UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

July 26, 2018

 

SL GREEN REALTY CORP.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

Maryland

 

1-13199

 

13-3956775

(STATE OR OTHER
JURISDICTION OF
INCORPORATION)

 

(COMMISSION FILE NUMBER)

 

(IRS EMPLOYER ID. NUMBER)

 

420 Lexington Avenue

 

10170

New York, New York

 

(ZIP CODE)

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

 

(212) 594-2700

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company     o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

 

 

 



 

Item 8.01.             Other Events

 

Second Quarter 2018 Results

 

Summary

 

On July 18, 2018, SL Green Realty Corp. (the “Company”) reported net income attributable to common stockholders for the quarter ended June 30, 2018 of $103.6 million, or $1.19 per share (diluted), as compared to net income attributable to common stockholders of $8.2 million, or $0.08 per share (diluted), for the same quarter in 2017. Net income attributable to common stockholders for the three months ended June 30, 2018 includes $57.2 million, or $0.62 per share (diluted), of net gains recognized from the sale of real estate as compared to $9.3 million, or $0.09 per share (diluted), for the same period in 2017.

 

The Company also reported net income attributable to common stockholders for the six months ended June 30, 2018 of $205.3 million, or $2.31 per share (diluted), as compared to net income attributable to common stockholders of $19.6 million, or $0.19 per share (diluted), for the same period in 2017. Net income attributable to common stockholders for the six months ended June 30, 2018 includes $74.3 million, or $0.79 per share (diluted), of net gains recognized from the sale of real estate as compared to $11.9 million, or $0.11 per share (diluted), for the same period in 2017.

 

The Company reported funds from operations, or FFO, for the quarter ended June 30, 2018 of $155.6 million, or $1.69 per share (diluted), as compared to FFO for the same period in 2017 of $186.8 million, or $1.78 per share (diluted). FFO for the second quarter of 2017 included $9.4 million, or $0.09 per share (diluted), of previously unrecognized income on the Company’s preferred equity investment in 885 Third Avenue and $10.3 million, or $0.10 per share (diluted), of net fees related to the closing of the One Vanderbilt joint venture.

 

The Company also reported FFO for the six months ended June 30, 2018 of $313.3 million, or $3.34 per share (diluted), as compared to FFO for the same period in 2017 of $352.7 million, or $3.36 per share (diluted).

 

For the quarter ended June 30, 2018, the Company reported consolidated revenues and operating income of $301.1 million and $172.6 million, respectively, compared to $398.2 million and $237.2 million, respectively, for the same period in 2017.

 

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased by 8.0% for the quarter ended June 30, 2018, or 8.1%, excluding lease termination income. For the quarter, consolidated property same-store cash NOI increased by 4.0% to $128.0 million, or 4.1% to $127.4 million, excluding lease termination income, while unconsolidated joint venture property same-store cash NOI increased by 17.8% to $58.7 million. No lease termination income was recognized in unconsolidated joint venture property same-store cash NOI during the quarter.

 

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased by 7.8% for the six months ended June 30, 2018, or 6.9%, excluding lease termination income, as compared to the same period in 2017. For the six months ended June 30, 2018, consolidated property same-store cash NOI increased by 4.3% to $255.2 million, or 3.0% to $251.0 million, excluding lease termination income, while unconsolidated joint venture property same-store cash NOI increased by 16.4% to $114.8 million. No lease termination income was recognized in unconsolidated joint venture property same-store cash NOI during the six months ended June 30, 2018.

 

In the second quarter, the Company signed 58 office leases in its Manhattan portfolio totaling 565,914 square feet. Forty-two leases comprising 322,937 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $66.90 per rentable square foot, representing a 5.2% increase over the previously fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases

 

2



 

signed in the second quarter was 8.4 years and average tenant concessions were 3.2 months of free rent with a tenant improvement allowance of $64.63 per rentable square foot.

 

During the first six months of 2018, the Company signed 86 office leases in its Manhattan portfolio totaling 941,727 square feet. Sixty-one leases comprising 480,112 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $73.11 per rentable square foot, representing a 7.1% increase over the previously fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the first six months of 2018 was 8.9 years and average tenant concessions were 4.8 months of free rent with a tenant improvement allowance of $70.19 per rentable square foot.

