SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
No. 1
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 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)
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/A No.1, dated January 25, 1999
(filed with the Securities and Exchange Commission on February 8, 1999), 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 CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Balance Sheet
(Unaudited) as of December 31, 1998................................. F-4
Pro Forma Income Statement
(Unaudited) for the year ended
December 31, 1998................................................... F-5
Notes to Pro Forma Financial Information............................... F-6
555 WEST 57th STREET
Report of Independent Auditors......................................... F-7
Statement of Revenues and Certain Expenses
of 555 West 57th Street for the year ended
December 31, 1998 ................................................... F-8
Notes to Statement of Revenues and Certain
Expenses of 555 West 57th Street..................................... F-9
(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/ ANN ISELEY
------------------------------------------
Ann Iseley
Chief Financial Officer
Date: April 9, 1999
SL GREEN REALTY CORP.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma consolidated balance sheet of SL Green Realty
Corp. (the "Company") as of December 31, 1998 has been prepared as if the
Company's acquisition of a 65% controlling interest in a joint venture owning
555 West 57th Street had been consumated on December 31, 1998. The unaudited
pro forma consolidated income statement for the year ended December 31, 1998
is presented as if the Company's acquisition of a 65% interest in 555 West
57th Street occurred at January 1, 1998 and the effect was carried forward
through the year.
The pro forma consolidated 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 Company's acquisition of a 65%
controlling interest in a joint venture owning 555 West 57th Street had
occurred at the beginning of the year 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. These pro forma consolidated financial
statements should be read in conjunction with the Company's 1998 annual
report on Form 10-K.
F-3
SL GREEN REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SL GREEN PURCHASE OF
REALTY CORP. 555 WEST COMPANY
HISTORICAL 57TH STREET PRO FORMA
(A) (B) AS ADJUSTED
------------ ---------- -----------
ASSETS :
Commercial real estate
properties at cost:
Land and land interests....... $ 112,123 $ 16,308 $ 128,431
Buildings and improvements.... 492,568 65,271 557,839
Building leasehold............ 80,162 80,162
Property under capital lease.. 12,208 12,208
------------ ---------- -----------
697,061 81,579 778,640
Less accumulated
depreciation............ (37,355) (37,355)
------------ ---------- -----------
659,706 81,579 741,285
Cash and cash equivalents..... 6,236 6,236
Restricted cash............... 18,635 4,390 23,025
Receivables................... 3,951 3,951
Related party receivables..... 245 245
Deferred rents receivable, net
of reserve for tenant credit
loss of $2,369.............. 20,891 20,891
Investment in and advances to
Service Corporations........ 10,694 10,694
Deferred costs, net........... 15,282 15,282
Mortgage loans receivable..... 26,401 26,401
Other assets.................. 15,755 15,755
------------ ---------- -----------
Total assets.............. $ 777,796 $ 85,969 $ 863,765
------------ ---------- -----------
------------ ---------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Mortgage notes payable........ $ 50,862 $ 45,000 $ 95,862
Secured bridge facilities..... 87,500 87,500
Revolving credit facility..... 23,800 38,100 61,900
Accrued interest payable...... 494 494
Capitalized lease
obligations................. 14,741 14,741
Deferred land lease payable... 9,947 9,947
Accounts payable and accrued
expenses.................... 5,588 5,588
Accounts payable to related
parties..................... 63 63
Dividend and distributions
payable..................... 11,585 11,585
Security deposits............. 16,949 16,949
------------ ---------- ----------
Total liabilities......... 221,529 83,100 304,629
------------ ---------- ----------
Minority interest in operating
partnership................. 41,491 41,491
Minority interest in joint
venture...................... 2,869 2,869
Preferred stock............... 109,950 109,950
Common stock.................. 240 240
Additional paid-in capital.... 416,939 416,939
Deferred compensation plan.... (3,266) (3,266)
Officers' loans............... (528) (528)
Distributions in excess
of earnings.................. (8,559) (8,559)
------------ ---------- ----------
Total stockholders'
equity.................. 404,826 404,826
------------ ---------- ----------
Total liabilities and
stockholders' equity.... $ 777,796 $ 85,969 $ 863,765
------------ ---------- ----------
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F-4
SL GREEN REALTY CORP.
