NEW YORK–(BUSINESS WIRE)–Oct. 17, 2018–
SL Green Realty Corp. (NYSE: SLG):
Financial and Operating Highlights
- Net income attributable to common stockholders of $1.03 per share
for the third quarter as compared to $0.40 per share for the same
period in 2017. - Funds from operations, or FFO, of $1.66 per share for the third
quarter, after giving effect to $2.2 million, or $0.02 per share, of
unamortized costs that were written off upon early repayment of the
mortgage at 220 East 42nd Street and a
reserve of $1.1 million, or $0.01 per share, that was recorded against
a debt investment that is being repaid, as compared to $1.49 per share
for the same period in 2017. - Same-store cash net operating income, or NOI, including our share
of same-store cash NOI from unconsolidated joint ventures, increased
7.0% for the first nine months of 2018, or 6.4%, excluding lease
termination income, as compared to the same period in the prior year. - Signed 50 Manhattan office leases covering 491,441 square feet in
the third quarter and 136 Manhattan office leases covering 1,433,168
square feet in the first nine months of 2018. The mark-to-market on
signed Manhattan office leases was 1.0% higher for the third quarter
and 5.0% higher for the first nine months over the previous fully
escalated rents on the same spaces. - Manhattan same-store occupancy was 95.7% as of September 30, 2018,
inclusive of leases signed but not yet commenced.
Investing Highlights
- To date in 2018, the Company has repurchased 7.7 million shares of
its common stock and redeemed 0.4 million common units of its
Operating Partnership, or OP units, under the previously announced
$2.0 billion share repurchase plan, at an average price of $97.34 per
share/unit. In total, the Company has acquired 16.5 million shares of
its common stock and OP units under the program at an average price of
$99.52 per share/unit. - Entered into an agreement to sell its 48.9% interest in 3 Columbus
Circle to the Moinian Group, the current owner of the remaining 51.1%
interest. The transaction is expected to generate net cash proceeds of
$223.0 million and close in the fourth quarter of 2018. - Entered into an agreement to sell its interests in 1231 Third
Avenue, which the Company took possession of during the third quarter,
and an Upper East Side Assemblage for a combined sales price of $143.8
million. The transaction is expected to close in the fourth quarter of
2018.
Financing Highlights
- Issued $350.0 million aggregate principal amount of floating rate
notes due 2021. The notes are callable by the Company, at par, after
one year and bear interest at a floating rate of 0.98% over LIBOR. - Closed on a $65.6 million financing of 115 Spring Street. The new
mortgage has a 5-year term and bears interest at a floating rate of
3.40% over LIBOR.
Summary
SL Green Realty Corp. (the “Company”) (NYSE: SLG) today reported net
income attributable to common stockholders for the quarter ended
September 30, 2018 of $88.2 million, or $1.03 per share, as compared to
net income attributable to common stockholders of$38.9 million,
or $0.40 per share, for the same quarter in 2017. Net income
attributable to common stockholders for the three months ended
September 30, 2018 includes $68.4 million, or $0.76 per share, of net
gains recognized from the sale of real estate as compared to $1.0
million, or $0.01 per share, for the same period in 2017.
The Company also reported net income attributable to common stockholders
for the nine months ended September 30, 2018 of $293.5 million, or $3.34
per share, as compared to net income attributable to common stockholders
of $58.4 million, or $0.59 per share, for the same period in 2017. Net
income attributable to common stockholders for the nine months ended
September 30, 2018 includes $142.7 million, or $1.54 per share, of net
gains recognized from the sale of real estate as compared to $12.9
million, or $0.12 per share, for the same period in 2017.
The Company reported FFO for the quarter ended September 30, 2018 of
$149.8 million, or $1.66 per share, after giving effect to $2.2 million,
or $0.02 per share, of unamortized costs that were written off upon
early repayment of the mortgage at 220 East 42nd Street and a
reserve of $1.1 million, or $0.01 per share, that was recorded against a
debt investment that is being repaid, as compared to FFO for the same
period in 2017 of $152.9 million, or $1.49 per share.
