UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported):

July 23, 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 July 23, 2007 announcing the Company’s results for the second quarter ended June 30, 2007, 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 is increasing its earnings guidance for the year ending December 31, 2007 from $5.40 to $5.50 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 July 23, 2007, the Company issued a press release announcing its results for the second quarter ended June 30, 2007. The Company is increasing its earnings guidance for the year ending December 31, 2007 from $5.40 to $5.50 per share of FFO.

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 July 24, 2007, SL Green Realty Corp. announced that it has entered into an agreement to form a joint venture with Wachovia Corporation (NYSE:WB) for 1372 Broadway, New York, New York, a property which is currently wholly-owned by SL Green.  Under the terms of the joint venture agreement, Wachovia will own an 85% interest in the property based upon a gross aggregate price of $335 million. The Company is attaching the press release as Exhibit 99.3.

Item 9.01.              Financial Statements and Exhibits

(c)           Exhibits

99.1                           Press Release regarding second quarter earnings.

99.2                           Supplemental package.

99.3                           Press release regarding sale of 1372 Broadway.

2

---

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.

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, 2006 and still owned at the end of the quarter, the Company determines net operating income by subtracting property operating expenses and ground rent from recurring rental and tenant reimbursement revenues.  Same-store net operating income is not an alternative to

3

---

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).

4

---

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: July 24, 2007

 

 

5

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT

Gregory F. Hughes

Chief Operating Officer and

Chief Financial Officer

(212) 594-2700

or

Heidi Gillette

Investor Relations

(212) 216-1601

SL GREEN REALTY CORP. REPORTS

SECOND QUARTER FFO OF $1.26 PER SHARE

 

Second Quarter Highlights

·                  Increased second quarter FFO to $1.26 per share (diluted) from $1.22 per share (diluted) during the second quarter of 2006, an increase of 3.3%.  FFO for the six months ended June 30, 2007 increased 42.2% over the same period in the prior year to $3.27 per share (diluted).

·                  Net income available to common stockholders for the second quarter of 2007 totaled $4.38 per share (diluted). Net income available to common stockholders for the six months ended June 30, 2007 totaled $6.93 per share (diluted).

·                  Increased average Manhattan office starting rents by 40.5% over previously fully escalated rents reflecting continued growth in rents for Manhattan office leases signed during the second quarter.

·                  Recognized combined same-store GAAP NOI growth of 9.2% during the second quarter, including 14.3% from the consolidated same-store properties.

·                  Closed on the sales of 125 Broad Street and 110 East 42nd Street for $384.5 million recognizing a gain of approximately $252.0 million, or $3.98 per share (diluted).

·                  Closed on the sale of 5 Madison Avenue - the ClockTower for $200.0 million and realized a $5.5 million incentive distribution.

·                  Closed on the acquisitions of 333 West 34th Street, 331 Madison Avenue and 48 East 43rd Street for approximately $256.0 million.

·                  Acquired a fee interest in 2 Herald Square, subject to a long-term operating lease, for $225.0 million. SL Green owns a 55% tenancy-in-common interest in the fee and Gramercy Capital Corp. (NYSE: GKK), or Gramercy, owns the remaining 45%.

·                  Acquired a fee and leasehold interest in 885 Third Avenue, the Lipstick Building, subject to a long-term operating lease, for $317.0 million, in July

1

---

2007. SL Green owns a 55% tenancy-in-common interest in the fee and leasehold and Gramercy owns the remaining 45%.

·                  Agreed to acquire Gramercy’s 45% interest in One Madison Avenue at an implied value of $1.0 billion for the entire property.

·                  Entered into an agreement to renew and extend the maturity date of the ground lease at Graybar through December 31, 2029, with options for further extension through 2080.  Ground lease rent payments under the new lease will total approximately $12.2 million per year.

·                  Amended and restated the Company’s existing unsecured revolving credit facility increasing availability from $800 million to $1.25 billion, reducing interest rate spreads, extending the maturity date to June 28, 2011 and modifying certain financial and other restrictive covenants of the credit facility to provide the Company with greater financial flexibility.

·                  Repaid and terminated the Company’s $500.0 million unsecured bridge loan and $200.0 million secured term loan.  Redeemed $50.0 million of Reckson Operating Partnership’s 6.0% notes due June 2007 and $150.0 million 7.2% notes due August 2007 in April 2007.  These redemptions and repayments included one time charges of approximately $8.1 million for exit fees, make-whole payments and the write-off of deferred financing costs.

·                  Acquired $49.9 million of the Company’s common stock at an average share price of $128.21 pursuant to a stock repurchase program.

·                  Signed 75 Manhattan office leases totaling 692,925 square feet during the second quarter.

·                  Signed a 15-year lease with Giorgio Armani for more than 40,000 square feet at 717 Fifth Avenue.

·                  Finished the quarter at 97.6% occupancy for the Manhattan portfolio.

·                  Originated $62.7 million of structured finance investments during the quarter.  There was also $90.4 million in redemptions during the quarter, which generated exit fees of approximately $4.8 million.

·                  Received $12.8 million in dividends and fees from our investment in, and management arrangements with, Gramercy, including a $3.8 million incentive fee earned during the quarter.

·                  Acquired 16 Court Street, Brooklyn for $107.5 million in a joint venture with The City Investment Fund which will own a 65% interest.

·                  Closed on a $27.0 million financing at 1604 Broadway and increased our economic interest from 45% to 63%.

·                  Closed on the acquisitions of 1010 Washington Avenue, CT and 500 West Putnam, CT for approximately $94.0 million.

·                  Closed on joint venture investments in 1745 Broadway (32.26% interest) and One and Two Jericho Plaza, Long Island (20.26% interest) for a total of $80.7 million.

Summary

New York, NY, July 23, 2007 - SL Green Realty Corp. (NYSE:  SLG) today reported funds from operations available to common stockholders, or FFO, of $79.5 million, or

2

---

 

$1.26 per share, for the second quarter ended June 30, 2007, a 3.3% increase over the same quarter in 2006.  The Company also reported FFO of $3.27 per share for the six months ended June 30, 2007, a 42.2% increase over the same period in 2006, which was $2.30 per share.

Net income available to common stockholders totaled $265.9 million, or $4.38 per share, for the second quarter and $413.3 million, or $6.93 per share for the six months ended June 30, 2007, an increase of $236.8 million and $360.5 million over the respective periods in 2006.  The three and six months ended June 30, 2007 results include gains on sale of $3.98 per share and $5.31 per share, respectively, compared to no gain on sale for the same periods in 2006.

All per share amounts are presented on a diluted basis.

