SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 1
CURRENT REPORT
------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 1997
SL GREEN REALTY CORP.
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-13199 13-3956775
(Commission File Number) (IRS Employer Id. Number)
70 West 36th Street 10018
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 594-2700
(Registrant's telephone number, including area code)
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant hereby amends the following items, financial statements,
exhibits or other portions of its Current Report on Form 8-K, dated
September 15, 1997, as set forth in the pages attached hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) FINANCIAL STATEMENTS OF PROPERTY ACQUIRED AND PRO FORMA
FINANCIAL INFORMATION
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Pro Forma Combined Balance Sheet
(Unaudited) as of June 30, 1997..................................... F-4
Pro Forma Combined Income Statement
(Unaudited) for the six months ended
June 30, 1997....................................................... F-5
Pro Forma Combined Income Statement
(Unaudited) for the year ended
December 31, 1996................................................... F-6
Notes to Pro Forma Combined Financial Information...................... F-7
ACQUISITION PROPERTY
Report of Independent Auditors......................................... F-20
Statement of Revenues and Certain Expenses
of 110 East 42nd Street for the year ended
December 31, 1996 and for the six months
ended June 30, 1997 (Unaudited)...................................... F-21
Notes to Statement of Revenues and Certain
Expenses of 110 East 42nd Street..................................... F-22
(c) EXHIBITS
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SL GREEN REALTY CORP.
By: /s/ David J. Nettina
------------------------------------------
David J. Nettina
Executive Vice President, Chief Operating
Officer and Chief Financial Officer
Date: November 12, 1997
SL GREEN REALTY CORP.
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma balance sheet of the Company as of June 30, 1997 has been
prepared as if the Company's initial public offering of common stock (including
the exercise of the underwriters over-allotment option (the "shoe") totaling
1,515,000 additional common shares, the "Offering"), the Formation Transactions
effected in connection with the Offering (the "Formation Transactions")
and the purchase of the property located at 110 East 42nd Street had been
consummated on June 30, 1997. The pro forma statements of income for the six
months ended June 30, 1997 and for the year ended December 31, 1996 are
presented as if the completion of the Offering, the Formation Transactions and
the purchase of the property located at 110 East 42nd Street occurred at
January 1, 1996 and the effect thereof was carried foward through the six
month period ended June 30, 1997.
The pro forma financial statements do not purport to represent what the
Company's financial position or results of operations would have been
assuming the completion of the Formation Transactions and the Offering on
such date or at the beginning of the period indicated, nor do they purport to
project the Company's financial position or results of operations at any
future date or for any future period. The pro forma combined financial
statements should be read in conjunction with the combined financial
statements of SL Green Predecessor included in the Company's registration
statement on Form S-11 (333-29329) dated August 14, 1997.
F-3
SL GREEN REALTY CORP.
PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ACQUISITION EQUITY
SL GREEN OF CONVERSION OF
PREDECESSOR PARNERSHIPS' SERVICE ACQUISITION FINANCING PRO FORMA
HISTORICAL INTERESTS CORPORATIONS THE OFFERING PROPERTIES ADJUSTMENTS ADJUSTMENTS
(A) (B) (C) (D) (E) (F) (G)
------------ ------------- ------------- ------------ ----------- ----------- -----------
ASSETS :
Commercial real estate
property at cost............
Land.......................... $ 7,719 $ 4,079 $ 22,267 $ 60
Buildings and improvements.... 35,186 70,523 89,170 229
Property under capital lease.. 12,208 4,592
------------ ------------- ------------- ------------ ----------- ----------- -----------
42,905 86,810 116,029 289
Less accumulated
depreciation............ (6,251) (14,638)
------------ ------------- ------------- ------------ ----------- ----------- -----------
36,654 72,172 116,029 289
Cash and cash equivalents..... 1,221 (6,434) $ (529) $ 222,958 (103,597) $ (45,678) (21,691)
Restricted cash............... 1,685 2,305
Receivables................... 1,107 12 (944)
Related party receivables..... 1,658 26 (783)
Deferred rents receivable..... 1,383 9,690
Investment in
Partnerships................ 1,176 (1,176)
Service corporations........ 1,008
Deferred lease fees and loan
costs....................... 1,561 2,887 (214) (107)
Other assets.................. 2,319 2,792 (657) 1,560
------------ ------------- ------------- ------------ ----------- ----------- -----------
Total assets.............. $ 48,764 $ 82,274 $ (2,119) $ 222,958 $ 13,992 $ (45,785) $ (21,402)
------------ ------------- ------------- ------------ ----------- ----------- -----------
------------ ------------- ------------- ------------ ----------- ----------- -----------
LIABILITIES AND EQUITY :
Mortgage loans payable........ $ 26,646 $ 57,725 $ (37,638)
Accrued interest payable...... 109 10,851 (10,863)
LBHI loan payable............. 7,000 530 $ 9,400 (16,930)
Capitalized lease
obligations................. 14,374 4,592
Deferred land lease payable... 12,021
Accrued expenses and accounts
payable..................... 1,171 576 $ (768)
Accounts payable to related
parties..................... 1,298 503 (1,298)
Excess of distributions and
share of losses over amounts
invested in:
Partnerships............ 18,007 (18,007)
Security deposits............. 1,683 2,390
------------ ------------- ------------- ------------ ----------- ----------- -----------
Total liabilities......... 55,914 80,963 (2,066) 13,992 (65,431)
------------ ------------- ------------- ------------ ----------- ----------- -----------
Minority interest in Operating
Partnership.................
Common stock.................. $ 123 $ 1
Additional paid-in capital....
Owners' equity (deficit)...... (7,150) 1,311 (53) 222,835 19,646 (21,403)
------------ ------------- ------------- ------------ ----------- ----------- -----------
Total equity.............. (7,150) 1,311 (53) 222,958 19,646 (21,402)
------------ ------------- ------------- ------------ ----------- ----------- -----------
Total liabilities and
equity.................. $ 48,764 $ 82,274 $ (2,119) $ 222,958 $ 13,992 $ (45,785) $ (21,402)
------------ ------------- ------------- ------------ ----------- ----------- -----------
------------ ------------- ------------- ------------ ----------- ----------- -----------
MINORITY
INTEREST
IN OPERATION PURCHASE OF
PARTNERSHIP 110 EAST COMPANY
ADJUSTMENT COMPANY 42ND STREET PRO FORMA
(H) PRO FORMA (I) AS ADJUSTED
------------ ----------- ---------- -----------
ASSETS :
Commercial real estate
property at cost............
