NEW YORK–(BUSINESS WIRE)–Jan. 23, 2019–
SL Green Realty Corp. (NYSE: SLG):
Financial and Operating Highlights
- Net loss attributable to common stockholders of $0.73 per share for
the fourth quarter of 2018 as compared to net income of $0.29 per
share for the same period in the prior year. Net loss attributable to
common stockholders for the fourth quarter of 2018 included $1.48 per
share of net gains from the sale of real estate offset by $2.50 per
share of depreciable real estate reserves. - Funds from operations, or FFO, of $1.61 per share for the fourth
quarter and $6.62 per share for the year ended December 31, 2018, net
of $14.9 million, or $0.16 per share, related to the early repayment
of the debt at One Madison Avenue, as compared to $1.60 and $6.45 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
4.9% for the full year, or 4.5%, excluding lease termination income,
as compared to the prior year. - Signed 44 Manhattan office leases covering 837,881 square feet in
the fourth quarter and 180 Manhattan office leases covering 2,271,049
square feet for the full year. The mark-to-market on signed Manhattan
office leases was 8.6% higher for the fourth quarter and 6.5% higher
for the full year over the previous fully escalated rents on the same
spaces. - Reached 52% leased at One Vanderbilt Avenue after signing leases
with TD Securities, MFA Financial Inc. and McDermott Will & Emery
during the fourth quarter. - Manhattan same-store occupancy was 95.7% as of December 31, 2018,
inclusive of leases signed but not yet commenced. - Increased the quarterly dividend by 4.6%, to $0.85 per share,
resulting in a new annual dividend of $3.40 per share.
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 $2.5 billion. To date, the Company has acquired 18.4 million shares
of its common stock and redeemed 0.4 million common units of its
Operating Partnership, or OP units, under the program at an average
price of $98.51 per share/unit. - Entered into an agreement to purchase a majority and controlling
interest in 460 West 34th Street at a gross purchase price of $440
million resulting in the Company having a blended average basis in the
property of $528 per square foot. The transaction is expected to close
in the first half of 2019. - Completed the second phase of the Company’s preferred equity
investment in 245 Park Avenue. The Company’s investment now totals
$148.2 million and the Company will serve as the building’s property
manager, overseeing all leasing and operations. - Closed on the sale of its 48.9% interest in 3 Columbus Circle to
the Moinian Group, the owner of the remaining 51.1% interest. The
transaction generated net cash proceeds to the Company of $223.0
million. - Closed on the sale of its interests in 1231 Third Avenue and an
Upper East Side residential assemblage for a combined sales price of
$143.8 million. - Closed on the sale of its 20.0% interest in 131-137 Spring Street
to Invesco Real Estate, the owner of the remaining 80.0% interest. The
transaction generated net cash proceeds to the Company of $15.2
million. - Completed the recapitalization of 2 Herald Square, which included
securing $150.0 million of mortgage financing and selling a 49.0%
interest in the property. The new mortgage has a 3-year term, with two
one-year extension options and bears interest at a floating rate of
1.55% over LIBOR. - Acquired the retail co-op at 133 Greene Street in Soho. The 6,425
square foot retail space, inclusive of 3,300 square feet on grade, is
located along one of SoHo’s most popular shopping corridors and is
currently occupied by Dior Homme. - Acquired 712 Madison Avenue on Manhattan’s Upper East Side. The
five-story building offers 6,362 square feet of retail space, which is
currently occupied by David Yurman.
Financing Highlights
- Refinanced One Vanderbilt Avenue’s construction facility,
increasing the facility size from $1.5 billion to $1.75 billion and
decreasing the interest rate by 75 basis points. - Closed on a $225.0 million construction facility for 185 Broadway.
The floating rate facility has a term of three years, with two
one-year extension options and bears interest at an initial floating
rate of 2.85% over LIBOR.