Operating and Leasing Activity

For the second quarter of 2007, the Company reported revenues and EBITDA of $257.7 million and $148.6 million, respectively, increases of $134.1 million, or 108.4%, and $76.5 million, or 106.1%, respectively, over the same period in 2006, largely due to strong leasing activity at 485 Lexington Avenue, 555 West 57th Street and 625 Madison Avenue as well as 2007 acquisitions, including the Reckson acquisition.  Same-store GAAP NOI on a combined basis increased by 9.2% for the second quarter when compared to the same quarter in 2006, with the wholly-owned properties increasing 14.3% to $51.1 million during the second quarter and the joint venture properties increasing 2.0% to $31.8 million.

Average starting Manhattan office rents of $52.96 per rentable square foot for the second quarter represented a 40.5% increase over the previously fully escalated rents.

Occupancy for the Manhattan portfolio increased from 97.3% at March 31, 2007 to 97.6% at June 30, 2007.  During the quarter, the Company signed 75 leases for the Manhattan portfolio totaling 692,925 square feet, with 66 leases and 677,807 square feet representing office leases.

Average starting Suburban office rents of $29.88 per rentable square foot for the second quarter represented an 0.4% increase over the previously fully escalated rents.

Occupancy for the Suburban portfolio increased from 92.7% at March 31, 2007 to 93.8% at June 30, 2007.  During the quarter, the Company signed 20 leases for the Suburban portfolio totaling 60,701 square feet, with 19 leases and 60,581 square feet representing office leases.

Significant leasing activities during the second quarter included:

-                    Early renewal and expansion with Ann Taylor, Inc. for approximately 100,062 square feet at 1372 Broadway.

-                    Early renewal with J. & W. Seligman for approximately 90,039 square feet at 100 Park Avenue.

-                    Early renewal with Value Line Inc. for approximately 63,805 square feet at 220 East 42nd Street.

3

---

 

-                    Expansion with CBS Broadcasting, Inc. for approximately 32,721 square feet at 555 West 57th Street.

-                    Expansion with Polo Ralph Lauren for approximately 27,798 square feet at 625 Madison Avenue.

-                    New lease with Konica Minolta Business for approximately 26,400 square feet at 485 Lexington Avenue.

Real Estate Investment Activity

During the past three months of 2007, the Company announced/closed investments totaling approximately $2.8 billion.

Investment activity announced during the past three months included:

-                    In April 2007, the Company completed the acquisition of 331 Madison Avenue and 48 East 43rd Street for a total of $73.0 million. Both 331 Madison Avenue and 48 East 43rd Street are located adjacent to 317 Madison Avenue, a property that the Company acquired in 2001. 331 Madison Avenue is an approximately 92,000-square foot, 14-story office building. The 22,850-square-foot 48 East 43rd Street property is a seven-story loft building that was later converted to office use.

-                    In April 2007, the Company acquired a 32.26% interest in the office condominium located at 1745 Broadway in Midtown Manhattan.  The investment was made through a joint venture with SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, and The Witkoff Group. The interest was acquired for approximately $66.5 million, valuing the office space at approximately $520.0 million. The property encompasses approximately 674,000 square feet.

-                    In April 2007, the Company acquired the fee interest in 333 West 34th Street for approximately $183.0 million from Citigroup Global Markets, Inc. The property encompasses approximately 345,000 square feet. At closing, Citigroup entered into a full building triple net lease through 2009.

-                    In April 2007, the Company acquired a 20.26% interest in One Jericho Plaza and Two Jericho Plaza in Jericho, New York in a partnership with Onyx Equities and an affiliate of Credit Suisse Securities (USA) LLC.  The interest was acquired for approximately $14.2 million, valuing the office space at approximately $210.0 million. The property encompasses approximately 640,000 square feet.

-                    In April 2007, the Company, along with Gramercy, together as tenants-in-common, acquired a fee interest in 2 Herald Square, a 354,400 square foot office and retail property located at 1328 Broadway in New York City. The fee interest, which is subject to a long-term operating lease, was purchased for approximately $225.0 million. The Company owns 55% of the fee and Gramercy owns the remaining 45%. The tenancy-in-common financed its acquisition with a $191.25 million, 10-year fixed rate loan provided by an affiliate of Goldman, Sachs & Co.

-                    In June 2007, the Company, along with its joint venture partners, acquired the second and third floors in the office tower at 717 Fifth Avenue for approximately

4

---

$16.9 million, excluding closing costs. This acquisition was funded by a $17.5 million upsize to the existing loan.

-                    In July 2007, the Company entered into an agreement to acquire Gramercy’s 45% equity interest in the joint venture that owns One Madison Avenue for approximately $147.2 million (and the assumption of Gramercy’s proportionate share of the debt encumbering the property of approximately $305.3 million). Following the closing of the acquisition of this interest, which is expected to occur in the third quarter, the Company will own 100% of One Madison Avenue.

-                    In July 2007, the Company, along with Gramercy, acquired a 79% fee interest and a 21% leasehold interest in the Lipstick building, a 607,000 square foot class A office building located at 885 Third Avenue in New York City for approximately $317.0 million. Simultaneously, Gramercy and SL Green entered into a 70-year leasehold/sub-leasehold arrangement for the improvements. The Company owns 55% of the investment and Gramercy owns the remaining 45%. The acquisition was financed with a $267.7 million, 10-year fixed rate loan provided by Goldman Sachs Commercial Mortgage Capital.

-                    In July 2007, the Company, along with The City Investment Fund, or CIF, closed on the acquisition of 16 Court Street, Brooklyn for approximately $107.5 million. SL Green will own a 35% interest in the venture. CIF will own the remaining 65% interest. The property is a 38-story, 317,625-square-foot office building.

-                    In June 2007, the Company closed on the acquisition of 1010 Washington Avenue, CT, a 143,400 square foot office tower. The fee interest was purchased for approximately $38.0 million.

-                    In June 2007, the Company acquired an office property located at 500 West Putnam Avenue in Greenwich, Connecticut. The Greenwich property, a four-story, 121,500-square-foot office building, was purchased for approximately $56.0 million.

-                    In June 2007, the joint venture that owned 5 Madison Avenue - The ClockTower sold it for approximately $200.0 million. The Company realized a $5.5 million incentive distribution upon the winding down of the joint venture.

-                    In June 2007, the Company sold its office condominium interest in floors six through eighteen at 110 East 42nd Street for approximately $111.5 million, excluding closing costs. The property encompasses approximately 181,000 square feet. The sale does not include approximately 112,000 square feet of developable air rights, which the Company retained along with the ability to transfer these rights off-site. The Company recognized a gain on sale of approximately $84.0 million.

-                    In June 2007, the Company sold its condominium interests in 125 Broad Street for approximately $273.0 million, excluding closing costs. The property is approximately 525,000 square feet. The Company recognized a gain on sale of approximately $167.9 million.

