UNITED STATES

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 (Date of earliest event reported):

July 28, 2008

SL GREEN REALTY CORP.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND

(STATE OF INCORPORATION)

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(212) 594-2700

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.              Results of Operations and Financial Condition

Following the issuance of a press release on July 28, 2008 announcing the Company’s results for the second quarter ended June 30, 2008, the Company intends to make available supplemental information regarding the Company’s operations that is too voluminous for a press release.  The Company is attaching the press release as Exhibit 99.1 and the supplemental package as Exhibit 99.2 to this Current Report on Form 8-K.

The information (including exhibits 99.1 and 99.2) being furnished pursuant to this “Item 2.02 Results of Operations and Financial Condition” shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act regardless of any general incorporation language in such filing.

Item 7.01.              Regulation FD Disclosure

As discussed in Item 2.02 above, on July 28, 2008, the Company issued a press release announcing its results for the second quarter ended June 30, 2008.

The information being furnished pursuant to this “Item 7.01 Regulation FD Disclosure” shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act regardless of any general incorporation language in such filing.  This information will not be deemed an admission as to the materiality of such information that is required to be disclosed solely by Regulation FD.

Item 9.01.              Financial Statements and Exhibits

(c)           Exhibits

99.1                           Press Release regarding second quarter 2008 earnings.

99.2                           Supplemental package.

NON-GAAP Supplemental Financial Measures

Funds from Operations (FFO)

FFO is a widely recognized measure of REIT performance.  We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do.  The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002 defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.  We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITS, particularly those that own and operate commercial office properties.  We also use FFO as one of several criteria to determine performance-based bonuses for members of our senior management.  FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time.  Historically, however, real estate values have risen or fallen with market conditions.  Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year,

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reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs, providing perspective not immediately apparent from net income.  FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

Funds Available for Distribution (FAD)

FAD is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined in accordance with GAAP.  FAD is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company’s ability to fund its dividends.  Because all companies do not calculate FAD the same way, the presentation of FAD may not be comparable to similarly titled measures of other companies.   FAD does not represent cash flow from operating, investing and finance activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of our liquidity.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

The Company presents earnings before interest, taxes, depreciation and amortization (EBITDA) because the Company believes that EBITDA, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of the Company’s ability to incur and service debt.  EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of our liquidity.

Same-Store Net Operating Income

The Company presents same-store net operating income on a cash and GAAP basis because the Company believes that it provides investors with useful information regarding the operating performance of properties that are comparable for the periods presented.  For properties owned since January 1, 2007 and still owned at the end of the current quarter, the Company determines net operating income by subtracting property operating expenses and ground rent from recurring rental and tenant reimbursement revenues.  Same-store net operating income is not an alternative to net income (determined in accordance with GAAP) and same-store performance should not be considered an alternative to GAAP net income performance.

Debt to Market Capitalization Ratio

The Company presents the ratio of debt to market capitalization as a measure of the Company’s leverage position relative to the Company’s estimated market value.  The Company’s estimated market value is based upon the quarter-end trading price of the Company’s common stock multiplied by all common shares and operating partnership units outstanding plus the face value of the Company’s preferred equity. This ratio is presented on a consolidated basis and a combined basis.  The combined debt to market capitalization includes the Company’s pro-rata share of off-balance sheet (unconsolidated) joint venture debt.  The Company believes this ratio may provide investors with another measure of the Company’s current leverage position.  The debt to market capitalization ratio should be used as one measure of the Company’s leverage position, and this measure is commonly used in the REIT sector; however, this may not be comparable to other REITs that do not compute in the same manner.  The debt to market capitalization ratio does not represent the Company’s borrowing capacity and should not be considered an alternative measure to the Company’s current lending arrangements.

