SL Green Realty Corp. (the "Company") (NYSE: SLG):
Financial and Operating
Highlights
- Net income attributable to common stockholders of $1.94 per
share for the second quarter as compared to $1.19 per share for the
same period in 2018. Net income attributable to common stockholders
for the second quarter of 2019 included a non-cash fair value
adjustment of $67.6 million, or $0.77 per share, related to the
acquisition of 460 West 34th street.
- Funds from operations, or FFO, of $1.82 per share for the
second quarter as compared to $1.69 per share for the same period
in 2018. FFO for the second quarter of 2019 included $3.4 million,
or $0.04 per share, of promote income from the sale of 521 Fifth
Avenue.
- Same-store cash net operating income, or NOI, including our
share of same-store cash NOI from unconsolidated joint ventures,
increased 3.2% for the first six months of 2019 excluding lease
termination income and free rent given to Viacom at 1515 Broadway,
as compared to same period in the prior year.
- Signed 40 Manhattan office leases covering 507,743 square
feet in the second quarter and 72 Manhattan leases covering 915,645
square feet in the first six months of 2019. The mark-to-market on
signed Manhattan office leases for the first six months of 2019 was
30.5% higher than the previous fully escalated rents on the same
spaces.
- Signed a new 28,448 square foot lease with Sentinel Capital
Partners at One Vanderbilt, bringing the property to 59% leased
ahead of its planned opening in August 2020. Construction on the
super structure has reached 1,130 feet with steel construction
scheduled to top out in September of 2019.
- Manhattan same-store occupancy was 95.2% as of June 30,
2019, inclusive of leases signed but not yet commenced.
Investing Highlights
- During the first half of 2019, the Company repurchased 1.3
million shares of common stock under the previously announced $2.5
billion share repurchase plan, at an average price of $86.42 per
share. To date, the Company has repurchased 19.4 million shares of
its common stock and redeemed 0.4 million common units of its
Operating Partnership, or OP units, under the program.
- Together with our joint venture partner, closed on the sale
of 521 Fifth Avenue for a sale price of $381.0 million. The
transaction generated net proceeds to the Company of $106.0
million, inclusive of a $3.4 million promote, and the Company
recognized a gain on sale of $60.9 million.
- Closed on the acquisition of a majority and controlling
interest in 460 West 34th Street at a gross asset valuation of $440
million. As of the closing date, the Company's basis in the
20-story property, which will undergo a large scale redevelopment,
was approximately $528 per square foot after taking into account
earlier investments.
- Closed on the acquisition of the remaining 10% interest in
110 Greene Street from our joint venture partner at a gross asset
valuation of $256.5 million.
Financing Highlights
- Entered into an agreement to reduce the interest rate spread
by 65 basis points on the Company's $200.0 million, 7-year term
loan that matures in 2024. This reduction will be effective in
November, 2019.
- Closed on a $465.0 million construction facility for the
redevelopment of 460 West 34th Street. 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 2.225% over
LIBOR.
- Closed on a $228.7 million mortgage financing of 360
Hamilton Avenue in White Plains, NY and 100, 200 and 500 Summit
Lake Drive in Valhalla, New York. The new mortgage has a 3-year
term, with two one-year extension options and bears interest at a
floating rate of 2.79% per annum over LIBOR.
Summary
SL Green Realty Corp. (the "Company") (NYSE: SLG) today reported
net income attributable to common stockholders for the quarter
ended June 30, 2019 of $161.1 million, or $1.94 per share, as
compared to net income attributable to common stockholders of
$103.6 million, or $1.19 per share, for the same quarter in 2018.
Net income attributable to common stockholders for the three months
ended June 30, 2019 includes $59.0 million, or $0.68 per share, of
net gains recognized from the sale of real estate as compared to
$57.2 million, or $0.62 per share, for the same period in 2018. Net
income attributable to common stockholders for the second quarter
of 2019 also included a non-cash fair value adjustment of $67.6
million, or $0.77 per share, related to the acquisition of 460 West
34th street.
The Company also reported net income attributable to common
stockholders for the six months ended June 30, 2019 of $204.9
million, or $2.46 per share, as compared to net income attributable
to common stockholders of $205.3 million, or $2.31 per share, for
the same period in 2018. Net income attributable to common
stockholders for the six months ended June 30, 2019 includes $75.1
million, or $0.86 per share, of net gains recognized from the sale
of real estate as compared to $74.3 million, or $0.79 per share,
for the same period in 2018.
