UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 20549


                           FORM 10-Q


      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF 
              THE SECURITIES EXCHANGE ACT OF 1934

       For the quarterly period ended March 31, 1998
                                
              Commission file number: 001-14183



                 RECKSON SERVICE INDUSTRIES, INC.
     (Exact name of registrant as specified in its charter) 


Delaware                                             11-3383642
(State other jurisdiction of incorporation         (IRS. Employer
of organization)                                   Identification Number)

225 Broadhollow Road, Melville, NY                                 11747
(Address of principal executive office)                         (zip code)

                         (516) 719-7400
      (Registrant's telephone number including area code)


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.

                           Yes      No   X     

The company has only one class of common stock, issued at $.01 par value
per share with 4,111,730 shares outstanding as of June 11, 1998.
                                
<PAGE>
               RECKSON SERVICE INDUSTRIES, INC.
                       QUARTERLY REPORT
           FOR THE THREE MONTHS ENDED MARCH 31, 1998
                       TABLE OF CONTENTS
                                
                                
                                
INDEX

PART I. FINANCIAL INFORMATION                                      
                                                                  
Item 1.   Financial Statements (Unaudited)

          Balance Sheets of Reckson Service Industries, Inc. as of March
          31, 1998 and December 31, 1997 ...............................

          Statement of Operations of Reckson Service Industries, Inc. for
          the three months ended March 31, 1998 and ....................
         
          Statement of Cash Flows of Reckson Service Industries, Inc. for
          the three months ended March 31, 1998 ........................

          Notes to the Financial Statements of Reckson Service Industries,
          Inc. .........................................................

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations ........................................

PART II   OTHER INFORMATION ............................................


Item 1.   Legal Proceedings
Item 2.   Changes in Securities
Item 3.   Defaults Upon Senior Securities
Item 4.   Submission of Matters to a Vote of Securities Holders
Item 5.   Other Information

SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION                                      
Item 1. Financial Statements
<TABLE>
                                Reckson Service Industries, Inc.
                                         Balance Sheets
<CAPTION>
                                                          March 31,     December 31,
                                                             1998           1997
                                                       --------------  --------------
                                                         (Unaudited)
<S>                                                    <C>             <C>
Assets:
Cash                                                          65,228         129,704
Investment in RO Partners Management, LLC (Note 3)     $   4,038,660   $   3,868,093
Investment In ACLC (Note 3)                                1,879,642       1,652,165
Investment in and advances to RSVP HOLDINGS,
LLC (Notes 3 and 5)                                        5,343,588             ----
Equipment (net of depreciation of  $1,107)                    29,343             ----
Affiliate receivables (Note 5)                             1,923,841         832,854
Loan receivables (Note 5)                                    975,000         325,000
Organization and pre-acquisition costs (net of
amortization of $22,056 and $8,214, respectively)            693,975         681,694
Other Assets                                                  96,208          30,185
                                                       --------------  --------------
Total Assets                                           $  15,045,485   $   7,519,695
                                                       ==============  ==============
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses                  $     233,445   $     119,384
Loans payables to affiliates (Note 5)                     11,863,847       3,177,857
                                                       --------------  --------------
Total Liabilities                                         12,097,292       3,297,241
 
Commitments (Note 6)                                              ---            ----
 
Stockholders' Equity: (Notes 1 and 4)
Common Stock, $.01 par value                                      10              10
Additional paid in capital                                 3,915,279       4,480,331
Retained earnings                                           (967,096)       (257,887)
                                                       --------------  --------------
Total Stockholders' Equity                                 2,948,193       4,222,454
                                                       --------------  --------------
Total Liabilities and Stockholders' Equity             $  15,045,485   $   7,519,695
                                                       ==============  ==============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
                       Reckson Service Industries, Inc.
                           Statement of Operations
                                 (Unaudited)
<CAPTION>
                                                           Three
                                                        Months Ended
                                                          March 31,
                                                            1998
                                                       ---------------
<S>                                                    <C>
Revenues:
Equity in (loss) of RSVP Holdings, LLC                 $     (543,412)
Equity in income of RO Partners Management, LLC               170,567
Equity in (loss) of ACLC                                      (51,508)
Interest income                                                46,661
                                                       ---------------
Total Revenues                                               (377,692)
                                                       ---------------
Expenses:
General and administrative expenses                           187,886
                                                       ---------------
Total Administrative                                          187,886
                                                       ---------------
Net Operating Loss                                           (565,578)
 
