Prepared and filed by St Ives Burrups

10-K 1 b405026_10k.htm ANNUAL REPORT Prepared and filed by St Ives Burrups

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2004

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 ASSOCIATES REALTY CORP.
(Exact name of registrant as specified in its charter)

Maryland			11-3233650
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

225 Broadhollow Road,			11747
Melville, NY			(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (631) 694-6900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Name of Each Exchange on Which Registered
Common stock, $.01 par value			New York Stock Exchange

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 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.

Indicate by checkmark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes No

The aggregate market value of the shares of common stock held by non-affiliates was approximately $2.5 billion based on the closing price on the New York Stock Exchange for such shares on March 4, 2005.

The Company has one class of common stock, issued at $.01 par value per share, with 80,985,405 shares outstanding on March 4, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Shareholder’s Meeting to be held May 19, 2005 are incorporated by reference into Part III.

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TABLE OF CONTENTS

Item No.		Page
	Part I
1.	Business	I-1
2.	Properties	I-12
3.	Legal Proceedings	I-24
4.	Submission of Matters to a Vote of Security Holders	I-24

	Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	II-1
6.	Selected Financial Data	II-2
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	II-3
7A.	Quantitative and Qualitative Disclosures about Market Risk	II-29
8.	Financial Statements and Supplementary Data	II-30
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	II-30
9A.	Controls and Procedures	II-30
9B.	Other Information	II-30

	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 and Related Stockholder Matters	III-1
13.	Certain Relationships and Related Transactions	III-1
14.	Principal Accountant Fees and Services	III-1

	Part IV
15.	Exhibits and Financial Statement Schedules	IV-1

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PART I

Item 1. Business

General

Reckson Associates Realty Corp. was incorporated in September 1994 and commenced operations effective with the completion of its initial public offering (the “IPO”) on June 2, 1995. Reckson Associates Realty Corp., together with Reckson Operating Partnership, L.P. (the “Operating Partnership”), and their affiliates (collectively, 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 45 years, Reckson has been engaged in the business of owning, developing, acquiring, constructing, managing and leasing office and industrial properties in the New York City tri-state area (the “Tri-State Area”). Based on industry surveys, management believes that the Company is one of the largest owners and operators of Class A central business district (“CBD”) and suburban office properties in the Tri-State Area. The Company operates as a fully integrated, self- administered and self-managed real estate investment trust (“REIT”). At December 31, 2004 the Company owned 87 properties (inclusive of eight joint venture properties) in the Tri-State Area CBD and suburban markets, encompassing approximately 15.9 million rentable square feet, all of which are managed by the Company. The properties include 17 Class A CBD office properties encompassing approximately 6.3 million rentable square feet. The CBD office properties consist of six properties located in New York City, nine properties located in Stamford, CT and two properties located in White Plains, NY. The CBD office properties comprised 56% of the Company’s net operating income (property operating revenues less property operating expenses) for the three months ended December 31, 2004. These properties also include 62 Class A suburban office properties encompassing approximately 8.8 million rentable square feet, of which 43 of these properties, or 75% as measured by square footage, are located within the Company’s ten office parks. Reckson has historically emphasized the development and acquisition of its suburban office properties in large-scale office parks. The Company believes that owning properties in planned office parks provides strategic and synergistic advantages, including the following: (i) certain tenants prefer locating 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. Additionally, the properties include eight industrial/R&D properties encompassing approximately 863,000 rentable square feet. The Company also owns a 354,000 square foot non-core office property located in Orlando, Florida.

In November 2003, the Company sold all but three of the properties included in its Long Island industrial building portfolio to members of the Rechler family for approximately $315.5 million. (See “Recent Developments” for further discussion on this sale.)

Through its ownership of properties in the key CBD and suburban office markets in the Tri-State Area, the Company believes it has a unique competitive advantage as the trend toward the regional decentralization of the workplace increases. Subsequent to the events of September 11, 2001, as well as the impact of technological advances, which further enable decentralization, companies are strategically re-evaluating the benefits and feasibility of regional decentralization and reassessing their long-term space needs. The Company believes this multi-location regional decentralization will continue to take place, increasing as companies begin to have better visibility as to the future of the economy, further validating its regional strategy of maintaining a significant market share in the key CBD and suburban office markets in the Tri-State Area.

At December 31, 2004, the Company also owned approximately 326 acres of land in 12 separate parcels of which the Company can, based on current estimates, develop approximately 3.0 million square feet of office space. During July 2004 the Company commenced the ground-up development on one of these parcels of a 277,000 square foot Class A office building with a total anticipated investment of approximately $61.0 million. There can be no assurances that the actual cost of this development will not exceed the anticipated amount. This development is located within the Company’s existing 404,000 square foot executive office park in Melville, New York. In addition, one of these parcels, comprising 39.5 acres located in Valhalla, New York, is currently under contract for sale. This sale is contingent upon obtaining zoning for residential use of the land and other customary approvals. The proceeds ultimately received from such sale will be determined based

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upon the number of residential units permitted by the rezoning. The zoning approvals and closing is expected to occur during 2006. Another one of these land parcels, comprising 24.7 acres located in Princeton, New Jersey on which the Company estimates that 316,000 square feet of office space can be developed, is under contract for sale for approximately $24.6 million and is expected to close within three months. The aggregate cost basis of this parcel was approximately $23.2 million at December 31, 2004. The Company is currently evaluating alternative land uses for certain of the other land holdings to realize the highest economic value. These alternatives may include rezoning certain land parcels from commercial to residential for potential disposition. As of December 31, 2004, the Company had invested approximately $112.0 million in these development projects, exclusive of the aforementioned land parcel located in Princeton, New Jersey and inclusive of approximately $8.3 million of costs capitalized during 2004 relating to real estate taxes, interest and other carrying costs. Management has made subjective assessments as to the value and recoverability of these investments based on current and proposed development plans, market comparable land values and alternative use values.

The Company has historically opportunistically purchased underdeveloped land, vacant buildings or buildings that were under managed or under performing. The Company applies its real estate expertise to develop, redevelop, renovate and reposition its assets with the goal of creating value in these real estate assets. Since the IPO the Company has developed, redeveloped, renovated or repositioned 18 properties encompassing approximately 2.8 million square feet of office and industrial/R&D space.

The Company holds a $17.0 million note receivable, which bears interest at 12% per annum and is secured by a minority partnership interest in Omni Partners, L.P., owner of the Omni, a 579,000 square foot Class A office property located in Uniondale, New York (the “Omni Note”). The Company currently owns a 60% majority partnership interest in Omni Partners, L.P. and on March 14, 2007 may exercise an option to acquire the remaining 40% interest for a price based on 90% of the fair market value of the property. The Company also holds a $30 million junior mezzanine loan which is secured by a pledge of an indirect ownership interest of an entity which owns the ground leasehold estate under a 1.1 million square foot office complex located on Long Island, New York (the “Mezz Note”). The Mezz Note matures in September 2005 and the borrower has rights to extend its term for three additional one-year periods and, under certain circumstances, prepay amounts outstanding. At December 31, 2004, the Mezz Note had an outstanding balance of approximately $27.6 million and a weighted average interest rate of 13.50% per annum. Such interest rate is based on a spread over LIBOR, with a LIBOR floor of 1.63% per annum.