5

---

 

-                    In July 2007, the Company sold its property located at 292 Madison Avenue for approximately $140.0 million, excluding closing costs. The property encompasses approximately 187,000 square feet. The Company recognized a gain on sale of approximately $99.0 million.

Financing and Capital Activity

In June 2007, the Company amended and restated its existing unsecured revolving credit facility with Wachovia Bank, as agent for itself and other lenders in connection with the Credit Facility. Pursuant to the amendment and restatement, the amount available under the credit facility was increased from $800.0 million to $1.25 billion. The Company has the ability to increase the capacity under the credit facility by an additional $250 million, subject to lender approval.  The amendment and restatement also reduced the applicable interest rate spreads, extended the maturity date to June 28, 2011 and eased certain financial and other restrictive covenants of the credit facility.  As a result of the amendment, interest rate spreads decreased from approximately 110 basis points to 80 basis points over the 30-day LIBOR.

In April 2007, the Company redeemed its $50.0 million 6.0% notes due June 2007 and $150.0 million 7.2% notes due August 2007. These notes had been assumed in connection with the merger with Reckson Associates Realty Corp. Also, in June 2007, the Company paid off and terminated its existing (i) $500.0 million credit agreement, dated as of January 24, 2007, and (ii) $200.0 million five-year non-recourse term loan. In connection with these repayments, the Company realized a one-time expense of approximately $8.1 million for exit fees, make-whole payments and the write-off of unamortized deferred financing costs.

In June 2007, the Company renewed and extended the maturity date of the ground lease at 420 Lexington Avenue through December 31, 2029, with an option for further extension through 2080.  Ground lease rent payments under the new lease will total approximately $12.2 million per year. The ground lease was subject to a revaluation in December 2008.

The Company acquired $49.9 million of its common stock at an average share price of $128.21 during the quarter ended June 30, 2007 pursuant to the stock repurchase program.

The joint venture that owns 1604-1610 Broadway closed on a $27.0 million, 5-year, fixed rate mortgage carrying an interest rate of 5.66% per annum. As a result of the refinancing, the Company’s economic interest in the joint venture increased from 45% to 63%.

In May 2007, the Company repaid, at maturity, the $12.3 million mortgage that had encumbered 100 Summit Road, Westchester.

Structured Finance Activity

The Company’s structured finance investments totaled $661.7 million on June 30, 2007, a decrease of approximately $26.6 million from the balance at March 31, 2007. The structured finance investments currently have a weighted average maturity of 7.0 years. 

6

---

The weighted average yield for the quarter ended June 30, 2007 was 10.52%, compared to a yield of 10.31% for the quarter ended June 30, 2006.

During the second quarter of 2007, the Company originated $62.7 million of structured finance investments which yield approximately 11.45%.  There were also $90.4 million of redemptions during the second quarter of 2007.

Investment In Gramercy Capital Corp.

At June 30, 2007, the book value of the Company’s investment in Gramercy totaled $120.7 million. Fees earned from various arrangements between the Company and Gramercy totaled approximately $9.2 million for the quarter ended June 30, 2007, including an incentive fee of $3.8 million earned as a result of Gramercy’s FFO (as defined in Gramercy’s management agreement) exceeding the 9.5% annual return on equity performance threshold.  For the six months ended June 30, 2007, the Company earned $16.9 million in fees from Gramercy.  The Company’s share of FFO generated from its investment in Gramercy totaled approximately $5.6 million and $10.5 million for the three and six months ended June 30, 2007, respectively, compared to $3.7 million and $6.9 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 June 30, 2007, the Company’s MG&A includes approximately $3.4 million of costs associated with Gramercy.

Dividends

During the second quarter of 2007, 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 July 13, 2007 to stockholders of record on the close of business on June 29, 2007.

-                    $0.4766 and $0.4922 per share on the Company’s Series C and D Preferred Stock, respectively, for the period April 15, 2007 through and including July 14, 2007. Distributions were made on July 13, 2007 to stockholders of record on the close of business on June 29, 2007. Distributions reflect regular quarterly distributions, which are the equivalent of an annualized distribution of $1.90625 and $1.96875, respectively.

7

---

 

Conference Call and Audio Webcast

The Company’s executive management team, led by Marc Holliday, Chief Executive Officer, will host a conference call and audio web cast on Tuesday, July 24, 2007 at 2:00 p.m. EDT to discuss second quarter financial results. The conference call may be accessed by dialing 866.700.0161 Domestic or 617.213.8832 International, SL Green is the passcode. The live conference will be simultaneously broadcast in a listen-only mode on the Company’s web site at www.slgreen.com.

A replay of the call will be available through July 31, 2007 by dialing 888-286-8010 Domestic or (617) 801-6888 International, using pass code 92557990.

Supplemental Information

The Supplemental Package outlining second quarter 2007 financial results will be available prior to the quarterly conference call on the Company’s website.

Company Profile

SL Green Realty Corp. is a self-administered and self-managed real estate investment trust, or REIT, that predominantly acquires, owns, repositions and manages Manhattan office properties. The Company is the only publicly held REIT that specializes in this niche.  As of June 30, 2007, the Company owned 32 New York City office properties totaling approximately 22.5 million square feet, making it New York’s largest office landlord. In addition, SL Green holds investment interests in Manhattan retail properties totaling approximately 285,000 square feet at nine properties, along with ownership of 33 suburban assets totaling 7.0 million square feet in Long Island, Westchester County, Connecticut and New Jersey.

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

8

---

 

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 pages10 and 12 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 filings with the Securities and Exchange Commission.

9

 

SL GREEN REALTY CORP.

STATEMENTS OF OPERATIONS-UNAUDITED

(Amounts in thousands, except per share data)

