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SL Green Realty Corp. Reports Fourth Quarter 2020 EPS of $3.43 Per Share; and FFO of $1.56 Per Share

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NEW YORK–(BUSINESS WIRE)–SL Green Realty Corp. (NYSE: SLG):

Financial and Operating Highlights

  • Net income attributable to common stockholders of $3.43 per share for the fourth quarter of 2020 and of $5.85 for the full year as compared to $0.22 and $3.19 per share for the same periods in 2019.
  • Funds from operations, or FFO, of $1.56 per share for the fourth quarter of 2020 and $7.11 per share for the full year, excluding the accounting impact of the Company’s reverse stock split in January 2021, as compared to $1.75 and $7.00 per share for the same periods in the prior year. FFO for the fourth quarter and the full year of 2020 includes $8.3 million, or $0.11 per share, and $35.3 million, or $0.45 per share, of losses on certain debt and preferred equity (“DPE”) investments that were sold and reserves against retained investments.
  • Announced an increase to the size of the Company’s share repurchase program by an additional $500 million, bringing the program to a total of $3.5 billion. To date, the Company has repurchased a total of 32.4 million shares of its common stock under the program and redeemed 1.1 million common units of its Operating Partnership, or OP units.
  • Increased the annual ordinary cash dividend by 2.8%, to $3.64 per share and issued a special stock dividend with a value of $1.6967 per share.
  • Signed 27 Manhattan office leases covering 463,927 square feet in the fourth quarter of 2020 and 125 Manhattan office leases covering 1,247,552 square feet for the full year. The mark-to-market on signed Manhattan office leases was 11.9% lower for the fourth quarter and 3.6% lower for the full year of 2020 than the previous fully escalated rents on the same spaces.
  • To date, the Company has collected gross tenant billings, including rent and other billable expenses for the full year of 2020, as follows:

Office

Retail

Overall (1)

97.9%

80.8%

94.8%

(1) Includes garage, suburban and residential properties

  • Same-store cash net operating income, or NOI, including our share of same-store cash NOI from unconsolidated joint ventures, decreased by 5.9% for the fourth quarter of 2020 and increased 4.6% for the full year as compared to the same periods in 2019. Excluding lease termination income and free rent to Viacom at 1515 Broadway, same-store cash NOI decreased 5.4% for the fourth quarter of 2020 and 1.6% for the full year.
  • Manhattan same-store office occupancy was 93.4% as of December 31, 2020, inclusive of leases signed but not yet commenced, as compared to 94.2% at the end of the previous quarter.

Investing Highlights

  • Together with its partners, closed on the sale of 410 Tenth Avenue for gross consideration of $952.5 million. The transaction generated net cash proceeds to the Company, which owned 70.9% of the venture, of $206.5 million and the Company recognized a gain of $41.3 million. These amounts exclude the net cash proceeds that will be recognized upon the sale of a retained 5.0% interest, which will be held through completion of the property’s redevelopment.
  • Closed on the sale of two retail condominiums in Williamsburg, Brooklyn, for a gross sales price of $32.0 million. The transaction generated net cash proceeds to the Company of $29.6 million and the Company recognized a gain of $12.6 million.
  • Closed on the sale of 1055 Washington Boulevard in Stamford, Connecticut for a gross sales price of $23.8 million. The transaction generated net cash proceeds to the Company of $22.4 million.
  • Closed on the sale of 712 Madison Avenue for a gross sales price of $43.0 million, pursuant to the exercise of a purchase option by the ground lessee of the property. The transaction generated net cash proceeds to the Company of $14.2 million.

Financing Highlights

  • Together with our joint venture partners, closed on a new $1.25 billion construction facility for One Madison Avenue. The facility has a term of up to 6 years and bears interest at a floating rate of 3.35% over LIBOR, with the ability to reduce the spread to as low as 3.00% upon achieving certain pre-leasing and completion milestones.
  • Together with our joint venture partner, closed on the early refinancing of 100 Park Avenue. The new $360.0 million mortgage has a term of up to 5 years and bears interest at a floating rate of 2.25% over LIBOR.

