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 20, 2004

 

SL GREEN REALTY CORP.

(Exact name of Registrant as specified in its Charter)

 

 

 

Item 7.                                                           Financial Statements and Exhibits

 

(c)                                  Exhibits

 

99.1                           Press Release

99.2                           Supplemental Package

 

Item 9.                                                           Regulation FD Disclosure

 

The information being furnished pursuant to this “ Item 9. 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 12.                                                    Results of Operations and Financial Condition

 

The information (including exhibits 99.1 and 99.2) being furnished pursuant to this “Item 12. 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.

 

Following the issuance of a press release on July 20, 2004 announcing the Company’s results for the second quarter ended June 30, 2004, 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.

 

NON-GAAP Supplemental Financial Measures

 

Funds from Operations (FFO)

 

FFO is a widely recognized measure of REIT performance.  Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors.  The Company computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (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 the Company.

 

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The revised White Paper on FFO approved by the Board of Governors of NAREIT in October 1999 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 believe that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flow from operating activities, financing activities and investing activities, it provides investors with an indication of our ability to incur and service debt, to make capital expenditures and to fund other cash needs.  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, 2003, 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

 

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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:  July 21, 2004

 

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Exhibit 99.1

 

 

420 Lexington Avenue, New York City, NY 10170

 

CONTACT

Gregory F. Hughes

Chief Financial Officer

(212) 594-2700

 

FOR IMMEDIATE RELEASE

 

 

SL GREEN REALTY CORP. REPORTS

SECOND QUARTER FFO OF $1.04 PER SHARE

 

 

Release Highlights

 

•                  FFO increased 20% to $1.04 per share (diluted) versus $0.87 per share (diluted) for the same quarter in 2003

•                  Signed agreement to acquire 750 Third Avenue and 485 Lexington Avenue for $480 million, or $282 per square foot

•                  Closed on $117.4 million of structured financed investments bringing total originations in 2004 to $197.4 million

•                  Sold a 75% interest in One Park Avenue generating $83 million in net proceeds and recognizing a $22 million gain ($0.52 per share) in addition to a $4.3 million incentive distribution ($0.10 per share)

•                  Issued 4.0 million shares of 7.875% Series D perpetual preferred stock in two public offerings raising $100 million in gross proceeds.  The sale of 1.55 million of the shares closed on July 15, 2004

•                  Refinanced 1515 Broadway with a $425 million first mortgage generating $47.0 million of proceeds to the Company

•                  Signed 70 office leases totaling approximately 342,000 rentable square feet

•                  Ended the quarter at 96.6% occupancy, an increase from 96.3% at March 31, 2004

•                  Filed third amendment to Gramercy Capital Corp. S-11 and commenced road show.

 

Financial Results

 

New York, NY, July 20, 2004 – SL Green Realty Corp. (NYSE:SLG) reported funds from operations (FFO) totaling $44.1 million, or $1.04 per share (diluted), for the three months ended June 30, 2004, compared to $33.9 million, or $0.87 per share (diluted), for the same quarter in 2003.  The increase in FFO is primarily due to (i) increased income from the unconsolidated joint ventures, (ii) increased investment income and (iii) increased other income primarily due to incentive distribution received in connection with the recapitalization of One Park Avenue.

 

For the six months ended June 30, 2004, operating results improved 9% as FFO before minority interests totaled $79.1 million, or $1.87 per share (diluted), compared to $66.4 million, or $1.72

 

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per share (diluted), for the same period in 2003.  The increase is primarily attributable to increased investment income, income from unconsolidated joint ventures and other income.

 

Net income available to common shareholders for the three months ended, June 30, 2004 totaled $45.4 million, or $1.13 per share (diluted), an increase of $0.63 per share as compared to the same quarter in 2003 when net income totaled $15.5 million, or $0.49 per share (diluted).  The increase in net income is primarily due to the gain from the sale of a 75% interest in One Park Avenue ($0.52) and the net effect of the aforementioned changes in FFO.

 

Net income available to common shareholders for the six months ended June 30, 2004 totaled $61.4 million, or $1.54 per share (diluted), as compared to the same period in 2003 when net income totaled $49.5 million, or $1.51 per share (diluted).  The six months ended June 30, 2003 includes a gain on the sale of 50 West 23^rd Street totaling $17.5 million ($0.46 per share).

 

The Company’s second quarter weighted average diluted shares outstanding increased 3.7 million, or 9.5%, to 42.5 million in 2004 from 38.8 million in 2003.  The increase was primarily attributable to (i) the 1.8 million common stock offering completed on January 16, 2004, (ii) operating partnership units issued in connection with certain 2003 acquisitions and (iii) the effects of stock and option-based compensation.

 

Consolidated Results

 

Total quarterly revenues increased 20% in the second quarter of 2004 to $89.4 million compared to $74.4 million in the same quarter of 2003.  The $15.0 million growth in revenue resulted primarily from the following items:

 

•                  $5.8 million increase in other income, primarily due to the One Park Avenue incentive distribution and service corporation revenue

•                  $5.1 million increase in preferred and investment income

•                  $3.8 million increase from 2003 acquisitions

•                  $1.2 million increase from same store properties

•                  $0.9 million decrease-other.

 

The Company’s EBITDA increased by $15.8 million to $57.4 million, compared to $41.6 million in the same quarter in 2003.  The following items drove the EBITDA increase:

 

•                  $8.1 million increase from GAAP NOI (before discontinued operations)

•                  $7.2 million increase in income from unconsolidated joint ventures

•                  $0.4 million increase from 2003 property acquisitions and other reserves

•                  $0.5 million increase from same-store properties

•                  $3.8 million increase in other income, net of affiliate revenue ($2.0 million)

•                  $5.1 million increase in preferred and investment income

•                  $0.5 million increase-other

•                  $1.7 million decrease from higher MG&A expense.

