SL Green Realty Corp. (the "Company") (NYSE: SLG):
Financial and Operating
Highlights
- Net income attributable to common stockholders of $0.40 per
share for the third quarter as compared to $1.03 per share for the
same period in 2018. Net income attributable to common stockholders
for the third quarter of 2019 includes $3.5 million, or $0.04 per
share, of net gains recognized from the sale of real estate as
compared to $68.4 million, or $0.76 per share, for the same period
in 2018.
- Funds from operations, or FFO, of $1.75 per share for the
third quarter as compared to $1.66 per share for the same period in
2018.
- Same-store cash net operating income, or NOI, including our
share of same-store cash NOI from unconsolidated joint ventures,
increased 2.6% for the first nine months of 2019 excluding lease
termination income and free rent given to Viacom at 1515 Broadway,
as compared to the same period in the prior year.
- Signed 31 Manhattan office leases covering 268,349 square
feet in the third quarter and 104 Manhattan leases covering
1,184,895 square feet in the first nine months of 2019. The
mark-to-market on signed Manhattan office leases for the first nine
months of 2019 was 22.0% higher than the previous fully escalated
rents on the same spaces.
- Topped out steel at One Vanderbilt Avenue at 1,401 feet.
Construction is more than three months ahead of schedule and $100
million under budget with an expected opening in August
2020.
- Manhattan same-store occupancy was 95.3% as of September 30,
2019, inclusive of leases signed but not yet commenced.
Investing Highlights
- To date in 2019, the Company has repurchased a combined 2.7
million shares of common stock and common units of its Operating
Partnership, or OP units, under the previously announced $2.5
billion share repurchase plan, at an average price of $84.08 per
share. Since inception of the program, the Company has repurchased
a total of 20.6 million shares of its common stock and redeemed 0.6
million OP units.
- Entered into a contract to sell 220 East 42nd Street, also
known as The News Building, for total consideration of $815.0
million, or approximately $715 per square foot. Net proceeds from
the sale will be available for share repurchases, debt repayment or
new investments. This marks one of the highest valuations for an
office building ever sold on Second Avenue. The transaction is
expected to close in the first quarter of 2020.
- Entered into a contract to acquire a six-story,
160,000-square-foot office property on the far west side of midtown
Manhattan for a gross purchase price of $90.0 million. The property
will be redeveloped into a modern, Class-A building, attracting
companies across industries, including TAMI and boutique FIRE
tenants. The transaction is expected to close within 90
days.
- Entered into a contract to sell 1010 Washington Boulevard in
Stamford, Connecticut, for sale price of $23.1 million. The
transaction is expected to generate cash proceeds of $21.6 million
and close in the fourth quarter of 2019.
- Entered into a 25-year ground lease for the high street
retail property at 712 Madison Avenue to Graff Diamonds.
- Sold a 49% interest in the prime retail condominium at 115
Spring Street in Soho at a gross asset valuation of $66.6 million.
The property was acquired in 2014 for $52.0 million.
Financing Highlights
- Together with our joint venture partner, closed on the
refinancing of 55 West 46th Street, also known as Tower 46. The new
$198.0 million mortgage replaces the previous $195.0 million
mortgage, has a 3-year term, with two one-year extension options,
and bears interest at a floating rate of 1.25% over LIBOR.
- Together with our joint venture partner, closed on a $75.0
million upsize of our existing financing at 2 Herald Square to
$225.0 million and reduced the interest rate on the loan by 10
basis points to a floating rate of 1.45% 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, 2019 of $33.2 million, or $0.40 per share, as
compared to net income attributable to common stockholders of $88.2
million, or $1.03 per share, for the same quarter in 2018. Net
income attributable to common stockholders for the three months
ended September 30, 2019 includes $3.5 million, or $0.04 per share,
of net gains recognized from the sale of real estate as compared to
$68.4 million, or $0.76 per share, for the same period in 2018.
The Company also reported net income attributable to common
stockholders for the nine months ended September 30, 2019 of $238.1
million, or $2.87 per share, as compared to net income attributable
to common stockholders of $293.5 million, or $3.34 per share, for
the same period in 2018. Net income attributable to common
stockholders for the nine months ended September 30, 2019 includes
$78.7 million, or $0.90 per share, of net gains recognized from the
sale of real estate as compared to $142.7 million, or $1.54 per
share, for the same period in 2018.
