View Filing Data

Document and Entity Information - shares	3 Months Ended
Mar. 31, 2012	Apr. 30, 2012
Document and Entity Information
Entity Registrant Name	RECKSON OPERATING PARTNERSHIP LP
Entity Central Index Key	0000930810
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		0
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Commercial real estate properties, at cost:
Land and land interests	$ 759,250	$ 759,237
Building and improvements	3,982,400	3,976,219
Commercial real estate properties, gross	4,741,650	4,735,456
Less: accumulated depreciation	(604,399)	(574,658)
Total commercial real estate properties, net	4,137,251	4,160,798
Cash and cash equivalents	18,079	23,754
Restricted cash	15,526	15,947
Tenant and other receivables, net of allowance of $4,719 and $3,949 in 2012 and 2011, respectively	10,410	11,927
Deferred rents receivable, net of allowance of $14,765 and $14,297 in 2012 and 2011, respectively	115,527	110,598
Debt investment, net of allowance of $8,125 in 2011		600
Investment in unconsolidated joint venture	41,761	41,913
Deferred costs, net of accumulated amortization of $27,761 and $24,686 in 2012 and 2011, respectively	81,270	83,948
Other assets	95,712	80,669
Total assets	4,515,536	4,530,154
Liabilities
Mortgage note payable	500,000	500,000
Revolving credit facility	400,000	350,000
Senior unsecured notes	873,327	873,604
Accrued interest payable and other liabilities	12,004	17,221
Accounts payable and accrued expenses	36,373	37,634
Deferred revenue	182,235	188,555
Security deposits	15,150	15,286
Total liabilities	2,019,089	1,982,300
Commitments and contingencies
Capital
General partner capital	2,140,464	2,188,864
Limited partner capital	0
Accumulated other comprehensive loss	(4,977)	(5,117)
Noncontrolling interests in other partnerships	360,960	364,107
Total capital	2,496,447	2,547,854
Total liabilities and capital	$ 4,515,536	$ 4,530,154

Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenues
Rental revenue, net	$ 97,563	$ 98,923
Escalation and reimbursement	17,913	16,745
Investment income		3,077
Other income	855	1,625
Total revenues	116,331	120,370
Expenses
Operating expenses (including $3,462 and $3,082, paid to affiliates in 2012 and 2011, respectively)	26,970	27,555
Real estate taxes	20,161	19,728
Ground rent	2,684	2,652
Interest expense, net of interest income	24,284	13,809
Amortization of deferred finance costs	1,332	107
Depreciation and amortization	32,040	31,265
Loan loss reserves, net of recoveries	(472)	(3,150)
Marketing, general and administrative	5	85
Total expenses	107,004	92,051
Income from continuing operations before equity in net income from unconsolidated joint venture and noncontrolling interests	9,327	28,319
Equity in net income from unconsolidated joint venture	126	146
Net income	9,453	28,465
Net income attributable to noncontrolling interests in other partnerships	(1,373)	(3,553)
Net income attributable to ROP common unitholder	8,080	24,912
Other comprehensive income:
Unrealized loss on derivative instruments	140
Comprehensive income attributable to ROP common unitholder	$ 8,220	$ 24,912