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Coverage Ratios

The Company presents fixed charge and interest coverage ratios to provide a measure of the Company’s financial flexibility to service current debt amortization, interest expense and ground rent from current cash net operating income.  These coverage ratios are provided on both a consolidated and combined basis.  The combined coverage ratios include the Company’s pro-rata share of off-balance sheet (unconsolidated) joint venture fixed charges and cash net operating income.  These coverage ratios represent a common measure of the Company’s ability to service fixed cash payments; however, these ratios are not used as an alternative to cash flow from operating, financing and investing activities (determined in accordance with GAAP).

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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.

Date:  July 29, 2008

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Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT

Gregory F. Hughes

Chief Operating Officer and

Chief Financial Officer

(212) 594-2700

or

Heidi Gillette

Investor Relations

(212) 216-1601

SL GREEN REALTY CORP. REPORTS

SECOND QUARTER 2008 FFO OF $2.00 PER SHARE

Second Quarter Highlights

·      Second quarter FFO totaled $2.00 per share (diluted) compared to $1.26 per share (diluted) during the second quarter of 2007, an increase of 58.7%.  FFO for the six months ended June 30, 2008 increased 4.9% over the same period in the prior year to $3.43 per share (diluted).

·      Net income available to common stockholders for the second quarter of 2008 totaled $2.37 per share (diluted) compared to $4.38 per share (diluted) in the same period in the prior year. Net income available to common stockholders for the six months ended June 30, 2008 totaled $4.51 per share (diluted) compared to $6.93 per share (diluted) in the prior year.

·      Closed on the previously announced sale of 1250 Broadway for $310.0 million, generating an incentive distribution to SL Green of approximately $25.0 million and a gain on sale of approximately $93.5 million.

·      Acquired various interests in the fee positions at 919 Third Avenue for $32.8 million increasing the joint venture’s ownership to 100% of the fee interest.

·      Signed 42 Manhattan office leases totaling 431,345 square feet during the second quarter increasing occupancy for the Manhattan portfolio to 96.7%.  The leases carried an average starting rent of $65.89.

·      Increased average Manhattan office starting rents by 53.5% over previously fully escalated rents reflecting strong growth in rents for Manhattan office leases signed during the second quarter.

·      Recognized combined same-store GAAP NOI growth of 8.9% during the second quarter, including 9.2% from the consolidated same-store properties and 7.9% from the unconsolidated joint venture same-store properties.

·      Originated $65.1 million in new structured finance investments during the quarter which carry a weighted average spread to LIBOR of approximately 452 basis points.

·      Closed on a three-year, $55.0 million construction loan facility for the build-out of 27-29 West 34^th Street which carries an interest rate of 200 basis points

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over the 30-day LIBOR, which will result in SL Green repatriating all its capital upon final funding.

·      Received $16.5 million in dividends and management fees from our investment in, and management arrangements with, Gramercy Capital Corp. (NYSE: GKK), or Gramercy, including a $2.6 million incentive fee earned during the quarter.

·      Acquired $29.4 million of the Company’s common stock since April 1, 2008 at an average share price of $85.38 pursuant to its previously announced $300.0 million stock repurchase program.  The Company has now acquired approximately $230.0 million of its common stock.

Summary

New York, NY, July 28, 2008 - SL Green Realty Corp. (NYSE:  SLG) today reported funds from operations available to common stockholders, or FFO, of $122.0 million, or $2.00 per share (diluted), for the second quarter ended June 30, 2008, an increase of 58.7% compared to the same quarter in 2007, which was $1.26 per share (diluted).  The 2008 results included an incentive distribution of approximately $25.0 million ($0.41 per share (diluted)) from the sale of 1250 Broadway.  The Company also reported FFO of $3.43 per share (diluted) for the six months ended June 30, 2008, a 4.9% increase over the same period in 2007, which was $3.27 per share (diluted).  The six month 2007 results include an incentive distribution of $77.2 million ($1.27 per share (diluted)) from the sale of One Park Avenue.

Net income available to common stockholders totaled $138.9 million, or $2.37 per share, (diluted) for the second quarter and $264.8 million, or $4.51 per share (diluted) for the six months ended June 30, 2008, compared to $265.9 million and $413.3 million for the respective periods in 2007.  The results for the three and six months ended June 30, 2008 include gains on sale of $1.53 per share (diluted) and $3.33 per share (diluted), respectively, compared to gains on sale of $3.98 per share (diluted) and $5.31 per share (diluted) for the same periods in 2007.

