420 Lexington Avenue New York City, NY 10170
Exhibit 99.1
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420 Lexington Avenue New York City, NY 10170 |
CONTACT
Michael W. Reid
Chief Operating Officer
-or-
Thomas E. Wirth
Chief Financial Officer
(212) 594-2700
FOR IMMEDIATE RELEASE
SL GREEN REALTY CORP. REPORTS
SECOND QUARTER FFO OF $0.81 PER SHARE
Second Quarter Highlights
Financial Results
New York, NY, July 23, 2002—SL Green Realty Corp. (NYSE:SLG) reported a 1.3% improvement in operating results for the three months ended June 30, 2002 as funds from operations (FFO) before minority interest totaled $28.4 million, or $0.81 per share diluted, compared to $23.4 million, or $0.80 per share diluted for the same quarter in 2001. The prior year included income related to an early redemption of a structured finance investment totaling $1.0 million, or $0.03 per share.
For the six months ended June 30, 2002, operating results improved 3.9% as FFO before minority interest totaled $55.3 million, or $1.59 per share diluted, compared to $44.6 million, or $1.53 per share diluted for the same period in 2001.
The Company's weighted average diluted shares outstanding increased 5.7 million, or 17.7%, to 37.9 million in 2002 from 32.2 million in 2001. The increase is primarily attributable to the Company's July 2001 offering of 5.0 million common shares.
As a result of property dispositions and the contribution of One Park Avenue to a joint venture in the second quarter of 2001, second quarter 2002 revenues decreased 6.3% to $62.3 million compared to $66.5 million last year. The $4.2 million net decrease in revenue resulted from:
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Same store cash NOI increased $0.3 million, or 1.2%, to $25.7 million over the same quarter in the prior year. Cash NOI margins before ground rent decreased year over year from 59.4% to 59.3%. The improvement in cash NOI was driven primarily by a $1.0 million increase in cash revenue offsetting a $0.7 million increase in total expenses. The net increase in cash revenue is due to:
The $0.7 million increase in same store expenses was primarily due to:
The 2002 same-store second quarter electric recovery was 82% which is consistent with the prior year.
During the quarter, the Company signed 61 leases totaling approximately 184,000 rentable square feet with starting office cash rents averaging $37.38 per square foot, a 46.8% increase over previously escalated cash rents averaging $25.47 per square foot. Tenant concessions averaged one month of free rent and an allowance for tenant improvements of $11.24 per square foot.
The Company's EBITDA decreased $0.2 million to $38.5 million in 2002 compared to $38.7 million in the prior year. However, margins before ground rent increased to 75.8% compared to 68.8% for the same period last year and after ground rent margins improved to 70.1% from 63.6% in the corresponding period. This improvement in margins was primarily due to the increased net income from joint ventures and the increase in structured finance income. The components of EBITDA changed as follows:
Improvements:
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The improvements were offset by a $2.8 million decrease in GAAP NOI primarily due to a $6.8 million decrease from properties sold or contributed to joint venture. This decrease was partially offset by the following GAAP NOI improvements:
Despite the reduction in GAAP NOI and EBITDA from property sales, FFO improvement of $4.9 million resulted from the increased contribution from unconsolidated joint ventures ($3.6 million), structured finance investments ($0.7 million) and a decrease in interest expense ($3.7 million).
The lower interest costs were associated with: lower average debt levels due to dispositions ($3.4 million) and lower interest rates ($1.4 million), partially offset by acquisition and structured finance debt ($0.9 million), the costs associated with the early repayment of the 470 Park Avenue South mortgage ($0.2 million), the funding of ongoing capital projects and working capital requirements ($0.1 million).
At the end of the quarter, consolidated debt totaled $595.3 million, reflecting a debt to market capitalization ratio of 32.0%.
The Company recorded a $3.0 million gain on the sale of property that was excluded from the Company's 2001 second quarter results. The following recorded transactions were excluded from the Company's 2001 six month results: (i) an extraordinary loss of $0.1 million from the early extinguishment of debt, (ii) a $4.5 million gain on sale of properties and (iii) a $0.5 million charge for a cumulative effect of change in accounting principle.
