UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
January 29, 2007

SL GREEN REALTY CORP.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND

(STATE OF INCORPORATION)

 

(212) 594-2700
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

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

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

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

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

Item 2.02.              Results of Operations and Financial Condition

Following the issuance of a press release on January 29, 2007 announcing the Company’s results for the fourth quarter and full year ended December 31, 2006, the Company intends to make available supplemental information regarding the Company’s operations that is too voluminous for a press release.  The Company is attaching the press release as Exhibit 99.1 and the supplemental package as Exhibit 99.2 to this Current Report on Form 8-K.

The Company announced that it is increasing its earnings guidance for the year ending December 31, 2007 to $5.30 per share of FFO.

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

Item 7.01.              Regulation FD Disclosure

As discussed in Item 2.02 above, on January 29, 2007, the Company issued a press release announcing its results for the fourth quarter and full year ended December 31, 2006.

The information being furnished pursuant to this “Item 7.01 Regulation FD Disclosure” shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.  This information will not be deemed an admission as to the materiality of such information that is required to be disclosed solely by Regulation FD.

Item 8.01.              Other Events

On January 29, 2007, SL Green Realty Corp. announced that it has completed a refinancing of the first mortgage loan on 485 Lexington Avenue for $450 million.  The ten-year interest only mortgage has an effective interest rate of 5.566%. The mortgage matures in January 2017.

On January 30, 2007, a joint venture of SL Green Realty Corp., SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, and SEB Immobilien-Investment GmbH, announced that it is selling One Park Avenue for $550 million, or $602 per square foot. SL Green expects to receive approximately $108 million in proceeds from the sale, a substantial portion of which will represent an incentive distribution under its joint venture arrangement with SEB.  The proceeds will be utilized in a tax efficient 1031-exchange to acquire certain assets from Reckson Associates Realty Corp.

On January 30, 2007, SL Green Realty Corp. announced that it has entered into an agreement to sell 70 West 36th Street for $61.5 million, or $393 per square foot. The Company expects to realize a gain on this sale of approximately $50.2 million.

On January 30, 2007, SL Green Realty Corp. announced that it has acquired 300 Main Street in Stamford, Connecticut and 399 Knollwood Road in White Plains, New York for $46.6 million, or $167 per square foot, inclusive of 50,000 square feet of garage parking at 300 Main Street, from affiliates of RPW Group.

2007 Earnings Guidance

The Company announced that it is increasing its earnings guidance for the year ending December 31, 2007 to $5.30 per share of FFO.

Copies of these press releases announcing these transactions are attached hereto as Exhibits 99.3 through 99.6 and are incorporated herein by reference.

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Item 9.01.              Financial Statements and Exhibits

(c)           Exhibits

99.1                           Press Release regarding fourth quarter earnings.

99.2                           Supplemental package.

99.3                           Press release regarding refinancing of 485 Lexington Avenue.

99.4                           Press release regarding sale of One Park Avenue.

99.5                           Press release regarding sale of 70 West 36th Street.

99.6                           Press release regarding acquisition of 300 Main Street and 399 Knollwood Road.

NON-GAAP Supplemental Financial Measures

Funds from Operations (FFO)

FFO is a widely recognized measure of REIT performance.  We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do.  The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002 defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.  We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITS, particularly those that own and operate commercial office properties.  We also use FFO as one of several criteria to determine performance-based bonuses for members of our senior management.  FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time.  Historically, however, real estate values have risen or fallen with market conditions.  Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs, providing perspective not immediately apparent from net income.  FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

Funds Available for Distribution (FAD)

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

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

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

Same-Store Net Operating Income

The Company presents same-store net operating income on a cash and GAAP basis because the Company believes that it provides investors with useful information regarding the operating performance of properties that are comparable for the periods presented.  For properties owned since January 1, 2005, the Company determines net operating income by subtracting property operating expenses and ground rent from recurring rental and tenant reimbursement revenues.  Same-store net operating income is not an alternative to net income (determined in accordance with GAAP) and same-store performance should not be considered an alternative to GAAP net income performance.

Debt to Market Capitalization Ratio

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

Coverage Ratios

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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	SL GREEN REALTY CORP.
	/s/ Gregory F. Hughes
	Gregory F. Hughes
	Chief Financial Officer
Date:  January 30, 2007

 

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Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT

Gregory F. Hughes

Chief Financial Officer

(212) 594-2700

or

Heidi Gillette

Investor Relations

(212) 216-1601

SL GREEN REALTY CORP. REPORTS

FOURTH QUARTER FFO OF $1.18 PER SHARE

Fourth Quarter Highlights

·                  Increased full year 2006 FFO to $4.61 per share (diluted), an increase of 10.8% over the prior year.

·                  Increased fourth quarter FFO to $1.18 per share (diluted) from $1.02 during the fourth quarter of 2005, an increase of 15.7%.

·                  Net income available to common stockholders in the fourth quarter of 2006 totaled $0.62 per share (diluted) and $4.38 per share for the full year 2006.

·                  Increased quarterly common stock dividend by 16.7% to $0.70 per share.

·                  Obtained stockholder approval to acquire Reckson Associates Realty Corp. (NYSE: RA) for approximately $6.0 billion and closed on January 25, 2007.  Simultaneously sold approximately $2.0 billion of Reckson assets.  In connection with this transaction, we issued approximately 9.0 million common shares, closed on a three-year $500.0 million term loan, $298.0 million of new mortgage financing and assumed $1.3 billion of Reckson’s unsecured notes.

·                  Increased the capacity on our unsecured line of credit by $300.0 million to $800.0 million.

·                  Increased average office starting rents by 28.7% over previously fully escalated rents reflecting continued growth in rents for office leases signed during the fourth quarter.

·                  Signed 38 office leases totaling 452,497 square feet during the fourth quarter.

·                  Finished the quarter at 97.0% occupancy, up from 96.1% at the end of the third quarter.

·                  Recognized combined same-store GAAP NOI growth of 16.4% during the fourth quarter.

·                  Recognized approximately $8.8 million of incentive fees in connection with the resolution of the joint ventures with Morgan Stanley, including the venture that owned 485 Lexington Avenue.

