EX-99.1 2 a08-26984_1ex99d1.htm EX-99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

CONTACT

Gregory F. Hughes

Chief Operating Officer and

Chief Financial Officer

-Or-

Heidi Gillette

Investor Relations

(212) 594-2700

 

SL GREEN REALTY CORP. REPORTS

THIRD QUARTER 2008 FFO OF $1.45 PER SHARE

 

Third Quarter Highlights

 

·                  Third quarter FFO totaled $1.45 per share (diluted) compared to $1.25 per share (diluted) during the third quarter of 2007, an increase of 16.0%.  FFO for the nine months ended September 30, 2008 increased 7.7% over the same period in the prior year to $4.89 per share (diluted).

 

·                  Net income available to common stockholders for the third quarter of 2008 totaled $0.58 per share (diluted) compared to $1.64 per share (diluted) in the same period in the prior year. Net income available to common stockholders for the nine months ended September 30, 2008 totaled $5.09 per share (diluted) compared to $8.62 per share (diluted) in the prior year.

 

·                  Signed 39 Manhattan office leases totaling 359,067 square feet with average starting rent of $66.78 during the third quarter.  Occupancy at quarter end for the Manhattan portfolio was 96.5%.

 

·                  Increased average Manhattan office starting rents by 55.0% on leases signed during the third quarter over previously fully escalated rents reflecting strong embedded growth in the Manhattan office portfolio.

 

·                  Recognized combined same-store GAAP NOI growth of 9.2% during the third quarter, including 10.7% from the consolidated same-store properties and 4.1% from the unconsolidated joint venture same-store properties.

 

·                  Closed on a five-year, $285.0 million financing at 717 Fifth Avenue, which carries an interest rate of 275 basis points over LIBOR.

 

·                  Closed on a five-year, $125.0 million financing at 28 West 44th Street which carries an interest rate of 201 basis points over LIBOR.

 

·                  Closed on the previously announced sale of 1372 Broadway in October for $274.0 million generating a gain of $238.9 million, a substantial portion of which had previously been deferred.

 

·                  Originated $98.1 million in new structured finance investments during the quarter which carry a weighted average yield of 13.5%.

 

1


 

Summary

 

New York, NY, October 27, 2008 - SL Green Realty Corp. (NYSE:  SLG) today reported funds from operations available to common stockholders, or FFO, of $88.0 million, or $1.45 per share (diluted), for the third quarter ended September 30, 2008, an increase of 16.0% compared to $1.25 per share (diluted) for the same quarter in 2007.  The Company also reported FFO of $4.89 per share (diluted) for the nine months ended September 30, 2008, a 7.7% increase over $4.54 per share (diluted) for the same period in 2007.

 

Net income available to common stockholders totaled $33.6 million, or $0.58 per share, (diluted) for the third quarter and $298.3 million, or $5.09 per share (diluted) for the nine months ended September 30, 2008, compared to $98.6 million and $511.9 million for the respective periods in 2007.  The results for the three and nine months ended September 30, 2008 include gains on sale of $0.16 per share (diluted) and $3.49 per share (diluted), respectively, compared to gains on sale of $1.34 per share (diluted) and $6.69 per share (diluted) for the same periods in 2007.

 

Operating and Leasing Activity

 

For the third quarter of 2008, the Company reported revenues and EBITDA of $268.7 million and $154.0 million, respectively, increases of $23.4 million, or 9.6%, and $14.1 million, or 10.1%, respectively, compared to the same period in 2007.  During the quarter, the Company had strong leasing activity at 100 Park Avenue, 461 Fifth Avenue, 711 Third Avenue, 420 Lexington Avenue, 750 Third Avenue and 750 Washington Boulevard.  Same-store GAAP NOI on a combined basis increased by 9.2% for the third quarter when compared to the same quarter in 2007, with the consolidated properties increasing 10.7% to $110.2 million and the unconsolidated joint venture properties increasing 4.1% to $28.7 million.

 

Average starting Manhattan office rents of $66.78 per rentable square foot for the third quarter represented a 55.0% increase over the previously fully escalated rents.

 

Occupancy for the Manhattan portfolio at June 30, 2008 was 96.7% compared to 96.5% at September 30, 2008.  During the quarter, the Company signed 52 leases in the Manhattan portfolio totaling 372,375 square feet, of which 39 leases and 359,067 square feet represented office leases.