 

FFO available to common shareholders increased $10.3 million primarily as a result of:

 

•                  $15.8 million increase in EBITDA

•                  $2.3 million increase in FFO related to the add back higher joint venture depreciation, primarily 1221 Avenue of the Americas

 

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•                  $1.4 million decrease in FFO from discontinued operations and other

•                  $3.4 million decrease from perpetual preferred stock dividends

•                  $3.0 million decrease from higher interest expense.

 

The $3.0 million increase in interest expense was primarily associated with additional debt used to fund new investment activity ($3.0 million) and higher interest costs associated with property-level refinancings ($1.7 million) which were partially offset by reduced loan balances due to previous disposition activity ($0.8 million) and proceeds from the Company’s common and preferred stock offerings and other ($0.9 million).

 

Same-Store Results

 

During the second quarter of 2004, same-store GAAP NOI increased by 2% ($0.5 million) to $29.3 million, as compared to $28.8 million for the same quarter in 2003.  The increase in same-store GAAP NOI was driven by a $1.1 million (2%) increase in rental revenues partially offset by a 3% ($0.7 million) increase in operating expenses.  The increase in revenue was primarily due to:

 

•                  $2.1 million increase in rental revenue primarily due to improved leasing at 420 Lexington Avenue and 555 West 57^th Street.

•                  $0.5 million decrease in escalation and reimbursement revenue primarily due to real estate tax and utility reimbursements

•                  $0.1 million increase from lower straight-line credit loss reserves

•                  $0.6 million reduction in signage rent and lease buy-out income

 

The $0.7 million (3%) increase in operating expenses resulted primarily from the following:

 

•                  $0.5 million (6%) increase in real estate taxes

•                  $0.3 million (14%) increase in condominium, management and professional fees

•                  $0.3 million (4%) increase in repairs, maintenance and payroll costs

•                  $0.4 million (8%) decrease in utility costs

 

Leasing Activity

 

For the second quarter of 2004, the Company signed 75 leases totaling approximately 356,000 rentable square feet of which 70 leases and approximately 342,000 square feet represent office leases.  Starting office cash rents averaged $32.43 per square foot, a 1.6% decrease over previously fully escalated cash rents averaging $32.95 per square foot.  Tenant concessions averaged 1.4 months of free rent with an allowance for tenant improvements of $20.34 per rentable square foot.  Excluding an expansion and lease extension for a tenant occupying approximately 33% at 673 First Avenue, the Company signed 69 office leases for approximately 302,000 square feet with starting cash rents 6.4% higher than the previously fully escalated cash rents.

 

For the six months ended, June 30, 2004, the Company signed 144 leases totaling approximately 635,000 rentable square feet of which 129 leases and 593,000 square feet represent office leases.  Starting office cash rents averaged $31.82 per square foot, a 0.1% increase over previously fully escalated cash rents averaging $31.79 per square foot.  Tenant concessions averaged 1.6 months of free rent with an allowance for tenant improvements of $22.83 per rentable square foot.  This

 

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leasing activity includes early renewals for 17 office leases totaling approximately 103,000 rentable square feet.

 

Real Estate Activity

 

750 Third Avenue and 485 Lexington Avenues

 

In June 2004, we announced that we had entered into an agreement to acquire two office buildings, comprising 1.7 million square feet, located at 750 Third Avenue (“750 Third”) and 485 Lexington Avenue (“485 Lexington”) for $480.0 million, or $282 per square foot.  The properties are being acquired from TIAA-CREF, a national financial services company.  The transaction is expected to close in the third quarter of 2004.  The properties will be acquired separately by two SL Green-controlled entities.

 

750 Third will be purchased by us as a wholly-owned asset for $255.0 million.  The acquisition will initially be funded by proceeds from our unsecured revolving credit facility.  At closing, TIAA-CREF, a AAA-rated company, will enter into an operating lease for the entire building.  At the expiration of such operating lease, in December 2005, the building will be approximately 25% vacant.  The majority of such vacancy will be in the upper tower floors of the property.  The balance of the property is currently leased to credit-quality tenants including Fairchild Publications, Inc., Richard A. Eisner, LLP and TIAA-CREF on a longer-term basis.

 

485 Lexington will be acquired in a joint venture with The City Investment Fund.  We expect to own approximately 30.0% of the equity interests in the property.  The allocated price for 485 Lexington is $225.0 million.  The joint venture has arranged for a loan facility to fund 75% of the acquisition and anticipated re-tenanting costs of 485 Lexington.  Consistent with our prior joint venture arrangements, we will be the operating partner and day-to-day manager of the venture and will be entitled to management fees, leasing commissions and incentive fees.  At closing, TIAA-CREF will enter into an operating lease for the entire building. Upon expiration of the operating lease in December 2005, it is anticipated that TIAA-CREF will vacate all of the space it occupies in 485 Lexington (approximately 870,000 square feet).

 

One Park Avenue

 

In May 2004, Credit Suisse First Boston LLC, through a wholly owned affiliate, acquired a 75% interest in One Park.  The interest was acquired from a joint venture comprised of SITQ and us.  Simultaneous with the closing of the acquisition, the new joint venture completed a refinancing of the property with an affiliate of Credit Suisse First Boston.

