Table of Contents

 

 

 

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-Q**

 

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**x****        QUARTERLY REPORT PURSUANT TO SECTION 13OR 15(d) OF**

**THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended March 31, 2009**

 

**o****        TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF**

**THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thetransition period from              to                .**

 

**CommissionFile Number: 1-13762**

 

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**RECKSONOPERATING PARTNERSHIP, L.P.**

(Exact name ofregistrant as specified in its charter)

 

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| **Maryland**                                                     | **** **** | ****11-3233647****                    |
|------------------------------------------------------------------|----------------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) | ** **     | (I.R.S. Employer  Identification No.) |

 

**420Lexington Avenue, New York, New York 10170**

(Address ofprincipal executive offices) (Zip Code)

 

**(212)594-2700**

(Registrant’stelephone number, including area code)

 

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Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  YES x     NO o

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). YES o    NO  o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,”“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of theExchange Act.

 
| Large accelerated filer  o |                                           | Accelerated filer o |   | Non-accelerated filer x |   | Smaller Reporting Company  o |
|----------------------------|------------------------------------------------|---------------------|--------|-------------------------|--------|------------------------------|
|                       |                                           |                |   |                    |   |                         |
|                       | (Do not check if a  smaller reporting company) |
|                            |                                                |                     |        |                         |        |                              |  |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).YES o    NO x

 

As of April 30,2009, no common units of limited partnership interest of the Registrant wereheld by non-affiliates of the Registrant. There is no established trading market for such units.

 

 

 

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Table of Contents

 

**RECKSON OPERATING PARTNERSHIP, L.P.**

** **

**INDEX**

 
| ** **        | **PAGE**                                                                                                              |
|-------------------|-----------------------------------------------------------------------------------------------------------------------|
| ** **        | ** **                                                                                                            | ** ** |
| **PART I.**  | **FINANCIAL INFORMATION**                                                                                             | ** ** |
| ** **        | ** **                                                                                                            | ** ** |
| **ITEM 1.**       | **FINANCIAL STATEMENTS**                                                                                              | ** ** |
| ** **        | ** **                                                                                                            | ** ** |
|              | Condensed  Consolidated Balance Sheets as of March 31, 2009 (unaudited) and  December 31, 2008              | 3 |
|              |                                                                                                                  |   |
|              | Condensed  Consolidated Statements of Income for the three months ended March 31,  2009 and 2008 (unaudited)     | 4 |
|              |                                                                                                                  |   |
|              | Condensed  Consolidated Statements of Cash Flows for the three months ended  March 31, 2009 and 2008 (unaudited) | 5 |
|              |                                                                                                                  |   |
|              | Notes to Condensed Consolidated Financial Statements  (unaudited)                                                     | 6 |
|              |                                                                                                                  |   |
| **ITEM 2.**       | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**                       | 17 |
|              |                                                                                                                  |   |
| **ITEM 3.**       | **QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**                                                       | 24 |
|              |                                                                                                                  |   |
| **ITEM 4T.**      | **CONTROLS AND  PROCEDURES**                                                                                          | 24 |
|              |                                                                                                                  |   |
| **PART II.** | **OTHER INFORMATION**                                                                                                 | 24 |
|              |                                                                                                                  |   |
| **ITEM 1.**       | **LEGAL PROCEEDINGS**                                                                                                 | 24 |
|              |                                                                                                                  |   |
| **ITEM 1A.**      | **RISK FACTORS**                                                                                                      | 24 |
|              |                                                                                                                  |   |
| **ITEM 2.**       | **UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**                                                      | 24 |
| ** **        | ** **                                                                                                            |   |
| **ITEM 3.**       | **DEFAULTS UPON  SENIOR SECURITIES**                                                                                  | 24 |
| ** **        | ** **                                                                                                            |   |
| **ITEM 4.**       | **SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS**                                                              | 25 |
| ** **        | ** **                                                                                                            |   |
| **ITEM 5.**       | **OTHER INFORMATION**                                                                                                 | 25 |
|              |                                                                                                                  |   |
| **ITEM 6.**       | **EXHIBITS**                                                                                                          | 25 |
|              |                                                                                                                  |   |
| **SIGNATURES**    | 26                                                                                                                    |

 

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Table of Contents

 

**PART I.     FINANCIALINFORMATION**

###### **ITEM 1.     FinancialStatements**

###### ** **

**Reckson OperatingPartnership, L.P.**

**Condensed Consolidated Balance Sheets**

**(Amountsin thousands)**

 
| ** **                                                                                            | ** ** | **March 31  2009** | ** **    | **December 31,  2008** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|-------------------------|---------------|-----------------------------|------------|
| ** **                                                                                            | ** ** | **(Unaudited)**         | ** **    | ** **                  | ** ** |
| **Assets**                                                                                            |       |                    |          |                        |       |
| Commercial real  estate properties, at cost:                                                          |       |                    |          |                        |       |
| Land and land  interests                                                                              | ** ** | **$**                   | **643,306**   |                        | $          | 643,156 |   |
| Building and  improvements                                                                            | ** ** | **3,267,175**           |          | 3,264,826                   |       |
| ** **                                                                                            |       | **3,910,481**           |          | 3,907,982                   |       |
| Less:  accumulated depreciation                                                                       | ** ** | **(185,048**            | **)**         | (162,324                    | )          |
| ** **                                                                                            |       | **3,725,433**           |          | 3,745,658                   |       |
| Cash and cash  equivalents                                                                            | ** ** | **17,899**              |          | 23,114                      |       |
| Restricted cash                                                                                       | ** ** | **6,837**               |          | 7,265                       |       |
| Tenant and other  receivables, net of allowance of $1,619 and $659 in 2009 and 2008, respectively     | ** ** | **12,401**              |          | 12,796                      |       |
| Deferred rents  receivable, net of allowance of $3,646 and $4,548 in 2009 and 2008,  respectively     | ** ** | **34,969**              |          | 31,148                      |       |
| Structured  finance investments                                                                       | ** ** | **91,368**              |          | 90,794                      |       |
| Investment in  unconsolidated joint venture                                                           | ** ** | **55,057**              |          | 56,291                      |       |
| Deferred costs,  net of accumulated amortization of $1,597 and $1,157 in 2009 and 2008,  respectively | ** ** | **15,730**              |          | 15,267                      |       |
| Other assets                                                                                          | ** ** | **143,702**             |          | 139,714                     |       |
| Total assets                                                                                          | ** ** | **$**                   | **4,103,396** |                        | $          | 4,122,047 |   |
|                                                                                                  |       |                    |          |                        |       |
| **Liabilities**                                                                                       |       |                    |          |                        |       |
| Mortgage notes  payable                                                                               | ** ** | **$**                   | **227,329**   |                        | $          | 228,046 |   |
| Senior unsecured  notes                                                                               | ** ** | **743,970**             |          | 954,315                     |       |
| Accrued interest  payable and other liabilities                                                       | ** ** | **13,328**              |          | 17,321                      |       |
| Accounts payable  and accrued expenses                                                                | ** ** | **33,314**              |          | 30,883                      |       |
| Deferred revenue                                                                                      | ** ** | **310,555**             |          | 326,227                     |       |
| Security  deposits                                                                                    | ** ** | **5,690**               |          | 5,667                       |       |
| Total  liabilities                                                                                    | ** ** | **1,334,186**           |          | 1,562,459                   |       |
|                                                                                                  |       |                    |          |                        |       |
| Commitments and  Contingencies                                                                        | ** ** | **—**              |          | —                      |       |
|                                                                                                  |       |                    |          |                        |       |
| **Capital**                                                                                           |       |                    |          |                        |       |
| General partner  capital — ROP                                                                   | ** ** | **2,268,478**           |          | 2,057,111                   |       |
| Limited partner  capital                                                                              | ** ** | **—**              |          | —                      |       |
| Noncontrolling  interests in other partnerships                                                       | ** ** | **500,732**             |          | 502,477                     |       |
| Total capital                                                                                         | ** ** | **2,769,210**           |          | 2,559,588                   |       |
| Total  liabilities and capital                                                                        | ** ** | **$**                   | **4,103,396** |                        | $          | 4,122,047 |   |

 

The accompanying notes are anintegral part of these financial statements.

 

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**Reckson OperatingPartnership, L.P.**

**Condensed Consolidated Statements of Income**

**(Unaudited,and amounts in thousands)**

 
| ** **                                                                                                                                             | ** ** | **Three Months  Ended  March 31,** | ** ** | **Three Months  Ended  March 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|
| ** **                                                                                                                                             | ** ** | **2009**                                | ** ** | **2008**                                | ** ** |
| **Revenues**                                                                                                                                           |       |                                    |       |                                    |       |
| Rental revenue, net                                                                                                                                    | ** ** | **$**                                   | **70,201** |                                    | $          | 68,685 |   |
| Escalation and  reimbursement                                                                                                                          | ** ** | **14,370**                              |       | 13,193                                  |       |
| Investment  income                                                                                                                                     | ** ** | **939**                                 |       | 1,380                                   |       |
| Other income                                                                                                                                           | ** ** | **459**                                 |       | 229                                     |       |
| Total revenues                                                                                                                                         | ** ** | **85,969**                              |       | 83,487                                  |       |
| **Expenses**                                                                                                                                           |       |                                    |       |                                    |       |
| Operating  expenses ($570 and $484 paid to affiliates in 2009 and 2008, respectively)                                                                  | ** ** | **19,495**                              |       | 18,798                                  |       |
| Real estate  taxes                                                                                                                                     | ** ** | **14,361**                              |       | 12,564                                  |       |
| Ground rent                                                                                                                                            | ** ** | **2,161**                               |       | 2,161                                   |       |
| Interest  expense, net of interest income                                                                                                              | ** ** | **15,423**                              |       | 17,477                                  |       |
| Depreciation and  amortization                                                                                                                         | ** ** | **23,540**                              |       | 21,086                                  |       |
| Marketing,  general and administrative                                                                                                                 | ** ** | **135**                                 |       | 477                                     |       |
| Total expenses                                                                                                                                         | ** ** | **75,115**                              |       | 72,563                                  |       |
| Income from  continuing operations before equity in net income from unconsolidated joint  venture, noncontrolling interest and discontinued operations | ** ** | **10,854**                              |       | 10,924                                  |       |
| Equity in net  income (loss) from unconsolidated joint venture                                                                                         | ** ** | **281**                                 |       | (52                                     | )          |
| Income from  continuing operations before noncontrolling interest and discontinued  operations                                                         | ** ** | **11,135**                              |       | 10,872                                  |       |
| Gain on early  extinguishment of debt                                                                                                                  | ** ** | **1,908**                               |       | —                                  |       |
| Income from  continuing operations                                                                                                                     | ** ** | **13,043**                              |       | 10,872                                  |       |
| Income (loss) from  discontinued operations                                                                                                            | ** ** | **(25**                                 | **)**      | 558                                     |       |
| Net income                                                                                                                                             | ** ** | **13,018**                              |       | 11,430                                  |       |
| Net income  attributable to noncontrolling interests in other partnerships                                                                             | ** ** | **(3,327**                              | **)**      | (5,318                                  | )          |
| Net income  attributable to ROP common unitholders                                                                                                     | ** ** | **$**                                   | **9,691**  |                                    | $          | 6,112 |   |
|                                                                                                                                                   |       |                                    |       |                                    |       |
| **Amounts  attributable to ROP common unitholders:**                                                                                                   |       |                                    |       |                                    |       |
| Income from  continuing operations                                                                                                                     | ** ** | **$**                                   | **9,716**  |                                    | $          | 5,895 |   |
| Discontinued  operations                                                                                                                               | ** ** | **(25**                                 | **)**      | 217                                     |       |
| Net income                                                                                                                                             | ** ** | **$**                                   | **9,691**  |                                    | $          | 6,112 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