		Three Months Ended June 30,						Six Months Ended June 30,
Revenue:
Rental revenue, net		$	176,761		$	80,486		$	328,681		$	156,086
Escalations & reimbursement revenues		30,298			14,467			58,334			27,797
Preferred equity and investment income		27,443			17,305			49,152			30,784
Other income		23,204			11,382			113,089			21,190
Total revenues		257,706			123,640			549,256			235,857
Equity in net income from unconsolidated joint ventures		12,059			10,596			21,413			20,564
Expenses:
Operating expenses		54,581			26,247			102,570			52,662
Ground rent		7,766			4,921			15,031			9,842
Real estate taxes		34,652			17,686			65,202			34,721
Marketing, general and administrative		24,131			13,257			58,378			26,243
Total expenses		121,130			62,111			241,181			123,468
Earnings Before Interest, Depreciation and Amortization (EBITDA)		148,635			72,125			329,488			132,953
Interest expense		62,595			21,528			120,186			39,019
Amortization of deferred financing costs		9,242			1,242			12,543			1,956
Depreciation and amortization		44,623			16,720			81,981			31,793
Net income from Continuing Operations		32,175			32,635			114,778			60,185
Income from Discontinued Operations, net of minority interest		2,505			3,818			4,297			6,932
Gain on sale of Discontinued Operations, net of minority interest		241,906			—			286,600			—
Equity in net gain on sale of interest in unconsolidated joint venture		—			—			31,509			—
Minority interests		(5,736)			(2,424)			(13,938)			(4,387)
Preferred stock dividends		(4,969)			(4,969)			(9,938)			(9,938)
Net income available to common shareholders		$	265,881		$	29,060		$	413,308		$	52,792
Net income per share (Basic)		$	4.47		$	0.67		$	7.09		$	1.23
Net income per share (Diluted)		$	4.38		$	0.65		$	6.93		$	1.19
Funds From Operations (FFO)
FFO per share (Basic)		$	1.28		$	1.26		$	3.34		$	2.37
FFO per share (Diluted)		$	1.26		$	1.22		$	3.27		$	2.30
FFO Calculation:
Net income from continuing operations		$	32,175		$	32,635		$	114,778		$	60,185
Add:
Depreciation and amortization		44,623			16,720			81,981			31,793
FFO from Discontinued Operations		2,849			5,434			5,987			10,425
FFO adjustment for Joint Ventures		5,078			7,613			10,900			15,593
Less:
Dividend on perpetual preferred stock		(4,969)			(4,969)			(9,938)			(9,938)
Depreciation of non-real estate assets		(243)			(239)			(479)			(506)
FFO before minority interests – BASIC and DILUTED		$	79,513		$	57,194		$	203,229		$	107,552
Basic ownership interest
Weighted average REIT common shares for net income per share		59,513			43,191			58,258			43,026
Weighted average partnership units held by minority interests		2,471			2,230			2,555			2,270
Basic weighted average shares and units outstanding for FFO per share		61,984			45,421			60,813			45,296
Diluted ownership interest
Weighted average REIT common share and common share equivalents		60,804			44,671			59,660			44,505
Weighted average partnership units held by minority interests		2,471			2,230			2,555			2,270
Diluted weighted average shares and units outstanding		63,275			46,901			62,215			46,775

 

10

 

SL GREEN REALTY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

		June 30, 2007			December 31, 2006
		(Unaudited)
Assets
Commercial real estate properties, at cost:
Land and land interests		$	1,285,915		$	439,986
Buildings and improvements		5,082,758			2,111,970
Building leasehold and improvements		1,201,786			490,995
Property under capital lease		12,208			12,208
		7,582,667			3,055,159
Less accumulated depreciation		(324,756		)	(279,436		)
		7,257,911			2,775,723
Assets held for sale		21,040			—
Cash and cash equivalents		80,300			117,178
Restricted cash		131,247			252,272
Tenant and other receivables, net of allowance of $12,729 and $11,079 in 2007 and 2006, respectively		41,657			34,483
Related party receivables		10,943			7,195
Deferred rents receivable, net of allowance of $12,308 and $10,925 in 2007 and 2006, respectively		111,740			96,624
Structured finance investments, net of discount of $18,590 and $14,804 in 2007 and 2006, respectively		661,720			445,026
Investments in unconsolidated joint ventures		839,087			686,069
Deferred costs, net		113,885			97,850
Other assets		182,815			119,807
Total assets		$	9,452,345		$	4,632,227
Liabilities and Stockholders’ Equity
Mortgage notes payable		$	2,173,460		$	1,190,379
Revolving credit facility		587,000			—
Term loans and unsecured notes		1,792,914			525,000
Accrued interest and other liabilities		42,286			10,008
Accounts payable and accrued expenses		148,158			138,181
Deferred revenue/gain		42,382			43,721
Capitalized lease obligation		16,466			16,394
Deferred land lease payable		16,829			16,938
Dividend and distributions payable		47,557			40,917
Security deposits		39,475			27,913
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities		100,000			100,000
Total liabilities		5,006,527			2,109,451
Commitments and contingencies		—			—
Minority interest in other partnerships		592,449			56,162
Minority interest in operating partnership		77,429			71,731
Stockholders’ Equity
7.625% Series C perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 6,300 issued and outstanding at June 30, 2007 and December 31, 2006, 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 June 30, 2007 and December 31, 2006, respectively		96,321			96,321
Common stock, $0.01 par value 160,000 shares authorized, 59,923 and 49,840 issued and outstanding at June 30, 2007 and December 31, 2006, respectively (inclusive of 297 shares held in Treasury at June 30, 2007)		598			498
Additional paid - in capital		2,905,765			1,809,893
Treasury stock-at cost		(40,368		)	—
Accumulated other comprehensive income		9,287			13,971
Retained earnings		652,356			322,219
Total stockholders’ equity		3,775,940			2,394,883
Total liabilities and stockholders’ equity		$	9,452,345		$	4,632,227

 

11

---

 

SL GREEN REALTY CORP.

SELECTED OPERATING DATA-UNAUDITED

		June 30,
		2007			2006
Manhattan Operating Data: (1)
Net rentable area at end of period (in 000’s)		22,540			18,780
Portfolio percentage leased at end of period		97.6%			95.8%
Same-Store percentage leased at end of period		97.3%			96.9%
Number of properties in operation		32			30
Office square feet leased during quarter (rentable)		677,807			427,862
Average mark-to-market percentage-office		40.5%			10.3%
Average starting cash rent per rentable square foot-office		$	52.96		$	46.40

(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 June 30,						Six Months Ended June 30,
		2007			2006			2007			2006
Earnings before interest, depreciation and amortization (EBITDA):		$	148,635		$	72,125		$	329,488		$	132,953
Add:
Marketing, general & administrative expense		24,131			13,257			58,378			26,243
Operating income from discontinued operations		4,057			6,806			8,522			13,159
Less:
Non-building revenue		(44,792		)	(26,447		)	(152,548		)	(45,312		)
Equity in net income from joint ventures		(12,059		)	(10,596		)	(21,413		)	(20,564		)
GAAP net operating income (GAAP NOI)		119,972			55,145			222,427			106,479
Less:
Operating income from discontinued operations		(4,057		)	(6,806		)	(8,522		)	(13,159		)
GAAP NOI from other properties/affiliates		(64,792		)	(3,602		)	(115,012		)	(4,732		)
Same-Store GAAP NOI		$	51,123		$	44,737		$	98,893		$	88,588

*                    See page 10 for a reconciliation of FFO and EBITDA to net income.

12

Exhibit 99.2

 

---

 

 

 

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 June 30, 2007 that will subsequently be released on Form 10-Q to be filed on or before August 9, 2007.