Non Operating Expenses:
Amortization and Depreciation                                  14,949
Interest Expense                                              128,682
                                                       ---------------
Net Loss                                               $     (709,209)
                                                       ===============
Basic net loss per weighted average common share       $        (0.18)
                                                       ---------------
Weighted average common shares outstanding                  3,928,202
                                                       ---------------
Diluted net loss per weighted average common share     $        (0.18)
                                                       ===============
Diluted weighted average common share outstanding           3,928,202
                                                       ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
                   Reckson Service Industries, Inc.
                        Statement of Cash Flows
                             (Unaudited)
<CAPTION>
                                                      Three
                                                   Months Ended
                                                     March 31,
                                                       1998
                                                  --------------
<S>                                               <C>
Cash Flows from Operating Activities:
Net Income                                        $    (709,209)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                            14,949
Equity in loss of RSVP Holdings, LLC                    543,412
Equity in loss of ACLC                                   51,508
Equity in (income) of RO Partners Management,
LLC                                                    (170,567)
Changes in operating assets and liabilities:
Other assets                                            (66,023)
Account payable and accrued expenses                    114,061
                                                  --------------
Net cash (used in) operating activities                (221,869)
                                                  --------------
Cash Flows from Investing Activities:
Purchase of equipment                                   (30,450)
Pre-acquisition costs                                   (26,123)
                                                  --------------
Net cash (used in)investing activities                  (56,573)
                                                  --------------
Cash Flows from Financing Activities:
Loan receivable                                        (650,000)
Costs of preferred equity issuance                   (5,565,052)
Preferred equity contribution                         5,000,000
Proceeds from affiliate loans                         8,685,990
Loan to RSVP Holdings, LLC                           (5,887,000)
Due from affiliates                                  (1,090,987)
Contributions to ACLC investment                       (278,985)
                                                  --------------
Net cash provided by  financing activities              213,966
                                                  --------------
Net decrease in cash and cash equivalents               (64,476)
Cash and cash equivalents at beginning of period        129,704
                                                  --------------
Cash and cash equivalents at end of period        $      65,228
                                                  ==============
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period of interest                     --- 
                                                  ==============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
                     Reckson Service Industries
                    Notes to Financial Statements
                           March 31, 1998
                            (unaudited)

1.    ORGANIZATION AND FORMATION OF THE COMPANY

Reckson Service Industries, Inc. ( "RSI" or the "Company") was formed on 
July 15, 1997 to engage in the business of providing commercial services 
to properties owned by Reckson Operating Partnership, L.P. ("ROP"), whose 
general partner is Reckson Associates Realty Corp. ("Reckson"), and its 
tenants and third parties and to invest in Reckson Strategic Venture 
Partners, LLC and related entities ("RSVP") a real estate venture capital 
fund.  The Company will operate under an agreement between the Company 
and ROP (the "Intercompany Agreement"). Under the Intercompany Agreement, 
the Company and ROP agree, subject to certain terms, to provide each 
other with first refusal rights to participate in certain transactions.

In connection with the initial capitalization of RSI, ROP contributed 
$4,256,324 for a 95% nonvoting equity interest and certain members of 
Reckson management contributed notes of $224,017 to the Company in 
exchange for a 5% voting ownership interest. On October 29, 1997, the 
notes were paid. 

On June 11, 1998, 95% of the common stock of RSI will be distributed (the 
"Distribution") to holders of common shares of Reckson and unit holders 
of ROP of record on May 26, 1998. Immediately prior to the Distribution, 
the shares of non-voting common stock held by ROP will be exchanged by 
RSI for RSI common shares.  Each share of the Company's Common Stock 
issued in the Distribution is expected to be accompanied by one Preferred 
Share Purchase Right.  In addition, simultaneously with the Distribution, 
the Company will issue rights to its stockholders to subscribe for the 
purchase of additional shares of common stock of the Company.

The Company owns a 33 1/3% interest in RO Partners Management, LLC 
("RO"), the remaining interest in RO is held 33 1/3% by Jon L. Halpern, a 
director of Reckson, and 33 1/3% by an independent third party investor.  
RO is the general partner of Reckson Opportunity Partners, L.P. 
("Opportunity Partners") predecessor to RSVP.  RSVP was formed on January 
23, 1998 to succeed to the operating activities of Opportunity Partners.  
The Company is the 100% common equity owner and a managing member of RSVP 
and Paine Webber Real Estate Securities, Inc. ("PWRES") is a non-managing 
member and preferred equity owner. It is anticipated that future 
investments by the Company in real estate venture capital fund activities 
will be conducted through RSVP.  On April 1, 1998, the Company 
transferred its equity interest in RO to RSVP.

