Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 10-Q
x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
OR
o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to                
Commission File Number: 1-13199 (SL Green Realty Corp.)
Commission File Number: 33-167793-02 (SL Green Operating Partnership, L.P.)
______________________________________________________________________
SL GREEN REALTY CORP.
SL GREEN OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
______________________________________________________________________
SL Green Realty Corp.
Maryland
13-3956755
SL Green Operating Partnership, L.P.
Delaware
13-3960938
 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
420 Lexington Avenue, New York, NY 10170
(Address of principal executive offices—Zip Code)

(212) 594-2700
(Registrant's telephone number, including area code)
______________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
SL Green Realty Corp.    Yes x    No o            SL Green Operating Partnership, L.P.    Yes x    No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
SL Green Realty Corp.     Yes x    No o            SL Green Operating Partnership, L.P.    Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
SL Green Realty Corp.
Large accelerated filer
x
 
Accelerated filer
o
Non-accelerated filer
o
 (Do not check if a smaller reporting company)
 
Smaller Reporting Company
o
 
Emerging Growth Company
o
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
SL Green Operating Partnership, L.P.
Large accelerated filer
o
 
Accelerated filer
o
Non-accelerated filer
x
 (Do not check if a smaller reporting company)
 
Smaller Reporting Company
o
 
Emerging Growth Company
o
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). 
SL Green Realty Corp.    Yes o    No x            SL Green Operating Partnership, L.P.    Yes o    No x
As of August 7, 2017, 98,968,471 shares of SL Green Realty Corp.'s common stock, par value $0.01 per share, were outstanding. As of August 7, 2017, 1,497,224 common units of limited partnership interest of SL Green Operating Partnership, L.P. were held by non-affiliates. There is no established trading market for such units.
 




EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2017 of SL Green Realty Corp. and SL Green Operating Partnership, L.P. Unless stated otherwise or the context otherwise requires, references to "SL Green Realty Corp.," the "Company" or "SL Green" mean SL Green Realty Corp. and its consolidated subsidiaries; and references to "SL Green Operating Partnership, L.P.," the "Operating Partnership" or "SLGOP" mean SL Green Operating Partnership, L.P. and its consolidated subsidiaries. The terms "we," "our" and "us" mean the Company and all the entities owned or controlled by the Company, including the Operating Partnership.
The Company is a Maryland corporation which operates as a self-administered and self-managed real estate investment trust, or REIT, and is the sole managing general partner of the Operating Partnership. As a general partner of the Operating Partnership, the Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership.
As of June 30, 2017 the Company owns 95.57% of the outstanding general and limited partnership interest in the Operating Partnership. The Company also owns 9,200,000 Series I Preferred Units of the Operating Partnership. As of June 30, 2017, noncontrolling investors held, in aggregate, a 4.43% limited partnership interest in the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership.
The Company and the Operating Partnership are managed and operated as one entity. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.
Noncontrolling interests in the Operating Partnership, stockholders' equity of the Company and partners' capital of the Operating Partnership are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership not owned by the Company are accounted as noncontrolling interests, within mezzanine equity, in the Company's and the Operating Partnership's consolidated financial statements.
We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:
Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
Combined reports eliminate duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Company and the Operating Partnership; and
Combined reports create time and cost efficiencies through the preparation of one combined report instead of two separate reports.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
consolidated financial statements;
the following notes to the consolidated financial statements:
Note 11, Noncontrolling Interests on the Company’s Consolidated Financial Statements;
Note 12, Stockholders' Equity of the Company;
Note 13, Partners' Capital of the Operating Partnership.
This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership, respectively, in order to establish that the Chief Executive Officer and the Chief Financial Officer of the Company, in both their capacity as the principal executive officer and principal financial officer of the Company and the principal executive officer and principal financial officer of the general partner of the Operating Partnership, have made the requisite certifications and that the Company and the Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.



SL GREEN REALTY CORP. AND SL GREEN OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
 
 
 
 
 
FINANCIAL STATEMENTS OF SL GREEN REALTY CORP.
 
 
Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016
 
Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016 (unaudited)
 
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016 (unaudited)
 
Consolidated Statement of Equity for the six months ended June 30, 2017 (unaudited)
 
Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016 (unaudited)
 
 
 
 
FINANCIAL STATEMENTS OF SL GREEN OPERATING PARTNERSHIP, L.P.
 