The Company also reported FFO for the nine months ended September 30,
2018 of $463.1 million, or $5.00 per share, as compared to FFO for the
same period in 2017 of $505.6 million, or $4.85 per share.
All per share amounts in this press release are presented on a diluted
basis.
Operating and Leasing Activity
For the quarter ended September 30, 2018, the Company reported
consolidated revenues and operating income of $307.5 million and $169.3
million, respectively, compared to $374.6 million and $206.1 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 6.1% for the quarter ended
September 30, 2018, or 6.0%, excluding lease termination income. For the
quarter, consolidated property same-store cash NOI increased by 6.4% to
$128.3 million, or 6.3% to $127.4 million, excluding lease termination
income, while unconsolidated joint venture property same-store cash NOI
increased by 5.4% to $55.5 million. No lease termination income was
recognized in unconsolidated joint venture property same-store cash NOI
during the quarter.
Same-store cash NOI, including our share of same-store cash NOI from
unconsolidated joint ventures, increased by 7.0% for the nine months
ended September 30, 2018, or 6.4%, excluding lease termination income,
as compared to the same period in 2017. For the nine months ended
September 30, 2018, consolidated property same-store cash NOI increased
by 5.0% to $382.9 million, or 4.1% to $377.9 million, excluding lease
termination income, while unconsolidated joint venture property
same-store cash NOI increased by 12.1% to $165.6 million. No lease
termination income was recognized in unconsolidated joint venture
property same-store cash NOI during the nine months ended September 30,
2018.
In the third quarter, the Company signed 50 office leases in its
Manhattan portfolio totaling 491,441 square feet. Thirty-three leases
comprising 251,511 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 $71.69 per rentable
square foot, representing a 1.0% increase over the previous fully
escalated rents on the same office spaces. The average lease term on the
Manhattan office leases signed in the third quarter was 11.2 years and
average tenant concessions were 7.5 months of free rent with a tenant
improvement allowance of $65.86 per rentable square foot.
During the first nine months of 2018, the Company signed 136 office
leases in its Manhattan portfolio totaling 1,433,168 square feet.
Ninety-four leases comprising 731,623 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 $72.62 per
rentable square foot, representing a 5.0% increase over the previous
fully escalated rents on the same office spaces. The average lease term
on the Manhattan office leases signed in the first nine months of 2018
was 9.7 years and average tenant concessions were 5.8 months of free
rent with a tenant improvement allowance of $68.63 per rentable square
foot.
Occupancy in the Company’s Manhattan same-store portfolio was 95.7% as
of September 30, 2018, inclusive of 395,569 square feet of leases signed
but not yet commenced, as compared to 95.9% at June 30, 2018 and 95.3%
at September 30, 2017.
In the third quarter, the Company signed 8 office leases in its Suburban
portfolio totaling 33,506 square feet. Seven leases comprising 25,978
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 $34.72 per rentable square foot, representing a 2.0%
decrease over the previous fully escalated rents on the same office
spaces. The average lease term on the Suburban office leases signed in
the third quarter was 4.5 years and average tenant concessions were 3.5
months of free rent with a tenant improvement allowance of $14.04 per
rentable square foot.
During the first nine months of 2018, the Company signed 40 office
leases in its Suburban portfolio totaling 236,215 square feet.
Twenty-eight leases comprising 87,354 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 $35.66 per
rentable square foot, representing a 2.4% decrease over the previous
fully escalated rents on the same office spaces. The average lease term
on the Suburban office leases signed in the first nine months of 2018
was 7.5 years and average tenant concessions were 7.8 months of free
rent with a tenant improvement allowance of $23.40 per rentable square
foot.
Occupancy in the Company’s Suburban same-store portfolio was 92.1% as of
September 30, 2018, inclusive of 12,043 square feet of leases signed but
not yet commenced, as compared to 92.2% at June 30, 2018 and 92.4% at
September 30, 2017.
