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Reckson Associates Realty Corp. (NYSE: RA) today
announced the execution of an underwriting agreement relating to the
offering in Australia of approximately A$263 million (approximately
US$202 million) of units in a newly-formed Reckson-sponsored property
trust, Reckson NYPT (the LPT), to be traded on the Australian Stock
Exchange (ASX). The Australian offer document was lodged with the
Australian Securities and Investments Commission (ASIC) on Monday,
August 15, 2005. The transaction is expected to close and Reckson NYPT
(ASX: RNY) is to begin trading on the Australian Stock Exchange on
September 26, 2005. The LPT will be managed by Reckson Australia
Management Limited (RAML), an Australian licensed Responsible Entity
which is wholly owned by Reckson Operating Partnership. Reckson
anticipates that the LPT will focus on core plus investment
opportunities in the New York Tri-State area markets.
Scott Rechler, Reckson's President and Chief Executive Officer,
stated, "We believe that the Australian LPT structure will enable us
to achieve our strategic objective of increasing scale without
diluting existing Reckson shareholders. It will enable us to focus on
operating locally and financing globally, by allowing us to get deeper
into our New York Tri-State area office markets to enhance our
competitive advantage, while sourcing capital globally." Mr. Rechler
continued, "Our successful launching of Reckson NYPT is a significant
achievement because it is the first Australian listed property trust
to focus on U.S. suburban office properties. I am extremely excited
about the growth potential of this vehicle as we continue to actively
pursue the acquisition of additional core plus assets in the New York
Tri-State area."
Reckson anticipates that it will continue to maintain a 25%
indirect interest in future core plus investments of the LPT. Core
plus assets are attractive investment opportunities that are derived
from Reckson's market presence and expertise which add additional
depth to Reckson's franchise in its markets. Based on current market
conditions, Reckson anticipates an increase in attractive core plus
investment opportunities. Typically, these types of properties are
under-managed and offer the opportunity for Reckson to apply its
expertise and scale to increase cash flow and enhance value.
Generally, Reckson will continue to wholly own strategic assets, which
are Class A trophy office properties in key markets that define
Reckson's franchise and enhance its competitive advantage, as well as
value creation opportunities, which include repositioning, development
and redevelopment projects.
Michael Maturo, Reckson's Chief Financial Officer, noted, "This
transaction will enable us to achieve our stated goal of efficiently
recycling capital to strategic and value-added investments. In
addition, it allows us to leverage our operating infrastructure to
enhance our ability to acquire core plus assets at superior
risk-adjusted returns."
Affiliates of Reckson will serve as property manager, leasing
agent, asset manager, and construction manager and will provide other
services to the properties in the LPT portfolio.
The LPT will initially purchase a 75% indirect interest in a
portfolio of 25 suburban core plus office properties, containing
approximately 3.4 million square feet, for a purchase price of
approximately US$563 million. Reckson will retain a 25% indirect
interest in these properties. The LPT will have a two-year option to
purchase an additional ten properties, comprising approximately 1.2
million square feet, to be priced at fair market value at the time the
option is exercised. The LPT transaction, as well as the two-year
option, have been structured to mitigate dilution to Reckson
shareholders. The LPT closing will take place in three tranches. The
first tranche is expected to close by the end of the third quarter of
2005, the second tranche is expected to close in the first quarter of
2006 and the third tranche is expected to close in the fourth quarter
of 2006.
Based on the properties being contributed, Reckson anticipates a
2005 net operating income (NOI) yield of 7.15% and a 2006 NOI yield of
7.91%, excluding the newly acquired 225 High Ridge property which
Reckson will be contributing at cost. Reckson anticipates a 2006
annualized after tax cash yield, including the one-time fees, of
approximately 18%, and excluding the one-time fees but including the
ongoing recurring fees, of approximately 15%. Reckson intends to use
the net proceeds from the LPT transaction to fund the Company's
recently announced acquisitions and for the repayment of outstanding
indebtedness.
This offering is being made through Citigroup Global Markets
Australia Pty Limited and UBS AG, Australia Branch in Australia.
Reckson Associates Realty Corp. is a self-administered and
self-managed real estate investment trust (REIT) specializing in the
acquisition, leasing, financing, management and development of Class A
office properties.
Reckson's core growth strategy is focused on the markets
surrounding and including New York City. The Company is one of the
largest publicly traded owners, managers and developers of Class A
office properties in the New York Tri-State area, with 90 properties
comprised of approximately 18.9 million square feet either owned or
controlled, or under contract. For additional information on Reckson
Associates Realty Corp., please visit the Company's web site at
www.reckson.com.
The offering referred to above is being made outside of the United
States. Nothing contained herein shall be construed as an offering of
the interests of the LPT.
Certain matters discussed herein, including guidance concerning
the Company's future performance, are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Company believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions,
forward-looking statements are not guarantees of results and no
assurance can be given that the expected results will be delivered.
Such forward-looking statements are subject to certain risks, trends
and uncertainties that could cause actual results to differ materially
from those expected. Among those risks, trends and uncertainties are
the general economic climate, including the conditions affecting
industries in which our principal tenants compete; financial condition
of our tenants; changes in the supply of and demand for office
properties in the New York Tri-State area; changes in interest rate
levels; changes in the Company's credit ratings; changes in the
Company's cost of and access to capital; downturns in rental rate
levels in our markets and our ability to lease or re-lease space in a
timely manner at current or anticipated rental rate levels; the
availability of financing to us or our tenants; changes in operating
costs, including utility, real estate taxes, security and insurance
costs; repayment of debt owed to the Company by third parties; risks
associated with joint ventures; liability for uninsured losses or
environmental matters; and other risks associated with the development
and acquisition of properties, including risks that development may
not be completed on schedule, that the tenants will not take occupancy
or pay rent, that development or operating costs may be greater than
anticipated, or that closing of the proposed acquisitions do not occur
as expected. For further information on factors that could impact
Reckson, reference is made to Reckson's filings with the Securities
and Exchange Commission. Reckson undertakes no responsibility to
update or supplement information contained in this press release.