SECURITIES 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): March 18, 1998
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
New York, New York 10018
(Address of principal executive offices) (Zip Code)
(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 its Current Report on Form 8-K dated March 18,
1998 (filed with the Securities and Exchange Commission on March 31, 1998),
to provide the financial statements and pro forma financial information of
420 Lexington Avenue, New York, New York (the Graybar Building) and 1466
Broadway, New York, New York (collectively, the "Properties").
Item 7. Financial Statements and Exhibits
(a) and (b) Financial Statements of the Properties Acquired and Pro
Forma Financial Information
Unaudited Pro Forma Combined Financial Information
Pro Forma/Combined Balance Sheet (unaudited)
as of December 31, 1997
Pro Forma/Combined Statement of Operations (unaudited) for the
Year Ended December 31, 1997
Notes to Pro Forma/Combined Financial Information
420 Lexington Ave.
Report of Independent Auditors
Statement of Revenues and Certain Expenses of 420 Lexington
Avenue for the year Ended December 31, 1997
Notes to Statement of Revenue and Certain Expenses of
420 Lexington Avenue
1466 Broadway
Report of Independent Auditors
Statement of Revenues and Certain Expenses of 1466 Broadway
for the Year Ended December 31, 1997
Notes to Statement of Revenues and Certain Expenses of
1466 Broadway
(c) Exhibits
None.
2
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 May 8, 1998
3
SL GREEN REALTY CORP.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma consolidated balance sheet of the Company as of
December 31, 1997 has been prepared as if the Company's purchase of the
Acquired Properties purchased after December 31, 1997 (1466 Broadway and 420
Lexington Avenue) had been consummated on December 31, 1997. The pro forma
consolidated statement of operations for the year ended December 31, 1997 is
presented as if the IPO, the Formation Transactions, the Offerings, and the
purchase of the Acquired Properties occurred at January 1, 1997 and the
effect thereof 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 IPO, Formation Transactions,
the Offerings and the purchase of the Acquired Properties had occurred 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 consolidated financial statements should
be read in conjunction with the Company's consolidated financial statements
for the period August 21, 1997 to December 31, 1997 and the SL Green
Predecessor combined financial statements for the period January 1, 1997 to
August 20, 1997 included in the Company's Annual Report on Form 10-K.
F-1
SL GREEN REALTY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SL GREEN
REALTY CORP. ACQUIRED FINANCING COMPANY
HISTORICAL PROPERTIES ADJUSTMENTS PRO FORMA
(A) (B) (C) AS ADJUSTED
------------ ----------- ----------- -----------
ASSETS
Commercial real estate property
at cost:
Land........................... $ 53,834 $ 13,074 $ 66,908
Buildings and improvements..... 272,776 52,298 325,074
Building leasehold............. 82,788 82,788
Property under capital lease... 12,208 12,208
------------ ----------- ----------- -----------
338,818 148,160 486,978
Less accumulated
depreciation............... (23,800) -- (23,800)
------------ ----------- ----------- -----------
315,018 148,160 463,178
Cash and cash equivalents...... 12,782 (146,500) $146,500 12,782
Restricted cash................ 10,310 10,310
Receivables.................... 738 738
Related party receivables...... 1,971 1,971
Deferred rents receivable, net
of provision for doubtful
accounts of $399............. 11,563 11,563
Investment in Service
Corporations................. 1,480 1,480
Mortgage loan receivable....... 15,500 15,500
Deferred costs, net............ 6,099 1,450 7,549
Other assets................... 7,314 7,314
------------ ----------- ----------- -----------
Total assets................. $ 382,775 $ 3,110 $ 146,500 $ 532,385
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Mortgage notes payable......... $ 52,820 $ 52,820
Credit Facility................ 76,000 $ (76,000) 0
Acquisition Facility........... 222,500 222,500