Significant leases that were signed in the third quarter included:
-
New lease with The Carlyle Group for 94,367 square feet at One
Vanderbilt Avenue, for 15.0 years; -
New lease with Industrial and Commercial Bank of China Limited for
98,594 square feet at 1185 Avenue of the Americas, for 11.6 years; -
Renewal with B and E Theaters LLC for 50,247 square feet at Landmark
Square in Stamford, Connecticut, for 12.3 years; -
Renewal with ION Media Networks, Inc. for 40,438 square feet at 810
Seventh Avenue, for 10.0 years; -
New lease with Ankura Consulting Group, LLC for 29,698 square feet at
485 Lexington Avenue, for 15.7 years; -
New lease with The Community Preservation Corp for 29,400 square feet
at 220 East 42nd Street, for 29.6 years; -
New lease with Fidelity National Title Insurance Company for 27,996
square feet at 485 Lexington Avenue, for 10.0 years.
Marketing, general and administrative, or MG&A, expense for the three
months ended September 30, 2018 was $20.6 million, or 4.7% of total
combined revenues and 44 basis points of total assets, including our
share of assets from unconsolidated joint ventures.
Investment Activity
To date in 2018, the Company has repurchased 7.7 million shares of
common stock and redeemed 0.4 million common units of its Operating
Partnership, or OP units, under the previously announced $2.0 billion
share repurchase program, at an average price of $97.34 per share/unit.
In total, the Company has acquired 16.5 million shares of its common
stock and OP units under the program at an average price of $99.52 per
share/unit, allowing the Company to save approximately $53.6 million of
common dividends on an annualized basis.
In September, the Company entered into an agreement to sell its
interests in 1231 Third Avenue, which the Company took possession of
during the third quarter, and an Upper East Side 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. The transaction is
expected to close in the fourth quarter of 2018.
In August, the Company entered into an agreement to sell its 48.9%
interest in 3 Columbus Circle to the Moinian Group, the current owner of
the remaining 51.1% interest. The Company had acquired its interest in
2011 and initiated a building-wide redevelopment program, which included
a new glass facade, new elevators, bathrooms and expanded lobby. The
repositioning strategy transformed the property into a Class-A corporate
address and was approximately 95.0 percent leased as of September 30,
2018. The transaction is expected to generate net cash proceeds of
$223.0 million and close in the fourth quarter of 2018.
Debt and Preferred Equity Investment Activity
The carrying value of the Company’s debt and preferred equity investment
portfolio decreased to $2.12 billion at September 30, 2018, including
$1.98 billion of investments at a weighted average current yield of 8.7%
that are classified in the debt and preferred equity line item on the
balance sheet, and investments aggregating $0.14 billion at a weighted
average current yield of 11.2% that are included in other balance sheet
line items for accounting purposes.
Financing Activity
In August, the Company issued $350.0 million aggregate principal amount
of floating rate notes due 2021. The notes are callable by the Company,
at par, after one year and bear interest at a floating rate of 0.98%
over LIBOR. The Company used $250.0 million of net proceeds from the
offering to repay the outstanding 5.00% Senior Notes that were due in
August 2018. The remaining proceeds were used for repayment of other
corporate indebtedness.
In August, the Company closed on a $65.6 million financing of 115 Spring
Street. The new mortgage has a 5-year term and bears interest at a
floating rate of 3.40% per annum over LIBOR.
Dividends
In the third quarter of 2018, the Company declared quarterly dividends
on its outstanding common and preferred stock as follows:
- $0.8125 per share of common stock, which was paid on October 15, 2018
to shareholders of record on the close of business on September 28,
2018; and - $0.40625 per share on the Company’s 6.50% Series I Cumulative
Redeemable Preferred Stock for the period July 15, 2018 through and
including October 14, 2018, which was paid on October 15, 2018 to
shareholders of record on the close of business on September 28, 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, October 18, 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 6893668.
A replay of the call will be available 7 days after the call by dialing
(855) 859-2056 using passcode 6893668. 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”.
Annual Institutional Investor Conference
The Company will host its Annual Institutional Investor Conference onMonday, December 3, 2018 in New York City beginning at 9:00am EST. For
more information on the Conference, please email SLG2018@slgreen.com.