On December 20, 2004, the Company advanced $34 million under a mezzanine loan agreement to an entity that is controlled by a preferred unit holder in the Operating Partnership (the “NYC Mezz Loan”). The NYC Mezz Loan matures on the earlier of the consummation of the refinancing of the NYC Mezz Loan or December 31, 2005, bears interest at 9% per annum and is secured by certain indirect interests in a 550,000 square foot condominium interest in a Manhattan Class A office tower, other guaranties, pledges and assurances.

As of December 31, 2003, the Company also held three other notes receivable, which aggregated $21.5 million and carried interest rates ranging from 10.5% to 12% per annum (the “Other Notes” and collectively with the Omni Note, the Mezz Note and the NYC Mezz Loan, the “Note Receivable Investments”). These notes are secured in part by a minority partner’s preferred unit interest in the Operating Partnership, an interest in real property and a personal guarantee. During 2004, the minority partner repaid $18.0 million of the Other Notes with $15.5 million in cash and by the minority partner exchanging, and the Operating Partnership redeeming, approximately 3,081 preferred units. The preferred units were redeemed at a par value of $3.1 million of which $600,000 of the redemption proceeds were applied to outstanding interest charges due from the minority partner and for prepaid interest. As a result, at December 31, 2004, the Other Notes aggregated $3.5 million and carried a weighted average interest rate of 11.57%. The Operating Partnership has agreed to extend the maturity of $2.5 million of the Other Notes through December 1, 2005 and the remaining $1.0 million through January 31, 2010. As of December 31, 2004, management has made subjective assessments as to the underlying security value on the Company’s Note Receivable Investments. These assessments indicate an excess of market value over the carrying value related to the Company’s Note Receivable Investments. Based on these assessments the Company’s management believes there is no impairment to the carrying value related to the Company’s Note Receivable Investments.

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The Company’s 354,000 square foot office building located in Orlando, Florida, is a non-core real estate holding which was acquired in May 1999 in connection with the Company’s initial New York City portfolio acquisition. This property was cross-collateralized under a $99.7 million mortgage note payable along with one of the Company’s New York City office buildings. On November 1, 2004, the Company exercised its right to prepay this note in its entirety, without penalty.

The Company also owns a 60% interest in a 172,000 square foot office building located at 520 White Plains Road in Tarrytown, New York (the “520JV”), which is managed by a wholly owned subsidiary of the Company. As of December 31, 2004, the 520JV had total assets of approximately $20.0 million, a mortgage note payable of $11.4 million and other liabilities of $177,000. The Company’s allocable share of the 520JV mortgage note payable is approximately $7.3 million. This mortgage note payable bears interest at 8.85% per annum and matures on September 1, 2005. The operating agreement of the 520JV requires approvals from members on certain decisions including sale of the property, refinancing of the property’s mortgage debt, and material renovations to the property. The Company accounts for the 520JV under the equity method of accounting.

During July 1998, the Company formed Metropolitan Partners, LLC (“Metropolitan”) for the purpose of acquiring Class A office properties in New York City. Currently the Company owns, through Metropolitan and the Operating Partnership, six Class A office properties aggregating approximately 4.6 million square feet.

During September 2000, the Company formed a joint venture (the “Tri-State JV”) with Teachers Insurance and Annuity Association (“TIAA”) and contributed nine Class A suburban office properties aggregating approximately 1.5 million square feet to the Tri-State JV for a 51% majority ownership interest. TIAA contributed approximately $136 million for a 49% interest in the Tri-State JV which was then distributed to the Company. In August 2003, the Company acquired TIAA’s 49% interest in the property located at 275 Broadhollow Road, Melville, NY, for approximately $12.4 million. During April 2004, the Tri-State JV sold 400 Garden City Plaza, Garden City, New York, a 175,000 square foot office building located on Long Island for approximately $30 million. Net proceeds from this sale were distributed to the members of the Tri-State JV. In addition, during September 2004, the Company acquired TIAA’s 49% interest in the property located at 90 Merrick Avenue, East Meadow, NY for approximately $14.9 million. As a result of these transactions, the Tri-State JV owns six Class A suburban office properties aggregating approximately 943,000 square feet. The Company is responsible for managing the day-to-day operations and business affairs of the Tri-State JV and has substantial rights in making decisions affecting the properties such as leasing, marketing and financing. The minority member has certain rights primarily intended to protect its investment. For purposes of its financial statements the Company consolidates the Tri-State JV.

On December 21, 2001, the Company formed a joint venture with the New York State Teachers’ Retirement Systems (“NYSTRS”) (the “919JV”) whereby NYSTRS acquired a 49% indirect interest in the property located at 919 Third Avenue, New York, NY for $220.5 million which was comprised of $122.1 million of its proportionate share of secured mortgage debt and approximately $98.4 million of cash which was then distributed to the Company. The Company is responsible for managing the day-to-day operations and business affairs of the 919JV and has substantial rights in making decisions affecting the property such as developing a budget, leasing and marketing. The minority member has certain rights primarily intended to protect its investment. For purposes of its financial statements the Company consolidates the 919JV.

As of December 31, 2004, the Company has invested approximately $55.2 million in REIT-qualified joint ventures with Reckson Strategic Venture Partners, LLC (“RSVP”), a real estate venture capital fund created in 1997 as a research and development vehicle for the Company to invest in alternative real estate sectors outside the Company’s core office and industrial/R&D focus (see “Recent Developments—Other Investing Activities” for further discussion).

All of the Company’s interests in its properties, land held for development, the Note Receivable Investments and joint ventures 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 December 31, 2004, owned approximately 95.7% of the Operating Partnership’s outstanding common units of limited partnership interest (“OP Units”).

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The Company has established an unsecured credit facility (the “Credit Facility”) with a maximum borrowing amount of $500 million scheduled to mature on August 6, 2007. The Credit Facility requires the Company to comply with a number of financial and other covenants on an ongoing basis.

The Company maintains access to unsecured debt markets through its investment grade ratings on its senior unsecured debt. The Company’s ratings as of December 31, 2004 from the major rating organizations are as follows:

Rating Organization	Rating		Outlook

Fitch Ratings		BBB-		Stable
Moody’s Investors Service		Baa3		Stable
Standard & Poor’s		BBB-		Stable

These security ratings are not a recommendation to buy, sell or hold the Company’s securities and they are subject to revision or withdrawal at any time by the rating organization. Ratings assigned by each rating organization have their own meaning within that organization’s overall classification system. Each rating should be evaluated independently of any other rating.

There are numerous commercial properties that compete with the Company in attracting tenants and numerous companies that compete in selecting land for development and properties for acquisition.

In order to protect the Company’s ability to qualify as a REIT, ownership of its common stock by any single stockholder is limited to 9%, subject to certain exceptions. In June 2003, the Company amended this provision of its charter to ensure that the ownership limit may only be used to protect the Company’s REIT status.

The Company’s principal 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, 2004, the Company had approximately 300 employees.

The Company makes certain filings with the Securities and Exchange Commission, including its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, available free of charge through its website, www.reckson.com, as soon as reasonably practicable after they are filed with the Securities and Exchange Commission. The Company’s annual report to shareholders, press releases and recent presentations are also available free of charge on the website.

