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EX-32.4 - EXHIBIT 32.4 - SL GREEN REALTY CORPslg-2016630x10qex324.htm
EX-32.3 - EXHIBIT 32.3 - SL GREEN REALTY CORPslg-2016630x10qex323.htm
EX-32.2 - EXHIBIT 32.2 - SL GREEN REALTY CORPslg-2016630x10qex322.htm
EX-32.1 - EXHIBIT 32.1 - SL GREEN REALTY CORPslg-2016630x10qex321.htm
EX-31.4 - EXHIBIT 31.4 - SL GREEN REALTY CORPslg-2016630x10qex314.htm
EX-31.3 - EXHIBIT 31.3 - SL GREEN REALTY CORPslg-2016630x10qex313.htm
EX-31.2 - EXHIBIT 31.2 - SL GREEN REALTY CORPslg-2016630x10qex312.htm
EX-31.1 - EXHIBIT 31.1 - SL GREEN REALTY CORPslg-2016630x10qex311.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 10-Q
x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2016
OR
o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to                
Commission File Number: 1-13199 (SL Green Realty Corp.)
Commission File Number: 33-167793-02 (SL Green Operating Partnership, L.P.)
______________________________________________________________________
SL GREEN REALTY CORP.
SL GREEN OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
______________________________________________________________________
SL Green Realty Corp.
Maryland
13-3956755
SL Green Operating Partnership, L.P.
Delaware
13-3960938
 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
420 Lexington Avenue, New York, NY 10170
(Address of principal executive offices—Zip Code)

(212) 594-2700
(Registrant's telephone number, including area code)
______________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
SL Green Realty Corp.    Yes x    No o            SL Green Operating Partnership, L.P.    Yes x    No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
SL Green Realty Corp.     Yes x    No o            SL Green Operating Partnership, L.P.    Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
SL Green Realty Corp.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller Reporting Company o
 
 
 (Do not check if a
smaller reporting
company)
 
SL Green Operating Partnership, L.P.
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller Reporting Company o
 
 
(Do not check if a
smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). 
SL Green Realty Corp.    Yes o    No x            SL Green Operating Partnership, L.P.    Yes o    No x
As of August 1, 2016, 100,319,785 shares of SL Green Realty Corp.'s common stock, par value $0.01 per share, were outstanding. As of August 1, 2016, 1,497,718 common units of limited partnership interest of SL Green Operating Partnership, L.P. were held by non-affiliates. There is no established trading market for such units.
 




EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2016 of SL Green Realty Corp. and SL Green Operating Partnership, L.P. Unless stated otherwise or the context otherwise requires, references to "SL Green Realty Corp.," the "Company" or "SL Green" mean SL Green Realty Corp. and its consolidated subsidiaries; and references to "SL Green Operating Partnership, L.P.," the "Operating Partnership" or "SLGOP" mean SL Green Operating Partnership, L.P. and its consolidated subsidiaries. The terms "we," "our" and "us" mean the Company and all the entities owned or controlled by the Company, including the Operating Partnership.
The Company is a Maryland corporation which operates as a self-administered and self-managed real estate investment trust, or REIT, and is the sole managing general partner of the Operating Partnership. As a general partner of the Operating Partnership, the Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership.
As of June 30, 2016, the Company owned 95.7% of the outstanding general and limited partnership interest in the Operating Partnership and noncontrolling investors held, in aggregate, a 4.3% limited partnership interest in the Operating Partnership. The Company also owns 9,200,000 Series I Preferred Units of the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership.
The Company and the Operating Partnership are managed and operated as one entity. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.
Noncontrolling interests in the Operating Partnership, stockholders' equity of the Company and partners' capital of the Operating Partnership are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership not owned by the Company are accounted for as noncontrolling interests, within mezzanine equity, in the Company's and the Operating Partnership's consolidated financial statements.
We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:
Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
Combined reports eliminate duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Company and the Operating Partnership; and
Combined reports create time and cost efficiencies through the preparation of one combined report instead of two separate reports.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
consolidated financial statements;
the following notes to the consolidated financial statements:
Note 11, Noncontrolling Interests on the Company’s Consolidated Financial Statements;
Note 12, Stockholders' Equity of the Company;
Note 13, Partners' Capital of the Operating Partnership;

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership, respectively, in order to establish that the Chief Executive Officer and the Chief Financial Officer of the Company, in both their capacity as the principal executive officer and principal financial officer of the Company and the principal executive officer and principal financial officer of the general partner of the Operating Partnership, have made the requisite certifications and that the Company and the Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.




SL GREEN REALTY CORP. AND SL GREEN OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
 
 
FINANCIAL STATEMENTS OF SL GREEN REALTY CORP.
 
