Partners' Capital of the Operating Partnership

6 Months Ended

Jun. 30, 2020

Partners' Capital of the Operating Partnership

Stockholders’ Equity of the Company

Common Stock

Our authorized capital stock consists of 260,000,000 shares, $0.01 par value per share, consisting of 160,000,000 shares of common stock, $0.01 par value per share, 75,000,000 shares of excess stock, at $0.01 par value per share, and 25,000,000 shares of preferred stock, par value $0.01 per share. As of June 30, 2020, 73,674,509 shares of common stock and no shares of excess stock were issued and outstanding.

Share Repurchase Program

In August 2016, our Board of Directors approved a share repurchase program under which we can buy up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized four separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, and fourth quarter of 2019 bringing the total program size to $3.0 billion.

At June 30, 2020, repurchases executed under the program were as follows:



Period	Shares repurchased	Average price paid per share	Cumulative number of shares repurchased as part of the repurchase plan or programs
Year ended 2017	8,342,411	$101.64	8,342,411
Year ended 2018	9,744,911	$96.22	18,087,322
Year ended 2019	4,596,171	$83.62	22,683,493
Six months ended June 30, 2020 ⁽¹⁾	5,600,670	$64.42	28,284,163


(1)	Includes 179,212 shares of common stock repurchased by the Company in June 2020 that were settled in July 2020.

Perpetual Preferred Stock

We have 9,200,000 shares of our 6.50% Series I Cumulative Redeemable Preferred Stock, or the Series I Preferred Stock, outstanding with a mandatory liquidation preference of $25.00 per share. The Series I Preferred stockholders receive annual dividends of $1.625 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. We are entitled to redeem the Series I Preferred Stock at par for cash at our option. In August 2012, we received $221.9 million in net proceeds from the issuance of the Series I Preferred Stock, which were recorded net of underwriters' discount and issuance costs, and contributed the net proceeds to the Operating Partnership in exchange for 9,200,000 units of 6.50% Series I Cumulative Redeemable Preferred Units of limited partnership interest, or the Series I Preferred Units.

Dividend Reinvestment and Stock Purchase Plan ("DRSPP")

In February 2018, the Company filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRSPP, which automatically became effective upon filing. The Company registered 3,500,000 shares of our common stock under the DRSPP. The DRSPP commenced on September 24, 2001.

The following table summarizes SL Green common stock issued, and proceeds received from dividend reinvestments and/or stock purchases under the DRSPP for the three and six months ended June 30, 2020 and 2019, respectively (dollars in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Shares of common stock issued	3,902		2,455		5,679		2,995
Dividend reinvestments/stock purchases under the DRSPP	$	198	$	216	$	364	$	263

Earnings per Share

We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the income available to common stockholders by the weighted-average number of common stock shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity.

SL Green's earnings per share for the three and six months ended June 30, 2020 and 2019 are computed as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
Numerator	2020			2019			2020			2019
Basic Earnings:
Income attributable to SL Green common stockholders	$	56,444		$	161,103		$	171,245		$	204,895
Less: distributed earnings allocated to participating securities	(333		)	(128		)	(444		)	(257		)
Less: undistributed earnings allocated to participating securities	—			(164		)	(391		)	(115		)
Net income attributable to SL Green common stockholders (numerator for basic earnings per share)	$	56,111		$	160,811		$	170,410		$	204,523
Add back: dilutive effect of earnings allocated to participating securities	333			128			444			257
Add back: undistributed earnings allocated to participating securities	—			164			391			115
Add back: effect of dilutive securities (redemption of units to common shares)	3,070			8,310			9,272			10,587
Income attributable to SL Green common stockholders (numerator for diluted earnings per share)	$	59,514		$	169,413		$	180,517		$	215,482



	Three Months Ended June 30,		Six Months Ended June 30,
Denominator	2020	2019	2020	2019
Basic Shares:
Weighted average common stock outstanding	75,690	82,971	76,782	83,141
Effect of Dilutive Securities:
Operating Partnership units redeemable for common shares	4,120	4,260	4,170	4,296
Stock-based compensation plans	409	167	440	169
Diluted weighted average common stock outstanding	80,219	87,398	81,392	87,606

The Company has excluded 2,192,240 and 1,643,616 common stock equivalents from the calculation of diluted shares outstanding for the three and six months ended June 30, 2020, respectively, as they were anti-dilutive. The Company has excluded 1,246,040 and 1,241,778 common stock equivalents from the calculation of diluted shares outstanding for the three and six months ended June 30, 2019, respectively, as they were anti-dilutive.

