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                                 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 JUNE 30, 2000



                        COMMISSION FILE NUMBER: 1-13762

                               ----------------

                        RECKSON ASSOCIATES REALTY CORP.
            (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                              <C>
                   MARYLAND                                    11-3233650
  (State other jurisdiction of incorporation     (IRS. Employer Identification Number)
               of organization)

       225 BROADHOLLOW ROAD, MELVILLE, NY                        11747
   (Address of principal executive office)                    (zip code)
</TABLE>

                                 (631) 694-6900
              (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)  Yes X No__,  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No__.

                               ----------------

     The company has two classes of common  stock,  issued at $.01 par value per
share with 45,125,839 and 10,283,513  shares of Class A common stock and Class B
common stock outstanding, respectively as of August 9, 2000


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--------------------------------------------------------------------------------

<PAGE>

                        RECKSON ASSOCIATES REALTY CORP.
                                QUARTERLY REPORT
                   FOR THE THREE MONTHS ENDED JUNE 30, 2000


                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
INDEX                                                                                   PAGE
-------                                                                                -----
<S>       <C>                                                                          <C>
PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements
          Consolidated Balance Sheets as of June 30, 2000 (unaudited) and
          December 31, 1999 ........................................................     2
          Consolidated Statements of Income for the three and six months ended
          June 30, 2000 and 1999 (unaudited) .......................................     3
          Consolidated Statements of Cash Flows for the six months ended
          June30, 2000 and 1999 (unaudited) ........................................     4
          Notes to the Consolidated Financial Statements (unaudited) ...............     5
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of
          Operations ...............................................................    13
Item 3.   Quantitative and Qualitative Disclosures about Market Risk ...............    24

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings ........................................................    25
Item 2.   Changes in Securities and Use of Proceeds ................................    25
Item 3.   Defaults Upon Senior Securities ..........................................    25
Item 4.   Submission of Matters to a Vote of Securities Holders ....................    25
Item 5.   Other Information ........................................................    25
Item 6.   Exhibits and Reports on Form 8-K .........................................    25
SIGNATURES .......................................................................      25
</TABLE>


                                       1
<PAGE>
                        PART I -- FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

                        RECKSON ASSOCIATES REALTY CORP.
                          CONSOLIDATED BALANCE SHEETS
               (DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                     JUNE 30, 2000   DECEMBER 31,
                                                                                      (UNAUDITED)        1999
                                                                                    --------------- -------------
<S>                                                                                 <C>             <C>
ASSETS:
Commercial real estate properties, at cost:
 Land .............................................................................   $  291,510     $  276,204
 Building and improvements ........................................................    1,916,027      1,802,611
Developments in progress:
 Land .............................................................................       61,013         60,894
 Development costs ................................................................       93,719         68,690
Furniture, fixtures and equipment .................................................        7,157          6,473
                                                                                      ----------     ----------
                                                                                       2,369,426      2,214,872
Less accumulated depreciation .....................................................     (254,595)      (218,385)
                                                                                      ----------     ----------
                                                                                       2,114,831      1,996,487
Investment in real estate joint ventures ..........................................       37,548         31,531
Investment in mortgage notes and notes receivable .................................      356,642        352,466
Cash and cash equivalents .........................................................       27,135         21,368
Tenants receivables ...............................................................        3,340          5,117
Investments in and advances to affiliates .........................................      174,734        178,695
Deferred rents receivable .........................................................       44,666         32,132
Prepaid expenses and other assets .................................................       70,907         66,977
Contract and land deposits and pre-acquisition costs ..............................        7,727          9,585
Deferred leasing and loan costs ...................................................       47,137         39,520
                                                                                      ----------     ----------
TOTAL ASSETS ......................................................................   $2,884,667     $2,733,878
                                                                                      ==========     ==========
LIABILITIES:
Mortgage notes payable ............................................................   $  527,466     $  459,174
Unsecured credit facility .........................................................      373,600        297,600
Unsecured term loan ...............................................................       75,000         75,000
Senior unsecured notes ............................................................      449,348        449,313
Accrued expenses and other liabilities ............................................       90,507         82,079
Dividends and distributions payable ...............................................       28,356         27,166
                                                                                      ----------     ----------
TOTAL LIABILITIES .................................................................    1,544,277      1,390,332
                                                                                      ----------     ----------
Commitments and other comments ....................................................           --             --
Minority partners' interests in consolidated partnerships .........................       92,071         93,086
Preferred unit interest in the operating partnership ..............................       42,518         42,518
Limited partners' minority interest in the operating partnership ..................       97,304         90,986
                                                                                      ----------     ----------
                                                                                         231,893        226,590
                                                                                      ----------     ----------
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 25,000,000 shares authorized
 Series A preferred stock, 9,192,000 shares issued and outstanding ................           92             92
 Series B preferred stock, 2,000,000 and 6,000,000 shares issued and outstanding,
   respectively ...................................................................           20             60
Common Stock, $01 par value, 100,000,000 shares authorized
 Class A Common Stock, 45,045,573 and 40,375,506 shares issued and outstanding,
   respectively ...................................................................          451            401
 Class B Common Stock, 10,283,513 and 10,283,763 shares issued and outstanding,
   respectively ...................................................................          103            103
Additional paid in capital ........................................................    1,107,831      1,116,300
                                                                                      ----------     ----------
Total Stockholders' Equity ........................................................    1,108,497      1,116,956
                                                                                      ----------     ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................   $2,884,667     $2,733,878
                                                                                      ==========     ==========
</TABLE>

                (see accompanying notes to financial statements)

                                       2
<PAGE>

                        RECKSON ASSOCIATES REALTY CORP.
                       CONSOLIDATED STATEMENTS OF INCOME
       (UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                JUNE 30,                      JUNE 30,
                                                      ----------------------------- -----------------------------
                                                           2000           1999           2000           1999
                                                      -------------- -------------- -------------- --------------
<S>                                                   <C>            <C>            <C>            <C>
REVENUES:
Base rents ..........................................  $    96,099    $    77,192    $   190,499    $   139,285
Tenant escalations and reimbursements ...............       12,984          8,586         25,830         17,129
Equity in earnings of real estate joint ventures and
 service companies ..................................        1,775            512          3,187            889
Interest income on mortgage notes and notes
 receivable .........................................        2,190          2,299          4,476          5,107
Gain on sales of real estate ........................        6,662             --          6,662             --
Other ...............................................        5,745          2,650         12,459          4,938
                                                       -----------    -----------    -----------    -----------
 Total Revenues .....................................      125,455         91,239        243,113        167,348
                                                       -----------    -----------    -----------    -----------
EXPENSES:
Property operating expenses .........................       36,368         27,539         74,523         50,446
Marketing, general and administrative ...............        6,649          5,045         13,221          9,437
Interest ............................................       24,176         18,902         48,016         32,846
Depreciation and amortization .......................       22,426         19,127         43,437         34,218
                                                       -----------    -----------    -----------    -----------
 Total Expenses .....................................       89,619         70,613        179,197        126,947
                                                       -----------    -----------    -----------    -----------
Income before preferred dividends and distributions
 and minority interests .............................       35,836         20,626         63,916         40,401
Minority partners' interests in consolidated
 partnerships .......................................       (1,925)        (1,615)        (3,899)        (2,783)
Distributions to preferred unit holders .............         (660)          (660)        (1,321)        (1,321)
Limited partners' minority interest in the operating
 partnership ........................................       (3,083)        (1,827)        (5,361)        (4,068)
                                                       -----------    -----------    -----------    -----------
Income before dividends to preferred shareholders .         30,168         16,524         53,335         32,229
Dividends to preferred shareholders .................       (7,197)        (5,329)       (14,521)        (9,710)
                                                       -----------    -----------    -----------    -----------
Net income available to common shareholders .........  $    22,971    $    11,195    $    38,814    $    22,519
                                                       ===========    ===========    ===========    ===========
Net Income available to:
 Class A common shareholders ........................  $    16,655    $     9,464    $    28,101    $    20,788
 Class B common shareholders ........................        6,316          1,731         10,713          1,731
                                                       -----------    -----------    -----------    -----------
Total ...............................................  $    22,971    $    11,195    $    38,814    $    22,519
                                                       ===========    ===========    ===========    ===========
Basic net income per weighted average common
 share:
 Class A common shareholders ........................  $       .40    $       .23    $       .69    $       .52
                                                       ===========    ===========    ===========    ===========
 Class B common shareholders ........................  $       .61    $       .35    $      1.04    $       .71
                                                       ===========    ===========    ===========    ===========
Basic weighted average common shares outstanding:
 Class A common shareholders ........................   41,343,118     40,284,511     40,862,650     40,167,445
 Class B common shareholders ........................   10,283,513      4,883,446     10,283,556      2,455,213
Diluted net income per weighted average common
 share:
 Class A common shareholders ........................  $       .40    $       .23    $       .68    $       .51
                                                       ===========    ===========    ===========    ===========
 Class B common shareholders ........................  $       .44    $       .24    $       .75    $       .52
                                                       ===========    ===========    ===========    ===========
Diluted weighted average common shares
 outstanding:
 Class A common shareholders ........................   41,700,478     40,704,147     41,204,762     40,577,871
 Class B common shareholders ........................   10,283,513      4,883,446     10,283,556      2,455,213
</TABLE>

                (see accompanying notes to financial statements)

                                       3
<PAGE>

                        RECKSON ASSOCIATES REALTY CORP.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (UNAUDITED AND IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                          JUNE 30,
                                                                                 ---------------------------
                                                                                     2000           1999
                                                                                 ------------   ------------
<S>                                                                              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before dividends to preferred shareholders ............................    $   53,335     $   32,229
Adjustments to reconcile income before dividends to preferred shareholders
 to net cash provided by operating activities:
 Depreciation and amortization ...............................................        43,437         34,218
 Gain on sales of real estate ................................................        (6,662)            --
 Minority partners' interests in consolidated partnerships ...................         3,899          2,783
 Loss reserve on real estate held for sale ...................................            --          4,450
 Gain on mortgage redemption .................................................            --         (4,492)
 Limited partners' minority interest in the operating partnership ............         5,361          4,068
 Equity in earnings of real estate joint ventures and service companies ......        (3,187)          (889)
Changes in operating assets and liabilities:
 Tenant receivables ..........................................................         1,777          2,181
 Real estate tax escrows .....................................................         3,387           (618)
 Prepaid expenses and other assets ...........................................        (3,857)       (15,593)
 Deferred rents receivable ...................................................       (12,534)        (2,429)
 Accrued expenses and other liabilities ......................................         8,552         13,138
                                                                                  ----------     ----------
 Net cash provided by operating activities ...................................        93,508         69,046
                                                                                  ----------     ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Increase in deposits and pre-acquisition costs ..............................        (6,079)        (1,889)
 Increase in developments in progress ........................................       (15,923)        (8,073)
 Purchase of commercial real estate properties ...............................      (154,573)      (194,871)
 Increase in real estate held for sale .......................................            --        (57,095)
 Investment in mortgage notes and notes receivable ...........................            --       (262,643)
 Proceeds from mortgage note repayments ......................................         2,157             --
 Investments in real estate joint ventures ...................................        (4,770)        (6,223)
 Distribution from a real estate joint venture ...............................           226            173
 Additions to commercial real estate properties ..............................       (22,108)       (16,389)
 Purchase of furniture, fixtures and equipment ...............................          (676)          (447)
 Payment of leasing costs ....................................................        (9,379)        (7,377)
 Proceeds from sales of property and mortgage redemption .....................        42,595         25,929
                                                                                  ----------     ----------
 Net cash used in investing activities .......................................      (168,530)      (528,905)
                                                                                  ----------     ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock net of issuance costs ................         1,486          1,300
 Proceeds from issuance of preferred stock net of issuance costs .............            --        148,000
 Principal payments on secured borrowings ....................................       (23,708)        (1,495)
 Payment of loan and equity issuance costs ...................................        (2,399)        (5,368)
 (Increase) decrease in investments in and advances to affiliates ............         5,646        (40,544)
 Proceeds from issuance of senior unsecured notes net of issuance costs ......            --        299,262
 Proceeds from secured borrowings ............................................        92,000             --
 Proceeds from unsecured credit facility .....................................       125,000        299,000
 Repayment of unsecured credit facility ......................................       (49,000)      (230,750)
 Contributions of minority partners' in consolidated partnerships ............            --         75,000
 Distributions to minority partners' in consolidated partnerships ............        (4,914)        (2,450)
 Distributions to limited partners' in the operating partnership .............        (5,714)        (5,222)
 Distributions to preferred unit holders .....................................        (1,321)        (1,321)
 Dividends to common shareholders ............................................       (41,638)       (27,111)
 Dividends to preferred shareholders .........................................       (14,649)        (8,762)
                                                                                  ----------     ----------
Net cash provided by financing activities ....................................        80,789        499,539
                                                                                  ----------     ----------
Net increase in cash and cash equivalents ....................................         5,767         39,680
Cash and cash equivalents at beginning of period .............................        21,368          2,349
                                                                                  ----------     ----------
Cash and cash equivalents at end of period ...................................    $   27,135     $   42,029
                                                                                  ==========     ==========
</TABLE>

                (see accompanying notes to financial statements)

                                       4
<PAGE>

                        RECKSON ASSOCIATES REALTY CORP.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2000
                                  (UNAUDITED)

1. ORGANIZATION AND FORMATION OF THE COMPANY

     Reckson Associates Realty Corp. (the "Company") is a self-administered  and
self-managed  real estate  investment  trust ("REIT") which was  incorporated in
Maryland in  September  1994.  In June,  1995 the Company  completed  an initial
public offering (the "IPO") and commenced operations.