Consolidated Statement of Capital $ in Thousands	3 Months Ended
Consolidated Statement of Capital $ in Thousands	Mar. 31, 2012 USD ($)
Increase (Decrease) in Partners' Capital
Balance	$ 2,547,854
Contributions	367,960
Distributions	(428,960)
Net income	9,453
Other comprehensive income	140
Balance	2,496,447
General Partner's Capital \| Class A Common Units
Increase (Decrease) in Partners' Capital
Balance	2,188,864
Contributions	367,960
Distributions	(424,440)
Net income	8,080
Balance	2,140,464
Noncontrolling Interests In Other Partnerships
Increase (Decrease) in Partners' Capital
Balance	364,107
Distributions	(4,520)
Net income	1,373
Balance	360,960
Accumulated Other Comprehensive Loss
Increase (Decrease) in Partners' Capital
Balance	(5,117)
Other comprehensive income	140
Balance	$ (4,977)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Operating Activities
Net income	$ 9,453	$ 28,465
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,372	31,372
Equity in net income from unconsolidated joint venture	(126)	(146)
Distributions of cumulative earnings from unconsolidated joint venture	126	146
Loan loss reserve, net of recoveries	(472)	(3,150)
Deferred rents receivable	(5,871)	(9,093)
Other non-cash adjustments	(3,406)	(5,980)
Changes in operating assets and liabilities:
Restricted cash - operations	421	(241)
Tenant and other receivables	734	(216)
Deferred lease costs	(586)	(2,038)
Other assets	(18,833)	(20,760)
Accounts payable, accrued expenses and other liabilities	355	868
Net cash provided by operating activities	15,167	19,227
Investing Activities
Additions to land, buildings and improvements	(10,249)	(7,104)
Distributions in excess of cumulative earnings from unconsolidated joint venture	152	158
Repayment of debt investments	777	27,187
Net cash (used in) provided by investing activities	(9,320)	20,241
Financing Activities
Repayments of mortgage note payable		(809)
Net proceeds from revolving credit facility	300,000
Repayments of revolving credit facility and senior unsecured notes	(250,300)	(84,823)
Contributions from common unitholder	367,960	195,171
Distributions to noncontrolling interests in other partnerships	(4,520)	(2,106)
Distributions to common unitholder	(424,440)	(128,300)
Deferred loan costs	(222)	(10,605)
Net cash used in financing activities	(11,522)	(31,472)
Net (decrease) increase in cash and cash equivalents	(5,675)	7,996
Cash and cash equivalents at beginning of period	23,754	22,831
Cash and cash equivalents at end of period	$ 18,079	$ 30,827

Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2012

Organization and Basis of Presentation

Organization and Basis of Presentation

1. Organization and Basis of Presentation

Reckson Operating Partnership, L.P., or ROP, commenced operations on June 2, 1995. The sole general partner of ROP is a wholly-owned subsidiary of SL Green Operating Partnership, L.P., or the Operating Partnership. The sole limited partner of ROP is the Operating Partnership.

ROP is engaged in the ownership, management and operation of commercial real estate properties, principally office properties and also owns land for future development located in the New York City, Westchester County and Connecticut, which collectively is also known as the New York Metropolitan area.

SL Green Realty Corp., or SL Green, and the Operating Partnership were formed in June 1997. SL Green has qualified, and expects to qualify in the current fiscal year as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, and operates as a self-administered, self-managed REIT. A REIT is a legal entity that holds real estate interests and, through payments of dividends to stockholders, is permitted to reduce or avoid the payment of Federal income taxes at the corporate level. Unless the context requires otherwise, all references to “we,” “our,” “us” and the “Company” means ROP and all entities owned or controlled by ROP.

On January 25, 2007, SL Green completed the acquisition of all of the outstanding shares of common stock of Reckson Associates Realty Corp., or RARC, the prior general partner of ROP. This transaction is referred to herein as the Merger.

In November 2011, in connection with the closing of our 2011 revolving credit facility in which we, along with SL Green and the Operating Partnership are borrowers, SL Green transferred five properties from the Operating Partnership to ROP. These properties comprised an aggregate of $683.8 million in total assets at November 1, 2011. Under the Business Combinations guidance, this was determined to be a transfer of assets between entities under common control. As such, the assets and liabilities transferred were done so at their carrying value. The transfer is required to be recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The financial statements and financial information presented for all prior periods have been retrospectively adjusted to furnish comparative information.

