NEW YORK, Aug. 5 /PRNewswire/ -- SL Green Realty Corp. (NYSE: SLG) today
reported results for the three and six months ended June 30, 1998.
For the three months ended June 30, 1998, the Company increased funds
from operations (FFO) 43% to $9.6 million, before minority interest and an
extraordinary loss, from a pro forma $6.7 million for the same period in
1997. Revenues for the second quarter 1998 were $34.3 million, compared to
$12.9 million, for the second quarter 1997.
FFO per share for the period ended June 30, 1998 was $0.46 versus $0.45
in the pro forma period ended June 30, 1997. During the second quarter, the
Company completed an equity offering which resulted in an increase in its
weighted average shares outstanding by 6,066,000.
For the six months ended June 30, 1998, FFO before minority interest
and an extraordinary loss were $16.9 million, or $0.95 per share, basic and
diluted, on revenues of $56.4 million, compared to pro forma FFO of
$12.9 million or $0.88 per share basic and $0.87 per share diluted on revenues
of $27.0 million for the six months ended June 30, 1997. During this
six-month period the Company recognized an extraordinary loss of $0.6 million
in recognition of the early extinguishment of debt, which resulted from the
repayment of the Company's acquisition bridge financing.
For the three months ended June 30, 1998 compared to the pro forma
three months ended June 30, 1997 revenues including Equity in income from
Service Corps. increased $19.7 million primarily due to (i) first time
revenue from properties acquired during the quarter -- $2.2 million, (ii) an
$11.8 million increase attributed to other properties purchased in 1998,
(iii) $5.5 million resulting from post 1997 IPO acquisition properties, (iv)
$0.9 million from Core and IPO properties and (v) $0.9 million from investment
income, of which $465,000 results from the 17 Battery Place mortgage and the
balance results from interest income on uninvested cash. These improvements
were offset by the reduction in third party management and leasing revenue of
$1.6 million.
Offsetting these revenue gains were the Company's costs of operations
for the three months ended June 30, 1998 which increased in three areas:
property related costs -- $11.9 million, interest expense -- $2.7 million, and
MG&A expense -- $0.7 million. Total costs of property operations increased
in three areas: operating expenses, real property taxes and the cost of ground
leases all of which increased by approximately $11.9 million. Factors
contributing to this increase result from new property acquisitions in the
quarter -- $1.2 million, other properties acquired in 1998 -- $7.4 million (of
which the Graybar building accounts for approximately $6.0 million), and 1997
post IPO acquisitions -- $2.7 million (of which 17 Battery contributed $1.6
million); the balance of the increase was spread throughout the portfolio.
Interest expense for the period of $3.9 million increased $2.7 million
over the comparable period in 1997 as a result of the Company's use of a
bridge loan facility to acquire properties in 1998. This loan was paid off
with proceeds from the Company's recent public offerings.
MG&A costs increased $0.7 million during the recent quarter compared to
the prior year. These costs increased as a result of increased personnel
costs, higher operating costs associated with the reduction of the third-party
management and leasing business and costs associated with the Company's
investment in new management information systems, including Year 2000
compliance.
Second quarter 1997 pro forma results comprise properties owned and
acquired at the IPO date. Since the Company's IPO in August 1997, SL Green
has acquired eight properties for an initial cost of approximately $349
million. These acquisitions added 3.7 million square feet to its
portfolio, representing an increase of approximately 168%. 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, and 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.
On May 12, 1998 the Company completed its 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
weighted average number of shares outstanding were 20,803,000 on June 30, 1998
versus 14,737,000 on June 30, 1997.
During June, the Company acquired 440 Ninth Avenue, an 18-story, 340,000
square foot building, for approximately $32 million in cash, which was
provided from the Company's recent offerings. It is situated at 35th Street
and Ninth Avenue, in the heart of the redeveloping Pennsylvania Station area.
The building is currently 75% leased, with major tenants including Duane
Reade, Holmes Protection and Self-Help Community Services, Incorporated.