 

Credit Suisse First Boston’s affiliated entity acquired its equity interest for $60.0 million.  The acquisition was based on a total capitalization of approximately $318.5 million, or $344 per square foot.  The $238.5 million 10-year interest only loan bears interest at a fixed rate of 5.8% and replaced the existing $150.0 million floating rate loan, which was scheduled to mature in January 2005.  We received $83.0 million in net proceeds from the recapitalization.  Net proceeds, which were used to pay down our unsecured revolving credit facility, included an incentive fee of approximately $4.3 million earned pursuant to the prior joint venture agreement with SITQ.

 

We have retained a 16.7% interest in the new venture, which may be increased substantially based upon the financial performance of the property.  We will manage the venture, in addition to continuing our responsibility of leasing and managing the property.

 

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We accounted for the transaction as a sale of interests and recognized a gain on sale of approximately $22 million.  Our initial book basis in the new joint venture will be approximately $4.3 million and it will be accounted for under the equity method.

 

125 Broad Street

 

In June 2004, the Company exercised its option to acquire its share of the fee position at 125 Broad Street for approximately $6.0 million.

 

Financing/ Capital Activity

 

Series D Perpetual Preferred Stock

 

In April 2004, we priced a public offering of 2,450,000 shares of our 7.875% Series D Cumulative Redeemable Preferred Stock, or Series D preferred stock, with a mandatory liquidation preference of $25.00 per share.  Net proceeds from this offering (approximately $59.0 million) were used principally to repay amounts outstanding under our secured and unsecured revolving credit facilities.  The Series D preferred stock receives annual dividends of  $1.96875 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions.  On or after May 27, 2009, we may redeem the Series D preferred stock for cash at our option.  In July 2004, we issued an additional 1,550,000 shares of our Series D preferred stock with net proceeds to us of approximately $37.3 million.  The gross proceeds from these offerings were $100 million.

 

1515 Broadway Refinancing

 

In June 2004, we refinanced 1515 Broadway with a $425.0 million first mortgage.  The interest only mortgage has an interest rate of 90 basis points over the 30-day LIBOR.  The all-in blended weighted average effective interest rate was 3.84% for the quarter ended June 30, 2004.  The mortgage matures in July 2006 and is subject to three one-year as-of-right renewal options.  This loan replaced the $335 million loan, which bore interest at 190 basis points over LIBOR.

 

1250 Broadway Refinancing

 

In July 2004, we refinanced 1250 Broadway with a $115 million first mortgage.  The interest-only mortgage has an interest rate of 120 basis points over the 30-day LIBOR.  The mortgage matures in August 2006 and is subject to three one-year as-of-right renewal options.  This loan replaced the $85 million loan, which bore interest at 250 basis points over LIBOR.

 

485 Lexington Avenue Financing

 

The Company has received a $240 million commitment to finance the acquisition and redevelopment of 485 Lexington Avenue.  The loan, which will bear interest at 200 basis points over the 30-day LIBOR, is for three years and has two one-year extension options.  The loan, which is expected to close during the third quarter, is subject to customary closing conditions.  At closing, the Company expects to draw approximately $170 million to fund the acquisition.

 

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Structured Finance Activity

 

As of June 30, 2004, the par value of the Company’s structured finance and preferred equity investments totaled $264.3 million.  The weighted average balance outstanding for the second quarter of 2004 was $235.2 million.  During the second quarter of 2004, the weighted average yield was 10.2%.

 

During the second quarter 2004, the Company originated $117.4 million of structured finance investments with an initial yield of approximately 10.1%.  The Company also received redemptions totaling $129.6 million that were yielding 13.2%.

 

Conference Call

 

The Company will host a conference call and audio web cast on Wednesday, July 21, 2004 at 2 pm ET to discuss the financial results. The conference call can be accessed by dialing (913) 981-5519. A replay of the call will be available through July 28, 2004 by dialing (888) 203-1112 or (719) 457-0820, passcode 539987. The call will be simultaneously broadcast via the Internet and individuals who wish to access the conference call should go to www.slgreen.com to log onto the call or to listen to a replay following the call.

 

Non-GAAP Financial Measures

 

During the July 21, 2004 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 seven and nine of this release and in our second quarter supplemental data package.

 

* Financial Tables attached

 

To receive the Company’s latest news release and other corporate documents, including the second quarter supplemental data, via FAX at no cost, please contact the Investor Relations office at 212-216-1601.  All releases and supplemental data can also be downloaded directly from the SL Green website at: www.slgreen.com.

 

