SEC Filing | SL Green Realty Corp.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ 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	13-3956775
SL Green Operating Partnership, L.P.	Delaware	13-3960938
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Vanderbilt Avenue, New York, NY 10017

(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 every Interactive Data File required to be submitted 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 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

Accelerated filer

☐

Non-accelerated filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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.

☐

SL Green Operating Partnership, L.P.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

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 ☐ No x SL Green Operating Partnership, L.P. Yes ☐ No x

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Trading Symbol

Title of Each Class

Name of Each Exchange on Which Registered

SL Green Realty Corp.

SLG

Common Stock, $0.01 par value

New York Stock Exchange

SL Green Realty Corp.

SLG.PRI

6.500% Series I Cumulative Redeemable Preferred Stock, $0.01 par value

New York Stock Exchange

As of May 4, 2023, 64,375,527 shares of SL Green Realty Corp.'s common stock, par value $0.01 per share, were outstanding. As of May 4, 2023, 306,987 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 March 31, 2023 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, including SL Green Operating Partnership, L.P.; 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 March 31, 2023, the Company owns 93.82% of the outstanding general and limited partnership interest in the Operating Partnership and owns 9,200,000 Series I Preferred Units of the Operating Partnership. As of March 31, 2023, noncontrolling investors held, in aggregate, a 6.18% 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; and

•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; and

◦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, or the Exchange Act.

SL GREEN REALTY CORP. AND SL GREEN OPERATING PARTNERSHIP, L.P.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS	5

	FINANCIAL STATEMENTS OF SL GREEN REALTY CORP.
	Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022	5
	Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited)	7
	Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2023 and 2022 (unaudited)	8
	Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022 (unaudited)	9
	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	10

	FINANCIAL STATEMENTS OF SL GREEN OPERATING PARTNERSHIP, L.P.
	Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022	12
	Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited)	14
	Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2023 and 2022 (unaudited)	15
	Consolidated Statements of Capital for the three months ended March 31, 2023 and 2022 (unaudited)	16
	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	17
	Notes to Consolidated Financial Statements (unaudited)	19
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	52
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	65
Item 4.	Controls and Procedures (SL Green Realty Corp. and SL Green Operating Partnership, L.P.)	66
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	67
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	71
Item 6.	Exhibits	72
	Signatures	73

Table of Contents

SL GREEN REALTY CORP. AND SL GREEN OPERATING PARTNERSHIP, L.P.

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

SL Green Realty Corp.

Consolidated Balance Sheets

(in thousands)


	March 31, 2023		December 31, 2022
	(unaudited)
Assets
Commercial real estate properties, at cost:
Land and land interests	$	1,576,927	$	1,576,927
Building and improvements	4,940,138		4,903,776
Building leasehold and improvements	1,700,376		1,691,831

Right of use asset - operating leases	1,026,265		1,026,265
	9,243,706		9,198,799
Less: accumulated depreciation	(2,100,804)		(2,039,554)
	7,142,902		7,159,245

Cash and cash equivalents	158,937		203,273
Restricted cash	198,325		180,781
Investments in marketable securities	10,273		11,240
Tenant and other receivables	36,289		34,497
Related party receivables	26,794		27,352
Deferred rents receivable	266,567		257,887
Debt and preferred equity investments, net of discounts and deferred origination fees of $1,689 and $1,811 and allowances of $13,520 and $6,630 in 2023 and 2022, respectively	626,803		623,280
Investments in unconsolidated joint ventures	3,164,729		3,190,137
Deferred costs, net	117,602		121,157
Other assets	592,898		546,945
Total assets (1)	$	12,342,119	$	12,355,794
Liabilities
Mortgages and other loans payable, net	$	3,226,781	$	3,227,563
Revolving credit facility, net	483,601		443,217
Unsecured term loans, net	1,667,114		1,641,552
Unsecured notes, net	99,718		99,692
Accrued interest payable	16,049		14,227
Other liabilities	282,958		236,211
Accounts payable and accrued expenses	150,873		154,867
Deferred revenue	264,852		272,248
Lease liability - financing leases	104,544		104,218
Lease liability - operating leases	892,984		895,100
Dividend and distributions payable	21,768		21,569
Security deposits	50,585		50,472

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities	100,000		100,000
Total liabilities (1)	7,361,827		7,260,936

Table of Contents

SL Green Realty Corp.