 

Occupancy in the Company’s Manhattan same-store portfolio was 95.9% as of June 30, 2018, inclusive of 557,637 square feet of leases signed but not yet commenced, as compared to 95.5% at March 31, 2018 and 94.7% at June 30, 2017.

 

In the second quarter, the Company signed 13 office leases in its Suburban portfolio totaling 45,224 square feet. Ten leases comprising 35,832 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $38.13 per rentable square foot, representing a 4.9% decrease over the previously fully escalated rents on the same office spaces. The average lease term on the Suburban office leases signed in the second quarter was 6.0 years and average tenant concessions were 5.5 months of free rent with a tenant improvement allowance of $10.95 per rentable square foot.

 

During the first six months of 2018, the Company signed 32 office leases in its Suburban portfolio totaling 202,709 square feet. Twenty-one leases comprising 61,376 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $36.05 per rentable square foot, representing a 2.6% decrease over the previously fully escalated rents on the same office spaces. The average lease term on the Suburban office leases signed in the first six months of 2018 was 8.0 years and average tenant concessions were 8.6 months of free rent with a tenant improvement allowance of $24.94 per rentable square foot.

 

Occupancy in the Company’s Suburban same-store portfolio was 87.2% as of June 30, 2018, inclusive of 5,732 square feet of leases signed but not yet commenced, as compared to 87.6% at March 31, 2018 and 86.2% as of June 30, 2017.

 

Significant leases that were signed in the second quarter included:

 

·                  New lease with McDermott Will & Emery LLP for 105,539 square feet at One Vanderbilt Avenue, for 20.0 years;

 

·                  New lease with Syska Hennessy Group, Inc. for 55,016 square feet at 1185 Avenue of the Americas, for 10.3 years;

 

·                  Renewal with Canon Solutions America, Inc. for 33,766 square feet at 125 Park Avenue, for 10.6 years;

 

·                  New lease with Puma North America, Inc. for 24,000 square feet at 609 Fifth Avenue, for 16.0 years;

 

·                  New lease with Milburn Ridgefield Corporation for 22,523 square feet at 55 West 46th Street, known as Tower 46, for 10.5 years;

 

·                  New lease with TravelClick, Inc. for 22,518 square feet at 55 West 46th Street, known as Tower 46, for 10.3 years;

 

·                  New lease with United Refining, Inc. for 20,010 square feet at 800 Third Avenue, for 10.3 years; and

 

3



 

·                  New lease with Coty, Inc. for 10,040 square feet at 719 Seventh Avenue, known as 30 Times Square, for 10.4 years.

 

Marketing, general and administrative, or MG&A, expense for the three months ended June 30, 2018 was $22.5 million, or 5.1% of total combined revenues and 47 basis points of total assets, including our share of assets from unconsolidated joint ventures.

 

Investment Activity

 

During the quarter, the Company announced that its Board of Directors had authorized a $500 million increase to the size of its share repurchase program, bringing the program total to $2.0 billion. To date, the Company has acquired 15.6 million shares of its common stock under the program at an average price of $99.58 per share, allowing the Company to save approximately $50.8 million of common dividends on an annualized basis.

 

In July, the Company closed on the sale of substantially all of its interest in 724 Fifth Avenue to its joint venture partner. In addition, the Company was redeemed on its investment in 720 Fifth Avenue, and partially repaid on another partnership loan. The transactions generated net proceeds of $85.6 million.

 

In July, the Company closed on the previously announced sale of Reckson Executive Park, which consists of six Class-A office buildings totaling 540,000 square-feet located at 1-6 International Drive in Rye Brook, New York, for a sale price of $55.0 million. The transaction generated net proceeds of $53.2 million.

 

In June, the Company closed on the previously announced sale of 635 Madison Avenue for a sale price of $153.0 million. The transaction generated net proceeds of $141.7 million.

 

In June, the Company closed on the previously announced sale of its 11.7% interest in Jericho Plaza, two office buildings totaling 640,000 square-feet located in Jericho, New York, for a gross asset valuation of $117.4 million. The transaction generated net proceeds of $4.1 million.

 

In May, the Company took ownership of the leasehold interest at 2 Herald Square following the foreclosure of the asset. The Company also reached an agreement to joint venture the asset with an Israeli-based institutional investor.