Through RSVP Holdings, LLC the Company is a managing member and 100% 
owner of the common equity of RSVP.  New World Realty LLC ("New World"), 
an entity owned by two individuals retained by RSVP Holdings, LLC as 
Managing Directors, acts as a managing member of RSVP Holdings, LLC and 
owns a carried interest which provides for the Managing Directors to 
receive a share in the profits of RSVP after the Company has received 
certain minimum returns and a return of capital.  In addition, it is 
anticipated that New World will receive transaction fees of up to $1 
million a year for identifying investment opportunities for RSVP.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements of RSI include the Company's equity 
interests in RO, American Campus Lifestyles Companies, L.L.C. ("ACLC"), 
and RSVP Holdings, LLC.

Use of Estimates

The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the amounts reported in the financial statements 
and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents

The Company considers highly liquid investments with a maturity of three 
months or less when purchased to be cash equivalents.

Long-Lived Assets

At inception, the Company adopted SFAS No. 121, "Accounting for the 
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed 
Of," which establishes methods of valuation for the impairment of long-
lived assets, certain identifiable intangibles, and goodwill related to 
those assets to be held and used. The adoption of this statement had no 
material impact on the accompanying financial statements.

Stock Options

The Company has elected to follow Accounting Principles Board Opinion No. 
25, "Accounting for Stock Issued to Employees" ("APB 25") and related 
Interpretations in accounting for its employee stock options because the 
alternative fair value accounting provided for under FASB Statement No. 
123, "Accounting for Stock-Based Compensation," ("FAS No. 123") requires 
the use of option valuation models that were not developed for use in 
valuing employee stock options. Under APB 25, no compensation expense was 
recognized because the exercise price of the Company's employee stock 
options equals the market price of the underlying stock on the date of 
grant.  (See Note 4)

Equity Investments

The Company accounts for its investment of less than 50% in other 
entities using the equity method.

Income Taxes

At inception, the Company adopted SFAS No. 109, "Accounting for Income 
Taxes" ("SFAS No. 109"), which prescribes an asset and liability method 
of accounting for income taxes. Under SFAS No. 109, deferred tax assets 
are to be recognized unless it is more likely than not that some portion 
or all of the deferred tax assets will not be realized.

Earnings Per Share

In 1997, the Financial Accounting Standards Board issued Statement No. 
128, Earnings per Share.  Statement 128 replaced the calculation of 
primary and fully diluted earnings per share with basic and diluted 
earnings per share.  Unlike primary earnings per share, basic earnings 
per share excludes any dilutive effects of options, warrants and 
convertible securities.  Diluted earnings per share is very similar to 
the previously reported fully diluted earnings per share.  All earnings 
per share amounts for all periods have been presented to conform to the 
Statement 128 requirements.

3.	INVESTMENTS

In March 1998 the Company advanced approximately $5,887,000 to RSVP 
Holdings, LLC.

Summarized financial information and a summary of the Company's 
investment in, advances and share of loss from RSVP Holdings, LLC is as 
follows:

Balance Sheet
                                                          March 31,
                                                            1998
                                                       ---------------
Deferred compensation expense                          $    5,821,589
Other Assets                                                  384,340
                                                       ---------------
Total Assets                                                6,205,929
                                                       ===============
 
Due to affiliates                                             682,686
Other Liabilities                                             179,655
                                                       ---------------
Total Liabilities                                             862,341
                                                       ---------------
Net investment in and advances to RSVP
Holdings, LLC                                          $    5,343,588
                                                       ===============
 
Statement of Operations
                                                       For the period
                                                      January 23, 1998
                                                        1998 to March
                                                          31, 1998
                                                       ---------------
Operating expenses                                     $      114,775
General and administrative expenses                           338,989
Interest expense                                               48,397
Depreciation and amortization                                  41,251
                                                       ---------------
Net Loss                                               $     (543,412)
                                                       ===============

In 1997, the Company invested $3.62 million in RO, which contributed such 
amount to Opportunity Partners.  Opportunity Partners invested 
approximately $10.8 million to acquire a 70% interest in Dobie Center, 
L.P., which owns 100% in Dobie Center, a mixed use student housing and 
retail property located in Austin, Texas.