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**Reckson OperatingPartnership, L.P.**

**Condensed Consolidated Statements of Cash Flows**

**(Unaudited,and amounts in thousands)**

 
| ** **                                                                         | ** ** | **Three Months  Ended March 31,** | ** ** | **Three Months  Ended March 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                         | ** ** | **2009**                               | ** ** | **2008**                               | ** ** |
| **Operating  Activities**                                                          |       |                                   |       |                                   |       |
| Net income                                                                         |       | $                                      | 13,018     |                                   | $          | 11,430 |   |
| Adjustment to  reconcile net income to net cash provided by operating activities:  |       |                                   |       |                                   |       |
| Depreciation and  amortization                                                     |       | 23,540                                 |       | 21,473                                 |       |
| Equity in net  income from unconsolidated joint venture                            |       | (281                                   | )          | 52                                     |       |
| Distributions of  cumulative earnings from unconsolidated joint venture            |       | 281                                    |       | —                                 |       |
| Gain on early  extinguishment of debt                                              |       | (1,908                                 | )          | —                                 |       |
| Deferred rents  receivable                                                         |       | (3,821                                 | )          | (3,672                                 | )          |
| Other non-cash  adjustments                                                        |       | (2,371                                 | )          | (3,968                                 | )          |
| Changes in  operating assets and liabilities:                                      |       |                                   |       |                                   |       |
| Restricted cash  — operations                                                 |       | 431                                    |       | 985                                    |       |
| Tenant and other  receivables                                                      |       | (565                                   | )          | (3,226                                 | )          |
| Deferred lease  costs                                                              |       | (903                                   | )          | (417                                   | )          |
| Other assets                                                                       |       | (12,410                                | )          | (12,132                                | )          |
| Accounts  payable, accrued expenses and other liabilities                          |       | (2,863                                 | )          | (2,060                                 | )          |
| Net cash  provided by operating activities                                         |       | 12,598                                 |       | 8,465                                  |       |
| **Investing  Activities**                                                          |       |                                   |       |                                   |       |
| Additions to  land, buildings and improvements                                     |       | (5,289                                 | )          | —                                 |       |
| Restricted  cash-capital improvements                                              |       | (3                                     | )          | 64                                     |       |
| Distributions in  excess of cumulative earnings from unconsolidated joint ventures |       | 1,234                                  |       | 1,481                                  |       |
| Net cash (used  in) provided by investing activities                               |       | (4,058                                 | )          | 1,545                                  |       |
| **Financing  Activities**                                                          |       |                                   |       |                                   |       |
| Repayments of  mortgage notes payable                                              |       | (717                                   | )          | (632                                   | )          |
| Repayments of  senior unsecured notes                                              |       | (209,337                               | )          | —                                 |       |
| Contributions  from common unitholders                                             |       | 285,382                                |       | 63,794                                 |       |
| Noncontrolling  interest in other partnerships - distributions                     |       | (5,073                                 | )          | (5,280                                 | )          |
| Distributions to  common unitholders                                               |       | (83,560                                | )          | (73,428                                | )          |
| Net cash used in  financing activities                                             |       | (13,305                                | )          | (15,546                                | )          |
| Net decrease in  cash and cash equivalents                                         |       | (5,215                                 | )          | (5,536                                 | )          |
| Cash and cash  equivalents at beginning of period                                  |       | 23,114                                 |       | 16,463                                 |       |
| Cash and cash  equivalents at end of period                                        |       | $                                      | 17,899     |                                   | $          | 10,927 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

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**Reckson Operating Partnership, L.P.**

**Notes to Condensed Consolidated FinancialStatements**

**(Unaudited)**

**March 31, 2009**

** **

**1.  Organization and Basis of Presentation**

 

**Reckson Operating Partnership, L.P., orROP, commenced operations on June 2, 1995. Since consummation of the Merger on January 25, 2007, SL Green OperatingPartnership, L.P., or the operating partnership, has owned all the economicinterests in ROP either by direct ownership or by indirect ownership throughits wholly-owned subsidiary Wyoming Acquisition GP LLC, or WAGP.  Reckson Associates Realty Corp., or RARC,served as the sole general partner of ROP until November 15, 2007, at whichtime RARC withdrew and WAGP succeeded it as the sole general partner ofROP.   Since consummation of the Merger,RARC has been a wholly-owned subsidiary of SL Green Realty Corp., or SL Green.**

** **

**ROP is engaged in the ownership,management, operation, leasing, financing and development of commercial realestate properties, principally office properties and also owns land for futuredevelopment located in New York City, Westchester and Connecticut, whichcollectively is also known as the New York Metro Area.  At March 31, 2009, our inventory ofdevelopment parcels aggregated approximately 81 acres of land in four separateparcels on which we can, based on estimates at March 31, 2009, developapproximately 1.1 million square feet of office space and in which we hadinvested approximately $65.0 million.  Inaddition, as of March 31, 2009 ROP also held approximately $91.4 millionof structured finance investments.**

** **

SLGreen and the operating partnership were formed in June 1997.  SL Green has qualified, and expects toqualify in the current fiscal year as a real estate investment trust, or REIT,under the Internal Revenue Code of 1986, as amended, or the Code, and operatesas a self-administered, self-managed REIT. A REIT is a legal entity that holds real estate interests and, throughpayments of dividends to stockholders, is permitted to reduce or avoid thepayment of Federal income taxes at the corporate level.  Unless the context requires otherwise, allreferences to “we,” “our” and “us” means ROP and all entities owned orcontrolled by ROP.

 

On January 25, 2007,SL Green completed the acquisition of all of the outstanding shares of commonstock of RARC pursuant to the terms of the Agreement and Plan of Merger, datedas of August 3, 2006, as amended, the Merger Agreement, among SL Green,Wyoming Acquisition Corp., or Wyoming, Wyoming Acquisition GP LLC, WyomingAcquisition Partnership LP, RARC and ROP. We paid approximately $6.0 billion,inclusive of transaction costs, for Reckson. This transaction is referred to herein as the Merger.

 

On January 25, 2007,SL Green completed the sale of certain assets of ROP to an investment group ledby certain of RARC’s former executive management for a total consideration ofapproximately $2.0 billion.

 

As a result of thesubstantial change in ownership from the Merger, SL Green has recorded theMerger in accordance with the provisions of Emerging Issues Task Force TopicD-97, “Push-Down Accounting.”  Theapplication of “push-down accounting” resulting in the adjustment of thecarrying values of the assets and liabilities of ROP to fair value in the samemanner as ROP’s assets and liabilities were recorded by SL Green subsequent tothe Merger.  The net impact of suchadjustments was approximately $3.0 billion, related primarily to increases tothe carrying value of real estate assets and lease related intangibles.

 

As of March 31, 2009, we owned the followinginterests in commercial office properties in the New York Metro area, primarilyin midtown Manhattan, a borough of New York City, or Manhattan.  Ourinvestments in the New York Metro area also include investments in Queens,Westchester County and Connecticut, which are collectively known as theSuburban assets:

 
| ** **   | ** ** | ** **                | ** ** | ** **     | ** ** | ** **      | ** ** | **Weighted**         | ** ** |
|--------------|------------|---------------------------|------------|----------------|------------|-----------------|------------|----------------------|------------|
| ** **   | ** ** | ** **                | ** ** | **Number of**  | ** ** | ** **      | ** ** | **Average**          | ** ** |
| **Location** | ** ** | **Ownership**             | ** ** | **Properties** | ** ** | **Square Feet** | ** ** | **Occupancy****(1)** | ** ** |
| Manhattan    |       | Consolidated properties   |       | 4              |       | 3,770,000       |       | 96.6                 | %          |
|         |       |                      |       |           |       |            |       |                 |       |
| Suburban     |       | Consolidated properties   |       | 16             |       | 2,642,100       |       | 89.5                 | %          |
|         |       | Unconsolidated properties |       | 1              |       | 1,402,000       |       | 100.0                | %          |
|         |       |                      |       | 21             |       | 7,814,100       |       | 94.8                 | %          |

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(1)                                     The weightedaverage occupancy represents the total leased square feet divided by totalavailable rentable square feet.

 

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**Reckson Operating Partnership, L.P.**

**Notes to CondensedConsolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

#### **Basis of Quarterly Presentation**

 

The accompanyingconsolidated financial statements include the consolidated financial positionof ROP and the Service Companies (as defined below) at March 31, 2009 and December 31,2008, the consolidated results of their operations for the three months ended March 31,2009 and 2008 and their cash flows for the three months ended March 31,2009 and 2008.  ROP’s investments inmajority-owned and controlled real estate joint ventures are reflected in theaccompanying financial statements on a consolidated basis with a reduction forthe minority partners’ interests.  ROP’sinvestments in real estate joint ventures, where it owns less than acontrolling interest, are reflected in the accompanying financial statements onthe equity method of accounting.  TheService Companies, which provide management, development and constructionservices to ROP and to third parties, include Reckson Management Group, Inc.,RANY Management Group, Inc., Reckson Construction & DevelopmentLLC and Reckson Construction Group New York, Inc. (collectively, the “ServiceCompanies”).  All significantintercompany balances and transactions have been eliminated in the consolidatedfinancial statements.

 

The accompanyingunaudited condensed consolidated financial statements have been prepared inaccordance with generally accepted accounting principles in the United States,or U.S. GAAP, for interim financial information and with the instructions to Form 10-Qand Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notesrequired by U.S. GAAP for complete financial statements.  In the opinion of management, all adjustments(consisting of normal recurring accruals) considered necessary for fairpresentation have been included.  The2009 operating results for the periods presented are not necessarily indicativeof the results that may be expected for the year ending December 31,2009.  These financial statements shouldbe read in conjunction with the financial statements and accompanying notesincluded in our annual report on Form 10-K for the year ended December 31,2008.

 

The balance sheet at December 31,2008 has been derived from the audited financial statements at that date butdoes not include all the information and footnotes required by U.S. GAAP forcomplete financial statements.

 

**2.  Significant Accounting Policies**

 

**Principlesof Consolidation**

 

The consolidated financialstatements include our accounts and those of our subsidiaries, which arewholly-owned or controlled by us or entities which are variable interestentities, or VIEs, in which we are the primary beneficiary under the FinancialAccounting Standards Board, or FASB, Interpretation No. 46R, or FIN 46R, “Consolidationof Variable Interest Entities - an Interpretation of ARB No. 51.”  Entities which we do not control and entitieswhich are VIEs, but where we are not the primary beneficiary are accounted forunder the equity method.  We consolidateVIEs in which we are determined to be the primary beneficiary.  The interest that we do not own is includedin “Noncontrolling Interests in Other Partnerships” on the balance sheet.  All significant intercompany balances andtransactions have been eliminated.

