SL Green Realty Corp. (NYSE:SLG):

Financial and Operating Highlights
  • Third quarter 2016 net income attributable to common stockholders of $0.34 per share compared to third quarter 2015 net income attributable to common stockholders of $1.64 per share. Third quarter 2015 net income attributable to common stockholders includes $155.8 million, or $1.50 per share, of net gains recognized from the sale of real estate.
  • Third quarter 2016 FFO of $1.63 per share net of transaction related costs of $0.05 per share compared to third quarter 2015 FFO of $1.65 per share net of transaction related costs of $0.06 per share. Third quarter 2016 FFO includes $41.1 million, or $0.39 per share, of additional income related to the recapitalization of a debt investment, offset by $19.6 million, or $0.19 per share, of lost income and accounting write-offs related to space previously leased to Aeropostale at 1515 Broadway.
  • Combined same-store cash NOI increased 6.0% for the first nine months of 2016 as compared to the same period in the prior year.
  • Signed 41 Manhattan office leases covering 1,282,518 square feet during the third quarter. The mark-to-market on signed Manhattan office leases was 28.6% higher in the third quarter than the previously fully escalated rents on the same spaces.
  • Signed 22 Suburban office leases covering 156,002 square feet during the third quarter. The mark-to-market on signed Suburban office leases was 4.4% higher in the third quarter than the previous fully escalated rents on the same spaces.
  • Manhattan same-store occupancy, inclusive of leases signed but not yet commenced, was 97.5% as of September 30, 2016 as compared to 97.3% as of September 30, 2015 and 97.4% as of June 30, 2016.

Investing Highlights
  • Closed on the sale of a 40% interest in Eleven Madison Avenue for a total gross asset valuation of $2.6 billion, inclusive of the costs associated with lease stipulated improvements to the property. The Company received $484.2 million in net proceeds from the sale.
  • In October, closed on the sale of a 49% interest in 400 East 57 th Street for a total gross asset valuation of $170.0 million. The Company recognized net proceeds of $65.0 million from the recapitalization of the property which included obtaining a new 10-year $100 million mortgage loan with a fixed interest rate of 3.0%. The new mortgage replaces the previous $66.7 million mortgage loan, which bore interest at a fixed rate of 4.13%.
  • Closed on the previously announced sale of 500 West Putnam Avenue in Greenwich, Connecticut, for a total gross asset valuation of $41.0 million. The Company recognized net proceeds of $39.5 million from the sale.
  • Originated new debt and preferred equity investments totaling $472.0 million in the third quarter, of which $434.5 million was retained at a yield of 9.2%.

Financing Highlights
  • Closed on $1.5 billion of construction financing for One Vanderbilt Avenue. The facility has a term of up to 7 years and bears interest at a floating rate of 3.50% over LIBOR, with the ability to reduce the spread to as low as 3.00% upon achieving certain pre-leasing and completion milestones.
  • Closed on an expansion of the term loan portion of the Company's unsecured corporate credit facility by $250.0 million, increasing the total facility size to $2.783 billion.
  • Together with our joint venture partner, closed on a $97.0 million refinancing of 650 Fifth Avenue, which replaces the previous $65.0 million mortgage.

Summary

SL Green Realty Corp. (the "Company") (NYSE:SLG) today reported net income attributable to common stockholders for the quarter ended September 30, 2016 of $34.3 million, or $0.34 per share as compared to net income attributable to common stockholders of $163.7 million, or $1.64 per share for the same quarter in 2015. Net income attributable to common stockholders for the quarter ended September 30, 2016 includes $0.6 million, or $0.01 per share, of net gains recognized from the sale of real estate as compared to $155.8 million, or $1.50 per share, of net gains recognized from the sale of real estate for the same quarter in 2015.