Recent Developments

Acquisitions, Dispositions and Investing Activities

In January 2004, the Company sold a 104,000 square foot office property, 120 Mineola Boulevard, located on Long Island for approximately $18.5 million. Net proceeds from the sale were used to repay borrowings under the Credit Facility. As a result, the Company recorded a net gain of approximately $5.2 million, net of limited partners’ minority interest.

In January 2004, the Company acquired 1185 Avenue of the Americas, a 42-story, 1.1 million square foot Class A office tower, located between 46^th and 47^th Streets in New York, NY for $321 million. In connection with this acquisition, the Company assumed a $202 million mortgage and $48 million of mezzanine debt. The balance of the purchase price was paid through an advance under the Credit Facility. The floating rate mortgage and mezzanine debt both matured in August 2004 at which time the Company satisfied the outstanding debt through an advance under its Credit Facility along with cash-on-hand. The property is encumbered by a ground lease which has a remaining term of approximately 40 years with rent scheduled to be re-set at the end of 2005 and then remain constant for the balance of the term. Pursuant to the terms of the ground lease, the Company and the ground lessor have commenced arbitration proceedings relating to the re-setting of the rent under the ground lease. There can be no assurances as to the outcome of the rent re-set process.

During February 2004, a 3.9 acre land parcel located on Long Island was condemned by the Town of Oyster Bay. As consideration for the condemnation the Company initially received approximately $1.8 million.

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The Company’s cost basis in this land parcel was approximately $1.4 million. The Company is currently contesting this valuation and seeking payment of additional consideration from the Town of Oyster Bay but there can be no assurances that the Company will be successful in obtaining any such additional consideration.

In April 2004, the Company, on behalf of the Tri-State JV, sold a 175,000 square foot office building, 400 Garden City Plaza, located on Long Island for approximately $30 million, of which the Company owned a 51% interest, and a wholly owned 9,000 square foot retail property for approximately $2.8 million. In addition, the Company completed the sale of two of the remaining three properties from the November 2003 sale of its Long Island industrial building portfolio for approximately $5.8 million. The disposition of the remaining industrial property, which is subject to certain environmental issues, was conditioned upon the approval of the buyer’s lender, which was not obtained. As a result, the buyer will not be acquiring this property. Management believes that the cost to remediate the environmental issues will not have a material adverse effect on the Company, but there can be no assurance in this regard.

In July 2004, the Company acquired a 141,000 square foot Class A office property, 3 Giralda Farms, located in Madison, NJ for approximately $22.7 million. The Company made this acquisition through available cash-on-hand.

During September 2004, the Company, through Reckson Construction Group, Inc., acquired the remaining 49% interest in the property located at 90 Merrick Avenue, East Meadow, NY, from the Company’s joint venture partner, TIAA, for approximately $14.9 million. This acquisition was financed, in part, from the proceeds received from the April 2004 sale of two industrial properties and with cash-on-hand. In addition, the Company acquired a 215,000 square foot Class A office property, 44 Whippany Road, located in Morristown, New Jersey for approximately $30 million. The Company made this acquisition using funds received from the Company’s September 2004 common equity offering, cash-on-hand and the issuance of approximately 34,000 OP Units which were priced at $28.70 per unit.

During September 2004, the Company sold a 92,000 square foot industrial property, 500 Saw Mill River Road, located in Westchester County for approximately $7.3 million. In connection with this sale, the Company recorded a net gain of approximately $2.2 million, net of limited partners’ minority interest.

On October 1, 2004, the Company acquired a 260,500 square foot Class A office property, 300 Broadhollow Road, located in Melville, Long Island, for approximately $41.0 million. The Company made this acquisition, in part, through an advance under the Credit Facility and with cash-on-hand.

On December 14, 2004, the Tri-State JV acquired a parcel of land adjacent to one of its existing properties for approximately $1.1 million. A small commercial building is situated on the property which the Company anticipates demolishing. The Tri-State JV made this acquisition with available cash-on-hand.

On December 15, 2004, the Company sold a 3.8 acre parcel of land, zoned for industrial use, located on Long Island for approximately $1.1 million which resulted in a gain to the Company, net of limited partners’ minority interest of approximately $706,000.

During January 2005, the Company acquired, in two separate transactions, two Class A office properties located at One and Seven Giralda Farms in Madison, New Jersey for total consideration of approximately $78 million. One Giralda Farms encompasses approximately 150,000 rentable square feet and Seven Giralda Farms encompasses approximately 203,000 rentable square feet. The Company made these acquisitions through advances under its Credit Facility.

Other Investing Activities

During 1997, the Company formed FrontLine Capital Group, formerly Reckson Service Industries, Inc. (“FrontLine”) and RSVP. RSVP is a real estate venture capital fund which invested primarily in real estate and real estate operating companies outside the Company’s core office and industrial/R&D focus and whose common equity is held indirectly by FrontLine. In connection with the formation and spin-off of FrontLine, the Operating Partnership established an unsecured credit facility with FrontLine (the “FrontLine Facility”) in the amount of $100 million for FrontLine to use in its investment activities, operations and other general corporate

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purposes. The Company advanced approximately $93.4 million under the FrontLine Facility. The Operating Partnership also approved the funding of investments of up to $110 million relating to RSVP (the “RSVP Commitment”), through RSVP-controlled joint ventures (for REIT-qualified investments) or advances made to FrontLine under an unsecured loan facility (the “RSVP Facility”) having terms similar to the FrontLine Facility (advances made under the RSVP Facility and the FrontLine Facility hereafter, the “FrontLine Loans”). At December 31, 2004, approximately $109.1 million had been funded through the RSVP Commitment, of which $59.8 million represents investments by the Company in RSVP-controlled (REIT-qualified) joint ventures and $49.3 million represents loans made to FrontLine under the RSVP Facility. As of December 31, 2004, interest accrued (net of reserves) under the FrontLine Facility and the RSVP Facility was approximately $19.6 million.

A committee of the Board of Directors, comprised solely of independent directors, considers any actions to be taken by the Company in connection with the FrontLine Loans and its investments in joint ventures with RSVP. During the third quarter of 2001, the Company noted a significant deterioration in FrontLine’s operations and financial condition and, based on its assessment of value and recoverability and considering the findings and recommendations of the committee and its financial advisor, the Company recorded a $163 million valuation reserve charge, inclusive of anticipated costs, in its consolidated statements of operations relating to its investments in the FrontLine Loans and joint ventures with RSVP. The Company has discontinued the accrual of interest income with respect to the FrontLine Loans. The Company has also reserved against its share of GAAP equity in earnings from the RSVP controlled joint ventures funded through the RSVP Commitment until such income is realized through cash distributions.

At December 31, 2001, the Company, pursuant to Section 166 of the Code, charged off for tax purposes $70 million of the aforementioned reserve directly related to the FrontLine Facility, including accrued interest. On February 14, 2002, the Company charged off for tax purposes an additional $38 million of the reserve directly related to the FrontLine Facility, including accrued interest, and $47 million of the reserve directly related to the RSVP Facility, including accrued interest.

FrontLine is in default under the FrontLine Loans from the Operating Partnership and on June 12, 2002, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.

