SL Green Realty Corp. (the "Company") (NYSE: SLG) today reported a
net loss attributable to common stockholders for the quarter ended
March 31, 2021 of $(7.5) million, or $(0.11) per share, as
compared to net income of $114.8 million, or $1.51 per share, for
the same quarter in 2020. Net income attributable to common
stockholders for the first quarter of 2020 included
$72.3 million, or $0.90 per share, of net gains recognized
from the sale of 315 West 33rd Street, also known as The Olivia,
and $37.7 million, or $0.47 per share, of incremental income
from Credit Suisse at One Madison Avenue.
The Company reported FFO for the quarter ended
March 31, 2021 of $128.3 million, or $1.73 per share,
inclusive of $10.5 million, or $0.14 per share, of lease
termination income, as compared to FFO for the same period in 2020
of $172.0 million, or $2.08 per share. FFO for the first quarter of
2020 included $37.7 million, or $0.47 per share, of
incremental income from Credit Suisse at One Madison Avenue.
All per share amounts are presented on a diluted
basis.
Operating and Leasing
Activity
For the quarter ended March 31, 2021, the
Company reported consolidated revenues and operating income of
$226.1 million and $105.9 million, respectively, compared to $314.3
million and $162.8 million, respectively, for the same period in
2020.
To date, the Company has collected gross tenant
billings, including rent and other billable expenses for the first
quarter of 2021, as follows:
|
Office |
Retail |
Overall (1) |
1Q 2021 |
98.0% |
85.0% |
95.3% |
|
(1) Includes garage, suburban and residential properties |
Same-store cash NOI, including our share of
same-store cash NOI from unconsolidated joint ventures decreased by
1.4% for the first quarter of 2021, and decreased 1.4% excluding
lease termination income, as compared to the same period in
2020.
During the first quarter of 2021, the Company
signed 21 office leases in its Manhattan portfolio totaling 352,752
square feet. Thirteen leases comprising 187,326 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 $57.16 per rentable square foot, representing a
2.8% decrease over the previous fully escalated rents on the same
office spaces. The average lease term on the Manhattan office
leases signed in the first quarter of 2021 was 5.8 years and
average tenant concessions were 6.9 months of free rent with a
tenant improvement allowance of $61.90 per rentable square
foot.
Occupancy in the Company's Manhattan same-store
office portfolio was 94.2% as of March 31, 2021, inclusive of
96,653 square feet of leases signed but not yet commenced, as
compared to 94.4% at the end of the previous quarter.
Significant leases that were signed in the first
quarter included:
- New lease with
Beam Suntory for 99,556 square feet at 11 Madison Avenue, for 15.0
years;
- New lease with a
financial service firm for 26,770 square feet at One Vanderbilt
Avenue, for 15.0 years;
- New lease with
Grand Central Office Suites, LLC for 19,647 square feet at 420
Lexington Avenue, for 16.3 years;
- New lease with
Ellington Management Group, LLC for 19,587 square feet at 711 Third
Avenue, for 5.0 years; and
- New lease with
Walker & Dunlop, LLC for 16,614 square feet at One Vanderbilt
Avenue, for 7.0 years.
Investment Activity
To date, the Company has repurchased a total of
32.8 million shares of its common stock and redeemed 1.3 million OP
units for a combined total of $2.9 billion under the
previously announced $3.5 billion share repurchase program.
In February, the Company closed on the
previously announced sale of its 25.0% interest in the commercial
condominium units located at 55 West 46th Street, also known as
"Tower 46", for a gross valuation of $275.0 million, or $793
per square foot, to a Brookfield Asset Management real estate fund.
The commercial condominium units consisted of office floors 2,
22-34, a retail store on 46th Street and the building's parking
garage and fitness center. The transaction generated net cash
proceeds to the Company of $20.9 million.
In April, the Company entered into an agreement
to sell its 20.0% interest in 605 West 42nd Street, also known as
"Sky," for a gross asset valuation of $858.1 million. The
Company acquired its interest in Sky in 2016 as part of the
origination of a mezzanine loan to The Moinian Group in 2014. The
71-story, 948,233 square foot luxury multifamily tower is 90.0%
occupied, includes 295 affordable units of dedicated affordable
housing and 68,000 square feet of retail space. The transaction is
expected to close in the second quarter of 2021, subject to
customary closing conditions, and generate net cash proceeds to the
Company of approximately $53.0 million.