The Company reported FFO for the quarter ended June 30, 2019 of
$159.2 million, or $1.82 per share, as compared to FFO for the same
period in 2018 of $155.6 million, or $1.69 per share. FFO for the
second quarter of 2019 included $3.4 million, or $0.04 per share,
of promote income from the sale of 521 Fifth Avenue.
The Company also reported FFO for the six months ended June 30,
2019 of $306.7 million, or $3.50 per share, as compared to FFO for
the same period in 2018 of $313.3 million, or $3.34 per share.
All per share amounts in this press release are presented on a
diluted basis.
Operating and Leasing
Activity
For the quarter ended June 30, 2019, the Company reported
consolidated revenues and operating income of $313.0 million and
$166.4 million, respectively, compared to $301.1 million and $172.6
million, respectively, for the same period in 2018.
Same-store cash NOI, including our share of same-store cash NOI
from unconsolidated joint ventures, decreased by 2.7% for the
quarter ended June 30, 2019, but increased by 1.1% excluding lease
termination income and free rent given to Viacom at 1515
Broadway.
Same-store cash NOI, including our share of same-store cash NOI
from unconsolidated joint ventures, decreased by 2.8% for the six
months ended June 30, 2019, but increased by 3.2% excluding lease
termination income and free rent given to Viacom at 1515
Broadway.
During the second quarter, the Company signed 40 office leases
in its Manhattan portfolio totaling 507,743 square feet.
Twenty-nine leases comprising 362,568 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 $75.11 per rentable square foot, representing a
54.3% increase over the previous fully escalated rents on the same
office spaces. The average lease term on the Manhattan office
leases signed in the second quarter was 12.0 years, or 12.3 years
including the office leases signed at One Vanderbilt, and average
tenant concessions were 8.0 months of free rent with a tenant
improvement allowance of $71.67 per rentable square foot.
During the first six months of 2019, the Company signed 72
office leases in its Manhattan portfolio totaling 915,645 square
feet. Fifty-three leases comprising 596,850 square feet,
representing office leases on space that had been occupied within
the prior twelve months, are considered replacement leases on which
mark-to-market is calculated. Those replacement leases had average
starting rents of $73.95 per rentable square foot, representing a
30.5% increase over the previously fully escalated rents on the
same office spaces. The average lease term on the Manhattan office
leases signed in the first six months of 2019 was 11.9 years, or
12.1 years including the office leases signed at One Vanderbilt,
and average tenant concessions were 6.2 months of free rent with a
tenant improvement allowance of $65.09 per rentable square
foot.
Occupancy in the Company's Manhattan same-store portfolio was
95.2% as of June 30, 2019, inclusive of 274,272 square feet of
leases signed but not yet commenced, as compared 96.0% at June 30,
2018.
During the second quarter, the Company signed 10 office leases
in its Suburban portfolio totaling 77,712 square feet. Eight leases
comprising 73,702 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
$38.58 per rentable square foot, representing a 3.5% decrease over
the previous fully escalated rents on the same office spaces. The
average lease term on the Suburban office leases signed in the
second quarter was 9.0 years and average tenant concessions were
8.0 months of free rent with a tenant improvement allowance of
$13.06 per rentable square foot.
During the first six months of 2019, the Company signed 18
office leases in its Suburban portfolio totaling 110,682 square
feet. Fifteen leases comprising 103,553 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 $36.82 per rentable square foot, representing a
2.8% decrease over the previously fully escalated rents on the same
office spaces. The average lease term on the Suburban office leases
signed in the first six months of 2019 was 7.4 years and average
tenant concessions were 6.6 months of free rent with a tenant
improvement allowance of $11.21 per rentable square foot.
Occupancy in the Company's Suburban same-store portfolio was
90.0% as of June 30, 2019, as compared to 92.2% at June 30,
2018.
Significant leases that were signed in the second quarter
included:
- New lease with First Republic Bank for 211,521 square feet at
460 West 34th Street, for 15.0 years;
- Renewal with Tribune Media Company and WPIX LLC for 101,658
square feet at 220 East 42nd Street, for 15.8 years;
- Renewal with American Multi-Cinema, Inc. for 95,341 square feet
at 315 West 33rd Street, known as The Olivia, for 15.3 years;
- Renewal with Skadden, Arps, Slate, Meagher & Flom LLP for
56,239 square feet at 360 Hamilton Avenue in White Plains, NY, for
10.8 years; and
- New lease with Sentinel Capital Partners for 28,448 square feet
at One Vanderbilt Avenue, for 15.0 years.
