michael Maturo 10.8 a Purchase Option Agreements relating to the Reckson Option Properties 10.9 a Purchase Option Agreements relating to the Other Option Properties 10.10 c Amended 1995 Stock Option Plan 10.11 c 1996 Employee Stock Option Plan 10.12 b Ground Leases for certain of the properties 10.13 h Third Amended and Restated Agreement of Limited Partnership of Reckson FS Limited Partnership 10.14 a Indemnity Agreement relating to 100 Oser Avenue 10.15 e Amended and Restated 1997 Stock Option Plan 10.16 e 1998 Stock Option Plan 10.17 e Note Purchase Agreement for the Senior Unsecured Notes 10.18 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Donald Rechler 10.19 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Scott Rechler 10.20 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Mitchell Rechler 10.21 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Gregg Rechler 10.22 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Roger Rechler 10.23 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and J. Michael Maturo 10.24 d $500 million Credit Agreement dated July 23, 1998 among Reckson Operating Partnership, L.P. and Reckson Morris Operating Partnership, L.P. and the Chase Manhattan Bank, UBS AG and PNC Bank and other lenders party thereto 10.25 f Agreement and Plan of Merger by and among Tower Realty Trust, Inc., Reckson Associates Realty Corp., Reckson Operating Partnership, L.P. and Metropolitan Partners LLC, dated December 8, 1998 10.26 f Stock Purchase Agreement by and between Tower Realty Trust, Inc. and Metropolitan Partners LLC, dated December 8, 1998 10.27 f Amended and Restated Operating Agreement of Metropolitan Partners LLC, dated December 8, 1998 10.28 h Intercompany Agreement by and between Reckson Operating Partnership, L.P. and Reckson Service Industries, Inc., dated May 13, 1998 10.29 o Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service Industries, Inc., as borrower and Reckson Operating Partnership, L.P., as Lender relating to Reckson Strategic Venture Partners, LLC ("RSVP Credit Agreement") 10.30 o Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service Industries, Inc., as borrower and Reckson Operating Partnership, L.P., as Lender relating to the operations of Reckson Service Industries, Inc. ("RSI Credit Agreement") 10.31 o Letter Agreement, dated November 30, 1999, amending the RSVP Credit Agreement and the RSI Credit Agreement 10.32 k Consolidated, Amended and Restated Fee and Leasehold Mortgage Note relating to 919 Third Avenue 10.33 m Agreement of Purchase and Sale, between NBBRE 919 Third Avenue Associates, L.P., as Seller, and Reckson Operating Partnership, L.P., as Purchaser 10.34 l Contribution and Exchange Agreement by and between Reckson Morris Industrial Trust, Reckson Morris Industrial Interim GP, LLC, Reckson Operating Partnership, L.P., Robert Morris, Joseph D. Morris, Ronald Schram, Mark M. Bava, The Drew Morris Trust, The Justin Morris Trust, The Keith Morris Trust, Joseph D. Morris Family Limited Partnership and Robert Morris Family Limited Partnership, and American Real Estate Investment L.P. and American Real Estate Corporation 10.35 n $75 million Second Amended and Restated Credit Facility Agreement dated as of December 17, 1999 12.1 Statement of Ratios of Earnings to Fixed Charges 21.1 Statement of Subsidiaries 23.0 Consent of Independent Auditors 24.1 Power of Attorney (included in Part IV of the Form 10-K) 27.0 Financial Data Schedule
IV-2 - -------- (a) Previously filed as an exhibit to Registration Statement Form S-11 (No. 333-1280) and incorporated herein by reference. (b) Previously filed as an exhibit to Registration Statement Form S-11 (No. 33-84324) and incorporated herein by reference. (c) Previously filed as an exhibit to the Company's Form 8-K report filed with the SEC on November 25, 1996 and incorporated herein by reference. (d) Previously filed as an exhibit to the Company's Form 8-K report filed with the SEC on August 14, 1998 and incorporated herein by reference. (e) Previously filed as an exhibit to the Company's Form 10-K filed with the SEC on March 26, 1998 and incorporated herein by reference. (f) Previously filed as an exhibit to the Company's Form 8-K report filed with the SEC on December 22, 1998 and incorporated herein by reference. (g) Previously filed as an exhibit to the Company's Form 8-K report filed with the SEC on March 1, 1999 and incorporated herein by reference. (h) Previously filed as an exhibit to the Company's Form 10-K filed with the SEC on March 16, 1999 and incorporated herein by reference. (i) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on March 26, 1999 and incorporated herein by reference. (j) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on June 7, 1999 and incorporated herein by reference. (k) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on June 25, 1999 and incorporated herein by reference. (l) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on August 25, 1999 and incorporated herein by reference. (m) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on January 14, 2000 and incorporated herein by reference. (n) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on February 8, 2000 and incorporated herein by reference. (o) Previously filed as an exhibit to the Company's Form 10-K filed with the SEC on March 17, 2000 and incorporated herein by reference. (B) REPORTS ON FORM 8-K On October 25, 1999, the Operating Partnership filed reports on Form 8-K relating to: 1. the completion of the first stage of the RMI closing and the sale of certain industrial properties to Matrix, 2. the Company's Board of Directors authorizing the repurchase of up to three million shares of Class B Common Stock, 3. the Company's sale and disposition of the Tower assets located outside the Tri-State Area other than one Class A office property located in Orlando, Florida and 4. the Operating Partnership entering into a contract to acquire 1350 Avenue of the Americas, a 540,000 square foot, 35 story, Class A office property located in New York City for a purchase price of approximately $126.5 million. IV-3 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 22, 2000. RECKSON OPERATING PARTNERSHIP, L.P. By: RECKSON ASSOCIATES REALTY CORP., its general partner By: /s/ Donald J. Rechler --------------------------- Donald J. Rechler, Chairman of the Board and Co-Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of Reckson Associates Realty Corp., the corporate general partner of the registrant, hereby severally constitutes and appoints Scott H. Rechler, Michael Maturo and Mitchell D. Rechler, and each of them, his attorney-in-fact and agent, with full power of substitution and resubstitution for him in any and all capacities, to sign any or all amendments to this annual report on Form 10-K for the fiscal year ended December 31, 1999, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that such attorney-in-fact or his substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 22, 2000.
SIGNATURE TITLE SIGNATURE TITLE - -------------------------- --------------------------- ------------------------ -------------------------- /s/ Donald J. Rechler Chairman of the Board, /s/ Scott H. Rechler President, Co-Chief - ---------------- Co-Chief Executive ---------------- Executive Officer and Donald J. Rechler Officer and Director Scott H. Rechler Director (principal executive officer) /s/ Roger M. Rechler Vice-Chairman of the /s/ Michael Maturo Executive Vice President, - ---------------- Board, Executive Vice ---------------- Treasurer and Chief Roger M. Rechler President and Director Michael Maturo Financial Officer (principal financial officer and principal accounting officer) /s/ Mitchell D. Rechler Executive Vice President, - ---------------- Co-Chief Operating ---------------- Director Mitchell D. Rechler Officer and Director Harvey R. Blau /s/ Leonard Feinstein Director /s/ Herve A. Kevenides Director - ---------------- ---------------- Leonard Feinstein Herve A. Kevenides /s/ John V. Klein Director /s/ Lewis S. Ranieri Director - ---------------- ---------------- John V. N. Klein Lewis S. Ranieri /s/ Conrad D. Stephensen Director - ---------------- Conrad D. Stephensen
IV-4 REPORT OF INDEPENDENT AUDITORS To the Partners Reckson Operating Partnership, L. P. We have audited the accompanying consolidated balance sheets of Reckson Operating Partnership, L. P. (the "Operating Partnership") as of December 31, 1999 and 1998, and the related consolidated statements of income, partners' capital, and cash flows for each of the three years in the period ended December 31 1999. We have also audited the financial statement schedule listed in the index at item 14 (a). These financial statements and financial statement schedule are the responsibility of the Operating Partnership's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Reckson Operating Partnership, L. P. at December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. ERNST & YOUNG LLP New York, New York February 15, 2000 IV-5 RECKSON OPERATING PARTNERSHIP, L. P. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT UNIT DATA)
DECEMBER 31, --------------------------------- 1999 1998 --------------- --------------- ASSETS Commercial real estate properties, at cost (Notes 2, 3, 5, 6, and 8) .................. Land .................................................................................. $ 276,204 $ 212,540 Buildings and improvements ............................................................ 1,802,611 1,372,549 Developments in progress: Land .................................................................................. 60,894 69,143 Development costs ..................................................................... 68,690 82,901 Furniture, fixtures and equipment ..................................................... 6,473 6,090 ----------- ----------- 2,214,872 1,743,223 Less accumulated depreciation ......................................................... (218,385) (159,049) ----------- ----------- 1,996,487 1,584,174 Investments in real estate joint ventures (Note 8) .................................... 31,531 15,104 Investment in mortgage notes and notes receivable (Note 6) ............................ 352,466 99,268 Cash and cash equivalents (Note 12) ................................................... 21,122 2,228 Tenant receivables .................................................................... 5,117 5,159 Investments in and advances to affiliates (Note 8) .................................... 179,762 53,154 Deferred rents receivable ............................................................. 22,489 22,526 Prepaid expenses and other assets (Note 6) ............................................ 66,855 46,372 Contract and land deposits and pre-acquisition costs .................................. 9,585 2,253 Deferred lease and loan costs, less accumulated amortization of $24,484 and $18,170, respectively................................................................. 39,520 24,282 ----------- ----------- Total Assets .......................................................................... $ 2,724,934 $ 1,854,520 =========== =========== LIABILITIES Mortgage notes payable (Note 2) ....................................................... $ 459,174 $ 253,463 Unsecured credit facility (Note 3) .................................................... 297,600 465,850 Unsecured term loan (Note 3) .......................................................... 75,000 20,000 Senior unsecured notes (Note 4) ....................................................... 449,313 150,000 Accrued expenses and other liabilities (Note 5) ....................................... 71,622 50,779 Distributions payable ................................................................. 27,166 19,663 ----------- ----------- Total Liabilities ..................................................................... 1,379,875 959,755 ----------- ----------- Commitments and other comments (Notes 9, 10, and 13) .................................. -- -- Minority interests' in consolidated partnerships ...................................... 93,086 52,173 ----------- ----------- PARTNERS' CAPITAL (Note 7) Preferred Capital, 15,234,518 and 9,234,518 units outstanding, respectively ........... 413,126 263,126 General Partner's Capital: Common Units, 40,375,506 and 40,035,419 units outstanding, respectively .............. 477,172 485,341 Class B Common Units, 10,283,763 and 0 units outstanding, respectively ............... 270,689 -- Limited Partners' Capital, 7,701,142 and 7,764,630 units outstanding, respectively 90,986 94,125 ----------- ----------- Total Partners' Capital ............................................................... 1,251,973 842,592 ----------- ----------- Total Liabilities and Partners' Capital ............................................... $ 2,724,934 $ 1,854,520 =========== ===========
