Press Release Details
SL Green Realty Corp. Reports Fourth Quarter and Full Year 2017 EPS of $0.29 and $0.87 Per Share; and FFO of $1.60 and $6.45 Per Share
Raises 2018 Earnings Guidance
Financial and Operating Highlights
-
Net income attributable to common stockholders of
$0.29 per share for the fourth quarter and$0.87 per share for the full year 2017 as compared to$0.44 and$2.34 per share for the same periods in 2016. -
FFO of
$1.60 per share for the fourth quarter and$6.45 per share for the year endedDecember 31, 2017 as compared to$1.43 and$8.29 per share for the same periods in 2016. FFO for the fourth quarter of 2017 included a$4.1 million charge to MG&A expense related to forfeiture of the Company's 2014 Outperformance Plan awards, partially offset by a$3.2 million real estate tax refund that was received in the Suburban portfolio. -
Raising 2018 earnings guidance by
$0.05 per share to net income per share of$2 .32 to $2.42, and NAREIT defined FFO per share of$6 .70 to $6.80 after taking into consideration the$4.1 million charge taken in the fourth quarter of 2017 related to forfeiture of the Company's 2014 Outperformance Plan awards, which was previously projected to be a 2018 expense. - Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased 2.0% for the full year, or 2.7% excluding lease termination income, as compared to the prior year.
-
Signed 47 Manhattan office leases covering 358,135 square feet in
the fourth quarter and 191 Manhattan office leases covering 1,472,657
square feet during the year ended
December 31, 2017 . The mark-to-market on signedManhattan office leases was 12.1% higher for the fourth quarter and 11.3% higher for the year over the previously fully escalated rents on the same spaces. -
Signed 22 Suburban office leases covering 116,212 square feet in
the fourth quarter and 89 Suburban office leases covering 542,084
square feet during the year ended
December 31, 2017 . The mark-to-market on signed Suburban office leases was 3.7% higher for the fourth quarter and 2.9% higher for the year over the previously fully escalated rents on the same spaces. -
Manhattan same-store occupancy, inclusive of leases signed but not yet commenced, increased by 50 basis points to 95.3% as ofDecember 31, 2017 . -
Suburban same-store occupancy, inclusive of leases signed but not
yet commenced, increased by 60 basis points to 87.2% as of
December 31, 2017 .
Investing Highlights
-
During the fourth quarter, the Company repurchased 4.9 million
shares of common stock at an average price of
$100.76 per share and announced a$500 million increase to the size of its share repurchase program to $1.5 billion. To date, the Company has acquired 9.3 million shares of its common stock under the program at an average price of$101.46 per share. -
Closed on the sale of a 30% interest in
1515 Broadway at a gross asset valuation of$1.950 billion , or$1,045 per square foot, pursuant to the previously announced agreement to sell interests totaling 43%. The balance of the transaction is scheduled to close in the first quarter. The two closings, in total, are expected to generate net proceeds of$433.8 million . -
Closed on the previously announced sale of
600 Lexington Avenue in January at a gross asset valuation of$305.0 million , or $1,005 per square foot. The transaction generated net proceeds of$290.4 million . -
Closed on the previously announced sale of
125 Chubb Avenue inLyndhurst, New Jersey , for a total gross asset valuation of$29.5 million . The transaction generated net proceeds of$28.7 million . -
Together with our joint venture partner, entered into an agreement
to sell the multi-family property at
1274 Fifth Avenue at a gross asset valuation of$44.1 million . The transaction is expected to close during the first quarter and generate net proceeds of$4.0 million .
Financing Highlights
- Fitch Ratings upgraded the corporate credit ratings for the Company, including the Company's Issuer Default Rating (IDR), to 'BBB' from 'BBB-' with a Rating Outlook of Stable.
-
Refinanced, extended and expanded our unsecured corporate credit
facility by $217 million, to $3.0 billion. The new facility, which
reduced overall borrowing costs, includes a
$1.5 billion revolving line of credit and$1.3 billion funded term loan component that both mature in 2023 as well as a new$200.0 million 7-year term loan component that matures in 2024. -
Together with our joint venture partner, closed on a
$195.0 million refinancing of1552 Broadway , which bears interest at a floating rate of 2.65% over LIBOR. The new loan matures in 2022, as extended, and replaces the previous$185.4 million of indebtedness on the property. -
Issued an additional
$100.0 million of 4.50% senior unsecured notes dueDecember 2022 . The Notes priced at 105.334% plus accrued interest with a yield to maturity of 3.298% and generated net proceeds of$104.7 million . -
Together with our joint venture partner, closed on a
$195.0 million refinancing of55 West 46th Street , known as Tower 46, which bears interest at a floating rate of 2.125% over LIBOR. The new loan matures in 2023, as extended, and replaces the previous$165.6 million of indebtedness on the property. -
Together with our joint venture partner, closed on a new
$65.0 million mezzanine loan at650 Fifth Avenue . The loan matures inOctober 2022 and carries a fixed interest rate of 5.450%. The property is also financed with a$210.0 million mortgage that matures inOctober 2022 and bears interest at a fixed interest rate of 4.460%.