Investment Activity
During the first half of 2019, the Company repurchased 1.3
million shares of common stock under the previously announced $2.5
billion share repurchase plan, at an average price of $86.42 per
share. To date, the Company has repurchased 19.4 million shares of
its common stock and redeemed 0.4 million common units of its
Operating Partnership, or OP units, at an average price of $97.96
per share under the program, saving the Company approximately $67.3
million of common dividends and distributions on an annualized
basis.
In May, the Company, along with our joint venture partner,
closed on the previously announced sale of 521 Fifth Avenue, at a
sale price of $381.0 million. The transaction generated net
proceeds to the Company of $106.0 million, inclusive of a $3.4
million promote, and the Company recognized a gain on sale of $60.9
million.
In May, the Company closed on the previously announced
acquisition of a majority and controlling interest in 460 West 34th
Street at a gross asset valuation of $440 million. After taking
into account earlier investments made through the Company's Debt
and Preferred Equity platform, the Company's blended average basis
in the 20-story property, which will undergo a large scale
redevelopment, was $528 per square foot as of the closing date.
In May, the Company closed on the acquisition of the remaining
10% interest in 110 Greene Street from our joint venture partner at
a gross asset valuation of $256.5 million. The Company had acquired
its 90% interest in the property in 2015 and now owns 100% of the
asset.
Debt and Preferred Equity Investment
Activity
The carrying value of the Company’s debt and preferred equity
investment portfolio decreased to $2.26 billion at June 30, 2019,
including $2.23 billion of investments at a weighted average
current yield of 9.1% that are classified in the debt and preferred
equity line item on the balance sheet, and investments aggregating
$0.03 billion at a weighted average current yield of 6.6% that are
included in other balance sheet line items for accounting
purposes.
During the second quarter, the Company originated or acquired
new subordinate debt and preferred equity investments totaling
$136.2 million, of which $130.8 million was retained and $71.3
million was funded at a weighted average yield of 9.6%.
Financing Activity
In July, the Company closed on a $228.7 million mortgage
financing of 360 Hamilton Avenue in White Plains, NY and 100, 200
and 500 Summit Lake Drive in Valhalla, New York. The new mortgage
has a 3-year term, with two one-year extension options and bears
interest at a floating rate of 2.79% per annum over LIBOR.
In May, the Company, along with its joint venture partners,
closed on a $465.0 million construction facility for the
redevelopment of 460 West 34th Street. 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 2.225% over
LIBOR.
In May, the Company entered into an agreement to reduce the
interest rate spread by 65 basis points on the Company's $200.0
million, 7-year term loan that matures in 2024. This reduction will
be effective in November 2019 resulting in annualized interest
savings of $1.3 million.
Dividends
In the second quarter of 2019, 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 July 15,
2019 to shareholders of record on the close of business on June 28,
2019; and
- $0.40625 per share on the Company's 6.50% Series I Cumulative
Redeemable Preferred Stock for the period April 15, 2019 through
and including July 14, 2019, which was paid on July 15, 2019 to
shareholders of record on the close of business on June 28, 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, July 18, 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 8857713.