Summary
SL Green Realty Corp. (the “Company”) (NYSE: SLG) today reported net
loss attributable to common stockholders for the quarter ended
December 31, 2018 of $61.2 million, or $0.73 per share, as compared to
net income attributable to common stockholders of$28.0 million,
or $0.29 per share, for the same quarter in 2017. Net loss attributable
to common stockholders for the fourth quarter of 2018 included $130.5
million, or $1.48 per share, of net gains recognized from the sale of
real estate, offset by $220.9 million, or $2.50 per share, of
depreciable real estate reserves related to the Company’s suburban
portfolio, which the Company has stated it intends to dispose of.
The Company also reported net income attributable to common stockholders
for the year ended December 31, 2018 of $232.3 million, or $2.67 per
share, as compared to net income attributable to common stockholders of
$86.4 million, or $0.87 per share, for 2017. Net income attributable to
common stockholders for the year ended December 31, 2018 includes $273.2
million, or $2.98 per share, of net gains recognized from the sale of
real estate offset by $227.5 million, or $2.49 per share, of depreciable
real estate reserves, as compared to net gains recognized from the sale
of real estate of $89.4 million, or $0.86 per share, for 2017.
The Company reported FFO for the quarter ended December 31, 2018 of
$142.7 million, or $1.61 per share, net of $14.9 million, or $0.17 per
share, related to the early repayment of the debt at One Madison Avenue,
as compared to FFO for the same period in 2017 of $161.7 million, or
$1.60 per share.
The Company also reported FFO for the year ended December 31, 2018 of
$605.7 million, or $6.62 per share, net of $14.9 million, or $0.16 per
share, related to the early repayment of the debt at One Madison Avenue,
as compared to FFO for 2017 of $667.3 million, or $6.45 per share.
All per share amounts in this press release are presented on a diluted
basis.
Operating and Leasing Activity
For the quarter ended December 31, 2018, the Company reported
consolidated revenues and operating income of $317.0 million and $158.2
million, respectively, compared to $361.3 million and $204.7 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 2.7% for the quarter ended
December 31, 2018, or 2.8%, excluding lease termination income. For the
quarter, consolidated property same-store cash NOI increased by 4.4% to
$131.7 million, or 4.3% to $131.4 million, excluding lease termination
income, while unconsolidated joint venture property same-store cash NOI
decreased by (1.3)% to $51.8 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 4.9% for the year ended
December 31, 2018, or 4.5%, excluding lease termination income, as
compared to 2017. For the year ended December 31, 2018, consolidated
property same-store cash NOI increased by 4.8% to $514.5 million, or
4.2% to $509.3 million, excluding lease termination income, while
unconsolidated joint venture property same-store cash NOI increased by
5.1% to $204.2 million. No lease termination income was recognized in
unconsolidated joint venture property same-store cash NOI in 2018.
During the fourth quarter, the Company signed 44 office leases in its
Manhattan portfolio totaling 837,881 square feet. Thirty leases
comprising 486,066 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 $80.31 per rentable
square foot, representing an 8.6% 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 14.9 years, or
15.6 years including the office leases signed at One Vanderbilt, and
average tenant concessions were 8.8 months of free rent with a tenant
improvement allowance of $53.85 per rentable square foot.
During 2018, the Company signed 180 office leases in its Manhattan
portfolio totaling 2,271,049 square feet. One hundred twenty-four leases
comprising 1,217,689 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 $75.69 per rentable
square foot, representing a 6.5% increase over the previous fully
escalated rents on the same office spaces. The average lease term on the
Manhattan office leases signed in 2018 was 11.6 years, or 13.0 years
including the office leases signed at One Vanderbilt, and average tenant
concessions were 6.9 months of free rent with a tenant improvement
allowance of $63.36 per rentable square foot.
Occupancy in the Company’s Manhattan same-store portfolio was 95.7% as
of December 31, 2018, inclusive of 307,416 square feet of leases signed
but not yet commenced, as compared to 95.7% at September 30, 2018 and
95.8% at December 31, 2017.