     The  Company  became  the  sole  general   partner  of  Reckson   Operating
Partnership L.P. (the "Operating Partnership") by contributing substantially all
of the net proceeds of the IPO, in exchange for an  approximate  73% interest in
the Operating Partnership. All properties acquired by the Company are held by or
through the Operating  Partnership.  In conjunction  with the IPO, the Operating
Partnership  executed various option and purchase  agreements  whereby it issued
common units of limited partnership  interest in the Operating  Partnership ("OP
Units") to certain continuing investors in exchange for (i) interests in certain
property partnerships, (ii) fee simple and leasehold interests in properties and
development land, (iii) certain business assets of executive center entities and
(iv) 100% of the non-voting  preferred stock of the management and  construction
companies.

     As of June 30, 2000,  the Company  owned and operated 78 office  properties
comprising  approximately  13.7 million square feet,  105 industrial  properties
comprising  approximately  6.9  million  square  feet and two retail  properties
comprising  approximately  20,000 square feet, located in the New York tri-state
area (the "Tri-State  Area"). The Company also owns a 357,000 square foot office
building located in Orlando,  Florida and  approximately  346 acres of land in16
separate  parcels of which the  Company can  develop  approximately  1.9 million
square feet of office space and approximately  350,000 square feet of industrial
space.  The Company also has invested  approximately  $301.5 million in mortgage
notes encumbering two Class A office properties  encompassing  approximately 1.6
million square feet,  approximately  403 acres of land located in New Jersey and
approximately  $17.1  million  in a note  receivable  secured  by a  partnership
interest in Omni Partner's, L.P., owner of the Omni, a 575,000 square foot Class
A office property located in Uniondale, New York.

     During  July  1998,  the  Company   formed   Metropolitan   Partners,   LLC
("Metropolitan")   for  the  purpose  of  acquiring  Tower  Realty  Trust,  Inc.
("Tower").  On May 24,  1999 the  Company  completed  the merger  with Tower and
acquired three Class A office  properties  located in New York City totaling 1.6
million  square feet and one office  property  located on Long  Island  totaling
approximately  101,000  square feet.  In addition,  pursuant to the merger,  the
Company also acquired certain office  properties,  a property under  development
and land located  outside of the Tri-State  Area. All of the assets  acquired in
the merger located  outside of the Tri-State  Area,  other than a 357,000 square
foot office property located in Orlando, Florida, have been sold.

2. BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the consolidated
financial position of the Company and the Operating Partnership at June 30, 2000
and December 31, 1999 and the results of their  operations for the three and six
months ended June 30, 2000 and 1999 respectively,  and, their cash flows for the
six  months  ended  June  30,  2000  and  1999,   respectively.   The  Operating
Partnership's  investments in Metropolitan,  Omni Partner's,  L. P. ("Omni") and
certain  industrial  joint venture  properties  formerly owned by Reckson Morris
Operating Partnership, L. P. ("RMI") are reflected in the accompanying financial
statements  on a  consolidated  basis with a reduction  for  minority  partners'
interest.  The  Operating  Partnership's  investment in RMI was reflected in the
accompanying  financial  statements on a consolidated basis with a reduction for
minority  partner's  interest through September 26, 1999. On September 27, 1999,
the Operating  Partnership  sold its interest in RMI to Keystone  Property Trust
("KTR").  The operating results of the service businesses currently conducted by
Reckson  Management  Group,  Inc.,  and Reckson  Construction  Group,  Inc., are
reflected  in the  accompanying  financial  statements  on the equity  method of
accounting. The Operating Partnership also invests in real estate joint ventures
where it may own less than a controlling  interest,  such  investments  are also
reflected  in the  accompanying  financial  statements  on the equity  method of
accounting.  All significant  intercompany  balances and transactions  have been
eliminated in the consolidated financial statements.


                                       5
<PAGE>

     The  minority  interests  at June 30, 2000  represent  an  approximate  12%
limited  partnership  interest  in  the  Operating  Partnership,  a  convertible
preferred interest in Metropolitan and a 40% interest in Omni.

     The accompanying  interim unaudited financial statements have been prepared
by the  Company's  management  pursuant  to the  rules  and  regulations  of the
Securities and Exchange Commission.  Certain information and footnote disclosure
normally  included  in the  financial  statements  prepared in  accordance  with
generally  accepted  accounting  principles  ("GAAP") may have been condensed or
omitted pursuant to such rules and  regulations,  although  management  believes
that  the  disclosures  are  adequate  to make  the  information  presented  not
misleading.  The unaudited financial  statements as of June 30, 2000 and for the
three and six month periods ended June 30, 2000 and 1999 include, in the opinion
of management,  all  adjustments,  consisting of normal  recurring  adjustments,
necessary to present  fairly the financial  information  set forth  herein.  The
results of operations for the interim periods are not necessarily  indicative of
the results  that may be expected for the year ending  December 31, 2000.  These
financial  statements  should be read in conjunction with the Company's  audited
financial  statements  and the notes thereto  included in the Company's Form 10K
for the year ended December 31, 1999.

     The Company  intends to qualify as a REIT under  Section 856 through 869 of
the Internal  Revenue  Code of 1986,  as amended (the  "Code").  As a REIT,  the
Company will not generally be subject to corporate  Federal income taxes as long
as  it  satisfies  certain  technical  requirements  of  the  Code  relating  to
composition of its income and assets and requirements  relating to distributions
of taxable income to shareholders.

     In June 1999, the Financial Accounting Standards Board issued Statement No.
137,  amending  Statement No. 133,  "accounting  for Derivative  Instruments and
Hedging  Activities",  which extended the required date of adoption to the years
beginning  after June 15, 2000.  The Statement  permits early adoption as of the
beginning of any fiscal quarter after its issuance. The Company expects to adopt
the new Statement  effective  January 1, 2001.  The Company does not  anticipate
that the  adoption  of this  Statement  will have any  effect on its  results of
operations or financial position.

     Certain  prior  period  amounts  have been  reclassified  to conform to the
current period presentation.

3. MORTGAGE NOTES PAYABLE

     As of June 30, 2000, the Company had approximately  $457.5 million of fixed
rate mortgage  notes which mature at various  times  between 2000 and 2027.  The
notes are secured by 22 properties and have a weighted  average interest rate of
approximately  7.6%.  In addition,  the Company had a $70 million  variable rate
mortgage note which matures in August 2001.  The note is secured by one property
and bears interest at LIBOR plus 165 basis points.

4. SENIOR UNSECURED NOTES

     As  of  June  30,  2000,   the  Operating   Partnership   had   outstanding
approximately  $449.3  million (net of issuance  discounts) of senior  unsecured
notes  (the  "Senior  Unsecured  Notes").  The  following  table  sets forth the
Operating  Partnership's  Senior  Unsecured Notes and other related  disclosures
(dollars in thousands):

<TABLE>
<CAPTION>
                             FACE
       ISSUANCE             AMOUNT      COUPON RATE     TERM          MATURITY
----------------------   -----------   -------------   ------      ----------------
<S>                      <C>           <C>             <C>         <C>
  August 27, 1997         $150,000          7.20%      10 years    August 28, 2007
  March 26, 1999          $100,000          7.40%       5 years    March 15, 2004
  March 26, 1999          $200,000          7.75%      10 years    March 15, 2009

</TABLE>

     Interest  on the  Senior  Unsecured  Notes  is  payable  semiannually  with
principal and unpaid interest due on the scheduled  maturity dates. In addition,
the Senior  Unsecured Notes issued on March 26, 1999 were issued at an aggregate
discount of $738,000.


                                       6
<PAGE>

5. UNSECURED CREDIT FACILITY AND UNSECURED TERM LOAN

     As of June 30, 2000,  the Company had a three year $500  million  unsecured
revolving  credit  facility (the "Credit  Facility")  from Chase Manhattan Bank,
Union Bank of Switzerland  and PNC Bank as  co-managers  of the Credit  Facility
bank group which matures in July,  2001.  Interest rates on borrowings under the
Credit Facility are priced off of LIBOR plus 90 basis points.

     The  Company  utilizes  the  Credit  Facility   primarily  to  finance  the
acquisitions  of  properties  and  other  real  estate  investments,   fund  its
development  activities and for working capital purposes.  At June 30, 2000, the
Company  had  availability  under the Credit  Facility  to borrow an  additional
$126.4  million (of which,  $49.1  million  has been  reserved  for  outstanding
undrawn letters of credit).

     As of June 30, 2000, the Company had  outstanding an 18 month,  $75 million
unsecured term loan (the "Term Loan") from Chase Manhattan Bank which matures in
June,  2001.  Interest rates on borrowings under the Term Loan are priced off of
LIBOR plus 150 basis points.

6. COMMERCIAL REAL ESTATE INVESTMENTS

     On January 13, 2000,  the Company  acquired 1350 Avenue of the Americas,  a
540,000  square foot,  35 story,  Class A office  property,  located in New York
City, for a purchase price of approximately $126.5 million. This acquisition was
financed  through a $70  million  secured  debt  financing  and a draw under the
Credit Facility.

     On June 15, 1999, the Company acquired the first mortgage note secured by a
47 story,  1.4 million square foot Class A office property  located at 919 Third
Avenue in New York City for  approximately  $277.5  million.  The first mortgage
note  entitles  the  Company  to all the net cash  flow of the  property  and to
substantial  rights  regarding the operations of the property,  with the Company
anticipating to ultimately  obtain title to the property.  This  acquisition was
financed  with  proceeds  from the  issuance of six  million  shares of Series B
Convertible  Cumulative  Preferred  Stock and  through  draws  under the  Credit
Facility.  Current financial  accounting  guidelines provide that where a lender
has  virtually  the same risks and  potential  rewards as those of a real estate
owner it should  recognize the full economics  associated with the operations of
the property.  As such, the Company has recognized the real estate operations of
the 919 Third Avenue in the accompanying  consolidated statements of income from
the date of acquisition.  On July 28, 2000, the Company  consented to the filing
of a  consensual,  pre-packaged  bankruptcy  plan with the current fee owner and
expects to take title to this property by November 30, 2000.

     On August 9, 1999,  the  Company  executed  a contract  for the sale of its
interest in RMI, which consisted of 28 properties,  comprising approximately 6.1
million  square feet and three other big box  industrial  properties  to KTR. In
addition, the Company also entered into a sale agreement with Matrix relating to
a first mortgage note and certain  industrial land holdings (the "Matrix Sale").
The combined total sale price is $310 million ($41.6 million of which is payable
to and of which  $10.4  million  of debt  relief is  attributable  to the Morris
Companies and its  affiliates)  and consists of a combination of (i) cash,  (ii)
convertible  preferred and common stock of KTR, (iii)  preferred  units of KTR's
operating  partnership,  (iv) relief of debt and (v) a purchase  money  mortgage
note secured by certain land that is being sold to Matrix.