The Company reported FFO for the quarter ended September 30,
2019 of $151.4 million, or $1.75 per share, as compared to FFO for
the same period in 2018 of $149.8 million, or $1.66 per share.
The Company also reported FFO for the nine months ended
September 30, 2019 of $458.1 million, or $5.25 per share, as
compared to FFO for the same period in 2018 of $463.1 million, or
$5.00 per share.
All per share amounts are presented on a diluted basis.
Operating and Leasing
Activity
For the quarter ended September 30, 2019, the Company reported
consolidated revenues and operating income of $313.6 million and
$162.1 million, respectively, compared to $307.5 million and $169.3
million, respectively, for the same period in 2018.
Same-store cash NOI, including our share of same-store cash NOI
from unconsolidated joint ventures increased by 1.5% for the third
quarter and 2.6% for the nine months ended September 30, 2019,
excluding lease termination income and free rent given to Viacom at
1515 Broadway.
During the third quarter, the Company signed 31 office leases in
its Manhattan portfolio totaling 268,349 square feet. Twenty-three
leases comprising 222,785 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
$71.15 per rentable square foot, representing a 3.2% 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 7.2 years and average tenant concessions were 3.9
months of free rent with a tenant improvement allowance of $53.18
per rentable square foot.
During the first nine months of 2019, the Company signed 104
office leases in its Manhattan portfolio totaling 1,184,895 square
feet. Seventy-seven leases comprising 820,536 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 $73.18 per rentable square foot, representing a
22.0% 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 nine months of 2019 was 10.7 years, or
11.2 years including the office leases signed at One Vanderbilt,
and average tenant concessions were 5.6 months of free rent with a
tenant improvement allowance of $62.08 per rentable square
foot.
Occupancy in the Company's Manhattan same-store portfolio was
95.3% as of September 30, 2019, inclusive of 213,515 square feet of
leases signed but not yet commenced, as compared to 95.2% as of
June 30, 2019.
Significant leases that were signed in the third quarter
included:
- Renewal and expansion with Kobre & Kim LLP for 67,230
square feet at 800 Third Avenue, for 10.8 years;
- New lease with IMG Worldwide Inc. for 36,077 square feet at 304
Park Avenue South, for 8.1 years;
- New lease with Chicago Title Insurance Company for 32,826
square feet at 711 Third Avenue, for 10.5 years; and
- New retail lease with Ulta Beauty, Inc. for 21,706 square feet
at 2 Herald Square, for 10.1 years.
Investment Activity
To date in 2019, the Company has repurchased a combined 2.7
million shares of common stock and common units of its Operating
Partnership, or OP units, under the previously announced $2.5
billion share repurchase plan, at an average price of $84.08 per
share. Since inception of the program, the Company has repurchased
a total of 20.6 million shares of its common stock and redeemed 0.6
million OP units, at an average price of $96.88 per share, saving
the Company approximately $72.2 million of common dividends and
distributions on an annualized basis.
In October, the Company entered into a contract to acquire a
six-story, 160,000-square-foot office property on the far west side
of midtown Manhattan for a gross purchase price of $90.0 million.
The property will be redeveloped into a modern, Class-A building,
attracting companies across industries, including TAMI and boutique
FIRE tenants. The transaction is expected to close within 90
days.
In October, the Company entered into a 25-year ground lease for
the high street retail property at 712 Madison Avenue to Graff
Diamonds. The five-story building is located on Madison Avenue
between 63rd and 64th Streets on Manhattan's Upper East Side and is
adjacent to Graff Diamonds' flagship store.
In September, the Company entered into a contract to sell 220
East 42nd Street in Midtown Manhattan for total consideration of
$815.0 million, or approximately $715 per square foot. Net proceeds
will be available for share repurchases, debt repayment or new
investments. Located on the corner of 42nd Street and Second
Avenue, 220 East 42nd Street, also known as The News Building, is a
37-story art-deco skyscraper that was originally the headquarters
for The New York Daily News. The property was acquired by the
Company in 2003 for $265.0 million and the transaction is expected
to close in the first quarter of 2020, subject to customary closing
conditions.
In September, the Company entered into a contract to sell 1010
Washington Boulevard in Stamford, Connecticut, for sale price of
$23.1 million. The transaction is expected to generate cash
proceeds of $21.6 million and close in the fourth quarter of
2019.
