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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2010	Dec. 31, 2009
Commercial real estate properties, at cost:
Land and land interests	$ 1,459,690	$ 1,379,052
Building and improvements	5,838,978	5,585,584
Building leasehold and improvements	1,288,798	1,280,256
Property under capital lease	12,208	12,208
Total commercial real estate properties, at cost	8,599,674	8,257,100
Less: accumulated depreciation	(871,910)	(738,422)
Total commercial real estate properties, net	7,727,764	7,518,678
Assets held for sale		992
Cash and cash equivalents	270,803	343,715
Restricted cash	153,667	94,495
Investment in marketable securities	72,090	58,785
Tenant and other receivables, net of allowance of $14,402 and $14,271 in 2010 and 2009, respectively	29,470	22,483
Related party receivables	7,088	8,570
Deferred rents receivable, net of allowance of $24,785 and $24,347 in 2010 and 2009, respectively	190,481	166,981
Structured finance investments, net of discount of $40,822 and $46,802 and allowance of $87,768 and $93,844 in 2010 and 2009, respectively	907,936	784,620
Investments in unconsolidated joint ventures	777,556	1,058,369
Deferred costs, net	156,502	139,257
Other assets	294,518	290,632
Total assets	10,587,875	10,487,577
Liabilities
Mortgage notes and other loans payable	2,896,946	2,595,552
Revolving credit facility	800,000	1,374,076
Senior unsecured notes	831,261	823,060
Accrued interest payable and other liabilities	21,357	34,734
Accounts payable and accrued expenses	144,814	125,982
Deferred revenue/gains	320,712	349,669
Capitalized lease obligation	17,028	16,883
Deferred land leases payable	18,204	18,013
Dividend and distributions payable	14,203	12,006
Security deposits	38,019	39,855
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities	100,000	100,000
Total liabilities	$ 5,202,544	$ 5,489,830
Commitments and contingencies
Noncontrolling interests in operating partnership	$ 79,117	$ 84,618
SL Green stockholders' equity:
Common stock, $0.01 par value 160,000 shares authorized and 81,621 and 80,875 issued and outstanding at September 30, 2010 and December 31, 2009, respectively (including 3,369 and 3,360 shares at September 30, 2010 and December 31, 2009, held in Treasury, respectively)	816	809
Additional paid-in-capital	3,570,752	3,525,901
Treasury stock at cost	(303,222)	(302,705)
Accumulated other comprehensive loss	(30,936)	(33,538)
Retained earnings	1,180,667	949,669
Total SL Green stockholders' equity	4,788,398	4,388,438
Noncontrolling interests in other partnerships	517,816	524,691
Total equity	5,306,214	4,913,129
Total liabilities and equity	10,587,875	10,487,577
Series C Preferred Stock
SL Green stockholders' equity:
Preferred stock	274,000	151,981
Total equity	274,000	151,981
Series D Preferred Stock
SL Green stockholders' equity:
Preferred stock	96,321	96,321
Total equity	$ 96,321	$ 96,321

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2010	Sep. 30, 2009	Sep. 30, 2010	Sep. 30, 2009
Revenues
Rental revenue, net	$ 199,347	$ 189,454	$ 591,664	$ 571,094
Escalation and reimbursement	31,491	29,061	91,344	92,595
Preferred equity and investment income	84,377	16,266	125,543	48,697
Other income	8,065	10,988	25,450	40,421
Total revenues	323,280	245,769	834,001	752,807
Expenses
Operating expenses (including approximately $3,391 and $9,572 (2010) and $3,316 and $11,042 (2009) paid to affiliates)	59,320	54,315	170,998	159,809
Real estate taxes	36,534	34,220	112,259	106,344
Ground rent	7,860	7,912	23,360	24,004
Interest expense, net of interest income	57,225	65,366	172,353	182,105
Amortization of deferred financing costs	2,802	3,069	7,110	5,981
Depreciation and amortization	56,932	56,364	169,668	164,477
Loan loss and other investment reserves, net of recoveries	1,338	16,100	12,323	123,677
Transaction related costs	3,254		8,416
Marketing, general and administrative	18,474	18,869	55,251	54,736
Total expenses	243,739	256,215	731,738	821,133
Income (loss) from continuing operations before equity in net income of unconsolidated joint ventures, noncontrolling interests and discontinued operations	79,541	(10,446)	102,263	(68,326)
Equity in net income from unconsolidated joint ventures	7,544	16,585	32,925	46,486
Equity in net gain on sale of interest in unconsolidated joint ventures/ real estate	520		127,289	6,848
Gain (loss) on equity investment in marketable securities		52	(285)	(629)
Gain (loss) on early extinguishment of debt	(511)	8,368	(1,900)	85,401
Income from continuing operations	87,094	14,559	260,292	69,780
Net income from discontinued operations	1,987	1,863	5,420	4,180
Gain (loss) on sale of discontinued operations	35,485	(11,829)	35,485	(5,257)
Net income	124,566	4,593	301,197	68,703
Net (income) loss attributable to noncontrolling interests in the operating partnership	(1,786)	214	(4,544)	(1,488)
Net income attributable to noncontrolling interests in other partnerships	(3,735)	(2,358)	(10,831)	(9,518)
Net income attributable to SL Green	119,045	2,449	285,822	57,697
Preferred stock dividends	(7,545)	(4,969)	(22,205)	(14,906)
Net income (loss) attributable to SL Green common stockholders	111,500	(2,520)	263,617	42,791
Amounts attributable to SL Green common stockholders:
Income from continuing operations	74,087	7,158	98,272	37,213
Discontinued operations	1,957	1,807	5,328	4,040
Gain (loss) on sale of discontinued operations	34,944	(11,485)	34,884	(5,080)
Gain on sale of unconsolidated joint ventures/ real estate	512		125,133	6,618
Net (loss)	$ 111,500	$ (2,520)	$ 263,617	$ 42,791
Basic earnings per share:
Net income from continuing operations before gain on sale and discontinued operations (in dollars per share)	$ 0.95	$ 0.09	$ 1.26	$ 0.56
Net income from discontinued operations (in dollars per share)	0.03	0.03	0.07	0.06
Gain (loss) on sale of discontinued operations (in dollars per share)	0.44	(0.15)	0.45	(0.08)
Gain on sale of unconsolidated joint ventures/ real estate (in dollars per share)	0.01		1.60	0.10
Net income (loss) attributable to SL Green common stockholders (in dollars per share)	1.43	(0.03)	3.38	0.64
Diluted earnings per share:
Net income from continuing operations before gain on sale and discontinued operations (in dollars per share)	0.94	0.09	1.24	0.56
Net income from discontinued operations (in dollars per share)	0.03	0.03	0.07	0.06
Gain (loss) on sale of discontinued operations (in dollars per share)	0.44	(0.15)	0.45	(0.08)
Gain on sale of unconsolidated joint ventures/ real estate (in dollars per share)	0.01		1.60	0.10
Net income (loss) attributable to SL Green common stockholders (in dollars per share)	1.42	(0.03)	3.36	0.64
Dividends per share (in dollars per share)	$ 0.10	$ 0.10	$ 0.30	$ 0.575
Basic weighted average common shares outstanding (in shares)	78,227	76,832	78,034	67,196
Diluted weighted average common shares and common share equivalents outstanding (in shares)	79,781	79,168	79,722	69,580

Condensed Consolidated Statement of Equity shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2010 USD ($) shares
Increase (Decrease) in Stockholders' Equity
Balance	$ 4,913,129
Comprehensive Income:
Net income	296,653
Net unrealized loss on derivative instruments	(4,194)
SL Green's share of joint venture net unrealized loss on derivative instruments	(2,534)
Unrealized gain on marketable securities	9,330
Preferred dividends	(22,205)
Redemption of units and DRIP proceeds	23,342
Reallocation of noncontrolling interest in the operating partnership	(11,865)
Deferred compensation plan & stock award, net	(43)
Amortization of deferred compensation plan	18,043
Deconsolidation of real estate investments	(6,521)
Net proceeds from preferred stock offering	122,019
Proceeds from stock options exercised	2,999
Cash contributions from noncontrolling interests	2,782
Cash distributions to noncontrolling interests	(10,956)
Cash distribution declared ($0.30 per common share of which none represented a return of capital for federal income tax purposes)	(23,765)
Balance	5,306,214
Common Stock
Increase (Decrease) in Stockholders' Equity
Balance	$ 809
Balance (in shares) \| shares	77,515
Comprehensive Income:
Redemption of units and DRIP proceeds	$ 4
Redemption of units and DRIP proceeds, shares \| shares	470
Deferred compensation plan & stock award, net	$ 2
Deferred compensation plan & stock award, net, shares \| shares	169
Proceeds from stock options exercised	$ 1
Proceeds from stock options exercised, shares \| shares	98
Balance	$ 816
Balance (in shares) \| shares	78,252
Additional Paid-In-Capital
Increase (Decrease) in Stockholders' Equity
Balance	$ 3,525,901
Comprehensive Income:
Redemption of units and DRIP proceeds	23,338
Deferred compensation plan & stock award, net	472
Amortization of deferred compensation plan	18,043
Proceeds from stock options exercised	2,998
Balance	3,570,752
Treasury Stock
Increase (Decrease) in Stockholders' Equity
Balance	(302,705)
Comprehensive Income:
Deferred compensation plan & stock award, net	(517)
Balance	(303,222)
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity
Balance	(33,538)
Comprehensive Income:
Net unrealized loss on derivative instruments	(4,194)
SL Green's share of joint venture net unrealized loss on derivative instruments	(2,534)
Unrealized gain on marketable securities	9,330
Balance	(30,936)
Retained Earnings
Increase (Decrease) in Stockholders' Equity
Balance	949,669
Comprehensive Income:
Net income	285,822
Preferred dividends	(22,205)
Reallocation of noncontrolling interest in the operating partnership	(11,865)
Deconsolidation of real estate investments	3,011
Cash distribution declared ($0.30 per common share of which none represented a return of capital for federal income tax purposes)	(23,765)
Balance	1,180,667
Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity
Balance	524,691
Comprehensive Income:
Net income	10,831
Deconsolidation of real estate investments	(9,532)
Cash contributions from noncontrolling interests	2,782
Cash distributions to noncontrolling interests	(10,956)
Balance	517,816
Comprehensive Income
Comprehensive Income:
Net income	296,653
Net unrealized loss on derivative instruments	(4,194)
SL Green's share of joint venture net unrealized loss on derivative instruments	(2,534)
Unrealized gain on marketable securities	9,330
Balance	299,255
Series C Preferred Stock
Increase (Decrease) in Stockholders' Equity
Balance	151,981
Comprehensive Income:
Net proceeds from preferred stock offering	122,019
Balance	274,000
Series D Preferred Stock
Increase (Decrease) in Stockholders' Equity
Balance	96,321
Comprehensive Income:
Balance	$ 96,321