Accrued interest payable....... 552 552
Accounts payable and accrued
expenses..................... 3,340 3,340
Accounts payable to related
parties...................... 367 367
Capitalized lease
obligations.................. 14,490 14,490
Dividend and distributions
payable...................... 5,136 5,136
Overage rent payable........... $3,110 3,110
Deferred land lease payable.... 8,481 8,481
Security deposits.............. 11,475 11,475
------------ ----------- ----------- -----------
Total liabilities............ 172,661 3,110 146,500 322,271
------------ ----------- ----------- -----------
Minority interest in Operating
Partnership.................. 33,906 33,906
STOCKHOLDERS' EQUITY
Common stock................... 123 123
Additional paid-in capital..... 178,669 178,669
Distributions in excess of
earnings..................... (2,584) (2,584)
------------ ----------- ----------- -----------
Total stockholders' equity... 176,208 176,208
------------ ----------- ----------- -----------
Total liabilities and
stockholders' equity....... $ 382,775 $ 3,110 $ 146,500 $ 532,385
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
F-2
SL GREEN REALTY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
IPO/FORMATION TRANSACTIONS
-------------------------------------------------------
SL GREEN ACQUISITION EQUITY
REALTY SL GREEN OF CONVERSION IPO IPO
CORP. PREDECESSOR PARTNERSHIPS' SERVICE ACQUISITION FINANCING
HISTORICAL HISTORICAL INTERESTS CORPORATIONS PROPERTIES ADJUSTMENTS
(A) (B) (C) (D) (E) (F)
----------- ------------- ------------- ------------- ----------- ------------
Revenues
Rental revenue.............................. $ 20,033 $ 4,107 $ 13,079 $ 12,254
Escalations and reimbursement revenues...... 2,205 792 859 1,644
Management revenues......................... 1,268 $ (1,268)
Leasing commissions......................... 484 3,464 (3,464)
Construction revenues....................... 77 (77)
Investment income........................... 485
Other income................................ 16 89 (11) 1,582
----------- ------ ------------- ------------- ----------- ------------
Total revenues.......................... 23,207 9,724 14,027 (4,820) 15,480
----------- ------ ------------- ------------- ----------- ------------
Equity in net income (loss) in Service
Corporations.............................. (101) 1,948
Equity in net (loss) from uncombined joint
ventures.................................. (770) 770
----------- ------ ------------- ------------- ----------- ------------
Expenses
Operating expenses.......................... 7,077 2,722 4,985 (1,000) 3,679
Interest.................................... 2,135 1,062 5,320 $ (3,008)
Depreciation and amortization............... 2,815 811 2,456 (48) 1,390 (16)
Real estate taxes........................... 3,498 705 1,741 2,714
Marketing, general and administrative....... 948 2,189 (1,521)
----------- ------ ------------- ------------- ----------- ------------
Total expenses.......................... 16,473 7,489 14,502 (2,569) 7,783 (3,024)
----------- ------ ------------- ------------- ----------- ------------
Income (loss) before minority interest and
extraordinary item........................ 6,633 1,465 295 (303) 7,697 3,024
Minority interest in operating partnership.. (1,074)
----------- ------ ------------- ------------- ----------- ------------
Income (loss) before extraordinary item... $ 5,559 $ 1,465 $ 295 $ (303) $ 7,697 $ 3,024
----------- ------ ------------- ------------- ----------- ------------
----------- ------ ------------- ------------- ----------- ------------
Pro forma income before extraordinary item
- basic (O).................................
Pro forma income before extraordinary item
- diluted (O)...............................
1997 1998 1998
ACQUIRED ACQUIRED FINANCING PRO COMPANY
PROPERTIES PROPERTIES ADJUSTMENTS FORMA PRO
(G) (H) (I) ADJUSTMENTS FORMA
----------- ----------- ------------- ------------- ------------
Revenues
Rental revenue.............................. $ 17,725 $ 34,283 $ 101,481
Escalations and reimbursement revenues...... 1,390 6,468 13,358
Management revenues.........................