The Company also reported net income attributable to common stockholders for the nine months ended September 30, 2016 of $190.9 million, or $1.90 per share as compared to net income attributable to common stockholders of $167.8 million, or $1.68 per share for the same period in 2015. Net income attributable to common stockholders for the nine months ended September 30, 2016 includes $244.0 million, or $2.33 per share, of net gains recognized from the sale of real estate as compared to $169.5 million, or $1.64 per share, of net gains recognized from the sale of real estate for the same period in 2015.

The Company reported funds from operations, or FFO, for the quarter ended September 30, 2016 of $171.6 million, or $1.63 per share, net of transaction related costs of $5.6 million, or $0.05 per share, as compared to FFO for the same period in 2015 of $171.5 million, or $1.65 per share, net of transaction related costs of $5.9 million, or $0.06 per share. Third quarter 2016 FFO includes $41.1 million, or $0.39 per share, of additional income related to the recapitalization of a debt investment, offset by $19.6 million, or $0.19 per share, of lost income and accounting write-offs related to space previously leased to Aeropostale at 1515 Broadway.

The Company also reported FFO for the nine months ended September 30, 2016 of $719.1 million, or $6.86 per share, net of transaction related costs of $9.0 million, or $0.09 per share, as compared to FFO for the same period in 2015 of $494.6 million, or $4.77 per share, net of transaction related costs of $10.1 million, or $0.10 per share.

All per share amounts in this press release are presented on a diluted basis.

Operating and Leasing Activity

For the quarter ended September 30, 2016, the Company reported consolidated revenues and operating income of $416.7 million and $232.8 million, respectively, compared to $432.1 million and $258.5 million, respectively, for the same period in 2015. For the nine months ended September 30, 2016, the Company reported consolidated revenues and operating income of $1.5 billion and $974.6 million, respectively, compared to $1.2 billion and $742.8 million, respectively, for the same period in 2015.

Same-store cash NOI on a combined basis increased by 1.6% to $177.4 million for the quarter ended September 30, 2016 as compared to the same period in 2015. For the quarter, consolidated property same-store cash NOI increased by 1.7% to $158.1 million and unconsolidated joint venture property same-store cash NOI increased by 0.3% to $19.4 million in 2016 as compared to the same period in 2015.

Same-store cash NOI on a combined basis increased by 6.0% to $538.6 million for the nine months ended September 30, 2016 as compared to $508.0 million for the same period in 2015. For the nine months ended September 30, 2016, consolidated property same-store cash NOI increased by 6.0% to $480.0 million and unconsolidated joint venture property same-store cash NOI increased by 6.2% to $58.6 million, as compared to the same period in 2015.

During the third quarter, the Company signed 41 office leases in its Manhattan portfolio totaling 1,282,518 square feet. Twenty-seven leases comprising 1,113,043 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 $74.34 per rentable square foot, representing a 28.6% increase over the previously fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the third quarter was 15.7 years and average tenant concessions were 4.8 months of free rent with a tenant improvement allowance of $54.51 per rentable square foot.

During the first nine months of 2016, the Company signed 138 office leases in its Manhattan portfolio totaling 2,753,254 square feet. One hundred eight leases comprising 2,421,221 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 $71.09 per rentable square foot, representing a 28.5% increase over the previously fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the first nine months of 2016 was 12.4 years and average tenant concessions were 4.1 months of free rent with a tenant improvement allowance of $45.65 per rentable square foot.

Manhattan same-store occupancy was 97.5% at September 30, 2016, inclusive of 238,234 square feet of leases signed but not yet commenced as compared to 97.3% at September 30, 2015 and 97.4% at June 30, 2016.

During the third quarter, the Company signed 22 office leases in its Suburban portfolio totaling 156,002 square feet. Nine leases comprising the remaining 54,514 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 $33.09 per rentable square foot, representing a 4.4% increase over the previously fully escalated rents on the same office spaces. The average lease term on the Suburban office leases signed in the third quarter was 6.6 years and average tenant concessions were 6.1 months of free rent with a tenant improvement allowance of $23.99 per rentable square foot.