 

Average starting Suburban office rents of $38.48 per rentable square foot for the third quarter represented a 22.58% increase over the previously fully escalated rents.

 

Occupancy for the Suburban portfolio increased modestly from 91.8% at June 30, 2008 to 91.9% at September 30, 2008.  During the quarter, the Company signed 20 leases in the Suburban portfolio totaling 77,039 square feet, of which 17 leases and 76,519 square feet represented office leases.

 

Significant leasing activities during the third quarter included:

 

·                  New lease with BDO Seidman, LLP for approximately 121,444 square feet at 100 Park Avenue.

·                  New lease with RBC Third Avenue NY LLC for approximately 52,418 square feet at 750 Third Avenue.

 

2


 

·                  Early renewal with Chicago Title Insurance Company for approximately 30,035 square feet at 711 Third Avenue.

·                  Early renewal with Oppenheimer & Co. Inc. for approximately 21,349 square feet at 750 Washington Boulevard, Stamford, CT.

 

Real Estate Investment Activity

 

In August 2008, the Company sold 80% of its interest in 1551/1555 Broadway to Jeff Sutton, its joint venture partner, for approximately $17.0 million and the right to future asset management, leasing and construction fees.  As a result of this transaction, the Company holds a 10% interest in this joint venture.  The Company recognized a gain of approximately $9.5 million on this transaction which resulted in a 21.7% IRR to the Company.  This return excludes certain future asset management, leasing and construction fees that may be earned by the Company.

 

In October 2008, the Company with its joint venture partner, closed on the sale of the 525,000 square foot office property at 1372 Broadway for $274.0 million.  The Company will recognize a gain of $238.9 million in the fourth quarter of 2008, a substantial portion of which had been deferred from the Company’s sale of 85% of the property in July 2007.

 

Financing and Capital Activity

 

The Company acquired $81.2 million of its common stock at an average share price of $67.63 since July 1, 2008 pursuant to its stock repurchase program.  The Company has now completed its purchases under the previously authorized $300.0 million stock buy-back program.

 

In September 2008, the Company closed on a five-year $125.0 million financing at 28 West 44th Street.  This interest-only loan carries an interest rate of 201 basis points over the 30-day LIBOR.

 

In September 2008, the joint venture that owns the retail condominium at 717 Fifth Avenue refinanced the property with a $285.0 million five-year financing.  This financing carries an interest rate of 275 basis points over the 30-day LIBOR.

 

Structured Finance Activity

 

The Company’s structured finance investments totaled $926.9 million on September 30, 2008, an increase of approximately $87.1 million from the balance at June 30, 2008. During the third quarter of 2008, the Company originated approximately $98.1 million of structured finance investments which carry a weighted average yield of approximately 13.5%.  During the third quarter of 2008, the Company recorded $9.1 million in reserves against its non-New York City structured finance investments.  The structured finance investments currently have a weighted average maturity of 5.1 years and a weighted average yield for the quarter ended September 30, 2008 of 10.43%.

 

Investment in Gramercy Capital Corp.

 

At September 30, 2008, the book value of the Company’s investment in Gramercy Capital Corp. totaled $141.5 million. Fees earned from various management arrangements between the Company and Gramercy totaled approximately $8.0 million for the quarter ended September 30, 2008 and $29.4 million for the nine months ended September 30,

 

3


 

2008.  During the quarter the Company waived its right to receive approximately $2.0 million of incentive fees and CDO collateral management fees.  The Company’s share of FFO generated from its investment in Gramercy has been estimated at approximately $4.9 million and $15.3 million for the three and nine months ended September 30, 2008, respectively, compared to $5.7 million and $16.3 million for the same periods in the prior year.

 

The Company’s marketing, general and administrative, or MG&A, expenses include the consolidation of the expenses of its subsidiary GKK Manager LLC, the entity which manages and advises Gramercy.  For the quarter ended September 30, 2008, the Company’s MG&A included approximately $5.7 million of costs associated with Gramercy compared to $3.7 million in the prior year.  This increase is primarily due to personnel hired in connection with the AFR acquisition.

 

Dividends

 

During the third quarter of 2008, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:

 

·                  $0.7875 per share of common stock. Dividends were paid on October 15, 2008 to stockholders of record on the close of business on September 30, 2008.