Land.......................... $ 34,125 $ 6,017 $ 40,142
Buildings and improvements.... 195,108 24,092 219,200
Property under capital lease.. 16,800 16,800
------------ ----------- ---------- -----------
246,033 30,109 276,142
Less accumulated
depreciation............ (20,889) (20,889)
------------ ----------- ---------- -----------
225,144 30,109 255,253
Cash and cash equivalents..... 46,250 (28,109) 18,141
Restricted cash............... 3,990 3,990
Receivables................... 175 175
Related party receivables..... 901 901
Deferred rents receivable..... 11,073 11,073
Investment in
Partnerships................ 0 0
Service corporations........ 1,008 1,008
Deferred lease fees and loan
costs....................... 4,127 4,127
Other assets.................. 6,014 (2,000) 4,014
------------ ----------- ---------- -----------
Total assets.............. $ 298,682 $ 0 $ 298,682
------------ ----------- ---------- -----------
------------ ----------- ---------- -----------
LIABILITIES AND EQUITY :
Mortgage loans payable........ $ 46,733 $ 46,733
Accrued interest payable...... 97 97
LBHI loan payable............. 0 0
Capitalized lease
obligations................. 18,966 18,966
Deferred land lease payable... 12,021 12,021
Accrued expenses and accounts
payable..................... 979 979
Accounts payable to related
parties..................... 503 503
Excess of distributions and
share of losses over amounts
invested in:
Partnerships............ 0 0
Security deposits............. 4,073 4,073
------------ ----------- ---------- -----------
Total liabilities......... 83,372 83,372
------------ ----------- ---------- -----------
Minority interest in Operating
Partnership................. $ 34,860 34,860 34,860
Common stock.................. 124 124
Additional paid-in capital.... 180,326 180,326 180,326
Owners' equity (deficit)...... (215,186) 0 0
------------ ----------- ---------- -----------
Total equity.............. (34,860) 180,450 180,450
------------ ----------- ---------- -----------
Total liabilities and
equity.................. $ 0 $ 298,682 $ 298,682
------------ ----------- ---------- -----------
------------ ----------- ---------- -----------
F-4
SL GREEN REALTY CORP.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
EQUITY
SL GREEN ACQUISITION OF CONVERSION
PREDECESSOR PARTNERSHIPS' SERVICE ACQUISITION FINANCING PRO
HISTORICAL INTERESTS CORPORATIONS PROPERTIES ADJUSTMENTS FORMA
(J) (K) (L) (M) (N) ADJUSTMENTS
------------- --------------- --------------- ------------- ------------- -----------
REVENUES:
Rental revenue.......... $ 2,800 $ 10,579 $ 9,639
Escalations and
reimbursement
revenues.............. 456 725 1,293
Management revenues..... 966 $ (966)
Leasing commissions..... 3,088 (1,563)
Construction revenues... 8 (8)
Investment income.......
Other income............ 16 (11) 1,532
Equity in Service
Corporations
income................ 382
------ ------- ------ ------ ------------- ------------
Total revenues...... 7,334 11,304 (2,166) 12,464
------ ------- ------ ------ ------------- ------------
Share of net loss from
uncombined
joint ventures........ 564 (564)
------ ------- ------ ------ ------------- ------------
EXPENSES:
Operating expenses...... 1,625 2,099 (696) 2,683
Ground rent............. 1,938
Interest................ 713 4,163 189 $ (2,079)
Depreciation and
amortization............ 599 1,939 (47) 1,146 (10) $ 3(P)
Real estate taxes....... 482 1,461 2,135
Marketing, general and
administrative........ 1,835 (1,235) 828(Q)
------ ------- ------ ------ ------------- ------------
Total expenses...... 5,254 11,600 (1,978) 6,153 (2,089) 831
------ ------- ------ ------ ------------- ------------
Income (loss) before
minority interest and
extraordinary
item................ 1,516 268 (188) 6,311 2,089 (831)
Minority interest in
operating
partnership........... (1,485)(R)
------ ------- ------ ------ ------------- ------------
Income (loss) before
extraordinary
item................ $ 1,516 $ 268 $ (188) $ 6,311 $ 2,089 $ (2,316)
------ ------- ------ ------ ------------- ------------
------ ------- ------ ------ ------------- ------------
Income per common
share (S)..........
110 EAST COMPANY PRO
COMPANY PRO 42ND STREET FORMA
FORMA (O) AS ADJUSTED
----------- ----------- -----------
REVENUES:
Rental revenue...................... $ 23,018 $ 2,353 $ 25,371
Escalations and reimbursement
revenues.......................... 2,474 354 2,828
Management revenues................. 0 0
Leasing commissions................. 1,525 1,525
Construction revenues............... 0 0
Investment income...................
Other income........................ 1,537 10 1,547
Equity in Service Corporations
income............................ 382 382
----------- ----------- -----------
Total revenues.................. 28,936 2,717 31,653
----------- ----------- -----------
Share of net loss from uncombined
joint ventures.................... 0 0
----------- ----------- -----------
EXPENSES:
Operating expenses.................. 5,711 1,135 6,846
Ground rent......................... 1,938 1,938
Interest............................ 2,986 2,986
Depreciation and amortization....... 3,630 301 3,931
Real estate taxes................... 4,078 706 4,784
Marketing, general and
administrative.................... 1,428 59 1,487
----------- ----------- -----------
Total expenses.................. 19,771 2,201 21,972
----------- ----------- -----------
Income (loss) before minority
interest and extraordinary
item............................ 9,165 516 9,681
Minority interest in operating
partnership....................... (1,485) (1,485)
----------- ----------- -----------
Income (loss) before extraordinary
item............................ $ 7,680 $ 516 $ 8,196
----------- ----------- -----------
----------- ----------- -----------
Income per common share (R)....... $ 0.62 $ 0.67
----------- -----------
----------- -----------
F-5
SL GREEN REALTY CORP.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED
DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ACQUISITION EQUITY
SL GREEN OF CONVERION OF
PREDECESSOR PARTNERSHIPS' SERVICE ACQUISITION FINANCING PRO FORMA
HISTORICAL INTERESTS CORPORATIONS PROPERTIES ADJUSTMENTS ADJUSTMENTS
(A) (B) (C) (D) (E) (G)
------------- --------------- --------------- ----------- ------------- -------------
REVENUES:
Rental revenue........................ $ 4,199 $ 20,985 $ 19,154
Escalations and reimbursement
revenues............................ 1,051 2,304 3,274
Management revenues................... 2,336 $ (2,336)
Leasing commissions................... 2,372 (1,115)
Construction revenues................. 101 (101)
Investment income..................... 15
Other income.......................... 123 13 (92) 906
Equity in Service Corporations
income..............................
------------- ------- ------- ----------- ------------- -------------
Total revenues...................... 10,182 23,317 (3,644) 23,334
------------- ------- ------- ----------- ------------- -------------
Share of net loss from uncombined
joint ventures...................... 1,408 (1,408) 504
------------- ------- ------- ----------- ------------- -------------
EXPENSES:
Operating expenses.................... 3,197 4,608 (1,522) 6,016
Ground rent........................... 3,925
Interest.............................. 1,357 7,743 379 $ (3,621)
Depreciation and amortization......... 975 3,812 (92) 2,292 (13) $ 5
Real estate taxes..................... 703 3,189 4,356
Marketing, general and
administrative...................... 3,250 (2,264) 1,657
------------- ------- ------- ----------- ------------- -------------
Total expenses...................... 9,482 23,277 (3,878) 13,043 (3,634) 1,662
------------- ------- ------- ----------- ------------- -------------
Income (loss) before minority
interest and extraordinary item... (708) 1,448 (270) 10,291 3,634 (1,662)
Minority interest
in Operating Partnership (H)........ (2,063)
------------- ------- ------- ----------- ------------- -------------
Income (loss)
before extraordinary item......... $ (708) $ 1,448 $ (270) $ 10,291 $ 3,634 $ (3,725)
------------- ------- ------- ----------- ------------- -------------
------------- ------- ------- ----------- ------------- -------------
Income per common share(I)..........