A replay of the call will be available 7 days after the call by
dialing (855) 859-2056 using passcode 8857713. 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 June 30, 2019, SL Green held interests in 96 Manhattan
buildings totaling 46.0 million square feet. This included
ownership interests in 27.2 million square feet of Manhattan
buildings and 18.8 million square feet securing debt and preferred
equity investments. In addition, SL Green held ownership interests
in 7 suburban properties comprised of 15 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
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Revenues:
Rental revenue, net
$
216,480
$
211,369
$
429,119
$
426,738
Escalation and reimbursement
28,479
27,052
55,958
53,451
Investment income
51,618
49,273
101,649
94,563
Other income
16,447
13,422
30,553
28,059
Total revenues
313,024
301,116
617,279
602,811
Expenses:
Operating expenses, including related
party expenses of $5,323 and $8,116 in 2019 and $4,665 and $8,499
in 2018
58,317
56,237
116,015
116,019
Real estate taxes
46,694
45,322
93,382
90,983
Operating lease rent
8,298
8,846
16,596
17,154
Interest expense, net of interest
income
47,160
53,611
97,685
101,527
Amortization of deferred financing
costs
2,712
3,546
5,454
7,083
Depreciation and amortization
69,461
67,914
137,804
137,302
Transaction related costs
261
348
316
510
Marketing, general and administrative
25,480
22,479
51,459
46,007
Total expenses
258,383
258,303
518,711
516,585
Equity in net (loss) income from
unconsolidated joint ventures
(7,546
)
4,702
(12,780
)
8,738
Equity in net gain on sale of interest in
unconsolidated joint venture/real estate
59,015
72,025
76,181
65,585
Purchase price and other fair value
adjustment
67,631
11,149
65,590
60,442
(Loss) gain on sale of real estate,
net
—
(14,790
)
(1,049
)
8,731
Net income
173,741
115,899
226,510
229,722
Net income attributable to noncontrolling
interests in the Operating Partnership
(8,310
)
(5,586
)
(10,587
)
(10,858
)
Net loss (income) attributable to
noncontrolling interests in other partnerships
2,138
(173
)
1,900
(371
)
Preferred unit distributions
(2,729
)
(2,847
)
(5,453
)
(5,696
)
Net income attributable to SL Green
164,840
107,293
212,370
212,797
Perpetual preferred stock dividends
(3,737
)
(3,737
)
(7,475
)
(7,475
)
Net income attributable to SL Green common
stockholders
$
161,103
$
103,556
$
204,895
$
205,322
Earnings Per Share (EPS)
Net income per share (Basic)
$
1.94
$
1.19
$
2.46
$
2.31
Net income per share (Diluted)
$
1.94
$
1.19
$
2.46
$
2.31
Funds From Operations (FFO)
FFO per share (Basic)
$
1.83
$
1.69
$
3.51
$
3.35
FFO per share (Diluted)
$
1.82
$
1.69
$
3.50
$
3.34
Basic ownership interest
Weighted average REIT common shares for
net income per share
82,971
87,176
83,141
88,772
Weighted average partnership units held by
noncontrolling interests
4,260
4,706
4,296
4,695
Basic weighted average shares and units
outstanding
87,231
91,882
87,437
93,467
Diluted ownership interest
Weighted average REIT common share and
common share equivalents
83,138
87,377
83,310
88,972
Weighted average partnership units held by
noncontrolling interests
4,260
4,706
4,296
4,695
Diluted weighted average shares and units
outstanding
87,398
92,083
87,606
93,667
SL GREEN REALTY CORP.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per share
data)
June 30,
December 31,
2019
2018
Assets
(Unaudited)
Commercial real estate properties, at
cost:
Land and land interests
$
1,929,496
$
1,774,899
Building and improvements
5,749,261
5,268,484
Building leasehold and improvements
1,427,225
1,423,107
Right of use asset - financing leases
47,445
47,445
Right of use asset - operating leases
396,795
—
9,550,222
8,513,935
Less: accumulated depreciation
(2,217,013
)
(2,099,137
)
7,333,209
6,414,798
Cash and cash equivalents
148,978
129,475
Restricted cash
92,169
149,638
Investment in marketable securities
29,978
28,638
Tenant and other receivables
38,270
41,589
Related party receivables
23,686
28,033
Deferred rents receivable
341,659
335,985
Debt and preferred equity investments, net
of discounts and deferred origination fees of $19,963 and $22,379
and allowances of $1,750 and $5,750 in 2019 and 2018,
respectively
2,228,912
2,099,393
Investments in unconsolidated joint
ventures
2,937,153
3,019,020
Deferred costs, net
220,572
209,110
Other assets
235,355
295,679
Total assets
$
13,629,941
$
12,751,358
Liabilities
Mortgages and other loans payable
$
2,366,907
$
1,988,160
Revolving credit facility
670,000
500,000
Unsecured term loan
1,500,000
1,500,000
Unsecured notes
1,503,305
1,503,758
Deferred financing costs, net
(57,423
)
(50,218
)
Total debt, net of deferred financing
costs
5,982,789
5,441,700
Accrued interest payable
25,564
23,154
Accounts payable and accrued expenses