In September 2003, RSVP completed the restructuring of its capital structure and management arrangements. RSVP also restructured its management arrangements whereby a management company formed by its former managing directors has been retained to manage RSVP pursuant to a management agreement and the employment contracts of the managing directors with RSVP have been terminated. The management agreement provides for an annual base management fee, and disposition fees equal to 2% of the net proceeds received by RSVP on asset sales. (The base management fee and disposition fees are subject to a maximum over the term of the agreement of $7.5 million.) In addition, the managing directors retained a one-third residual interest in RSVP’s assets which is subordinated to the distribution of an aggregate amount of $75 million to RSVP and/or the Company in respect of its joint ventures with RSVP. The management agreement has a three-year term, subject to early termination in the event of the disposition of all of the assets of RSVP.

In connection with the restructuring, RSVP and certain of its affiliates obtained a $60 million secured loan (the “RSVP Secured Loan”). In connection with this loan, the Operating Partnership agreed to indemnify the lender in respect of any environmental liabilities incurred with regard to RSVP’s remaining assets in which the Operating Partnership has a joint venture interest (primarily certain student housing assets held by RSVP) and guaranteed the obligation of an affiliate of RSVP to the lender in an amount up to $6 million plus collection costs for any losses incurred by the lender as a result of certain acts of malfeasance on the part of RSVP and/or its affiliates. The RSVP Secured Loan is scheduled to mature in 2006 and is expected to be repaid from proceeds of assets sales by RSVP and or a joint venture between RSVP and a subsidiary of the Operating Partnership.

In August 2004, American Campus Communities, Inc. (“ACC”), a student housing company owned by RSVP and the joint venture between RSVP and a subsidiary of the Operating Partnership completed an initial public offering (the “ACC IPO”) of its common stock. RSVP and the joint venture between RSVP and a subsidiary of the Operating Partnership sold its entire ownership position in ACC as part of the ACC IPO. Proceeds from the ACC IPO were used in part to pay accrued interest on the RSVP Secured Loan and reduce

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the principal balance down to $30 million. The Company through its ownership position in the joint venture and outstanding advances made under the RSVP facility anticipates realizing approximately $30 million in the aggregate from the ACC sale. To date, the Company has received approximately $10.6 million of such proceeds. The remaining amount is expected to be received subsequent to the United States Bankruptcy Court’s approval of a plan of re-organization of FrontLine. At December 31, 2004, RSVP had approximately $20.5 million of cash and cash equivalents net of contractual reserves. There can be no assurances as to the final outcome of such Plan of re-organization.

As a result of the foregoing, the net carrying value of the Company’s investments in the FrontLine Loans and joint venture investments with RSVP, inclusive of the Company’s share of previously accrued GAAP equity in earnings on those investments, is approximately $55.2 million which was reassessed with no change by management as of December 31, 2004. Such amount has been reflected in investments in affiliate loans and joint ventures on the Company’s consolidated balance sheet.

Scott H. Rechler, who serves as Chief Executive Officer, President and Chairman of the Board of the Company, serves as CEO and Chairman of the Board of Directors of FrontLine and is its sole board member. Scott H. Rechler also serves as a member of the management committee of RSVP and serves as a member of the Board of Directors of ACC.

In November 2004, Concord Associates LLC and Sullivan Resorts LLC, a joint venture approximately 47% owned by RSVP, executed a binding agreement to contribute its Concord and Grossingers resort properties (excluding residential land) to Empire Resorts Inc. (NASDAQ: NYNY)(“Empire”) for consideration of 18 million shares of common stock of Empire and the right to appoint five members of the Board of Directors. It is currently anticipated that Scott H. Rechler will be appointed to fill one seat on Empire’s Board. On March 4, 2005, Empire announced that the agreement had been amended, whereby the parties agreed to waive the condition to closing which required final governmental approval of gaming in the Catskills. The transaction is subject to satisfaction of certain conditions and approvals, including the approval of Empire’s shareholders.

Leasing Activity

During the year ended December 31, 2004, the Company executed 242 leases encompassing approximately 3.1 million square feet. The following table summarizes the leasing activity by location and property type:

	Number of leases		Leased square feet		Average effective rent per square foot (1)

CBD office properties
Connecticut		33		240,156	$	24.43
New York City		44		928,627	$	52.13
Westchester		8		90,583	$	26.72

Subtotal / Weighted average		85		1,259,366	$	45.02


Suburban office properties
Long Island		75		788,476	$	26.92
New Jersey		24		434,288	$	26.05
Westchester		53		501,250	$	22.48

Subtotal / Weighted average		152		1,724,014	$	25.41


Industrial / R&D properties
Connecticut		1		78,877	$	4.21
New Jersey		2		7,908	$	6.99
Westchester		2		50,151	$	18.84

Subtotal / Weighted average		5		136,936	$	9.73

Total / Weighted average		242		3,120,316	$	32.64

(1) Base rent adjusted on a straight-line basis for free rent periods, tenant improvements and leasing commissions.

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Financing Activities

The Company maintains its $500 million Credit Facility from JPMorgan Chase Bank, as administrative agent, Wells Fargo Bank, National Association as syndication agent and Citicorp North America, Inc. and Wachovia Bank, National Association as co-documentation agents. The Credit Facility matures in August 2007, contains options for a one-year extension subject to a fee of 25 basis points and, upon receiving additional lender commitments, increasing the maximum revolving credit amount to $750 million. In addition, borrowings under the Credit Facility are currently priced off LIBOR plus 90 basis points and the Credit Facility carries a facility fee of 20 basis points per annum. In the event of a change in the Operating Partnership’s senior unsecured credit ratings the interest rates and facility fee are subject to change. At December 31, 2004, the outstanding borrowings under the Credit Facility aggregated $235.5 million and carried a weighted average interest rate of 3.30% per annum.

The following table sets forth the Company’s applicable margin, pursuant to the Credit Facility, which indicates the additional respective percentages per annum applied to LIBOR based-borrowings determined based on the Operating Partnership’s senior unsecured credit rating:

Senior unsecured credit rating	Applicable Margin


A- / A3		0.600%
BBB+ / Baa1		0.625%
BBB / Baa2		0.700%
BBB- / Baa3		0.900%
Below BBB- / Baa3 or unrated		1.200%

The Company utilizes the Credit Facility primarily to finance real estate investments, fund its real estate development activities and for working capital purposes. At December 31, 2004, the Company had availability under the Credit Facility to borrow approximately an additional $263.3 million, subject to compliance with certain financial covenants. Such amount is net of approximately $1.2 million in outstanding undrawn standby letters of credit, which are issued under the Credit Facility.

In connection with the acquisition of certain properties, contributing partners of such properties have provided guarantees on indebtedness of the Company. As a result, the Company maintains certain outstanding balances on its Credit Facility.

On January 22, 2004, the Operating Partnership issued $150 million of seven-year 5.15% (5.196% effective rate) senior unsecured notes. Interest on the notes is payable semi-annually on January 15^th and July 15^th that commenced on July 15, 2004. Prior to the issuance of these notes, the Company entered into several anticipatory interest rate hedge instruments to protect itself against potentially rising interest rates. At the time the notes were issued the Company incurred a net cost of approximately $980,000 to settle these instruments. Such costs are being amortized to interest expense over the term of the notes. Net proceeds of approximately $148 million received from this issuance were used to repay outstanding borrowings under the Credit Facility and to invest in short-term liquid investments.

On March 15, 2004, the Company repaid $100 million of the Operating Partnership’s 7.4% senior unsecured notes at maturity.