 
Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016
 
Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016 (unaudited)
 
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016 (unaudited)
 
Consolidated Statement of Capital for the six months ended June 30, 2017 (unaudited)
 
Consolidated Statements of Cash Flows for six months ended June 30, 2017 and 2016 (unaudited)
 
PART II.
OTHER INFORMATION
 
 


Table of Contents


PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)
 
June 30, 2017
 
December 31, 2016
   
(unaudited)
 
 
Assets
 
 
 
Commercial real estate properties, at cost:
 
 
 
Land and land interests 
$
2,936,879

 
$
3,309,710

Building and improvements 
7,476,108

 
7,948,852

Building leasehold and improvements 
1,441,587

 
1,437,325

Properties under capital lease 
47,445

 
47,445

 
11,902,019

 
12,743,332

Less: accumulated depreciation 
(2,397,299
)
 
(2,264,694
)
 
9,504,720

 
10,478,638

Assets held for sale
119,224

 

Cash and cash equivalents
270,965

 
279,443

Restricted cash
109,959

 
90,524

Investments in marketable securities
29,524

 
85,110

Tenant and other receivables, net of allowance of $17,677 and $16,592 in 2017 and 2016, respectively
50,946

 
53,772

Related party receivables
23,725

 
15,856

Deferred rents receivable, net of allowance of $23,270 and $25,203 in 2017 and 2016, respectively
385,040

 
442,179

Debt and preferred equity investments, net of discounts and deferred origination fees of $15,079 and $16,705 in 2017 and 2016, respectively
1,986,413

 
1,640,412

Investments in unconsolidated joint ventures
2,219,371

 
1,890,186

Deferred costs, net
249,724

 
267,600

Other assets
360,096

 
614,067

Total assets (1)
$
15,309,707

 
$
15,857,787

Liabilities
 
 
 
Mortgages and other loans payable, net  
$
3,813,976

 
$
4,073,830

Revolving credit facility, net
195,125

 

Unsecured term loan, net
1,180,217

 
1,179,521

Unsecured notes, net
1,086,936

 
1,128,315

Accrued interest payable  
36,478

 
36,052

Other liabilities
195,940

 
206,238

Accounts payable and accrued expenses
134,294

 
190,583

Deferred revenue
229,692

 
217,955

Capital lease obligations 
42,480

 
42,132

Deferred land leases payable
2,911

 
2,583

Dividend and distributions payable
86,081

 
87,271

Security deposits
68,286

 
66,504

Liabilities related to assets held for sale
106

 

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
100,000

 
100,000

Total liabilities (1)
7,172,522

 
7,330,984


4

Table of Contents

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)

 
June 30, 2017
 
December 31, 2016
   
(unaudited)
 
 
Commitments and contingencies

 

Noncontrolling interests in Operating Partnership
487,660

 
473,882

Preferred units
301,885

 
302,010

 
 
 
 
Equity
 
 
 
SL Green stockholders' equity:
 
 
 
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2017 and December 31, 2016
221,932

 
221,932

Common stock, $0.01 par value, 160,000 shares authorized and 99,422 and 101,617 issued and outstanding at June 30, 2017 and December 31, 2016, respectively (including 1,055 shares held in treasury at June 30, 2017 and December 31, 2016)
995

 
1,017

Additional paid-in-capital
5,391,038

 
5,624,545

Treasury stock at cost
(124,049
)
 
(124,049
)
Accumulated other comprehensive income
14,354

 
22,137

Retained earnings
1,431,442

 
1,578,893

Total SL Green stockholders' equity
6,935,712

 
7,324,475

Noncontrolling interests in other partnerships
411,928

 
426,436

Total equity
7,347,640

 
7,750,911

Total liabilities and equity
$
15,309,707

 
$
15,857,787

 
 
 
 
1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $384.0 million and $412.3 million of land, $1.4 billion and $1.5 billion of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $47.4 million and $47.4 million of properties under capital lease, $311.8 million and $327.2 million of accumulated depreciation, $390.5 million and $289.0 million of other assets included in other line items, $626.7 million and $621.8 million of real estate debt, net, $2.5 million and $2.2 million of accrued interest payable, $42.5 million and $42.1 million of capital lease obligations, and $102.3 million and $118.0 million of other liabilities included in other line items as of June 30, 2017 and December 31, 2016, respectively.


The accompanying notes are an integral part of these consolidated financial statements.

5

Table of Contents

SL Green Realty Corp.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
 
Rental revenue, net
 
$
279,407

 
$
416,809

 
$
560,736

 
$
762,416

Escalation and reimbursement
 
42,620

 
48,616

 
86,812

 
94,227

Investment income
 
60,622

 
44,214

 
100,921

 
98,951

Other income
 
15,501

 
107,975

 
27,062

 
117,464

Total revenues
 
398,150

 
617,614

 
775,531

 
1,073,058

Expenses
 

 
 
 

 
 
Operating expenses, including related party expenses of $5,262 and $9,436 in 2017 and $6,667 and $10,129 in 2016.
 
70,852

 
75,324

 
145,358

 
154,844

Real estate taxes
 
60,945

 
62,124

 
122,013

 
123,798

Ground rent
 
8,308

 
8,307

 
16,616

 
16,615

Interest expense, net of interest income
 
64,856

 
89,089

 
130,478

 
183,761

Amortization of deferred financing costs
 
3,432

 
7,433

 
8,193

 
15,365

Depreciation and amortization
 
133,054

 
425,042

 
227,188

 
604,350

Transaction related costs
 
46

 
2,115

 
179

 
3,394

Marketing, general and administrative
 
24,256

 
24,484

 
48,399

 
48,516

Total expenses
 
365,749

 
693,918

 
698,424

 
1,150,643

Income (loss) before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, (loss) gain on sale of real estate, net, depreciable real estate reserves, and (loss) gain on sale of investment in marketable securities
 