Substantially all of RO's assets, liabilities, revenues and expenses 
relate to its investment in Dobie Center.  Summarized financial 
information and a summary of the Company's investment in and share of 
income from RO is as follows:

Balance Sheets

                                          March 31,      December 31,
                                            1998             1997
                                        --------------  --------------
Property and equipment, less
depreciation                            $  35,161,387   $  35,345,013
Other Assets                                5,976,392       6,700,605
                                        --------------  --------------
Total Assets                               41,137,779      42,045,618
                                        ==============  ==============
 
Mortgage payable                           20,030,500      20,280,500
Other Liabilities                           3,806,783       5,195,624
                                        --------------  --------------
Total Liabilities                          23,837,283      25,476,124
                                        --------------  --------------
Minority Interest                           5,134,763       4,915,462
Members' equity                            12,165,733      11,654,032
Less: Other members' equity                (8,127,073)     (7,785,939)
                                        --------------  --------------
Net investment in RO                    $   4,038,660   $   3,868,093
                                        ==============  ==============


Statement of Income

                                       For the three     Period from
                                        months ended    July 15, 1997
                                          March 31,      to December
                                             1998          31, 1997
                                        --------------  --------------
Rental Income                           $   2,573,145   $   4,265,584
Interest Income                                63,507         102,971
Other Income                                    4,226         434,264
                                        --------------  --------------
Total Income                                2,640,878       4,802,819
                                        --------------  --------------
Property operating expenses                   969,607       1,691,906
General and administrative expenses           293,405         663,337
Interest expense                              361,943         875,019
Depreciation and amortization                 210,426         381,292
Non-recurring expense                          74,495         221,222
                                        --------------  --------------
Total Expense                               1,909,876       3,832,776
                                        --------------  --------------
Minority interest                             219,301         233,264
Net income                                    511,701         736,779
Less: Other members' share                    341,134         491,186
                                        --------------  --------------
Company's share                         $     170,567   $     245,593
                                        ==============  ==============


The Company contributed $1.51 million to and acquired a 33 1/3% interest 
in RFG Capital Management Partners ("RFG Capital") whose sole net 
investment is a 76.09% interest in ACLC, a student housing enterprise 
which owns, develops, constructs, manages and acquires, on-and off campus 
student housing projects.  As of March 31, 1998, the excess of the 
Company's investment over its share of the equity in the underlying net 
assets of ACLC ("Excess Investment") was $190,920.  This Excess 
Investment is being amortized over the life of the investment.  On April 
1, 1998, the Company transferred its equity interest in ACLC to RSVP.

Summarized financial information and a summary of the Company's investment
in and share of loss from ACLC is as follows:


Balance Sheets

                                           March 31,     December 31,
                                             1998            1997
                                        --------------  --------------
Investment in leasehold estates,
less accumulated depreciation           $  33,627,068   $  30,042,101
Other Assets                                3,615,695       4,035,570
                                        --------------  --------------
Total Assets                               37,242,763      34,077,671
                                        ==============  ==============
 
Note payable                               28,178,960      25,635,208
Other Liabilities                           3,357,893       3,633,473
                                        --------------  --------------
Total Liabilities                          31,536,853      29,268,681
                                        --------------  --------------
Minority Interest                             639,741         425,254
Members' equity                             5,066,169       4,383,736
Less: Other members' equity                (3,377,447)     (2,922,491)
                                        --------------  --------------
Company's share of the equity
in underlying net assets of ACLC            1,688,722       1,461,245
Excess investment                             190,920         190,920
                                        --------------  --------------
Net investment in ACLC                  $   1,879,642   $   1,652,165
                                        ==============  ==============


Statement of Operations

                                        For the three    Period from
                                        months ended     October 17,
                                          March 31,    1997 to December
                                            1998           31, 1997
                                        --------------  --------------
Rental Income                           $   1,219,340   $     980,402
Other Income                                  197,365         504,252
                                        --------------  --------------
Total Income                                1,416,705       1,484,654
                                        --------------  --------------
General and administrative expenses           603,150         612,682
Property operating expenses                   310,357         353,912
Interest expense                              543,599         452,864
Depreciation                                  162,686         152,550
                                        --------------  --------------
Total Expense                               1,619,792       1,572,008
                                        --------------  --------------
Minority interest                             (48,564)        (20,886)
Net income                                   (154,523)        (66,468)
Less: Other members' share                   (103,015)        (44,312)
                                        --------------  --------------
Company's share                         $     (51,508)  $     (22,156)
                                        ==============  ==============

RSI has contracted to acquire a 58.69% equity interest in On-Site 
Venture, LLC ("On-Site"), a company that provides advanced 
telecommunications systems and services within commercial and residential 
buildings and/or building complexes.  Under the terms of the contract, 
the Company has also committed to contribute $6.5 million to On-Site to 
fund certain capital costs of installing telecommunication systems and 
for working capital (see Note 5).