During the first nine months of 2016, the Company signed 65 office leases in its Suburban portfolio totaling 555,933 square feet. Thirty-seven leases comprising the remaining 334,179 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 $38.72 per rentable square foot, representing a 5.3% increase over the previously fully escalated rents on the same office spaces. The average lease term on the Suburban office leases signed in the first nine months of 2016 was 7 years and average tenant concessions were 6.4 months of free rent with a tenant improvement allowance of $27.52 per rentable square foot.

Same-store occupancy for the Company's Suburban portfolio was 85.4% at September 30, 2016, inclusive of 67,639 square feet of leases signed but not yet commenced as compared to 84.3% at September 30, 2015 and 83.9% at June 30, 2016.

Significant leases that were signed during the third quarter included:
  • Renewal on 603,650 square feet with Penguin Random House at 1745 Broadway, bringing the remaining lease term to 16.8 years;
  • New lease on 308,115 square feet with Visiting Nurse Service of New York at 220 East 42 nd Street for 30.5 years;
  • Renewal on 64,111 square feet with Omnicom Group at 220 East 42 nd Street bringing the remaining lease terms to 15.6 years;
  • Renewal on 28,650 square feet with Newmark & Company at 110 East 42 nd Street bringing the remaining lease terms to 15.1 years;
  • New lease on 34,393 square feet with Pace University at 100 Summit Lake Drive in Valhalla, New York, for 11.0 years; and
  • New lease on 16,210 square feet with Canon U.S.A, Inc. at 125 Chubb Way, Lyndhurst, New Jersey, for 7.8 years.

Marketing, general and administrative, or MG&A, expenses for the quarter ended September 30, 2016 were $25.5 million, or 5.2% of total combined revenues and an annualized 53 basis points of total combined assets.

Real Estate Investment Activity

In October, the Company closed on the sale of a 49% interest in the entity that owns 400 East 57th Street at a gross asset valuation of $170.0 million and obtained a new 10-year $100 million mortgage loan, which bears interest at a fixed rate of 3.0%, replacing the previous $66.7 million mortgage loan, which bore interest at a fixed rate of 4.13%. The Company recognized net proceeds of $65.0 million from the recapitalization of the property.

In August, the Company closed on the sale of a 40% interest in Eleven Madison Avenue to PGIM Real Estate, the real estate investment business of PGIM, Inc., the global investment management businesses of Prudential Financial, Inc. (NYSE: PRU) for a total gross asset valuation of $2.6 billion, inclusive of the costs associated with lease stipulated improvements to the property. PGIM Real Estate has a one-year option to acquire an additional 9% stake in the venture at the same total gross property valuation of $2.6 billion. The Company received $484.2 million in cash proceeds from the sale. The partnership is seeking a modification to the mortgage on the property, which, if not obtained within six months after the closing, may result in the Company repurchasing the sold interest. The modification is expected to be granted during the fourth quarter of 2016.

In July, the Company sold 500 West Putnam Avenue, a 121,500-square-foot office property located in Greenwich, Connecticut, for a gross sale price of $41.0 million, or $337 per square foot. The transaction closed in July and the Company recognized net proceeds of $39.5 million.

Debt and Preferred Equity Investment Activity

The carrying value of the Company's debt and preferred equity investment portfolio totaled $1.5 billion at September 30, 2016 at a weighted average current yield of 9.2%, excluding $0.3 billion of debt and preferred equity investments that are included in other balance sheet line items for accounting purposes. During the third quarter, the Company originated new debt and preferred equity investments totaling $472.0 million, of which $434.5 million was retained and $309.6 million was funded, at a weighted average current yield of 9.2%. During the third quarter, the Company recorded $239.3 million of principal reductions from investments that were repaid and sold/syndicated.

Financing Activity

In September, the Company closed on $1.5 billion of construction financing for One Vanderbilt Avenue. The facility, which paves the way for the development of the 1,401 foot tower adjacent to Grand Central Terminal, was led by Wells Fargo Bank, N.A. as Administrative Agent, The Bank of New York Mellon, JP Morgan Chase Bank, TD Bank, N.A., and Bank of China, as Syndication Agents, and Landesbank Baden-Württemberg as Documentation Agent, has a term of up to 7 years and bears interest at a floating interest rate of 3.50% over LIBOR, with the ability to reduce the spread to as low as 3.00% upon achieving certain pre-leasing and completion milestones.