(see accompanying notes to financial statements) IV-6 RECKSON OPERATING PARTNERSHIP, L. P. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT UNIT DATA)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------- 1999 1998 1997 -------------- -------------- -------------- REVENUES (Note 10): Base rents ........................................................ $ 324,146 $ 224,703 $ 128,778 Tenant escalations and reimbursements ............................. 44,989 27,744 14,981 Equity in earnings of service companies and real estate joint ventures ......................................................... 2,148 1,836 514 Interest income on mortgage notes and notes receivable ............ 7,944 7,739 5,437 Gain on sales of real estate (Note 6) ............................. 10,052 -- 672 Investment and other income ....................................... 13,863 4,290 2,966 ----------- ----------- ----------- Total Revenues .................................................... 403,142 266,312 153,348 ----------- ----------- ----------- EXPENSES: Property operating expenses ....................................... 125,994 84,280 50,316 Marketing, general and administrative ............................. 22,269 15,971 8,501 Interest .......................................................... 74,709 47,795 21,585 Depreciation and amortization ..................................... 74,504 52,957 27,237 ----------- ----------- ----------- Total Expenses .................................................... 297,476 201,003 107,639 ----------- ----------- ----------- Income before distributions to preferred unit holders, minority interests and extraordinary loss ................................. 105,666 65,309 45,709 Preferred unit distributions ...................................... (27,001) (14,244) -- Minority partners' interest in consolidated partnerships .......... (6,802) (2,819) (920) ----------- ----------- ----------- Income before extraordinary loss .................................. 71,863 48,246 44,789 Extraordinary loss on extinguishment of debts (Note 3) ............ (629) (1,993) (2,808) ----------- ----------- ----------- NET INCOME AVAILABLE TO COMMON UNIT HOLDERS ....................... $ 71,234 $ 46,253 $ 41,981 =========== =========== =========== Net income available to: General Partner -- common units .................................. $ 48,791 $ 38,667 $ 34,742 General Partner -- Class B Common Units .......................... 13,110 -- -- Limited Partners' ................................................ 9,333 7,586 7,239 ----------- ----------- ----------- Total ............................................................. $ 71,234 $ 46,253 $ 41,981 =========== =========== =========== Net income per weighted average units: General Partner -- per common unit before extraordinary loss. $ 1.22 $ 1.02 $ 1.13 Extraordinary loss per general partnership common unit ........... (.01) (.04) (.07) ----------- ----------- ----------- Net income per weighted average general partnership common unit ........................................................... $ 1.21 $ .98 $ 1.06 =========== =========== =========== General Partner -- per Class B Common Unit before extraordinary loss ............................................. $ 1.96 $ -- $ -- Extraordinary loss per Class B general partnership unit .......... (.02) -- -- ----------- ----------- ----------- Net income per weighted average Class B general partnership unit ........................................................... $ 1.94 $ -- $ -- =========== =========== =========== Limited Partners' -- per common unit before extraordinary loss ........................................................... $ 1.22 $ 1.02 $ 1.11 Extraordinary loss per limited partnership unit .................. (.01) (.04) (.08) ----------- ----------- ----------- Net income per weighted average limited partnership unit ......... $ 1.21 $ .98 $ 1.03 =========== =========== =========== Weighted average common units outstanding: General Partner -- common units .................................. 40,270,000 39,473,000 32,727,000 General Partner -- Class B Common Units .......................... 6,744,000 -- -- Limited Partners' ................................................ 7,705,000 7,728,000 7,016,000
(see accompanying notes to financial statements) IV-7 RECKSON OPERATING PARTNERSHIP, L. P. CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (IN THOUSANDS)
GENERAL PARTNER'S CAPITAL ----------------------------- PREFERRED CLASS B LIMITED PARTNERS' TOTAL CAPITAL COMMON UNITS COMMON UNITS CAPITAL PARTNERS' CAPITAL ----------- -------------- -------------- ------------------- ------------------ BALANCE JANUARY 1, 1997 ................. $ -- $ -- $ 184,798 $ 51,879 $ 236,677 Net Income .............................. -- -- 34,742 7,239 41,981 Contributions ........................... -- -- 267,827 35,339 303,166 Distributions ........................... -- -- (40,665) (8,707) (49,372) --------- --------- --------- --------- ----------- BALANCE DECEMBER 31, 1997 ............... -- -- 446,702 85,750 532,452 Net Income .............................. -- -- 38,667 7,586 46,253 Contributions ........................... 263,126 -- 54,089 11,484 328,699 Distributions ........................... -- -- (55,193) (10,695) (65,888) Contribution of a 1% interest in Reckson FS Limited Partnership ......... -- -- 1,076 -- 1,076 --------- --------- --------- --------- ----------- BALANCE DECEMBER 31, 1998 263,126 -- 485,341 94,125 842,592 Net Income .............................. -- 13,110 48,791 9,333 71,234 Contributions ........................... 150,000 302,653 1,601 -- 454,254 Distributions ........................... -- (14,787) (58,561) (10,987) (84,335) Retirement of units ..................... -- (30,287) -- (1,485) (31,772) --------- --------- --------- --------- ----------- BALANCE DECEMBER 31, 1999 ............... $ 413,126 $ 270,689 $ 477,172 $ 90,986 $ 1,251,973 ========= ========= ========= ========= ===========
(see accompanying notes to financial statements) IV-8 RECKSON OPERATING PARTNERSHIP, L. P. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------ 1999 1998 1997 ------------- -------------- ------------- Net Income available to common unitholders .................................. $ 71,234 $ 46,253 $ 41,981 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ............................................... 74,504 52,957 27,237 Extraordinary loss on extinguishment of debts ............................... 629 1,993 2,808 Minority partners' interests in consolidated partnerships ................... 6,802 2,819 920 Gain on sale of interest in Reckson Executive Centers, LLC .................. -- (9) -- Gain on sales of real estate, securities and mortgage repayment ............. (9,657) (43) (672) Distribution from investments in real estate joint ventures ................. 442 470 408 Equity in earnings of service companies and real estate joint ventures ...... (2,148) (1,836) (514) Changes in operating assets and liabilities: increase (decrease) Prepaid expenses and other assets ........................................... (23,600) (7,199) (1,931) Tenant and affiliate receivables ............................................ 42 (184) (1,183) Deferred rents receivable ................................................... (2,158) (7,553) (4,500) Accrued expenses and other liabilities ...................................... 39,619 30,849 11,240 ---------- ----------- ---------- Net cash provided by operating activities ................................... 155,709 118,517 75,794 ---------- ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of commercial real estate properties .............................. (284,741) (449,241) (429,379) Interest receivables ........................................................ (692) 2,602 (2,392) Investment in mortgage notes and notes receivable ........................... (295,048) 4,072 (50,282) Contract deposits and preacquisition costs .................................. (12,650) 8,839 (1,303) Additions to developments in progress ....................................... (9,615) (97,570) (40,367) Additions to commercial real estate properties .............................. (28,135) (21,181) (12,038) Payment of leasing costs .................................................... (16,467) (8,802) (5,417) Investments in securities ................................................... -- (42,299) (1,756) Additions to furniture, fixtures and equipment .............................. (461) (2,071) (1,159) Investments in real estate joint ventures ................................... (15,033) (7,773) (1,734) Investment in and distributions from service companies ...................... -- 15 (4,241) Proceeds from sales of real estate, securities and mortgage repayment ....... 269,916 809 725 ---------- ----------- ---------- Net cash (used in) investing activities ..................................... (392,926) (612,600) (549,343) ---------- ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from secured borrowings ............................................ 125,548 -- -- Principal payments on secured borrowings .................................... (4,714) (4,735) (1,624) Proceeds from issuance of senior unsecured notes, net of issuance costs ..... 299,262 -- 150,000 Proceeds from mortgage refinancing's, net of refinancing costs .............. -- 11,458 20,134 Payment of loan costs and prepayment penalties .............................. (8,264) (4,738) (4,983) Investments in and advances to affiliates ................................... (126,249) (24,409) (20,182) Proceeds from unsecured credit facilities and term loans .................... 397,500 413,100 421,000 Principal payments on unsecured credit facilities ........................... (510,750) (137,500) (319,250) Contributions ............................................................... 149,512 272,734 299,991 Distributions ............................................................... (102,761) (57,683) (53,327) Retirement of units ......................................................... (31,772) -- -- Contributions by minority partners' in consolidated partnerships ............ 75,500 10,000 -- Distributions to minority partners' in consolidated partnerships ............ (6,701) (3,592) (8,855) ---------- ----------- ---------- Net cash provided by financing activities ................................... 256,111 474,635 482,904 ---------- ----------- ---------- Net increase (decrease) in cash and cash equivalents ........................ 18,894 (19,448) 9,355 Cash and cash equivalents at beginning of period ............................ 2,228 21,676 12,321 ---------- ----------- ---------- Cash and cash equivalents at end of period .................................. $ 21,122 $ 2,228 $ 21,676 ========== =========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest .................................... $ 77,014 $ 52,622 $ 20,246 ========== =========== ==========
(see accompanying notes to financial statements) IV-9 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Reckson Operating Partnership, L. P. (the "Operating Partnership") is engaged in the ownership, management, operation, leasing and development of commercial real estate properties, principally office and industrial buildings and also own certain undeveloped land (collectively, the "Properties") located in the New York tri-state area (the "Tri-State Area"). ORGANIZATION AND FORMATION OF THE OPERATING PARTNERSHIP The Operating Partnership commenced operations on June 2, 1995. The sole general partner in the Operating Partnership, Reckson Associates Realty Corp. (the "Company") is a self administered and self managed real estate investment trust ("REIT"). During June, 1995, the Company contributed approximately $162 million in cash to the Operating Partnership in exchange for an approximate 73% general partnership interest. The Operating Partnership executed various option and purchase agreements whereby it issued units in the Operating Partnership ("Units") to the continuing investors and assumed certain indebtedness in exchange for interests in certain property partnerships, fee simple and leasehold interests in properties and development land, certain business assets of the executive center entities and 100% of the non-voting preferred stock of the management and construction companies. During 1997, the Company formed Reckson Service Industries, Inc. currently D/B/A FrontLine Capital Group ("FrontLine") and Reckson Strategic Venture Partners, LLC ("RSVP"). On June 11, 1998, the Operating Partnership distributed its 95% common stock interest in FrontLine of approximately $3 million to its owners, including the Company which, in turn, distributed the common stock of FrontLine received from the Operating Partnership to its stockholders. Additionally, during June 1998, the Operating Partnership established a credit facility with FrontLine (the "FrontLine Facility") in the amount of $100 million for FrontLine's e-commerce and e-services operations and other general corporate purposes. As of December 31, 1999, the Company had advanced $79.5 million under the FrontLine Facility. In addition, the Operating Partnership has approved the funding of investments of up to $100 million with or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint venture REIT-qualified investments or advances made to FrontLine under terms similar to the FrontLine Facility. As of December 31, 1999, approximately $67.2 million had been invested through the RSVP Commitment, of which $24.8 million represents RSVP-controlled joint venture REIT-qualified investments and $42.4 million represents advances to FrontLine under the RSVP Commitment. During November 1999, the Board of Directors of FrontLine and the Operating Partnership approved an amendment to the FrontLine Facility and the RSVP Commitment to permit FrontLine to incur secured debt and to pay interest thereon. In consideration of the amendments, FrontLine has paid the Operating Partnership a fee of approximately $3.6 million in the form of shares of FrontLine common stock. Such fee is being recognized in income over an estimated nine month benefit period. FrontLine identifies, acquires interests in and develops a network of business to business e-commerce and e-services companies that service small to medium sized enterprises, independent professionals and entrepreneurs and the mobile workforce of larger companies. FrontLine serves as the managing member of RSVP. RSVP was formed to provide the Operating Partnership with a research and development vehicle to invest in alternative real estate sectors. RSVP invests primarily in real estate and real estate related operating companies generally outside of the Operating Partnership's core office and industrial focus. RSVP's strategy is to identify and acquire interests in established entrepreneurial enterprises with experienced management teams in market sectors which are in the early stages of their growth cycle or offer unique circumstances for attractive investments as well as a platform for future growth. IV-10 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS On January 6, 1998, the Operating Partnership made its initial investment in the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse facilities. In connection with the transaction the Morris Companies contributed 100% of their interests in certain industrial properties to Reckson Morris Operating Partnership, L. P. ("RMI") in exchange for operating partnership units in RMI. On September 27, 1999, the Operating Partnership sold its interest in RMI to Keystone Property Trust ("KTR") (formerly American Real Estate Investment Corporation) (see Note 6). During July 1998, the Company formed Metropolitan Partners, LLC ("Metropolitan") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower"). On May 24, 1999 the Company completed the merger with Tower and acquired three Class A office properties located in New York City totaling 1.6 million square feet and one office property located on Long Island totaling approximately 101,000 square feet. In