4.	SHAREHOLDERS' EQUITY

The Company has established the 1998 stock option plan (the "Plan") for 
the purpose of attracting and retaining executive officers, directors and 
other key employees.  Pursuant to the Plan 3,700,376 of the Company's 
authorized shares have been reserved for issuance under the Plan.  On 
January 10, 1998 and March 30, 1998, the Company granted options to 
purchase 542,890 and 2,613,745, respectively of the Company's common 
shares at an exercise price of $1.10 and $1.04 respectively per share 
based on the fair value on each	 date of grant, which the board of 
directors of the Company has concluded to be book value on each date of 
grant.

In connection with the PWRES preferred equity financing the Company paid 
a commitment fee of 2.5% of the total preferred equity investment of 
which $1,400,000 was paid to an entity owned by one of RSVP managing 
directors who is a former employee of PWRES.

The following is the Company's reconciliation of the numerators and 
denominators of the basic and diluted net loss per weighted average 
common share computations and other related disclosures required be FAS 
Statement 128:

The following table set forth the computation of basic and diluted 
earnings per share:

                                                           Three
                                                        Months Ended
                                                          March 31,
                                                            1998
                                                       ---------------
Numerator:
Net loss                                               $     (709,209)
                                                       ---------------
Numerator for basic and diluted
earnings per share                                     $     (709,209)
                                                       ---------------
Denominator:
Denominator for basic earnings per
share - weighted average shares                             3,928,202
 
Effect of dilutive securities:
Employee stock options                                             ---
                                                       ---------------
Denominator for diluted earnings per
share - adjusted weighted average shares
and assumed conversions                                     3,928,202
                                                       ---------------
Basic earnings per common share:
Net loss per common share                              $        (0.18)
                                                       ---------------
Diluted earnings per common share:
Diluted net loss per common share                      $        (0.18)
                                                       ---------------

5. 	TRANSACTIONS WITH RELATED PARTIES

Included in affiliate receivables on the accompanying Balance Sheet is a 
secured by interest loan of $666,666 to RFG Capital, an entity which is 
owned evenly at 33 1/3% by  the Company, Jon L. Halpern, and an 
independent third party investor.  The note bears interest at 12% per 
annum.

ROP has advanced the Company $5,976,847 and $2,943,210 at March 31, 1998 
and December 31, 1997 respectively.  These advances bear interest at 12% 
per annum.

In February 1998, RSVP Holdings, LLC, entered into employment agreements 
with the two managing directors of RSVP.  The agreements provide for a 
base salary of $500,000 and have a seven-year term. In addition to the 
base salary each Managing Director has received a $3.0 million grant of 
common stock of Reckson (the "Reckson Stock") which will vest equally 
over five years.  The Reckson Stock was purchased by the Company and 
advanced to RSVP Holdings, LLC.

RSI has obtained an option from Reckson Management Group, Inc., a company 
in which ROP owns a 97% non-voting equity interest to acquire a majority 
equity interest in a privately held national executive office suites 
business.  The Company's option to acquire this equity interest has a 
five year term.

The Company advanced On-Site $975,000 through March 31, 1998 and an 
additional $150,000 through April 10, 1998 to fund certain operating 
costs.  The advances are evidenced by loans convertible into equity 
interests in On-Site which bear interest at a rate of 12% per annum and 
mature on March 1, 1999 (See Note 3).  

6.	FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosures About 
Fair Value of Financial Instruments," requires RSI to disclose the 
estimated fair values of its financial instrument assets and liabilities.  
The carrying amounts approximate fair value for cash and cash equivalents 
because of the short maturity of those instruments.  For the loans 
payable to affiliates the estimated fair value approximates the recorded 
balance.