 

·                  $0.4766 and $0.4922 per share on the Company’s Series C and D Preferred Stock, respectively, for the period July 15, 2008 through and including October 14, 2008. Distributions were made on October 15, 2008 to stockholders of record on the close of business on September 30, 2008. Distributions reflect regular quarterly distributions, which are the equivalent of an annualized distribution of $1.90625 and $1.96875, respectively.

 

4


 

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 web cast on Tuesday, October 28, 2008 at 2:00 pm EST to discuss third quarter 2008 financial results. The Supplemental Package will be available prior to the quarterly conference call on the Company’s web site.

 

The live conference will be webcast in listen-only mode on the Company’s web site at www.slgreen.com and on Thomson’s StreetEvents Network. The conference may also be accessed by dialing 866.543.6407 Domestic or 617.213.8898 International, using passcode SL Green.

 

A replay of the call will be available through Tuesday, November 4, 2008 by dialing 888.286.8010 Domestic or 617.801.6888 International, using passcode 36570701.

 

Supplemental Information

 

The Supplemental Package outlining third quarter 2008 financial results will be available prior to the quarterly conference call on the Company’s website.

 

Company Profile

 

SL Green Realty Corp. is a self-administered and self-managed real estate investment trust, or REIT, that predominantly acquires, owns, repositions and manages Manhattan office properties. The Company is the only publicly held REIT that specializes in this niche.  As of September 30, 2008, the Company owned 30 New York City office properties totaling approximately 23,719,200 square feet, making it New York’s largest office landlord. In addition, at September 30, 2008, SL Green held investment interests in, among other things, eight retail properties encompassing approximately 400,212 square feet, two development properties encompassing approximately 363,000 square feet and two land interests, along with ownership interests in 36 suburban assets totaling 7,867,500 square feet in Brooklyn, Queens, 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 212-216-1601.

 

5


 

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 page 7 and 9 of this release and in the Company’s Supplemental Package.

 

Forward-looking Information

 

This press release contains forward-looking information based upon the Company’s current best judgment and expectations. Actual results could vary from those presented herein. The risks and uncertainties associated with forward-looking information in this release include the strength of the commercial office real estate markets in New York, reduced demand for office space, unanticipated increases in financing and other costs, competitive market conditions, unanticipated administrative costs, 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, which are beyond the Company’s control. We undertake no obligation to publicly update or revise any of the forward-looking information. For further information, please refer to the Company’s filings with the Securities and Exchange Commission.

 

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SL GREEN REALTY CORP.

STATEMENTS OF OPERATIONS-UNAUDITED

(Amounts in thousands, except per share data)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2008

 

2007

 

2008

 

2007

 

Revenue:

 

 

 

 

 

 

 

 

 

Rental revenue, net

 

$

199,437

 

$

179,248

 

$

589,508

 

$

487,820

 

Escalations & reimbursement revenues

 

32,311

 

29,365

 

92,277

 

83,774

 

Preferred equity and investment income

 

23,420

 

21,848

 

63,028

 

70,990

 

Other income

 

13,505

 

14,790

 

87,424

 

127,754

 

Total revenues

 

268,673

 

245,251

 

832,237

 

770,338

 

 

 

 

 

 

 

 

 

 

 

Equity in net income from unconsolidated joint ventures

 

12,292

 

11,302

 

49,540

 

32,715

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Operating expenses

 

61,134

 

55,428

 

169,553

 

151,842

 

Real estate taxes

 

31,546

 

30,395

 

96,830

 

91,415

 

Ground rent

 

7,709

 

8,674

 

23,784

 

23,705

 

Marketing, general and administrative

 

26,603

 

22,224

 

86,992

 

80,602

 

Total expenses

 

126,992

 

116,721

 

377,159

 

347,564

 

 

 

 

 

 

 

 

 

 

 

Earnings Before Interest, Depreciation and Amortization (EBITDA)

 

153,973

 

139,832

 

504,618

 

455,489

 

Interest expense

 

69,118

 

66,165

 

214,563

 

186,351

 

Amortization of deferred financing costs

 

1,604

 

1,652

 

4,780

 

14,195

 

Depreciation and amortization

 

54,554

 

47,246

 

164,137

 

124,983

 

Net income from Continuing Operations

 

28,697

 

24,769

 

121,138

 