addition, pursuant to the merger, the Company also acquired certain office properties, a property under development and land located outside of the Tri-State Area. All of the assets acquired in the merger, located outside the Tri-State Area, other than a 357,000 square foot office property located in Orlando, Florida, have been sold (see note 6). BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements include the consolidated financial position of the Operating Partnership and its subsidiaries as at December 31, 1999 and 1998 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999. The Operating Partnership's investments in Metropolitan and Omni Partners, L. P. ("Omni"), are reflected in the accompanying financial statements on a consolidated basis with a reduction for minority partners' interest. The Operating Partnership's investment in RMI was reflected in the accompanying financial statements on a consolidated basis with a reduction for minority partners interest through September 26, 1999. On September 27, 1999, the Operating Partnership sold its interest in RMI to KTR (see note 6). The operating results of the service businesses currently conducted by Reckson Management Group, Inc., ("RMG"), and Reckson Construction Group, Inc., ("RCG") are reflected in the accompanying financial statements on the equity method of accounting. The operating results of Reckson Executive Centers, L.L.C., ("REC"), a service business of the Operating Partnership were reflected in the accompanying financial statements on the equity method of accounting through March 31, 1998. On April 1, 1998, the Operating Partnership sold its 9.9% interest in REC to FrontLine. Additionally, the operating results of FrontLine were reflected in the accompanying financial statements on the equity method of accounting through June 10, 1998. On June 11, 1998 the Operating Partnership distributed its 95% common stock interest in FrontLine to its owners, including the Company which, in turn, distributed the common stock of FrontLine to its stockholders. The Operating Partnership also invests in real estate joint ventures where it may own less than a controlling interest, such investments are also reflected in the accompanying financial statements on the equity method of accounting. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. The minority interests at December 31, 1999 represents an approximate 28% interest in certain industrial joint venture properties formerly owned by RMI, a convertible preferred interest in Metropolitan and a 40% interest in Omni. The minority interests at December 31, 1998 represents an approximately 28% interest in RMI, a convertible preferred interest in Metropolitan and a 40% interest in Omni. The merger with Tower (see note 6) was accounted for as a purchase in accordance with Accounting Principles Board Opinion No. 16. Accordingly, the fair value of the consideration given by the Operating Partnership, in accordance with generally accepted accounting principles ("GAAP"), was used as the valuation basis for the merger. The assets acquired and liabilities assumed by the Operating Partnership IV-11 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) were recorded at the fair value as of the closing date of the merger and the excess of the purchase price over the historical basis of the net assets acquired was allocated primarily to operating real estate properties and real estate properties which have been sold. Comprehensive Income During 1997 the Financial Accounting Standards Board ("FASB") issued statement No. 130, "Reporting Comprehensive Income" ("SFAS 130") which is effective for fiscal years beginning after December 15, 1997. SFAS 130 established standards for reporting comprehensive income and its components in a full set of general-purpose financial statements. SFAS 130 requires that all components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The adoption of this standard had no impact on the Operating Partnership's financial position or results of operations. Segment Reporting In 1997, the FASB issued Statement No. 131 "Disclosures about segments of an Enterprise and Related Information" ("Statement 131") which is effective for fiscal years beginning after December 15, 1997. Statement 131 establishes standards for reporting information about operating segments in annual financial statements and in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. The adoption of this standard had no impact on the Operating Partnership's financial position or results of operations but did affect the disclosure of segment information. (See Note 11). Recent Pronouncements In June 1999, the Financial Accounting Standards Board issued Statement No. 137, amending Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities", which extended the required date of adoption to the years beginning after June 15, 2000. The Statement permits early adoption as of the beginning of any fiscal quarter after its issuance. The Operating Partnership expects to adopt the new Statement effective January 1, 2001. The Operating Partnership does not anticipate that the adoption of this Statement will have any effect on its results of operations or financial position. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Real Estate Depreciation is computed utilizing the straight-line method over the estimated useful lives of ten to thirty years for buildings and improvements and five to ten years for furniture, fixtures and equipment. Tenant improvements, which are included in buildings and improvements, are amortized on a straight-line basis over the term of the related leases. Cash Equivalents The Operating Partnership considers highly liquid investments with a maturity of three months or less when purchased, to be cash equivalents. Deferred Costs Tenant leasing commissions and related costs incurred in connection with leasing tenant space are capitalized and amortized over the life of the related lease. In addition, loan costs incurred are capitalized and amortized over the term of the related loan. IV-12 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Income Taxes No provision has been made for income taxes in the accompanying consolidated financial statements since such taxes, if any, are the responsibility of the individual partners. Revenue Recognition Minimum rental income is recognized on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due are included in deferred rents receivable on the accompanying balance sheets. Contractually due but unpaid rents are included in tenant receivables on the accompanying balance sheets. Certain lease agreements provide for reimbursement of real estate taxes, insurance, common area maintenance costs and indexed rental increases, which are recorded on an accrual basis. The Operating Partnership records interest income on investments in mortgage notes and notes receivable on an accrual basis of accounting. The Operating Partnership does not accrue interest on impaired loans where, in the judgment of management, collection of interest according to the contractual terms is considered doubtful. Among the factors the Operating Partnership considers in making an evaluation of the collectibility of interest are: the status of the loan, the value of the underlying collateral, the financial condition of the borrower and anticipated future events. Loan discounts are amortized over the life of the real estate using the constant interest method. Gains from sales of real estate are recorded when title is conveyed to the buyer, subject to the buyer's financial commitment being sufficient to provide economic substance to the sale. Net Income Per Common Partnership Unit Net income per common partnership unit and Class B Common partnership unit is determined by allocating net income after preferred distributions and minority partners' interest in consolidated partnerships income to the general and limited partners' based on their weighted average distribution per common partnership units outstanding during the respective periods presented. Distributions to Preferred Unit Holders Holders of preferred units of limited and general partnership interest are entitled to distributions based on the stated rates of return (subject to adjustment) for those units. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. 2. MORTGAGE NOTES PAYABLE At December 31, 1999, there were 17 mortgage notes payable with an aggregate outstanding principal amount of approximately $459.2 million. Properties with an aggregate carrying value at December 31, 1999 of approximately $808 million are pledged as collateral against the mortgage notes payable. In addition, $47.8 million of the $459.2 million are recourse to the Operating Partnership. The mortgage notes bear interest at rates ranging from 6.45% to 9.25%, and mature between 2000 and 2027. The weighted average interest rates on the outstanding mortgage notes payable at December 31, 1999, 1998 and 1997 were 7.6%, 7.8% and 7.7%, respectively. Certain of the mortgage notes payable are guaranteed by certain minority partners in the Operating Partnership. IV-13 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 2. MORTGAGE NOTES PAYABLE - (CONTINUED) Scheduled principal repayments during the next five years and thereafter are as follows (in thousands):
YEAR ENDED DECEMBER 31, -------------------------------- 2000 ......................... $ 35,145 2001 ......................... 22,751 2002 ......................... 16,499 2003 ......................... 8,350 2004 ......................... 11,769 Thereafter ................... 364,660 --------- $ 459,174 =========
3. UNSECURED CREDIT FACILITIES AND UNSECURED TERM LOAN As of December 31, 1999, the Operating Partnership had a three year $500 million unsecured revolving credit facility (the "Credit Facility") from Chase Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the Credit Facility bank group. Interest rates on borrowings under the Credit Facility are priced off of LIBOR plus a sliding scale ranging from 65 basis points to 90 basis points based on the Operating Partnership's investment grade rating on its senior unsecured debt. On March 16, 1999, the Operating Partnership received its investment grade rating on its senior unsecured debt. As a result, the pricing under the Credit Facility was adjusted to LIBOR plus 90 basis points. The Operating Partnership utilizes the Credit Facility primarily to finance the acquisitions of properties and other real estate investments, fund its development activities and for working capital purposes. At December 31, 1999, the Operating Partnership had availability under the Credit Facility to borrow an additional $150.1 million (net of $52.3 million of outstanding undrawn letters of credit). As of December 31 1999, the Operating Partnership had outstanding an 18 month, $75 million unsecured term loan (the "Term Loan") from Chase Manhattan Bank. Interest rates on borrowings under the Term Loan are priced off of LIBOR plus 150 basis points. The Term Loan replaced the Operating Partnership's previous term loan which matured on December 17, 1999. On May 24, 1999, in conjunction with the acquisition of Tower (see Note 6), the Operating Partnership obtained a $130 million unsecured bridge facility (The "Bridge Facility") from UBS AG. Interest rates on borrowings under the Bridge Facility were priced off of LIBOR plus approximately 214 basis points. On July 23, 1999, the Bridge Facility was repaid through a long term fixed rate secured borrowing and an advance under the Credit Facility. As a result, certain deferred loan costs incurred in connection with the Bridge Facility were written off. Such amount is reflected as an extraordinary loss in the accompanying consolidated statements of income. The Operating Partnership capitalized interest incurred on borrowings to fund certain development costs in the amount of $9.8 million, $7.3 million and $2.4 million for the years ended December 31, 1999, 1998 and 1997, respectively. 4. SENIOR UNSECURED NOTES As of December 31, 1999, the Operating Partnership had outstanding approximately $449.3 million (net of issuance discounts) of senior unsecured notes (the "Senior Unsecured Notes"). IV-14 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table sets forth the Operating Partnership's Senior Unsecured Notes and other related disclosures (dollars in thousands):
FACE COUPON ISSUANCE AMOUNT RATE TERM MATURITY - ------------------------------- ------------ ---------- ---------- ---------------- August 27, 1997 ......... $ 150,000 7.20% 10 years August 28, 2007 March 26, 1999 .......... $ 100,000 7.40% 5 years March 15, 2004 March 26, 1999 .......... $ 200,000 7.75% 10 years March 15, 2009
Interest on the Senior Unsecured Notes is payable semiannually with principal and unpaid interest due on the scheduled maturity dates. In addition, the Senior Unsecured Notes issued on March 26, 1999 were issued at an aggregate discount of $738,000. Net proceeds of approximately $297.4 million received from the issuance of the March 26, 1999 Senior Unsecured Notes were used to repay outstanding borrowings under the Operating Partnership's Credit Facility. 5. LAND LEASES The Operating Partnership leases, pursuant to noncancellable operating leases, the land on which ten of its buildings were constructed. The leases, which contain renewal options, expire between 2018 and 2080. The leases either contain provisions for scheduled increases in the minimum rent at specified intervals or for adjustments to rent based upon the fair market value of the underlying land or other indexes at specified intervals. Minimum ground rent is recognized on a straight-line basis over the terms of the leases. The excess of amounts recognized over amounts contractually due is approximately $2.6 million and $2.3 million at December 31, 1999 and 1998, respectively. These amounts are included in accrued expenses and other liabilities on the accompanying balance sheets. Future minimum lease commitments relating to the land leases during the next five years and thereafter are as follows (in thousands):
YEAR ENDED DECEMBER 31, -------------------------------- 2000 ......................... $ 1,833 2001 ......................... 1,850 2002 ......................... 1,869 2003 ......................... 1,818 2004 ......................... 1,942 Thereafter ................... 48,232 -------- $ 57,544 ========