 

Effective January 1,2009, we adopted SFAS No. 160, or SFAS No. 160, “Non-controllingInterests in Consolidated Financial Statements — an amendment of ARB No. 51,”which defines a non-controlling interest in a consolidated subsidiary as “theportion of the equity (net assets) in a subsidiary not attributable, directlyor indirectly, to a parent” and requires non-controlling interests to bepresented as a separate component of equity in the consolidated balance sheetsubject to the provisions of EITF Topic D-98, or EITF D-98, “Classification andMeasurement of Redeemable Securities.” SFAS No. 160 also modifies thepresentation of net income by requiring earnings and other comprehensive incometo be attributed to controlling and non-controlling interests. Below are thesteps we have taken as a result of the implementation of this standard:

 

·                  We have reclassified the non-controlling interests of otherconsolidated partnerships from the mezzanine section of our balance sheets toequity. This reclassification totaled approximately $500.7 million and $502.5million as of March 31, 2009 and December 31, 2008, respectively.

 

·                  Net income attributable to non-controlling interests of otherconsolidated partnerships is no longer included in the determination of netincome. We reclassified prior year amounts to reflect this requirement.

 

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**RecksonOperating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

**Investmentin Commercial Real Estate Properties**

 

Ona periodic basis, we assess whether there are any indicators that the value ofour real estate properties may be impaired or that their carrying values maynot be recoverable.  A property’s valueis considered impaired if management’s estimate of the aggregate future cashflows (undiscounted and without interest charges for consolidated propertiesand discounted for unconsolidated properties) to be generated by the propertyare less than the carrying value of the property.  To the extent impairment has occurred, theloss shall be measured as the excess of the carrying amount of the propertyover the fair value of the property.  Wedo not believe that the value of any of our real estate properties was impairedat March 31, 2009 and December 31, 2008.

 

Inaccordance with SFAS No. 141, “Business Combinations,” we allocate thepurchase price of real estate to land and building and, if determined to bematerial, intangibles, such as the value of above-, below- and at-market leasesand origination costs associated with the in-place leases.  We depreciate the amount allocated tobuilding and other intangible assets over their estimated useful lives, whichgenerally range from three to 40 years and from one to 40 years,respectively.  The values of the above-and below-market leases are amortized and recorded as either an increase (inthe case of below-market leases) or a decrease (in the case of above-marketleases) to rental income over the remaining term of the associated lease, whichrange from one to 14 years.  The valueassociated with in-place leases and tenant relationships are amortized over theexpected term of the relationship, and its estimated term, which range from oneto 14 years.  If a tenant vacates itsspace prior to the contractual termination of the lease and no rental paymentsare being made on the lease, any unamortized balance of the related intangiblewill be written off.  The tenantimprovements and origination costs are amortized as an expense over theremaining life of the lease (or charged against earnings if the lease isterminated prior to its contractual expiration date).  We assess fair value of the leases based onestimated cash flow projections that utilize appropriate discount andcapitalization rates and available market information.  Estimates of future cash flows are based on anumber of factors including the historical operating results, known trends, andmarket/economic conditions that may affect the property.

 

Asa result of our evaluations, under SFAS No. 141, of acquisitions made, werecognized an increase of approximately $4.6 million and $4.7 million in rentalrevenue for the three months ended March 31, 2009 and 2008, respectively,for the amortization of aggregate below-market rents in excess of above-marketleases and a reduction in lease origination costs, resulting from thereallocation of the purchase price of the applicable properties.  We recognized a reduction in interest expensefor the amortization of above-market rate mortgages of approximately $1.8million and $1.7 million for the three months ended March 31, 2009 and2008, respectively.

 

Thefollowing summarizes our identified intangible assets (acquired above-marketleases and in-place leases) and intangible liabilities (acquired below-marketleases) as of March 31, 2009 and December 31, 2008 (amounts inthousands).

 
| ** **                                                         | ** ** | **March 31,  2009** | ** **  | **December 31,  2008** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------|-------------|-----------------------------|------------|
| Identified  intangible assets (included in other assets):          |       |                     |        |                        |       |
| Gross amount                                                       | ** ** | **$**                    | **167,078** |                        | $          | 167,078 |   |
| Accumulated  amortization                                          | ** ** | **(43,765**              | **)**       | (35,343                     | )          |
| Net                                                                | ** ** | **$**                    | **123,313** |                        | $          | 131,735 |   |
|                                                               |       |                     |        |                        |       |
| Identified  intangible liabilities (included in deferred revenue): |       |                     |        |                        |       |
| Gross amount                                                       | ** ** | **$**                    | **373,950** |                        | $          | 373,950 |   |
| Accumulated  amortization                                          | ** ** | **(70,359**              | **)**       | (57,380                     | )          |
| Net                                                                | ** ** | **$**                    | **303,591** |                        | $          | 316,570 |   |

 

**IncomeTaxes**

 

No provision has beenmade for income taxes in the accompanying consolidated financial statementssince such taxes, if any, are the responsibility of the individual partners.

 

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**RecksonOperating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

**Reserve for Possible CreditLosses**

 

The expense for possiblecredit losses in connection with structured finance investments is the chargeto earnings to increase the allowance for possible credit losses to the levelthat we estimate to be adequate considering delinquencies, loss experience andcollateral quality.  Other factorsconsidered relate to geographic trends and product diversification, the size ofthe portfolio and current economic conditions. Based upon these factors, we establish the provision for possible creditlosses by category of asset.  When it isprobable that we will be unable to collect all amounts contractually due, theaccount is considered impaired.

 

Where impairment isindicated, a valuation allowance is measured based upon the excess of therecorded investment amount over the net fair value of the collateral, as reduced by sellingcosts.  Any deficiency between thecarrying amount of an asset and the net sales price of repossessed collateralis charged to expense.  We recorded noloan loss reserves during the three months ended March 31, 2009 and 2008,respectively.

 

**Use ofEstimates**

 

The preparation offinancial statements in conformity with U.S. GAAP requires management to makeestimates and assumptions that affect the amounts reported in the financialstatements and accompanying notes. Actual results could differ from thoseestimates.

 

**Concentrations of CreditRisk**

** **

Financialinstruments that potentially subject us to concentrations of credit riskconsist primarily of cash investments, structured finance investments andaccounts receivable.  We place our cashinvestments in excess of insured amounts with high quality financialinstitutions.  The collateral securingour structured finance investments is primarily located in the Greater New YorkArea. See Note 4. We perform ongoing credit evaluations of our tenants andrequire certain tenants to provide security deposits or letters of credit.  Though these security deposits and letters ofcredit are insufficient to meet the total value of a tenant’s lease obligation,they are a measure of good faith and a source of funds to offset the economiccosts associated with lost rent and the costs associated with re-tenanting thespace.  Although the properties in ourreal estate portfolio are primarily located in Manhattan, we also have Suburbanproperties located in Westchester County, Connecticut and Long IslandCity.  The tenants located in our buildingsoperate in various industries.  Otherthan two tenants who contributed approximately 6.5% and 7.0% of our annualizedrent, no other tenant in the portfolio contributed more than 4.5% of ourannualized rent, including our share of joint venture annualized rent, at March 31,2009.  Approximately 14%, 16%, 27% and12% of our annualized rent, including our share of joint venture annualizedrent, was attributable to 810 Seventh Avenue, 919 Third Avenue, 1185 Avenue ofthe Americas and 1350 Avenue of the Americas, respectively, for the quarter endedMarch 31, 2009.  One borroweraccounted for more than 10.0% of the revenue earned on structured financeinvestments during the three months ended March 31, 2009.

 

**Reclassification**

 

Certain prior yearbalances have been reclassified to conform with the current year presentationprimarily in order to comply with SFAS No. 144 for discontinued operationspresentation and the adoption of FSP 14-1 and SFAS No. 160.

 

**NewAccounting Pronouncements**

 

In December 2007,the FASB issued SFAS No. 141(R), “Business Combinations.”  Thisstatement changes the accounting for acquisitions specifically eliminating thestep acquisition model, changing the recognition of contingent considerationfrom being recognized when it is probable to being recognized at the time ofacquisition, disallowing the capitalization of transaction costs and delayswhen restructurings related to acquisitions can be recognized. The standard iseffective for fiscal years beginning after December 15, 2008 and will onlyimpact the accounting for acquisitions we make after our adoption. The adoptionof this standard on January 1, 2009, did not have any impact on ourhistorical financial statements.

 

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**RecksonOperating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

In May 2008, theFASB issued FASB Staff Position No. APB 14-1, or FSP 14-1, “Accounting forConvertible Debt Instruments that may be Settled in Cash upon Conversion.” FSP14-1 requires the issuer of certain convertible debt instruments that may besettled in cash (or other assets) on conversion to separately account for theliability (debt) and equity (conversion option) components of the instrument ina manner that reflects the issuer’s nonconvertible debt borrowing rate. FSP14-1 will significantly affect the accounting for instruments commonly referredto as Instruments B and C in EITF No. 90-19, “Convertible Bonds withIssuer Option to Settle for Cash upon Conversion,” which is nullified by FSP14-1, and any other convertible debt instruments that require or permitsettlement in any combination of cash and shares at the issuer’s option, suchas those sometimes referred to as “Instrument X.” The resulting debt discountwill be amortized over the period during which the debt is expected to beoutstanding (i.e., through the first optional redemption dates) as additionalnon-cash interest expense.  This amount(before netting) will increase in subsequent reporting periods through thefirst optional redemption dates as the debt accretes to its par value over thesame period. FSP 14-1 is effective for fiscal years beginning after December 15,2008, and interim periods within those fiscal years. Early adoption is notpermitted. Upon adoption, FSP 14-1 requires companies to retrospectively applythe requirements of the pronouncement to all periods presented.  Adoption of FSP 14-1 had the following impacton our financial statements (in thousands):

 

| ** **                                         | ** ** | **December 31,  2008  As Reported**       | ** ** | **December 31,  2008  As Restated**       | ** ** |
|----------------------------------------------------|------------|------------------------------------------------|------------|------------------------------------------------|------------|
| Senior unsecured  notes                            |       | $                                              | 956,540    |                                           | $          | 954,315 |   |
| Total  liabilities                                 |       | 1,564,684                                      |       | 1,562,459                                      |       |
| Total capital                                      |       | 2,054,886                                      |       | 2,559,588                                      |       |
|                                               |       |                                           |       |                                           |       |
| ** **                                         | ** ** | **March 31, 2008  As Reported** | ** ** | **March 31, 2008  As Restated** | ** ** |
| Interest expense                                   |       | $                                              | 17,388     |                                           | $          | 18,639 |   |
| Net income  attributable to ROP common unitholders |       | 7,363                                          |       | 6,112                                          |       |

 

In April 2009, theFASB issued SFAS No. 107-1 and APB 28-1, “Interim Disclosures about FairValue of Financial Instruments.” SFAS No. 107-1 amends SFAS No. 107, “Disclosuresabout Fair Value of Financial Instruments” to require disclosure about fairvalue of financial instruments in interim financial statements. SFAS No. 107-1and APB 28-1 are effective for interim and annual periods ending after June 15,2009 with early adoption permitted for periods ending after March 15,2009.  We will include the disclosures required under this standardbeginning in our June 30, 2009 Condensed Consolidated FinancialStatements.