Consolidated Balance Sheets

(in thousands)


	March 31, 2023		December 31, 2022
	(unaudited)
Commitments and contingencies
Noncontrolling interests in Operating Partnership	273,175		269,993
Preferred units	177,943		177,943

Equity
SL Green stockholders' equity:
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both March 31, 2023 and December 31, 2022	221,932		221,932
Common stock, $0.01 par value, 160,000 shares authorized and 65,433 and 65,440 issued and outstanding at March 31, 2023 and December 31, 2022, respectively (including 1,060 and 1,060 shares held in treasury at March 31, 2023 and December 31, 2022, respectively)	656		656
Additional paid-in-capital	3,798,101		3,790,358
Treasury stock at cost	(128,655)		(128,655)
Accumulated other comprehensive income	19,428		49,604
Retained earnings	549,024		651,138
Total SL Green stockholders' equity	4,460,486		4,585,033
Noncontrolling interests in other partnerships	68,688		61,889
Total equity	4,529,174		4,646,922
Total liabilities and equity	$	12,342,119	$	12,355,794

(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: $41.2 million and $41.2 million of land, $40.1 million and $41.0 million of building and improvements, $— million and $— million of building and leasehold improvements, $— million and $— million of right of use assets, $4.6 million and $4.4 million of accumulated depreciation, $670.7 million and $599.2 million of other assets included in other line items, $49.9 million and $49.8 million of real estate debt, net, $0.2 million and $0.2 million of accrued interest payable, $— million and $— million of lease liabilities, and $179.3 million and $146.4 million of other liabilities included in other line items as of March 31, 2023 and December 31, 2022, respectively.

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

Table of Contents

SL Green Realty Corp.

Consolidated Statements of Operations

(unaudited, in thousands, except per share data)


	Three Months Ended March 31,
	2023		2022
Revenues
Rental revenue, net	$	195,042	$	156,031
Investment income	9,057		19,888
Other income	19,476		12,045
Total revenues	223,575		187,964
Expenses
Operating expenses, including related party expenses of $1 in 2023, and $2,523 in 2022	52,064		42,583
Real estate taxes	41,383		30,747
Operating lease rent	6,301		6,564
Interest expense, net of interest income	41,653		15,070
Amortization of deferred financing costs	2,021		1,948
Depreciation and amortization	78,548		46,983
Loan loss and other investment reserves, net of recoveries	6,890		—
Transaction related costs	884		28
Marketing, general and administrative	23,285		24,776
Total expenses	253,029		168,699

Equity in net loss from unconsolidated joint ventures	(7,412)		(4,715)
Equity in net loss on sale of interest in unconsolidated joint venture/real estate	(79)		—
Purchase price and other fair value adjustments	239		(63)
Loss on sale of real estate, net	(1,651)		(1,002)






Net (loss) income	(38,357)		13,485
Net loss (income) attributable to noncontrolling interests:
Noncontrolling interests in the Operating Partnership	2,337		(492)
Noncontrolling interests in other partnerships	1,625		143
Preferred units distributions	(1,598)		(1,647)
Net (loss) income attributable to SL Green	(35,993)		11,489
Perpetual preferred stock dividends	(3,738)		(3,738)
Net (loss) income attributable to SL Green common stockholders	$	(39,731)	$	7,751






















Basic (loss) earnings per share	$	(0.63)	$	0.12










Diluted (loss) earnings per share	$	(0.63)	$	0.11

Basic weighted average common shares outstanding	64,079		64,349
Diluted weighted average common shares and common share equivalents outstanding	68,182		70,228

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

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SL Green Realty Corp.