     As of June 30, 2000, the Matrix Sale and the sale of the Company's interest
in RMI was completed for a combined  sales price of  approximately  $258 million
(net of minority partner's interest).  The combined  consideration  consisted of
approximately  (i) $159.7 million in cash,  (ii) $60 million of preferred  stock
and operating  partnership  units of KTR,  (iii) $1.5 million in common stock of
KTR, (iv) approximately $26.7 million of debt relief and (v) approximately $10.1
million in purchase money mortgages. As a result, the Company incurred a gain of
approximately  $16.7 million of which  approximately $6.7 million was recognized
during the three months ended June 30, 2000.  Cash  proceeds from the sales were
used primarily to repay borrowings under the Credit Facility.  During July 2000,
the Company redeemed approximately $20 million of the preferred stock of KTR.


                                       7
<PAGE>

     In July 1998, the Company formed a joint venture, Metropolitan Partners LLC
("Metropolitan"),  with  Crescent  Real Estate  Equities  Company,  a Texas REIT
("Crescent") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower"). On
May 24, 1999 the Company  completed  the merger  with Tower and  acquired  three
Class A office  properties  located in New York City totaling 1.6 million square
feet and one office  property  located  on Long  Island  totaling  approximately
101,000  square  feet.  In  addition,  pursuant to the merger,  the Company also
acquired  certain  office  properties,  a property  under  development  and land
located  outside of the Tri-State Area. All of the assets acquired in the merger
located outside of the Tri-State  Area,  other than a 357,000 square foot office
property located in Orlando, Florida, have been sold.

     The  Company  controls  Metropolitan  and owns 100% of the  common  equity;
Crescent  owns  a $85  million  preferred  equity  investment  in  Metropolitan.
Crescent's  investment  accrues  distributions at a rate of 7.5% per annum for a
two-year  period  (May 24,  1999  through  May 24,  2001) and may be redeemed by
Metropolitan  at any time  during that  period for $85  million,  plus an amount
sufficient to provide a 9.5% internal rate of return.  If Metropolitan  does not
redeem the  preferred  interest,  upon the  expiration  of the two-year  period,
Crescent  must  convert its $85  million  preferred  interest  into either (i) a
common membership interest in Metropolitan or (ii) shares of the Company's Class
A common stock at a conversion price of $24.61 per share.

7. STOCKHOLDERS' EQUITY

     On  May  24,  1999,  the  Company  issued  11,694,567  shares  of  Class  B
Exchangeable  Common Stock, par value $.01 per share, of the Company (the "Class
B common stock"), which were valued for GAAP purposes at $26 per share for total
consideration  of  approximately  $304.1  million.  The shares of Class B common
stock were  entitled to receive an initial  annual  dividend of $2.24 per share,
which dividend is subject to adjustment  annually.  The shares of Class B common
stock are  exchangeable at any time, at the option of the holder,  into an equal
number of shares of Class A common  stock,  par  value  $.01 per  share,  of the
Company  subject to customary  antidilution  adjustments.  The  Company,  at its
option,  may redeem any or all of the Class B common  stock in  exchange  for an
equal  number  of  shares  of the  Company's  Class A  common  stock at any time
following the four year,  six-month  anniversary  of the issuance of the Class B
common stock.  On July 1, 2000, the annual  dividend on the Class B Common Stock
was increased to $2.40 per share.

     On June 14,  2000,  the Board of  Directors  of the  Company  declared  the
following dividends on the Company's securities:

<TABLE>
<CAPTION>
                                                                                                          ANNUALIZED
                                 DIVIDEND/            RECORD           PAYMENT         THREE MONTHS        DIVIDEND/
         SECURITY               DISTRIBUTION           DATE              DATE             ENDED          DISTRIBUTION
--------------------------   -----------------   ---------------   ---------------   ---------------   ----------------
<S>                              <C>              <C>               <C>               <C>                 <C>
Class A common stock             $ .38600         July 10, 2000     July 21, 2000     June 30, 2000       $ 1.544
Class B common stock             $ .59400 (a)     July 14, 2000     July 31, 2000     July 31, 2000       $ 2.377 (a)
Series A preferred stock         $ .47660         July 14, 2000     July 31, 2000     July 31, 2000       $ 1.906
Series B preferred stock         $ .52188         July 14, 2000     July 31, 2000     July 31, 2000       $ 2.088
</TABLE>

------------------
(a)  adjusted to $.60 per share  quarterly and $2.40 per share  annually on July
     1, 2000.

     On June 20, 2000,  the Company  issued  4,181,818  shares of Class A common
stock in exchange for four  million  shares of Series B  Convertible  Cumulative
Preferred Stock with a liquidation preference value of $100 million.

     The Board of Directors of the Company has  authorized the purchase of up to
three million  shares of the Company's  Class B common stock.  In addition,  the
Board of Directors has also authorized the purchase of up to an additional three
million  shares of the Company's  Class B common stock and/or its Class A common
stock.  The buy-back program will be effected in accordance with the safe harbor
provisions of the  Securities  Exchange Act of 1934 and may be terminated by the
Company at any time. As of June 30, 2000,  the Company had purchased and retired
1,410,804 shares of Class B common stock for approximately $30.3 million.


                                       8
<PAGE>

     Basic  net  income  per  share on the  Company's  Class A common  stock was
calculated using the weighted average number of shares outstanding of 41,343,118
and 40,284,511 for the three months ended June, 2000 and 1999,  respectively and
40,862,650  and  40,167,445  for the six months  ended  June 30,  2000 and 1999,
respectively.

     Basic  net  income  per  share on the  Company's  Class B common  stock was
calculated using the weighted average number of shares outstanding of 10,283,513
and  4,883,446  for the three months ended June 30, 2000 and 1999,  respectively
and  10,283,556  and  2,455,213 for the six months ended June 30, 2000 and 1999,
respectively.

     The following table sets forth the Company's  reconciliation  of numerators
and  denominators of the basic and diluted  earnings per weighted average common
share  and the  computation  of basic  and  diluted  earnings  per share for the
Company's  Class A common  stock (in  thousands  except for  earnings  per share
data):

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                       JUNE 30,                    JUNE 30,
                                                               -------------------------   -------------------------
                                                                   2000          1999          2000          1999
                                                               -----------   -----------   -----------   -----------
<S>                                                            <C>           <C>           <C>           <C>
Numerator:
 Income before, dividends to preferred shareholders and
   income allocated to Class B common shareholders .........    $ 30,168      $ 16,524      $  53,335     $ 32,229
 Dividends to preferred shareholders .......................      (7,197)       (5,329)       (14,521)      (9,710)
 Income allocated to Class B common shareholders ...........      (6,316)       (1,731)       (10,713)      (1,731)
                                                                --------      --------      ---------     --------
 Numerator for basic and diluted earnings per Class A
   common share ............................................    $ 16,655      $  9,464      $  28,101     $ 20,788
                                                                ========      ========      =========     ========
Denominator:
 Denominator for basic earnings per share-
   weighted-average Class A common shares ..................      41,343        40,285         40,863       40,167
 Effect of dilutive securities:
   Employee stock options ..................................         357           419            342          411
                                                                --------      --------      ---------     --------
 Denominator for diluted earnings per Class A common
   share-adjusted weighted-average shares and assumed
   conversions .............................................      41,700        40,704         41,205       40,578
                                                                ========      ========      =========     ========
Basic earnings per Class A common share:
 Net income per Class A common share .......................    $    .40      $    .23      $     .69     $    .52
                                                                ========      ========      =========     ========
Diluted earnings per Class A common share:
 Diluted net income per Class A common share ...............    $    .40      $    .23      $     .68     $    .51
                                                                ========      ========      =========     ========
</TABLE>

     The following table sets forth the Company's  reconciliation  of numerators
and  denominators of the basic and diluted  earnings per weighted average common
share  and the  computation  of basic  and  diluted  earnings  per share for the
Company's  Class B common  stock (in  thousands  except for  earnings  per share
data):

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                       JUNE 30,                    JUNE 30,
                                                               -------------------------   -------------------------
                                                                   2000          1999          2000          1999
                                                               -----------   -----------   -----------   -----------
<S>                                                            <C>           <C>           <C>           <C>
Numerator:
 Income before dividends to preferred shareholders and
   income allocated to Class A common shareholders .........    $  30,168     $ 16,524      $  53,335     $  32,229
 Dividends to preferred shareholders .......................       (7,197)      (5,329)       (14,521)       (9,710)
 Income allocated to Class A common shareholders ...........      (16,655)      (9,464)       (28,101)      (20,788)
                                                                ---------     --------      ---------     ---------
 Numerator for basic earnings per Class B common ...........        6,316        1,731         10,713         1,731
Add back:
 Income allocated to Class A common shareholders ...........       16,655        9,464         28,101        20,788
</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                            JUNE 30,                       JUNE 30,
                                                                  ----------------------------   -----------------------------
                                                                       2000           1999            2000            1999
                                                                  -------------   ------------   -------------   -------------
<S>                                                               <C>             <C>            <C>             <C>
 Limited partners' minority interest in the operating
   partnership ................................................         3,083          1,827           5,361           4,068
                                                                    ---------       --------       ---------       ---------
 Numerator for diluted earnings per Class B common
   share ......................................................     $  26,054       $ 13,022       $  44,175       $  26,587
                                                                    =========       ========       =========       =========
Denominator:
 Denominator for basic earnings per share-
   weighted-average Class B common shares .....................        10,284          4,883          10,284           2,455
 Effect of dilutive securities:
   Weighted average Class A common shares outstanding .........        41,343         40,285          40,863          40,167
   Weighted average OP Units outstanding ......................         7,695          7,705           7,697           7,708
   Employee stock options .....................................           357            419             342             411
                                                                    ---------       --------       ---------       ---------
Denominator for diluted earnings per Class B common
 share-adjusted weighted-average shares and assumed
 conversions ..................................................        59,679         53,292          59,186          50,741
                                                                    =========       ========       =========       =========
Basic earnings per Class B common share:
 Net income per Class B common share ..........................     $     .61       $    .35       $    1.04       $     .71
                                                                    =========       ========       =========       =========
Diluted earnings per Class B common share:
 Diluted net income per Class B common share ..................     $     .44       $    .24       $     .75       $     .52
                                                                    =========       ========       =========       =========
</TABLE>

8. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION (in thousands)

<TABLE>
<CAPTION>
                                                           SIX MONTHS ENDED
                                                               JUNE 30,
                                                        -----------------------
                                                           2000         1999
                                                        ----------   ----------
<S>                                                     <C>          <C>
   Cash paid during the period for interest .........    $52,135      $30,062
                                                         =======      =======
   Interest capitalized during the period ...........    $ 5,173      $ 4,400
                                                         =======      =======
</TABLE>

     On June 20, 2000,  the Company  issued  4,181,818  shares of Class A common
stock in exchange for four  million  shares of Series B  Convertible  Cumulative
Preferred Stock with a liquidation preference value of $100 million.

9. SEGMENT DISCLOSURE

     The Company owns all of the  interests in its real estate  properties by or
through the Operating  Partnership.  The Company's portfolio consists of Class A
office properties located within the New York City metropolitan area and Class A
suburban  office and  industrial  properties  located  and  operated  within the
Tri-State Area (the "Core Portfolio"). The Company's portfolio also includes one
office property located in Orlando,  Florida,  certain  industrial joint venture
properties  formerly owned by RMI and for the period commencing  January 6, 1998
and ending September 26, 1999, industrial properties which were owned by RMI and
subsequently sold to KTR. The Company has managing directors who report directly
to the  Chief  Operating  Officer  and  Chief  Financial  Officer  who have been
identified  as the  Chief  Operating  Decision  Makers  because  of their  final
authority over resource allocation, decisions and performance assessment.