On August 9, 2004, the Company borrowed $222.5 million under its Credit Facility and, along with cash-on-hand, paid off the $250 million balance of the mortgage debt on the property located at 1185 Avenue of the Americas in New York City.

On August 13, 2004, the Operating Partnership issued $150 million of 5.875% (5.989% effective yield) senior unsecured notes due August 15, 2014. Interest on the notes will be payable semi-annually on February 15th and August 15th, commencing February 15, 2005. Prior to the issuance of these notes, the Company entered into several anticipatory interest rate hedge instruments to protect itself against potentially rising interest rates. At the time the notes were issued, these instruments were settled and the Company received a net benefit of approximately $1.9 million. Such benefit is being amortized over the term of the notes to effectively reduce interest expense. The Operating Partnership used the net proceeds from this offering to

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repay a portion of the Credit Facility borrowings which were used to satisfy the outstanding mortgage debt on one of the Company’s New York City properties.

On November 1, 2004, the Company exercised its right to prepay the outstanding mortgage debt of approximately $99.6 million, without penalty, on the properties located at One Orlando Center in Orlando, Florida and 120 West 45^th Street in New York City. The Company borrowed under its Credit Facility to fund such repayment.

Stock and Other Equity Offerings

In January 2004, the Company exercised its option to redeem 2.0 million shares, or 100% of its outstanding 8.85% Series B Convertible Cumulative Preferred Stock, with a stated value of $50.0 million, for approximately 1,958,000 shares of its common stock priced at $25.54 per share.

In March 2004, the Company completed an equity offering of 5.5 million shares of its common stock raising approximately $149.5 million, net of an underwriting discount, or $27.18 per share. Net proceeds received from this transaction were used to repay outstanding borrowings under the Credit Facility, repay $100 million of the Operating Partnership’s 7.4% senior unsecured notes and for general corporate purposes, including the redemption of its 7.625% Series A Convertible Cumulative Preferred Stock (the “Series A preferred stock”).

On September 14, 2004, the Company completed an equity offering of 5.0 million shares of its common stock raising approximately $137.5 million, net of an underwriting discount, or $27.39 per share. Net proceeds received from this transaction were used to redeem the Company’s Series A preferred stock and for general corporate purposes.

During September 2004, in connection with the Company’s acquisition of 44 Whippany Road, the Operating Partnership issued approximately 34,000 OP Units to the sellers of the property which were priced at $28.70 per unit.

On December 14, 2004, the Company completed an equity offering of 4.5 million shares of its common stock raising approximately $148.1 million, net of an underwriting discount, or $32.90 per share. Net proceeds from this transaction were used to repay outstanding borrowings under the Credit Facility.

During 2004, the Company received approximately $63.7 million of proceeds from the exercising of approximately 2.8 million stock options.

The Board of Directors of the Company initially authorized the purchase of up to 5.0 million shares of the Company’s common stock. Transactions conducted on the New York Stock Exchange have been, and will continue to be, effected in accordance with the safe harbor provisions of the Securities Exchange Act of 1934 and may be terminated by the Company at any time. Since the Board’s initial authorization, the Company has purchased 3,318,600 shares of its common stock for an aggregate purchase price of approximately $71.3 million. In June 2004, the Board of Directors re-set the Company’s common stock repurchase program back to 5.0 million shares. No purchases were made during the year ended December 31, 2004.

The Company’s Series A preferred stock, aggregating 8,834,500 shares, was redeemable by the Company on or after April 13, 2004 at a price of $25.7625 per share with such price decreasing, at annual intervals, to $25.00 per share on April 13, 2008. In addition, the Series A preferred stock, at the option of the holder, was convertible at any time into the Company’s common stock at a price of $28.51 per share. On May 13, 2004, the Company purchased on the open market and retired 140,600 shares of the Series A preferred stock for approximately $3.4 million or $24.45 per share. During July 2004, the Company completed an exchange with a holder of 1,350,000 shares of the Series A preferred stock for 1,304,602 shares of common stock. During August 2004, the Company announced the redemption of 2,000,000 shares of its then outstanding shares of Series A preferred stock at a redemption price of $25.7625 per share plus accumulated and unpaid dividends. On September 20, 2004, the Company redeemed 1,841,905 of such shares for approximately $47.9 million, including accumulated and unpaid dividends. The remaining 158,095 shares of Series A preferred stock were exchanged into common stock of the Company at the election of the Series A preferred shareholders. During September 2004, the Company announced the redemption of all of its then

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outstanding shares of Series A preferred stock aggregating 5,343,900 shares at a redemption price of $25.7625 per share plus accumulated and unpaid dividends. On October 15, 2004, the Company redeemed 4,965,062 shares of Series A preferred stock for approximately $129.9 million, including accumulated and unpaid dividends. The remaining 378,838 shares of Series A preferred stock were exchanged into common stock of the Company, at the election of the Series A preferred shareholders.

During 2004, the Operating Partnership redeemed and/or exchanged approximately 18,462 of its outstanding preferred units, with an aggregate stated value of approximately $18.5 million with approximately $3.1 million of such amount applied to amounts owed from the preferred unit holder under the Other Notes and the balance into approximately 531,000 OP Units. Subsequent to these exchanges, the OP Units were exchanged for an equal number of shares of the Company’s common stock.

Other

In March of 2004, the Company received notification from the Internal Revenue Service indicating that it has selected the 2001 tax return of the Operating Partnership for examination. The examination process is currently in its latter stages and nearing completion. To date, we have not been informed of any adjustment to the tax return under examination. However, no assurances can be made at this time with respect to the ultimate outcome of the examination.

Corporate Strategies and Growth Opportunities

The Company’s primary business objectives are to maximize current return to stockholders through increases in distributable cash flow per share and to increase stockholders’ long-term total return through the appreciation in value of its common stock. The Company’s core business strategy is based on a long-term outlook considering real estate as a cyclical business. The Company seeks to accomplish long-term stability and success by developing and maintaining an infrastructure and franchise that is modeled for success over the long-term. This approach allows the Company to recognize different points in the market cycle and adjust its strategy accordingly. During 2004, the Company experienced increased leasing activity, which resulted in increased occupancies in its properties. The increased leasing activity is a result of the economic recovery occurring in the New York tri-state region. The Company is cautiously optimistic about the prospects for continued economic recovery in its markets. With this cautious bias we choose to maintain our conservative strategy of focusing on retaining high occupancies, controlling operating expenses, maintaining a high level of investment discipline and preserving financial flexibility. The Company plans to achieve these objectives by continuing Reckson’s corporate strategies and capitalizing on the internal and external growth opportunities as described below.

Corporate Strategies. Management believes that throughout its 45-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: (i) a multidisciplinary leasing approach that involves architectural design and construction personnel as well as leasing professionals, (ii) innovative marketing programs that strategically position the Company’s properties and distinguish its portfolio from the competition, increase brand equity and gain market-share. These cost-effective, high-yield programs include electronic web-casting, targeted outdoor and print media campaigns and sales promotion that enhances broker relationships and influences tenant retention, (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 Company’s market position and efficiencies attributable to the state-of-the-art energy control systems at many of the office properties, (v) a fully integrated infrastructure of proprietary and property management accounting systems which encompasses technologically advanced systems and tools that provide meaningful information, on a real time basis, throughout the entire organization and (vi) an acquisition, disposition 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.