Consolidated Statements of Comprehensive (Loss) Income

(unaudited, in thousands)


	Three Months Ended March 31,
	2023		2022
Net (loss) income	$	(38,357)	$	13,485
Other comprehensive (loss) income:
(Decrease) increase in unrealized value of derivative instruments, including SL Green's share of joint venture derivative instruments	(31,059)		43,567
Decrease in unrealized value of marketable securities	(968)		(1,793)
Other comprehensive (loss) income	(32,027)		41,774
Comprehensive (loss) income	(70,384)		55,259
Net loss (income) attributable to noncontrolling interests and preferred units distributions	2,364		(1,996)
Other comprehensive loss (income) attributable to noncontrolling interests	1,851		(2,277)
Comprehensive (loss) income attributable to SL Green	$	(66,169)	$	50,986

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

Table of Contents

SL Green Realty Corp.

Consolidated Statements 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		Retained Earnings		Noncontrolling Interests		Total
Balance at December 31, 2022		$	221,932	64,380	$	656	$	3,790,358	$	(128,655)	$	49,604	$	651,138	$	61,889	$	4,646,922


Net loss													(35,993)		(1,625)		(37,618)

Other comprehensive loss											(30,176)						(30,176)
Preferred dividends													(3,738)				(3,738)
DRSPP proceeds				5			184										184

Reallocation of noncontrolling interest in the Operating Partnership													(10,147)				(10,147)

Deferred compensation plan and stock awards, net of forfeitures and tax withholdings				(12)			7,559										7,559




Contributions to consolidated joint venture interests															8,560		8,560

Cash distributions to noncontrolling interests															(136)		(136)

Cash distributions declared ($0.812 per common share, none of which represented a return of capital for federal income tax purposes)													(52,236)				(52,236)
Balance at March 31, 2023		$	221,932	64,373	$	656	$	3,798,101	$	(128,655)	$	19,428	$	549,024	$	68,688	$	4,529,174

	SL Green Realty Corp. Stockholders
				Common Stock
		Series I Preferred Stock		Shares	Par Value		Additional Paid- In-Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Noncontrolling Interests		Total
Balance at December 31, 2021		$	221,932	64,105	$	672	$	3,739,409	$	(126,160)	$	(46,758)	$	975,781	$	13,377	$	4,778,253
Net income													11,489		(143)		11,346

Other comprehensive income											39,497						39,497
Preferred dividends													(3,738)				(3,738)
DRSPP proceeds				1			89										89

Reallocation of noncontrolling interest in the Operating Partnership													(43,023)				(43,023)

Deferred compensation plan and stock awards, net of forfeitures and tax withholdings				28	1		5,055										5,056


Repurchases of common stock				(1,971)	(20)		(114,979)						(36,198)				(151,197)




Cash distributions to noncontrolling interests															(123)		(123)
Issuance of special dividend paid primarily in stock				1,961			163,115		(2,495)								160,620
Cash distributions declared ($0.932 per common share, none of which represented a return of capital for federal income tax purposes)													(57,665)				(57,665)
Balance at March 31, 2022		$	221,932	64,124	$	653	$	3,792,689	$	(128,655)	$	(7,261)	$	846,646	$	13,111	$	4,739,115

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

Table of Contents

SL Green Realty Corp.

Consolidated Statements of Cash Flows

(unaudited, in thousands, except per share data)


	Three Months Ended March 31,
	2023		2022
Operating Activities
Net (loss) income	$	(38,357)	$	13,485
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	80,569		48,931
Equity in net loss from unconsolidated joint ventures	7,412		4,715
Distributions of cumulative earnings from unconsolidated joint ventures	258		188
Equity in net loss on sale of interest in unconsolidated joint venture interest/real estate	79		—
Purchase price and other fair value adjustments	(239)		63

Loss on sale of real estate, net	1,651		1,002
Loan loss reserves and other investment reserves, net of recoveries	6,890		—



Deferred rents receivable	(7,431)		(546)
Non-cash lease expense	5,261		6,043
Other non-cash adjustments	(3,271)		(6,964)
Changes in operating assets and liabilities:
Tenant and other receivables	(969)		13,673
Related party receivables	577		(2,335)
Deferred lease costs	(3,911)		(4,240)
Other assets	(11,160)		(25,076)
Accounts payable, accrued expenses, other liabilities and security deposits	4,656		28,049
Deferred revenue	2,450		3,550
Lease liability - operating leases	(2,116)		864
Net cash provided by operating activities	42,349		81,402
Investing Activities

Additions to land, buildings and improvements	(61,918)		(61,680)
Acquisition deposits and deferred purchase price	—		(15,000)
Investments in unconsolidated joint ventures	(22,985)		(11,399)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	41,812		16,089
Net proceeds from disposition of real estate/joint venture interest	—		91,994




Other investments	(17,700)		209
Origination of debt and preferred equity investments	(5,578)		(13,122)
Repayments or redemption of debt and preferred equity investments	—		6,405
Net cash (used in) provided by investing activities	(66,369)		13,496

Table of Contents

SL Green Realty Corp.