In April, the Company entered into an agreement
to sell its interests in 400 East 57th Street for a gross asset
valuation of $133.5 million. The property includes 263
residential units and approximately 10,000 square feet of retail
leased to essential service providers. The transaction is expected
to close in the third quarter of 2021, subject to customary closing
conditions, and generate net cash proceeds to the Company of
approximately $18.0 million.
Debt and Preferred Equity Investment
Activity
The carrying value of the Company’s DPE
portfolio was $1.13 billion at March 31, 2021. The portfolio
is comprised of $1.10 billion of investments at a weighted average
current yield of 6.9%, or 8.6% excluding the effect of
$232.1 million of investments that are on non-accrual, that
are classified in the debt and preferred equity line item on the
balance sheet, and mortgage investments aggregating $0.03 billion
at a weighted average current yield of 3.6% that are included in
other balance sheet line items for accounting purposes.
Financing Activity
During the first quarter of 2021, the Company,
along with its joint venture partners, entered into
$2.25 billion of 10-year, fixed-rate forward starting swaps in
anticipation of a refinancing of One Vanderbilt Avenue, which is
anticipated to be in excess of the swapped amount. The swaps have a
weighted average interest rate of 1.6114%.
ESG Achievements
In April, the Company announced that it earned
the WELL Health-Safety Rating across its entire 23 million square
foot core portfolio, including at One Vanderbilt Avenue, one month
after SL Green moved its headquarters into the sky-line defining
tower in the heart of East Midtown. The WELL Health-Safety Rating
is an evidence-based rating verified through the International WELL
Building Institute (IWBI) that focuses on operational policies,
maintenance protocols, stakeholder engagement, and emergency plans
to address a post-COVID-19 environment.
Achieving the WELL Health-Safety Rating across
the entire core portfolio is a testament to the effectiveness of SL
Green’s response to the new operating conditions under COVID-19.
The company is at the forefront of instituting new policies and
initiatives to protect occupant health and to keep tenants and
employees informed through a comprehensive COVID-19 plan called SL
Green Forward. SL Green Forward is an extension of the company’s
best-in-class operating platform to promote a high degree of
safety, cleanliness, and wellness for all building occupants.
In April, the Company announced that it has
received a 2021 ENERGY STAR Partner of the Year Sustained
Excellence Award for the fourth consecutive year. This award honors
organizations across the United States that have implemented
distinguished corporate energy management programs. Less than one
percent of 16,000 U.S. Environmental Protection Agency (EPA)
partners achieve the Sustained Excellence distinction.
The U.S. Department of Energy and EPA awarded SL
Green this award, the highest level of EPA recognition, for its
extensive tenant outreach on energy efficiency, educational
programs and widespread promotion of ENERGY STAR tools and best
practices. As a continued leader in this space, SL Green achieved
ENERGY STAR labels for over 14 buildings covering 10.6 million
square feet across its industry-leading portfolio in 2020.
Dividends
In the first quarter of 2021, the Company
declared:
- Three monthly
dividends on its outstanding common stock of $0.3033 per share
which were paid on February 15, March 15, and April 15, 2021,
equating to an annualized dividend of $3.64 per share of common
stock; and
- Quarterly
dividends on its outstanding 6.50% Series I Cumulative Redeemable
Preferred Stock of $0.40625 per share for the period January 15,
2021 through and including April 14, 2021, which was paid on April
15, 2021 and 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
Marc Holliday, Chairman and Chief Executive Officer, will host a
conference call and audio webcast on Thursday, April 22, 2021 at
2:00 pm ET to discuss the financial results.
The supplemental data will be available prior to
the quarterly conference call in the Investors section of the SL
Green Realty Corp. website at https://slgreen.com/ under “Financial
Reports.”
The live conference call will be webcast in
listen-only mode in the Investors section of the SL Green Realty
Corp. website at https://slgreen.com/ under “Presentations &
Webcasts”. The conference may also be accessed by dialing toll-free
(877) 312-8765 or international (419) 386-0002, and using
conference ID 1787091.
A replay of the call will be available for 7
days after the call by dialing (855) 859-2056 using conference ID
1787091. A webcast replay will also be available in the Investors
section of the SL Green Realty Corp. website at
https://slgreen.com/ under “Presentations & Webcasts.”