Operating and Leasing Activity

For the second quarter of 2008, the Company reported revenues and EBITDA of $305.8 million and $192.3 million, respectively, increases of $54.0 million, or 21.4%, and $47.1 million, or 32.4%, respectively, compared to the same period in 2007.  During the quarter, the Company had strong leasing activity at 1185 Avenue of the Americas, 711 Third Avenue, 420 Lexington Avenue and 750 Third Avenue.  Same-store GAAP NOI on a combined basis increased by 8.9% for the second quarter when compared to the same quarter in 2007, with the consolidated properties increasing 9.2% to $111.6 million and the unconsolidated joint venture properties increasing 7.9% to $31.2 million.

Average starting Manhattan office rents of $65.89 per rentable square foot for the second quarter represented a 53.5% increase over the previously fully escalated rents.

Occupancy for the Manhattan portfolio increased from 96.3% at March 31, 2008 to 96.7% at June 30, 2008.  During the quarter, the Company signed 52 leases in the Manhattan portfolio totaling 451,365 square feet, of which 42 leases and 431,345 square feet represented office leases.

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Average starting Suburban office rents of $38.64 per rentable square foot for the second quarter represented a 23.7% increase over the previously fully escalated rents.

Occupancy for the Suburban portfolio decreased modestly from 91.9% at March 31, 2008 to 91.8% at June 30, 2008.  During the quarter, the Company signed 25 leases in the Suburban portfolio totaling 75,625 square feet, of which 24 leases and 75,491 square feet represented office leases.

Significant leasing activities during the second quarter included:

·      Early renewal with Parade Publications, Inc. for approximately 89,413 square feet at 711 Third Avenue.

·      New lease with News America, Inc. for approximately 83,822 square feet at 1185 Avenue of the Americas.

·      New lease with RSM McGladrey, Inc. for approximately 27,508 square feet at 1185 Avenue of the Americas.

·      Early renewal with Hess Corp. Amerada for approximately 27,508 square feet at 1185 Avenue of the Americas.

·      Early renewal with Greenwich Hospital for approximately 16,230 square feet at 500 West Putnam, Greenwich CT.

Real Estate Investment Activity

In May 2008, SL Green, along with its joint venture partner SITQ, closed on the sale of the 39-story, 670,000 square foot Class A office tower located at 1250 Broadway in Manhattan to an entity affiliated with Murray Hill Properties for $310.0 million. The Company recognized an incentive distribution of approximately $25.0 million in addition to SL Green’s share of the gain on sale of approximately $93.5 million.

During the second quarter of 2008, SL Green, along with its joint venture partner NYSTERS, acquired various interests in the fee positions at 919 Third Avenue for approximately $32.8 million increasing the joint venture’s ownership to 100% of the fee interest.

Financing and Capital Activity

The Company acquired $29.4 million of its common stock at an average share price of $85.38 since April 1, 2008 pursuant to its previously announced $300.0 million stock repurchase program.  The Company has now acquired approximately $230.0 million of its common stock at an average share price of $102.19.

The Company closed on a $55.0 million construction loan facility for the build-out of 27-29 West 34^th Street.  The loan bears interest at 200 basis points over the 30-day LIBOR. The interest rate decreases to 165 basis points over the 30-day LIBOR upon rent commencement, at which point the final advance of approximately $7.6 million is expected to be funded.  The loan has a three-year term and two one-year extensions.  The joint venture drew down approximately $34.0 million at the closing.

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Structured Finance Activity

The Company’s structured finance investments totaled $839.8 million on June 30, 2008, an increase of approximately $63.3 million from the balance at March 31, 2008. During the second quarter of 2008, the Company originated approximately $65.1 million of structured finance investments which carry a weighted average spread to LIBOR of approximately 452 basis points.  During the second quarter of 2008, the Company recorded $6.0 million in reserves against specific structured finance investments.  The structured finance investments currently have a weighted average maturity of 5.6 years and a weighted average yield for the quarter ended June 30, 2008 of 9.71%.