     In  addition,  as the  Company  expects  to meet its  short-term  liquidity
requirements  in part  through  the  Credit  Facility  and Term  Loan,  interest
incurred on borrowings under the Credit Facility and Term Loan is not considered
as part of  property  operating  performance.  Further,  the  Company  does  not
consider the property  operating  performance of the office property  located in
Orlando,  Florida  as a part of its  Core  Portfolio.  Additionally,  commencing
January 1, 2000, the Company does not consider the operating  performance of the
industrial  joint venture  properties  formerly owned by RMI as part of its Core
Portfolio.

     The accounting  policies of the  reportable  segments are the same as those
described in the summary of significant accounting policies.


                                       10

<PAGE>

     The following table sets forth the components of the Company's revenues and
expenses and other related  disclosures for the three months ended June 30, 2000
and 1999 (in thousands):

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED
                                      ---------------------------------------------
                                                      JUNE 30, 2000
                                      ---------------------------------------------
                                                                      CONSOLIDATED
                                       CORE PORTFOLIO      OTHER         TOTALS
                                      ---------------- ------------- --------------
<S>                                   <C>              <C>           <C>
REVENUES:
Base rents, tenant escalations and
 reimbursements .....................    $   106,852     $   2,231     $  109,083
Equity in earnings of real estate
 joint ventures and service
 companies ..........................             --         1,775          1,775
Interest and other income ...........            257        14,340         14,597
                                         -----------     ---------     ----------
Total Revenues ......................        107,109        18,346        125,455
                                         -----------     ---------     ----------
EXPENSES:
Property operating expenses .........         35,810           558         36,368
Marketing, general and
 administrative .....................          4,928         1,721          6,649
Interest ............................          9,403        14,773         24,176
Depreciation and amortization .......         20,055         2,371         22,426
                                         -----------     ---------     ----------
Total Expenses ......................         70,196        19,423         89,619
                                         -----------     ---------     ----------
Income (loss) before preferred
 dividends and distributions and
 minority interests .................    $    36,913     $  (1,077)    $   35,836
                                         ===========     =========     ==========
Total assets ........................    $ 2,054,183     $ 830,484     $2,884,667
                                         ===========     =========     ==========

<CAPTION>
                                                         THREE MONTHS ENDED
                                      ---------------------------------------------------------
                                                            JUNE 30, 1999
                                      ---------------------------------------------------------
                                                                                   CONSOLIDATED
                                       CORE PORTFOLIO       RMI         OTHER         TOTALS
                                      ---------------- ------------ ------------- -------------
<S>                                   <C>              <C>          <C>           <C>
REVENUES:
Base rents, tenant escalations and
 reimbursements .....................    $    76,943    $   5,287     $   3,548    $    85,778
Equity in earnings of real estate
 joint ventures and service
 companies ..........................             --           --           512            512
Interest and other income ...........            144           --         4,805          4,949
                                         -----------    ---------     ---------    -----------
Total Revenues ......................         77,087        5,287         8,865         91,239
                                         -----------    ---------     ---------    -----------
EXPENSES:
Property operating expenses .........         25,554          816         1,169         27,539
Marketing, general and
 administrative .....................          3,858          167         1,020          5,045
Interest ............................          5,191          940        12,771         18,902
Depreciation and amortization .......         16,212        1,287         1,628         19,127
                                         -----------    ---------     ---------    -----------
Total Expenses ......................         50,815        3,210        16,588         70,613
                                         -----------    ---------     ---------    -----------
Income (loss) before preferred
 dividends and distributions and
 minority interests .................    $    26,272    $   2,077     $  (7,723)   $    20,626
                                         ===========    =========     =========    ===========
Total assets ........................    $ 2,082,784    $ 194,898     $ 618,673    $ 2,896,355
                                         ===========    =========     =========    ===========
</TABLE>

     The following table sets forth the components of the Company's revenues and
expenses and other  related  disclosures  for the six months ended June 30, 2000
and 1999 (in thousands):

<TABLE>
<CAPTION>
                                                     SIX MONTHS ENDED
                                       ---------------------------------------------
                                                       JUNE 30, 2000
                                       ---------------------------------------------
                                                                       CONSOLIDATED
                                        CORE PORTFOLIO      OTHER         TOTALS
                                       ---------------- ------------- --------------
<S>                                    <C>              <C>           <C>
REVENUES:
Base rents, tenant escalations and
 reimbursements ......................     $ 211,672      $   4,657       216,329
Equity in earnings of real estate
 joint ventures and service
 companies ...........................            --          3,187         3,187
Interest and other income ............           664         22,933        23,597
                                           ---------      ---------       -------
Total Revenues .......................       212,336         30,777       243,113
                                           ---------      ---------       -------
EXPENSES:
Property operating expenses ..........        73,297          1,226        74,523
Marketing, general and
 administrative ......................        10,029          3,192        13,221
Interest .............................        18,595         29,421        48,016
Depreciation and amortization ........        39,388          4,049        43,437
                                           ---------      ---------       -------
Total Expenses .......................       141,309         37,888       179,197
                                           ---------      ---------       -------
Income (loss) before preferred
 dividends and distributions and
 minority interests ..................     $  71,027      $  (7,111)     $ 63,916
                                           =========      =========      ========

<CAPTION>
                                                           SIX MONTHS ENDED
                                       --------------------------------------------------------
                                                            JUNE 30, 1999
                                       --------------------------------------------------------
                                                                                   CONSOLIDATED
                                        CORE PORTFOLIO      RMI         OTHER         TOTALS
                                       ---------------- ---------- -------------- -------------
<S>                                    <C>              <C>        <C>            <C>
REVENUES:
Base rents, tenant escalations and
 reimbursements ......................     $ 142,966     $ 9,900     $    3,548     $ 156,414
Equity in earnings of real estate
 joint ventures and service
 companies ...........................            --          --            889           889
Interest and other income ............           213           2          9,830        10,045
                                           ---------     -------     ----------     ---------
Total Revenues .......................       143,179       9,902         14,267       167,348
                                           ---------     -------     ----------     ---------
EXPENSES:
Property operating expenses ..........        47,710       1,567          1,169        50,446
Marketing, general and
 administrative ......................         7,800         298          1,339         9,437
Interest .............................         9,751       1,217         21,878        32,846
Depreciation and amortization ........        28,993       2,367          2,858        34,218
                                           ---------     -------     ----------     ---------
Total Expenses .......................        94,254       5,449         27,244       126,947
                                           ---------     -------     ----------     ---------
Income (loss) before preferred
 dividends and distributions and
 minority interests ..................     $  48,925     $ 4,453     $  (12,977)    $  40,401
                                           =========     =======     ==========     =========
</TABLE>

10. OTHER INVESTMENTS AND ADVANCES

     During 1997,  the Company  formed  FrontLine  Capital  Group  ("FrontLine")
(formerly  Reckson  Service  Industries,  Inc.) and  Reckson  Strategic  Venture
Partners,  LLC  ("RSVP").  In connection  with the  formation of FrontLine,  the
Operating  Partnership   established  a  credit  facility  with  FrontLine  (the
"FrontLine  Facility") in the amount of $100 million for FrontLine's  e-commerce
and e-services


                                       11
<PAGE>

operations  and  other  general  corporate  purposes.  As  of June 30, 2000, the
Company  had  advanced approximately $92.7 million under the FrontLine Facility.
In  addition,  the Operating Partnership has approved the funding of investments
of  up  to  $100  million  with  or  in  RSVP  (the  "RSVP Commitment"), through
RSVP-controlled  joint  venture  REIT-qualified  investments or advances made to
FrontLine  under  terms  similar to the FrontLine Facility. As of June 30, 2000,
approximately  $67.9  million  had been invested through the RSVP Commitment, of
which  $29.4  million  represents  RSVP-controlled  joint venture REIT-qualified
investments  and  $38.5  million represents advances to FrontLine under the RSVP
Commitment.  Both  the FrontLine Facility and the RSVP Commitment have a term of
five  years  and  advances  under  each  are  recourse obligations of FrontLine.
Interest  accrues  on  advances made under the credit facilities at a rate equal
to  the  greater  of  (a) the prime rate plus two percent and (b) 12% per annum,
with  the rate on amounts that are outstanding for more than one year increasing
annually  at a rate of four percent of the prior year's rate. Prior to maturity,
interest  is payable quarterly but only to the extent of net cash flow and on an
interest-only basis.

     During  November  1999,  the Board of Directors of the Company  approved an
amendment to the FrontLine  Facility and the RSVP Commitment to permit FrontLine
to incur secured debt and to pay interest  thereon and to issue  preferred stock
and to pay dividends thereon. In consideration of the amendments, FrontLine paid
the  Operating  Partnership a fee of  approximately  $3.6 million in the form of
shares of FrontLine common stock. Such fee is being recognized in income over an
estimated nine month benefit period.

     FrontLine  identifies,  acquires  interests  in and  develops  a network of
e-commerce  and  e-services   companies  that  service  small  to  medium  sized
enterprises,   independent   professionals  and  entrepreneurs  and  the  mobile
workforce of larger companies.  FrontLine serves as the managing member of RSVP.
RSVP was formed to provide the Company with a research and  development  vehicle
to invest in alternative  real estate  sectors.  RSVP invests  primarily in real
estate and real estate  related  operating  companies  generally  outside of the
Company's core office and industrial  focus.  RSVP's strategy is to identify and
acquire  interests in established  entrepreneurial  enterprises with experienced
management teams in market sectors which are in the early stages of their growth
cycle or offer unique  circumstances  for  attractive  investments  as well as a
platform for future growth.














                                       12
<PAGE>

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  Consolidated  Financial  Statements of Reckson  Associates  Realty
Corp. (the "Company") and related notes thereto.

     The  Company   considers   certain   statements  set  forth  herein  to  be
forward-looking  statements  within the meaning of Section 27A or the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended,  with  respect to the  Company's  expectations  for future  periods.
Certain forward-looking statements,  including,  without limitation,  statements
relating  to the  timing and  success  of  acquisitions,  the  financing  of the
Company's operations, the ability to lease vacant space and the ability to renew
or relet space under expiring leases,  involve certain risks and  uncertainties.
Although  the  Company  believes  that  the   expectations   reflected  in  such
forward-looking  statements  are based on  reasonable  assumptions,  the  actual
results  may  differ  materially  from  those set  forth in the  forward-looking
statements  and the Company can give no assurance that its  expectation  will be
achieved.  Certain factors that might cause the results of the Company to differ
materially  from those  indicated by such  forward-looking  statements  include,
among other factors,  general economic conditions,  general real estate industry
risks,  tenant default and  bankruptcies,  loss of major tenants,  the impact of
competition and acquisition, redevelopment and development risks, the ability to
finance business opportunities and local real estate risks such as an oversupply
of space or a reduction in demand for real estate in the  Company's  real estate
markets. Consequently, such forward-looking statements should be regarded solely
as  reflections of the Company's  current  operating and  development  plans and
estimates.  These plans and estimates are subject to revisions from time to time
as additional information becomes available,  and actual results may differ from
those indicated in the referenced statements.

OVERVIEW AND BACKGROUND

     The Company is a self-administered  and self-managed real estate investment
trust ("REIT") specializing in the acquisition,  leasing, financing,  management
and  development  of office and  industrial  properties.  The  Company's  growth
strategy  is  focused  on the real  estate  markets  in and  around the New York
tri-state area (the "Tri-State Area").

     The  Company  owns  all of the  interests  in its real  properties  through
Reckson Operating Partnership,  L.P. (the "Operating  Partnership").  As of June
30,  2000,  the  Company  owned and  operated  78 office  properties  comprising
approximately  13.7 million square feet, 105  industrial  properties  comprising
approximately  6.9  million  square  feet and two retail  properties  comprising
approximately  20,000 square feet,  located in the Tri-State  Area.  The Company
also owns a 357,000 square foot office building located in Orlando,  Florida and
approximately  346 acres of land in 16 separate parcels of which the Company can
develop  approximately 1.9 million square feet of office space and approximately
350,000  square  feet  of  industrial  space.  The  Company  also  has  invested
approximately  $301.5 million in mortgage notes  encumbering  two Class A office
properties encompassing approximately 1.6 million square feet, approximately 403
acres of land located in New Jersey and  approximately  $17.1  million in a note
receivable secured by a partnership  interest in Omni Partner's,  L.P., owner of
the Omni, a 575,000  square foot Class A office  property  located in Uniondale,
New York.

