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SL Green Realty Corp. Reports Fourth Quarter And Full Year 2012 FFO Of $1.16 And $5.35 Per Share Before Transaction Costs And EPS Of $0.22 And $1.74 Per Share

Stocks in this article: SLG

The Supplemental Package will be available prior to the quarterly conference call on the Company's website, www.slgreen.com, under “Financial Reports” in the Investors section.

The live conference will be webcast in listen-only mode on the Company's web site under “Event Calendar & Webcasts” in the Investors section and on Thomson's StreetEvents Network. The conference may also be accessed by dialing 866.271.0675 Domestic or 617.213.8892 International, using pass-code “SL Green.”

A replay of the call will be available through February 7, 2013 by dialing 888.286.8010 Domestic or 617.801.6888 International, using pass-code 66429574.

Company Profile

SL Green Realty Corp., New York City's largest office landlord, is the only fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of December 31, 2012, SL Green owned interests in 85 Manhattan properties totaling 40.8 million square feet. This included ownership interests in 27.8 million square feet of commercial properties and debt and preferred equity investments secured by 13.0 million square feet of properties. In addition to its Manhattan investments, SL Green holds ownership interests in 31 suburban assets totaling 5.4 million square feet in Brooklyn, Long Island, Westchester County, Connecticut and New Jersey, along with four development properties in the suburbs encompassing approximately 0.5 million square feet. The Company also has ownership interests in 31 properties totaling 4.5 million square feet in southern California.

To be added to the Company's distribution list or to obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at 212.594.2700.

Disclaimers

Non-GAAP Financial Measures

During the quarterly conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found on pages 11 and 12 of this release and in the Company’s Supplemental Package.

Forward-looking Statement

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. All forward-looking statements speak only as of the date of this press release. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others, the strength of the commercial office real estate markets in the New York Metropolitan area, reduced demand for office space, unanticipated increases in financing and other costs, competitive market conditions, unanticipated administrative costs, divergent interests from or the financial condition of our joint venture partners, timing of leasing income, general and local economic conditions, interest rates, capital market conditions, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, environmental, regulatory and/or safety requirements, and other factors, all of which are beyond the Company's control. Additional information or factors that could affect the Company and the forward-looking statements contained herein are included in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

               
 

SL GREEN REALTY CORP.

CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED

(Amounts in thousands, except per share data)

 
Three Months Ended

December 31,

Twelve Months Ended

December 31,

2012         2011 2012         2011
Revenues:
Rental revenue, net $ 268,067 $ 253,343 $ 1,077,976 $ 961,935
Escalation and reimbursement 41,362 41,152 167,388 145,596
Investment and preferred equity income 31,500 22,162 119,155 120,418
Other income 9,805   12,222   35,736   35,479  
Total revenues 350,734   328,879   1,400,255   1,263,428  
Expenses:
Operating expenses (including approximately $5,187 and $18,101 (2012) and $5,252 and $16,266 (2011) paid to related parties) 72,198 71,916 298,322 263,709
Real estate taxes 52,874 45,497 210,467 174,454
Ground rent 11,296 8,810 37,866 32,919
Interest expense, net of interest income 82,277 78,876 330,569 285,917
Amortization of deferred financing costs 7,824 4,649 19,450 14,118
Depreciation and amortization 93,765 74,951 332,028 277,345
Loan loss and other investment reserves, net of recoveries --- 8,592 564 6,722
Transaction related costs 1,227 1,741 5,625 5,561
Marketing, general and administrative 21,372   18,728   82,840   80,103  
Total expenses 342,833   313,760   1,317,731   1,140,848  
Income from continuing operations before equity in net income of unconsolidated joint ventures, noncontrolling interests and discontinued operations 7,901 15,119 82,524 122,580
Equity in net income (loss) from unconsolidated joint ventures (4,570 ) (6,080 ) 76,418 1,583
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/ real estate 19,277 (114 ) 37,053 2,918
Purchase price fair value adjustment --- 8,306 --- 498,195
Gain (loss) on investment in marketable securities 2,703 4,999 4,940 4,866
Depreciable real estate reserves --- (5,789 ) --- (5,789 )
Gain (loss) on early extinguishment of debt (6,978 ) ---   (6,978 ) 904  
Income from continuing operations 18,333 16,441 193,957 625,257
Net income from discontinued operations 9,127 1,115 9,116 5,780
Gain on sale of discontinued operations ---   ---   6,627   46,085  
Net income 27,460 17,556 209,700 677,122
Net income attributable to noncontrolling interests in the operating partnership (721 ) (683 ) (5,597 ) (14,629 )
Preferred unit distributions (574 ) --- (2,107 ) ---
Net (income) loss attributable to noncontrolling interests in other partnerships 1,202   (6,519 ) (5,591 ) (15,083 )
Net income attributable to SL Green 27,367 10,354 196,405 647,410
Preferred stock redemption costs --- --- (10,010 ) ---
Preferred stock dividends (7,407 ) (7,545 ) (30,411 ) (30,178 )
Net income attributable to SL Green common stockholders $ 19,960   $ 2,809   $ 155,984   $ 617,232  
 
