SL Green Realty Corp. Reports Fourth Quarter and Full Year 2019 EPS of $0.22 and $3.11 Per Share; and FFO of $1.75 and $7.00 Per Share

NEW YORK--(BUSINESS WIRE)--Jan. 22, 2020-- SL Green Realty Corp. (NYSE:SLG):

Financial and Operating Highlights

  • Net income attributable to common stockholders of $0.22 per share for the fourth quarter and $3.11 for the full year 2019 as compared to net loss of $0.73 and net income of $2.67 per share for the same periods in 2018.
  • Funds from operations, or FFO, of $1.75 per share for the fourth quarter and $7.00 per share for the year ended December 31, 2019, as compared to $1.61 and $6.62 per share for the same periods in the prior year.
  • Same-store cash net operating income, or NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased 2.6% for the full year excluding lease termination income and free rent given to Viacom at 1515 Broadway, as compared to the prior year.
  • Signed 59 Manhattan office leases covering 1,283,470 square feet in the fourth quarter and 163 Manhattan leases covering 2,468,365 square feet for the full year. The mark-to-market on signed Manhattan office leases was 56.0% higher for the fourth quarter and 38.1% for the full year over the previous fully escalated rents on the same spaces.
  • Reached 65% leased at One Vanderbilt Avenue after signing a new lease with Oak Hill Advisors and expansions with The Carlyle Group and McDermott Will & Emery LLP during the fourth quarter.
  • Manhattan same-store occupancy was 96.2% as of December 31, 2019, inclusive of leases signed but not yet commenced, as compared to 95.3% at the end of the previous quarter.

Investing Highlights

  • Announced an increase to the size of the Company's share repurchase program by an additional $500 million, bringing the program to a total of $3.0 billion. To date the Company has repurchased a total of 22.7 million shares of its common stock under the program and redeemed 0.6 million common units of its Operating Partnership, or OP units. The average price of total share repurchases and OP Unit redemptions to date is $95.70 per share/unit.
  • Closed on the acquisition of 707 Eleventh Avenue for a gross purchase price of $90.0 million. The 160,000-square-foot property will be redeveloped into a modern, Class-A building, attracting companies across industries, including TAMI and boutique FIRE tenants.
  • Closed on the sale of 360 Hamilton Avenue in White Plains, New York and 100, 200 and 500 Summit Lake Drive in Valhalla, New York, reducing the Company’s combined debt by $228.7 million.
  • Closed on the sale of the development site at 562 Fifth Avenue for a sale price of $52.4 million. The transaction generated net cash proceeds to the Company of $50.9 million.
  • Closed on the sale of the development site at 1640 Flatbush Avenue in Brooklyn, for a sale price of $16.2 million. The transaction generated net cash proceeds to the Company of $15.6 million.
  • Closed on the sale of 1010 Washington Boulevard in Stamford, Connecticut, for a sale price of $23.1 million. The transaction generated net cash proceeds to the Company of $20.9 million.

Summary

SL Green Realty Corp. (the "Company") (NYSE:SLG) today reported net income attributable to common stockholders for the quarter ended December 31, 2019 of $17.4 million, or $0.22 per share, as compared to net loss attributable to common stockholders of $61.2 million, or $0.73 per share, for the same quarter in 2018.

The Company also reported net income attributable to common stockholders for the year ended December 31, 2019 of $255.5 million, or $3.11 per share, as compared to net income attributable to common stockholders of $232.3 million, or $2.67 per share, for 2018. Net income attributable to common stockholders for the year ended December 31, 2019 includes $0.69 per share, of net gains recognized from the sale of real estate offset by $0.08 per share of depreciable real estate reserves.

The Company reported FFO for the quarter ended December 31, 2019 of $147.6 million, or $1.75 per share, as compared to FFO for the same period in 2018 of $142.7 million, or $1.61 per share.

The Company also reported FFO for the year ended December 31, 2019 of $605.7 million, or $7.00 per share, as compared to FFO for 2018 of $605.7 million, or $6.62 per share.

All per share amounts are presented on a diluted basis.

Operating and Leasing Activity

For the quarter ended December 31, 2019, the Company reported consolidated revenues and operating income of $308.1 million and $155.4 million, respectively, compared to $317.0 million and $158.2 million, respectively, for the same period in 2018.

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures increased by 2.0% for the fourth quarter and 2.6% for the year ended December 31, 2019, excluding lease termination income and free rent given to Viacom at 1515 Broadway.