New Property Activity
On May 15, 2002, SL Green acquired 1515 Broadway, New York, New York in a transaction valued at approximately $480.0 million, or $274 per square foot. The property was acquired in a joint venture with SITQ Immobilier, with SL Green retaining an approximate 55% interest in the asset. The property was 98.2% occupied, with current market rents for office space at a 34% premium to fully escalated in-place rents. The initial cash NOI yield of the transaction is approximately 8.2%. SL Green will perform all management and leasing services for the property.
On June 24, 2002, the joint venture comprised of SL Green and Morgan Stanley Real Estate Fund III, L.P. sold 469 Seventh Avenue for $53.1 million, or $222 per square foot. The joint venture purchased the asset in January 2001 for $45.7 million. This sale resulted in the joint venture recognizing a gain totaling $4.8 million. As part of the transaction, SL Green made a preferred equity investment of $6.0 million in the entity acquiring the asset. As a result of the continuing $6.0 million preferred investment, the Company will defer recognition of its share ($1.7 million) of the joint venture gain.
New Structured Finance Activity
During the second quarter of 2002, the Company completed the following transactions:
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After this activity, the structured finance portfolio, including preferred equity interests, totaled $195.2 million with a current yield of 12.67%, after seller financing.
Other
Today, SL Green's portfolio consists of interests in 25 properties, aggregating 11.5 million square feet.
SL Green Realty Corp. is a self-administered and self-managed real estate investment trust ("REIT") that acquires, owns and manages commercial office properties in Manhattan. 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 First 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 certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward looking statements are based on reasonable assumptions, actual results could vary from those presented herein. The risks and uncertainties associated with forward-looking statements in this release include general economic and business (particularly real estate) conditions, the business opportunities that may be presented to and pursued by the Company, changes in laws or regulations (including changes to laws governing the taxation of REITs), availability of capital (debt and equity), interest rate fluctuations, competition, supply and demand for properties in our current and any proposed market areas, tenants' ability to pay rent at current or increased levels, accounting principles, policies and guidelines applicable to REITs, environmental risks, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, and other factors, many of which are beyond the control of the Company. We undertake no obligation to publicly update or revise any of the information in this press release that becomes untrue. For further information on factors that could impact the Company, 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)
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Three Months Ended June 30 |
Six Months Ended June 30 |
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2002 |
2001 |
2002 |
2001 |
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| Revenue: | ||||||||||||||
| Rental revenue, net | $ | 48,184 | $ | 53,405 | $ | 95,968 | $ | 108,408 | ||||||
| Escalations & reimbursement revenues | 6,536 | 7,296 | 13,262 | 15,353 | ||||||||||
| Signage rent | 267 | 179 | 733 | 529 | ||||||||||
| Preferred equity investment income | 1,934 | — | 3,845 | |||||||||||
| Investment income | 3,828 | 5,046 | 7,548 | 8,320 | ||||||||||
| Other income | 1,528 | 550 | 2,604 | 860 | ||||||||||
| Total revenues | 62,277 | 66,476 | 123,960 | 133,470 | ||||||||||