129,960

 

Income (loss) from Discontinued Operations, net of minority interest

 

297

 

2,547

 

(1,418

)

15,525

 

Gain on sale of Discontinued Operations, net of minority interest

 

—

 

80,214

 

105,979

 

367,007

 

Equity in net gain on sale of interest in unconsolidated joint venture

 

9,533

 

—

 

103,014

 

31,509

 

Minority interests

 

14

 

(3,993

)

(15,473

)

(17,218

)

Preferred stock dividends

 

(4,969

)

(4,969

)

(14,906

)

(14,907

)

Net income available to common stockholders

 

$

33,572

 

$

98,568

 

$

298,334

 

$

511,876

 

 

 

 

 

 

 

 

 

 

 

Net income per share (Basic)

 

$

0.58

 

$

1.66

 

$

5.12

 

$

8.73

 

Net income per share (Diluted)

 

$

0.58

 

$

1.64

 

$

5.09

 

$

8.62

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

 

 

 

 

 

 

 

 

FFO per share (Basic)

 

$

1.46

 

$

1.26

 

$

4.91

 

$

4.60

 

FFO per share (Diluted)

 

$

1.45

 

$

1.25

 

$

4.89

 

$

4.54

 

 

 

 

 

 

 

 

 

 

 

FFO Calculation:

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

28,697

 

$

24,769

 

$

121,138

 

$

129,960

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

54,554

 

47,246

 

164,137

 

124,983

 

FFO from Discontinued Operations

 

720

 

5,242

 

1,690

 

24,271

 

FFO adjustment for Joint Ventures

 

9,258

 

5,747

 

26,564

 

17,434

 

Less:

 

 

 

 

 

 

 

 

 

Dividend on perpetual preferred stock

 

(4,969

)

(4,969

)

(14,906

)

(14,907

)

Depreciation of non-real estate assets

 

(237

)

(215

)

(693

)

(692

)

FFO before minority interests – BASIC and DILUTED

 

$

88,023

 

$

77,820

 

$

297,930

 

$

281,049

 

 

 

 

 

 

 

 

 

 

 

Basic ownership interest

 

 

 

 

 

 

 

 

 

Weighted average REIT common shares for net income per share

 

58,113

 

59,432

 

58,307

 

58,649

 

Weighted average partnership units held by minority interests

 

2,340

 

2,352

 

2,340

 

2,487

 

Basic weighted average shares and units outstanding for FFO per share

 

60,453

 

61,784

 

60,647

 

61,136

 

Diluted ownership interest

 

 

 

 

 

 

 

 

 

Weighted average REIT common share and common share equivalents

 

58,376

 

60,059

 

58,645

 

59,428

 

Weighted average partnership units held by minority interests

 

2,340

 

2,352

 

2,340

 

2,487

 

Diluted weighted average shares and units outstanding

 

60,716

 

62,411

 

60,985

 

61,915

 

 

7


 

SL GREEN REALTY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

 

 

 

September 30,
2008

 

December 31,
2007

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Commercial real estate properties, at cost:

 

 

 

 

 

Land and land interests

 

$

1,400,042

 

$

1,436,569

 

Buildings and improvements

 

5,590,822

 

5,924,626

 

Building leasehold and improvements

 

1,251,626

 

1,249,093

 

Property under capital lease

 

12,208

 

12,208

 

 

 

8,254,698

 

8,622,496

 

Less accumulated depreciation

 

(498,885

)

(381,510

)

 

 

7,755,813

 

8,240,986

 

Assets held for sale

 

120,120

 

41,568

 

Cash and cash equivalents

 

711,147

 

45,964

 

Restricted cash

 

105,834

 

105,475

 

Tenant and other receivables, net of allowance of $15,282 and $13,932 in 2008 and 2007, respectively

 

39,054

 

49,015

 

Related party receivables

 

10,556

 

13,082

 

Deferred rents receivable, net of allowance of $13,533 and $13,400 in 2008 and 2007, respectively

 

152,718

 

136,595

 

Structured finance investments, net of discount of $24,335 and $30,783 in 2008 and 2007, respectively

 

926,931

 

805,215

 

Investments in unconsolidated joint ventures

 

1,139,918

 

1,438,123

 

Deferred costs, net

 

135,949

 

134,354

 

Other assets

 

393,189

 

419,701

 