During the fourth quarter, the Company signed 59 office leases in its Manhattan portfolio totaling 1,283,470 square feet. Thirty-nine leases comprising 941,150 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 $73.52 per rentable square foot, representing a 56.0% increase over the previous fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the fourth quarter was 10.6 years and average tenant concessions were 7.9 months of free rent with a tenant improvement allowance of $64.56 per rentable square foot.

During 2019, the Company signed 163 office leases in its Manhattan portfolio totaling 2,468,365 square feet. One hundred sixteen leases comprising 1,761,686 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 $73.36 per rentable square foot, representing a 38.1% increase over the previously fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in 2019 was 10.7 years, or 11.1 years including the office leases signed at One Vanderbilt, and average tenant concessions were 6.8 months of free rent with a tenant improvement allowance of $63.38 per rentable square foot.

Occupancy in the Company's Manhattan same-store portfolio was 96.2% as of December 31, 2019, inclusive of 373,434 square feet of leases signed but not yet commenced, as compared to 95.3% as of September 30, 2019.

Significant leases that were signed in the fourth quarter included:

  • New lease with Amazon for 335,408 square feet at 410 10th Avenue, for 16.2 years;
  • Renewal with BMW of Manhattan, Inc. for 226,556 square feet at 555 West 57th Street, for 10.0 years;
  • New lease with Strategic Family, Inc. for 82,557 square feet at 711 Third Avenue, for 6.0 years;
  • New lease with Oak Hill Advisors for 45,954 square feet at One Vanderbilt Avenue, for 15.0 years;
  • New lease with West Monroe Partners, Inc. for 41,715 square feet at Worldwide Plaza, for 10.5 years;
  • New lease with RAD Entertainment Group for 39,436 square feet at 1515 Broadway, for 20.0 years; and
  • New lease with Greenberg Traurig for 38,098 square feet at 420 Lexington Avenue, for 15.0 years.

Investment Activity

In December, the Company announced that its Board of Directors authorized a $500 million increase to the size of its share repurchase program, bringing the program to a total of $3.0 billion. To date, the Company has acquired 22.7 million shares of its common stock under the program and redeemed 0.6 million common units of its Operating Partnership, or OP units, allowing the Company to save approximately $82.7 million of common dividends and distributions on an annualized basis. The average price of total share repurchases and OP Unit redemptions to date is $95.70 per share/unit.

In January, the Company closed on the acquisition of 707 Eleventh Avenue for a gross purchase price of $90.0 million. The 160,000-square-foot property will be redeveloped into a modern, Class-A building, attracting companies across industries, including TAMI and boutique FIRE tenants.

In December, the Company closed on the sale of 360 Hamilton Avenue in White Plains, New York and 100, 200 and 500 Summit Lake Drive in Valhalla, New York, reducing the Company’s combined debt by $228.7 million.

In December, the Company closed on the sale of the development site at 562 Fifth Avenue for a sale price of $52.4 million. The transaction generated net cash proceeds to the Company of $50.9 million.

In December, the Company closed on the sale of the development site at 1640 Flatbush Avenue in Brooklyn, for a sale price of $16.2 million. The transaction generated net cash proceeds to the Company of $15.6 million.

In November, the Company closed on the previously announced sale of 1010 Washington Boulevard in Stamford, Connecticut, for a sale price of $23.1 million. The transaction generated net cash proceeds to the Company of $20.9 million.

Debt and Preferred Equity Investment Activity

The carrying value of the Company’s debt and preferred equity investment portfolio decreased to $1.61 billion at December 31, 2019, including $1.58 billion of investments at a weighted average current yield of 8.6% that are classified in the debt and preferred equity line item on the balance sheet, and mortgage investments aggregating $0.03 billion at a weighted average current yield of 6.5% that are included in other balance sheet line items for accounting purposes.

During the fourth quarter, the Company originated or acquired new subordinate debt and preferred equity investments totaling $150.0 million, all of which was retained and $86.8 million was funded, at a weighted average yield of 10.2%.

Dividends

In the fourth quarter of 2019, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:

  • $0.885 per share of common stock, which was paid on January 15, 2020 to shareholders of record on the close of business on January 2, 2020; and
  • $0.40625 per share on the Company's 6.50% Series I Cumulative Redeemable Preferred Stock for the period October 15, 2019 through and including January 14, 2020, which was paid on January 15, 2020 to shareholders of record on the close of business on January 2, 2020, and reflects the regular quarterly dividend, which is the equivalent of an annualized dividend of $1.625 per share.