As of March 31, 2012, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan, a borough of New York City. Our investments in the New York Metropolitan area also include investments in Long Island City, Westchester County and Connecticut, which are collectively known as the Suburban assets:

Location	Ownership	Number of Properties	Square Feet	Weighted Average Occupancy (1)
Manhattan	Consolidated properties	8	6,036,400	96.5	%

Suburban	Consolidated properties	17	2,785,500	81.1	%
	Unconsolidated properties	1	1,402,000	100.0	%
		26	10,223,900	92.8	%

(1) The weighted average occupancy represents the total leased square feet divided by total available rentable square feet.

At March 31, 2012, our inventory of development parcels included approximately 81 acres of land in four separate parcels on which we can, based on estimates at March 31, 2012, develop approximately 1.1 million square feet of office space and in which we had invested approximately $67.1 million. We also own one development property encompassing approximately 36,800 square feet.

Basis of Quarterly Presentation

The accompanying consolidated financial statements include the consolidated financial position of ROP and the Service Companies (as defined below) at March 31, 2012 and December 31, 2011, the consolidated results of their operations for the three months ended March 31, 2012 and 2011, their statement of capital for the three months ended March 31, 2012 and their statements of cash flows for the three months ended March 31, 2012 and 2011. Our investments in majority-owned and controlled real estate joint ventures are reflected in the accompanying financial statements on a consolidated basis with a reduction for the noncontrolling partners’ interests.

ROP’s investments in real estate joint ventures, where it owns less than a controlling interest, are reflected in the accompanying financial statements in the equity method of accounting. The Service Companies, which provide management, development and construction services to ROP, include Reckson Management Group, Inc., RANY Management Group, Inc., Reckson Construction & Development LLC and Reckson Construction Group New York, Inc. (collectively, the “Service Companies”). All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the financial position of the Company at March 31, 2012 and the results of operations for the periods presented have been included. The 2012 operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. These financial statements should be read in conjunction with the financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2011.

The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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+ Details

Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Significant Accounting Policies

Significant Accounting Policies

2. Significant Accounting Policies

The consolidated financial statements include our accounts, those of our subsidiaries, which are wholly-owned or controlled by us and the Service Companies. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method. See Note 3. ROP’s investments in majority-owned and controlled real estate joint ventures are reflected in the accompanying financial statements on a consolidated basis with a reduction for the noncontrolling partners’ interests. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

The FASB amended the guidance for determining whether an entity is a variable interest entity, or VIE, and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheet and modify the presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and noncontrolling interests.

We assess the accounting treatment for each joint venture. This assessment includes a review of each joint venture or partnership limited liability company agreement to determine which party has what rights and whether those rights are protective or participating. For all VIE’s, we review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance. In situations where we or our partner approves, among other things, the annual budget, receives a detailed monthly reporting package from us, meets on a quarterly basis to review the results of the joint venture, reviews and approves the joint venture’s tax return before filing, and approves all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power of the activities that most significantly impact the performance of our joint venture. Our joint venture agreements also contain certain protective rights such as the requirement of partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan.

Investment in Commercial Real Estate Properties

On a periodic basis, we assess whether there are any indicators that the value of our real estate properties may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges for consolidated properties) to be generated by the property are less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the calculated fair value of the property. In addition, we assess our investment in our unconsolidated joint venture for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investment for impairment based on the joint venture’s projected discounted cash flows. In November 2011, we recorded a $5.8 million impairment charge in connection with the expected sale of our equity investment. No impairment charge was recorded during the three months ended March 31, 2012 and 2011. We do not believe that the value of any of our consolidated properties was impaired at March 31, 2012 or December 31, 2011, respectively.

We allocate the purchase price of real estate to land and building and, if determined to be material, intangibles, such as the value of above-, below- and at-market leases and origination costs associated with the in-place leases. We depreciate the amount allocated to building and other intangible assets over their estimated useful lives, which generally range from three to 40 years and from one to 14 years, respectively. The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease, which generally range from one to 14 years. The value associated with in-place leases is amortized over the expected term of the associated lease, which generally ranges from one to 14 years. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. To the extent acquired leases contain fixed rate renewal options that are below market and determined to be material, we amortized such below market lease value into rental income over the renewal period.

