Raises 2018 Earnings Guidance
NEW YORK–(BUSINESS WIRE)–
SL Green Realty Corp. (NYSE: SLG):
Financial and Operating Highlights
-
Net income attributable to common stockholders of $0.29 per share
for the fourth quarter and $0.87 per share for the full year 2017 as
compared to $0.44 and $2.34 per share for the same periods in 2016.
-
FFO of $1.60 per share for the fourth quarter and $6.45 per share
for the year ended December 31, 2017 as compared to $1.43 and $8.29
per share for the same periods in 2016. FFO for the fourth quarter of
2017 included a $4.1 million charge to MG&A expense related to
forfeiture of the Company’s 2014 Outperformance Plan awards, partially
offset by a $3.2 million real estate tax refund that was received in
the Suburban portfolio.
-
Raising 2018 earnings guidance by $0.05 per share to net income per
share of $2.32 to $2.42, and NAREIT defined FFO per share of
$6.70 to $6.80 after taking into consideration the $4.1 million charge
taken in the fourth quarter of 2017 related to forfeiture of the
Company’s 2014 Outperformance Plan awards, which was previously
projected to be a 2018 expense.
-
Same-store cash NOI, including our share of same-store cash NOI
from unconsolidated joint ventures, increased 2.0% for the full year,
or 2.7% excluding lease termination income, as compared to the prior
year.
-
Signed 47 Manhattan office leases covering 358,135 square feet in
the fourth quarter and 191 Manhattan office leases covering 1,472,657
square feet during the year ended December 31, 2017. The
mark-to-market on signed Manhattan office leases was 12.1% higher for
the fourth quarter and 11.3% higher for the year over the previously
fully escalated rents on the same spaces.
-
Signed 22 Suburban office leases covering 116,212 square feet in
the fourth quarter and 89 Suburban office leases covering 542,084
square feet during the year ended December 31, 2017. The
mark-to-market on signed Suburban office leases was 3.7% higher for
the fourth quarter and 2.9% higher for the year over the previously
fully escalated rents on the same spaces.
-
Manhattan same-store occupancy, inclusive of leases signed but not
yet commenced, increased by 50 basis points to 95.3% as of
December 31, 2017.
-
Suburban same-store occupancy, inclusive of leases signed but not
yet commenced, increased by 60 basis points to 87.2% as of
December 31, 2017.
Investing Highlights
-
During the fourth quarter, the Company repurchased 4.9 million
shares of common stock at an average price of $100.76 per share and
announced a $500 million increase to the size of its share repurchase
program to $1.5 billion. To date, the Company has acquired 9.3 million
shares of its common stock under the program at an average price of
$101.46 per share.
-
Closed on the sale of a 30% interest in 1515 Broadway at a gross
asset valuation of $1.950 billion, or $1,045 per square foot, pursuant
to the previously announced agreement to sell interests totaling 43%.
The balance of the transaction is scheduled to close in the first
quarter. The two closings, in total, are expected to generate net
proceeds of $433.8 million.
-
Closed on the previously announced sale of 600 Lexington Avenue in
January at a gross asset valuation of $305.0 million, or $1,005 per
square foot. The transaction generated net proceeds of $290.4 million.
-
Closed on the previously announced sale of 125 Chubb Avenue in
Lyndhurst, New Jersey, for a total gross asset valuation of $29.5
million. The transaction generated net proceeds of $28.7 million.
-
Together with our joint venture partner, entered into an agreement
to sell the multi-family property at 1274 Fifth Avenue at a gross
asset valuation of $44.1 million. The transaction is expected to close
during the first quarter and generate net proceeds of $4.0 million.
Financing Highlights
-
Fitch Ratings upgraded the corporate credit ratings for the
Company, including the Company’s Issuer Default Rating (IDR), to ‘BBB’
from ‘BBB-‘ with a Rating Outlook of Stable.
-
Refinanced, extended and expanded our unsecured corporate credit
facility by $217 million, to $3.0 billion. The new facility, which
reduced overall borrowing costs, includes a $1.5 billion revolving
line of credit and $1.3 billion funded term loan component that both
mature in 2023 as well as a new $200.0 million 7-year term loan
component that matures in 2024.
-
Together with our joint venture partner, closed on a $195.0 million
refinancing of 1552 Broadway, which bears interest at a floating rate
of 2.65% over LIBOR. The new loan matures in 2022, as extended, and
replaces the previous $185.4 million of indebtedness on the property.