32,401

 
(76,304
)
 
77,107

 
(77,585
)
Equity in net income from unconsolidated joint ventures
 
3,412

 
5,841

 
10,026

 
15,937

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
13,089

 
33,448

 
15,136

 
43,363

(Loss) gain on sale of real estate, net
 
(3,823
)
 
196,580

 
(3,256
)
 
210,353

Depreciable real estate reserves
 
(29,064
)
 
(10,387
)
 
(85,336
)
 
(10,387
)
(Loss) gain on sale of investment in marketable securities
 

 
(83
)
 
3,262

 
(83
)
Net income
 
16,015

 
149,095

 
16,939

 
181,598

Net income attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Noncontrolling interests in the Operating Partnership

(419
)
 
(5,586
)
 
(895
)
 
(6,508
)
Noncontrolling interests in other partnerships

(786
)
 
(3,435
)
 
16,705

 
(5,409
)
Preferred units distributions

(2,851
)
 
(2,880
)
 
(5,701
)
 
(5,528
)
Net income attributable to SL Green
 
11,959

 
137,194

 
27,048

 
164,153

Perpetual preferred stock dividends
 
(3,737
)
 
(3,737
)
 
(7,475
)
 
(7,475
)
Net income attributable to SL Green common stockholders
 
$
8,222

 
$
133,457

 
$
19,573

 
$
156,678

 
 
 
 
 
 
 
 
 

6

Table of Contents

SL Green Realty Corp.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Amounts attributable to SL Green common stockholders:
 
 
 
 
 
 
 
 
Income (loss) before depreciable real estate reserves and gains (losses) on sale
 
$
27,156

 
$
(77,056
)
 
$
89,818

 
$
(76,947
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
12,517

 
32,058

 
14,474

 
41,634

(Loss) gain on sale of real estate, net
 
(3,656
)
 
188,410

 
(3,114
)
 
201,964

Depreciable real estate reserves
 
(27,795
)
 
(9,955
)
 
(81,605
)
 
(9,973
)
Net income attributable to SL Green common stockholders
 
$
8,222

 
$
133,457

 
$
19,573

 
$
156,678

Basic earnings per share:
 
 
 
 
 
 
 
 
Income (loss) before depreciable real estate reserves and gains (losses) on sale
 
$
0.27

 
$
(0.77
)
 
$
0.90

 
$
(0.77
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.13

 
0.32

 
0.14

 
0.42

(Loss) gain on sale of real estate, net
 
(0.04
)
 
1.88

 
(0.03
)
 
2.02

Depreciable real estate reserves
 
(0.28
)
 
(0.10
)
 
(0.81
)
 
(0.10
)
Net income attributable to SL Green common stockholders
 
$
0.08

 
$
1.33

 
$
0.20


$
1.57

Diluted earnings per share:
 
 
 
 
 
 
 
 
Income (loss) before depreciable real estate reserves and gains (losses) on sale
 
$
0.27

 
$
(0.77
)
 
$
0.89

 
$
(0.77
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.12

 
0.32

 
0.14

 
0.42

(Loss) gain on sale of real estate, net
 
(0.04
)
 
1.88

 
(0.03
)
 
2.01

Depreciable real estate reserves
 
(0.27
)
 
(0.10
)
 
(0.81
)
 
(0.10
)
Net income attributable to SL Green common stockholders
 
$
0.08

 
$
1.33

 
$
0.19

 
$
1.56

 
 
 
 
 
 
 
 
 
Dividends per share
 
$
0.775

 
$
0.72

 
$
1.55

 
$
1.44

Basic weighted average common shares outstanding
 
99,900

 
100,134

 
100,268

 
100,093

Diluted weighted average common shares and common share equivalents outstanding
 
104,732

 
104,792

 
105,140

 
104,533



The accompanying notes are an integral part of these consolidated financial statements.

7

Table of Contents


SL Green Realty Corp.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Net income

$
16,015

 
$
149,095

 
$
16,939

 
$
181,598

Other comprehensive loss:


 
 
 

 
 
Change in net unrealized gain on derivative instruments, including SL Green's share of joint venture net unrealized gain on derivative instruments

(2,520
)
 
257

 
(3,595
)
 
(7,315
)
Change in unrealized gain on marketable securities

263

 
354

 
(4,487
)
 
(869
)
Other comprehensive (loss) income

(2,257
)
 
611

 
(8,082
)
 
(8,184
)
Comprehensive income

13,758

 
149,706

 
8,857

 
173,414

Net (income) loss attributable to noncontrolling interests and preferred units distributions

(4,056
)
 
(11,901
)
 
10,109

 
(17,445
)
Other comprehensive loss attributable to noncontrolling interests

100

 
53

 
299

 
375

Comprehensive income attributable to SL Green

$
9,802

 
$
137,858

 
$
19,265

 
$
156,344



The accompanying notes are an integral part of these consolidated financial statements.