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SL GREEN 555 WEST
REALTY CORP. 57TH PRO
HISTORICAL STREET FORMA COMPANY PRO
(A) (B) ADJUSTMENTS FORMA
------------ --------- ----------- ----------
REVENUES:
Rental revenue................. $ 117,304 $ 14,188 313(C) $ 131,805
Escalations and reimbursement
revenues..................... 15,923 1,954 17,877
Investment income.............. 3,267 3,267
Other income................... 478 565 1,280(D) 2,323
--------- --------- ----------- ----------
Total revenues............. 136,972 16,707 1,593 155,272
--------- --------- ----------- ----------
Equity in net income from
Service Corporations......... 387 387
--------- --------- ----------- ----------
EXPENSES:
Operating expenses............. 36,545 6,000 42,545
Ground rent.................... 11,082 11,082
Interest....................... 13,086 3,361 2,477(E) 18,924
Depreciation and amortization.. 15,404 1,632(F) 17,036
Real estate taxes.............. 21,224 2,901 24,125
Loss on hedge transaction...... 176 176
Loss on terminated project..... 1,065 1,065
Marketing, general and
administrative............... 5,760 5,760
--------- --------- ----------- ----------
Total expenses............. 104,342 12,262 4,109 120,713
--------- --------- ----------- ----------
Income (loss) before minority
interest, extraordinary
item and preferred
dividends.................. 33,017 4,445 (2,516) 34,946
Minority interest in joint
venture (G)................ (1,556) (271) (1,827)
Minority interest in
operating partnership...... (3,043) (266) 256 (3,053)
--------- --------- ----------- ----------
Income (loss) before
extraordinary item......... 29,974 2,623 (2,531) 30,066
Preferred stock dividends
and accretion.............. (5,970) (5,970)
--------- ----------
Income available to common
shareholders before
extraordinary item......... $ 24,004 $ 2,623 $ (2,531) $ 24,096
--------- --------- ----------- ----------
--------- --------- ----------- ----------
Income per common share basic
and diluted (h)............ $ 1.22 $ 1.22
--------- ----------
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F-5
SL GREEN REALTY CORP
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(A) To reflect the consolidated balance sheet of SL Green Realty Corp. as
reported on form 10-K for the year ended December 31, 1998.
(B) To reflect the January 25, 1999 purchase price allocation for the
Company's acquisition of a 65% controlling interest in the property located
at 555 West 57th Street as of December 31, 1998 for $38.1 million in cash and
the minority interest holders' 35% interest in the property. The joint
venture is obligated for an existing $45 million mortgage. There was no
formal valuation performed on this property. The cash portion of purchase was
financed through the Company's line of credit.
ADJUSTMENTS TO THE PRO FORMA COMBINED INCOME STATEMENT FOR THE YEAR ENDED
DECEMBER 31, 1998
(A) To reflect the consolidated statement of operations of SL Green
Realty Corp. for the year December 31, 1998 as reported on the Company's Form
10-K for the year ended December 31, 1998.
(B) To reflect the historical operations of 555 West 57th Street for the
year ended December 31, 1998.
(C) Rental income at 555 West 57th Street was adjusted to reflect
straight line amounts as of January 1, 1998.
(D) To reflect a 36 month licensing agreement signed in connection with
the acquisition that relates to approximately 57,000 square feet with annual
rent totalling approximately $1.3 million.
(E) To reflect the interest expense for borrowings under the Company's
revolving credit facility at an assumed interest rate of 6.5%.
(F) To reflect straightline depreciation for the property located at 555
West 57th Street based on an estimated useful life of 40 years.
(G) To reflect the minority shareholders 35% interest in the operating
results of 555 West 57th Street.
(H) Basic income per common share is calculated based on 19,675 weighted
average common shares outstanding and diluted income per common share is
calculated based 19,739 weighted average common shares and common share
equivalents outstanding.
