The Melville, NY-based REIT also closed on a substantial portion of the sale of its 95-property, 5.9 million sf, $315.5 million Long Island industrial portfolio. In September, the company began the process of selling the portfolio to Rechler Equity Partners, a newly formed company directed by family members Donald, Roger, Mitchell and Gregg Rechler. The remaining portion is expected to close later this week.

"1185 Avenue of the Americas is a premier Class A office asset that offers the potential for significant upside with 40% of the leases expiring through 2011 at rents that we believe to be approximately 58% below market, says Scott Rechler, Reckson's CEO and president. Rechler pointed out that 1185 is going through a state of transition with one of its largest tenants in bankruptcy, the rent on the ground lease scheduled to be re-set in 2005 and the building requiring certain infrastructure upgrades.

These transactions are consistent with Reckson's strategy to focus on Class A office product in region, restructure management, eliminate approximately $9.5 million of current annual overhead and enhance the company's corporate governance.

The property is presently encumbered by a $202 million mortgage and $48 million mezzanine debt that Reckson would assume upon closing. The floating rate mortgage and mezzanine debt both mature in August 2004 and presently have a weighted average interest rate of 4.95%. The property is also encumbered by a ground lease which has a remaining term of approximately 40 years with rent scheduled to be re-set to market at the end of 2005 and then remain flat for the balance of the term. Tenants include WestPoint Stevens, Amerada Hess, Goldstein Golub & Kessler/American Express, Ralph Lauren and Aspen Publishers.

Based on the building purchase and the closing of the industrial portfolio sale, Reckson adjusted fourth quarter 2003 funds from operations earnings guidance to $.35 per share and 2004 FFO earnings guidance to $2.30 to $2.40 per share.

Instant Insights /

Reckson Buys 1185 Ave. of the Americas for $321M

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