Conference Call and Audio Webcast

The Company's executive management team, led by Marc Holliday, Chairman and Chief Executive Officer, will host a conference call and audio webcast on Thursday, January 23, 2020 at 2:00 pm ET to discuss the financial results.

The supplemental data will be available prior to the quarterly conference call in the Investors section of the SL Green Realty Corp. website at https://slgreen.com/ under “Financial Reports.”

The live conference call will be webcast in listen-only mode in the Investors section of the SL Green Realty Corp. website at https://slgreen.com/ under “Presentations & Webcasts”. The conference may also be accessed by dialing toll-free (877) 312-8765 or international (419) 386-0002, and using passcode 2796502.

A replay of the call will be available 7 days after the call by dialing (855) 859-2056 using passcode 2796502. A webcast replay will also be available in the Investors section of the SL Green Realty Corp. website at https://slgreen.com/ under “Presentations & Webcasts”.

Company Profile

SL Green Realty Corp., an S&P 500 company and New York City's largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of December 31, 2019, SL Green held interests in 97 buildings totaling 44.0 million square feet. This included ownership interests in 26.5 million square feet of Manhattan buildings and 16.4 million square feet securing debt and preferred equity investments.

To be added to the Company's distribution list or to obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at (212) 594-2700.

Disclaimers

Non-GAAP Financial Measures
During the quarterly conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found in this release and in the Company’s Supplemental Package.

Forward-looking Statements
This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms.

Forward-looking statements contained in this press release are subject to a number of risks and uncertainties, many of which are beyond our control, that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by forward-looking statements made by us. Factors and risks to our business that could cause actual results to differ from those contained in the forward-looking statements are described in our filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

SL GREEN REALTY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

Revenues:

 

 

 

 

 

 

 

Rental revenue, net

$

218,495

 

 

$

216,477

 

 

$

863,061

 

 

$

864,978

 

Escalation and reimbursement

31,957

 

 

31,042

 

 

120,496

 

 

113,596

 

Investment income

42,423

 

 

57,952

 

 

195,590

 

 

201,492

 

Other income

15,207

 

 

11,565

 

 

59,848

 

 

47,326

 

Total revenues

308,082

 

 

317,036

 

 

1,238,995

 

 

1,227,392

 

Expenses:

 

 

 

 

 

 

 

Operating expenses, including related party expenses of $4,531 and $18,106 in 2019 and $4,534 and $17,823 in 2018

58,814

 

 

56,476

 

 

234,676

 

 

229,347

 

Real estate taxes

47,756

 

 

46,563

 

 

190,764

 

 

186,351

 

Operating lease rent

8,297

 

 

6,304

 

 

33,188

 

 

32,965

 

Interest expense, net of interest income

44,724

 

 

51,974

 

 

190,521

 

 

208,669

 

Amortization of deferred financing costs

3,087

 

 

2,695

 

 

11,653

 

 

12,408

 

Depreciation and amortization

64,090

 

 

71,458

 

 

272,358

 

 

279,507

 

Loan loss and other investment reserves, net of recoveries

 

 

5,752

 

 

 

 

6,839

 

Transaction related costs

369

 

 

426

 

 

729

 

 

1,099

 

Marketing, general and administrative

25,575

 

 

26,030

 

 

100,875

 

 

92,631

 

Total expenses

252,712

 

 

267,678

 

 

1,034,764

 

 

1,049,816

 

 

 

 

 

 

 

 

 

Equity in net (loss) income from unconsolidated joint ventures

(11,874

)

 

(2,398

)

 

(34,518

)

 

7,311

 

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

 

 

167,445

 

 

76,181

 

 

303,967

 

Purchase price and other fair value adjustment

 

 

 

 

69,389

 

 

57,385

 

Loss on sale of real estate, net

(19,241

)

 

(36,984

)

 

(16,749

)

 

(30,757

)

Depreciable real estate reserves

 

 

(220,852

)

 

(7,047

)

 

(227,543

)

Loss on early extinguishment of debt

 

 

(14,889

)

 

 

 

(17,083

)

Net income (loss)

24,255

 

 

(58,320

)

 

291,487

 

 

270,856

 

Net (income) loss attributable to noncontrolling interests in the Operating Partnership

(995

)

 

3,439

 

 

(13,301

)

 

(12,216

)

Net loss attributable to noncontrolling interests in other partnerships

635

 

 

241

 

 

3,159

 

 

6

 

Preferred unit distributions

(2,726

)

 

(2,842

)

 

(10,911

)

 

(11,384

)

