SL Green Realty Corp.


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SL Green Realty Corp. Reports Third Quarter 2011 FFO of $1.01 per Share Before Transaction Costs and EPS of $0.08 Per Share

SL Green Realty Corp. Reports Third Quarter 2011 FFO of $1.01 per Share Before Transaction Costs and EPS of $0.08 Per Share

Operating Highlights


  • Third quarter FFO of $1.01 per diluted share before transaction related costs of $0.01 per share, as compared with $1.05 per diluted share before transaction related costs of $0.04 per share in the third quarter of 2010, excluding a $0.81 per share FFO gain realized in 2010 upon the repayment of the first mortgage and senior mezzanine loan on 510 Madison Avenue.


  • Third quarter net income attributable to common stockholders of $0.08 per diluted share as compared with $1.42 per diluted share in the third quarter of 2010. The third quarter of 2010 included gains of $1.25 per share.


  • Combined same-store GAAP NOI for the third quarter increased 4.6 percent to $172.6 million as compared to the prior year.


  • Signed 60 Manhattan leases totaling 626,908 square feet during the third quarter and 194 Manhattan leases totaling 1,707,766 square feet in the first nine months of 2011. The mark-to-market on office leases signed in Manhattan was 6.7 percent higher in the third quarter and 6.4 percent higher year-to-date than the previously fully escalated rents on the same office spaces.


  • Signed 20 Suburban leases totaling 122,691 square feet during the third quarter and 89 Suburban leases totaling 442,585 square feet in 2011. The mark-to-market on office leases signed in the Suburbs was 2.1 percent higher in the third quarter and 2.4 percent lower year-to-date than the previously fully escalated rents on the same office spaces.


  • Quarter-end occupancy of 95.1 percent in stabilized Manhattan same-store properties, excluding 100 Church Street, as compared to 94.4 percent in the same quarter of the previous year.

Investing Highlights


  • Realized a non-FFO gain of $4.0 million upon the sale of the remaining 10 percent interest in 1551/1555 Broadway.


  • Acquired the fee interest at 1552 Broadway for $136.6 million through a 50/50 joint venture with Jeff Sutton. The joint venture also entered into a 70-year leasehold at 1560 Broadway, the property adjacent to 1552 Broadway. In connection with this transaction, the joint venture closed on a $125.0 million mortgage of which $94.4 million was funded at closing.


  • Acquired the cooperative commercial unit at 747 Madison Avenue for $66.3 million through a joint venture with Jeff Sutton and Harel Insurance Company Ltd. The acquisition was financed with a three-year, $33.1 million loan. SL Green holds a 33.3 percent interest in the joint venture.


  • Formed a joint venture with Stonehenge Partners and entered into a contract to acquire six retail and two multifamily properties in Manhattan for $416.0 million. The transaction is anticipated to close in the first quarter of 2012.


  • Purchased or originated new debt and preferred equity investments totaling $348.1 million at a weighted current yield of 9.3 percent, all of which are directly or indirectly collateralized by New York City commercial office properties.

Financing Highlights


  • Sold $250.0 million of 5.0 percent senior notes due August 15, 2018. SL Green received net proceeds of $246.5 million from the sale of the notes.


  • Sold 1.2 million shares of common stock through an At-The-Market (“ATM”) equity offering program for gross proceeds of $98.6 million ($97.1 million of net proceeds after related expenses). In 2011 to date, the Company has sold 6.7 million shares of common stock through the ATM for gross proceeds of $525.0 million ($517.1 million of net proceeds after related expenses).


  • Entered into a new $250 million ATM program to sell shares of SL Green’s common stock. The Company has not sold any shares of its common stock under this program.


Summary

New York, NY, October 26, 2011 – SL Green Realty Corp. (NYSE: SLG) today reported funds from operations, or FFO, of $87.9 million, or $1.00 per diluted share, for the quarter ended September 30, 2011, compared to $145.3 million, or $1.82 per diluted share, for the same quarter in 2010. The results for the quarter ended September 30, 2010 included a $0.81 gain per diluted share realized in 2010 upon the repayment of the first mortgage and senior mezzanine loan on 510 Madison Avenue.

Net income attributable to common stockholders totaled $7.1 million, or $0.08 per diluted share, for the quarter ended September 30, 2011, compared to $111.5 million, or $1.42 per diluted share, for the same quarter in 2010. The results for the quarter ended September 30, 2010 included $0.44 per diluted share relating to a gain on the sale of the 19 West 44th Street and $0.81 per diluted share related to a gain on the repayment of the first mortgage and senior mezzanine loan on 510 Madison Avenue.