Leasing commissions......................... $ (484)(L)
Construction revenues.......................
Investment income........................... 1,782 (485)(M) 1,782
Other income................................ 96 988 2,760
----------- ----------- ------------- ------------- ------------
Total revenues.......................... 20,993 41,739 (969) 119,381
----------- ----------- ------------- ------------- ------------
Equity in net income (loss) in Service
Corporations.............................. 484 (L) 2,331
Equity in net (loss) from uncombined joint
ventures..................................
----------- ----------- ------------- ------------- ------------
Expenses
Operating expenses.......................... 6,747 22,392 1,628 (O) 48,230
Interest.................................... $ 16,207 21,716
Depreciation and amortization............... 2,269 3,796 4 (J) 13,477
Real estate taxes........................... 3,267 7,754 19,679
Marketing, general and administrative....... 961 (K) 2,577
----------- ----------- ------------- ------------- -----------
Total expenses.......................... 12,283 33,942 16,207 2,593 105,679
----------- ----------- ------------- ------------- ------------
Income (loss) before minority interest and
extraordinary item........................ 8,710 7,797 (16,207) (3,078) 16,033
Minority interest in operating partnership.. (1,523) (N) (2,597)
----------- ----------- ------------- ------------- ------------
Income (loss) before extraordinary item... $ 8,710 $ 7,797 $ (16,207) $ (4,601) $ 13,436
----------- ----------- ------------- ------------- ------------
----------- ----------- ------------- ------------- ------------
Pro forma income before extraordinary item
- basic (P)................................. $ 1.09
---------
---------
Pro forma income before extraordinary item
- diluted (P)...............................
$ 1.08
---------
---------
F-3
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ADJUSTMENTS TO THE PRO FORMA CONSOLIDATED BALANCE SHEET
(A) To reflect the consolidated balance sheet of SL Green Realty Corp. as of
December 31, 1997.
(B) To reflect the acquisition of the two respective Acquired Properties
at cost which represents the purchase price, including certain closing costs,
of 420 Lexington Avenue and 1466 Broadway as follows:
420
LEXINGTON 1466
AVENUE BROADWAY TOTAL
----------- ----------- ----------
Assets acquired:
Land........................ $ 13,074 $ 13,074
Building.................... 52,298 52,298
Building leasehold.......... $ 82,788 82,788
----------- ----------- ----------
82,788 65,372 148,160
Liabilities assumed:
Overage rent payable (3,110) (3,110)
----------- ----------- ----------
Acquisition costs........... $ 79,678 $ 65,372 $ 145,050
----------- ----------- ----------
----------- ----------- ----------
The purchase of 420 Lexington and 1466 Broadway were funded primarily by
proceeds from the Company's Acquisition Facility totalling approximately
$145,050. In addition, the Company utilized the Acquisition Facility to repay
the Credit Facility in the amount of $76,000 and paid $1,450 in financing
costs related to the Acquisition Facility.
F-4
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(C) To reflect the repayment of the Company's Credit Facility. The Credit
Facility remained committed until the Acquisition Facility is repaid, at which
time, the Company will be in compliance under the Credit Facility and is able
to draw additional funds under such Credit Facility.
ADJUSTMENTS TO THE PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(A) To reflect the historical consolidated statement of operations of SL
Green Realty Corp. for the period August 21, 1997 to December 31, 1997.
(B) To reflect the historical combined statement of operations of SL Green
Predecessor for the period January 1, 1997 to August 20, 1997.
F-5
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(C) To reflect the period January 1, 1997 to August 20, 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 of 100% of the partnership interests.