During the fourth quarter, the Company signed 9 office leases in its
Suburban portfolio totaling 137,882 square feet. Five leases comprising
124,362 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 $26.60 per rentable square foot,
representing a 4.9% decrease over the previous fully escalated rents on
the same office spaces. The average lease term on the Suburban office
leases signed in the fourth quarter was 7.5 years and average tenant
concessions were 6.8 months of free rent with a tenant improvement
allowance of $24.26 per rentable square foot.
During 2018, the Company signed 49 office leases in its Suburban
portfolio totaling 374,097 square feet. Thirty-three leases comprising
211,716 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 $30.34 per rentable square foot,
representing a 3.7% decrease over the previous fully escalated rents on
the same office spaces. The average lease term on the Suburban office
leases signed in 2018 was 7.5 years and average tenant concessions were
7.5 months of free rent with a tenant improvement allowance of $23.71
per rentable square foot.
Occupancy in the Company’s Suburban same-store portfolio was 91.8% as of
December 31, 2018, inclusive of 12,606 square feet of leases signed but
not yet commenced, as compared to 92.1% at September 30, 2018 and 92.7%
at December 31, 2017.
Significant leases that were signed in the fourth quarter included:
-
New lease with WeWork for 138,563 square feet at 609 Fifth Avenue, for
16.4 years; -
New lease with TD Securities for 118,872 square feet at One Vanderbilt
Avenue, for 21.5 years; -
Renewal with FujiFilm Holdings America Corporation for 124,119 square
feet at 200 Summit Lake Drive in Valhalla, New York, for 7.6 years; -
Renewal and expansion with Mercy College for 95,370 square feet at 2
Herald Square, for 30.0 years; -
New lease with TD Securities for 52,450 square feet at 125 Park
Avenue, for 22.6 years; -
Renewal and expansion with Teneo Holding LLC for 46,199 square feet at
280 Park Avenue, for 3.6 years; -
New lease with MFA Financial Inc. for 30,169 square feet at One
Vanderbilt Avenue, for 15.0 years; and -
New lease with WeWork for 60,268 square feet at 2 Herald Square, for
17.0 years.
Marketing, general and administrative, or MG&A, expense for the year
ended December 31, 2018 was $92.6 million, or 5.2% of total combined
revenues as compared to $100.5 million for the prior year.
Investment Activity
In November, 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 $2.5 billion. To date, the
Company has acquired 18.4 million shares of its common stock and
redeemed 0.4 million common units of its Operating Partnership, or OP
units, under the program at an average price of $98.51 per share/unit,
allowing the Company to save approximately $64.1 million of common
dividends and distributions on an annualized basis.
In December, the Company announced that it had entered into an agreement
to purchase a majority and controlling interest in 460 West 34th Street.
The transaction values the 20-story Class-A office building at a gross
purchase price of $440 million. After taking into account earlier
structured investments made through our debt and preferred equity
platform, the Company’s blended average basis in the property will
be $528 per square foot. The transaction is expected to close in the
first half of 2019.
In November, the Company entered into an agreement to sell its 20.0%
interest in 131-137 Spring Street to Invesco Real Estate, the current
owner of the remaining 80.0% interest. The transaction closed in January
2019 and generated net cash proceeds to the Company of $15.2 million.
In November, the Company completed the recapitalization of 2 Herald
Square, which included securing $150.0 million of new mortgage financing
and closing on the previously announced sale of a 49.0% interest in the
property to an Israeli institutional investor.
In November, the Company acquired 66,186 zoning square feet of
development rights for its planned 31-Story Mixed-Use Affordable New
York residential project at 185 Broadway in lower Manhattan. Through
this transaction, SL Green also obtained a light and air easement and
cantilever right over 189 Broadway for the purpose of permitting lot
line windows and maximizing efficient residential floor plates.
In November, the Company closed on the previously announced sale of its
48.9% interest in 3 Columbus Circle to the Moinian Group, the owner of
the remaining 51.1% interest. The transaction generated net cash
proceeds to the Company of $223.0 million.