Consolidated Statements of Cash Flows

(unaudited, in thousands, except per share data)


	Three Months Ended March 31,
	2023		2022
Financing Activities
Proceeds from mortgages and other loans payable	—		5,309
Repayments of mortgages and other loans payable	(1,473)		(55,715)
Proceeds from revolving credit facility and unsecured notes	143,000		320,000
Repayments of revolving credit facility and unsecured notes	(78,000)		(210,000)
Proceeds from stock options exercised and DRSPP issuance	184		89

Repurchase of common stock	—		(151,197)
Redemption of preferred stock	—		(17,967)
Redemption of OP units	(5,220)		(18,272)
Distributions to noncontrolling interests in other partnerships	(136)		(123)
Contributions from noncontrolling interests in other partnerships	426		—

Distributions to noncontrolling interests in the Operating Partnership	(3,822)		(4,415)
Dividends paid on common and preferred stock	(57,373)		(66,339)
Other obligations related to secured borrowing	—		77,874
Tax withholdings related to restricted share awards	—		(3,888)
Deferred loan costs	(358)		80

Net cash used in financing activities	(2,772)		(124,564)
Net decrease in cash, cash equivalents, and restricted cash	(26,792)		(29,666)
Cash, cash equivalents, and restricted cash at beginning of year	384,054		336,984
Cash, cash equivalents, and restricted cash at end of period	$	357,262	$	307,318





Supplemental Disclosure of Non-Cash Investing and Financing Activities:






Issuance of special dividend paid primarily in stock	$	—	$	160,620
Tenant improvements and capital expenditures payable	—		8,700

Fair value adjustment to noncontrolling interest in the Operating Partnership	10,147		43,023


Contribution to consolidated joint venture interest	8,134		—







Removal of fully depreciated commercial real estate properties	4,247		651

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.


	Three Months Ended March 31,
	2023		2022
Cash and cash equivalents	$	158,937	$	223,674
Restricted cash	198,325		83,644
Total cash, cash equivalents, and restricted cash	$	357,262	$	307,318

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

Table of Contents

SL Green Operating Partnership, L.P.

Consolidated Balance Sheets

(in thousands)


	March 31, 2023		December 31, 2022
	(unaudited)
Assets
Commercial real estate properties, at cost:
Land and land interests	$	1,576,927	$	1,576,927
Building and improvements	4,940,138		4,903,776
Building leasehold and improvements	1,700,376		1,691,831

Right of use asset - operating leases	1,026,265		1,026,265
	9,243,706		9,198,799
Less: accumulated depreciation	(2,100,804)		(2,039,554)
	7,142,902		7,159,245

Cash and cash equivalents	158,937		203,273
Restricted cash	198,325		180,781
Investments in marketable securities	10,273		11,240
Tenant and other receivables	36,289		34,497
Related party receivables	26,794		27,352
Deferred rents receivable	266,567		257,887
Debt and preferred equity investments, net of discounts and deferred origination fees of $1,689 and $1,811 and allowances of $13,520 and $6,630 in 2023 and 2022, respectively	626,803		623,280
Investments in unconsolidated joint ventures	3,164,729		3,190,137
Deferred costs, net	117,602		121,157
Other assets	592,898		546,945
Total assets (1)	$	12,342,119	$	12,355,794
Liabilities
Mortgages and other loans payable, net	$	3,226,781	$	3,227,563
Revolving credit facility, net	483,601		443,217
Unsecured term loans, net	1,667,114		1,641,552
Unsecured notes, net	99,718		99,692
Accrued interest payable	16,049		14,227
Other liabilities	282,958		236,211
Accounts payable and accrued expenses	150,873		154,867
Deferred revenue	264,852		272,248