NEW YORK, Feb. 11 /PRNewswire/ -- SL Green Realty Corp. (NYSE: SLG) today
reported improved results for the three and twelve months ended December 31,
1998. For the three months ended December 31, 1998, funds from operations
(FFO) before minority interest totaled $13.3 million or $0.50 per share, a 22%
improvement over the comparable period in 1997 when FFO was $6.1 million or
$0.41 per share. Revenues for the fourth quarter of 1998 were $40.1 million,
compared to $16.1 million for the fourth quarter of 1997, an increase of over
149%.
The quarter-over-quarter revenue increase of $24.0 million was primarily
due to (i) $19.3 million of incremental revenue related to six acquisitions
which occurred in 1998 and (ii) $2.7 million resulting from the full quarter
effect of post IPO acquisitions which were completed in late 1997. These 1997
properties, in addition, increased revenues by $0.4 million due to 1998
leasing activity. The balance of revenue growth came from mortgage loan
investments and other income.
For the quarter ended December 31, 1998, "same store" aggregate revenue
grew 3% to $14.1 million, compared to the same period last year. GAAP NOI
from these properties rose from $7.4 million at December 31, 1997 to $8.3
million at December 31, 1998, or approximately 12%. This increase was
principally the result of a $0.4 million increase in rental revenue, primarily
at 1372 Broadway ($0.3 million) due to increased occupancy. Operating
expenses declined by $0.4 million, reflecting cost reductions primarily at
1372 Broadway, which were the result of lower cleaning and security
maintenance costs ($0.2 million) and less than anticipated repairs and
maintenance expense throughout the balance of the "same store" portfolio. On
a "same store" basis, GAAP operating margins improved from 54.2% at the end of
December 1997 to 58.7% for the current period. Cash NOI also improved by 12%,
with operating margins improving to 55%.
For the year ended December 31, 1998, FFO before minority interest and an
extraordinary loss totaled $42.9 million, or $1.94 per share, (basic and
diluted), on revenues of $137.0 million, compared to pro forma FFO of $25.2
million or $1.71 per share (basic) and $1.70 (diluted) on revenues of $59.4
million for the year ended December 31, 1997.
In the aggregate, the Company's EBITDA margin was 49.5% compared to 48.7%
in 1997. The increase was primarily due to improved overall occupancy to
93.1% at December 31, 1998 from 92.6% at December 31, 1997. Underlying this
modest improvement, same store EBITDA margin actually rose by 5% (7% in the
acquired properties) and was partially offset by the impact of acquired
vacancy in the 1997 and 1998 acquisitions.
SL Green ended the year with total debt of $162.2 million. This
translates to a current debt to market cap ratio of 19.1%, significantly below
the market average.
Since the Company's IPO in August 1997, SL Green has acquired nine
properties for an initial cost of approximately $431 million. These
acquisitions added approximately 4.0 million square feet to its portfolio,
representing an increase of approximately 182%. All of these acquisitions,
except one, have been made in three of Manhattan's strongest markets,
including the Grand Central District, and the Times Square Redevelopment area,
the emerging niche market along 43rd and 44th Streets between Avenue of the
Americas and Grand Central Terminal and the Pennsylvania Station area. The
remaining property is located in the lower Manhattan Financial District.
Commenting on the year, Stephen L. Green, Chairman and Chief Executive
Officer of SL Green, said, "We are very satisfied with our results for 1998,
which we feel reflect the strength of our value added approach to acquiring,
owning and managing key Class B office properties in New York City's most
dynamic submarkets.
"While 1998 was a challenging year for both the stock market and REITs, in
general, we were convinced that the fundamentals of the New York City economy
and real estate market remained sound -- with single digit vacancy rates,
little new construction and rising rental rates. As such, we maintained our
strategy and focus and were able to continue to leverage our nearly two
decades of experience, along with our solid relationships in the industry, to
successfully maximize the yields on our core properties while also expanding
our portfolio. As a result of various capital market conditions, we currently
face greatly reduced public company competition, leaving SL Green as the only
pure play public Class B office REIT in the Manhattan market.
"In addition, with an expanded and stronger management team in place,
newly upgraded systems, and an ever growing pipeline of new acquisition
opportunities before us -- and backed by a healthy balance sheet -- we look
forward to significant future growth, both internal and external."
On May 12, 1998 the Company completed public offerings of 11,500,000
shares of common stock at $22.25 per share, and 4,600,000 shares of 8%
Preferred Income Equity Redeemable Shares with a liquidation preference of
$25.00 per share, raising proceeds of approximately $353 million, after
accounting for the underwriters' discount. For comparison purposes, the three
month weighted average number of shares outstanding were 23,952,000 on
December 31, 1998 versus 12,293,000 on December 31, 1997, an increase of
approximately 95%.
SL Green's portfolio consists of 18 properties, comprising approximately
6.3 million rentable square feet.
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 geographic area property type.