ACQUISITION OF PARTNERSHIPS' INTERESTS AND
FAIR MARKET VALUE ADJUSTMENTS
------------------------------------------------------
ELIMINATE
HISTORICAL UNCOMBINED 673 470 29 36
AMOUNTS TOTAL FIRST AVE PARK AVE WEST 35TH WEST 44TH
----------- ------------- ----------- ----------- ------------- -------------
REVENUES:
Rental revenue(a)........................ $ 12,604 $ 247 $ 152 $ 64 $ 12
Escalations and reimbursement revenues... 859
Other income............................. 89
----------- ------------- ----------- ----------- ------------- -------------
Total revenues..................... 13,552 247 152 64 12
----------- ------------- ----------- ----------- ------------- -------------
Equity in net income/(loss) of
investees.............................. $ 770
----------- ------------- ----------- ----------- ------------- -------------
EXPENSES:
Operating expenses(b).................... 2,976 (221) (128) (37) (62)
Real estate taxes........................ 1,741
Ground rent(c)........................... 2,425 31
Interest................................. 5,320
Depreciation and amortization(c)......... 2,510 24 (64) (11) (2)
----------- ------------- ----------- ----------- ------------- -------------
Total expenses..................... 14,972 (166) (192) (48) (64)
----------- ------------- ----------- ----------- ------------- -------------
Income (loss) before minority interest... $ 770 $ (1,420) $ 413 $ 344 $ 112 $ 76
----------- ------------- ----------- ----------- ------------- -------------
----------- ------------- ----------- ----------- ------------- -------------
TOTAL
ADJUSTMENTS
-------------
REVENUES:
Rental revenue(a)........................ $ 13,079
Escalations and reimbursement revenues... 859
Other income............................. 89
-------------
Total revenues..................... 14,027
-------------
Equity in net income/(loss) of
investees.............................. 770
-------------
EXPENSES:
Operating expenses(b).................... 2,528
Real estate taxes........................ 1,741
Ground rent(c)........................... 2,456
Interest................................. 5,320
Depreciation and amortization(c)......... 2,457
-------------
Total expenses..................... 14,502
-------------
Income (loss) before minority interest... $ 295
-------------
-------------
- ------------------------
(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-6
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(D) To reflect the operations of the Service Corporations pursuant to the
equity method of accounting for the period January 1, 1997 to August 20, 1997.
EXPENSES
HISTORICAL ATTRIBUTABLE EQUITY
SERVICE TO REIT CONVERSION TOTAL
CORPORATIONS (A) (B) ADJUSTMENT
------------- ------------- ----------- -----------
STATEMENT OF OPERATIONS:
Management revenues.......................... $ 1,268 $ (1,268)
Leasing commissions.......................... 3,464 (3,464)
Construction revenues........................ 77 (77)
Equity in net income of Service
Corporations............................... $ (1,948) 1,948
Other income................................. 11 (11)
------ ----- ----------- -----------
Total revenues........................... 4,820 (1,948) (2,872)
------ ----- ----------- -----------
EXPENSES
Operating expenses........................... 1,000 (1,000)
Depreciation and amortization................ 48 (48)
Marketing, general and administrative........ 2,189 $ (668) (1,521)
------ ----- ----------- -----------
Total expenses........................... 3,237 (668) (2,569)
------ ----- ----------- -----------
Income (loss)............................ $ 1,583 $ 668 $ (1,948) $ (303)
------ ----- ----------- -----------
------ ----- ----------- -----------
- ------------------------
(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............................................. $ 1,583
Adjustment for management fees eliminated in the combined
historical financial statements due to acquisition of
partnerships interests........................................................... (201)
Expenses attributable to REIT...................................................... 668
---------
Income............................................................................. $ 2,050
---------
---------
Equity in net income of Service Corporations' at 95 percent........................ $ 1,948
---------
---------
F-7
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(E) To reflect the operations of 1372 Broadway, 1140 Avenue of the Americas
and 50 West 23rd Street for the period January 1, 1997 to August 20, 1997.