F-6
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 555 West 57th Street, as described in Note 1, for the year ended December 31,
1998. 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/A 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, 1998 in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
March 19, 1999
F-7
555 West 57th Street
Statement of Revenues and Certain Expenses
(Dollars in thousands)
Note 1
YEAR ENDED DECEMBER 31, 1998
Revenues
Rental revenue $14,188
Escalations and reimbursement revenue 1,954
Other income 565
-------------------
Total revenues 16,707
-------------------
Certain expenses
Interest expense 3,361
Property taxes 2,901
Utilities 2,358
Payroll and expenses 1,673
Cleaning and service contracts including $237 to affiliates 466
Management fees to affiliates 444
Repairs and maintenance 437
Professional fees 195
Insurance 160
Other operating expenses 267
-------------------
Total certain expenses 12,262
-------------------
Revenues in excess of certain expenses $4,445
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SEE ACCOMPANYING NOTES.
F-8
555 West 57th Street
Notes to Statement of Revenues and Certain Expenses
(Dollars in thousands)
For the year ended December 31, 1998
1. BASIS OF PRESENTATION
Presented herein is the statement of revenues and certain expenses related to
the operations of the property, located at 555 West 57th Street, in the
midtown west sub-market, in the borough of Manhattan in New York City, (the
"Property"). On January 25, 1999 SL Green Operating Partnership LP (the
"Company") acquired a 65% controlling interest in a joint venture ("Joint
Venture") which is the owner of the Property, for $38.1 million in cash.
Additionally, the Joint Venture is obligated for an existing $45 million
mortgage.
The accompanying financial statement has 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 statement
excludes certain revenues and expenses that may not be comparable to those
expected to be incurred by the Company, in the proposed future operations of the
Property. Items excluded consist of certain interest income, corporate taxes,
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 recognized over amounts due pursuant to the underlying leases
amounted to approximately $1,644 for the year ended December 31, 1998.
4. CONCENTRATION OF REVENUE
Approximately 67% of the Property's rental revenue for the year ended December
31, 1998 was derived from five tenants.
F-9
555 West 57th Street
Notes to Statement of Revenues and Certain Expenses (continued)
(Dollars in thousands)
5. MANAGEMENT AGREEMENTS
During 1998 the Property was managed by Kaufman Newmark Realty Corporation. The
management fees were based on 3% of gross revenues collected for the year ended
December 31, 1998.
The fee incurred for managing the Property for the year ended December 31, 1998
was approximately $444.
6. MORTGAGE DEBT AND INTEREST
The mortgage loan matures on November 1, 2000 and bears interest at a rate equal
to 175 basis points over the London Interbank Offered Rate ("LIBOR"). At
December 31, 1998 the outstanding mortgage loan balance was approximately $45
million and the interest rate on the mortgage loan was 7.3% per annum. Since the
mortgage loan will be assumed, the associated interest expense has been included
in the statement of revenues and certain expenses.
7. RELATED PARTY TRANSACTIONS
The Property paid approximately $237 to affiliated companies for cleaning
expenses and $444 of management fees. Certain principals owning less than 4%
of the Property are also part owners of the cleaning and management companies.
8. BENEFIT PLANS
The building employees of the Property are covered by multi-employer defined
contribution pension plans and health and welfare plans. Contributions to these
plans amounted to $256 during the year ended December 31, 1998. Separate
actuarial information regarding such plans is not made available to the
contributing employers by the union administrators or trustees, since the plans
do not maintain separate records for each reporting unit.
F-10
555 West 57th Street
Notes to Statement of Revenues and Certain Expenses (continued)
(Dollars in thousands)
9. LEASE AGREEMENTS
The Property is being leased to tenants under operating leases with term
expiration dates ranging from 1999 to 2017. 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, 1998
(exclusive of renewal option periods) are as follows:
1999 $13,994
2000 15,897
2001 15,892
2002 15,347
2003 15,009
Thereafter 94,581
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$170,720
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