In October, the Company closed on the previously announced sale of its
interests in 1231 Third Avenue and an Upper East Side residential
assemblage, which consists of 260 East 72nd Street, 31,076 square feet
of development rights, 252-254 East 72nd Street, 257 East 71st Street
and 259 East 71st Street, for a combined sales price of $143.8 million.
In December, the Company acquired 712 Madison Avenue. The five-story
building is located on Madison Avenue between 63rd and 64th Streets on
Manhattan’s Upper East Side and offers 6,362 square feet of retail
space. The property is currently 100% occupied by David Yurman.
In September, the Company acquired the retail co-op at 133 Greene Street
in Soho. The 6,425 square foot retail space, inclusive of 3,300 square
feet on grade, is located along one of SoHo’s most popular shopping
corridors, across from Paul Smith and close proximity to Apple’s local
flagship. The property is currently 100% occupied by Dior Homme.
The properties at 712 Madison Avenue and 133 Greene Street previously
served as collateral for debt and preferred equity investments and were
acquired through negotiated transactions with the respective sponsors of
each investment.
Debt and Preferred Equity Investment Activity
The carrying value of the Company’s debt and preferred equity investment
portfolio decreased to $2.13 billion at December 31, 2018, including
$2.10 billion of investments at a weighted average current yield of 9.0%
that are classified in the debt and preferred equity line item on the
balance sheet, and investments aggregating $0.03 billion at a weighted
average current yield of 6.6% that are included in other balance sheet
line items for accounting purposes.
During the fourth quarter, the Company originated or acquired new debt
and preferred equity investments totaling $156.5 million, all of which
was retained and $129.0 million of which was funded. New mortgage
investments totaled $55.0 million, all of which was retained and $30.0
million of which was funded, at a weighted average current yield of
6.6%. New subordinate debt and preferred equity investments totaled
$101.5 million, all of which was retained and $99.0 million of which was
funded, at a weighted average yield of 7.4%.
During the fourth quarter, the Company recorded reserves of $5.8
million, or $0.07 per share, against two debt and preferred investments
totaling $159.9 million that are being marketed for sale.
In November, the Company completed the second phase of its preferred
equity investment at in 245 Park Avenue. The Company’s investment now
totals $148.2 million and the Company will serve as the building’s
property manager, overseeing all leasing and operations.
Financing Activity
In December, the Company closed on a $150 million mortgage financing of
2 Herald Square. The new mortgage has a 3-year term, with two one year
extension options and bears interest at a floating rate of 1.55% per
annum over LIBOR.
In November, the Company closed on a $225.0 million construction
facility for 185 Broadway. The floating rate facility has a term of
three years, with two one year extension options and bears interest at
an initial floating rate of 2.85% over LIBOR.
In November, the Company, along with its joint venture partners,
refinanced One Vanderbilt Avenue’s construction facility, increasing the
facility size from $1.5 billion to $1.75 billion and decreasing the
interest rate by 75 basis points. The significant improvement in terms
was due, in large part, to the rapid pace of leasing and construction
progress.
Dividends
In the fourth quarter of 2018, the Company declared quarterly dividends
on its outstanding common and preferred stock as follows:
- $0.85 per share of common stock, which was paid on January 15, 2019 to
shareholders of record on the close of business on January 2, 2019; and - $0.40625 per share on the Company’s 6.50% Series I Cumulative
Redeemable Preferred Stock for the period October 15, 2018 through and
including January 14, 2019, which was paid on January 15, 2019 to
shareholders of record on the close of business on January 2, 2019,
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 24, 2019 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 9675583.