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·                  Issued 3,998,100 shares of common stock in November 2006 raising net proceeds of approximately $532.1 million.

·                  Sold a 49.9% partnership interest in 521 Fifth Avenue, valuing the property at approximately $240.0 million and recognized gain of approximately $3.5 million.

·                  Invested $109.5 million in 800 Third Avenue through loans secured by up to 47% of the interests in the property’s ownership, with an option to convert the loan to an equity interest.

·                  Originated $97.1 million of structured finance investments with an initial yield of 9.23%.

·                  Received $11.5 million in dividends and fees from our investment in, and management arrangements with, Gramercy Capital Corp. (NYSE: GKK), or Gramercy, including a $3.0 million incentive fee earned during the quarter.

Summary

New York, NY, January 29, 2007 - SL Green Realty Corp. (NYSE:  SLG) today reported funds from operations available to common stockholders, or FFO, of $60.5 million, or $1.18 per share, for the fourth quarter ended December 31, 2006, a 15.7% increase over the same quarter in 2005.  The Company also reported FFO of $4.61 per share for the year ended December 31, 2006, a 10.8% increase over the same period in 2005, which was $4.16 per share.

Net income available to common stockholders totaled $29.4 million, or $0.62 per share, for the fourth quarter and $200.8 million, or $4.38 per share, for the year ended December 31, 2006, an increase of $8.5 million and $63.3 million over the respective periods in 2005.  Full-year 2006 results include gains on sale of $2.12 per share compared to gains on sale of $1.04 per share in 2005.

All per share amounts are presented on a diluted basis.

		Three Months Ended December 31,						Twelve Months Ended December 31,
(In Millions except per share)		2006			2005			2006			2005
Funds from operations		$	60.5		$	46.9		$	223.6		$	189.5
-   per share (diluted)		$	1.18		$	1.02		$	4.61		$	4.16
Net income		$	29.4		$	20.8		$	200.8		$	137.5
-   per share (diluted)		$	0.62		$	0.48		$	4.38		$	3.20

 

Operating and Leasing Activity

For the fourth quarter of 2006, the Company reported revenues and EBITDA of $159.5 million and $88.1 million, respectively, increases of $49.4 million, or 44.9%, and $25.8 million, or 41.4%, respectively, over the same period in 2005, largely due to strong leasing activity at 461 Fifth Avenue, 673 First Avenue and 521 Fifth Avenue as well as 2006 acquisitions, including 521 Fifth Avenue (March 2006), 609 Fifth Avenue (June 2006) and an investment in 717 Fifth Avenue (September 2006).  Same-store GAAP NOI on a combined basis increased by 16.4% for the fourth quarter when compared to the same quarter in 2005, with the wholly-owned properties increasing 22.3% to $52.1 million during the fourth quarter and the joint venture properties increasing 5.5% to $24.7 million.

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Average starting office rents of $61.99 per rentable square foot for the fourth quarter represented a 28.7% increase over the previously fully escalated rents.

Occupancy for the portfolio increased from 96.1% at September 30, 2006 to 97.0% at December 31, 2006.  During the quarter, the Company signed 47 leases totaling 458,376 square feet, with 38 leases and 452,497 square feet representing office leases.  For the year, the Company leased approximately 2.1 million square feet.

Significant leasing activities during the fourth quarter included:

·                  Additional expansion with Morgan Stanley and Co., Inc. for approximately 110,948 square feet at 1221 Avenue of the Americas.

·                  Expansion with New York Presbyterian Hospital for approximately 65,096 square feet at 673 First Avenue.

·                  New lease with Novantas, LLC for approximately 41,147 square feet at 485 Lexington Avenue.

·                  New lease with Clarins USA, Inc. for approximately 37,925 square feet at One Park Avenue.

Real Estate Investment Activity

During the fourth quarter of 2006, the Company announced new investments totaling approximately $6.9 billion.

Investment activity announced during the fourth quarter included:

·                  In January 2007, the Company acquired Reckson Associates Realty Corp. for approximately $6.0 billion.  The transaction includes the acquisition of thirty properties encompassing approximately 9.2 million square feet, of which 5 properties encompassing approximately 4.2 million square feet are located in Manhattan.  Simultaneously, the Company also sold approximately $2.0 billion of the Reckson assets to an asset purchasing venture which includes certain members of Reckson’s senior management.

·                  In December 2006, the Company invested approximately $109.5 million in 800 Third Avenue 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 have the right to re-acquire approximately 4% of the property’s equity.  The investment values the midtown Manhattan office property at $285.0 million.  SL Green will control a minority interest in the property in a joint venture with the remaining existing owners. 800 Third Avenue is a 40-story Class A office building located in the Grand Central submarket. Joseph P. Day Realty Corp. will continue to operate and lease the property in partnership with SL Green.

·                  In December 2006, the Company purchased interests in 485 Lexington Avenue from its partners, The City Investment Fund (CIF) and The Witkoff Group, resulting in majority ownership and control of the property. As a result of the acquisition of interests from CIF and The Witkoff Group, SL Green’s ownership interest in 485 Lexington Avenue is 87%.  The transaction values the property at

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$578 million compared to $225 million or $244 per square foot when first acquired in 2004.  In addition, SL Green originated a loan secured by CIF’s remaining ownership stake.  SL Green also acquired an option from CIF to purchase its remaining equity interest.

·                  During the fourth quarter of 2006, SL Green sold to CIF a 49.9% interest in the entity that owns the leasehold interest in 521 Fifth Avenue.  The sale of the interest in the property, which encompasses approximately 460,000 square feet, valued the property at $240.0 million.  This sale generated a gain of approximately $3.5 million, or $0.07 per share.

Financing and Capital Activity

In November 2006, the Company sold 3,998,100 shares of its common stock for net proceeds, after deducting underwriting discounts, commissions and transaction expenses, of approximately $532.1 million.

In January 2007, the Company exercised the accordian feature in their unsecured revolving line of credit. As a result, the capacity under the unsecured revolver increased by $300.0 million to $800.0 million.

In January 2007, the Company issued approximately 9.0 million common shares, closed on $298.0 million of new mortgage financing, assumed approximately $238.6 million of mortgage debt, approximately $967.8 million of unsecured notes and approximately $287.5 million of convertible debt in connection with the acquisition of Reckson.