| Expenses: | ||||||||||||||
| Operating expenses | 14,195 | 14,081 | 27,914 | 29,907 | ||||||||||
| Ground rent | 3,159 | 3,159 | 6,318 | 6,318 | ||||||||||
| Interest | 9,519 | 13,171 | 18,631 | 27,068 | ||||||||||
| Depreciation and amortization | 9,753 | 9,189 | 19,350 | 18,909 | ||||||||||
| Real estate taxes | 7,348 | 7,958 | 14,703 | 16,138 | ||||||||||
| Marketing, general and administrative | 3,357 | 3,668 | 6,559 | 7,215 | ||||||||||
| Total expenses | 47,331 | 51,226 | 93,475 | 105,555 | ||||||||||
| Income before minority interests, preferred stock dividends, gain on sales, extraordinary item, affiliates, joint venture and change in accounting principle | 14,946 | 15,250 | 30,485 | 27,915 | ||||||||||
| Equity in net income/(loss) from affiliates | 307 | (658 | ) | 223 | (927 | ) | ||||||||
| Equity in net income from unconsolidated joint ventures | 3,998 | 1,756 | 7,331 | 3,269 | ||||||||||
| Gain on sale of rental property | — | 3,002 | — | 4,516 | ||||||||||
| Minority interests | (1,153 | ) | (1,405 | ) | (2,305 | ) | (2,486 | ) | ||||||
| Extraordinary loss, net of minority interest | — | — | — | (98 | ) | |||||||||
| Cumulative effect of change in accounting principle | — | — | — | (532 | ) | |||||||||
| Preferred stock dividends and accretion | (2,423 | ) | (2,415 | ) | (4,846 | ) | (4,829 | ) | ||||||
| Net income available to common shareholders | $ | 15,675 | $ | 15,530 | $ | 30,888 | $ | 26,828 | ||||||
| Net income per share (Basic) | $ | 0.52 | $ | 0.63 | $ | 1.03 | $ | 1.09 | ||||||
| Net income per share (Diluted) | $ | 0.51 | $ | 0.60 | $ | 1.00 | $ | 1.06 | ||||||
| Funds From Operations (FFO) | ||||||||||||||
| FFO per share (Basic) | $ | 0.87 | $ | 0.87 | $ | 1.77 | $ | 1.65 | ||||||
| FFO per share (Diluted) | $ | 0.81 | $ | 0.80 | $ | 1.59 | $ | 1.53 | ||||||
| FFO Calculation: | ||||||||||||||
| Income before minority interests, preferred stock dividends and accretion, extraordinary loss and gain on sales | $ | 19,251 | $ | 16,348 | $ | 38,039 | $ | 30,257 | ||||||
| Less: | ||||||||||||||
| Preferred stock dividend | (2,300 | ) | (2,300 | ) | (4,600 | ) | (4,600 | ) | ||||||
| Add: | ||||||||||||||
| Joint venture FFO adjustment | 2,713 | 1,358 | 4,594 | 2,354 | ||||||||||
| Depreciation and amortization | 9,753 | 9,189 | 19,350 | 18,909 | ||||||||||
| Amortization of deferred financing costs and depreciation of non-real estate assets | (1,057 | ) | (1,157 | ) | (2,044 | ) | (2,312 | ) | ||||||
| FFO—BASIC | 28,360 | 23,438 | 55,339 | 44,608 | ||||||||||
| Add: Preferred stock dividends | 2,300 | 2,300 | 4,600 | 4,600 | ||||||||||
| FFO—DILUTED | $ | 30,660 | $ | 25,738 | $ | 59,939 | $ | 49,208 | ||||||
| Basic ownership interests | ||||||||||||||
| Weighted average REIT common shares | 30,200 | 24,706 | 30,097 | 24,706 | ||||||||||
| Weighted average partnership units held by minority interest | 2,222 | 2,295 | 1,147 | 2,289 | ||||||||||
| Basic weighted average shares and units outstanding | 32,422 | 27,001 | 31,244 | 26,995 | ||||||||||
| Diluted ownership interest | ||||||||||||||
| Weighted average REIT common and common share equivalent shares | 30,961 | 25,189 | 30,804 | 25,182 | ||||||||||
| Weighted average partnership units held by minority interests | 2,222 | 2,295 | 2,247 | 2,289 | ||||||||||
| Common share equivalents for preferred stock | 4,699 | 4,699 | 4,699 | 4,699 | ||||||||||
| Diluted weighted average equivalent shares and units outstanding | 37,882 | 32,183 | 37,750 | 32,170 | ||||||||||
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SL GREEN REALTY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
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June 30, 2002 |
December 31, 2001 |
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(unaudited) |