2

---

 

TABLE OF CONTENTS

 

 

Highlights of Current Period Financial Performance
Unaudited Financial Statements
Corporate Profile	4
Financial Highlights	5-14
Balance Sheets	15-16
Statements of Operations	17
Funds From Operations	18
Statement of Stockholders’ Equity	19
Taxable Income	20
Joint Venture Statements	21-24
Selected Financial Data	25-28
Summary of Debt and Ground Lease Arrangements	29-31
Mortgage Investments and Preferred Equity	32-33
Property Data
Composition of Property Portfolio	34-35
Top Tenants	36
Tenant Diversification	37
Leasing Activity Summary	38-41
Lease Expiration Schedule	42-43
Summary of Acquisition/Disposition Activity	44-46
Supplemental Definitions	47
Corporate Information	48

 

3

---

 

CORPORATE PROFILE

 

 

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

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

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

Looking forward, SL Green will continue its opportunistic investment philosophy through three established business lines: investment in long-term core properties, investment in opportunistic assets, and structured finance investments. Structured finance investments include SL Green’s interest in Gramercy Capital Corp., or Gramercy, (NYSE: GKK) since 2004. SL Green owns approximately 25% of Gramercy. This three-legged investment strategy allows SL Green to balance the components of its portfolio to take advantage of each stage in the business cycle.

4

---

 

FINANCIAL HIGHLIGHTS SECOND QUARTER 2007 UNAUDITED

 

FINANCIAL RESULTS

Funds From Operations, or FFO, available to common stockholders totaled $79.5 million, or $1.26 per share for the second quarter ended June 30, 2007, a 3.3% increase over the same quarter in 2006 when FFO totaled $57.2 million, or $1.22 per share.

Net income available for common stockholders totaled $265.9 million, or $4.38 per share (diluted) for the second quarter ended June 30, 2007. Net income available to common stockholders totaled $29.1 million or $0.65 per share in the same quarter in 2006.  Second quarter 2007 results include gains on sale of $3.98 per share compared to no gains on sale for the same periods in 2006.

Funds available for distribution, or FAD, for the second quarter 2007 increased to $0.97 per share (diluted) versus $0.94 per share (diluted) in the prior year, a 3.2% increase.

The Company’s dividend payout ratio was 55.7% of FFO and 72.1% of FAD before first cycle leasing costs.

All per share amounts are presented on a diluted basis.

CONSOLIDATED RESULTS

Total quarterly revenues increased 108.4% in the second quarter to $257.7 million compared to $123.6 million in the prior year.  The $134.1 million growth in revenue resulted primarily from the following items:

·                  $105.5 million increase from 2007 and 2006 acquisitions, including the Reckson properties,

·                  $10.1 million increase from same-store properties,

·                  $10.1 million increase in preferred equity and investment income, and

·                  $8.4 million increase in other revenue, which was primarily due to incentive and asset management fees earned in 2007 ($7.1 million) as well as from fees earned from Gramercy ($3.4 million) and the Service Corporation ($0.4 million). This was partially offset by a decrease in revenue from discontinued operations ($1.2 million).

The Company’s earnings before interest, taxes, depreciation and amortization, or EBITDA, increased by $76.5 million (106.1%) to $148.6 million.  The following items drove EBITDA improvements:

·                  $58.2 million increase from 2007 and 2006 acquisitions, including the Reckson properties,

·                  $6.3 million increase from same-store properties.

·                  $10.1 million increase in preferred equity and investment income.  The weighted-average structured finance investment balance for the quarter increased to $699.6 million from $409.7 million in the prior year second quarter.  The weighted-average yield for the quarter was 10.5% compared to 10.3% in the prior year.

·                  $1.5 million increase from increased contributions to equity in net income from unconsolidated joint ventures primarily

5

---

 

FINANCIAL HIGHLIGHTS SECOND QUARTER 2007 UNAUDITED

 

from Gramercy ($1.8 million), 800 Third Avenue ($0.8 million) and 2 Herald Square ($1.4 million). This was partially offset by reductions in contributions primarily from 521 Fifth Avenue, which is under redevelopment ($0.7 million), 485 Lexington Avenue which is wholly-owned since December 2006 ($0.6 million) and the Mack-Green joint venture ($0.9 million).

·                  $10.9 million decrease from higher MG&A expense.

·                  $11.3 million increase in non-real estate revenues net of expenses, primarily due to increased incentive and asset management  fees earned in 2007 ($7.1 million) in addition to fee income from Gramercy ($3.4 million).

FFO before minority interests improved $22.3 million primarily as a result of:

·                  $76.5 million increase in EBITDA,

·                  $5.1 million decrease in FFO from unconsolidated joint ventures, discontinued operations and non-real estate depreciation, and

·                  $49.1 million decrease from higher interest expense, including a one-time expense of approximately $8.1 million for exit fees, make-whole payments and the write-off of unamortized deferred financing costs.

SAME-STORE RESULTS

Consolidated Properties

Same-store second quarter 2007 GAAP NOI increased $6.4 million (14.3%) to $51.1 million compared to the prior year.  Operating margins before ground rent increased from 50.18% to 51.65%.

The $6.4 million increase in GAAP NOI was primarily due to:

·                  $5.9 million (7.9%) increase in rental revenue primarily due to improved leasing,

·                  $1.4 million (10.5%) increase in escalation and reimbursement revenue,

·                  $2.8 million (2,978.7%) increase in investment and other income,

·                  $2.9 million (13.2%) increase in operating expenses, primarily driven by increases in payroll and utility costs, but was offset by reductions in insurance costs,

·                  $0.4 million (7.9%) increase in ground rent expense, and

·                  $0.4 million (2.3%) increase in real estate taxes.

Joint Venture Properties

The Joint Venture same-store properties second quarter 2007 GAAP NOI increased $0.6 million (2.0%) to $31.8 million compared to the prior year.  Operating margins before ground rent increased from 62.12% to 62.37%.

The $0.6 million increase in GAAP NOI was primarily due to:

·                  $1.2 million (2.8%) increase in rental revenue primarily due to improved leasing,

·                  $0.4 million (97.0%) decrease in investment and other income, and

6

---

 

FINANCIAL HIGHLIGHTS SECOND QUARTER 2007 UNAUDITED

 

·                  $0.2 million (1.7%) increase in operating expenses primarily driven by increases in utilities and repairs and maintenance which were partially offset by a reduction in insurance.

STRUCTURED FINANCE ACTIVITY

As of June 30, 2007, our structured finance and preferred equity investments totaled $661.7 million.  The weighted average balance outstanding for the second quarter of 2007 was $699.6 million.  During the second quarter of 2007 the weighted average yield was 10.52%.