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2010	Sep. 30, 2009
Operating Activities
Net income	$ 301,197	$ 68,703
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	178,404	172,996
(Gain) loss on sale of discontinued operations	(35,485)	5,257
Equity in net income from unconsolidated joint ventures	(32,925)	(46,486)
Equity in net gain on sale of unconsolidated joint venture interests/ real estate	(127,289)	(6,848)
Distributions of cumulative earnings from unconsolidated joint ventures	19,423	28,890
Loan loss and other investment reserves	12,323	123,677
Loss on equity investment in marketable securities	285	629
(Gain) loss on early extinguishment of debt	1,900	(85,401)
Deferred rents receivable	(30,472)	(19,132)
Other non-cash adjustments	(12,607)	1,163
Changes in operating assets and liabilities:
Restricted cash - operations	(5,717)	19,878
Tenant and other receivables	(3,352)	6,210
Related party receivables	1,609	(909)
Deferred lease costs	(27,331)	(15,497)
Other assets	(1,404)	(27,601)
Accounts payable, accrued expenses and other liabilities	10,272	(6,441)
Deferred revenue and land leases payable	5,218	(4,276)
Net cash provided by operating activities	254,049	214,812
Investing Activities
Acquisitions of real estate property	(183,750)	(8,340)
Additions to land, buildings and improvements	(55,389)	(62,815)
Escrowed cash - capital improvements/acquisition deposits	(5,979)	(5,837)
Investments in unconsolidated joint ventures	(83,355)	(14,522)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	15,160	26,631
Net proceeds from disposition of real estate/ partial interest in property	623,121	27,946
Other investments	(7,811)	(41,082)
Structured finance and other investments net of repayments/participations	(127,007)	40,606
Net cash provided by (used in) investing activities	174,990	(37,413)
Financing Activities
Proceeds from mortgage notes and other loans payable	166,892	186,399
Repayments of mortgage notes and other loans payable	(133,887)	(159,824)
Proceeds from revolving credit facility and senior unsecured notes	303,306	30,433
Repayments of revolving credit facility and senior unsecured notes	(873,940)	(626,207)
Proceeds from stock options exercised and DRIP issuance	14,245	278
Net proceeds from sale of preferred/common stock	122,019	387,230
Deferred compensation - treasury stock	(517)
Distributions to noncontrolling interests in other partnerships	(10,952)	(14,030)
Contributions from noncontrolling interests in other partnerships	2,782
Redemption of noncontrolling interests in operating partnership	(11,096)
Distributions to noncontrolling interests in operating partnership	(387)	(1,985)
Dividends paid on common and preferred stock	(43,607)	(65,574)
Deferred loan costs and capitalized lease obligation	(36,809)	(6,936)
Net cash used in financing activities	(501,951)	(270,216)
Net decrease in cash and cash equivalents	(72,912)	(92,817)
Cash and cash equivalents at beginning of period	343,715	726,889
Cash and cash equivalents at end of period	$ 270,803	$ 634,072

Significant Accounting Policies

9 Months Ended

Sep. 30, 2010

Significant Accounting Policies

Significant Accounting Policies

2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method or as structured finance investments. See Note 5 and Note 6. All significant intercompany balances and transactions have been eliminated.

In June 2009, the FASB amended the guidance for determining whether an entity is a variable interest entity, or VIE, and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Adoption of this guidance on January 1, 2010 did not have a material impact on our consolidated financial statements.

A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheet and modifies the presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and noncontrolling interests.

We assess the accounting treatment for each joint venture and structured finance investment. This assessment includes a review of each joint venture or limited liability company agreement to determine which party has what rights and whether those rights are protective or participating. For all VIE’s, we review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance. In situations where we or our partner approves, among other things, the annual budget, receives a detailed monthly reporting package from us, meets on a quarterly basis to review the results of the joint venture, reviews and approves the joint venture’s tax return before filing, and approves all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power of the activities that most significantly impact the performance of our joint venture. Our joint venture agreements also contain certain protective rights such as the requirement of partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan. We have no VIE’s for which we are the primary beneficiary.

Investment in Commercial Real Estate Properties

On a periodic basis, we assess whether there are any indicators that the value of our real estate properties may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges for consolidated and unconsolidated properties to be generated by the property are less than the carrying value of the property. To the extent impairment has occurred and is considered to be other than temporary, the loss will be measured as the excess of the carrying amount of the property over the calculated fair value of the property. In addition, we assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the inve stment to its fair value. We evaluate our equity investments for impairment based on the joint venture’s projected cash flows. We do not believe that the value of any of our consolidated or unconsolidated real estate properties or investments in unconsolidated joint ventures was impaired at September 30, 2010 and December 31, 2009, respectively.

We allocate the purchase price of real estate to land and building and, if determined to be material, intangibles, such as the value of above-, below- and at-market leases and origination costs associated with the in-place leases. We depreciate the amount allocated to building and other intangible assets over their estimated useful lives, which generally range from three to 40 years and from one to 14 years, respectively. The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease, which generally range from one to 14 years. The value associated with in-place leases are amortized over the expected term of the associated lease, which generally range from one to 14 years. I f a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

We recognized an increase of approximately $6.1 million, $18.9 million, $6.1 million and $16.6 million in rental revenue for the three and nine months ended September 30, 2010 and 2009, respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase price of the applicable properties. We recognized a reduction in interest expense for the amortization of the above-market rate mortgages assumed of approximately $0.3 million, $1.2 million, $0.3 million and $2.4 million for the three and nine months ended September 30, 2010 and 2009, respectively.

The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) (amounts in thousands):

	September 30, 2010			December 31, 2009
Identified intangible assets (included in other assets):
Gross amount	$	257,413		$	236,594
Accumulated amortization	(121,982		)	(98,090		)
Net	$	135,431		$	138,504

Identified intangible liabilities (included in deferred revenue):
Gross amount	$	487,750		$	480,770
Accumulated amortization	(205,016		)	(164,073		)
Net	$	282,734		$	316,697

Investment in Marketable Securities

We invest in marketable securities. At the time of purchase, we are required to designate a security as held-to-maturity, available-for-sale, or trading depending on ability and intent. We do not have any securities designated as held-to-maturity or trading at this time. Securities available-for-sale are reported at fair value pursuant to ASC 820-10, with the net unrealized gains or losses reported as a component of accumulated other comprehensive loss. Unrealized losses that are determined to be other-than-temporary are recognized in earnings up to their credit component. Included in accumulated other comprehensive loss at September 30, 2010 is approximately $5.6 million in net unrealized gains related to marketable securities.

At September 30, 2010, we held the following marketable securities (in thousands):

Level 1 — Equity marketable securities	$	9,398
Level 2 — Bonds	62,692
Total marketable securities available-for-sale	$	72,090

Fair Value Measurements

The methodologies used for valuing financial instruments have been categorized into three broad levels as follows:

Level 1 — Quoted prices in active markets for identical instruments.

Level 2 — Valuations based principally on other observable market parameters, including

· Quoted prices in active markets for similar instruments,

· Quoted prices in less active or inactive markets for identical or similar instruments,

· Other observable inputs (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates), and

· Market corroborated inputs (derived principally from or corroborated by observable market data).

Level 3 — Valuations based significantly on unobservable inputs.

· Valuations based on third party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable as Level 2 valuations.

· Valuations based on internal models with significant unobservable inputs.

These levels form a hierarchy. We follow this hierarchy for our financial instruments measured at fair value on a recurring and nonrecurring basis. The classifications are based on the lowest level of input that is significant to the fair value measurement.

Reserve for Possible Credit Losses

The expense for possible credit losses in connection with structured finance investments is the charge to earnings to increase the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors considered relate to geographic trends and product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish the provision for possible credit losses by loan. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.

Where impairment is indicated, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value of the collateral. Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense. We recorded approximately $5.0 million, $15.0 million, none and $54.6 million in loan loss reserves during the three and nine months ended September 30, 2010 and 2009, respectively, on investments being held to maturity and none, $1.0 million, $16.1 million and $69.1 million on investments held for sale during the three and nine months ended September 30, 2010 and 2009, respectively. We also recorded approximately $3.7 million in recoveries during the three and nine months ended September 30, 2010 in connection with the sale of a loan.

Structured finance investments held for sale are carried at the lower of cost or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the loan will be reclassified at its net carrying value to structured finance investments held to maturity. For these reclassified loans, the difference between the current carrying value and the expected cash to be collected at maturity will be accreted into income over the remaining term of the loan.

Income Taxes

We are taxed as a REIT under Section 856(c) of the Code. As a REIT, we generally are not subject to Federal income tax. To maintain our qualification as a REIT, we must distribute at least 90% of our REIT taxable income to our stockholders and meet certain other requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income tax on our taxable income at regular corporate rates. We may also be subject to certain state, local and franchise taxes. Under certain circumstances, Federal income and excise taxes may be due on our undistributed taxable income.

Pursuant to amendments to the Code that became effective January 1, 2001, we have elected, and may in the future, elect to treat certain of our existing or newly created corporate subsidiaries as taxable REIT subsidiaries, or a TRS. In general, a TRS of ours may perform non-customary services for our tenants, hold assets that we cannot hold directly and generally may engage in any real estate or non-real estate related business. Our TRSs’ generate income, resulting in Federal income tax liability for these entities. Our TRSs’ recorded approximately $0.9 million and $0.7 million in Federal, state and local tax expense during the nine months ended September 30, 2010 and 2009, respectively. We made estimated tax payments of $0.3 million and $0.8 million during the nine months ended September 30, 2010 and 2009, respect ively.