110 EAST COMPANY
COMPANY 42ND STREET PRO FORMA
PRO FORMA (F) AS ADJUSTED
----------- ------------ -----------
REVENUES:
Rental revenue........................ $ 44,338 $ 4,507 $ 48,845
Escalations and reimbursement
revenues............................ 6,629 520 7,149
Management revenues...................
Leasing commissions................... 1,257 1,257
Construction revenues................. 0 0
Investment income..................... 15 15
Other income.......................... 950 16 966
Equity in Service Corporations
income..............................
----------- --------- -----------
Total revenues...................... 53,189 5,043 58,232
----------- --------- -----------
Share of net loss from uncombined
joint ventures...................... 504 504
----------- --------- -----------
EXPENSES:
Operating expenses.................... 12,299 2,248 14,547
Ground rent........................... 3,925 3,925
Interest.............................. 5,858 5,858
Depreciation and amortization......... 6,979 602 7,581
Real estate taxes..................... 8,248 1,422 9,670
Marketing, general and
administrative...................... 2,643 102 2,745
----------- --------- -----------
Total expenses...................... 39,952 4,374 44,326
----------- --------- -----------
Income (loss) before minority
interest and extraordinary item... 12,733 669 13,402
Minority interest
in Operating Partnership (G)........ (2,063) (2,063)
----------- --------- -----------
Income (loss)
before extraordinary item......... $ 10,670 $ 669 $ 11,339
----------- --------- -----------
----------- --------- -----------
Income per common share(H).......... $ 0.87 $ 0.92
----------- -----------
----------- -----------
F-6
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ADJUSTMENTS TO THE PRO FORMA COMBINED BALANCE SHEET
(A) To reflect the SL Green Predecessor historical combined balance sheet
as of June 30, 1997. The real estate and other assets and the assumption of
liabilities and deficit of the SL Green Predecessor transferred at their
historical amounts to the Operating Partnership.
(B) To reflect 673 First Avenue, 470 Park Avenue South and 29 West 35th
Street (the "Equity Properties") as consolidated entities rather than as
uncombined joint ventures as a result of the acquisition of 100% of the
partnerships' interests and to record payment of transfer costs on the transfer
of the properties to the Operating Partnership. The Company accounts for
interests acquired from third parties (the other partners), by the purchase
method.
ACQUISITION OF THIRD PARTY
PARTNERSHIP INTERESTS
ELIMINATE -------------------------------------
HISTORICAL UNCOMBINED RECLASSIFY 673 470 29
AMOUNTS TOTAL AND OTHER FIRST AVE PARK AVE WEST 35TH
----------- ----------- --------------- ----------- ----------- -----------
ASSETS:
Commercial real estate property at cost,
net...................................... $ 57,955 $ 8,859 $ 3,106 $ 2,252
Cash and cash equivalents.................. 1,663 (5,449) (260) (2,388)
Restricted cash............................ 1,305 1,000
Receivables................................ $ 12
Related party receivables.................. 26
Deferred rents receivable.................. 14,881 (2,880) (1,458) (853)
Investment in partnerships................. $ (1,176)
Deferred lease fees and loan costs......... 4,337 (900) (395) (155)
Other assets............................... 2,300 492
----------- ----------- --- ----------- ----------- -----------
Total assets............................. $ (1,176) $ 82,441 $ 530 $ 630 $ 993 $ (1,144)
----------- ----------- --- ----------- ----------- -----------
----------- ----------- --- ----------- ----------- -----------
LIABILITIES AND EQUITY:......................
Mortgage loans payable..................... $ 63,724 $ (5,649) $ (350)
Accrued interest payable................... 16,329 (1,834) (3,644)
LBHI Loan payable.......................... $ 530
Capitalized lease obligations.............. 14,374
Deferred land lease payable................ 11,996 25
Accrued expenses and accounts payable...... 576
Accounts payable to related parties........ 628 (125)
Excess of distributions and share of losses
over amounts invested in partnerships.... $ (18,007)
Security deposits.......................... 2,390
----------- ----------- --- ----------- ----------- -----------
Total liabilities........................ (18,007) 110,017 530 (7,458) (4,119)
----------- ----------- --- ----------- ----------- -----------
Total equity (deficit)..................... 16,831 (27,576) 8,088 5,112 $ (1,144)
----------- ----------- --- ----------- ----------- -----------
Total liabilities and equity............. $ (1,176) $ 82,441 $ 530 $ 630 $ 993 $ (1,144)
----------- ----------- --- ----------- ----------- -----------
----------- ----------- --- ----------- ----------- -----------
TOTAL
ADJUSTMENTS
-----------
ASSETS:
Commercial real estate property at cost,
net...................................... $ 72,172
Cash and cash equivalents.................. (6,434)
Restricted cash............................ 2,305
Receivables................................ 12
Related party receivables.................. 26
Deferred rents receivable.................. 9,690
Investment in partnerships................. (1,176)
Deferred lease fees and loan costs......... 2,887
Other assets............................... 2,792
-----------
Total assets............................. $ 82,274
-----------
-----------
LIABILITIES AND EQUITY:......................
Mortgage loans payable..................... $ 57,725
Accrued interest payable................... 10,851
LBHI Loan payable.......................... 530
Capitalized lease obligations.............. 14,374
Deferred land lease payable................ 12,021
Accrued expenses and accounts payable...... 576
Accounts payable to related parties........ 503
Excess of distributions and share of losses
over amounts invested in partnerships.... (18,007)
Security deposits.......................... 2,390
-----------
Total liabilities........................ 80,963
-----------
Total equity (deficit)..................... 1,311
-----------
Total liabilities and equity............. $ 82,274
-----------
-----------
The purchase price for each third party interest acquired is as follows:
UNITS
CASH IN DOLLARS TOTAL
--------- ----------- ---------
673 First Avenue..................................... $ 4,033 $ 4,033
470 Park Avenue South................................ 25 $ 450 475
29 West 35th Street.................................. 2,326 2,326
--------- ----- ---------
$ 6,384 $ 450 $ 6,834
--------- ----- ---------
--------- ----- ---------
F-7
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(C) To reflect adjustments required to record the Company's investments in
the Service Corporations pursuant to the equity method of accounting. As a
result of the Formation Transactions the Company does not own the majority of
the voting stock of the Service Corporations but will continue to exercise
significant influence due to the following:
--Substantially all of the economic benefits flow to the Company (who
own 100% of the non-voting common stock representing 95% of the total
equity).
--The Company and the Service Corporations have common officers and
employees.
--The owners of a majority of the voting stock of the Service
Corporations have not contributed substantial equity to the Service
Corporations.
--The views of the Company's management influence the operations of the
Service Corporations.
The adjustment is as follows:
HISTORICAL
SERVICE EQUITY TOTAL
CORPORATIONS CONVERSION ADJUSTMENT
------------- ------------- -----------
ASSETS:
Cash and cash equivalents............................................... $ 529 $ (529)
Receivables............................................................. 944 (944)
Related party receivables............................................... 783 (783)
Deferred lease fees and loan costs...................................... 214 (214)
Other assets............................................................ 657 (657)
Investment in service corporations...................................... $ 1,008 1,008
------ ------------- -----------
Total Assets.......................................................... $ 3,127 $ 1,008 $ (2,119)
------ ------------- -----------
------ ------------- -----------
LIABILITIES AND EQUITY:
Accrued expenses and accounts payable................................... $ 768 $ (768)
Accounts payable to related parties..................................... 1,298 (1,298)
Excess share of losses over amounts invested in Service Corporations....