We recognized increases of approximately $5.0 million and $6.7 million in rental revenue for the three months ended March 31, 2012 and 2011, respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase price of the applicable properties. We recognized an increase/(reduction) in interest expense for the amortization of above-market rate mortgages assumed of approximately $0.1 million and ($0.6) million for the three months ended March 31, 2012 and 2011, respectively.

The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of March 31, 2012 and December 31, 2011 (amounts in thousands).

	March 31, 2012			December 31, 2011
Identified intangible assets (included in other assets):
Gross amount	$	169,181		$	169,181
Accumulated amortization	(105,766		)	(101,626		)
Net	$	63,415		$	67,555

Identified intangible liabilities (included in deferred revenue):
Gross amount	$	375,946		$	375,946
Accumulated amortization	(198,093		)	(188,914		)
Net	$	177,853		$	187,032

Income Taxes

No provision has been made for income taxes in the accompanying consolidated financial statements since such taxes, if any, are the responsibility of the individual partners.

Reserve for Possible Credit Losses

The expense for possible credit losses in connection with debt investments is the charge to earnings to increase the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors considered relate to geographic trends and product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish the provision for possible credit losses on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.

Where impairment is indicated on an investment that is held to maturity, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value of the collateral. Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense. The write-off of the reserve balance is called a charge-off. We did not record any loan loss reserves or charge offs on investments being held to maturity during the three months ended March 31, 2012 and 2011. We recorded $0.5 million and $3.2 million in recoveries during the three months ended March 31, 2012 and 2011, respectively, in connection with the sale of our debt investments. This is included in Loan loss reserves, net of recoveries in the accompanying Consolidated Statements of Income and Comprehensive Income.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).

The estimated fair values of tangible and intangible assets and liabilities recorded in connection with business combinations are based on level three inputs. We estimate fair values based on cash flow projections utilizing appropriate discount and/or capitalization rates and available market information.

We determine impairment in real estate investments including intangibles, utilizing cash flow projections that apply estimated revenue and expense growth rates, discount rates and capitalization rates, which are classified as Level 3 inputs.

We use the following methods and assumptions in estimating fair value disclosures for financial instruments.

· Cash and cash equivalents: The carrying amount of unrestricted cash and cash equivalents reported in our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.

· Mortgage and other loans payable and other debt: The fair value of borrowings is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by us.

The methodologies used for valuing financial instruments have been categorized into three broad levels as follows:

Level 1 — Quoted prices in active markets for identical instruments.

Level 2 — Valuations based principally on other observable market parameters, including

· Quoted prices in active markets for similar instruments,

· Quoted prices in less active or inactive markets for identical or similar instruments,

· Other observable inputs (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates), and

· Market corroborated inputs (derived principally from or corroborated by observable market data).

Level 3 — Valuations based significantly on unobservable inputs.

· Valuations based on third-party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable as Level 2 valuations.

· Valuations based on internal models with significant unobservable inputs.

These levels form a hierarchy. We follow this hierarchy for our financial instruments measured at fair value on a recurring and nonrecurring basis. The classifications are based on the lowest level of input that is significant to the fair value measurement.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments and accounts receivable. We place our cash investments in excess of insured amounts with high quality financial institutions. We perform ongoing credit evaluations of our tenants and require certain tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the total value of a tenant’s lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space. Although the properties in our real estate portfolio are primarily located in Manhattan, we also have Suburban properties located in Westchester County, Connecticut and Long Island City. The tenants located in our buildings operate in various industries. Other than three tenants who contributed approximately 3.6%, 3.6% and 5.6% of our annualized cash rent, no other tenant in the portfolio contributed more than 3.5% of our annualized cash rent, including our share of joint venture annualized cash rent, at March 31, 2012. Approximately 11%, 10%, 12%, 20%, and 10% of our annualized cash rent, including our share of joint venture annualized cash rent, was attributable to 750 Third Avenue, 810 Seventh Avenue, 919 Third Avenue, 1185 Avenue of the Americas and 1350 Avenue of the Americas, respectively, for the quarter ended March 31, 2012.