Structured Finance Activity

The Company’s structured finance investments totaled $445.0 million on December 31, 2006, an increase of approximately $97.5 million over the balance at September 30, 2006. The structured finance investments currently have a weighted average maturity of 7.4 years.  The weighted average yield for the quarter ended December 31, 2006 was 10.45%, compared to a yield of 10.32% for the quarter ended September 30, 2006.

During the fourth quarter 2006, the Company originated $97.1 million of structured finance investments with an initial yield of 9.23%.  There were no redemptions during the quarter.

Investment In Gramercy Capital Corp.

At December 31, 2006, the book value of the Company’s investment in Gramercy totaled $118.6 million. Fees earned from various arrangements between the Company and Gramercy totaled approximately $7.9 million for the quarter ended December 31, 2006, including an incentive fee of $3.0 million earned as a result of Gramercy’s FFO (as defined in Gramercy’s management agreement) exceeding the 9.5% annual return on equity performance threshold.  For the year ended December 31, 2006, the Company earned $24.3 million in fees from Gramercy.  The Company’s share of FFO generated from its investment in Gramercy totaled approximately $5.1 million and $16.0 million for the quarter and year ended December 31, 2006, respectively, compared to $3.2 million and $9.1 million for the same periods in the prior year.

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The Company’s marketing, general and administrative, or MG&A, expenses include the consolidation of the expenses of its subsidiary GKK Manager LLC, the entity which manages and advises Gramercy.  For the quarter ended December 31, 2006, the Company’s MG&A includes approximately $1.9 million of costs associated with Gramercy as well as approximately $10.0 million of additional incentive compensation expense.  The Company’s board of directors elected to convey this additional incentive compensation to various senior executives in recognition of their extraordinary efforts in 2006, including the approval of the Reckson merger, as well as, the Company’s sector leading performance.

Dividends

During the fourth quarter of 2006, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:

·                  $0.70 per share of common stock. Dividends were paid on January 12, 2007 to stockholders of record on the close of business on December 29, 2006.

·                  $0.4766 and $0.4922 per share on the Company’s Series C and D Preferred Stock, respectively, for the period October 15, 2006 through and including January 14, 2007. Distributions were made on January 12, 2007 to stockholders of record on the close of business on December 29, 2006. Distributions reflect regular quarterly distributions, which are the equivalent of an annualized distribution of $1.90625 and $1.96875, respectively.

Conference Call and Audio Webcast

The Company’s executive management team, led by Marc Holliday, President and Chief Executive Officer, will host a conference call and audio web cast on Tuesday, January 30, 2007 at 2:00 p.m. ET to discuss fourth quarter and full year 2006 financial results. The Supplemental Package will be available prior to the quarterly conference call on the Company’s web site.

The live conference will be webast in listen-only mode on the Company’s web site at www.slgreen.com and on Thomson’s StreetEvents Network. The conference may also be accessed by dialing (866) 203-3436 Domestic or (617) 213-8849 International, using pass code SL Green.

A replay of the call will be available through Tuesday, February 06, 2007 by dialing (888) 286-8010 Domestic or (617) 801-6888 International, using pass code 44713455.

Supplemental Information

The Supplemental Package outlining fourth quarter 2006 financial results will be available prior to the quarterly conference call on the Company’s website.

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Company Profile

SL Green Realty Corp. is a self-administered and self-managed real estate investment trust, or REIT, that predominantly acquires, owns, repositions and manages a portfolio of Manhattan office properties. The Company is the only publicly held REIT that specializes exclusively in this niche.  As of December 31, 2006, the Company owned 28 office properties totaling 19.0 million square feet. The Company’s retail space ownership totals 296,000 square feet at eight properties.

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

Disclaimers

Non-GAAP Financial Measures

During the quarterly conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure (net income) can be found on pages 7 and 9 of this release and in the Company’s Supplemental Package.

Forward-looking Information

This press release contains forward-looking information based upon the Company’s current best judgment and expectations. Actual results could vary from those presented herein. The risks and uncertainties associated with forward-looking information in this release include the strength of the commercial office real estate markets in New York, competitive market conditions, unanticipated administrative costs, timing of leasing income, general and local economic conditions, interest rates, capital market conditions, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, and other factors, which are beyond the Company’s control. We undertake no obligation to publicly update or revise any of the forward-looking information. For further information, please refer to the Company’s filing with the Securities and Exchange Commission.

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SL GREEN REALTY CORP.