Stock-Based Employee Compensation Plans

We have a stock-based employee compensation plan, described more fully in Note 12.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our plan has characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our employee stock options.

Compensation cost for stock options, if any, is recognized ratably over the vesting period of the award. Our policy is to grant options with an exercise price equal to the quoted closing market price of our stock on the grant date. Awards of stock or restricted stock are expensed as compensation over the benefit period based on the fair value of the stock on the grant date.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model based on historical information with the following weighted average assumptions for grants during the nine months ended September 30, 2010 and 2009, respectively.

	2010		2009
Dividend yield	2.00	%	5.79	%
Expected life of option	5.9 years		5 years
Risk-free interest rate	2.84	%	1.55	%
Expected stock price volatility	50.47	%	55.07	%

Earnings Per Share

We present both basic and diluted earnings per share, or EPS. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, as well as units of limited partnership, were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount. This also includes units of limited partnership interest.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, structured finance investments and accounts receivable. We place our cash investments in excess of insured amounts with high quality financial institutions. The collateral securing our structured finance investments is primarily located in the New York Metro area. (See Note 5). We perform ongoing credit evaluations of our tenants and require certain tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the total value of a tenant’s lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space. Alth ough the properties in our real estate portfolio are primarily located in Manhattan, we also have properties located in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey. The tenants located in our buildings operate in various industries. Other than one tenant who accounts for approximately 8.1% of our annualized rent, no other tenant in our portfolio accounts for more than 6.0% of our annualized rent, including our share of joint venture annualized rent at September 30, 2010. Approximately 7%, 6%, 7% and 6% of our annualized rent, including our share of joint venture annualized rent, was attributable to 1515 Broadway, 420 Lexington Avenue, 1185 Avenue of the Americas and One Madison Avenue, respectively, for the quarter ended September 30, 2010. Three investments each accounted for more than 10.0% of the revenue earned on structured finance investments during the three months ended September 30, 2010.

Reclassification

Certain prior year balances have been reclassified to conform with the current year presentation primarily in order to eliminate discontinued operations from income from continuing operations.

Accounting Standards Updates

In June 2009, the FASB issued guidance on accounting for transfers of financial assets. This guidance amends various components of the existing guidance governing sale accounting, including the recognition of assets obtained and liabilities assumed as a result of a transfer, and considerations of effective control by a transferor over transferred assets. In addition, this guidance removes the exemption for qualifying special purpose entities from the consolidation guidance. While the amended guidance governing sale accounting is applied on a prospective basis, the removal of the qualifying special purpose entity exception will require us to evaluate certain entities for consolidation. Adoption of this guidance on January 1, 2010 did not have a material impact on our consolidated financial statements.

In July 2010, the FASB issued updated guidance on disclosures about the credit quality of financing receivables and the allowance for credit losses which will require a greater level of information disclosed about the credit quality of loans and allowance for loan losses, as well as additional information related to credit quality indicators, past due information, and information related to loans modified in trouble debt restructuring. This guidance is effective for the fourth quarter of 2010 and as it only amends existing disclosure requirements we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In March 2010, the FASB issued updated guidance on embedded credit derivatives for contracts containing an embedded credit derivative feature related to the transfer of credit risk that is not solely in the form of subordination. This guidance is effective for the third quarter of 2010, though early adoption is permitted. Adoption of this guidance in the third quarter of 2010 did not have a material effect on our consolidated financial statements.

In January 2010, the FASB issued updated guidance on fair value measurements and disclosures, which requires disclosure of details of significant asset or liability transfers in and out of Level 1 and Level 2 measurements within the fair value hierarchy and inclusion of gross purchases, sales, issuances, and settlements in the rollforward of assets and liabilities valued using Level 3 inputs within the fair value hierarchy. The guidance also clarifies and expands existing disclosure requirements related to the disaggregation of fair value disclosures and inputs used in arriving at fair values for assets and liabilities using Level 2 and Level 3 inputs within the fair value hierarchy. These disclosure requirements were effective for interim and annual reporting periods beginning after December 15, 2009. The gross presentation of the Level 3 rollforward is requir ed for interim and annual reporting periods beginning after December 15, 2010.

Structured Finance Investments

9 Months Ended

Sep. 30, 2010

Structured Finance Investments

Structured Finance Investments

5. Structured Finance Investments

During the nine months ended September 30, 2010 and 2009, our structured finance and preferred equity investments (net of discounts), including investments classified as held-for-sale, increased approximately $437.7 million and $61.0 million, respectively, due to originations, purchases, accretion of discounts and paid-in-kind interest. We recorded approximately $315.3 million and $193.5 million in repayments, participations, sales, foreclosures and loan loss reserves during those periods, respectively, which offset the increases in structured finance investments.

As of September 30, 2010 and December 31, 2009, we held the following structured finance investments, excluding preferred equity investments, with an aggregate weighted average current yield of approximately 7.1% (in thousands):

Loan Type	Gross Investment		Senior Financing		2010 Principal Outstanding			2009 Principal Outstanding			Initial Maturity Date
Other Loan(1)	$	3,500	$	15,000	$	3,500		$	3,500		September 2021
Mezzanine Loan(1)	60,000		205,000		59,069			58,760			February 2016
Mortgage/ Mezzanine Loan(1)	50,000		174,329		46,346			25,000			May 2016
Mezzanine Loan(1)	35,000		165,000		39,669			39,125			October 2016
Mezzanine Loan(1)(3)(9)(10)(11)	75,000		4,273,051		70,092			70,092			December 2016
Other Loan(1)(5)(9)(11)	—		—		—			5,350			—
Whole Loan(2)(3)(9)(17)	—		—		—			9,636			—
Mezzanine Loan(1)(2)(4)(9)(11)	25,000		309,985		27,422			26,605			January 2013
Mezzanine Loan(1)	16,000		90,000		15,697			15,697			August 2017
Mezzanine Loan(3)(13)	—		—		—			40,938			—
Other Loan(1)	1,000		—		1,000			1,000			December 2010
Junior Participation(1)(6)(9)(11)	14,189		—		9,938			9,938			April 2008
Mezzanine Loan(1)(11) (12)	67,000		1,139,000		84,062			84,636			March 2017
Mezzanine Loan(14)	—		—		—			35,908			—
Mezzanine Loan(3)(9)(11)	22,644		—		—			—			—
Junior Participation(1)(9)	11,000		53,000		11,000			11,000			November 2011
Junior Participation(7)(9)	12,000		61,250		10,875			10,875			June 2012
Junior Participation(9)(11)	9,948		48,198		5,866			5,866			December 2010
Junior Participation(8)(9)	50,000		2,192,522		47,509			47,691			April 2011
Mortgage/ Mezzanine Loan(2)(16)	146,164		285,000		137,222			104,431			July 2012
Whole Loan(1)(3)	9,375		—		9,918			9,902			February 2015
Junior Participation	35,041		210,000		41,113			30,548			January 2012
Mortgage/mezzanine loan(15)	—		—		—			167,717			—
Whole loan(1)	11,150		—		11,150			—			November 2013
Junior Participation(18)	9,113		70,800		9,113			—			October 2011
Mezzanine Loan(1)	201,375		755,000		201,375			—			June 2016
Mezzanine Loan(1)	15,000		75,000		15,000			—			July 2013
Mortgage(19)	86,339		—		86,339			—			June 2012
Loan loss reserve(9)	—		—		(105,783		)	(101,866		)	—
	$	965,838	$	10,122,135	$	837,492		$	712,349

(1)	This is a fixed rate loan.
(2)	The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.
(3)	Gramercy holds a pari passu interest in this asset.
(4)	This loan had been in default since December 2007. We reached an agreement with the borrower to, amongst other things, extend the maturity date to January 2013.
(5)	The original loan which was scheduled to mature in February 2010 was replaced with two loans which mature in May 2011. The total principal balance remained unchanged. Approximately $10.4 million was redeemed in October 2008. We were foreclosed out of this loan in September 2010.
(6)	This loan is in default. The lender has begun foreclosure proceedings. Another participant holds a $12.2 million pari-pasu interest in this loan.
(7)	This loan was extended for two years to June 2012.
(8)	Gramercy is the borrower under this loan. This loan consists of mortgage and mezzanine financing.
(9)	This represents specifically allocated loan loss reserves. Our reserves reflect management’s judgment of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct or that reserves will be adequate over time to protect against potential future losses. This includes a $1.0 million and $69.1 million mark-to-market adjustment against our held for sale investment during the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.
(10)	This investment which was classified as held for sale at June 30, 2010 and December 31, 2009 was sold in August 2010.
(11)	This loan is on non-accrual status.
(12)	Interest is added to the principal balance for this accrual only loan.
(13)	This loan was in default as it was not repaid upon maturity. We were designated as special servicer for this loan and took over management and leasing of the property under a forbearance agreement in August 2009. We foreclosed on this property in January 2010.
(14)	We acquired Gramercy’s interest in this investment in July 2009 for approximately $16.0 million. This investment was sold in February 2010.
(15)	In connection with the sale in September 2010, of 510 Madison Avenue by the owner, the first mortgage loan and senior mezzanine loan, which we had purchased in December 2009 and February 2010 for $180.5 million in the aggregate, were repaid at par. In connection with the repayment of the loans, we recognized additional income of approximately $64.8 million. The income was recorded in preferred equity and investment income on the accompanying statement of income.
(16)	Gramercy holds a pari passu interest in the mezzanine loan.
(17)	This loan was repaid in August 2010.
(18)	The maturity date for this loan was extended for one year to October 2011.
(19)	We hold an 88% interest in the consolidated joint venture that acquired this loan.