6. COMMERCIAL REAL ESTATE INVESTMENTS The Tower Merger In July 1998, the Company formed a joint venture, Metropolitan Partners LLC, a Delaware limited liability company ("Metropolitan"), with Crescent Real Estate Equities Company, a Texas real estate investment trust ("Crescent"). On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc. ("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the "Merger") into Metropolitan, with Metropolitan surviving the Merger. Concurrently with the Merger, Tower Realty Operating IV-15 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED) Partnership, L.P. ("Tower OP") was merged with and into a subsidiary of Metropolitan. The consideration issued in the mergers was comprised of (i) 25% cash (approximately $107.2 million) and (ii) 75% of shares of Class B Exchangeable Common Stock, par value $.01 per share, of the Company (the "Class B Common Stock") (valued for GAAP purposes at approximately $304.1 million). Under the terms of the transaction, Metropolitan effectively paid for each share of Tower common stock and each unit of limited partnership interest of Tower OP the sum of (i) $5.75 in cash, and (ii) 0.6273 of a share of Class B Common Stock. The shares of Class B Common Stock are entitled to receive an initial annual dividend of $2.24 per share, which dividend is subject to adjustment annually commencing on July 1, 2000. The shares of Class B Common Stock are exchangeable at any time, at the option of the holder, into an equal number of shares of common stock, par value $.01 per share, of the Company subject to customary antidilution adjustments. The Company, at its option, may redeem any or all of the Class B Common Stock in exchange for an equal number of shares of the Company's common stock at any time following the four year, six-month anniversary of the issuance of the Class B Common Stock. The Board of Directors of the Company has authorized a purchase buy back program for the Company's Class B Common Stock (see note 7). The Company controls Metropolitan and owns 100% of the common equity; Crescent owns a $85 million preferred equity interest in Metropolitan. Crescent's interest accrues distributions at a rate of 7.5% per annum for a two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by Metropolitan at any time during that period for $85 million, plus an amount sufficient to provide a 9.5% internal rate of return. If Metropolitan does not redeem the preferred interest, upon the expiration of the two-year period, Crescent must convert its $85 million preferred interest into either (i) a common membership interest in Metropolitan or (ii) shares of the Company's common stock at a conversion price of $24.61 per share. The Tower portfolio acquired in the Merger consists of three office properties comprising approximately 1.6 million square feet located in New York City, one office property located on Long Island and certain office properties and other real estate assets located outside the Tri-State Area. Prior to the closing of the Merger, the Company arranged for the sale of four of Tower's Class B New York City properties, comprising approximately 701,000 square feet for approximately $84.5 million. Subsequent to the closing of the Merger, the Company has sold a real estate joint venture interest and all of the property located outside the Tri-State Area other than one office property located in Orlando, Florida for approximately $171.1 million. The combined consideration consisted of approximately $143.8 million in cash and approximately $27.3 million of debt relief. Net cash proceeds from the sales were used primarily to repay borrowings under the Credit Facility. As a result of incurring certain sales and closing costs in connection with the sale of the assets located outside the Tri-State Area, the Company has incurred a loss of approximately $4.4 million which has been included in gain on sales of real estate on the accompanying consolidated statements of income. "Big Box" Industrial Investment Activity On January 6, 1998, the Operating Partnership made an initial investment in the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse facilities. In connection with the transaction the Morris Companies contributed 100% of their interests in certain industrial properties to RMI in exchange for operating partnership units in RMI. During 1999, the Operating Partnership purchased approximately 68.1 acres of vacant land in Northern New Jersey for approximately $2.6 million. In addition, RMI purchased 74.6 acres of vacant land for approximately $3.7 million and a 846,000 square foot industrial property located in Cranbury, New Jersey for approximately $34 million. These assets were sold to KTR and the Matrix Development Group ("Matrix") as discussed below. IV-16 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS On August 9, 1999, the Operating Partnership executed a contract for the sale, which will take place in three stages, of its interest in RMI which consisted of 28 properties, comprising approximately 6.1 million square feet and three other big box industrial properties to KTR. In addition, the Operating Partnership also entered into a sale agreement with Matrix relating to a first mortgage note and certain industrial land holdings (the "Matrix Sale"). The combined total sale price is $310 million (approximately $42 million of which is payable to the Morris Companies and its affiliates) and consists of a combination of (i) cash, (ii) convertible preferred and common stock of KTR, (iii) preferred units of KTR's operating partnership, (iv) relief of debt and (v) a purchase money mortgage note secured by certain land that is being sold to Matrix. During September 1999, the Matrix Sale and the first stage of the RMI closing occurred whereby the Operating Partnership sold its interest in RMI to KTR for a combined sales price of approximately $164.7 million (net of minority partner's interest). The combined consideration consisted of approximately (i) $86.3 million in cash, (ii) $40 million of preferred stock of KTR, (iii) $1.5 million in common stock of KTR, (iv) approximately $26.7 million of debt relief and (v) approximately $10.2 million in purchase money mortgages. As a result, the Operating Partnership incurred a gain of approximately $10.1 million which has been included in gain on sales of real estate on the accompanying consolidated statements of income. In addition, the $41.5 million of common and preferred stock of KTR has been included in prepaid expenses and other assets on the accompanying consolidated balance sheet. Cash proceeds from the sales were used primarily to repay borrowings under the Credit Facility. The second and third stages of the RMI closing are scheduled to be completed in April 2000. The remaining stages consist of six industrial buildings and are being sold for total consideration of approximately $98 million. Other Real Estate Investment Activities During 1998, the Operating Partnership acquired three office properties encompassing approximately 674,000 square feet, two industrial properties encompassing approximately 200,000 square feet and approximately 79.9 acres of vacant land which allows for approximately 816,000 square feet of future development opportunities on Long Island for an aggregate purchase price of approximately $82.8 million. During 1998, the Operating Partnership acquired four office properties encompassing approximately 522,000 square feet, six industrial properties encompassing approximately 985,000 square feet and approximately 112.2 acres of vacant land which allows for approximately 815,000 square feet of future development opportunities in New Jersey for an aggregate purchase price of approximately $138.1 million. During 1998, the Operating Partnership acquired Stamford Towers located in Stamford, Connecticut for approximately $61.3 million. Stamford Towers is a Class A office complex consisting of two eleven story towers totaling approximately 325,000 square feet. During 1998, the Operating Partnership acquired a portfolio of six office properties encompassing approximately 980,000 square feet in Westchester County, New York from Cappelli Enterprises and affiliated entities ("Cappelli") for a purchase price of approximately $173 million. The Cappelli acquisition includes a five building, 850,000 square foot Class A office park in Valhalla and Court House Square, a 130,000 square foot Class A office building located in White Plains. The Operating Partnership also obtained from Cappelli the remaining 50% interest in 360 Hamilton Avenue, a 365,000 square foot vacant office tower in downtown White Plains for $10 million plus the return of his capital contributions of approximately $1.5 million. In addition, the Operating Partnership received an option from Cappelli to acquire the remaining development parcels within the Valhalla office park on which up to 875,000 IV-17 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED) square feet of office space can be developed. These acquisitions were financed in part through proceeds from a draw under the credit facilities, the issuance of 42,518 (approximately $42.5 million) preferred operating partnership units (the "Cappelli Preferred Units"), and the assumption of approximately $47.1 million of mortgage debt. Additionally, as of December 31, 1999, the Operating Partnership issued and advanced to Cappelli $36.5 million under three liquidity loans (the "Cappelli Liquidity Loans"). The Cappelli Liquidity Loans bear interest at rates ranging from 10% to 10.5% per annum and are secured by Cappelli's right, title and interest in the Cappelli Preferred Units. Such amounts have been included in investments in mortgage notes and notes receivable on the accompanying balance sheet. On April 13, 1999, the Operating Partnership received approximately $25.8 million from the redemption of a mortgage note receivable which secured three office properties located in Garden City, Long Island, encompassing approximately 400,000 square feet. As a result, the Operating Partnership recognized a gain of approximately $4.3 million. Such gain has been included in gain on sales of real estate on the accompanying consolidated statements of income. On June 7, 1999, the Operating Partnership sold a 24,000 square foot office property located in Ossining, New York for approximately $1.5 million. As partial consideration for the sale, the Operating Partnership obtained a $1.2 million, three year purchase money mortgage. On June 15, 1999, the Operating Partnership acquired the first mortgage note secured by a 47 story, 1.4 million square foot Class A office property located at 919 Third Avenue in New York City for approximately $277.5 million. The first mortgage note entitles the Operating Partnership to all the net cash flow of the property and to substantial rights regarding the operations of the property, with the Operating Partnership anticipating to ultimately obtain title to the property. This acquisition was financed with proceeds from the issuance of six million Series B preferred units of general partnership interest (see note 7) and through an advance under the Credit Facility. Current financial accounting guidelines provide that where a lender has virtually the same risks and potential rewards as those of a real estate owner it should recognize the full economics associated with the operations of the property. As such, the Operating Partnership has recognized the real estate operations of the 919 Third Avenue in the accompanying consolidated statement of income for the period from the date of acquisition. In addition, as of December 31, 1999, the Operating Partnership has invested approximately $15.7 million in certain mortgage indebtedness encumbering one Class A office property encompassing approximately 177,000 square feet and approximately 472 acres of land located in New Jersey. The Operating Partnership has also loaned approximately $17 million to its minority partner in Omni, its 575,000 square foot flagship Long Island office property, and effectively increased its economic interest in the property owning partnership. 7. PARTNERS' CAPITAL On April 21, 1998, the Operating Partnership issued 25,000 Series B preferred units of limited partnership interest at a stated value of $1,000 per unit and 11,518 Series C preferred units of limited partnership interest at a stated valued of $1,000 per unit in connection with the acquisition of the Cappelli portfolio. The Series B preferred units have a current distribution rate of 6.25% and are convertible to common units at a conversion price of approximately $32.51 for each preferred unit. The Series C preferred units have a current distribution rate of 6.25% and are convertible to common units at a conversion price of approximately $29.39 for each preferred unit. During the year ended December 31, 1998, the Operating Partnership issued 2,265,261 units of general partnership interest to the Company in exchange for approximately $53 million. The proceeds were used to repay borrowings under the credit facilities. IV-18 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Additionally, the Operating Partnership issued 9,200,000 Series A preferred units of general partnership interest to the Company in exchange for approximately $221 million. The Series A preferred units have a liquidation preference of $25 per unit, a distribution rate of 7.625% and are convertible to common units at a conversion rate of .8769 common units for each preferred unit. As of December 31, 1999, 8,000 Series A preferred units were converted to common units. On July 2, 1998, the Operating Partnership issued 6,000 Series D preferred units of limited partnership interest at a stated value of $1,000 per unit in connection wit the acquisition of the remaining 50% interest in 360 Hamilton Avenue located in White Plains, New York. The Series D preferred units have a current distribution rate of 6.25% and are convertible to common units at a conversion price of approximately $29.12 for each preferred unit. On May 24, 1999, in conjunction with the Tower acquisition, the Operating Partnership issued 11,694,567 Class B Common Units of general partnership interest to the Company which were valued for GAAP purposes at $26 per unit for total consideration of approximately $304.1 million. The Class B Common Units are entitled to receive an initial annual distribution of $2.24 per unit which distribution is subject to adjustment annually. The Class B Common Units are exchangeable at any time, at the option of the holder, into an equal number of common units subject to customary antidilution adjustments. The Class B Common Units will be exchanged for an equal number of common units upon the exchange, if any, by the Company of common stock for Class B Common Stock at any time following the four year, six-month anniversary of the issuance of the Class B Common Stock. On June 2, 1999, in connection with the Company's issuance of Series B convertible preferred stock, the Operating Partnership issued six million Series E preferred units of general partnership interests to the Company in exchange for approximately $150 million. The Series E preferred units have a liquidation preference of $25 per unit, and an initial distribution rate of 7.85% per annum with such rate increasing to 8.35% per annum on April 30, 2000 and to 8.85% per annum from and after April 30, 2001. The Series E preferred units are convertible into common units at a price of $26.05 per unit and are redeemable by the Operating Partnership on or after March 2, 2002. Proceeds from the issuance of the Series E preferred units were used as partial consideration in the acquisition of the first mortgage note secured by 919 Third Avenue located in New York City. As of December 31, 1999, in conjunction with the Company's Class B Common Stock buy back program, the Operating Partnership purchased and retired 1,410,804 Class B Common Units for approximately $30.3 million. 