Operating and Leasing Activity

For the third quarter of 2011, the Company reported revenues and operating income of $308.6 million and $164.2 million, respectively, a decrease of 3.3 percent and 18.4 percent compared to $319.2 million and $201.4 million, respectively, for the same period in 2010.

Same-store GAAP NOI on a combined basis increased by 4.6 percent to $172.6 million for the third quarter of 2011, after giving consideration to 1515 Broadway and 521 Fifth Avenue as consolidated properties, as compared to the same quarter in 2010. Consolidated property GAAP NOI increased by 3.4 percent to $143.7 million and unconsolidated joint venture property GAAP NOI increased 10.9 percent to $28.9 million.

Occupancy for the Company’s stabilized, same-store Manhattan portfolio, excluding 100 Church Street, at September 30, 2011 was 95.1 percent as compared to 94.4 percent for the same period in the previous year. During the quarter, the Company signed 52 office leases in its Manhattan portfolio totaling 585,351 square feet. Nine leases totaling 102,922 square feet represented office leases that replaced previous vacancy, while 43 office leases comprising 482,429 square feet had average starting rents of $54.11 per rentable square foot, representing a 6.7 percent increase over the previously fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the third quarter was 8.9 years and average tenant concessions were 3.2 months of free rent with a tenant improvement allowance of $31.05 per rentable square foot. Of the 544,836 square feet of office leases which commenced during the third quarter, 75,212 square feet represented office leases that replaced previous vacancy, while 469,624 square feet represented office leases that had average starting rents of $49.37 per rentable square foot, representing a 4.0 percent increase over the previously fully escalated rents on the same office spaces.

Occupancy for the Company’s Suburban portfolio was 85.9 percent at September 30, 2011. During the quarter, the Company signed 20 office leases in the Suburban portfolio totaling 122,691 square feet. Nine leases totaling 35,169 square feet represented office leases that replaced previous vacancy, while 11 office leases comprising 87,522 square feet had average starting rents of $39.28 per rentable square foot, representing a 2.1 percent increase over the previously fully escalated rents on the same office spaces. The average lease term on the Suburban office leases signed in the third quarter was 7.9 years and average tenant concessions were 12.5 months of free rent with a tenant improvement allowance of $23.16 per rentable square foot. Of the 124,158 square feet of office leases which commenced during the third quarter, 20,879 square feet represented office leases that replaced previous vacancy, while 103,279 square feet represented office leases that had average starting rents of $38.49 per rentable square foot, representing a 1.7 percent increase over the previously fully escalated rents on the same office spaces.

Significant leases that were signed during the third quarter included:


  • Early renewal with St. Lukes Roosevelt/Beth Israel Medical Center for 15.6 years for 112,941 square feet at 555 West 57th Street;


  • New lease with Polo Ralph Lauren for 7 years for 91,417 square feet at 625 Madison Avenue;


  • Early renewal and expansion with Adzinia Media Group for 4.5 years for 59,753 square feet at 1350 Avenue of the Americas;


  • New lease with Endurance Reinsurance for 3.6 years for 57,316 square feet at 750 Third Avenue;


  • New lease with Centerline Capital Group, Inc. for 15 years for 57,945 square feet at 100 Church Street; and


  • New lease with Astoria Federal Savings and Loan for 10 years for 55,361 square feet at Jericho Plaza, Long Island.

Marketing, general and administrative, or MG&A, expenses for the quarter ended September 30, 2011 were $18.9 million, or 5.3 percent of total revenues including the Company’s share of joint venture revenue.

Real Estate Investment Activity

In August 2011, the Company sold its remaining 10% interest in 1551/1555 Broadway and realized a gain of $4.0 million.



In August 2011, the Company, through a 50/50 joint venture with Jeff Sutton, acquired the fee interest at 1552 Broadway for $136.6 million. Subsequently, the joint venture entered into a 70-year leasehold at 1560 Broadway, the property adjacent to 1552 Broadway. The transactions enable the joint venture to assemble up to 48,897 square feet of space with direct Times Square frontage. In connection with this transaction, the joint venture closed on a $125.0 million mortgage of which $94.4 million was funded at closing. The mortgage bears interest at 300 basis points over the 90-day LIBOR and has a two-year term with three, one-year extension options.

In September 2011, the Company, through a joint venture with Jeff Sutton and Harel Insurance Company Ltd, acquired the cooperative commercial unit at 747 Madison Avenue for $66.3 million. The acquisition was financed with a three-year, $33.1 million loan which bears interest at 275 basis points over the 30-day LIBOR. SL Green holds a 33.3 percent interest in the joint venture.


