SL Green Realty Corp. Logo

Print Print page | Email Email page | PDF Download PDF
« Previous Release | Next Release »



SL Green Realty Corp. Reports 21% Gain in Third Quarter FFO

Third Quarter Highlights

-- 21% FFO increase, $0.70 per share (diluted) versus $0.58 prior

year

-- 14% same store portfolio cash NOI growth

-- Announced sales of 17 Battery South and 90 Broad Street

-- Announced the purchases of One Park Avenue, 1370 Broadway, and 180

Madison Avenue

-- Refinanced 420 Lexington Avenue; generating $70 million in net

liquidity

Financial Results

NEW YORK--(BUSINESS WIRE)--October 25, 2000--SL Green Realty Corp. (NYSE:SLG - news) reported a 21% increase in operating results for the three months ended September 30, 2000.

During this period funds from operations (FFO) before minority interest totaled $20.1 million, or $0.70 per share (diluted), compared to $15.9 million, or $0.58 per share for the same quarter in 1999.

Total revenues increased 11% in the third quarter to $60.9 million compared to $54.7 million last year. The $6.2 million growth in revenue resulted from:

-- 2000 same store portfolio ($5.5 million)

-- Investment income ($3.4 million)

-- 1999 acquisitions ($1.0 million)

These revenue increases were partially offset by reduced revenues of properties sold ($1.8 million) or contributed to unconsolidated joint ventures ($1.9 million).

During the quarter, the Company received $8.7 million and, after transaction costs and deferred compensation awards, recorded a gain of $5.6 million, resulting from the early redemption of a preferred equity investment in 1370 Avenue of Americas and sale of the property. The gain on the redemption is not reflected in the Company's FFO results, as it is excluded from the definition of FFO. In connection with this transaction, the Company received $0.7 million in accelerated investment income that is included in the Company's FFO results.

Same store cash NOI increased $2.9 million, or 14%, to $23.5 million over the same period in the prior year. Cash NOI margins before ground rent improved year over year from 54.9% to 55.6%. The improvement in cash NOI was driven primarily by a $4.8 million increase in cash revenue due to:

-- A 30% increase in replacement rents over previously

fully-escalated rents ($1.7 million)

-- Reduced free rent as many properties reached stabilization ($0.3

million)

-- Increased occupancy from 95% to 98% ($1.0 million)

-- Rent steps from current in-place tenants ($0.5 million)

-- $1.5 million increase in escalation and reimbursement income

primarily from increased electric recoveries ($1.1 million)

The increase in revenue was partially offset by a $2.0 million or 20% increase in operating costs, over half of which was related to higher utility costs ($1.2 million) and the remainder from increased payroll and cleaning costs ($0.6 million). The increased payroll and cleaning costs relate to increased overtime payroll ($0.2 million) charged back to tenants, lower prior year costs related to benefit refunds ($0.2 million), and 5% higher labor costs ($0.2 million). Approximately 75% of the electric increase was recovered from tenants under the utility clause of their lease. In addition, real estate taxes increased due to higher assessed values at several properties ($0.2 million).

The Company's EBITDA increased $6.2 million, resulting in increased margins before ground rent of 65.4% compared to 57.7% for the same period last year and after ground rent margin improvement of 59.7% from 51.6% in the corresponding period. Margin improvement was driven by each of the Company's real estate investment themes:

-- GAAP NOI of $2.9 million;

-- Income from structured finance, $3.5 million, and other $0.1

million

-- Reduced MG&A, $0.4 million primarily due to increased allocation

of costs to the service corporation and joint ventures

These increases in EBITDA were offset by ($0.7 million) from minority interest in joint ventures.

FFO improved $4.2 million as a result of:

-- $6.2 million increase in EBITDA

-- $0.7 million increase in income from unconsolidated joint

ventures, and

-- $0.4 million from the acquisition of the minority interest in the

BMW building.

These improvements were offset in part by higher interest costs ($2.9 million) associated with: higher average debt levels due to acquisition and new investment debt ($1.6 million), the higher average debt levels due to the funding of ongoing capital projects and working capital requirements ($0.5 million), and higher interest rates from floating rate debt ($0.8 million).

At the end of the quarter, consolidated debt totaled $472.1 million, reflecting a debt to market capitalization ratio of 35.2%.

New Investments to Date

On September 21, 2000, the Company entered into an agreement to purchase 1370 Broadway for $50.4 million. This 16-story, 255,000 square foot office building is located in the heart of Times Square, directly across the street from 1372 Broadway, another SL Green building. In-place rents are approximately $27.72, approximately 38% below current market levels. The acquisition will be funded through the Company's unsecured line of credit. This transaction is scheduled to close January 2001.