8. RELATED PARTY TRANSACTIONS The Operating Partnership, through its subsidiaries and affiliates, provides management, leasing and other tenant related services to the Properties. Certain executive officers of the Company have continuing ownership interests in the unconsolidated service companies. The Operating Partnership in connection with its formation was granted a ten year option period to acquire ten properties which are either owned by the Reckson Group, the predecessor to the Company, or in which the Reckson Group owns a non-controlling minority interest. During 1998, one of these properties was sold by the Reckson Group to a third party. In addition, as of December 31, 1999, the Company has acquired four of these properties for a aggregate purchase price of approximately $35 million, which included the issuance of approximately 475,000 Units valued at approximately $8.8 million. The Operating Partnership and FrontLine have entered into an intercompany agreement (the "Reckson Intercompany Agreement") to formalize their relationship and to limit conflicts of interest. Under the Reckson Intercompany Agreement, FrontLine granted the Operating Partnership a right of first opportunity to make any REIT -qualified investment that becomes available to FrontLine. In IV-19 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 8. RELATED PARTY TRANSACTIONS - (CONTINUED) addition, if a REIT-qualified investment opportunity becomes available to an affiliate of FrontLine, including RSVP, the Reckson Intercompany Agreement requires such affiliate to allow the Operating Partnership to participate in such opportunity to the extent of FrontLine's interest. Under the Reckson Intercompany Agreement, the Operating Partnership granted FrontLine a right of first opportunity to provide commercial services to the Operating Partnership and its tenants. FrontLine will provide services to the Operating Partnership at rates and on terms as attractive as either the best available for comparable services in the market or those offered by FrontLine to third parties. In addition, the Operating Partnership will give FrontLine access to its tenants with respect to commercial services that may be provided to such tenants and, under the Reckson Intercompany Agreement, subject to certain conditions, the Operating Partnership granted FrontLine 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 the Company's status as a REIT, it is required to enter into a "master" lease agreement. On March 23, 1998, the Company sold approximately $5.9 million of common stock to FrontLine at the market closing price of $25 per share. The Operating Partnership loaned FrontLine the $5.9 million to execute this transaction. Such amount was repaid to the Operating Partnership by FrontLine during August 1998. On August 27, 1998 the Operating Partnership announced the formation of a joint venture with RSVP and the Dominion Group, an Oklahoma-based, privately-owned group of companies that focuses on the development, acquisition and ownership of government occupied office buildings and correctional facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"), is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating Partnership. The Dominion Venture is primarily engaged in acquiring, developing and/or owning government-occupied office buildings and privately operated correctional facilities. Under the Dominion Venture's operating agreement, RSVP is to invest up to $100 million, some of which may be invested by the Operating Partnership ( the "RSVP Capital"). The initial contribution of RSVP Capital was approximately $39 million of which approximately $10.1 million was invested by a subsidiary of the Operating Partnership. The Operating Partnership's investment was funded through the RSVP Commitment. In addition, the Operating Partnership advanced approximately $2.9 million to FrontLine through the RSVP Commitment for an investment in RSVP which was then invested on a joint venture basis with the Dominion Group in certain service business activities related to the real estate activities. As of December 31, 1999, the Dominion Venture had investments in 13 government office buildings and three correctional facilities. During 1998, the Operating Partnership made investments in and advances to RMG of approximately $29.5 million. Such investments and advances were used by RMG in connection with RMG's acquisition of an approximate 64% ownership interest in an executive office suite business. Concurrently with RMG's investment, FrontLine received an option to purchase RMG's interest at cost plus 8%. RMG is owned 97% by the Operating Partnership and 3% by an entity owned by certain officers of the Company. On November 9, 1998, FrontLine exercised its option and, as a result, RMG earned income during the period of ownership of approximately $707,000. In addition, FrontLine assumed the outstanding debt plus accrued interest owing to the Operating Partnership. During July 1999, the Operating Partnership sold its interest in a 852,000 square foot development property to RCG in exchange for a $12.3 million note. The note accrues interest annually at the rate of 12%, has a five year maturity and is prepayable in whole or in part. During October 1999, RCG made a payment to the Operating Partnership, in the form of 97 shares of its preferred stock, valued at approximately $4.0 million, towards accrued interest and principal due under the note. IV-20 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In 1999 the Operating Partnership invested approximately $7.2 million, through a subsidiary, in RAP Student Housing Properties, LLC ("RAP - SHP"), a company that engages primarily in the acquisition and development of off-campus student housing projects. The Operating Partnership's investment was funded through the RSVP Commitment. In addition, the Operating Partnership has advanced approximately $3.2 million to FrontLine through the RSVP Commitment for an additional investment in RSVP which was invested in certain service business activities related to student housing. As of December 31, 1999, RAP - SHP had investments in 4 off - campus student housing projects. 9. FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with FASB Statement No. 107, "Disclosures About Fair Value of Financial Instruments", management has made the following disclosures of estimated fair value at December 31, 1999 as required by FASB Statement No. 107. Cash equivalents and variable rate debt are carried at amounts which reasonably approximate their fair values. The fair value of the Operating Partnership's long term debt, mortgage notes and notes receivable is estimated based on discounting future cash flows at interest rates that management believes reflects the risks associated with long term debt, mortgage notes and notes receivable of similar risk and duration. In addition, management believes that the estimated aggregate fair value of these assets and liabilities approximates their carrying values. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. 10. RENTAL INCOME The Properties are being leased to tenants under operating leases. The minimum rental amount due under certain leases are generally either subject to scheduled fixed increases or indexed escalations. In addition, the leases generally also require that the tenants reimburse the Operating Partnership for increases in certain operating costs and real estate taxes above base year costs. Included in base rents and tenant escalations and reimbursements in the accompanying statements of operations are amounts from Reckson Executive Centers, LLC, a service business of the Operating Partnership through March 31, 1998 and, a related party as follows (in thousands):
TENANT ESCALATIONS AND FOR THE PERIODS BASE RENTS REIMBURSEMENTS - ------------------------------------------------- ------------ ---------------- January 1 through March 31, 1998 ......... $ 597 $ 149 Year ended December 31, 1997 ............. $ 2,154 $ 441
IV-21 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 10. RENTAL INCOME - (CONTINUED) Expected future minimum rents to be received over the next five years and thereafter from leases in effect at December 31, 1999 are as follows (in thousands): 2000 ......................... $ 312,654 2001 ......................... 295,862 2002 ......................... 293,714 2003 ......................... 257,655 2004 ......................... 230,477 Thereafter ................... 1,286,533 ---------- $2,676,895 ==========
11. SEGMENT DISCLOSURE The Operating Partnership's portfolio consists of Class A office properties located within the New York City metropolitan area and Class A suburban office and industrial properties located and operated within the Tri-State Area (the "Core Portfolio"). In addition the Operating Partnership's portfolio also includes one office property located in Orlando, Florida and for the period commencing January 6, 1998 and ending September 26, 1999, industrial properties which were owned by RMI. The Operating Partnership has managing directors who report directly to the Chief Operating Officer and Chief Financial Officer who have been identified as the Chief Operating Decision Makers because of their final authority over resource allocation decisions and performance assessment. In addition, as the Operating Partnership expects to meet its short term liquidity requirements in part through the Credit Facility and Term Loan, interest incurred on borrowings under the Credit Facility and Term Loan is not considered as part of property operating performance. Further, the Operating Partnership does not consider the property operating performance of the office property located in Orlando, Florida as a part of its Core Portfolio. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The following table sets forth the components of the Operating Partnership's revenues and expenses and other related disclosures for the years ended December 31, 1999 and 1998, respectively (in thousands):
YEAR ENDED ---------------------------------------------------------- DECEMBER 31, 1999 ---------------------------------------------------------- CONSOLIDATED CORE PORTFOLIO RMI OTHER TOTALS ---------------- ----------- -------------- -------------- REVENUES: Base rents, tenant escalations and reimbursements ............... $ 340,293 $ 15,394 $ 13,448 $ 369,135 Equity in earnings of real estate joint ventures and service companies ................ -- -- 2,148 2,148 Other income ...................... 448 9 31,402 31,859 ----------- -------- ---------- ----------- Total Revenues ..................... 340,741 15,403 46,998 403,142 ----------- -------- ---------- ----------- EXPENSES: Property expenses ................. 119,270 2,406 4,318 125,994 Marketing, general and administrative ................... 16,981 548 4,740 22,269 Interest .......................... 25,167 445 49,097 74,709 Depreciation and amortization. 64,097 3,663 6,744 74,504 ----------- -------- ---------- ----------- Total Expenses ..................... 225,515 7,062 64,899 297,476 ----------- -------- ---------- ----------- Income before distributions to preferred unitholders, minority interests and extraordinary loss ................ $ 115,226 $ 8,341 $ (17,901) $ 105,666 =========== ======== ========== =========== Total Assets ....................... $ 2,142,696 $ 0 $ 582,238 $ 2,724,934 =========== ======== ========== ===========
YEAR ENDED ------------------------------------------------------ DECEMBER 31, 1998 ------------------------------------------------------ CORE CONSOLIDATED PORTFOLIO RMI OTHER TOTALS ------------- ----------- -------------- ------------- REVENUES: Base rents, tenant escalations and reimbursements ............... $ 237,105 $ 15,137 $ 205 $ 252,447 Equity in earnings of real estate joint ventures and service companies ................ -- -- 1,836 1,836 Other income ...................... 460 -- 11,569 12,029 ---------- -------- ---------- ---------- Total Revenues ..................... 237,565 15,137 13,610 266,312 ---------- -------- ---------- ---------- EXPENSES: Property expenses ................. 80,489 2,587 1,204 84,280 Marketing, general and administrative ................... 11,699 456 3,816 15,971 Interest .......................... 16,651 1,101 30,043 47,795 Depreciation and amortization. 43,701 3,491 5,765 52,957 ---------- -------- ---------- ---------- Total Expenses ..................... 152,540 7,635 40,828 201,003 ---------- -------- ---------- ---------- Income before distributions to preferred unitholders, minority interests and extraordinary loss ................ $ 85,025 $ 7,502 $ (27,218) $ 65,309 ========== ======== ========== ========== Total Assets ....................... $1,424,472 $156,430 $ 273,618 $1,854,520 ========== ======== ========== ==========