In August, the Company sold a 49% interest in the 5,218 square
foot prime retail condominium at 115 Spring Street in Soho at a
gross asset valuation of $66.6 million. The property was acquired
in 2014 for $52.0 million.
Debt and Preferred Equity Investment
Activity
The carrying value of the Company’s debt and preferred equity
investment portfolio decreased to $1.99 billion at September 30,
2019, including $1.95 billion of investments at a weighted average
current yield of 9.0% that are classified in the debt and preferred
equity line item on the balance sheet, and mortgage investments
aggregating $0.04 billion at a weighted average current yield of
6.6% that are included in other balance sheet line items for
accounting purposes.
Financing Activity
In October, the Company, along with its joint venture partner,
closed on a $75.0 million upsize of our existing financing at 2
Herald Square, $40.0 million of which was funded at closing,
increasing the mortgage to $225.0 million, and reducing the
interest rate on the entire mortgage loan by 10 basis points to a
floating rate of 1.45% over LIBOR.
In August, the Company, along with its joint venture partner,
closed on the refinancing of 55 West 46th Street, known as Tower
46. The new $198.0 million mortgage, of which $192.5 million was
funded at closing, has a 3-year term, with two one-year extension
options, bears interest at a floating rate of 1.25% over LIBOR and
replaces the previous $195.0 million of indebtedness on the
property that bore interest at a floating rate of 2.125% over
LIBOR.
Dividends
In the third 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 October 15,
2019 to shareholders of record on the close of business on
September 30, 2019; and
- $0.40625 per share on the Company's 6.50% Series I Cumulative
Redeemable Preferred Stock for the period July 15, 2019 through and
including October 14, 2019, which was paid on October 15, 2019 to
shareholders of record on the close of business on September 30,
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, October 17, 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 2683935.
A replay of the call will be available 7 days after the call by
dialing (855) 859-2056 using passcode 2683935. 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 September 30, 2019, SL Green held interests in 93 Manhattan
buildings totaling 45.0 million square feet. This included
ownership interests in 27.2 million square feet of Manhattan
buildings and 17.8 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
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Revenues:
Rental revenue, net
$
215,447
$
221,763
$
644,566
$
648,501
Escalation and reimbursement
32,581
29,103
88,539
82,554
Investment income
51,518
48,977
153,167
143,540
Other income
14,088
7,702
44,641
35,761
Total revenues
313,634
307,545
930,913
910,356
Expenses:
Operating expenses, including related
party expenses of $5,460 and $13,575 in 2019 and $4,790 and $13,289
in 2018
59,847
56,852
175,862
172,871
Real estate taxes
49,626
48,805
143,008
139,788
Operating lease rent
8,295
9,507
24,891
26,661
Interest expense, net of interest
income
48,112
55,168
145,797
156,695
Amortization of deferred financing
costs
3,112
2,630
8,566
9,713
Depreciation and amortization
70,464
70,747
208,268
208,049
Loan loss and other investment reserves,
net of recoveries
—
1,087
—
1,087
Transaction related costs
44
163
360
673
Marketing, general and administrative
23,841
20,594
75,300
66,601
Total expenses
263,341
265,553
782,052
782,138
Equity in net (loss) income from
unconsolidated joint ventures
(9,864
)
971
(22,644
)
9,709
Equity in net gain on sale of interest in
unconsolidated joint venture/real estate
—
70,937
76,181
136,522
Purchase price and other fair value
adjustment
3,799
(3,057
)
69,389
57,385
Gain (loss) on sale of real estate,
net
3,541
(2,504
)
2,492
6,227
Depreciable real estate reserves
(7,047
)
(6,691
)
(7,047
)
(6,691
)
Loss on early extinguishment of debt
—
(2,194
)
—
(2,194
)
Net income
40,722
99,454
267,232
329,176
Net income attributable to noncontrolling
interests in the Operating Partnership
(1,719
)
(4,797
)
(12,306
)
(15,656
)
Net loss (income) attributable to
noncontrolling interests in other partnerships
624
136
2,524
(234
)
Preferred unit distributions
(2,732
)
(2,846
)
(8,185
)
(8,542
)
Net income attributable to SL Green
36,895
91,947
249,265
304,744
Perpetual preferred stock dividends
(3,738
)
(3,738
)
(11,213
)
(11,213
)
Net income attributable to SL Green common
stockholders
$
33,157
$
88,209
$
238,052
$
293,531
Earnings Per Share (EPS)
Net income per share (Basic)
$
0.40
$
1.03
$
2.87
$
3.34
Net income per share (Diluted)
$
0.40
$
1.03
$
2.87
$
3.34
Funds From Operations (FFO)
FFO per share (Basic)
$
1.75
$
1.66
$
5.26
$
5.01
FFO per share (Diluted)
$
1.75
$
1.66
$
5.25
$
5.00
Basic ownership
interest
Weighted average REIT common shares for
net income per share
82,292
85,566
82,855
87,692
Weighted average partnership units held by
noncontrolling interests
4,258
4,643
4,283
4,677
Basic weighted average shares and units
outstanding
86,550
90,209
87,138
92,369
Diluted ownership
interest
Weighted average REIT common share and
common share equivalents
82,456
85,785
83,026
87,903
Weighted average partnership units held by
noncontrolling interests
4,258
4,643
4,283
4,677
Diluted weighted average shares and units
outstanding
86,714
90,428
87,309
92,580
SL GREEN REALTY CORP.