 
Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015
 
Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015 (unaudited)
 
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015 (unaudited)
 
Consolidated Statement of Equity for the six months ended June 30, 2016 (unaudited)
 
Consolidated Statements of Cash Flows for the three and six months ended June 30, 2016 and 2015 (unaudited)
 
FINANCIAL STATEMENTS OF SL GREEN OPERATING PARTNERSHIP, L.P.
 
 
Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015
 
Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015 (unaudited)
 
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015 (unaudited)
 
Consolidated Statement of Capital for the six months ended June 30, 2016 (unaudited)
 
Consolidated Statements of Cash Flows for the three and six months ended June 30, 2016 and 2015 (unaudited)
 
PART II.
OTHER INFORMATION
 
 



PART I

ITEM 1.

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)
 
June 30, 2016
 
December 31, 2015
 
(unaudited)
 
 
Assets
 
 
 
Commercial real estate properties, at cost:
 
 
 
Land and land interests
$
4,108,821

 
$
4,779,159

Building and improvements
9,362,614

 
10,423,739

Building leasehold and improvements
1,435,255

 
1,431,259

Properties under capital lease
47,445

 
47,445

 
14,954,135

 
16,681,602

Less: accumulated depreciation
(2,166,059
)
 
(2,060,706
)
 
12,788,076

 
14,620,896

Assets held for sale
39,642

 
34,981

Cash and cash equivalents
276,226

 
255,399

Restricted cash
166,905

 
233,578

Investments in marketable securities
39,339

 
45,138

Tenant and other receivables, net of allowance of $18,728 and $17,618 in 2016 and 2015, respectively
57,551

 
63,491

Related party receivables
13,059

 
10,650

Deferred rents receivable, net of allowance of $22,917 and $21,730 in 2016 and 2015, respectively
443,981

 
498,776

Debt and preferred equity investments, net of discounts and deferred origination fees of $14,329 and $18,759 in 2016 and 2015, respectively
1,357,181

 
1,670,020

Investments in unconsolidated joint ventures
1,126,486

 
1,203,858

Deferred costs, net
256,303

 
239,920

Other assets
979,474

 
850,939

Total assets
$
17,544,223

 
$
19,727,646

Liabilities
 
 
 
Mortgages and other loans payable, net
$
5,524,110

 
$
6,881,920

Revolving credit facility, net
277,420

 
985,055

Term loan and senior unsecured notes, net
2,060,690

 
2,308,478

Accrued interest payable
36,378

 
42,406

Other liabilities
243,011

 
168,477

Accounts payable and accrued expenses
189,690

 
196,213

Deferred revenue
384,145

 
399,102

Capital lease obligations
41,751

 
41,360

Deferred land leases payable
2,236

 
1,783

Dividend and distributions payable
80,555

 
79,790

Security deposits
68,199

 
68,023

Liabilities related to assets held for sale
7

 
29,000

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
100,000

 
100,000

Total liabilities
9,008,192

 
11,301,607


4


SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)

 
June 30, 2016
 
December 31, 2015
 
(unaudited)
 
 
Commitments and contingencies

 

Noncontrolling interests in Operating Partnership
486,452

 
424,206

Preferred units
302,460

 
282,516

 
 
 
 
Equity
 
 
 
SL Green stockholders' equity:
 
 
 
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2016 and December 31, 2015
221,932

 
221,932

Common stock, $0.01 par value, 160,000 shares authorized and 100,164 and 100,063 issued and outstanding at June 30, 2016 and December 31, 2015, respectively (including 87 shares held in treasury at June 30, 2016 and December 31, 2015)
1,003

 
1,001

Additional paid-in-capital
5,466,593

 
5,439,735

Treasury stock at cost
(10,000
)
 
(10,000
)
Accumulated other comprehensive loss
(16,558
)
 
(8,749
)
Retained earnings
1,655,320

 
1,643,546

Total SL Green stockholders' equity
7,318,290

 
7,287,465

Noncontrolling interests in other partnerships
428,829

 
431,852

Total equity
7,747,119

 
7,719,317

Total liabilities and equity
$
17,544,223

 
$
19,727,646



The accompanying notes are an integral part of these consolidated financial statements.