Historical rental revenue was adjusted for straight line rents as of the
acquisition date, historical operating expenses were reduced for management
fees, the land 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
----------------------------------------- ---------------------------------------
HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA
----------- --------------- ----------- ----------- ------------- -----------
REVENUES:
Rental revenue....................... $ 5,154 $ 578 $ 5,732 $ 2,768 $ 230 $ 2,998
Escalations & reimbursement
revenues........................... 713 713 440 440
Other income......................... 1,520 1,520 61 61
----------- ----- ----------- ----------- ----- -----------
Total revenues................... 7,387 578 7,965 3,269 230 3,499
----------- ----- ----------- ----------- ----- -----------
EXPENSES:
Operating expenses................... 1,701 (181) 1,520 1,261 (130) 1,131
Ground rent.......................... 268 268
Depreciation & amortization.......... 658 658 271 271
Real estate taxes.................... 1,396 1,396 660 660
----------- ----- ----------- ----------- ----- -----------
Total expenses................... 3,097 477 3,574 1,921 409 2,330
----------- ----- ----------- ----------- ----- -----------
Income before minority interest...... $ 4,290 $ 101 $ 4,391 $ 1,348 $ (179) $ 1,169
----------- ----- ----------- ----------- ----- -----------
----------- ----- ----------- ----------- ----- -----------
50 WEST 23RD STREET
--------------------------------------- TOTAL
HISTORICAL ADJUSTMENT PRO FORMA PRO FORMA
----------- ------------- ----------- ---------
REVENUES:
Rental revenue....................... $ 3,303 $ 221 $ 3,524 $ 12,254
Escalations & reimbursement
revenues........................... 491 491 1,644
Other income......................... 1 1 1,582
----------- ----- ----------- ---------
Total revenues................... 3,795 221 4,016 15,480
----------- ----- ----------- ---------
EXPENSES:
Operating expenses................... 876 (116) 760 3,411
Ground rent.......................... 268
Depreciation & amortization.......... 461 461 1,390
Real estate taxes.................... 658 658 2,714
----------- ----- ----------- ---------
Total expenses................... 1,534 345 1,879 7,783
----------- ----- ----------- ---------
Income before minority interest...... $ 2,261 $ (124) $ 2,137 $ 7,697
----------- ----- ----------- ---------
----------- ----- ----------- ---------
(F) To reflect the changes in interest expense as the result of the IPO
financing transactions and the related adjustments to deferred financing
expense.
470 29 36 70
673 1ST AVE PAS W 35TH W 44TH W 36TH
----------- --------- ----------- ----------- -----------
Interest................................................ $ (1,123) $ (1,025) $ (593) $ (339)
Depreciation and amortization........................... 30 9 $ 3 (47)
----------- --------- ----------- ----------- -----------
Total expenses.................................... (1,093) (1,016) 3 (593) (386)
----------- --------- ----------- ----------- -----------
Income before minority interest................... $ 1,093 $ 1,016 $ (3) $ 593 $ 386
----------- --------- ----------- ----------- -----------
----------- --------- ----------- ----------- -----------
NEW
1414 MORTGAGE
AVE. AMERICAS LOAN TOTAL
--------------- ----------- ---------
Interest................................................ $ (591) $ 663 $ (3,008)
Depreciation and amortization........................... (29) 18 (16)
--------------- ----------- ---------
Total expenses.................................... (620) 681 (3,024)
--------------- ----------- ---------
Income before minority interest................... $ 620 $ (681) $ 3,024
--------------- ----------- ---------
--------------- ----------- ---------
F-8
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(G) To reflect the operations of 110 East 42nd Street for the period January
1, 1997 to September 15, 1997, 17 Battery Place including the mortgage loan
receivable for the period January 1, 1997 to December 18, 1997, and 633 Third
Avenue for the period January 1, 1997 to December 31, 1997. Historical rental
revenue was adjusted for straight line rents as of the acquisition date,
historical operating expenses were reduced for management fees, and depreciation
based on recorded cost. These acquisitions were funded by proceeds from the IPO
and Revolving Credit Facility.