During June and July, the Company acquired 50% of the fee interest and
100% of the operating sub-leasehold of 711 Third Avenue, a 520,000 square foot
building located on Third Avenue between 44th and 45th Streets, in close
proximity to the Grand Central District of Manhattan. The property was
acquired through the purchase of a mortgage outstanding of $44.6 million. A
50% interest in the fee owning partnership was acquired for $20 million in
cash and the issuance of 44,772 Operating Partnership Units on July
2nd. On July 24th, the Receiver for the property turned over to the Company
$3.5 million, which will reduce the overall acquisition costs. The 20-story,
post-war building at 711 Third Avenue was the first to be built on Third
Avenue in 1955, after demolition of the Third Avenue E1. The property counts
among its major tenants Eddie Bauer, the Avenue, Dun & Bradstreet and Parade
Publications. Of its 520,000 square feet of retail and office space,
approximately 78% is currently occupied.
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 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-UNAUDITED
(Amounts in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
(Historical) (Pro forma) (Historical) (Pro forma)
Revenue:
Rental revenue $ 29,302 $ 11,548 $ 48,730 $ 23,018
Escalations &
reimbursement revenues 4,022 1,337 6,150 2,474
Investment income 928 -- 1,565 --
Other income -- 40 4 1,537
Total revenues 34,252 12,925 56,449 27,029
Equity in income (loss)
from Service Corporations (91) 1,531 (49) 1,907
Expenses:
Operating expenses 8,848 2,804 14,512 5,711
Ground rent 3,536 1,093 4,724 2,152
Interest 3,877 1,167 7,371 2,645
Depreciation and
amortization 3,951 1,942 6,644 3,630
Real estate taxes 5,471 2,050 8,754 4,078
Marketing, general and
administrative 1,344 681 2,382 1,395
Total expenses 27,027 9,737 44,387 19,611
Income before minority
interest, preferred stock
dividends, and
extraordinary loss 7,134 4,719 12,013 9,325
Minority interest in
operating partnership (762) (764) (1,552) (1,511)
6,372 3,955 10,461 7,814
Extraordinary loss, net
of minority interest (522) -- (522) --
Preferred stock dividends
and accretion (1,191) -- (1,191) --
Net income available to
common shareholders $ 4,659 $ 3,955 $ 8,748 $ 7,814
Net income per share
(Basic) $ 0.25 $ 0.32 $ 0.57 $ 0.64
Net income per share
(Diluted) $ 0.25 $ 0.32 $ 0.57 $ 0.63
Funds From Operations (FFO)
FFO per share (Basic) $ 0.46 $ 0.45 $ 0.95 $ 0.88
FFO per share (Diluted) $ 0.46 $ 0.45 $ 0.95 $ 0.87
FFO Calculation
Income before minority
interest and
extraordinary loss $ 7,134 $ 4,719 $ 12,013 $ 9,325
Less:
Preferred stock
dividend (1,120) -- (1,120) --
Add:
Depreciation
and amortization (A) 3,951 1,942 6,644 3,630
Amortization of deferred
financing costs and
depreciation of
non-real estate assets (384) (10) (625) (73)
FFO $ 9,581 $ 6,651 $ 16,912 $ 12,882
Basic ownership
interests
Weighted average
REIT common shares 18,358 12,292 15,342 12,292
Partnership units held
by minority interest 2,383 2,383 2,383 2,383
Basic weighted average
shares and units
outstanding 20,741 14,675 17,725 14,675
Diluted ownership
interest
REIT common and
equivalent shares 18,420 12,354 15,434 12,384
Partnership units held
by minority interests 2,383 2,383 2,383 2,383
Diluted weighted average
and equivalent shares
and units outstanding 20,803 14,737 17,817 14,767
(A) Includes properties recorded on the equity method during 1997
SL GREEN REALTY CORP.
SELECTED BALANCE SHEET DATA-UNAUDITED
(Amounts in thousands, except operating and percentage data)
June 30, 1998 December 31, 1997
Real estate assets, before depreciation $583,783 $338,818
Cash and cash equivalents 38,478 12,782
Total assets 672,422 382,775
Total liabilities 115,450 172,661
Minority interest 41,130 33,906
Preferred stock 109,653 --
Total owners' equity 406,187 176,208
Shares and units outstanding at period end 26,176 14,675
Operating Data:
Net rentable area at end of period (in 000's) 5,865 3,322
Portfolio occupancy percentage at end of period 91.1 93.9
Core properties occupancy percentage at
end of period 99.4 99.1 (1)
Number of properties in operation 17 12
(A) Includes core portfolio only
SOURCE SL Green Realty Corp.
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