5


SL Green Realty Corp.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
 
Rental revenue, net
 
$
416,809

 
$
304,226

 
$
762,416

 
$
607,555

Escalation and reimbursement
 
48,616

 
41,407

 
94,227

 
82,376

Investment income
 
44,214

 
45,191

 
98,951

 
87,260

Other income
 
107,975

 
18,250

 
117,464

 
28,182

Total revenues
 
617,614

 
409,074

 
1,073,058

 
805,373

Expenses
 
 
 
 
 
 
 
 
Operating expenses, including $6,667 and $10,129 in 2016 and $4,472 and $8,189 in 2015 of related party expenses
 
75,324

 
70,114

 
154,844

 
146,891

Real estate taxes
 
62,124

 
56,286

 
123,798

 
112,009

Ground rent
 
8,307

 
8,086

 
16,615

 
16,274

Interest expense, net of interest income
 
89,089

 
75,746

 
183,761

 
151,553

Amortization of deferred financing costs
 
7,433

 
5,952

 
15,365

 
12,567

Depreciation and amortization
 
425,042

 
199,565

 
604,350

 
307,902

Transaction related costs
 
2,115

 
3,067

 
3,394

 
4,210

Marketing, general and administrative
 
24,484

 
23,200

 
48,516

 
48,664

Total expenses
 
693,918

 
442,016

 
1,150,643

 
800,070

(Loss) income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate, net, depreciable real estate reserves, loss on sale of investment in marketable securities and loss on early extinguishment of debt
 
(76,304
)
 
(32,942
)
 
(77,585
)
 
5,303

Equity in net income from unconsolidated joint ventures
 
5,841

 
2,994

 
15,937

 
7,024

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
33,448

 
769

 
43,363

 
769

Gain on sale of real estate, net
 
196,580

 

 
210,353

 

Depreciable real estate reserves
 
(10,387
)
 

 
(10,387
)
 

Loss on sale of investment in marketable securities
 
(83
)
 

 
(83
)
 

Loss on early extinguishment of debt
 

 

 

 
(49
)
Income (loss) from continuing operations
 
149,095

 
(29,179
)
 
181,598

 
13,047

Net income (loss) from discontinued operations
 

 

 

 
427

Gain on sale of discontinued operations
 

 

 

 
12,983

Net income (loss)
 
149,095

 
(29,179
)
 
181,598

 
26,457

Net income attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Noncontrolling interests in the Operating Partnership

(5,586
)
 
1,577

 
(6,508
)
 
(166
)
Noncontrolling interests in other partnerships

(3,435
)
 
(6,626
)
 
(5,409
)
 
(12,553
)
Preferred units distributions

(2,880
)
 
(1,140
)
 
(5,528
)
 
(2,091
)
Net income (loss) attributable to SL Green
 
137,194

 
(35,368
)
 
164,153

 
11,647

Perpetual preferred stock dividends
 
(3,737
)
 
(3,738
)
 
(7,475
)
 
(7,476
)
Net income (loss) attributable to SL Green common stockholders
 
$
133,457

 
$
(39,106
)
 
$
156,678

 
$
4,171

 
 
 
 
 
 
 
 
 

6


SL Green Realty Corp.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Amounts attributable to SL Green common stockholders:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(77,056
)
 
$
(39,846
)
 
$
(76,947
)
 
$
(9,467
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
32,058

 
740

 
41,634

 
740

Net income from discontinued operations
 

 

 

 
411

Gain on sale of discontinued operations
 

 

 

 
12,487

Gain on sale of real estate
 
188,410

 

 
201,964

 

Depreciable real estate reserves
 
(9,955
)
 

 
(9,973
)
 

Net income (loss) attributable to SL Green common stockholders
 
$
133,457

 
$
(39,106
)
 
$
156,678

 
$
4,171

Basic earnings per share:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(0.77
)
 
$
(0.40
)
 
$
(0.77
)
 
$
(0.10
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.32

 
0.01

 
0.42

 
0.01

Gain on sale of discontinued operations
 

 

 

 
0.13

Gain on sale of real estate
 
1.88

 

 
2.02

 

Depreciable real estate reserves
 
(0.10
)
 

 
(0.10
)
 

Net income (loss) attributable to SL Green common stockholders
 
$
1.33

 
$
(0.39
)
 
$
1.57


$
0.04

Diluted earnings per share:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(0.77
)
 
$
(0.40
)
 
$
(0.77
)
 
$
(0.10
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.32

 
0.01

 
0.42

 
0.01

Gain on sale of discontinued operations
 

 

 

 
0.13

Gain on sale of real estate
 
1.88

 

 
2.01

 

Depreciable real estate reserves
 
(0.10
)
 

 
(0.10
)
 

Net income (loss) attributable to SL Green common stockholders
 
$
1.33

 
$
(0.39
)
 
$
1.56

 
$
0.04

Dividends per share
 
$
0.72

 
$
0.60

 
$
1.44

 
$
1.20

Basic weighted average common shares outstanding
 
100,134

 
99,579

 
100,093

 
98,994

Diluted weighted average common shares and common share equivalents outstanding
 
104,792

 
99,579

 
104,533

 
103,423



The accompanying notes are an integral part of these consolidated financial statements.