633 THIRD
110 EAST 42ND STREET 17 BATTERY PLACE AVENUE
------------------------------------- ------------------------------------- -------------
HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL
----------- ----------- ----------- ----------- ----------- ----------- -------------
REVENUES:
Rental revenue.......... $ 3,499 $ (166) $ 3,333 $ 12,458 $ 742 $ 13,200 $ 809
Escalation &
reimbursement
revenues.............. 501 501 889 889
Investment income....... 1,782 1,782
Other income............ 14 14 82 82
----------- ----------- ----------- ----------- ----------- ----------- -----
Total revenues...... 4,014 (166) 3,848 13,429 2,524 15,953 809
----------- ----------- ----------- ----------- ----------- ----------- -----
EXPENSES:
Operating expenses...... 1,839 (147) 1,692 5,264 (410) 4,854 201
Interest expense........
Depreciation &
amortization.......... 426 426 1,627 1,627
Real estate taxes....... 1,000 1,000 2,075 2,075 192
----------- ----------- ----------- ----------- ----------- ----------- -----
Total expenses...... 2,839 279 3,118 7,339 1,217 8,556 393
----------- ----------- ----------- ----------- ----------- ----------- -----
Income before minority
interest................ $ 1,175 $ (445) $ 730 $ 6,090 $ 1,307 $ 7,397 $ 416
----------- ----------- ----------- ----------- ----------- ----------- -----
----------- ----------- ----------- ----------- ----------- ----------- -----
TOTAL
PRO
ADJUSTMENT PRO FORMA FORMA
------------- ----------- ---------
REVENUES:
Rental revenue.......... $ 383 $ 1,192 $ 17,725
Escalation &
reimbursement
revenues.............. 1,390
Investment income....... 1,782
Other income............ 96
----- ----------- ---------
Total revenues...... 383 1,192 20,993
----- ----------- ---------
EXPENSES:
Operating expenses...... 201 6,747
Interest expense........
Depreciation &
amortization.......... 216 216 2,269
Real estate taxes....... 192 3,267
----- ----------- ---------
Total expenses...... 216 609 12,283
----- ----------- ---------
Income before minority
interest................ $ 167 $ 583 $ 8,710
----- ----------- ---------
----- ----------- ---------
F-9
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(H) To reflect two of the Acquired Properties operations purchased
after December 31, 1997 of 420 Lexington Avenue and 1466 Broadway for the
year ended December 31, 1997. Historical rental revenue was adjusted for
straight line rents and historical operating expenses were reduced for
management fees and depreciation based on the recorded cost.
420 LEXINGTON AVE 1466 BROADWAY
------------------------------------- ------------------------------------- TOTAL
HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA PRO FORMA
----------- ----------- ----------- ----------- ----------- ----------- -----------
Revenue:
Rental revenue......... $ 25,278 $ 876 $ 26,154 $ 7,749 $ 380 $ 8,129 $ 34,283
Escalation &
reimbursement
revenues............. 5,708 5,708 760 760 6,468
Other income........... 763 763 225 225 988
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues..... 31,749 876 32,625 8,734 380 9,114 41,739
----------- ----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Operating expenses..... $ 20,431 (442) 19,989 2,554 (151) 2,403 22,392
Depreciation &
amortization......... 2,516 2,516 1,280 1,280 3,796
Real estate taxes...... 5,823 5,823 1,931 1,931 7,754
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses..... 26,254 2,074 28,328 4,485 1,129 5,614 33,942
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before minority
interest............. $ 5,495 $ (1,198) $ 4,297 $ 4,249 $ (749) $ 3,500 $ 7,797
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
F-10
SL GREEN REALTY CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(I) To reflect the additional borrowings required under the Acquisition
Facility to fund the Acquired Properties (7.3785% interest rate).
