New York, NY, April 26, 2010 - SL Green Realty Corp. (NYSE: SLG) today reported funds from operations, or FFO, of $85.0 million, or $1.07 per share (diluted), for the quarter ended March 31, 2010, compared to $88.1 million, or $1.48 per share (diluted), for the same quarter in 2009.
Net income attributable to common stockholders totaled $15.1 million, or $0.19 per share (diluted), for the quarter ended March 31, 2010, compared to net income of $32.8 million, or $0.57 per share (diluted), for the same quarter in 2009. The first quarter of 2009 included $0.27 per share (diluted) relating to gains on sale.
Operating and Leasing Activity
For the first quarter of 2010, the Company reported revenues and EBITDA of $258.6 million and $143.5 million, respectively, compared to $262.4 million and $143.4 million in the same period in 2009.
Same-store GAAP NOI on a combined basis increased by 2.4% for the first quarter when compared to the same quarter in 2009, with the consolidated properties increasing 2.5% to $130.6 million and the unconsolidated joint venture properties increasing 2.2% to $54.2 million.
Occupancy for the Manhattan portfolio at March 31, 2010 was 94.0% when excluding 100 Church Street, which the Company foreclosed on in January 2010. Including 100 Church Street, occupancy for the Manhattan portfolio was 91.9% at March 31, 2010. During the quarter, the Company signed or commenced 58 leases in the Manhattan portfolio totaling 536,221 square feet, of which 47 leases and 501,321 square feet represented office leases. Average starting Manhattan office rents of $45.00 per rentable square foot on the 501,321 square feet of office leases signed or commenced during the first quarter represented a 5.1% decrease over the previously fully escalated rents. The average lease term was 9.1 years and average tenant concessions were 5.5 months of free rent with a tenant improvement allowance of $28.31 per rentable square foot.
Occupancy for the Suburban portfolio was 88.1% at March 31, 2010. During the quarter, the Company signed 37 leases in the Suburban portfolio totaling 240,172 square feet, of which 31 leases and 214,931 square feet represented office leases. Average starting Suburban office rents of $28.57 per rentable square foot for the first quarter represented a 10.9% decrease over the previously fully escalated rents.
Significant leases that were signed or commenced during the first quarter included:
Marketing, general and administrative, or MG&A, expenses for the quarter ended March 31, 2010 were approximately $19.4 million, compared to approximately $17.9 million for the same quarter ended March 31, 2009. MG&A for the quarter included a non-recurring expense of approximately $1.1 million for non-recoverable costs incurred in connection with the pursuit of a redevelopment project.
Real Estate Investment Activity
The Company became the sole owner of 100 Church Street, a 1.05 million-square-foot office tower located in downtown Manhattan, following the successful foreclosure of the senior mezzanine loan at the property in January 2010. The Company's initial investment totaled $40.9 million which was comprised of a 50% interest in the senior mezzanine loan and two other mezzanine loans at 100 Church Street, which it acquired from Gramercy Capital Corp. (NYSE: GKK), or Gramercy, in the summer of 2007. As part of a consensual arrangement reached with the then-current owners in August 2009, SL Green, on behalf of the mezzanine lender, obtained management and leasing control of the property. At completion of the foreclosure, the Company funded an additional $15.0 million of capital into the project as part of its agreement with Wachovia Bank, N.A. to extend and restructure the existing financing. The restructured $139.7 million mortgage carries an interest rate of 250 basis points over the 30-day LIBOR. The mortgage matures in January 2013 and has a one-year extension option. Gramercy declined to fund its share of this capital and instead entered into a transaction whereby it transferred its interests in the investment to SL Green at closing, subject to certain future contingent payments.
In April 2010, the Company entered into an agreement to acquire the 303,515 square foot property located at 600 Lexington Avenue in Manhattan for $193.0 million. This transaction, which is subject to customary closing conditions, is expected to close during the second quarter of 2010. In connection with the acquisition, SL Green will assume $49.85 million of in-place financing. The 5.74% interest-only loan matures in March 2014.
Financing and Capital Activity
In March 2010, Reckson, the Company and SL Green OP, as co-obligors, completed an offering (the "Offering") of $250.0 million aggregate principal amount of 7.75% senior unsecured notes due March 15, 2020. The Company used the net proceeds from the Offering to fund the tender offer described below, which it announced simultaneously, for certain outstanding notes of Reckson and SL Green OP, with the remaining proceeds being used for general corporate purposes and/or working capital purposes.
Simultaneous with the Offering, the Company commenced a cash tender offer (the "Tender Offer") to purchase up to $250.0 million aggregate principal amount of the outstanding 3.000% Exchangeable Senior Notes due 2027, 4.000% Exchangeable Senior Debentures due 2025, 5.150% Senior Unsecured Notes due 2011 and 5.875% Senior Unsecured Notes due 2014.