A replay of the call will be available 7 days after the call by dialing
(855) 859-2056 using passcode 9675583. 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, 2018, SL
Green held interests in 101 Manhattan buildings totaling 46.0 million
square feet. This included ownership interests in 27.8 million square
feet of Manhattan buildings and 18.2 million square feet of buildings
securing debt and preferred equity investments. In addition, SL Green
held ownership interests in 7 suburban properties comprised of 15
suburban buildings totaling 2.3 million square feet in Brooklyn,
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, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues: | ||||||||||||||||
| Rental revenue, net | $ | 216,477 | $ | 265,492 | $ | 864,978 | $ | 1,100,993 | ||||||||
| Escalation and reimbursement | 31,042 | 41,378 | 113,596 | 172,939 | ||||||||||||
| Investment income | 57,952 | 45,130 | 201,492 | 193,871 | ||||||||||||
| Other income | 11,565 | 9,342 | 47,326 | 43,670 | ||||||||||||
| Total revenues | 317,036 | 361,342 | 1,227,392 | 1,511,473 | ||||||||||||
| Expenses: | ||||||||||||||||
|
Operating expenses, including related party expenses $4,534 and $17,823 in 2018 and $6,459 and $21,400 in 2017 |
56,476 | 72,079 | 229,347 | 293,364 | ||||||||||||
| Real estate taxes | 46,563 | 58,150 | 186,351 | 244,323 | ||||||||||||
| Ground rent | 6,304 | 8,308 | 32,965 | 33,231 | ||||||||||||
| Interest expense, net of interest income | 51,974 | 60,933 | 208,669 | 257,045 | ||||||||||||
| Amortization of deferred financing costs | 2,695 | 4,297 | 12,408 | 16,498 | ||||||||||||
| Depreciation and amortization | 71,458 | 84,404 | 279,507 | 403,320 | ||||||||||||
| Loan loss and other investment reserves, net of recoveries | 5,752 | — | 6,839 | — | ||||||||||||
| Transaction related costs | 426 | (2,199 | ) | 1,099 | (1,834 | ) | ||||||||||
| Marketing, general and administrative | 26,030 | 28,136 | 92,631 | 100,498 | ||||||||||||
| Total expenses | 267,678 | 314,108 | 1,049,816 | 1,346,445 | ||||||||||||
| Equity in net (loss) income from unconsolidated joint ventures | (2,398 | ) | 7,788 | 7,311 | 21,892 | |||||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
167,445 | — | 303,967 | 16,166 | ||||||||||||
| Purchase price and other fair value adjustment | — | — | 57,385 | — | ||||||||||||
| (Loss) gain on sale of real estate, net | (36,984 | ) | 76,497 | (30,757 | ) | 73,241 | ||||||||||
| Depreciable real estate reserves | (220,852 | ) | (93,184 | ) | (227,543 | ) | (178,520 | ) | ||||||||
| Gain on sale of marketable securities | — | — | — | 3,262 | ||||||||||||
| Loss on early extinguishment of debt | (14,889 | ) | — | (17,083 | ) | — | ||||||||||
| Net (loss) income | (58,320 | ) | 38,335 | 270,856 | 101,069 | |||||||||||
|
Net loss (income) attributable to noncontrolling interests in the Operating Partnership |
3,439 | (1,288 | ) | (12,216 | ) | (3,995 | ) | |||||||||
|
Net loss (income) attributable to noncontrolling interests in other partnerships |
241 | (2,478 | ) | 6 | 15,701 | |||||||||||
| Preferred unit distributions | (2,842 | ) | (2,850 | ) | (11,384 | ) | (11,401 | ) | ||||||||
| Net (loss) income attributable to SL Green | (57,482 | ) | 31,719 | 247,262 | 101,374 | |||||||||||
| Perpetual preferred stock dividends | (3,737 | ) | (3,737 | ) | (14,950 | ) | (14,950 | ) | ||||||||
| Net (loss) income attributable to SL Green common stockholders | $ | (61,219 | ) | $ | 27,982 | $ | 232,312 | $ | 86,424 | |||||||