Preferred Equity Investments

As of September 30, 2010 and December 31, 2009, we held the following preferred equity investments, with an aggregate weighted average current yield of approximately 9.1% (in thousands):

Type	Gross Investment		Senior Financing		2010 Amount Outstanding			2009 Amount Outstanding			Initial Mandatory Redemption
Preferred equity(1)(3)(5)(8)	$	—	$	—	$	—		$	15,000		—
Preferred equity(1)(2)(6)(7)	51,000		208,181		44,972			41,791			February 2014
Preferred equity(3)(5)	34,120		88,000		31,178			31,178			March 2010
Preferred equity(3)(4)	44,733		984,708		46,372			46,372			August 2012
Loan loss reserve(3)	—		—		(52,078		)	(61,078		)	—
	$	129,853	$	1,280,889	$	70,444		$	73,263

(1)	This is a fixed rate investment.
(2)	Gramercy holds a mezzanine loan on the underlying asset.
(3)	This represents specifically allocated loan loss reserves. Our reserves reflect management’s judgment of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct and that reserves will be adequate over time to protect against potential future losses.
(4)	This loan was converted from a mezzanine loan to preferred equity in July 2009.
(5)	This investment is on non-accrual status.
(6)	The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.
(7)	This investment was classified as held for sale at September 30, 2009, but as held-to-maturity at December 31, 2009. The reserve previously taken against this loan is being accreted up to the face amount through the maturity date.
(8)	We recovered approximately $3.7 million from the sale of this loan which had previously been fully reserved.

The following table is a rollforward of our total allowance for loan loss reserves at September 30, 2010 and December 31, 2009 (in thousands):

	2010			2009
Balance at beginning of year	$	93,844		$	98,916
Expensed	15,985			145,855
Recoveries	(3,662		)	—
Charge-offs	(18,399		)	(150,927		)
Balance at end of period	$	87,768		$	93,844

At September 30, 2010 and December 31, 2009, all structured finance investments, other than as noted above, were performing in accordance with the terms of the loan agreements.

Investment in Unconsolidated Joint Ventures

9 Months Ended

Sep. 30, 2010

Investment in Unconsolidated Joint Ventures

Investment in Unconsolidated Joint Ventures

6. Investment in Unconsolidated Joint Ventures

We have investments in several real estate joint ventures with various partners, including The City Investment Fund, or CIF, SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, or SITQ, Canada Pension Plan Investment Board, or CPPIB, a fund managed by JP Morgan Investment Management, or JP Morgan, Prudential Real Estate Investors, or Prudential, Onyx Equities, or Onyx, The Witkoff Group, or Witkoff, Credit Suisse Securities (USA) LLC, or Credit Suisse, Jeff Sutton, or Sutton, and Gramercy Capital Corp. (NYSE: GKK), or Gramercy, as well as private investors. As we do not control these joint ventures, we account for them under the equity method of accounting.

In May 2010, Green Hill Acquisition LLC, a wholly owned subsidiary of ours, sold its 45% beneficial interest in the property known as 1221 Avenue of the Americas, located in Manhattan, to a wholly owned subsidiary of CPPIB, for total consideration of $577.4 million, of which approximately $95.9 million represented payment for existing reserves and the assumption of our pro-rata share of in-place financing. The sale generated proceeds to us of approximately $500.9 million. We recognized a gain of approximately $126.8 million on the sale of our interest.

The table below provides general information on each of our joint ventures as of September 30, 2010 (in thousands):

Property	Partner	Ownership Interest		Economic Interest		Square Feet	Acquired	Acquisition Price(1)

1515 Broadway(2)	SITQ	55.00	%	68.45	%	1,750	05/02	$	483,500
100 Park Avenue	Prudential	49.90	%	49.90	%	834	02/00	$	95,800
379 West Broadway	Sutton	45.00	%	45.00	%	62	12/05	$	19,750
21 West 34th Street	Sutton	50.00	%	50.00	%	30	07/05	$	22,400
800 Third Avenue(3)	Private Investors	42.95	%	42.95	%	526	12/06	$	285,000
521 Fifth Avenue	CIF	50.10	%	50.10	%	460	12/06	$	240,000
One Court Square	JP Morgan	30.00	%	30.00	%	1,402	01/07	$	533,500
1604-1610 Broadway	Onyx/Sutton	45.00	%	63.00	%	30	11/05	$	4,400
1745 Broadway(4)	Witkoff/SITQ/Lehman Bros.	32.26	%	32.26	%	674	04/07	$	520,000
1 and 2 Jericho Plaza	Onyx/Credit Suisse	20.26	%	20.26	%	640	04/07	$	210,000
2 Herald Square(5)	Gramercy	55.00	%	55.00	%	354	04/07	$	225,000
885 Third Avenue(6)	Gramercy	55.00	%	55.00	%	607	07/07	$	317,000
16 Court Street	CIF	35.00	%	35.00	%	318	07/07	$	107,500
The Meadows(7)	Onyx	50.00	%	50.00	%	582	09/07	$	111,500
388 and 390 Greenwich Street(8)	SITQ	50.60	%	50.60	%	2,600	12/07	$	1,575,000
27-29 West 34th Street	Sutton	50.00	%	50.00	%	41	01/06	$	30,000
1551-1555 Broadway	Sutton	10.00	%	10.00	%	26	07/05	$	80,100
717 Fifth Avenue	Sutton/Nakash	32.75	%	32.75	%	120	09/06	$	251,900
141 Fifth Avenue(9)	Sutton/Rapport	45.00	%	45.00	%	22	09/05	$	13,250
180/182 Broadway and 63 Nassau Street	Sutton	50.00	%	50.00	%	71	02/08	$	43,600
600 Lexington Avenue	CPPIB	55.00	%	55.00	%	304	05/10	$	193,000

(1)	Acquisition price represents the actual or implied purchase price for the joint venture.
(2)	Under a tax protection agreement established to protect the limited partners of the partnership that transferred 1515 Broadway to the joint venture, the joint venture has agreed not to adversely affect the limited partners’ tax positions before December 2011. One tenant, whose leases primarily end in 2015, represents approximately 77.9% of this joint venture’s annualized rent at September 30, 2010.
(3)	We invested approximately $109.5 million in this asset through the origination of a loan secured by up to 47% of the interests in the property’s ownership, with an option to convert the loan to an equity interest. Certain existing members had the right to re-acquire approximately 4% of the property’s equity. These interests were re-acquired in December 2008 and reduced our interest to 42.95%
(4)	We have the ability to syndicate our interest down to 14.79%.
(5)	We, along with Gramercy, together as tenants-in-common, acquired a fee interest in 2 Herald Square. The fee interest is subject to a long-term operating lease.
(6)	We, along with Gramercy, together as tenants-in-common, acquired a fee and leasehold interest in 885 Third Avenue. The fee and leasehold interests are subject to a long-term operating lease.
(7)	We, along with Onyx, acquired the remaining 50% interest on a pro-rata basis in September 2009.
(8)	The property is subject to a 13-year triple-net lease arrangement with a single tenant. The lease commenced in 2007.
(9)	The deconsolidation of this joint venture in 2010, resulted in an adjustment to retained earnings of approximately $3.0 million and to the noncontrolling interests in other partnerships of approximately $9.5 million.

We finance our joint ventures with non-recourse debt. The first mortgage notes payable collateralized by the respective joint venture properties and assignment of leases at September 30, 2010 and December 31, 2009, respectively, are as follows (in thousands):

Property	Maturity Date	Interest Rate(1)		2010		2009

1515 Broadway(2)	12/2014	3.50	%	$	465,962	$	475,000
100 Park Avenue(3)	09/2014	6.64	%	$	200,000	$	200,000
379 West Broadway	07/2011	1.96	%	$	20,991	$	20,991
21 West 34th Street	12/2016	5.76	%	$	100,000	$	100,000
800 Third Avenue	08/2017	6.00	%	$	20,910	$	20,910
521 Fifth Avenue	04/2011	1.31	%	$	140,000	$	140,000
One Court Square	09/2015	4.91	%	$	315,000	$	315,000
2 Herald Square	04/2017	5.36	%	$	191,250	$	191,250
1604-1610 Broadway(4)	04/2012	5.66	%	$	27,000	$	27,000
1745 Broadway	01/2017	5.68	%	$	340,000	$	340,000
1 and 2 Jericho Plaza	05/2017	5.65	%	$	163,750	$	163,750
885 Third Avenue	07/2017	6.26	%	$	267,650	$	267,650
The Meadows	09/2012	1.66	%	$	87,613	$	85,478
388 and 390 Greenwich Street(5)	12/2017	5.09	%	$	1,138,379	$	1,138,379
16 Court Street	10/2013	2.81	%	$	87,035	$	88,573
27-29 West 34th Street	05/2011	1.96	%	$	54,488	$	54,800
1551-1555 Broadway(6)	10/2011	4.32	%	$	129,850	$	133,600
717 Fifth Avenue(7)	09/2011	5.25	%	$	245,000	$	245,000
141 Fifth Avenue	06/2017	5.70	%	$	25,000	$	25,000
180/182 Broadway and 63 Nassau Street(8)	02/2011	2.56	%	$	23,903	$	22,534
600 Lexington Avenue(9)	03/2014	5.74	%	$	49,850	$	—

(1)	Interest rate represents the effective all-in weighted average interest rate for the quarter ended September 30, 2010.
(2)	In December 2009 the $625.0 million mortgage was repaid and replaced with a $475.0 million mortgage. In connection with the refinancing, the partners made an aggregate $163.9 million capital contribution to the joint venture.
(3)	This loan was refinanced in September 2009, and replaced a $175.0 million construction loan which was scheduled to mature in November 2015 and which carried a fixed interest rate of 6.52%. The new loan has a committed amount of $215.0 million.
(4)	This loan went into default in November 2009 due to the non-payment of debt service. The joint venture is in discussions with the special servicer to resolve this default.
(5)	Comprised of a $576.0 million mortgage and a $562.4 million mezzanine loan, both of which are fixed rate loans, except for $16.0 million of the mortgage and $15.6 million of the mezzanine loan which are floating. Up to $200.0 million of the mezzanine loan, secured indirectly by these properties, is recourse to us. We believe it is unlikely that we will be required to perform under this guarantee.
(6)	This amortizing loan was fully funded in September 2009 at the reduced committed amount of $133.6 million.
(7)	This loan has a committed amount of $285.0 million.
(8)	This loan has a committed amount of $31.0 million.
(9)	See Note 19.