During the second quarter 2007, the Company originated $62.7 million of structured finance investments, which yield approximately 11.45%.  There were also $90.4 million of redemptions during the second quarter of 2007.

QUARTERLY LEASING HIGHLIGHTS

Manhattan vacancy at March 31, 2007 was 590,183 useable square feet net of holdover tenants.  During the quarter, 292,367 additional useable office, retail and storage square feet became available at an average escalated cash rent of $46.32 per rentable square foot.  The Company acquired 2,800 of available usable square feet in connection with the closing of the 48 East 43rd Street transaction.  The Company sold 1,936 of available usable square feet in connection with the sale of 110 East 42nd Street.  Space available to lease during the quarter totaled 883,414 useable square feet, or 3.9% of the total Manhattan portfolio.

During the second quarter, 66 Manhattan office leases, including early renewals, were signed totaling 677,807 rentable square feet.  New cash rents averaged $52.96 per rentable square foot.  Replacement rents were 40.5% higher than rents on previously occupied space, which had fully escalated cash rents averaging $37.70 per rentable square foot.  The average lease term was 8.3 years and average tenant concessions were 1.5 months of free rent with a tenant improvement allowance of $13.62 per rentable square foot.

Suburban vacancy at March 31, 2007 was 471,321 usable square feet net of holdover tenants.  During the quarter, 14,641 additional useable office square feet became available at an average escalated cash rent of $32.53 per rentable square foot.  The Company acquired 27,012 of available usable square feet connection with the acquisitions of 1010 Washington Avenue, CT, 500 West Putnam Avenue, CT and 1 Jericho Plaza.  Space available to lease during the quarter totaled 512,974 useable square feet, or 7.4% of the total Suburban portfolio.

During the second quarter, 19 Suburban office leases, including early renewals, were signed totaling 60,581 rentable square feet.  New cash rents averaged $29.88 per rentable square foot.  Replacement rents were 0.4% higher than rents on previously occupied space, which had fully escalated cash rents averaging $29.75 per rentable square foot.  The average lease term was 5.3 years and average tenant concessions were 0.1 months of

7

---

 

FINANCIAL HIGHLIGHTS SECOND QUARTER 2007 UNAUDITED

 

free rent with a tenant improvement allowance of $22.83 per rentable square foot.

The Company also signed a total of 10 retail and storage leases, including early renewals, for 15,238 rentable square feet.  The average lease term was 9.6 years and the average tenant concessions were 3.2 months of free rent with a tenant improvement allowance of $9.62 per rentable square foot.

REAL ESTATE ACTIVITY

Real estate investment transactions entered into during the past three months totaled approximately $2.8 billion and included:

-                    In April 2007, the Company completed the acquisition of 331 Madison Avenue and 48 East 43rd Street for a total of $73.0 million. Both 331 Madison Avenue and 48 East 43rd Street are located adjacent to 317 Madison Avenue, a property that the Company acquired in 2001. 331 Madison Avenue is an approximately 92,000-square foot, 14-story office building. The 22,850-square-foot 48 East 43rd Street property is a seven-story loft building that was later converted to office use.

-                    In April 2007, the Company acquired a 32.26% interest in the office condominium located at 1745 Broadway in Midtown Manhattan.  The investment was made through a joint venture with SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, and The Witkoff Group. The interest was acquired for approximately $66.5 million, valuing the office space at approximately $520.0 million. The property encompasses approximately 674,000 square feet.

-                    In April 2007, the Company acquired the fee interest in 333 West 34th Street for approximately $183.0 million from Citigroup Global Markets, Inc. The property encompasses approximately 345,000 square feet. At closing, Citigroup entered into a full building triple net lease through 2009.

-                    In April 2007, the Company acquired a 20.26% interest in One Jericho Plaza and Two Jericho Plaza in Jericho, New York in a partnership with Onyx Equities and an affiliate of Credit Suisse Securities (USA) LLC.  The interest was acquired for approximately $14.2 million, valuing the office space at approximately $210.0 million. The property encompasses approximately 640,000 square feet.

-                    In April 2007, the Company, along with Gramercy, together as tenants-in-common, acquired a fee interest in 2 Herald Square, a 354,400 square foot office and retail property located at 1328 Broadway in New York City. The fee interest, which is subject to a long-term operating lease, was purchased for approximately $225.0 million. The Company owns 55% of the fee and Gramercy owns the remaining 45%. The tenancy-in-common financed its acquisition with a $191.25 million, 10-year fixed rate loan provided by an affiliate of Goldman, Sachs & Co.

8

---

 

FINANCIAL HIGHLIGHTS SECOND QUARTER 2007 UNAUDITED

 

-                    In June 2007, the Company, along with its joint venture partners, acquired the second and third floors in the office tower at 717 Fifth Avenue for approximately $16.9 million, excluding closing costs. This acquisition was funded by a $17.5 million upsize to the existing loan.

-                    In July 2007, the Company entered into an agreement to acquire Gramercy’s 45% equity interest in the joint venture that owns One Madison Avenue for approximately $147.2 million (and the assumption of Gramercy’s proportionate share of the debt encumbering the property of approximately $305.3 million). Following the closing of the acquisition of this interest, which is expected to occur in the third quarter, the Company will own 100% of One Madison Avenue.

-                    In July 2007, the Company, along with Gramercy, acquired a 79% fee interest and 21% leasehold interst in the Lipstick building, a 607,000 square foot class A office building located at 885 Third Avenue in New York City for approximately $317.0 million. Simultaneously, Gramercy and SL Green entered into a 70-year leasehold/sub-leasehold arrangement for the improvements. The Company owns 55% of the investment and Gramercy owns the remaining 45%. The acquisition was financed with a $267.7 million, 10-year fixed rate loan provided by Goldman Sachs Commercial Mortgage Capital.

-                    In July 2007, the Company, along with The City Investment Fund, or CIF, closed on the acquisition of 16 Court Street, Brooklyn for approximately $107.5 million. SL Green will own a 35% interest in the venture. CIF will own the remaining 65% interest. The property is a 38-story, 317,625-square-foot office building.

-                    In June 2007, the Company closed on the acquisition of 1010 Washington Avenue, CT, a 143,400 square foot office tower. The fee interest was purchased for approximately $38.0 million.

-                    In June 2007, the Company acquired an office property located at 500 West Putnam Avenue in Greenwich, Connecticut. The Greenwich property, a four-story, 121,500-square-foot office building, was purchased for approximately $56.0 million.

-                    In June 2007, the joint venture that owned 5 Madison Avenue - The ClockTower sold it for approximately $200.0 million. The Company realized a $5.5 million incentive distribution upon the winding down of the joint venture.