STATEMENTS OF OPERATIONS-UNAUDITED

(Amounts in thousands, except per share data)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2006			2005			2006			2005
Revenue:
Rental revenue, net		$	101,230		$	74,345		$	365,135		$	285,316
Escalations & reimbursement revenues		16,881			16,186			68,053			55,739
Preferred equity and investment income		15,210			11,266			61,982			44,989
Other income		26,215			8,337			57,107			38,142
Total revenues		159,536			110,134			552,277			424,186
Equity in net income from unconsolidated joint ventures		10,537			10,706			40,780			49,349
Expenses:
Operating expenses		32,255			26,937			125,912			99,464
Ground rent		5,463			5,162			20,150			19,250
Real estate taxes		18,591			14,484			75,204			58,037
Marketing, general and administrative		25,669			11,965			65,741			44,215
Total expenses		81,978			58,548			287,007			220,966
Earnings Before Interest, Depreciation and Amortization (EBITDA)		88,095			62,292			306,050			252,569
Interest expense		29,834			20,100			96,349			77,353
Amortization of deferred financing costs		1,329			875			4,425			4,461
Depreciation and amortization		21,592			15,869			75,085			58,648
Net income from Continuing Operations		35,340			25,448			130,191			112,107
Income from Discontinued Operations, net of minority interests		—			1,976			4,217			6,506
Gain on sale of Discontinued Operations, net of minority interests		—			—			93,976			33,875
Equity in net gain on sale of interest in unconsolidated joint venture		—			—			—			11,550
Gain on sale of real estate interest		3,451			—			3,451			—
Minority interests		(4,464		)	(1,619		)	(11,116		)	(6,619		)
Preferred stock dividends		(4,969		)	(4,969		)	(19,875		)	(19,875		)
Net income available to common shareholders		$	29,358		$	20,836		$	200,844		$	137,544
Net income per share (Basic)		$	0.62		$	0.49		$	4.50		$	3.29
Net income per share (Diluted)		$	0.62		$	0.48		$	4.38		$	3.20
Funds From Operations (FFO)
FFO per share (Basic)		$	1.22		$	1.05		$	4.75		$	4.28
FFO per share (Diluted)		$	1.18		$	1.02		$	4.61		$	4.16
FFO Calculation:
Net income from continuing operations		$	35,340		$	25,448		$	130,191		$	112,107
Add:
Depreciation and amortization		21,592			15,869			75,085			58,648
FFO from Discontinued Operations		—			2,600			5,172			9,002
FFO adjustment for Joint Ventures		8,808			8,130			34,049			30,412
Less:
Dividend on perpetual preferred stock		(4,969		)	(4,969		)	(19,875		)	(19,875		)
Depreciation of non-real estate assets		(241		)	(204		)	(988		)	(781		)
FFO before minority interests – BASIC and DILUTED		$	60,530		$	46,874		$	223,634		$	189,513
Basic ownership interest
Weighted average REIT common shares for net income per share		46,993			42,148			44,593			41,793
Weighted average partnership units held by minority interests		2,697			2,448			2,511			2,499
Basic weighted average shares and units outstanding for FFO per share		49,690			44,596			47,104			44,292
Diluted ownership interest
Weighted average REIT common share and common share equivalents		48,463			43,372			45,984			43,005
Weighted average partnership units held by minority interests		2,697			2,448			2,511			2,499
Diluted weighted average shares and units outstanding		51,160			45,820			48,495			45,504

 

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SL GREEN REALTY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

		December 31, 2006			December 31, 2005
		(Unaudited)
Assets
Commercial real estate properties, at cost:
Land and land interests		$	439,986		$	288,239
Buildings and improvements		2,111,970			1,440,584
Building leasehold and improvements		490,995			481,891
Property under capital lease		12,208			12,208
		3,055,159			2,222,922
Less accumulated depreciation		(279,436		)	(219,295		)
		2,775,723			2,003,627
Cash and cash equivalents		117,178			24,104
Restricted cash		252,272			60,750
Tenant and other receivables, net of allowance of $11,079 and $9,681 in 2006 and 2005, respectively		34,483			23,722
Related party receivables		7,195			7,707
Deferred rents receivable, net of allowance of $10,925 and $8,698 in 2006 and 2005, respectively		96,624			75,294
Structured finance investments, net of discount of $14,804 and $1,537 in 2006 and 2005, respectively		445,026			400,076
Investments in unconsolidated joint ventures		686,069			543,189
Deferred costs, net		97,850			79,428
Other assets		119,807			91,880
Total assets		$	4,632,227		$	3,309,777
Liabilities and Stockholders’ Equity
Mortgage notes payable		$	1,190,379		$	885,252
Revolving credit facility		—			32,000
Term loans		525,000			525,000
Accrued interest		10,008			7,711
Accounts payable and accrued expenses		138,181			87,390
Deferred revenue/gain		43,721			25,691
Capitalized lease obligation		16,394			16,260
Deferred land lease payable		16,938			16,312
Dividend and distributions payable		40,917			31,103
Security deposits		27,913			24,556
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities		100,000			100,000
Total liabilities		2,109,451			1,751,275
Commitments and contingencies		—			—
Minority interest in other partnerships		56,162			25,012
Minority interest in operating partnership		71,731			74,049
Stockholders’ Equity
7.625% Series C perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 6,300 issued and outstanding at December 31, 2006 and 2005, respectively		151,981			151,981
7.875% Series D perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 4,000 issued and outstanding at December 31, 2006 and 2005, respectively		96,321			96,321
Common stock, $0.01 par value 100,000 shares authorized, 49,840 and 42,456 issued and outstanding at December 31, 2006 and 2005, respectively		498			425
Additional paid - in capital		1,809,893			959,858
Accumulated other comprehensive income		13,971			15,316
Retained earnings		322,219			235,540
Total stockholders’ equity		2,394,883			1,459,441
Total liabilities and stockholders’ equity		$	4,632,227		$	3,309,777

 

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SL GREEN REALTY CORP.

SELECTED OPERATING DATA-UNAUDITED

		December 31,
		2006			2005
Operating Data: (1)
Net rentable area at end of period (in 000’s)		19,000			18,200
Portfolio percentage leased at end of period		97.0		%	96.7		%
Same-Store percentage leased at end of period		97.4		%	96.5		%
Number of properties in operation		28			28
Office square feet leased during quarter (rentable)		452,497			963,087
Average mark-to-market percentage-office		28.7		%	20.3		%
Average starting cash rent per rentable square foot-office		$	61.99		$	46.89

 

(1)           Includes wholly owned and joint venture properties.

SL GREEN REALTY CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES*

(Amounts in thousands, except per share data)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2006			2005			2006			2005
Earnings before interest, depreciation and amortization (EBITDA):		$	88,095		$	62,292		$	306,050		$	252,569
Add:
Marketing, general & administrative expense		25,669			11,965			65,741			44,215
Operating income from discontinued operations		—			2,601			5,174			9,191
Less:
Non-building revenue		(32,607		)	(16,528		)	(100,058		)	(70,871		)
Equity in net income from joint ventures		(10,537		)	(10,706		)	(40,780		)	(49,349		)
GAAP net operating income (GAAP NOI)		70,620			49,624			236,127			185,755
Less:
Operating income from discontinued operations		(—		)	(2,601		)	(5,174		)	(9,191		)
GAAP NOI from other properties/affiliates		(18,493		)	(4,410		)	(44,533		)	(11,241		)
Same-Store GAAP NOI		$	52,127		$	42,613		$	186,420		$	165,323

 

*              See page 7 for a reconciliation of FFO and EBITDA to net income.

9

Exhibit 99.2

SL Green Realty Corp.