Summary
The Company also reported net income attributable to common stockholders
for the year ended
The Company reported funds from operations, or FFO, for the quarter
ended
The Company also reported FFO for the year ended
All per share amounts in this press release are presented on a diluted basis.
Operating and Leasing Activity
For the quarter ended
Same-store cash NOI, including our share of same-store cash NOI from
unconsolidated joint ventures, increased by 1.1% for the quarter ended
Same-store cash NOI, including our share of same-store cash NOI from
unconsolidated joint ventures, increased by 2.0% for the year ended
In the fourth quarter, the Company signed 47 office leases in its
During 2017, the Company signed 191 office leases in its
Occupancy in the Company's
In the fourth quarter, the Company signed 22 office leases in its
Suburban portfolio totaling 116,212 square feet. Fourteen leases
comprising 92,684 square feet, representing office leases on space that
had been occupied within the prior twelve months, are considered
replacement leases on which mark-to-market is calculated. Those
replacement leases had average starting rents of
During the year ended 2017, the Company signed 89 office leases in its
Suburban portfolio totaling 542,084 square feet. Forty-eight leases
comprising 281,396 square feet, representing office leases on space that
had been occupied within the prior twelve months, are considered
replacement leases on which mark-to-market is calculated. Those
replacement leases had average starting rents of
Occupancy in the Company's Suburban same-store portfolio increased 60
basis points to 87.2% as of
Significant leases that were signed in the fourth quarter included:
-
Renewal and expansion with
Consolidated Edison Solutions, Inc. for 47,868 square feet at100 Summit Lake Drive inValhalla, New York , for 5.9 years; -
Renewal with
Pride Technologies LLC andPride Global Finance, LLC for 40,075 square feet at420 Lexington Avenue , for 8.9 years; -
New lease with
Columbia Management Investment Advisors for 38,651 square feet at485 Lexington Avenue , for 11.2 years; -
New lease with
Ankura Consulting Group, LLC for 29,574 square feet at485 Lexington Avenue , for 15.7 years; and -
New lease with
Laidlaw & Company (UK) Ltd. for 20,987 square feet at521 Fifth Avenue , for 10.8 years.
Marketing, general and administrative, or MG&A, expenses for the year
ended
Investment Activity
During the fourth quarter, the Company repurchased 4.9 million shares of
common stock at an average price of
In January, the Company closed on the previously announced sale of
In November, the Company closed on the sale of a 30% interest in
In October, the Company closed on the previously announced sale of
In January, the Company, along with its joint venture partner, reached
an agreement to sell
Debt and Preferred Equity Investment Activity
The carrying value of the Company's debt and preferred equity investment
portfolio totaled
Financing Activity
In December, Fitch Ratings upgraded the corporate credit ratings for the Company, including the Company's Issuer Default Rating (IDR), to 'BBB' from 'BBB-' with a Rating Outlook of Stable.
In November, the Company refinanced, extended and expanded its unsecured corporate credit facility by $217 million, to $3.0 billion. The 5-year funded term loan component of the facility was increased by $117 million to $1.3 billion, the maturity date extended from June 2019 to March 2023 and the current borrowing cost reduced to 110 basis points over LIBOR. The revolving line of credit component of the facility was reduced by $100 million to $1.5 billion, the maturity date extended from March 2019 to March 2023, inclusive of as-of-right extension options aggregating 1-year, and the current borrowing cost reduced to 100 basis points over LIBOR. In addition, a new $200 million, 7-year funded term loan component was added to the facility, which matures in November 2024 and currently bears interest at 165 basis points over LIBOR.