7


SL Green Realty Corp.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Net income (loss)
 
$
149,095

 
$
(29,179
)
 
$
181,598

 
$
26,457

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Change in net unrealized gain (loss) on derivative instruments, including SL Green's share of joint venture net unrealized (loss) gain on derivative instruments
 
257

 
2,250

 
(7,315
)
 
(3,430
)
Change in unrealized gain (loss) on marketable securities
 
354

 
(1,304
)
 
(869
)
 
(654
)
Other comprehensive income (loss)
 
611

 
946

 
(8,184
)
 
(4,084
)
Comprehensive income (loss)
 
149,706

 
(28,233
)
 
173,414

 
22,373

Net income (loss) attributable to noncontrolling interests and preferred units distributions
 
(11,901
)
 
(6,189
)
 
(17,445
)
 
(14,810
)
Other comprehensive income (loss) attributable to noncontrolling interests
 
53

 
(42
)
 
375

 
158

Comprehensive income (loss) attributable to SL Green
 
$
137,858

 
$
(34,464
)
 
$
156,344

 
$
7,721



The accompanying notes are an integral part of these consolidated financial statements.


8


SL Green Realty Corp.
Consolidated Statement of Equity
(unaudited, in thousands, except per share data)


 
SL Green Realty Corp. Stockholders
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 


 
 
Series I
Preferred
Stock
 
Shares
 
Par
Value
 
Additional
Paid-
In-Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2015
 
$
221,932

 
99,976

 
$
1,001

 
$
5,439,735

 
$
(10,000
)
 
$
(8,749
)
 
$
1,643,546

 
$
431,852

 
$
7,719,317

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
164,153

 
5,409

 
169,562

Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
(7,809
)
 
 
 
 
 
(7,809
)
Preferred dividends
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,475
)
 
 
 
(7,475
)
DRSPP proceeds
 
 
 
1

 
 
 
89

 
 
 
 
 
 
 
 
 
89

Conversion of units of the Operating Partnership to common stock
 
 
 
109

 
1

 
11,794

 
 
 
 
 
 
 
 
 
11,795

Reallocation of noncontrolling interest in the Operating Partnership
 
 
 
 
 
 
 
 
 
 
 
 
 
(906
)
 
 
 
(906
)
Deferred compensation plan and stock award, net
 
 
 
4

 
 
 
(2,150
)
 
 
 
 
 
 
 
 
 
(2,150
)
Amortization of deferred compensation plan
 
 
 
 
 
 
 
12,823

 
 
 
 
 
 
 
 
 
12,823

Issuance of common stock
 
 
 
 
 
 
 
(40
)
 
 
 
 
 
 
 
 
 
(40
)
Proceeds from stock options exercised
 
 
 
74

 
1

 
4,342

 
 
 
 
 
 
 
 
 
4,343

Contributions to consolidated joint venture interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,434

 
1,434

Cash distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(9,866
)
 
(9,866
)
Cash distributions declared ($1.44 per common share, none of which represented a return of capital for federal income tax purposes)
 
 
 
 
 
 
 
 
 
 
 
 
 
(143,998
)
 
 
 
(143,998
)
Balance at June 30, 2016
 
221,932

 
100,164

 
$
1,003

 
$
5,466,593

 
$
(10,000
)
 
$
(16,558
)
 
$
1,655,320

 
$
428,829

 
$
7,747,119



The accompanying notes are an integral part of these consolidated financial statements.

9


SL Green Realty Corp.
Consolidated Statements of Cash Flows
(unaudited, in thousands, except per share data)


 
Six Months Ended June 30,
 
2016
 
2015
Operating Activities
 
 
 
Net income
$
181,598

 
$
26,457

Adjustments to reconcile net income to net cash provided by operating activities:

 

Depreciation and amortization
619,715

 
320,472

Equity in net income from unconsolidated joint ventures
(15,937
)
 
(7,024
)
Distributions of cumulative earnings from unconsolidated joint ventures
15,260

 
22,464

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(43,363
)
 
(769
)
Depreciable real estate reserves
10,387

 

Gain on sale of real estate
(210,353
)
 

Gain on sale of discontinued operations

 
(12,983
)
Loss on sale of investments in marketable securities
83

 

Loss on early extinguishment of debt

 
49

Deferred rents receivable
53,042

 
(65,260
)
Other non-cash adjustments (1)
(164,276
)
 
(3,592
)
Changes in operating assets and liabilities:
 
 
 
Restricted cash—operations
(10,069
)
 
(1,246
)
Tenant and other receivables
4,820

 
(6,826
)
Related party receivables
(2,386
)
 
340

Deferred lease costs
(31,951
)
 
(35,918
)
Other assets
4,362

 
11,410

Accounts payable, accrued expenses and other liabilities and security deposits
(33,635
)
 
(16,987
)
Deferred revenue and land leases payable
(3,919
)
 
