NEW YORK, Nov. 4 /PRNewswire/ -- SL Green Realty Corp. (NYSE: SLG) today
reported results for the three and nine months ended September 30, 1998.
For the three months ended September 30, 1998, aggregate funds from
operations (FFO) before minority interest, increased by 105% totaling
$12.6 million versus pro forma results of $6.2 million for the same period in
1997. Revenues for the third quarter 1998 were $40.5 million, compared to
$14.8 million, for the third quarter 1997, an increase of over 172%.
FFO per share for the three months ended September 30, 1998 increased 14%
to $0.48 versus $0.42 in the pro forma period ended September 30, 1997. The
increase in FFO per share is reflective of the Company's offering of 11.5
million common shares in the second quarter of 1998. This offering increased
the weighted average shares outstanding to 23.9 million.
For the nine months ended September 30, 1998, FFO before minority interest
and an extraordinary loss were $29.6 million, or $1.43 per share, (basic and
diluted), on revenues of $96.9 million, compared to pro forma FFO of
$19.1 million or $1.30 (basic) and $1.29 (diluted) per share on revenues of
$43.3 million for the nine months ended September 30, 1997. During 1998 and
1997 the Company recognized extraordinary losses of $0.5 and $1.9 million,
respectively, in recognition of the early extinguishment of debt.
For the three months ended September 30, 1998 compared to the pro forma
three months ended September 30, 1997 revenues increased $25.7 million
primarily due to (i) a $19.5 million increase attributed to properties
purchased in 1998, (ii) $5.3 million resulting from post 1997 IPO acquisition
properties, (iii) $1.0 million from properties owned at the time of the IPO,
and (iv) $0.6 million from investment income, of which $465,000 is
attributable to the 17 Battery Place mortgage. These improvements were offset
by the reduction in leasing revenue derived from the Company's tenant-rep
division of $0.7 million. This activity in 1998 is being included in the
results from the Service Corporations, which are accounted for under the
equity method. Notwithstanding this reclassification, tenant-rep leasing
income decreased $0.6 million primarily due to timing and strong results in
the previous 1997 quarter. Third party management and leasing revenues were
essentially unchanged primarily due to a $0.3 million leasing commission
received on a managed property for which the management contract has
subsequently been terminated.
For the three months ended September 30, 1998 operating expenses, real
estate taxes, and depreciation and amortization increased $8.0 million,
$4.0 million and $2.3 million primarily due to 1997 and 1998 acquired
properties of which properties owned at the time of the IPO accounted for
approximately $0.5 million. Ground rent increased $2.3 million as a result of
the acquisitions of 420 Lexington Avenue ($2.1 million) and 711 Third Avenue
($0.2 million).
Interest expense for the three months ended September 30, 1998 increased
$1.1 million to $2.4 million over the comparable pro forma period in 1997,
primarily due to borrowings on the Company's Credit Facility to acquire 1412
Broadway.
MG&A costs increased $0.9 million during the recent quarter compared to
the prior year. These costs increased as a result of increased personnel
costs, higher operating costs as a result of the increasing size of the
Company's portfolio, and a reduction of costs allocated to the third-party
management and leasing business ($0.7 million) which is being phased out in
favor of direct property ownership. Additionally, costs also increased due to
higher public entity management and technology costs ($0.2 million).
Third 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 nine properties for an initial cost of approximately
$431 million. These acquisitions added 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, 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 three
month weighted average number of shares outstanding were 23,922,000 on
September 30, 1998 versus 12,292,000 on September 30, 1997, an increase of
approximately 95%.
During the third quarter, the Company closed on its purchase of 1412
Broadway -- The Fashion Gallery Building -- for $72 million, plus
approximately $5 million for reimbursement of loan prepayment charges and
$5 million related to capital expenditures, commissions and other closing
costs. This property consists of 389,000 square feet and was approximately
89.5% leased at acquisition.
The Company also acquired a first mortgage interest on 636 11th Avenue,
which is a 469,000 square foot industrial and warehouse block front property
located between 46th and 47th Streets for $10.9 million.