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 the
forward-looking information include the strength of the commercial office and
industrial real estate markets in which the Company operates, competitive
market conditions, general 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 Twelve Months Ended
December 31, December 31,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Pro forma)
(Unaudited)
Revenue:
Rental revenue $34,265 $14,618 $117,304 $49,472
Escalations & reimbursement
revenues 4,490 1,162 15,923 5,500
Leasing commissions -- -- -- 2,251
Investment income 849 278 3,267 485
Other income 459 -- 478 1,676
Total revenues 40,063 16,058 136,972 59,384
Equity in income from Service
Corporations 457 29 387 168
Expenses:
Operating expenses 9,540 4,046 34,125 13,165
Allowance for tenant
credit loss 735 281 2,419 --
Ground rent 2,930 1,069 11,082 4,297
Interest 3,296 1,542 13,086 5,509
Depreciation and amortization 4,690 1,969 15,404 7,413
Real estate taxes 6,336 2,489 21,224 8,658
Marketing, general and
administrative 1,807 511 5,761 2,578
Loss on terminated project 1,065 -- 1,065 --
Loss on hedge transaction 176 -- 176 --
Total expenses 30,575 11,907 104,342 41,620
Income before minority interest,
preferred stock dividends, and
extraordinary loss 9,945 4,180 33,017 17,932
Minority interest in operating
partnership (689) (677) (3,043) (2,905)
9,256 3,503 29,974 15,027
Extraordinary loss, net of
minority interest -- -- (522) (1,874)
Preferred stock dividends
and accretion (2,346) -- (5,970) --
Net income available to
common shareholders $6,910 $3,503 $23,482 $ 13,153
Net income per share (Basic) $0.29 $0.28 $1.19 $1.07
Net income per share (Diluted) $0.29 $0.28 $1.19 $1.06
Funds From Operations (FFO)
FFO per share (Basic) $0.50 $0.41 $1.94 $1.71
FFO per share (Diluted) $0.50 $0.41 $1.94 $1.70
FFO Calculation:
Income before minority interest
preferred stock dividends and
extraordinary loss $9,945 $4,180 $33,017 $17,932
Less:
Preferred stock dividend (2,300) -- (5,720) --
Add:
Loss on hedge transaction 176 -- 176 --
Loss on terminated project 1,065 -- 1,065 --
Depreciation and
amortization (A) 4,690 1,969 15,404 7,413
Amortization of deferred
financing costs and
depreciation of non-real
estate assets (A) (273) (50) (1,084) (186)
FFO $13,303 $6,099 $42,858 $25,159
Basic ownership interests
Weighted average REIT
common shares 23,952 12,293 19,675 12,293
Weighted average partnership
units held by minority
interest 2,428 2,383 2,406 2,383
Basic weighted average shares
and units outstanding 26,380 14,676 22,081 14,676
Diluted ownership interest
Weighted average REIT common
and equivalent shares 23,993 12,412 19,739 12,404
Weighted average partnership
units held by minority
interests 2,428 2,383 2,406 2,383
Diluted weighted average and
equivalent shares and
units outstanding 26,421 14,795 22,145 14,787
(A) Includes properties recorded on the equity method during 1997
SL Green Realty Corp.
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
December 31, December 31,
1998 1997
Assets
Commercial real estate properties, at cost:
Land $112,123 $53,834
Buildings and improvements 492,568 272,776
Building leasehold 80,162 --
Property under capital lease 12,208 12,208
697,061 338,818
Less accumulated depreciation (37,355) (23,800)
659,706 315,018
Cash and cash equivalents 6,236 12,782
Restricted cash 18,635 10,310
Tenant receivables, net $100 reserve 1998 3,951 738
Related party receivables 9,072 1,971
Deferred rents receivable net of provision for
doubtful accounts of $2,369 and $399 in 1998
and 1997, respectively 20,891 11,563
Investment in and advances to Service
Corporations 1,867 1,480
Mortgage loans receivable 26,401 15,500
Deferred costs, net 15,282 6,099
Other assets 15,755 7,314
Total assets $777,796 $382,775
Liabilities and Stockholders' Equity
Mortgage notes payable $50,862 $52,820
Secured bridge facilities 87,500 --
Revolving credit facility 23,800 76,000
Accrued interest payable 494 552
Accounts payable and accrued expenses 5,588 3,340
Accounts payable to related parties 63 367
Capitalized lease obligations 14,741 14,490
Deferred land lease payable 9,947 8,481
Dividend and distributions payable 11,585 5,136
Security deposits 16,949 11,475
Total liabilities 221,529 172,661
Minority interest 41,491 33,906
8% Preferred Income Equity Mandatory
Redeemable Stock $0.01 par value, $25.00
liquidation preference 25 million shares
authorized, 4.6 million outstanding in 1998109,950 --
Commitments, contingencies and other matters
Stockholders' Equity
Common stock, $.01 par value 100,000 shares
authorized, 23,952 and 12,292 issued and
outstanding in 1998 and 1997, respectively 240 123
Additional paid - in capital 416,939 178,669
Deferred compensation plan (3,266) --
Officers' loans (528) --
Distributions in excess of earnings (8,559) (2,584)
Total stockholders' equity 404,871 176,208
Total liabilities and stockholders'
equity $777,796 $382,775
SL GREEN REALTY CORP.
SELECTED OPERATING DATA-UNAUDITED
December 31, 1998December 31, 1997
Operating Data:
Net rentable area at end of period (in 000's) 6,254 3,280
Portfolio occupancy percentage at end of period 93.0% 92.6%
Core properties occupancy percentage at
end of period 99.4% 99.1%
Number of properties in operation 18 12
SOURCE SL Green Realty Corp.
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Related links:
http://www.slgreen.com
CONTACT:
Stephen L. Green, Chairman, or David Nettina,
President & Chief Operating Officer, both of SL Green Realty
Corp., 212-594-2700; or General Info., Paula Schwartz or Michael
Lawson, Analyst Info., Pamela King, or Media Info., Judith
Sylk-Siegel, all of The Financial Relations Board, 212-661-8030
NOTE TO EDITORS: To receive SLG's latest news release and other
corporate documents via FAX -- no cost -- dial 1-800-PRO-INFO.
Use company's symbol, SLG. Visit SL Green's website at
http://www.slgreen.com or SL Green's pages as http://www.frbinc.com
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