133,473
147,061
Deferred revenue
122,941
94,453
Lease liability - financing leases
44,034
43,616
Lease liability - operating leases
387,602
3,603
Dividend and distributions payable
79,272
80,430
Security deposits
62,735
64,688
Junior subordinate deferrable interest
debentures held by trusts that issued trust preferred
securities
100,000
100,000
Other liabilities
123,921
116,566
Total liabilities
7,062,331
6,115,271
Commitments and contingencies
—
—
Noncontrolling interest in the Operating
Partnership
401,824
387,805
Preferred units
286,285
300,427
Equity
Stockholders’ equity:
Series I Preferred Stock, $0.01 par value,
$25.00 liquidation preference, 9,200 issued and outstanding at both
June 30, 2019 and December 31, 2018
221,932
221,932
Common stock, $0.01 par value 160,000
shares authorized, 83,465 and 84,739 issued and outstanding at June
30, 2019 and December 31, 2018, respectively (including 1,055 held
in Treasury at both June 30, 2019 and December 31, 2018)
835
847
Additional paid-in capital
4,451,209
4,508,685
Treasury stock at cost
(124,049
)
(124,049
)
Accumulated other comprehensive (loss)
income
(28,395
)
15,108
Retained earnings
1,288,390
1,278,998
Total SL Green Realty Corp. stockholders’
equity
5,809,922
5,901,521
Noncontrolling interests in other
partnerships
69,579
46,334
Total equity
5,879,501
5,947,855
Total liabilities and equity
$
13,629,941
$
12,751,358
SL GREEN REALTY CORP.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(unaudited and in thousands,
except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
Funds From Operations (FFO)
Reconciliation:
2019
2018
2019
2018
Net income attributable to SL Green common
stockholders
$
161,103
$
103,556
$
204,895
$
205,322
Add:
Depreciation and amortization
69,461
67,914
137,804
137,302
Joint venture depreciation and
noncontrolling interest adjustments
49,903
47,308
97,528
95,314
Net income attributable to noncontrolling
interests
6,172
5,759
8,687
11,229
Less:
(Loss) gain on sale of real estate,
net
—
(14,790
)
(1,049
)
8,731
Equity in net gain on sale of interest in
unconsolidated joint venture/real estate
59,015
72,025
76,181
65,585
Purchase price and other fair value
adjustments
67,631
11,149
65,590
60,442
Depreciation on non-rental real estate
assets
746
584
1,453
1,150
FFO attributable to SL Green common
stockholders
$
159,247
$
155,569
$
306,739
$
313,259
Three Months Ended
Six Months Ended
June 30,
June 30,
Operating income and Same-store NOI
Reconciliation:
2019
2018
2019
2018
Net income
$
173,741
$
115,899
$
226,510
$
229,722
Equity in net gain on sale of interest in
unconsolidated joint venture/real estate
(59,015
)
(72,025
)
(76,181
)
(65,585
)
Purchase price and other fair value
adjustments
(67,631
)
(11,149
)
(65,590
)
(60,442
)
Loss (gain) on sale of real estate,
net
—
14,790
1,049
(8,731
)
Depreciation and amortization
69,461
67,914
137,804
137,302
Interest expense, net of interest
income
47,160
53,611
97,685
101,527
Amortization of deferred financing
costs
2,712
3,546
5,454
7,083
Operating income
166,428
172,586
326,731
340,876
Equity in net loss (income) from
unconsolidated joint ventures
7,546
(4,702
)
12,780
(8,738
)
Marketing, general and administrative
expense
25,480
22,479
51,459
46,007
Transaction related costs, net
261
348
316
510
Investment income
(51,618
)
(49,273
)
(101,649
)
(94,563
)
Non-building revenue
(7,268
)
(9,397
)
(16,413
)
(14,176
)
Net operating income (NOI)
140,829
132,041
273,224
269,916
Equity in net (loss) income from
unconsolidated joint ventures
(7,546
)
4,702
(12,780
)
8,738
SLG share of unconsolidated JV
depreciation and amortization
48,176
47,565
96,304
95,184
SLG share of unconsolidated JV interest
expense, net of interest income
38,281
36,670
77,688
72,450
SLG share of unconsolidated JV
amortization of deferred financing costs
1,591
1,752
3,159
3,425
SLG share of unconsolidated JV investment
income
(476
)
(1,708
)
(2,703
)
(4,794
)
SLG share of unconsolidated JV
non-building revenue
(1,215
)
(1,147
)
(1,926
)
(2,148
)
NOI including SLG share of
unconsolidated JVs
219,640
219,875
432,966
442,771
NOI from other properties/affiliates
(7,951
)
(14,705
)
(17,493
)
(35,586
)
Same-Store NOI
211,689
205,170
415,473
407,185
Ground lease straight-line adjustment
514
524
1,028
1,048
Joint Venture ground lease straight-line
adjustment
208
258
465
516
Straight-line and free rent
(3,487
)
(1,482
)
(3,563
)
(3,580
)
Amortization of acquired above and
below-market leases, net
(922
)
(1,238
)
(1,868
)
(2,921
)
Joint Venture straight-line and free
rent
(14,641
)
(4,972
)
(30,027
)
(11,099
)
Joint Venture amortization of acquired
above and below-market leases, net
(4,248
)
(3,815
)
(8,510
)
(7,550
)
Same-store cash NOI
$
189,113
$
194,445
$
372,998
$
383,599
SL GREEN REALTY CORP.