 

In May, the Company, along with our joint venture partner, Ivanhoe Cambridge, closed on the sale of the leasehold office condominium at 1745 Broadway, at a sale price of $633 million, or $939 per square foot. The transaction generated net proceeds of $126.9 million and the Company recognized a gain on sale of $52.0 million.

 

In May, the Company closed on the previously announced sale of 115-117 Stevens Avenue, which consists of two office buildings totaling 178,000 square-feet located in Valhalla, New York, for a sale price of $12.0 million. The transaction generated net proceeds of $11.0 million.

 

Debt and Preferred Equity Investment Activity

 

The carrying value of the Company’s debt and preferred equity investment portfolio increased to $2.36 billion at June 30, 2018, including $2.17 billion of investments at a weighted average current yield of 8.8% that are classified in the debt and preferred equity line item on the balance sheet, and investments aggregating $0.19 billion at a weighted average current yield of 10.6% that are included in other balance sheet line items for accounting purposes.

 

During the second quarter, the Company originated or acquired new debt and preferred equity investments totaling $541.0 million, all of which was retained and $477.9 million of which was funded. New mortgage investments totaled $280.0 million, all of which was retained and $257.7 million of which was funded, at a weighted average current yield of 7.1% and a weighted average levered yield of 9.1%, after taking into consideration $120.6 million drawn on the Company’s mortgage financing facility. New subordinate debt and preferred equity investments totaled $261.0 million, all of which was retained and $220.1 million of which was funded, at a weighted average yield of 9.9%.

 

4



 

Dividends

 

In the second quarter of 2018, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:

 

·                  $0.8125 per share of common stock, which was paid on July 16, 2018 to shareholders of record on the close of business on June 29, 2018; and

 

·                  $0.40625 per share on the Company’s 6.50% Series I Cumulative Redeemable Preferred Stock for the period April 15, 2018 through and including July 14, 2018, which was paid on July 16, 2018 to shareholders of record on the close of business on June 29, 2018, and reflects the regular quarterly dividend, which is the equivalent of an annualized dividend of $1.625 per share.

 

Non-GAAP Supplemental Financial Measures

 

Funds from Operations (FFO)

 

FFO is a widely recognized non-GAAP measure of REIT performance. The Company computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company does. The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002, and subsequently amended, defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles, or GAAP), excluding gains (or losses) from sales of properties, debt restructurings and real estate related impairment charges, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.

 

The Company presents FFO because it considers it an important supplemental measure of the Company’s operating performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, particularly those that own and operate commercial office properties. The Company also uses FFO as one of several criteria to determine performance-based bonuses for members of its senior management. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, and interest costs, providing perspective not immediately apparent from net income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company’s financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is it indicative of funds available to fund the Company’s cash needs, including our ability to make cash distributions.

 

Net Operating Income (NOI) and Cash NOI

 

NOI is a non-GAAP financial measure that is calculated as operating income before transaction related costs, gains/losses on early extinguishment of debt, marketing general and administrative expenses and non-real estate revenue. Cash NOI is calculated by subtracting free rent (net of amortization), straight-line rent, FAS 141 rental income from NOI, while adding ground lease straight-line adjustment and the allowance for straight-line tenant credit loss.

 

The Company presents NOI and Cash NOI because the Company believes that these measures, when taken together with the corresponding GAAP financial measures and our reconciliations, provide investors with meaningful information regarding the operating performance of properties. When operating performance is compared across

 

5



 

multiple periods, the investor is provided with information not immediately apparent from net income that is determined in accordance with GAAP. NOI and Cash NOI provide information on trends in the revenue generated and expenses incurred in operating our properties, unaffected by the cost of leverage, straight-line adjustments, depreciation, amortization, and other net income components. The Company uses these metrics internally as performance measures. None of these measures is an alternative to net income (determined in accordance with GAAP) and same-store performance should not be considered an alternative to GAAP net income performance.

 

6



 

SL GREEN REALTY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2018

 

2017

 

2018

 

2017

 

Revenues:

 

 

 

 

 

 

 

 

 

Rental revenue, net

 

$

211,369

 

$

279,407

 

$

426,738

 

$

560,736

 

Escalation and reimbursement

 

27,052

 

42,620

 

53,451

 

86,812

 

Investment income

 

49,273

 

60,622

 

94,563

 

100,921

 

Other income

 

13,422

 

15,501

 

28,059

 

27,062

 

Total revenues

 

301,116

 

398,150

 

602,811

 

775,531

 

Expenses:

 

 

 

 

 

 

 

 

 

Operating expenses, including related party expenses $4,665 and $8,499 in 2018 and $5,262 and $9,436 in 2017.