7.	SUBSEQUENT EVENTS

On April 1, 1998 the Company purchased Reckson's 9.9% equity interest in 
Reckson Executive Centers, LLC ("REC") for $200,000.  REC owns and 
operates executive office suite business in the New York tri-state area.  
All of REC's centers are located within buildings owned and operated by 
ROP.

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the 
accompanying Financial Statements of Reckson Service Industries, Inc. 
(the "Company" or "RSI") and related notes thereto.

OVERVIEW AND BACKGROUND

The Company's primary business is to create and manage a system of 
interrelated services to be offered to Reckson Operating Partnership, 
L.P. ("ROP"), ROP's tenants (the "Reckson Customer Base") and the general 
marketplace through a centralized infrastructure.  The Company's growth 
strategy is to acquire primarily established businesses within each of 
its targeted service sectors, and, where appropriate, to retain the 
existing management of such businesses ("Service Platforms"). 
Specifically, the Company will seek opportunities for which there is 
broad demand in the Reckson Customer Base, strong entrepreneurial 
management, a reputation for high quality services and growth potential.  
Such Service Platform investment will serve as a basis for future 
acquisitions in such sectors.  The Company will establish Service 
Platforms that present significant opportunities to provide commercial 
services to the Reckson Customer Base and other third parties. Currently, 
the Reckson Customer Base retains third parties to provide many services 
for their day-to-day operations.  Of these services, the Company may seek 
to provide the Reckson Customer Base with telecommunications, document 
storage, document reproduction and logistics services (i.e., inventory 
services, messenger services and delivery services), as well as with 
other services that the Company determines may be utilized by the Reckson 
Customer Base.  The Company will seek growth in each Service Platform by 
(i) accessing the Reckson Customer Base as an anchor for growth 
opportunities in ROP's markets, (ii) integrating each Service Platform 
into RSI's centralized infrastructure and (iii) acquiring similar 
businesses or making additional investments within such Service Platform.

In February 1998, RSVP Holdings, LLC, the managing member of Reckson 
Strategic Venture Partners ("RSVP") entered into employment agreements 
with two highly experienced real estate professionals (the "Managing 
Directors").  The agreements provide for a base salary of $500,000 and 
have a seven-year term. In addition to the base salary each Managing 
Director has received a $3.0 million grant of common stock of Reckson 
Associates Realty Corp. ("Reckson"), (the "Reckson Stock") which will 
vest equally over five years.  The Reckson Stock was purchased by the 
Company and advanced to RSVP Holdings, LLC.  The Company is a managing 
member and 100% owner of the common equity of RSVP Holdings, LLC.  New 
World Realty LLC ("New World"), an entity owned by the Managing 
Directors, acts as a managing member of RSVP Holdings, LLC and owns a 
carried interest which provides for the Managing Directors to receive a 
share in the profits of RSVP after the Company and Paine Webber Real 
Estate Securities ("PWRES"), the preferred equity investor, have received 
certain minimum returns and a return of capital.  In addition, it is 
anticipated that New World will receive transaction fees of up to $1 
million a year for identifying investment opportunities for RSVP.

RESULTS OF OPERATIONS

For the three months ended March 31, 1998 the Company reported a net loss 
of $709,209.  Total revenues include (i) equity in earnings of RO of 
$170,567 and represent RO's 33 1/3 % interest in a joint venture that owns 
a 70% interest in Dobie Center, L.P. an entity which owns the Dobie 
Center Student Housing Facility located in Austin, Texas.  Dobie Center, 
L.P. reported total revenues of $2.6 million, operating income of $1.6 
million and net income of $.7 million, (ii) equity in loss of American 
Campus Lifestyles Companies, a student housing company ("ACLC") of 
$51,508.  ACLC reported total revenues of $1.4 million, operating income 
of $.9 million and a net loss of $154,523, (iii) equity in loss of RSVP 
Holdings, LLC of $543,412 and (iv) interest income of $46,661 relating to 
loans made to certain affiliates. The Company also reported total 
expenses of $331,517 which substantially represents interest, payroll and 
office costs.