------ ------------- -----------
Total liabilities..................................................... 2,066 (2,066)
Equity.................................................................. 1,061 $ (1,008) (53)
------ ------------- -----------
Total liabilities and equity.......................................... $ 3,127 $ (1,008) $ (2,119)
------ ------------- -----------
------ ------------- -----------
Historical equity of service corporations.......................... $ 1,061
---------
Investment in service corporations at 95 percent interest........ $ 1,008
---------
---------
F-8
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(D) To reflect the issuance of 11,615,000 shares (including the exercise
of the shoe totaling 1,515,000 additional common shares) of common stock at
price of $21 per share which is reduced by the underwriting discount of
$15,216, an advisory fee of $1,591 payable to Lehman Brothers Inc. and other
costs of the Offering of $4,150.
(E) To reflect the acquisition of the respective properties at cost which
represents the purchase price plus estimated closing costs of 1372 Broadway,
1140 Avenue of the Americas and 50 West 23rd Street as follows:
1140 50 TOTAL
1372 AVENUE OF WEST ACQUISITION
BROADWAY THE AMERICAS 23RD STREET PROPERTIES
----------- ------------- ----------- -----------
ASSETS ACQUIRED
Land.......................................................... $ 10,828 $ 4,242 $ 7,197 $ 22,267
Building...................................................... 43,312 17,023 28,835 89,170
Property under capital lease.................................. 4,592 4,592
----------- ------------- ----------- -----------
Net Property.............................................. 54,140 25,857 36,032 116,029
Other assets-escrow........................................... 1,560 1,560
----------- ------------- ----------- -----------
$ 54,140 $ 25,857 $ 37,592 $ 117,589
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
SOURCES OF FUNDS
Cash.......................................................... $ 47,440 $ 19,265 $ 36,892 $ 103,597
Capitalized lease obligations................................. 4,592 4,592
LBHI loan payable............................................. 6,700 2,000 700 9,400
----------- ------------- ----------- -----------
$ 54,140 $ 25,857 $ 37,592 $ 117,589
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
(F) To reflect the following financing transactions:
- Repayment of certain mortgage loans, payment of prepayment penalties and
write off of deferred financing costs.
- Cancellation of portions of mortgage loans and accrued interest due to
negotiations with the mortgage holders regarding the value of the
collateral and the likelihood of repayment at par of the entire principal
amount together with accrued interest.
- Payment of mortgage fees which are capitalized and amortized over the
remaining lives of the loans transferred from the SL Green Predecessor to
the Company.
- Repayment of portions of the LBHI Loan which were borrowed in connection
with the purchase of additional partnership interests and the Acquisition
Properties.
- Borrowings under the LBHI Loan to pay a portion of the prepayment penalty
on the 1414 Avenue of the Americas mortgage.
F-9
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
- Borrowings under a new mortgage loan and the payment of loan fees which
will be capitalized and amortized over the life of the loan are summarized
as follows:
470 29 36 70 1414
673 PARK WEST WEST WEST AVENUE NEW
FIRST AVENUE 35TH 44TH 36TH OF THE MORTGAGE LBHI
AVENUE SOUTH STREET STREET STREET AMERICAS LOAN LOAN
--------- --------- ----------- --------- --------- ----------- ----------- ---------
Cash and cash equivalents..... $ (1,389) $ (13,162) $ (30) $ (10,200) $ (6,568) $ (11,059) $ 13,860 $ (17,130)
--------- --------- --- --------- --------- ----------- ----------- ---------
--------- --------- --- --------- --------- ----------- ----------- ---------
Deferred lease fees and loan
costs:.......................
Financing costs capitalized... $ 390 $ 111 $ 30 $ 140
Amortization of deferred
financing costs.............. (25) (7) (4) (14)
Deferred financing costs
written off.................. $ (260) $ (468)
--------- --------- --- --------- ----------- -----------
Net deferred lease fees
and loan costs.......... $ 365 $ 104 $ 26 $ (260) $ (468) $ 126
--------- --------- --- --------- ----------- -----------
--------- --------- --- --------- ----------- -----------
Mortgage loans payable:
Loans funded.................. $ 14,000
Loans repaid (A).............. $ (1,000) $ (13,042) $ (10,200) $ (6,568) $ (9,878)
Loans forgiven (B)............ (10,300) (650)
--------- --------- --------- --------- ----------- -----------
Net mortgage loans
payable................. $ (11,300) $ (13,692) $ (10,200) $ (6,568) $ (9,878) $ 14,000
--------- --------- --------- --------- ----------- -----------
--------- --------- --------- --------- ----------- -----------
Accrued interest payable:
Accrued interest paid....... $ (9) $ (109)
Accrued interest forgiven
(B)....................... $ (3,771) (6,974)
--------- --------- -----------
Net accrued interest
payable................. $ (3,771) $ (6,983) $ (109)
--------- --------- -----------
--------- --------- -----------
LBHI loan payable:
funded...................... $ 200
repaid...................... $ (17,130)
----------- ---------
Net LBHI Loan............. $ 200 $ (17,130)
----------- ---------
----------- ---------
Equity:
Increase for forgiveness of
debt...................... $ 14,072 $ 7,624
Decrease due to buyout of
profit participation...... $ (1,272)
Decrease due to deferred
loan costs................ $ (260) (468)
Decrease due to amortization
of loan costs............. (25) (7) $ (4) $ (14)
--------- --------- --- --------- ----------- -----------
Net equity................ $ 14,047 $ 7,617 $ (4) $ (260) $ (1,740) $ (14)
--------- --------- --- --------- ----------- -----------
--------- --------- --- --------- ----------- -----------
TOTAL
PRO FORMA
ADJUSTMENT
-----------
Cash and cash equivalents..... $ 45,678
-----------
-----------
Deferred lease fees and loan
costs:.......................
Financing costs capitalized... $ 671
Amortization of deferred
financing costs.............. (50)
Deferred financing costs
written off.................. (728)
-----------
Net deferred lease fees
and loan costs.......... $ (107)
-----------
-----------
Mortgage loans payable:
Loans funded.................. $ 14,000
Loans repaid (A).............. (40,688)
Loans forgiven (B)............ (10,950)
-----------
Net mortgage loans
payable................. $ (37,638)
-----------
-----------
Accrued interest payable:
Accrued interest paid....... $ (118)
Accrued interest forgiven
(B)....................... (10,745)
-----------
Net accrued interest
payable................. $ (10,863)
-----------
-----------
LBHI loan payable:
funded...................... $ 200
repaid...................... (17,130)
-----------
Net LBHI Loan............. $ (16,930)
-----------
-----------
Equity:
Increase for forgiveness of
debt...................... $ 21,696
Decrease due to buyout of
profit participation...... (1,272)
Decrease due to deferred
loan costs................ (728)
Decrease due to amortization
of loan costs............. (50)
-----------
Net equity................ $ 19,646
-----------
-----------
- ------------------------
(A) In anticipation of the establishment of the Credit Facility in order to
preserve New York State Tax Mortgage Recording Tax Credits which
will mitigate future financing costs of the Company, it is currently
expected that Lehman Brothers Holdings Inc. will acquire certain of the
mortgage indebtedness and the proceeds from the Offering intended to repay
such indebtedness and deposited those proceede into an escrow account to
serve that indebtedness.
