**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

----

** **

**FORM 10-Q**

----

 
| x          | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|------------|------------|-----------------------------------------------------------------------------------------------|
| ** ** |       | ** **                                                                                    |
| ** ** |       | **For the  quarterly period ended March 31, 2007**                                            |
| ** ** |       | ** **                                                                                    |
| o          | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

** **

**For thetransition period from              to               **

**CommissionFile Number: 1-13762**

----

** **

**RECKSONOPERATING PARTNERSHIP, L.P.**(Exact name of registrant as specified in its charter)

----

** **

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

 

**420Lexington Avenue, New York, New York 10170**(Address of principal executive offices) (Zip Code)

**(212)594-2700**(Registrant’s telephone number, including area code)

** **

----

** **

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.  YES x     NO o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer.  See definition of“accelerated filer and large accelerated filer” in Rule 12b-2 of the ExchangeAct.

| Large accelerated  filer o |   | Accelerated  filer o |   | Non-accelerated  filer x |
|---------------------------------|--------|---------------------------|--------|-------------------------------|

 

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 March 31, 2007, nocommon units of limited partnership interest of the Registrant were held by non-affiliatesof the Registrant.  There is noestablished trading market for such units.

 

 

----

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

**INDEX**

**PART I.         FINANCIALINFORMATION**

**ITEM 1.        FINANCIALSTATEMENTS**
|                | ** ** | **PAGE**                                                                                                                                                                                                                                           |
|----------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |       | Condensed Consolidated Balance Sheets as of March 31,  2007 (unaudited) (Successor) and December 31, 2006 (Predecessor)                                                                                                                            |   |   | 3 |   |
|           |       |                                                                                                                                                                                                                                               |   |   |   |   |
|           |       | Condensed Consolidated Statements of Operations for  the period January 26, 2007 to March 31, 2007 (Successor), the period January  1, 2007 to January 25, 2007 (Predecessor) and the three months ended March  31, 2006 (Predecessor) (unaudited) |   |   | 4 |   |
|           |       |                                                                                                                                                                                                                                               |   |   |   |   |
|           |       | Condensed Consolidated Statements of Cash Flows for  the three months ended March 31, 2007 and the three months ended March 31,  2006 (unaudited) (Predecessor)                                                                                    |   |   | 5 |   |
|           |       |                                                                                                                                                                                                                                               |   |   |   |   |
|           |       | Notes to Condensed Consolidated Financial Statements  (unaudited)                                                                                                                                                                                  |   |   | 6 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         | ** ** | ** ** | ** ** |   |
| **ITEM 2.**    | ** ** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS**                                                                                                                                                    |   |   | 16 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM 3.**    | ** ** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET  RISK**                                                                                                                                                                                    |   |   | 23 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM 4T.**   | ** ** | **CONTROLS AND PROCEDURES**                                                                                                                                                                                                                        |   |   | 23 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **PART  II.**  |       | **OTHER  INFORMATION**                                                                                                                                                                                                                             |   |   | 24 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM  1.**   | ** ** | **LEGAL  PROCEEDINGS**                                                                                                                                                                                                                             |   |   | 24 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM  1A.**  | ** ** | **RISK  FACTORS**                                                                                                                                                                                                                                  |   |   | 25 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM 2.**    | ** ** | **UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF  PROCEEDS**                                                                                                                                                                                   |   |   | 33 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM 3.**    | ** ** | **DEFAULTS UPON SENIOR SECURITIES**                                                                                                                                                                                                                |   |   | 33 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM 4.**    | ** ** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**                                                                                                                                                                                            |   |   | 33 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM 5.**    | ** ** | **OTHER INFORMATION**                                                                                                                                                                                                                              |   |   | 33 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **ITEM 6.**    | ** ** | **EXHIBITS**                                                                                                                                                                                                                                       |   |   | 33 |   |
| ** **     | ** ** | ** **                                                                                                                                                                                                                                         |   |   |   |   |
| **Signatures** |       |                                                                                                                                                                                                                                               | 35 |   |

 

----

 

**PART I.****                                                                            FINANCIALINFORMATION**

###### **ITEM1.****                                                                             FinancialStatements**

**Reckson OperatingPartnership, L.P.**

**Condensed Consolidated Balance Sheets**

**(Amounts in thousands)**
| ** **                                      | ** ** | **March 31,  2007** | ** **    | ** ** | ** ** | **December 31,  2006** | ** ** |
|-------------------------------------------------|------------|--------------------------|---------------|------------|------------|-----------------------------|------------|
| ** **                                      | ** ** | **(Successor)**          | ** **    | ** ** | ** ** | **(Predecessor)**           | ** ** |
| **Assets**                                      | ** ** | **(Unaudited)**          | ** **    | ** ** | ** ** | ** **                  | ** ** |
| Commercial real estate  properties, at cost:    |       |                     |          |       |       |                        |       |
| Land and land interests                         | ** ** | **$**                    | **684,435**   |       |       |                        | $          | 559,325 |   |
| Building and  improvements                      | ** ** | **3,047,827**            |          |       |       | 3,090,549                   |       |
| ** **                                      | ** ** | **3,732,262**            |          |       |       | 3,649,874                   |       |
| Less: accumulated  depreciation                 | ** ** | **(13,819**              | **)**         |       |       | (644,771                    | )          |
| ** **                                      | ** ** | **3,718,443**            |          |       |       | 3,005,103                   |       |
| Cash and cash  equivalents                      | ** ** | **19,612**               |          |       |       | 51,192                      |       |
| Restricted cash                                 | ** ** | **8,286**                |          |       |       | 19,982                      |       |
| Tenant and other  receivables                   | ** ** | **15,527**               |          |       |       | 13,611                      |       |
| Deferred rents  receivable                      | ** ** | **2,351**                |          |       |       | 155,256                     |       |
| Structured finance  investments                 | ** ** | **136,646**              |          |       |       | 198,454                     |       |
| Investments in unconsolidated  joint ventures   | ** ** | **64,760**               |          |       |       | 53,390                      |       |
| Deferred costs, net                             | ** ** | **125**                  |          |       |       | 88,089                      |       |
| Other assets                                    | ** ** | **54,250**               |          |       |       | 161,754                     |       |
| Total assets                                    | ** ** | **$**                    | **4,020,000** |       |       |                        | $          | 3,746,831 |   |
|                                            |       |                     |          |       |       |                        |       |
| **Liabilities and Partners’  Capital**     |       |                     |          |       |       |                        |       |
| Mortgage notes payable                          | ** ** | **$**                    | **246,540**   |       |       |                        | $          | 418,613 |   |
| Revolving credit  facility                      | ** ** | **—**               |          |       |       | 269,000                     |       |
| Unsecured notes                                 | ** ** | **1,256,725**            |          |       |       | 1,255,187                   |       |
| Accrued interest  payable and other liabilities | ** ** | **26,119**               |          |       |       | 20,585                      |       |
| Accounts payable and  accrued expenses          | ** ** | **60,678**               |          |       |       | 142,093                     |       |
| Deferred revenue/gain                           | ** ** | **—**               |          |       |       | 53,590                      |       |
| Deferred land leases  payable                   | ** ** | **43**                   |          |       |       | 10,457                      |       |
| Dividend and  distributions payable             | ** ** | **—**               |          |       |       | 36,839                      |       |
| Security deposits                               | ** ** | **5,705**                |          |       |       | 19,217                      |       |
| Total  liabilities                              | ** ** | **1,595,810**            |          |       |       | 2,225,581                   |       |
|                                            |       |                     |          |       |       |                        |       |
| Commitments and  Contingencies                  |       | **—**               |          |       |       | **—**                  |       |
| Minority interests in  other partnerships       | ** ** | **401,108**              |          |       |       | 259,736                     |       |
|                                            |       |                     |          |       |       |                        |       |
| **Partners’ Capital**                      | ** ** | ** **               | ** **    | ** ** | ** ** | ** **                  | ** ** |
| Preferred Capital                               | ** ** | **—**               |          |       |       | 1,200                       |       |
| General Partner Capital                         | ** ** | **2,023,082**            |          |       |       | 1,241,985                   |       |
| Limited Partner Capital                         | ** ** | **—**               |          |       |       | 16,513                      |       |
| Accumulated other  comprehensive income         | ** ** | **—**               |          |       |       | 1,816                       |       |
| Total Partners’ Capital                    | ** ** | **2,023,082**            |          |       |       | 1,261,514                   |       |
| Total Liabilities and Partners’  Capital   | ** ** | **$**                    | **4,020,000** |       |       |                        | $          | 3,746,831 |   |

 

Theaccompanying notes are an integral part of these financial statements.

3

----

**Reckson OperatingPartnership, L.P.**

**Condensed Consolidated Statements of Operations**

**(Unaudited, and amounts in thousands)**
| ** **                                                                                                                                                            | ** ** | **Period  January 26 to   March 31,** | ** ** | ** ** | ** ** | **Period  January 1 to  January 25,** | ** ** | **Three months  Ended   March 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|------------|------------|------------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                                                                                                                                                            | ** ** | **2007**                                                  | ** ** | ** ** | ** ** | **2007**                                             | ** ** | **2006**                                           | ** ** |
| **Revenues**                                                                                                                                                          | ** ** | **(Successor)**                                           | ** ** | ** ** | ** ** | **(Predecessor)**                                    | ** ** | **(Predeccessor)**                                 | ** ** |
| Rental revenue,  net                                                                                                                                                  |       | $                                                         | 46,684     |       |       |                                                 | $          | 21,821                                             |       | $ | 67,335 |   |
| Escalation and  reimbursement                                                                                                                                         |       | 9,719                                                     |       |       |       | 3,728                                                |       | 12,328                                             |       |
| Investment  income                                                                                                                                                    |       | 3,451                                                     |       |       |       | 1,201                                                |       | 5,606                                              |       |
| Other income                                                                                                                                                          |       | 12                                                        |       |       |       | —                                               |       | 12,159                                             |       |
| Total revenues                                                                                                                                                        |       | 59,866                                                    |       |       |       | 26,750                                               |       | 97,428                                             |       |
| **Expenses**                                                                                                                                                          |       |                                                      |       |       |       |                                                 |       |                                               |       |
| Operating  expenses                                                                                                                                                   |       | 13,035                                                    |       |       |       | 6,921                                                |       | 19,703                                             |       |
| Real estate  taxes                                                                                                                                                    |       | 9,781                                                     |       |       |       | 4,744                                                |       | 14,043                                             |       |
| Ground rent                                                                                                                                                           |       | 1,858                                                     |       |       |       | 699                                                  |       | 2,126                                              |       |
| Interest                                                                                                                                                              |       | 14,453                                                    |       |       |       | 6,728                                                |       | 25,403                                             |       |
| Amortization of  deferred financing costs                                                                                                                             |       | —                                                    |       |       |       | 152                                                  |       | 1,122                                              |       |
| Depreciation and  amortization                                                                                                                                        |       | 13,853                                                    |       |       |       | 5,311                                                |       | 18,954                                             |       |
| Merger related  costs                                                                                                                                                 |       | —                                                    |       |       |       | 8,814                                                |       | —                                             |       |
| Marketing, general  and administrative                                                                                                                                |       | 31                                                        |       |       |       | 5,347                                                |       | 10,840                                             |       |
| Total expenses                                                                                                                                                        |       | 53,011                                                    |       |       |       | 38,716                                               |       | 92,191                                             |       |
| Income (loss)  from continuing operations before equity in net income from unconsolidated  joint venture, gain on sale, minority interest and discontinued operations |       | 6,855                                                     |       |       |       | (11,966                                              | )          | 5,237                                              |       |
| Equity in net  income from unconsolidated joint venture                                                                                                               |       | 230                                                       |       |       |       | 8                                                    |       | 396                                                |       |
| Income (loss) from  continuing operations before minority interest, gain on sale and discontinued  operations                                                         |       | 7,085                                                     |       |       |       | (11,958                                              | )          | 5,633                                              |       |
| Gain on sale of  real estate                                                                                                                                          |       | —                                                    |       |       |       | —                                               |       | 35,393                                             |       |
| Minority  interest in other partnerships                                                                                                                              |       | (881                                                      | )          |       |       | (1,665                                               | )          | (4,109                                             | )          |
| Income (loss) from  continuing operations                                                                                                                             |       | 6,204                                                     |       |       |       | (13,623                                              | )          | 36,917                                             |       |
| Income from  discontinued operations, net                                                                                                                             |       | —                                                    |       |       |       | 2,520                                                |       | 12,747                                             |       |
| Gain on sale of  real estate from discontinued operations                                                                                                             |       | —                                                    |       |       |       | —                                               |       | 9,518                                              |       |
| Net income (loss)  available to common unitholders                                                                                                                    |       | $                                                         | 6,204      |       |       |                                                 | $          | (11,103                                            | )          | $ | 59,182 |   |

 

The accompanying notes are an integral part of thesefinancial statements.

4

----

**RecksonOperating Partnership, L.P.Condensed Consolidated Statements of Cash Flows(Unaudited, and amounts in thousands)**
| ** **                                                                               | ** ** | **Three months  Ended March 31,** | ** ** | **Three months  Ended March 31,** | ** ** |
|------------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                               | ** ** | **2007**                                         | ** ** | **2006**                                         | ** ** |
| ** **                                                                               | ** ** | **(Successor)**                                  | ** ** | **(Predecessor)**                                | ** ** |
| **Operating Activities**                                                                 |       |                                             |       |                                             |       |
| Net income (loss)                                                                        |       | $                                                | (4,899     | )                                                | $          | 59,182 |   |
| Adjustment to reconcile  net income (loss) to net cash provided by operating activities: |       |                                             |       |                                             |       |
| Non-cash  adjustments related to income from discontinued operations                     |       | 4,032                                            |       | 14,667                                           |       |
| Depreciation and  amortization                                                           |       | 19,164                                           |       | 18,954                                           |       |
| Gain on sale of  real estate                                                             |       | —                                           |       | (44,982                                          | )          |
| Equity in net  income from unconsolidated joint ventures                                 |       | (238                                             | )          | (120                                             | )          |
| Distributions of  cumulative earnings from unconsolidated joint venture                  |       | 238                                              |       | —                                           |       |
| Sale of option  to acquire joint venture interest                                        |       | —                                           |       | (9,016                                           | )          |
| Minority  interest in other partnerships                                                 |       | 2,546                                            |       | 4,109                                            |       |
| Deferred rents  receivable                                                               |       | (3,046                                           | )          | (5,359                                           | )          |
| Other non-cash  adjustments                                                              |       | 4,601                                            |       | (1,661                                           | )          |
| Changes in operating  assets and liabilities:                                            |       |                                             |       |                                             |       |
| Restricted cash  — operations                                                       |       | 11,696                                           |       | (2,982                                           | )          |
| Tenant and other  receivables                                                            |       | (1,916                                           | )          | 3,915                                            |       |
| Deferred lease  costs                                                                    |       | —                                           |       | (5,669                                           | )          |
| Other assets                                                                             |       | 91,501                                           |       | 6,017                                            |       |
| Accounts  payable, accrued expenses and other liabilities                                |       | (82,686                                          | )          | (11,840                                          | )          |
| Net cash provided by  operating activities                                               |       | 40,993                                           |       | 25,215                                           |       |
| **Investing  Activities**                                                                |       |                                             |       |                                             |       |
| Additions to land,  buildings and improvements                                           |       | (19,631                                          | )          | (26,740                                          | )          |
| Distributions in excess  of cumulative earnings from unconsolidated joint ventures       |       | 5,897                                            |       | 2,140                                            |       |
| Proceeds from  disposition of real estate/ partial interest in property                  |       | —                                           |       | 97,054                                           |       |
| Proceeds from the Asset  Sale                                                            |       | 1,978,764                                        |       | —                                           |       |
| Structured finance and  other investments net of repayments/participations               |       | 4,250                                            |       | 2,303                                            |       |
| Net cash provided by investing  activities                                               |       | 1,969,280                                        |       | 74,757                                           |       |
| **Financing  Activities**                                                                |       |                                             |       |                                             |       |
| Repayments of mortgage  notes payable                                                    |       | (172,072                                         | )          | (74,800                                          | )          |
| Proceeds from revolving  credit facilities, term loans and unsecured notes               |       | 12,000                                           |       | 537,819                                          |       |
| Repayments of revolving  credit facilities and term loans                                |       | (281,000                                         | )          | (504,000                                         | )          |
| Contributions                                                                            |       | 34,800                                           |       | 2,098                                            |       |
| Other financing  activities                                                              |       | (3,119                                           | )          | (72                                              | )          |
| Distributions                                                                            |       | (1,632,462                                       | )          | (39,104                                          | )          |
| Net cash used in financing  activities                                                   |       | (2,041,853                                       | )          | (78,059                                          | )          |
| Net increase (decrease)  in cash and cash equivalents                                    |       | (31,580                                          | )          | 21,913                                           |       |
| Cash and cash  equivalents at beginning of period                                        |       | 51,192                                           |       | 12,028                                           |       |
| Cash and cash equivalents at end of period                                               |       | $                                                | 19,612     |                                             | $          | 33,941 |   |

 

The accompanying notes are an integral part of thesefinancial statements.