Accounting Standards Updates

In May 2011, the FASB issued updated guidance on fair value measurement which amends U.S. GAAP to conform to IFRS measurement and disclosure requirements. The amendments change the wording used to describe the requirements in U.S. GAAP for measuring fair value, changes certain fair value measurement principles and enhances disclosure requirements. The guidance was effective as of the first quarter of 2012 and its adoption did not have a material effect on our consolidated financial statements.

In June 2011, the FASB issued guidance to increase the prominence of other comprehensive income in the financial statements. The standard gives businesses two options for presenting other comprehensive income (OCI), which previously had typically been included within the statement of capital. An OCI statement may be included with the statement of income, and together the two will make a statement of total comprehensive income. Alternatively, businesses may have an OCI statement separate from the statement of income, but the two statements will have to appear consecutively within a financial report. These requirements related to the presentation of OCI became effective for interim and annual reporting periods beginning after December 15, 2011. We adopted this guidance and included an OCI statement within the statement of income and comprehensive income. In December 2011, the FASB temporarily delayed those requirements that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. During the deferral period, the FASB plans to re-evaluate the requirement, with a final decision in 2012.

In December 2011, the FASB issued guidance that concluded when a parent ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity must apply the accounting guidance for sales of real estate to determine whether it should derecognize the in substance real estate. The reporting entity is precluded from derecognizing the real estate until legal ownership has been transferred to the lender to satisfy the debt. The guidance is effective for calendar year-end public and nonpublic companies in 2013 and is to be applied on a prospective basis. Early adoption of the guidance is permitted. Adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

Corporate Indebtedness

3 Months Ended

Mar. 31, 2012

Corporate Indebtedness

Corporate Indebtedness

5. Corporate Indebtedness

2011 Revolving Credit Facility

In November 2011, we entered into a $1.5 billion revolving credit facility, or the 2011 revolving credit facility. The 2011 revolving credit facility bears interest at a spread over LIBOR ranging from 100 basis points to 185 basis points, based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. At March 31, 2012, the applicable spread was 150 basis points. The 2011 revolving credit facility matures in November 2015 and has a one-year as-of-right extension option, subject to certain conditions and the payment of an extension fee of 20 basis points. We also have an option, subject to customary conditions, without the consent of existing lenders, to increase the capacity under the 2011 revolving credit facility to $1.75 billion at any time prior to the maturity date. We are required to pay quarterly in arrears a 17.5 to 45 basis point facility fee on the total commitments under the 2011 revolving credit facility, which fee is based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. As of December 31, 2011, the facility fee was 35 basis points. At March 31, 2012, we had approximately $400.0 million of borrowings and letters of credit totaling approximately $50.5 million outstanding under the 2011 revolving credit facility, with undrawn capacity of $1.0 billion.

SL Green, ROP and the Operating Partnership are all borrowers jointly and severally obligated under the 2011 revolving credit facility. No other subsidiary of ours is an obligor under the 2011 revolving credit facility.

The 2011 revolving credit facility includes certain restrictions and covenants (see Restrictive Covenants below).

Senior Unsecured Notes

The following table sets forth our senior unsecured notes and other related disclosures by scheduled maturity date as of March 31, 2012 and December 31, 2011, respectively (in thousands):

	March 31,
	2012		March 31,		December 31,
	Unpaid		2012		2011
	Principal		Accreted		Accreted		Coupon		Effective		Term
Issuance	Balance		Balance		Balance		Rate(1)		Rate		(in Years)	Maturity
June 27, 2005(2)	$	357	$	357	$	657	4.000	%	4.147	%	20	June 15, 2025
March 16, 2010(3)	250,000		250,000		250,000		7.750	%	7.750	%	10	March 15, 2020
August 5, 2011(3)	250,000		249,578		249,565		5.000	%	5.031	%	7	August 15, 2018
March 31, 2006	275,000		274,814		274,804		6.000	%	6.019	%	10	March 31, 2016
August 13, 2004	98,578		98,578		98,578		5.875	%	5.875	%	10	August 15, 2014
	$	873,935	$	873,327	$	873,604

(1) Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.