-
Issued an additional $100.0 million of 4.50% senior unsecured notes
due December 2022. The Notes priced at 105.334% plus accrued interest
with a yield to maturity of 3.298% and generated net proceeds of
$104.7 million.
-
Together with our joint venture partner, closed on a $195.0 million
refinancing of 55 West 46th Street, known as Tower 46, which bears
interest at a floating rate of 2.125% over LIBOR. The new loan matures
in 2023, as extended, and replaces the previous $165.6 million of
indebtedness on the property.
-
Together with our joint venture partner, closed on a new $65.0
million mezzanine loan at 650 Fifth Avenue. The loan matures in
October 2022 and carries a fixed interest rate of 5.450%. The property
is also financed with a $210.0 million mortgage that matures in
October 2022 and bears interest at a fixed interest rate of 4.460%.
Summary
SL Green Realty Corp. (the “Company”) (NYSE: SLG) today reported net
income attributable to common stockholders for the quarter ended
December 31, 2017 of $28.0 million, or $0.29 per share, as compared to
net income attributable to common stockholders of $44.0 million,
or $0.44 per share, for the same quarter in 2016.
The Company also reported net income attributable to common stockholders
for the year ended December 31, 2017 of $86.4 million, or $0.87 per
share, as compared to net income attributable to common stockholders of
$234.9 million, or $2.34 per share, for the same period in 2016. Net
income attributable to common stockholders for the year ended
December 31, 2017 includes $89.4 million, or $0.86 per share, of net
gains recognized from the sale of real estate as compared to $282.1
million, or $2.69 per share, for the same period in 2016.
The Company reported funds from operations, or FFO, for the quarter
ended December 31, 2017 of $161.7 million, or $1.60 per share, as
compared to FFO for the same period in 2016 of $150.8 million, or $1.43
per share. FFO for the fourth quarter of 2017 included a $4.1 million
charge to MG&A expenses related to forfeiture of the Company’s 2014
Outperformance Plan awards, partially offset by a $3.2 million real
estate tax refund that was received at 1-6 International Drive in Rye
Brook, NY, following a successful appeal.
The Company also reported FFO for the year ended December 31, 2017 of
$667.3 million, or $6.45 per share, as compared to FFO for the same
period in 2016 of $869.9 million, or $8.29 per share. FFO for 2016
included $207.6 million, or $1.98 per share, of income related to the
sale of 388-390 Greenwich Street, which was closed in the second quarter
of 2016.
All per share amounts in this press release are presented on a diluted
basis.
Operating and Leasing Activity
For the quarter ended December 31, 2017, the Company reported
consolidated revenues and operating income of $361.3 million and $204.7
million, respectively, compared to $374.2 million and $199.5 million,
respectively, for the same period in 2016.
Same-store cash NOI, including our share of same-store cash NOI from
unconsolidated joint ventures, increased by 1.1% for the quarter ended
December 31, 2017, or 2.0% excluding lease termination income, as
compared to the same period in 2016. For the quarter, consolidated
property same-store cash NOI increased by 0.1% to $148.2 million, while
unconsolidated joint venture property same-store cash NOI increased by
6.5% to $30.6 million in 2017 as compared to the same period in 2016.
Same-store cash NOI, including our share of same-store cash NOI from
unconsolidated joint ventures, increased by 2.0% for the year ended
December 31, 2017, or 2.7% excluding lease termination income, as
compared to the same period in 2016. For the year, consolidated property
same-store cash NOI increased by 0.9% to $572.6 million, inclusive of
the effect of expected tenant move-outs at 485 Lexington Avenue, 1515
Broadway and 220 East 42nd Street, while unconsolidated joint
venture property same-store cash NOI increased by 7.8% to $116.8 million
in 2017 as compared to the same period in 2016.
In the fourth quarter, the Company signed 47 office leases in its
Manhattan portfolio totaling 358,135 square feet. Thirty-three leases
comprising 195,887 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 $76.86 per rentable
square foot, representing a 12.1% increase over the previously fully
escalated rents on the same office spaces. The average lease term on the
Manhattan office leases signed in the fourth quarter was 7.9 years and
average tenant concessions were 5.1 months of free rent with a tenant
improvement allowance of $55.92 per rentable square foot.
During 2017, the Company signed 191 office leases in its Manhattan
portfolio totaling 1,472,657 square feet. Manhattan office leasing
volume for 2017 was below the Company’s goal of 1,600,000 square feet as
a result of leases signed in January 2018 that were expected to be
signed in December 2017. One hundred thirty-eight leases comprising
888,144 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 $72.97 per rentable square foot,
representing an 11.3% increase over the previously fully escalated rents
on the same office spaces. The average lease term on the Manhattan
office leases signed in the year ended December 31, 2017 was 8.2 years
and average tenant concessions were 4.6 months of free rent with a
tenant improvement allowance of $56.48 per rentable square foot.