NON-GAAP FINANCIAL MEASURES -
DISCLOSURES
Funds from Operations
(FFO)
FFO is a widely recognized non-GAAP financial measure of REIT
performance. The Company computes FFO in accordance with standards
established by NAREIT, which may not be comparable to FFO reported
by other REITs that do not compute FFO in accordance with the
NAREIT definition, or that interpret the NAREIT definition
differently than the Company does. The revised White Paper on FFO
approved by the Board of Governors of NAREIT in April 2002, and
subsequently amended, defines FFO as net income (loss) (computed in
accordance with GAAP), excluding gains (or losses) from sales of
properties, and real estate related impairment charges, plus real
estate related depreciation and amortization and after adjustments
for unconsolidated partnerships and joint ventures.
The Company presents FFO because it considers it an important
supplemental measure of the Company’s operating performance and
believes that it is frequently used by securities analysts,
investors and other interested parties in the evaluation of REITs,
particularly those that own and operate commercial office
properties. The Company also uses FFO as one of several criteria to
determine performance-based bonuses for members of its senior
management. FFO is intended to exclude GAAP historical cost
depreciation and amortization of real estate and related assets,
which assumes that the value of real estate assets diminishes
ratably over time. Historically, however, real estate values have
risen or fallen with market conditions. Because FFO excludes
depreciation and amortization unique to real estate, gains and
losses from property dispositions, and real estate related
impairment charges, it provides a performance measure that, when
compared year over year, reflects the impact to operations from
trends in occupancy rates, rental rates, operating costs, and
interest costs, providing perspective not immediately apparent from
net income. FFO does not represent cash generated from operating
activities in accordance with GAAP and should not be considered as
an alternative to net income (determined in accordance with GAAP),
as an indication of the Company’s financial performance or to cash
flow from operating activities (determined in accordance with GAAP)
as a measure of the Company’s liquidity, nor is it indicative of
funds available to fund the Company’s cash needs, including our
ability to make cash distributions.
Funds Available for Distribution
(FAD)
FAD is a non-GAAP financial measure that is calculated as FFO
plus non-real estate depreciation, allowance for straight line
credit loss, adjustment for straight line operating lease rent,
non-cash deferred compensation, and a pro-rata adjustment for FAD
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 operating
lease straight-line adjustment and the allowance for straight-line
tenant credit loss.
The Company presents NOI and Cash NOI because the Company
believes that these measures, when taken together with the
corresponding GAAP financial measures and our reconciliations,
provide investors with meaningful information regarding the
operating performance of properties. When operating performance is
compared across multiple periods, the investor is provided with
information not immediately apparent from net income that is
determined in accordance with GAAP. NOI and Cash NOI provide
information on trends in the revenue generated and expenses
incurred in operating our properties, unaffected by the cost of
leverage, straight-line adjustments, depreciation, amortization,
and other net income components. The Company uses these metrics
internally as performance measures. None of these measures is an
alternative to net income (determined in accordance with GAAP) and
same-store performance should not be considered an alternative to
GAAP net income performance.
Coverage Ratios
The Company presents fixed charge and debt service coverage
ratios to provide a measure of the Company’s financial flexibility
to service current debt amortization, interest expense and
operating lease rent from current cash net operating income. These
coverage ratios represent a common measure of the Company’s ability
to service fixed cash payments; however, these ratios are not used
as an alternative to cash flow from operating, financing and
investing activities (determined in accordance with GAAP).
SLG-EARN
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190717005760/en/
Matt DiLiberto Chief Financial Officer (212) 594-2700
SL Green Realty (NYSE:SLG)
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