Fourth Quarter 2006

Supplemental Data

December 31, 2006

 

 

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

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

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

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

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

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

The following discussion related to the consolidated financial statements of the Company should be read in conjunction with the financial statements for the quarter ended December 31, 2006 that will subsequently be released on Form 10-K to be filed on or before March 1, 2007.

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TABLE OF CONTENTS

Highlights of Current Period Financial Performance
Unaudited Financial Statements
Corporate Profile	4
Financial Highlights	5-11
Balance Sheets	12-13
Statements of Operations	14
Funds From Operations	15
Statement of Stockholders’ Equity	16
Taxable Income	17
Joint Venture Statements	18-21
Selected Financial Data	22-25
Summary of Debt and Ground Lease Arrangements	26-27
Mortgage Investments and Preferred Equity	28-29
Property Data
Composition of Property Portfolio	30
Top Tenants	31
Tenant Diversification	32
Leasing Activity Summary	33-34
Lease Expiration Schedule	35
Summary of Acquisition/Disposition Activity	36-37
Supplemental Definitions	38
Corporate Information	39

 

3

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CORPORATE PROFILE

SL Green Realty Corp. (the “Company”) was formed on August 20, 1997 to continue the commercial real estate business of S.L. Green Properties Inc. founded in 1980 by Stephen L. Green, our current Chairman.  For more than 25 years SL Green has been engaged in the business of owning, managing, leasing, acquiring and repositioning office properties in Manhattan.  The Company’s investment focus is to create value through the acquisition, redevelopment and repositioning of Manhattan office properties and releasing and managing these properties for maximum cash flow.

Looking forward, SL Green Realty Corp. will continue its opportunistic investment philosophy through three established business lines:  investment in long-term core properties, investment in opportunistic assets and structured finance investments.  With the formation of Gramercy Capital Corp., or Gramercy, (NYSE: GKK) in 2004, there will be a reduced focus on direct structured finance investments by the Company.  This three-legged investment strategy will allow SL Green to balance the components of its portfolio to take advantage of each stage in the business cycle.

Today, the Company is the only fully integrated, self-managed, self-administered Real Estate Investment Trust, or REIT, exclusively focused on owning and operating office buildings in Manhattan. SL Green is a pure play for investors to own a piece of New York.

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FINANCIAL HIGHLIGHTS Fourth Quarter 2006 UNAUDITED

 

FINANCIAL RESULTS

Funds From Operations, or FFO, available to common stockholders totaled $60.5 million, or $1.18 per share for the fourth quarter ended December 31, 2006, a 15.7% increase over the same quarter in 2005 when FFO totaled $46.9 million, or $1.02 per share.

Net income available for common stockholders totaled $29.4 million, or $0.62 per share (diluted) for the fourth quarter ended December 31, 2006. Net income available to common stockholders totaled $20.8 million or $0.48 per share in the same quarter in 2005.  Fourth quarter 2006 results include gains on sale of $0.07 per share compared to no gains on sale in 2005.

Funds available for distribution, or FAD, for the fourth quarter 2006 increased to $0.78 per share (diluted) versus $0.67 per share (diluted) in the prior year, a 16.4% increase.

The Company’s dividend payout ratio was 59.2% of FFO and 90.2% of FAD before first cycle leasing costs.

All per share amounts are presented on a diluted basis.

CONSOLIDATED RESULTS

Total quarterly revenues increased 44.9% in the fourth quarter to $159.5 million compared to $110.1 million in the prior year.  The $49.4 million growth in revenue resulted primarily from the following items:

·                  $15.2 million increase from 2006 and 2005 acquisitions,

·                  $10.9 million increase from same-store properties,

·                  $3.9 million increase in preferred equity and investment income, and

·                  $19.4 million increase in other revenue, which was primarily due to a incentive fees earned in 2006 ($8.8 million) as well as from fees earned from Gramercy ($2.5 million).

The Company’s earnings before interest, taxes, depreciation and amortization, or EBITDA, increased by $25.8 million (41.4%) to $88.1 million.  The following items drove EBITDA improvements:

·                  $12.6 million increase from 2006 and 2005 acquisitions.

·                  $9.6 million increase from same-store properties.

·                  $3.9 million increase in preferred equity and investment income.  The weighted-average structured finance investment balance for the quarter decreased to $381.3 million from $400.0 million in the prior year.  The weighted-average yield for the quarter was 10.45% compared to 10.43% in the prior year.

·                  $0.2 million decrease from reductions in equity in net income from unconsolidated joint ventures primarily due to our investments at 1515 Broadway ($1.3 million), 485 Lexington Avenue ($0.6 million) and the Mack-Green joint venture ($0.4 million).  This was partially offset by

5

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increases at Gramercy ($1.8 million) and 1250 Broadway ($0.5 million).

·                  $13.7 million decrease from higher MG&A expense.  This is primarily due to higher compensation costs at GKK Manager LLC, which is consolidated into the accounts of SL Green.

·                  $13.6 million increase in non-real estate revenues net of expenses, primarily due to increased incentive fees earned in 2006 ($8.8 million) in addition to fee income from Gramercy ($2.5 million).

FFO before minority interests improved $9.9 million primarily as a result of:

·                  $25.8 million increase in EBITDA,

·                  $5.7 million decrease in FFO from unconsolidated joint ventures, discontinued operations and non-real estate depreciation, and

·                  $10.2 million decrease from higher interest expense.

SAME-STORE RESULTS

Consolidated Properties

Same-store fourth quarter 2006 GAAP NOI increased $9.5 million (22.3%) to $52.1 million compared to the prior year.  Operating margins before ground rent increased from 54.2% to 58.2%.

The $9.5 million increase in GAAP NOI was primarily due to:

·                  $7.5 million (10.5%) increase in rental revenue primarily due to improved leasing,

·                  $0.5 million (3.3%) decrease in escalation and reimbursement revenue,

·                  $3.0 million (349.0%) increase in investment and other income, and

·                  $0.5 million (2.2%) increase in operating expenses, primarily driven by increases in payroll, repairs and maintenance and insurance costs, but was offset by reductions in utility costs.

Joint Venture Properties

The Joint Venture same-store properties fourth quarter 2006 GAAP NOI increased $1.3 million (5.5%) to $24.7 million compared to the prior year.  Operating margins before ground rent increased from 55.4% to 56.4%.