Company Profile
SL Green Realty Corp., Manhattan's largest
office landlord, is a fully integrated real estate investment
trust, or REIT, that is focused primarily on acquiring, managing
and maximizing value of Manhattan commercial properties. As of
March 31, 2021, SL Green held interests in 84 buildings
totaling 37.8 million square feet. This included ownership
interests in 28.3 million square feet of Manhattan buildings and
8.7 million square feet securing debt and preferred equity
investments.
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 investor.relations@slgreen.com.
Disclaimers
Non-GAAP Financial
MeasuresDuring 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, including the
statements herein under the section entitled "Guidance". 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 include risks and
uncertainties related to the on-going COVID-19 pandemic and the
duration and impact it will have on our business and the industry
as a whole and the other risks and uncertainties described in our
filings with the Securities and Exchange Commission. Except to the
extent required by law, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a
result of future events, new information or otherwise.
|
SL GREEN REALTY CORP.CONSOLIDATED
STATEMENTS OF OPERATIONS(unaudited and in thousands,
except per share data) |
|
|
|
Three Months Ended |
|
March 31, |
Revenues: |
2021 |
|
2020 |
|
|
|
Rental revenue, net |
$ |
162,810 |
|
|
$ |
195,463 |
|
Escalation and
reimbursement |
25,279 |
|
|
27,168 |
|
Investment income |
19,273 |
|
|
38,533 |
|
Other income |
18,740 |
|
|
53,139 |
|
Total revenues |
226,102 |
|
|
314,303 |
|
Expenses: |
|
|
|
Operating expenses, including
related party expenses of $2,225 in 2021 and $3,749 in 2020 |
42,284 |
|
|
53,866 |
|
Real estate taxes |
45,411 |
|
|
46,622 |
|
Operating lease rent |
6,739 |
|
|
7,367 |
|
Interest expense, net of
interest income |
23,388 |
|
|
37,494 |
|
Amortization of deferred
financing costs |
3,774 |
|
|
2,500 |
|
Depreciation and
amortization |
62,996 |
|
|
68,279 |
|
Loan loss and other investment
reserves, net of recoveries |
— |
|
|
11,248 |
|
Transaction related costs |
22 |
|
|
65 |
|
Marketing, general and
administrative |
22,885 |
|
|
19,570 |
|
Total expenses |
207,499 |
|
|
247,011 |
|
|
|
|
|
Equity in net loss from
unconsolidated joint ventures |
(2,864 |
) |
|
(12,814 |
) |
Equity in net loss on sale of
interest in unconsolidated joint venture/real estate |
(12,629 |
) |
|
— |
|
Purchase price and other fair
value adjustment |
2,664 |
|
|
— |
|
(Loss) gain on sale of real
estate, net |
(1,388 |
) |
|
72,636 |
|
Depreciable real estate
reserves |
(8,241 |
) |
|
— |
|
Net (loss) income |
(3,855 |
) |
|
127,114 |
|
Net loss (income) attributable
to noncontrolling interests in the Operating Partnership |
476 |
|
|
(6,202 |
) |
Net loss attributable to
noncontrolling interests in other partnerships |
1,499 |
|
|
293 |
|
Preferred unit
distributions |
(1,846 |
) |
|
(2,666 |
) |
Net (loss) income attributable
to SL Green |
(3,726 |
) |
|
118,539 |
|
Perpetual preferred stock
dividends |
(3,738 |
) |
|
(3,738 |
) |
Net (loss) income attributable to SL Green common stockholders |
$ |
(7,464 |
) |
|
$ |
114,801 |
|
Earnings Per Share
(EPS) |
|
|
|
Net (loss) income per share
(Basic) (1) |
$ |
(0.11 |
) |
|
$ |
1.51 |
|
Net (loss) income per share
(Diluted) (1) |
$ |
(0.11 |
) |
|
$ |
1.51 |
|
|
|
|
|
Funds From Operations
(FFO) |
|
|
|
FFO per share (Basic) (1) |
$ |
1.75 |
|
|
$ |
2.15 |
|
FFO per share (Diluted)
(1) |
$ |
1.73 |
|
|
$ |
2.14 |
|
FFO per share (Pro forma)
(2) |
$ |
1.73 |
|
|
$ |
2.08 |
|
|
|
|
|
Basic ownership
interest |
|
|
|
Weighted average REIT common
shares for net income per share |
69,010 |
|
|
75,656 |
|
Weighted average partnership
units held by noncontrolling interests |