Occupancy in the Company’s Manhattan same-store portfolio increased 50
basis points to 95.3% as of December 31, 2017, inclusive of 627,956
square feet of leases signed but not yet commenced, as compared to 94.8%
as of September 30, 2017.
In the fourth quarter, the Company signed 22 office leases in its
Suburban portfolio totaling 116,212 square feet. Fourteen leases
comprising 92,684 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 $34.45 per rentable
square foot, representing a 3.7% increase over the previously fully
escalated rents on the same office spaces. The average lease term on the
Suburban office leases signed in the fourth quarter was 4.6 years and
average tenant concessions were 1.4 months of free rent with a tenant
improvement allowance of $17.84 per rentable square foot.
During the year ended 2017, the Company signed 89 office leases in its
Suburban portfolio totaling 542,084 square feet. Forty-eight leases
comprising 281,396 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 $33.62 per rentable
square foot, representing a 2.9% increase over the previously fully
escalated rents on the same office spaces. The average lease term on the
Suburban office leases signed in the year ended December 31, 2017 was
6.3 years and average tenant concessions were 5.1 months of free rent
with a tenant improvement allowance of $25.93 per rentable square foot.
Occupancy in the Company’s Suburban same-store portfolio increased 60
basis points to 87.2% as of December 31, 2017, inclusive of 8,608 square
feet of leases signed but not yet commenced, as compared to 86.6% as of
September 30, 2017.
Significant leases that were signed in the fourth quarter included:
-
Renewal and expansion with Consolidated Edison Solutions, Inc. for
47,868 square feet at 100 Summit Lake Drive in Valhalla, New York, for
5.9 years;
-
Renewal with Pride Technologies LLC and Pride Global Finance, LLC for
40,075 square feet at 420 Lexington Avenue, for 8.9 years;
-
New lease with Columbia Management Investment Advisors for 38,651
square feet at 485 Lexington Avenue, for 11.2 years;
-
New lease with Ankura Consulting Group, LLC for 29,574 square feet at
485 Lexington Avenue, for 15.7 years; and
-
New lease with Laidlaw & Company (UK) Ltd. for 20,987 square feet at
521 Fifth Avenue, for 10.8 years.
Marketing, general and administrative, or MG&A, expenses for the year
ended December 31, 2017 were $100.5 million, or 5.3% of total combined
revenues and 53 basis points of total assets, including our share of
assets from unconsolidated joint ventures. MG&A expenses for 2017
included $11.6 million related to the Company’s 2014 Outperformance Plan
which expired valueless to the recipients.
Investment Activity
During the fourth quarter, the Company repurchased 4.9 million shares of
common stock at an average price of $100.76 per share and announced that
the Company’s Board of Directors had authorized a $500 million increase
to the size of its share repurchase program, to $1.5 billion. To date,
the Company has acquired 9.3 million shares of its common stock under
the program at an average price of $101.46 per share.
In January, the Company closed on the previously announced sale of 600
Lexington Avenue, a 36-story, 303,515 square foot Midtown Manhattan
office building, for a gross sales price of $305.0 million,
or $1,005 per square foot. The transaction generated net proceeds of
$290.4 million.
In November, the Company closed on the sale of a 30% interest in 1515
Broadway, a 1.86 million-square-foot, Class-A Times Square office
building, for a gross sales price of $1.950 billion, or $1,045 per
square foot, pursuant to the previously announced agreement to
sell interests totaling 43%. The balance of the transaction is scheduled
to close in the first quarter. The two closings, in total, are expected
to generate net proceeds of approximately $433.8 million.
In October, the Company closed on the previously announced sale of 125
Chubb Avenue in Lyndhurst, New Jersey, at a gross asset valuation of
$29.5 million. The transaction generated net proceeds of $28.7 million.
In January, the Company, along with its joint venture partner, reached
an agreement to sell 1274 Fifth Avenue, a 54-unit multifamily building
know as Stonehenge on Fifth, at a gross asset valuation of $44.1
million, or $923 per square foot. The transaction is expected to close
during the first quarter and generate net proceeds of approximately $4.0
million.