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The Company also currently intends to adhere to a policy of maintaining a stabilized debt ratio over time (defined as the total debt of the Company as a percentage of the sum of the Company’s total debt and the market value of its equity) of not more than 50%. This debt ratio is intended to provide the Company with financial flexibility to select the optimal source of capital (whether debt or equity) with which to finance external growth. There can be no assurances that the Company will not adjust this policy in the future. As of December 31, 2004, the Company’s debt ratio was approximately 33.8%. This calculation is net of minority partners’ proportionate share of joint venture debt and includes the Company’s share of unconsolidated joint venture debt.

Growth Opportunities. The Company intends to achieve its primary business objectives by applying its corporate strategies to the internal and external growth opportunities described below.

Internal Growth. To the extent New York City, Long Island, Westchester, New Jersey and the Southern Connecticut office markets stabilize and continue to recover with limited new supply, management believes the Company is well positioned to benefit from rental revenue growth through: (i) contractual annual compounding of 3-4% base rent increases on approximately 90% of existing leases from its Long Island properties, (ii) periodic contractual increases in base rent on existing leases from its Westchester properties, New Jersey properties, New York City properties and its Southern Connecticut properties and (iii) the potential for increases to base rents as leases expire and space is re-leased at the higher rents that exist in the current market environment.

Through its ownership of properties in the key CBD and suburban office markets in the Tri-State Area, the Company believes it has a unique competitive advantage as the trend toward the regional decentralization of the workplace increases. Subsequent to the events of September 11, 2001 as well as the impact of technological advances, which further enable decentralization, companies are strategically re-evaluating the benefits and feasibility of regional decentralization and reassessing their long-term space needs. The Company believes this multi-location regional decentralization will continue to take place, increasing as companies begin to have better visibility as to the future of the economy, further validating our regional strategy of maintaining a significant market share in the key CBD and suburban office markets in the Tri-State Area.

External Growth. The Company seeks to acquire multi-tenant Class A office buildings in New York City and the surrounding Tri-State Area CBD and core suburban markets located in the Tri-State Area. Management believes that the Tri-State Area presents future opportunities to acquire or invest in properties at attractive yields. Valuations of Class A office properties in the Company’s tri-state area markets have risen significantly over the past 18 months. The Company believes this is attributable to several factors including the economic recovery the market is experiencing, the flow of capital into the real estate sector, the lack of available product and the supply constrained nature of our markets. The Company believes that its (i) capital structure, in particular its Credit Facility providing for a maximum borrowing amount of up to $500 million (with additional capacity of $250 million upon receiving additional lender commitments) and access to unsecured debt markets, (ii) ability to acquire a property for OP Units and thereby defer the seller’s income tax on gain, (iii) operating economies of scale, (iv) relationships with corporate owners of real estate, financial institutions and private real estate owners, (v) fully integrated operations in its five existing divisions and (vi) its substantial 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 Company also intends to selectively develop new Class A CBD and suburban office properties primarily on land it currently owns and to continue to redevelop existing properties as these opportunities arise. The Company will concentrate its development activities on Class A CBD and suburban office properties within the Tri-State Area. The Company will also invest in mezzanine debt or preferred equity positions that are secured by assets or interests in assets located in its Tri-State Area markets. The Company believes that these types of investments may have higher risk/reward attributes. However, management believes that such risks can be mitigated by the Company’s experience, knowledge and operating expertise in the markets in which the assets are located.

The Company also believes that its New York City division provides additional leasing and operational capabilities 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 key Tri-State Area sub-markets. The Company actively seeks alternative sources of low-cost capital to finance its growth opportunities. The Company plans

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to expand its joint venture relationships with institutional partners or seek similar low-cost capital providers to purchase assets in its markets. The Company believes that establishing these capital sources will provide the Company with a competitive advantage in acquiring assets as well as provide the Company the ability to leverage its operating infrastructure in the form of management and other fees.

In addition, when valuations for commercial real estate properties are high, the Company may seek to sell certain properties or interests therein to realize value and profit created. The Company will then seek opportunities to reinvest the capital realized from these dispositions back into assets in the Company’s core Tri-State Area markets. However, there can be no assurances that the Company will be able to identify such opportunities that meet the Company’s underwriting criteria.

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 Company may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property.

All of the Company’s properties have been subjected to a Phase I or similar environmental audit (which involved general inspections without soil sampling, ground water analysis or radon testing) completed by independent environmental consultant companies. These environmental audits have not revealed any environmental liability that would have a material adverse effect on the Company’s business.

Soil, sediment and groundwater contamination, consisting of volatile organic compounds (“VOCs”) and metals, has been identified at the property at 32 Windsor Place, Central Islip, New York. The contamination is associated with industrial activities conducted by a tenant at the property over a number of years. The contamination, which was identified through an environmental investigation conducted on behalf of the Company, has been reported to the New York State Department of Environmental Conservation. The Company has notified the tenant of the findings and has demanded that the tenant take appropriate actions to fully investigate and remediate the contamination. Under applicable environmental laws, both the tenant and the Company are liable for the cost of investigation and remediation. The Company does not believe that the cost of investigation and remediation will be material and the Company has recourse against the tenant. However, there can be no assurance that the Company will not incur liability that would have a material adverse effect on the Company’s business.

Item 2. Properties

General

As of December 31, 2004 the Company owned 87 properties (including eight joint venture properties) in the Tri-State Area CBD and suburban markets, encompassing approximately 15.9 million rentable square feet, all of which are managed by the Company. The properties include 17 Class A CBD office properties encompassing approximately 6.3 million rentable square feet. The CBD office properties consist of six

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properties located in New York City, nine properties located in Stamford, CT and two properties located in White Plains, NY. The CBD office properties comprised 56% of the Company’s net operating income (property operating revenues less property operating expenses) for the three months ended December 31, 2004. The properties also include 62 Class A suburban office properties encompassing approximately 8.8 million rentable square feet, of which 43 of these properties, or 75% as measured by square footage, are located within the Company’s ten office parks. Reckson has historically emphasized the development and acquisition of its suburban office properties in large-scale office parks. The Company believes that owning properties in planned office parks provides strategic and synergistic advantages, including the following: (i) certain tenants prefer locating 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. The properties also include eight industrial/ R&D properties encompassing approximately 863,000 rentable square feet. The Company also owns a 354,000 square foot non-core office property located in Orlando, Florida.

Set forth below is a summary of certain information relating to the Company’s properties, categorized by office and industrial / R&D properties, as of December 31, 2004.

Office Properties

General

As of December 31, 2004, the Company owned or had an interest in 17 Class A CBD office properties encompassing approximately 6.3 million square feet and 62 Class A suburban office properties encompassing approximately 8.8 million square feet. As of December 31, 2004, the office properties were approximately 94.1% leased (excluding properties under development) to approximately 880 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. The 17 Class A CBD office properties consist of six properties located in New York City, nine properties located in Stamford, CT and two properties located in White Plains, NY. Forty-three of the 62 suburban office properties are located within the Company’s ten office parks. The buildings in these office parks offer a full array of amenities including health clubs, racquetball courts, restaurants, computer controlled HVAC access systems and conference centers. Management believes that the location, quality of construction and amenities as well as the Company’s reputation for providing a high level of tenant service have enabled the Company to attract and retain a national tenant base. The office tenants include companies representing all major industry groups including consumer products, financial services, pharmaceuticals, health care, telecommunication and technology and insurance and service companies, such as “Big Four” accounting firms and major law firms.