4,148 |
|
|
4,220 |
|
Basic weighted average
shares and units outstanding (1) |
73,158 |
|
|
79,876 |
|
|
|
|
|
Diluted ownership
interest |
|
|
|
Weighted average REIT common
share and common share equivalents |
69,922 |
|
|
76,132 |
|
Weighted average partnership
units held by noncontrolling interests |
4,148 |
|
|
4,220 |
|
Diluted weighted
average shares and units outstanding
(1) |
74,070 |
|
|
80,352 |
|
Pro forma adjustment (2) |
— |
|
|
2,215 |
|
Pro forma diluted
weighted average shares and units outstanding
(2) |
74,070 |
|
|
82,567 |
|
|
|
|
|
(1) During the first quarter of 2021, the
Company completed a reverse stock split to mitigate the dilutive
impact of stock issued for a special dividend paid primarily in
stock. The 2020 basic and diluted weighted average common shares
outstanding have been retroactively adjusted to reflect the reverse
stock split.(2) During the first quarter of 2021, the Company
completed a reverse stock split to mitigate the dilutive impact of
stock issued for a special dividend paid primarily in stock. GAAP
requires the weighted average common shares outstanding to be
adjusted retroactively for all periods presented to reflect the
reverse stock split. To facilitate comparison between the periods
presented, the Company calculated Pro forma diluted weighted
average shares and units outstanding for the 2020 periods
presented, which adjusts the share counts back to the
originally-reported numbers.
|
SL GREEN REALTY CORP.CONSOLIDATED BALANCE
SHEETS(in thousands, except per share data) |
|
|
|
|
|
March 31, |
|
December 31, |
|
2021 |
|
2020 |
Assets |
(Unaudited) |
|
|
Commercial real estate
properties, at cost: |
|
|
|
Land and land interests |
$ |
1,445,199 |
|
|
$ |
1,315,832 |
|
Building and improvements |
4,096,930 |
|
|
4,168,193 |
|
Building leasehold and
improvements |
1,730,418 |
|
|
1,448,134 |
|
Right of use asset - financing
leases |
55,711 |
|
|
55,711 |
|
Right of use asset - operating
leases |
502,316 |
|
|
367,209 |
|
|
7,830,574 |
|
|
7,355,079 |
|
Less: accumulated
depreciation |
(2,004,945 |
) |
|
(1,956,077 |
) |
|
5,825,629 |
|
|
5,399,002 |
|
Assets held for sale |
— |
|
|
— |
|
Cash and cash equivalents |
304,999 |
|
|
266,059 |
|
Restricted cash |
96,608 |
|
|
106,736 |
|
Investment in marketable
securities |
23,784 |
|
|
28,570 |
|
Tenant and other
receivables |
42,505 |
|
|
44,507 |
|
Related party receivables |
34,310 |
|
|
34,657 |
|
Deferred rents receivable |
304,420 |
|
|
302,791 |
|
Debt and preferred equity
investments, net of discounts and deferred origination fees of
$9,817 and $11,232 and allowances of $13,213 and $13,213 in 2021
and 2020, respectively |
1,097,202 |
|
|
1,076,542 |
|
Investments in unconsolidated
joint ventures |
3,698,701 |
|
|
3,823,322 |
|
Deferred costs, net |
170,252 |
|
|
177,168 |
|
Other assets |
445,635 |
|
|
448,213 |
|
Total assets |
$ |
12,044,045 |
|
|
$ |
11,707,567 |
|
|
|
|
|
Liabilities |
|
|
|
Mortgages and other loans
payable |
$ |
1,867,663 |
|
|
$ |
2,001,361 |
|
Revolving credit facility |
630,000 |
|
|
110,000 |
|
Unsecured term loan |
1,500,000 |
|
|
1,500,000 |
|
Unsecured notes |
1,251,647 |
|
|
1,251,888 |
|
Deferred financing costs,
net |
(30,558 |
) |
|
(34,521 |
) |
Total debt, net of deferred
financing costs |
5,218,752 |
|
|
4,828,728 |
|
Accrued interest payable |
22,796 |
|
|
14,825 |
|
Accounts payable and accrued
expenses |
120,015 |
|
|
151,309 |
|
Deferred revenue |
119,215 |
|
|
118,572 |
|
Lease liability - financing
leases |
152,622 |
|
|
152,521 |
|
Lease liability - operating
leases |
455,385 |
|
|
339,458 |
|
Dividend and distributions
payable |
24,924 |
|
|
149,294 |
|
Security deposits |
54,181 |
|
|
53,836 |
|
Liabilities related to assets
held for sale |
— |
|
|
— |
|
Junior subordinate deferrable