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 September 30, 2018, SL
Green held interests in 106 Manhattan buildings totaling 46.4 million
square feet. This included ownership interests in 28.2 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 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 | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Revenues: | ||||||||||||||||||
| Rental revenue, net | $ | 221,763 | $ | 274,765 | $ | 648,501 | $ | 835,501 | ||||||||||
| Escalation and reimbursement | 29,103 | 44,749 | 82,554 | 131,561 | ||||||||||||||
| Investment income | 48,977 | 47,820 | 143,540 | 148,741 | ||||||||||||||
| Other income | 7,702 | 7,266 | 35,761 | 34,328 | ||||||||||||||
| Total revenues | 307,545 | 374,600 | 910,356 | 1,150,131 | ||||||||||||||
| Expenses: | ||||||||||||||||||
|
Operating expenses, including related party expenses $4,790 and $13,289 in 2018 and $5,505 and $14,941 in 2017. |
56,852 | 75,927 | 172,871 | 221,285 | ||||||||||||||
| Real estate taxes | 48,805 | 64,160 | 139,788 | 186,173 | ||||||||||||||
| Ground rent | 9,507 | 8,307 | 26,661 | 24,923 | ||||||||||||||
| Interest expense, net of interest income | 55,168 | 65,634 | 156,695 | 196,112 | ||||||||||||||
| Amortization of deferred financing costs | 2,630 | 4,008 | 9,713 | 12,201 | ||||||||||||||
| Depreciation and amortization | 70,747 | 91,728 | 208,049 | 318,916 | ||||||||||||||
| Loan loss and other investment reserves, net of recoveries | 1,087 | — | 1,087 | — | ||||||||||||||
| Transaction related costs | 163 | 186 | 673 | 365 | ||||||||||||||
| Marketing, general and administrative | 20,594 | 23,963 | 66,601 | 72,362 | ||||||||||||||
| Total expenses | 265,553 | 333,913 | 782,138 | 1,032,337 | ||||||||||||||
|
Net income before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, purchase price and other fair value adjustments, (loss) gain on sale of real estate net, depreciable real estate reserves, gain on sale of marketable securities, and loss on early extinguishment of debt |
41,992 | 40,687 | 128,218 | 117,794 | ||||||||||||||
| Equity in net income from unconsolidated joint ventures | 971 | 4,078 | 9,709 | 14,104 | ||||||||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
70,937 | 1,030 | 136,522 | 16,166 | ||||||||||||||
| Purchase price and other fair value adjustment | (3,057 | ) | — | 57,385 | — | |||||||||||||
| (Loss) gain on sale of real estate, net | (2,504 | ) | — | 6,227 | (3,256 | ) | ||||||||||||
| Depreciable real estate reserves | (6,691 | ) | — | (6,691 | ) | (85,336 | ) | |||||||||||
| Gain on sale of marketable securities | — | — | — | 3,262 | ||||||||||||||
| Loss on early extinguishment of debt | (2,194 | ) | — | (2,194 | ) | — | ||||||||||||
| Net income | 99,454 | 45,795 | 329,176 | 62,734 | ||||||||||||||
|
Net income attributable to noncontrolling interests in the Operating Partnership |
(4,797 | ) | (1,812 | ) | (15,656 | ) | (2,707 | ) | ||||||||||
|
Net (income) loss attributable to noncontrolling interests in other partnerships |
136 | 1,474 | (234 | ) | 18,179 | |||||||||||||
| Preferred unit distributions | (2,846 | ) | (2,850 | ) | (8,542 | ) | (8,551 | ) | ||||||||||
| Net income attributable to SL Green | 91,947 | 42,607 | 304,744 | 69,655 | ||||||||||||||
| Perpetual preferred stock dividends | (3,738 | ) | (3,738 | ) | (11,213 | ) | (11,213 | ) | ||||||||||
| Net income attributable to SL Green common stockholders | $ | 88,209 | $ | 38,869 | $ | 293,531 | $ | 58,442 | ||||||||||