 

5

----

**Reckson Operating Partnership, L.P.|**Notes to CondensedConsolidated Financial Statements(Unaudited)March 31, 2007

**1.  Organization and Basis of Presentation**

**Reckson Operating Partnership,L.P., or ROP, commenced operations on June 2, 1995.  Reckson Associates Realty Corp., or RARC, isthe sole general partner of ROP.  RARC isa wholly-owned subsidiary of SL Green Realty Corp., or SL Green.  The sole limited partner of ROP is SL GreenOperating Partnership, L.P., or the operating partnership.**

**As of March 31, 2007, ROP wasengaged in the ownership, management, operation and development of commercialreal estate properties, principally office and also owned land for futuredevelopment located in the New York City, Westchester and Connecticut, whichcollectively is also known as the Greater New York Area. At March 31,2007, ourinventory of development parcels aggregated approximately 81 acres of land in 4separate parcels on which we can, based on estimates at March 31, 2007, developapproximately 1.1 million square feet of office space and in which we hadinvested approximately $63.8 million. In addition, ROP also held approximately$136.6 million of structured finance investments.**

SL Green and the operating partnership were formedin June 1997.  SL Green hasqualified, and expects to qualify in the current fiscal year as a real estateinvestment trust, or REIT, under the Internal Revenue Code of 1986, as amended,or the Code, and operates as a self-administered, self-managed REIT.  A REIT is a legal entity that holds realestate interests and, through payments of dividends to stockholders, ispermitted to reduce or avoid the payment of Federal income taxes at thecorporate level.  Unless the contextrequires otherwise, all references to “we,” “our” and “us” means ROP and allentities owned or controlled by ROP.

On January 25,2007, SL Green completed the acquisition of all of the outstanding shares ofcommon stock of RARC pursuant to the terms of the Agreement and Plan of Merger,dated as 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. Pursuant to the terms of the MergerAgreement, each of the issued and outstanding shares of common stock of RARCwere converted into (i) $31.68 in cash, (ii) 0.10387 of a share of the commonstock, par value $0.01 per share, of SL Green and (iii) a pro-rated dividend inan amount equal to approximately $0.0977 in cash. SL Green also assumed anaggregate of approximately $226.3 million of ROP mortgage debt, approximately$287.5 million of ROP convertible public debt and approximately $967.8 millionof ROP public unsecured notes.  Thistransaction is referred to herein as the Merger.

OnJanuary 25, 2007, SL Green completed the sale, or Asset Sale, of certain assetsof ROP to an investment group led by certain of RARC’s former executivemanagement, or the Buyer, for a total consideration of approximately $2.0billion. SL Green caused ROP to transfer the following assets to the Buyer inthe Asset Sale: (1) certain real property assets and/or entities owning suchreal property assets, in either case, of ROP and 100% of certain loans securedby real property, all of which are located in Long Island, New York; (2)certain real property assets and/or entities owning such real property assets,in either case, of ROP located in White Plains and Harrison, New York; (3) allof the real property assets and/or entities owning 100% of the interests insuch real property assets, in either case, of ROP located in New Jersey; (4)the entity owning a 25% interest in Reckson Australia Operating Company LLC,RARC’s former Australian management company (including its former Australianlicensed responsible entity), and other related entities, and ROP and ROPsubsidiaries’ rights to and interests in, all related contracts and assets,including, without limitation, property management and leasing, constructionservices and asset management contracts and services contracts; (5) the director indirect interest of RARC in Reckson Asset Partners, LLC, an affiliate ofRSVP and all of ROP’s rights in and to certain loans made by ROP to FrontlineCapital Group, the bankrupt parent of RSVP, and other related entities, whichwill be purchased by a 50/50 joint venture with an affiliate of SL Green; (6) a50% participation interest in certain loans made by a subsidiary of ROP thatare secured by four real property assets located in Long Island, New York; and (7)100% of certain loans secured by real property located in White Plains and NewRochelle, New York.

As aresult of the substantial change in ownership from the Merger, SL Green hasrecorded the Merger in accordance with the provisions of Emerging Issues TaskForce Topic D-97, “Push-Down Accounting.” The effect of applying “push-downaccounting” was to restate the assets and liabilities of ROP to fair value inthe same manner as ROP’s assets and liabilities were recorded by SL Greensubsequent to the Merger (See Note 2).

6

----

 

As of March 31,2007, we owned the following interests in commercial office propertiesprimarily in midtown Manhattan, a borough of New York City, or Manhattan, aswell as Long Island City, Westchester County and Connecticut, which arecollectively known as the Suburban assets:
| **Location** | ** ** | **Ownership**           | ** ** | **Number of  Properties** | ** ** | **Square Feet** | ** ** | **Weighted Average  Occupancy **(1) | ** ** |
|--------------|------------|-------------------------|------------|--------------------------------|------------|----------------------|------------|-----------------------------------------------|------------|
| Manhattan    |       | Consolidated properties |       | 4                              |       | 3,770,000            |       | 98.6                                          | %          |
|         |       |                    |       |                           |       |                 |       |                                          |       |
| Suburban     |       | Consolidated properties |       | 19                             |       | 2,889,900            |       | 89.9                                          | %          |
|         |       |                    |       |                           |       |                 |       |                                          |       |
| Suburban     |       | Unconsolidated property |       | 1                              |       | 1,402,000            |       | 100.0                                         | %          |
|         |       |                    |       |                           |       |                 |       |                                          |       |
|         |       |                    |       | 24                             |       | 8,061,900            |       |                                          |       |

----

(1)             Theweighted average occupancy represents the total leased square feet divided bytotal available square feet.

#### **Basisof Quarterly Presentation**

The accompanyingconsolidated financial statements include the consolidated financial positionof ROP and the Service Companies (as defined below) at March 31, 2007(Successor) and December 31, 2006 (Predecessor) and the consolidated results oftheir operations for each of the periods January 26, 2007 to March 31, 2007(Successor), January 1, 2007 to January 25, 2007 (Predecessor) and the threemonths ended March 31, 2006 (Predecessor) and their cash flows for the periodsJanuary 26, 2007 to March 31, 2007 (Successor) and January 1,2007 to January 25, 2007 (Predecessor) and for the three months endedMarch 31, 2006 (Predecessor).  ROP’sinvestments in majority-owned and controlled real estate joint ventures arereflected in the accompanying financial statements on a consolidated basis witha reduction for the minority partners’ interests.  ROP investments in real estate jointventures, where it owns less than a controlling interest, are reflected in the accompanyingfinancial statements on the equity method of accounting.  The Service Companies, which providemanagement, development and construction services to ROP and to third parties,include Reckson Management Group, Inc., RANY Management Group, Inc., RecksonConstruction & Development LLC and Reckson Construction Group New York,Inc. (collectively, the “Service Companies”). All significant intercompany balances and transactions have beeneliminated in the consolidated financial statements.

The accompanying unaudited condensed consolidatedfinancial statements have been prepared in accordance with accountingprinciples generally accepted in the United States for interim financialinformation and with the instructions to Form 10-Q and Article 10 of RegulationS-X.  Accordingly, they do not includeall of the information and notes required by accounting principles generallyaccepted in the United States for complete financial statements.  In the opinion of management, all adjustments(consisting of normal recurring accruals) considered necessary for fairpresentation have been included.  The2007 operating results for the period presented are not necessarily indicativeof the results that may be expected for the year ending December 31, 2007.  These financial statements should be read inconjunction with the financial statements and accompanying notes included inour annual report on Form 10-K for the year ended December 31, 2006.

The balance sheet at December 31, 2006 has been derivedfrom the audited financial statements at that date but does not include all theinformation and footnotes required by accounting principles generally acceptedin the United States for complete financial statements.

The financial position as of December 31, 2006 and theresults of operations for the period from January 1, 2007 to January 25, 2007 (Predecessor)and for the three months ended March 31, 2006 (Predecessor), have been recordedbased on the historical values of the assets and liabilities of ROP prior tothe Merger.  The financial position as ofMarch 31, 2007 and the results of operations for the period from January 26,2007 to March 31, 2007 (Successor) have been recorded based on the fair valuesassigned to the assets and liabilities of ROP in connection with the Merger.  As such, the information presented may not becomparable.

**2.  Significant AccountingPolicies**

**Principles of Consolidation**

Theconsolidated financial statements include our accounts and those of oursubsidiaries, which are wholly-owned or controlled by us or entities which arevariable interest entities in which we are the primary beneficiary under theFinancial Accounting Standards Board, or FASB, Interpretation No. 46, or FIN46, “Consolidation of Variable Interest Entities - an Interpretation of ARB No.51,” and FIN 46, “Interpretation No. 46R, or FIN 46R.” Entities which we do notcontrol and entities which are variable interest entities, or VIEs, but wherewe are not the primary beneficiary are accounted for under the equitymethod.  We consolidate VIEs in which weare determined to be the primary beneficiary. The interest that we do not own is included in Minority Interest in OtherPartnerships on the balance sheet.  Allsignificant intercompany balances and transactions have been eliminated.

7

----

 

InJune 2005, the FASB ratified the consensus in EITF Issue No. 04-5, “DeterminingWhether a General Partner, or the General Partners as a Group, Controls aLimited Partnership or Similar Entity When the Limited Partners Have CertainRights,” which provides guidance in determining whether a general partnercontrols a limited partnership.  EITF04-5 states that the general partner in a limited partnership is presumed tocontrol that limited partnership.  Thepresumption may be overcome if the limited partners have either (1) thesubstantive ability to dissolve the limited partnership or otherwise remove thegeneral partner without cause or (2) substantive participating rights, whichprovide the limited partners with the ability to effectively participate insignificant decisions that would be expected to be made in the ordinary courseof the limited partnership’s and thereby preclude the general partner fromexercising unilateral control over the partnership.  Our adoption of EITF 04-5 did not have any effecton net income or partners’ capital.

**Investment in Commercial Real Estate Properties**

In accordance with SFAS No. 141, “BusinessCombinations,” we allocate the purchase price of real estate to land andbuilding and, if determined to be material, intangibles, such as the value ofabove, below and at-market leases and origination costs associated with thein-place leases.  We depreciate theamount allocated to building and other intangible assets over their estimateduseful lives, which generally range from three to 40 years.  The values of the above and below marketleases are amortized and recorded as either an increase (in the case of belowmarket leases) or a decrease (in the case of above market leases) to rentalincome over the remaining term of the associated lease.  The value associated with in-place leases andtenant relationships are amortized over the expected term of the relationship,which includes an estimated probability of the lease renewal, and its estimatedterm.  If a tenant vacates its spaceprior to the contractual termination of the lease and no rental payments arebeing made on the lease, any unamortized balance of the related intangible willbe written off.  The tenant improvementsand origination costs are amortized as an expense over the remaining life ofthe lease (or charged against earnings if the lease is terminated prior to itscontractual expiration date).  We assessfair value of the leases based on estimated cash flow projections that utilizeappropriate discount and capitalization rates and available marketinformation.  Estimates of future cashflows are based on a number of factors including the historical operatingresults, known trends, and market/economic conditions that may affect theproperty.

SL Green has not yet obtained all the informationnecessary to finalize its estimates to complete the purchase price allocationsin accordance with SFAS No. 141 related to our assets in connection with theMerger.  The purchase price allocationswill be finalized once the information we identified has been received, whichshould not be longer than one year from the date of acquisition.

**Finite Life Joint Venture Agreements**

In May 2003,the FASB issued SFAS No. 150, or SFAS No. 150, “Accounting for CertainFinancial Instruments with Characteristics of both Liabilities and Equity.”SFAS No. 150 establishes standards for classifying and measuring asliabilities certain financial instruments that embody obligations of the issuerand have characteristics of both liabilities and equity. We adopted StatementNo. 150 on July 1, 2003, which had no effect on our financialstatements. SFAS No. 150 also requires the disclosure of the estimatedsettlement values of non-controlling interests in joint ventures that havefinite lives.  Two of our consolidatedjoint ventures are subject to finite life joint venture agreements. Inaccordance with SFAS No. 150, we have estimated the settlement value of thesenon-controlling interests at March 31, 2007 and December 31, 2006 to beapproximately $94.2 million and $175.0 million, respectively. The carryingvalue of these non-controlling interests, which is included in minorityinterests in other partnerships on our consolidated balance sheets, wasapproximately $76.2 million and $134.3 million at March 31, 2007 andDecember 31, 2006, respectively.

**Income Taxes**

No provision hasbeen made for income taxes in the accompanying consolidated financialstatements since such taxes, if any, are the responsibility of the individualpartners.

**Earnings Per Unit**

Earningsper unit was not computed in 2007 as there were no outstanding common units atMarch 31, 2007.  Basic earnings per unit,or EPU, excludes dilution and is computed by dividing net income available tocommon unitholders by the weighted average number of common units outstandingduring the period. Basic EPU was $0.70 for the three months ended March 31,2006.

8

----

 

**Use of Estimates**

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States requires management to make estimatesand assumptions that affect the amounts reported in the financial statementsand accompanying notes. Actual results could differ from those estimates.