 

In April 2009, theFASB released FSP SFAS No. 157- 4, “Determining Fair Value When the Volumeand Level of Activity for the Asset or Liability has Significantly Decreasedand Identifying Transactions that are Not Orderly,” or FSP SFAS No. 157-4.FSP SFAS No. 157-4 was issued contemporaneously with FSP SFAS No. 115-2and SFAS No. 124-2, “Recognition and Presentation of Other-Than-TemporaryImpairments,” or FSP SFAS 115-2 and FSP SFAS No. 107-1 and APB 28-1. FSPSFAS No. 157-4 amends FASB Statement No. 157, “Fair ValueMeasurements,” or SFAS No. 157, to provide additional guidance onestimating fair value when the volume and level of transaction activity for anasset or liability have significantly decreased in relation to normal marketactivity for the asset or liability. The FSP also provides additional guidanceon circumstances that may indicate that a transaction is not orderly.

 

FSP SFAS No. 157-4also requires additional disclosures about fair value measurements in annualand interim reporting periods. FSP SFAS No. 157-4 is effective for interimand annual reporting periods ending after 15 June 2009. We will apply theprovisions of FSP SFAS No. 157-4 beginning in our June 30, 2009Condensed Consolidated Financial Statements. We do not believe that adoption ofthe FSP will have a material impact on our financial statements.

 

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**RecksonOperating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

**3.  Property Dispositions and Assets Held forSale**

 

AtMarch 31, 2009, discontinued operations included the results of operationsof real estate assets sold prior to that date. This included 100/120 White Plains Road which was sold in October 2008.

 

Thefollowing table summarizes income from discontinued operations (net of minorityinterest) for the three months ended March 31, 2008 (in thousands).  No assets were considered as held for saleduring the three months ended March 31, 2009.

 
| ** **                                  | ** ** | **Three Months  Ended  March 31,** | ** ** | **Three Months  Ended  March 31,** | ** ** |
|---------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|
| ** **                                  | ** ** | **2009**                                | ** ** | **2008**                                | ** ** |
| Revenues                                    |       |                                    |       |                                    |       |
| Rental revenue                              | ** ** | $                                       | —     |                                    | $          | 1,593 | ** ** |
| Escalation and  reimbursement revenues      |       | (7                                      | )          | 145                                     |       |
| Investment and  other income                |       | —                                  |       | 17                                      |       |
| Total revenues                              |       | (7                                      | )          | 1,755                                   |       |
| Operating  expenses                         |       | 18                                      |       | 485                                     |       |
| Real estate  taxes                          |       | —                                  |       | 325                                     |       |
| Depreciation and  amortization              |       | —                                  |       | 387                                     |       |
| Total expenses                              |       | 18                                      |       | 1,197                                   |       |
| Income (loss)  from discontinued operations | ** ** | $                                       | (25        | )                                       | $          | 558 |   |

 

**4.  Structured Finance Investments**

 

Asof March 31, 2009 and December 31, 2008, we held the followingstructured finance investments, with an aggregate weighted average currentyield of approximately 9.0% (in thousands):

 
| **Loan  Type**                                      | ** ** | **Gross  Investment** | ** ** | **Senior  Financing** | ** ** | **2009  Principal  Outstanding** | ** ** | **2008  Principal  Outstanding** | ** ** | **Initial  Maturity  Date** | ** ** |
|-----------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|----------------------------------|------------|----------------------------------|------------|-----------------------------|------------|
| Mezzanine Loan (1) (2)                         |       | $                     | 55,250     |                  | $          | 225,000                          | ** ** | **$**                            | **62,738** |                        | $          | 62,164 |   | December 2020 |   |
| Mezzanine Loan (1)(2)(3)(5)(6)                      |       | 25,000                |       | 314,830               | ** ** | **27,742**                       |       | 27,742                           |       | November 2009          |       |
| Other Loan (1)                                      |       | 1,000                 |       | —                | ** ** | **1,000**                        |       | 1,000                            |       | January 2010           |       |
| Other Loan (1)                                      |       | 500                   |       | —                | ** ** | **500**                          |       | 500                              |       | December 2009          |       |
| Junior Participation (1) (4) (5) (6) |       | 14,189                |       | —                | ** ** | **9,938**                        |       | 9,938                            |       | April 2008             |       |
| Loan loss  reserves (5)                             |       | —                |       | —                | ** ** | **(10,550**                      | **)**      | (10,550                          | )          | ** **                  | ** ** |
|                                                |       | $                     | 95,939     | ** **            | $          | 539,830                          |       | **$**                            | **91,368** |                        | $          | 90,794 |   |   |   |

----

| (1) |   | This is a fixed rate loan.                                                                                                                                                                                                                                                                                                                                                |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | The difference between the pay and accrual rates is  included as an addition to the principal balance outstanding.                                                                                                                                                                                                                                                        |
| (3) |   | As of December 31, 2007, this loan was in  default. We are pursuing our remedies and expect to recover the full value of  our investment.                                                                                                                                                                                                                            |
| (4) |   | This loan is in default. We have begun foreclosure  proceedings. Our partner holds a $12.2 million pari-pasu interest in this  loan.                                                                                                                                                                                                                                      |
| (5) |   | This represents specifically allocated loan loss  reserves recorded during the year ended December 31, 2008. Our reserves  reflect management’s judgment of the probability and severity of losses. We  cannot be certain that our judgment will prove to be correct and that  reserves will be adequate over time to protect against potential future  losses. |
| (6) |   | This loan is on non-accrual status.                                                                                                                                                                                                                                                                                                                                       |

 

At March 31, 2009and December 31, 2008 all loans, other than as noted above, wereperforming in accordance with the terms of the loan agreements.

 

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**Reckson Operating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

**5.  Investment in Unconsolidated Joint Venture**

 

In May 2005, weacquired a 1.4 million square foot, 50-story, Class A office tower locatedat One Court Square, Long Island City, NY, for approximately $471.0 million,inclusive of transfer taxes and transactional costs.  One Court Square is 100% leased to theseller, Citibank N.A., under a 15-year net lease.  The lease contains partial cancellationoptions effective during 2011 and 2012 for up to 20% of the leased space and in2014 and 2015 for up to an additional 20% of the originally leased space, subjectto notice and the payment of early termination penalties. On November 30,2005, we sold a 70% joint venture interest in One Court Square to certaininstitutional funds advised by JPMorgan Investment Management, or the JPMInvestors, for approximately $329.7 million, including the assumption of $220.5million of the property’s mortgage debt.  The operating agreement of the Court Square JV requires approvals frommembers on certain decisions including annual budgets, sale of the property,refinancing of the property’s mortgage debt and material renovations to theproperty. In addition, after September 20, 2009 the members each have theright to recommend the sale of the property, subject to the terms of themortgage debt, and to dissolve the Court Square JV. We have evaluated theimpact of FIN 46R on our accounting for the Court Square JV and have concludedthat the Court Square JV is not a VIE. We account for the Court Square JV under the equity method of accounting.We have also evaluated, under EITF 04-5, “Determining Whether a General Partner, or the General Partners as aGroup, Controls a Limited Partnership or Similar Entity When the LimitedPartners Have Certain Rights,” that the JPM Investors have substantiveparticipating rights in the ordinary course of the Court Square JV’s business.

 

**6.  Mortgage Note Payable**

** **

The first mortgage notepayable collateralized by the property and assignment of leases at March 31,2009 and December 31, 2008, respectively, was as follows (in thousands):

 
| **Property**                        | ** ** | **Interest  Rate****(1)** | ** ** | **Maturity Date** | ** ** | **March 31,  2009** | ** **  | **December 31,  2008** | ** ** |
|-------------------------------------|------------|---------------------------|------------|-------------------|------------|--------------------------|-------------|-----------------------------|------------|
| 919 Third Avenue  New York, NY  (2) |       | 6.87                      | %          | 7/2011            | ** ** | **$**                    | **227,329** |                        | $          | 228,046 |   |
|                                     |            |                           |            |                   |            |                          |             |                             |            |  |  |

----

| (1) |   | Effective interest rate for the three months ended  March 31, 2009.                                                                                        |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | We own a 51% controlling interest in  the joint venture that is the borrower on this loan. This loan is  non-recourse to us. We consolidate this joint venture. |

 

AtMarch 31, 2009, the gross book value of the property collateralizing themortgage note was approximately $1.3 billion.

 

Interestexpense, excluding capitalized interest, was comprised of the following (inthousands):

 
| ** **             | ** ** | **Three Months Ended** | ** ** |
|------------------------|------------|------------------------|------------|
| ** **             | ** ** | **March 31,**     | ** ** |
| ** **             | ** ** | **2009**               | ** ** | **2008** | ** ** |
| Interest expense       | ** ** | **$**                  | **15,521** |   | $ | 18,639 |   |
| Interest income        | ** ** | **(98**                | **)**      | (1,162 | ) |
| Interest  expense, net | ** ** | **$**                  | **15,423** |   | $ | 17,477 |   |
| Interest  capitalized  | ** ** | **$**                  | **—** |   | $ | 98 |   |

 

At March 31, 2009,our unconsolidated joint venture had total indebtedness of approximately $315.0million with a fixed interest rate of approximately 4.91%.  The mortgage matures in June 2015.  Our aggregate pro-rata share of theunconsolidated joint venture debt was approximately $94.5 million.

 

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**RecksonOperating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

**7.  Corporate Indebtedness**

 

**SeniorUnsecured Notes**

 

The following table setsforth our senior unsecured notes and other related disclosures by scheduledmaturity date as of March 31, 2009 (in thousands):

 
| **Issuance**               | ** ** | **Accreted  Balance** | ** **  | **Coupon Rate****(1)** | ** ** | **Term  (in Years)** | ** ** | **Maturity**         | ** **            |
|----------------------------|------------|-----------------------|-------------|------------------------|------------|----------------------|------------|----------------------|-----------------------|
| January 22,  2004 (2) |       | $                     | 138,755     |                   | 5.15       | %                    | 7          |                 | January 15, 2011 |   |
| August 13,  2004      |       | 150,000               |        | 5.875                  | %          | 10                   |       | August 15, 2014 |                  |
| March 31,  2006       |       | 274,700               |        | 6.00                   | %          | 10                   |       | March 31, 2016  |                  |
| June 27,  2005 (3)    |       | 180,515               |        | 4.00                   | %          | 20                   |       | June 15, 2025   |                  |
| ** **                 |       | **$**                 | **743,970** |                   |       |                 |       |                 |                  |   |

----

| (1) |   | Interest  on the senior unsecured notes is payable semi-annually with principal and  unpaid interest due on the scheduled maturity dates.                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | During the three months ended March 31, 2009,  we repurchased approximately $11.2 million of these notes and realized net  gains on early extinguishment of debt of approximately $1.9 million.                                                                                                                                                                                                                                                                                                                                                            |
| (3) |   | Exchangeable senior debentures which are callable after  June 17, 2010 at 100% of par. In addition, the debentures can be put to  us, at the option of the holder at par plus accrued and unpaid interest, on  June 15, 2010, 2015 and 2020 and upon the occurrence of certain change  of control transactions. As a result of the Merger, the adjusted exchange  rate for the debentures is 7.7461 shares of SL Green common stock per $1,000  of principal amount of debentures and the adjusted reference dividend for the  debentures is $1.3491. |

 

On March 16, 2009,the $200.0 million, 7.75% unsecured notes scheduled to mature in March 2009,assumed as part of the Merger, were redeemed.

