View:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 25, 1999
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)
420 Lexington Avenue 10170
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 594-2700
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
The information set forth in the press release issued by SL Green
Realty Corp. on October 25, 1999, attached hereto as Exhibit 99.1 is
incorporated by reference herein.
(c) Exhibits
99.1 Press Release of SL Green Realty Corp., dated October 25, 1999
SIGNATURE
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.
(Registrant)
By: /s/ David J. Nettina
Name: David J. Nettina
Title: President and
Chief Operating Officer
Date: October 25, 1999
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT
David Nettina
President & Chief Operating Officer
- -or-
Thomas E. Wirth
Chief Financial Officer
(212) 594-2700
SL GREEN REALTY CORP. REPORTS 21% GAIN IN THIRD QUARTER FFO AND
ACQUIRES REMAINING MINORITY INTEREST IN BMW BUILDING
THIRD QUARTER HIGHLIGHTS
21% FFO increase, $0.58 per share (diluted) versus $0.48 prior year
Revenues grew 37% over the prior year, to $54.7 M
14% same store portfolio Cash NOI growth 95% overall portfolio
occupancy rate
Completed acquisition of 1250 Broadway through a joint venture
Completed joint venture on 90 Broad Street
FINANCIAL RESULTS
NEW YORK, NY, OCTOBER 25, 1999 - SL Green Realty Corp. (NYSE:SLG) reported
improved results for the three and nine months ended September 30, 1999. Funds
from operations (FFO) before minority interest totaled $15.9 million, or $0.58
per share, based on 31.4 million shares and common share equivalents
outstanding. This compares to $12.6 million, or $0.48 per share for the same
quarter in 1998.
Revenues for the third quarter were $54.7 million compared to $39.8 million in
the same period last year - an increase of 37%. Revenue growth was derived
from $2.5 million in new leasing activity, $1.3 million from other real estate
incentives and fee based business and $11.1 million from normalization of 1998
and 1999 acquisitions.
The 1999 "same store" cash NOI in the third quarter increased 14% to $11.2
million over prior year, in spite of increased utility costs associated with
this year's hot summer. Operating cash margins improved from 49% to 52% over
the prior year on aggregate revenue growth of $1.5 million or 7%. This
improvement resulted in part from the combination of a $1.1 million increase
in rental revenue (as occupancy increased from 95% to 96%) offset by a 3%
increase in operating costs of $0.3 million. Cost increases resulted from
higher utilities costs throughout the portfolio ($0.2 million) and increased
occupancy associated with the re-development of 17 Battery Place ($0.1
million).
The Company's EBITDA margins before ground rent improved to 58%
compared to 54% in the third quarter of 1998. EBITDA margins after ground rent
were 52% compared to 45% in the third quarter of 1998. This increase was
driven by increased property GAAP NOI ($8.9 million) and an increase in
investment and other income of $1.3 million. Increases were partially offset
by increased MG&A.
The $3.3 million increase in FFO over the third quarter came from:
$2.5 million from lease-up of approximately 330,000 square feet of vacant
space and a positive spread in replacement rents of 26%;
$4.8 million came from the normalization of GAAP NOI from 1998 and 1999
acquisitions:
$1.0 million from increased escalation and signage revenues.
$1.7 million was derived from investment and other income, the Company's
joint venture and taxable subsidiaries income;
Offsetting these improvements was an increase of $6.7 million from interest
costs and MG&A.
SL Green's total combined debt at the quarter's close was $422.4 million,
translating to a current debt to market cap ratio of 39% at quarter end.
NEW INVESTMENTS TO DATE
The Company announced today that it has exercised its rights to acquire
the remaining 35% interest in the BMW Building located at 555 West 57th
Street, New York, New York for $34.1 million. This acquisition is expected
to be completed for cash in the amount of $18.7 million. The acquisition
price is consistent with the price paid by the Company for the 65%
controlling interest acquired in January, 1999. The Company's total
acquisition cost basis in the property is approximately $100 million, or
$106 per square foot.
Simultaneous with the closing of this transaction, the Company has
obtained a new $70 million first mortgage commitment from The Bank of New
York. The new first mortgage has a term of 5 years and a variable interest
rate. The Company intends to eliminate the variable rate exposure through
an interest rate swap. The proceeds of the refinancing will be used to
repay the existing first mortgage loan of $44 million, as well as provide
funds for the acquisition of the various equity interests and capital
needs at the property.
The property is fully occupied with average in place rents approximately
30% below current market rents of $30 per square foot. Reflecting the
strength of the New York leasing market, the Company has already
recaptured and re-leased over 10% of the property space, realizing
immediate benefits of the market. Key tenants in the building include
BMW, City University of New York (John Jay College), St. Luke's Roosevelt
Hospital, CBS and Greater New York Hospital.