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, many of 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 June 30,						Six Months Ended June 30,
		2004			2003			2004			2003
Revenue:
Rental revenue, net		$	63,477		$	59,309		$	124,988		$	110,868
Escalations & reimbursement revenues		10,372			10,022			20,162			18,200
Signage rent		52			407			122			732
Preferred equity investment income		2,138			731			6,182			2,287
Investment income		6,424			2,718			16,209			6,079
Other income		6,982			1,164			9,472			2,863
Total revenues		89,445			74,351			177,135			141,029
Equity in net loss from affiliates		––			(99		)	––			(196		)
Equity in net income from unconsolidated joint ventures		10,834			3,651			21,385			7,827
Expenses:
Operating expenses		22,249			19,313			45,604			35,998
Ground rent		3,866			3,266			7,732			6,430
Real estate taxes		12,339			10,955			24,680			20,584
Marketing, general and administrative		4,467			2,804			15,370			5,990
Total expenses		42,921			36,338			93,386			69,002
Earnings Before Interest, Depreciation and Amortization (EBITDA)		57,358			41,565			105,134			79,658
Interest Expense		14,578			11,574			29,408			21,225
Depreciation and amortization		13,318			11,573			26,366			22,163
Net income from Continuing Operations		29,462			18,418			49,360			36,270
Income from Discontinued Operations, net of minority interests		––			958			––			2,691
Gain (loss) on sale of Discontinued Operations, net of minority interests		––			(300		)	––			17,524
Equity in net gain on sale of unconsolidated joint ventures		22,012			––			22,012			––
Minority interests		(2,643		)	(1,103		)	(3,586		)	(2,165		)
Preferred stock dividends and accretion		(3,446		)	(2,431		)	(6,446		)	(4,862		)
Net income available to common shareholders		$	45,385		$	15,542		$	61,340		$	49,458
Net income per share (Basic)		$	1.18		$	0.50		$	1.60		$	1.60
Net income per share (Diluted)		$	1.13		$	0.49		$	1.54		$	1.51
Funds From Operations (FFO)
FFO per share (Basic)		$	1.08		$	0.95		$	1.95		$	1.86
FFO per share (Diluted)		$	1.04		$	0.87		$	1.87		$	1.72
FFO Calculation:
Income before minority interests, preferred stock dividends and accretion and discontinued operations		$	29,462		$	18,418		$	49,360		$	36,270
Less:
Preferred stock dividend on convertible preferred stock		––			(2,300		)	––			(4,600		)
Dividend on perpetual preferred stock		(3,446		)	––			(6,446		)	––
Add:
Depreciation and amortization		13,318			11,573			26,366			22,163
FFO from Discontinued Operations		––			1,333			––			3,517
Joint venture FFO adjustment		5,780			3,438			11,780			6,825
Amortization of deferred financing costs and depreciation of non-real estate assets		(968		)	(886		)	(1,924		)	(2,371		)
FFO before minority interests– BASIC		44,146			31,576			79,136			61,804
Add:  Convertible preferred stock dividends		––			2,300			––			4,600
FFO before minority interests – DILUTED		$	44,146		$	33,876		$	79,136		$	66,404
Basic ownership interest
Weighted average REIT common shares for net income per share		38,638			31,082			38,308			30,895
Weighted average partnership units held by minority interests		2,225			2,326			2,255			2,302
Basic weighted average shares and units outstanding for FFO per share		40,863			33,408			40,563			33,197
Diluted ownership interest
Weighted average REIT common share and common share equivalents		40,231			31,794			39,960			31,511
Weighted average partnership units held by minority interests		2,225			2,326			2,255			2,302
Common share equivalents for preferred stock		––			4,699			––			4,699
Diluted weighted average shares and units outstanding		42,456			38,819			42,215			38,512

 

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SL GREEN REALTY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

 

		June 30, 2004			December 31, 2003
		(Unaudited)
Assets
Commercial real estate properties, at cost:
Land and land interests		$	174,625		$	168,032
Buildings and improvements		862,527			849,013
Building leasehold and improvements		320,969			317,178
Property under capital lease		12,208			12,208
		1,370,329			1,346,431
Less accumulated depreciation		(175,601		)	(156,768		)
		1,194,728			1,189,663
Cash and cash equivalents		65,045			38,546
Restricted cash		41,868			59,542
Tenant and other receivables, net of allowance of $7,837 and $7,533 in 2004 and 2003, respectively		14,347			13,165
Related party receivables		4,509			6,610
Deferred rents receivable, net of allowance of  $7,597 and $7,017 in 2004 and 2003, respectively		66,811			63,131
Structured finance investments, net of discount of $2,088 and $44 in 2004 and 2003, respectively		264,296			218,989
Investments in unconsolidated joint ventures		502,658			590,064
Deferred costs, net		44,831			39,277
Other assets		57,521			42,854
Total assets		$	2,256,614		$	2,261,841
Liabilities and Stockholders’ Equity
Mortgage notes payable		$	514,180		$	515,871
Revolving credit facilities		104,900			236,000
Term loans		300,000			367,578
Derivative instruments at fair value		1,277			9,009
Accrued interest payable		4,135			3,500
Accounts payable and accrued expenses		57,801			43,835
Deferred revenue/gain		8,599			8,526
Capitalized lease obligations		16,328			16,168
Deferred land lease payable		15,486			15,166
Dividend and distributions payable		23,447			18,647
Security deposits		23,182			21,968
Total liabilities		1,069,335			1,256,268
Commitments and contingencies
Minority interest in partially owned entities		484			510
Minority interest in operating partnership		53,756			54,281
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, 2004 and December 31, 2003, respectively		151,981			151,981
7.875% Series D perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 2,450 and none issued and outstanding at June 30, 2004 and December 31, 2003, respectively		58,873			––
Common stock, $0.01 par value 100,000 shares authorized, 38,692 and 36,016 issued and outstanding at June 30, 2004 and December 31, 2003, respectively		387			360
Additional paid - in capital		830,821			728,882
Deferred compensation plan		(17,051		)	(8,446		)
Accumulated other comprehensive income (loss)		6,337			(961		)
Retained earnings		101,691			78,966
Total stockholders’ equity		1,133,039			950,782
Total liabilities and stockholders’ equity		$	2,256,614		$	2,261,841

 

8

 

SL GREEN REALTY CORP.