In November, the Company, along with its joint venture partner, closed
on a new mezzanine loan at
In October, the Company, along with its joint venture partner, closed on
the refinancing of
In October, the Company issued an additional
In October, the Company, along with its joint venture partner, closed on
the refinancing of
Guidance
The Company is raising its earnings guidance for the
year ending December 31, 2018 by
The Company's revised earnings guidance for the year ending
Dividends
In the fourth quarter of 2017, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:
-
$0.8125 per share of common stock, which was paid onJanuary 16, 2018 to shareholders of record on the close of business onJanuary 2, 2018 ; and -
$0.40625 per share on the Company's 6.50% Series I Cumulative Redeemable Preferred Stock for the periodOctober 15, 2017 through and includingJanuary 14, 2018 , which was paid onJanuary 16, 2018 to shareholders of record on the close of business onJanuary 2, 2018 , and reflects the regular quarterly dividend, which is the equivalent of an annualized dividend of$1.625 per share.
Conference Call and Audio Webcast
The Company's executive management team, led by
The supplemental data will be available prior to the quarterly
conference call in the Investors section of the
The live conference call will be webcast in listen-only mode in the
Investors section of the
A replay of the call will be available 7 days after the call by dialing
(855) 859-2056 using passcode 3996788. A webcast replay will also be
available in the Investors section of the
Company Profile
To be added to the Company's distribution list or to obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at (212) 594-2700.
Disclaimers
Non-GAAP Financial Measures
During the quarterly conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found in this release and in the Company's Supplemental Package.
Forward-looking Statements
This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms.
Forward-looking statements contained in this press release are
subject to a number of risks and uncertainties, many of which are beyond
our control, that may cause our actual results, performance or
achievements to be materially different from future results, performance
or achievements expressed or implied by forward-looking statements made
by us. Factors and risks to our business that could cause actual results
to differ from those contained in the forward-looking statements are
described in our filings with the
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share data) |
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Three Months Ended | Twelve Months Ended | |||||||||||||||
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2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Rental revenue, net | $ | 265,492 | $ | 279,869 | $ | 1,100,993 | $ | 1,323,767 | ||||||||
Escalation and reimbursement | 41,378 | 49,501 | 172,939 | 196,858 | ||||||||||||
Investment income | 45,130 | 38,661 | 193,871 | 213,008 | ||||||||||||
Other income | 9,342 | 6,211 | 43,670 | 130,348 | ||||||||||||
Total revenues | 361,342 | 374,242 | 1,511,473 | 1,863,981 | ||||||||||||
Expenses: | ||||||||||||||||
Operating expenses, including related party expenses of |
72,079 | 78,590 | 293,364 | 312,859 | ||||||||||||
Real estate taxes | 58,150 | 60,457 | 244,323 | 248,388 | ||||||||||||
Ground rent | 8,308 | 8,308 | 33,231 | 33,261 | ||||||||||||
Interest expense, net of interest income | 60,933 | 64,873 | 257,045 | 321,199 | ||||||||||||
Amortization of deferred financing costs | 4,297 | 4,384 | 16,498 | 24,564 | ||||||||||||
Depreciation and amortization | 84,404 | 104,026 | 403,320 | 821,041 | ||||||||||||
Transaction related costs | (2,199 | ) | 1,541 | (1,834 | ) | 7,528 | ||||||||||
Marketing, general and administrative | 28,136 | 25,785 | 100,498 | 99,759 | ||||||||||||
Total expenses | 314,108 | 347,964 | 1,346,445 | 1,868,599 | ||||||||||||
Net income (loss) before equity in net income (loss) from
unconsolidated joint ventures, equity in net gain |
47,234 | 26,278 | 165,028 | (4,618 | ) | |||||||||||
Equity in net income (loss) from unconsolidated joint ventures | 7,788 | (95 | ) | 21,892 | 11,874 | |||||||||||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate | — | 421 | 16,166 | 44,009 | ||||||||||||
Gain on sale of real estate, net | 76,497 | 27,366 | 73,241 | 238,116 | ||||||||||||
Depreciable real estate reserves | (93,184 | ) | — | (178,520 | ) | (10,387 | ) | |||||||||
Gain (loss) on sale of marketable securities | — | — | 3,262 | (83 | ) | |||||||||||