LIQUIDITY AND CAPITAL RESOURCES

In connection with the formation and capitalization of RSI, ROP 
contributed $4,256,324 to RSI for a 95% non-voting equity interest. 
Simultaneously, certain officers of Reckson contributed $224,017 of 
subscription notes to RSI in exchange for a 5% voting equity interest, 
which subscription notes were subsequently paid off. On June 11, 1998, 
95% of the common stock of RSI will be distributed (the "Distribution") 
to holders of common shares of Reckson and unit holders of ROP. 
Immediately prior to the Distribution, the shares of non-voting common 
stock held by ROP will be exchanged by RSI for RSI common shares.  Each 
share of the Company's Common Stock issued in the Distribution is 
expected to be accompanied by one Preferred Share Purchase Right.  In 
addition, simultaneously with the Distribution, the Company will issue 
rights to its stockholders to subscribe for the purchase of 20,557,130 
additional shares of common stock of the Company at a purchase price of 
$1.03.  RSI will rely primarily on funds raised in the rights offering 
and on ROP through borrowings under the Credit Facility from ROP for the 
financing of RSI's operations.

RSI will commence the rights offering as a means for RSI to raise 
sufficient capital to (i) fund certain organizational and start-up costs 
and fund anticipated short-term operating losses of the Company, (ii) 
provide RSI sufficient initial equity capital in order to pursue its 
business objectives, and (iii) provide capital towards meeting minimum 
capital requirements to commence trading in the future on an organized 
trading system.

Immediately after the Distribution of RSI common stock, RSI will grant to 
its stockholders (collectively, "Holders") one Subscription Right for 
each share of RSI common stock.  Each Subscription Right will entitle the 
Holder to purchase one share of RSI common stock at a purchase price of 
$1.03 per share (the "Exercise Price") and, at the election of such 
Holder, four additional shares (but not less than four additional shares) 
at a purchase price of $1.03 per share.  Holders may exercise their 
Subscription Rights in respect of one or five shares of RSI common stock 
that they are entitled to purchase pursuant to each Subscription Right.  
Holders will not be permitted to purchase more than one share and less 
than five shares in respect of a Subscription Right.  Holders of 
Subscription Rights will have the opportunity to acquire up to an 
aggregate of approximately 20,557,130 shares of RSI common stock.  RSI 
and Reckson Standby, LLC (the "Standby Purchaser") (an entity owned by 
several members of management), have entered into a Standby Agreement 
pursuant to which the Standby Purchaser has agreed to purchase, and RSI
has agreed to sell, any and all shares of RSI common stock that are the
subject of Subscription Rights in the Rights Offering but are not subscribed
for by the Holders on the Expiration Date at the Exercise Price.

RSI expects to establish a credit facility (the "RSI Facility") with ROP 
in the amount of $100 million for RSI's service sector operations and 
other general corporate purposes.  In addition, ROP has approved the 
funding of investments of up to $100 million with or in RSVP, through (i) 
loans for the funding of RSVP investments prior to the Distribution, (ii) 
RSVP-controlled joint venture REIT-Qualified Investments, or (iii) 
advances made to RSI subsequent to the Distribution under a credit 
facility similar to the RSI Facility (the "RSVP Facility").  Advances 
under the RSVP Facility in excess of $25 million in respect of any single 
platform will be subject to approval by Reckson's board of directors, 
while advances under the RSI Facility in excess of $10 million in respect 
of any single investment in a Service Platform, as well as advances for 
investments in opportunities in non-commercial services, will be subject 
to approval by Reckson's board of directors, or a committee thereof.  It 
is expected that the RSI and RSVP Facilities (the "Credit Facilities") 
will each have a term of five years and advances thereunder will be 
recourse obligations of RSI.  Interest will accrue on advances made under 
the Credit Facilities at a rate equal to the greater of (i) the prime 
rate plus 2% and (ii) 12% per annum, with the rate referred to in clause 
(ii) increasing annually at a rate of 4% of the prior year's rate.  Prior 
to maturity, interest will be payable quarterly but only to the extent of 
net cash flow and on an interest-only basis and will be prepayable 
without penalty at the option of RSI.  As long as there are outstanding 
advances under the Credit Facilities, RSI will be prohibited from paying 
dividends on any shares of its capital stock.  The Credit Facilities will 
be subject to certain other covenants and will prohibit advances 
thereunder to the extent such advances could, in the determination of 
Reckson, endanger Reckson's status as a REIT. Additional indebtedness may 
be incurred by subsidiaries of RSI.