8

Table of Contents

SL Green Realty Corp.
Consolidated Statement of Equity
(unaudited, in thousands, except per share data)


 
SL Green Realty Corp. Stockholders
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 


 
 
Series I
Preferred
Stock
 
Shares
 
Par
Value
 
Additional
Paid-
In-Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive Income (Loss)
 
Retained
Earnings
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2016
 
$
221,932

 
100,562

 
$
1,017

 
$
5,624,545

 
$
(124,049
)
 
$
22,137

 
$
1,578,893

 
$
426,436

 
$
7,750,911

Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
27,048

 
(16,705
)
 
10,343

Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
(7,783
)
 
 
 
 
 
(7,783
)
Preferred dividends
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,475
)
 
 
 
(7,475
)
DRSPP proceeds
 
 
 
1

 
 
 
111

 
 
 
 
 
 
 
 
 
111

Conversion of units of the Operating Partnership to common stock
 
 
 
122

 
1

 
13,241

 
 
 
 
 
 
 
 
 
13,242

Reallocation of noncontrolling interest in the Operating Partnership
 
 
 
 
 
 
 
 
 
 
 
 
 
(12,712
)
 
 
 
(12,712
)
Equity component of repurchased exchangeable senior notes
 
 
 
 
 
 
 
(18,824
)
 
 
 
 
 
 
 
 
 
(18,824
)
Deferred compensation plan and stock award, net
 
 
 
(8
)
 
 
 
(1,943
)
 
 
 
 
 
 
 
 
 
(1,943
)
Amortization of deferred compensation plan
 
 
 
 
 
 
 
15,487

 
 
 
 
 
 
 
 
 
15,487

Repurchase of common stock
 
 
 
(2,448
)
 
(24
)
 
(253,173
)
 
 
 
 
 
 
 
 
 
(253,197
)
Proceeds from stock options exercised
 
 
 
138

 
1

 
11,594

 
 
 
 
 
 
 
 
 
11,595

Contributions to consolidated joint venture interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33,009

 
33,009

Deconsolidation of partially owned entity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(30,203
)
 
(30,203
)
Cash distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(609
)
 
(609
)
Cash distributions declared ($1.55 per common share, none of which represented a return of capital for federal income tax purposes)
 
 
 
 
 
 
 
 
 
 
 
 
 
(154,312
)
 
 
 
(154,312
)
Balance at June 30, 2017
 
$
221,932

 
98,367

 
$
995

 
$
5,391,038

 
$
(124,049
)
 
$
14,354

 
$
1,431,442

 
$
411,928

 
$
7,347,640



The accompanying notes are an integral part of these consolidated financial statements.

9

Table of Contents

SL Green Realty Corp.
Consolidated Statements of Cash Flows
(unaudited, in thousands, except per share data)


 
Six Months Ended June 30,
 
2017
 
2016
Operating Activities
 
 
 
Net income
$
16,939

 
$
181,598

Adjustments to reconcile net income to net cash provided by operating activities:

 

Depreciation and amortization
235,381

 
619,715

Equity in net income from unconsolidated joint ventures
(10,026
)
 
(15,937
)
Distributions of cumulative earnings from unconsolidated joint ventures
12,388

 
15,260

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(15,136
)
 
(43,363
)
Depreciable real estate reserves
85,336

 
10,387

Loss (gain) on sale of real estate, net
3,256

 
(210,353
)
(Gain) loss on sale of investments in marketable securities
(3,262
)
 
83

Deferred rents receivable
(23,237
)
 
53,042

Other non-cash adjustments (1)
17,551

 
(164,276
)
Changes in operating assets and liabilities:

 
 
Restricted cash—operations
5,023

 
(10,069
)
Tenant and other receivables
1,447

 
4,820

Related party receivables
(7,869
)
 
(2,386
)
Deferred lease costs
(23,560
)
 
(31,951
)
Other assets
680

 
4,362

Accounts payable, accrued expenses, other liabilities and security deposits
(10,660
)
 
(33,635
)
Deferred revenue and land leases payable
29,471

 
(3,919
)
Net cash provided by operating activities
313,722


373,378

Investing Activities
 
 
 
Acquisitions of real estate property
(19
)
 
(37,728
)
Additions to land, buildings and improvements
(165,262
)
 
(157,118
)
Escrowed cash—capital improvements/acquisition deposits/deferred purchase price
11,980

 
76,220

Investments in unconsolidated joint ventures
(93,182
)
 
(25,389
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
93,688

 
161,413

Net proceeds from disposition of real estate/joint venture interest
23,082

 
1,916,312

Proceeds from sale or redemption of marketable securities
54,363

 
5,180

Purchases of marketable securities

 
(331
)
Other investments
3,014

 
(2,987
)
Origination of debt and preferred equity investments
(854,577
)
 
(227,196
)
Repayments or redemption of debt and preferred equity investments
663,140

 
418,371

Net cash (used in) provided by investing activities
(263,773
)
 
2,126,747


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Table of Contents

SL Green Realty Corp.
Consolidated Statements of Cash Flows
(unaudited, in thousands, except per share data)

 
Six Months Ended June 30,
 
2017
 
2016
Financing Activities
 
 
 