(B) In connection with the Formation Transactions, the Company will recognize an
extraordinary gain on the forgiveness of the debt of approximately $22,000.
F-10
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(G) To reflect the following pro forma transaction:
--Distribution of excess working capital from the building accounts to
partners.
--$20,000 of the offering proceeds will be used by the Operating
Partnership to repay a portion of a loan made to a company indirectly owned
by Stephen L. Green, which loan was transferred to the Operating Partnership
in connection with the transfer thereto by Stephen L. Green of his ownership
interests, which has been accounted for as a distribution to Stephen L.
Green.
--Payment of real property transfer taxes which are capitalized and
amortized over the life of the commercial property.
--Initial capitalization of SL Green Realty Corp.
INITIAL
470 PARK 70 WEST 1414 AVENUE CAPITALIZATION TOTAL PRO
673 FIRST AVENUE 36TH OF THE OF SL GREEN FORMA
AVENUE SOUTH STREET AMERICAS LBHI LOAN REALTY CORP. ADJUSTMENT
----------- --------- --------- ----------- ---------- ------------- -----------
Cash and cash equivalents:
Preformation distributions to
partners...................... $ (403) $ (1,000) $ (1,403)
Repayment of LBHI loan.......... $ (20,000) (20,000)
Payment of real property
transfer costs................ $ (124) $ (165) (289)
Initial Company
capitalization................ $ 1 1
----- --------- --------- ----- ---------- ------------- -----------
Net (decrease) in cash and cash
equivalents...................... $ (403) $ (1,000) $ (124) $ (165) $ (20,000) $ 1 $ (21,691)
----- --------- --------- ----- ---------- ------------- -----------
----- --------- --------- ----- ---------- ------------- -----------
Land.............................. $ 11 $ 49 $ 60
Buildings and improvements........ 113 116 229
--------- ----- -----------
124 165 289
--------- ----- -----------
Equity:
Decreases for distributions to
partners......................... $ (403) $ (1,000) (1,403)
Decrease for distribution......... $ (20,000) (20,000)
Common stock...................... $ 1 1
----- --------- ---------- ------------- -----------
(Decrease) increase to equity..... (403) (1,000) (20,000) (21,402)
----- --------- --------- ----- ---------- ------------- -----------
Net adjustment.................... $ (403) $ (1,000) $ (124) $ (165) $ (20,000) $ 1 $ (21,691)
----- --------- --------- ----- ---------- ------------- -----------
----- --------- --------- ----- ---------- ------------- -----------
In connection with the formation of the Company a financial advisor received
85,600 shares of common stock at a value of $21 per share which will be
accounted for as Offering costs in the amount of $1,798. The accounting is as
follows:
Common stock/additional paid-in-capital..................... $ 1,798
Offering costs.............................................. (1,798)
---------
$ 0
---------
---------
F-11
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(H) Reflects the elimination of accumulated deficit against additional paid
in capital and the establishment of limited partners' interest (16.2% after
exercise of the Offering Shoe) in the Operating Partnership as follows:
Total owners' equity...................................... $ 215,186
Limited partners' percentage ownership interest in the net
assets of the Operating Partnership...................... 16.2%
---------
Limited partners' interest in the Operating Partnership... $ 34,860
---------
---------
(I) To reflect the September 15, 1997 purchase price allocation for the
acquisition for th acquisition of the property located at 110 East 42nd
Street as of June 30, 1997. There was no formal valuation performed on
this property.
ADJUSTMENTS TO THE PRO FORMA COMBINED INCOME STATEMENT FOR THE SIX MONTHS ENDED
JUNE 30, 1997
(J) To reflect the SL Green Predecessor historical combined statement of
operations for the six months ended June 30, 1997.
(K) To reflect the six months ended June 30, 1997 operations of 673 First
Avenue, 470 Park Avenue South, 29 West 35th Street and 36 West 44th Street (the
"Equity Properties") as consolidated entities rather than equity method
investees due to the acquistion 100% of the partnership interests.
ACQUISITION OF PARTNERSHIP INTERESTS AND FAIR
MARKET VALUE ADJUSTMENTS
ELIMINATE --------------------------------------------------
HISTORICAL UNCOMBINED 673 470 29 36 TOTAL
AMOUNTS TOTAL FIRST AVE PARK AVE WEST 35TH WEST 44TH ADJUSTMENTS
----------- ----------- ----------- ----------- ----------- ----------- -----------
REVENUES:
Rental revenue(a)............. $ 10,203 $ 194 $ 120 $ 50 $ 12 $ 10,579
Escalations and reimbursement
revenues..................... 725 725
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues............ 10,928 194 120 50 12 11,304
----------- ----------- ----------- ----------- ----------- ----------- -----------
Equity in net loss of
investees.................... $ (564) (564)
----------- ----------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
Operating expenses(b)......... 2,448 (162) (98) (27) (62) 2,099
Real estate taxes 1,461 1,461
Ground rent(c)................ 1,913 25 1,938
Interest...................... 4,163 4,163
Depreciation and
amortization(c).............. 1,982 19 (51) (9) (2) 1,939
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses............ 11,967 (118) (149) (36) (64) 11,600
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before minority
interest................ $ 564 $ (1,039) $ 312 $ 269 $ 86 $ 76 $ 268
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
- ------------------------
(a) Rental income is adjusted to reflect straight line amounts as of the
acquisition date.
(b) Operating expenses are adjusted to eliminate management fees paid to the
Service Corporations (Management fee income received by the Service
Corporations was also eliminated.)
(c) Ground rent and depreciation and amortization were adjusted to reflect the
purchase of the assets.
F-12
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(L) To reflect the six months operations of the Service Corporations
pursuant to the equity method of accounting.
LEASING EXPENSES
HISTORICAL COMMISSIONS ATTRIBUTABLE EQUITY
SERVICE ATTRIBUTABLE TO REIT CONVERSION TOTAL
CORPORATIONS TO LLC (A) (B) ADJUSTMENT
------------ ------------ ------------- --------------- -----------
STATEMENT OF OPERATIONS:
Management revenue......................... $ 966 $ (966)
Leasing commissions........................ 3,088 $ (1,525) (1,563)
Construction revenues...................... 8 (8)
Equity in net income of Service
Corporations.............................. $ (382) 382
Other income............................... 11 (11)
------------ ------------ ----- ----- -----------
Total revenue............................ 4,073 (1,525) (382) (2,166)
------------ ------------ ----- ----- -----------
EXPENSES
Operating expenses......................... 696 (696)
Depreciation and amortization.............. 47 (47)
Marketing, general and administrative...... 1,835 $ (600) (1,235)
------------ ------------ ----- ----- -----------
Total expenses........................... 2,578 (600) (1,978)
------------ ------------ ----- ----- -----------
Income (loss)............................ $ 1,495 $ (1,525) $ 600 $ (382) $ (188)
------------ ------------ ----- ----- -----------
------------ ------------ ----- ----- -----------
- ------------------------
(a) Expenses are allocated to the Service Corporations and the Management LLC
based upon the job functions of the employees.
