Quarterly Highlights
* FFO increases to $0.52 per share (diluted) up 4% over prior year, on
113% increase in common share equivalents.
* Company achieves 92% increase in quarterly aggregate FFO -- up $6.7
million to $14 million.
* 1998 same store portfolio GAAP NOI up 13%
* New 1999 same store portfolio GAAP NOI up 7%
* Achieves 96% overall portfolio occupancy.
* Secures Tower Realty property acquisition financing - $118 million
bridge facilities.
* Acquired/contracted to acquire 1.6 million square feet of office
space.
Subsequent Highlights
* Completes $103 permanent refinancings of short-term debt.
* Initiates Mezzanine Debt Program -- closes $20 million second mortgage
financing.
NEW YORK, May 6 /PRNewswire/ -- SL Green Realty Corp. (NYSE: SLG) today
reported improved results for the three months ended March 31, 1999.
Financial Results
Funds from operations (FFO) before minority interest totaled $14.0 million
or $0.52 per share based on 31.4 million shares and common share equivalents
outstanding, compared to $0.50 per share based on 14.8 million shares and
common share equivalents outstanding during the first quarter of 1998.
Revenues for the first quarter ended March 31, 1999 were $47.5 million
compared to $22.2 million in the same period last year -- an increase of 114%.
The Company's improved first quarter 1999 results were derived from strong
internal growth, contributions from 1998 and 1999 acquisitions and a strong
New York leasing market.
Real estate revenue increased $24.8 million primarily due to (i)
$18.7 million of incremental revenue related to the 1998 acquisitions (ii)
$5.2 million resulting from the 1999 acquisitions and (iii) $0.9 million
increase in 1999 "same store" revenue.
For the quarter ended March 31, 1999, GAAP NOI from 1999 "same store"
properties rose approximately 7% to $11.9 million from $11.1 million at
March 31, 1998. Operating margins (GAAP NOI) improved from 56.6% last year to
58.4% on aggregate revenue growth of 5% to $21.2 million. This improvement
was principally the result of a $0.8 million increase in rental revenue
resulting from improved occupancy, increasing from 93% to 96%. The majority
of leasing actually occurred at the Company's 17 Battery Place and 110 East
42nd Street properties, which included the replacement of two of the Company's
Top 25 tenants. Other income increased $0.3 million primarily due to lease
buy-out income at 1372 Broadway ($0.2 million), which was offset by an
increase in operating expenses ($0.2 million). The timing of lease-up at the
Company's 110 East 42nd Street and 17 Battery Place (121,000 square feet)
properties depressed Cash NOI growth as a result of these new leases
commencing their free rent periods simultaneously during the quarter.
EBITDA margins before ground rent and one-time relocation costs remained
relatively constant at 56.5% for the first quarter compared to 56.9% in the
prior year's period. EBITDA margin after ground rent was 49.7% compared to
51.3% in the first quarter of 1998. The decrease was primarily the result of
the normalization of properties acquired in 1998 which had ground rent
expense; 420 Lexington Avenue ($1.7 million) and 711 Third Avenue ($0.3
million), and increased MG&A expense ($1.5 million). Growth in MG&A
represents both normalization of and increases in organizational costs
incurred over the course of 1998 and the absorption of costs related to the
phase out of third-party services.
SL Green ended the quarter with total debt of $294.6 million. This
translates to a current debt to market cap ratio of 32.4%. Additionally,
shortly after quarter end, the Company refinanced all of its short-term debt
(excluding its unsecured line of credit) with permanent fixed rate mortgage
financings.
Recent Events
On January 25, 1999, the Company purchased a 65% controlling interest in
555 West 57th Street for $66.7 million (including assumed mortgage debt) from
an affiliate of Blackacre Capital Management LLC. The property, a 20-story,
941,000 square foot midtown Manhattan property known as the BMW Building was
100% leased at the time of acquisition. For reporting purposes, the BMW
acquisition has been consolidated into the Company's financial statements at
100%.
On March 17, 1999, the Company signed an agreement with Reckson Associates
Realty Corp. ("Reckson") (NYSE: RA) to purchase the fee interest in four New
York City office properties, comprising 675,000 square feet, for $84.5
million. The properties are owned by Tower Realty Trust (NYSE: TOW)and are
among those included in the pending merger agreement among Reckson,
Metropolitan Partners LLC ("Metropolitan") and Tower. The Company expects to
complete the acquisition of these properties during mid May.
On April 12, 1999, the Company announced that it had originated and funded
a $20 million second mortgage bridge loan to finance 521 Fifth Avenue
Partners, LLC's acquisition of a 440,000 square foot office building located
at 521 Fifth Avenue in the Grand Central District of New York City. The
second mortgage loan has a term of six months which may be extended for an
additional three months. Goldman Sachs Mortgage Company purchased a 50%
participation in the investment. SL Green will asset manage the mortgage
investment.