**Concentrations of Credit Risk**

Financial instruments that potentially subject us toconcentrations of credit risk consist primarily of cash investments, structuredfinance investments and accounts receivable. We place our cash investments in excess of insured amounts with highquality financial institutions.  Thecollateral securing our structured finance investments is primarily located inthe Greater New York area. See Note 4. We perform ongoing credit evaluations of our tenants and require certaintenants 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 ourbuildings operate in various industries. Other than two tenants who contributed approximately 7.0% and 7.4% of ourannualized rent, no other tenant in the portfolio contributed more than 3.8% ofour annualized rent, including our share of joint venture annualized rent, atMarch 31, 2007.  Approximately 15%, 16%,24% and 11% of our annualized rent, including our share of joint ventureannualized rent, was attributable to 810 Seventh Avenue, 919 Third Avenue, 1185Avenue of the Americas and 1350 Avenue of the Americas, respectively, for thequarter ended March 31, 2007.  Four borrowers accounted for more than10.0% of the revenue earned on structured finance investments during the threemonths ended March 31, 2007.

**Reclassification**

Certainprior year balances have been reclassified to conform with the current yearpresentation.

**NewAccounting Pronouncements**

In July 2006, the FASB issued InterpretationNo. 48, “Accounting forUncertainty in Income Taxes,” or FIN48. This interpretation, among other things, creates a two-step approach forevaluating uncertain tax positions. Recognition (step one) occurs when anenterprise concludes that a tax position, based solely on its technical merits,is more-likely-than-not to be sustained upon examination. Measurement (steptwo) determines the amount of benefit that more-likely-than-not will berealized upon settlement. Derecognition of a tax position that was previouslyrecognized would occur when a company subsequently determines that a taxposition no longer meets the more-likely-than-not threshold of being sustained.FIN 48 specifically prohibits the use of a valuation allowance as a substitutefor derecognition of tax positions, and it has expanded disclosurerequirements.  FIN 48 is effective forfiscal years beginning after December 15, 2006, in which the impact of adoptionshould be accounted for as a cumulative-effect adjustment to the beginningbalance of retained earnings. The adoption of FIN 48, did not have a materialimpact on our consolidated financial statements.

**3.  Property Dispositions**

On January 25,2007, we sold the interests in various properties as part of the Asset Sale forapproximately $2.0 billion, excluding closing costs.  Due to the application of “push-downaccounting,” no gain on sale was recognized. Simultaneous with the Merger, theproperties located at 120 West 45th Street, NY, and Landmark Square 1-6,Connecticut, were assigned by ROP to the operating partnership.

At March 31, 2007, discontinued operations includedthe results of operations of real estate assets sold prior to that date.  This included the assets sold as part of theAsset Sale.

9

----

The following table summarizes income fromdiscontinued operations (net of minority interest) and the related realizedgain on sale of discontinued operations (net of minority interest) for theperiod January 1, 2007 to January 25, 2007 (Predecessor) and the three monthsended March 31, 2006 (Predecessor) (in thousands).  No assets were considered as held for saleduring the Successor period.
| ** **                                                     | ** ** | **Period  January 1 to  January 25,** | ** ** | **Three Months  Ended  March 31,** | ** ** |
|----------------------------------------------------------------|------------|------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                     | ** ** | **2007**                                             | ** ** | **2006**                                     | ** ** |
| ** **                                                     | ** ** | **(Predecessor)**                                    | ** ** | **(Predecessor)**                            | ** ** |
| Revenues                                                       | ** ** | ** **                                           |       |                                         |       |
| Rental revenue                                                 | ** ** | **$**                                                | **14,344** | ** **                                   | $          | 50,864 |   |
| Escalation and  reimbursement revenues                         | ** ** | **346**                                              |       | 6,746                                        |       |
| Total revenues                                                 | ** ** | **14,690**                                           |       | 57,610                                       |       |
| Operating expense                                              | ** ** | **3,731**                                            |       | 14,164                                       |       |
| Real estate taxes                                              | ** ** | **2,658**                                            |       | 10,541                                       |       |
| Ground rent                                                    | ** ** | **134**                                              |       | 537                                          |       |
| Interest                                                       | ** ** | **465**                                              |       | 2,589                                        |       |
| Marketing, general and  administrative                         | ** ** | **1,150**                                            |       | 2,365                                        |       |
| Depreciation and  amortization                                 | ** ** | **3,524**                                            |       | 14,309                                       |       |
| Total expenses                                                 | ** ** | **11,662**                                           |       | 44,505                                       |       |
| Income from  discontinued operations                           | ** ** | **3,028**                                            |       | 13,105                                       |       |
| Gain on disposition of  discontinued operations                | ** ** | **—**                                           |       | 9,518                                        |       |
| Minority interest in  other partnerships                       | ** ** | **(508**                                             | )          | (358                                         | )          |
| Income from  discontinued operations, net of minority interest | ** ** | **$**                                                | **2,520**  |                                         | $          | 22,265 |   |

** **

**4.  Structured Finance Investments**

As of March 31, 2007 (Successor) and December 31,2006 (Predecessor), we held the following structured finance investments, withan aggregate weighted average current yield of approximately 12.99% (inthousands):
| **Loan  Type**        | ** ** | **Gross  Investment** | ** ** | **Senior  Financing** | ** ** | **2007  Principal  Outstanding** | ** ** | **2006  Principal  Outstanding** | ** **  | **Initial  Maturity  Date** | ** ** |
|-----------------------|------------|-----------------------|------------|-----------------------|------------|----------------------------------|------------|----------------------------------|-------------|-----------------------------|------------|
| Mezzanine  Loan(1)(2) |       | $                     | 55,250     |                  | $          | 225,000                          | ** ** | **$**                            | **58,485**  |                        | $          | 57,990 |   | December 2020 |   |
| Mezzanine Loan(1)     |       | 10,000                |       | 4,500                 | ** ** | **10,000**                       |       | 10,000                           |        | October 2007                |       |
| Mezzanine Loan(1)     |       | 30,000                |       | 91,500                | ** ** | **30,000**                       |       | 30,000                           |        | December 2007               |       |
| Mezzanine  Loan(1)(2) |       | 25,000                |       | 314,830               | ** ** | **26,723**                       |       | 26,389                           |        | November 2009               |       |
| Other Loan(1)         |       | 1,000                 |       | —                | ** ** | **1,000**                        |       | 1,000                            |        | January 2010                |       |
| Other Loan(1)         |       | 500                   |       | —                | ** ** | **500**                          |       | 500                              |        | December 2009               |       |
| Mezzanine Loan(1)     |       | 14,189                |       | 15,661                | ** ** | **9,938**                        |       | 14,188                           |        | April 2008                  |       |
| Mezzanine Loans(3)    |       | —                |       | —                | ** ** | **—**                       |       | 58,387                           |        | —                      |       |
|                  |       | $                     | 135,939    |                  | $          | 651,491                          | ** ** | **$**                            | **136,646** |                        | $          | 198,454 |   |   |   |

----

(1)             This is a fixed rateloan.

(2)             The differencebetween the pay and accrual rates is included as an addition to the principalbalance outstanding.

(3)             Theseloans have been aggregated and were sold as part of the Asset Sale.

At March 31, 2007 and December 31, 2006, all loanswere performing in accordance with the terms of the loan agreements.

**5.  Investments in Unconsolidated Joint Venture**

In May 2005, weacquired a 1.4 million square foot, 50-story, Class A office tower located atOne 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,subject to notice and the payment of early termination penalties. On November30, 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 CourtSquare JV requires approvals from members on certain decisions including annualbudgets, sale of the property, refinancing of the property’s mortgage debt and

10

----

materialrenovations to the property. In addition, after September 20, 2009 the memberseach have the right to recommend the sale of the property, subject to the termsof the mortgage debt, and to dissolve the Court Square JV. We have evaluatedthe impact 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 ofaccounting. We have also evaluated, under EITF 04-5, that the JPM Investors havesubstantive participating rights in the ordinary course of the Court Square JV’sbusiness.  In accordance with the equitymethod of accounting, our proportionate share of the Court Square JV income wasapproximately $0.2 million for the period January 26 to March 31, 2007(Successor), $8,000 for the period January 1 to January 25, 2007 (Predecessor) and$42,600 for the three months ended March 31, 2006 (Predecessor).

**6.  Mortgage Notes Payable**

Thefirst mortgage notes payable collateralized by the respective properties andassignment of leases at March 31, 2007 and December 31, 2006, respectively,were as follows (in thousands):
| **Property**                                       | ** ** | **Interest  Rate (1)** | ** ** | **Maturity Date** | ** ** | **2007**   | ** **  | **2006** | ** ** |
|----------------------------------------------------|------------|-----------------------------|------------|------------------------|------------|------------|-------------|----------|------------|
| 919 Third Avenue,  New York, NY(2)                 |       | 6.87                        | %          | 7/2018                 | ** ** | **$**      | **234,222** |     | $          | 235,113 |   |
| 100 Summit Road,  Westchester, NY                  |       | 8.50                        | %          | 4/2007                 | ** ** | **12,318** |        | 12,788   |       |
| 333 Earle  Ovington Blvd., Mitchel Field, NY(3)(6) |       | —                      |       | —                 | ** ** | **—** |        | 49,377   |       |
| 810 Seventh  Avenue, NY, NY(4)(6)                  |       | —                      |       | —                 | ** ** | **—** |        | 75,913   |       |
| 275 Broadhollow  Road, Melville, NY(4)(6)          |       | —                      |       | —                 | ** ** | **—** |        | 14,774   |       |
| 90 Merrick  Avenue, Merrick, NY(4)(6)              |       | —                      |       | —                 | ** ** | **—** |        | 18,123   |       |
| 711 Westchester  Avenue, White Plains, NY(5)(6)    |       | —                      |       | —                 | ** ** | **—** |        | 12,525   |       |
|                                               |       |                        |       |                   | ** ** | ** ** |        |     |       |
| Total mortgage notes  payable                      | ** ** | ** **                  |       |                   |       | **$**      | **246,540** |     | $          | 418,613 |   |

----

(1)             Effective interestrate for the three months ended March 31, 2007.

(2)             We own a 51% interestin the joint venture that is the borrower on this loan.  This loan is non-recourse to us. Weconsolidate this joint venture.

(3)             At December 31, 2006,we had a 60% general partnership interest in this property and ourproportionate share of the aggregate principal amount of the mortgage wasapproximately $29.6 million.

(4)             These mortgages werecross-collateralized.

(5)             This mortgage notewas interest only through January 2007 and then amortized over a 30-yearperiod.

(6)             Thesemortgages were satisfied or assigned in connection with the Merger and theAsset Sale.

At March 31, 2007, the gross book value of theproperties collateralizing the mortgage notes was approximately $1.2 billion.

For the period January 26, 2007 to March 31, 2007 (Successor), January 1,2007 to January 25, 2007 (Predecessor), and the three months ended March 31,2006 (Predecessor), we incurred approximately $14.5 million, $6.8 million and$26.5 million of interest expense, respectively, excluding interest which wascapitalized of approximately none, none and $3.1 million, respectively.

At March 31, 2007,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.

**7.  Corporate Indebtedness**

**UnsecuredRevolving Credit Facility**As of December 31, 2006, we maintained a $500 million unsecured revolving creditfacility, or the Credit Facility.  TheCredit Facility was scheduled to mature in August 2008. Borrowings under theCredit Facility accrued interest at a rate of LIBOR plus 80 basis points andthe Credit Facility carried a facility fee of 20 basis points per annum.  At December 31, 2006, the outstandingborrowings under the Credit Facility aggregated $269.0 million, and carried aweighted average interest rate of 6.14% per annum.

During January2007, we incurred a net increase of $12.0 million in borrowings under theCredit Facility primarily for costs incurred or to be incurred pursuant to theMerger.  Upon the closing of the Mergeron January 25, 2007, the aggregate balance of $281.0 million outstanding underthe Credit Facility, together with accrued and unpaid interest, was repaid andthe Credit Facility was terminated.

11

----

**SeniorUnsecured Notes**As of March 31, 2007, we had outstanding approximately $1.26 billion (net ofunamortized issuance discounts) of senior unsecured notes.

Thefollowing table sets forth our senior unsecured notes and other relateddisclosures by scheduled maturity date (in thousands):
| **Issuance**         | ** ** | **Face Amount** | ** ** | **Coupon Rate** | ** ** | **Term  (in Years)** | ** ** | **Maturity**     | ** **    |
|----------------------|------------|----------------------|------------|----------------------|------------|---------------------------|------------|------------------|---------------|
| June 17, 2002 (1)    |       | $                    | 50,000     |                 | 6.00       | %                         | 5          |             | June 15, 2007 |   |
| August 27, 1997  (1) |       | 150,000              |       | 7.20                 | %          | 10                        |       | August 28, 2007  |          |
| March 26, 1999       |       | 200,000              |       | 7.75                 | %          | 10                        |       | March 15, 2009   |          |
| January 22, 2004     |       | 150,000              |       | 5.15                 | %          | 7                         |       | January 15, 2011 |          |
| August 13, 2004      |       | 150,000              |       | 5.875                | %          | 10                        |       | August 15, 2014  |          |
| March 31, 2006       |       | 275,000              |       | 6.00                 | %          | 10                        |       | March 31, 2016   |          |
| June 27, 2005 (2)    |       | 287,500              |       | 4.00                 | %          | 20                        |       | June 15, 2025    |          |
|                 |       | $                    | 1,262,500  |                 |       |                      |       |             |          |   |

----

(1)             These notes wereredeemed on April 27, 2007.

(2)             Exchangeablesenior 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 June15, 2010, 2015 and 2020 and upon the occurrence of certain change of controltransactions.  As a result of the Merger,the adjusted exchange rate for the debentures is 7.7461 shares of SL Green commonstock per $1,000 of principal amount of debentures and the adjusted referencedividend for the debentures is $1.3491.

Interest on the senior unsecured notes is payablesemi-annually with principal and unpaid interest due on the scheduled maturitydates. In addition, certain of the senior unsecured notes were issued atdiscounts aggregating approximately $6.1 million.  Such discounts are being amortized tointerest expense over the term of the senior unsecured notes to which theyrelate.  Through March 31, 2007,approximately $0.4 million of the aggregate discounts have been amortized.

**RestrictiveCovenants**The terms of the senior unsecured notes include certain restrictions andcovenants which limit, among other things, the incurrence of additionalindebtedness and liens, and which require compliance with financial ratiosrelating to the minimum amount of debt service coverage, the maximum amount ofconsolidated unsecured and secured indebtedness and the minimum amount ofunencumbered assets.  As of March 31,2007 and December 31, 2006, we were in compliance with all such covenants.

