"This gives us 5.6 million more sf in Manhattan," Holliday said during a late afternoon conference call with analysts yesterday. "These additions to our portfolio reinforce our already dominant position in the Manhattan marketplace." The acquisition brings SL Green's Manhattan portfolio to 24.5 million sf. SL Green's total portfolio is pegged at 28.1 million sf.The transaction has been approved by both companies' boards of directors and is expected to close in January 2007. Reckson's stockholders will have to approve the deal first, and the agreement is subject to the usual closing conditions.

SL Green chief financial officer Greg Hughes said during the call that shedding suburban parts of the acquisition falls in line with what has produced historic success for each company. "The Long Island and New Jersey portfolios running out of Long Island and SL Green absorbing New York into its existing New York offices… ."

Under the terms of the agreement, SL Green will acquire all of Reckson's common stock and OP units for $31.68 per share in cash and a fixed exchange ratio of 0.1039 shares of SL Green common stock. The transaction consideration represents $43.31 per Reckson common share and OP unit. Completion of the buy action is not subject to receipt of financing by SL Green and does not require approval by SL Green stockholders. After the dust clears, Reckson stockholders will own approximately 15.2% of SL Green.

SL Green has also entered into related agreements where certain parts of Reckson will be sold to an investment group led by existing Reckson executives and Marathon Asset Management for $2.1 billion. The investor group will acquire all of Reckson's Long Island real estate, the 13-property Eastridge Portfolio in Westchester, 711 Westerchester Ave. in White Plains, 20 office properties and three development parcels in New Jersey and Reckson's interests in its Australian listed property trust. The sale is expected to close simultaneously with the closing of the main agreement. Marathon Asset Management was represented by Paul, Hastings, Janosfsky & Walker LLP.

Marathon Asset Management, a diversified hedge fund and investment management firm with $7.5 billion in capital and $13 billion in assets, will is partnering with Scott Rechler and his senior management team to establish a venture to manage portfolio of real estate assets in the New York area.

"Our initial analysis suggests SLG is paying $580 per sf for the assets it will ultimately end up with," says Bank of America analyst Ross Nussbaum. "We also estimate a cap rate of 5.2% on 2007E NOI. While by no means a bargain, the pricing is consistent with recent office sale comps in the New York market.

"Our initial analysis suggests SLG is paying $580 per sf for the assets it will ultimately end up with. We also estimate a cap rate of 5.2% on 2007E NOI. While by no means a bargain, the pricing is consistent with recent office sale comps in the New York market," says Nussbaum

Speculation had been growing during the last week amid rumors that Reckson was either on the block or taking itself private.

Scott Rechler, chairman and CEO of Reckson said in a statement, "After 11 exciting years in the public arena, we have decided to recognize the significant value we have created in our portfolio and combine with SL Green to create the premiere office REIT in the metropolitan NY area." Reckson did not participate in yesterday's conference call.

Citigroup served as a financial advisor to Reckson while Goldman Sachs and Greenhill & Co. were financial advisors to the firm's independent directors. The two latter firms also rendered fairness opinions. Wachtell Lipton Rosen and Katz provided legal counsel to Reckson's directors. For SL Green, Merrill Lynch was exclusive financial advisor and Clifford Chance US LLP provided legal counsel.