In September, the Company closed on the expansion of its unsecured corporate credit facility by $250.0 million, to $2.783 billion. The term loan portion of the facility, which matures in June 2019, has been increased from $933.0 million to $1.183 billion while the revolving line of credit portion of the facility, which matures in March 2020, remains at $1.6 billion.

In July, the Company, along with its joint venture partner, closed on the refinancing of 650 Fifth Avenue. The $97.0 million facility has a 2-year term (subject to two 1-year extension options), carries a floating interest rate of LIBOR plus 3.75%, and replaces the previous $65.0 million of indebtedness on the property.

Dividends

During the third quarter of 2016, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:
  • $0.72 per share of common stock, which was paid on October 17, 2016 to shareholders of record on the close of business on September 30, 2016; and
  • $0.40625 per share on the Company's 6.50% Series I Cumulative Redeemable Preferred Stock for the period July 15, 2016 through and including October 14, 2016, which was paid on October 17, 2016 to shareholders of record on the close of business on September 30, 2016, and reflects the regular quarterly dividend, which is the equivalent of an annualized dividend of $1.625 per share.

Annual Institutional Investor Conference

The Company will host its Annual Institutional Investor Conference on Monday, December 5, 2016 in New York City beginning at 9:00am EST. For more information on the Conference, please email  SLG2016@slgreen.com .

Conference Call and Audio Webcast

The Company's executive management team, led by Marc Holliday, Chief Executive Officer, will host a conference call and audio webcast on Thursday, October 20, 2016 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 http://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 http://slgreen.com/ under "Event Calendar & Webcasts". The conference may also be accessed by dialing toll-free (877) 312-8765 or international (419) 386-0002, and using passcode 85055428.

A replay of the call will be available 7 days after the call by dialing (855) 859-2056 using pass-code 85055428. A webcast replay will also be available in the Investors section of the SL Green Realty Corp. website at http://slgreen.com/ under "Event Calendar & Webcasts".

Company Profile

SL Green Realty Corp., an S&P 500 company and New York City'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 September 30, 2016, SL Green held interests in 125 Manhattan buildings totaling 46.6 million square feet. This included ownership interests in 28.1 million square feet of commercial buildings and debt and preferred equity investments secured by 18.6 million square feet of buildings. In addition, SL Green held ownership interests in 30 suburban buildings totaling 4.8 million square feet in Brooklyn, Long Island, Westchester County, Connecticut and New Jersey.

To be added to the Company's distribution list or to obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at (212) 594-2700.

Disclaimers

Non-GAAP Financial Measures

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

Forward-looking Statement

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. Forward-looking statements are not guarantees of future performance and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms.

Forward-looking statements contained in this press release are subject to a number of risks and uncertainties, many of which are beyond our control, that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by forward-looking statements made by us. Factors and risks to our business that could cause actual results to differ from those contained in the forward-looking statements are described in our filings with the Securities and Exchange Commission. 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
  Nine Months Ended
September 30, September 30,
2016   2015 2016   2015
Revenues:
Rental revenue, net $ 281,482 $ 318,465 $ 1,043,898 $ 926,020
Escalation and reimbursement 53,130 48,254 147,357 130,630
Investment income 75,396 49,328 174,347 136,588
Other income 6,673   16,019   124,137   44,201  
Total revenues 416,681 432,066 1,489,739 1,237,439
Expenses:

Operating expenses, including related party expenses of $5,042 and $15,171 in 2016 and $5,238 and $13,415 in 2015.
79,425 78,648 234,269 225,539
Real estate taxes 64,133 61,009 187,931 173,018
Ground rent 8,338 8,252 24,953 24,526
Interest expense, net of interest income 72,565 84,141 256,326 235,694
Amortization of deferred financing costs 4,815 7,160 20,180 19,727
Depreciation and amortization 112,665 146,185 717,015 454,087
Transaction related costs 2,593 5,829 5,987 10,039
Marketing, general and administrative 25,458   23,475   73,974   72,139  
Total expenses 369,992   414,699   1,520,635   1,214,769  

Income (loss) from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate, loss on sale of marketable securities and loss on early extinguishment of debt
46,689 17,367 (30,896 ) 22,670
Equity in net (loss) income from unconsolidated joint ventures (3,968 ) 3,627 11,969 10,651
Equity in net gain on sale of interest in unconsolidated joint venture/real estate 225 15,281 43,588 16,050
Gain on sale of real estate, net 397 159,704 210,750 159,704
Depreciable real estate reserves (19,226 ) (10,387 ) (19,226 )
Loss on sale of marketable securities (83 )
Loss on early extinguishment of debt       (49 )
Income from continuing operations 43,343 176,753 224,941 189,800
Net income from discontinued operations 427
Gain on sale of discontinued operations       12,983  
Net income 43,343 176,753 224,941 203,210
Net income attributable to noncontrolling interests in the Operating Partnership (1,663 ) (6,467 ) (8,171 ) (6,634 )
Net income attributable to noncontrolling interests in other partnerships (836 ) (665 ) (6,245 ) (13,217 )
Preferred unit distributions (2,854 ) (2,225 ) (8,382 ) (4,316 )
Net income attributable to SL Green 37,990 167,396 202,143 179,043
Perpetual preferred stock dividends (3,738 ) (3,738 ) (11,213 ) (11,214 )
Net income attributable to SL Green common stockholders $ 34,252   $ 163,658   $ 190,930   $ 167,829  
 
Earnings Per Share (EPS)
Net income per share (Basic) $ 0.34   $ 1.64   $ 1.91   $ 1.69  
Net income per share (Diluted) $ 0.34   $ 1.64   $ 1.90   $ 1.68  
 
Funds From Operations (FFO)
FFO per share (Basic) $ 1.64   $ 1.66   $ 6.89   $ 4.80  
FFO per share (Diluted) $ 1.63   $ 1.65   $ 6.86   $ 4.77  
 

Basic ownership interest
Weighted average REIT common shares for net income per share 100,233 99,621 100,140 99,205
Weighted average partnership units held by noncontrolling interests 4,497   3,901   4,272   3,924  
Basic weighted average shares and units outstanding 104,730   103,522   104,412   103,129  
 

Diluted ownership interest
Weighted average REIT common share and common share equivalents 100,646 100,028 100,489 99,685
Weighted average partnership units held by noncontrolling interests 4,497   3,901   4,272   3,924  
Diluted weighted average shares and units outstanding 105,143   103,929   104,761   103,609  
 
 
SL GREEN REALTY CORP.
CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)
 
 

September 30,
  December 31,
2016 2015
Assets (Unaudited)
Commercial real estate properties, at cost:
Land and land interests $ 3,347,482 $ 4,779,159
Building and improvements 7,777,647 10,423,739
Building leasehold and improvements 1,436,287 1,431,259
Properties under capital lease 47,445   47,445  
12,608,861 16,681,602
Less accumulated depreciation (2,190,142 ) (2,060,706 )
10,418,719 14,620,896
Assets held for sale 117,159 34,981
Cash and cash equivalents 405,896 255,399
Restricted cash 100,195 233,578
Investment in marketable securities 60,352 45,138

Tenant and other receivables, net of allowance of $18,278 and $17,618 in 2016 and 2015, respectively
55,976 63,491
Related party receivables 14,840 10,650

Deferred rents receivable, net of allowance of $24,922 and $21,730 in 2016 and 2015, respectively
430,642 498,776