     During 1997,  the Company  formed  FrontLine  Capital  Group  ("FrontLine")
(formerly  Reckson  Service  Industries,  Inc.) and  Reckson  Strategic  Venture
Partners,  LLC  ("RSVP").  In connection  with the  formation of FrontLine,  the
Operating  Partnership   established  a  credit  facility  with  FrontLine  (the
"FrontLine  Facility") in the amount of $100 million for FrontLine's  e-commerce
and e-services  operations and other general corporate purposes.  As of June 30,
2000, the Company had advanced  approximately  $92.7 million under the FrontLine
Facility.  In addition,  the Operating  Partnership  has approved the funding of
investments  of up to $100  million  with or in RSVP  (the  "RSVP  Commitment"),
through  RSVP-controlled  joint venture  REIT-qualified  investments or advances
made to FrontLine under terms similar to the FrontLine Facility.  As of June 30,
2000, approximately $67.9 million had been invested through the RSVP Commitment,
of which $29.4 million represents  RSVP-controlled joint venture  REIT-qualified
investments  and $38.5 million  represents  advances to FrontLine under the RSVP
Commitment.  Both the FrontLine  Facility and the RSVP Commitment have a term of
five years and


                                       13
<PAGE>

advances under each are recourse  obligations of FrontLine.  Interest accrues on
advances made under the credit  facilities at a rate equal to the greater of (a)
the prime rate plus two percent and (b) 12% per annum,  with the rate on amounts
that are  outstanding  for more than one year  increasing  annually at a rate of
four percent of the prior year's  rate.  Prior to maturity,  interest is payable
quarterly  but  only to the  extent  of net  cash  flow of  FrontLine  and on an
interest-only basis.

     During  November  1999,  the Board of Directors of the Company  approved an
amendment to the FrontLine  Facility and the RSVP Commitment to permit FrontLine
to incur secured debt and to pay interest  thereon and to issue  preferred stock
and to pay dividends thereon. In consideration of the amendments, FrontLine paid
the  Operating  Partnership a fee of  approximately  $3.6 million in the form of
shares of FrontLine common stock. Such fee is being recognized in income over an
estimated nine month benefit period.

     FrontLine  identifies,  acquires  interests  in and  develops  a network of
e-commerce  and  e-services   companies  that  service  small  to  medium  sized
enterprises,   independent   professionals  and  entrepreneurs  and  the  mobile
workforce of larger companies.  FrontLine serves as the managing member of RSVP.
RSVP was formed to provide the Company with a research and  development  vehicle
to invest in alternative  real estate  sectors.  RSVP invests  primarily in real
estate and real estate  related  operating  companies  generally  outside of the
Company's core office and industrial  focus.  RSVP's strategy is to identify and
acquire  interests in established  entrepreneurial  enterprises with experienced
management teams in market sectors which are in the early stages of their growth
cycle or offer unique  circumstances  for  attractive  investments  as well as a
platform for future growth.

     On August 9, 1999,  the  Company  executed  a contract  for the sale of its
interest in Reckson Morris Operating Partnership, L. P. ("RMI"), which consisted
of 28  properties,  comprising  approximately  6.1 million square feet and three
other big box  industrial  properties to Keystone  Property  Trust  ("KTR").  In
addition, the Company also entered into a sale agreement with Matrix relating to
a first mortgage note and certain  industrial land holdings (the "Matrix Sale").
The combined total sale price is $310 million ($41.6 million of which is payable
to, and of which  $10.4  million of debt  relief is  attributable  to the Morris
Companies and its  affiliates)  and consists of a combination of (i) cash,  (ii)
convertible  preferred and common stock of KTR, (iii)  preferred  units of KTR's
operating  partnership,  (iv) relief of debt and (v) a purchase  money  mortgage
note secured by certain land that is being sold to Matrix.

     As of June 30, 2000, the Matrix Sale and the sale of the Company's interest
in RMI was completed for a combined  sales price of  approximately  $258 million
(net of minority partner's interest).  The combined  consideration  consisted of
approximately  (i) $159.7 million in cash,  (ii) $60 million of preferred  stock
and operating  partnership  units of KTR,  (iii) $1.5 million in common stock of
KTR, (iv) approximately $26.7 million of debt relief and (v) approximately $10.1
million in purchase money mortgages. As a result, the Company incurred a gain of
approximately  $16.7 million of which  approximately $6.7 million was recognized
during the three months ended June 30, 2000.  Cash  proceeds from the sales were
used primarily to repay borrowings under the Credit Facility.  During July 2000,
the Company redeemed approximately $20 million of the preferred stock of KTR.

     In July 1998, the Company formed a joint venture, Metropolitan Partners LLC
("Metropolitan"),  with  Crescent  Real Estate  Equities  Company,  a Texas REIT
("Crescent") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower"). On
May 24, 1999 the Company  completed  the merger  with Tower and  acquired  three
Class A office  properties  located in New York City totaling 1.6 million square
feet and one office  property  located  on Long  Island  totaling  approximately
101,000  square  feet.  In  addition,  pursuant to the merger,  the Company also
acquired  certain  office  properties,  a property  under  development  and land
located  outside of the Tri-State Area. All of the assets acquired in the merger
located outside of the Tri-State  Area,  other than a 357,000 square foot office
property located in Orlando, Florida, have been sold.

     The  Company  controls  Metropolitan  and owns 100% of the  common  equity;
Crescent  owns  a $85  million  preferred  equity  investment  in  Metropolitan.
Crescent's  investment  accrues  distributions at a rate of 7.5% per annum for a
two-year  period  (May 24,  1999  through  May 24,  2001) and may be redeemed by
Metropolitan  at any time  during that  period for $85  million,  plus an amount
sufficient to provide a


                                       14
<PAGE>

9.5%  internal  rate of return.  If  Metropolitan  does not redeem the preferred
interest,  upon the expiration of the two-year period, Crescent must convert its
$85 million preferred  interest into either (i) a common membership  interest in
Metropolitan  or  (ii)  shares  of the  Company's  Class  A  common  stock  at a
conversion price of $24.61 per share.

     The market capitalization of the Company at June 30, 2000 was approximately
$3.33 billion.  The Company's market  capitalization  is based on the sum of (i)
the market  value of the  Company's  Class A common  stock and  common  units of
limited partnership interest in the Operating Partnership ("OP Units") (assuming
conversion)  of  $23.77  per  share/unit  (based  on the  closing  price  of the
Company's  Class A common stock on June 30, 2000),  (ii) the market value of the
Company's  Class B common stock of $25.44 per share (based on the closing  price
of the Company's  Class B common stock on June 30, 2000),  (iii) the liquidation
preference  value of the  Company's  Series A  preferred  and Series B preferred
stock of $25 per share,  (iv) the liquidation  preference value of the Operating
Partnership's  preferred units of $1,000 per unit, (v) the contributed  value of
Metropolitan's  preferred  interest of $85  million  and (vi) the  approximately
$1.41  billion  (including  its share of joint  venture debt and net of minority
partners'  interests) of debt  outstanding  at June 30, 2000.  As a result,  the
Company's  total  debt to total  market  capitalization  ratio at June 30,  2000
equaled approximately 42.3%.

RESULTS OF OPERATIONS

     The Company's  total  revenues  increased by $34.2 million or 37.5% for the
three  months  ended June 30,  2000 as  compared  to the 1999  period.  Property
operating  revenues,  which  include  base  rents  and  tenant  escalations  and
reimbursements  ("Property  Operating  Revenues")  increased by $23.3 million or
27.2% for the three  months  ended June 30, 2000 as compared to the 1999 period.
The increase in Property Operating Revenues is substantially attributable to the
Tower  portfolio  acquisition in May 1999, the acquisition of the first mortgage
note  secured by 919 Third  Avenue  (which  revenue  was  reflected  in Property
Operating  Revenues)  in June  1999 and the  acquisition  of 1350  Avenue of the
Americas in January 2000.  In addition,  Property  Operating  Revenues were also
positively  impacted by approximately $3.6 million from increases in occupancies
and  rental  rates in our  "same  store"  properties.  The  Company's  base rent
reflects  the  positive  impact of the  straight-line  rent  adjustment  of $8.3
million for the three months ended June 30, 2000 as compared to $3.2 million for
the 1999 period.  The  remaining  balance of the  increase in total  revenues is
attributable  to the gain on  sales of real  estate,  interest  income  and fees
relating  to the  FrontLine  Facility  and  the  RSVP  Commitment  and  earnings
generated by RSVP-controlled joint venture REIT-qualified investments.

     Property operating expenses,  real estate taxes and ground rents ("Property
Expenses")  increased  by $8.8  million or 32.1% for the three months ended June
30, 2000 as compared to the 1999 period.  These  increases  are primarily due to
the acquisition of the Tower portfolio in May 1999, the acquisition of the first
mortgage note secured by 919 Third Avenue in June 1999,  (which  operations were
reflected  in  Property  Expenses)  and the  acquisition  of 1350  Avenue of the
Americas in January 2000. Gross operating margins (defined as Property Operating
Revenues less  Property  Expenses,  taken as a percentage of Property  Operating
Revenues)  for the three  months  ended  June 30 , 2000 and 1999 were  66.7% and
67.9%  respectively.  The  decrease  in gross  operating  margins  is  primarily
attributable to a larger  proportionate  share of gross operating margin derived
from office  properties,  which has a lower  gross  margin  percentage,  in 2000
compared to 1999. The higher  proportionate share of the gross operating margins
is  attributable  to the office  properties  acquired during the period May 1999
through January 2000 and the disposition of net leased industrial  properties in
September  1999 and April 2000.  This shift in the  composition of the portfolio
was offset by increases in rental rates and operating efficiencies realized.

     Marketing,  general and  administrative  expenses increased by $1.6 million
for the three  months  ended June 30, 2000 as compared to the 1999  period.  The
increase is due to the increased  costs of managing the  acquisition  properties
and the increase in corporate  management and  administrative  costs  associated
with the  growth  of the  Company  including  the  opening  of its New York City
division.  Marketing,  general and  administrative  expenses as a percentage  of
total revenues were 5.3% for the three months ended June 30, 2000 as compared to
5.5% for the 1999 period.


                                       15
<PAGE>

     Interest expense  increased by $5.3 million for the three months ended June
30,  2000 as  compared  to the  1999  period.  The  increase  is due to  secured
borrowings  assumed in the Tower  acquisition  as well as new debt incurred with
the  Tower and 1350  Avenue  of the  Americas  acquisitions.  Additionally,  the
increase is due to an increase cost  attributable to an increased balance on the
Company's   credit  facility  and  term  loan.  The  weighted   average  balance
outstanding  on the Company's  credit  facility and term loan was $464.1 million
for the three months  ended June 30, 2000 as compared to $352.1  million for the
three months ended June 30, 1999.

     The Company's  total  revenues  increased by $75.8 million or 45.3% for the
six  months  ended  June  30,  2000 as  compared  to the 1999  period.  Property
Operating  Revenues,  which  include  base  rents  and  tenant  escalations  and
reimbursements increased by $59.9 million or 38.3% for the six months ended June
30, 2000 as  compared to the 1999  period.  The  increase in Property  Operating
Revenues is substantially attributable to the Tower portfolio acquisition in May
1999,  the  acquisition  of the first  mortgage note secured by 919 Third Avenue
(which  revenue was reflected in Property  Operating  Revenues) in June 1999 and
the  acquisition  of 1350 Avenue of the Americas in January  2000.  In addition,
Property Operating Revenues were also positively  impacted by approximately $5.4
million  from  increases  in  occupancies  and rental  rates in our "same store"
properties.  The  Company's  base  rent  reflects  the  positive  impact  of the
straight-line rent adjustment of $12.8 million for the six months ended June 30,
2000 as compared to $4.6 million for the 1999 period.  The remaining  balance of
the  increase  in total  revenues is  attributable  to the gain on sales of real
estate, interest income and fees relating to the FrontLine Facility and the RSVP
Commitment   and   earnings   generated   by   RSVP-controlled   joint   venture
REIT-qualified investments.