IV-22 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 12. NON-CASH INVESTING AND FINANCING ACTIVITIES Additional supplemental disclosures of non-cash investing and financing activities are as follows: During 1998, the Operating Partnership issued 584,062 Units in connection with the acquisition of three office and two industrial properties encompassing approximately 580,000 square feet for a total non cash investment of approximately $13.7 million. In addition, in connection with the acquisitions of the Cappelli portfolio and 360 Hamilton Avenue located in White Plains, New York, the Operating Partnership assumed approximately $47.1 million of indebtedness and issued 42,518 preferred units with a stated value of approximately $42.5 million for a total non cash investment of approximately $89.6 million. On June 11, 1998, the Operating Partnership distributed its 95% common stock interest in FrontLine of approximately $3 million to its partners. During 1998, in connection with the Operating Partnership's investment in the Morris Companies, the Operating Partnership assumed approximately $23 million of indebtedness ($16.9 million net of minority partners interest). In addition, the Morris Companies contributed net assets of approximately $36 million to the Operating Partnership in exchange for an approximate 28.2% minority partners interest in RMI. On May 24, 1999, in conjunction with the Tower portfolio acquisition, the Operating Partnership issued 11,694,567 shares of Class B Common Units which were valued for GAAP purposes at approximately $304.1 million and assumed approximately $133.4 million of indebtedness for a total non cash investment of approximately $437.5 million. During June 1999, in connection with the sale of an office property, the Operating Partnership obtained a $1.2 million purchase money mortgage as partial consideration for the sale. During July 1999, the Operating Partnership sold its interest in a 852,000 square foot development property to RCG in exchange for a $12.3 million note. During October 1999, the Operating Partnership accepted 97 shares of preferred stock of RCG as payment of $4.0 million of principal and interest due under the note. During September 1999, in connection with the Matrix Sale and the first stage closing of RMI, the Operating Partnership received as partial consideration for the sale $41.5 million of common and preferred stock of KTR and approximately $10.2 million in purchase money mortgages from Matrix. In addition, the Operating Partnership was also relieved of approximately $26.7 million of secured indebtedness. During November 1999, the Operating Partnership received approximately $3.6 million of common stock of FrontLine as consideration for amending the FrontLine Facility and the RSVP Commitment. 13. COMMITMENTS AND OTHER COMMENTS The Operating Partnership had outstanding undrawn letters of credit against its Credit Facility of approximately $52.3 million and $26.1 million at December 31, 1999 and 1998, respectively. IV-23 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED ) 14. QUARTERLY FINANCIAL DATA (UNAUDITED) The following summary represents the Operating Partnership's results of operations for each quarter during 1999 and 1998 (in thousands, except unit data):
1999 ---------------------------------------------------------------------- FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER --------------- ---------------- --------------- --------------- Total revenues .............................. $ 76,107 $ 90,846 $ 125,731 $ 110,458 =========== =========== =========== =========== Income before distributions to preferred unit holders, minority interests and extraordinary loss ......................... $ 20,091 $ 20,728 $ 35,709 $ 29,138 Preferred unit distributions ................ (5,041) (5,989) (7,985) (7,986) Minority partners' interest in consolidated partnerships ............................... (1,168) (1,615) (2,150) (1,869) Extraordinary loss .......................... -- -- (629) -- ----------- ----------- ----------- ----------- Net income available to common unit holders. $ 13,882 $ 13,124 $ 24,945 $ 19,283 =========== =========== =========== =========== Net income available to: General Partner -- common units ............ $ 11,641 $ 9,550 $ 15,409 $ 12,191 General Partner -- Class B Common Units. -- 1,747 6,596 4,767 Limited Partners' .......................... 2,241 1,827 2,940 2,325 ----------- ----------- ----------- ----------- Total ....................................... $ 13,882 $ 13,124 $ 24,945 $ 19,283 =========== =========== =========== =========== Net income per common unit: General Partner -- common units ............ $ .29 $ .24 $ .38 $ .30 General Partner -- Class B Common Units. $ -- $ .36 $ .58 $ .46 Limited Partners' .......................... $ .29 $ .24 $ .38 $ .30 Weighted average common units outstanding: General Partner -- common units ............ 40,049,000 40,285,000 40,367,000 40,375,000 General Partner -- Class B Common Units. -- 4,883,000 11,457,000 10,469,000 Limited Partners' .......................... 7,710,000 7,705,000 7,702,000 7,701,000
1998 ---------------------------------------------------------------------- FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER --------------- ---------------- --------------- --------------- Total revenues .............................. $ 55,062 $ 66,267 $ 71,595 $ 73,388 =========== =========== =========== =========== Income before distributions to preferred unit holders, minority interests and extraordinary loss ......................... $ 12,387 $ 17,664 $ 17,348 $ 17,910 Preferred unit distributions ................ -- (4,168) (5,034) (5,042) Minority partners' interest in consolidated partnerships ............................... (561) (712) (665) (881) Extraordinary loss .......................... -- -- (1,993) -- ----------- ----------- ----------- ----------- Net income available to common unit holders. $ 11,826 $ 12,784 $ 9,656 $ 11,987 =========== =========== =========== =========== Net income available to: General Partner -- common units ............ $ 9,835 $ 10,022 $ 8,770 $ 10,040 Limited Partners' .......................... 1,991 2,762 886 1,947 ----------- ----------- ----------- ----------- Total ....................................... $ 11,826 $ 12,784 $ 9,656 $ 11,987 =========== =========== =========== =========== Net income per common unit: General Partner ............................ $ .26 $ .25 $ .22 $ .25 Limited Partners' .......................... $ .26 $ .36 $ .11 $ .25 Weighted average common units outstanding: General Partner ............................ 38,183,000 39,637,000 40,012,000 40,035,000 Limited Partners' .......................... 7,709,000 7,694,000 7,741,000 7,765,000
IV-24 RECKSON OPERATING PARTNERSHIP, L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. PRO FORMA RESULTS (UNAUDITED) The following unaudited pro forma operating results of the Operating Partnership for the year ended December 31, 1999 have been prepared as if the property acquisitions made during 1999 had occurred on January 1, 1999. Unaudited pro forma financial information is presented for informational purposes only and may not be indicative of what the actual results of operations of the Operating Partnership would have been had the events occurred as of January 1, 1999, nor does it purport to represent the results of operations for future periods (in thousands except per unit data):
Total Revenues ................................................... $ 455,650 ========== Income before distributions to preferred unit holders, minority interests and extraordinary loss ................................ $ 119,943 ========== Net income available to General Partner -- common units .......... $ 55,847 ========== Net Income per weighted average general partnership common unit ..................................................... $ 1.39 ========== Net Income available to General Partner -- Class B Common Units ............................................ $ 15,001 ========== Net Income per weighted average Class B general partnership common unit ..................................................... $ 2.22 ========== Net Income available to Limited Partners' ........................ $ 10,680 ========== Net income per weighted average limited partnership unit ......... $ 1.39 ==========
16. SUBSEQUENT EVENT On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the Americas, a 540,000 square foot, 35 story, Class A office property, located in New York City, for a purchase price of approximately $126.5 million. This acquisition was financed through a $70 million secured debt financing and a draw under the Credit Facility. IV-25 RECKSON OPERATING PARTNERSHIP, L.P. SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (IN THOUSANDS)
COLUMN A COLUMN B COLUMN C COLUMN D - ------------------------------------------------------ ---------------- ------------------------- ---------------------- COST CAPITALIZED, SUBSEQUENT TO INITIAL COST ACQUISITION ------------------------- ---------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS - ------------------------------------------------------ ---------------- --------- --------------- ------ --------------- Vanderbilt Industrial Park, Hauppauge, New York (27 buildings in an industrial park) ................ B $1,940 $ 9,955 -- 10,082 Airport International Plaza, Islip, New York (17 buildings in an industrial park) .................... 2,616 (C) 1,263 13,608 -- 10,895 County Line Industrial Center, Huntington, New York (3 buildings in an industrial park) ............ B 628 3,686 -- 2,693 32 Windsor Place, Islip, New York .................... B 32 321 -- 46 42 Windsor Place, Islip, New York .................... B 48 327 -- 548 505 Walt Whitman Rd., Huntington, New York ........... B 140 42 -- 59 1170 Northern Blvd., N. Great Neck, New York ......... B 30 99 -- 34 50 Charles Lindbergh Blvd., Mitchel Field, New York ................................................ 15,479 A 12,089 -- 5,286 200 Broadhollow Road, Melville, New York ............. 6,560 338 3,354 -- 3,057 48 South Service Road, Melville, New York ............ B 1,652 10,245 -- 4,733 395 North Service Road, Melville, New York ........... 20,933 A 15,551 -- 6,852 6800 Jericho Turnpike, Syosset, New York ............. 15,001 582 6,566 -- 8,126 6900 Jericho Turnpike, Syosset, New York ............. 5,279 385 4,228 -- 3,359 300 Motor Parkway, Hauppauge, New York ............... B 276 1,136 -- 1,510 88 Duryea Road, Melville, New York ................... B 200 1,565 -- 690 210 Blydenburgh Road, Islandia, New York ............. B 11 158 -- 156 208 Blydenburgh Road, Islandia, New York ............. B 12 192 -- 147 71 Hoffman Lane, Islandia, New York .................. B 19 260 -- 172 933 Motor Parkway, Hauppauge, New York ............... B 106 375 -- 356 65 and 85 South Service Road Plainview, New York ..... B 40 218 -- 17 333 Earl Ovington Blvd., Mitchel Field, New York (Omni) .............................................. 56,367 A 67,221 -- 18,521 135 Fell Court Islip, New York ....................... B 462 1,265 -- 52 40 Cragwood Road, South Plainfield, New Jersey ....... B 725 7,131 -- 5,593 110 Marcus Drive, Huntington, New York ............... B 390 1,499 -- 107 333 East Shore Road, Great Neck, New York ............ B A 564 -- 200 310 East Shore Road, Great Neck, New York ............ 2,322 485 2,009 -- 1,458 70 Schmitt Blvd., Farmingdale, New York .............. B 727 3,408 -- 33
COLUMN A COLUMN E COLUMN F COLUMN G - ------------------------------------------------------ ---------------------------------- -------------- -------------- GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD ---------------------------------- BUILDINGS AND ACCUMULATED DATE OF DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION - ------------------------------------------------------ --------- --------------- -------- -------------- -------------- Vanderbilt Industrial Park, Hauppauge, New York (27 buildings in an industrial park) ................ $1,940 20,037 21,977 13,495 1961-1979 Airport International Plaza, Islip, New York (17 buildings in an industrial park) .................... 1,263 24,503 25,766 14,637 1970-1988 County Line Industrial Center, Huntington, New York (3 buildings in an industrial park) ............ 628 6,379 7,007 4,333 1975-1979 32 Windsor Place, Islip, New York .................... 32 367 399 336 1971 42 Windsor Place, Islip, New York .................... 48 875 923 717 1972 505 Walt Whitman Rd., Huntington, New York ........... 140 101 241 81 1950 1170 Northern Blvd., N. Great Neck, New York ......... 30 133 163 127 1947 50 Charles Lindbergh Blvd., Mitchel Field, New York ................................................ 0 17,375 17,375 9,110 1984 200 Broadhollow Road, Melville, New York ............. 338 6,411 6,749 3,774 1981 48 South Service Road, Melville, New York ............ 1,652 14,978 16,630 7,277 1986 395 North Service Road, Melville, New York ........... 0 22,403 22,403 11,094 1988 6800 Jericho Turnpike, Syosset, New York ............. 582 14,692 15,274 8,631 1977 6900 Jericho Turnpike, Syosset, New York ............. 385 7,587 7,972 3,699 1982 300 Motor Parkway, Hauppauge, New York ............... 276 2,646 2,922 1,381 1979 88 Duryea Road, Melville, New York ................... 200 2,255 2,455 1,261 1980 210 Blydenburgh Road, Islandia, New York ............. 11 314 325 297 1969 208 Blydenburgh Road, Islandia, New York ............. 12 339 351 337 1969 71 Hoffman Lane, Islandia, New York .................. 19 432 451 414 1970 933 Motor Parkway, Hauppauge, New York ............... 106 731 837 592 1973 65 and 85 South Service Road Plainview, New York ..... 40 235 275 224 1961 333 Earl Ovington Blvd., Mitchel Field, New York (Omni) .............................................. 0 85,742 85,742 19,681 1990 135 Fell Court Islip, New York ....................... 462 1,317 1,779 330 1965 40 Cragwood Road, South Plainfield, New Jersey ....... 725 12,724 13,449 6,839 1970 110 Marcus Drive, Huntington, New York ............... 390 1,606 1,996 1,190 1980 333 East Shore Road, Great Neck, New York ............ 0 764 764 525 1976 310 East Shore Road, Great Neck, New York ............ 485 3,467 3,952 1,527 1981 70 Schmitt Blvd., Farmingdale, New York .............. 727 3,441 4,168 497 1965