Investment In Gramercy Capital Corp.

At June 30, 2008, the book value of the Company’s investment in Gramercy totaled $149.9 million. Fees earned from various management arrangements between the Company and Gramercy totaled approximately $11.7 million for the quarter ended June 30, 2008, including an incentive fee of $2.6 million earned as a result of Gramercy’s FFO (as defined in Gramercy’s management agreement) exceeding the 9.5% annual return on equity performance threshold.  For the six months ended June 30, 2008, the Company earned $21.4 million in management fees from Gramercy.  The Company’s share of FFO generated from its investment in Gramercy totaled approximately $5.1 million and $10.4 million for the three and six months ended June 30, 2008, respectively, compared to $5.6 million and $10.5 million for the same periods in the prior year.

In April 2008, Gramercy closed on its acquisition of American Financial Realty Trust (NYSE:AFR). SL Green participated in $50.0 million of the financing to Gramercy for the closing of the acquisition.  SL Green also recognized approximately $6.6 million as an advisory fee in connection with this transaction, which was paid in restricted common stock of Gramercy.  As of June 30, 2008, the Company held 8,119,370 shares, or approximately 15.8%, of Gramercy’s common stock.

The Company’s marketing, general and administrative, or MG&A, expenses include the consolidation of the expenses of its subsidiary GKK Manager LLC, the entity which manages and advises Gramercy.  For the quarter ended June 30, 2008, the Company’s MG&A included approximately $7.0 million of costs associated with Gramercy compared to $3.4 million in the prior year.  This increase is primarily due to personnel hired in connection with the AFR acquisition which added approximately $3.0 million of MG&A for the quarter.  MG&A also includes a non-recurring expense of approximately $2.0 million for costs incurred in connection with the pursuit of redevelopment projects.

Dividends

During the second quarter of 2008, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:

·      $0.7875 per share of common stock. Dividends were paid on July 15, 2008 to stockholders of record on the close of business on June 30, 2008.

·      $0.4766 and $0.4922 per share on the Company’s Series C and D Preferred Stock, respectively, for the period April 15, 2008 through and including July 14, 2008. Distributions were made on July 15, 2008 to stockholders of record on the close of business on June 30, 2008. Distributions reflect regular quarterly distributions,

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which are the equivalent of an annualized distribution of $1.90625 and $1.96875, respectively.

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Conference Call and Audio Webcast

The Company’s executive management team, led by Marc Holliday, Chief Executive Officer, will host a conference call and audio web cast on Tuesday, July 29, 2008 at 2:00 pm EST to discuss second quarter 2008 financial results. The Supplemental Package will be available prior to the quarterly conference call on the Company’s web site.

The live conference will be webcast in listen-only mode on the Company’s web site at www.slgreen.com and on Thomson’s StreetEvents Network. The conference may also be accessed by dialing (866) 270-6057 Domestic or (617) 213-8891 International, using passcode SL Green.

A replay of the call will be available through Tuesday, August 5, 2008 by dialing (888) 286-8010 Domestic or (617) 801-6888 International, using passcode 67260136.

Supplemental Information

The Supplemental Package outlining second quarter 2008 financial results will be available prior to the quarterly conference call on the Company’s website.

Company Profile

SL Green Realty Corp. is a self-administered and self-managed real estate investment trust, or REIT, that predominantly acquires, owns, repositions and manages Manhattan office properties. The Company is the only publicly held REIT that specializes in this niche.  As of June 30, 2008, the Company owned 30 New York City office properties totaling approximately 23,719,200 square feet, making it New York’s largest office landlord. In addition, SL Green holds investment interests in, among other things, eight retail properties encompassing approximately 400,212 square feet, two development properties encompassing approximately 363,000 square feet and two land interests, along with ownership interests in 36 suburban assets totaling 7,867,500 square feet in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey.