SELECTED OPERATING DATA-UNAUDITED

 

		June 30,
		2004			2003
Operating Data:
Net rentable area at end of period (in 000’s)(1)		15,444			12,860
Portfolio percentage leased at end of period		96.6		%	95.5		%
Same-Store percentage leased at end of period		97.0		%	97.3		%
Number of properties in operation (1)		27			26
Office square feet leased during quarter (rentable)		341,730			311,388
Average mark-to-market percentage-office		(1.6		)%	10		%
Average starting cash rent per rentable square foot-office		$	32.43		$	31.42

 

(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,
		2004			2003			2004			2003
Earnings before interest, depreciation and amortization (EBITDA):		$	57,358		$	41,565		$	105,134		$	79,658
Add:
Marketing, general & administrative expense		4,467			2,804			15,370			5,990
Operating income from discontinued operations		––			1,333			––			3,517
Depreciation adjustment for joint ventures		5,780			3,480			11,780			6,825
Less:
Non-building revenue		19,089			7,373			39,615			16,296
GAAP net operating income (GAAP NOI)		48,516			41,809			92,669			79,694
Less:
Operating income from discontinued operations		––			1,333			––			3,517
Net income from joint ventures		10,834			3,651			21,385			7,827
GAAP NOI from other properties/ affiliates		8,380			7,983			15,610			11,424
2004 Same-Store GAAP NOI		$	29,302		$	28,841		$	55,674		$	56,926

 

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

 

9

Exhibit 99.2

 

SL Green Realty Corp.
Second Quarter 2004
Supplemental Data
June 30, 2004

 

 

 

 

SL Green Realty Corp. is a fully integrated, self-administered and self-managed Real Estate Investment Trust (REIT) that primarily owns, manages, leases, acquires 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 Gregory F. Hughes at greg.hughes@slgreen.com or at 212-594-2700.

 

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, 2004 that will subsequently be released on Form 10-Q to be filed on or before August 10, 2004.

 

2

 

TABLE OF CONTENTS

 

Highlights of Current Period Financial Performance
Unaudited Financial Statements
Corporate Profile
Financial Highlights
Balance Sheets
Statements of Operations
Joint Venture Statements
Statement of Stockholders’ Equity
Funds From Operations
Selected Financial Data
Summary of Debt and Ground Lease Arrangements
Mortgage Investments and Preferred Equity
Property Data
Composition of Property Portfolio
Top Tenants
Leasing Activity Summary
Lease Expiration Schedule
Summary of Acquisition/Disposition Activity
Supplemental Definitions
Corporate Information

 

3

 

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 20 years SL Greenhas 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.  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 (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.

 

4

 

FINANCIAL HIGHLIGHTS

 

SECOND QUARTER 2004

UNAUDITED

 

FINANCIAL RESULTS

 

Funds From Operations (FFO) before minority interests, for the second quarter 2004 totaled $44.1 million, or $1.04 per share (diluted), a 20% increase compared to the same quarter in 2003 when FFO totaled $33.9 million, or $0.87 per share (diluted).

 

Net income available for common shareholders for the second quarter 2004 totaled $45.4 million, or $1.13 per share (diluted), an increase of $0.63 per share as compared to the same quarter in 2003 when net income totaled $15.5 million, or $0.49 per share (diluted).

 

The increase in net income in the second quarter 2004 is primarily due to the $22.0 million ($0.52 per share) gain recognized on the recapitalization of One Park Avenue.

 

Funds available for distribution (FAD) for the second quarter 2004 increased to $0.72 share per share (diluted) versus $0.60 per share (diluted) in the prior year, a 20% increase.  The increase is primarily due to the $0.17 per share increase in FFO partially off-set by higher tenant improvements and leasing commissions.

 

The Company’s dividend payout ratio was 48% of FFO and 70% of FAD before first cycle leasing costs.

 

CONSOLIDATED RESULTS

 

Total quarterly revenues increased 20% in the second quarter to $89.4 million, compared to $74.4 million last year.  The $15.0 million growth in revenue resulted from the following items:

 

•                  $5.8 million in other income, primarily due to the incentive distribution recognized from the recapitalization of One Park Avenue

•                  $5.1 million increase in preferred and investment income

•                  $3.8 million increase from 2003 acquisitions

•                  $1.2 million increase from same-store properties

•                  $0.9 million decrease-other

 

The Company’s EBITDA increased $15.8 million to $57.4 million; margins before ground rent increased to 82.8% compared to 64.2% for the same period last year.  The following items drove EBITDA improvements:

 

(1)  Consolidated GAAP NOI (before discontinued operations) increased $8.1 million:

 

•          $7.2 million increase from the equity in income from unconsolidated joint ventures primarily due to the December 2003 acquisition of 1221 Avenue of the Americas ($7.4 million).  The increase was partially offset by lower affiliate income and reserves.

 

5

 

•          $0.5 million increase in same-store results (see below)

•          $0.4 million increase from 2003 property acquisitions of 461 Fifth Avenue (October 2003) net of reserves.

 

(2)  $5.1 million increase in investment and preferred income primarily due to the recognition of accelerated origination and exit fees related to the early redemption of several mortgage investments, and an increase in the weighted-average asset balance from $120.0 million to $235.2 million.  The weighted-average yield decreased from 12.4% to 10.2%.

 

(3)  $3.8 million increase in other income (excluding $2.0 million of service corporation revenue) is due to an One Park Avenue incentive distribution totaling $4.3 million, partially offset by lower lease buy-out income and lower asset management fees.

 

(4)  $1.7 million decrease from higher MG&A expense.

 

FFO available to common shareholders improved $10.3 million primarily as a result of:

•                  $15.8 million increase in EBITDA

•                  $2.3 million increase in FFO adjustment from unconsolidated joint ventures primarily due to increased depreciation expense from 1221 Avenue of the Americas

•                  $1.3 million decrease in FFO from discontinued operations

•                  $3.4 million decrease from perpetual preferred stock dividends

•                  $3.0 million decrease from higher interest expense

•                  $0.1 million increase from lower amortization of finance costs

 

The $3.0 million increase in interest expense was primarily associated with additional debt used to fund new investment activity ($3.0 million) and higher interest costs associated with property-level refinancings ($1.7 million) which were partially offset by reduced loan balances due to previous disposition activity ($0.8 million) and proceeds from the Company’s common and preferred stock offerings and other ($0.9 million).