Debt and Preferred Equity Investment Activity
The carrying value of the Company’s debt and preferred equity investment
portfolio totaled $2.27 billion at December 31, 2017, including $2.11
billion of investments at a weighted average current yield of 9.1% that
are classified in the debt and preferred equity line item on the balance
sheet, and investments aggregating $0.16 billion at a weighted average
current yield of 8.9% that are included in other balance sheet line
items for accounting purposes. The weighted average yield of 9.1%
excludes our investments in 2 Herald Square, which were moved to
non-accrual status in August 2017. Our investments in 2 Herald are
currently the subject of an uncontested foreclosure action, for which we
have received summary judgment and we expect to complete foreclosure in
2018. During the fourth quarter, the Company originated or acquired new
debt and preferred equity investments totaling $447.8 million, of which
$252.2 million was retained and $164.4 million of which was funded, at a
weighted average current yield of 7.5%.
Financing Activity
In December, Fitch Ratings upgraded the corporate credit ratings for the
Company, including the Company’s Issuer Default Rating (IDR), to ‘BBB’
from ‘BBB-‘ with a Rating Outlook of Stable.
In November, the Company refinanced, extended and expanded its unsecured
corporate credit facility by $217 million, to $3.0 billion. The 5-year
funded term loan component of the facility was increased
by $117 million to $1.3 billion, the maturity date extended from June
2019 to March 2023 and the current borrowing cost reduced to 110 basis
points over LIBOR. The revolving line of credit component of the
facility was reduced by $100 million to $1.5 billion, the maturity date
extended from March 2019 to March 2023, inclusive of as-of-right
extension options aggregating 1-year, and the current borrowing cost
reduced to 100 basis points over LIBOR. In addition, a new $200 million,
7-year funded term loan component was added to the facility, which
matures in November 2024 and currently bears interest at 165 basis
points over LIBOR.
In November, the Company, along with its joint venture partner, closed
on a new mezzanine loan at 650 Fifth Avenue. The new $65.0 million loan
matures in October 2022 and carries a fixed interest rate of 5.450%. The
property is also financed with a $210.0 million mortgage that matures in
October 2022 and bears interest at a fixed interest rate of 4.460%.
In October, the Company, along with its joint venture partner, closed on
the refinancing of 1552 Broadway. The new $195.0 million mortgage has a
5-year term, as extended, bears interest at a floating rate of 2.65%
over LIBOR and replaces the previous $185.4 million of indebtedness on
the property that bore interest at a floating rate of 4.17% over LIBOR.
In October, the Company issued an additional $100.0 million of 4.50%
senior unsecured notes due December 2022. The Notes priced at 105.334%
plus accrued interest with a yield to maturity of 3.298% and generated
net proceeds of $104.7 million.
In October, the Company, along with its joint venture partner, closed on
the refinancing of 55 West 46th Street, known as Tower 46. The new
$195.0 million mortgage, of which $167.8 million was funded at closing,
has a 6-year term, as extended, bears interest at a floating rate of
2.125% over LIBOR and replaces the previous $165.6 million of
indebtedness on the property that bore interest at a floating rate of
2.30% over LIBOR.
Guidance
The Company is raising its earnings guidance for the
year ending December 31, 2018 by $0.05 per share after taking into
consideration a $4.1 million charge taken in the fourth quarter of 2017
related to forfeiture of the Company’s 2014 Outperformance Plan awards,
which was previously projected to be a 2018 expense.
The Company’s revised earnings guidance for the year ending December 31,
2018 is net income per share of $2.32 to $2.42, and FFO per share of
$6.70 to $6.80, increased from the previous guidance range of $2.27 to
$2.37 and $6.65 to $6.75 per share, respectively.
Dividends
In the fourth quarter of 2017, 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 January 16, 2018
to shareholders of record on the close of business on January 2, 2018;
and
-
$0.40625 per share on the Company’s 6.50% Series I Cumulative
Redeemable Preferred Stock for the period October 15, 2017 through and
including January 14, 2018, which was paid on January 16, 2018 to
shareholders of record on the close of business on January 2, 2018,
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, Chief
Executive Officer, will host a conference call and audio webcast on
Thursday, January 25, 2018 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 3996788.
A replay of the call will be available 7 days after the call by dialing
(855) 859-2056 using passcode 3996788. A webcast replay will also be
available in the Investors section of the SL Green Realty Corp. website
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, 2017, SL
Green held interests in 121 Manhattan buildings totaling 50.0 million
square feet. This included ownership interests in 29.5 million square
feet of Manhattan buildings and debt and preferred equity investments
secured by 20.5 million square feet of buildings. In addition, SL Green
held ownership interests in 25 suburban buildings totaling 3.7 million
square feet in Brooklyn, Long Island, Westchester County, and
Connecticut.