To be added to the Company’s distribution list or to obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at 212-216-1601.

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Disclaimers

Non-GAAP Financial Measures

During the quarterly conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found on page 8 and 10 of this release and in the Company’s Supplemental Package.

Forward-looking Information

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 real estate markets in New York, reduced demand for office space, unanticipated increases in financing and other costs, competitive market conditions, unanticipated administrative costs, timing of leasing income, general and local economic conditions, interest rates, capital market conditions, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, environmental, regulatory and/or safety requirements, and other factors, which are beyond the Company’s control. We undertake no obligation to publicly update or revise any of the forward-looking information. For further information, please refer to the Company’s filings with the Securities and Exchange Commission.

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SL GREEN REALTY CORP.

STATEMENTS OF OPERATIONS-UNAUDITED

(Amounts in thousands, except per share data)

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SL GREEN REALTY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

9

SL GREEN REALTY CORP.

SELECTED OPERATING DATA-UNAUDITED

(1)  Includes wholly owned and joint venture properties.

SL GREEN REALTY CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES*

(Amounts in thousands, except per share data)

* See page 8 for a reconciliation of FFO and EBITDA to net income.

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Exhibit 99.2

SL Green Realty Corp.

Second Quarter

Supplemental Data

June 30, 2008

SL Green Realty Corp. is a fully integrated, self-administered and self-managed Real Estate Investment Trust, or REIT, that primarily acquires, owns, manages, leases and repositions office properties in emerging, high-growth submarkets of Manhattan.

·      SL Green’s common stock is listed on the New York Stock Exchange, and trades under the symbol SLG.

·      SL Green maintains an internet site at www.slgreen.com at which most key investor relations data pertaining to dividend declaration, payout, current and historic share price, etc. can be found.  Such information is not reiterated in this supplemental financial package.  This supplemental financial package is available through the Company’s internet site.

·      This data is furnished to supplement audited and unaudited regulatory filings of the Company and should be read in conjunction with those filings.  The financial data herein is unaudited and is provided from the perspective of timeliness to assist readers of quarterly and annual financial filings.  As such, data otherwise contained in future regulatory filings covering the same period may be restated from the data presented herein.

Questions pertaining to the information contained herein should be referred to Investor Relations at investor.relations@slgreen.com or at 212-216-1601.

This report includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical facts, included in this report that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), expansion and other development trends of the real estate industry, business strategies, expansion and growth of the Company’s operations and other such matters are forward-looking statements.  These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate.  Such statements are subject to a number of assumptions, risks and uncertainties, general economic and business conditions, the business opportunities that may be presented to and pursued by the Company, changes in laws or regulations and other factors, many of which are beyond the control of the Company.  Any such statements are not guarantees of future performance and actual results or developments may differ materially from those anticipated in the forward-looking statements.

The following discussion related to the consolidated financial statements of the Company should be read in conjunction with the financial statements for the quarter ended June 30, 2008 that will subsequently be released on Form 10-Q to be filed on or before August 11, 2008.

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SL Green Realty Corp., or the Company, is New York City’s largest commercial office landlord and is the only fully integrated, self-managed, self-administered Real Estate Investment Trust, or REIT, primarily focused on owning and operating office buildings in Manhattan.

The Company was formed on August 20, 1997 to continue the commercial real estate business of S.L. Green Properties Inc., a company that was founded in 1980 by Stephen L. Green, our current Chairman.  For more than 25 years SL Green has been engaged in the business of owning, managing, leasing, acquiring and repositioning office properties in Manhattan.  The Company’s investment focus is to create value through strategically acquiring, redeveloping and repositioning office properties primarily located in Manhattan, and re-leasing and managing these properties for maximum cash flow.

In 2007, SL Green acquired Reckson Associates Realty Corp. and added over 9 million square feet to its portfolio. Included in this total is over 3 million square feet of Class A office space located in Westchester, New York and Stamford, Connecticut.  These suburban portfolios serve as natural extensions of SL Green’s core ownership in the Grand Central submarket of Midtown Manhattan. The Company has since made selective additions to the holdings in these areas.