 

SAME-STORE RESULTS

 

Same-store second quarter GAAP NOI increased $0.5 million (2%) to $29.3 million in 2004 due to a $1.1 million increase in rental revenue partially offset by a $0.7 million increase in operating expenses.  Operating margins after ground rent were essentially flat decreasing 0.1% to 51.7%.

 

The $1.1 million increase in revenue was due to:

 

•                  $2.1 million increase in rental revenue primarily due to improved leasing at 420 Lexington Avenue and 555 West 57^th Street.

•                  $0.5 million decrease in escalation and reimbursement revenue primarily due to real estate tax and utility reimbursements

•                  $0.1 million increase from lower straight-line credit loss reserves

 

6

 

•                  $0.6 million reduction in signage rent and lease buy-out income

 

The $0.7 million (3%) increase in same-store operating expenses resulted from:

 

•                  $0.5 million (6%) increase in real estate taxes primarily due to higher property value assessments.

•                  $0.3 million (14%) increase in condominium, management, professional and advertising costs

•                  $0.3 million (4%) increase in repairs, maintenance and payroll costs

•                  $0.4 million (8%) decrease in utility costs

 

QUARTERLY LEASING HIGHLIGHTS

 

Vacancy at June 30, 2004 was 574,532 useable square feet net of holdover tenants.  During the quarter, 263,172 additional usable office, retail and storage square feet became available at an average escalated cash rent of $36.97 per rentable square foot.  Space available before holdovers to lease during the quarter totaled 837,704 useable square feet, or 5.4% of the total portfolio.

 

During the second quarter, 61 leases were signed totaling 220,671 usable square feet.  New cash rents averaged $33.69 per rentable square foot.  Replacement rents were 7% less than rents on previously occupied space, which had fully escalated cash rents averaging $36.06 per rentable square foot.  The average lease term was 8.1 years and average tenant concessions were 1.9 months of free rent with a tenant improvement allowance of $22.15 per rentable square foot.  Including early renewals and excluding holdover tenants, the tenant renewal rate was 50% based on square feet expiring.  34 leases have expired comprising 62,093 useable square feet that are in a holdover status.  This results in 554,940 useable square feet (net of holdovers) remaining available as of June 30, 2004.

 

The Company signed 12 office leases for 62,013 useable square feet that were for early renewals.  The early renewals for space were not scheduled to become available until after the fourth quarter of 2004.  The Company renewed the current office tenants at an average cash rent of $34.18 per rentable square foot, representing an increase of 23% above the previously fully escalated rents of $27.73.  The average lease term extension on the office early renewals was 9.4 years with a tenant improvement allowance of $12.40 per rentable square foot and 0.6 months of free rent.

 

REAL ESTATE ACTIVITY

 

750 Third Avenue and 485 Lexington Avenues

 

In June 2004, we announced that we had entered into an agreement to acquire two office buildings, comprising 1.7 million square feet, located at 750 Third Avenue (“750 Third”) and 485 Lexington Avenue (“485 Lexington”) for $480.0 million, or $282 million per square foot.  The properties are being acquired from TIAA-CREF, a national financial services

 

7

 

company.  The transaction is expected to close in the third quarter of 2004.  The properties will be acquired separately by two SL Green-controlled entities.

 

750 Third will be purchased by us as a wholly-owned asset for $255.0 million.  The acquisition will initially be funded by proceeds from our unsecured revolving credit facility.  At closing, TIAA-CREF, a AAA-rated company, will enter into an operating lease for the entire building.  At the expiration of such operating lease, in December 2005, the building will be approximately 25% vacant.  The majority of such vacancy will be in the upper tower floors of the property.

 

485 Lexington will be acquired in a joint venture with The City Investment Fund.  We expect to own approximately 30.0% of the equity interests in the property.  The allocated price for 485 Lexington is $225.0 million.  The joint venture has arranged for a loan facility to fund 75% of the acquisition and anticipated re-tenanting costs of 485 Lexington.  Consistent with our prior joint venture arrangements, we will be the operating partner and day-to-day manager of the venture and will be entitled to management fees, leasing commissions and incentive fees.  At closing, TIAA-CREF will enter into an operating lease for the entire building. Upon expiration of the operating lease in December 2005, it is anticipated that TIAA-CREF will vacate all of the space it occupies in 485 Lexington (approximately 870,000 square feet).

 

One Park Avenue

 

In May 2004, Credit Suisse First Boston LLC, through a wholly owned affiliate, acquired a 75% interest in One Park.  The interest was acquired from a joint venture comprised of SITQ and us.  Simultaneous with the closing of the acquisition, the new joint venture completed a refinancing of the property with an affiliate of Credit Suisse First Boston.

 

Credit Suisse First Boston’s affiliated entity acquired its equity interest for $60.0 million.  The acquisition was based on a total capitalization of approximately $318.5 million, or $344 per square foot.  The $238.5 million 10-year interest only loan bears interest at a fixed rate of 5.8% and replaced the existing $150.0 million floating rate loan, which was scheduled to mature in January 2005.  We received $83.0 million in net proceeds from the recapitalization.  Net proceeds, which were used to pay down our unsecured revolving credit facility, included an incentive fee of approximately $4.3 million earned pursuant to the prior joint venture agreement with SITQ.

 

We have retained a 16.7% interest in the new venture, which may be increased substantially based upon the financial performance of the property.  We will manage the venture, in addition to continuing our responsibility of leasing and managing the property.

 

We accounted for the transaction as a sale of interests and recognized a gain on sale of approximately $22 million.  Our initial book basis in the new joint venture will be

 

8

 

approximately $4.3 million and it will be accounted for under the equity method.