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 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, 2004 for each of the office properties.

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	Percentage Ownership			Ownership Interest (Ground Lease Expiration Date)(1)				Year Constructed			Land Area (Acres)		Number of Floors		Rentable Square Feet		Percent Leased		Annual Base Rent(2)		Annual Base Rent Per Leased Sq. Ft.		Number of Tenant Leases

Suburban Office Properties:

Huntington Melville Corporate Center
395 North Service Rd, Melville, NY		100	%		Lease	(2081	)		1988			7.5		4		188,233		100.0%	$	5,513,622	$	29.29		13
200 Broadhollow Rd, Melville, NY		100	%			Fee			1981			4.6		4		68,522		98.2%	$	1,546,417	$	22.99		18
48 South Service Rd, Melville, NY		100	%			Fee			1986			7.3		4		128,024		99.7%	$	3,044,805	$	23.87		19
35 Pinelawn Rd, Melville, NY		100	%			Fee			1980			6.0		2		108,503		92.8%	$	2,385,780	$	23.68		41
275 Broadhollow Rd, Melville, NY		100	%			Fee			1970			5.8		4		126,770		100.0%	$	3,190,288	$	25.17		4
300 Broadhollow Rd, Melville, NY		100	%			Fee			1989			14.7		4		239,351		93.9%	$	4,139,131	$	18.42		15
58 South Service Rd, Melville, NY		100	%			Fee			2000			16.5		4		280,497		91.7%	$	8,268,662	$	32.15		13
1305 Old Walt Whitman Rd, Melville, NY		51	%			Fee			1998	(3)		18.1		3		164,166		100.0%	$	4,525,136	$	27.56		7

Total—Huntington Melville Corporate Center												80.5				1,304,066		96.4%	$	32,613,840	$	25.95		130

North Shore Atrium
6800 Jericho Turnpike, Syosset, NY		100	%			Fee			1977			13.0		2		206,403		97.2%	$	3,692,963	$	18.40		48
6900 Jericho Turnpike, Syosset, NY		100	%			Fee			1982			5.0		4		95,085		92.5%	$	2,042,659	$	23.22		19

Total—North Shore Atrium												18.0				301,488		95.7%	$	5,735,623	$	19.87		67

Nassau West Corporate Center
50 Charles Lindbergh Blvd., Mitchell Field, NY		100	%		Lease	(2082	)		1984			9.1		6		217,578		94.9%	$	5,079,945	$	24.60		31
60 Charles Lindbergh Blvd., Mitchell Field, NY		100	%		Lease	(2082	)		1989			7.8		2		219,066		100.0%	$	4,983,345	$	22.75		8
51 Charles Lindbergh Blvd. , Mitchell Field, NY		100	%		Lease	(2081	)		1989			6.6		1		108,000		100.0%	$	2,766,067	$	25.61		1
55 Charles Lindbergh Blvd. , Mitchell Field, NY		100	%		Lease	(2081	)		1982			10.0		2		214,581		100.0%	$	2,920,255	$	13.61		2
333 Earl Ovington Blvd., Mitchell Field, NY		60	%		Lease	(2088	)		1991			30.6		10		580,758		85.2%	$	14,320,656	$	28.93		37
90 Merrick Ave., Mitchell Field, NY		100	%		Lease	(2084	)		1985			13.2		9		235,328		99.4%	$	5,823,107	$	24.89		30

Total—Nassau West Corporate Center												77.3				1,575,311		93.8%	$	35,893,375	$	24.30		109

Stand-alone Long Island Properties
88 Duryea Rd., Melville, NY		100	%			Fee			1986			1.5		2		23,878		100.0%	$	589,320	$	24.68		4
310 East Shore Rd., Great Neck, NY		100	%			Fee			1981			1.5		4		50,054		100.0%	$	1,218,001	$	24.33		18
333 East Shore Rd., Great Neck, NY		100	%		Lease	(2064	)		1976			1.5		2		17,650		100.0%	$	493,729	$	27.97		9
520 Broadhollow Rd., Melville, NY		100	%			Fee			1978			7.0		1		85,784		100.0%	$	1,643,221	$	19.16		4
1660 Walt Whitman Rd., Melville, NY		100	%			Fee			1980			6.5		1		77,109		100.0%	$	1,586,584	$	20.58		11
150 Motor Parkway, Hauppauge, NY		100	%			Fee			1984			11.3		4		185,361		97.6%	$	3,883,918	$	21.47		28
300 Motor Parkway, Hauppauge, NY		100	%			Fee			1979			4.2		1		54,154		88.3%	$	918,075	$	19.21		8
48 Harbor Pk Dr., Port Washington, NY		100	%			Fee			1976			2.7		1		35,000		100.0%	$	860,602	$	24.59		1
50 Marcus Dr., Melville, NY		100	%			Fee			2000			12.9		2		163,762		100.0%	$	4,066,684	$	24.83		2

Total—Stand-alone Long Island Properties												49.1				692,752		98.4%	$	15,260,134	$	22.38		85

Tarrytown Corporate Center
505 White Plains Rd., Tarrytown, NY		100	%			Fee			1974			1.4		2		26,319		92.6%	$	460,031	$	18.88		21
520 White Plains Rd., Tarrytown, NY		60	%			Fee(4)			1981			6.8		6		158,560		98.3%	$	2,882,244	$	18.49		5
555 White Plains Rd., Tarrytown, NY		100	%			Fee			1972			4.2		5		121,894		84.8%	$	2,204,222	$	21.32		8
560 White Plains Rd., Tarrytown, NY		100	%			Fee			1980			4.0		6		124,136		88.1%	$	2,595,545	$	23.74		21
580 White Plains Rd., Tarrytown, NY		100	%			Fee			1977			6.1		6		169,809		64.0%	$	2,258,906	$	20.79		16
660 White Plains Rd., Tarrytown, NY		100	%			Fee			1983			10.9		6		253,283		94.1%	$	5,817,516	$	24.40		53

Total—Tarrytown Corporate Center												33.4				854,001		86.7%	$	16,218,463	$	21.91		124

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	Percentage Ownership			Ownership Interest (Ground Lease Expiration Date)(1)		Year Constructed		Land Area (Acres)		Number of Floors		Rentable Square Feet		Percent Leased			Annual Base Rent(2)		Annual Base Rent Per Leased Sq. Ft.		Number of Tenant Leases

Reckson Executive Park
1 International Dr., Ryebrook, NY		100	%		Fee		1983		N/A		3		90,000		100.0	%	$	1,155,000	$	12.83		1
2 International Dr., Ryebrook, NY		100	%		Fee		1983		N/A		3		90,000		100.0	%	$	1,155,000	$	12.83		1
3 International Dr., Ryebrook, NY		100	%		Fee		1983		N/A		3		91,193		50.9	%	$	1,118,049	$	24.07		3
4 International Dr., Ryebrook, NY		100	%		Fee		1986		N/A		3		87,833		92.9	%	$	2,090,863	$	25.61		12
5 International Dr., Ryebrook, NY		100	%		Fee		1986		N/A		3		90,000		51.1	%	$	1,039,920	$	22.59		2
6 International Dr., Ryebrook, NY		100	%		Fee		1986		N/A		3		95,097		84.1	%	$	1,996,513	$	24.97		9