We act as the operating partner and day-to-day manager for all our joint ventures, except for 800 Third Avenue, 1 and 2 Jericho Plaza and The Meadows. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to our joint ventures. We earned approximately $2.6 million, $11.7 million, $2.8 million and $16.0 million for these services for the three and nine months ended September 30, 2010, and 2009, respectively. In addition, we have the ability to earn incentive fees based on the ultimate financial performance of certain of the joint venture properties.

Gramercy Capital Corp.

In April 2004, we formed Gramercy as a commercial real estate finance business. Gramercy qualified as a REIT for federal income tax purposes and expects to qualify for its current fiscal year.

At September 30, 2010, we held 6,219,370 shares, or approximately 12.47% of Gramercy’s common stock. Our total investment of approximately $8.6 million is based on the market value of our common stock investment in Gramercy at September 30, 2010. As we no longer have any significant influence over Gramercy, we account for our investment as available-for-sale securities.

Prior to Gramercy’s internalization of GKK Manager LLC, or the Manager (a former wholly-owned subsidiary of our operating partnership which was the external manger to Gramercy), which we refer to as the GKK Internalization, we were entitled to an incentive return payable through the Class B limited partner interests in Gramercy’s operating partnership, equal to 25% of the amount by which funds from operations (as defined in Gramercy’s amended and restated partnership agreement) plus certain accounting gains exceed the product of the weighted average stockholders’ equity of Gramercy multiplied by 9.5% (divided by four to adjust for quarterly calculations). This arrangement was terminated when the GKK Internalization was completed in April 2009. Amounts payable to the Class B limited partnership interests were waived s ince July 1, 2008.

In connection with Gramercy’s initial public offering, the Manager entered into a management agreement with Gramercy, which provided for an initial term through December 2007, and which was subsequently extended through December 2009. The management agreement was further amended in September 2007 and amended and restated in October 2008 and was subsequently terminated on April 24, 2009 in connection with the GKK Internalization. In addition, Gramercy also paid the Manager a collateral management fee. For the three and nine months ended September 30, 2009, we received an aggregate of approximately none and $6.5 million, respectively, and we received nothing under the collateral management agreement in either period. Fees payable to the Manager under the collateral management agreement were remitted to Gramercy for all periods subsequent to June 30, 2008. In 2008, we, as well as Gramercy, each formed special committees comprised solely of independent directors to consider whether the GKK Internalization and/or amendment to the management agreement would be in the best interest of each company and its respective shareholders. The GKK Internalization was completed on April 24, 2009 through the direct acquisition by Gramercy of the Manager.

On October 27, 2008, the Manager entered into a Second Amended and Restated Management Agreement (the “Second Amended Management Agreement”) with Gramercy and GKK Capital LP. The Second Amended Management Agreement generally contained the same terms and conditions as the Amended and Restated Management Agreement, dated as of April 19, 2006, but provided that all management, service and similar fees relating to Gramercy’s CDOs that the Manager was entitled to receive were to be remitted by the Manager to Gramercy for any period subsequent to July 1, 2008. The Second Amended Management Agreement was terminated in connection with the GKK Internalization.

In May 2005, our Compensation Committee approved long-term incentive performance awards pursuant to which certain of our officers and employees, including some of whom are our senior executive officers, were awarded a portion of the interests previously held by us in the Manager, which at the time was an affiliate of ours, as well as in the Class B limited partner interests in Gramercy’s operating partnership. The vesting of these awards was dependent upon, among other things, tenure of employment and the performance of our investment in Gramercy. These awards vested in May 2008. On April 24, 2009, Gramercy acquired all the interests in the Manager and all the Class B limited partner interests from us for no consideration.

Prior to the GKK Internalization, Gramercy was obligated to reimburse the Manager for its costs incurred under an asset servicing agreement and an outsourcing agreement between the Manager and us. The outsourcing agreement provided for a fee of $2.7 million per year, increasing 3% annually over the prior year. For the three and nine months ended September 30, 2009, the Manager received an aggregate of approximately none and $1.0 million, respectively, under the outsourcing and asset servicing agreements.

On October 27, 2008, we, Gramercy and GKK Capital LP entered into a services agreement (the “Services Agreement”) pursuant to which we provided consulting and other services to Gramercy. We made certain members of management available in connection with the provision of the services until the completion of the GKK Internalization on April 24, 2009. In consideration for the consulting services, we received from Gramercy a fee of $200,000 per month. We also provided Gramercy with certain other services described in the Services Agreement for a fee of $100,000 per month in cash until April 24, 2009. The Services Agreement was terminated in connection with the GKK Internalization. Since October 27, 2008, an affiliate of ours has served as special servicer for certain as sets held by Gramercy or its affiliates and assigned its duties to a subsidiary of ours.

All fees earned from Gramercy are included in Other Income in the Consolidated Statements of Income.

Effective May 2005, June 2009 and October 2009, Gramercy entered into three lease agreements with an affiliate of ours, for their corporate offices at 420 Lexington Avenue in Manhattan. The first lease is for approximately 7,300 square feet and carries a term of ten years with rents of approximately $249,000 per annum for year one increasing to $315,000 per annum in year ten. The second lease is for approximately 900 square feet pursuant to a lease which ends in April 2015, with annual rent under this lease of approximately $35,300 per annum for year one increasing to $42,800 per annum in year six. The third lease is for approximately 1,400 square feet pursuant to a lease which ends in April 2015, with annual rent under this lease of approximately $67,300 per annum for year one increasing to $80,500 per annum in year six.

Gramercy holds tenancy-in-common interests along with us in 2 Herald Square and 885 Third Avenue. See Note 5 for information on our structured finance investments in which Gramercy also holds an interest.

A consolidated affiliate of ours held an investment in Gramercy’s preferred stock with a market value of approximately $0.8 million at September 30, 2010.

On October 27, 2009, Marc Holliday, our Chief Executive Officer, Andrew Mathias, our President and Chief Investment Officer and Gregory F. Hughes, our Chief Financial Officer and Chief Operating Officer resigned as Chief Executive Officer, Chief Investment Officer and Chief Credit Officer, respectively, of Gramercy. Mr. Holliday also resigned as President of Gramercy effective as of October 28, 2009. Mr. Holliday and Mr. Mathias agreed to remain as consultants to Gramercy through the earliest of (i) September 30, 2009, (ii) the termination of the Second Amended Management Agreement or (iii) the termination of their respective employment with us. This agreement was terminated in connection with the GKK Internalization.

On October 28, 2009, Gramercy announced the appointment of Roger M. Cozzi, as President and Chief Executive Officer, effective immediately. Effective as of November 13, 2009, Timothy J. O’Connor was appointed as President of Gramercy. Mr. Holliday remains a board member of Gramercy.

In 2009, we, as well as a consolidated affiliate of ours, entered into consulting agreements with Gramercy whereby Gramercy provides services required for the evaluation, acquisition, disposition and portfolio management of CMBS investments. We pay 10 basis points and our affiliate pays 25 basis points of the principal amount of all trades executed. We and our affiliate paid approximately $48,000 in aggregate fees for such services during the nine months ended September 30, 2010.

The condensed combined balance sheets for the unconsolidated joint ventures, at September 30, 2010 and December 31, 2009, are as follows (in thousands):

	2010		2009
Assets
Commercial real estate property, net	$	5,377,548	$	6,095,668
Other assets	601,515		665,065
Total assets	$	5,979,063	$	6,760,733

Liabilities and members’ equity
Mortgages payable	$	4,093,632	$	4,177,382
Other liabilities	244,900		276,805
Members’ equity	1,640,531		2,306,546
Total liabilities and members’ equity	$	5,979,063	$	6,760,733
Company’s net investment in unconsolidated joint ventures	$	777,556	$	1,058,369

The condensed combined statements of operations for the unconsolidated joint ventures for the three and nine months ended September 30, 2010 and 2009, or partial period for acquisitions which closed during these periods, are as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2010		2009			2010		2009
Total revenues	$	132,817	$	329,752		$	456,779	$	991,234
Operating expenses	21,659		74,808			74,015		226,714
Real estate taxes	13,474		30,870			53,371		96,258
Interest expense, net of interest income	51,174		111,475			152,061		341,580
Depreciation and amortization	37,874		65,364			120,765		203,006
Other income/ expenses	—		219,611			1,075		463,954
Total expenses	124,181		502,128			401,287		1,331,512
Net income (loss) before gain on sale	$	8,636	$	(172,376	)	$	55,492	$	(340,278	)
Company’s equity in net income of unconsolidated joint ventures	$	7,544	$	16,585		$	32,925	$	46,486

Mortgage Notes and Other Loans Payable

9 Months Ended

Sep. 30, 2010

Mortgage Notes and Other Loans Payable

Mortgage Notes and Other Loans Payable

8. Mortgage Notes and Other Loans Payable

The first mortgage notes and other loans payable collateralized by the respective properties and assignment of leases at September 30, 2010 and December 31, 2009, respectively, were as follows (in thousands):

Property	Maturity Date	Interest Rate(2)		2010		2009
711 Third Avenue(1)	06/2015	4.99	%	$	120,000	$	120,000
420 Lexington Avenue(1)(7)	09/2016	7.52	%	149,627		150,561
673 First Avenue(1)	02/2013	5.67	%	30,994		31,608
220 East 42nd Street(1)	11/2013	5.24	%	195,813		198,871
625 Madison Avenue(1)(8)	11/2015	7.22	%	132,955		135,117
609 Fifth Avenue(1)	10/2013	5.85	%	96,877		97,952
609 Partners, LLC(1)(9)	07/2014	5.00	%	35,421		41,391
485 Lexington Avenue(1)	02/2017	5.61	%	450,000		450,000
120 West 45th Street(1)	02/2017	6.12	%	170,000		170,000
919 Third Avenue(1)(3)	08/2011	6.87	%	221,305		224,104
300 Main Street(1)	02/2017	5.75	%	11,500		11,500
500 West Putnam(1)	01/2016	5.52	%	25,000		25,000
141 Fifth Avenue (4)	—	—		—		25,000
One Madison Avenue(1)(5)	05/2020	5.91	%	643,128		651,917
125 Park Avenue	10/2014	5.75	%	146,250		—
Total fixed rate debt				2,428,870		2,333,021
180/182 Broadway(1)(4)	—	—		—		22,534
100 Church Street(1)	01/2013	5.00	%	139,672		---
Landmark Square(1)(6)	02/2011	2.15	%	113,226		116,517
28 West 44th Street(1)	08/2013	2.51	%	122,386		123,480
Other loan payable(10)	06/2013	3.23	%	62,792		—
Other loan payable	06/2016	3.05	%	30,000		—
Total floating rate debt				468,076		262,531
Total mortgage notes and other loans payable				$	2,896,946	$	2,595,552

(1)	Held in bankruptcy remote special purpose entity.
(2)	Effective interest rate for the quarter ended September 30, 2010.
(3)	We own a 51% controlling interest in the joint venture that is the borrower on this loan. This loan is non-recourse to us.
(4)	This investment was deconsolidated in 2010.
(5)	From April 2005 until August 2007, we held a 55% partnership interest in the joint venture that owned this property. We now own 100% of the property.
(6)	This loan has one remaining one-year as-of-right renewal option.
(7)	The $108.1 million loan which had an original maturity date in November 2010 and carried a fixed interest rate of 8.44% was repaid in August 2009. The new loan was upsized by $6.0 million in November 2009.
(8)	In July 2009, we upsized this loan by $40.0 million resulting in a blended fixed interest rate of 7.22%.
(9)	This loan was paid down by $22.5 million in August 2009 and $4.0 million in March 2010.
(10)	This loan bears interest at 250 basis points over the three month GBP LIBOR. This loan is denominated in British Pounds.