| Earnings Per Share (EPS) | ||||||||||||||||||
| Net income per share (Basic) | $ | 1.03 | $ | 0.40 | $ | 3.35 | $ | 0.59 | ||||||||||
| Net income per share (Diluted) | $ | 1.03 | $ | 0.40 | $ | 3.34 | $ | 0.59 | ||||||||||
| Funds From Operations (FFO) | ||||||||||||||||||
| FFO per share (Basic) | $ | 1.66 | $ | 1.49 | $ | 5.01 | $ | 4.86 | ||||||||||
| FFO per share (Diluted) | $ | 1.66 | $ | 1.49 | $ | 5.00 | $ | 4.85 | ||||||||||
|
Basic ownership interest |
||||||||||||||||||
| Weighted average REIT common shares for net income per share | 85,566 | 97,783 | 87,692 | 99,431 | ||||||||||||||
| Weighted average partnership units held by noncontrolling interests | 4,643 | 4,543 | 4,677 | 4,570 | ||||||||||||||
| Basic weighted average shares and units outstanding | 90,209 | 102,326 | 92,369 | 104,001 | ||||||||||||||
|
Diluted ownership interest |
||||||||||||||||||
| Weighted average REIT common share and common share equivalents | 85,785 | 98,027 | 87,903 | 99,710 | ||||||||||||||
| Weighted average partnership units held by noncontrolling interests | 4,643 | 4,543 | 4,677 | 4,570 | ||||||||||||||
| Diluted weighted average shares and units outstanding | 90,428 | 102,570 | 92,580 | 104,280 | ||||||||||||||
| SL GREEN REALTY CORP. | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
|
(in thousands, except per share data) |
||||||||||
| September 30, | December 31, | |||||||||
| 2018 | 2017 | |||||||||
| Assets | (Unaudited) | |||||||||
| Commercial real estate properties, at cost: | ||||||||||
| Land and land interests | $ | 1,827,999 | $ | 2,357,051 | ||||||
| Building and improvements | 5,271,442 | 6,351,012 | ||||||||
| Building leasehold and improvements | 1,427,381 | 1,450,614 | ||||||||
| Properties under capital lease | 47,445 | 47,445 | ||||||||
| 8,574,267 | 10,206,122 | |||||||||
| Less accumulated depreciation | (2,049,338 | ) | (2,300,116 | ) | ||||||
| 6,524,929 | 7,906,006 | |||||||||
| Assets held for sale | 696,069 | 338,354 | ||||||||
| Cash and cash equivalents | 160,248 | 127,888 | ||||||||
| Restricted cash | 98,344 | 122,138 | ||||||||
| Investment in marketable securities | 28,538 | 28,579 | ||||||||
|
Tenant and other receivables, net of allowance of $16,401 and $18,637 in 2018 and 2017, respectively |
44,614 | 57,644 | ||||||||
| Related party receivables | 21,425 | 23,039 | ||||||||
|
Deferred rents receivable, net of allowance of $15,482 and $17,207 in 2018 and 2017, respectively |
329,325 | 365,337 | ||||||||
|
Debt and preferred equity investments, net of discounts and deferred origination fees of $16,973 and $25,507 in 2018 and 2017, respectively |
1,977,057 | 2,114,041 | ||||||||
| Investments in unconsolidated joint ventures | 3,070,825 | 2,362,989 | ||||||||
| Deferred costs, net | 202,500 | 226,201 | ||||||||
| Other assets | 301,128 | 310,688 | ||||||||
| Total assets | $ | 13,455,002 | $ | 13,982,904 | ||||||
| Liabilities | ||||||||||
| Mortgages and other loans payable | $ | 2,339,030 | $ | 2,865,991 | ||||||
| Revolving credit facility | 145,000 | 40,000 | ||||||||
| Unsecured term loan | 1,500,000 | 1,500,000 | ||||||||
| Unsecured notes | 1,503,986 | 1,404,605 | ||||||||
| Deferred financing costs, net | (47,220 | ) | (56,690 | ) | ||||||
| Total debt, net of deferred financing costs | 5,440,796 | 5,753,906 | ||||||||
| Accrued interest payable | 27,211 | 38,142 | ||||||||
| Accounts payable and accrued expenses | 141,082 | 137,142 | ||||||||