The $1.3 million increase in GAAP NOI was primarily due to:

·                  $0.8 million (2.4%) increase in rental revenue primarily due to improved leasing,

·                  $0.6 million (7.4%) increase in escalation and reimbursement revenue primarily due to electric reimbursements and real estate tax and operating expense recoveries,

·                  $0.1 million (15.4%) increase in other income, and

·                  $0.2 million (1.7%) increase in operating expenses primarily driven by increases in utilities and insurance.

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STRUCTURED FINANCE ACTIVITY

As of December 31, 2006, our structured finance and preferred equity investments totaled $445.0 million.  The weighted average balance outstanding for the fourth quarter of 2006 was $381.3 million.  During the fourth quarter of 2006 the weighted average yield was 10.45%.

During the fourth quarter 2006, the Company originated $97.1 million of structured finance investments with an initial yield of 9.2%.There were no redemptions during the quarter.

QUARTERLY LEASING HIGHLIGHTS

Vacancy at September 30, 2006 was 723,388 useable square feet net of holdover tenants.  During the quarter, 212,804 additional useable office, retail and storage square feet became available at an average escalated cash rent of $57.61 per rentable square foot.  The Company acquired 16,280 of available usable square feet in connection with the closing of the 800 Third Avenue transaction.  Space available to lease during the quarter totaled 936,192 useable square feet, or 4.9% of the total portfolio.

During the fourth quarter, 38 office leases, including early renewals, were signed totaling 452,497 rentable square feet.  New cash rents averaged $61.99 per rentable square foot.  Replacement rents were 28.7% higher than rents on previously occupied space, which had fully escalated cash rents averaging $48.18 per rentable square foot.  The average lease term was 10 years and average tenant concessions were 3.3 months of free rent with a tenant improvement allowance of $32.49 per rentable square foot.

The Company also signed 9 retail and storage leases, including early renewals, for 5,879 rentable square feet.  The average lease term was 9.1 years and the average tenant concessions were 2.7 months of free rent with a tenant improvement allowance of $21.83 per rentable square foot.

REAL ESTATE ACTIVITY

Real estate investment transactions entered into during the fourth quarter totaled approximately $6.9 billion and included:

·                  In January 2007, the Company acquired Reckson Associates Realty Corp. for approximately $6.0 billion.  The transaction includes the acquisition of thirty properties encompassing approximately 9.2 million square feet, of which 5 properties encompassing approximately 4.2 million square feet are located in Manhattan.  Simultaneously, the Company also sold approximately $2.0 billion of the Reckson assets to an asset purchasing venture which includes certain members of Reckson’s senior management.

·                  In December 2006, the Company invested approximately $109.5 million in 800 Third Avenue 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 have the right to re-acquire

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approximately 4% of the property’s equity.  The investment values the midtown Manhattan office property at $285.0 million.  SL Green will control a minority interest in the property in a joint venture with the remaining existing owners. 800 Third Avenue is a 40-story Class A office building located in the Grand Central submarket.  Joseph P. Day Realty Corp. will continue to operate and lease the property in partnership with SL Green.

·                  In December 2006, the Company purchased interests in 485 Lexington Avenue from its partners, The City Investment Fund (CIF) and The Witkoff Group, resulting in majority ownership and control of the property. As a result of the acquisition of interests from CIF and The Witkoff Group, SL Green’s ownership interest in 485 Lexington Avenue is 87%.  The transaction values the property at $578 million compared to $225 million or $244 per square foot when first acquired in 2004.  In addition, SL Green originated a loan secured by CIF’s remaining ownership stake.  SL Green also acquired an option from CIF to purchase its remaining equity interest.

·                  During the fourth quarter of 2006, SL Green sold to CIF a 49.9% interest in the entity that owns the leasehold interest in 521 Fifth Avenue.  The sale of the interest in the property, which encompasses approximately 460,000 square feet, valued the property at $240.0 million.  This sale generated a gain of approximately $3.5 million, or $0.07 per share.

Investment In Gramercy Capital Corp.

At December 31, 2006, the book value of the Company’s investment in Gramercy totaled $118.6 million. Fees earned from various arrangements between the Company and Gramercy totaled approximately $7.9 million for the quarter ended December 31, 2006, including an incentive fee of $3.0 million earned as a result of Gramercy’s FFO (as defined in Gramercy’s management agreement) exceeding the 9.5% annual return on equity performance threshold.  For the year ended December 31, 2006, the Company earned $24.3 million in fees from Gramercy.  The Company’s share of FFO generated from its investment in Gramercy totaled approximately $5.1 million and $16.0 million for the quarter and year ended December 31, 2006, respectively, compared to $3.2 million and $9.1 million for the same periods in the prior year.

The Company’s marketing, general and administrative, or MG&A, expenses include the consolidation of the expenses of its subsidiary GKK Manager LLC, the entity which manages and advises Gramercy.  For the quarter ended December 31, 2006, the Company’s MG&A includes approximately $1.9 million of costs associated with Gramercy as well as approximately $10.0 million of additional incentive compensation expense.  The Company’s board of directors elected to convey this additional incentive compensation to various senior executives in recognition of their extraordinary efforts in 2006, including the approval of the Reckson merger, as well as the Company’s sector leading performance.

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FINANCING/ CAPITAL ACTIVITY

In November 2006, the Company sold 3,998,100 million shares of its common stock for net proceeds, after deducting underwriting discounts, commissions and transaction expenses, of approximately $532.1 million.

In January 2007, the Company exercised the accordian feature in their unsecured revolving line of credit. As a result, the capacity under the unsecured revolver increased by $300.0 million to $800.0 million.

In January 2007, the Company issued approximately 9.0 million common shares and closed on $298.0 million of new mortgage financing, assumed approximately $238.6 million of mortgage debt, approximately $967.8 million of unsecured notes and approximately $287.5 million of convertible debt in connection with the acquisition of Reckson.

Dividends

On December 4, 2006, the Company declared a dividend of $0.70 per common share for the fourth quarter 2006.  The dividend was payable January 12, 2007 to stockholders of record on the close of business on December 29, 2006.  This distribution reflects the regular quarterly dividend, which is the equivalent of an annualized distribution of $2.80 per common share.