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, |
|||||||||||||||
|
2017 |
|
2016 |
2017 |
|
2016 |
|||||||||||
|
Revenues: |
||||||||||||||||
|
Rental revenue, net |
$ |
265,492 |
$ |
279,869 |
$ |
1,100,993 |
$ |
1,323,767 |
||||||||
|
Escalation and reimbursement |
41,378 |
49,501 |
172,939 |
196,858 |
||||||||||||
|
Investment income |
45,130 |
38,661 |
193,871 |
213,008 |
||||||||||||
|
Other income |
9,342 |
|
6,211 |
|
43,670 |
|
130,348 |
|
||||||||
|
Total revenues |
361,342 |
374,242 |
1,511,473 |
1,863,981 |
||||||||||||
|
Expenses: |
||||||||||||||||
|
Operating expenses, including related party expenses of $6,459 and $21,400 in 2017 and $6,719 and |
72,079 |
78,590 |
293,364 |
312,859 |
||||||||||||
|
Real estate taxes |
58,150 |
60,457 |
244,323 |
248,388 |
||||||||||||
|
Ground rent |
8,308 |
8,308 |
33,231 |
33,261 |
||||||||||||
|
Interest expense, net of interest income |
60,933 |
64,873 |
257,045 |
321,199 |
||||||||||||
|
Amortization of deferred financing costs |
4,297 |
4,384 |
16,498 |
24,564 |
||||||||||||
|
Depreciation and amortization |
84,404 |
104,026 |
403,320 |
821,041 |
||||||||||||
|
Transaction related costs |
(2,199 |
) |
1,541 |
(1,834 |
) |
7,528 |
||||||||||
|
Marketing, general and administrative |
28,136 |
|
25,785 |
|
100,498 |
|
99,759 |
|
||||||||
|
Total expenses |
314,108 |
|
347,964 |
|
1,346,445 |
|
1,868,599 |
|
||||||||
|
Net income (loss) before equity in net income (loss) from unconsolidated joint ventures, equity in net gain interest in unconsolidated joint venture/real estate, gain on sale of real estate net, depreciable real gain (loss) on sale of marketable securities |
47,234 |
26,278 |
165,028 |
(4,618 |
) |
|||||||||||
|
Equity in net income (loss) from unconsolidated joint ventures |
7,788 |
(95 |
) |
21,892 |
11,874 |
|||||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
— |
421 |
16,166 |
44,009 |
||||||||||||
|
Gain on sale of real estate, net |
76,497 |
27,366 |
73,241 |
238,116 |
||||||||||||
|
Depreciable real estate reserves |
(93,184 |
) |
— |
(178,520 |
) |
(10,387 |
) |
|||||||||
|
Gain (loss) on sale of marketable securities |
— |
|
— |
|
3,262 |
|
(83 |
) |
||||||||
|
Net income |
38,335 |
53,970 |
101,069 |
278,911 |
||||||||||||
|
Net income attributable to noncontrolling interests in the Operating Partnership |
(1,288 |
) |
(1,966 |
) |
(3,995 |
) |
(10,136 |
) |
||||||||
|
Net (income) loss attributable to noncontrolling interests in other partnerships |
(2,478 |
) |
(1,398 |
) |
15,701 |
(7,644 |
) |
|||||||||
|
Preferred unit distributions |
(2,850 |
) |
(2,853 |
) |
(11,401 |
) |
(11,235 |
) |
||||||||
|
Net income attributable to SL Green |
31,719 |
47,753 |
101,374 |
249,896 |
||||||||||||
|
Perpetual preferred stock dividends |
(3,737 |
) |
(3,737 |
) |
(14,950 |
) |
(14,950 |
) |
||||||||
|
Net income attributable to SL Green common stockholders |
$ |
27,982 |
|
$ |
44,016 |
|
$ |
86,424 |
|
$ |
234,946 |
|
||||
|
|
||||||||||||||||
|
Earnings Per Share (EPS) |
||||||||||||||||
|
Net income per share (Basic) |
$ |
0.29 |
|
$ |
0.44 |
|
$ |
0.88 |
|
$ |
2.35 |
|
||||
|
Net income per share (Diluted) |
$ |
0.29 |
|
$ |
0.44 |
|
$ |
0.87 |
|
$ |
2.34 |
|
||||
|
|
||||||||||||||||
|
Funds From Operations (FFO) |
||||||||||||||||
|
FFO per share (Basic) |
$ |
1.61 |
|
$ |
1.44 |
|
$ |
6.47 |
|
$ |
8.32 |
|
||||
|
FFO per share (Diluted) |
$ |
1.60 |
|
$ |
1.43 |
|
$ |
6.45 |
|
$ |
8.29 |
|
||||
|
|
||||||||||||||||
|
Basic ownership interest |
||||||||||||||||
|
Weighted average REIT common shares for net income per share |
96,018 |
100,321 |
98,571 |
100,186 |
||||||||||||
|
Weighted average partnership units held by noncontrolling interests |