On August 3, 1999, the Company announced a joint venture agreement
with Morgan Stanley Real Estate Fund III, LP whereby the Company retained
a 35% interest in 90 Broad Street, New York. The 339,000 square foot
office building was purchased by SL Green in May 1999 as a part of the
multi-property purchase from Tower Realty. SL Green was appointed the
operating partner of the venture and managing agent for the property and
will be compensated on a fee basis.
On August 31, 1999, the Company announced a joint venture agreement
with Carlyle Realty to co-invest in the $93 million acquisition of 1250
Broadway, a 670,000 square foot office building in Manhattan. The terms
of the agreement provide SL Green with a 49.9% interest in the joint
venture. The purchase and subsequent capital improvement program will be
funded partially with a $69.65 million first mortgage. SL Green will
manage the venture and will provide management, leasing and construction
services on a fee basis at the property.
At September 30, 1999, SL Green's portfolio consisted of 24 properties, 21 of
which are wholly owned, comprising approximately 8.5 million rentable square
feet. This portfolio has grown by 2.3 million square feet (37%) since
September 30, 1998.
SL Green Realty is a self-administered and self-managed real estate investment
trust ("REIT") that acquires, owns and manages a Class B Manhattan office
portfolio. The Company is the only publicly held REIT which exclusively
specializes in this niche.
Financial Tables attached
To receive SL Green's latest news release and other corporate
documents via FAX at no cost, dial 1-800-PRO-INFO. Use the Company's ticker
symbol, SLG. Or visit SL Green's website at www.slgreen.com.
This press release contains forward-looking information based upon the
Company's current best judgment and expectations. Actual results could vary
from those presented herein. The risks and uncertainties associated with
forward-looking information in this release include the strength of the
commercial office and industrial real estate markets in New York, competitive
market conditions, unanticipated administrative costs, timing of leasing
income, general and local economic growth, interest rates and capital market
conditions. For further information, please refer to the Company's filing with
the Securities and Exchange Commission.
SL GREEN REALTY CORP.
STATEMENTS OF OPERATIONS - UNAUDITED
(Amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
1999 1998 1999 1998
------------- ------------- ------------- -----------
REVENUE:
Rental revenue, net $ 45,080 $ 33,600 $ 129,267 $ 81,354
Escalations & reimbursement revenues 6,856 5,281 16,473 11,432
Signage Rent 559 --- 1,112 ---
Investment income 1,469 851 3,731 2,419
Other income 688 18 1,545 20
------------- ------------- ------------- -----------
Total revenues 54,652 39,750 152,128 95,225
Total revenues
------------- ------------- ------------- -----------
Equity in income (loss) from Service Corporations 223 (22) 551 (70)
Equity in income (loss) from Joint Ventures 151 --- 151 ---
------------- ------------- ------------- -----------
EXPENSES:
Operating expenses 14,293 11,049 36,778 24,585
Ground rent 3,183 3,428 9,572 8,152
Interest 7,772 2,419 19,722 9,790
Depreciation and amortization 7,677 4,069 19,705 10,714
Real estate taxes 7,481 6,134 21,904 14,888
Marketing, general and administrative 2,979 1,571 8,387 3,954
------------- ------------- ------------- -----------
Total expenses 43,385 28,670 116,068 72,083
------------- ------------- ------------- -----------
Income before minority interests, preferred stock
dividends and extraordinary losses 11,641 11,058 36,762 23,072
Minority interests (1,169) (802) (4,262) (2,354)
------------- ------------- ------------- ----------
10,472 10,256 32,500 20,718
Extraordinary loss, net of minority interest --- --- (628) (522)
Preferred stock dividends and accretion (2,399) (2,433) (7,198) (3,624)
------------- ------------- ------------- ----------
Net income available to common shareholders $ 8,073 $ 7,823 $ 24,674 $ 16,572
============= ============= ============= ==========
Net income per share (Basic) $0.33 $0.33 $1.02 $0.91
Net income per share (Diluted) $0.33 $0.33 $1.02 $0.91
FUNDS FROM OPERATIONS (FFO)
FFO per share (Basic) $0.60 $0.48 $1.72 $1.43
FFO per share (Diluted) $0.58 $0.48 $1.68 $1.43
FFO Calculation:
INCOME BEFORE MINORITY INTERESTS, PREFERRED STOCK DIVIDENDS
AND EXTRAORDINARY LOSS $ 11,641 $ 11,058 $ 36,762 $ 23,072
LESS:
Preferred stock dividend (2,300) (2,300) (6,900) (3,420)
Minority interest in commercial property (354) --- (1,765) ---
Add:
Joint venture FFO adjustment 120 --- 120 ---
Depreciation and amortization 7,677 4,069 19,705 10,714
Amortization of deferred financing costs and depreciation of
non-real estate assets (878) (186) (2,140) (811)
------------- ------------- ------------- -------------
FFO - BASIC $ 15,905 $ 12,641 $ 45,782 $ 29,555
Add: Preferred stock dividends 2,300 --- 6,900 ---
FFO - DILUTED $ 18,205 --- $ 52,682 ---
Basic ownership interests
Weighted average REIT common shares 24,200 23,922 24,195 18,233