 

56,237

 

70,852

 

116,019

 

145,358

 

Real estate taxes

 

45,322

 

60,945

 

90,983

 

122,013

 

Ground rent

 

8,846

 

8,308

 

17,154

 

16,616

 

Interest expense, net of interest income

 

53,611

 

64,856

 

101,527

 

130,478

 

Amortization of deferred financing costs

 

3,546

 

3,432

 

7,083

 

8,193

 

Depreciation and amortization

 

67,914

 

133,054

 

137,302

 

227,188

 

Transaction related costs

 

348

 

46

 

510

 

179

 

Marketing, general and administrative

 

22,479

 

24,256

 

46,007

 

48,399

 

Total expenses

 

258,303

 

365,749

 

516,585

 

698,424

 

Net income before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, purchase price and other fair value adjustments, (loss) gain on sale of real estate net, depreciable real estate reserves, and gain on sale of marketable securities

 

42,813

 

32,401

 

86,226

 

77,107

 

Equity in net income from unconsolidated joint ventures

 

4,702

 

3,412

 

8,738

 

10,026

 

Equity in net gain on sale of interest in unconsolidated joint venture/real estate

 

72,025

 

13,089

 

65,585

 

15,136

 

Purchase price and other fair value adjustment

 

11,149

 

 

60,442

 

 

(Loss) gain on sale of real estate, net

 

(14,790

)

(3,823

)

8,731

 

(3,256

)

Depreciable real estate reserves

 

 

(29,064

)

 

(85,336

)

Gain on sale of marketable securities

 

 

 

 

3,262

 

Net income

 

115,899

 

16,015

 

229,722

 

16,939

 

Net income attributable to noncontrolling interests in the Operating Partnership

 

(5,586

)

(419

)

(10,858

)

(895

)

Net (income) loss attributable to noncontrolling interests in other partnerships

 

(173

)

(786

)

(371

)

16,705

 

Preferred unit distributions

 

(2,847

)

(2,851

)

(5,696

)

(5,701

)

Net income attributable to SL Green

 

107,293

 

11,959

 

212,797

 

27,048

 

Perpetual preferred stock dividends

 

(3,737

)

(3,737

)

(7,475

)

(7,475

)

Net income attributable to SL Green common stockholders

 

$

103,556

 

$

8,222

 

$

205,322

 

$

19,573

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share (EPS)

 

 

 

 

 

 

 

 

 

Net income per share (Basic)

 

$

1.19

 

$

0.08

 

$

2.31

 

$

0.20

 

Net income per share (Diluted)

 

$

1.19

 

$

0.08

 

$

2.31

 

$

0.19

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

 

 

 

 

 

 

 

 

FFO per share (Basic)

 

$

1.69

 

$

1.79

 

$

3.35

 

$

3.36

 

FFO per share (Diluted)

 

$

1.69

 

$

1.78

 

$

3.34

 

$

3.36

 

 

 

 

 

 

 

 

 

 

 

Basic ownership interest

 

 

 

 

 

 

 

 

 

Weighted average REIT common shares for net income per share

 

87,176

 

99,900

 

88,772

 

100,268

 

Weighted average partnership units held by noncontrolling interests

 

4,706

 

4,562

 

4,695

 

4,584

 

Basic weighted average shares and units outstanding

 

91,882

 

104,462

 

93,467

 

104,852

 

 

 

 

 

 

 

 

 

 

 

Diluted ownership interest

 

 

 

 

 

 

 

 

 

Weighted average REIT common share and common share equivalents

 

87,377

 

100,170

 

88,972

 

100,556

 

Weighted average partnership units held by noncontrolling interests

 

4,706

 

4,562

 

4,695

 

4,584

 

Diluted weighted average shares and units outstanding

 

92,083

 

104,732

 

93,667

 

105,140

 

 

7



 

SL GREEN REALTY CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

 

June 30,

 

December 31,

 

 

 

2018

 

2017

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Commercial real estate properties, at cost:

 

 

 

 

 

Land and land interests

 

$

1,893,047

 

$

2,357,051

 

Building and improvements

 