CONSOLIDATED BALANCE SHEETS (in thousands, except per share
data)
September 30,
December 31,
2019
2018
Assets
(Unaudited)
Commercial real estate properties, at
cost:
Land and land interests
$
1,860,922
$
1,774,899
Building and improvements
5,352,144
5,268,484
Building leasehold and improvements
1,431,183
1,423,107
Right of use asset - financing leases
47,445
47,445
Right of use asset - operating leases
396,795
—
9,088,489
8,513,935
Less: accumulated depreciation
(2,147,395
)
(2,099,137
)
6,941,094
6,414,798
Assets held for sale
403,488
—
Cash and cash equivalents
121,751
129,475
Restricted cash
94,793
149,638
Investment in marketable securities
30,208
28,638
Tenant and other receivables
44,950
41,589
Related party receivables
20,030
28,033
Deferred rents receivable
306,431
335,985
Debt and preferred equity investments, net
of discounts and deferred origination fees of $16,224 and $22,379
and allowances of $1,750 and $5,750 in 2019 and 2018,
respectively
1,954,556
2,099,393
Investments in unconsolidated joint
ventures
2,923,595
3,019,020
Deferred costs, net
182,621
209,110
Other assets
271,467
295,679
Total assets
$
13,294,984
$
12,751,358
Liabilities
Mortgages and other loans payable
$
2,454,684
$
1,988,160
Revolving credit facility
335,000
500,000
Unsecured term loan
1,500,000
1,500,000
Unsecured notes
1,503,072
1,503,758
Deferred financing costs, net
(56,988
)
(50,218
)
Total debt, net of deferred financing
costs
5,735,768
5,441,700
Accrued interest payable
27,568
23,154
Accounts payable and accrued expenses
143,361
147,061
Deferred revenue
126,321
94,453
Lease liability - financing leases
44,251
43,616
Lease liability - operating leases
384,661
3,603
Dividend and distributions payable
78,541
80,430
Security deposits
62,166
64,688
Junior subordinate deferrable interest
debentures held by trusts that issued trust preferred
securities
100,000
100,000
Other liabilities
140,899
116,566
Total liabilities
6,843,536
6,115,271
Commitments and contingencies
—
—
Noncontrolling interest in the Operating
Partnership
401,863
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
September 30, 2019 and December 31, 2018
221,932
221,932
Common stock, $0.01 par value 160,000
shares authorized, 82,570 and 84,739 issued and outstanding at
September 30, 2019 and December 31, 2018, respectively (including
1,055 held in Treasury at both September 30, 2019 and December 31,
2018)
826
847
Additional paid-in capital
4,407,667
4,508,685
Treasury stock at cost
(124,049
)
(124,049
)
Accumulated other comprehensive (loss)
income
(40,132
)
15,108
Retained earnings
1,225,904
1,278,998
Total SL Green Realty Corp. stockholders’
equity
5,692,148
5,901,521
Noncontrolling interests in other
partnerships
71,152
46,334
Total equity
5,763,300
5,947,855
Total liabilities and equity
$
13,294,984
$
12,751,358
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:
2019
2018
2019
2018
Net income attributable to SL Green common
stockholders
$
33,157
$
88,209
$
238,052
$
293,531
Add:
Depreciation and amortization
70,464
70,747
208,268
208,049
Joint venture depreciation and
noncontrolling interest adjustments
47,674
45,485
145,202
140,799
Net income attributable to noncontrolling
interests
1,095
4,661
9,782
15,890
Less:
Gain (loss) on sale of real estate,
net
3,541
(2,504
)
2,492
6,227
Equity in net gain on sale of interest in