Total assets

 

$

11,491,229

 

$

11,430,078

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Mortgage notes payable

 

$

2,693,275

 

$

2,844,644

 

Revolving credit facility

 

1,288,833

 

708,500

 

Term loans and unsecured notes

 

1,793,860

 

2,069,938

 

Accrued interest and other liabilities

 

33,367

 

45,194

 

Accounts payable and accrued expenses

 

154,158

 

180,898

 

Deferred revenue/gain

 

462,734

 

819,022

 

Capitalized lease obligation

 

16,662

 

16,542

 

Deferred land lease payable

 

17,559

 

16,960

 

Dividend and distributions payable

 

51,268

 

52,077

 

Security deposits

 

34,105

 

35,021

 

Liabilities related to assets held for sale

 

309,166

 

—

 

Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities

 

100,000

 

100,000

 

Total liabilities

 

6,954,987

 

6,888,796

 

Commitments and contingencies

 

—

 

—

 

Minority interest in other partnerships

 

556,262

 

632,400

 

Minority interest in operating partnership

 

88,460

 

82,007

 

Stockholders’ Equity

 

 

 

 

 

7.625% Series C perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 6,300 issued and outstanding at September 30, 2008 and December 31, 2007, respectively

 

151,981

 

151,981

 

7.875% Series D perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 4,000 issued and outstanding at September 30, 2008 and December 31, 2007, respectively

 

96,321

 

96,321

 

Common stock, $0.01 par value 160,000 shares authorized, 60,400 and 60,071 issued and outstanding at September 30, 2008 and December 31, 2007, respectively (inclusive of 2,794 and 1,312 shares held in Treasury at September 30, 2008 and December 31, 2007, respectively)

 

604

 

601

 

Additional paid - in capital

 

2,970,757

 

2,931,887

 

Treasury stock-at cost

 

(267,327

)

(150,719

)

Accumulated other comprehensive income

 

(13,728

)

4,943

 

Retained earnings

 

952,912

 

791,861

 

Total stockholders’ equity

 

3,891,520

 

3,826,875

 

Total liabilities and stockholders’ equity

 

$

11,491,229

 

$

11,430,078

 

 

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SL GREEN REALTY CORP.

SELECTED OPERATING DATA-UNAUDITED

 

 

 

September 30,

 

 

 

2008

 

2007

 

Manhattan Operating Data: (1)

 

 

 

 

 

Net rentable area at end of period (in 000’s)

 

23,719

 

22,353

 

Portfolio percentage leased at end of period

 

96.5

%

97.0

%

Same-Store percentage leased at end of period

 

95.6

%

96.5

%

Number of properties in operation

 

30

 

31

 

 

 

 

 

 

 

Office square feet leased during quarter (rentable)

 

359,067

 

340,246

 

Average mark-to-market percentage-office

 

55.0

%

59.5

%

Average starting cash rent per rentable square foot-office

 

$

66.78

 

$

61.63

 

 

(1)  Includes wholly owned and joint venture properties.

 

 

SL GREEN REALTY CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES*

(Amounts in thousands, except per share data)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2008

 

2007

 

2008

 

2007

 

Earnings before interest, depreciation and amortization (EBITDA):

 

$

153,973

 

$

139,832

 

$

504,618

 

$

455,489

 

Add:

 

 

 

 

 

 

 

 

 

Marketing, general & administrative expense

 

26,603

 

22,224

 

86,992

 

80,602

 

Operating income from discontinued operations

 

1,059

 

5,772

 

3,144

 

27,338

 

Less:

 

 

 

 

 

 

 

 

 

Non-building revenue

 

(32,990

)

(31,401

)

(131,544

)

(183,814

)

Equity in net income from joint ventures

 

(12,292

)

(11,302

)

(49,540

)

(32,715

)

GAAP net operating income (GAAP NOI)

 

136,353

 

125,125

 

413,670

 

346,900

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

Operating income from discontinued operations

 

(1,059

)

(5,772

)

(3,144

)

(27,338

)

GAAP NOI from other properties/affiliates

 

(81,083

)

(71,792

)

(250,950

)

(164,681

)

Same-Store GAAP NOI

 

$

54,211

 

$

47,561

 

$

159,576

 

$

154,881

 

 

* See page 7 for a reconciliation of FFO and EBITDA to net income.

 

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