COLUMN A COLUMN H COLUMN I - ------------------------------------------------------ ------------ -------------- LIFE ON WHICH DATE DEPRECIATION DESCRIPTION ACQUIRED IS COMPUTED - ------------------------------------------------------ ------------ -------------- Vanderbilt Industrial Park, Hauppauge, New York (27 buildings in an industrial park) ................ 1961-1979 10-30 Years Airport International Plaza, Islip, New York (17 buildings in an industrial park) .................... 1970-1988 10-30 Years County Line Industrial Center, Huntington, New York (3 buildings in an industrial park) ............ 1975-1979 10-30 Years 32 Windsor Place, Islip, New York .................... 1971 10-30 Years 42 Windsor Place, Islip, New York .................... 1972 10-30 Years 505 Walt Whitman Rd., Huntington, New York ........... 1968 10-30 Years 1170 Northern Blvd., N. Great Neck, New York ......... 1962 10-30 Years 50 Charles Lindbergh Blvd., Mitchel Field, New York ................................................ 1984 10-30 Years 200 Broadhollow Road, Melville, New York ............. 1981 10-30 Years 48 South Service Road, Melville, New York ............ 1986 10-30 Years 395 North Service Road, Melville, New York ........... 1988 10-30 Years 6800 Jericho Turnpike, Syosset, New York ............. 1978 10-30 Years 6900 Jericho Turnpike, Syosset, New York ............. 1982 10-30 Years 300 Motor Parkway, Hauppauge, New York ............... 1979 10-30 Years 88 Duryea Road, Melville, New York ................... 1980 10-30 Years 210 Blydenburgh Road, Islandia, New York ............. 1969 10-30 Years 208 Blydenburgh Road, Islandia, New York ............. 1969 10-30 Years 71 Hoffman Lane, Islandia, New York .................. 1970 10-30 Years 933 Motor Parkway, Hauppauge, New York ............... 1973 10-30 Years 65 and 85 South Service Road Plainview, New York ..... 1961 10-30 Years 333 Earl Ovington Blvd., Mitchel Field, New York (Omni) .............................................. 1995 10-30 Years 135 Fell Court Islip, New York ....................... 1992 10-30 Years 40 Cragwood Road, South Plainfield, New Jersey ....... 1983 10-30 Years 110 Marcus Drive, Huntington, New York ............... 1980 10-30 Years 333 East Shore Road, Great Neck, New York ............ 1976 10-30 Years 310 East Shore Road, Great Neck, New York ............ 1981 10-30 Years 70 Schmitt Blvd., Farmingdale, New York .............. 1995 10-30 Years
Continued IV-26 RECKSON OPERATING PARTNERSHIP, L.P. SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (CONTINUED) (IN THOUSANDS)
COLUMN A COLUMN B COLUMN C COLUMN D - ------------------------------------------------------- ------------- ------------------------ ---------------------- COST CAPITALIZED, SUBSEQUENT TO INITIAL COST ACQUISITION ------------------------ ---------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS - ------------------------------------------------------- ------------- -------- --------------- ------ --------------- 19 Nicholas Drive, Yaphank, New York .................. B 160 7,399 -- 4,731 1516 Motor Parkway, Hauppauge, New York ............... B 603 6,722 -- 127 125 Baylis Road, Melville, New York ................... B 1,601 8,626 -- 1,443 35 Pinelawn Road, Melville, New York .................. B 999 7,073 -- 2,067 520 Broadhollow Road, Melville, New York .............. B 457 5,572 -- 1,574 1660 Walt Whitman Road, Melville, New York ............ B 370 5,072 -- 350 70 Maxess Road, Melville, New York .................... B 367 1,859 95 2,879 85 Nicon Court, Hauppauge, New York ................... B 797 2,818 -- 64 104 Parkway Drive So., Hauppauge, New York ............ B 54 804 -- 136 20 Melville Park Rd., Melville, New York .............. B 391 2,650 -- 202 105 Price Parkway, Hauppauge, New York ................ B 2,030 6,327 -- 469 48 Harbor Park Drive, Hauppauge, New York ............ B 1,304 2,247 -- 89 125 Ricefield Lane, Hauppauge, New York ............... B 13 852 -- 330 110 Ricefield Lane, Hauppauge, New York ............... B 33 1,043 -- 57 120 Ricefield Lane, Hauppauge, New York ............... B 16 1,051 -- 74 135 Ricefield Lane, Hauppauge, New York ............... B 24 906 -- 473 30 Hub Drive, Huntington, New York .................... B 469 1,571 -- 312 60 Charles Lindbergh, Mitchel Field, New York ......... B A 20,800 -- 1,654 155 White Plains Rod., Tarrytown, New York ............ B 1,613 2,542 -- 874 235 Main Street, Tarrytown, New York .................. B 933 5,375 -- 881 245 Main Street, Tarrytown, New York .................. B 1,235 7,284 -- 614 505 White Plains Road, Tarrytown, New York ............ B 210 1,332 -- 209 555 White Plains Road, Tarrytown, New York ............ B 712 4,133 51 4,233 560 White Plains Road, Tarrytown, New York ............ B 1,521 8,756 -- 1,788 580 White Plains Road, Tarrytown, New York ............ 8,172 2,414 14,595 -- 2,203 660 White Plains Road, Tarrytown, New York ............ B 3,929 22,640 45 3,447 Landmark Square, Stamford, Connecticut ................ 47,809 11,603 64,466 769 20,723 110 Bi-County Blvd., Farmingdale, New York ............ 4,221 2,342 6,665 -- 170 RREEF Portfolio, Hauppauge, New York (10 additional buildings in Vanderbuilt Industrial Park) B 930 20,619 -- 2,845 275 Broadhollow Road, Melville, New York .............. B 5,250 11,761 -- 594 One Eagle Rock, East Hanover, New Jersey .............. B 803 7,563 -- 2,099
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H - ------------------------------------------------------- --------------------------------- -------------- -------------- ---------- GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD --------------------------------- BUILDINGS AND ACCUMULATED DATE OF DATE DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED - ------------------------------------------------------- -------- --------------- -------- -------------- -------------- ---------- 19 Nicholas Drive, Yaphank, New York .................. 160 12,130 12,290 1,147 1989 1995 1516 Motor Parkway, Hauppauge, New York ............... 603 6,849 7,452 1,012 1981 1995 125 Baylis Road, Melville, New York ................... 1,601 10,069 11,670 1,353 1980 1995 35 Pinelawn Road, Melville, New York .................. 999 9,140 10,139 1,508 1980 1995 520 Broadhollow Road, Melville, New York .............. 457 7,146 7,603 1,461 1978 1995 1660 Walt Whitman Road, Melville, New York ............ 370 5,422 5,792 802 1980 1995 70 Maxess Road, Melville, New York .................... 462 4,738 5,200 585 1967 1995 85 Nicon Court, Hauppauge, New York ................... 797 2,882 3,679 383 1984 1995 104 Parkway Drive So., Hauppauge, New York ............ 54 940 994 124 1985 1996 20 Melville Park Rd., Melville, New York .............. 391 2,852 3,243 316 1965 1996 105 Price Parkway, Hauppauge, New York ................ 2,030 6,796 8,826 871 1969 1996 48 Harbor Park Drive, Hauppauge, New York ............ 1,304 2,336 3,640 299 1976 1996 125 Ricefield Lane, Hauppauge, New York ............... 13 1,182 1,195 229 1973 1996 110 Ricefield Lane, Hauppauge, New York ............... 33 1,100 1,133 150 1980 1996 120 Ricefield Lane, Hauppauge, New York ............... 16 1,125 1,141 125 1983 1996 135 Ricefield Lane, Hauppauge, New York ............... 24 1,379 1,403 284 1981 1996 30 Hub Drive, Huntington, New York .................... 469 1,883 2,352 269 1976 1996 60 Charles Lindbergh, Mitchel Field, New York ......... 0 22,454 22,454 3,041 1989 1996 155 White Plains Rod., Tarrytown, New York ............ 1,613 3,416 5,029 390 1963 1996 235 Main Street, Tarrytown, New York .................. 933 6,256 7,189 868 1974 1996 245 Main Street, Tarrytown, New York .................. 1,235 7,898 9,133 1,163 1983 1996 505 White Plains Road, Tarrytown, New York ............ 210 1,541 1,751 270 1974 1996 555 White Plains Road, Tarrytown, New York ............ 763 8,366 9,129 1,551 1972 1996 560 White Plains Road, Tarrytown, New York ............ 1,521 10,544 12,065 2,155 1980 1996 580 White Plains Road, Tarrytown, New York ............ 2,414 16,798 19,212 2,618 1997 1996 660 White Plains Road, Tarrytown, New York ............ 3,974 26,087 30,061 3,974 1983 1996 Landmark Square, Stamford, Connecticut ................ 12,372 85,189 97,561 8,489 1973-1984 1996 110 Bi-County Blvd., Farmingdale, New York ............ 2,342 6,835 9,177 723 1984 1997 RREEF Portfolio, Hauppauge, New York (10 additional buildings in Vanderbuilt Industrial Park) 930 23,464 24,394 2,358 1974-1982 1997 275 Broadhollow Road, Melville, New York .............. 5,250 12,355 17,605 1,191 1970 1997 One Eagle Rock, East Hanover, New Jersey .............. 803 9,662 10,465 1,077 1986 1997
COLUMN A COLUMN I - ------------------------------------------------------- -------------- LIFE ON WHICH DEPRECIATION DESCRIPTION IS COMPUTED - ------------------------------------------------------- -------------- 19 Nicholas Drive, Yaphank, New York .................. 10-30 Years 1516 Motor Parkway, Hauppauge, New York ............... 10-30 Years 125 Baylis Road, Melville, New York ................... 10-30 Years 35 Pinelawn Road, Melville, New York .................. 10-30 Years 520 Broadhollow Road, Melville, New York .............. 10-30 Years 1660 Walt Whitman Road, Melville, New York ............ 10-30 Years 70 Maxess Road, Melville, New York .................... 10-30 Years 85 Nicon Court, Hauppauge, New York ................... 10-30 Years 104 Parkway Drive So., Hauppauge, New York ............ 10-30 Years 20 Melville Park Rd., Melville, New York .............. 10-30 Years 105 Price Parkway, Hauppauge, New York ................ 10-30 Years 48 Harbor Park Drive, Hauppauge, New York ............ 10-30 Years 125 Ricefield Lane, Hauppauge, New York ............... 10-30 Years 110 Ricefield Lane, Hauppauge, New York ............... 10-30 Years 120 Ricefield Lane, Hauppauge, New York ............... 10-30 Years 135 Ricefield Lane, Hauppauge, New York ............... 10-30 Years 30 Hub Drive, Huntington, New York .................... 10-30 Years 60 Charles Lindbergh, Mitchel Field, New York ......... 10-30 Years 155 White Plains Rod., Tarrytown, New York ............ 10-30 Years 235 Main Street, Tarrytown, New York .................. 10-30 Years 245 Main Street, Tarrytown, New York .................. 10-30 Years 505 White Plains Road, Tarrytown, New York ............ 10-30 Years 555 White Plains Road, Tarrytown, New York ............ 10-30 Years 560 White Plains Road, Tarrytown, New York ............ 10-30 Years 580 White Plains Road, Tarrytown, New York ............ 10-30 Years 660 White Plains Road, Tarrytown, New York ............ 10-30 Years Landmark Square, Stamford, Connecticut ................ 10-30 Years 110 Bi-County Blvd., Farmingdale, New York ............ 10-30 Years RREEF Portfolio, Hauppauge, New York (10 additional buildings in Vanderbuilt Industrial Park) 10-30 Years 275 Broadhollow Road, Melville, New York .............. 10-30 Years One Eagle Rock, East Hanover, New Jersey .............. 10-30 Years
Continued IV-27 RECKSON OPERATING PARTNERSHIP, L.P. SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (CONTINUED) (IN THOUSANDS)
COLUMN A COLUMN B COLUMN C COLUMN D - --------------------------------------------- ------------- ------------------------ ---------------------- COST CAPITALIZED, SUBSEQUENT TO INITIAL COST ACQUISITION ------------------------ ---------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS - --------------------------------------------- ------------- -------- --------------- ------ --------------- 710 Bridgeport Avenue, Shelton, Connecticut . B 5,405 21,620 7 623 101 JFK Expressway, Short Hills, New Jersey . B 7,745 43,889 -- 1,134 10 Rooney Circle, West Orange, New Jersey ... B 1,302 4,615 1 421 Executive Hill Office Park, West Orange, New Jersey ..................................... B 7,629 31,288 4 1,073 3 University Plaza, Hackensack, New Jersey .. B 7,894 11,846 -- 1,068 400 Garden City Plaza, Garden City, New York B 13,986 10,127 -- 1,275 425 Rabro Drive, Hauppauge, New York ........ B 665 3,489 -- 71 One Paragon Drive, Montvale, New Jersey ..... B 2,773 9,901 -- 533 90 Merrick Avenue, East Meadow, New York .... B A 19,193 -- 3,350 150 Motor Parkway, Hauppauge, New York ...... B 1,114 20,430 -- 2,588 390 Motor Parkway, Hauppauge, New York ...... B 240 4,459 -- 249 Reckson Executive Park, Ryebrook, New York .. B 18,343 55,028 -- 1,299 120 White Plains Road, Tarrytown, New York .. B 3,355 24,605 -- 182 University Square, Princeton, New Jersey .... B 3,288 8,888 -- 111 100 Andrews Road Hicksville, New York ....... B 2,337 1,711 155 5,707 2 Macy Road, Harrison, New York ............. B 642 2,131 -- 47 80 Grasslands, Elmsford, New York ........... B 1,208 6,728 -- 242 65 Marcus Drive, Melville, New York ......... B 295 1,966 57 885 400 Cabot Drive, Hamilton, New Jersey ....... B 2,068 18,614 -- 71 51 JFK Parkway, Short Hills, New York ....... B 8,732 58,437 -- 874 Triad V -- 1979 Marcus Ave. Lake Success, New York ....................................... B 3,528 31,786 -- 5,897 100 Forge Way, Rockaway, New Jersey ......... B 315 902 -- 89 200 Forge Way, Rockaway, New Jersey ......... B 1,128 3,228 -- 178 300 Forge Way, Rockaway, New Jersey ......... B 376 1,075 -- 254 400 Forge Way, Rockaway, New Jersey ......... B 1,142 3,267 -- 179 51-55 Charles Lindergh Blvd., Uniondale, New York ....................................... B A 27,975 -- 4,174 155 Passaic Avenue, Fairfield, New Jersey ... B 3 3,538 -- 1,418 100 Summit Drive Vahalla, New York .......... 22,614 3,007 41,351 -- 2,769
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H - --------------------------------------------- --------------------------------- -------------- -------------- ---------- GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD --------------------------------- BUILDINGS AND ACCUMULATED DATE OF DATE DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED - --------------------------------------------- -------- --------------- -------- -------------- -------------- ---------- 710 Bridgeport Avenue, Shelton, Connecticut . 5,412 22,243 27,655 2,091 1971-1979 1997 101 JFK Expressway, Short Hills, New Jersey . 7,745 45,023 52,768 3,970 1981 1997 10 Rooney Circle, West Orange, New Jersey ... 1,303 5,036 6,339 505 1971 1997 Executive Hill Office Park, West Orange, New Jersey ..................................... 7,633 32,361 39,994 2,782 1978-1984 1997 3 University Plaza, Hackensack, New Jersey .. 7,894 12,914 20,808 1,157 1985 1997 400 Garden City Plaza, Garden City, New York 13,986 11,402 25,388 938 1989 1997 425 Rabro Drive, Hauppauge, New York ........ 665 3,560 4,225 305 1980 1997 One Paragon Drive, Montvale, New Jersey ..... 2,773 10,434 13,207 870 1980 1997 90 Merrick Avenue, East Meadow, New York .... 0 22,543 22,543 1,817 1985 1997 150 Motor Parkway, Hauppauge, New York ...... 1,114 23,018 24,132 1,999 1984 1997 390 Motor Parkway, Hauppauge, New York ...... 240 4,708 4,948 386 1980 1997 Reckson Executive Park, Ryebrook, New York .. 18,343 56,327 74,670 4,140 1983-1986 1997 120 White Plains Road, Tarrytown, New York .. 3,355 24,787 28,142 1,717 1984 1997 University Square, Princeton, New Jersey .... 3,288 8,999 12,287 625 1987 1997 100 Andrews Road Hicksville, New York ....... 2,492 7,418 9,910 826 1954 1996 2 Macy Road, Harrison, New York ............. 642 2,178 2,820 158 1962 1997 80 Grasslands, Elmsford, New York ........... 1,208 6,970 8,178 516 1989/1964 1997 65 Marcus Drive, Melville, New York ......... 352 2,851 3,203 310 1968 1996 400 Cabot Drive, Hamilton, New Jersey ....... 2,068 18,685 20,753 1,255 1989 1998 51 JFK Parkway, Short Hills, New York ....... 8,732 59,311 68,043 3,643 1988 1998 Triad V -- 1979 Marcus Ave. Lake Success, New York ....................................... 3,528 37,683 41,211 2,669 1987 1998 100 Forge Way, Rockaway, New Jersey ......... 315 991 1,306 67 1986 1998 200 Forge Way, Rockaway, New Jersey ......... 1,128 3,406 4,534 227 1989 1998 300 Forge Way, Rockaway, New Jersey ......... 376 1,329 1,705 101 1989 1998 400 Forge Way, Rockaway, New Jersey ......... 1,142 3,446 4,588 230 1989 1998 51-55 Charles Lindergh Blvd., Uniondale, New York ....................................... 0 32,149 32,149 3,232 1981 1998 155 Passaic Avenue, Fairfield, New Jersey ... 3 4,956 4,959 296 1984 1998 100 Summit Drive Vahalla, New York .......... 3,007 44,120 47,127 2,614 1988 1998