unconsolidated joint venture/real estate
—
70,937
76,181
136,522
Purchase price and other fair value
adjustments
3,799
(3,057
)
69,389
57,385
Depreciable real estate reserves
(7,047
)
(6,691
)
(7,047
)
(6,691
)
Depreciation on non-rental real estate
assets
740
616
2,193
1,766
FFO attributable to SL Green common
stockholders
$
151,357
$
149,801
$
458,096
$
463,060
Three Months Ended
Nine Months Ended
September 30,
September 30,
Operating income and Same-store NOI
Reconciliation:
2019
2018
2019
2018
Net income
$
40,722
$
99,454
$
267,232
$
329,176
Equity in net gain on sale of interest in
unconsolidated joint venture/real estate
—
(70,937
)
(76,181
)
(136,522
)
Purchase price and other fair value
adjustments
(3,799
)
3,057
(69,389
)
(57,385
)
(Gain) loss on sale of real estate,
net
(3,541
)
2,504
(2,492
)
(6,227
)
Depreciable real estate reserves
7,047
6,691
7,047
6,691
Depreciation and amortization
70,464
70,747
208,268
208,049
Interest expense, net of interest
income
48,112
55,168
145,797
156,695
Amortization of deferred financing
costs
3,112
2,630
8,566
9,713
Operating income
162,117
169,314
488,848
510,190
Equity in net loss (income) from
unconsolidated joint ventures
9,864
(971
)
22,644
(9,709
)
Marketing, general and administrative
expense
23,841
20,594
75,300
66,601
Transaction related costs, net
44
163
360
673
Investment income
(51,518
)
(48,977
)
(153,167
)
(143,540
)
Loan loss and other investment reserves,
net of recoveries
—
1,087
—
1,087
Non-building revenue
(6,055
)
(2,531
)
(22,468
)
(15,708
)
Loss on early extinguishment of debt
—
2,194
—
2,194
Net operating income (NOI)
138,293
140,873
411,517
411,788
Equity in net (loss) income from
unconsolidated joint ventures
(9,864
)
971
(22,644
)
9,709
SLG share of unconsolidated JV
depreciation and amortization
46,557
45,839
142,861
141,023
SLG share of unconsolidated JV interest
expense, net of interest income
38,295
34,947
115,983
107,397
SLG share of unconsolidated JV
amortization of deferred financing costs
1,505
1,390
4,664
4,815
SLG share of unconsolidated JV loss on
early extinguishment of debt
258
—
258
—
SLG share of unconsolidated JV investment
income
(314
)
(4,469
)
(3,017
)
(9,263
)
SLG share of unconsolidated JV
non-building revenue
(798
)
(901
)
(2,724
)
(2,911
)
NOI including SLG share of
unconsolidated JVs
213,932
218,650
646,898
662,558
NOI from other properties/affiliates
(7,362
)
(14,097
)
(26,408
)
(52,295
)
Same-Store NOI
206,570
204,553
620,490
610,263
Ground lease straight-line adjustment
514
524
1,542
1,572
Joint Venture ground lease straight-line
adjustment
107
258
573
773
Straight-line and free rent
(2,339
)
(5,536
)
(5,943
)
(8,979
)
Amortization of acquired above and
below-market leases, net
(902
)
(1,320
)
(2,770
)
(4,241
)
Joint Venture straight-line and free
rent
(15,739
)
(3,878
)
(45,765
)
(14,975
)
Joint Venture amortization of acquired
above and below-market leases, net
(4,122
)
(4,065
)
(12,632
)
(11,616
)
Same-store cash NOI
$
184,089
$
190,536
$
555,495
$
572,797
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
from SLG’s unconsolidated JVs, 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/20191016005877/en/
Matt DiLiberto Chief Financial Officer (212) 594-2700
SL Green Realty (NYSE:SLG)
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