**PrincipalMaturities**Combined aggregate principal maturities of mortgages and notes payable, senior unsecurednotes and our share of joint venture debt as of March 31, 2007, excludingextension options, were as follows (in thousands):
| ** **     | ** ** | **Scheduled  Amortization** | ** ** | **Principal  Repayments** | ** ** | **Unsecured Notes** | ** ** | **Total** | ** **    | **Joint Venture Debt** | ** ** |
|----------------|------------|-----------------------------|------------|---------------------------|------------|--------------------------|------------|-----------|---------------|----------------------------------|------------|
| **2007**       | ** ** | $                           | 2,542      |                      | $          | 12,318                   |       | $         | 200,000       |                             | $          | 214,860 |   | **—** | ** ** |
| **2008**       |       | 3,634                       |       | —                    |       | —                   |       | 3,634     | ** **    | **—**                       | ** ** |
| **2009**       |       | 3,942                       |       | —                    |       | 200,000                  |       | 203,942   | ** **    | **—**                       | ** ** |
| **2010**       |       | 4,225                       |       | —                    |       | —                   |       | 4,225     | ** **    | **—**                       | ** ** |
| **2011**       |       | 3,222                       |       | 216,657                   |       | 150,000                  |       | 369,879   | ** **    | **—**                       | ** ** |
| **Thereafter** |       | —                      |       | —                    |       | 706,725                  |       | 706,725   | ** **    | **94,500**                       | ** ** |
| ** **     | ** ** | **$**                       | **17,565** | ** **                | **$**      | **228,975**              | ** ** | **$**     | **1,256,725** | ** **                       | **$**      | **1,503,265** | ** ** | **$** | **94,500** | ** ** |
|                |            |                             |            |                           |            |                          |            |           |               |                                  |            |  |  |  |  |  |

 

12

----

**8.  Rental Income**

We arethe lessor and the sublessor to tenants under operating leases with expirationdates ranging from April 1, 2007 to 2037. The minimum rental amounts due under the leases are generally eithersubject to scheduled fixed increases or adjustments.  The leases generally also require that thetenants reimburse us for increases in certain operating costs and real estatetaxes above their base year costs. Approximate future minimum rents to be received over the next five yearsand thereafter for non-cancelable operating leases in effect at March 31, 2007for the consolidated properties, including our consolidated joint ventureproperties, and our share of our unconsolidated joint venture property are asfollows (in thousands):
| ** ** | ** ** | **Consolidated  Properties** | ** ** | **Unconsolidated  Joint Venture  Property** | ** ** |
|------------|------------|------------------------------|------------|--------------------------------------------------|------------|
| 2007       |       | $                            | 179,044    |                                             | $          | 6,973 |   |
| 2008       |       | 233,614                      |       | 9,358                                            |       |
| 2009       |       | 229,307                      |       | 9,442                                            |       |
| 2010       |       | 213,547                      |       | 9,527                                            |       |
| 2011       |       | 195,484                      |       | 7,690                                            |       |
| Thereafter |       | 1,302,138                    |       | 54,016                                           |       |
|       |       | $                            | 2,353,134  |                                             | $          | 97,006 |   |

** **

**9.  Partners’ Capital**

Prior to theMerger, a Class A OP Unit and a share of common stock of RARC had similareconomic characteristics as they effectively share equally in the net income orloss and distributions of ROP.  As ofMarch 31, 2007, all of our issued and outstanding Class A OP Units were ownedby RARC or the operating partnership.

As of December 31,2006, we had issued and outstanding 1,200 preferred units of limitedpartnership interest with a liquidation preference value of $1,000 per unit anda stated distribution rate of 7.0%, or Preferred Units, 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.

**Net income per common partnershipunit is determined by allocating net income after preferred distributions andminority partners’ interest in consolidated partnerships income to the generaland limited partners based on their weighted average distribution per commonpartnership units outstanding during the respective periods presented.**

Holders ofpreferred units of limited and general partnership interest were entitled todistributions based on the stated rates of return (subject to adjustment) forthose units.

Prior to theMerger, RARC maintained a long term incentive program, or LTIP. With respect tothe LTIP units and the restricted equity awards, RARC recorded compensationexpense which has been included in marketing, general and administrativeexpenses on the accompanying consolidated statements of operations. As ofDecember 31, 2006, RARC had accrued approximately $33.7 million of compensationexpense with respect to the special outperformance pool. These costs were includedin accounts payable and accrued expenses on the balance sheet atDecember 31, 2006. During January 2007, in connection with the Merger,RARC paid, in cash, approximately $35.5 million to the participants of thespecial outperformance pool of which $1.8 million was expensed during theperiod January 1, 2007 to January 25, 2007 (Predecessor).

13

----

On January 25,2007, in connection with the Merger, certain former executive officers of RARCwaived approximately 443,000 of their LTIP Units.  The remaining balance of LTIP Units,regardless of their vesting status, were deemed earned.

**10.  Commitments and Contingencies**

We arenot presently involved in any material litigation nor, to our knowledge, is anymaterial litigation 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.

Ourproperty located at 810 7th Avenue, New York, NY is subject to certain airrights lease agreements.  These leaseagreements have terms expiring in 2044 and 2048, including renewal options.

Thefollowing is a schedule of future minimum lease payments under capitalleases and noncancellable operating leases with initial terms in excess of oneyear as of March 31, 2007 (in thousands):
| ** **                    | ** ** | **Air Rights** | ** ** | **Non-cancellable  operating leases** | ** ** |
|-------------------------------|------------|---------------------|------------|--------------------------------------------|------------|
|                          |       |                |       |                                       |       |
| 2007                          |       | $                   | 21         |                                       | $          | 7,356 |   |
| 2008                          |       | 29                  |       | 9,524                                      |       |
| 2009                          |       | 29                  |       | 9,524                                      |       |
| 2010                          |       | 29                  |       | 9,083                                      |       |
| 2011                          |       | 29                  |       | 7,109                                      |       |
| Thereafter                    |       | 213                 |       | 221,466                                    |       |
| Total minimum  lease payments |       | $                   | 350        |                                       | $          | 264,062 |   |

 

**11.  Environmental Matters**

Ourmanagement believes that the properties are in compliance in all materialrespects with applicable Federal, state and local ordinances and regulationsregarding environmental issues. Management is not aware of any environmental liability that it believeswould have a materially adverse impact on our financial position, results ofoperations or cash flows.  Management isunaware of any instances in which it would incur significant environmental costif any of our properties were sold.

**12.  Segment Information**

We areengaged in owning, managing and leasing commercial office properties inManhattan, Westchester County, Connecticut and Long Island City and have tworeportable segments, real estate and structured finance investments.  We evaluate real estate performance andallocate resources based on earnings contribution to income from continuingoperations.

Ourreal estate portfolio is primarily located in the geographical markets ofManhattan, Westchester County, Connecticut and Long Island City.  The primary sources of revenue are generatedfrom 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.

14

----

** **

Selected results ofoperations for the period January 26, 2007 to March 31, 2007 (Successor),January 1, 2007 to January 25, 2007 (Predecessor) and the three months endedMarch 31, 2006 (Predecessor), and selected asset information as of March 31,2007 and December 31, 2006, regarding our operating segments are as follows (inthousands):

|                                                                                                                | ** ** | **Real  Estate  Segment** | ** ** | **Structured  Finance  Segment** | ** ** | **Total  Company** | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|---------------------------|------------|----------------------------------|------------|--------------------|------------|
| Total revenues                                                                                                 |       |                      |       |                             |       |               |       |
| January 26 to  March 31, 2007 (Successor)                                                                      |       | $                         | 56,415     |                             | $          | 3,451              |       | $ | 59,866 |   |
| January 1 to  January 25, 2007 (Predecessor)                                                                   |       | 25,549                    |       | 1,201                            |       | 26,750             |       |
| Three months  ended March 31, 2006 (Predecessor)                                                               |       | 91,822                    |       | 5,606                            |       | 97,428             |       |
|                                                                                                           |       |                      |       |                             |       |               |       |
| Income (loss) from  continuing operations before minority interest, gain on sale and discontinued  operations: |       |                      |       |                             |       |               |       |
| January 26 to  March 31, 2007 (Successor)                                                                      |       | $                         | 5,220      |                             | $          | 1,865              |       | $ | 7,085 |   |
| January 1 to  January 25, 2007 (Predecessor)                                                                   |       | (12,422                   | )          | 464                              |       | (11,958            | )          |
| Three months  ended March 31, 2006 (Predecessor)                                                               |       | 2,471                     |       | 3,162                            |       | 5,633              |       |
|                                                                                                           |       |                      |       |                             |       |               |       |
| Total assets                                                                                                   |       |                      |       |                             |       |               |       |
| As of:                                                                                                         |       |                      |       |                             |       |               |       |
| March 31, 2007  (Successor)                                                                                    |       | $                         | 3,883,354  |                             | $          | 136,646            |       | $ | 4,020,000 |   |
| December 31, 2006  (Predecessor)                                                                               |       | 3,548,377                 |       | 198,454                          |       | 3,746,831          |       |

 

Incomefrom continuing operations represents total revenues less total expenses forthe real estate segment and total investment income less allocated interestexpense for the structured finance segment. Interest costs for the structured finance segment are imputed assuming100% leverage at SL Green’s unsecured revolving credit facility borrowingcost.  We do not allocate marketing,general and administrative expenses to the structured finance segment, since webase performance on the individual segments prior to allocating marketing,general and administrative expenses.  Allother expenses, except interest, relate entirely to the real estateassets.  There were no transactionsbetween the above two segments.

The table below reconciles income from continuing operations beforeminority interest to net income available to common unitholders for the periodJanuary 26, 2007 to March 31, 2007 (Successor), January 1, 2007 to January 25,2007 (Predecessor) and for the three months ended March 31, 2006 (Predecessor) (inthousands):

|                                                                                                               | ** ** | **January 26 to  March 31,** | ** ** | **January 1 to  January 25,** | ** ** | **Three months  Ended  March 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                                                                    | ** ** | **2007**                                    | ** ** | **2007**                                     | ** ** | **2006**                                     | ** ** |
| ** **                                                                                                    | ** ** | **(Successor)**                             | ** ** | **(Predecessor)**                            | ** ** | **(Predecessor)**                            | ** ** |
| Income (loss) from  continuing operations before minority interest, gain on sale and discontinued  operations |       | $                                           | 7,085      |                                         | $          | (11,958                                      | )          | $ | 5,633 |   |
| Gain on sale of real  estate                                                                                  |       | —                                      |       | —                                       |       | 35,393                                       |       |
| Minority interest in  other partnerships                                                                      |       | (881                                        | )          | (1,665                                       | )          | (4,109                                       | )          |
| Income from  continuing operations                                                                            |       | 6,204                                       |       | (13,623                                      | )          | 36,917                                       |       |
| Net income/ gains from  discontinued operations                                                               |       | —                                      |       | 2,520                                        |       | 22,265                                       |       |
| Net income (loss) available  to common unitholders                                                            |       | $                                           | 6,204      |                                         | $          | (11,103                                      | )          | $ | 59,182 |   |

 

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

A summary of our non-cash investing and financingactivities for the three months ended March 31, 2007 and 2006 is presentedbelow (in thousands):

|                                                                                                                           | ** ** | **Three months Ended  March 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                                                                | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Redemption of preferred  units                                                                                            | ** ** | $                                                | 1,200      |   | $ | — |   |
| Transfer of real estate  to the operating partnership                                                                     |       | 608,222                                          |       | — |   |
| Adjustments to fair  value of real estate, investment in unconsolidated joint venture and structured  finance investments |       | (3,131,606                                       | )          | — |   |
| Adjustments to  contributed capital                                                                                       |       | 2,327,290                                        |       | — |   |
| Other non-cash-financing                                                                                                  |       | 92,017                                           |       | — |   |
| Other non-cash  adjustments-investing                                                                                     |       | 104,077                                          |       | — |   |
|                                                                                                                           |            |                                                  |            |  |  |  |  |

 

15

----

 

**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.  Reckson Associates Realty Corp., or RARC, isthe sole general partner of ROP.  RARC isa wholly-owned subsidiary of SL Green Realty Corp., or SL Green.  The sole limited partner of ROP is SL GreenOperating Partnership, L.P., or the operating partnership.**

**As of March 31, 2007, ROP wasengaged in the ownership, management, operation, acquisition, leasing,financing and development of commercial real estate properties, principallyoffice and also owned land for future development located in the New York City,Westchester and Connecticut which collectively is also known as the Greater NewYork Area. At March 31, 2007, our inventory of development parcels aggregated  approximately 81 acres of land in 4 separateparcels on which we can, based on estimates at March 31, 2007, developapproximatley 1.1 milion square feet of office space and in which we hadinvested approximately $63.8 million. In addition, ROP also held approximately$136.6 million of structured finance investments.**

On January 25,2007, SL Green completed the acquisition of all of the outstanding shares ofcommon stock of RARC pursuant to the terms of the Agreement and Plan of Merger,dated as 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. Pursuant to the terms of the MergerAgreement, each of the issued and outstanding shares of common stock of RARCwere converted into (i) $31.68 in cash, (ii) 0.10387 of a share of the commonstock, par value $0.01 per share, of SL Green and (iii) a pro-rated dividend inan amount equal to approximately $0.0977 in cash. We also assumed an aggregateof approximately $226.3 million of ROP mortgage debt, approximately $287.5million of ROP convertible public debt and approximately $967.8 million of ROPpublic unsecured notes. This transaction is referred to herein as the Merger.

OnJanuary 25, 2007, SL Green completed the sale, or Asset Sale, of certain assetsof ROP to an investment group led by certain of Reckson’s former executivemanagement, or the Buyer, for a total consideration of approximately $2.0 billion.SL Green caused ROP to transfer the following assets to the Buyer in the AssetSale: (1) certain real property assets and/or entities owning such realproperty assets, in either case, of ROP and 100% of certain loans secured byreal property, all of which are located in Long Island, New York; (2) certainreal property assets and/or entities owning such real property assets, ineither case, of ROP located in White Plains and Harrison, New York; (3) all ofthe real property assets and/or entities owning 100% of the interests in suchreal property assets, in either case, of ROP located in New Jersey; (4) theentity owning a 25% interest in Reckson Australia Operating Company LLC, RARC’sformer Australian management company (including its former Australian licensedresponsible entity), and other related entities, and ROP and ROP subsidiaries’rights to and interests in, all related contracts and assets, including,without limitation, property management and leasing, construction services andasset management contracts and services contracts; (5) the direct or indirectinterest of RARC in Reckson Asset Partners, LLC, an affiliate of RSVP and allof ROP’s rights in and to certain loans made by ROP to Frontline Capital Group,the bankrupt parent of RSVP, and other related entities, which will bepurchased by a 50/50 joint venture with an affiliate of SL Green; (6) a 50%participation interest in certain loans made by a subsidiary of ROP that aresecured by four real property assets located in Long Island, New York; and (7)100% of certain loans secured by real property located in White Plains and NewRochelle, New York.

Thefollowing discussion related to our consolidated financial statements should beread in conjunction with the financial statements appearing in this report andin Item 8 of our Annual Report on Form 10-K for the year ended December 31,2006.

As aresult of the substantial change in ownership from the Merger, SL Green hasrecorded the Merger in accordance with the provisions of Emerging Issues TaskForce Topic D-97, “Push-Down Accounting.” The effect of applying “push-down accounting” is to restate the assetsand liabilities of ROP to fair value in the same manner as ROP’s assets andliabilities were recorded by SL Green subsequent to the Merger.