interest debentures held by trusts that issued trust preferred
securities |
100,000 |
|
|
100,000 |
|
Other liabilities |
267,908 |
|
|
302,798 |
|
Total liabilities |
6,535,798 |
|
|
6,211,341 |
|
|
|
|
|
Commitments and
contingencies |
— |
|
|
— |
|
Noncontrolling interest in the
Operating Partnership |
374,124 |
|
|
358,262 |
|
Preferred units |
198,503 |
|
|
202,169 |
|
|
|
|
|
Equity |
|
|
|
Stockholders’ equity: |
|
|
|
Series I Preferred Stock, $0.01 par value, $25.00 liquidation
preference, 9,200 issued and outstanding at both March 31, 2021 and
December 31, 2020 |
221,932 |
|
|
221,932 |
|
Common stock, $0.01 par value
160,000 shares authorized, 70,380 and 69,534 issued and outstanding
at March 31, 2021 and December 31, 2020, respectively (including
1,026 held in Treasury at both March 31, 2021 and December 31,
2020) |
705 |
|
|
716 |
|
Additional paid-in
capital |
3,913,258 |
|
|
3,862,949 |
|
Treasury stock at cost |
(124,049 |
) |
|
(124,049 |
) |
Accumulated other
comprehensive loss |
(18,897 |
) |
|
(67,247 |
) |
Retained earnings |
918,077 |
|
|
1,015,462 |
|
Total SL Green Realty Corp.
stockholders’ equity |
4,911,026 |
|
|
4,909,763 |
|
Noncontrolling interests in
other partnerships |
24,594 |
|
|
26,032 |
|
Total equity |
4,935,620 |
|
|
4,935,795 |
|
Total liabilities and
equity |
$ |
12,044,045 |
|
|
$ |
11,707,567 |
|
|
|
|
|
|
|
|
|
|
SL GREEN REALTY CORP.RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES(unaudited and in thousands,
except per share data) |
|
|
|
Three Months Ended |
|
March 31, |
Funds From Operations
(FFO) Reconciliation: |
2021 |
|
2020 |
|
|
|
|
Net (loss) income attributable to SL Green common stockholders |
$ |
(7,464 |
) |
|
$ |
114,801 |
|
Add: |
|
|
|
Depreciation and amortization |
62,996 |
|
|
68,279 |
|
Joint venture depreciation and noncontrolling interest
adjustments |
55,702 |
|
|
56,318 |
|
Net (loss) income attributable to noncontrolling interests |
(1,975 |
) |
|
5,909 |
|
Less: |
|
|
|
(Loss) gain on sale of real estate, net |
(1,388 |
) |
|
72,636 |
|
Equity in net loss on sale of interest in unconsolidated joint
venture/real estate |
(12,629 |
) |
|
— |
|
Purchase price and other fair value adjustments |
2,664 |
|
|
— |
|
Depreciable real estate reserves |
(8,241 |
) |
|
— |
|
Depreciation on non-rental real estate assets |
527 |
|
|
650 |
|
FFO attributable to SL
Green common stockholders and unit holders |
$ |
128,326 |
|
|
$ |
172,021 |
|
|
Three Months Ended |
|
March 31, |
Operating income and
Same-store NOI Reconciliation: |
2021 |
|
2020 |
|
|
|
|
Net (loss) income |
$ |
(3,855 |
) |
|
$ |
127,114 |
|
Equity in net loss on sale of
interest in unconsolidated joint venture/real estate |
12,629 |
|
|
— |
|
Purchase price and other fair
value adjustments |
(2,664 |
) |
|
— |
|
Loss (gain) on sale of real
estate, net |
1,388 |
|
|
(72,636 |
) |
Depreciable real estate
reserves |
8,241 |
|
|
— |
|
Depreciation and
amortization |
62,996 |
|
|
68,279 |
|
Interest expense, net of
interest income |
23,388 |
|
|
37,494 |
|
Amortization of deferred
financing costs |
3,774 |
|
|
2,500 |
|
Operating
income |
105,897 |
|
|
162,751 |
|
|
|
|
|
Equity in net loss from
unconsolidated joint ventures |
2,864 |
|
|
12,814 |
|
Marketing, general and
administrative expense |
22,885 |
|
|
19,570 |
|
Transaction related costs,
net |
22 |
|
|
65 |
|
Investment income |
(19,273 |
) |
|
(38,533 |
) |
Loan loss and other investment
reserves, net of recoveries |
— |
|
|
11,248 |
|
Non-building revenue |
(192 |
) |
|
(7,268 |
) |
Net operating income
(NOI) |
112,203 |
|
|
160,647 |
|
|
|
|
|
Equity in net loss from
unconsolidated joint ventures |
(2,864 |
) |
|
(12,814 |
) |
SLG share of unconsolidated JV
depreciation and amortization |
55,275 |
|
|
45,874 |
|
SLG share of unconsolidated JV
interest expense, net of interest income |
33,427 |
|
|
35,777 |