On December 4, 2006, the Company also approved a distribution on its Series C preferred stock for the period October 15, 2006 through and including January 14, 2007, of $0.4766 per share, payable January 12, 2007 to stockholders of record on the close of business on December 29, 2006. The distribution reflects the regular quarterly distribution, which is the equivalent of an annualized distribution of $1.90625 per Series C preferred stock.

On December 4, 2006, the Company also approved a distribution on its Series D preferred stock for the period October 15, 2006 through and including January 14, 2007, of $0.4922 per share, payable January 12, 2007 to stockholders of record on the close of business on December 29, 2006. The distribution reflects the regular quarterly distribution, which is the equivalent of an annualized distribution of $1.96875 per Series D preferred stock.

Other

For 2007, the consolidated Same-Store Properties will include 19 West and 28 West 44th Street and the joint-venture Same-Store Properties will include One Madison Avenue-South Building.

9

SL Green Realty Corp. Key Financial Data December 31, 2006 (Dollars in Thousands Except Per Share and Sq. Ft.)

 

		As of or for the three months ended
		12/31/2006			9/30/2006			6/30/2006			3/31/2006			12/31/2005
Earnings Per Share
Net income available to common shareholders - diluted		$	0.62		$	2.53		$	0.65		$	0.54		$	0.48
Funds from operations available to common shareholders - diluted		$	1.18		$	1.13		$	1.22		$	1.08		$	1.02
Funds available for distribution to common shareholders - diluted		$	0.78		$	0.81		$	0.94		$	0.80		$	0.67
Common Share Price & Dividends
At the end of the period		$	132.78		$	111.70		$	109.47		$	101.50		$	76.39
High during period		$	139.50		$	115.90		$	109.47		$	103.09		$	77.14
Low during period		$	112.37		$	107.17		$	95.31		$	77.70		$	63.80
Common dividends per share		$	0.70		$	0.60		$	0.60		$	0.60		$	0.60
FFO Payout Ratio		59.16		%	53.16		%	49.20		%	55.53		%	58.65		%
FAD Payout Ratio		90.23		%	73.75		%	63.91		%	75.40		%	89.03		%
Common Shares & Units
Common shares outstanding		49,840			45,774			43,226			43,133			42,456
Units outstanding		2,694			2,219			2,219			2,263			2,427
Total shares and units outstanding		52,534			47,993			45,445			45,396			44,883
Weighted average common shares and units outstanding - basic		49,689			47,495			45,421			45,169			44,596
Weighted average common shares and units outstanding - diluted		51,160			49,215			46,901			46,608			45,820
Market Capitalization
Market value of common equity		$	6,975,465		$	5,360,818		$	4,974,864		$	4,607,694		$	3,428,612
Liquidation value of preferred equity		257,500			257,500			257,500			257,500			257,500
Consolidated debt		1,815,379			1,975,325			1,853,644			1,693,907			1,542,252
Consolidated market capitalization		$	9,048,344		$	7,593,643		$	7,086,008		$	6,559,101		$	5,228,364
SLG portion JV debt		1,209,281			1,181,397			1,179,332			1,111,160			1,040,265
Combined market capitalization		$	10,257,625		$	8,775,040		$	8,265,340		$	7,670,261		$	6,268,629
Consolidated debt to market capitalization		20.06		%	26.01		%	26.16		%	25.83		%	29.50		%
Combined debt to market capitalization		29.49		%	35.97		%	36.70		%	36.57		%	41.20		%
Consolidated debt service coverage		3.12			3.38			3.63			3.55			3.53
Consolidated fixed charge coverage		2.36			2.47			2.59			2.45			2.39
Combined fixed charge coverage		1.89			1.93			2.03			1.95			1.93
Portfolio Statistics
Directly owned office buildings		20			20			23			22			21
Joint venture office buildings		8			7			7			7			7
		28			27			30			29			28
Directly owned square footage		10,086,000			9,625,000			9,965,000			9,805,000			9,345,000
Joint venture square footage		8,879,900			8,814,900			8,814,900			8,814,900			8,814,900
		18,965,900			18,439,900			18,779,900			18,619,900			18,159,900
Quarter end occupancy-portfolio		97.0		%	96.1		%	95.9		%	95.2		%	96.7		%
Quarter end occupancy- same store - wholly owned		97.5		%	97.0		%	96.8		%	96.1		%	96.0		%
Quarter end occupancy- same store - combined (wholly owned + joint venture)		97.4		%	96.9		%	96.9		%	96.3		%	96.5		%

 

10

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SL Green Realty Corp. Key Financial Data December 31, 2006 (Dollars in Thousands Except Per Share and Sq. Ft.)

 