COLUMN A COLUMN I - --------------------------------------------- -------------- LIFE ON WHICH DEPRECIATION DESCRIPTION IS COMPUTED - --------------------------------------------- -------------- 710 Bridgeport Avenue, Shelton, Connecticut. 10-30 Years 101 JFK Expressway, Short Hills, New Jersey.. 10-30 Years 10 Rooney Circle, West Orange, New Jersey ... 10-30 Years Executive Hill Office Park, West Orange, New Jersey ..................................... 10-30 Years 3 University Plaza, Hackensack, New Jersey .. 10-30 Years 400 Garden City Plaza, Garden City, New York 10-30 Years 425 Rabro Drive, Hauppauge, New York ........ 10-30 Years One Paragon Drive, Montvale, New Jersey ..... 10-30 Years 90 Merrick Avenue, East Meadow, New York .... 10-30 Years 150 Motor Parkway, Hauppauge, New York ...... 10-30 Years 390 Motor Parkway, Hauppauge, New York ...... 10-30 Years Reckson Executive Park, Ryebrook, New York .. 10-30 Years 120 White Plains Road, Tarrytown, New York .. 10-30 Years University Square, Princeton, New Jersey .... 10-30 Years 100 Andrews Road Hicksville, New York ....... 10-30 Years 2 Macy Road, Harrison, New York ............. 10-30 Years 80 Grasslands, Elmsford, New York ........... 10-30 Years 65 Marcus Drive, Melville, New York ......... 10-30 Years 400 Cabot Drive, Hamilton, New Jersey ....... 10-30 Years 51 JFK Parkway, Short Hills, New York ....... 10-30 Years Triad V -- 1979 Marcus Ave. Lake Success, New York ....................................... 10-30 Years 100 Forge Way, Rockaway, New Jersey ......... 10-30 Years 200 Forge Way, Rockaway, New Jersey ......... 10-30 Years 300 Forge Way, Rockaway, New Jersey ......... 10-30 Years 400 Forge Way, Rockaway, New Jersey ......... 10-30 Years 51-55 Charles Lindergh Blvd., Uniondale, New York ....................................... 10-30 Years 155 Passaic Avenue, Fairfield, New Jersey ... 10-30 Years 100 Summit Drive Vahalla, New York .......... 10-30 Years
Continued IV-28 RECKSON OPERATING PARTNERSHIP, L.P. SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (CONTINUED) (IN THOUSANDS)
COLUMN A COLUMN B COLUMN C COLUMN D - -------------------------------------------------- ------------- --------------------------- ------------------------- COST CAPITALIZED, SUBSEQUENT TO INITIAL COST ACQUISITION --------------------------- ------------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS - -------------------------------------------------- ------------- ----------- --------------- --------- --------------- 115/117 Stevens Avenue, Valhalla, New York ....... B 1,094 22,490 -- 628 200 Summit Lake Drive, Valhalla, New York ........ 20,463 4,343 37,305 -- 541 140 Grand Street., Valhalla, New York ............ B 1,932 18,744 -- 153 500 Summit Lake Drive, Valhalla, New York ........ B 7,052 37,309 -- 7,547 5 Henderson Drive, West Caldwell, New Jersey ..... B 2,450 6,984 4 690 Stamford Towers, Stamford, Connecticut ........... B 13,557 47,916 -- 3,377 99 Cherry Hill Road, Parsippany, New Jersey ...... B 2,360 7,508 -- 339 119 Cherry Hill Road, Parsipanny, New Jersey ..... B 2,512 7,622 -- 577 120 Wilbur Place, Bohemia, New York .............. B 202 1,154 8 114 45 Melville Park Road, Melville, New York ........ B 355 1,487 -- 1,813 500 Saw Mill River Road, Elmsford, New York ...... B 1,542 3,796 -- 178 2004 Orville Drive, No. Bohemia, New York ........ B 633 4,226 -- 1,407 2005 Orville Drive North Bohemia, New York ....... B 984 5,410 -- 489 120 W. 45th Street New York, New York ............ 66,933 28,757 162,809 -- 338 4 Appelgate Drive Robbinsville, New Jersey ....... B 544 7,623 -- 1,503 1305 Walt Whitman Road Melville, New York ........ B 2,885 15,029 -- 3,448 600 Old Willets Path Hauppauge, New York ......... B 295 3,521 -- 723 1255 Broad Street Clifton, New Jersey ............ B 1,329 15,869 -- 2,806 810 Seventh Avenue New York, New York ............ 86,822 26,984 152,767 -- 2,036 120 Mineola Blvd. Mineola, New York .............. B 1,869 10,603 -- 41 100 Wall Street, New York, New York .............. 37,623 11,749 66,517 -- 1,020 One Orlando, Orlando, Florida .................... 39,960 9,386 51,136 -- 0 Land held for development ........................ B 60,894 -- -- 0 Developments in progress ......................... -- -- 68,690 -- -- Other property ................................... B -- -- -- 5,482 ------ ------ ------- ------ ----- Total ............................................ $459,174 $335,902 $1,656,797 $1,196 214,504 ======== ======== ========== ====== =======
COLUMN A COLUMN E COLUMN F COLUMN G - -------------------------------------------------- ---------------------------------------- -------------- -------------- GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD ---------------------------------------- BUILDINGS AND ACCUMULATED DATE OF DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION - -------------------------------------------------- ----------- --------------- ------------ -------------- -------------- 115/117 Stevens Avenue, Valhalla, New York ....... 1,094 23,118 24,212 1,309 1984 200 Summit Lake Drive, Valhalla, New York ........ 4,343 37,846 42,189 2,133 1990 140 Grand Street., Valhalla, New York ............ 1,932 18,897 20,829 1,059 1991 500 Summit Lake Drive, Valhalla, New York ........ 7,052 44,856 51,908 1,779 1986 5 Henderson Drive, West Caldwell, New Jersey ..... 2,454 7,674 10,128 363 1967 Stamford Towers, Stamford, Connecticut ........... 13,557 51,293 64,850 2,686 1989 99 Cherry Hill Road, Parsippany, New Jersey ...... 2,360 7,847 10,207 375 1982 119 Cherry Hill Road, Parsipanny, New Jersey ..... 2,512 8,199 10,711 385 1982 120 Wilbur Place, Bohemia, New York .............. 210 1,268 1,478 64 1972 45 Melville Park Road, Melville, New York ........ 355 3,300 3,655 229 1998 500 Saw Mill River Road, Elmsford, New York ...... 1,542 3,974 5,516 264 1968 2004 Orville Drive, No. Bohemia, New York ........ 633 5,633 6,266 522 1998 2005 Orville Drive North Bohemia, New York ....... 984 5,899 6,883 58 1999 120 W. 45th Street New York, New York ............ 28,757 163,147 191,904 3,603 1998 4 Appelgate Drive Robbinsville, New Jersey ....... 544 9,126 9,670 300 1999 1305 Walt Whitman Road Melville, New York ........ 2,885 18,477 21,362 579 1999 600 Old Willets Path Hauppauge, New York ......... 295 4,244 4,539 143 1999 1255 Broad Street Clifton, New Jersey ............ 1,329 18,675 20,004 175 1999 810 Seventh Avenue New York, New York ............ 26,984 154,803 181,787 3,398 1970 120 Mineola Blvd. Mineola, New York .............. 1,869 10,644 12,513 234 1977 100 Wall Street, New York, New York .............. 11,749 67,537 79,286 1,477 1969 One Orlando, Orlando, Florida .................... 9,386 51,136 60,522 702 1987 Land held for development ........................ 60,894 0 60,894 0 N/A Developments in progress ......................... -- 68,690 68,690 0 Other property ................................... -- 5,482 5,482 637 ------ ------- ------- ----- Total ............................................ $337,098 1,871,301 2,208,399 215,112 ======== ========= ========= =======
COLUMN A COLUMN H COLUMN I - -------------------------------------------------- ---------- -------------- LIFE ON WHICH DATE DEPRECIATION DESCRIPTION ACQUIRED IS COMPUTED - -------------------------------------------------- ---------- -------------- 115/117 Stevens Avenue, Valhalla, New York ....... 1998 10-30 Years 200 Summit Lake Drive, Valhalla, New York ........ 1998 10-30 Years 140 Grand Street., Valhalla, New York ............ 1998 10-30 Years 500 Summit Lake Drive, Valhalla, New York ........ 1998 10-30 Years 5 Henderson Drive, West Caldwell, New Jersey ..... 1998 10-30 Years Stamford Towers, Stamford, Connecticut ........... 1998 10-30 Years 99 Cherry Hill Road, Parsippany, New Jersey ...... 1998 10-30 Years 119 Cherry Hill Road, Parsipanny, New Jersey ..... 1998 10-30 Years 120 Wilbur Place, Bohemia, New York .............. 1998 10-30 Years 45 Melville Park Road, Melville, New York ........ 1998 10-30 Years 500 Saw Mill River Road, Elmsford, New York ...... 1998 10-30 Years 2004 Orville Drive, No. Bohemia, New York ........ 1998 10-30 Years 2005 Orville Drive North Bohemia, New York ....... 1999 10-30 Years 120 W. 45th Street New York, New York ............ 1999 10-30 Years 4 Appelgate Drive Robbinsville, New Jersey ....... 1999 10-30 Years 1305 Walt Whitman Road Melville, New York ........ 1999 10-30 Years 600 Old Willets Path Hauppauge, New York ......... 1999 10-30 Years 1255 Broad Street Clifton, New Jersey ............ 1999 10-30 Years 810 Seventh Avenue New York, New York ............ 1999 10-30 Years 120 Mineola Blvd. Mineola, New York .............. 1999 10-30 Years 100 Wall Street, New York, New York .............. 1999 10-30 Years One Orlando, Orlando, Florida .................... 1999 10-30 Years Land held for development ........................ Various N/A Developments in progress ......................... Other property ................................... Total ............................................
- ------ A These land parcels are leased (see Note 4). B There are no encumbrances on these properties. C The Encumbrance of $2,616 is related to one property. The aggregate cost for Federal Income Tax purposes was approximately $1,728 million at December 31, 1999. IV-29 RECKSON OPERATING PARTNERSHIP, L.P. SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED) (IN THOUSANDS) The changes in real estate for each of the periods in the three years ended December 31, 1999 are as follows:
1999 1998 1997 ------------- ------------- -------------- Real estate balance at beginning of period ........................ $1,737,133 $1,011,228 $ 516,768 Improvements ..................... 57,571 134,582 37,778 Disposal, including write-off of fully depreciated building improvements ..................... (317,864) -- (154) Acquisitions ..................... 731,559 591,323 456,836 ---------- ---------- ---------- Balance at end of period ......... $2,208,399 $1,737,133 $1,011,228 ========== ========== ==========
The changes in accumulated depreciation, exclusive of amounts relating to equipment, autos, furniture and fixtures, for each of the periods in the three years ended December 31, 1999 are as follows:
1999 1998 1997 ----------- ----------- ------------ Balance at beginning of period ...... $156,231 $108,652 $ 86,344 Depreciation for period ............. 65,471 47,579 22,442 Disposal, including write-off of fully depreciated building improvements ........................ (6,590) -- (134) -------- -------- -------- Balance at end of period ............ $215,112 $156,231 $108,652 ======== ======== ========
IV-30 EX-12.1 2 EXHIBIT 12.1 EXHIBIT 12.1 RECKSON OPERATING PARTNERSHIP, L. P. RATIOS OF EARNINGS TO FIXED CHARGES The following table sets forth the Operating Partnership's consolidated ratios of earnings to fixed charges for the periods shown:
For the years ended December 31, June 3, 1995 January 1, 1995 -------------------------------- to to 1999 1998 1997 1996 December 31, 1995 June 2, 1995 - --------------------------------------------------------------------------------------------------------------------- 2.07x 2.00x 2.69x 2.71x 2.71x 1.02x (1) - ---------------------------------------------------------------------------------------------------------------------
(1) Prior to June 2, 1995, the Operating Partnership's predecessors operated in a manner as to minimize net taxable income to the owners. As a result of the Operating Partnership commencing operations and the related formation transactions, the Operating Partnership deleveraged its properties significantly which resulted in a significantly improved ratio of earnings to fixed charges. The Operating Partnership's consolidated ratio of earnings to fixed charges and preferred distributions for the year ended December 31, 1999 and 1998 was 1.54x and 1.60x, respectively. The Operating Partnership had no preferred capital outstanding prior to April 1998. EX-21.1 3 EXHIBIT 21.1 EXHIBIT 21.1 RECKSON OPERATING PARTNERSHIP, L. P. STATEMENT OF SUBSIDIARIES NAME STATE OF ORGANIZATION - ------------------------------- --------------------= OMNI PARTNERS, L.P. DELAWARE RECKSON FS LIMITED PARTNERSHIP DELAWARE METROPOLITAN PARTNERS, LLC DELAWARE RECKSON MANAGEMENT GROUP, INC. NEW YORK RECKSON CONSTRUCTION GROUP, INC NEW YORK RECKSON SHORT HILLS, LLC DELAWARE RECKSON / STAMFORD TOWERS, LLC DELAWARE EXHIBIT 23.0 RECKSON OPERATING PARTNERSHIP, L. P. CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement Form S-3 (No. 333-67129) and in the related Prospectus of Reckson Operating Partnership, L. P., of our report dated February 15, 2000, with respect to the consolidated financial statements and schedule of Reckson Operating Partnership, L. P., included in this Annual Report Form 10-K for the year ended December 31, 1999. Ernst & Young, LLP New York, New York March 17, 2000 EX-27 4 FDS --
5 EXHIBIT 27 FINANCIAL DATA SCHEDULE RECKSON OPERATING PARTNERSHIP, L. P. (in thousands except EPS data) 0000930810 RECKSON OPERATING PARTNERSHIP, L. P. 1 U.S. DOLLARS 12-MOS DEC-31-1999 JAN-1-1999 DEC-31-1999 1 21,122 0 207,368 0 0 228,490 2,214,872 (218,385) 2,724,934 98,788 1,281,087 0 413,126 838,847 0 2,724,934 369,135 403,142 0 148,263 0 0 74,709 105,666 0 105,666 0 (629) 0 71,234 1.21 0
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