SL Green has not yet obtained all the information necessary to finalizeits estimates to complete the purchase price allocations in accordance withSFAS No. 141 related to our assets in connection with the Merger.  The purchase price allocations will befinalized once the information we identified has been received, which shouldnot be longer than one year from the date of acquisition.

As of March 31,2007, we owned the following interests in commercial office properties primarilyin midtown Manhattan, a borough of New York City, or Manhattan, as well as LongIsland City, Westchester County, and Connecticut which are collectively knownas the Suburban assets:

 

| Location  | ** ** | **Ownership**           | ** ** | **Number of  Properties** | ** ** | **Square Feet** | ** ** | **Weighted Average   Occupancy **(1) | ** ** |
|-----------|------------|-------------------------|------------|--------------------------------|------------|----------------------|------------|-----------------------------------------------------|------------|
| Manhattan |       | Consolidated properties |       | 4                              |       | 3,770,000            |       | 98.6                                                | %          |
|      |       |                    |       |                           |       |                 |       |                                                |       |
| Suburban  |       | Consolidated properties |       | 19                             |       | 2,889,900            |       | 89.9                                                | %          |
|      |       |                    |       |                           |       |                 |       |                                                |       |
| Suburban  |       | Unconsolidated property |       | 1                              |       | 1,402,000            |       | 100.0                                               | %          |
|      |       |                    |       | 24                             |       | 8,061,900            |       |                                                |       |

----

(1)     The weighted average occupancyrepresents the total leased square feet divided by total available square feet.

 

16

----

** **

**Critical Accounting Policies**

Referto our 2006 Annual Report on Form 10-K for a discussion of our criticalaccounting policies, which include rental property, investment inunconsolidated joint ventures, revenue recognition, allowance for doubtfulaccounts, reserve for possible credit losses and derivative instruments.  There have been no material changes to thesepolicies in 2007.

**Resultsof Operations**

***Comparison of the three months ended March31, 2007 to the three months ended March 31, 2006***

Comparisons discussed below are made using thecombined operations of the Predecessor and Successor for 2007 as compared tothe Predecessor’s operations for the same period in 2006.  The results of operations may not becomparable for the periods presented due to the change in the basis ofaccounting between the Successor and Predecessor periods resulting from theapplication of “push-down accounting.” The results of operations for 2006include 120 West 45th Street and Landmark Square 1-6. In connection with theMerger, these properties were transferred to the operating partnership and aretherefore not included in the Successor period results of operations.

 

| Rental Revenues (in millions) | ** ** | **2007** | ** ** | **2006** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|----------------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Rental revenue                               |       | $        | 68.5       |     | $          | 67.3          |       | $             | 1.2        |   | 1.8 | % |
| Escalation and  reimbursement revenue        |       | 13.4     |       | 12.3     |       | 1.1           |       | 8.9           |       |
| Total                                        |       | $        | 81.9       |     | $          | 79.6          |       | $             | 2.3        |   | 2.9 | % |

 

At March 31, 2007, we estimated that the currentmarket rents on our consolidated Manhattan properties and consolidated Suburbanassets were approximately 39.0% and 14.8% higher, respectively, than thenexisting in-place fully escalated rents. Approximately 5.6% of the space leased at our consolidated propertiesexpires during the remainder of 2007.

 

| Investment and Other Income (in millions) | ** ** | **2007** | ** ** | **2006** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|--------------------------------------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Equity in net income of  unconsolidated joint ventures             |       | $        | 0.2        |     | $          | 0.4           |       | $             | (0.2       | ) | (50.0 | )% |
| Investment and other  income                                       |       | 4.7      |       | 17.8     |       | (13.1         | )          | (73.6         | )          |
| Total                                                              |       | $        | 4.9        |     | $          | 18.2          |       | $             | (13.3      | ) | (73.1 | )% |

 

The decrease in equity in net income ofunconsolidated joint venture was primarily due to lower net income contributionfrom One Court Square resulting from additional depreciation expense.  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 March31, 2007, we estimated that current market rents at our Suburban joint venture assetwas approximately 11.0% higher than then existing in-place fully escalatedrents.

The decrease in investment and other income wasprimarily due to the sale in 2006 of our option to acquire the minority partner’s40% partnership interest in a property for net consideration of approximately$9.0 million.

 

| Property Operating Expenses (in millions) | ** ** | **2007** | ** ** | **2006** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|---------------------------------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Operating expenses                                            |       | $        | 20.0       |     | $          | 19.7          |       | $             | 0.3        |   | 1.5 | % |
| Real estate taxes                                             |       | 14.5     |       | 14.0     |       | 0.5           |       | 3.6           |       |
| Ground rent                                                   |       | 2.6      |       | 2.1      |       | 0.5           |       | 23.8          |       |
| Total                                                         |       | $        | 37.1       |     | $          | 35.8          |       | $             | 1.3        |   | 3.6 | % |

 

17

----

 

Operating expenses remained comparable to the sameperiod in the prior year.

 

| Other Expenses (in millions)    | ** ** | **2007** | ** ** | **2006** | ** ** | **$  Change** | ** ** | **%  Change** | ** ** |
|------------------------------------------------|------------|----------|------------|----------|------------|---------------|------------|---------------|------------|
| Interest expense                               |       | $        | 21.3       |     | $          | 26.5          |       | $             | (5.2       | ) | (19.6 | )% |
| Depreciation and  amortization expense         |       | 19.2     |       | 19.0     |       | 0.2           |       | 1.1           |       |
| Marketing, general and  administrative expense |       | 14.2     |       | 10.8     |       | 3.4           |       | 31.5          |       |
| Total                                          |       | $        | 54.7       |     | $          | 56.3          |       | $             | (1.6       | ) | (2.8 | )% |

 

The decrease in interest expense is due to mortgagedebt on certain properties being repaid after March 31, 2006 and thoseproperties remaining unencumbered.

The increase in marketing, general andadministrative expenses is primarily due to SL Green’s policy of not allocatingcorporate costs to the properties. The Predecessor 2007 period includesapproximately $8.8 million related to merger costs.

**Liquidityand Capital Resources**

We currently expect thatour principal sources of funds to meet our short-term and long-term liquidityrequirements and (working capital, property operations, debt service,redevelopment of properties, tenant improvements and leasing costs) willinclude cash flow from operations and net proceeds from divestitures ofproperties and redemptions of structured finance investments.

Cash flow from operationsis primarily dependent upon the occupancy level of our portfolio, the neteffective rental rates achieved on our leases, the collectibility of rent andoperating escalations and recoveries from our tenants and the level ofoperating and other costs.

We believe that oursources of working capital specifically our cash flow from operations, areadequate for us to meet our short-term and long-term liquidity requirements forthe foreseeable future.

On January 25, 2007, wewere acquired by SL Green. See Item 2 “Management’s Discussion andAnalysis — Liquidity and Capital Resources” in SL Green’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2007 for a complete discussion ofadditional sources of liquidity available to us due to our indirect ownershipby SL Green.

#### **Cash Flows**

**Thefollowing summary discussion of our cash flows is based on our condensedconsolidated statements of cash flows in “Item 1. Financial Statements” and isnot meant to be an all-inclusive discussion of the changes in our cash flowsfor the periods presented below.**

For purposes of this cash flow analysis, the cash flows for the periodfrom January 1, 2007 to January 25, 2007 (Predecessor), the date of the Merger,have been combined with the cash flows for the period January 26, 2007 to March31, 2007 (Successor) to provide a reasonable comparison to the cash flows forthe three months ended March 31, 2006 (Predecessor).  Summarized cash flow information for the threemonths ended March 31, 2007and 2006 are as follows (in thousands):

|                                            | ** ** | **Three months ended March 31,** | ** ** |
|--------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                 | ** ** | **2007**                                             | ** ** | **2006** | ** ** | **Increase  (Decrease)** | ** ** |
|                                       |       |                                                 |       |   |   |   |   |
| Net cash provided by operating  activities |       | $                                                    | 40,993     |   | $ | 25,215 |   | $ | 15,778 |   |
| Net cash provided by investing  activities |       | $                                                    | 1,969,280  |   | $ | 74,757 |   | $ | 1,894,523 |   |
| Net cash used in financing activities      |       | $                                                    | (2,041,853 | ) | $ | (78,059 | ) | $ | (1,963,794 | ) |

 

**Ourprincipal source of operating cash flow is related to the leasing and operatingof the properties in our portfolio. Our properties provide a relativelyconsistent stream of cash flow that provides us with resources to pay operatingexpenses, debt service and fund quarterly dividend and distribution paymentrequirements. At March 31, 2007, our portfolio was 93.2% occupied. In addition,rental rates continue to increase and tenant concession packages decrease inthe Manhattan and Suburban marketplaces. Our structured finance and jointventure investments also provide a steady stream of operating cash flow to us.**

18

----

 

**Cash is used in investing activities to fundacquisitions, redevelopment projects and recurring and nonrecurring capitalexpenditures. We selectively invest in existing buildings that meet ourinvestment criteria. During the three months ended March 31, 2007 compared tothe same period in the prior year, we generated cash primarily from thefollowing investing activities (in thousands):**
| Capital expenditures  and capitalized interest |   | $         | 7,109  |   |
|------------------------------------------------|--------|-----------|--------|--------|
| Distributions from  joint ventures             |   | 3,757     |   |
| Proceeds from sales of  real estate            |   | (97,054   | )      |
| Structured finance and  other investments      |   | 1,947     |   |
| Proceeds from Asset Sale                       |   | 1,978,764 |   |

** **

**We generally fund our investment activity throughproperty-level financing and asset sales. During the three months ended March31, 2007 compared to the same period in the prior year, the following financingactivities used the funds generated by the investing activity noted above (inthousands):**
| Proceeds from our debt  obligations          |   | $          | (525,819 | ) |
|----------------------------------------------|--------|------------|----------|---|
| Repayments under our  debt obligations       |   | 125,728    |     |
| Contributions                                |   | 32,702     |     |
| Distributions and other financing activities |   | (1,596,405 | )        |

** **

**Capitalization**

Prior to theMerger, a Class A OP Unit and a share of common stock of RARC had similareconomic characteristics as they effectively share equally in the net income orloss and distributions of ROP.  As ofMarch 31, 2007, all of our issued and outstanding Class A OP Units were ownedby RARC or the operating partnership.

As of December 31,2006, we had issued and outstanding 1,200 preferred units of limitedpartnership interest with a liquidation preference value of $1,000 per unit anda stated distribution rate of 7.0%, or Preferred Units, 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.

**Net income per common partnershipunit for the three months ended March 31, 2006 was determined byallocating net income after preferred distributions and minority partners’interest in consolidated partnerships income to the general and limitedpartners based on their weighted average distribution per common partnershipunits outstanding during the respective periods presented.**

Holders ofpreferred units of limited and general partnership interest were entitled todistributions based on the stated rates of return (subject to adjustment) forthose units.

**ContractualObligations**

Combinedaggregate principal maturities of mortgages payable and senior unsecured notes,our share of joint venture debt, excluding extension options, estimatedinterest expense, and our obligations under our air rights and ground leases,as of March 31, 2007 are as follows (in thousands):
| ** **                  | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **Thereafter** | ** ** | **Total** | ** ** |
|-----------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|
| Property  Mortgages         |       | $        | 14,860     |     | $          | 3,634    |       | $        | 3,942      |     | $          | 4,225          |       | $         | 219,879    |   | $ | — |   | $ | 246,540 |   |
| Senior unsecured  notes     |       | 200,000  |       | —   |       | 200,000  |       | —   |       | 150,000  |       | 706,725        |       | 1,256,725 |       |
| Ground leases               |       | 7,356    |       | 9,524    |       | 9,524    |       | 9,083    |       | 7,109    |       | 221,466        |       | 264,062   |       |
| Air rights                  |       | 21       |       | 29       |       | 29       |       | 29       |       | 29       |       | 213            |       | 350       |       |
| Estimated  interest expense |       | 83,171   |       | 76,059   |       | 68,049   |       | 60,018   |       | 48,458   |       | 254,362        |       | 590,117   |       |
| Joint venture  debt         |       | —   |       | —   |       | —   |       | —   |       | —   |       | 94,500         |       | 94,500    |       |
| Total                       |       | $        | 305,408    |     | $          | 89,246   |       | $        | 281,544    |     | $          | 73,355         |       | $         | 425,475    |   | $ | 1,277,266 |   | $ | 2,452,294 |   |

 

19

----

 

**Corporate Indebtedness**

#### **Unsecured Revolving Credit Facility**

As of December 31,2006 we maintained a $500 million unsecured revolving credit facility, or theCredit Facility.  The Credit Facility wasscheduled to mature in August 2008.  AtDecember 31, 2006, the outstanding borrowings under the Credit Facilityaggregated $269.0 million and carried a weighted average interest rate of 6.14%per annum. In connection with the Merger on January 25, 2007, this CreditFacility was repaid and terminated.

**Senior Unsecured Notes**

As ofMarch 31, 2007, we had outstanding approximately $1.26 billion (net ofunamortized issuance discounts) of senior unsecured notes.

Thefollowing table sets forth our senior unsecured notes and other relateddisclosures by scheduled maturity date (in thousands):
| **Issuance**       | ** ** | **Face Amount** | ** ** | **Coupon Rate** | ** ** | **Term  (in Years)** | ** ** | **Maturity**     | ** ** |
|--------------------|------------|----------------------|------------|----------------------|------------|---------------------------|------------|------------------|------------|
| June 17, 2002(1)   |       | 50,000               |       | 6.00                 | %          | 5                         |       | June 15, 2007    |       |
| August 27, 1997(1) |       | 150,000              |       | 7.20                 | %          | 10                        |       | August 28, 2007  |       |
| March 26, 1999     |       | 200,000              |       | 7.75                 | %          | 10                        |       | March 15, 2009   |       |
| January 22, 2004   |       | 150,000              |       | 5.15                 | %          | 7                         |       | January 15, 2011 |       |
| August 13, 2004    |       | 150,000              |       | 5.875                | %          | 10                        |       | August 15, 2014  |       |
| March 31, 2006     |       | 275,000              |       | 6.00                 | %          | 10                        |       | March 31, 2016   |       |
| June 27, 2005(2)   |       | 287,500              |       | 4.00                 | %          | 20                        |       | June 15, 2025    |       |
|               | ** ** | $                    | 1,262,500  |                 |       | ** **                |       |             |       |   |
|                    |            |                      |            |                      |            |                           |            |                  |            |  |

----

(1)             These notes wereredeemed on April 27, 2007.

(2)             Exchangeablesenior 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 June15, 2010, 2015 and 2020 and upon the occurrence of certain change of controltransactions.  As a result of the Merger,the adjusted exchange rate for the debentures is 7.7461 shares of SL Green commonstock per $1,000 of principal amount of debentures and the adjusted referencedividend for the debentures is $1.3491.

Interest on the senior unsecured notes is payablesemiannually with principal and unpaid interest due on the scheduled maturitydates.  In addition, certain of thesenior unsecured notes were issued at discounts aggregating approximately $6.1million.  Such discounts are beingamortized to interest expense over the term of the senior unsecured notes towhich they relate.  Through March 31,2007, approximately $0.4 million of the aggregate discounts have beenamortized.