 

**RestrictiveCovenants**

 

Theterms of the senior unsecured notes include certain restrictions and covenantswhich limit, among other things, the incurrence of additional indebtedness andliens, and which require compliance with financial ratios relating to theminimum amount of debt service coverage, the maximum amount of consolidatedunsecured and secured indebtedness and the minimum amount of unencumberedassets.  As of March 31, 2009 and December 31,2008, we were in compliance with all such covenants.

 

**PrincipalMaturities**

 

Combined aggregateprincipal maturities of mortgages and notes payable, senior unsecured notes(net of discount) and our share of joint venture debt as of March 31,2009, excluding extension options, were as follows (in thousands):

** **
| ** ** | ** ** | **Scheduled  Amortization** | ** ** | **Principal  Repayments** | ** ** | **Unsecured  Notes** | ** ** | **Total** | ** **  | **Joint  Venture  Debt** | ** ** |
|------------|------------|-----------------------------|------------|---------------------------|------------|----------------------|------------|-----------|-------------|--------------------------|------------|
| 2009       |       | $                           | 3,225      |                      | $          | —               |       | $         | —      |                     | $          | 3,225 |   | — |   |
| 2010       |       | 4,225                       |       | —                    |       | 180,515              |       | 184,740   |        | —                   |       |
| 2011       |       | 3,223                       |       | 216,656                   |       | 138,755              |       | 358,634   |        | —                   |       |
| 2012       |       | —                      |       | —                    |       | —               |       | —    |        | —                   |       |
| 2013       |       | —                      |       | —                    |       | —               |       | —    |        | —                   |       |
| Thereafter |       | —                      |       | —                    |       | 424,700              |       | 424,700   |        | 94,500                   |       |
| ** ** | ** ** | **$**                       | **10,673** | ** **                | **$**      | **216,656**          | ** ** | **$**     | **743,970** | ** **               | **$**      | **971,299** | ** ** | **$** | **94,500** | ** ** |
|            |            |                             |            |                           |            |                      |            |           |             |                          |            |  |  |  |  |  |

 

**8.  Partners’ Capital**

** **

Priorto the Merger, a Class A common unit of ROP and a share of commonstock of Reckson Associates Realty Corp., or RARC, had similar economiccharacteristics as they effectively shared equally in the net income orloss and distributions of ROP.  Since consummation of the Merger onJanuary 25, 2007, SL Green Operating Partnership, L.P., or the operatingpartnership, has owned all the economic interests in ROP either by directownership or by indirect ownership through its wholly-ownedsubsidiary Wyoming Acquisition GP LLC, or WAGP.  Reckson AssociatesRealty Corp., or RARC, served as the sole general partner ofROP until November 15, 2007, at which time RARC withdrew and WAGP succeeded it as the sole general partner of ROP.  Sinceconsummation of the Merger, RARC has been a wholly-owned subsidiary of SL GreenRealty Corp., or SL Green.

 

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**RecksonOperating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

As of December 31,2006, we had issued and outstanding 1,200 preferred units of limitedpartnership interest, or Preferred Units, with a liquidation preference valueof $1,000 per unit and a stated distribution rate of 7.0% which was subject toreduction based upon terms of their initial issuance.  The terms of the Preferred Units provided forthis reduction in distribution rate in order to address the effect of certainmortgages with above market interest rates which were assumed by us inconnection with properties contributed to us in 1998.   As a result of the aforementioned reduction,no distributions were being made on the Preferred Units.  In connection with the Merger, the holder ofthe Preferred Units transferred the Preferred Units to the operatingpartnership in exchange for the issuance of 1,200 preferred units of limitedpartnership interest in the operating partnership with substantially similarterms as the Preferred Units.

 

Intercompany transactionsbetween SL Green and ROP are generally recorded as contributions anddistributions.

 

**9.  Commitments and Contingencies**

 

We are not presentlyinvolved in any material litigation nor, to our knowledge, are any materiallitigation threatened against us or our properties, other than routinelitigation arising in the ordinary course of business.  Management believes the costs, if any,incurred by us related to this litigation will not materially affect ourfinancial position, operating results or liquidity.

 

The following is aschedule of future minimum lease payments under noncancellable operatingleases with initial terms in excess of one year as of March 31, 2009 (inthousands):

 
| **March 31,**            | ** ** | **Non-cancellable  operating leases** | ** **  |
|-------------------------------|------------|---------------------------------------|-------------|
|                          |       |                                  |        |
| 2009                          |       | $                                     | 7,604       |   |
| 2010                          |       | 9,698                                 |        |
| 2011                          |       | 7,724                                 |        |
| 2012                          |       | 7,593                                 |        |
| 2013                          |       | 7,593                                 |        |
| Thereafter                    |       | 254,831                               |        |
| Total minimum  lease payments | ** ** | **$**                                 | **295,043** | ** ** |

 

**10.  Environmental Matters**

 

Our management believesthat the properties are in compliance in all material respects with applicableFederal, state and local ordinances and regulations regarding environmentalissues.  Management is not aware of anyenvironmental liability that it believes would have a materially adverse impacton our financial position, results of operations or cash flows.  Management is unaware of any instances inwhich it would incur significant environmental cost if any of the propertieswere sold.

 

**11.  Segment Information**

 

We are engaged in owning,managing and leasing commercial office properties in the New York Metro Areaand have two reportable segments, real estate and structured financeinvestments.  We evaluate real estateperformance and allocate resources based on earnings contribution to incomefrom continuing operations.

 

Our real estate portfoliois primarily located in the geographical markets of the New York MetroArea.  The primary sources of revenue aregenerated from tenant rents and escalations and reimbursement revenue.  Real estate property operating expensesconsist primarily of security, maintenance, utility costs, real estate taxesand ground rent expense (at certain applicable properties).  See Note 4 for additional details on ourstructured finance investments.

 

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**Reckson Operating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

Selected results of operations for the three monthsended March 31, 2009 and 2008 and selected asset information as of March 31,2009 and December 31, 2008, regarding our operating segments are asfollows (in thousands):

 
| ** **                                                                                             | ** ** | **Real  Estate  Segment** | ** ** | **Structured  Finance  Segment** | ** ** | **Total  Company** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|---------------------------|------------|----------------------------------|------------|--------------------|------------|
| Total revenues:                                                                                        |       |                      |       |                             |       |               |       |
| Three months  ended March 31, 2009                                                                |       | $                         | 85,030     |                             | $          | 939                |       | $ | 85,969 |   |
| Three months  ended March 31, 2008                                                                |       | 82,107                    |       | 1,380                            |       | 83,487             |       |
|                                                                                                   |       |                      |       |                             |       |               |       |
| Income (loss)  from continuing operations before noncontrolling interest and discontinued  operations: |       |                      |       |                             |       |               |       |
| Three months  ended March 31, 2009                                                                |       | $                         | 12,448     |                             | $          | 595                |       | $ | 13,043 |   |
| Three months  ended March 31, 2008                                                                |       | 10,643                    |       | 229                              |       | 10,872             |       |
|                                                                                                   |       |                      |       |                             |       |               |       |
| Total assets                                                                                           |       |                      |       |                             |       |               |       |
| As of:                                                                                                 |       |                      |       |                             |       |               |       |
| March 31,  2009                                                                                   |       | $                         | 4,011,498  |                             | $          | 91,898             |       | $ | 4,103,396 |   |
| December 31,  2008                                                                                |       | 4,030,724                 |       | 91,323                           |       | 4,122,047          |       |

 

Income from continuingoperations represents total revenues less total expenses for the real estatesegment and total investment income less allocated interest expense for thestructured finance segment.  Interestcosts for the structured finance segment are imputed assuming 100% leverage atSL Green’s unsecured revolving credit facility borrowing cost.  We do not allocate marketing, general andadministrative expenses to the structured finance segment, since we baseperformance on the individual segments prior to allocating marketing, general andadministrative expenses.  All otherexpenses, except interest, relate entirely to the real estate assets.  There were no transactions between the abovetwo segments.

 

Thetable below reconciles income from continuing operations before minorityinterest to net income available to common unitholders for the three monthsended March 31, 2009 and 2008 (in thousands):

 
| ** **                                                                 | ** ** | **Three Months  Ended  March 31,** | ** ** | **Three Months  Ended  March 31,** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|
| ** **                                                                 | ** ** | **2009**                                | ** ** | **2008**                                | ** ** |
|                                                                       |       |                                    |       |                                    |       |
| Income from  continuing operations                                         |       | $                                       | 13,043     |                                    | $          | 10,872 |   |
| Net income  (loss) gains from discontinued operations                      |       | (25                                     | )          | 558                                     |       |
| Net income                                                                 |       | 13,018                                  |       | 11,430                                  |       |
| Net income  attributable to noncontrolling interests in other partnerships |       | (3,327                                  | )          | (5,318                                  | )          |
| Net income  attributable to ROP common unitholders                         |       | $                                       | 9,691      |                                    | $          | 6,112 |   |

 

**12. ****Related Party Transactions**

 

**Cleaning/Security/ Messenger and Restoration Services**

 

Through Alliance BuildingServices, or Alliance, First Quality Maintenance, L.P., or First Quality,provides cleaning, extermination and related services, Classic Security LLCprovides security services, Bright Star Couriers LLC provides messengerservices, and Onyx Restoration Works provides restoration services with respectto certain properties owned by us. Alliance is owned by Gary Green, a son of Stephen L. Green, the chairmanof our board of directors.  In addition,First Quality has the non-exclusive opportunity to provide cleaning and relatedservices to individual tenants at our properties on a basis separately negotiatedwith any tenant seeking such additional services.  We paid Alliance approximately $0.6 millionand $0.5 million for three months ended March 31, 2009 and 2008,respectively, for these services (excluding services provided directly totenants).

 

**AllocatedExpenses from SL Green**

 

Subsequent to the Merger,property operating expenses include an allocation of salary and other operatingcosts from SL Green.  Such amount wasapproximately $1.0 million and $1.1 million for the three months ended March 31,2009 and 2008, respectively.

 

**Insurance**

 

Subsequent to the Merger,we obtained insurance coverage through an insurance program administered by SLGreen.  In connection with this programwe incurred insurance expense of approximately $0.7 million and $0.6 millionfor the three months ended March 31, 2009 and 2008, respectively.

