In July, the Melville-based company announced the pending acquisition of the two 15-story office towers. According to a Reckson spokesperson, the company feels the repositioning effort is necessary because, though it is arguably the most recognizable office complex on Long Island, it is not commanding the rental rates the REIT feels it should. The property is approximately 90% occupied and has a tenant roster that includes Citibank, NA Washington Mutual and Dreyfus Service Corp.
Reckson has already had staff completing cosmetic changes such as new signage and held a meet-and-greet session with tenants to find out what their needs are, according to the spokesperson. Long-range plans include adding amenities such as a fitness center and valet parking. The complex already offers, among other amenities, a cafeteria, dry cleaner, sundry shop, daycare center and an outdoor ice-skating rink.
Reckson expects to generate an initial GAAP net operating income yield of approximately 6.5% on Reckson Plaza. The REIT anticipates that its property operating initiatives will result in cumulative annual NOI growth in excess of 5.0%.
Reckson believes it can increase the property's value by effectively addressing its near-term vacancies, using its pricing power in the market to increase rents and leveraging its scale to generate significant operating expense efficiencies. Additionally, operating expenses prior to Reckson's acquisition were running materially higher than expenses at the company's neighboring Omni property which offers the same high quality space and amenities.
"We believe that under Reckson's ownership, the property can be restored to its original position as one of the country's most impressive suburban office developments, commanding premium rents and offering superior services and amenities," Scott Rechler, Reckson's president and chief executive officer, says.
With this acquisition, Reckson has increased its Long Island portfolio to approximately five million sf. Reckson Plaza increases the company's portfolio in the Mitchel Field area to approximately 2.6 million sf of class A office space. The remainder of Reckson's Long Island office portfolio is approximately 96% leased.
In addition, Reckson purchased the adjoining 8.2-acre development site, for $19 million, which is anticipated to be contributed into a joint venture between the New York Islanders owner Charles Wang and Reckson in connection with its proposed redevelopment of the Nassau Coliseum site. The seller was advised by Yoron Cohen of Cushman & Wakefield.
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