     Property  Expenses  increased by $24.1  million or 47.7% for the six months
ended  June  30,  2000 as  compared  to the 1999  period.  These  increases  are
primarily  due to the  acquisition  of the  Tower  portfolio  in May  1999,  the
acquisition of the first mortgage note secured by 919 Third Avenue in June 1999,
(which  operations  were reflected in Property  Expenses) and the acquisition of
1350 Avenue of the Americas in January 2000. Gross Operating Margins for the six
months  ended  June 30 , 2000 and 1999 were  65.6% and 67.8%  respectively.  The
decrease  in gross  operating  margins  is  primarily  attributable  to a larger
proportionate  share of gross operating  margin derived from office  properties,
which has a lower gross margin percentage,  in 2000 compared to 1999. The higher
proportionate share of the gross operating margins is attributable to the office
properties  acquired  during the period May 1999  through  January  2000 and the
disposition of net leased industrial properties in September 1999. This shift in
the  composition  of the  portfolio  was offset by increases in rental rates and
operating efficiencies realized.

     Marketing,  general and  administrative  expenses increased by $3.8 million
for the six months  ended June 30,  2000 as  compared  to the 1999  period.  The
increase is due to the increased  costs of managing the  acquisition  properties
and the increase in corporate  management and  administrative  costs  associated
with the  growth  of the  Company  including  the  opening  of its New York City
division.  Marketing,  general and  administrative  expenses as a percentage  of
total  revenues  were 5.4% for the six months ended June 30, 2000 as compared to
5.6% for the 1999 period.

     Interest  expense  increased by $15.2 million for the six months ended June
30, 2000 as compared  to the 1999  period.  The  increase  is  primarily  due to
secured borrowings assumed in the Tower acquisition as well as new debt incurred
with the Tower and 1350 Avenue of the Americas acquisitions.  Additionally,  the
increase is also due to $300 million of Senior  Unsecured  Notes issued on March
26, 1999 and an increased cost  attributable to an increased  average balance on
the Company's credit facility and term loan. The weighted average balance on the
Company's  credit  facility and term loan was $464.8  million for the six months
ended June 30, 2000 as compared to $429.0  million for the six months ended June
30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30,  2000 the Company  had a three year $500  million  unsecured
revolving  credit  facility (the "Credit  Facility")  with Chase Manhattan Bank,
Union Bank of Switzerland  and PNC Bank as  co-managers  of the Credit  Facility
bank group which matures in July,  2001.  Interest rates on borrowings under the
Credit Facility are priced off of LIBOR plus 90 basis points.


                                       16
<PAGE>

     The  Company  utilizes  the  Credit  Facility   primarily  to  finance  the
acquisitions  of  properties  and  other  real  estate  investments,   fund  its
development  activities and for working capital purposes.  At June 30, 2000, the
Company  had  availability  under the Credit  Facility  to borrow an  additional
$126.4  million (of which,  $49.1  million  has been  reserved  for  outstanding
undrawn letters of credit).

     As of June 30,  2000,  the Company had an 18 month,  $75 million  unsecured
term loan (the "Term Loan") from Chase Manhattan Bank which matures during June,
2001.  Interest rates on borrowings  under the Term Loan are priced off of LIBOR
plus 150 basis points.

     On  May  24,  1999,  the  Company  issued  11,694,567  shares  of  Class  B
Exchangeable  Common Stock, par value $.01 per share, of the Company (the "Class
B common stock"), which were valued for generally accepted accounting principles
("GAAP")  purposes  at $26 per share for total  consideration  of  approximately
$304.1  million.  The shares of Class B common stock were entitled to receive an
initial  annual  dividend  of $2.24 per  share,  which  dividend  is  subject to
adjustment annually.  The shares of Class B common stock are exchangeable at any
time,  at the option of the  holder,  into an equal  number of shares of Class A
common  stock,  par value $.01 per share,  of the Company  subject to  customary
antidilution  adjustments.  The Company, at its option, may redeem any or all of
the  Class B common  stock in  exchange  for an equal  number  of  shares of the
Company's  Class A common stock at any time  following the four year,  six-month
anniversary  of the issuance of the Class B common stock.  On July 1, 2000,  the
annual dividend on the Class B Common Stock was increased to $2.40 per share.

     On June 20, 2000,  the Company  issued  4,181,818  shares of Class A common
stock in exchange for four  million  shares of Series B  Convertible  Cumulative
Preferred Stock with a liquidation preference value of $100 million.

     The Board of Directors of the Company has  authorized the purchase of up to
three million  shares of the Company's  Class B common stock.  In addition,  the
Board of Directors has also authorized the purchase of up to an additional three
million  shares of the Company's  Class B common stock and/or its Class A common
stock.  The buy-back program will be effected in accordance with the safe harbor
provisions of the  Securities  Exchange Act of 1934 and may be terminated by the
Company at any time. As of June 30, 2000,  the Company had purchased and retired
1,410,804 shares of Class B Common Stock for approximately $30.3 million.

     The Company's  indebtedness  at June 30, 2000 totaled  approximately  $1.41
billion (including its share of joint venture debt and net of minority partners'
interests)  and was  comprised of $373.6  million  outstanding  under the Credit
Facility,  $75 million  outstanding  under the Term Loan,  approximately  $449.3
million of senior unsecured notes and  approximately  $513.3 million of mortgage
indebtedness.   Based  on  the   Company's   total  market   capitalization   of
approximately $3.33 billion at June 30, 2000 (calculated based on the sum of (i)
the market value of the  Company's  Class A common stock and OP Units,  assuming
conversion,  (ii) the market value of the Company's Class B common stock,  (iii)
the liquidation  preference  value of the Company's  preferred  stock,  (iv) the
liquidation preference value of the Operating Partnership's preferred units, (v)
the contributed  value of Metropolitan's  preferred  interest and (vi) the $1.41
billion of debt),  the Company's  debt  represented  approximately  42.3% of its
total market capitalization.

     Historically,  rental revenue has been the principal source of funds to pay
operating   expenses,   debt   service  and  capital   expenditures,   excluding
non-recurring  capital  expenditures of the Company. The Company expects to meet
its short-term liquidity requirements generally through its net cash provided by
operating  activities along with the Credit Facility previously  discussed.  The
Company expects to meet certain of its financing  requirements through long-term
secured and unsecured  borrowings and the issuance of debt and equity securities
of the Company.  In addition,  the Company also believes that it will, from time
to time,  generate funds from the sale of certain of its real estate  properties
or interests therein. The Company will refinance existing mortgage  indebtedness
or  indebtedness  under the Credit  Facility  at  maturity  or retire  such debt
through  the  issuance  of  additional  debt  securities  or  additional  equity
securities.  The Company  anticipates  that the current balance of cash and cash
equivalents  and cash  flows  from  operating  activities,  together  with  cash
available  from  borrowings and equity  offerings,  will be adequate to meet the
capital  and  liquidity  requirements  of the  Company  in both  the  short  and
long-term.


                                       17
<PAGE>

     In order to qualify as a REIT for federal income tax purposes,  the Company
is required to make  distributions  to its  stockholders of at least 95% of REIT
taxable  income.  The  Company  expects  to use its  cash  flow  from  operating
activities  for  distributions  to  stockholders  and for payment of  recurring,
non-incremental  revenue-generating  expenditures. The Company intends to invest
amounts accumulated for distribution in short-term investments.

INFLATION

     The office  leases  generally  provided  for fixed base rent  increases  or
indexed  escalations.  In  addition,  the office  leases  provide  for  separate
escalations  of real estate  taxes and electric  costs over a base  amount.  The
industrial leases generally  provide for fixed base rent increases,  direct pass
through of certain  operating  expenses and separate real estate tax escalations
over a base amount. The Company believes that inflationary increases in expenses
will be offset by contractual rent increases and expense  escalations  described
above.

     The Credit  Facility and Term Loan bear interest at a variable rate,  which
will be influenced by changes in short-term  interest rates, and is sensitive to
inflation.

FUNDS FROM OPERATIONS

     Management  believes that funds from  operations  ("FFO") is an appropriate
measure  of  performance  of an equity  REIT.  FFO is  defined  by the  National
Association of Real Estate  Investment  Trusts ("NAREIT") as net income or loss,
excluding gains or losses from debt  restructuring  and sales of properties plus
depreciation  and  amortization,   and  after  adjustments  for   unconsolidated
partnerships  and joint  ventures.  FFO does not represent  cash  generated from
operating activities in accordance with generally accepted accounting principles
and is not  indicative of cash  available to fund cash needs.  FFO should not be
considered  as an  alternative  to net income as an indicator  of the  Company's
operating  performance  or as an  alternative  to  cash  flow  as a  measure  of
liquidity.  In November 1999,  NAREIT issued a "White Paper" analysis to address
certain  interpretive  issues  under its  definition  of FFO.  The  White  Paper
provides  that FFO should  include both  recurring and  non-recurring  operating
results,  except those results defined as "extraordinary items" under GAAP. This
revised definition is effective for all periods beginning on or after January 1,
2000.

     Since all companies and analysts do not calculate FFO in a similar fashion,
the  Company's  calculation  of FFO  presented  herein may not be  comparable to
similarly titled measures as reported by other companies.


                                       18
<PAGE>

     The  following  table presents the Company's FFO calculation (unaudited and
in thousands, except per share/unit data):

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                           JUNE 30,
                                                                                   -------------------------
                                                                                       2000         1999
                                                                                   ------------ ------------
<S>                                                                                <C>          <C>
Net income available to common shareholders ......................................   $ 22,971     $ 11,195
Add:
 Real estate depreciation and amortization .......................................     21,937       18,406
 Minority partners' interests in consolidated partnerships .......................      1,925        1,615
 Limited partners' minority interest in the operating partnership ................      3,083        1,827
Less:
 Gain on sales of real estate ....................................................      6,662           --
 Amounts distributable to minority partners' in consolidated partnerships ........      2,136        1,980
                                                                                     --------     --------
Funds From Operations (FFO) -- basic .............................................     41,118       31,063
Less:
 Straight line rents .............................................................      8,300        3,178
 Non-Incremental capitalized tenant improvements and leasing commissions .........      1,873        1,236
 Non-Incremental capitalized improvements ........................................      1,446          838
                                                                                     --------     --------
Cash available for distribution ("CAD") -- basic .................................   $ 29,499     $ 25,811
                                                                                     ========     ========
Computation of diluted FFO and CAD:
Basic FFO ........................................................................   $ 41,118     $ 31,063
Add:
 Dividends and distributions on dilutive shares and units ........................      9,451        6,663
                                                                                     --------     --------
FFO -- diluted ...................................................................     50,569       37,726
Less:
 Straight line rents, non incremental capitalized improvements, tenant
  improvements and leasing commissions ...........................................     11,619        5,252
                                                                                     --------     --------
CAD -- diluted ...................................................................   $ 38,950     $ 32,474
                                                                                     ========     ========
Basic FFO and CAD calculations:
 Weighted average shares outstanding .............................................     51,627       45,168
 Weighted average units of limited partnership interest outstanding ..............      7,695        7,705
                                                                                     --------     --------
 Weighted average shares and units outstanding ...................................     59,322       52,873
                                                                                     ========     ========
 FFO per weighted average share or unit ..........................................   $    .69      $   .59
                                                                                     ========     ========
 CAD per weighted average share or unit ..........................................   $    .50      $   .49
                                                                                     ========     ========
 Weighted average dividends or distributions per share or unit ...................   $    .42      $   .39
                                                                                     ========     ========
 FFO payout ratio ................................................................       60.8%        66.2%
                                                                                     ========     ========
 CAD payout ratio ................................................................       84.7%        79.6%
                                                                                     ========     ========
Diluted FFO and CAD calculations:
 Basic GAAP weighted average shares and units outstanding ........................     59,322       52,873
 Add GAAP weighted average dilutive securities ...................................        357          419
                                                                                     --------     --------
 Dilutive GAAP weighted average shares and units .................................     59,679       53,292
 Adjustments for dilutive FFO and CAD weighted average shares and units:
  Add:
  Weighted average shares of Series A Preferred Stock ............................      8,060        8,060
  Weighted average shares of Series B Preferred Stock ............................      5,294        1,835
  Weighted average shares of minority partner's preferred interest ...............      3,454        1,443
  Weighed average shares of preferred units of limited partnership interest .           1,367        1,367
                                                                                     --------     --------
Dilutive FFO and CAD weighted average shares and units outstanding ...............     77,854       65,997
                                                                                     ========     ========
FFO per weighted average share or unit ...........................................   $    .65      $   .57
                                                                                     ========     ========
CAD per weighted average share or unit ...........................................   $    .50      $   .49
                                                                                     ========     ========
Weighted average dividends or distributions per share or unit ....................   $    .41      $   .39
                                                                                     ========     ========
FFO payout ratio .................................................................       63.6%        67.4%
                                                                                     ========     ========
CAD payout ratio .................................................................       82.5%      78.3%
                                                                                     ========     ========