**RestrictiveCovenants**

The terms of our senior unsecured notes include certain restrictionsand covenants which limit, among other things, the incurrence of additionalindebtedness and liens, and which require compliance with financial ratiosrelating to the minimum amount of debt service coverage, the maximum amount ofconsolidated unsecured and secured indebtedness and the minimum amount ofunencumbered assets.  As of March 31,2007 and December 31, 2006, we were in compliance with all such covenants.

**MarketRate Risk**

We are not exposed to changes in interest rates as we have no floatingrate borrowing arrangements.

All ofour long-term debt, totaling approximately $1.5 billion, bears interest atfixed rates, and therefore the fair value of these instruments is affected bychanges in the market interest rates.

**Off-BalanceSheet Arrangements**

We have a number of off-balance sheet investments, including a jointventure investment and structured finance investments.  These investments all have varying ownershipstructures.  Our joint venturearrangement is accounted for under the equity method of accounting as we havethe ability to exercise significant influence, but not control over theoperating and financial decisions of this joint venture arrangement.  Our off-balance sheet arrangements are discussedin Note 4, “Structured Finance Investments” and Note 5, “Investment inUnconsolidated Joint Venture” in the accompanying financial statements.

**CapitalExpenditures**

Weestimate that for the nine months ending December 31, 2007, we will incurapproximately $54.9 million of capital expenditures (including tenantimprovements and leasing commissions) on consolidated properties and none atour joint venture property.  We expect tofund these capital expenditures with operating cash flow, borrowings under SLGreen’s credit facility and cash on hand. We believe that we will have sufficient resources to satisfy our capitalneeds during the next 12-month period.

20

----

 

Thereafter,we expect that our capital needs will be met through a combination of net cashprovided by operations, borrowings, potential asset sales or additional equityor debt issuances by SL Green.

**Related Party Transactions**

**Other**

**Insurance**

**SL Green maintains “all-risk”property and rental value coverage (including coverage regarding the perils offlood, earthquake and terrorism) and liability insurance with limits in excessof $200.0 million per location. These insurance policies cover the ROPassets. The property policies expire on December 31, 2007 and theliability policies expire on October 31, 2007.  SL Green now maintains two property insuranceportfolios. The first portfolio maintains a blanket limit of$600.0 million per occurrence for the majority of the New York Cityproperties in our portfolio with a sub-limit of $450.0 million for acts ofterrorism. The second portfolio maintains a $600.0 million per occurrence,including terrorism, for the majority of the Suburban properties. The New YorkCity portfolio incorporates SL Green’s captive, Belmont Insurance Company,which we formed in an effort to stabilize, to some extent, the fluctuations ofinsurance market conditions. Belmont is licensed to write up to$100.0 million of coverage for us, but at this time is providing$50.0 million of terrorism coverage in excess of $100.0 million andis insuring a large deductible on the liability insurance with a $250,000deductible per occurrence and a $2.4 million annual aggregate loss limit. SLGreen has secured an excess insurer to protect against catastrophic liabilitylosses (above $250,000 / occurrence) and a stop loss for aggregate claims thatexceed $2.4 million.  SL Green 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. Although SL Green considers its insurance coverage (inclusive of the ROPassets) to be appropriate, in the event of a major catastrophe, such as an actof terrorism, SL Green may not have sufficient coverage to replace certainproperties.**

The Terrorism Risk Insurance Act, or TRIA, which wasenacted in November 2002, was renewed on January 1, 2006. Congressextended TRIA, now called TRIEA (Terrorism Risk Insurance Extension Act) untilDecember 31, 2007. The law extends the federal Terrorism InsuranceProgram that requires insurance companies to offer terrorism coverage andprovides for compensation for insured losses resulting from acts of terrorism. Our debt instruments, consisting of mortgage loanssecured by our properties (which are generally non-recourse to us) groundleases and senior unsecured notes, contain customary covenants requiring us tomaintain insurance. There can be no assurance that the lenders or groundlessors under these instruments will not take the position that a total orpartial exclusion from “all-risk” insurance coverage for losses due toterrorist acts is a breach of these debt and ground lease instruments thatallows the lenders or ground lessors to declare an event of default andaccelerate repayment of debt or recapture of ground lease positions. Inaddition, if lenders insist on full coverage for these risks and prevail inasserting that we are required to maintain such coverage, it could result insubstantially higher insurance premiums.

**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.

21

----

 

**Forward-LookingInformation**

Thisreport includes certain statements that may be deemed to be “forward-lookingstatements” within the meaning of Section 27A of the Securities Act of1933, as amended, or the Act, and Section 21E of the Securities ExchangeAct of 1934, as amended, or the Exchange Act. Such forward-looking statements relate to, without limitation, ourfuture capital expenditures, dividends and acquisitions (including the amountand nature thereof) and other development trends of the real estate industryand the Manhattan, Westchester and Connecticut office market, businessstrategies, and the expansion and growth of our operations.  These statements are based on certainassumptions and analyses made by us in light of our experience and ourperception of historical trends, current conditions, expected futuredevelopments and other factors we believe are appropriate.  We intend such forward-looking statements tobe covered by the safe harbor provisions for forward-looking statementscontained in Section 27A of the Act and Section 21E of the ExchangeAct.  Such statements are subject to anumber of assumptions, risks and uncertainties which may cause our actualresults, performance or achievements to be materially different from futureresults, performance or achievements expressed or implied by theseforward-looking 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.  Readers are cautioned not toplace undue reliance on these forward-looking statements.  Among the factors about which we have madeassumptions are:

·                  general economicor business (particularly real estate) conditions, either nationally or in NewYork City, Westchester County and Connecticut being less favorable thanexpected;

·                  reduced demandfor office space;

·                  risks of realestate acquisitions;

·                  risks ofstructured finance investments;

·                  availability andcreditworthiness of prospective tenants;

·                  adverse changesin the real estate markets, including increasing vacancy, decreasing rentalrevenue and increasing insurance costs;

·                  availability ofcapital (debt and equity);

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

·                  market interestrates could adversely affect the market price of our common stock, as well asour performance and cash flows;

·                  our ability tosatisfy complex rules in order for us to qualify as a REIT, for federal incometax purposes, our Operating Partnership’s ability to satisfy the rules in orderfor it to qualify as a partnership for federal income tax purposes, the abilityof certain of our subsidiaries to qualify as REITs and certain of oursubsidiaries to qualify as taxable REIT subsidiaries for federal income taxpurposes and our ability and the ability of our subsidiaries to operateeffectively within the limitations imposed by these rules;

·                  accountingprinciples and policies and guidelines applicable to REITs;

·                  competition withother companies;

·                  the continuingthreat of terrorist attacks on the national, regional and local economiesincluding, in particular, the New York City area and our tenants;

·                  legislative orregulatory changes adversely affecting real estate investment trusts and thereal estate business; and

·                  environmental,regulatory and/or safety requirements.

Weundertake no obligation to publicly update or revise any forward-lookingstatements, whether as a result of future events, new information or otherwise.

Therisks included here are not exhaustive. Other sections of this report or our Annual Report on Form 10-K for theyear ended December 31, 2006 may include additional factors that couldadversely affect the our business and financial performance.  Moreover, we operate 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 our 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.

22

----

 

**ITEM 3.  Quantitative and Qualitative Disclosure AboutMarket Risk**

Forquantitative and qualitative disclosures about market risk, see item 7A, “Quantitativeand Qualitative Disclosures About Market Risk,” of our Annual Report on Form10-K for the year ended December 31, 2006. Our exposures to market risk have not changed materially since December31, 2006.

**ITEM 4T.  Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

We maintaindisclosure controls and procedures that are designed to ensure that informationrequired to be disclosed in our Exchange Act reports is recorded, processed,summarized and reported within the time periods specified in the SEC’s rulesand forms, 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 Rule13a-15(e) of the Exchange Act. Notwithstanding the foregoing, a control system, no matter how welldesigned and operated, can provide only reasonable, not absolute, assurancethat it will detect or uncover failures within the Company to disclose materialinformation otherwise required to be set forth in our periodic reports.  Also, we have investments in certainunconsolidated entities.  As we do notcontrol these entities, our disclosure controls and procedures with respect tosuch entities are necessarily substantially more limited than those we maintainwith respect to our consolidated subsidiaries.

As of the end ofthe period covered by this report, we carried out an evaluation, under thesupervision and with the participation of our management, including our Presidentand our Treasurer, of the effectiveness of the design and operation of ourdisclosure controls and procedures. Based upon that evaluation, our President and Treasurer concluded thatour disclosure controls and procedures were effective as of the end of theperiod covered by this report.

We are not currently required to comply with Section 404 (Management’sAnnual Report on Internal Control Over Financial Reporting) of theSarbanes-Oxley Act of 2002 because we are not an “accelerated filer,” asdefined by Rule 12b-2 under the Exchange Act. We are in the process ofcontinuously improving our internal controls over financial reporting processesand procedures for our financial reporting so that our management can report onthese processes and procedures when required to do so.

**Changes in Internal Control over Financial Reporting**

There have been nosignificant changes in our internal control over financial reporting during thequarter ended March 31, 2007, that has materially affected, or is reasonablylikely to material affect, our internal control over financial reporting.

23

----

** **

**PART II OTHER INFORMATION**

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

As ofDecember 31, 2006, we were not involved in any material litigation nor, tomanagement’s knowledge, is any material litigation threatened against us or ourportfolio other than routine litigation arising in the ordinary course ofbusiness or litigation that is adequately covered by insurance.

OnDecember 6, 2006, SL Green announced that it and RARC had reached an agreementin principal with the plaintiffs to settle the previously disclosed classaction lawsuits relating to the Merger. The settlement, which remains subject to documentation and judicialreview and approval, provides (1) for certain contingent profit sharingparticipations for former RARC stockholders relating to specified assets, noneof which are owned by ROP (2) for potential payments to former RARC stockholdersof amounts relating to Reckson’s interest in contingent profit sharingparticipations in connection with the sale of certain Long Island industrialproperties in a prior transaction, none of which are owned by ROP and (3) forthe dismissal by the plaintiffs of all actions with prejudice and customaryreleases of all defendants and related parties.

24

----

#####  

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

## We encourage you to read “Item 1A—Risk Factors” in the AnnualReport on Form 10-K and the Quarterly Report on Form 10-Q for SLGreen Realty Corp., our 100% indirect parent company.

## **Declines in the demand for office space inNew York City, and in particular, in midtown Manhattan as well as WestchesterCounty, Connecticut, and Long Island City, resulting from general economic conditions could adversely affect thevalue of our real estate portfolio and our results of operations and, consequently,our ability to service current debt and make distributions to SL Green.**

Most of our office properties are located in midtownManhattan. As a result, our business is dependent on the condition of the NewYork City economy in general and the market for office space in midtownManhattan, in particular. Weakness in the New York City economy couldmaterially reduce the value of our real estate portfolio and our revenues, andthus adversely affect our ability to service current debt and to pay dividendsto stockholders.  We could also beimpacted by weakness in our Suburban markets, including Westchester County, Connecticut and Long Island City.

**We may be unable to renew leases orrelet space as leases expire.**

When our tenants decide not to renew their leases upontheir expiration, we may not be able to relet the space. Even if tenants dorenew or we can relet the space, the terms of renewal or reletting, includingthe cost of required renovations, may be less favorable than current lease terms.Over the next five years, through the end of 2011, leases will expire onapproximately 38.4% and none of the rentable square feet at our consolidatedproperties and unconsolidated joint venture property, respectively. As of March31, 2007, approximately 2.5 million and no square feet are scheduled to expireby December 31, 2011 at our consolidated properties and unconsolidatedjoint venture property, respectively, and these leases currently haveannualized escalated rental income totaling approximately $87.4 million andnone, respectively. If we are unable to promptly renew the leases or relet thisspace at similar rates, our cash flow and ability to service debt and makedistributions to SL Green would be adversely affected.

**The expiration of long term leases oroperating sublease interests could adversely affect our results of operations.**

Our interest in three of our commercial office propertiesis through long-term leasehold interests in the land and the improvements,rather than by a fee interest in the land. Unless we can purchase a feeinterest in the underlying land or extend the terms of these leases beforetheir expiration, we will lose our right to operate these properties and ourinterest in the improvements upon expiration of the leases, which wouldsignificantly adversely affect our results of operations. These properties are919 Third Avenue, 1185 Avenue of the Americas, and 1055 Washington Avenue, CT.The average remaining term of these long-term leases, including our unilateral extensionrights on each of the properties, is approximately 48 years. Pursuant tothe leasehold arrangements, we, as tenant under the operating sublease, performthe functions traditionally performed by landlords with respect to oursubtenants. We are responsible for not only collecting rent from oursubtenants, but also maintaining the property and paying expenses relating tothe property. Our share of annualized escalated rents of these properties atMarch 31, 2007 totaled approximately $101.6 million, or 42.5%, of our share oftotal portfolio annualized revenue associated with these properties.

**We rely on four large properties for asignificant portion of our revenue.**

As of March 31, 2007, four of our properties, 1185 Avenueof the Americas, 919 Third Avenue, 810 Seventh Avenue and 1350 Avenue of theAmericas, accounted for approximately 66.5% of our portfolio annualized rent,including our share of joint venture annualized rent, and 1185 Avenue of theAmericas alone accounted for approximately 24% of our portfolio annualizedrent, including our share of joint venture annualized rent. Our revenue andcash available for distribution to SL Green would be materially adverselyaffected if the ground lease for the 1185 Avenue of the Americas property wereterminated for any reason or if one or all of these properties were materiallydamaged or destroyed. Additionally, our revenue and cash available fordistribution to SL Green would be materially adversely affected if our tenantsat these properties experienced a downturn in their business which may weakentheir financial condition and result in their failure to timely make rentalpayments, defaulting under their leases or filing for bankruptcy.

25

----

 

**The continuing threat of terrorist attacks mayadversely affect the value of our properties and our ability to generate cashflow.**

There may be a decrease in demand for space in New YorkCity because it is considered at risk for future terrorist attacks, and thisdecrease may reduce our revenues from property rentals. In the aftermath of aterrorist attack, tenants in the New York City area may choose to relocatetheir business to less populated, lower-profile areas of the UnitedStates that are not as likely to be targets of future terrorist activity. Thisin turn would trigger a decrease in the demand for space in the New York Cityarea, which could increase vacancies in our properties and force us to leaseour properties on less favorable terms. As a result, the value of ourproperties and the level of our revenues could materially decline.