On September 22, 2000, the Company, via a joint venture with Morgan Stanley Real Estate Fund III ("MSREF"), entered into an agreement to purchase 180 Madison Avenue for $41.25 million. The property consists of 265,000 square feet over 23 floors. It is located at the corner of 34th Street and Madison Avenue. SL Green will purchase a 49.9% interest in the property. The Company intends to use the acquisition to effect a Section 1031 tax-free exchange in order to partially defer the capital gain resulting from the sale of 90 Broad Street. SL Green will assume managing and leasing responsibilities for the property. This transaction is scheduled to close December 2000.

On September 28, 2000, the Company entered into an agreement to purchase various ownership and mortgage interests in One Park Avenue for $233.9 million. This 913,000 square foot, 20-story office building is located between 32nd and 33rd Streets with full block prominence on Park Avenue. The Company also acquired an option to purchase the ground lease position. The acquisition will be financed with a mortgage loan from Lehman Brothers Holdings, Inc. and the Company's unsecured line of credit. This transaction is scheduled to close in January 2001.

The Company announced that it has entered into contracts for the sale of two downtown properties:

The first is located at 90 Broad Street. This property is owned through a joint venture partnership with MSREF, and the Company owns a 35% interest in this partnership. The property is approximately 339,000 square feet with a contracted sales price of $60 million, or $177 per square foot. The sale is scheduled to close in November 2000.

The second is a wholly-owned property located at 17 Battery Place South. This property is approximately 400,000 square feet with a contracted sales price of $53 million or $132 per square foot. The sale is expected to occur in December 2000.

At September 30, 2000, SL Green's portfolio consisted of interests in 23 properties, aggregating 9.1 million square feet. Since September 30, 1999, the portfolio has grown by a net 0.6 million square feet, or 7%.

SL Green Realty is a self-administered and self-managed real estate investment trust ("REIT") that acquires, owns and manages a Class B Manhattan office portfolio. The Company is the only publicly held REIT which exclusively specializes in this niche.

Financial Tables attached

To receive SL Green's latest news release and other corporate
documents, including the Third Quarter Supplemental Data, via FAX at

no cost, please contact the Investor Relations office at 212-216-1601.
All releases and supplemental data can also be downloaded directly

from the SL Green website at:

www.slgreen.com.

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 and industrial real estate markets in New York, competitive market conditions, unanticipated administrative costs, timing of leasing income, general and local economic growth, interest rates and capital market conditions. For further information, please refer to the Company's filings with the Securities and Exchange Commission.

                         SL GREEN REALTY CORP.
                       STATEMENTS OF OPERATIONS
             (Amounts in thousands, except per share data)

Three Months Ended Nine Months Ended Sept 30 Sept 30 2000 1999 2000 1999 ------------------ ----------------- (unaudited) (unaudited) Revenue: Rental revenue, net $47,647 $45,080 $140,998 $129,267 Escalations & reimbursement revenues 7,593 6,856 18,941 16,473 Signage Rent 496 559 1,593 1,112 Investment income 4,968 1,469 9,903 3,731 Other income 170 688 693 1,545 ------ ------- ------ ------

Total revenues 60,874 54,652 172,128 152,128 ------ ------- ------- ------- Expenses: Operating expenses 15,260 14,293 41,893 36,778 Ground rent 3,164 3,183 9,505 9,572 Interest 10,698 7,772 30,243 19,722 Depreciation and amortization 8,300 7,677 24,519 19,705 Real estate taxes 7,299 7,481 21,688 21,904 Marketing, general and administrative 2,540 2,979 8,517 8,387 ----- ------ ------ ------

Total expenses 47,261 43,385 136,365 116,068 ------ ------ ------- -------

Income before minority interests, preferred stock dividends, gain on sales, extraordinary item, service corporation and joint venture income 13,613 11,267 35,763 36,060

Equity in net income from affiliates 71 223 609 551 Equity in net income from unconsolidated joint ventures 586 151 2,209 151 Minority interests (1,496) (1,169) (4,964) (4,262)

Extraordinary losses -- -- (430) (628)

Gain on sale of rental properties/investments 5,624 -- 24,646 -- Preferred stock dividends and accretion (2,407) (2,399) (7,220) (7,198) --------- ---------- -------- --------

Net income available to common shareholders $15,991 $8,073 $50,613 $24,674 ========= ========== ======== ========

Basic earnings per share $0.65 $0.33 $2.08 $1.02 Diluted earnings per share $0.64 $0.33 $2.05 $1.02