Debt and preferred equity investments, net of discounts and deferred origination fees of $14,630 and $18,759 in 2016 and 2015, respectively
1,453,234 1,670,020
Investments in unconsolidated joint ventures 1,860,912 1,203,858
Deferred costs, net 252,179 239,920
Other assets 620,838   850,939  
Total assets $ 15,790,942   $ 19,727,646  
 

Liabilities
Mortgages and other loans payable $ 4,024,896 $ 6,992,504
Revolving credit facility 994,000
Term loan and senior unsecured notes 2,313,616 2,319,244
Deferred financing costs, net (87,591 ) (130,295 )
Total debt, net of deferred financing costs 6,250,921 10,175,453
Accrued interest payable 30,734 42,406
Other liabilities 218,404 168,477
Accounts payable and accrued expenses 178,946 196,213
Deferred revenue 237,548 399,102
Capitalized lease obligations 41,951 41,360
Deferred land leases payable 2,419 1,783
Dividend and distributions payable 81,392 79,790
Security deposits 67,709 68,023
Liabilities related to assets held for sale 65,520 29,000

Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities
100,000   100,000  
Total liabilities 7,275,544 11,301,607
 
Commitments and contingencies
Noncontrolling interest in the Operating Partnership 490,440 424,206
Preferred units 302,310 282,516
 
Equity
Stockholders' equity:

Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both September 30, 2016 and December 31, 2015
221,932 221,932

Common stock, $0.01 par value 160,000 shares authorized, 101,319 and 100,063 issued and outstanding at September 30, 2016 and December 31, 2015, respectively (including 1,055 and 87 shares held in Treasury at September 30, 2016 and December 31, 2015, respectively)
1,013 1,001
Additional paid-in capital 5,596,026 5,439,735
Treasury stock at cost (124,049 ) (10,000 )
Accumulated other comprehensive loss (14,074 ) (8,749 )
Retained earnings 1,612,707   1,643,546  
Total SL Green Realty Corp. stockholders' equity 7,293,555 7,287,465
Noncontrolling interests in other partnerships 429,093   431,852  
Total equity 7,722,648   7,719,317  
Total liabilities and equity $ 15,790,942   $ 19,727,646  
 
 
SL GREEN REALTY CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(unaudited and in thousands, except per share data)
 
  Three Months Ended
September 30,
2016 2015

FFO Reconciliation:
Net income attributable to SL Green common stockholders $ 34,252 $ 163,658

Add:
Depreciation and amortization 112,665 146,185
Joint venture depreciation and noncontrolling interest adjustments 23,349 10,796
Net income attributable to noncontrolling interests 2,499 7,132

Less:
Gain on sale of real estate and discontinued operations, net 397 159,704
Equity in net gain on sale of interest in unconsolidated joint venture/real estate 225 15,281
Depreciable real estate reserve (19,226 )
Depreciation on non-rental real estate assets 509   500  
Funds From Operations attributable to SL Green common stockholders and noncontrolling interests $ 171,634   $ 171,512  
 
 
  Consolidated Properties  

Unconsolidated Joint Ventures (100%)
Three Months Ended Three Months Ended
September 30, September 30,

Operating income and Same-store NOI Reconciliation:
2016   2015 2016 2015

Income (loss) from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate, loss on sale of marketable securities and loss on early extinguishment of debt
$ 46,689 $ 17,367 $ (6,255 ) $ 1,169
 
Equity in net income from unconsolidated joint ventures (3,968 ) 3,627
Depreciation and amortization 112,665 146,185 56,890 38,144
Interest expense, net of interest income 72,565 84,141 51,789 51,430
Amortization of deferred financing costs 4,815 7,160 7,155 3,473
Loss on early extinguishment of debt       (248 )
Operating income 232,766   258,480   109,579   93,968  
 
Marketing, general and administrative expense 25,458 23,475
Net operating income from discontinued operations
Transaction related costs, net 2,593 5,829 5,359 604
Non-building revenue (77,962 ) (55,707 ) (8,990 ) (2,990 )
Equity in net income from unconsolidated joint ventures 3,968 (3,627 )
Loss on early extinguishment of debt             (248 )
Net operating income (NOI) $ 186,823 $ 228,450 $ 105,948 $ 91,334
 