<CAPTION>
                                                                                       SIX MONTHS ENDED
                                                                                           JUNE 30,
                                                                                   -------------------------
                                                                                       2000         1999
                                                                                   ------------ ------------
<S>                                                                                <C>          <C>
Net income available to common shareholders ......................................   $ 38,814     $ 22,519
Add:
 Real estate depreciation and amortization .......................................     42,552       33,094
 Minority partners' interests in consolidated partnerships .......................      3,899        2,783
 Limited partners' minority interest in the operating partnership ................      5,361        4,068
Less:
 Gain on sales of real estate ....................................................      6,662           --
 Amounts distributable to minority partners' in consolidated partnerships ........      4,517        3,424
                                                                                     --------     --------
Funds From Operations (FFO) -- basic .............................................     79,447       59,040
Less:
 Straight line rents .............................................................     12,838        4,514
 Non-Incremental capitalized tenant improvements and leasing commissions .........      4,743        2,055
 Non-Incremental capitalized improvements ........................................      2,697        1,479
                                                                                     --------     --------
Cash available for distribution ("CAD") -- basic .................................   $ 59,169     $ 50,992
                                                                                     ========     ========
Computation of diluted FFO and CAD:
Basic FFO ........................................................................   $ 79,447     $ 59,040
Add:
 Dividends and distributions on dilutive shares and units ........................     19,029       11,704
                                                                                     --------     --------
FFO -- diluted ...................................................................     98,476       70,744
Less:
 Straight line rents, non incremental capitalized improvements, tenant
  improvements and leasing commissions ...........................................     20,278        8,048
                                                                                     --------     --------
CAD -- diluted ...................................................................   $ 78,198     $ 62,696
                                                                                     ========     ========
Basic FFO and CAD calculations:
 Weighted average shares outstanding .............................................     51,146       42,623
 Weighted average units of limited partnership interest outstanding ..............      7,697        7,707
                                                                                     --------     --------
 Weighted average shares and units outstanding ...................................     58,843       50,330
                                                                                     ========     ========
 FFO per weighted average share or unit ..........................................   $   1.35      $  1.17
                                                                                     ========     ========
 CAD per weighted average share or unit ..........................................   $   1.01      $  1.01
                                                                                     ========     ========
 Weighted average dividends or distributions per share or unit ...................   $    .83      $   .73
                                                                                     ========     ========
 FFO payout ratio ................................................................       61.2%        62.1%
                                                                                     ========     ========
 CAD payout ratio ................................................................       82.1%        71.9%
                                                                                     ========     ========
Diluted FFO and CAD calculations:
 Basic GAAP weighted average shares and units outstanding ........................     58,843       50,330
 Add GAAP weighted average dilutive securities ...................................        342          411
                                                                                     --------     --------
 Dilutive GAAP weighted average shares and units .................................     59,185       50,741
 Adjustments for dilutive FFO and CAD weighted average shares and units:
  Add:
  Weighted average shares of Series A Preferred Stock ............................      8,060        8,060
  Weighted average shares of Series B Preferred Stock ............................      5,526          923
  Weighted average shares of minority partner's preferred interest ...............      3,454          724
  Weighed average shares of preferred units of limited partnership interest .           1,367        1,367
                                                                                     --------     --------
Dilutive FFO and CAD weighted average shares and units outstanding ...............     77,592       61,815
                                                                                     ========     ========
FFO per weighted average share or unit ...........................................   $   1.27      $  1.14
                                                                                     ========     ========
CAD per weighted average share or unit ...........................................   $   1.01      $  1.01
                                                                                     ========     ========
Weighted average dividends or distributions per share or unit ....................   $    .81      $   .73
                                                                                     ========     ========
FFO payout ratio .................................................................       63.8%        63.4%
                                                                                     ========     ========
CAD payout ratio .................................................................       80.3%        71.5%
                                                                                     ========     ========
</TABLE>

                                       19
<PAGE>

           SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES, TENANT
                      IMPROVEMENTS AND LEASING COMMISSIONS

     The   following   table   summarizes   the   expenditures    incurred   for
non-incremental   capital   expenditures,   tenant   improvements   and  leasing
commissions for the Company's office and industrial properties for the six month
period ended June 30, 2000 and the  historical  average of such  non-incremental
capital expenditures,  tenant improvements and leasing commissions for the years
1996 through 1999.

            NON-INCREMENTAL REVENUE GENERATING CAPITAL EXPENDITURES

<TABLE>
<CAPTION>
                                                                                                           SIX MONTHS
                                                                                            1998-1999         ENDED
                                1996           1997            1998            1999          AVERAGE      JUNE 30, 2000
                           ------------- --------------- --------------- --------------- --------------- --------------
<S>                        <C>           <C>             <C>             <C>             <C>             <C>
SUBURBAN OFFICE PROPERTIES
 Total ...................   $ 375,026     $ 1,108,675     $ 2,004,976     $ 2,298,899     $ 1,446,894    $ 1,698,839
 Per Square Foot .........        0.13            0.22            0.23            0.23            0.20           0.17
CBD OFFICE PROPERTIES
 Total ...................         N/A             N/A             N/A             N/A             N/A    $   746,275
 Per Square Foot .........         N/A             N/A             N/A             N/A             N/A           0.35
INDUSTRIAL PROPERTIES
 Total ...................   $ 670,751     $   733,233     $ 1,205,266     $ 1,048,688     $   914,485    $   431,699
 Per Square Foot .........        0.18            0.15            0.12            0.11            0.14           0.05
</TABLE>

 NON-INCREMENTAL REVENUE GENERATING TENANT IMPROVEMENTS AND LEASING COMMISSIONS

<TABLE>
<CAPTION>
                                                                                                                  SIX MONTHS
                                                                                                    1998-1999        ENDED
                                         1996          1997            1998            1999          AVERAGE     JUNE 30, 2000
                                    ------------- -------------- --------------- --------------- -------------- --------------
<S>                                 <C>           <C>            <C>             <C>             <C>            <C>
LONG ISLAND OFFICE PROPERTIES
 Tenant Improvements ..............   $ 523,574     $  784,044     $ 1,140,251     $ 1,009,357     $  864,307     $ 778,333
 Per Square Foot Improved .........        4.28           7.00            3.98            4.73           5.00          5.06
 Leasing Commissions ..............   $ 119,047     $  415,822     $   418,191     $   551,762     $  376,206     $ 936,595
 Per Square Foot Leased ...........        0.97           4.83            1.46            2.59           2.46          4.92
                                      ---------     ----------     -----------     -----------     ----------     ---------
 Total Per Square Foot ............   $    5.25     $    11.83     $      5.44     $      7.32     $     7.46     $    9.98
                                      =========     ==========     ===========     ===========     ==========     =========
WESTCHESTER OFFICE PROPERTIES
 Tenant Improvements ..............   $ 834,764     $1,211,665     $   711,160     $ 1,316,611     $1,018,550     $ 712,852
 Per Square Foot Improved .........        6.33           8.90            4.45            5.62           6.33          7.33
 Leasing Commissions ..............   $ 264,388     $  366,257     $   286,150     $   457,730     $  343,631     $ 131,402
 Per Square Foot Leased ...........        2.00           2.69            1.79            1.96           2.11          3.00
                                      ---------     ----------     -----------     -----------     ----------     ---------
 Total Per Square Foot ............   $    8.33     $    11.59     $      6.24     $      7.58     $     8.44     $   10.33
                                      =========     ==========     ===========     ===========     ==========     =========
CONNECTICUT OFFICE PROPERTIES (A)
 Tenant Improvements ..............   $  58,000     $1,022,421     $   202,880     $   179,043     $  449,952     $ 230,365
 Per Square Foot Improved .........       12.45          13.39            5.92            4.88           9.16          5.44
 Leasing Commissions ..............   $       0     $  256,615     $   151,063     $   110,252     $  159,363     $ 113,263
 Per Square Foot Leased ...........        0.00           3.36            4.41            3.00           2.69          2.67
                                      ---------     ----------     -----------     -----------     ----------     ---------
 Total Per Square Foot ............   $   12.45     $    16.75     $     10.33     $      7.88     $    11.85     $    8.11
                                      =========     ==========     ===========     ===========     ==========     =========
 NEW JERSEY OFFICE PROPERTIES
 Tenant Improvements ..............         N/A            N/A      $  654,877     $   454,054     $  554,466     $ 914,789
 Per Square Foot Improved .........         N/A            N/A            3.78            2.29           3.04          7.03
 Leasing Commissions ..............         N/A            N/A      $  396,127     $   787,065     $  591,596     $ 739,594
 Per Square Foot Leased ...........         N/A            N/A            2.08            3.96           3.02          5.83
                                      ---------     ----------     -----------     -----------     ----------     ---------
 Total Per Square Foot ............         N/A            N/A      $     5.86     $      6.25     $     6.06     $   12.86
                                      =========     ==========     ===========     ===========     ==========     =========
NEW YORK OFFICE PROPERTIES
 Tenant Improvements ..............         N/A            N/A             N/A             N/A            N/A      $ 11,977
 Per Square Foot Improved .........         N/A            N/A             N/A             N/A            N/A          1.18
 Leasing Commissions ..............         N/A            N/A             N/A             N/A            N/A      $ 21,031
 Per Square Foot Leased ...........         N/A            N/A             N/A             N/A            N/A          2.07
                                      ---------     ----------     -----------     -----------     ----------     ---------
 Total Per Square Foot ............         N/A            N/A             N/A             N/A            N/A      $   3.25
                                      =========     ==========     ===========     ===========     ==========     =========
INDUSTRIAL PROPERTIES
 Tenant Improvements ..............   $ 380,334     $  230,466     $   283,842     $   375,646     $  317,572     $ 263,746
 Per Square Foot Improved .........        0.72           0.55            0.76            0.25           0.57          0.50
 Leasing Commissions ..............   $ 436,213     $   81,013     $   200,154     $   835,108     $  388,122     $ 115,590
 Per Square Foot Leased ...........        0.82           0.19            0.44            0.56           0.50          0.22
                                      ---------     ----------     -----------     -----------     ----------     ---------
 Total Per Square Foot ............   $    1.54     $     0.74     $      1.20     $      0.81     $     1.07     $    0.72
                                      =========     ==========     ===========     ===========     ==========     =========
</TABLE>
----------
(A) 1996 -- 1999 average weighted to reflect October 1996 acquisition date

                                       20
<PAGE>

                               LEASE EXPIRATIONS

     The  following  table  sets  forth scheduled lease expirations for executed
leases as of June 30, 2000:

LONG ISLAND OFFICE PROPERTIES (EXCLUDING OMNI):

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................        21              57,738              1.9%           $ 20.43         $ 22.65
2001 ........................        42             193,716              6.3%           $ 22.44         $ 24.45
2002 ........................        35             287,016              9.3%           $ 21.86         $ 24.21
2003 ........................        50             310,620             10.1%           $ 22.17         $ 25.08
2004 ........................        45             275,654              9.0%           $ 23.04         $ 25.73
2005 ........................        56             557,431             18.2%           $ 22.87         $ 25.16
2006 AND THEREAFTER .........        78           1,389,520             45.2%                --              --
                                     --           ---------            -----
TOTAL .......................       327           3,071,695            100.0%
                                    ===           =========            =====
</TABLE>