Additionally, RSVP has obtained the Paine Webber Equity Facility from 
PWRES which provides for the investment by PWRES of up to $200 million in 
RSVP in the form of preferred equity, subject to certain conditions.  
Amounts available under the Paine Webber Equity Facility will be used by 
RSVP to make investments consistent with its business objectives and to 
fund working capital.  Under the terms of the Paine Webber Equity 
Facility, RSVP is subject to various covenants and events of default and 
related remedies.  Such remedies include increased control rights of 
PWRES over the operation of RSVP under certain circumstances.  Advances 
under the Paine Webber Equity Facility will be partially funded by an 
investment fund that is jointly sponsored by financier George Soros and 
PWRES. In addition, PWRES and such investment fund will receive a 
priority or preferred distribution from RSVP prior to the distribution of 
cash to RSI.

The Company will use the proceeds from the rights offering and the RSI 
Facility to support its capital requirements, as described above.  The 
Company will use the proceeds from the rights offering and advances under 
the RSI Facility primarily to make investments in operating companies 
that provide services directed towards occupants of office, industrial 
and other property types. The Company may make additional investments in 
these operating companies to accommodate their respective growth plans. 
The Company's investments in interests in operating companies are 
anticipated to produce net cash flow as a result of their operating 
activities although the level and timing of net cash flow for each 
investment in the short term and long term may vary based upon the stage 
of the respective operating companies growth cycle.  The Company will 
target investments in operating companies that will produce net cash flow 
in the long term.  Net cash flow produced by the Company's investments 
will be used for debt service under the RSI Facility and for the 
Company's operating costs.  The Company expects to meet its short term 
liquidity requirements generally through its net cash flow produced by 
its operations along with the proceeds from the rights offering and 
advances under the RSI Facility.  The Company expects that it will 
refinance indebtedness under the RSI Facility at maturity or retire such 
debt through the issuance of debt securities or equity securities, 
although there can be no assurance that the Company will be able to 
refinance or retire such indebtedness.  The Company anticipates that cash 
on hand, from proceeds of the rights offering and net cash flows from 
operating activities, together with cash available from borrowings under 
the RSI Facility, will be adequate to meet the capital and liquidity 
requirements of the Company in both the short and long term.

The Credit Facilities will bear interest at the greater of the Prime Rate 
plus 2% or 12% (increasing 4% per year, as described above).  The rate of 
interest on the Credit Facilities will be influenced by changes in short 
term rates and is sensitive to inflation and other economic factors.  A 
significant increase in interest rates may have a negative impact on the 
earnings of the Company due to the variable interest rate under the 
Credit Facilities.

IMPACT OF YEAR 2000

Some of the Company's older computer programs were written using two 
digits rather than four to define the applicable year.  As a result, 
those computer programs have time-sensitive software that recognizes a 
date using "00" as the year 1900 rather than the year 2000.  This could 
cause a system failure or miscalculation causing disruptions of 
operations, including, among other things, a temporary inability to 
process transactions, send invoices, or engage in similar normal business 
activities.

The Company has completed an assessment to modify or replace portions of 
its software so that its computer systems will function properly with 
respect to dates in the year 2000 and thereafter.  Currently, the entire 
property management system is year 2000 compliant and has been thoroughly 
tested.  Since the Company's accounting software is maintained and 
supported by a third party, the total year 2000 project cost is estimated 
to be minimal.

The costs of the project and the date on which the Company believes it 
will complete the year 2000 modifications are based on management's best 
estimates, which were derived utilizing numerous assumptions of future 
events, including the continued availability of certain resources and 
other factors.  However, there can be no guarantee that these estimates 
will be achieved and actual results could differ materially from those 
anticipated.  Specific factors that might cause such material differences 
include, but are not limited to, the availability and costs of personnel 
trained in this area, the ability to locate and correct all relevant 
computer codes, and similar uncertainties.

INFLATION

Student housing is subject to incremental rent increases each year.  The 
Company believes that inflationary increases will be offset by these rent 
increases.

PART II

OTHER INFORMATION

Item 1.  Legal Proceedings - None
Item 2.  Changes in Securities - None
Item 3.  Defaults Upon Senior Securities - None
Item 4.  Submission of Matters to a Vote of Securities Holders - None
Item 5.  Other information - None

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                            RECKSON SERVICE INDUSTRIES, INC.
                            Registrant

June 29, 1998               Scott H. Rechler
Date                        Scott H. Rechler, President, 
                            Chief Operating Officer and Director
                            (Principal Executive Officer)

June 29, 1998               Michael Maturo
Date                        Michael Maturo, Executive Vice President
                            and Chief Financial Officer      
                            (Principal Financial and Accounting
                             Officer)