Earnings Per Share (EPS)
Net income per share (Basic) $ 0.22 $ 0.03 $ 1.75 $ 7.37
Net income per share (Diluted) $ 0.22   $ 0.03   $ 1.74   $ 7.33  
 
Funds From Operations (FFO)
FFO per share (Basic) $ 1.14 $ 1.02 $ 5.30 $ 4.83
FFO per share (Diluted) $ 1.14   $ 1.02   $ 5.28   $ 4.80  
 
Basic ownership interest
Weighted average REIT common shares for net income per share 90,481 86,020 89,319 83,762
Weighted average partnership units held by noncontrolling interests 3,266   2,306   3,207   1,985  
Basic weighted average shares and units outstanding for FFO per share 93,747   88,326   92,526   85,747  
 
Diluted ownership interest
Weighted average REIT common share and common share equivalents 90,745 86,438 89,666 84,259
Weighted average partnership units held by noncontrolling interests 3,266   2,306   3,207   1,985  
Diluted weighted average shares and units outstanding 94,011   88,744   92,873   86,244  
 
 
               
 

SL GREEN REALTY CORP.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share data)

 

December 31,

2012

December 31,

2011

Assets (Unaudited)
Commercial real estate properties, at cost:
Land and land interests $ 2,886,099 $ 2,684,626
Buildings and improvements 7,389,766 7,147,527
Building leasehold and improvements 1,346,748 1,302,790
Properties under capital lease 40,340   12,208  
11,662,953 11,147,151
Less accumulated depreciation (1,393,323 ) (1,136,603 )
10,269,630 10,010,548
Assets held for sale 4,901 76,562
Cash and cash equivalents 189,984 138,192
Restricted cash 136,071 86,584
Investment in marketable securities 21,429 25,323
Tenant and other receivables, net of allowance of $21,652 and $16,772 in 2012 and 2011, respectively 48,544 32,107
Related party receivables 7,531 4,001
Deferred rents receivable, net of allowance of $29,580 and $29,156 in 2012 and 2011, respectively 340,747 281,974
Debt and preferred equity investments, net of discount of $13,572 and $24,996 and allowance of $7,000 and $50,175 in 2012 and 2011, respectively 1,357,203 985,942
Investments in and advances to unconsolidated joint ventures 1,032,243 893,933
Deferred costs, net 261,145 210,786
Other assets 718,326   737,900  
Total assets $ 14,387,754   $ 13,483,852  
 

Liabilities

Mortgages and other loans payable $ 4,615,464 $ 4,314,741
Revolving credit facility 70,000 350,000
Term loan and senior unsecured notes 1,734,956 1,270,656
Accrued interest and other liabilities 73,769 126,135
Accounts payable and accrued expenses 159,598 142,428
Deferred revenue/gain 321,764 357,193
Capitalized lease obligation 37,518 17,112
Deferred land lease payable 20,897 18,495
Dividend and distributions payable 37,839 28,398
Security deposits 46,253 46,367
Liabilities related to assets held for sale 136 61,988
Junior subordinate deferrable interest debentures held by

trusts that issued trust preferred securities

100,000   100,000  
Total liabilities 7,218,194 6,833,513
 
Commitments and contingencies --- ---
Noncontrolling interests in the operating partnership 212,907 195,030
Series G preferred units, $25.00 liquidation preference, 1,902 issued and