(J) To reflect for 70 West 36th Street and 1414 Avenue of the Americas,
depreciation expense adjustments for real property transfer taxes capitalized in
connection with the Formation Transactions which are amortized over the
remaining life of the commercial property.
(K) To reflect the increase in marketing, general and administrative
expenses related to operations of a public company for the period January 1,
1997 to August 20, 1997 which includes the following:
Officers' compensation and related costs............................. $ 446
Professional fees.................................................... 203
Directors' fees and insurance........................................ 174
Printing and distribution costs...................................... 87
Other................................................................ 51
---------
$ 961
---------
---------
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."
(L) Represents the reclassifications of leasing commissions attributable to
the Service Corporations since all leasing commissions is presently being
recorded in the Service Corporations.
(M) Represents the reduction of interest income from the excess cash that
was used to fund Acquired Properties.
(N) Represents the 16.2% interest of the minority shareholders in the
Operating Partnership less Unit Holders 9.8% share of the preferred dividends
and accretion totalling $789.
(O) To adjust the provision for doubtful accounts based upon 2% of Pro Forma
rental revenue.
(P) Pro Forma income before extraordinary item per common share--basic is
based upon 12,292,311 shares of common stock outstanding as of December 31,
1997. Pro Forma income before extraordinary item per common share--diluted is
based upon 12,404,412 weighted average shares of common stock outstanding as
of December 31, 1997, which gives effect to stock options. As each 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. Pursuant to the terms of
the Partnership Agreement, the Unit holders that received Units at the IPO
may not, for up to two years from the IPO date, transfer any of their rights
or redeem their Units as a limited partner without the consent of the Company.
F-11
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 1466 Broadway, as described in Note 1, for the year ended December
31, 1997. 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 8K/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, 1997 in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
March 13, 1998
F-12
1466 BROADWAY
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(DOLLARS IN THOUSANDS)
NOTE 1
YEAR ENDED
DECEMBER 31,
1997
-------------
Revenues
Rental revenue.................................................................................... $ 7,749
Escalations and reimbursement revenue............................................................. 760
Other income...................................................................................... 225
------
Total revenues...................................................................................... 8,734
------
Certain Expenses
Property taxes.................................................................................... 1,931
Utilities......................................................................................... 559
Cleaning and service contracts.................................................................... 542
Payroll and expenses.............................................................................. 463
Management fees................................................................................... 151
Repairs and maintenance........................................................................... 453
Professional fees................................................................................. 87
Insurance......................................................................................... 87
Other operating expenses.......................................................................... 212
------
Total certain expenses.............................................................................. 4,485
------
Revenues in excess of certain expenses.............................................................. $ 4,249
------
------
See accompanying notes.
F-13
1466 BROADWAY
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1997
1. BASIS OF PRESENTATION
Presented herein is the statement of revenues and certain expenses related
to the operations of the property, located at 1466 Broadway, in the Times Square
sub-market, in the borough of Manhattan in New York City, (the "Property").
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 expenses that may not be comparable to those expected
to be incurred by SL Green Realty Corp., in the proposed future operations of
the Property. 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 $308 for the year ended December 31,
1997.
4. CONCENTRATION OF REVENUE
Approximately 15% of the Property's revenue for the year ended December 31,
1997 was derived from one tenant.
5. MANAGEMENT AGREEMENTS
During 1997 the Property was managed by Helmsley Noyes Co., Inc., an
affiliate of Helmsley Enterprises Inc., the owner of the Property. During the
year ended December 31, 1997 the management fees were based on gross
collections, as follows: 5.0% for the first $200, 3.0% for the next $300 and
1.5% for the excess above $500.
The fees incurred for managing the Property by the affiliated company for
the year ended December 31, 1997 was $151.
