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NEW YORK CITY-Late yesterday afternoon, Reckson Associates Realty Corp.’s president and co-CEO Scott Rechler and CFO, treasurer and executive vice president Michael Maturo together announced increased gains for the third quarter in a special live conference call. They also announced that earlier in the day Reckson had officially received the title to 919 Third Ave. Fielding questions from participants, the two also explained how the company profited from lapsing leases and rent hikes.

Scott Rechler said early in the 45-minute long call that much of the gains were due to the expiration of many leases in its portfolio. Reckson was able to exercise its right not to renew and significantly increase rent. This fueled some of the company’s third quarter success.

“The New York market continues to be on fire,” said Rechler. “I don’t think anyone could have predicted it.” Rechler and Maturo said most of its leases were renting below market value and they realized that if “actually brought to market,” this would dramatically reshape the company’s financial situation.

“Today we received the title of 919 Third Ave. after completing a consensual bankruptcy process,” Rechler related. He also noted that the process had begun in May 1999 when “we acquired the first mortgage for $277½ million.” A $250 million loan was secured on the property. He called it “such a great success” for Reckson. Rechler noted that eventually the company might “look for a long-term partner, maybe some time next year and get some long-term financing.”

Rechler and Maturo said one of Reckson’s greatest successes was its performance in the third quarter. They said Reckson generated a 7.4% cash increase and a 9.1% GAAP increase in the same property NOI. Throughout markets in New York City, Westchester and New Jersey, the executives said they saw a same space rent growth of 22% GAAP and 10% cash for office property and 18% GAAP and 9.8% cash for industrial/R&D, because, in part, of the aforementioned hikes. A three-year, unsecured revolving credit facility of $575 million was closed earlier in the fall, refinancing a prior credit facility and term loan.

Teachers Insurance and Annuity Association purchased 49% of the holding interest in eight Class-A office properties. TIAA paid approximately $136 million. Outstanding borrowings were paid down with this money.

FrontLine Capital, a spin-off of Reckson, of which Rechler is president and CEO, plans to pay down its debt, he says. Greater details of FrontLine’s plans for the future and financial situation will be shared in a Nov. 7 (Election Day) live conference call (details to be announced). Rechler did say that he knows FrontLine is seeking to become stable and move on to paying off the interest it owes.

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