| Earnings Per Share (EPS) | ||||||||||||||||
| Net (loss) income per share (Basic) | $ | (0.73 | ) | $ | 0.29 | $ | 2.67 | $ | 0.88 | |||||||
| Net (loss) income per share (Diluted) | $ | (0.73 | ) | $ | 0.29 | $ | 2.67 | $ | 0.87 | |||||||
| Funds From Operations (FFO) | ||||||||||||||||
| FFO per share (Basic) | $ | 1.62 | $ | 1.61 | $ | 6.63 | $ | 6.47 | ||||||||
| FFO per share (Diluted) | $ | 1.61 | $ | 1.60 | $ | 6.62 | $ | 6.45 | ||||||||
|
Basic ownership interest |
||||||||||||||||
| Weighted average REIT common shares for net income per share | 83,967 | 96,018 | 86,753 | 98,571 | ||||||||||||
| Weighted average partnership units held by noncontrolling interests | 4,220 | 4,514 | 4,562 | 4,556 | ||||||||||||
| Basic weighted average shares and units outstanding | 88,187 | 100,532 | 91,315 | 103,127 | ||||||||||||
|
Diluted ownership interest |
||||||||||||||||
| Weighted average REIT common share and common share equivalents | 84,156 | 96,265 | 86,968 | 98,847 | ||||||||||||
| Weighted average partnership units held by noncontrolling interests | 4,220 | 4,514 | 4,562 | 4,556 | ||||||||||||
| Diluted weighted average shares and units outstanding | 88,376 | 100,779 | 91,530 | 103,403 | ||||||||||||
| SL GREEN REALTY CORP. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
|
(in thousands, except per share data) |
||||||||
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Assets | (Unaudited) | |||||||
| Commercial real estate properties, at cost: | ||||||||
| Land and land interests | $ | 1,774,899 | $ | 2,357,051 | ||||
| Building and improvements | 5,268,484 | 6,351,012 | ||||||
| Building leasehold and improvements | 1,423,107 | 1,450,614 | ||||||
| Properties under capital lease | 47,445 | 47,445 | ||||||
| 8,513,935 | 10,206,122 | |||||||
| Less accumulated depreciation | (2,099,137 | ) | (2,300,116 | ) | ||||
| 6,414,798 | 7,906,006 | |||||||
| Assets held for sale | — | 338,354 | ||||||
| Cash and cash equivalents | 129,475 | 127,888 | ||||||
| Restricted cash | 149,638 | 122,138 | ||||||
| Investment in marketable securities | 28,638 | 28,579 | ||||||
|
Tenant and other receivables, net of allowance of $15,702 and $18,637 in 2018 and 2017, respectively |
41,589 | 57,644 | ||||||
| Related party receivables | 28,033 | 23,039 | ||||||
|
Deferred rents receivable, net of allowance of $15,457 and $17,207 in 2018 and 2017, respectively |
335,985 | 365,337 | ||||||
|
Debt and preferred equity investments, net of discounts and deferred origination fees of $22,379 and $25,507 in 2018 and 2017, respectively |
2,099,393 | 2,114,041 | ||||||
| Investments in unconsolidated joint ventures | 3,019,020 | 2,362,989 | ||||||
| Deferred costs, net | 209,110 | 226,201 | ||||||
| Other assets | 295,679 | 310,688 | ||||||
| Total assets | $ | 12,751,358 | $ | 13,982,904 | ||||
| Liabilities | ||||||||
| Mortgages and other loans payable | $ | 1,988,160 | $ | 2,865,991 | ||||
| Revolving credit facility | 500,000 | 40,000 | ||||||
| Unsecured term loan | 1,500,000 | 1,500,000 | ||||||
| Unsecured notes | 1,503,758 | 1,404,605 | ||||||
| Deferred financing costs, net | (50,218 | ) | (56,690 | ) | ||||
| Total debt, net of deferred financing costs | 5,441,700 | 5,753,906 | ||||||
| Accrued interest payable | 23,154 | 38,142 | ||||||
| Accounts payable and accrued expenses | 147,061 | 137,142 | ||||||
| Deferred revenue | 94,453 | 208,119 | ||||||