Net income (loss) attributable to SL Green

21,169

 

 

(57,482

)

 

270,434

 

 

247,262

 

Perpetual preferred stock dividends

(3,737

)

 

(3,737

)

 

(14,950

)

 

(14,950

)

Net income (loss) attributable to SL Green common stockholders

$

17,432

 

 

$

(61,219

)

 

$

255,484

 

 

$

232,312

 

 

 

 

 

 

 

 

 

Earnings Per Share (EPS)

 

 

 

 

 

 

 

Net income (loss) per share (Basic)

$

0.21

 

 

$

(0.73

)

 

$

3.10

 

 

$

2.67

 

Net income (loss) per share (Diluted)

$

0.22

 

 

$

(0.73

)

 

$

3.11

 

 

$

2.67

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

 

 

 

 

 

 

FFO per share (Basic)

$

1.76

 

 

$

1.62

 

 

$

7.04

 

 

$

6.63

 

FFO per share (Diluted)

$

1.75

 

 

$

1.61

 

 

$

7.00

 

 

$

6.62

 

 

 

 

 

 

 

 

 

Basic ownership interest

 

 

 

 

 

 

 

Weighted average REIT common shares for net income per share

79,517

 

 

83,967

 

 

81,733

 

 

86,753

 

Weighted average partnership units held by noncontrolling interests

4,250

 

 

4,220

 

 

4,275

 

 

4,562

 

Basic weighted average shares and units outstanding

83,767

 

 

88,187

 

 

86,008

 

 

91,315

 

 

 

 

 

 

 

 

 

Diluted ownership interest

 

 

 

 

 

 

 

Weighted average REIT common share and common share equivalents

80,070

 

 

84,156

 

 

82,287

 

 

86,968

 

Weighted average partnership units held by noncontrolling interests

4,250

 

 

4,220

 

 

4,275

 

 

4,562

 

Diluted weighted average shares and units outstanding

84,320

88,376

 

86,562

 

91,530

SL GREEN REALTY CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

December 31,

 

December 31,

 

2019

 

2018

Assets

(Unaudited)

 

 

Commercial real estate properties, at cost:

 

 

 

Land and land interests

$

1,751,544

 

 

$

1,774,899

 

Building and improvements

5,154,990

 

 

5,268,484

 

Building leasehold and improvements

1,433,793

 

 

1,423,107

 

Right of use asset - financing leases

47,445

 

 

47,445

 

Right of use asset - operating leases

396,795

 

 

 

 

8,784,567

 

 

8,513,935

 

Less: accumulated depreciation

(2,060,560

)

 

(2,099,137

)

 

6,724,007

 

 

6,414,798

 

Assets held for sale

391,664

 

 

 

Cash and cash equivalents

166,070

 

 

129,475

 

Restricted cash

75,360

 

 

149,638

 

Investment in marketable securities

29,887

 

 

28,638

 

Tenant and other receivables

43,968

 

 

41,589

 

Related party receivables

21,121

 

 

28,033

 

Deferred rents receivable

283,011

 

 

335,985

 

Debt and preferred equity investments, net of discounts and deferred origination fees of $14,562 and $22,379 and allowances of $1,750 and $5,750 in 2019 and 2018, respectively

1,580,306

 

 

2,099,393

 

Investments in unconsolidated joint ventures

2,912,842

 

 

3,019,020

 

Deferred costs, net

205,283

 

 

209,110

 

Other assets

332,801

 

 

295,679

 

Total assets

$

12,766,320

 

 

$

12,751,358

 

 

 

 

 

Liabilities

 

 

 

Mortgages and other loans payable

$

2,211,883

 

 

$

1,988,160

 

Revolving credit facility

240,000

 

 

500,000

 

Unsecured term loan

1,500,000

 

 

1,500,000

 

Unsecured notes

1,502,837

 

 

1,503,758

 

Deferred financing costs, net

(46,583

)

 

(50,218

)

Total debt, net of deferred financing costs

5,408,137

 

 

5,441,700

 

Accrued interest payable

22,148

 

 

23,154

 

Accounts payable and accrued expenses

166,905

 

 

147,061

 

Deferred revenue

114,052

 

 

94,453

 

Lease liability - financing leases

44,448

 

 

43,616

 

Lease liability - operating leases

381,671

 

 

3,603

 

Dividend and distributions payable

79,282

 

 

80,430

 

Security deposits

62,252

 

 

64,688

 

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

100,000

 

 

100,000

 

Other liabilities

177,080

 

 

116,566

 

Total liabilities

6,555,975

 