Funds From Operations (FFO) FFO per share (Basic) $0.74 $0.60 $2.05 $1.72 FFO per share (Diluted) $0.70 $0.58 $1.97 $1.68 FFO Calculation: Income before minority interests, extraordinary items, preferred stock dividends and gains on sales $14,270 $11,641 $38,581 $36,762 Less: Preferred stock dividend (2,300) (2,300) (6,900) (6,900) Minority interest in commercial property -- (354) -- (1,765) Add: Joint venture FFO adjustment 842 120 2,468 120 Depreciation and amortization 8,300 7,677 24,519 19,705 Amortization of deferred financing costs and depreciation of non-real estate assets (1,042) (878) (3,105) (2,140) ---------- --------- ------- --------

FFO - BASIC 20,070 15,906 55,563 45,782 Add: Preferred stock dividends 2,300 2,300 6,900 6,900 ---------- --------- -------- --------

FFO - DILUTED $22,370 $18,206 $62,463 $52,682 ========== ========= ======== ========

Basic ownership interests Weighted average REIT common shares 24,458 24,200 24,329 24,195 Weighted average partnership units held by minority interest 2,346 2,428 2,385 2,428 --------- ---------- ------- -------

Basic weighted average shares and units outstanding 26,804 26,628 26,714 26,623 =========== =========== ======= =======

Diluted ownership interest Weighted average REIT common and common share equivalent share 24,954 24,278 24,678 24,258 Weighted average partnership units held by minority interests 2,346 2,428 2,385 2,428 Common share equivalents for preferred stock 4,699 4,699 4,699 4,699 ---------- ---------- -------- --------

Diluted weighted average equivalent shares and units outstanding 31,999 31,405 31,762 31,385 ========== ========== ======== ========

SL Green Realty Corp. Condensed Consolidated Balance Sheets (Dollars in Thousands)

Sept 30, December 31, 2000 1999 ------- ------------ (unaudited) Assets Commercial real estate properties, at cost: Land and land interests.......................$125,572 $132,081 Buildings and improvements.................... 609,089 632,004 Building leasehold............................ 137,441 132,573 Property under capital 12,208 12,208 lease......................................... 884,310 908,866 Less accumulated (72,179) (56,983) depreciation................................. 812,131 851,883

Properties held for sale...................... 49,890 25,835 Cash and cash equivalents................................... 14,064 21,561 Restricted cash.......................................... 34,583 34,168 Tenant and other receivables, net $1,930 and $938 reserve in 2000 and 1999, respectively............................ 9,132 5,747 Related party receivables................................... 964 463 Deferred rents receivable net of provision for doubtful accounts of $5,002 and $5,337 in 2000 and 1999, respectively...... 43,452 37,015 Investment in and advances to affiliates..... 7,943 4,978 Investment in unconsolidated joint ventures... 59,632 23,441 Mortgage loans and preferred investments...... 49,903 20,000 Deferred costs, net........................... 37,924 30,540 Other assets.................................. 34,100 15,611 ---------------- -------------

Total assets............................... $1,153,718 $1,071,242 ================ =============

Liabilities and Stockholders' Equity Mortgage notes payable....................... $345,351 $352,693 Revolving credit facility.................... 126,752 83,000 Accrued interest payable..................... 3,069 2,650 Accounts payable and accrued expenses........ 28,045 17,167 Deferred revenue............................. 1,444 306 Capitalized lease obligations................ 15,242 15,017 Deferred land lease payable.................. 12,805 11,611 Dividend and distributions payable........... 12,065 11,947 Security deposits............................ 18,951 18,905 Total liabilities............................ 563,724 513,296 ------------------- -------------- Minority interests........................... 41,753 41,494

8%Preferred Income Equity Redeemable Stock $0.01 par value, $25.00 mandatory liquidation preference 25 million shares authorized, 4.6 million outstanding in 2000 and 1999.............................. 110,667 110,348

Stockholders' Equity Common stock, $.01 par value 100,000 shares authorized, 24,516 and 24,184 issued and outstanding in 2000 and 1999, respectively.... 245 242

Additional paid - in capital................................... 428,635 421,958

Deferred compensation plan........... (5,939) (6,674) Distributions in excess of earnings.. 14,633 (9,422) --------- ----------

Total stockholders' equity........................................ 437,574 406,104 --------- ---------

Total liabilities and stockholders' equity................................... $1,153,718 $1,071,242 ========== ==========

SL GREEN REALTY CORP. SELECTED OPERATING DATA-UNAUDITED

September 30, 2000 December 31, 1999

Operating Data:

Net rentable area at end of period (in 000's)(1) 9,130 8,540 Portfolio occupancy percentage at end of period 98% 97% Same Store occupancy percentage at end of period 98% 97% Number of properties in operation 23 24

(1) Includes wholly-owned and minority owned properties.

Close window | Back to top