 

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**Reckson Operating Partnership, L.P.**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

**March 31, 2009**

** **

**13.  Supplemental Disclosure of Non-Cash Investingand Financing Activities**

 

Asummary of our non-cash investing and financing activities for the three monthsended March 31, 2009 and 2008 is presented below (in thousands):

 
| ** **                  | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------|------------|---------------------------------------------|------------|
| ** **                  | ** ** | **2009**                                    | ** ** | **2008** | ** ** |
| Accretion of  debt discount |       | $                                           | 900        |   | $ | 59 |   |
|                             |            |                                             |            |  |  |  |  |

 

**14. Subsequent Events**

 

From April 1, 2009 to May 14, 2009, we repurchased approximately $14.9million of our senior unsecured bonds and notes and realized net gains on earlyextinguishment of debt of approximately $0.9 million.

 

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**ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Resultsof Operations**

** **

**Overview**

 

Reckson Operating Partnership, L.P., or ROP,commenced operations on June 2, 1995. Since consummation of the Merger on January 25, 2007, SL Green OperatingPartnership, L.P., or the operating partnership, has owned all theeconomic interests in ROP either by direct ownership or by indirectownership through its wholly-owned subsidiary Wyoming Acquisition GPLLC, or WAGP.  Reckson Associates Realty Corp., or RARC, served asthe sole general partner of ROP until November 15, 2007, at whichtime RARC withdrew and WAGP succeeded it as the sole general partnerof ROP.   Since consummation of the Merger, RARC has been awholly-owned subsidiary of SL Green Realty Corp., or SL Green.

** **

**ROP is engaged in the ownership,management, operation, leasing, financing and development of commercial realestate properties, principally office properties and also owns land for futuredevelopment located in the New York City, Westchester and Connecticut whichcollectively is also known as the New York Metro Area.  At March 31, 2009, our inventory ofdevelopment parcels aggregated approximately 81 acres of land in four separateparcels on which we can, based on estimates at March 31, 2009, developapproximately 1.1 million square feet of office space and in which we hadinvested approximately $65.0 million.  Inaddition, as of March 31, 2009, ROP also held approximately $91.4 millionof structured finance investments.**

** **

On January 25, 2007,SL Green completed the acquisition of all of the outstanding shares of commonstock of RARC pursuant to the terms of the Agreement and Plan of Merger, datedas of August 3, 2006, as amended, the Merger Agreement, among SL Green,Wyoming Acquisition Corp., or Wyoming, Wyoming Acquisition GP LLC, WyomingAcquisition Partnership LP, RARC and ROP. We paid approximately $6.0 billion,inclusive of transaction costs, for Reckson. This transaction is referred to herein as the Merger.

 

On January 25, 2007,SL Green completed the sale of certain assets of ROP to an investment group ledby certain of Reckson’s former executive management for a total consideration ofapproximately $2.0 billion.

 

The following discussionrelated to our consolidated financial statements should be read in conjunctionwith the financial statements appearing in this Quarterly Report on Form 10-Qand in Item 8 of our Annual Report on Form 10-K for the year ended December 31,2008.

 

As a result of thesubstantial change in ownership from the Merger, SL Green has recorded theMerger in accordance with the provisions of Emerging Issues Task Force TopicD-97, “Push-Down Accounting.”  The applicationof “push-down accounting” resulted in the adjustment of the carrying values ofthe assets and liabilities of ROP to fair value in the same manner as ROP’sassets and liabilities were recorded by SL Green subsequent to the Merger.  The net impact of such adjustments wasapproximately $3.0 billion.

 

As of March 31, 2009, we owned the followinginterests in commercial office properties in the New York Metro Area, primarilyin midtown Manhattan, a borough of New York City, or Manhattan.  Ourinvestments in the New York Metro Area also include investments in Queens,Westchester County and Connecticut, which are collectively known as theSuburban assets:

 
| **Location** | ** ** | **Ownership**             | ** ** | **Number of  Properties** | ** ** | **Square Feet** | ** ** | **Weighted Average  Occupancy****(1)** | ** ** |
|--------------|------------|---------------------------|------------|---------------------------|------------|-----------------|------------|---------------------------------------------|------------|
| Manhattan    |       | Consolidated properties   |       | 4                         |       | 3,770,000       |       | 96.6                                        | %          |
|         |       |                      |       |                      |       |            |       |                                        |       |
| Suburban     |       | Consolidated properties   |       | 16                        |       | 2,642,100       |       | 89.5                                        | %          |
|         |       | Unconsolidated properties |       | 1                         |       | 1,402,000       |       | 100.0                                       | %          |
|         |       |                      |       | 21                        |       | 7,814,100       |       | 94.8                                        | %          |

----

(1)    The weighted average occupancy represents thetotal leased square feet divided by total available rentable square feet.

 

**CriticalAccounting Policies**

 

Refer to our 2008 AnnualReport on Form 10-K for a discussion of our critical accounting policies,which include investment in commercial real estate properties, investment inunconsolidated joint ventures, revenue recognition, allowance for doubtfulaccounts and reserve for possible credit losses.  There have been no changes to these policiesin 2009.

 

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**Results of Operations**

 

***Comparison of the three months ended March 31, 2009 tothe three months ended March 31, 2008***

 

Thefollowing section compares the results of operations for the three months endedMarch 31, 2009 to the three months ended March 31, 2008 for the 20consolidated properties owned by ROP.

 

| **Rental Revenues (in millions)**     | ** ** | **2009** | ** ** | **2008** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|---------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Rental revenue                        |       | $        | 70.2       |     | $          | 68.7          |       | $             | 1.5        |   | 2.2 | % |
| Escalation and  reimbursement revenue |       | 14.4     |       | 13.2     |       | 1.2           |       | 9.1           |       |
| Total                                 |       | $        | 84.6       |     | $          | 81.9          |       | $             | 2.7        |   | 3.3 | % |

 

AtMarch 31, 2009, we estimated that the current market rents on ourconsolidated Manhattan properties and consolidated Suburban properties wereapproximately 14.1% and 3.7% higher, respectively, than then existing in-placefully escalated rents.  Approximately3.5% of the space leased at our consolidated properties expires during theremainder of 2009.

 

| **Investment and Other Income (in millions)**          | ** ** | **2009** | ** ** | **2008** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|--------------------------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Equity in net  income of unconsolidated joint ventures |       | $        | 0.3        |     | $          | (0.1          | )          | $             | 0.4        |   | 400.0 | % |
| Investment and  other income                           |       | 1.4      |       | 1.6      |       | (0.2          | )          | (12.5         | )          |
| Total                                                  |       | $        | 1.7        |     | $          | 1.5           |       | $             | 0.2        |   | 13.3 | % |

 

Theincrease in equity in net income of unconsolidated joint venture was primarilydue to higher net income contribution from One Court Square.  Our joint venture at One Court Square is netleased to a single tenant until 2020.  Assuch, we do not anticipate much change in occupancy rates or net incomecontributions from this asset.  At March 31,2009, we estimated that current market rents at our Suburban joint ventureasset was approximately 9.8% higher than then existing in-place fully escalatedrents.

 

Thedecrease in investment and other income is primarily due to the averageinvestment balance decreasing between 2008 and 2009 due to the redemption ofcertain loans.  In addition, certainloans were placed on non-accrual status during 2008.

 

| **Property Operating Expenses (in millions)** | ** ** | **2009** | ** ** | **2008** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|-----------------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Operating  expenses                           |       | $        | 19.5       |     | $          | 18.8          |       | $             | 0.7        |   | 3.7 | % |
| Real estate  taxes                            |       | 14.4     |       | 12.6     |       | 1.8           |       | 14.3          |       |
| Ground rent                                   |       | 2.2      |       | 2.2      |       | —        |       | —        |       |
| Total                                         |       | $        | 36.1       |     | $          | 33.6          |       | $             | 2.5        |   | 7.4 | % |

 

Operatingexpenses increased slightly compared to the same period in the prior year.  The increase was primarily attributable toincreases in payroll, repairs and maintenance and insurance.  The increase in real estate taxes wasprimarily due to higher assessed values and higher tax rates.

 

| **Other Expenses (in millions)**               | ** ** | **2009** | ** ** | **2008** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|------------------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Interest expense                               |       | $        | 15.4       |     | $          | 17.5          |       | $             | (2.1       | ) | (12.0 | )% |
| Depreciation and  amortization expense         |       | 23.5     |       | 21.1     |       | 2.4           |       | 11.4          |       |
| Marketing,  general and administrative expense |       | 0.1      |       | 0.5      |       | (0.4          | )          | (80.0         | )          |
| Total                                          |       | $        | 39.0       |     | $          | 39.1          |       | $             | (0.1       | ) | (0.3 | )% |

 

Thedecrease in interest expense was due to the redemption of $200.0 million ofsenior unsecured notes at maturity and which bore an average interest rate of7.75%.  We also repurchased approximately$102.4 million of our 4% exchangeable senior unsecured notes, due June 2025during the fourth quarter of 2008, thereby reducing our interest expense duringthe first quarter of 2009.

 

Thedecrease in marketing, general and administrative expenses is primarily due toa decrease in professional fees incurred.

 

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**Liquidityand Capital Resources**

 

Weare currently experiencing a global economic downturn and credit crunch.  As a result, many financial industryparticipants, including commercial real estate owners, operators, investors andlenders continue to find it extremely difficult to obtain cost-effective debtcapital to finance new investment activity or to refinance maturing debt.  In the few instances in which debt isavailable, it is at a cost much higher than in the recent past.

 

We currently expect that our principal sources offunds to meet our short-term and long-term liquidity requirements (workingcapital, property operations, debt service, redevelopment of properties, tenantimprovements and leasing costs) will include cash flow from operations and netproceeds from divestitures of properties and redemptions of structured financeinvestments.

 

Cash flow from operations is primarily dependent uponthe occupancy level of our portfolio, the net effective rental rates achievedon our leases, the collectability of rent and operating escalations andrecoveries from our tenants and the level of operating and other costs.

 

We believe that our sources of working capital,specifically our cash flow from operations, are adequate for us to meet ourshort-term and long-term liquidity requirements for the foreseeable future.

 

On January 25, 2007, we were acquired by SLGreen. See Item 2 “Management’s Discussion and Analysis — Liquidity andCapital Resources” in SL Green’s Quarterly Report on Form 10-Q/A for thequarter ended March 31, 2009 for a complete discussion of additionalsources of liquidity available to us due to our indirect ownership by SL Green.