-                    In June 2007, the Company sold its office condominium interest in floors six through eighteen at 110 East 42nd Street for approximately $111.5 million, excluding closing costs. The property encompasses approximately 181,000 square feet. The sale does not include approximately 112,000 square feet of

9

---

 

FINANCIAL HIGHLIGHTS SECOND QUARTER 2007 UNAUDITED

 

developable air rights, which the Company retained along with the ability to transfer these rights off-site. The Company recognized a gain on sale of approximately $84.0 million.

-                    In June 2007, the Company sold its condominium interests in 125 Broad Street for approximately $273.0 million, excluding closing costs. The property is approximately 525,000 square feet. The Company recognized a gain on sale of approximately $167.9 million.

-                    In July 2007, the Company sold its property located at 292 Madison Avenue for approximately $140.0 million, excluding closing costs. The property encompasses approximately 187,000 square feet. The Company recognized a gain on sale of approximately $99.0 million.

Investment In Gramercy Capital Corp.

At June 30, 2007, the book value of the Company’s investment in Gramercy totaled approximately $120.7 million. Fees earned from various arrangements between the Company and Gramercy totaled approximately $9.2 million for the quarter ended June 30, 2007, including an incentive fee of $3.8 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.  The Company’s share of FFO generated from its investment in Gramercy totaled approximately $5.6 million for the quarter ended June 30, 2007, compared to $3.7 million for the same period 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 June 30, 2007, the Company’s MG&A includes approximately $3.4 million of costs associated with Gramercy.

Financing/ Capital Activity

In June 2007, the Company amended and restated its existing unsecured revolving credit facility with Wachovia Bank, as agent for itself and other lenders in connection with the Credit Facility. Pursuant to the amendment and restatement, the amount available under the credit facility was increased from $800.0 million to $1.25 billion. The Company has the ability to increase the capacity under the credit facility by an additional $250 million, subject to lender approval.  The amendment and restatement also reduced the applicable interest rate spreads, extended the maturity date to June 28, 2011 and eased certain financial and other restrictive covenants of the credit facility.  As a result of the amendment, interest rate spreads decreased from approximately 110 basis points to 80 basis points over the 30-day LIBOR.

In April 2007, the Company redeemed its $50.0 million 6.0% notes due June 2007 and $150.0 million 7.2% notes due August 2007. These notes had been assumed in connection with the merger with Reckson Associates Realty Corp. Also, in June 2007, the Company paid off and terminated its existing (i)

10

FINANCIAL HIGHLIGHTS SECOND QUARTER 2007 UNAUDITED

 

$500.0 million credit agreement, dated as of January 24, 2007, and (ii) $200.0 million five-year non-recourse term loan. In connection with these repayments, the Company realized a one-time expense of approximately $8.1 million for exit fees, make-whole payments and the write-off of unamortized deferred financing costs.

In June 2007, the Company renewed and extended the maturity date of the ground lease at 420 Lexington Avenue through December 31, 2029, with an option for further extension through 2080.  Ground lease rent payments under the new lease will total approximately $12.2 million per year. The ground lease was subject to a revaluation in December 2008.

The Company acquired $49.9 million of its common stock at an average share price of $128.21, during the quarter ended June 30, 2007 pursuant to the stock repurchase program.

The joint venture that owns 1604-1610 Broadway closed on a $27.0 million, 5-year, fixed rate mortgage carrying an interest rate of 5.66% per annum. As a result of the refinancing, the Company’s economic interest in the joint venture increased from 45% to 63%.

In May 2007, the Company repaid, at maturity, the $12.3 million mortgage that had encumbered 100 Summit Road, Westchester.

Dividends

On June 13, 2007, the Company declared a dividend of $0.70 per common share for the second quarter 2007.  The dividend was payable July 13, 2007 to stockholders of record on the close of business on June 29, 2007.  This distribution reflects the regular quarterly dividend, which is the equivalent of an annualized distribution of $2.80 per common share.

On June 13, 2007, the Company also approved a distribution on its Series C preferred stock for the period April 15, 2007 through and including July 14, 2007, of $0.4766 per share, payable July 13, 2007 to stockholders of record on the close of business on June 29, 2007. The distribution reflects the regular quarterly distribution, which is the equivalent of an annualized distribution of $1.90625 per Series C preferred stock.

On June 13, 2007, the Company also approved a distribution on its Series D preferred stock for the period April 15, 2007 through and including July 14, 2007, of $0.4922 per share, payable July 13, 2007 to stockholders of record on the close of business on June 29, 2007. The distribution reflects the regular quarterly distribution, which is the equivalent of an annualized distribution of $1.96875 per Series D preferred stock.

Other

Effective April 1, 2007, the 2007 wholly-owned same-store properties will no longer include 110 East 42nd Street and 125 Broad Street.

11

---

 

	SL Green Realty Corp.
	Key Financial Data
	June 30, 2007
	(Dollars in Thousands Except Per Share and Sq. Ft.)

 

		As of or for the three months ended
		6/30/2007			3/31/2007			12/31/2006			9/30/2006			6/30/2006
Earnings Per Share
Net income available to common shareholders - diluted		$	4.38		$	2.53		$	0.62		$	2.53		$	0.65
Funds from operations available to common shareholders - diluted		$	1.26		$	2.03		$	1.18		$	1.13		$	1.22
Funds available for distribution to common shareholders - diluted		$	0.97		$	1.93		$	0.78		$	0.81		$	0.94
Common Share Price & Dividends
At the end of the period		$	123.89		$	137.18		$	132.78		$	111.70		$	109.47
High during period		$	143.47		$	156.10		$	139.50		$	115.90		$	109.47
Low during period		$	122.78		$	131.81		$	112.37		$	107.17		$	95.31
Common dividends per share		$	0.70		$	0.70		$	0.70		$	0.60		$	0.60
FFO Payout Ratio		55.70%			34.47%			59.16%			53.16%			49.20%
FAD Payout Ratio		72.09%			36.21%			90.23%			73.75%			63.91%
Common Shares & Units
Common shares outstanding		59,626			59,182			49,840			45,774			43,226
Units outstanding		2,365			2,619			2,694			2,219			2,219
Total shares and units outstanding		61,991			61,801			52,534			47,993			45,445
Weighted average common shares and units outstanding - basic		61,984			59,301			49,689			47,495			45,421
Weighted average common shares and units outstanding - diluted		63,275			60,930			51,160			49,215			46,901
Market Capitalization
Market value of common equity		$	7,680,065		$	8,477,861		$	6,975,465		$	5,360,818		$	4,974,864
Liquidation value of preferred equity		257,500			257,500			257,500			257,500			257,500
Consolidated debt		4,653,374			5,023,057			1,815,379			1,975,325			1,853,644
Consolidated market capitalization		$	12,590,939		$	13,758,418		$	9,048,344		$	7,593,643		$	7,086,008
SLG portion JV debt		1,483,534			1,264,200			1,209,281			1,181,397			1,179,332
Combined market capitalization		$	14,074,473		$	15,022,618		$	10,257,625		$	8,775,040		$	8,265,340
Consolidated debt to market capitalization		36.96%			36.51%			20.06%			26.01%			26.16%
Combined debt to market capitalization		43.60%			41.85%			29.49%			35.97%			36.70%
Consolidated debt service coverage		2.35			3.00			3.12			3.38			3.63
Consolidated fixed charge coverage		2.00			2.53			2.36			2.47			2.59
Combined fixed charge coverage		1.76			2.18			1.89			1.93			2.03
Portfolio Statistics (Manhattan)
Consolidated office buildings		24			24			20			20			23
Unconsolidated office buildings		8			7			8			7			7
		32			31			28			27			30
Consolidated office buildings square footage		13,899,300			14,145,000			10,086,000			9,625,000			9,965,000
Unconsolidated office buildings square footage		8,640,900			7,966,900			8,879,900			8,814,900			8,814,900
		22,540,200			22,111,900			18,965,900			18,439,900			18,779,900
Quarter end occupancy-portfolio		97.6%			97.3%			97.0%			96.1%			95.9%
Quarter end occupancy- same store - wholly owned		97.9%			98.7%			97.5%			97.0%			96.7%
Quarter end occupancy- same store - combined (wholly owned + joint venture)		97.3%			97.6%			97.4%			97.2%			96.9%