6. LEASE AGREEMENTS
The Property is being leased to tenants under operating leases with term
expiration dates ranging from 1998 to 2009. 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
F-14
1466 BROADWAY
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES (CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1997
6. LEASE AGREEMENTS (CONTINUED)
rents to be received over the next five years and thereafter for non-cancelable
operating leases as of December 31, 1997 (exclusive of renewal option periods)
are as follows:
1998............................................................... $ 6,600
1999............................................................... 5,600
2000............................................................... 4,100
2001............................................................... 3,200
2002............................................................... 2,600
Thereafter......................................................... 13,900
---------
$ 36,000
---------
---------
F-15
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 420 Lexington Avenue, as described in Note 1, for the year ended
December 31, 1997. 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 8K/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, 1997 in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
March 13, 1998
F-16
420 LEXINGTON AVENUE
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(DOLLARS IN THOUSANDS)
NOTE 1
YEAR ENDED
DECEMBER 31,
1997
------------
Revenues
Rental revenue.................................................................................... $ 25,278
Escalations and reimbursement revenue............................................................. 5,708
Other income...................................................................................... 763
------------
Total revenues...................................................................................... 31,749
------------
Certain Expenses
Ground rent....................................................................................... 7,946
Property taxes.................................................................................... 5,823
Utilities......................................................................................... 3,452
Cleaning and service contracts.................................................................... 946
Payroll and expenses.............................................................................. 4,537
Management fees................................................................................... 442
Repairs and maintenance........................................................................... 1,499
Professional fees................................................................................. 622
Insurance......................................................................................... 358
Other operating expenses.......................................................................... 629
------------
Total certain expenses.............................................................................. 26,254
------------
Revenues in excess of certain expenses.............................................................. $ 5,495
------------
------------
See accompanying notes.
F-17
420 LEXINGTON AVENUE
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1997
1. BASIS OF PRESENTATION
Presented herein is the statement of revenues and certain expenses related
to the operations of the property, located at 420 Lexington Avenue, in the Grand
Central District sub-market, in the borough of Manhattan in New York City, (the
"Property").
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 expenses that may not be comparable to those expected
to be incurred by SL Green Realty Corp., in the proposed future operations of
the Property. 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 $201 for the year ended December 31,
1997.
4. CONCENTRATION OF REVENUE
Approximately 20% of the Property's revenue for the year ended December 31,
1997 was derived from two tenants.
5. MANAGEMENT AGREEMENTS
During 1997 the Property was managed by Helmsley Noyes Co., Inc., an
affiliate of Helmsley Enterprises Inc., the owner of the Property. During the
year ended December 31, 1997 the management fees were based on gross
collections, as follows: 5.0% for the first $200, 3.0% for the next $300 and
1.5% for the excess above $500.
The fees incurred for managing the Property by the affiliated company for
the year ended December 31, 1997 was $442.
6. RELATED PARTY TRANSACTIONS
The Property recognized approximately $116 in rental income from companies
affiliated with the seller for the year ended December 31, 1997.
7. GROUND RENT
The Property is subject to an operating sublease agreement (the "Ground
Lease"), which is subject to the terms and conditions of three other subleases.
The Ground Lease, expiring on December 31, 2008,
F-18
420 LEXINGTON AVENUE
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES (CONTINUED)
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1997
7. GROUND RENT (CONTINUED)
requires fixed annual rent of approximately $7,918, (which includes $6,000 of
ground rent) plus an additional annual rent (overage rent) equal to 33.3% of net
earnings in excess of $2,740, a portion of which is deferred and paid over five
years. The Ground Lease contains an option to renew for an additional term of 21
years to the year 2029.
8. LEASE AGREEMENTS
The Property is being leased to tenants under operating leases with term
expiration dates ranging from 1998 to 2016. 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, 1997
(exclusive of renewal option periods) are as follows:
1998.............................................................. $ 23,900
1999.............................................................. 21,300
2000.............................................................. 19,400
2001.............................................................. 16,200
2002.............................................................. 12,500
Thereafter........................................................ 66,100
---------
$ 159,400
---------
---------
F-19