In April 2010, the Company completed the Tender Offer and purchased $13.0 million of the 3.000% Exchangeable Senior Notes due 2027, $13.2 million of the 4.000% Exchangeable Senior Debentures due 2025, $38.8 million of the 5.150% Senior Unsecured Notes due 2011 and $50.0 million of the 5.875% Senior Unsecured Notes due 2014.
The Company repurchased approximately $21.4 million of its 4.000% Exchangeable Senior Debentures since January 1, 2010, exclusive of the notes repurchased as part of the tender offer.
In February 2010, the Company, along with the City Investment Fund, its joint venture partner, extended the maturity date of the 16 Court Street mortgage and construction loans to October 2013. The loans have a one-year extension option. The floating rate loans will carry an interest rate of 250 basis points over the 30-day LIBOR.
In January 2010, the Company completed an underwritten public offering of 5,400,000 shares of its 7.625% Series C Cumulative Redeemable Preferred Stock. With the completion of this offering, the Company has 11,700,000 shares of 7.625% Series C Cumulative Redeemable Preferred Stock outstanding. The shares of Series C preferred stock have a liquidation preference of $25.00 per share and are redeemable at par, plus accrued and unpaid dividends, at any time at the option of the Company. The shares were priced at $23.53 per share including accrued dividends equating to a yield of 8.101%. The Company used the estimated net offering proceeds of $122.2 million for general corporate and/or working capital purposes, which may include investment opportunities, purchases of the indebtedness of its subsidiaries in the open market from time to time and the repayment of indebtedness at the applicable maturity or put date.
Structured Finance Activity
The Company's structured finance investments totaled approximately $786.1 million at March 31, 2010 (excluding approximately $1.0 million of structured finance investments which were classified as held for sale at March 31, 2010), an increase of approximately $1.5 million from the balance at December 31, 2009. The increase resulted from new investments exceeding positions sold, reserved or foreclosed. This included the Company obtaining a senior position in an existing structured finance investment in exchange for a mezzanine loan on which the Company had previously taken a loan loss reserve. The Company recognized a gain of approximately $2.5 million on the exchange. During the first quarter, the Company also recorded approximately $6.0 million in additional reserves against its structured finance investments. The structured finance investments currently have a weighted average maturity of 2.7 years and had a weighted average yield for the quarter ended March 31, 2010 of 8.5%, exclusive of loans totaling $88.4 million which are on non-accrual status.
During the first quarter of 2010, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:
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 Tuesday, April 27, 2010 at 2:00 pm ET to discuss the financial results. 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 website under "event calendar & webcasts" in the investors section and on Thomson's StreetEvents Network. The conference may also be accessed by dialing 866.783.2139 Domestic or 857.350.1598 International, using pass-code "SL Green."
A replay of the call will be available through May 4, 2010 by dialing 888.286.8010 Domestic or 617.801.6888 International, using pass-code 55783658.
The Supplemental Package outlining the Company's first quarter 2010 financial results will be available prior to the quarterly conference call on the Company's website.
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 March 31, 2010, the Company owned interests in 30 New York City office properties totaling approximately 24,258,700 square feet, making it New York's largest office landlord. In addition, at March 31, 2010, SL Green held investment interests in, among other things, eight retail properties encompassing approximately 374,812 square feet, three development properties encompassing approximately 399,800 square feet and two land interests, along with ownership interests in 31 suburban assets totaling 6,804,700 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.
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 10 of this release and in the Company's Supplemental Package.
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, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), development trends of the real estate industry and the Manhattan, Brooklyn, Queens, Westchester County, Connecticut, Long Island and New Jersey office markets, business strategies, expansion and growth of our operations and other similar matters, are forward-looking statements. 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 materially differ, 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 which 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. These risks and uncertainties include the effect of the credit crisis on general economic, business and financial conditions, and on the New York Metro real estate market in particular; dependence upon certain geographic markets; risks of real estate acquisitions, dispositions and developments, including the cost of construction delays and cost overruns; risks relating to structured finance investments; availability and creditworthiness of prospective tenants and borrowers; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants; adverse changes in the real estate markets, including reduced demand for office space, increasing vacancy, and increasing availability of sublease space; availability of capital (debt and equity); unanticipated increases in financing and other costs, including a rise in interest rates; our ability to comply with financial covenants in our debt instruments; our ability to maintain our status as a REIT; risks of investing through joint venture structures, including the fulfillment by our partners of their financial obligations; the continuing threat of terrorist attacks, in particular in the New York Metro area and on our tenants; our ability to obtain adequate insurance coverage at a reasonable cost and the potential for losses in excess of our insurance coverage, including as a result of environmental contamination; and legislative, regulatory and/or safety requirements adversely affecting REITs and the real estate business, including costs of compliance with the Americans with Disabilities Act, the Fair Housing Act and other similar laws and regulations.
Other factors and risks to our business, many of which are beyond our control, 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.
Gregory F. Hughes
Chief Operating Officer and
Chief Financial Officer