| Deferred revenue | 110,283 | 208,119 | ||||||||
| Capitalized lease obligations | 43,416 | 42,843 | ||||||||
| Deferred land leases payable | 3,731 | 3,239 | ||||||||
| Dividend and distributions payable | 79,165 | 85,138 | ||||||||
| Security deposits | 64,501 | 67,927 | ||||||||
| Liabilities related to assets held for sale | 311,049 | 4,074 | ||||||||
|
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities |
100,000 | 100,000 | ||||||||
| Other liabilities | 97,565 | 189,231 | ||||||||
| Total liabilities | 6,418,799 | 6,629,761 | ||||||||
| Commitments and contingencies | — | — | ||||||||
| Noncontrolling interest in the Operating Partnership | 467,743 | 461,954 | ||||||||
| Preferred units | 301,285 | 301,735 | ||||||||
| Equity | ||||||||||
| Stockholders’ equity: | ||||||||||
|
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both September 30, 2018 and December 31, 2017 |
221,932 | 221,932 | ||||||||
|
Common stock, $0.01 par value 160,000 shares authorized, 86,649 and 93,858 issued and outstanding at September 30, 2018 and December 31, 2017, respectively (including 1,055 held in Treasury at September 30, 2018 and December 31, 2017) |
867 | 939 | ||||||||
| Additional paid-in capital | 4,602,650 | 4,968,338 | ||||||||
| Treasury stock at cost | (124,049 | ) | (124,049 | ) | ||||||
| Accumulated other comprehensive income | 36,299 | 18,604 | ||||||||
| Retained earnings | 1,476,959 | 1,139,329 | ||||||||
| Total SL Green Realty Corp. stockholders’ equity | 6,214,658 | 6,225,093 | ||||||||
| Noncontrolling interests in other partnerships | 52,517 | 364,361 | ||||||||
| Total equity | 6,267,175 | 6,589,454 | ||||||||
| Total liabilities and equity | $ | 13,455,002 | $ | 13,982,904 | ||||||
| SL GREEN REALTY CORP. | ||||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||
|
(unaudited and in thousands, except per share data) |
||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| Funds From Operations (FFO) Reconciliation: | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Net income attributable to SL Green common stockholders | $ | 88,209 | $ | 38,869 | $ | 293,531 | $ | 58,442 | ||||||||||
| Add: | ||||||||||||||||||
| Depreciation and amortization | 70,747 | 91,728 | 208,049 | 318,916 | ||||||||||||||
| Joint venture depreciation and noncontrolling interest adjustments | 45,485 | 23,517 | 140,799 | 72,936 | ||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 4,661 | 338 | 15,890 | (15,472 | ) | |||||||||||||
| Less: | ||||||||||||||||||
| (Loss) gain on sale of real estate, net | (2,504 | ) | — | 6,227 | (3,256 | ) | ||||||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
70,937 | 1,030 | 136,522 | 16,166 | ||||||||||||||
| Purchase price and other fair value adjustments | (3,057 | ) | — | 57,385 | — | |||||||||||||
| Depreciable real estate reserve | (6,691 | ) | — | (6,691 | ) | (85,336 | ) | |||||||||||
| Depreciation on non-rental real estate assets | 616 | 557 | 1,766 | 1,636 | ||||||||||||||
| FFO attributable to SL Green common stockholders | $ | 149,801 | $ | 152,865 | $ | 463,060 | $ | 505,612 | ||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| Operating income and Same-store NOI Reconciliation: | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Net income | $ | 99,454 | $ | 45,795 | $ | 329,176 | $ | 62,734 | ||||||||||
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
(70,937 | ) | (1,030 | ) | (136,522 | ) | (16,166 | ) | ||||||||||
| Purchase price and other fair value adjustments | 3,057 | — | (57,385 | ) | — | |||||||||||||