OMNI:

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................        --                 --                --                 --              --
2001 ........................         4             32,680               5.8%           $ 27.39         $ 32.92
2002 ........................         4            129,351              22.8%           $ 30.00         $ 38.62
2003 ........................         6             81,809              14.4%           $ 29.60         $ 33.87
2004 ........................         4            112,414              19.8%           $ 26.05         $ 33.44
2005 ........................         6             59,115              10.4%           $ 27.91         $ 34.38
2006 AND THEREAFTER .........         6            152,411              26.8%                --              --
                                     --            -------             -----
TOTAL .......................        30            567,780             100.0%
                                     ==            =======             =====
</TABLE>

INDUSTRIAL PROPERTIES:

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................        18             276,554              5.6%            $ 5.43          $ 6.10
2001 ........................        30             624,759             12.6%            $ 5.79          $ 7.00
2002 ........................        26             240,344              4.8%            $ 6.43          $ 7.19
2003 ........................        29             728,234             14.6%            $ 5.29          $ 6.10
2004 ........................        34             634,085             12.8%            $ 6.40          $ 7.07
2005 ........................        15             368,464              7.4%            $ 5.65          $ 7.91
2006 AND THEREAFTER .........        44           2,097,360             42.2%                --              --
                                     --           ---------            -----
TOTAL .......................       196           4,969,800            100.0%
                                    ===           =========            =====
</TABLE>


                                       21
<PAGE>

                        LEASE EXPIRATIONS -- (CONTINUED)

RESEARCH AND DEVELOPMENT PROPERTIES:

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................         3              22,501              1.8%           $ 12.49         $ 11.06
2001 ........................         7              96,120              7.5%           $ 11.61         $ 13.21
2002 ........................         3             118,620              9.3%           $ 10.19         $ 11.80
2003 ........................         6             301,064             23.5%           $  5.72         $  6.71
2004 ........................        10             129,218             10.1%           $ 11.98         $ 13.43
2005 ........................         3             293,704             23.0%           $  8.08         $  8.86
2006 AND THEREAFTER .........        13             317,457             24.8%                --              --
                                     --             -------            -----
TOTAL .......................        45           1,278,684            100.0%
                                     ==           =========            =====
</TABLE>

WESTCHESTER OFFICE PROPERTIES:

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................        22             118,125              3.9%           $ 20.53         $ 21.07
2001 ........................        38             253,217              8.3%           $ 20.79         $ 21.07
2002 ........................        48             459,216             15.1%           $ 20.12         $ 20.37
2003 ........................        42             259,105              8.5%           $ 21.90         $ 23.14
2004 ........................        26             164,609              5.4%           $ 21.27         $ 22.01
2005 ........................        29             302,342              9.9%           $ 22.52         $ 23.57
2006 AND THEREAFTER .........        40           1,483,874             48.9%                --              --
                                     --           ---------            -----
TOTAL .......................       245           3,040,488            100.0%
                                    ===           =========            =====
</TABLE>

STAMFORD OFFICE PROPERTIES:

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................        18              83,909              8.0%           $ 21.52         $ 22.39
2001 ........................        23             112,738             10.7%           $ 24.46         $ 24.16
2002 ........................        19             100,029              9.5%           $ 27.15         $ 28.31
2003 ........................        13              94,448              9.0%           $ 31.61         $ 32.41
2004 ........................        21             224,424             21.3%           $ 22.85         $ 23.71
2005 ........................        12              80,132              7.6%           $ 26.79         $ 29.02
2006 AND THEREAFTER .........        19             357,199             33.9%                --              --
                                     --             -------            -----
TOTAL .......................       125           1,052,879            100.0%
                                    ===           =========            =====
</TABLE>


                                       22
<PAGE>

                        LEASE EXPIRATIONS -- (CONTINUED)

NEW JERSEY OFFICE PROPERTIES:

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................         7              29,478              1.5%           $ 17.20         $ 17.68
2001 ........................        21             247,144             12.8%           $ 17.68         $ 17.95
2002 ........................        21             180,187              9.4%           $ 19.92         $ 20.41
2003 ........................        21             337,598             17.5%           $ 20.02         $ 20.21
2004 ........................        35             248,891             12.9%           $ 22.69         $ 23.13
2005 ........................        28             343,777             17.9%           $ 22.47         $ 23.12
2006 AND THEREAFTER .........        17             539,228             28.0%                --              --
                                     --             -------            -----
TOTAL .......................       150           1,926,303            100.0%
                                    ===           =========            =====
</TABLE>

NEW YORK CITY OFFICE

<TABLE>
<CAPTION>
           YEAR OF                             TOTAL RENTABLE        % OF TOTAL            PER             PER
            LEASE                  NUMBER        SQUARE FEET      RENTABLE SQUARE      SQUARE FOOT     SQUARE FOOT
          EXPIRATION             OF LEASES        EXPIRING         FEET EXPIRING      S/L RENT (1)      RENT (2)
-----------------------------   -----------   ----------------   -----------------   --------------   ------------
<S>                             <C>           <C>                <C>                 <C>              <C>
2000 ........................         8              85,054              2.6%           $ 30.12         $ 31.68
2001 ........................        21             172,930              5.3%           $ 37.24         $ 35.12
2002 ........................        18             184,130              5.6%           $ 31.98         $ 32.83
2003 ........................         7             115,726              3.5%           $ 31.89         $ 32.34
2004 ........................        18             215,648              6.6%           $ 35.83         $ 36.97
2005 ........................        30             437,437             13.3%           $ 34.63         $ 35.94
2006 AND THEREAFTER .........       110           2,072,808             63.1%                --              --
                                    ---           ---------            -----
TOTAL .......................       212           3,283,733            100.0%
                                    ===           =========            =====
</TABLE>

(1) Per  square  foot rental rate represents annualized straight line rent as of
    the lease expiration date.

(2) Per  square foot rental rate represents annualized base rent as of the lease
    expiration date plus non-recoverableoperating expense pass-throughs.

                                       23
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The primary  market  risk  facing the Company is interest  rate risk on its
long term debt, mortgage notes and notes receivable.  The Company does not hedge
interest rate risk using  financial  instruments  nor is the Company  subject to
foreign currency risk.

     The Company manages its exposure to interest rate risk on its variable rate
indebtedness  by borrowing on a  short-term  basis under its Credit  Facility or
Term Loan until such time as it is able to retire the  short-term  variable rate
debt with a long-term  fixed rate debt  offering or an equity  offering  through
accessing the capital markets on terms that are advantageous to the Company.

     The following table sets forth the Company's long term debt  obligations by
scheduled  principal  cash flow  payments and maturity  date,  weighted  average
interest  rates  and  estimated  fair  market  value  ("FMV" ) at June 30,  2000
(dollars in thousands):

<TABLE>
<CAPTION>
                                                    FOR THE YEAR ENDED DECEMBER 31,
                                  -------------------------------------------------------------------
                                      2000         2001          2002         2003          2004
                                  ------------ ------------ ------------- ------------ --------------
<S>                               <C>          <C>          <C>           <C>          <C>
Long term debt:
 Fixed rate .....................   $ 11,577     $ 23,048     $  16,820     $  8,698     $  112,146
 Weighted average interest rate .       7.49%        7.59%         7.80%        7.78%          7.50%
 Variable rate ..................   $     --     $518,600     $      --     $     --     $       --
 Weighted average interest rate .         --         7.62%           --           --             --

<CAPTION>
                                    THEREAFTER      TOTAL(1)         FMV
                                  -------------- -------------- ------------
<S>                               <C>            <C>            <C>
Long term debt:
 Fixed rate .....................   $  735,177     $  907,466    $ 907,466
 Weighted average interest rate .         7.56%          7.56%
 Variable rate ..................   $       --     $  518,600    $ 518,600
 Weighted average interest rate .           --           7.62%
</TABLE>

----------------
(1) Includes  unamortized  issuance  discounts  of $652,000 on the 5 and 10 year
    senior  unsecured  notes issued on March 26, 1999 which are due at maturity.

     In addition, the Company has assessed the market risk for its variable rate
debt, which is based upon LIBOR, and believes that a one percent increase in the
LIBOR rate would have an approximate  $5.2 million  annual  increase in interest
expense based on approximately $518.6 million outstanding at June 30, 2000.

     The  following  table  sets  forth  the  Company's  mortgage notes and note
receivables  by  scheduled  maturity  date,  weighted average interest rates and
estimated FMV at June 30, 2000 (dollars in thousands):

<TABLE>
<CAPTION>
                                              FOR THE YEAR ENDED DECEMBER 31,
                                  --------------------------------------------------------
                                       2000        2001        2002     2003      2004      THEREAFTER    TOTAL (2)       FMV
                                  ------------- ---------- ----------- ------ ------------ ------------ ------------- -----------
<S>                               <C>           <C>        <C>         <C>    <C>          <C>          <C>           <C>
Mortgage notes and Notes
 receivable:
 Fixed rate .....................   $ 283,116    $    15    $  9,361    $ --    $ 36,500     $ 16,990     $ 345,982    $345,982
 Weighted average Interest rate .        9.42%      9.00%      10.31%     --       10.23%       11.65%         9.64%
</TABLE>

     The fair value of the Company's  long term debt,  mortgage  notes and notes
receivable is estimated based on discounting future cash flows at interest rates
that  management  believes  reflects the risks  associated  with long term debt,
mortgage notes and notes receivable of similar risk and duration.

----------------
(2) Excludes   mortgage   note   receivable   acquisition   costs  and  interest
receivables aggregating approximately $10.7 million.


                                       24
<PAGE>

                         PART II -- OTHER INFORMATION

Item 1. Legal Proceedings -- None
Item 2. Changes in Securities and use of proceeds

On  June  20,  2000, the Company issued 4,181,818 shares of Class A common stock
in  exchange  for  four  million  shares  of  Series  B  Convertible  Cumulative
Preferred  Stock  with  a  liquidation  preference  value  of  $100  million. In
connection  with  this  transaction the Company granted registration rights with
respect  to  the  Class  A  common  stock.  This  transaction  was  exempt  from
registration pursuant to section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities -- None
Item 4. Submission of Matters to a Vote of Securities Holders

     On May 18, 2000 the Company held its annual  meeting of  stockholders.  The
matters on which the  stockholders  voted,  in person or by proxy,  were (1) the
election of three  nominees as class II directors to serve until the 2003 annual
meeting of stockholders and until their  respective  successors are duly elected
and qualified and (2) to ratify the selection of the independent auditors of the
Company.  The three  nominees were elected and the auditors were  ratified.  The
results of the voting are set forth below:

<TABLE>
<CAPTION>
      ELECTION OF DIRECTORS         VOTES CAST FOR     VOTES CAST AGAINST
--------------------------------   ----------------   -------------------
<S>                                <C>                <C>
     Donald J. Rechler               38,062,442                  --
     Mitchell D. Rechler             38,062,442                  --
     Leonard Feinstein               38,062,442                  --

     RATIFICATION OF AUDITORS        37,902,465              20,126
--------------------------------

</TABLE>

Item 5. Other information -- None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

<TABLE>
<CAPTION>
   NUMBER
-----------
<S>         <C>
  10.1      Registration rights agreement, dated June 16, 2000,
            between Reckson Associates Realty Corp. and
            Stichting Pensioenfonds ABP
  27.0      Financial Data Schedule
</TABLE>

b)   During the three months ended June 30, 2000,  the  Registrant  did not file
     any reports on Form 8-K.

                                  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 hereunto duly authorized.

RECKSON ASSOCIATES REALTY CORP.

<TABLE>
<S>                                              <C>
By:     \s\ Scott H. Rechler                           \s\ Michael Maturo
 ----------------------------------              -----------------------------------
Scott H. Rechler, Co-Chief Executive Officer     Michael Maturo, Executive Vice President,
and President                                    Treasurer and Chief Financial Officer
</TABLE>

DATE: August 9, 2000


                                       25