| Capitalized lease obligations | 43,616 | 42,843 | ||||||
| Deferred land leases payable | 3,603 | 3,239 | ||||||
| Dividend and distributions payable | 80,430 | 85,138 | ||||||
| Security deposits | 64,688 | 67,927 | ||||||
| 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 | ||||||
| Other liabilities | 116,566 | 189,231 | ||||||
| Total liabilities | 6,115,271 | 6,629,761 | ||||||
| Commitments and contingencies | — | — | ||||||
| Noncontrolling interest in the Operating Partnership | 387,805 | 461,954 | ||||||
| Preferred units | 300,427 | 301,735 | ||||||
| Equity | ||||||||
| Stockholders’ equity: | ||||||||
|
Series I Preferred Stock, $0.01 par value, $25.00 liquidation |
221,932 | 221,932 | ||||||
|
Common stock, $0.01 par value 160,000 shares authorized, 84,739 |
847 | 939 | ||||||
| Additional paid-in capital | 4,508,685 | 4,968,338 | ||||||
| Treasury stock at cost | (124,049 | ) | (124,049 | ) | ||||
| Accumulated other comprehensive income | 15,108 | 18,604 | ||||||
| Retained earnings | 1,278,998 | 1,139,329 | ||||||
| Total SL Green Realty Corp. stockholders’ equity | 5,901,521 | 6,225,093 | ||||||
| Noncontrolling interests in other partnerships | 46,334 | 364,361 | ||||||
| Total equity | 5,947,855 | 6,589,454 | ||||||
| Total liabilities and equity | $ | 12,751,358 | $ | 13,982,904 | ||||
| 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: | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net (loss) income attributable to SL Green common stockholders | $ | (61,219 | ) | $ | 27,982 | $ | 232,312 | $ | 86,424 | |||||||
| Add: | ||||||||||||||||
| Depreciation and amortization | 71,458 | 84,404 | 279,507 | 403,320 | ||||||||||||
| Joint venture depreciation and noncontrolling interest adjustments | 46,348 | 29,397 | 187,147 | 102,334 | ||||||||||||
| Net (loss) income attributable to noncontrolling interests | (3,680 | ) | 3,766 | 12,210 | (11,706 | ) | ||||||||||
| Less: | ||||||||||||||||
| (Loss) gain on sale of real estate, net | (36,984 | ) | 76,497 | (30,757 | ) | 73,241 | ||||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
167,445 | — | 303,967 | 16,166 | ||||||||||||
| Purchase price and other fair value adjustments | — | — | 57,385 | — | ||||||||||||
| Depreciable real estate reserve | (220,852 | ) | (93,184 | ) | (227,543 | ) | (178,520 | ) | ||||||||
| Depreciation on non-rental real estate assets | 638 | 554 | 2,404 | 2,191 | ||||||||||||
| FFO attributable to SL Green common stockholders | $ | 142,660 | $ | 161,682 | $ | 605,720 | $ | 667,294 | ||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| Operating income and Same-store NOI Reconciliation: | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Net (loss) income | $ | (58,320 | ) | $ | 38,335 | $ | 270,856 | $ | 101,069 | |||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
(167,445 | ) | — | (303,967 | ) | (16,166 | ) | |||||||||||
| Purchase price and other fair value adjustments | — | — | (57,385 | ) | — | |||||||||||||
| Loss (gain) on sale of real estate, net | 36,984 | (76,497 | ) | 30,757 | (73,241 | ) | ||||||||||||
| Depreciable real estate reserves | 220,852 | 93,184 | 227,543 | 178,520 | ||||||||||||||
| Gain on sale of marketable securities | — | — | — | (3,262 | ) | |||||||||||||
| Depreciation and amortization | 71,458 | 84,404 | 279,507 | 403,320 | ||||||||||||||
| Interest expense, net of interest income | 51,974 | 60,933 | 208,669 | 257,045 | ||||||||||||||