outstanding at December 31, 2012

47,550 ---
Series H preferred units, $25.00 liquidation preference, 80 issued and

outstanding at December 31, 2012 and 2011, respectively

2,000 2,000
 
Equity
SL Green Realty Corp. stockholders’ equity
7.625% Series C perpetual preferred shares, $0.01 par value, $25.00 liquidation preference, 7,700 and 11,700 issued and outstanding at December 31, 2012 and 2011, respectively 180,340 274,022
7.875% Series D perpetual preferred shares, $0.01 par value, $25.00 liquidation preference, none and 4,000 issued and outstanding at December 31, 2012 and 2011, respectively --- 96,321
6.5% Series I perpetual preferred shares, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at December 31, 2012 221,965 ---
Common stock, $0.01 par value 160,000 shares authorized, 94,896 and 89,210 issued and outstanding at December 31, 2012 and 2011, respectively (inclusive of 3,646 and 3,427 shares held in Treasury at December 31, 2012 and 2011, respectively) 950 892
Additional paid-in capital 4,667,900 4,236,959
Treasury stock-at cost (322,858 ) (308,708 )
Accumulated other comprehensive loss (29,587 ) (28,445 )
Retained earnings 1,701,092   1,704,506  
Total SL Green Realty Corp. stockholders’ equity 6,419,802 5,975,547
Noncontrolling interests in other partnerships 487,301   477,762  
Total equity 6,907,103   6,453,309  
Total liabilities and equity $ 14,387,754   $ 13,483,852  
 
 
                     
 

SL GREEN REALTY CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

 
Three Months Ended

December 31,

Twelve Months Ended

December 31,

2012         2011 2012           2011

FFO Reconciliation:

Net income attributable to common stockholders $ 19,960 $ 2,809 $ 155,984 $ 617,232

Add:

Depreciation and amortization 93,765 74,951 332,028 277,345
Discontinued operations depreciation adjustments 21 --- 82 676
Joint venture depreciation and noncontrolling interest adjustments 13,417 8,005 35,593 31,179
Net income attributable to noncontrolling interests (481 ) 7,202 11,188 29,712

Less:

Gain on sale of discontinued operations --- --- 6,627 46,085
Equity in net gain (loss) on sale of joint venture interest 19,277 (114 ) 37,053 2,918
Purchase price fair value adjustment --- 8,306 --- 498,195
Depreciable real estate reserves --- (5,789 ) --- (5,789 )
Depreciation on non-rental real estate assets 243   255   940 922  
Funds from Operations 107,162 90,309 490,255 413,813
Transaction related costs (1) 1,533   1,785   6,585 6,734  
Funds from Operations before transaction related costs $ 108,695   $ 92,094   $

496,840

$ 420,547  
 

(1)  Includes the Company’s share of joint venture transaction related costs.

 
 
                         
 
Consolidated Properties SL Green’s share of Unconsolidated Joint Ventures Combined
Three Months Ended

December 31,

Three Months Ended

December 31,

Three Months Ended

December 31,

Operating income and Same-store NOI Reconciliation:

2012         2011 2012       2011 2012         2011
Income from continuing operations before equity in net income of unconsolidated joint ventures, noncontrolling interests and discontinued operations $ 7,901 $ 15,119

$

$

 
Equity in net income (loss) from joint ventures (4,570 ) (6,080 ) (4,570 ) (6,080 )
Depreciation and amortization 93,765 74,951 21,911 15,031
Interest expense, net of interest income 82,277 78,876 21,540 26,702
Amortization of deferred financing costs 7,824 4,649 1,104 1,095
Gain (loss) on early extinguishment of debt (6,978 ) ---   ---   ---  
Operating income $ 180,219   $ 167,515   $ 39,985   $ 36,748  
 
Marketing, general & administrative expense 21,372 18,728 --- ---
Net operating income from discontinued operations 116 1,945 --- ---
Loan loss and other investment reserves, net of recoveries --- 8,592 --- ---
Transaction related costs 1,227 1,741 306 44
 