At March 31, 1999 SL Green's portfolio consisted of 19 properties,
comprising approximately 7.2 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.
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
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 - UNAUDITED
(Amounts in thousands, except per share data)
Three Months Ended
March 31,
1999 1998
Revenue:
Rental revenue $41,244 $19,428
Escalations & reimbursement revenues 4,932 2,128
Investment income 837 637
Other income 466 4
Total revenues 47,479 22,197
Equity in income from Service Corporations 211 42
Expenses:
Operating expenses 11,221 5,278
Allowance for tenant credit loss 816 386
Ground rent 3,207 1,188
Interest 5,238 3,494
Depreciation and amortization 5,438 2,693
Real estate taxes 7,083 3,283
Marketing, general and administrative 2,645 1,038
Total expenses 35,648 17,360
Income before minority interests and
preferred stock dividends 12,042 4,879
Minority interests (1,429) (790)
10,613 4,089
Preferred stock dividends and accretion (2,399) ---
Net income available to common shareholders $8,214 $4,089
Net income per share (Basic) $0.34 $0.33
Net income per share (Diluted) $0.34 $0.33
Funds From Operations (FFO)
FFO per share (Basic) $0.53 $0.50
FFO per share (Diluted) $0.52 $0.50
FFO Calculation:
Income before minority interest and
preferred stock dividends $12,042 $4,879
Preferred stock dividend (2,300) ---
Minority interest in commercial property (572) ---
Depreciation and amortization 5,438 2,693
Amortization of deferred financing costs and
depreciation of non-real estate assets (569) (241)
FFO - BASIC 14,039 7,331
Add: Preferred stock dividends 2,300 ---
FFO -- DILUTED $16,339 $7,331
Basic ownership interests
Weighted average REIT common shares 24,192 12,292
Weighted average partnership units
held by minority interest 2,428 2,383
Basic weighted average shares
and units outstanding 26,620 14,675
Diluted ownership interest
Weighted average REIT common and common
share equivalent shares 24,236 12,404
Weighted average partnership units held
by minority interests 2,428 2,383
Common share equivalents for
preferred stock 4,698 ---
Diluted weighted average and equivalent
shares and units outstanding 31,362 14,787
SL GREEN REALTY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
1999 1998
(Unaudited)
Assets
Commercial real estate properties, at cost:
Land and land interests $128,016 $112,123
Buildings and improvements 566,633 492,568
Building leasehold 107,561 80,162
Property under capital lease 12,208 12,208
814,418 697,061
Less accumulated depreciation (41,911) (37,355)
772,507 659,706
Cash and cash equivalents 21,411 6,236
Restricted cash 23,863 18,635
Tenant receivables, net $597 and $100
reserve in 1999 and 1998, respectively 5,847 3,951
Related party receivables 362 182
Deferred rents receivable net of provision
for doubtful accounts of $3,101 and
$2,369 in 1998 and 1997, respectively 25,940 20,891
Investment in and advances to Service
Corporations 9,249 10,694
Mortgage loans receivable 26,401 26,401
Deferred costs, net 22,108 15,282
Other assets 12,619 15,755
Total assets $920,307 $777,733
Liabilities and Stockholders' Equity
Mortgage notes payable $94,278 $50,862
Secured bridge facilities 87,500 87,500
Revolving credit facility 112,800 23,800
Accrued interest payable 1,711 494
Accounts payable and accrued expenses 9,428 5,588
Capitalized lease obligations 14,808 14,741
Deferred land lease payable 10,388 9,947
Dividend and distributions payable 11,670 11,585
Security deposits 17,805 16,949
Total liabilities 360,388 221,466
Minority interests 44,949 41,491
8% Preferred Income Equity Redeemable
Stock $0.01 par value, $25.00 mandatory
liquidation preference 25 million
shares authorized, 4.6 million
outstanding in 1998 110,049 109,950
Stockholders' Equity
Common stock, $.01 par value 100,000
shares authorized, 24,192 and
23,952 issued and outstanding in
1999 and 1998, respectively 242 240
Additional paid - in capital 422,128 416,939
Deferred compensation plan (8,160) (3,266)
Officers' loans (478) (528)
Distributions in excess of earnings (8,811) (8,559)
Total stockholders' equity 404,921 404,826
Total liabilities and
stockholders' equity $920,307 $777,733
SL GREEN REALTY CORP.
SELECTED OPERATING DATA-UNAUDITED
March 31, 1999 (1) December 31, 1998
Operating Data:
Net rentable area at end of
period (in 000's) 7,295 6,254
Portfolio occupancy percentage
at end of period 96% 93%
Same Store occupancy percentage
at end of period 96% 93%
Number of properties in operation 19 18
(1) Includes wholly-owned and majority owned properties.
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 of SL Green, 212-594-2700; or
General Info, Paula Schwartz or Michael Lawson, Analyst Info,
Pamela King, or Media Info, Judith Sylk- Siegel of The Financial
Relations Board, 212-661-8030
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