2,872

Net cash provided by operating activities
373,378


233,459

Investing Activities
 
 
 
Acquisitions of real estate property
(37,728
)
 
(42,556
)
Additions to land, buildings and improvements
(157,118
)
 
(122,520
)
Escrowed cash—capital improvements/acquisition deposits/deferred purchase price
76,220

 
(229,853
)
Investments in unconsolidated joint ventures
(25,389
)
 
(109,135
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
161,413

 
49,059

Net proceeds from disposition of real estate/joint venture interest
1,916,312

 
491,598

Proceeds from sale of marketable securities
5,180

 
295

Purchases of marketable securities
(331
)
 
(7,769
)
Other investments
(2,987
)
 
(9,620
)
Origination of debt and preferred equity investments
(227,196
)
 
(387,216
)
Repayments or redemption of debt and preferred equity investments
418,371

 
109,784

Net cash provided by investing activities
2,126,747

 
(257,933
)

10


SL Green Realty Corp.
Consolidated Statements of Cash Flows
(unaudited, in thousands, except per share data)

 
 
Six Months Ended June 30,
 
 
2016
 
2015
 
Financing Activities
 
 
 
 
Proceeds from mortgages and other loans payable
$
250,514

 
$
106,421

 
Repayments of mortgages and other loans payable
(1,663,616
)
 
(489,138
)
 
Proceeds from revolving credit facility and senior unsecured notes
700,000

 
1,055,000

 
Repayments of revolving credit facility and senior unsecured notes
(1,664,296
)
 
(735,007
)
 
Proceeds from stock options exercised and DRIP issuance
4,431

 
111,307

 
Proceeds from sale of common stock

 
124,999

 
Redemption of preferred stock
(2,849
)
 
(200
)
 
Distributions to noncontrolling interests in other partnerships
(9,866
)
 
(111,715
)
 
Contributions from noncontrolling interests in other partnerships
1,434

 
8,655

 
Distributions to noncontrolling interests in the Operating Partnership
(6,009
)
 
(4,693
)
 
Dividends paid on common and preferred stock
(156,234
)
 
(127,310
)
 
Other obligations related to mortgage loan participations
76,500

 
25,000

 
Deferred loan costs and capitalized lease obligation
(9,307
)
 
(4,358
)
 
Net cash used in financing activities
(2,479,298
)
 
(41,039
)
 
Net increase in cash and cash equivalents
20,827

 
(65,513
)
 
Cash and cash equivalents at beginning of year
255,399

 
281,409

 
Cash and cash equivalents at end of period
$
276,226

 
$
215,896

 
 
 
 
 
 
(1) Included in Other non-cash adjustments is $172.4 million for the six months ended June 30, 2016 for the amortization of the below-market lease at 388-390 Greenwich Street as a result of the tenant exercising their option to purchase the property and entering into an agreement to accelerate the sale
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
 
 
 
 
Issuance of units in the operating partnership relating to the investment in unconsolidated joint ventures
$
51,647

 
$

 
Redemption of units in the operating partnership
11,795

 
37,992

 
Derivative instruments at fair value
7,701

 
2,000

 
Exchange of debt investment for equity in joint venture
68,581

 
10,151

 
Transfer of restricted cash to operating cash and cash equivalents as a result of sale

 
21,578

 
Acquisition of subsidiary interest from noncontrolling interest

 
20,630

 
Issuance of preferred units relating to the real estate acquisition
22,793

 
53,808

 
Tenant improvements and capital expenditures payable
11,637

 
17,661

 
Fair value adjustment to noncontrolling interest in operating partnership
906

 
20,670

 
Capital lease assets

 

 
Transfer of assets to assets held for sale
1,931,217

 
420,569

 
Transfer of liabilities related to assets held for sale
1,612,008

 
178,252

 
Deferred leasing payable
1,222

 
5,525

 
Removal of fully depreciated commercial real estate properties
13,471

 

The accompanying notes are an integral part of these consolidated financial statements.

11



SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)

 
 
June 30, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
Assets
 
 
 
 
Commercial real estate properties, at cost:
 
 
 
 
Land and land interests
 
$
4,108,821

 
$
4,779,159

Building and improvements
 
9,362,614

 
10,423,739

Building leasehold and improvements
 
1,435,255

 
1,431,259

Property under capital lease
 
47,445

 
47,445

 
 
14,954,135

 
16,681,602

Less: accumulated depreciation
 
(2,166,059
)
 
(2,060,706
)
 
 
12,788,076

 
14,620,896

Assets held for sale
 
39,642

 
34,981

Cash and cash equivalents
 
276,226

 
255,399

Restricted cash
 
166,905

 
233,578

Investments in marketable securities
 
39,339

 
45,138

Tenant and other receivables, net of allowance of $18,728 and $17,618 in 2016 and 2015, respectively
 