In October 2011, SL Green formed a joint venture with Stonehenge Partners and entered into a contract to acquire eight retail and multifamily properties in Manhattan for $416 million. The transaction is expected to be completed in the first quarter of 2012.

Debt and Preferred Equity Investment Activity

The Company’s debt and preferred equity investment portfolio totaled $897.0 million at September 30, 2011. During the third quarter, the Company purchased and originated new debt and preferred equity investments totaling $348.1 million, which are directly or indirectly collateralized by New York City commercial office properties, and received $37.7 million of proceeds from investments that were sold, redeemed, or repaid. The debt and preferred equity investment portfolio had a weighted average maturity of 3.2 years as of September 30, 2011 and had a weighted average yield for the quarter ended September 30, 2011 of 8.87 percent, exclusive of loans with a net carrying value of $85.9 million, which are on non-accrual status.

Financing and Capital Activity

In August 2011, SL Green, the Operating Partnership and Reckson, as co-obligors, completed the sale of $250.0 million aggregate principal amount of 5.0 percent senior notes due August 15, 2018. Net proceeds to SL Green from the sale of the notes were $246.5 million.

In the third quarter of 2011, the Company sold 1.2 million shares of common stock through an ATM equity offering program for aggregate gross proceeds of $98.6 million ($97.1 million of net proceeds after related expenses). In 2011 to date, the Company has sold 6.7 million shares of its common stock through the ATM for aggregate gross proceeds of $525.0 million ($517.1 million of net proceeds after related expenses). There is no additional capacity under these programs.

In July 2011, SL Green, along with SL Green Operating Partnership, entered into a new ATM program with Citigroup Global Markets Inc. and J.P. Morgan Securities LLC to sell shares of its common stock having aggregate sales proceeds of $250.0 million. SL Green has not sold any shares of its common stock under this program.

Dividends

During the third quarter of 2011, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:


  • $0.10 per share of common stock, which was paid on October 14, 2011 to stockholders of record on the close of business on September 30, 2011; and


  • $0.4766 and $0.4922 per share on the Company’s Series C and D Preferred Stock, respectively, for the period July 15, 2011 through and including October 14, 2011, which were paid on October 15, 2011 to stockholders of record on the close of business on September 30, 2011, and reflect regular quarterly dividends which are the equivalent of annualized dividends of $1.9064 and $1.9688, respectively.

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, October 27, 2011, at 2:00 pm ET to discuss the financial results.

The Supplemental Package will be available prior to the quarterly conference call on the Company’s website, www.slgreen.com, under “Financial Reports” in the Investors section.

The live conference will be webcast in listen-only mode on the Company’s website under “Event Calendar & Webcasts” in the Investors section and on Thomson’s StreetEvents Network. The conference may also be accessed by dialing 888.396.2384 Domestic or 617.847.8711 International, using pass-code “SL Green.”

A replay of the call will be available through November 3, 2011 by dialing 888.286.8010 Domestic or 617.801.6888 International, using pass-code 84884697.

Annual Institutional Investor Conference

The Company will host its Annual Institutional Investor Conference on Monday, December 5, 2011. Details of the event will be provided via email the week of October 31, 2011. To be added to the Conference’s email distribution list or to pre-register, please email SLG.2011@slgreen.com.

Company Profile

SL Green Realty Corp., New York City’s largest office landlord, is the only fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of September 30, 2011, SL Green owned interests in 58 Manhattan properties totaling more than 35.3 million square feet. This included ownership interests in 25.8 million square feet of commercial properties and debt and preferred equity investments secured by 9.5 million square feet of properties. In addition to its Manhattan investments, SL Green holds ownership interests and debt and preferred equity interests in 32 suburban assets totaling 7.3 million square feet in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey, along with four development properties in the suburbs encompassing approximately 465,000 square feet.

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 on page 10 of this release and in the Company’s Supplemental Package.

Forward-looking Statement

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. All forward-looking statements speak only as of the date of this press release. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others, the strength of the commercial office real estate markets in the New York metro area, reduced demand for office space, unanticipated increases in financing and other costs, competitive market conditions, unanticipated administrative costs, divergent interests from or the financial condition of our joint venture partners, timing of leasing income, general and local economic conditions, interest rates, capital market conditions, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, environmental, regulatory and/or safety requirements, and other factors, all of which are beyond the Company’s control. Additional information or factors that could affect the Company and the forward-looking statements contained herein are included in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.




CONTACT

James Mead

Chief Financial Officer

-or-

Heidi Gillette

Investor Relations

(212) 594-2700