SL Green Realty going forward with plans to acquire Reckson

Long Island Business News, Nov 3, 2006 by Dawn Wotapka Hardesty

SL Green Realty won't let mounting shareholder complaints derail its plans to acquire Reckson Associates Realty Corp.

"SL Green is only interested in buying Reckson in its entirety," said SL Green spokesman Rick Matthews.

SL Green proposes paying $6 billion for Long Island's largest office landlord and then reselling most of the suburban properties to an investment team led by Scott Rechler, Reckson's current chief executive, for $2.1 billion. That will give SL Green, already a dominant Manhattan landlord with more than 17 million square feet, about 5.5 million new square feet across six city buildings.

A shareholder vote is set for Nov. 22.

In the last few weeks, some shareholders and analysts have complained that the suburban portfolio wasn't put on the market, where it could have commanded a higher price from buyers not interested in the Manhattan space. For example, Arnhold & S. Bleichroeder Advisers LLC, which owns 1 percent of Uniondale-based Reckson, said earlier this week it will vote against the plan.

In documents filed with the Securities & Exchange Commission last month, Reckson defended its price, stating no one else offered to pay more for the Island addresses.

"There's absolutely no one who knows the market better, the portfolio better," Matthews said. "That's why SL Green felt that they could get the best possible price from him."

Late Thursday, Reckson said its third quarter funds from operations, a key REIT performance measure, fell to $42.6 million, or 50 cents per share, compared with $51.7 million, or 61 cents per share, a year ago.

The 17.6 percent decline is "consistent with the rationale for our pending transaction with SL Green," Reckson said in a statement. One source pointed out that it has been hard to keep profits healthy with prices rising faster than rents, which can be locked in for years at a time.

Shares of Reckson (NYSE: RA) lost 19 cents to trade at $43.52 Friday afternoon. SL Green (NYSE: SLG) dropped $1.80 to $115.30 a share.