57,551

 
63,491

Related party receivables
 
13,059

 
10,650

Deferred rents receivable, net of allowance of $22,917 and $21,730 in 2016 and 2015, respectively
 
443,981

 
498,776

Debt and preferred equity investments, net of discounts and deferred origination fees of $14,329 and $18,759 in 2016 and 2015, respectively
 
1,357,181

 
1,670,020

Investments in unconsolidated joint ventures
 
1,126,486

 
1,203,858

Deferred costs, net
 
256,303

 
239,920

Other assets
 
979,474

 
850,939

Total assets
 
$
17,544,223

 
$
19,727,646

Liabilities
 
 
 
 
Mortgages and other loans payable, net
 
$
5,524,110

 
$
6,881,920

Revolving credit facility, net
 
277,420

 
985,055

Term loan and senior unsecured notes, net
 
2,060,690

 
2,308,478

Accrued interest payable
 
36,378

 
42,406

Other liabilities
 
243,011

 
168,477

Accounts payable and accrued expenses
 
189,690

 
196,213

Deferred revenue
 
384,145

 
399,102

Capital lease obligations
 
41,751

 
41,360

Deferred land leases payable
 
2,236

 
1,783

Dividend and distributions payable
 
80,555

 
79,790

Security deposits
 
68,199

 
68,023

Liabilities related to assets held for sale
 
7

 
29,000

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
 
100,000

 
100,000

Total liabilities
 
9,008,192

 
11,301,607

Commitments and contingencies
 

 

Limited partner interests in SLGOP (4,504 and 3,746 limited partner common units outstanding at June 30, 2016 and December 31, 2015, respectively)
 
486,452

 
424,206

Preferred units
 
302,460

 
282,516


12


 
 
June 30, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
Capital
 
 
 
 
SLGOP partners' capital:
 
 
 
 
Series I Preferred Units, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2016 and December 31, 2015
 
221,932

 
221,932

SL Green partners' capital (1,041 and 1,035 general partner common units and 99,041 and 98,941 limited partner common units outstanding at June 30, 2016 and December 31, 2015, respectively)
 
7,112,916

 
7,074,282

Accumulated other comprehensive loss
 
(16,558
)
 
(8,749
)
Total SLGOP partners' capital
 
7,318,290

 
7,287,465

Noncontrolling interests in other partnerships
 
428,829

 
431,852

Total capital
 
7,747,119

 
7,719,317

Total liabilities and capital
 
$
17,544,223

 
$
19,727,646



The accompanying notes are an integral part of these consolidated financial statements.

13


SL Green Operating Partnership, L.P.
Consolidated Statements of Operations
(unaudited, in thousands, except per unit data)



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016

2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
 
Rental revenue, net
 
$
416,809

 
$
304,226

 
$
762,416

 
$
607,555

Escalation and reimbursement
 
48,616

 
41,407

 
94,227

 
82,376

Investment income
 
44,214

 
45,191

 
98,951

 
87,260

Other income
 
107,975

 
18,250

 
117,464

 
28,182

Total revenues
 
617,614

 
409,074

 
1,073,058

 
805,373

Expenses
 
 
 
 
 
 
 
 
Operating expenses, including $6,667 and $10,129 in 2016 and $4,472 and $8,189 in 2015 of related party expenses
 
75,324

 
70,114

 
154,844

 
146,891

Real estate taxes
 
62,124

 
56,286

 
123,798

 
112,009

Ground rent
 
8,307

 
8,086

 
16,615

 
16,274

Interest expense, net of interest income
 
89,089

 
75,746

 
183,761

 
151,553

Amortization of deferred financing costs
 
7,433

 
5,952

 
15,365

 
12,567

Depreciation and amortization
 
425,042

 
199,565

 
604,350

 
307,902

Transaction related costs
 
2,115

 
3,067

 
3,394

 
4,210

Marketing, general and administrative
 
24,484

 
23,200

 
48,516

 
48,664

Total expenses
 
693,918

 
442,016

 
1,150,643

 
800,070

(Loss) income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate, net, depreciable real estate reserves, loss on sale of investment in marketable securities and loss on early extinguishment of debt
 
(76,304
)
 
(32,942
)
 
(77,585
)
 
5,303

Equity in net income from unconsolidated joint ventures
 
5,841

 
2,994

 
15,937

 
7,024

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
33,448

 
769

 
43,363

 
769

Gain on sale of real estate, net
 
196,580

 

 
210,353

 

Depreciable real estate reserves
 
(10,387
)
 

 
(10,387
)
 

Loss on sale of investment in marketable securities
 
(83
)
 

 
(83
)
 

Loss on early extinguishment of debt
 

 

 