 

125 Broad Street

 

In June 2004, the Company exercised an option to acquire its share of the fee position at 125 Broad Street for approximately $6.0 million.

 

Structured Finance Activity

 

As of June 30, 2004, the par value of the Company’s structured finance and preferred equity investments totaled $264.3 million.  The weighted average balance outstanding for the second quarter of 2004 was $235.2 million.  During the second quarter of 2004, the weighted average yield was 10.2%.

 

During the second quarter of 2004, the Company originated $117.4 million of structured finance investments with an initial yield of approximately 10.1%.  The Company also received redemptions totaling $129.6 million that was yielding 13.2%.

 

Financing/ Capital Activity

 

Series D Perpetual Preferred Stock

 

In April 2004, we priced a public offering of 2,450,000 shares of our 7.875% Series D Cumulative Redeemable Preferred Stock, or Series D preferred stock with a mandatory liquidation preference of $25.00 per share.  Net proceeds from this offering (approximately $59.0 million) were used principally to repay amounts outstanding under our secured and unsecured revolving credit facilities.  The Series D preferred stock receives annual dividends of $1.96875 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions.  On or after May 27, 2009, we may redeem the Series D preferred stock for cash at our option.  In July 2004, we issued an additional 1,550,000 shares of our Series D preferred stock with net proceeds to us of approximately $37.3 million.  The gross proceeds from these offerings were $100 million.

 

1515 Broadway Refinance

 

In June 2004, we refinanced 1515 Broadway with a $425.0 million first mortgage.  The interest only mortgage has an interest rate of 90 basis points over the 30-day LIBOR.  The all-in blended weighted average effective interest rate was 3.84% for the quarter ended June 30, 2004.  The mortgage matures in July 2006 and is subject to three one-year as-of-right renewal options.  This loan replaced the $335 million loan, which bore interest at 190 basis points over LIBOR.

 

1250 Broadway Refinancing

 

In July 2004, we refinanced 1250 Broadway with a $115 million first mortgage.  The interest-only mortgage has an interest rate of 120 basis points over the 30-day LIBOR.  The mortgage matures in August 2006 and is subject to three one-

 

9

 

year as-of-right renewal options.  This loan replaced the $85 million loan, which bore interest at 250 basis points over LIBOR.

 

485 Lexington Avenue Financing

 

The Company has received a $240 million commitment to finance the acquisition and redevelopment of 485 Lexington Avenue.  The loan, which will bear interest at 200 basis points over the 30-day LIBOR, is for three years and has two one-year extension options.  The loan, which is expected to close during the third quarter, is subject to customary closing conditions.  At closing, the Company is expected to draw approximately $170 million to fund the acquisition.

 

Other

 

Dividends

 

On June 15, 2003, the Company declared a dividend distribution of $0.50 per common share for the second quarter 2004.  This distribution reflects the regular quarterly dividend, which is the equivalent of an annualized distribution of $2.00 per common share.

 

On June 15, 2003, the Company also declared a dividend on the Company’s Series C preferred stock for the period April 15, 2004 through and including July 14, 2004, of $0.4766 per share, payable July 15, 2004 to shareholders of record on the close of business on June 30, 2004. The distribution reflects the regular quarterly dividend, which is the equivalent of an annualized distribution of $1.90625 per Series C preferred stock.

 

On June 15, 2004, the Company also declared a dividend on the Company’s Series D preferred stock for the period May 27, 2004 through and including July 14, 2004, of $0.2625 per share, payable July 15, 2004 to shareholders of record on the close of business on June 30, 2004. The distribution reflects the regular annualized distribution of $1.96875, pro rated for the period during which the Series D preferred stock was outstanding.

 

Consolidation of Affiliate

 

In connection with recently enacted accounting pronouncements (FIN 46) the Company has consolidated the results of its previously unconsolidated affiliate.  The consolidation is effective July 1, 2003 and is not retroactive for the three and six months ended December 31, 2003.  The consolidated affiliate revenue totaled $2.0 million and consolidated expenses totaled $1.8 for the three months ended June 30, 2004.

 

10

 

OTHER

 

Annually, the Company adjusts the same-store pool to include

 

all properties owned for a minimum of twelve months (since January 1, 2003).  The 2004 same-store pool will include the following wholly owned properties:

 

2004 SAME-STORE

 

673 First Avenue

470 Park Avenue South

555 West 57^th Street

711 Third Avenue

286 Madison Avenue

110 East 42^nd Street

1140 Avenue of the Americas

1466 Broadway

440 Ninth Avenue

1372 Broadway

290 Madison Avenue

317 Madison Avenue

420 Lexington Avenue

70 West 36^th Street

1414 Avenue of the Americas

292 Madison Avenue

17 Battery Place North

 

11

 

SL Green Realty Corp.

Key Financial Data

June 30, 2004

( Dollars in Thousands Except Per Share and Sq. Ft.)