Proceeds from mortgages and other loans payable
$
779,642

 
$
250,514

Repayments of mortgages and other loans payable
(693,243
)
 
(1,663,616
)
Proceeds from revolving credit facility and senior unsecured notes
1,072,800

 
700,000

Repayments of revolving credit facility and senior unsecured notes
(875,697
)
 
(1,664,296
)
Proceeds from stock options exercised and DRIP issuance
11,706

 
4,431

Repurchase of common stock
(211,599
)
 

Redemption of preferred stock
(125
)
 
(2,849
)
Distributions to noncontrolling interests in other partnerships
(609
)
 
(9,866
)
Contributions from noncontrolling interests in other partnerships
33,009

 
1,434

Distributions to noncontrolling interests in the Operating Partnership
(7,112
)
 
(6,009
)
Dividends paid on common and preferred stock
(168,678
)
 
(156,234
)
Other obligations related to loan participations
10,000

 
76,500

Deferred loan costs and capitalized lease obligation
(8,521
)
 
(9,307
)
Net cash used in financing activities
(58,427
)
 
(2,479,298
)
Net (decrease) increase in cash and cash equivalents
(8,478
)
 
20,827

Cash and cash equivalents at beginning of year
279,443

 
255,399

Cash and cash equivalents at end of period
$
270,965

 
$
276,226

 
 
 
 
(1) Included in Other non-cash adjustments is $172.4 million for the six months ended June 30, 2016 for the amortization of the below-market lease at 388-390 Greenwich Street as a result of the tenant exercising their option to purchase the property and entering into an agreement to accelerate the sale.
 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
 
 
 
Issuance of units in the Operating Partnership
$
20,824

 
$
51,647

Redemption of units in the Operating Partnership for stock
13,242

 
11,795

Derivative instruments at fair value
6,766

 
7,701

Exchange of debt investment for equity in joint venture

 
68,581

Issuance of preferred units relating to a real estate acquisition

 
22,793

Tenant improvements and capital expenditures payable
7,210

 
11,637

Fair value adjustment to noncontrolling interest in Operating Partnership
12,712

 
906

Deconsolidation of subsidiaries
328,644

 

Transfer of assets related to assets held for sale
173,918

 
1,931,217

Transfer of liabilities related to assets held for sale
149

 
1,612,008

Deferred leasing payable
800

 
1,222

Removal of fully depreciated commercial real estate properties
5,754

 
13,471

Share repurchase payable
41,598

 

Bond repurchase payable
65,416

 

Proceeds from sale held in restricted cash
38,166

 

The accompanying notes are an integral part of these consolidated financial statements.


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Table of Contents
SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)


 
 
June 30, 2017
 
December 31, 2016
 
 
(unaudited)
 
 
Assets
 
 
 
 
Commercial real estate properties, at cost:
 
 
 
 
Land and land interests 
 
$
2,936,879

 
$
3,309,710

Building and improvements 
 
7,476,108

 
7,948,852

Building leasehold and improvements 
 
1,441,587

 
1,437,325

Properties under capital lease 
 
47,445

 
47,445

 
 
11,902,019

 
12,743,332

Less: accumulated depreciation 
 
(2,397,299
)
 
(2,264,694
)
 
 
9,504,720

 
10,478,638

Assets held for sale
 
119,224

 

Cash and cash equivalents
 
270,965

 
279,443

Restricted cash
 
109,959

 
90,524

Investments in marketable securities
 
29,524

 
85,110

Tenant and other receivables, net of allowance of $17,677 and $16,592 in 2017 and 2016, respectively
 
50,946

 
53,772

Related party receivables
 
23,725

 
15,856

Deferred rents receivable, net of allowance of $23,270 and $25,203 in 2017 and 2016, respectively
 
385,040

 
442,179

Debt and preferred equity investments, net of discounts and deferred origination fees of $15,079 and $16,705 in 2017 and 2016, respectively
 
1,986,413

 
1,640,412

Investments in unconsolidated joint ventures
 
2,219,371

 
1,890,186

Deferred costs, net
 
249,724

 
267,600

Other assets
 
360,096

 
614,067

Total assets (1)
 
$
15,309,707

 
$
15,857,787

Liabilities
 
 
 
 
Mortgages and other loans payable, net  
 
$
3,813,976

 
$
4,073,830

Revolving credit facility, net
 
195,125

 

Unsecured term loan, net
 
1,180,217

 
1,179,521

Unsecured notes, net
 
1,086,936

 
1,128,315

Accrued interest payable  
 
36,478

 
36,052

Other liabilities
 
195,940

 
206,238

Accounts payable and accrued expenses
 
134,294

 
190,583

Deferred revenue
 
229,692

 
217,955

Capital lease obligations 
 
42,480

 
42,132

Deferred land leases payable
 
2,911

 
2,583

Dividend and distributions payable
 
86,081

 
87,271

Security deposits
 
68,286

 
66,504

Liabilities related to assets held for sale
 
106

 

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
 
100,000

 
100,000

Total liabilities (1)
 
7,172,522

 
7,330,984

Commitments and contingencies
 

 