(2) Exchangeable senior debentures which are currently callable at 100% of par. In addition, the debentures can be put to us, at the option of the holder at par plus accrued and unpaid interest, on June 15, 2015 and 2020 and upon the occurrence of certain change of control transactions. As a result of the Merger, the adjusted exchange rate for the debentures is 7.7461 shares of SL Green common stock per $1,000 of principal amount of debentures and the adjusted reference dividend for the debentures is $1.3491. During the first quarter of 2012, we repurchased $300,000 of these bonds at par.

(3) We, SL Green and the Operating Partnership are co-obligators.

ROP also provides a guaranty of the Operating Partnership’s obligations under its 3.00% Exchangeable Senior Notes due 2017.

Restrictive Covenants

The terms of the 2011 revolving credit facility and certain of the senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose assets, and which require compliance with financial ratios relating to the minimum amount of tangible net worth, the maximum ratio of indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that SL Green will not during any time when a default is continuing, make distributions with respect to SL Green’s common stock or other equity interests, except to enable SL Green to continue to qualify as a REIT for Federal Income Tax purposes. As of March 31, 2012 and December 31, 2011, we were in compliance with all such covenants.

Principal Maturities

Combined aggregate principal maturities of mortgage note payable, 2011 revolving credit facility, senior unsecured notes and our share of joint venture debt as of March 31, 2012, including as-of-right extension options, were as follows (in thousands):

					Revolving		Senior				Joint
	Scheduled		Principal		Credit		Unsecured				Venture
	Amortization		Repayments		Facility		Notes		Total		Debt
2012	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		—		—		—		—		—
2014	—		—		—		98,578		98,578		—
2015	—		—		—		357		357		94,500
2016	4,116		—		400,000		274,814		678,930		—
Thereafter	45,276		450,608		—		499,578		995,462		—
	$	49,392	$	450,608	$	400,000	$	873,327	$	1,773,327	$	94,500

Interest expense, excluding capitalized interest, was comprised of the following (in thousands):

	Three Months Ended
	March 31,
	2012			2011
				As Adjusted
Interest expense	$	24,286		$	13,812
Interest income	(2		)	(3		)
Interest expense, net	$	24,284		$	13,809
Interest capitalized	$	—		$	—

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2012

Fair Value of Financial Instruments

Fair Value of Financial Instruments

6. Fair Value of Financial Instruments

The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies as discussed in Note 2. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and cash equivalents, accounts receivable and accounts payable balances reasonably approximate their fair values due to the short maturities of these items. Mortgage note payable and the senior unsecured notes had an estimated fair value based on discounted cash flow models, based on Level 3 inputs, of approximately $1.5 billion, compared to the book value of the related fixed rate debt of approximately $1.4 billion at March 31, 2012. Our floating rate debt, inclusive of our 2011 revolving credit facility, but excluding $30 million of which was swapped, had an estimated fair value based on discounted cash flow models, based on Level 3 inputs, of approximately $358.3 million, compared to the book value of approximately $370.0 million at March 31, 2012.

Disclosure about fair value of financial instruments is based on pertinent information available to us as of March 31, 2012. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
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-Subparagraph a, b
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Number 159
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Financial Instruments: Derivatives and Hedging

3 Months Ended

Mar. 31, 2012

Financial Instruments: Derivatives and Hedging

Financial Instruments: Derivatives and Hedging

8. Financial Instruments: Derivatives and Hedging

We recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. Reported net income and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows.

Accumulated Other Comprehensive Loss at March 31, 2012 consists of approximately $3.3 million from the settlement of hedges, which are being amortized over the remaining term of the related senior unsecured notes. Currently, all of our designated derivative instruments are effective hedging instruments.