|
SLG share of unconsolidated JV
amortization of deferred financing costs |
2,885 |
|
|
1,687 |
|
SLG share of unconsolidated JV
loss on early extinguishment of debt |
— |
|
|
— |
|
SLG share of unconsolidated JV
investment income |
(296 |
) |
|
(307 |
) |
SLG share of unconsolidated JV
non-building revenue |
(2,425 |
) |
|
(1,215 |
) |
NOI including SLG
share of unconsolidated JVs |
198,205 |
|
|
229,649 |
|
|
|
|
|
NOI from other
properties/affiliates |
(32,326 |
) |
|
(62,747 |
) |
Same-Store
NOI |
165,879 |
|
|
166,902 |
|
|
|
|
|
Ground lease straight-line
adjustment |
245 |
|
|
288 |
|
Joint Venture ground lease
straight-line adjustment |
232 |
|
|
342 |
|
Straight-line and free
rent |
(3,202 |
) |
|
(2,818 |
) |
Amortization of acquired above
and below-market leases, net |
(241 |
) |
|
(1,716 |
) |
Joint Venture straight-line
and free rent |
(7,356 |
) |
|
(5,781 |
) |
Joint Venture amortization of
acquired above and below-market leases, net |
(4,303 |
) |
|
(3,821 |
) |
Same-store cash
NOI |
$ |
151,254 |
|
|
$ |
153,396 |
|
|
|
|
|
|
|
|
|
SL GREEN REALTY
CORP.NON-GAAP FINANCIAL MEASURES -
DISCLOSURES
Funds from Operations (FFO)
FFO is a widely recognized non-GAAP financial
measure of REIT performance. The Company computes FFO in accordance
with standards established by NAREIT, which may not be comparable
to FFO reported by other REITs that do not compute FFO in
accordance with the NAREIT definition, or that interpret the NAREIT
definition differently than the Company does. The revised White
Paper on FFO approved by the Board of Governors of NAREIT in April
2002, and subsequently amended, defines FFO as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses)
from sales of properties, and real estate related impairment
charges, plus real estate related depreciation and amortization and
after adjustments for unconsolidated partnerships and joint
ventures.
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 real estate related
impairment charges, 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 the
Company's 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 operating
lease rent, non-cash deferred compensation, and pro-rata
adjustments from the Company's unconsolidated JVs, 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 National Association of Real Estate Investment Trusts, or
NAREIT, which may not be comparable to EBITDAre reported by other
REITs that do not compute EBITDAre in accordance with the NAREIT
definition, or that interpret the NAREIT definition differently
than the Company does. The White Paper on EBITDAre approved by the
Board of Governors of NAREIT in September 2017 defines EBITDAre as
net income (loss) (computed in accordance with Generally Accepted
Accounting Principles, or GAAP), plus interest expense, plus income
tax expense, plus depreciation and amortization, plus (minus)
losses and gains on the disposition of depreciated property, plus
impairment write-downs of depreciated property and investments in
unconsolidated joint ventures, plus adjustments to reflect the
entity's share of EBITDAre of unconsolidated joint ventures.
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
also a non-GAAP financial measure that is calculated by subtracting
free rent (net of amortization), straight-line rent, and the
amortization of acquired above and below-market leases from NOI,
while adding operating 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 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 the Company's 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.
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 operating lease 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
Matt DiLibertoChief Financial Officer(212)
594-2700
SL Green Realty (NYSE:SLG)
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