Weighted average partnership units held by minority 2,428 2,428 2,428 2,398
interest
------------- ------------- ------------ -------------
Basic weighted average shares and units outstanding 26,628 26,350 26,623 20,631
============= ============= ============= ===========
Diluted ownership interest
Weighted average REIT common and common share equivalent
shares 24,278 23,928 24,258 18,295
Weighted average partnership units held by minority 2,428 2,428 2,428 2,398
interests
Common share equivalents for preferred stock 4,699 4,699
------------- ------------- ------------- -----------
Diluted weighted average equivalent shares and units 31,405 26,356 31,385 20,693
outstanding ============= ============= ============= ===========
SL GREEN REALTY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September 30, December 31,
1999 1998
------------------- -----------------
(Unaudited)
ASSETS
Commercial real estate properties, at cost:
Land and land interests................................................... $137,144 $112,123
Buildings and improvements................................................ 618,886 488,914
Building leasehold........................................................ 126,974 83,816
Property under capital lease.............................................. 12,208 12,208
------------------- ----------------
895,212 697,061
Less accumulated depreciation............................................. (53,335) (37,355)
------------------- ----------------
841,877 659,706
Cash and cash equivalents................................................. 8,409 6,236
Restricted cash........................................................... 27,931 18,635
Tenant receivables, net $867 and $100 reserve in 1999 and 1998,
respectively............................................................ 8,386 3,951
Related party receivables................................................. 728 182
Deferred rents receivable net of provision for doubtful accounts of
$4,625 and $2,369 in 1999 and 1998, respectively.................... 33,821 20,891
Investment in and advances to Service Corporations........................ 4,886 10,694
Investment in joint ventures.............................................. 22,534 ---
Mortgage loans receivable................................................. 40,901 26,401
Deferred costs, net....................................................... 26,978 15,282
Other assets.............................................................. 13,790 15,755
------------------ --------------
Total assets.............................................................. $1,030,241 $777,733
================== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable.................................................... $337,190 $50,862
Secured bridge facilities................................................. --- 87,500
Revolving credit facility................................................. 61,000 23,800
Accrued interest payable.................................................. 2,341 494
Accounts payable and accrued expenses..................................... 12,094 5,588
Capitalized lease obligations............................................. 14,946 14,741
Deferred land lease payable............................................... 11,170 9,947
Dividend and distributions payable........................................ . 11,672 11,585
Security deposits......................................................... 18,481 16,949
------------------ ---------------
Total liabilities......................................................... 468,894 221,466
------------------ ---------------
Minority interests........................................................ 45,558 41,491
8%Preferred Income Equity Redeemable Stock $0.01 par
value, $25.00 mandatory liquidation preference 25 million
shares authorized, 4.6 million outstanding in 1999 and 1998............. 110,248 109,950
STOCKHOLDERS' EQUITY
Common stock, $.01 par value 100,000 shares
authorized, 24,192 and 23,952 issued and
outstanding in 1999 and 1998, respectively........... 242 240
Additional paid - in capital...................................... 422,377 416,939
Deferred compensation plan........................................ (7,410) (3,266)
Officers' loans................................................... (378) (528)
Distributions in excess of earnings............................... (9,290) (8,559)
------------------- ----------------
Total stockholders' equity................................................. 405,541 404,826
------------------- ----------------
Total liabilities and stockholders' equity................................. $1,030,241 $777,733
=================== ================
SL GREEN REALTY CORP.
SELECTED OPERATING DATA-UNAUDITED
September 30, 1999 December 31, 1998
OPERATING DATA:
Net rentable area at end of period (in 000's)(1) 8,540 6,254
Portfolio occupancy percentage at end of period 95% 93%
Same Store occupancy percentage at end of period 96% 93%
Number of properties in operation 24 18
(1) Includes wholly-owned and majority and minority owned properties.