4,514 |
|
4,473 |
|
4,556 |
|
4,322 |
|
||||||||
|
Basic weighted average shares and units outstanding |
100,532 |
|
104,794 |
|
103,127 |
|
104,508 |
|
||||||||
|
|
||||||||||||||||
|
Diluted ownership interest |
||||||||||||||||
|
Weighted average REIT common share and common share equivalents |
96,265 |
100,695 |
98,847 |
100,558 |
||||||||||||
|
Weighted average partnership units held by noncontrolling interests |
4,514 |
|
4,473 |
|
4,556 |
|
4,322 |
|
||||||||
|
Diluted weighted average shares and units outstanding |
100,779 |
|
105,168 |
|
103,403 |
|
104,880 |
|
||||||||
|
SL GREEN REALTY CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) |
||||||||
|
|
|
|||||||
|
December 31, |
December 31, |
|||||||
|
2017 |
2016 |
|||||||
|
Assets |
(Unaudited) |
|||||||
|
Commercial real estate properties, at cost: |
||||||||
|
Land and land interests |
$ |
2,357,051 |
$ |
3,309,710 |
||||
|
Building and improvements |
6,351,012 |
7,948,852 |
||||||
|
Building leasehold and improvements |
1,450,614 |
1,437,325 |
||||||
|
Properties under capital lease |
47,445 |
|
47,445 |
|
||||
|
10,206,122 |
12,743,332 |
|||||||
|
Less accumulated depreciation |
(2,300,116 |
) |
(2,264,694 |
) |
||||
|
7,906,006 |
10,478,638 |
|||||||
|
Assets held for sale |
338,354 |
— |
||||||
|
Cash and cash equivalents |
127,888 |
279,443 |
||||||
|
Restricted cash |
122,138 |
90,524 |
||||||
|
Investment in marketable securities |
28,579 |
85,110 |
||||||
|
Tenant and other receivables, net of allowance of $18,637 and $16,592 in 2017 and 2016, respectively |
57,644 |
53,772 |
||||||
|
Related party receivables |
23,039 |
15,856 |
||||||
|
Deferred rents receivable, net of allowance of $17,207 and $25,203 in 2017 and 2016, respectively |
365,337 |
442,179 |
||||||
|
Debt and preferred equity investments, net of discounts and deferred origination fees of $25,507 and $16,705 in 2017 and respectively |
2,114,041 |
1,640,412 |
||||||
|
Investments in unconsolidated joint ventures |
2,362,989 |
1,890,186 |
||||||
|
Deferred costs, net |
226,201 |
267,600 |
||||||
|
Other assets |
310,688 |
|
614,067 |
|
||||
|
Total assets |
$ |
13,982,904 |
|
$ |
15,857,787 |
|
||
|
|
||||||||
|
Liabilities |
||||||||
|
Mortgages and other loans payable |
$ |
2,865,991 |
$ |
4,140,712 |
||||
|
Revolving credit facility |
40,000 |
— |
||||||
|
Unsecured term loan |
1,500,000 |
1,183,000 |
||||||
|
Unsecured notes |
1,404,605 |
1,133,957 |
||||||
|
Deferred financing costs, net |
(56,690 |
) |
(82,258 |
) |
||||
|
Total debt, net of deferred financing costs |
5,753,906 |
6,375,411 |
||||||
|
Accrued interest payable |
38,142 |
36,052 |
||||||
|
Other liabilities |
189,231 |
212,493 |
||||||
|
Accounts payable and accrued expenses |
137,142 |
190,583 |
||||||
|
Deferred revenue |
208,119 |
217,955 |
||||||
|
Capitalized lease obligations |
42,843 |
42,132 |
||||||
|
Deferred land leases payable |
3,239 |
2,583 |
||||||
|
Dividend and distributions payable |
85,138 |
87,271 |
||||||
|
Security deposits |
67,927 |
66,504 |
||||||
|
Liabilities related to assets held for sale |
4,074 |
— |
||||||
|
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities |
100,000 |
|
100,000 |
|
||||
|
Total liabilities |
6,629,761 |
7,330,984 |
||||||
|
|
||||||||
|
Commitments and contingencies |
— |
— |
||||||
|
Noncontrolling interest in the Operating Partnership |
461,954 |
473,882 |
||||||
|
Preferred units |
301,735 |
302,010 |
||||||
|
|
||||||||
|
Equity |
||||||||
|
Stockholders’ equity: |
||||||||
|
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both December 31, and December 31, 2016 |
221,932 |
221,932 |
||||||
|