 

#### **Cash Flows**

#### ** **

**The following summary discussion of our cash flows is based on ourcondensed consolidated statements of cash flows in “Item 1. FinancialStatements” and is not meant to be an all-inclusive discussion of the changesin our cash flows for the periods presented below.**

** **

Cashand cash equivalents were $17.9 million and $10.9 million at March 31,2009 and March 31, 2008, respectively, representing an increase of $7.0million.  The increase was a result ofthe following increases and decreases in cash flows (in thousands):

 

| ** **                                           | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                           | ** ** | **2009**                              | ** ** | **2008** | ** ** | **Increase  (Decrease)** | ** ** |
| ** **                                           | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net cash  provided by operating activities           |       | $                                     | 12,598     |   | $ | 8,465 |   | $ | 4,124 |   |
| Net cash (used  in) provided by investing activities |       | $                                     | (4,058     | ) | $ | 1,545 |   | $ | (5,603 | ) |
| Net cash used in  financing activities               |       | $                                     | (13,305    | ) | $ | (15,546 | ) | $ | 2,241 |   |

 

**Our principal source of operating cash flow is related to the leasing andoperating of the properties in our portfolio. Our properties provide arelatively consistent stream of cash flow that provides us with resources topay operating expenses, debt service and fund quarterly dividend anddistribution payment requirements. At March 31, 2009, our portfolio was94.8% occupied. In addition, rental rates continue to increase and tenantconcession packages decrease in the Manhattan and Suburban marketplaces. Ourstructured finance and joint venture investments also provide a steady streamof operating cash flow to us.**

** **

**Cash isused in investing activities to fund acquisitions, redevelopment projects andrecurring and nonrecurring capital expenditures. We selectively invest inexisting buildings that meet our investment criteria.  During the three months ended March 31,2009, compared to the same period in the prior year, we used cash primarilyfrom the following investing activities (in thousands):**

 

| Capital  expenditures and capitalized interest |   | $    | (5,289 | ) |
|------------------------------------------------|--------|------|--------|---|
| Distributions  from joint ventures             |   | (247 | )      |
| Other investing  activities                    |   | (67  | )      |

** **

**We generally fund our investment activity through property-levelfinancing and asset sales.  During thethree months ended March 31, 2009, compared to the same period in theprior year, we used our funds to complete the following financing activities(in thousands):**

** **

| Repayments under  our debt obligations        |       | $       | (209,422 | ) |
|-----------------------------------------------|------------|---------|----------|---|
| Contributions                                 |       | 221,588 |     |
| Distributions  and other financing activities | ** ** | (9,925  | )        |

 

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**Capitalization**

** **

Prior to the Merger, a Class Acommon unit and a share of common stock of RARC had similar economiccharacteristics as they effectively share equally in the net income or loss anddistributions of ROP.  As of January 25,2007, all of our issued and outstanding Class A common units were owned byRARC.  In connection with the Merger,RARC assigned all of its interest in the Class A common units to WAGP andthe operating partnership.  On November 15,2007, RARC withdrew, and WAGP succeeded it, as the sole general partner of ROP.All of our issued and outstanding Class A common units were owned by WAGPor the operating partnership.

 

As of December 31,2006, we had issued and outstanding 1,200 preferred units of limitedpartnership interest, or Preferred Units, with a liquidation preference valueof $1,000 per unit and a stated distribution rate of 7.0% which was subject toreduction based upon terms of their initial issuance.  The terms of the Preferred Units provided forthis reduction in distribution rate in order to address the effect of certainmortgages with above market interest rates which were assumed by us inconnection with properties contributed to us in 1998.   As a result of the aforementioned reduction,no distributions were being made on the Preferred Units.  In connection with the Merger, the holder ofthe Preferred Units transferred the Preferred Units to the operatingpartnership in exchange for the issuance of 1,200 preferred units of limitedpartnership interest in the operating partnership with substantially similarterms as the Preferred Units.

 

**ContractualObligations**

 

Combined aggregateprincipal maturities of mortgages payable and senior unsecured notes (net ofdiscount), our share of joint venture debt, excluding extension options,estimated interest expense, and our obligations under our ground leases, as of March 31,2009 are as follows (in thousands):

 

| ** **                  | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **2013** | ** ** | **Thereafter** | ** ** | **Total** | ** ** |
|-----------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|
| Property  mortgages         |       | $        | 3,225      |     | $          | 4,225    |       | $        | 219,879    |     | $          | —         |       | $         | —     |   | $ | — |   | $ | 227,329 |   |
| Senior unsecured  notes     |       | —   |       | 180,515  |       | 138,755  |       | —   |       | —   |       | 424,700        |       | 743,970   |       |
| Ground leases               |       | 7,604    |       | 9,698    |       | 7,724    |       | 7,593    |       | 7,593    |       | 254,831        |       | 295,043   |       |
| Estimated  interest expense |       | 41,615   |       | 51,487   |       | 36,473   |       | 25,347   |       | 25,347   |       | 45,742         |       | 226,011   |       |
| Joint venture  debt         |       | —   |       | —   |       | —   |       | —   |       | —   |       | 94,500         |       | 94,500    |       |
| Total                       |       | $        | 52,444     |     | $          | 245,925  |       | $        | 402,831    |     | $          | 32,940         |       | $         | 32,940     |   | $ | 819,773 |   | $ | 1,586,853 |   |

 

**SeniorUnsecured Notes**

 

The following table setsforth our senior unsecured notes and other related disclosures by scheduledmaturity date (in thousands):

 

| **Issuance**              | ** ** | **Accreted  Balance** | ** **  | **Coupon Rate****(1)** | ** ** | **Term  (in Years)** | ** ** | **Maturity**         | ** **            |
|---------------------------|------------|-----------------------|-------------|------------------------|------------|----------------------|------------|----------------------|-----------------------|
| January 22,  2004(2) |       | $                     | 138,755     |                   | 5.15       | %                    | 7          |                 | January 15, 2011 |   |
| August 13,  2004     |       | 150,000               |        | 5.875                  | %          | 10                   |       | August 15, 2014 |                  |
| March 31,  2006      |       | 274,700               |        | 6.00                   | %          | 10                   |       | March 31, 2016  |                  |
| June 27,  2005(3)    |       | 180,515               |        | 4.00                   | %          | 20                   |       | June 15, 2025   |                  |
| ** **                |       | **$**                 | **743,970** |                   |       |                 |       |                 |                  |   |

----

|   | (1) | Interest  on the senior unsecured notes is payable semi-annually with principal and  unpaid interest due on the scheduled maturity dates.                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2) | During the three months ended March 31, 2009,  we repurchased approximately $11.2 million of these notes and realized net  gains on early extinguishment of debt of approximately $1.9 million.                                                                                                                                                                                                                                                                                                                                                            |
|   | (3) | Exchangeable senior debentures which are callable after  June 17, 2010 at 100% of par. In addition, the debentures can be put to  us, at the option of the holder at par plus accrued and unpaid interest, on  June 15, 2010, 2015 and 2020 and upon the occurrence of certain change  of control transactions. As a result of the Merger, the adjusted exchange  rate for the debentures is 7.7461 shares of SL Green common stock per $1,000  of principal amount of debentures and the adjusted reference dividend for the  debentures is $1.3491. |

 

On March 16, 2009,the $200.0 million, 7.75% unsecured notes scheduled to mature in March 2009,assumed as part of the Merger, were redeemed.

 

**RestrictiveCovenants**

 

Theterms of our senior unsecured notes include certain restrictions and covenantswhich limit, among other things, the incurrence of additional indebtedness andliens, and which require compliance with financial ratios relating to theminimum amount of debt service coverage, the maximum amount of consolidatedunsecured and secured indebtedness and the minimum amount of unencumberedassets.  As of March 31, 2009 and December 31,2008, we were in compliance with all such covenants.

 

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**MarketRate Risk**

 

We arenot exposed to changes in interest rates as we have no floating rate borrowingarrangements.

 

All of our long-termdebt, totaling approximately $1.0 billion, bears interest at fixed rates, andtherefore the fair value of these instruments is affected by changes in themarket interest rates.

 

**Off-BalanceSheet Arrangements**

 

Wehave a number of off-balance sheet investments, including a joint ventureinvestment and structured finance investments. These investments all have varying ownership structures.  Our joint venture arrangement is accountedfor under the equity method of accounting as we have the ability to exercisesignificant influence, but not control over the operating and financialdecisions of this joint venture arrangement. Our off-balance sheet arrangements are discussed in Note 4, “StructuredFinance Investments” and Note 5, “Investment in Unconsolidated Joint Venture”in the accompanying financial statements.

 

**CapitalExpenditures**

 

We estimate that for thenine months ending December 31, 2009, we will incur approximately $23.9 millionof capital expenditures (including tenant improvements and leasing commissions)on consolidated properties and none at our joint venture property.  We expect to fund these capital expenditureswith operating cash flow, borrowings under SL Green’s credit facility and cashon hand.  We believe that we will havesufficient resources to satisfy our capital needs during the next 12-monthperiod.

 

Thereafter, we expectthat our capital needs will be met through a combination of net cash providedby operations, borrowings, potential asset sales or additional equity or debtissuances by SL Green.

 

**RelatedParty Transactions**

 

**Cleaning/Security/ Messenger and Restoration Services**

 

Through Alliance BuildingServices, or Alliance, First Quality Maintenance, L.P., or First Quality,provides cleaning, extermination and related services, Classic Security LLCprovides security services, Bright Star Couriers LLC provides messengerservices, and Onyx Restoration Works provides restoration services with respectto certain properties owned by us. Alliance is owned by Gary Green, a son of Stephen L. Green, the chairmanof our board of directors.  In addition,First Quality has the non-exclusive opportunity to provide cleaning and relatedservices to individual tenants at our properties on a basis separatelynegotiated with any tenant seeking such additional services.  We paid Alliance approximately $0.6 millionand $0.5 million for three months ended March 31, 2009 and 2008,respectively, for these services (excluding services provided directly totenants).

 

**AllocatedExpenses from SL Green**

 

Subsequent to the Merger,property operating expenses include an allocation of salary and other operatingcosts from SL Green.  Such amount wasapproximately $1.0 million and $1.1 million for the three months ended March 31,2009 and 2008, respectively.

 

**Insurance**

 

SL Green maintains “all-risk”property and rental value coverage (including coverage regarding the perils offlood, earthquake and terrorism) within two property insurance portfolios andliability insurance. This includes the ROP assets. The first property portfoliomaintains a blanket limit of $600.0 million per occurrence for themajority of the New York City properties in our portfolio with a sub-limit of$450.0 million for acts of terrorism. The second portfolio maintains alimit of $600.0 million per occurrence, including terrorism, for a few New YorkCity properties and the majority of the Suburban properties.  Bothproperty policies expire on December 31, 2009.  Additional coveragemay be purchased on a stand alone basis for certain assets.  The liability policies cover all ourproperties and provide limits of $200.0 million per property.  Theliability policies expire on October 31, 2009.

 

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In October 2006, SLGreen formed a wholly-owned taxable REIT subsidiary, Belmont Insurance Company,or Belmont, to act as a captive insurance company and be one of the elements ofour overall insurance program Belmont was formed in an effort to, among otherreasons, stabilize to some extent the fluctuations of insurance marketconditions. Belmont is licensed in New York to write Terrorism, NBCR (nuclear,biological, chemical, and radiological), General Liability and D&Ocoverage.

 

·                  Terrorism:Belmont acts as a direct property insurer with respect to a portion of ourterrorism coverage for the New York City properties.  Effective December 31, 2008, Belmontincreased its terrorism coverage from $50 million to $250 million in an upperlayer.  In addition, Belmont purchasedreinsurance to reinsure the retained insurable risk not otherwise covered underTerrorism Risk Insurance Program Reauthorization and Extension Act of 2007(TRIPRA), as detailed below.