 

6,115,271

 

 

 

 

 

Commitments and contingencies

 

 

 

Noncontrolling interest in the Operating Partnership

409,862

 

 

387,805

 

Preferred units

283,285

 

 

300,427

 

 

 

 

 

Equity

 

 

 

Stockholders’ equity:

 

 

 

Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both December 31, 2019 and December 31, 2018

221,932

 

 

221,932

 

Common stock, $0.01 par value 160,000 shares authorized, 80,258 and 84,739 issued and outstanding at December 31, 2019 and December 31, 2018, respectively (including 1,055 held in Treasury at both December 31, 2019 and December 31, 2018)

803

 

 

847

 

Additional paid-in capital

4,286,395

 

 

4,508,685

 

Treasury stock at cost

(124,049

)

 

(124,049

)

Accumulated other comprehensive (loss) income

(28,485

)

 

15,108

 

Retained earnings

1,084,719

 

 

1,278,998

 

Total SL Green Realty Corp. stockholders’ equity

5,441,315

 

 

5,901,521

 

Noncontrolling interests in other partnerships

75,883

 

 

46,334

 

Total equity

5,517,198

 

 

5,947,855

 

Total liabilities and equity

$

12,766,320

 

$

12,751,358

SL GREEN REALTY CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(unaudited and in thousands, except per share data)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

Funds From Operations (FFO) Reconciliation:

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Net income (loss) attributable to SL Green common stockholders

$

17,432

 

 

$

(61,219

)

 

$

255,484

 

 

$

232,312

 

Add:

 

 

 

 

 

 

 

Depreciation and amortization

64,090

 

 

71,458

 

 

272,358

 

 

279,507

 

Joint venture depreciation and noncontrolling interest adjustments

47,224

 

 

46,348

 

 

192,426

 

 

187,147

 

Net income (loss) attributable to noncontrolling interests

360

 

 

(3,680

)

 

10,142

 

 

12,210

 

Less:

 

 

 

 

 

 

 

Loss on sale of real estate, net

(19,241

)

 

(36,984

)

 

(16,749

)

 

(30,757

)

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

 

 

167,445

 

 

76,181

 

 

303,967

 

Purchase price and other fair value adjustments

 

 

 

 

69,389

 

 

57,385

 

Depreciable real estate reserves

 

 

(220,852

)

 

(7,047

)

 

(227,543

)

Depreciation on non-rental real estate assets

742

 

 

638

 

 

2,935

 

 

2,404

 

FFO attributable to SL Green common stockholders

$

147,605

 

 

$

142,660

 

 

$

605,701

 

 

$

605,720

 

 
 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

Operating income and Same-store NOI Reconciliation:

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Net income (loss)

$

24,255

 

 

$

(58,320

)

 

$

291,487

 

 

$

270,856

 

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

 

 

(167,445

)

 

(76,181

)

 

(303,967

)

Purchase price and other fair value adjustments

 

 

 

 

(69,389

)

 

(57,385

)

Loss on sale of real estate, net

19,241

 

 

36,984

 

 

16,749

 

 

30,757

 

Depreciable real estate reserves

 

 

220,852

 

 

7,047

 

 

227,543

 

Depreciation and amortization

64,090

 

 

71,458

 

 

272,358

 

 

279,507

 

Interest expense, net of interest income

44,724

 

 

51,974

 

 

190,521

 

 

208,669

 

Amortization of deferred financing costs

3,087

 

 

2,695

 

 

11,653

 

 

12,408

 

Operating income

155,397

 

 

158,198

 

 

644,245

 

 

668,388

 

 

 

 

 

 

 

 

 

Equity in net loss (income) from unconsolidated joint ventures

11,874

 

 

2,398

 

 

34,518

 

 

(7,311

)

Marketing, general and administrative expense

25,575

 

 

26,030

 

 

100,875

 

 

92,631

 

Transaction related costs, net

369

 

 

426

 

 

729

 

 

1,099

 

Investment income

(42,423

)

 

(57,952

)

 

(195,590

)

 

(201,492

)

Loan loss and other investment reserves, net of recoveries

 

 

5,752

 

 

 

 

6,839

 

Non-building revenue

(9,392

)

 

(6,391

)

 

(31,860

)

 

(22,099

)

Loss on early extinguishment of debt

 

 

14,889

 

 

 

 

17,083

 

Net operating income (NOI)

141,400

 

 

143,350

 

 

552,917

 

 

555,138

 

 

 

 

 

 

 

 

 