 
(49
)
Income (loss) from continuing operations
 
149,095

 
(29,179
)
 
181,598

 
13,047

Net income (loss) from discontinued operations
 

 

 

 
427

Gain on sale of discontinued operations
 

 

 

 
12,983

Net income (loss)
 
149,095

 
(29,179
)
 
181,598

 
26,457

Noncontrolling interests in other partnerships
 
(3,435
)
 
(6,626
)
 
(5,409
)
 
(12,553
)
Preferred units distributions
 
(2,880
)
 
(1,140
)
 
(5,528
)
 
(2,091
)
Net income (loss) attributable to SLGOP
 
142,780

 
(36,945
)
 
170,661

 
11,813

Perpetual preferred unit distributions
 
(3,737
)
 
(3,738
)
 
(7,475
)
 
(7,476
)
Net income (loss) attributable to SLGOP common unitholders
 
$
139,043

 
$
(40,683
)
 
$
163,186

 
$
4,337


14


SL Green Operating Partnership, L.P.
Consolidated Statements of Operations
(unaudited, in thousands, except per unit data)


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016

2015
 
2016
 
2015
Amounts attributable to SLGOP common unitholders:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(80,598
)
 
$
(41,452
)
 
$
(80,143
)
 
$
(9,842
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
33,448

 
769

 
43,363

 
769

Net income from discontinued operations
 

 

 

 
427

Gain on sale of discontinued operations
 

 

 

 
12,983

Gain on sale of real estate
 
196,580

 

 
210,353

 

Depreciable real estate reserves
 
(10,387
)
 

 
(10,387
)
 

Net income (loss) attributable to SLGOP common unitholders
 
$
139,043

 
$
(40,683
)

$
163,186


$
4,337

 
 
 
 
 
 
 
 
 
Basic earnings per unit:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before gains on sale and discontinued operations
 
$
(0.77
)
 
$
(0.40
)
 
$
(0.77
)
 
$
(0.10
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.32

 
0.01

 
0.42

 
0.01

Net income from discontinued operations
 

 

 

 

Gain on sale of discontinued operations
 

 

 

 
0.13

Gain on sale of real estate
 
1.88

 

 
2.02

 

Depreciable real estate reserves
 
(0.10
)
 

 
(0.10
)
 

Net income (loss) attributable to SLGOP common unitholders
 
$
1.33

 
$
(0.39
)

$
1.57


$
0.04

Diluted earnings per unit:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before gains on sale and discontinued operations
 
$
(0.77
)
 
$
(0.40
)
 
$
(0.77
)
 
$
(0.10
)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.32

 
0.01

 
0.42

 
0.01

Gain on sale of discontinued operations
 

 

 

 
0.13

Gain on sale of real estate
 
1.88

 

 
2.01

 

Depreciable real estate reserves
 
(0.10
)
 

 
(0.10
)
 

Net income (loss) attributable to SLGOP common unitholders
 
$
1.33

 
$
(0.39
)
 
$
1.56

 
$
0.04

Dividends per unit
 
$
0.72

 
$
0.60

 
$
1.44

 
1.20

Basic weighted average common units outstanding
 
104,476

 
103,487

 
104,251

 
102,930

Diluted weighted average common units and common unit equivalents outstanding
 
104,792

 
103,487

 
104,533

 
103,423



The accompanying notes are an integral part of these consolidated financial statements.


15


SL Green Operating Partnership, L.P.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016

2015
 
2016
 
2015
Net income (loss)
 
$
149,095

 
(29,179
)
 
$
181,598

 
26,457

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Change in net unrealized (loss) gain on derivative instruments, including SLGOP's share of joint venture net unrealized (loss) gain on derivative instruments
 
257

 
2,250

 
(7,315
)
 
(3,430
)
Change in unrealized gain (loss) on marketable securities
 
354

 
(1,304
)
 
(869
)
 
(654
)
Other comprehensive income (loss)
 
611

 
946

 
(8,184
)
 
(4,084
)
Comprehensive income (loss)
 
149,706

 
(28,233
)
 
173,414

 
22,373

Net income attributable to noncontrolling interests
 
(3,435
)
 
(6,626
)
 
(5,409
)
 
(12,553
)
Other comprehensive income (loss) attributable to noncontrolling interests
 
53

 
(42
)
 
375

 
158

Comprehensive income attributable to SLGOP
 
$
146,324

 
$
(34,901
)
 
$
168,380

 
$
9,978



The accompanying notes are an integral part of these consolidated financial statements.