Common stock, $0.01 par value 160,000 shares authorized, 93,858 and 101,617 issued and outstanding at December 31, December 31, 2016, respectively (including 1,055 held in Treasury at December 31, 2017 and December 31, 2016) |
939 |
1,017 |
||||||
|
Additional paid-in capital |
4,741,697 |
5,624,545 |
||||||
|
Treasury stock at cost |
(124,049 |
) |
(124,049 |
) |
||||
|
Accumulated other comprehensive income |
18,604 |
22,137 |
||||||
|
Retained earnings |
1,365,970 |
|
1,578,893 |
|
||||
|
Total SL Green Realty Corp. stockholders’ equity |
6,225,093 |
7,324,475 |
||||||
|
Noncontrolling interests in other partnerships |
364,361 |
|
426,436 |
|
||||
|
Total equity |
6,589,454 |
|
7,750,911 |
|
||||
|
Total liabilities and equity |
$ |
13,982,904 |
|
$ |
15,857,787 |
|
||
|
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: |
2017 |
|
2016 |
2017 |
|
2016 |
||||||||||
|
|
||||||||||||||||
|
Net income attributable to SL Green common stockholders |
$ |
27,982 |
$ |
44,016 |
$ |
86,424 |
$ |
234,946 |
||||||||
|
Add: |
||||||||||||||||
|
Depreciation and amortization |
84,404 |
104,026 |
403,320 |
821,041 |
||||||||||||
|
Joint venture depreciation and noncontrolling interest adjustments |
29,397 |
27,662 |
102,334 |
69,853 |
||||||||||||
|
Net income (loss) attributable to noncontrolling interests |
3,766 |
3,364 |
(11,706 |
) |
17,780 |
|||||||||||
|
Less: |
||||||||||||||||
|
Gain on sale of real estate, net |
76,497 |
27,366 |
73,241 |
238,116 |
||||||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
— |
421 |
16,166 |
44,009 |
||||||||||||
|
Depreciable real estate reserve |
(93,184 |
) |
— |
(178,520 |
) |
(10,387 |
) |
|||||||||
|
Depreciation on non-rental real estate assets |
554 |
|
522 |
|
2,191 |
|
2,027 |
|
||||||||
|
FFO attributable to SL Green common stockholders and noncontrolling interests |
$ |
161,682 |
|
$ |
150,759 |
|
$ |
667,294 |
|
$ |
869,855 |
|
||||
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
|
December 31, |
December 31, |
|||||||||||||||
|
Operating income and Same-store NOI Reconciliation: |
2017 |
2016 |
2017 |
2016 |
||||||||||||
|
|
||||||||||||||||
|
Net income |
$ |
38,335 |
$ |
53,970 |
$ |
101,069 |
$ |
278,911 |
||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
— |
(421 |
) |
(16,166 |
) |
(44,009 |
) |
|||||||||
|
Gain on sale of real estate, net |
(76,497 |
) |
(27,366 |
) |
(73,241 |
) |
(238,116 |
) |
||||||||
|
Depreciable real estate reserves |
93,184 |
— |
178,520 |
10,387 |
||||||||||||
|
(Gain) loss on sale of marketable securities |
— |
— |
(3,262 |
) |
83 |
|||||||||||
|
Depreciation and amortization |
84,404 |
104,026 |
403,320 |
821,041 |
||||||||||||
|
Interest expense, net of interest income |
60,933 |
64,873 |
257,045 |
321,199 |
||||||||||||
|
Amortization of deferred financing costs |
4,297 |
|
4,384 |
|
16,498 |
|
24,564 |
|
||||||||
|
Operating income |
204,656 |
|
199,466 |
|
863,783 |
|
1,174,060 |
|
||||||||
|
|
||||||||||||||||
|
Equity in net (income) loss from unconsolidated joint ventures |
(7,788 |
) |
95 |
(21,892 |
) |
(11,874 |
) |
|||||||||
|
Marketing, general and administrative expense |
28,136 |
25,785 |
100,498 |
99,759 |
||||||||||||
|
Transaction related costs, net |
(2,199 |
) |
1,541 |
(1,834 |
) |
7,528 |
||||||||||
|
Investment income |
(45,130 |
) |
(38,661 |
) |
(193,871 |
) |
(213,008 |
) |
||||||||
|
Non-building revenue |
(4,522 |
) |
1,061 |
|
(23,781 |
) |
(4,937 |
) |
||||||||
|
Net operating income (NOI) |
173,153 |
|
189,287 |
|
722,903 |
|
1,051,528 |
|
||||||||
|
|
||||||||||||||||
|
Equity in net income (loss) from unconsolidated joint ventures |
7,788 |
(95 |
) |
21,892 |
11,874 |
|||||||||||