Over time, the realized and unrealized gains and losses held in Accumulated Other Comprehensive Loss will be reclassified into earnings as an adjustment to interest expense in the same periods in which the hedged interest payments affect earnings. We estimate that approximately $0.4 million of the current balance held in Accumulated Other Comprehensive Loss will be reclassified into earnings within the next 12 months.

The following table presents the effect of our derivative financial instruments and our share of our joint venture’s derivative financial instruments on the Statements of Income and Comprehensive Income as of March 31, 2012 and 2011, respectively (in thousands):

Amount of (Loss) or

Gain Reclassified from

Accumulated Other

Comprehensive Loss into

Amount of (Loss) or

Interest Expense/ Equity

Gain Recognized

Gain Recognized in

in net income of

in Interest Expense/Equity in

Other Comprehensive

unconsolidated

Net Income of Unconsolidated

Loss

joint ventures

Joint Ventures

(Effective Portion)

(Ineffective Portion)

For the Three Months Ended

March 31,

Designation\Cash Flow

Derivative

2012

2011

2012

2011

2012

2011

Qualifying

Interest Rate Swaps/Caps

(104

)

—

(244

)

—

Non-qualifying

Interest Rate Caps/Currency Hedges

—

- Definition

The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information

Segment Information

12. Segment Information

We are engaged in owning, managing and leasing commercial office properties in Manhattan, Westchester County, Connecticut and Long Island City and have two reportable segments, real estate and debt investments. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.

Our real estate portfolio is primarily located in the geographical markets of Manhattan, Westchester County, Connecticut and Long Island City. The primary sources of revenue are generated from tenant rents and escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, real estate taxes and ground rent expense (at certain applicable properties). Debt investments relate to junior participation and mezzanine loans that were sold in March 2012 and February 2011, respectively.

Selected results of operations for the three months ended March 31, 2012 and 2011 and selected asset information as of March 31, 2012 and December 31, 2011, regarding our operating segments are as follows (in thousands):

	Real
	Estate		Debt		Total
	Segment		Segment		Company
Total revenues:
Three months ended March 31, 2012	$	116,331	$	—	$	116,331
Three months ended March 31, 2011, As Adjusted	117,293		3,077		120,370

Net income:
Three months ended March 31, 2012	$	8,984	$	469	$	9,453
Three months ended March 31, 2011, As Adjusted	22,292		6,173		28,465

Total assets:
As of:
March 31, 2012	$	4,515,536	$	—	$	4,515,536
December 31, 2011	4,529,554		600		4,530,154

Income from continuing operations represents total revenues less total expenses for the real estate segment and total investment income less allocated interest expense for the debt segment. Interest costs for the debt segment are imputed assuming 100% leverage at SL Green’s 2011 revolving credit facility borrowing cost. We also allocate loan loss reserves, net of recoveries to the debt investment. We do not allocate marketing, general and administrative expenses to the debt segment, since we base performance on the individual segments prior to allocating marketing, general and administrative expenses. All other expenses, except interest, relate entirely to the real estate assets. There were no transactions between the above two segments.

The table below reconciles income from continuing operations to net income attributable to common unitholder for the three months ended March 31, 2012 and 2011, respectively (in thousands):

	Three Months Ended March 31,
	2012			2011
				As Adjusted
Net income	$	9,453		$	28,465
Net income attributable to noncontrolling interests in other partnerships	(1,373		)	(3,553		)
Net income attributable to ROP common unitholder	$	8,080		$	24,912

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Consolidated Balance Sheets
Tenant and other receivables, allowance	$ 4,719	$ 3,949
Deferred rents receivable, allowance	14,765	14,297
Debt investments, allowance		8,125
Deferred costs, accumulated amortization	$ 27,761	$ 24,686

Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Consolidated Statements of Income and Comprehensive Income
Operating expenses, paid to affiliates	$ 3,462	$ 3,082