| Amortization of deferred financing costs | 2,695 | 4,297 | 12,408 | 16,498 | ||||||||||||||
| Operating income | 158,198 | 204,656 | 668,388 | 863,783 | ||||||||||||||
| Equity in net (loss) income from unconsolidated joint ventures | 2,398 | (7,788 | ) | (7,311 | ) | (21,892 | ) | |||||||||||
| Marketing, general and administrative expense | 26,030 | 28,136 | 92,631 | 100,498 | ||||||||||||||
| Transaction related costs, net | 426 | (2,199 | ) | 1,099 | (1,834 | ) | ||||||||||||
| Investment income | (57,952 | ) | (45,130 | ) | (201,492 | ) | (193,871 | ) | ||||||||||
| Loan loss and other investment reserves, net of recoveries | 5,752 | — | 6,839 | — | ||||||||||||||
| Non-building revenue |
(6,391 |
) |
(4,522 |
) |
(22,099 |
) |
(23,781 |
) | ||||||||||
| Loss on early extinguishment of debt | 14,889 | — | 17,083 | — | ||||||||||||||
| Net operating income (NOI) |
143,350 |
173,153 |
555,138 |
722,903 |
||||||||||||||
| Equity in net (loss) income from unconsolidated joint ventures | (2,398 | ) | 7,788 | 7,311 | 21,892 | |||||||||||||
| SLG share of unconsolidated JV depreciation and amortization | 46,939 | 35,136 | 187,962 | 126,456 | ||||||||||||||
|
SLG share of unconsolidated JV interest expense, net of interest income |
37,266 | 28,692 | 144,663 | 96,554 | ||||||||||||||
|
SLG share of unconsolidated JV amortization of deferred financing costs |
1,500 | 1,696 | 6,315 | 8,220 | ||||||||||||||
| SLG share of unconsolidated JV loss on early extinguishment of debt | — | 131 | — | 3,950 | ||||||||||||||
| SLG share of unconsolidated JV transaction related costs | — | — | — | 110 | ||||||||||||||
| SLG share of unconsolidated JV investment income | (2,751 | ) | (4,438 | ) | (12,014 | ) | (16,777 | ) | ||||||||||
| SLG share of unconsolidated JV non-building revenue |
(725 |
) |
(2005 |
) |
(3,636 |
) |
(4,989 |
) | ||||||||||
| NOI including SLG share of unconsolidated JVs |
223,181 |
240,153 |
885,739 |
958,319 |
||||||||||||||
| NOI from other properties/affiliates |
(29,350 |
) |
(52,616 |
) |
(132,124 |
) |
(222,715 |
) | ||||||||||
| Same-Store NOI | 193,831 | 187,537 | 753,615 | 735,604 | ||||||||||||||
| Ground lease straight-line adjustment | 231 | 524 | 1,803 | 2,096 | ||||||||||||||
| Joint Venture ground lease straight-line adjustment | 258 | 258 | 1,031 | 1,078 | ||||||||||||||
| Straight-line and free rent | (5,626 | ) | (2,186 | ) | (14,747 | ) | (21,701 | ) | ||||||||||
| Amortization of acquired above and below-market leases, net | (1,184 | ) | (1,266 | ) | (5,425 | ) | (4,702 | ) | ||||||||||
| Joint Venture straight-line and free rent | (2,574 | ) | (3,418 | ) | (12,134 | ) | (14,117 | ) | ||||||||||
|
Joint Venture amortization of acquired above and below-market leases, net |
(1,488 | ) | (2,910 | ) | (5,401 | ) | (13,141 | ) | ||||||||||
| Same-store cash NOI | $ | 183,448 | $ | 178,539 | $ | 718,742 | $ | 685,117 | ||||||||||
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, 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 also a non-GAAP financial
measure that is calculated by subtracting free rent (net of
amortization), straight-line rent, and amortization of acquired above
and below-market leases, net 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.
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: https://www.businesswire.com/news/home/20190123005809/en/
Source: SL Green Realty Corp.
Matt DiLiberto
Chief Financial Officer
(212) 594-2700