Limited partner interests in SLGOP (4,562 and 4,364 limited partner common units outstanding at June 30, 2017 and December 31, 2016, respectively)
 
487,660

 
473,882

Preferred units
 
301,885

 
302,010


12

Table of Contents
SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)


 
 
June 30, 2017
 
December 31, 2016
 
 
(unaudited)
 
 
Capital
 
 
 
 
SLGOP partners' capital:
 
 
 
 
Series I Preferred Units, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2017 and December 31, 2016
 
221,932

 
221,932

SL Green partners' capital (1,029 and 1,049 general partner common units and 97,338 and 99,513 limited partner common units outstanding at June 30, 2017 and December 31, 2016, respectively)
 
6,699,426

 
7,080,406

Accumulated other comprehensive income
 
14,354

 
22,137

Total SLGOP partners' capital
 
6,935,712

 
7,324,475

Noncontrolling interests in other partnerships
 
411,928

 
426,436

Total capital
 
7,347,640

 
7,750,911

Total liabilities and capital
 
$
15,309,707

 
$
15,857,787

 
 
 
 
 
1) The Operating Partnership's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs: $384.0 million and $412.3 million of land, $1.4 billion and $1.5 billion of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $47.4 million and $47.4 million of properties under capital lease, $311.8 million and $327.2 million of accumulated depreciation, $390.5 million and $289.0 million of other assets included in other line items, $626.7 million and $621.8 million of real estate debt, net, $2.5 million and $2.2 million of accrued interest payable, $42.5 million and $42.1 million of capital lease obligations, and $102.3 million and $118.0 million of other liabilities included in other line items as of June 30, 2017 and December 31, 2016, respectively.


The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Operations
(unaudited, in thousands, except per unit data)



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017

2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
 
Rental revenue, net
 
$
279,407

 
$
416,809

 
$
560,736

 
$
762,416

Escalation and reimbursement
 
42,620

 
48,616

 
86,812

 
94,227

Investment income
 
60,622

 
44,214

 
100,921

 
98,951

Other income
 
15,501

 
107,975

 
27,062

 
117,464

Total revenues
 
398,150

 
617,614

 
775,531

 
1,073,058

Expenses
 

 
 
 

 
 
Operating expenses, including related party expenses of $5,262 and $9,436 in 2017 and $6,667 and $10,129 in 2016.
 
70,852

 
75,324

 
145,358

 
154,844

Real estate taxes
 
60,945

 
62,124

 
122,013

 
123,798

Ground rent
 
8,308

 
8,307

 
16,616

 
16,615

Interest expense, net of interest income
 
64,856

 
89,089

 
130,478

 
183,761

Amortization of deferred financing costs
 
3,432

 
7,433

 
8,193

 
15,365

Depreciation and amortization
 
133,054

 
425,042

 
227,188

 
604,350

Transaction related costs
 
46

 
2,115

 
179

 
3,394

Marketing, general and administrative
 
24,256

 
24,484

 
48,399

 
48,516

Total expenses
 
365,749

 
693,918

 
698,424

 
1,150,643

Income (loss) before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, (loss) gain on sale of real estate, net, depreciable real estate reserves, and (loss) gain on sale of investment in marketable securities
 
32,401

 
(76,304
)
 
77,107

 
(77,585
)
Equity in net income from unconsolidated joint ventures
 
3,412

 
5,841

 
10,026

 
15,937

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
13,089

 
33,448

 
15,136

 
43,363

(Loss) gain on sale of real estate, net
 
(3,823
)
 
196,580

 
(3,256
)
 
210,353

Depreciable real estate reserves
 
(29,064
)
 
(10,387
)
 
(85,336
)
 
(10,387
)
(Loss) gain on sale of investment in marketable securities
 

 
(83
)
 
3,262

 
(83
)
Net income
 
16,015

 
149,095

 
16,939

 
181,598

Noncontrolling interests in other partnerships
 
(786
)
 
(3,435
)
 
16,705

 
(5,409
)
Preferred units distributions
 
(2,851
)
 
(2,880
)
 
(5,701
)
 
(5,528
)
Net income attributable to SLGOP
 
12,378

 
142,780

 
27,943

 
170,661

Perpetual preferred unit distributions
 
(3,737
)
 
(3,737
)
 
(7,475
)
 
(7,475
)
Net income attributable to SLGOP common unitholders
 
$
8,641

 
$
139,043

 
$
20,468

 
$
163,186


14

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Operations
(unaudited, in thousands, except per unit data)


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017

2016
 
2017
 
2016
Amounts attributable to SLGOP common unitholders:
 
 
 
 
 
 
 
 
Income (loss) before depreciable real estate reserves and gains (losses) on sale
 
$
28,439

 
$
115,786


$
93,924


$
(80,143
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
13,089

 
33,448

 
15,136

 
43,363

(Loss) gain on sale of real estate, net
 
(3,823
)
 
196

 
(3,256
)
 
210,353

Depreciable real estate reserves
 
(29,064
)
 
(10,387
)
 
(85,336
)
 
(10,387
)
Net income attributable to SLGOP common unitholders
 
$
8,641

 
$
139,043

 
$
20,468

 
$
163,186

Basic earnings per unit:
 