 
NOI from discontinued operations
NOI from other properties/affiliates (33,531 ) (59,000 ) (84,620 ) (70,244 )
Same-Store NOI 153,292   169,450   21,328   21,090  
 
 
Ground lease straight-line adjustment 424 472
 
Straight-line and free rent (2,843 ) (9,194 ) (1,577 ) (1,334 )
Rental income - FAS 141 7,192   (5,330 ) (388 ) (454 )
Same-store cash NOI $ 158,065   $ 155,398   $ 19,363   $ 19,302  
 
SL GREEN REALTY CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(unaudited and in thousands, except per share data)
 
  Nine Months Ended
September 30,
2016 2015

FFO Reconciliation:
Net income attributable to SL Green common stockholders $ 190,930 $ 167,829

Add:
Depreciation and amortization 717,015 454,087
Joint venture depreciation and noncontrolling interest adjustments 42,191 23,853
Net income attributable to noncontrolling interests 14,416 19,851

Less:
Gain on sale of real estate and discontinued operations, net 210,750 172,687

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
43,588 16,050
Depreciable real estate reserve (10,387 ) (19,226 )
Depreciation on non-rental real estate assets 1,505   1,525  
Funds From Operations attributable to SL Green common stockholders and noncontrolling interests $ 719,096   $ 494,584  
 
 
  Consolidated Properties  

Unconsolidated Joint Ventures (100%)
Nine Months Ended Nine Months Ended
September 30, September 30,

Operating income and Same-store NOI Reconciliation:
2016   2015 2016 2015

Income (loss) from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate, loss on sale of marketable securities and loss on early extinguishment of debt
$ (30,896 ) $ 22,670 $ 16,198 $ 2,148
 
Equity in net income from unconsolidated joint ventures 11,969 10,651
Depreciation and amortization 717,015 454,087 132,035 109,022
Interest expense, net of interest income 256,326 235,694 147,876 147,152
Amortization of deferred financing costs 20,180 19,727 17,667 9,628
Loss on early extinguishment of debt   (49 ) (1,606 ) (1,081 )
Operating income 974,594   742,780   312,170   266,869  
 
Marketing, general and administrative expense 73,974 72,139
Net operating income from discontinued operations 427
Transaction related costs, net 5,987 10,039 5,359 615
Non-building revenue (180,345 ) (151,112 ) (20,531 ) (8,853 )
Equity in net income from unconsolidated joint ventures (11,969 ) (10,651 )
Loss on early extinguishment of debt   49   1,606   1,081  
Net operating income (NOI) $ 862,241 $ 663,671 $ 298,604 $ 259,712
 
 
NOI from discontinued operations
NOI from other properties/affiliates (364,355 ) (160,909 ) (233,642 ) (198,555 )
Same-Store NOI 497,886   502,762   64,962   61,157  
 
 
Ground lease straight-line adjustment 1,359 1,415
 
Straight-line and free rent (18,937 ) (38,181 ) (5,172 ) (4,551 )
Rental income - FAS 141 (346 ) (13,155 ) (1,170 ) (1,417 )
Same-store cash NOI $ 479,962   $ 452,841   $ 58,620   $ 55,189  
 
SL GREEN REALTY CORP.
SELECTED OPERATING DATA-UNAUDITED
 
  September 30,
2016   2015
Manhattan Operating Data: (1)
Net rentable area at end of period (in 000's) 22,613 24,029
Portfolio percentage leased at end of period 95.4 % 94.5 %
Same-Store percentage leased at end of period 96.3 % 96.7 %
Number of properties in operation 31 32
 
Office square feet where leases commenced during quarter ended (rentable) 1,195,004 289,016
Average mark-to-market percentage-office 18.4 % 26.8 %
Average starting cash rent per rentable square foot-office $ 73.22 $ 70.45
 

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

SLG-EARN

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