Subsequent to the 1412 Broadway acquisition, 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-UNAUDITED
(Amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(Historical) (Pro forma) (Historical) (Pro forma)
Revenue:
Rental revenue $34,310 $11,837 $83,039 $34,855
Escalations &
reimbursement revenues 5,281 1,864 11,432 4,338
Leasing commissions -- 726 -- 2,251
Investment income 851 207 2,419 207
Other income 18 139 20 1,676
Total revenues 40,460 14,773 96,910 43,327
Equity in income (loss)
from Service Corporations (22) (243) (70) 139
Expenses:
Operating expenses 11,049 3,003 24,585 8,714
Allowance for tenant
credit loss 710 124 1,685 124
Ground rent 3,428 1,076 8,152 3,228
Interest 2,419 1,322 9,790 3,967
Depreciation and
amortization 4,069 1,814 10,714 5,444
Real estate taxes 6,134 2,091 14,888 6,169
Marketing, general and
administrative 1,571 671 3,954 2,066
Total expenses 29,380 10,101 73,768 29,712
Income before minority
interest, preferred
stock dividends, and
extraordinary loss 11,058 4,429 23,072 13,754
Minority interest in
operating partnership (802) (717) (2,354) (2,228)
10,256 3,712 20,718 11,526
Extraordinary loss,
net of minority interest -- -- (522) (1,874)
Preferred stock
dividends and accretion (2,433) -- (3,624) --
Net income available to
common shareholders $7,823 $3,712 $16,572 $9,652
Net income per share (Basic)$0.33 $0.30 $0.91 $0.79
Net income per share
(Diluted) $0.33 $0.30 $0.91 $0.78
Funds From Operations (FFO)
FFO per share (Basic) $0.48 $0.42 $1.43 $1.30
FFO per share (Diluted) $0.48 $0.42 $1.43 $1.29
FFO Calculation:
Income before minority
interest preferred
stock dividends and
extraordinary loss $11,058 $4,429 $23,072 $13,754
Less:
Preferred stock dividend (2,300) -- (3,420) --
Add:
Depreciation and
amortization (a) 4,069 1,814 10,714 5,444
Amortization of deferred
financing costs and
depreciation of
non-real estate assets (186) (73) (811) (136)
FFO $12,641 $6,170 $29,555 $19,062
Basic ownership interests
Weighted average REIT
common shares 23,922 12,292 18,233 12,292
Partnership units held
by minority interest 2,428 2,383 2,398 2,383
Basic weighted average
shares and units
outstanding 26,350 14,675 20,631 14,675
Diluted ownership interest
REIT common and
equivalent shares 23,928 12,354 18,295 12,386
Partnership units held
by minority interests 2,428 2,383 2,398 2,383
Diluted weighted average
and equivalent shares
and units outstanding 26,356 14,737 20,693 14,769
(a) Includes properties recorded on the equity method during 1997
SL Green Realty Corp.
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
September 30, December 31,
1998 1997
(Unaudited)
Assets
Commercial real estate properties,
at cost:
Land $112,119 $53,834
Buildings and improvements 481,638 272,776
Building leasehold 83,272 --
Property under capital lease 12,208 12,208
689,237 338,818
Less accumulated depreciation (33,177) (23,800)
656,060 315,018
Cash and cash equivalents 976 12,782
Restricted cash 19,512 10,310
Receivables 4,532 738
Related party receivables 362 1,971
Deferred rents receivable net
of provision for doubtful
accounts of $1,733 and $399 in
1998 and 1997, respectively 18,187 11,563
Investment in and advances to
Service Corporations 7,569 1,480
Mortgage loans receivable 26,401 15,500
Deferred costs, net 9,753 6,099
Other assets 10,577 7,314
Total assets $753,929 $382,775
Liabilities and Stockholders' Equity
Mortgage notes payable $51,369 $52,820
Revolving credit facility 82,000 76,000
Accrued interest payable 381 552
Accounts payable and accrued expenses 9,149 3,340
Accounts payable to related parties 172 367
Capitalized lease obligations 14,676 14,490
Deferred land lease payable 9,357 8,481
Dividend and distributions payable 11,585 5,136
Security deposits 17,666 11,475
Total liabilities 196,355 172,661
Minority interest 41,652 33,906
8% Preferred Income Equity Redeemable
Stock $0.01 par value, $25.00
liquidation preference 25 million
shares authorized, 4.6 million
outstanding in 1998 109,904 --
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 417,003 178,669
Deferred compensation plan (3,562) --
Officers' loans (578) --
Distributions in excess of earnings (7,085) (2,584)
Total stockholders' equity 406,018 176,208
Total liabilities and
stockholders' equity $753,929 $382,775
SL GREEN REALTY CORP.
SELECTED BALANCE SHEET DATA-UNAUDITED
September 30, 1998 December 31, 1997
Operating Data:
Net rentable area at end of
period (in 000's) 6,254 3,322
Portfolio occupancy percentage at
end of period 93.0% 94.0%
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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CONTACT:
Stephen L. Green, Chairman, or David Nettina,
President & Chief Operating Officer, both of SL Green,
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 800-PRO-INFO. Use
company's symbol, SLG.
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