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| Assets | ||||||||
| Commercial real estate properties, at cost: | ||||||||
| Land and land interests | $ | 138,337 | $ | 138,337 | ||||
| Buildings and improvements | 701,721 | 689,094 | ||||||
| Building leasehold | 145,264 | 144,736 | ||||||
| Property under capital lease | 12,208 | 12,208 | ||||||
| 997,530 | 984,375 | |||||||
| Less accumulated depreciation | (115,555 | ) | (100,776 | ) | ||||
| 881,975 | 883,599 | |||||||
| Cash and cash equivalents | 20,486 | 13,193 | ||||||
| Restricted cash | 34,491 | 38,424 | ||||||
| Tenant and other receivables, net of allowance of $5,081 and $3,629 in 2002 and 2001, respectively | 8,619 | 8,793 | ||||||
| Related party receivables | 3,515 | 3,498 | ||||||
| Deferred rents receivable, net of allowance of $5,406 and $5,264 in 2002 and 2001, respectively | 55,975 | 51,855 | ||||||
| Investment in and advances to affiliates | 2,949 | 8,211 | ||||||
| Mortgage loans receivable, net of $400 and $593 discount in 2002 and 2001 respectively | 127,814 | 127,166 | ||||||
| Preferred equity investments | 67,434 | 61,472 | ||||||
| Investment in unconsolidated joint ventures | 223,354 | 123,469 | ||||||
| Deferred costs, net | 34,571 | 34,901 | ||||||
| Other assets | 18,691 | 16,996 | ||||||
| Total assets | $ | 1,479,874 | $ | 1,371,577 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Mortgage notes payable | $ | 397,371 | $ | 409,900 | ||||
| Revolving credit | 197,931 | 94,931 | ||||||
| Derivative instruments at fair value | 4,991 | 3,205 | ||||||
| Accrued interest payable | 1,951 | 1,875 | ||||||
| Accounts payable and accrued expenses | 27,259 | 22,819 | ||||||
| Deferred compensation awards | 671 | 1,838 | ||||||
| Deferred revenue/gain | 2,920 | 1,381 | ||||||
| Capitalized lease obligations | 15,802 | 15,574 | ||||||
| Deferred land lease payable | 14,406 | 14,086 | ||||||
| Dividend and distributions payable | 16,706 | 16,570 | ||||||
| Security deposits | 19,261 | 18,829 | ||||||
| Total liabilities | 699,269 | 601,008 | ||||||
| Commitments and contingencies | ||||||||
| Minority interest in Operating Partnership | 45,644 | 46,430 | ||||||
| 8% Preferred Income Equity Redeemable Shares $0.01 par value, $25.00 mandatory liquidation preference, 25,000 authorized and 4,600 outstanding in 2002 and 2001, respectively | 111,474 | 111,231 | ||||||
Stockckholders' Equity |
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| Common stock, $0.01 par value 100,000 shares authorized, 30,307 and 29,978 issued and outstanding in 2002 and 2001, respectively | 303 | 300 | ||||||
| Additional paid-in capital | 590,197 | 583,350 | ||||||
| Deferred compensation plan | (6,165 | ) | (7,515 | ) | ||||
| Accumulated other comprehensive loss | (4,709 | ) | (2,911 | ) | ||||
| Retained earnings | 43,861 | 39,684 | ||||||
| Total stockholders' equity | 623,487 | 612,908 | ||||||
| Total Liabilities and stockholders' equity | $ | 1,479,874 | $ | 1,371,577 | ||||
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SL GREEN REALTY CORP.
SELECTED OPERATING DATA—UNAUDITED
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June 30, |
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2002 |
2001 |
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| Operating Data: | |||||||
| Net rentable area at end of period (in 000's)(1) | 11,533 | 10,106 | |||||
| Portfolio occupancy percentage at end of period | 97.2 | % | 98.0 | % | |||
| Same Store occupancy percentage at end of period | 96.8 | % | 98.6 | % | |||
| Number of properties in operation | 25 | 25 | |||||
| Rentable square feet leased during quarter | 183,955 | 59,384 | |||||
| Average mark-to-market percentage—office | 46.8 | % | 46.8 | % | |||
| Average rent per rentable square foot—office | $ | 37.38 | $ | 42.52 | |||
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