Looking forward, SL Green will continue its opportunistic investment philosophy through three established business lines: investment in long-term core properties, investment in opportunistic assets, and structured finance investments. Structured finance investments include SL Green’s interest in Gramercy Capital Corp., or Gramercy, (NYSE: GKK) since 2004. As of June 30, 2008, SL Green owned approximately 15.8% of Gramercy. This three-legged investment strategy allows SL Green to balance the components of its portfolio to take advantage of each stage in the business cycle.

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FINANCIAL RESULTS

Funds From Operations, or FFO, available to common stockholders totaled $122.0 million, or $2.00 per share (diluted) for the second quarter ended June 30, 2008, a 58.7% increase over the same quarter in 2007 when FFO totaled $79.5 million, or $1.26 per share (diluted).  The 2008 results include an incentive distribution of approximately $25.0 million ($0.41 per share diluted) from the sale of 1250 Broadway.

Net income available to common stockholders totaled $138.9 million, or $2.37 per share, (diluted) for the second quarter and $264.8 million, or $4.51 per share (diluted) for the six months ended June 30, 2008, compared to $265.9 million and $413.3 million for the respective periods in 2007.  The results for the three and six months ended June 30, 2008 include gains on sale of $1.53 per share (diluted) and $3.33 per share (diluted), respectively, compared to gains on sale of $3.98 per share (diluted) and $5.31 per share (diluted) for the same periods in 2007.

Funds available for distribution, or FAD, for the second quarter of 2008 increased to $1.55 per share (diluted) versus $0.97 per share (diluted) in the prior year, a 59.8% increase.

The Company’s dividend payout ratio for the second quarter of 2008 was 39.4% of FFO and 50.7% of FAD before second cycle leasing costs.

All per share amounts are presented on a diluted basis.

CONSOLIDATED RESULTS

Total quarterly revenues totaled $305.8 million in the second quarter compared to $251.8 million in the prior year.  The $54.0 million increase in revenue resulted primarily from the following items:

·      $32.0 million increase from 2007 acquisitions, including the Reckson properties,

·      $3.8 million increase from same-store properties,

·      $9.1 million decrease in preferred equity and investment income, and

·      $27.3 million increase in other revenue, which was primarily due to the recognition of an incentive distribution of $25.0 million from the sale of 1250 Broadway in 2008 as well as fees earned from Gramercy ($9.9 million) and other fee income ($3.0 million), which was offset by a decrease in revenue from discontinued operations ($5.1 million) and incentive distributions earned in 2007 ($5.5 million).

The Company’s earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $192.3 million compared to $145.2 million in the prior year.  The following items drove the $47.1 million in EBITDA improvements:

·      $28.5 million increase from 2007 acquisitions, including the Reckson properties,

·      $2.0 million increase from same-store properties,

·      $9.1 million decrease in preferred equity and investment income primarily due to $6.0 million in reserves recorded

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against specific structured finance investments.  The weighted-average structured finance investment balance for the quarter increased to $823.2 million from $699.6 million in the prior year second quarter.  The weighted-average yield for the quarter was 9.71% compared to 10.5% in the prior year,

·      $5.8 million increase from increased contributions to equity in net income from unconsolidated joint ventures primarily from 388 Greenwich Street ($2.2 million), 1515 Broadway ($4.1 million), 521 Fifth Avenue ($1.1 million) and 885 Third Avenue ($1.7 million).   This was partially offset by reductions in contributions primarily from 100 Park, which was under redevelopment, ($0.8 million), Gramercy ($3.4 million) and The Meadows ($0.4 million),

·      $8.3 million decrease from lower MG&A expense, and

·      $28.2 million increase in non-real estate revenues, net of expenses, primarily due to increased fee income from Gramercy ($9.9 million), other incentive distributions ($20.7 million) and other items ($0.5 million), which was partially offset by a decrease in EBITDA from discontinued operations ($2.9 million).