**A terrorist attack could cause insurancepremiums to increase significantly.**

**Insurance**

**SL Green maintains “all-risk”property and rental value coverage (including coverage regarding the perils offlood, earthquake and terrorism) and liability insurance with limits in excessof $200.0 million per location. These policies cover the ROP assets. Theproperty policies expire on December 31, 2007 and the liability policiesexpire on October 31, 2007.  SLGreen now maintains two property insurance portfolios. The first 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 a$600.0 million per occurrence, including terrorism, for the majority of theSuburban properties. The New York City portfolio incorporates SL Green’scaptive, Belmont Insurance Company, which we formed in an effort to stabilize,to some extent, the fluctuations of insurance market conditions. Belmont islicensed to write up to $100.0 million of coverage for us, but at thistime is providing $50.0 million of terrorism coverage in excess of$100.0 million and is insuring a large deductible on the liabilityinsurance with a $250,000 deductible per occurrence and a $2.4 million annualaggregate loss limit. SL Green has secured an excess insurer to protect againstcatastrophic liability losses (above $250,000 / occurrence) and a stop loss foraggregate claims that exceed $2.4 million. SL Green has retained a third party administrator to manage all claimswithin the deductible and we anticipate that direct management of liabilityclaims will improve loss experience and ultimately lower the cost of liabilityinsurance in future years. Although SL Green considers our insurance coverage (inclusiveof the ROP assets) to be appropriate, in the event of a major catastrophe, suchas an act of terrorism, we may not have sufficient coverage to replace certainproperties.**

The Terrorism Risk Insurance Act,or TRIA, which was enacted in November 2002, was renewed onJanuary 1, 2006. Congress extended TRIA, now called TRIEA (Terrorism RiskInsurance Extension Act) until December 31, 2007. The law extendsthe federal Terrorism Insurance Program that requires insurance companies tooffer terrorism coverage and provides for compensation for insured lossesresulting from acts of terrorism. Our debtinstruments, consisting of mortgage loans secured by our properties (which aregenerally non-recourse to us) ground leases and senior unsecured notes, containcustomary covenants requiring us to maintain insurance. There can be noassurance that the lenders or ground lessors under these instruments will nottake the position that a total or partial exclusion from “all-risk” insurancecoverage for losses due to terrorist acts is a breach of these debt and groundlease instruments that allows the lenders or ground lessors to declare an eventof default and accelerate repayment of debt or recapture of ground leasepositions. In addition, if lenders insist on full coverage for these risks andprevail in asserting that we are required to maintain such coverage, it couldresult in substantially higher insurance premiums.

**Reliance on major tenants and insolvencyor bankruptcy of these and other tenants could adversely affect our results ofoperations.**

Giving effect to leases in effect as of March 31, 2007for consolidated properties and our unconsolidated joint venture property as ofthat date, our five largest tenants, based on square footage leased, accountedfor approximately 23.2% of our share of portfolio annualized rent, and, otherthan two tenants, Citigroup, N.A. and Debevoise & Plimpton, LLP who accountedfor approximately 7.0% and 7.4% of our share of portfolio annualized rent,respectively, no tenant accounted for more than 3.8% of that total. Ourbusiness would be adversely affected if any of these tenants or any othertenants became insolvent, declared bankruptcy or otherwise refused to pay rentin a timely fashion or at all.

**We may suffer adverse consequences ifour revenues decline since our operating costs do not necessarily decline inproportion to our revenue.**

We earn a significant portion of our income from rentingour properties. Our operating costs, however, do not necessarily fluctuate inrelation to changes in our rental revenue. This means that our costs will notnecessarily decline even if our revenues do. Our operating costs could also increasewhile our revenues do not. If our operating costs increase but our rentalrevenues do not, we may be forced to borrow to cover our costs, we may incurlosses and we may not have cash available for distributions.

26

----

 

**We face risks associated with propertyacquisitions.**

We have made acquisitions of individual properties andportfolios of properties. Our acquisition activities and their success may beexposed to the following risks:

·                  we may be unable to acquire a desiredproperty because of competition from other well capitalized real estateinvestors, including publicly traded REITs, institutional investment funds andprivate investors or at all;

·                  even if we enter into an acquisitionagreement for a property, it is usually subject to customary conditions toclosing, including due diligence investigations to our satisfaction;

·                  even if we are able to acquire a desiredproperty, competition from other real estate investors may significantlyincrease the purchase price;

·                  we may be unable to finance acquisitions onfavorable terms or at all;

·                  acquired properties may fail to perform as weexpected;

·                  our estimates of the costs of repositioningor redeveloping acquired properties may be inaccurate;

·                  we may not be able to obtain adequateinsurance coverage for new properties;

·                  acquired properties may be located in newmarkets where we may face risks associated with a lack of market knowledge orunderstanding of the local economy, lack of business relationships in the areaand unfamiliarity with local governmental and permitting procedures; and

·                  wemay be unable to quickly and efficiently integrate new acquisitions,particularly acquisitions of portfolios of properties, into our existingoperations, and as a result our results of operations and financial conditioncould be adversely affected.

We may acquire properties subject to liabilities andwithout any recourse, or with only limited recourse, with respect to unknownliabilities. As a result, if a liability were asserted against us based uponthose properties, we might have to pay substantial sums to settle it, whichcould adversely affect our cash flow. Unknown liabilities with respect toproperties acquired might include:

·                  liabilities for clean-up of undisclosedenvironmental contamination;

·                  claims by tenants, vendors or other personsdealing with the former owners of the properties;

·                  liabilities incurred in the ordinary courseof business; and

·                  claimsfor indemnification by general partners, directors, officers and othersindemnified by the former owners of the properties.

**Competition for acquisitions may reducethe number of acquisition opportunities available to us and increase the costsof those acquisitions.**

We may continue to acquire properties as we are presentedwith attractive opportunities. We may face competition for acquisitionopportunities with other investors, particularly private investors who canincur more leverage, and this competition may adversely affect us by subjectingus to the following risks:

·                  an inability to acquire a desired property becauseof competition from other well-capitalized real estate investors, includingpublicly traded and privately held REITs, institutional investment funds,investment banking firms and other real estate investors; and

·                  anincrease in the purchase price for such acquisition property, in the event weare able to acquire such desired property.

27

----

 

**Our dependence on smaller and growth-orientedbusinesses to rent our office space could adversely affect our cash flow andresults of operations.**

Many of the tenants in our properties are smaller, growth-orientedbusinesses that may not have the financial strength of larger corporatetenants. Smaller companies generally experience a higher rate of failure thanlarge businesses. Growth-oriented firms may also seek other office space,including Class A space, as they develop. Dependence on these companiescould create a higher risk of tenant defaults, turnover and bankruptcies, whichcould adversely affect our distributable cash flow and results of operations.

**Debt financing, financial covenants,degree of leverage, and increases in interest rates could adversely affect oureconomic performance.**

***Scheduled debtpayments could adversely affect our results of operations.***

The total principal amount of our outstanding consolidatedindebtedness was approximately $1.5 billion as of March 31, 2007,consisting of $1.3 billion under our senior unsecured notes, and approximately$0.2 million of non-recourse mortgage loans on two of our properties.  As of March 31, 2007, the total principalamount of non-recourse indebtedness outstanding at our joint venture propertywas approximately $315.0 million, of which our proportionate share wasapproximately $94.5 million. Cash flow could be insufficient to paydistributions at expected levels and meet the payments of principal andinterest required under our current mortgage indebtedness, senior unsecurednotes and indebtedness outstanding at our joint venture properties.

If we are unable to make payments under our senior unsecurednotes, the principal and unpaid interest will become immediately payable.  If a property is mortgaged to secure paymentof indebtedness and we are unable to meet mortgage payments, the mortgageecould foreclose on the property, resulting in loss of income and asset value.Foreclosure on mortgaged properties or an inability to make scheduled paymentsunder our unsecured notes would have a negative impact on our financialcondition and results of operations.

28

----

 

We may not be able to refinance existing indebtedness,which in all cases requires substantial principal payments at maturity. In2007, approximately $12.3 million and none of debt on our consolidatedproperties and our unconsolidated joint venture property, respectively, willmature. At the present time we intend to exercise extension options orrefinance the debt associated with our properties on or prior to theirrespective maturity dates. If any principal payments due at maturity cannot berefinanced, extended or paid with proceeds of other capital transactions, suchas new equity capital, our cash flow will not be sufficient in all years torepay all maturing debt. At the time of refinancing, prevailing interest ratesor other factors, such as the possible reluctance of lenders to make commercialreal estate loans may result in higher interest rates. Increased interestexpense on the refinanced debt would adversely affect cash flow and our abilityto service debt and make distributions to SL Green.

***Financial covenantscould adversely affect our ability to conduct our business.***

The mortgages on our properties contain customarynegative covenants that limit our ability to further mortgage the property, toenter into new leases or materially modify existing leases, and to discontinueinsurance coverage.  The terms ofour senior unsecured notes include certain restrictions and covenants which limit,among other things, the incurrence of additional indebtedness and liens, andwhich require compliance with financial ratios relating to the minimum amountof debt service coverage, the maximum amount of consolidated unsecured andsecured indebtedness and the minimum amount of unencumbered assets. Restrictions on our ability to conduct businesscould adversely affect our results of operations and our ability to makedistributions to SL Green.

***Our policy of nolimitation on debt could adversely affect our cash flow.***

Our organizational documents do not contain anylimitation on the amount of indebtedness we may incur. However, SL Green’s policyis to incur debt only if upon incurrence its consolidated debt to marketcapitalization ratio would be 60.0% or less. The board of directors of SL Greencan alter or eliminate this policy and may do so if it determines that thisaction is in the best interests of its business. If this policy is changed and webecome more highly leveraged, an increase in debt service could adverselyaffect cash available for distribution to SL Green and could increase the riskof default on our indebtedness. In addition, any change that increases SLGreen’s debt to market capitalization percentage could be viewed negatively byinvestors. As a result, SL Green’s share price could decrease.

SL Green has established its debt policy relative to thetotal market capitalization of its business rather than relative to the bookvalue of its assets. SL Green uses total market capitalization because itbelieves that the book value of its assets, which to a large extent is thedepreciated original cost of its properties, and its primary tangible assets,do not accurately reflect its ability to borrow and to meet debt servicerequirements. Its market capitalization, however, is more variable than bookvalue, and does not necessarily reflect the fair market value of its assets atall times. SL Green also will consider factors other than market capitalizationin making decisions regarding the incurrence of indebtedness, such as thepurchase price of properties to be acquired with debt financing, the estimatedmarket value of our properties upon refinancing and the ability of particularproperties and our business as a whole to generate cash flow to cover expecteddebt service.

**Structured finance investments couldcause expenses, which could adversely affect our results of operations.**

We owned mezzanine and other loans in five propertieswith an aggregate book value of approximately $136.6 million at March 31,2007. Such investments may or may not be recourse obligations of the borrowerand are not insured or guaranteed by governmental agencies or otherwise. In theevent of a default under these obligations, we may have to realize upon ourcollateral and thereafter make substantial improvements or repairs to theunderlying real estate in order to maximize the property’s investment potential.Borrowers may contest enforcement of foreclosure or other remedies, seekbankruptcy protection against such enforcement and/or bring claims for lenderliability in response to actions to enforce their obligation to us. Relativelyhigh loan-to-value ratios and declines in the value of the property may preventus from realizing an amount equal to our investment upon foreclosure orrealization.

**Joint investments could be adverselyaffected by our lack of sole decision-making authority and reliance upona co-venturer’s financial condition.**

We co-invest with third parties through partnerships,joint ventures, co-tenancies or other entities, acquiring non-controllinginterests in, or sharing responsibility for managing the affairs of, aproperty, partnership, joint venture, co-tenancy or other entity. Therefore, wewill not be in a position to exercise sole decision-making authorityregarding that property, partnership, joint venture or other entity.Investments in partnerships, joint ventures, or other entities may involverisks not present were a third party not involved, including the possibilitythat our partners, co-tenants or co-venturers might become bankrupt orotherwise fail to fund their share of required capital contributions.Additionally, our partners or co-venturers might at any time have economic orother business interests or goals, which are inconsistent with our businessinterests or goals. These investments may also have the potential risk ofimpasses on decisions such as a sale, because neither we nor the partner,co-tenant or co-venturer would have full control over the partnership or jointventure. Consequently, actions by such partner, co-tenant or co-venturer mightresult in subjecting properties owned by the partnership or joint venture toadditional risk. In addition, we may in specific circumstances be liable forthe actions of our third-party partners, co-tenants or co-venturers. Asof March 31, 2007, our unconsolidated joint venture owned one property and wehad an aggregate cost basis in the joint ventures totaling approximately$64.8 million. As of March 31, 2007, our share of unconsolidated jointventure debt totaled approximately $94.5 million.

29

----

 

**Our joint venture agreements containterms in favor of our partners that may have an adverse effect on the value ofour investments in the joint ventures.**

Each of our joint venture agreements has beenindividually negotiated with our partner in the joint venture and, in somecases, we have agreed to terms that are favorable to our partner in the jointventure. For example, our partner may be entitled to a specified portion of theprofits of the joint venture before we are entitled to any portion of suchprofits and our partner may have rights to buy our interest in the jointventure, to force us to buy the partner’s interest in the joint venture or tocompel the sale of the property owned by such joint venture. These rights maypermit our partner in a particular joint venture to obtain a greater benefitfrom the value or profits of the joint venture than us, which may have anadverse effect on the value of our investment in the joint venture and on ourfinancial condition and results of operations. We may also enter into similararrangements in the future.

**We are subject to possible environmentalliabilities and other possible liabilities.**

We are subject to various federal, state and localenvironmental laws. These laws regulate our use, storage, disposal andmanagement of hazardous substances and wastes and can impose liability onproperty owners or operators for the clean-up of certain hazardous substancesreleased on a property and any associated damage to natural resources withoutregard to whether the release was legal or whether it was caused by theproperty owner or operator. The presence of hazardous substances on ourproperties may adversely affect occupancy and our ability to develop or sell orborrow against those properties. In addition to potential liability forclean-up costs, private plaintiffs may bring claims for personal injury,property damage or for similar reasons. Various laws also impose liability forthe clean-up of contamination at any facility (e.g., a landfill) to which wehave sent hazardous substances for treatment or disposal, without regard towhether the materials were transported, treated and disposed in accordance withlaw.

Our properties may be subject to other risks relating tocurrent or future laws including laws benefiting disabled persons, and otherstate or local zoning, construction or other regulations. These laws mayrequire significant property modifications in the future for which we may nothave budgeted and could result in fines being levied against us. The occurrenceof any of these events could have an adverse impact on our cash flows andability to make distributions to stockholders.

**We may incur significant costs complyingwith the Americans with Disabilities Act and similar laws.**

Under the Americans with Disabilities Act, or ADA, allpublic accommodations must meet federal requirements related to access and useby disabled persons. Additional federal, state and local laws also may requiremodifications to our properties, or restrict our ability to renovate ourproperties. We have not conducted an audit or investigation of all of ourproperties to determine our compliance. If one or more of our properties is notin compliance with the ADA or other legislation, then we would be required toincur additional costs to bring the property into compliance. We cannot predictthe ultimate amount of the cost of compliance with ADA or other legislation. Ifwe incur substantial costs to comply with the ADA and any other legislation,our financial condition, results of operations and cash flow and/or ability tosatisfy our debt service obligations and to pay dividends to our stockholderscould be adversely affected.