Equity in net (loss) income from unconsolidated joint ventures

(11,874

)

 

(2,398

)

 

(34,518

)

 

7,311

 

SLG share of unconsolidated JV depreciation and amortization

46,429

 

 

46,939

 

 

189,290

 

 

187,962

 

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

37,168

 

 

37,266

 

 

153,151

 

 

144,663

 

SLG share of unconsolidated JV amortization of deferred financing costs

1,751

 

 

1,500

 

 

6,415

 

 

6,315

 

SLG share of unconsolidated JV loss on early extinguishment of debt

 

 

 

 

258

 

 

 

SLG share of unconsolidated JV investment income

(314

)

 

(2,751

)

 

(3,331

)

 

(12,014

)

SLG share of unconsolidated JV non-building revenue

(1,292

)

 

(725

)

 

(4,016

)

 

(3,636

)

NOI including SLG share of unconsolidated JVs

213,268

 

 

223,181

 

 

860,166

 

 

885,739

 

 

 

 

 

 

 

 

 

NOI from other properties/affiliates

(14,382

)

 

(17,877

)

 

(55,762

)

 

(84,595

)

Same-Store NOI

198,886

 

 

205,304

 

 

804,404

 

 

801,144

 

 

 

 

 

 

 

 

 

Ground lease straight-line adjustment

497

 

 

231

 

 

2,039

 

 

1,803

 

Joint Venture ground lease straight-line adjustment

107

 

 

258

 

 

680

 

 

1,031

 

Straight-line and free rent

(1,501

)

 

(6,036

)

 

(6,359

)

 

(15,429

)

Amortization of acquired above and below-market leases, net

(903

)

 

(1,185

)

 

(3,677

)

 

(5,420

)

Joint Venture straight-line and free rent

(359

)

 

(4,525

)

 

(46,125

)

 

(19,500

)

Joint Venture amortization of acquired above and below-market leases, net

(4,321

)

 

(4,225

)

 

(16,953

)

 

(15,841

)

Same-store cash NOI

$

192,406

 

 

$

189,822

 

 

$

734,009

 

 

$

747,788

 

SL GREEN REALTY CORP.
NON-GAAP FINANCIAL MEASURES - DISCLOSURES

Funds from Operations (FFO)

FFO is a widely recognized non-GAAP financial measure of REIT performance. The Company computes FFO in accordance with standards established by 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 GAAP), excluding gains (or losses) from sales of properties, 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 real estate related impairment charges, 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.

Funds Available for Distribution (FAD)

FAD is a non-GAAP financial measure that is calculated as FFO plus non-real estate depreciation, allowance for straight line credit loss, adjustment for straight line operating lease rent, non-cash deferred compensation, and a pro-rata adjustment for FAD from SLG’s unconsolidated JVs, less straight line rental income, free rent net of amortization, second cycle tenant improvement and leasing costs, and recurring building improvements.

FAD is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined in accordance with GAAP. FAD is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company’s ability to fund its dividends. Because all companies do not calculate FAD the same way, the presentation of FAD may not be comparable to similarly titled measures of other companies. FAD does not represent cash flow from operating, investing and finance 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, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company’s liquidity.

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre)

EBITDAre is a non-GAAP financial measure. The Company computes EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which may not be comparable to EBITDAre reported by other REITs that do not compute EBITDAre in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company does. The White Paper on EBITDAre approved by the Board of Governors of NAREIT in September 2017 defines EBITDAre as net income (loss) (computed in accordance with Generally Accepted Accounting Principles, or GAAP), plus interest expense, plus income tax expense, plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated joint ventures, plus adjustments to reflect the entity's share of EBITDAre of unconsolidated joint ventures.

The Company presents EBITDAre because the Company believes that EBITDAre, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of the Company’s ability to incur and service debt. EBITDAre should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company’s financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company’s liquidity.

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 also a non-GAAP financial measure that is calculated by subtracting free rent (net of amortization), straight-line rent, and the amortization of acquired above and below-market leases from NOI, while adding operating 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 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.

Coverage Ratios

The Company presents fixed charge and debt service coverage ratios to provide a measure of the Company’s financial flexibility to service current debt amortization, interest expense and operating lease rent from current cash net operating income. These coverage ratios represent a common measure of the Company’s ability to service fixed cash payments; however, these ratios are not used as an alternative to cash flow from operating, financing and investing activities (determined in accordance with GAAP).

SLG-EARN

Source: SL Green Realty Corp.

Matt DiLiberto
Chief Financial Officer
(212) 594-2700