|
SLG share of unconsolidated JV depreciation and amortization |
35,136 |
30,018 |
126,456 |
83,346 |
||||||||||||
|
SLG share of unconsolidated JV interest expense, net of interest income |
28,692 |
22,296 |
96,554 |
72,015 |
||||||||||||
|
SLG share of unconsolidated JV amortization of deferred financing costs |
1,696 |
2,471 |
8,220 |
8,309 |
||||||||||||
|
SLG share of unconsolidated JV loss on early extinguishment of debt |
131 |
— |
3,950 |
972 |
||||||||||||
|
SLG share of unconsolidated JV transaction related costs |
— |
97 |
110 |
3,116 |
||||||||||||
|
SLG share of unconsolidated JV investment income |
(4,438 |
) |
(4,550 |
) |
(16,777 |
) |
(16,250 |
) |
||||||||
|
SLG share of unconsolidated JV non-building revenue |
(2,005 |
) |
(3,852 |
) |
(4,989 |
) |
(7,179 |
) |
||||||||
|
NOI including SLG share of unconsolidated JVs |
240,153 |
|
235,672 |
|
958,319 |
|
1,207,731 |
|
||||||||
|
|
||||||||||||||||
|
NOI from other properties/affiliates |
(50,128 |
) |
(44,248 |
) |
(216,513 |
) |
(466,762 |
) |
||||||||
|
Same-Store NOI |
190,025 |
|
191,424 |
|
741,806 |
|
740,969 |
|
||||||||
|
|
||||||||||||||||
|
Ground lease straight-line adjustment |
524 |
531 |
2,096 |
2,312 |
||||||||||||
|
|
||||||||||||||||
|
Straight-line and free rent |
(4,244 |
) |
(7,061 |
) |
(25,276 |
) |
(30,231 |
) |
||||||||
|
Rental income – FAS 141 |
(4,318 |
) |
(4,035 |
) |
(17,144 |
) |
(19,802 |
) |
||||||||
|
Joint Venture straight-line and free rent |
(2,538 |
) |
(3,560 |
) |
(10,195 |
) |
(15,517 |
) |
||||||||
|
Joint Venture rental income – FAS 141 |
(608 |
) |
(411 |
) |
(1,852 |
) |
(1,723 |
) |
||||||||
|
Same-store cash NOI |
$ |
178,841 |
|
$ |
176,888 |
|
$ |
689,435 |
|
$ |
676,008 |
|
||||
SL GREEN REALTY CORP.
NON-GAAP FINANCIAL MEASURES –
DISCLOSURES
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.
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 ground rent, non-cash deferred
compensation, and a pro-rata adjustment for FAD for SLG’s unconsolidated
JV, 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 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 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.
Debt to Market Capitalization Ratio
Debt to Market Capitalization is a non-GAAP measure that is calculated
as the Company’s consolidated debt divided by the Company’s estimated
market value based upon the quarter-end trading price of the Company’s
common stock multiplied by all common shares and operating partnership
units outstanding plus the face value of the Company’s preferred equity.
The Company presents the ratio of debt to market capitalization as a
measure of the Company’s leverage position relative to the Company’s
estimated market value. The Company believes this ratio may provide
investors with another measure of the Company’s current leverage
position. The debt to market capitalization ratio should be used as one
measure of the Company’s leverage position, and this measure is commonly
used in the REIT sector; however, such measure may not be comparable to
those used by other REITs that do not compute such measure in the same
manner. The debt to market capitalization ratio does not represent the
Company’s borrowing capacity and should not be considered an alternative
measure to the Company’s current lending arrangements.
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 ground 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
View source version on businesswire.com: http://www.businesswire.com/news/home/20180124006177/en/
SL Green Realty Corp.
Matt DiLiberto
Chief Financial Officer
(212)
594-2700
Source: SL Green Realty Corp.
News Provided by Acquire Media