Net income | 38,335 | 53,970 | 101,069 | 278,911 | ||||||||||||
Net income attributable to noncontrolling interests in the |
(1,288 | ) | (1,966 | ) | (3,995 | ) | (10,136 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests in other partnerships | (2,478 | ) | (1,398 | ) | 15,701 | (7,644 | ) | |||||||||
Preferred unit distributions | (2,850 | ) | (2,853 | ) | (11,401 | ) | (11,235 | ) | ||||||||
Net income attributable to SL Green | 31,719 | 47,753 | 101,374 | 249,896 | ||||||||||||
Perpetual preferred stock dividends | (3,737 | ) | (3,737 | ) | (14,950 | ) | (14,950 | ) | ||||||||
Net income attributable to SL Green common stockholders | $ | 27,982 | $ | 44,016 | $ | 86,424 | $ | 234,946 | ||||||||
Earnings Per Share (EPS) | ||||||||||||||||
Net income per share (Basic) | $ | 0.29 | $ | 0.44 | $ | 0.88 | $ | 2.35 | ||||||||
Net income per share (Diluted) | $ | 0.29 | $ | 0.44 | $ | 0.87 | $ | 2.34 | ||||||||
Funds From Operations (FFO) | ||||||||||||||||
FFO per share (Basic) | $ | 1.61 | $ | 1.44 | $ | 6.47 | $ | 8.32 | ||||||||
FFO per share (Diluted) | $ | 1.60 | $ | 1.43 | $ | 6.45 | $ | 8.29 | ||||||||
Basic ownership interest |
||||||||||||||||
Weighted average REIT common shares for net income per share | 96,018 | 100,321 | 98,571 | 100,186 | ||||||||||||
Weighted average partnership units held by noncontrolling interests | 4,514 | 4,473 | 4,556 | 4,322 | ||||||||||||
Basic weighted average shares and units outstanding | 100,532 | 104,794 | 103,127 | 104,508 | ||||||||||||
Diluted ownership interest |
||||||||||||||||
Weighted average REIT common share and common share equivalents | 96,265 | 100,695 | 98,847 | 100,558 | ||||||||||||
Weighted average partnership units held by noncontrolling interests | 4,514 | 4,473 | 4,556 | 4,322 | ||||||||||||
Diluted weighted average shares and units outstanding | 100,779 | 105,168 | 103,403 | 104,880 |
CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) |
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2017 | 2016 | |||||||
Assets | (Unaudited) | |||||||
Commercial real estate properties, at cost: | ||||||||
Land and land interests | $ | 2,357,051 | $ | 3,309,710 | ||||
Building and improvements | 6,351,012 | 7,948,852 | ||||||
Building leasehold and improvements | 1,450,614 | 1,437,325 | ||||||
Properties under capital lease | 47,445 | 47,445 | ||||||
10,206,122 | 12,743,332 | |||||||
Less accumulated depreciation | (2,300,116 | ) | (2,264,694 | ) | ||||
7,906,006 | 10,478,638 | |||||||
Assets held for sale | 338,354 | — | ||||||
Cash and cash equivalents | 127,888 | 279,443 | ||||||
Restricted cash | 122,138 | 90,524 | ||||||
Investment in marketable securities | 28,579 | 85,110 | ||||||
Tenant and other receivables, net of allowance of |
57,644 | 53,772 | ||||||
Related party receivables | 23,039 | 15,856 | ||||||
Deferred rents receivable, net of allowance of |
365,337 | 442,179 | ||||||
Debt and preferred equity investments, net of discounts and
deferred origination fees of |
2,114,041 | 1,640,412 | ||||||
Investments in unconsolidated joint ventures | 2,362,989 | 1,890,186 | ||||||
Deferred costs, net | 226,201 | 267,600 | ||||||
Other assets | 310,688 | 614,067 | ||||||
Total assets | $ | 13,982,904 | $ | 15,857,787 | ||||
Liabilities | ||||||||
Mortgages and other loans payable | $ | 2,865,991 | $ | 4,140,712 | ||||
Revolving credit facility | 40,000 | — | ||||||
Unsecured term loan | 1,500,000 | 1,183,000 | ||||||
Unsecured notes | 1,404,605 | 1,133,957 | ||||||
Deferred financing costs, net | (56,690 | ) | (82,258 | ) | ||||
Total debt, net of deferred financing costs | 5,753,906 | 6,375,411 | ||||||
Accrued interest payable | 38,142 | 36,052 | ||||||
Other liabilities | 189,231 | 212,493 | ||||||
Accounts payable and accrued expenses | 137,142 | 190,583 | ||||||
Deferred revenue | 208,119 | 217,955 | ||||||
Capitalized lease obligations | 42,843 | 42,132 | ||||||
Deferred land leases payable | 3,239 | 2,583 | ||||||
Dividend and distributions payable | 85,138 | 87,271 | ||||||
Security deposits | 67,927 | 66,504 | ||||||
Liabilities related to assets held for sale | 4,074 | — | ||||||
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities | 100,000 | 100,000 | ||||||
Total liabilities | 6,629,761 | 7,330,984 | ||||||
Commitments and contingencies | — | — | ||||||
Noncontrolling interest in the |
461,954 | 473,882 | ||||||
Preferred units | 301,735 | 302,010 | ||||||
Equity | ||||||||
Stockholders' equity: | ||||||||
Series I Preferred Stock, |
221,932 | 221,932 | ||||||
Common stock, |
939 | 1,017 | ||||||
Additional paid-in capital | 4,741,697 | 5,624,545 | ||||||