In September 2010, we repaid a $104.0 million loan payable which had been secured by our interest in a structured finance investment.

At September 30, 2010 and December 31, 2009 the gross book value of the assets collateralizing the mortgage notes and loans payable was approximately $4.9 billion and $4.5 billion, respectively.

Interest expense, excluding capitalized interest, was comprised of the following (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Interest expense	$	57,704		$	66,236		$	173,704		$	185,654
Interest income	(479		)	(870		)	(1,351		)	(3,549		)
Interest expense, net	$	57,225		$	65,366		$	172,353		$	182,105
Interest capitalized	$	—		$	38		$	—		$	98

Corporate Indebtedness

9 Months Ended

Sep. 30, 2010

Corporate Indebtedness

Corporate Indebtedness

9. Corporate Indebtedness

2007 Unsecured Revolving Credit Facility

We have a $1.5 billion unsecured revolving credit facility, or the 2007 unsecured revolving credit facility. The 2007 unsecured revolving credit facility bears interest at a spread ranging from 70 basis points to 110 basis points over LIBOR, based on our leverage ratio. This facility matures in June 2011 and has a one-year as-of-right extension option. The 2007 unsecured revolving credit facility also requires a 12.5 to 20 basis point fee on the unused balance payable annually in arrears. The 2007 unsecured revolving credit facility had a balance of $0.8 billion and carried a spread over LIBOR of 80 basis points at September 30, 2010. Availability under the 2007 unsecured revolving credit facility was further reduced at September 30, 2010 by the issuance of approximately $24.0 million in letters of credit. The effective all-in interest rat e on the 2007 unsecured revolving credit facility was 1.12% for the three months ended September 30, 2010. The 2007 unsecured revolving credit facility includes certain restrictions and covenants (see restrictive covenants below).

In August 2009, we amended our 2007 unsecured revolving credit facility to provide us with the ability to acquire a portion of the loans outstanding under our 2007 unsecured revolving credit facility. Such repurchases reduce our availability under the 2007 unsecured revolving credit facility. In August 2009, a subsidiary of ours repurchased approximately $48.0 million of the total commitment, and we realized gains on early extinguishment of debt of approximately $7.1 million.

Senior Unsecured Notes

The following table sets forth our senior unsecured notes and other related disclosures by scheduled maturity date as of September 30, 2010 (in thousands):

Issuance	Accreted Balance		Coupon Rate(4)		Term (in Years)	Maturity
January 22, 2004(1)(5)	$	84,823	5.15	%	7	January 15, 2011
August 13, 2004(1) (5)	98,578		5.875	%	10	August 15, 2014
March 31, 2006(1)	274,755		6.00	%	10	March 31, 2016
March 16, 2010	250,000		7.75	%	10	March 15, 2020
June 27, 2005(1)(2)(5)	657		4.00	%	20	June 15, 2025
March 26, 2007(3)(5)	122,448		3.00	%	20	March 30, 2027
	$	831,261

(1) Assumed as part of the Reckson Merger.

(2) Exchangeable senior debentures which are currently callable at 100% of par. In addition, the debentures can be put to us, at the option of the holder at par plus accrued and unpaid interest, on June 15, 2015 and 2020 and upon the occurrence of certain change of control transactions. As a result of the Reckson Merger, the adjusted exchange rate for the debentures is 7.7461 shares of our common stock per $1,000 of principal amount of debentures and the adjusted reference dividend for the debentures is $1.3491. During the nine months ended September 30, 2010, we repurchased approximately $115.4 million of these bonds, inclusive of notes pu rchased in the tender offer discussed in Note (5) below, and realized a net loss on early extinguishment of debt of approximately $0.3 million. On the date of the Merger, $13.1 million was recorded in equity and was fully amortized as of June 30, 2010.

(3) In March 2007, we issued $750.0 million of these convertible bonds. Interest on these notes is payable semi-annually on March 30 and September 30. The notes have an initial exchange rate representing an exchange price that was set at a 25.0% premium to the last reported sale price of our common stock on March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The notes are senior unsecured obligations of our operating partnership and are exchangeable upon the occurrence of specified events, and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on t he second business day prior to the maturity date, into cash or a combination of cash and shares of our common stock, if any, at our option. The notes are redeemable, at our option, on and after April 15, 2012. We may be required to repurchase the notes on March 30, 2012, 2017 and 2022, and upon the occurrence of certain designated events. The net proceeds from the offering were approximately $736.0 million, after deducting estimated fees and expenses. The proceeds of the offering were used to repay certain of our existing indebtedness, make investments in additional properties, and make open market purchases of our common stock and for general corporate purposes. During the nine months ended September 30, 2010, we repurchased approximately $41.7 million of these bonds, inclusive of notes purchased in the tender offer discussed in Note (5) below, and realized a net loss on early extinguishment of debt of approximately $0.5 million. On the issuance date, $66.6 million w as recorded in equity. As of September 30, 2010, approximately $4.4 million remained unamortized.

(4) Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.

(5) In April 2010, we completed a cash tender offer and purchased $13.0 million of the outstanding 3.000% Exchangeable Senior Notes due 2027 issued by the operating partnership, and $13.2 million of the outstanding 4.000% Exchangeable Senior Debentures due 2025, $38.8 million of the 5.150% Notes due 2011 and $50.0 million of the 5.875% Notes due 2014 issued by Reckson.

In March 2009, the $200.0 million, 7.75% unsecured notes scheduled to mature in March 2009, assumed as part of the Reckson Merger, were redeemed at par.

Restrictive Covenants

The terms of the 2007 unsecured revolving credit facility and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, the payment of dividends (as discussed below), the incurrence of additional indebtedness, the incurrence of liens and the disposition of assets, and which require compliance with financial ratios relating to the minimum amount of tangible net worth, the minimum amount of debt service coverage and fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property debt service coverage and certain investment limitations. The dividend restriction referred to above provides that, except to enable us to continue to qualify as a REIT for Federal Income Tax purposes, we will not during any four consecutive fiscal quarters make distributions with respect to common stock or o ther equity interests in an aggregate amount in excess of 95% of funds from operations for such period, subject to certain other adjustments. As of September 30, 2010 and December 31, 2009, we were in compliance with all such covenants.

Junior Subordinate Deferrable Interest Debentures

In June 2005, we issued $100.0 million in unsecured floating rate trust preferred securities through a newly formed trust, SL Green Capital Trust I, or the Trust, which is a wholly-owned subsidiary of our operating partnership. The securities mature in 2035 and bear interest at a fixed rate of 5.61% for the first ten years ending July 2015. Interest payments may be deferred for a period of up to eight consecutive quarters if our operating partnership exercises its right to defer such payments. The trust preferred securities are redeemable, at the option of our operating partnership, in whole or in part, with no prepayment premium any time after July 2010. We do not consolidate the Trust even though it is a variable interest entity as we are not the primary beneficiary. Because the Trust is not consolidated, we have recorded the debt on our balance s heet and the related payments are classified as interest expense.

Principal Maturities

Combined aggregate principal maturities of mortgage notes and other loans payable, our 2007 unsecured revolving credit facility, trust preferred securities, senior unsecured notes and our share of joint venture debt as of September 30, 2010, including as-of-right extension options, were as follows (in thousands):

	Scheduled Amortization		Principal Repayments		Revolving Credit Facility		Trust Preferred Securities		Senior Unsecured Notes		Total		Joint Venture Debt
2010	$	7,608	$	—	$	—	$	—	—		7,608		$	2,078
2011	29,950		216,656		—		—		84,823		331,429		218,698
2012	33,455		113,227		800,000		—		122,448		1,069,130		62,080
2013	34,078		622,774		—		—		—		656,852		37,146
2014	30,042		181,671		—		—		98,578		310,291		361,917
Thereafter	170,626		1,456,859		—		100,000		525,412		2,252,897		1,137,199
	$	305,759	$	2,591,187	$	800,000	$	100,000	$	831,261	$	4,628,207	$	1,819,118

Stockholders' Equity

9 Months Ended

Sep. 30, 2010

Stockholders' Equity

Stockholders' Equity

12. Stockholders’ Equity

Common Stock

Our authorized capital stock consists of 260,000,000 shares, $.01 par value, of which we have authorized the issuance of up to 160,000,000 shares of common stock, $.01 par value per share, 75,000,000 shares of excess stock, at $.01 par value per share, and 25,000,000 shares of preferred stock, par value $.01 per share. As of September 30, 2010, 78,252,240 shares of common stock and no shares of excess stock were issued and outstanding.

Perpetual Preferred Stock

In January 2010, we sold 5,400,000 shares of our Series C preferred stock in an underwritten public offering. As a result of this offering, we have 11,700,000 shares of the Series C preferred stock outstanding. The shares of Series C preferred stock have a liquidation preference of $25.00 per share and are redeemable at par, plus accrued and unpaid dividends, at any time at our option. The shares were priced at $23.53 per share including accrued dividends equating to a yield of 8.101%. We used the net offering proceeds of approximately $122.0 million for general corporate and/or working capital purposes, including purchases of the indebtedness of our subsidiaries and investment opportunities.