5,225,431

 

6,351,012

 

Building leasehold and improvements

 

1,423,994

 

1,450,614

 

Properties under capital lease

 

47,445

 

47,445

 

 

 

8,589,917

 

10,206,122

 

Less accumulated depreciation

 

(1,994,696

)

(2,300,116

)

 

 

6,595,221

 

7,906,006

 

Assets held for sale

 

593,995

 

338,354

 

Cash and cash equivalents

 

287,240

 

127,888

 

Restricted cash

 

92,740

 

122,138

 

Investment in marketable securities

 

28,570

 

28,579

 

Tenant and other receivables, net of allowance of $16,558 and $18,637 in 2018 and 2017, respectively

 

47,482

 

57,644

 

Related party receivables

 

27,854

 

23,039

 

Deferred rents receivable, net of allowance of $15,776 and $17,207 in 2018 and 2017, respectively

 

322,656

 

365,337

 

Debt and preferred equity investments, net of discounts and deferred origination fees of $23,216 and $25,507 in 2018 and 2017, respectively

 

2,168,515

 

2,114,041

 

Investments in unconsolidated joint ventures

 

3,059,985

 

2,362,989

 

Deferred costs, net

 

198,941

 

226,201

 

Other assets

 

290,729

 

310,688

 

Total assets

 

$

13,713,928

 

$

13,982,904

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Mortgages and other loans payable

 

$

2,538,696

 

$

2,865,991

 

Revolving credit facility

 

360,000

 

40,000

 

Unsecured term loan

 

1,500,000

 

1,500,000

 

Unsecured notes

 

1,404,203

 

1,404,605

 

Deferred financing costs, net

 

(45,488

)

(56,690

)

Total debt, net of deferred financing costs

 

5,757,411

 

5,753,906

 

Accrued interest payable

 

26,104

 

38,142

 

Accounts payable and accrued expenses

 

140,739

 

137,142

 

Deferred revenue

 

95,756

 

208,119

 

Capitalized lease obligations

 

43,221

 

42,843

 

Deferred land leases payable

 

3,567

 

3,239

 

Dividend and distributions payable

 

79,518

 

85,138

 

Security deposits

 

63,872

 

67,927

 

Liabilities related to assets held for sale

 

265,538

 

4,074

 

Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities

 

100,000

 

100,000

 

Other liabilities

 

108,151

 

189,231

 

Total liabilities

 

6,683,877

 

6,629,761

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

Noncontrolling interest in the Operating Partnership

 

486,610

 

461,954

 

Preferred units

 

301,385

 

301,735

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2018 and December 31, 2017

 

221,932

 

221,932

 

Common stock, $0.01 par value 160,000 shares authorized, 86,780 and 93,858 issued and outstanding at June 30, 2018 and December 31, 2017, respectively (including 1,055 held in Treasury at June 30, 2018 and December 31, 2017)

 

868

 

939

 

Additional paid-in capital

 

4,601,608

 

4,968,338

 

Treasury stock at cost

 

(124,049

)

(124,049

)

Accumulated other comprehensive income

 

32,622

 

18,604

 

Retained earnings

 

1,457,835

 

1,139,329

 

Total SL Green Realty Corp. stockholders’ equity

 

6,190,816

 

6,225,093

 

Noncontrolling interests in other partnerships

 

51,240

 

364,361

 

Total equity

 

6,242,056

 

6,589,454

 

Total liabilities and equity

 

$

13,713,928

 

$

13,982,904

 

 

8



 

SL GREEN REALTY CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(unaudited and in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

Funds From Operations (FFO) Reconciliation:

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to SL Green common stockholders

 

$

103,556

 

$

8,222

 

$

205,322

 

$

19,573

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

67,914

 

133,054

 

137,302

 

227,188

 

Joint venture depreciation and noncontrolling interest adjustments

 

47,308

 

25,086

 

95,314

 

49,419

 

Net income (loss) attributable to noncontrolling interests

 

5,759

 

1,205

 

11,229

 

(15,810

)

Less:

 

 

 

 

 

 

 

 

 

(Loss) gain on sale of real estate, net

 

(14,790

)

(3,823

)

8,731

 

(3,256

)

Equity in net gain on sale of interest in unconsolidated joint venture/real estate

 

72,025

 

13,089

 

65,585

 

15,136

 