FFO before minority interests declined $42.5 million primarily as a result of:

·      $47.1 million increase in EBITDA,

·      $0.9 million decrease in FFO from unconsolidated joint ventures, discontinued operations and non-real estate depreciation, and

·      $3.7 million decrease from higher interest expense.

SAME-STORE RESULTS

Consolidated Properties

Same-store second quarter 2008 GAAP NOI increased $9.4 million (9.2%) to $111.6 million compared to the prior year.  Operating margins before ground rent increased from 58.13% to 59.68%.

The $9.4 million increase in GAAP NOI was primarily due to:

·      $8.7 million (5.5%) increase in rental revenue primarily due to increasing rental rates,

·      $1.3 million (4.6%) increase in escalation and reimbursement revenue,

·      $1.3 million (44.8%) increase in investment and other income,

·      $1.8 million (3.9%) increase in operating expenses, primarily driven by increases in payroll and utility costs, but was offset by reductions in insurance costs,

·      $0.2 million (2.0%) increase in ground rent expense, and

·      $0.1 million (0.3%) decrease in real estate taxes.

Joint Venture Properties

The Joint Venture same-store properties second quarter 2008 GAAP NOI increased $2.3 million (7.9%) to $31.2 million compared to the prior year.  Operating margins before ground rent increased from 58.4% to 59.2%.

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The $2.3 million increase in GAAP NOI was primarily due to:

·      $2.3 million (5.5%) increase in rental revenue primarily due to improved leasing,

·      $0.9 million (9.7%) increase in escalation and reimbursement revenues,

·      $1.0 million (8.2%) increase in operating expenses, and

·      $0.1 million (1.2%) decrease in real estate taxes.

STRUCTURED FINANCE ACTIVITY

As of June 30, 2008, our structured finance and preferred equity investments totaled $839.8 million.  The weighted average balance outstanding for the second quarter of 2008 was $823.2 million.  During the second quarter of 2008 the weighted average yield was 9.71%.

QUARTERLY LEASING HIGHLIGHTS

Manhattan vacancy at March 31, 2008 was 895,240 useable square feet net of holdover tenants.  During the quarter, 167,097 additional useable office, retail and storage square feet became available at an average escalated cash rent of $53.21 per rentable square foot.  The Company sold 43,697 of available useable square feet in connection with the sale of 1250 Broadway.  Space available to lease during the quarter totaled 1,018,640 useable square feet, or 4.3% of the total Manhattan portfolio.

During the second quarter, 42 Manhattan office leases, including early renewals, were signed totaling 431,345 rentable square feet.  New cash rents averaged $65.89 per rentable square foot.  Replacement rents were 53.5% higher than rents on previously occupied space, which had fully escalated cash rents averaging $42.92 per rentable square foot.  The average lease term was 8.6 years and average tenant concessions were 2.0 months of free rent with a tenant improvement allowance of $17.70 per rentable square foot.

Suburban vacancy at March 31, 2008 was 622,112 usable square feet net of holdover tenants.  During the quarter, 72,146 additional useable office and storage square feet became available at an average escalated cash rent of $30.70 per rentable square foot.  Space available to lease during the quarter totaled 694,258 useable square feet, or 8.8% of the total Suburban portfolio.

During the second quarter, 24 Suburban office leases, including early renewals, were signed totaling 75,491 rentable square feet.  New cash rents averaged $38.64 per rentable square foot.  Replacement rents were 23.7% higher than rents on previously occupied space, which had fully escalated cash rents averaging $31.24 per rentable square foot.  The average lease term was 7.0 years and average tenant concessions were 0.6 months of free rent with a tenant improvement allowance of $12.28 per rentable square foot.

The Company also signed a total of 11 retail and storage leases, including early renewals, for 20,154 rentable square feet.  The average lease term was 3.4 years and average tenant concessions were 2.7 months of free rent with a tenant improvement allowance of $5.88 per rentable square foot.