 

		As of or for the three months ended
		6/30/2004			3/31/2004			12/31/2003			9/30/2003			6/30/2003
Earnings Per Share
Net income available to common shareholders - diluted		$	1.13		$	0.40		$	0.58		$	0.59		$	0.49
Funds from operations available to common shareholders - diluted		$	1.04		$	0.83		$	0.89		$	0.87		$	0.87
Funds available for distribution to common shareholders - diluted		$	0.72		$	0.56		$	0.56		$	0.68		$	0.60
Common Share Price & Dividends
At the end of the period		$	46.80		$	47.70		$	41.05		$	36.11		$	34.89
High during period		$	48.20		$	47.78		$	41.05		$	37.42		$	36.00
Low during period		$	40.24		$	41.12		$	36.12		$	34.52		$	31.47
Common dividends per share		$	0.500		$	0.500		$	0.500		$	0.465		$	0.465
FFO Payout Ratio		48.09		%	60.03		%	56.42		%	54.58		%	53.29		%
FAD Payout Ratio		69.87		%	89.68		%	89.42		%	68.00		%	77.59		%
Common Shares & Units
Common shares outstanding		38,692			38,551			36,016			35,876			31,173
Units outstanding		2,225			2,225			2,306			2,306			2,306
Total shares and units outstanding		40,917			40,776			38,322			38,182			33,479
Weighted average common shares and units outstanding - basic		38,638			37,978			35,957			31,269			31,082
Weighted average common shares and units outstanding - diluted		42,456			42,010			39,764			39,186			38,819
Market Capitalization
Market value of common equity		$	1,914,902		$	1,945,017		$	1,573,114		$	1,378,753		$	1,168,094
Liquidation value of preferred equity		218,750			157,500			157,500			—			115,000
Consolidated debt		919,080			1,060,428			1,119,449			792,426			762,530
Consolidated market capitalization		$	3,052,732		$	3,162,945		$	2,850,063		$	2,171,179		$	2,045,624
SLG portion JV debt		496,542			489,940			473,558			402,635			396,047
Combined market capitalization		$	3,549,274		$	3,652,885		$	3,323,621		$	2,573,814		$	2,441,671
Consolidated debt to market capitalization		30.11		%	33.53		%	39.28		%	36.50		%	37.28		%
Combined debt to market capitalization		39.88		%	42.44		%	47.93		%	46.43		%	47.45		%
Consolidated debt service coverage		4.05			3.68			3.71			3.83			3.61
Consolidated fixed charge coverage		2.78			2.59			2.83			2.66			2.55
Combined fixed charge coverage		2.46			2.49			2.67			2.44			2.36
Portfolio Statistics
Directly owned buildings		20			20			20			19			20
Joint venture buildings		7			7			6			6			6
		27			27			26			25			26
Directly owned square footage		8,170,000			8,170,000			8,170,000			7,970,000			8,225,000
Joint venture square footage		7,274,000			7,274,000			6,902,000			4,635,000			4,635,000
		15,444,000			15,444,000			15,072,000			12,605,000			12,860,000
Quarter end occupancy-portfolio		96.6		%	96.3		%	95.8		%	95.5		%	95.5		%
Quarter end occupancy- same store		97.0		%	96.9		%	95.8		%	97.5		%	97.3		%

 

12

 

SL Green Realty Corp.

Key Financial Data

June 30, 2004

( Dollars in Thousands Except Per Share and Sq. Ft.)

 

		As of or for the three months ended
		6/30/2004			3/31/2004			12/31/2003			9/30/2003			6/30/2003
Selected Balance Sheet Data
Real estate assets before depreciation		$	1,370,329		$	1,355,880		$	1,346,431		$	1,273,606		$	1,266,476
Investments in unconsolidated joint ventures		$	502,658		$	600,002		$	590,064		$	205,821		$	216,620
Structured finance investments		$	264,296		$	276,538		$	218,989		$	167,954		$	125,517
Total Assets		$	2,256,614		$	2,295,883		$	2,261,841		$	1,765,147		$	1,725,583
Fixed rate & hedged debt		$	884,180		$	782,428		$	783,449		$	539,426		$	540,352
Variable rate debt		34,900			278,000			336,000			253,000			222,178
Total consolidated debt		$	919,080		$	1,060,428		$	1,119,449		$	792,426		$	762,530
Total Liabilities		$	1,069,335		$	1,210,662		$	1,256,268		$	926,791		$	900,433
Fixed rate & hedged debt-including SLG portion JV debt		$	1,151,772		$	1,010,358		$	1,011,507		$	767,611		$	671,949
Variable rate debt - including SLG portion JV debt		263,850			540,010			581,500			427,450			486,628
Total combined debt		$	1,415,622		$	1,550,368		$	1,593,007		$	1,195,061		$	1,158,577
Selected Operating Data
Property operating revenues		$	73,901		$	71,371		$	73,073		$	73,352		$	69,751
Property operating expenses		38,454			39,562			36,821			38,713			33,534
Property operating NOI		$	35,447		$	31,809		$	36,252		$	34,639		$	36,217
SLG share of Property NOI from JVs		$	22,412		$	22,174		$	12,886		$	12,094		$	12,334
Structured finance income		$	8,562		$	13,829		$	9,861		$	3,860		$	3,449
Other income		$	6,982		$	2,490		$	3,668		$	4,113		$	1,164
Marketing general & administrative expenses		$	4,467		$	10,903		$	8,048		$	2,994		$	2,804
Consolidated interest		$	14,578		$	14,830		$	12,683		$	10,991		$	11,817
Combined interest		$	19,616		$	19,944		$	17,366		$	15,978		$	16,547
Preferred Dividend & Accretion		$	3,446		$	3,000		$	625		$	2,224		$	2,431
Office Leasing Statistics
Total office leases signed		70			59			62			69			68
Total office square footage leased		341,730			251,144			664,716			275,434			311,388
Average rent psf		$	32.43		$	30.98		$	31.27		$	34.55		$	30.89
Escalated rents psf		$	32.95		$	30.22		$	30.71		$	32.85		$	28.58
Percentage of rent over escalated		-1.6		%	2.5		%	1.8		%	5.2		%	8.1		%
Tenant concession packages psf		$	20.34		$	26.21		$	22.43		$	16.49		$	20.15
Free rent months		1.4			1.9			1.1			1.1			1.7

 

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