In December 2003, we sold 6,300,000 shares of our 7.625% Series C preferred stock, (including the underwriters’ over-allotment option of 700,000 shares) with a mandatory liquidation preference of $25.00 per share. Net proceeds from this offering (approximately $152.0 million) were used principally to repay amounts outstanding under our secured and unsecured revolving credit facilities. The Series C preferred stockholders receive annual dividends of $1.90625 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. Beginning December 12, 2009, we have been entitled to redeem the Series C preferred stock at par for cash at our option. The Series C preferred stock was recorded net of underwriters discount and issuance costs.

In 2004, we sold 4,000,000 shares of our 7.875% Series D cumulative redeemable preferred stock, or the Series D preferred stock, with a mandatory liquidation preference of $25.00 per share. Net proceeds from these offerings (approximately $96.3 million) were used principally to repay amounts outstanding under our secured and unsecured revolving credit facilities. The Series D preferred stockholders receive annual dividends of $1.96875 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. Beginning May 27, 2009, we have been entitled to redeem the Series D preferred stock at par for cash at our option. The Series D preferred stock was recorded net of underwriters discount and issuance costs.< /p>

Rights Plan

In February 2000, our board of directors authorized a distribution of one preferred share purchase right, or Right, for each outstanding share of common stock under a shareholder rights plan. This distribution was made to all holders of record of the common stock on March 31, 2000. Each Right entitled the registered holder to purchase from us one one-hundredth of a share of Series B junior participating preferred stock, par value $0.01 per share, or Preferred Shares, at a price of $60.00 per one one-hundredth of a Preferred Share, or Purchase Price, subject to adjustment as provided in the rights agreement. The Rights expired on March 5, 2010, and the rights plan was terminated.

Dividend Reinvestment and Stock Purchase Plan

We filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRIP, which was declared effective in March 2009. We registered 2,000,000 shares of our common stock under the DRIP. The DRIP commenced on September 24, 2001.

During the nine months ended September 30, 2010 and 2009, approximately 251,000 and 142 shares were issued and approximately $11.3 million and $3,300 of proceeds were received, respectively, from dividend reinvestments and/or stock purchases under the DRIP. DRIP shares may be issued at a discount to the market price.

Second Amended and Restated 2005 Stock Option and Incentive Plan

We have a stock option and incentive plan. The second amended and restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by our board of directors in April 2010 and our stockholders in June 2010 at our annual meeting of stockholders. The 2005 Plan authorizes the issuance of stock options, stock appreciation rights, unrestricted and restricted stock, phantom shares, dividend equivalent rights and other equity-based awards. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 10,730,000 fungible units may be granted under the 2005 Plan. Currently, different types of awards count against the limit on the number of fungible units differently, with (1) full-value awards (i.e., those that deliver the full value of the award upon vesting, such as restricted s tock) counting as 1.65 fungible units per share subject to such award (2) stock options, stock appreciation rights and other awards that do not deliver full value and expire five year from the date of grant counting as 0.79 fungible units per share subject to such award and (3) all other awards (e.g., ten-year stock options) counting as 1.0 fungible units per share subject to such award. Awards granted under the 2005 Plan prior to the approval of the second amendment and restatement in June 2010 continue to count against the fungible unit limit based on the ratios that were in effect at the time such awards were granted, which may be different than the current ratios. As a result, depending on the types of awards issued, the 2005 Plan may result in the issuance of more or less than 10,730,000 shares. If a stock option or other award granted under the 2005 Plan expires or terminates, the common stock subject to any portion of the award that expires or t erminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. Shares of our common stock distributed under the 2005 Plan may be treasury shares or authorized but unissued shares. Currently, unless the 2005 Plan has been previously terminated by the Board, new awards may be granted under the 2005 Plan until June 15, 2020, which is the tenth anniversary of the date that the 2005 Plan was most recently approved by our stockholders. At September 30, 2010, approximately 5.2 million fungible units were available for issuance under the 2005 Plan, or 6.6 million if all fungible units available under the 2005 Plan were issued as five-year stock options.

Options are granted under the plan at the fair market value on the date of grant and, subject to termination of employment, generally expire ten years from the date of grant, are not transferable other than on death, and generally vest in one to five years commencing one year from the date of grant.

A summary of the status of our stock options as of September 30, 2010 and December 31, 2009 and changes during the periods then ended are presented below:

	2010					2009
	Options Outstanding			Weighted Average Exercise Price		Options Outstanding			Weighted Average Exercise Price
Balance at beginning of year	1,324,221			$	56.74	937,706			$	61.33
Granted	25,500			$	52.89	443,850			$	46.08
Exercised	(98,341		)	$	30.50	(22,000		)	$	28.17
Lapsed or cancelled	(41,833		)	$	77.33	(35,335		)	$	62.75
Balance at end of period	1,209,547			$	58.08	1,324,221			$	56.74

Options exercisable at end of period	641,852			$	68.90	595,851			$	62.17
Weighted average fair value of options granted during the period	$	564,671				$	8,276,500

The weighted average fair value of restricted stock granted during the nine months ended September 30, 2010 was approximately $25.6 million.

All options were granted within a price range of $20.67 to $137.18. The remaining weighted average contractual life of the options outstanding and exercisable was 4.9 years and 4.6 years, respectively.

Stock-based Compensation

Effective January 1, 1999, we implemented a deferred compensation plan, or the Deferred Plan, covering certain of our employees, including our executives. The shares issued under the Deferred Plan were granted to certain employees, including our executives and vesting will occur annually upon the completion of a service period or our meeting established financial performance criteria. Annual vesting occurs at rates ranging from 15% to 35% once performance criteria are reached. A summary of our restricted stock as of September 30, 2010 and the related expense during the nine months then ended are presented below:

	Nine Months Ended September 30,
Restricted Stock Awards	2010
Balance at beginning of year	2,330,532
Granted	190,657
Cancelled	(3,167		)
Balance at end of period	2,518,022
Vested during the period	34,527
Compensation expense recorded	$	9,919,348

2003 Long-Term Outperformance Compensation Program

Our board of directors adopted a long-term, seven-year compensation program for certain members of senior management. The program provided for restricted stock awards to be made to plan participants if the holders of our common equity achieved a total return in excess of 40% over a 48-month period commencing April 1, 2003. In April 2007, the compensation committee determined that under the terms of the 2003 Outperformance Plan, as of March 31, 2007, the performance hurdles had been met and the maximum performance pool of $22,825,000, taking into account forfeitures, was established. In connection with this event, approximately 166,312 shares of restricted stock (as adjusted for forfeitures) were allocated under the 2005 Plan. In accordance with the terms of the program, 40% of each award vested on March 31, 2007 and the rem ainder was scheduled to vest ratably over the subsequent three years based on continued employment. The fair value of the awards under this program on the date of grant was determined to be $3.2 million. This fair value is expensed over the term of the restricted stock award. Forty percent of the value of the award was amortized over four years from the date of grant and the balance was amortized, in equal parts, over five, six and seven years (i.e., 20% of the total value was amortized over five years (20% per year), 20% of the total value was amortized over six years (16.67% per year) and 20% of the total value was amortized over seven years (14.29% per year)). We recorded compensation expense of none, $23,000, $29,500 and $88,500 related to this plan during the three and nine months ended September 30, 2010 and 2009, respectively.

2005 Long-Term Outperformance Compensation Program

In December 2005, the compensation committee of our board of directors approved a long-term incentive compensation program, the 2005 Outperformance Plan. Participants in the 2005 Outperformance Plan were entitled to earn LTIP Units in our operating partnership if our total return to stockholders for the three-year period beginning December 1, 2005 exceeded a cumulative total return to stockholders of 30%.; provided that participants were entitled to earn LTIP Units earlier in the event that we achieved maximum performance for 30 consecutive days. The total number of LTIP Units that could be earned was to be a number having an assumed value equal to 10% of the outperformance amount in excess of the 30% benchmark, subject to a maximum dilution cap equal to the lesser of 3% of our outstanding shares and units of limited partnership interest as of December ;1, 2005 or $50.0 million. On June 14, 2006, the compensation committee determined that under the terms of the 2005 Outperformance Plan, as of June 8, 2006, the performance period had accelerated and the maximum performance pool of $49,250,000, taking into account forfeitures, had been earned. Under the terms of the 2005 Outperformance Plan, participants also earned additional LTIP Units with a value equal to the distributions that would have been paid with respect to the LTIP Units earned if such LTIP Units had been earned at the beginning of the performance period. The total number of LTIP Units earned under the 2005 Outperformance Plan by all participants as of June 8, 2006 was 490,475. Under the terms of the 2005 Ouperformance Plan, all LTIP Units that were earned remained subject to time-based vesting, with one-third of the LTIP Units earned scheduled to vest on each of November 30, 2009 and the first two anniversaries thereafter based on continued employment. The earned LTIP Units are to receive regular quarterly distributions on a per unit basis equal to the dividends per share paid on our common stock, whether or not they are vested.

The cost of the 2005 Outperformance Plan (approximately $8.0 million, subject to adjustment for forfeitures) will continue to be amortized into earnings through the final vesting period. We recorded approximately none, $1.6 million, $0.6 million and $1.8 million of compensation expense during the three and nine months ended September 30, 2010 and 2009, respectively, in connection with the 2005 Outperformance Plan.

2006 Long-Term Outperformance Compensation Program

On August 14, 2006, the compensation committee of our board of directors approved a long-term incentive compensation program, the 2006 Outperformance Plan. Participants in the 2006 Outperformance Plan were entitled to earn LTIP Units in our operating partnership if our total return to stockholders for the three-year period beginning August 1, 2006 exceeded a cumulative total return to stockholders of 30%.; provided that participants were entitled to earn LTIP Units earlier in the event that we achieved maximum performance for 30 consecutive days. The total number of LTIP Units that could be earned was to be a number having an assumed value of 10% of the outperformance amount in excess of the 30% benchmark, subject to a maximum dilution cap equal to $60.0 million. The 2006 Outperformance Plan provided that if the LTIP Units were earned, each participan t would also have been entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period. Those distributions would have been paid in the form of additional LTIP Units. Thereafter, distributions would have been paid currently with respect to all earned LTIP Units, whether vested or unvested. Any LTIP Units earned under the 2006 Outperformance Plan were to remain subject to time-based vesting, with one-third of the awards vesting on each of July 31, 2009 and the first two anniversaries thereafter based on continued employment.