| Loss (gain) on sale of real estate, net | 2,504 | — | (6,227 | ) | 3,256 | |||||||||||||
| Depreciable real estate reserves | 6,691 | — | 6,691 | 85,336 | ||||||||||||||
| Gain on sale of marketable securities | — | — | — | (3,262 | ) | |||||||||||||
| Depreciation and amortization | 70,747 | 91,728 | 208,049 | 318,916 | ||||||||||||||
| Interest expense, net of interest income | 55,168 | 65,634 | 156,695 | 196,112 | ||||||||||||||
| Amortization of deferred financing costs | 2,630 | 4,008 | 9,713 | 12,201 | ||||||||||||||
| Operating income | 169,314 | 206,135 | 510,190 | 659,127 | ||||||||||||||
| Equity in net income from unconsolidated joint ventures | (971 | ) | (4,078 | ) | (9,709 | ) | (14,104 | ) | ||||||||||
| Marketing, general and administrative expense | 20,594 | 23,963 | 66,601 | 72,362 | ||||||||||||||
| Transaction related costs, net | 163 | 186 | 673 | 365 | ||||||||||||||
| Investment income | (48,977 | ) | (47,820 | ) | (143,540 | ) | (148,741 | ) | ||||||||||
| Loan loss and other investment reserves, net of recoveries | 1,087 | — | 1,087 | — | ||||||||||||||
| Non-building revenue | (2,531 | ) | (2,704 | ) | (15,708 | ) | (19,259 | ) | ||||||||||
| Loss on early extinguishment of debt | 2,194 | — | 2,194 | — | ||||||||||||||
| Net operating income (NOI) | 140,873 | 175,682 | 411,788 | 549,750 | ||||||||||||||
| Equity in net income from unconsolidated joint ventures | 971 | 4,078 | 9,709 | 14,104 | ||||||||||||||
| SLG share of unconsolidated JV depreciation and amortization | 45,839 | 28,819 | 141,023 | 91,320 | ||||||||||||||
|
SLG share of unconsolidated JV interest expense, net of interest income |
34,947 | 23,893 | 107,397 | 67,862 | ||||||||||||||
|
SLG share of unconsolidated JV amortization of deferred financing costs |
1,390 | 1,589 | 4,815 | 6,524 | ||||||||||||||
| SLG share of unconsolidated JV loss on early extinguishment of debt | — | 3,819 | — | 3,819 | ||||||||||||||
| SLG share of unconsolidated JV transaction related costs | — | — | — | 110 | ||||||||||||||
| SLG share of unconsolidated JV investment income | (4,469 | ) | (3,593 | ) | (9,263 | ) | (12,339 | ) | ||||||||||
| SLG share of unconsolidated JV non-building revenue | (901 | ) | (906 | ) | (2,911 | ) | (2,984 | ) | ||||||||||
| NOI including SLG share of unconsolidated JVs | 218,650 | 233,381 | 662,558 | 718,166 | ||||||||||||||
| NOI from other properties/affiliates | (24,286 | ) | (49,359 | ) | (88,079 | ) | (163,880 | ) | ||||||||||
| Same-Store NOI | 194,364 | 184,022 | 574,479 | 554,286 | ||||||||||||||
| Ground lease straight-line adjustment | 524 | 524 | 1,572 | 1,572 | ||||||||||||||
| Joint Venture ground lease straight-line adjustment | 258 | 258 | 773 | 820 | ||||||||||||||
| Straight-line and free rent | (5,541 | ) | (5,140 | ) | (9,120 | ) | (19,517 | ) | ||||||||||
| Rental income – FAS 141 | (1,320 | ) | (1,109 | ) | (4,241 | ) | (3,436 | ) | ||||||||||
| Joint Venture straight-line and free rent | (3,134 | ) | (2,165 | ) | (11,310 | ) | (11,171 | ) | ||||||||||
| Joint Venture rental income – FAS 141 | (1,275 | ) | (3,107 | ) | (3,718 | ) | (9,998 | ) | ||||||||||
| Same-store cash NOI | $ | 183,876 | $ | 173,283 | $ | 548,435 | $ | 512,556 | ||||||||||
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: https://www.businesswire.com/news/home/20181017005863/en/
Source: SL Green Realty Corp.
SL Green Realty Corp.
Matt DiLiberto
Chief Financial Officer
(212)
594-2700