SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 26, 2000
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 April 26, 2000, attached hereto as Exhibit 99.1 is incorporated by
reference herein.
(c) Exhibits
99.1 Press Release of SL Green Realty Corp., dated April 26, 2000
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
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Name: David J. Nettina
Title: President and
Chief Operating Officer
Date: April 26, 2000
EXHIBIT 99.1
CONTACT
David Nettina
President & Chief Operating Officer
- -or-
Thomas E. Wirth
Chief Financial Officer
(212) 594-2700
FOR IMMEDIATE RELEASE
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SL GREEN REALTY CORP. REPORTS 19% GAIN IN FIRST QUARTER FFO
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First Quarter Highlights
o 19% FFO increase, $0.62 per share (diluted) versus $0.52 prior year
o 36% same store portfolio cash NOI growth
o Closed 100 Park Avenue joint venture
o Acquired $51.9 million first mortgage interest at 2 Grand Central Tower
o Contracted to sell 65% joint venture interest in 321 West 44th Street
o Closed two property sales raising $21.2 million in net new capital
o Received a commitment for new $250 million unsecured Line of Credit which
will increase borrowing capacity by $110 million.
Financial Results
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New York, NY, April 26, 2000 - SL Green Realty Corp. (NYSE:SLG) reported a 19%
increase in operating results for the three months ended March 31, 2000.
During this period funds from operations (FFO) before minority interest
totaled $17.2 million, or $0.62 per share, compared to $14.0 million, or $0.52
per share for the same quarter in 1999.
Revenues for the first quarter totaled $54.8 million compared to $46.7 million
last year - an increase of 17%. The $8.1 million growth in revenue resulted
from:
o 2000 same store portfolio ($5.1 million)
o 1999 acquisitions net of property sales ($2.7 million)
During the quarter the Company recorded gains on the sales of two portfolio
properties totaling $14.2 million that are not reflected in the Company's FFO
results.
The 2000 same store cash NOI in the first quarter increased $6.0 million, or
36%, to $22.9 million over the prior year. The increased NOI resulted in cash
margins before ground rent improving year over year from 49% to 58%. The
improvement in cash NOI came from a $6.8 million increase in cash revenue due
to:
o Reduced free rent as certain properties reached stabilized occupancy
from the previous year ($2.0 million). The reduction is primarily due
to three major tenants (Cipriani, Wildcat and Crains Communications)
receiving free rent during the 1999 quarter.
o Increased occupancy from 96% to 97% ($0.7 million)
o 30% increase in replacement rents versus previously fully escalated rents
($2.1 million)
o Rent steps from current in-place tenants ($1.0 million)
o Increased escalation and reimbursement income ($0.8 million) resulting
from increased electric ($0.3 million), fuel ($0.3 million), and CPI and
porter wage escalations ($0.2 million)
o Increased signage and other income ($0.2 million).
The increase in revenue was partially offset by a $1.0 million or 11% increase
in operating costs, over half of which was related to higher utility costs
($0.6 million). Much of the increase resulted from higher fuel adjustment
charges, of which about one half was recovered from tenants under the utility
clause of their lease. General R&M costs also increased ($0.4 million)
resulting primarily from one-time items at BMW Building and 420 Lexington
Avenue. These increased costs were offset by lower real estate taxes ($0.2
million).
The Company's EBITDA increased $6.6 million, resulting in increased margins
before ground rent of 61% compared to 57% last year and after ground rent
margin improvement of 55% from 50% in the same period. Margin improvement was
driven by increases in GAAP NOI of $6.9 million, $4.0 million of which
occurred in the same store portfolio (a 19% improvement), $2.1 million from
1999 acquisitions, and income from the unconsolidated joint ventures ($0.8
million). The increase in GAAP NOI was offset by higher MG&A and lower
non-real estate revenue ($0.3 million).
The $3.1 million increase in FFO results from:
o Same store GAAP NOI ($4.0 million)
o 1999 acquisition GAAP NOI ($2.1 million)
o Contribution from unconsolidated joint ventures ($1.5 million).
Higher interest costs associated with acquisition and new investment debt
($2.8 million), the funding of ongoing capital projects and working capital
requirements ($1.0 million) and higher interest rates ($0.4 million) offset
these gains. FFO was also offset by higher MG&A ($0.1 million) and non-real
estate depreciation ($0.4 million).
At the end of the quarter, debt totaled $474.0 million, reflecting a debt to
market capitalization ratio of 38.8%. A commitment for a new unsecured Line of
Credit was received for $250 million, which will replace the Company's
existing $140 million line which expires at year end.