 
 
 
 
 
 
 
Income (loss) before depreciable real estate reserves and gains (losses) on sale
 
$
0.27

 
$
(0.77
)
 
$
0.90

 
$
(0.77
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.13

 
0.32

 
0.14

 
0.42

(Loss) gain on sale of real estate, net
 
(0.04
)
 
1.88

 
(0.03
)
 
2.02

Depreciable real estate reserves
 
(0.28
)
 
(0.10
)
 
(0.81
)
 
(0.10
)
Net income attributable to SLGOP common unitholders
 
$
0.08

 
$
1.33


$
0.20


$
1.57

Diluted earnings per unit:
 
 
 
 
 
 
 
 
Income (loss) before depreciable real estate reserves and gains (losses) on sale
 
$
0.27

 
$
(0.77
)
 
$
0.89

 
$
(0.77
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.12

 
0.32

 
0.14

 
0.42

(Loss) gain on sale of real estate, net
 
(0.04
)
 
1.88

 
(0.03
)
 
2.01

Depreciable real estate reserves
 
(0.27
)
 
(0.10
)
 
(0.81
)
 
(0.10
)
Net income attributable to SLGOP common unitholders
 
$
0.08

 
$
1.33

 
$
0.19

 
$
1.56

 
 
 
 
 
 
 
 
 
Dividends per unit
 
$
0.775

 
$
0.72

 
$
1.55

 
$
1.44

Basic weighted average common units outstanding
 
104,462

 
104,476

 
104,852

 
104,251

Diluted weighted average common units and common unit equivalents outstanding
 
104,732

 
104,792

 
105,140

 
104,533



The accompanying notes are an integral part of these consolidated financial statements.


15

Table of Contents


SL Green Operating Partnership, L.P.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017

2016
 
2017
 
2016
Net income
 
$
16,015

 
$
149,095

 
$
16,939

 
$
181,598

Other comprehensive loss:
 
 
 
 
 
 
 
 
Change in net unrealized gain on derivative instruments, including SLGOP's share of joint venture net unrealized gain on derivative instruments
 
(2,520
)
 
257

 
(3,595
)
 
(7,315
)
Change in unrealized gain on marketable securities
 
263

 
354

 
(4,487
)
 
(869
)
Other comprehensive loss
 
(2,257
)
 
611

 
(8,082
)
 
(8,184
)
Comprehensive (loss) income
 
13,758

 
149,706

 
8,857

 
173,414

Net loss (income) attributable to noncontrolling interests
 
(786
)
 
(3,435
)
 
16,705

 
(5,409
)
Other comprehensive loss attributable to noncontrolling interests
 
100

 
53

 
299

 
375

Comprehensive income attributable to SLGOP
 
$
13,072

 
$
146,324

 
$
25,861

 
$
168,380



The accompanying notes are an integral part of these consolidated financial statements.


16

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statement of Capital
(unaudited, in thousands, except per unit data)



 
 
SL Green Operating Partnership Unitholders
 
 
 
 
 
 
 
 
Partners' Interest
 
 
 
 
 
 
 
 
Series I
Preferred
Units
 
Common
Units
 
Common
Unitholders
 
Accumulated
Other
Comprehensive Income (Loss)
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2016
 
$
221,932

 
100,562

 
$
7,080,406

 
$
22,137

 
$
426,436

 
$
7,750,911

Net income (loss)
 
 
 
 
 
27,048

 
 
 
(16,705
)
 
10,343

Other comprehensive loss
 
 
 
 
 
 
 
(7,783
)
 


 
(7,783
)
Preferred distributions
 
 
 
 
 
(7,475
)
 
 
 
 
 
(7,475
)
DRSPP proceeds
 
 
 
1

 
111

 
 
 
 
 
111

Conversion of common units
 
 
 
122

 
13,242

 
 
 
 
 
13,242

Reallocation of noncontrolling interests in the operating partnership
 
 
 
 
 
(12,712
)
 
 
 
 
 
(12,712
)
Equity component of repurchased exchangeable senior notes
 
 
 
 
 
(18,824
)
 
 
 
 
 
(18,824
)
Deferred compensation plan and stock award, net
 
 
 
(8
)
 
(1,943
)
 
 
 
 
 
(1,943
)
Amortization of deferred compensation plan
 
 
 
 
 
15,487

 
 
 
 
 
15,487

Repurchase of common stock
 
 
 
(2,448
)
 
(253,197
)
 
 
 
 
 
(253,197
)
Contribution to consolidated joint venture interests
 
 
 
 
 
 
 
 
 
33,009

 
33,009

Deconsolidation of partially owned entity
 
 
 
 
 
 
 
 
 
(30,203
)
 
(30,203
)
Contributions - proceeds from stock options exercised
 
 
 
138

 
11,595

 
 
 
 
 
11,595

Cash distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
(609
)
 
(609
)
Cash distributions declared ($1.55 per common unit, none of which represented a return of capital for federal income tax purposes)
 
 
 
 
 
(154,312
)
 
 
 
 
 
(154,312
)
Balance at June 30, 2017
 
$
221,932

 
98,367

 
$
6,699,426

 
$
14,354

 
$
411,928

 
$
7,347,640

   

The accompanying notes are an integral part of these consolidated financial statements.