The cost of the 2006 Outperformance Plan (approximately $16.4 million, subject to adjustment for forfeitures) will be amortized into earnings through the final vesting period. We recorded approximately $0.1 million, $0.2 million, $0.1 million and $0.3 million of compensation expense during the three and nine months ended September 30, 2010 and 2009, respectively, in connection with the 2006 Outperformance Plan. During the fourth quarter of 2008, we and certain of our employees, including our executive officers, mutually agreed to cancel a portion of the 2006 Outperformance Plan. The performance criteria under the 2006 Outperformance Plan were not met and, accordingly, no LTIP Units have been earned under the 2006 Outperformance Plan.

SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Plan

In December 2009, the compensation committee of our board of directors approved the general terms of the SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Program, the 2010 Long Term Compensation Plan. The 2010 Long-Term Compensation Plan is a long-term incentive compensation plan pursuant to which award recipients may earn, in the aggregate, from approximately $15 million up to approximately $75 million of LTIP Units in our operating partnership based on our stock price appreciation over three years beginning on December 1, 2009; provided that, if maximum performance has been achieved, approximately $25 million of awards may be earned at any time after the beginning of the second year and an additional approximately $25 million of awards may be earned at any time after the beginning of the third year. The amount of awards earned will range from a pproximately $15 million if our aggregate stock price appreciation during the performance period is 25% to the maximum amount of approximately $75 million if our aggregate stock price appreciation during the performance period is 50% or greater. No awards will be earned if our aggregate stock price appreciation is less than 25%. After the awards are earned, they will remain subject to vesting, with 50% of any LTIP Units earned vesting on January 1, 2013 and an additional 25% vesting on each of January 1, 2014 and 2015 based, in each case, on continued employment through the vesting date. We will not pay distributions on any LTIP Units until they are earned, at which time we will pay all distributions that would have been paid on the earned LTIP Units since the beginning of the performance period.

Overall, the 2010 Long Term Compensation Plan contemplates maximum potential awards of 1,179,987 LTIP Units and a cap of approximately $75 million when earned. However, sufficient shares were not available under the 2005 Plan to fund the entire 2010 Long Term Compensation Plan in December 2009, and the awards granted at that time, in the aggregate, were limited to 744,128 LTIP Units, subject to performance-based and time-based vesting, unless and until additional shares became available under the 2005 Plan prior to the end of the performance period for the 2010 Long Term Compensation Plan. At our annual meeting of stockholders on June 15, 2010, our stockholders approved the adoption of the 2005 Plan which, among other things, increased the number of shares available under the plan to award the balance of the LTIP Units due under the 2010 Long-Term Compensation Plan. The cost of the 2010 Long Term Compensation Plan (approximately $24.8 million, subject to forfeitures) will be amortized into earnings through the final vesting period. We recorded compensation expense of approximately $1.3 million and $2.8 million during the three and nine months ended September 30, 2010 related to this program.

Deferred Stock Compensation Plan for Directors

Under our Independent Director’s Deferral Program, which commenced July 2004, our non-employee directors may elect to defer up to 100% of their annual retainer fee, chairman fees and meeting fees. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The phantom stock units are convertible into an equal number of shares of common stock upon such directors’ termination of service from the Board of Directors or a change in control by us, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of our common stock on the applicable dividend record date for the respective quarter. Each participating non-employee director’s account is also credited for an equivalent amount of phantom stock units based on the dividend rate for each quarter.

During the nine months ended September 30, 2010, approximately 9,300 phantom stock units were earned. As of September 30, 2010, there were approximately 57,700 phantom stock units outstanding.

Employee Stock Purchase Plan

On September 18, 2007, our board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to increase their efforts to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended, and has been adopted by the board to enable our eligible employees to purchase our shares of common stock through payroll deductions. The ESPP became effective on January 1, 2009 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. We filed a registration statement on Form S-8 with the Securities and Exchange Com mission with respect to the ESPP. The common stock will be offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2009. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The ESPP was approved by our stockholders at our 2008 annual meeting of stockholders. As of September 30, 2010, approximately 45,300 shares of our common stock had been issued under the ESPP.

Earnings Per Share

Earnings per share for the three and nine months ended September 30, 2010 and 2009 is computed as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2010		2009			2010		2009
Numerator (Income)
Basic Earnings:
Income (loss) attributable to SL Green common stockholders	$	111,500	$	(2,520	)	$	263,617	$	42,791
Effect of Dilutive Securities:
Redemption of units to common shares	1,786		(214		)	4,544		1,488
Stock options	—		—					—
Diluted Earnings:
Income (loss) attributable to SL Green common stockholders	$	113,286	$	(2,734	)	$	268,161	$	44,279

	Three Months Ended September 30,		Nine Months Ended September 30,
	2010	2009	2010	2009
Denominator (Weighted Average Shares)
Basic Earnings:
Shares available to common stockholders	78,227	76,832	78,034	67,196
Effect of Dilutive Securities:
Redemption of units to common shares	1,210	2,336	1,345	2,337
3.0% exchangeable senior debentures	—	—	—	—
4.0% exchangeable senior debentures	—	—	—	—
Stock-based compensation plans	344	—	343	47
Diluted Shares	79,781	79,168	79,722	69,580

We have excluded approximately 794,000, 804,000, 499,000 and 939,000 common stock equivalents from the diluted shares outstanding for the three and nine months ended September 30, 2010 and 2009, respectively, as they were anti-dilutive.

Segment Information

9 Months Ended

Sep. 30, 2010

Segment Information

Segment Information

17. Segment Information

We are a REIT engaged in owning, managing, leasing, acquiring and repositioning commercial office and retail properties in the New York Metro area and have two reportable segments, real estate and structured finance investments. Our investment in Gramercy and its related earnings are included in the structured finance segment. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.

Our real estate portfolio is primarily located in the geographical markets of the New York Metro area. The primary sources of revenue are generated from tenant rents and escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, real estate taxes and ground rent expense (at certain applicable properties). See Note 5 for additional details on our structured finance investments.

Selected results of operations for the three and nine months ended September 30, 2010 and 2009, and selected asset information as of September 30, 2010 and December 31, 2009, regarding our operating segments are as follows (in thousands):

	Real Estate Segment		Structured Finance Segment			Total Company
Total revenues
Three months ended:
September 30, 2010	$	238,903	$	84,377		$	323,280
September 30, 2009	229,503		16,266			245,769

Nine months ended:
September 30, 2010	$	708,458	$	125,543		$	834,001
September 30, 2009	704,110		48,697			752,807

Income from continuing operations:
Three months ended:
September 30, 2010	$	6,109	$	80,465		$	86,574
September 30, 2009	16,421		(1,862		)	14,559

Nine months ended:
September 30, 2010	$	27,414	$	105,589		$	133,003
September 30, 2009	144,737		(81,805		)	62,932

Total assets
As of:
September 30, 2010	$	9,674,631	$	913,244		$	10,587,875
December 31, 2009	9,698,430		789,147			10,487,577

Income from continuing operations represents total revenues less total expenses for the real estate segment and total investment income less allocated interest expense for the structured finance segment. Interest costs for the structured finance segment are imputed assuming 100% leverage at our 2007 unsecured revolving credit facility borrowing cost. We do not allocate marketing, general and administrative expenses (approximately $18.5 million, $55.3 million, $18.9 million and $54.7 million for the three and nine months ended September 30, 2010 and 2009, respectively) to the structured finance segment, since we base performance on the individual segments prior to allocating marketing, general and administrative expenses. All other expenses, except interest, relate entirely to the real estate assets. There were no transactions between the above two se gments.

The table below reconciles income from continuing operations to net income attributable to SL Green common stockholders for the three and nine months ended September 30, 2010 and 2009 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009

Income from continuing operations	$	86,574		$	14,559		$	133,003		$	62,932
Gain on sale of joint venture interest/real estate	520			—			127,289			6,848
Income (loss)/gains from discontinued operations	37,472			(9,966		)	40,905			(1,077		)
Net income	124,566			4,593			301,197			68,703
Net income attributable to noncontrolling interests	(5,521		)	(2,144		)	(15,375		)	(11,006		)
Net income attributable to SL Green	119,045			2,449			285,822			57,697
Preferred stock dividend	(7,545		)	(4,969		)	(22,205		)	(14,906		)
Net income (loss) attributable to SL Green common stockholders	$	111,500		$	(2,520	)	$	263,617		$	42,791

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2010	Dec. 31, 2009
Statement [Line Items]
Tenant and other receivables, allowance (in dollars)	$ 14,402	$ 14,271
Deferred rents receivable, allowance (in dollars)	24,785	24,347
Structured finance investments, discount (in dollars)	40,822	46,802
Structured finance investments, allowance (in dollars)	$ 87,768	$ 93,844
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	160,000	160,000
Common stock, shares issued	81,621	80,875
Common stock, shares outstanding	81,621	80,875
Treasury stock, shares	3,369	3,360
Series C Preferred Stock
Statement [Line Items]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, issued	11,700	6,300
Preferred stock, outstanding	11,700	6,300
Series D Preferred Stock
Statement [Line Items]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, issued	4,000	4,000
Preferred stock, outstanding	4,000	4,000

Condensed Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2010	Sep. 30, 2009	Sep. 30, 2010	Sep. 30, 2009
Condensed Consolidated Statements of Income
Operating expenses paid to affiliates	$ 3,391	$ 3,316	$ 9,572	$ 11,042

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2010	Oct. 31, 2010
Document and Entity Information
Entity Registrant Name	SL GREEN REALTY CORP
Entity Central Index Key	0001040971
Document Type	10-Q
Document Period End Date	Sep. 30, 2010
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		78,260,832
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	Q3