 

·                  NBCR:Belmont acts as a direct insurer of NBCR coverage up to $250 million on theentire property portfolio.

 

·                  GeneralLiability: Belmont insures a deductible on the general liability insurance witha $250,000 deductible per occurrence and a $2.4 million annual aggregate stoploss limit. SL Green has secured an excess insurer to protect againstcatastrophic liability losses above the $250,000 deductible per occurrence anda stop loss if aggregate claims exceed $2.4 million.  Belmont has retaineda third party administrator to manage all claims within the deductible and weanticipate that direct management of liability claims will improve lossexperience and ultimately lower the cost of liability insurance in futureyears. In addition, SL Green has an umbrella liability policy of $200.0million.

 

·                  D&O:  Effective August 10, 2008, a directorsand officers liability policy was added by Belmont to provide reimbursement forSEC claims reducing the deductible from $2,500,000 to $1,000,000.

 

TRIA, which was enactedin November 2002, was renewed on December 31, 2007. Congress extendedTRIA, now called TRIPRA (Terrorism Risk Insurance Program Reauthorization andExtension Act of 2007) until December 31, 2014. The law extends thefederal Terrorism Insurance Program that requires insurance companies to offerterrorism coverage and provides for compensation for insured losses resultingfrom acts of foreign and domestic terrorism. Our debt instruments, consisting ofmortgage loans secured by our properties (which are generally non-recourse tous), mezzanine loans, ground leases and SL Green’s 2007 unsecured revolvingcredit facility, contain customary covenants requiring us to maintaininsurance. There can be no assurance that the lenders or ground lessors underthese instruments will not take the position that a total or partial exclusionfrom “all-risk” insurance coverage for losses due to terrorist acts is a breachof these debt and ground lease instruments that allows the lenders or groundlessors to declare an event of default and accelerate repayment of debt orrecapture of ground lease positions. In addition, if lenders insist on fullcoverage for these risks and prevail in asserting that we are required to maintainsuch coverage, it could result in substantially higher insurance premiums.

 

Subsequent to the Merger,we obtained insurance coverage through an insurance program administered by SLGreen.  In connection with this programwe incurred insurance expense of approximately $0.7 million and $0.6 millionfor the three months ended March 31, 2009 and 2008, respectively.

 

**RecentlyIssued Accounting Pronouncements**

 

TheRecently Issued Accounting Pronouncements are discussed in Note 2, “SignificantAccounting Policies-Recently Issued Accounting Pronouncements” in theaccompanying financial statements.

 

**Inflation**

 

Substantiallyall of the office leases provide for separate real estate tax and operatingexpense escalations as well as operating expense recoveries based on increasesin the Consumer Price Index or other measures such as porters’ wage.  In addition, many of the leases provide forfixed base rent increases.  We believethat inflationary increases may be at least partially offset by the contractualrent increases and expense escalations described above.

 

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**Forward-Looking Statement**

 

This report includescertain statements that may be deemed to be “forward-looking statements” withinthe meaning of the Private Securities Litigation Reform Act of 1995 and areintended to be covered by the safe harbor provisions thereof.  All statements, other than statements ofhistorical facts, included in this report that address activities, events ordevelopments that we expect, believe or anticipate will or may occur in thefuture, including such matters as future capital expenditures, dividends andacquisitions (including the amount and nature thereof), development trends ofthe real estate industry and the Manhattan, Westchester County, Connecticut,Long Island and New Jersey office markets, business strategies, expansion andgrowth of our operations and other similar matters, are forward-lookingstatements. These forward-looking statements are based on certain assumptionsand analyses made by us in light of our experience and our perception ofhistorical trends, current conditions, expected future developments and otherfactors we believe are appropriate.

 

Forward-lookingstatements are not guarantees of future performance and actual results ordevelopments may materially differ, and we caution you not to place unduereliance on such statements. Forward-looking statements are generally identifiable by the use of thewords “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,”“project,” “continue,” or the negative of these words, or other similar wordsor terms.

 

Forward-lookingstatements contained in this report is subject to a number of risks anduncertainties which may cause our actual results, performance or achievementsto be materially different from future results, performance or achievementsexpressed or implied by forward-looking statements made by us.  These risks and uncertainties include:

 

·                  the effect ofthe credit crisis on general economic, business and financial conditions, andon the New York Metro real estate market in particular;

·                  dependence uponcertain geographic markets;

·                  risks of real estateacquisitions, dispositions and developments, including the cost of constructiondelays and cost overruns;

·                  risks relatingto structured finance investments;

·                  availability andcreditworthiness of prospective tenants and borrowers;

·                  bankruptcy or insolvencyof a major tenant or a significant number of smaller tenants;

·                  adverse changesin the real estate markets, including reduced demand for office space,increasing vacancy, and increasing availability of sublease space;

·                  availability ofcapital (debt and equity);

·                  unanticipatedincreases in financing and other costs, including a rise in interest rates;

·                  our ability tocomply with financial covenants in our debt instruments;

·                  our ability tomaintain our status as a REIT;

·                  risks ofinvesting through joint venture structures, including the fulfillment by ourpartners of their financial obligations;

·                  the continuingthreat of terrorist attacks, in particular in the New York Metro Area and onour tenants;

·                  our ability toobtain adequate insurance coverage at a reasonable cost and the potential forlosses in excess of our insurance coverage, including as a result ofenvironmental contamination; and

·                  legislative,regulatory and/or safety requirements adversely affecting REITs and the realestate business, including costs of compliance with the Americans withDisabilities Act, the Fair Housing Act and other similar laws and regulations.

 

Other factors and risksto our business, many of which are beyond our control, are described in ourfilings with the Securities and Exchange Commission.  We undertake no obligation to publicly updateor revise any forward-looking statements, whether as a result of future events,new information or otherwise.

 

The risks included hereare not exhaustive.  Other sections ofthis report and our Annual Report on Form 10-K for the year ended December 31,2008 may include additional factors that could adversely affect ROP’s businessand financial performance.  In addition,sections of SL Green’s Annual Report on Form 10-K/A No. 2 for theyear ended December 31, 2008 contains additional factors that couldadversely effect our business and financial performance.  Moreover, ROP operates in a very competitiveand rapidly changing environment.  Newrisk factors emerge from time to time and it is not possible for management topredict all such risk factors, nor can it assess the impact of all such riskfactors on ROP’s business or the extent to which any factor, or combination offactors, may cause actual results to differ materially from those contained inany forward-looking statements.  Giventhese risks and uncertainties, investors should not place undue reliance onforward-looking statements as a prediction of actual results.

 

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**ITEM3.  Quantitative and QualitativeDisclosure About Market Risk**

 

For quantitative andqualitative disclosures about market risk, see item 7A, “Quantitative and QualitativeDisclosures About Market Risk,” of our Annual Report on Form 10-K for theyear ended December 31, 2008.  Ourexposures to market risk have not changed materially since December 31,2008.

 

**ITEM 4T.  Controls and Procedures**

** **

**Evaluation of Disclosure Controls and Procedures**

** **

We maintain disclosurecontrols and procedures that are designed to ensure that information requiredto be disclosed in our Exchange Act reports is recorded, processed, summarizedand reported within the time periods specified in the SEC’s rules andforms, and that such information is accumulated and communicated to ourmanagement, including our Chief Executive Officer and Chief Financial Officer,as appropriate, to allow timely decisions regarding required disclosure basedclosely on the definition of “disclosure controls and procedures” in Rule 13a-15(e) ofthe Exchange Act.  Notwithstanding theforegoing, a control system, no matter how well designed and operated, canprovide only reasonable, not absolute, assurance that it will detect or uncoverfailures within the Company to disclose material information otherwise requiredto be set forth in our periodic reports. Also, we have investments in certain unconsolidated entities.  As we do not control these entities, ourdisclosure controls and procedures with respect to such entities arenecessarily substantially more limited than those we maintain with respect toour consolidated subsidiaries.

 

As of the end of theperiod covered by this report, we carried out an evaluation, under thesupervision and with the participation of our management, including ourPresident and our Treasurer, of the effectiveness of the design and operationof our disclosure controls and procedures. Based upon that evaluation as of the end of the period covered by thisreport, our President and Treasurer concluded that our disclosure controls andprocedures were effective to give reasonable assurances to the timelycollection, evaluation and disclosure of information relating to the Companythat would potentially be subject to disclosure under the Securities ExchangeAct of 1934, as amended, and the rules and regulations promulgatedthereunder.

 

We are not currentlyrequired to comply with Section 404 (Management’s Annual Report onInternal Control Over Financial Reporting) of the Sarbanes-Oxley Act of 2002because we are not an “accelerated filer,” as defined by Rule 12b-2 underthe Exchange Act.  We are in the processof continuously improving our internal controls over financial reportingprocesses and procedures for our financial reporting so that our management canreport on these processes and procedures when required to do so.

 

**Changes in Internal Control over Financial Reporting**

** **

Therehave been no significant changes in our internal control over financialreporting during the quarter ended March 31, 2009, that has materiallyaffected, or is reasonably likely to material affect, our internal control overfinancial reporting.

 

**PART II              OTHERINFORMATION**

 

##### **ITEM 1.              LEGAL PROCEEDINGS**

##### ** **

As of March 31,2009, we were not involved in any material litigation nor, to management’sknowledge, is any material litigation threatened against us or our portfolioother than routine litigation arising in the ordinary course of business orlitigation that is adequately covered by insurance.

 

##### **ITEM 1A.           RISK FACTORS**

##### ** **

## We encourage you to read “Item 1A of Part 1-RiskFactors” in the Annual Reports on Form 10-K for ROP and Form 10-K/A No. 2for SL Green Realty Corp., our 100% indirect parent company.

##  

There have been nomaterial changes to the risk factors disclosed in Item 1A of Part 1 in theabove-mentioned Annual Reports on Form 10-K for the year ended December 31,2008.

 

##### **ITEM 2.              UNREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS**

##### ** **

None

 

#### **ITEM 3.              DEFAULTSUPON SENIOR SECURITIES**

#### ** **

None

 

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#### **ITEM 4.              SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS**

#### ** **

**None**

** **

#### **ITEM 5.              OTHERINFORMATION**

#### ** **

None

 

**ITEM 6.              EXHIBITS**

 

(a)                                                                                Exhibits:

 

31.1                                                                         Certificationby the President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002filed herewith.

 

31.2                                                                         Certificationby the Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002filed herewith.

 

32.1                                                                         Certificationpursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002 filed herewith.

 

32.2                                                                         Certificationpursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002 filed herewith.

 

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**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|                          | RECKSON OPERATING  PARTNERSHIP, L.P. |
|-------------------------------|--------------------------------------|
|                          | By: WYOMING ACQUISITION  GP LLC      |
|                          |                                 |   |
|                          |                                 |   |
|                          | By:                                  | /s/ Gregory F.  Hughes |
|                          |                                 | Gregory F. Hughes |
|                          |                                 | Treasurer |
|                          |                                 |   |
|                          |                                 |   |
| Date:  May 15, 2009 |                                 |   |

 

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