30

----

**We face potential conflicts of interest.**

***Members of managementmay have a conflict of interest over whether to enforce terms of agreementswith entities in which senior management, directly or indirectly, has aninterest.***

Two entities owned by one of Mr. Green’s sons, FirstQuality Maintenance, L.P. and Classic Security LLC, currently provide cleaning,exterminating and security services to all of SL Green’s officeproperties, with the exception of cleaning services at one property. SL Greenand its tenants accounted for approximately 13.4% of First Quality Maintenance,L.P.’s 2006 total revenue and 39.7% of Classic Security LLC’s 2006 totalrevenue. Bright Star Courier, LLC, a messenger service company owned by one ofMr. Green’s sons, has provided messenger services at SL Green’sproperties since May 1, 2002. SL Green accounted for approximately28.8% of Bright Star Courier, LLC’s 2006 total revenue. In addition, OnyxRestoration Works, a restoration company owned by one of Mr. Green’s sons,has provided restoration services at all of SL Green’s properties sinceMarch 2005. SL Green accounted for approximately 62.8% of OnyxRestoration Works’ 2006 total revenue. While the contracts pursuant to whichthese services are provided are reviewed by SL Green’s board of directors,they are not the result of arm’s length negotiations and, therefore, there canbe no assurance that the terms and conditions are not less favorable than thosewhich could be obtained from third parties providing comparable services. Inaddition, to the extent that SL Green chooses to enforce its rights underany of these agreements, they may determine to pursue available remedies, suchas actions for damages or injunctive relief, less vigorously than SL Greenotherwise might because of its desire to maintain its ongoing relationship withthe individual involved.

As of March 31, 2007, no services were beingprovided by these entities to any of the properties owned by ROP. Theseservices may be provided to ROP assets and tenants in the future.

***Members of managementmay have a conflict of interest over whether to enforce terms of seniormanagement’s employment and noncompetition agreements.***

Stephen Green, Marc Holliday, Gregory Hughes, AndrewLevine and Andrew Mathias entered into employment and noncompetition agreementswith SL Green pursuant to which they have agreed not to actively engage in theacquisition, development or operation of office real estate in the New YorkCity metropolitan area. For the most part these restrictions apply to theexecutive both during his employment and for a period of time thereafter. Eachexecutive is also prohibited from otherwise disrupting or interfering with ourbusiness through the solicitation of our employees or clients or otherwise. Tothe extent that SL Green chooses to enforce its rights under any of theseagreements, SL Green may determine to pursue available remedies, such asactions for damages or injunctive relief, less vigorously than we otherwisemight because of its desire to maintain its ongoing relationship with the individualinvolved. Additionally, the non-competition provisions of these agreementsdespite being limited in scope and duration, could be difficult to enforce, ormay be subject to limited enforcement, should litigation arise over them in thefuture. Mr. Green has interests in two properties in Manhattan, which areexempt from the non-competition provisions of his employment andnon-competition agreement.

**SL Green’s failure to qualify as a REIT would becostly.**

We believe that SL Green has operated in a manner toqualify as a REIT for federal income tax purposes and SL Green intends tocontinue to so operate.  Many of theserequirements, however, are highly technical and complex.  The determination that we are a REIT requiresan analysis of factual matters and circumstances.  These matters, some of which may not betotally within SL Green’s control, can affect its qualification as a REIT.  For example, to qualify as a REIT, at least95% of SL Green’s gross income must come from designated sources that are listedin the REIT tax laws.  SL Green is alsorequired to distribute to stockholders at least 90% of its REIT taxable incomeexcluding capital gains.  The fact thatSL Green holds its assets through subsidiaries further complicates theapplication of the REIT requirements. Even a technical or inadvertent mistake could jeopardize SL Green’s REITstatus.  Furthermore, Congress and theInternal Revenue Service, which we refer to as the IRS, might make changes tothe tax laws and regulations, and the courts might issue new rulings that makeit more difficult, or impossible, for SL Green to remain qualified as a REIT.

If SL Green fails to qualify as a REIT, it would besubject to federal income tax at regular corporate rates.  Also, unless the IRS grants SL Green reliefunder specific statutory provisions, it would remain disqualified as a REIT forfour years following the year it first failed to qualify.  If SL Green failed to qualify as a REIT, itwould have to pay significant income taxes and would therefore have less moneyavailable to service indebtedness.

****SLGreen would incur adverse tax consequences if Reckson failed to qualify as aREIT.****

SLGreen has assumed that RARC has qualified as a REIT for United Statesfederal income tax purposes and that SL Green will continue to beable to qualify as a REIT following the Merger.  However, if RARCfailed to qualify as a REIT, SL Green generally would havesucceeded to significant tax liabilities (including the significant taxliability that would result from a deemed sale of assets by RARC pursuantto the Merger).

**Previously enacted tax legislationreduces tax rates for dividends paid by non-REIT corporations.**

Under certain previously enacted tax legislation, themaximum tax rate on dividends to individuals has generally been reduced from38.6% to 15% (from January 1, 2003 through December 31, 2008). Thereduction in rates on dividends is generally not applicable to dividends paidby a REIT except in limited circumstances that we do not contemplate. Althoughthis legislation will not adversely affect the taxation of REITs or dividendspaid by REITs, the favorable treatment of regular corporate dividends couldcause investors who are individuals to consider stock of non-REIT corporationsthat pay dividends as relatively more attractive than stocks of REITs. It isnot possible to predict whether such a change in perceived relative value willoccur or what the effect, if any, this legislation will have on the marketprice of our stock.

31

----

 

**We face significant competition fortenants.**

The leasing of real estate is highly competitive. Theprincipal means of competition are rent charged, location, services providedand the nature and condition of the facility to be leased. We directly competewith all lessors and developers of similar space in the areas in which ourproperties are located. Demand for retail space has been impacted by the recentbankruptcy of a number of retail companies and a general trend towardconsolidation in the retail industry, which could adversely affect the abilityof our company to attract and retain tenants.

Our commercial office properties are concentrated inhighly developed areas of midtown Manhattan and certain Suburban centralbusiness districts, or CBDs.  Manhattanis the largest office market in the United States. The number of competitiveoffice properties in Manhattan and CBDs in which our Suburban properties arelocated (which may be newer or better located than our properties) could have amaterial adverse effect on our ability to lease office space at our properties,and on the effective rents we are able to charge.

**Loss of our key personnel could harm ouroperations.**

We are dependent on the efforts of Stephen L. Green, the chairman of theboard of directors of SL Green and an executive officer, Marc Holliday, the chiefexecutive officer of SL Green and president of RARC, Andrew Mathias, the presidentand chief investment officer of SL Green and Gregory F. Hughes, the chiefoperating officer and chief financial officer of SL Green and the treasurer ofRARC. A loss of the services of any of these individuals could adversely affectour operations.

**Our business and operations would sufferin the event of system failures.**

Despite system redundancy, the implementation of securitymeasures and the existence of a Disaster Recovery Plan for our internalinformation technology systems, our systems are vulnerable to damages from anynumber of sources, including computer viruses, unauthorized access, energyblackouts, natural disasters, terrorism, war and telecommunication failures.Any system failure or accident that causes interruptions in our operationscould result in a material disruption to our business. We may also incuradditional costs to remedy damages caused by such disruptions.

**Compliance with changing regulation of corporategovernance and public disclosure may result in additional expenses, affect ouroperations and affect our reputation.**

Changing laws, regulations and standards relating to corporategovernance and public disclosure, including the Sarbanes-Oxley Act of2002 and other SEC regulations and New York Stock Exchange rules, are creatinguncertainty for public companies. These new or changed laws, regulations andstandards are subject to varying interpretations in many cases due to theirlack of specificity, and as a result, their application in practice may evolveover time as new guidance is provided by regulatory and governing bodies, whichcould result in continuing uncertainty regarding compliance matters and highercosts necessitated by ongoing revisions to disclosure and governance practices.We are committed to maintaining high standards of corporate governance andpublic disclosure. As a result, our efforts to comply with evolving laws,regulations and standards have resulted in, and are likely to continue toresult in, increased general and administrative expenses and a diversion ofmanagement time and attention from revenue-generating activities tocompliance activities. In particular, our efforts to comply withSection 404 of the Sarbanes-Oxley Act of 2002 and the relatedregulations regarding our required assessment of our internal controls overfinancial reporting has required the commitment of significant financial andmanagerial resources. In addition, it has become more difficult and moreexpensive for us to obtain director and officer liability insurance. We expectthese efforts to require the continued commitment of significant resources.Further, our directors, chief executive officer and chief financial officercould face an increased risk of personal liability in connection with theperformance of their duties. As a result, we may have difficulty attracting andretaining qualified directors and executive officers, which could harm ourbusiness. If our efforts to comply with new or changed laws, regulations andstandards differ from the activities intended by regulatory or governing bodiesdue to ambiguities related to practice, our reputation may be harmed.

32

----

 
| **ITEM 2.** | ** ** | **UNREGISTERED SALES OF EQUITY SECURITIES AND USE  OF PROCEEDS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **ITEM 3.** | ** ** | **DEFAULTS UPON SENIOR SECURITIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **ITEM 4.** | ** ** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY  HOLDERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        | ** ** | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **ITEM 5.** | ** ** | **OTHER INFORMATION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       | On January 25, 2007, SL Green completed the sale, or  Asset Sale, of certain assets of ROP to an investment group led by certain of  Reckson’s former executive management, or the Buyer, for a total  consideration of approximately $2.0 billion. SL Green caused ROP to transfer  the following assets to the Buyer in the Asset Sale: (1) certain real  property assets and/or entities owning such real property assets, in either  case, of ROP and 100% of certain loans secured by real property, all of which  are located in Long Island, New York; (2) certain real property assets and/or  entities owning such real property assets, in either case, of ROP located in  White Plains and Harrison, New York; (3) all of the real property assets  and/or entities owning 100% of the interests in such real property assets, in  either case, of ROP located in New Jersey; (4) the entity owning a 25%  interest in Reckson Australia Operating Company LLC, RARC’s former Australian  management company (including its former Australian licensed responsible  entity), and other related entities, and ROP and ROP subsidiaries’ rights to  and interests in, all related contracts and assets, including, without  limitation, property management and leasing, construction services and asset  management contracts and services contracts; (5) the direct or indirect  interest of RARC in Reckson Asset Partners, LLC, an affiliate of RSVP and all  of ROP’s rights in and to certain loans made by ROP to Frontline Capital  Group, the bankrupt parent of RSVP, and other related entities, which will be  purchased by a 50/50 joint venture with an affiliate of SL Green; (6) a 50%  participation interest in certain loans made by a subsidiary of ROP that are  secured by four real property assets located in Long Island, New York; and  (7) 100% of certain loans secured by real property located in White Plains  and New Rochelle, New York. |

 
| **ITEM 6.** |   | **EXHIBITS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (a)         |   | Exhibits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.1        |   | 25% Membership Interests Purchase Agreement, dated  as of January 5, 2007, by and among 1350 Mezzanine LLC, SL Green Operating  Partnership, L.P., and SL Green Realty Corp., incorporated by reference to  the Company’s Form 8-K dated January 5, 2007, filed with the Commission on  January 11, 2007.                                                                                                                                                                                                                                                                                                                                             |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.2        |   | 75% Membership Interests Purchase Agreement dated as  of January 5, 2007, by and among 1350 Mezzanine LLC, SL Green Operating  Partnership, L.P., and SL Green Realty Corp., incorporated by reference to  the Company’s Form 8-K dated January 5, 2007, filed with the Commission on  January 11, 2007.                                                                                                                                                                                                                                                                                                                                              |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.3        |   | First Amendment to 25% Membership Interests Purchase  Agreement, dated as of January 9, 2007, to Purchase Agreement, dated as of  January 5, 2007, by and among 1350 Mezzanine LLC, SL Green Operating  Partnership, L.P., and SL Green Realty Corp., incorporated by reference to  the Company’s Form 8-K dated January 5, 2007, filed with the Commission on  January 11, 2007.                                                                                                                                                                                                                                                                     |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.4        |   | First Amendment to 75% Membership Interests Purchase  Agreement, dated as of January 9, 2007, to Purchase Agreement, dated as of  January 5, 2007, by and among 1350 Mezzanine LLC, SL Green Operating  Partnership, L.P., and SL Green realty Corp., incorporated by reference to  the Company’s Form 8-K dated January 5, 2007, filed with the Commission on  January 11, 2007.                                                                                                                                                                                                                                                                     |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.5        |   | First Supplemental Indenture, dated as of January  25, 2007, by and among Reckson Operating Partnership, L.P., Reckson  Associates Realty Corp., The Bank of New York and SL Green Realty Corp.,  incorporated by reference to the Company’s Form 8-K dated January 24, 2007,  filed with the Commission on January 30, 2007.                                                                                                                                                                                                                                                                                                                         |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.6        |   | Credit Agreement, dated as of January 24, 2007,  by and among SL Green Operating Partnership, L.P., SL Green Realty Corp.,  Wachovia Capital Markets LLC, as sole lead arranger and sole book manager,  Wachovia Bank, National Association, as agent, each of KeyBank National Association  and Wells Fargo Bank, National Association, as co-syndication agents, each of  Eurohypo AG, New York Branch and ING Real Estate Finance (USA) LLC, as  co-documentation agents, and each of the lenders party thereto, incorporated  by reference to the Company’s Form 8-K dated January 25, 2007, filed with the  Commission on January 30, 2007. |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.7        |   | First Amendment to Third Amended and Restated Credit  Agreement, dated as of January 24, 2007, by and among SL Green Operating  Partnership, L.P., SL Green Realty Corp., the lenders party thereto, and  Wells Fargo Bank, National Association, as agent, incorporated by reference  to the Company’s Form 8-K dated January 25, 2007, filed with the Commission  on January 30, 2007.                                                                                                                                                                                                                                                         |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.8        |   | First Amendment to Credit Agreement, dated as of January 24,  2007, by and among SL Green Operating Partnership, L.P., SL Green Realty  Corp., the lenders party thereto, and Wachovia Bank, National Association, as  agent, incorporated by reference to the Company’s Form 8-K dated January 25,  2007, filed with the Commission on January 30, 2007.                                                                                                                                                                                                                                                                                        |

 

33

----

 
| **ITEM 6.** |   | **EXHIBITS Continued**                                                                                                                   |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                     |
| 31.1        |   | Certification by the President pursuant to Section  302 of the Sarbanes-Oxley Act of 2002 filed herewith.                                |
|        |   |                                                                                                                                     |
| 31.2        |   | Certification by the Treasurer pursuant to Section  302 of the Sarbanes-Oxley Act of 2002 filed herewith.                                |
|        |   |                                                                                                                                     |
| 32.1        |   | Certification pursuant to 18 U.S.C. section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed  herewith. |
|        |   |                                                                                                                                     |
| 32.2        |   | Certification pursuant to 18 U.S.C. section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed  herewith. |

 

34

----

 

**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.
|                                           |   | RECKSON OPERATING PARTNERSHIP, L.P.                            |
|-------------------------------------------|--------|----------------------------------------------------------------|
|                                      |   | By: Reckson Associates Realty Corp., its sole  general partner |
|                                      |   |                                                           |
|                                      |   |                                                           |
|                                      |   | By:                                                            | /s/ Gregory  F. Hughes |
|                                      |   |                                                           | Gregory F. Hughes |
|                                      |   |                                                           | Treasurer |
|                                      |   |                                                           |
| Date:    May 22, 2007 |   |                                                           |

 

35

----