(b) The Equity in net income of the Service Corporations is computed as follows:
Historical Service Corporations income..................... $ 1,495
Adjustment for management fees eliminated in the combined
historical financial statements due to acquisition of
partnerships interests................................... (169)
Leasing commissions attributable to Management LLC......... (1,525)
Expenses attributable to REIT.............................. 600
---------
Income..................................................... $ 401
---------
---------
Equity in net income of Service Corporations at 95
percent.................................................. $ 382
---------
---------
(M) To reflect the operations of 1372 Broadway, 1140 Avenue of the Americas
and 50 West 23rd Street for the six months ended June 30, 1997. Historical
rental revenue was adjusted for straight line rents as of the acquisition date,
historical operating expenses were reduced for management fees, the capitalized
land
F-13
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
lease on 1140 Avenue of the Americas was recorded, and depreciation and
amortization based on cost was recorded.
1372 BROADWAY 1140 AVENUE OF THE AMERICAS 50 WEST 23RD STREET
--------------------------------------- --------------------------------------- --------------------------
HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT
----------- ------------- ----------- ----------- ------------- ----------- ----------- -------------
Revenues:
Rental revenue.. $ 4,054 $ 455 $ 4,509 $ 2,178 $ 181 $ 2,359 $ 2,597 $ 174
Escalations &
reimbursement
revenue....... 561 561 346 346 386
Other income.... 1,483 1,483 48 48 1
----------- ----- ----------- ----------- ----- ----------- ----------- -----
Total
revenue..... 6,098 455 6,553 2,572 181 2,753 2,984 174
----------- ----- ----------- ----------- ----- ----------- ----------- -----
Expenses:
Operating
expenses...... 1,337 (142) 1,195 992 (102) 890 689 (91)
Interest on
capital
lease......... 189 189
Depreciation &
amortization.. 541 541 245 245 360
Real estate
taxes......... 1,098 1,098 519 519 518
----------- ----- ----------- ----------- ----- ----------- ----------- -----
Total
expenses.... 2,435 399 2,834 1,511 332 1,843 1,207 269
----------- ----- ----------- ----------- ----- ----------- ----------- -----
Income before
minority
interest...... $ 3,663 $ 56 $ 3,719 $ 1,061 $ (151) $ 910 $ 1,777 $ (95)
----------- ----- ----------- ----------- ----- ----------- ----------- -----
----------- ----- ----------- ----------- ----- ----------- ----------- -----
TOTAL
PRO FORMA PRO FORMA
----------- -----------
Revenues:
Rental revenue.. $ 2,771 $ 9,639
Escalations &
reimbursement
revenue....... 386 1,293
Other income.... 1 1,532
----------- -----------
Total
revenue..... 3,158 12,464
----------- -----------
Expenses:
Operating
expenses...... 598 2,683
Interest on
capital
lease......... 189
Depreciation &
amortization.. 360 1,146
Real estate
taxes......... 518 2,135
----------- -----------
Total
expenses.... 1,476 6,153
----------- -----------
Income before
minority
interest...... $ 1,682 $ 6,311
----------- -----------
----------- -----------
(N) To reflect the changes in interest expense as the result of financing
transactions and the related adjustments to deferred financing expense (see note
(F)).
NEW
470 29 36 70 1414 MORTGAGE
673 1ST AVE PAS W 35TH W 44TH W 36TH AVE. AMERICAS LOAN
----------- --------- ----------- ----------- ----------- --------------- -----------
Interest....................... $ (799) $ (645) $ (461) $ (253) $ (460) $ 539
Depreciation and
amortization................. 25 6 $ 4 (36) (23) 14
--
----- --------- ----- ----- ----- -----
Total expenses............. (774) (639) 4 (461) (289) (483) 553
--
----- --------- ----- ----- ----- -----
Income before minority
interest................. $ 774 $ 639 $ (4) $ 461 $ 289 $ 483 $ (553)
--
--
----- --------- ----- ----- ----- -----
----- --------- ----- ----- ----- -----
TOTAL
---------
Interest....................... $ (2,079)
Depreciation and
amortization................. (10)
---------
Total expenses............. (2,089)
---------
Income before minority
interest................. $ 2,089
---------
---------
(O) To reflect the operations of 110 East 42nd Street for the six months
ended June 30, 1997. Historical rental revenue was adjusted for straight line
rents, historical operations expenses were reduced for management fees, and
depreciation was calculated based on the building cost that was recorded.
HISTORICAL ADJUSTMENT PRO FORMA
---------- ---------- ---------
Revenues:
Rental revenue $2,470 $(117) $2,353
------ ----- ------
Escalation 354 354
Other income 10 10
------ ----- ------
Total revenue 2,834 (117) 2,717
------ ----- ------
Expenses:
Operating expenses 1,135 1,135
Depreciation and amortization 0 301 301
Real estate taxes 706 706
MG&A 163 (104) 59
------ ----- ------
Total expenses 2,004 197 2,201
------ ----- ------
Income before minority interest $ 830 $(314) $ 516
------ ----- ------
------ ----- ------
(P) To reflect for 70 West 36th Street and 1414 Avenue of the Americas,
depreciation expense adjustments for real property transfer taxes capitalized
which are amortized over the remaining life of the commercial property (see note
(G)).
F-14
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(Q) To reflect the net increase in marketing, general and administrative
expenses related to operations of a public company which include the following:
Officers' compensation and related costs..................... $ 384
Professional fees............................................ 175
Directors' fees and insurance................................ 150
Printing and distribution costs.............................. 75
Other........................................................ 44
---------
$ 828
---------
---------
The additional officers' compensation and related costs are attributable
primarily to Employment Agreements with the officers as further described under
the caption "Employment and Non Competition Agreement."
(R) Represents the 16.2% interest of the minority in the Operating
Partnership.
(S) Pro Forma net income per common share is based upon 12,292,311 shares
of common stock outstanding after the Offering. As each Operating Partnership
Unit is redeemable for cash, or at the company's election, for one share of
common stock, the calculation of earnings per share upon redemption will be
unaffected as unitholders and stockholders share equally on a per unit and
per share basis in the net income of the Company. In February 1997, the
Financial Accounting Standards Board issued Statement No. 128, Earnings per
Share, which is required to be adopted on December 31, 1997. At that time the
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. Management does not believe the adoption
of Statement No. 128 will have a material impact on earnings per share.
F-15
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ADJUSTMENTS TO THE PRO FORMA COMBINED INCOME STATEMENT FOR THE YEAR ENDED
DECEMBER 31, 1996
(A) To reflect the SL Green Predecessor historical combined statement of
operations for the year ended December 31, 1996.
(B) To reflect 673 First Avenue, 470 Park Avenue South, 29 West 35th Street
and 36 West 44th Street (the "Equity Properties") as consolidated entities
rather than as uncombined joint ventures due to the acquisition of 100% of the
partnerships' interests.