16


SL Green Operating Partnership, L.P.
Consolidated Statement of Capital
(unaudited, in thousands, except per unit data)



 
 
SL Green Operating Partnership Unitholders
 
 
 
 
 
 
 
 
Partners' Interest
 
 
 
 
 
 
 
 
Series I
Preferred
Units
 
Common
Units
 
Common
Unitholders
 
Accumulated
Other
Comprehensive (Loss) Income
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2015
 
$
221,932

 
99,976

 
$
7,074,282

 
$
(8,749
)
 
$
431,852

 
$
7,719,317

Net income
 
 
 
 
 
164,153

 
 
 
5,409

 
169,562

Other comprehensive (loss)
 
 
 
 
 
 
 
(7,809
)
 
 
 
(7,809
)
Preferred distributions
 
 
 
 
 
(7,475
)
 
 
 
 
 
(7,475
)
DRSPP proceeds

 
 
 
1

 
89

 
 
 
 
 
89

Conversion of common units
 
 
 
109

 
11,755

 
 
 
 
 
11,755

Reallocation of noncontrolling interests in the operating partnership
 
 
 
 
 
(906
)
 
 
 
 
 
(906
)
Deferred compensation plan and stock award, net
 
 
 
4

 
(2,150
)
 
 
 
 
 
(2,150
)
Amortization of deferred compensation plan
 
 
 
 
 
12,823

 
 
 
 
 
12,823

Contribution to consolidated joint venture interests
 
 
 
 
 
 
 
 
 
1,434

 
1,434

Contributions - proceeds from stock options exercised
 
 
 
74

 
4,343

 
 
 
 
 
4,343

Cash distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
(9,866
)
 
(9,866
)
Cash distributions declared ($1.44 per common unit, none of which represented a return of capital for federal income tax purposes)
 
 
 
 
 
(143,998
)
 
 
 
 
 
(143,998
)
Balance at June 30, 2016
 
$
221,932

 
100,164

 
$
7,112,916

 
$
(16,558
)
 
$
428,829

 
$
7,747,119

   

The accompanying notes are an integral part of these consolidated financial statements.


17


SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)



 
Six Months Ended June 30,
 
2016

2015
Operating Activities
 
 
 
Net income
$
181,598

 
$
26,457

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
619,715

 
320,472

Equity in net income from unconsolidated joint ventures
(15,937
)
 
(7,024
)
Distributions of cumulative earnings from unconsolidated joint ventures
15,260

 
22,464

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(43,363
)
 
(769
)
Depreciable real estate reserves
10,387

 

Gain on sale of real estate
(210,353
)
 

Gain on sale of discontinued operations

 
(12,983
)
Loss on sale of investment in marketable securities
83

 

Loss on early extinguishment of debt

 
49

Deferred rents receivable
53,042

 
(65,260
)
Other non-cash adjustments (1)
(164,276
)
 
(3,592
)
Changes in operating assets and liabilities:
 
 
 
Restricted cash—operations
(10,069
)
 
(1,246
)
Tenant and other receivables
4,820

 
(6,826
)
Related party receivables
(2,386
)
 
340

Deferred lease costs
(31,951
)
 
(35,918
)
Other assets
4,362

 
11,410

Accounts payable, accrued expenses and other liabilities and security deposits
(33,635
)
 
(16,987
)
Deferred revenue and land leases payable
(3,919
)
 
2,872

Net cash provided by operating activities
373,378

 
233,459

Investing Activities
 
 
 
Acquisitions of real estate property
(37,728
)
 
(42,556
)
Additions to land, buildings and improvements
(157,118
)
 
(122,520
)
Escrowed cash—capital improvements/acquisition deposits/deferred purchase price
76,220

 
(229,853
)
Investments in unconsolidated joint ventures
(25,389
)
 
(109,135
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
161,413

 
49,059

Net proceeds from disposition of real estate/joint venture interest
1,916,312

 
491,598

Proceeds from sale of marketable securities
5,180

 
295

Purchases of marketable securities
(331
)
 
(7,769
)
Other investments
(2,987
)
 
(9,620
)
Origination of debt and preferred equity investments
(227,196
)
 
(387,216
)
Repayments or redemption of debt and preferred equity investments
418,371

 
109,784

Net cash provided by investing activities
2,126,747

 
(257,933
)
 
 
 
 

18


SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)


 
 
Six Months Ended June 30,
 
 
2016

2015
 
Financing Activities
 
 
 
 
Proceeds from mortgages and other loans payable
$
250,514

 
$
106,421

 
Repayments of mortgages and other loans payable
(1,663,616
)
 
(489,138
)
 
Proceeds from revolving credit facility, term loan and senior unsecured notes
700,000

 
1,055,000

 
Repayments of revolving credit facility, term loan and senior unsecured notes
(1,664,296
)
 
(735,007
)
 
Proceeds from stock options exercised and DRIP issuance
4,431

 
111,307

 
Net proceeds from sale of common stock

 
124,999

 
Redemption of preferred units
(2,849