		As of or for the three months ended
		12/31/2006			9/30/2006			6/30/2006			3/31/2006			12/31/05
Selected Balance Sheet Data
Real estate assets before depreciation		$	3,055,159		$	2,824,688		$	2,634,724		$	2,343,714		$	2,222,922
Investments in unconsolidated joint ventures		$	686,069		$	549,040		$	571,418		$	533,145		$	543,189
Structured finance investments		$	445,026		$	347,558		$	333,989		$	466,173		$	400,076
Total Assets		$	4,632,227		$	4,226,806		$	3,691,952		$	3,482,532		$	3,309,777
Fixed rate & hedged debt		$	1,511,714		$	1,418,106		$	1,419,065		$	1,254,116		$	1,255,141
Variable rate debt		303,665			462,219			339,579			439,791			287,111
Total consolidated debt		$	1,815,379		$	1,880,325		$	1,758,644		$	1,693,907		$	1,542,252
Total Liabilities		$	2,109,451		$	2,239,912		$	2,090,786		$	1,893,838		$	1,751,275
Fixed rate & hedged debt-including SLG portion of JV debt		$	2,099,716		$	1,957,206		$	1,958,896		$	1,768,857		$	1,741,225
Variable rate debt - including SLG portion of JV debt		924,944			1,104,516			979,080			1,036,210			841,292
Total combined debt		$	3,024,660		$	3,061,722		$	2,937,976		$	2,805,067		$	2,582,517
Selected Operating Data
Property operating revenues		$	118,111		$	113,124		$	104,004		$	97,948		$	90,531
Property operating expenses		56,309			58,867			53,269			52,824			46,583
Property operating NOI		$	61,802		$	54,257		$	50,735		$	45,124		$	43,948
NOI from discontinued operations		—			1,674			2,079			1,694			2,601
Total property operating NOI		$	61,802		$	55,931		$	52,814		$	46,818		$	46,549
SLG share of Property NOI from JVs		$	37,419		$	36,587		$	33,834		$	32,130		$	31,595
SLG share of FFO from Gramercy Capital		$	5,083		$	4,125		$	3,694		$	3,168		$	3,205
Structured finance income		$	15,210		$	15,714		$	17,305		$	13,479		$	11,266
Other income		$	26,215		$	9,517		$	11,475		$	9,900		$	8,337
Marketing general & administrative expenses		$	25,669		$	13,829		$	13,257		$	12,986		$	11,965
Consolidated interest		$	29,834		$	24,764		$	22,901		$	18,850		$	20,100
Combined interest		$	50,154		$	43,990		$	40,088		$	34,428		$	34,642
Preferred Dividend		$	4,969		$	4,969		$	4,969		$	4,969		$	4,969
Office Leasing Statistics
Total office leases signed		38			56			57			65			55
Total office square footage leased		452,497			586,223			427,862			539,399			963,087
Average rent psf		$	61.99		$	62.67		$	46.40		$	37.74		$	46.89
Escalated rents psf		$	48.18		$	49.81		$	42.08		$	32.33		$	38.99
Percentage of rent over escalated		28.7		%	25.8		%	10.3		%	16.7		%	20.3		%
Tenant concession packages psf		$	32.49		$	14.90		$	24.89		$	12.91		$	39.57
Free rent months		3.3			1.9			2.5			2.1			6.2

 

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COMPARATIVE BALANCE SHEETS Unaudited ($000’s omitted)

 

		12/31/2006			9/30/2006			6/30/2006			3/31/2006			12/31/2005
Assets
Commercial real estate properties, at cost:
Land & land interests		$	439,986		$	349,073		$	302,821		$	270,351		$	288,239
Buildings & improvements fee interest		2,111,970			1,671,234			1,477,106			1,365,554			1,440,584
Buildings & improvements leasehold		490,995			705,900			703,843			695,601			481,891
Buildings & improvements under capital lease		12,208			12,208			12,208			12,208			12,208
		$	3,055,159		$	2,738,415		$	2,495,978		$	2,343,714		$	2,222,922
Less accumulated depreciation		(279,436		)	(253,136		)	(236,727		)	(231,561		)	(219,295		)
		$	2,775,723		$	2,485,279		$	2,259,251		$	2,112,153		$	2,003,627
Other Real Estate Investments:
Investment in unconsolidated joint ventures		686,069			549,040			571,418			533,145			543,189
Structured finance investments		445,026			347,558			333,989			466,173			400,076
Assets held for sale		—			121,962			170,173			—			—
Cash and cash equivalents		117,178			176,444			14,184			20,535			24,104
Restricted cash		252,272			227,482			61,663			59,489			60,750
Tenant and other receivables, net of $11,079 reserve at 12/31/06		34,483			32,037			27,115			21,011			23,722
Related party receivables		7,195			9,563			8,330			6,329			7,707
Deferred rents receivable, net of reserve for tenant credit loss of $10,925 at 12/31/06		96,624			85,242			81,561			80,249			75,294
Deferred costs, net		97,850			74,223			73,747			77,145			79,428
Other assets		119,807			117,976			90,521			106,303			91,880
Total Assets		$	4,632,227		$	4,226,806		$	3,691,952		$	3,482,532		$	3,309,777

 

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COMPARATIVE BALANCE SHEETS Unaudited ($000’s omitted)

 

		12/31/2006			9/30/2006			6/30/2006			3/31/2006			12/31/2005
Liabilities and Stockholders’ Equity
Mortgage notes payable		$	1,190,379		$	1,255,325		$	1,078,999		$	912,262		$	885,252
Unsecured & Secured term loans		525,000			525,000			525,000			525,000			525,000
Revolving credit facilities		—			—			54,645			156,645			32,000
Accrued interest		10,008			9,353			7,991			7,706			7,711
Accounts payable and accrued expenses		138,181			96,741			84,977			69,079			87,390
Deferred revenue		43,721			63,358			49,045			30,759			25,691
Capitalized lease obligations		16,394			16,359			16,325			16,292			16,260
Deferred land lease payable		16,938			16,782			16,625			16,469			16,312
Dividend and distributions payable		40,917			33,247			31,725			31,408			31,103
Security deposits		27,913			28,368			30,075			28,218			24,556
Liabilities related to assets held for sale		—			95,379			95,379			—			—
Junior subordinated deferrable interest debentures		100,000			100,000			100,000			100,000			100,000
Total Liabilities		$	2,109,451		$	2,239,912		$	2,090,786		$	1,893,838		$	1,751,275
Minority interest in other partnerships		56,162			56,929			37,164			34,693			25,012
Minority interest in operating partnership (2,694 units outstanding) at 12/31/06		71,731			71,910			67,498			68,982			74,049
Stockholders’ Equity
7.625% Series C Perpetual Preferred Shares		151,981			151,981			151,981			151,981			151,981
7.875% Series D Perpetual Preferred Shares		96,321			96,321			96,321			96,321			96,321
Common stock, $.01 par value 100,000 shares authorized, 49,840 issued and outstanding at 12/31/06		498			458			432			431			425
Additional paid – in capital		1,809,893			1,268,491			991,241			983,144			959,858
Accumulated other comprehensive income		13,971			13,060			20,009			19,750			15,316
Retained earnings		322,219			327,744			236,520			233,392			235,540
Total Stockholders’ Equity		$	2,394,883		$	1,858,055		$	1,496,504		$	1,485,019		$	1,459,441
Total Liabilities and Stockholders’ Equity		$	4,632,227		$	4,226,806		$	3,691,952		$	3,482,532		$	3,309,777

 

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