Non-building revenue (36,306 ) (28,560 ) (3,687 ) (6,608 )
Equity in net (income) loss from joint ventures 4,570 6,080 --- ---
(Gain) loss on early extinguishment of debt 6,978   ---   ---   ---   $ $
Net operating income ( NOI) 178,176 176,041 36,604 30,184 214,780 206,225
 
 
Net operating income from discontinued operations (116 ) (1,945 ) --- --- (116 ) (1,945 )
NOI from other properties/affiliates (16,000 ) (8,506 ) (8,471 ) (3,422 ) (24,471 ) (11,928 )
Same-Store NOI $ 162,060   $ 165,590   $ 28,133   $ 26,762   $ 190,193   $ 192,352  
 
 
Ground lease straight-line adjustment 2,186 44 --- --- 2,186 44
 
Straight-line and free rent (12,659 ) (19,204 ) (1,582 ) (1,408 ) (14,241 ) (20,612 )
Rental income – FAS 141 (3,900 ) (4,206 ) (658 ) (320 ) (4,558 ) (4,526 )
Same-store cash NOI $ 147,687   $ 142,224   $ 25,893   $ 25,034   $ 173,580   $ 167,258  
 
 
                         
 
Consolidated Properties SL Green’s share of Unconsolidated Joint Ventures Combined
Twelve Months Ended

December 31,

Twelve Months Ended

December 31,

Twelve Months Ended

December 31,

Operating income and Same-store NOI Reconciliation:

2012         2011 2012       2011 2012         2011
Income from continuing operations before equity in net income of unconsolidated joint ventures, noncontrolling interests and discontinued operations $ 82,524 $ 122,580

$

---

$

---
 
Equity in net income (loss) from joint ventures 76,418 1,583 76,418 1,583
Depreciation and amortization 332,028 277,345 69,116 58,598
Interest expense, net of interest income 330,569 285,917 86,268 88,546
Amortization of deferred financing costs 19,450 14,118 3,859 4,996
Gain (loss) on early extinguishment of debt (6,978 ) 904   ---   ---  
Operating income $ 834,011   $ 702,447   $ 235,661   $ 153,723  
 
Marketing, general & administrative expense 82,840 80,103 --- ---
Net operating income from discontinued operations 1,385 10,878 --- ---
Loan loss and other investment reserves, net of recoveries 564 6,722 --- ---
Transaction related costs 5,625 5,561 960 1,173
 
Non-building revenue (134,392 ) (135,987 ) (93,144 ) (12,346 )
Equity in net income from joint ventures (76,418 ) (1,583 ) --- ---
(Gain) loss on early extinguishment of debt 6,978   (904 ) (10,711 ) ---   $ $
Net operating income ( NOI) 720,593 667,237 132,766 142,550 853,359 809,787
 
 
Net operating income from discontinued operations (1,385 ) (10,878 ) --- --- (1,385 ) (10,878 )
NOI from other properties/affiliates (69,006 ) (1,514 ) (23,150 ) (36,641 ) (92,156 ) (38,155 )
Same-Store NOI $ 650,202   $ 654,845   $ 109,616   $ 105,909   $ 759,818   $ 760,754  
 
 
Ground lease straight-line adjustment 2,702 440 --- (9 ) 2,702 431
 
Straight-line and free rent (54,686 ) (79,496 ) (4,217 ) (6,219 ) (58,903 ) (85,715 )
Rental income – FAS 141 (17,365 ) (21,201 ) (2,030 ) (1,172 ) (19,395 ) (22,373 )
Same-store cash NOI $ 580,853   $ 554,588   $ 103,369   $ 98,509   $ 684,222   $ 653,097  
 
 
         
 

SL GREEN REALTY CORP.

SELECTED OPERATING DATA-UNAUDITED

 
December 31,
2012           2011
Manhattan Operating Data: (1)
Net rentable area at end of period (in 000’s) 24,282 24,622
Portfolio percentage leased at end of period 94.1 % 92.5 %
Same-Store percentage leased at end of period 93.8 % 94.0 %
Number of properties in operation 36 33
 
Office square feet where leases commenced during quarter (rentable) 290,108 412,704
Average mark-to-market percentage-office 2.4 % 7.6 %
Average starting cash rent per rentable square foot-office $ 56.96 $ 63.11
 

(1)  Includes wholly-owned and joint venture properties.

 
 




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