ELIMINATE
HISTORICAL UNCOMBINED 673 470 29 36
AMOUNTS TOTAL FIRST AVE PARK AVE WEST 35TH WEST 44TH
----------- ----------- ----------- ----------- ----------- -----------
Revenues
Rental revenue................................. $ 17,386 $ 334 $ 183 $ 146 $ 2,936
Escalations and reimbursement revenues......... 1,488 816
Investment income.............................. 15
Other income................................... 13
----------- ----------- ----------- ----- ----- -----------
Total revenues............................. 18,902 334 183 146 3,752
----------- ----------- ----------- ----- ----- -----------
Equity in net loss of uncombined joint
ventures...................................... $ (1,408)
----------- ----------- ----------- ----- ----- -----------
Expenses
Operating expenses............................. 3,964 (316) (206) (68) 1,234
Real estate taxes.............................. 2,316 873
Ground rent.................................... 3,756 100 69
Interest....................................... 7,743
Depreciation and amortization.................. 3,580 40 (99) (22) 313
----------- ----------- ----------- ----- ----- -----------
Total expenses............................. 21,359 (176) (305) (90) 2,489
----------- ----------- ----------- ----- ----- -----------
Income (loss).............................. $ (2,457) $ 1,408 $ 510 $ 488 $ 236 $ 1,263
----------- ----------- ----------- ----- ----- -----------
----------- ----------- ----------- ----- ----- -----------
TOTAL
ADJUSTMENTS
-------------
Revenues
Rental revenue................................. $ 20,985
Escalations and reimbursement revenues......... 2,304
Investment income.............................. 15
Other income................................... 13
-------------
Total revenues............................. 23,317
-------------
Equity in net loss of uncombined joint
ventures...................................... (1,408)
-------------
Expenses
Operating expenses............................. 4,608
Real estate taxes.............................. 3,189
Ground rent.................................... 3,925
Interest....................................... 7,743
Depreciation and amortization.................. 3,812
-------------
Total expenses............................. 23,277
-------------
Income (loss).............................. $ 1,448
-------------
-------------
(C) To reflect adjustments to record the Company's share in the net income
of the Service Corporations pursuant to the equity method of accounting for the
year ended December 31, 1996. As a result of the Formation Transactions the
Company will not own any voting stock of the Service Corporations but will
continue to exercise significant influence due to the following:
- Substantially all of the economic benefits flow to the Company (who will
own 100% of the non-voting common stock representing 95% of the total
equity)
- The Company and the Service Corporations have common officers and
employees
- The owners of a majority of the voting stock of the Service Corporations
have not contributed substantial equity to the Service Corporations
- The views of the Company's management influence the operations of the
Service Corporations
F-16
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
The adjustment is as follows:
LEASING
COMMISSIONS EXPENSES
HISTORICAL ATTRIBUTABLE ATTRIBUTABLE EQUITY
SERVICE TO TO CONVERSION TOTAL
CORPORATIONS LLC REIT (A) ADJUSTMENTS
------------- ------------- --------------- ----------- -----------
REVENUE:
Management revenue........................ $ 2,336 $ (2,336)
Leasing commissions....................... 2,372 $ (1,257) (1,115)
Construction revenue...................... 101 (101)
Other income.............................. 92 (92)
------------- ------------- ------ ----------- -----------
Total revenue......................... 4,901 (1,257) (3,644)
Equity in net loss of Service
Corporations............................. $ 504 504
------------- ------------- ------ ----------- -----------
EXPENSES:
Operating expenses........................ 1,522 (1,522)
Depreciation and amortization............. 92 (92)
Marketing, general and administration..... 3,250 $ (986) (2,264)
------------- ------------- ------ ----------- -----------
Total expenses........................ 4,864 (986) (3,878)
------------- ------------- ------ ----------- -----------
Income (loss)......................... $ 37 $ (1,257) $ 986 $ 504 $ (270)
------------- ------------- ------ ----------- -----------
------------- ------------- ------ ----------- -----------
(a) The equity in net loss of Service Corporations is computed as follows:
Historical Service Corporations income............................. $ 37
Adjustment for management fees eliminated in the combined
historical financial statements due to acquisition of
partnerships' interests........................................... (297)
Leasing commissions attributable to Management LLC................. (1,257)
Expenses attributable to REIT...................................... 986
---------
Loss............................................................. $ (531)
---------
---------
Equity in net loss of investees at 95 percent...................... $ (504)
---------
---------
(D) To reflect the operations of 1372 Broadway, 1140 Avenue of the Americas
and 50 West 23rd Street for the year ended December 31, 1996. Historical rental
revenue was adjusted for straight line rents as of the acquisition date,
historical operating expenses were reduced for management fees, the capitalized
land lease on 1140 Avenue of the Americas and depreciation and amortization are
based on cost.
F-17
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1372 BROADWAY 1140 AVENUE OF THE AMERICAS 50 WEST 23RD STREET
--------------------------------------- --------------------------------------- --------------------------
HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT
----------- ------------- ----------- ----------- ------------- ----------- ----------- -------------
REVENUES:
Rental revenue..... $ 8,580 $ 656 $ 9,236 $ 4,265 $ 286 $ 4,551 $ 5,357 $ 10
Escalations &
reimbursement
revenue........... 1,842 1,842 716 716 716
Other income....... 690 690 204 204 12
----------- ------ ----------- ----------- ----- ----------- ----------- -----
Total revenue.. 11,112 656 11,768 5,185 286 5,471 6,085 10
----------- ------ ----------- ----------- ----- ----------- ----------- -----
EXPENSES:
Operating
expenses.......... 3,257 (459) 2,798 2,177 (275) 1,902 1,511 (195)
Interest on capital
lease............. 379 379
Depreciation &
amortization...... 1,082 1,082 490 490 720
Real estate taxes.. 2,343 2,343 1,007 1,007 1,006
----------- ------ ----------- ----------- ----- ----------- ----------- -----
Total
expenses..... 5,600 623 6,223 3,184 594 3,778 2,517 525
----------- ------ ----------- ----------- ----- ----------- ----------- -----
Income before
minority
interest.......... $ 5,512 $ 33 $ 5,545 $ 2,001 $ (308) $ 1,693 $ 3,568 $ (515)
----------- ------ ----------- ----------- ----- ----------- ----------- -----
----------- ------ ----------- ----------- ----- ----------- ----------- -----
TOTAL PRO
PRO FORMA FORMA
----------- -----------
REVENUES:
Rental revenue..... $ 5,367 $ 19,154
Escalations &
reimbursement
revenue........... 716 3,274
Other income....... 12 906
----------- -----------
Total revenue.. 6,095 23,334
----------- -----------
EXPENSES:
Operating
expenses.......... 1,316 6,016
Interest on capital
lease............. 379
Depreciation &
amortization...... 720 2,292
Real estate taxes.. 1,006 4,356
----------- -----------
Total
expenses..... 3,042 13,043
----------- -----------
Income before
minority
interest.......... $ 3,053 $ 10,291
----------- -----------
----------- -----------
(E) To eliminate interest expense and amortization of deferred financing
costs related to mortgage loans paid off or forgiven, to reflect amortization of
deferred financing cost related to the transfer of mortgage debt to the Company
and to record interest and amortization of deferred finance costs related to the
new mortgage.
AMORTIZATION OF
INTEREST DEFERRED
EXPENSE FINANCING COSTS
--------- -----------------
673 First Avenue................................................... $ (1,571) $ 49
470 Park Avenue South.............................................. (1,537) 13
29 West 35th Street................................................ 8
36 West 44th Street................................................ (234)
70 West 36th Street................................................ (911) (62)
1414 Avenue of the Americas........................................ (446) (28)
New mortgage interest.............................................. 1,078 7
--------- ---
$ (3,621) $ (13)
--------- ---
--------- ---
(F) To reflect the operations of 110 East 42nd Street for the year ended
December 31, 1996. Historical rental revenue was adjusted for straight line
rents, historical operations, expenses were reduced for management fees, and
depreciation was calculated based on the building cost that was recorded.
