NEW YORK CITY-Scott Rechler, president and CEO of FrontLine Capital Group, held a conference call broadcast on the company’s Web site yesterday to outline its ownership of HQ Global Workplaces and highlight its financial reporting for the third quarter. CEO Gary Kushin of HQ presented a report on the company’s business economics, summarizing the status and plans of the company. Rechler called HQ’s performance, “better than expected.”

Rechler announced last month HQ would be pushed forward as an individual company, standing out of the shadow, so to speak, of FrontLine. In breaking down FrontLine’s ownership of the company yesterday, Rechler explained control amounted to 59.8% or 8,607,076 shares. While FrontLine actually still owns 100% of the company, it is by shifting the way it focuses on control that Rechler hopes to strengthen HQ’s position in the marketplace.

HQ, as of Sept. 30, has $571 million in debt. FrontLine had $157 million in debt for the same period, $106 million of which is listed as debt to parent company, Reckson Strategic Venture Partners. It is in HQ’s $35 million in EBITDA in the third quarter that Rechler wished to focus the most attention during the call. There was approximately $160 million in total revenue and $81 million in gross profit.

Rechler and Kushin identified three mega trends: outsourcing, globalization and business use of technology. Its new center prototype is expected to meet the demands of the market. With 40,000 sf with 250 workstations, $2.2 million initial investment required, HQ expects it will break even in eight months with 14 months for stabilization. They expect revenues in excess of $4 million following the first 14 months and EBITDA yields in excess of 60% from then through year five.

Rechler stated early in the conference call, and again in response to a listener question, FrontLine adopted a shareholders’ rights plan “to protect from takeover while trading at a substantial discount to net asset value.” FrontLine expects to reduce its own monthly overhead by 80%, but the overwhelming majority are in payroll and benefits. These are followed by cuts in professional fees, rent and office expenses, with the slimmest change in corporate costs.

The total pie of FrontLine’s holdings are: 59% HQ, 13% others, 12% OnSite, 9% Realty IQ and 7% Employee Matters. Rechler said that step one was completed in its role with HQ as a holding company and now it is in step two, separating HQ into a separate operating unit. Step three will be to create possible spin offs of other FrontLine Holdings.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.