New Investments to Date
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o On April 5, 2000, the Company announced the sale of a partial interest
(65%) in 321 West 44th Street to Morgan Stanley Real Estate Fund III. The
joint venture will redevelop the property. This transaction represents the
second project undertaken by the parties pursuant to their joint venture
agreement. The property, a 203,000 square foot building located in the
Times Square submarket, was acquired by the Company in March 1998. The
property was contributed to the joint venture on a basis that values the
property at $28.4 million. Simultaneous with the initiation of this joint
venture, the venture has received a financing commitment from Lehman
Brothers for the acquisition and funding for the future capital
improvement program. The Company will also act as the operating partner
for the venture, responsible for redevelopment, construction, leasing and
management of the property and will earn management fees for these
services. The transaction will result in returning $25.3 million of
capital to the Company.
o On March 30, 2000, the Company acquired a $51.9 million interest in an
existing first mortgage loan secured by 2 Grand Central Tower, New York.
This is a subordinate participation interest in an existing first mortgage
loan currently held by Credit Suisse First Boston Mortgage Capital, LLC.
The property is an approximately 620,000 square foot commercial office
building located in the heart of the Grand Central submarket. The
transaction was partially financed on the Company's secured line of credit
($37.8 million).
o The Company closed its joint venture acquisition of 100 Park Avenue with
Prudential Real Estate Investors (PREI), who acted on behalf of PRISA, its
flagship commingled fund, to acquire 100 Park Avenue. The 36 story
property consists of 834,000 square feet. It is located one block south of
Grand Central Terminal on Park Avenue between 40th and 41st Streets. The
Company purchased a 49.9% interest in the venture for $95.8 million,
representing an implied overall property value of $192 million. The
Company has certain preferential rights to acquire PRISA's interests in
the future, and is responsible for managing and leasing the property, for
which it receives management fees. The acquisition was financed in part by
a first mortgage of $112.0 million.
o The Company completed the sale of two of its smaller side-street
properties:
The first property, 36 West 44th Street, also known as the Bar Building,
was sold for $31.5 million. The property is approximately 178,000 square
feet and the purchase price represents a sale value of $177 per square
foot. The sale reduced the Company's secured debt by $16.9 million and
resulted in $13.2 million in new proceeds.
The second property, 29 West 35th Street, was sold for $11.7 million.
The property is approximately 78,000 square feet and represents a sale
value of $150 per square foot. The sale reduced secured debt by $2.8
million and generated $8.1 million in new capital.
Commenting on the quarter, Stephen L. Green, Chairman and Chief Executive
Officer, noted, "The investment activity of the quarter reflects the strength
of our organization to operate simultaneously on all aspects of our business
plan, whether selling properties, forming joint ventures or completing complex
structured financings. Meanwhile, the strength of the market and our operating
group is reflected in continued strength in leasing and occupancy statistics,
and operating expense recovery."
At March 31, 2000, SL Green's portfolio consisted of 23 properties,
aggregating 9.1 million square feet. Since March 31, 1999, the portfolio has
grown by a net 1.9 million square feet, or 26%.
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,
including the Fourth Quarter Supplemental Data, via FAX at no cost,
please contact the Investor Relations office at 212-216-1601. All
releases and supplemental data can also be downloaded directly
from the SL Green website at:
www.slgreen.com.
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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 filings
with the Securities and Exchange Commission.
SL GREEN REALTY CORP.
STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended
March 31
2000 1999
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(unaudited)
Revenue:
Rental revenue, net $46,941 $40,217
Escalations & reimbursement revenues 5,981 4,932
Signage Rent 500 210
Investment income 1,013 837
Other income 324 466
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Total revenues 54,759 46,662
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Expenses:
Operating expenses 13,190 11,220
Ground rent 3,183 3,207
Interest 9,492 5,238
Depreciation and amortization 7,816 5,438
Real estate taxes 7,335 7,083
Marketing, general and administrative 2,788 2,645
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Total expenses 43,804 34,831
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Income before minority interests, preferred stock dividends, gain on sales,
service corporation and joint venture income 10,955 11,831
Equity in income from Service Corporation 170 211
Equity in income from Joint Ventures 841 ---
Minority interests (2,151) (1,429)
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9,815 10,613
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Gain on sale of rental properties 14,225 ---
Preferred stock dividends and accretion (2,407) (2,399)
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Net income available to common shareholders $21,633 $8,214
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Net income per share (Basic and diluted) $0.89 $0.34
Funds From Operations (FFO)
FFO per share (Basic) $0.65 $0.53
FFO per share (Diluted) $0.62 $0.52
FFO Calculation:
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Income before minority interests, preferred stock dividends and gains on sales $11,966 $12,042
Less:
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Preferred stock dividend (2,300) (2,300)
Minority interest in commercial property --- (572)
Add:
Joint venture FFO adjustment 709 ---
Depreciation and amortization 7,816 5,438
Amortization of deferred financing costs and depreciation of non-real
estate assets (1,023) (569)
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FFO - BASIC $17,168 $14,039
Add: Preferred stock dividends 2,300 2,300
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FFO - DILUTED $19,468 16,339
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Basic ownership interests
Weighted average REIT common shares 24,220 24,192
Weighted average partnership units held by minority interest 2,418 2,428
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Basic weighted average shares and units outstanding 26,638 26,380
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Diluted ownership interest
Weighted average REIT common and common share equivalent shares 24,414 24,236
Weighted average partnership units held by minority interests 2,418 2,428
Common share equivalents for preferred stock 4,699 4,699
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Diluted weighted average equivalent shares and units outstanding 31,531 31,363
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SL Green Realty Corp.
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
March 31, December 31,
2000 1999
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(unaudited)
Assets
Commercial real estate properties, at cost:
Land and land interests................................................................. $132,081 $132,081
Buildings and improvements.............................................................. 637,168 632,004
Building leasehold...................................................................... 134,304 132,573
Property under capital lease............................................................ 12,208 12,208
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915,761 908,866
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Less accumulated depreciation............................................................ (62,965) (56,983)
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852,796 851,883
Properties held for sale.................................................................. --- 25,835
Cash and cash equivalents................................................................. 10,147 21,561
Restricted cash........................................................................... 38,713 34,168
Tenant and other receivables, net $1,333 and $938 reserve in 2000 and 1999, respectively.. 5,079 5,747
Related party receivables................................................................. 466 463
Deferred rents receivable net of provision for doubtful accounts of $5,322 and
$5,337 in 2000 and 1999, respectively.................................................. 40,252 37,015
Investment in and advances to Service Corporation......................................... 5,695 4,978
Investment in unconsolidated joint ventures............................................... 62,021 23,441
Mortgage loans and preferred investments.................................................. 65,680 20,000
Deferred costs, net....................................................................... 31,542 30,540
Other assets.............................................................................. 11,563 15,611
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Total assets.............................................................................. $1,123,934 $1,071,242
================= ===============
Liabilities and Stockholders' Equity
Mortgage notes payable.................................................................... $332,262 $352,693
Revolving credit facility................................................................. 141,752 83,000
Accrued interest payable.................................................................. 3,158 2,650
Accounts payable and accrued expenses..................................................... 15,753 17,167
Deferred revenue.......................................................................... 1,480 306
Capitalized lease oblibations............................................................. 15,090 15,017
Deferred land lease payable............................................................... 12,052 11,611
Dividend and distributions payable........................................................ 11,962 11,947
Security deposits......................................................................... 17,510 18,905
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Total liabilities......................................................................... 551,019 513,296
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Minority interests........................................................................ 42,430 41,494
8% Preferred Income Equity Redeemable Stock $0.01 par
value, $25.00 mandatory liquidation preference 25 million shares
authorized, 4.6 million outstanding in 2000 and 1999................................... 110,325 110,348
Stockholders' Equity
Common stock, $.01 par value 100,000 shares
authorized, 24,239 and 24,184 issued and
outstanding in 2000 and 1999, respectively.................................... 242 242
Additional paid - in capital..................................................... 423,032 421,958
Deferred compensation plan....................................................... (6,622) (6,610)
Officers' loans.................................................................. (39) (64)
Distributions in excess of earnings.............................................. 3,418 (9,422)
Total stockholders' equity................................................................ 420,031 406,104
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Total liabilities and stockholders' equity................................................ $1,123,934 $1,071,242
================= ===============
SL GREEN REALTY CORP.
SELECTED OPERATING DATA-UNAUDITED
March 31, 2000 December 31, 1999
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Operating Data:
Net rentable area at end of period (in 000's)(1) 9,155 8,540
Portfolio occupancy percentage at end of period 98% 97%
Same Store occupancy percentage at end of period 97% 97%
Number of properties in operation 23 24
(1) Includes wholly-owned and minority owned properties.