Purchase price and other fair value adjustments

 

11,149

 

 

60,442

 

 

Depreciable real estate reserve

 

 

(29,064

)

 

(85,336

)

Depreciation on non-rental real estate assets

 

584

 

564

 

1,150

 

1,080

 

FFO attributable to SL Green common stockholders

 

$

155,569

 

$

186,801

 

$

313,259

 

$

352,746

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

Operating income and Same-store NOI Reconciliation:

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

115,899

 

$

16,015

 

$

229,722

 

$

16,939

 

Equity in net gain on sale of interest in unconsolidated joint venture/real estate

 

(72,025

)

(13,089

)

(65,585

)

(15,136

)

Purchase price and other fair value adjustments

 

(11,149

)

 

(60,442

)

 

Loss (gain) on sale of real estate, net

 

14,790

 

3,823

 

(8,731

)

3,256

 

Depreciable real estate reserves

 

 

29,064

 

 

85,336

 

Gain on sale of marketable securities

 

 

 

 

(3,262

)

Depreciation and amortization

 

67,914

 

133,054

 

137,302

 

227,188

 

Interest expense, net of interest income

 

53,611

 

64,856

 

101,527

 

130,478

 

Amortization of deferred financing costs

 

3,546

 

3,432

 

7,083

 

8,193

 

Operating income

 

172,586

 

237,155

 

340,876

 

452,992

 

 

 

 

 

 

 

 

 

 

 

Equity in net income from unconsolidated joint ventures

 

(4,702

)

(3,412

)

(8,738

)

(10,026

)

Marketing, general and administrative expense

 

22,479

 

24,256

 

46,007

 

48,399

 

Transaction related costs, net

 

348

 

46

 

510

 

179

 

Investment income

 

(49,273

)

(60,622

)

(94,563

)

(100,921

)

Non-building revenue

 

(9,397

)

(6,571

)

(14,176

)

(4,937

)

Net operating income (NOI)

 

132,041

 

190,852

 

269,916

 

385,686

 

 

 

 

 

 

 

 

 

 

 

Equity in net income from unconsolidated joint ventures

 

4,702

 

3,412

 

8,738

 

10,026

 

SLG share of unconsolidated JV depreciation and amortization

 

47,565

 

31,286

 

95,184

 

62,501

 

SLG share of unconsolidated JV interest expense, net of interest income

 

36,670

 

22,876

 

72,450

 

43,969

 

SLG share of unconsolidated JV amortization of deferred financing costs

 

1,752

 

2,314

 

3,425

 

4,935

 

SLG share of unconsolidated JV loss on early extinguishment of debt

 

 

 

 

 

SLG share of unconsolidated JV transaction related costs

 

 

56

 

 

110

 

SLG share of unconsolidated JV investment income

 

(1,708

)

(3,916

)

(4,794

)

(8,746

)

SLG share of unconsolidated JV non-building revenue

 

(1,147

)

(950

)

(2,148

)

(7,179

)

NOI including SLG share of unconsolidated JVs

 

219,875

 

245,930

 

442,771

 

491,302

 

 

 

 

 

 

 

 

 

 

 

NOI from other properties/affiliates

 

(26,009

)

(57,631

)

(57,138

)

(114,927

)

Same-Store NOI

 

193,866

 

188,299

 

385,633

 

376,375

 

 

 

 

 

 

 

 

 

 

 

Ground lease straight-line adjustment

 

524

 

524

 

1,048

 

1,048

 

Joint Venture ground lease straight-line adjustment

 

258

 

277

 

640

 

562

 

Straight-line and free rent

 

(1,474

)

(6,625

)

(3,563

)

(14,673

)

Rental income - FAS 141

 

(1,238

)

(1,121

)

(2,921

)

(2,315

)

Joint Venture straight-line and free rent

 

(4,052

)

(5,163

)

(8,411

)

(10,672

)

Joint Venture rental income - FAS 141

 

(1,261

)

(3,320

)

(2,443

)

(7,013

)

Same-store cash NOI

 

$

186,623

 

$

172,871

 

$

369,983

 

$

343,312

 

 

9



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

 

 

SL GREEN REALTY CORP.

 

 

 

/s/ Matthew J. DiLiberto

 

Matthew J. DiLiberto

 

Chief Financial Officer

 

 

Date: July 26, 2018

 

 

10