 

 

12

 

	SL Green Realty Corp.
	Key Financial Data
	June 30, 2007
	(Dollars in Thousands Except Per Share and Sq. Ft.)

 

		As of or for the three months ended
		6/30/2007			3/31/2007			12/31/2006			9/30/2006			6/30/2006
Selected Balance Sheet Data
Real estate assets before depreciation		$	7,619,487		$	7,375,047		$	3,055,159		$	2,824,688		$	2,634,724
Investments in unconsolidated joint ventures		$	839,087		$	743,978		$	686,069		$	549,040		$	571,418
Structured finance investments		$	661,720		$	688,303		$	445,026		$	347,558		$	333,989
Total Assets		$	9,452,345		$	9,625,785		$	4,632,227		$	4,226,806		$	3,691,952
Fixed rate & hedged debt		$	3,823,513		$	4,015,996		$	1,511,714		$	1,418,106		$	1,419,065
Variable rate debt		829,861			933,309			303,665			462,219			339,579
Total consolidated debt		$	4,653,374		$	4,949,305		$	1,815,379		$	1,880,325		$	1,758,644
Total Liabilities		$	5,006,527		$	5,394,598		$	2,109,451		$	2,239,912		$	2,090,786
Fixed rate & hedged debt-including SLG portion of JV debt		$	4,723,635		$	4,657,260		$	2,099,716		$	1,957,206		$	1,958,896
Variable rate debt - including SLG portion of JV debt		1,413,273			1,556,245			924,944			1,104,516			979,080
Total combined debt		$	6,136,908		$	6,213,505		$	3,024,660		$	3,061,722		$	2,937,976
Selected Operating Data
Property operating revenues		$	207,059		$	179,956		$	109,450		$	104,169		$	94,953
Property operating expenses		96,999			85,804			52,070			54,365			48,854
Property operating NOI		$	110,060		$	94,152		$	57,380		$	49,804		$	46,099
NOI from discontinued operations		4,057			4,465			4,481			5,939			6,806
Total property operating NOI		$	114,117		$	98,617		$	61,861		$	55,743		$	52,905
SLG share of Property NOI from JVs		$	44,194		$	37,364		$	37,419		$	36,587		$	33,834
SLG share of FFO from Gramercy Capital		$	5,623		$	4,894		$	5,083		$	4,125		$	3,694
Structured finance income		$	27,443		$	21,709		$	15,202		$	15,978		$	17,305
Other income		$	23,204		$	89,885		$	26,164		$	9,441		$	11,382
Marketing general & administrative expenses		$	24,131		$	34,247		$	25,669		$	13,830		$	13,257
Consolidated interest		$	63,803		$	58,917		$	29,834		$	24,764		$	22,901
Combined interest		$	87,234		$	79,239		$	50,154		$	43,990		$	40,088
Preferred Dividend		$	4,969		$	4,969		$	4,969		$	4,969		$	4,969
Office Leasing Statistics (Manhattan)
Total office leases signed		66			45			38			56			57
Total office square footage leased		677,807			330,972			452,497			586,223			427,862
Average rent psf		$	52.96		$	57.84		$	61.99		$	62.67		$	46.40
Escalated rents psf		$	37.70		$	42.21		$	48.18		$	49.81		$	42.08
Percentage of rent over escalated		40.5%			37.0%			28.7%			25.8%			10.3%
Tenant concession packages psf		$	13.62		$	24.93		$	32.49		$	14.90		$	24.89
Free rent months		1.5			2.7			3.3			1.9			2.5

 

13

---

 

	SL Green Realty Corp.
	Key Financial Data
	June 30, 2007
	(Dollars in Thousands Except Per Share and Sq. Ft.)

 

Suburban Properties

 

		As of or for the three months ended
		6/30/2007			3/31/2007(1)			12/31/2006			9/30/2006			6/30/2006
Selected Operating Data (Suburban)
Property operating revenues		$	30,973		$	22,641		$	—		$	—		$	—
Property operating expenses		12,894			9,228			—			—			—
Property operating NOI		$	18,079		$	13,413		$	—		$	—		$	—
SLG share of Property NOI from JV		$	2,826		$	1,768		—			—			—
Consolidated interest		$	4,416		$	3,580		—			—			—
Combined interest		$	5,967		$	4,482		—			—			—
Portfolio Statistics (Suburban)
Consolidated office buildings		30			28			—			—			—
Unconsolidated office buildings		3			1			—			—			—
		33			29
Consolidated office buildings square footage		4,925,800			4,660,900			—			—			—
Unconsolidated office buildings square footage		2,042,000			1,402,000			—			—			—
		6,967,800			6,062,900
Quarter end occupancy-portfolio		93.8%			92.7%			—			—			—
Office Leasing Statistics (Suburban)
Total office leases signed		19			22			—			—			—
Total office square footage leased		60,581			139,503			—			—			—
Average rent psf		$	29.88		$	30.44		—			—			—
Escalated rents psf		$	29.75		$	27.36		—			—			—
Percentage of rent over escalated		0.4%			11.2%			—			—			—
Tenant concession packages psf		$	22.83		$	17.82		—			—			—
Free rent months		0.1			1.1			—			—			—

(1) Includes operations since January 25th, 2007.

14