Accumulated Other Comprehensive Loss

The following tables set forth the changes in accumulated other comprehensive loss by component as of June 30, 2020 (in thousands):



	Net unrealized loss on derivative instruments ⁽¹⁾			SL Green’s share of joint venture net unrealized loss on derivative instruments ⁽²⁾			Net unrealized gain (loss) on marketable securities			Total
Balance at December 31, 2019	$	(22,780	)	$	(7,982	)	$	2,277		$	(28,485	)
Other comprehensive loss before reclassifications	(49,735		)	(7,764		)	(2,416		)	(59,915		)
Amounts reclassified from accumulated other comprehensive loss	4,208			1,821			—			6,029
Balance at June 30, 2020	$	(68,307	)	$	(13,925	)	$	(139	)	$	(82,371	)

(1)

Amount reclassified from accumulated other comprehensive loss is included in interest expense in the respective consolidated statements of operations. As of June 30, 2020 and December 31, 2019, the deferred net (gains) losses from these terminated hedges, which is included in accumulated other comprehensive loss relating to net unrealized (loss) gain on derivative instrument, was $(0.5) million and $(0.7) million, respectively.

(2)

Amount reclassified from accumulated other comprehensive loss is included in equity in net loss from unconsolidated joint ventures in the respective consolidated statements of operations.

SL Green Operating Partnership

Stockholders' Equity

Partners' Capital of the Operating Partnership

The Company is the sole managing general partner of the Operating Partnership and at June 30, 2020 owned 73,674,509 general and limited partnership interests in the Operating Partnership and 9,200,000 Series I Preferred Units. Partnership interests in the Operating Partnership are denominated as “common units of limited partnership interest” (also referred to as “OP Units”) or “preferred units of limited partnership interest” (also referred to as “Preferred Units”). All references to OP Units and Preferred Units outstanding exclude such units held by the Company. A holder of an OP Unit may present such OP Unit to the Operating Partnership for redemption at any time (subject to restrictions agreed upon at the issuance of OP Units to particular holders that may restrict such right for a period of time, generally one year from issuance). Upon presentation of an OP Unit for redemption, the Operating Partnership must redeem such OP Unit in exchange for the cash equal to the then value of a share of common stock of the Company, except that the Company may, at its election, in lieu of cash redemption, acquire such OP Unit for one share of common stock. Because the number of shares of common stock outstanding at all times equals the number of OP Units that the Company owns, one share of common stock is generally the economic equivalent of one OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of common stock. Each series of Preferred Units makes a distribution that is set in accordance with an amendment to the partnership agreement of the Operating Partnership. Preferred Units may also be convertible into OP Units at the election of the holder thereof or the Company, subject to the terms of such Preferred Units.

Net income (loss) allocated to the preferred unitholders and common unitholders reflects their pro rata share of net income (loss) and distributions.

Limited Partner Units

As of June 30, 2020, limited partners other than SL Green owned 5.20%, or 4,044,555 common units, of the Operating Partnership.

Preferred Units

Preferred units not owned by SL Green are further described in Note 11, “Noncontrolling Interests on the Company’s Consolidated Financial Statements - Preferred Units of Limited Partnership Interest in the Operating Partnership.”

Earnings per Unit

The Operating Partnership's earnings per unit for the three and six months ended June 30, 2020 and 2019, respectively, are computed as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
Numerator	2020			2019			2020			2019
Basic Earnings:
Income attributable to SLGOP common unitholders	$	59,514		$	169,413		$	180,517		$	215,482
Less: distributed earnings allocated to participating securities	(333		)	(128		)	(444		)	(257		)
Less: undistributed earnings allocated to participating securities	—			(164		)	(391		)	(115		)
Net Income attributable to SLGOP common unitholders (numerator for basic earnings per unit)	$	59,181		$	169,121		$	179,682		$	215,110
Add back: dilutive effect of earnings allocated to participating securities	333			128			444			257
Add back: undistributed earnings allocated to participating securities	—			164			391			115
Income attributable to SLGOP common unitholders (numerator for diluted earnings per unit)	$	59,514		$	169,413		$	180,517		$	215,482



	Three Months Ended June 30,		Six Months Ended June 30,
Denominator	2020	2019	2020	2019
Basic units:
Weighted average common units outstanding	79,810	87,231	80,952	87,437
Effect of Dilutive Securities:
Stock-based compensation plans	409	167	440	169
Diluted weighted average common units outstanding	80,219	87,398	81,392	87,606

The Operating Partnership has excluded 2,192,240 and 1,643,616 common unit equivalents from the diluted units outstanding for the three and six months ended June 30, 2020, respectively, as they were anti-dilutive. The Operating Partnership has excluded 1,246,040 and 1,241,778 common unit equivalents from the diluted units outstanding for the three and six months ended June 30, 2019, respectively, as they were anti-dilutive.