HISTORICAL ADJUSTMENT PRO FORMA
---------- ---------- ---------
Revenues:
Rental revenue $4,306 $ 201 $4,507
------ ----- ------
Escalation 520 520
Other income 16 16
------ ----- ------
Total revenue 4,842 201 5,043
------ ----- ------
Expenses:
Operating expenses 2,248 2,248
Depreciation and amortization 0 602 602
Real estate taxes 1,422 1,422
MG&A 274 (172) 102
------ ----- ------
Total expenses 3,944 430 4,374
------ ----- ------
Income before minority interest $ 898 $(229) $ 669
------ ----- ------
------ ----- ------
(G) To reflect depreciation and amortization expense related to the real
property transfer taxes incurred to transfer title of 70 West 36th Street and
1414 Avenue of the Americas to the Company and to reflect the net increase in
marketing, general and administrative expenses related to operations of a public
company.
F-18
SL GREEN REALTY CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
The additional marketing, general and adminsitrative expenses consist of the
following:
Officers' compensation and related costs............................ $ 768
Professional fees................................................... 350
Directors' fees and insurance....................................... 300
Printing and distribution costs..................................... 150
Other............................................................... 89
---------
$ 1,657
---------
---------
The additional officers' compensation and related costs are attributable
primarilty to employment agreements with the officers as further described under
the caption "Employment and Non-Competition Agreement."
(H) Represents the 16.2% interest of the minority in the Operating
Partnership.
(I) Pro Forma net income per common share is based upon 12,292,311 shares
of common stock outstanding after the Offering. As each Operating Partnership
unit is redeemable for cash, or at the company's election, for one share of
common stock, the calculation of earnings per share upon redemption will be
unaffected as unitholders and stockholders share equally on a per unit and
per share basis in the net income of the Company. In February 1997, the
Financial Accounting Standards Board issued Statement No. 128, Earnings per
Share, which is required to be adopted on December 31, 1997. At that time the
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. Management does not believe the adoption
of Statement No. 128 will have a material impact on earnings per share.
F-19
Report of Independent Auditors
To the Board of Directors of
SL Green Realty Corp.
We have audited the statement of revenues and certain expenses of the property
at 110 East 42nd Street, as described in Note 1, for the year ended December 31,
1996. The financial statement is the responsibility of management of the
Property. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purposes of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of SL Green Realty Corp., and is
not intended to be a complete presentation of the Property's revenues and
expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of the Property, as
described in Note 1 for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
ERNST & YOUNG
November 3, 1997
New York, New York
F-20
110 East 42nd Street
Statements of Revenues and Certain Expenses
(Dollars in thousands)
Note 1
(UNAUDITED)
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE
1996 30, 1997
----------------------
Revenues
Rental revenue, net $ 4,306 $ 2,470
Escalations and reimbursement revenue 520 354
Other income 16 10
----------------------
Total revenues 4,842 2,834
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Certain Expenses
Property taxes 1,422 706
Utilities 708 329
Cleaning and service contracts 811 411
Payroll and expenses 413 245
Management fees 172 104
Repairs and maintenance 150 60
Professional fees 42 29
Insurance 60 30
Other operating expenses 166 90
----------------------
Total certain expenses 3,944 2,004
----------------------
Revenues in excess of certain expenses $ 898 $ 830
======================
SEE ACCOMPANYING NOTES.
F-21
110 East 42nd Street
Notes to Statements of Revenues and Certain Expenses
(Dollars in thousands)
December 31, 1996
1. BASIS OF PRESENTATION
Presented herein is the statement of revenues and certain expenses related to
the operations of the property, located at 110 East 42nd Street, in the Grand
Central District sub-market, in the borough of Manhattan in New York City, (the
"Property"). The Property is comprised of a building containing 250,548 square
feet.
The accompanying financial statements have been prepared in accordance with the
applicable rules and regulations of the Securities and Exchange Commission for
the acquisition of real estate properties. Accordingly, the financial
statements exclude certain expenses that may not be comparable to those expected
to be incurred by SL Green Operating Partnerships, LP ("SL Green"), in the
proposed future operations of the Property. The Property was acquired by SL
Green on September 15, 1997. Items excluded consist of interest, amortization
and depreciation.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
3. REVENUE RECOGNITION
The Property is leased to tenants under operating leases. Minimum rental income
is generally recognized on a straight-line basis over the term of the lease.
The excess of amounts due pursuant to the underlying leases over amounts so
recognized amounted to approximately $ 280 for the year ended December 31, 1996.
For the six months ended June 30, 1997 amounts so recognized exceeded amounts
due pursuant to the underlying leases by $ 82 (unaudited).
4. CONCENTRATION OF REVENUE
Approximately 60% and 18% of the Property's revenue for the year ended December
31, 1996 and the six months ended June 30, 1997 (unaudited), respectively was
derived from one tenant.
F-22
110 East 42nd Street
Notes to Statements of Revenues and Certain Expenses (continued)
(Dollars in thousands)
December 31, 1996
5. MANAGEMENT AGREEMENTS
During 1996 and the period ended June 30, 1997 the Property was managed by
Metromedia, Inc. During the period from January 1, 1996 to December 31, 1996
the management fees were based on quarterly fixed payments of $13 and
administrative salaries. During the period January 1, 1997 to June 30, 1997
(unaudited) the management fees were based on quarterly fixed payments of $25
and administrative salaries.
6. RELATED PARTY TRANSACTIONS
Office space is leased to companies that have shareholders who are also partners
in the partnership which owned the Property. Total rents from these affiliated
companies totaled $82 and $50 at December 31, 1996 and June 30, 1997
(unaudited), respectively.
A company controlled by partners of the partnership which owned the Property
provided management and administrative services to the Property. The management
fee for these services were $172 and $104 for the year ended December 31, 1996
and for the six months ended June 30, 1997 (unaudited), respectively.
7. LEASE AGREEMENTS
The Property is being leased to tenants under operating leases with term
expiration dates ranging from 1997 to 2007. The minimum rental amounts due
under the leases are generally subject to scheduled fixed increases. The leases
generally also require that the tenants reimburse the Property for increases in
certain operating costs and real estate taxes above their base year costs.
Approximate future minimum rents to be received over the next five years and
thereafter for non-cancelable operating leases as of December 31, 1996
(exclusive of renewal option periods) are as follows:
1997 $ 4,654
1998 4,619
1999 4,564
2000 4,128
2001 3,533
Thereafter 9,204
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$ 30,702
===========
F-23
110 East 42nd Street
Notes to Statements of Revenues and Certain Expenses (continued)
(Dollars in thousands)
December 31, 1996
8. INTERIM UNAUDITED FINANCIAL INFORMATION
The financial statement for the six months ended June 30, 1997 is unaudited,
however, in the opinion of management all adjustments, (consisting solely of
normal recurring adjustments), necessary for a fair presentation of the
financial statement for the interim period have been included. The results of
the interim period is not necessarily indicative of the results to be obtained
for a full fiscal year.
F-24