|
(124,049 | ) | (124,049 | ) | ||||
Accumulated other comprehensive income | 18,604 | 22,137 | ||||||
Retained earnings | 1,365,970 | 1,578,893 | ||||||
|
6,225,093 | 7,324,475 | ||||||
Noncontrolling interests in other partnerships | 364,361 | 426,436 | ||||||
Total equity | 6,589,454 | 7,750,911 | ||||||
Total liabilities and equity | $ | 13,982,904 | $ | 15,857,787 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited and in thousands, except per share data) |
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Three Months Ended | Twelve Months Ended | |||||||||||||||
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Funds From Operations (FFO) Reconciliation: | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income attributable to SL Green common stockholders | $ | 27,982 | $ | 44,016 | $ | 86,424 | $ | 234,946 | ||||||||
Add: |
||||||||||||||||
Depreciation and amortization | 84,404 | 104,026 | 403,320 | 821,041 | ||||||||||||
Joint venture depreciation and noncontrolling interest adjustments | 29,397 | 27,662 | 102,334 | 69,853 | ||||||||||||
Net income (loss) attributable to noncontrolling interests | 3,766 | 3,364 | (11,706 | ) | 17,780 | |||||||||||
Less: |
||||||||||||||||
Gain on sale of real estate, net | 76,497 | 27,366 | 73,241 | 238,116 | ||||||||||||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate | — | 421 | 16,166 | 44,009 | ||||||||||||
Depreciable real estate reserve | (93,184 | ) | — | (178,520 | ) | (10,387 | ) | |||||||||
Depreciation on non-rental real estate assets | 554 | 522 | 2,191 | 2,027 | ||||||||||||
FFO attributable to SL Green common stockholders and noncontrolling interests | $ | 161,682 | $ | 150,759 | $ | 667,294 | $ | 869,855 | ||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
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Operating income and Same-store NOI Reconciliation: | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 38,335 | $ | 53,970 | $ | 101,069 | $ | 278,911 | ||||||||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate | — | (421 | ) | (16,166 | ) | (44,009 | ) | |||||||||
Gain on sale of real estate, net | (76,497 | ) | (27,366 | ) | (73,241 | ) | (238,116 | ) | ||||||||
Depreciable real estate reserves | 93,184 | — | 178,520 | 10,387 | ||||||||||||
(Gain) loss on sale of marketable securities | — | — | (3,262 | ) | 83 | |||||||||||
Depreciation and amortization | 84,404 | 104,026 | 403,320 | 821,041 | ||||||||||||
Interest expense, net of interest income | 60,933 | 64,873 | 257,045 | 321,199 | ||||||||||||
Amortization of deferred financing costs | 4,297 | 4,384 | 16,498 | 24,564 | ||||||||||||
Operating income | 204,656 | 199,466 | 863,783 | 1,174,060 | ||||||||||||
Equity in net (income) loss from unconsolidated joint ventures | (7,788 | ) | 95 | (21,892 | ) | (11,874 | ) | |||||||||
Marketing, general and administrative expense | 28,136 | 25,785 | 100,498 | 99,759 | ||||||||||||
Transaction related costs, net | (2,199 | ) | 1,541 | (1,834 | ) | 7,528 | ||||||||||
Investment income | (45,130 | ) | (38,661 | ) | (193,871 | ) | (213,008 | ) | ||||||||
Non-building revenue | (4,522 | ) | 1,061 | (23,781 | ) | (4,937 | ) | |||||||||
Net operating income (NOI) | 173,153 | 189,287 | 722,903 | 1,051,528 | ||||||||||||
Equity in net income (loss) from unconsolidated joint ventures | 7,788 | (95 | ) | 21,892 | 11,874 | |||||||||||
SLG share of unconsolidated JV depreciation and amortization | 35,136 | 30,018 | 126,456 | 83,346 | ||||||||||||
SLG share of unconsolidated JV interest expense, net of interest income | 28,692 | 22,296 | 96,554 | 72,015 | ||||||||||||
SLG share of unconsolidated JV amortization of deferred financing costs | 1,696 | 2,471 | 8,220 | 8,309 | ||||||||||||
SLG share of unconsolidated JV loss on early extinguishment of debt | 131 | — | 3,950 | 972 | ||||||||||||
SLG share of unconsolidated JV transaction related costs | — | 97 | 110 | 3,116 | ||||||||||||
SLG share of unconsolidated JV investment income | (4,438 | ) | (4,550 | ) | (16,777 | ) | (16,250 | ) | ||||||||
SLG share of unconsolidated JV non-building revenue | (2,005 | ) | (3,852 | ) | (4,989 | ) | (7,179 | ) | ||||||||
NOI including SLG share of unconsolidated JVs | 240,153 | 235,672 | 958,319 | 1,207,731 | ||||||||||||
NOI from other properties/affiliates | (50,128 | ) | (44,248 | ) | (216,513 | ) | (466,762 | ) | ||||||||
Same-Store NOI | 190,025 | 191,424 | 741,806 | 740,969 | ||||||||||||
Ground lease straight-line adjustment | 524 | 531 | 2,096 | 2,312 | ||||||||||||
Straight-line and free rent | (4,244 | ) | (7,061 | ) | (25,276 | ) | (30,231 | ) | ||||||||