17

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)



 
Six Months Ended June 30,
 
2017

2016
Operating Activities
 
 
 
Net income
$
16,939

 
$
181,598

Adjustments to reconcile net income to net cash provided by operating activities:

 
 
Depreciation and amortization
235,381

 
619,715

Equity in net income from unconsolidated joint ventures
(10,026
)
 
(15,937
)
Distributions of cumulative earnings from unconsolidated joint ventures
12,388

 
15,260

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(15,136
)
 
(43,363
)
Depreciable real estate reserves
85,336

 
10,387

Loss (gain) on sale of real estate, net
3,256

 
(210,353
)
(Gain) loss on sale of investments in marketable securities
(3,262
)
 
83

Deferred rents receivable
(23,237
)
 
53,042

Other non-cash adjustments (1)
17,551

 
(164,276
)
Changes in operating assets and liabilities:

 
 
Restricted cash—operations
5,023

 
(10,069
)
Tenant and other receivables
1,447

 
4,820

Related party receivables
(7,869
)
 
(2,386
)
Deferred lease costs
(23,560
)
 
(31,951
)
Other assets
680

 
4,362

Accounts payable, accrued expenses, other liabilities and security deposits
(10,660
)
 
(33,635
)
Deferred revenue and land leases payable
29,471

 
(3,919
)
Net cash provided by operating activities
313,722

 
373,378

Investing Activities

 
 
Acquisitions of real estate property
(19
)
 
(37,728
)
Additions to land, buildings and improvements
(165,262
)
 
(157,118
)
Escrowed cash—capital improvements/acquisition deposits/deferred purchase price
11,980

 
76,220

Investments in unconsolidated joint ventures
(93,182
)
 
(25,389
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
93,688

 
161,413

Net proceeds from disposition of real estate/joint venture interest
23,082

 
1,916,312

Proceeds from sale or redemption of marketable securities
54,363

 
5,180

Purchases of marketable securities

 
(331
)
Other investments
3,014

 
(2,987
)
Origination of debt and preferred equity investments
(854,577
)
 
(227,196
)
Repayments or redemption of debt and preferred equity investments
663,140

 
418,371

Net cash (used in) provided by investing activities
(263,773
)
 
2,126,747

 
 
 
 

18

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)


 
Six Months Ended June 30,
 
2017

2016
Financing Activities
 
 
 
Proceeds from mortgages and other loans payable
$
779,642

 
$
250,514

Repayments of mortgages and other loans payable
(693,243
)
 
(1,663,616
)
Proceeds from revolving credit facility and senior unsecured notes
1,072,800

 
700,000

Repayments of revolving credit facility and senior unsecured notes
(875,697
)
 
(1,664,296
)
Proceeds from stock options exercised and DRIP issuance
11,706

 
4,431

Repurchase of common stock
(211,599
)
 

Redemption of preferred stock
(125
)
 
(2,849
)
Distributions to noncontrolling interests in other partnerships
(609
)
 
(9,866
)
Contributions from noncontrolling interests in other partnerships
33,009

 
1,434

Distributions paid on common and preferred units
(175,790
)
 
(162,243
)
Other obligations related to loan participations
10,000

 
76,500

Deferred loan costs and capitalized lease obligation
(8,521
)
 
(9,307
)
Net cash used in financing activities
(58,427
)
 
(2,479,298
)
Net (decrease) increase in cash and cash equivalents
(8,478
)
 
20,827

Cash and cash equivalents at beginning of year
279,443

 
255,399

Cash and cash equivalents at end of period
$
270,965

 
$
276,226

 
 
 
 
(1) Included in Other non-cash adjustments is $172.4 million for the six months ended June 30, 2016 for the amortization of the below-market lease at 388-390 Greenwich Street as a result of the tenant exercising their option to purchase the property and entering into an agreement to accelerate the sale.
 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
 
 
 
Issuance of units in the Operating Partnership
$
20,824

 
$
51,647

Redemption of units in the Operating Partnership for stock
13,242

 
11,795

Derivative instruments at fair value
6,766

 
7,701

Exchange of debt investment for equity in joint venture

 
68,581

Issuance of preferred units relating to a real estate acquisition

 
22,793

Tenant improvements and capital expenditures payable
7,210

 
11,637

Fair value adjustment to noncontrolling interest in Operating Partnership
12,712

 
906

Deconsolidation of subsidiaries
328,644

 

Transfer of assets related to assets held for sale
173,918

 
1,931,217

Transfer of liabilities related to assets held for sale
149

 
1,612,008

Deferred leasing payable
800

 
1,222

Removal of fully depreciated commercial real estate properties
5,754

 
13,471

Share repurchase payable
41,598

 

Bond repurchase payable
65,416

 

Proceeds from sale held in restricted cash
38,166

 


The accompanying notes are an integral part of these consolidated financial statements.

19

Table of Contents