Total—Reckson Executive Park									44.4				544,123		79.8	%	$	8,555,345	$	19.71		28

Summit at Valhalla
100 Summit Dr., Valhalla, NY		100	%		Fee		1988		11.3		4		248,174		87.3	%	$	5,445,782	$	25.13		9
200 Summit Dr., Valhalla, NY		100	%		Fee		1990		18.0		4		233,585		99.4	%	$	6,022,938	$	25.95		13
500 Summit Dr., Valhalla, NY		100	%		Fee		1986		29.1		4		208,660		100.0	%	$	5,738,150	$	27.50		1

Total—Summit at Valhalla									58.4				690,419		95.2	%	$	17,206,870	$	26.17		23

Mt. Pleasant Corporate Center
115/117 Stevens Ave., Mt. Pleasant, NY		100	%		Fee		1984		5.0		3		168,859		91.5	%	$	3,210,327	$	20.77		20

Total—Mt. Pleasant Corporate Center									5.0				168,859		91.5	%	$	3,210,327	$	20.77		20

Stand-alone Westchester Properties
120 White Plains Rd., Tarrytown, NY		51	%		Fee		1984		9.7		6		209,822		93.5	%	$	4,789,430	$	24.42		15
80 Grasslands, Elmsford, NY		100	%		Fee		1989		4.9		3		87,114		100.0	%	$	1,862,953	$	21.39		5

Total—Stand-alone Westchester Properties									14.6				296,936		95.4	%	$	6,652,383	$	23.49		20

Executive Hill Office Park
100 Executive Dr., Rt. 280 Corridor, NJ		100	%		Fee		1978		10.1		3		93,349		98.4	%	$	1,655,016	$	18.02		13
200 Executive Dr., Rt. 280 Corridor, NJ		100	%		Fee		1980		8.2		4		106,652		94.0	%	$	2,092,303	$	20.87		12
300 Executive Dr., Rt. 280 Corridor, NJ		100	%		Fee		1984		8.7		4		124,777		94.0	%	$	2,468,825	$	21.06		15
10 Rooney Circle, Rt. 280 Corridor, NJ		100	%		Fee		1971		5.2		3		70,716		78.9	%	$	1,401,713	$	25.11		2

Total—Executive Hill Office Park									32.2				395,494		92.3	%	$	7,617,857	$	20.86		42

University Square Princeton
100 Campus Dr., Princeton/Rt. 1 Corridor, NJ		100	%		Fee		1987		N/A		1		27,888		100.0	%	$	505,693	$	18.13		3
104 Campus Dr., Princeton/Rt. 1 Corridor, NJ		100	%		Fee		1987		N/A		1		70,239		87.0	%	$	1,327,450	$	21.71		2
115 Campus Dr., Princeton/Rt. 1 Corridor, NJ		100	%		Fee		1987		N/A		1		33,600		100.0	%	$	834,759	$	24.84		1

Total—University Square Princeton									11.0				131,727		93.1	%	$	2,667,902	$	21.76		6

Short Hills Office Park
101 John F. Kennedy Parkway, Short Hills, NJ		100	%		Fee		1981		9.0		6		191,267		95.7	%	$	4,522,487	$	24.71		6
103 John F. Kennedy Parkway, Short Hills, NJ		100	%		Fee		1981		6.0		4		123,000		100.0	%	$	4,182,000	$	34.00		1
51 John F Kennedy Parkway, Short Hills, NJ		51	%		Fee		1986		11.0		5		250,713		98.7	%	$	8,769,878	$	35.45		20

Total—Short Hills Office Park									26.0				564,980		98.0	%	$	17,474,365	$	31.58		27

Stand-alone New Jersey Properties
99 Cherry Hill Road, Parsippany, NJ		100	%		Fee		1982		8.8		3		93,393		65.4	%	$	1,344,999	$	22.03		9
119 Cherry Hill Rd, Parsippany, NJ		100	%		Fee		1982		9.3		3		95,179		62.9	%	$	1,098,635	$	18.34		12
44 Whippany Road, Morristown, NJ		100	%		Fee		1985		20.0		3		215,037		90.6	%	$	4,352,380	$	22.33		6
One Eagle Rock, Hanover, NJ		100	%		Fee		1986		10.4		3		144,587		87.9	%	$	2,063,073	$	16.22		7
3 University Plaza, Hackensack, NJ		100	%		Fee		1985		10.6		6		219,796		100.0	%	$	4,197,401	$	19.10		24
1255 Broad St., Clifton, NJ		100	%		Fee		1968		11.1		2		193,574		100.0	%	$	3,173,963	$	16.40		6
492 River Rd., Nutley, NJ		100	%		Fee		1952		17.3		3		130,009		100.0	%	$	2,177,651	$	16.75		1
3 Giralda Farms, Madison, NJ		100	%		Fee		1990		21.0		4		141,000		100.0	%	$	1,878,869	$	13.33		1

Total—Stand-alone NJ Properties									108.5				1,232,575		91.5	%	$	20,286,970	$	18.00		66

Total Suburban Office Properties									558.4				8,752,731		93.0	%	$	189,393,452	$	23.26		747

I-15

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	Percentage Ownership			Ownership Interest (Ground Lease Expiration Date)(1)			Year Constructed		Land Area (Acres)		Number of Floors		Rentable Square Feet		Percent Leased			Annual Base Rent(2)		Annual Base Rent Per Leased Sq. Ft.		Number of Tenant Leases

CBD Office Properties:

Landmark Square
One Landmark Sq., Stamford, CT		100	%			Fee		1973		N/A		22		281,186		85.6	%	$	6,409,187	$	26.61		61
Two Landmark Sq., Stamford, CT		100	%			Fee		1976		N/A		3		36,889		85.7	%	$	841,302	$	26.61		11
Three Landmark Sq., Stamford, CT		100	%			Fee		1978		N/A		6		128,887		95.8	%	$	2,619,245	$	21.22		14
Four Landmark Sq., Stamford, CT		100	%			Fee		1977		N/A		5		99,296		79.3	%	$	1,694,110	$	21.51		16
Five Landmark Sq., Stamford, CT		100	%			Fee		1976		N/A		3		58,000		100.0	%	$	313,769	$	5.41		12
Six Landmark Sq., Stamford, CT		100	%			Fee		1984		N/A		10		167,081		98.9	%	$	1,767,398	$	10.70		5

Total—Landmark Square										7.2				771,339		90.5	%	$	13,645,013	$	19.55		119

Stand-alone Connecticut
1055 Washington Blvd., Stamford, CT		100	%		Lease	2090		1987		1.5		10		178,000		60.5	%	$	3,325,868	$	30.87		20
680 Washington Blvd., Stamford, CT		51	%			Fee		1989		1.3		11		132,759		100.0	%	$	4,131,110	$	31.12		9
750 Washington Blvd., Stamford, CT		51	%			Fee		1989		2.4		11		186,148		96.2	%	$	4,708,975	$	26.31		13

Total—Stand-alone Connecticut										5.2				496,907		84.4	%	$	12,165,953	$	29.00		42