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REAL ESTATE ACTIVITY

In May 2008, SL Green, along with its joint venture partner SITQ, closed on the sale of the 39-story, 670,000 square foot Class A office tower located at 1250 Broadway in Manhattan to an entity affiliated with Murray Hill Properties for $310.0 million. The Company recognized an incentive distribution of approximately $25.0 million in addition to SL Green’s share of the gain on sale of approximately $93.5 million.

During the second quarter of 2008, SL Green, along with its joint venture partner NYSTERS, acquired various interests in the fee positions at 919 Third Avenue for approximately $32.8 million increasing the joint venture’s ownership to 100% of the fee interest.

Investment In Gramercy Capital Corp.

At June 30, 2008, the book value of the Company’s investment in Gramercy totaled $149.9 million. Fees earned from various management arrangements between the Company and Gramercy totaled approximately $11.7 million for the quarter ended June 30, 2008, including an incentive fee of $2.6 million earned as a result of Gramercy’s FFO (as defined in Gramercy’s management agreement) exceeding the 9.5% annual return on equity performance threshold.  For the six months ended June 30, 2008, the Company earned $21.4 million in management fees from Gramercy.  The Company’s share of FFO generated from its investment in Gramercy totaled approximately $5.1 million and $10.4 million for the three and six months ended June 30, 2008, respectively, compared to $5.6 million and $10.5 million for the same periods in the prior year.

In April 2008, Gramercy closed on its acquisition of American Financial Realty Trust (NYSE:AFR). SL Green participated in $50.0 million of the financing to Gramercy for the closing of the acquisition.  SL Green also recognized approximately $6.6 million as an advisory fee in connection with this transaction, which was paid in restricted common stock of Gramercy.  As of June 30, 2008, the Company held 8,119,370 shares, or approximately 15.8%, of Gramercy’s common stock.

The Company’s marketing, general and administrative, or MG&A, expenses include the consolidation of the expenses of its subsidiary GKK Manager LLC, the entity which manages and advises Gramercy.  For the quarter ended June 30, 2008, the Company’s MG&A included approximately $7.0 million of costs associated with Gramercy compared to $3.4 million in the prior year.  This increase is primarily due to personnel hired in connection with the AFR acquisition which added approximately $3.0 million of MG&A for the quarter.  MG&A also includes a non-recurring expense of approximately $2.0 million for costs incurred in connection with the pursuit of redevelopment projects.

FINANCING/ CAPITAL ACTIVITY

The Company acquired $29.4 million of its common stock at an average share price of $85.38 since April 1, 2008 pursuant to its previously announced $300.0 million stock repurchase program.  The Company has now acquired approximately

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$230.0 million of its common stock at an average share price of $102.19.

The Company closed on a $55.0 million construction loan facility for the build-out of 27-29 West 34^th Street.  The loan bears interest at 200 basis points over the 30-day LIBOR. The interest rate decreases to 165 basis points over the 30-day LIBOR upon rent commencement, at which point the final advance of approximately $7.6 million is expected to be funded.  The loan has a three-year term and two one-year extensions.  The joint venture drew down approximately $34.0 million at the closing.

Dividends

On June 11, 2008, the Company declared a dividend of $0.7875 per common share for the second quarter of 2008.  The dividend was payable July 15, 2008 to stockholders of record on the close of business on June 30, 2008.  This distribution reflects the regular quarterly dividend, which is the equivalent of an annualized distribution of $3.15 per common share.

On June 11, 2008, the Company also approved a distribution on its Series C preferred stock for the period April 15, 2008 through and including July 14, 2008, of $0.4766 per share, payable July 15, 2008 to stockholders of record on the close of business on June 30, 2008. The distribution reflects the regular quarterly distribution, which is the equivalent of an annualized distribution of $1.90625 per Series C preferred stock.

On June 11, 2008, the Company also approved a distribution on its Series D preferred stock for the period April 15, 2008 through and including July 14, 2008, of $0.4922 per share, payable July 15, 2008 to stockholders of record on the close of business on June 30, 2008. The distribution reflects the regular quarterly distribution, which is the equivalent of an annualized distribution of $1.96875 per Series D preferred stock.

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