Rental income - FAS 141 | (4,318 | ) | (4,035 | ) | (17,144 | ) | (19,802 | ) | ||||||||
Joint Venture straight-line and free rent | (2,538 | ) | (3,560 | ) | (10,195 | ) | (15,517 | ) | ||||||||
Joint Venture rental income - FAS 141 | (608 | ) | (411 | ) | (1,852 | ) | (1,723 | ) | ||||||||
Same-store cash NOI | $ | 178,841 | $ | 176,888 | $ | 689,435 | $ | 676,008 |
NON-GAAP FINANCIAL MEASURES -
DISCLOSURES
Funds from Operations (FFO)
FFO is a widely recognized non-GAAP measure of REIT performance. The
Company computes FFO in accordance with standards established by the
The Company presents FFO because it considers it an important supplemental measure of the Company's operating performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, particularly those that own and operate commercial office properties. The Company also uses FFO as one of several criteria to determine performance-based bonuses for members of its senior management. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, and interest costs, providing perspective not immediately apparent from net income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company's financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is it indicative of funds available to fund the Company's cash needs, including our ability to make cash distributions.
Funds Available for Distribution (FAD)
FAD is a non-GAAP financial measure that is calculated as FFO plus non-real estate depreciation, allowance for straight line credit loss, adjustment for straight line ground rent, non-cash deferred compensation, and a pro-rata adjustment for FAD for SLG's unconsolidated JV, less straight line rental income, free rent net of amortization, second cycle tenant improvement and leasing costs, and recurring building improvements.
FAD 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 the Company's financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company's liquidity.
Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre)
EBITDAre is a non-GAAP financial measure. The Company computes EBITDAre
in accordance with standards established by the
The Company presents EBITDAre, because the Company believes that EBITDAre, 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. EBITDAre should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company's financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company's liquidity.
Net Operating Income (NOI) and Cash NOI
NOI is a non-GAAP financial measure that is calculated as operating income before transaction related costs, gains/losses on early extinguishment of debt, marketing general and administrative expenses and non-real estate revenue. Cash NOI is calculated by subtracting free rent (net of amortization), straight-line rent, FAS 141 rental income from NOI, while adding ground lease straight-line adjustment and the allowance for straight-line tenant credit loss.
The Company presents NOI and Cash NOI because the Company believes that these measures, when taken together with the corresponding GAAP financial measures and our reconciliations, provide investors with meaningful information regarding the operating performance of properties. When operating performance is compared across multiple periods, the investor is provided with information not immediately apparent from net income that is determined in accordance with GAAP. NOI and Cash NOI provide information on trends in the revenue generated and expenses incurred in operating our properties, unaffected by the cost of leverage, straight-line adjustments, depreciation, amortization, and other net income components. The Company uses these metrics internally as performance measures. None of these measures is an alternative to net income (determined in accordance with GAAP) and same-store performance should not be considered an alternative to GAAP net income performance.
Debt to Market Capitalization Ratio
Debt to Market Capitalization is a non-GAAP measure that is calculated as the Company's consolidated debt divided by the Company's estimated market value 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.
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 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, such measure may not be comparable to those used by other REITs that do not compute such measure 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 debt service 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 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).
SLG-EARN
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