Summary

New York, NY, January 27, 2021 – SL Green Realty Corp. (the “Company”) (NYSE: SLG) today reported net income attributable to common stockholders for the quarter ended December 31, 2020 of $242.0 million, or $3.43 per share, as compared to net income of $17.4 million, or $0.22 per share, for the same quarter in 2019.

The Company also reported net income attributable to common stockholders for the year ended December 31, 2020 of $427.1 million, or $5.85 per share, as compared to net income of $255.5 million, or $3.19 per share, for the year ended December 31, 2019.

The Company reported FFO for the quarter ended December 31, 2020 of $119.2 million, or $1.56 per share, excluding the accounting impact of the Company’s reverse stock split in January 2021, as compared to FFO for the same period of 2019 of $147.6 million, or $1.75 per share. FFO for the fourth quarter includes $8.3 million, or $0.11 per share, of losses related to certain debt and preferred equity investments that were sold and reserves against retained DPE positions.

The Company also reported FFO for the year ended December 31, 2020 of $562.7 million, or $7.11 per share, excluding the accounting impact of the Company’s reverse stock split in January 2021, as compared to FFO for the year ended December 31, 2019 of $605.7 million, or $7.00 per share. FFO for the full year of 2020 includes $35.3 million, or $0.45 per share, of losses related to certain debt and preferred equity investments that were sold and reserves against retained DPE positions.

All per share amounts are presented on a diluted basis.

Operating and Leasing Activity

For the quarter ended December 31, 2020, the Company reported consolidated revenues and operating income of $234.9 million and $97.8 million, respectively, compared to $308.1 million and $155.4 million, respectively, for the same period in 2019.

To date, the Company has collected gross tenant billings, including rent and other billable expenses for the full year of 2020, as follows:

Office

Retail

Overall (1)

97.9%

80.8%

94.8%

(1) Includes garage, suburban and residential properties

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures decreased by 5.9% for the fourth quarter of 2020, and decreased 5.4% excluding lease termination income and free rent to Viacom at 1515 Broadway, as compared to the same period in 2019.

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased by 4.6% for the year ended December 31, 2020, and decreased 1.6% excluding lease termination income and free rent given to Viacom at 1515 Broadway, as compared to the year ended December 31, 2019.

During the fourth quarter of 2020, the Company signed 27 office leases in its Manhattan portfolio totaling 463,927 square feet. Twenty leases comprising 357,567 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $60.52 per rentable square foot, representing an 11.9% decrease over the previous fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the fourth quarter of 2020 was 6.6 years and average tenant concessions were 4.3 months of free rent with a tenant improvement allowance of $36.51 per rentable square foot.

During the year ended December 31, 2020, the Company signed 125 office leases in its Manhattan portfolio totaling 1,247,552 square feet. Ninety-seven leases comprising 899,018 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $66.57 per rentable square foot, representing a 3.6% decrease over the previously fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the year ended December 31, 2020 was 6.9 years and average tenant concessions were 3.8 months of free rent with a tenant improvement allowance of $25.43 per rentable square foot.

Occupancy in the Company’s Manhattan same-store office portfolio was 93.4% as of December 31, 2020, inclusive of 248,577 square feet of leases signed but not yet commenced, as compared to 94.2% at the end of the previous quarter.

Significant leases that were signed in the fourth quarter included:

  • Early Renewal with Travelers Indemnity Company for 133,479 square feet at 485 Lexington Avenue, for 5.0 years;
  • New lease with Heidrick & Struggles International, Inc for 36,031 square feet at One Vanderbilt Avenue, for 12.0 years;
  • Early Renewal with Cohen & Gresser LLP for 33,900 square feet at 800 Third Avenue, for 10.0 years;
  • Renewal with Reitler, Kailas & Rosenblatt for 32,364 square feet at 885 Third Avenue, for 13.2 years;
  • New lease with a financial services firm for 26,770 square feet at One Vanderbilt Avenue, for 15.7 years;
  • Early Renewal with Napier Global Capital (US) LP for 25,224 square feet at 280 Park Avenue, for 7.3 years;
  • New lease with RSC Insurance Brokerage, Inc. for 24,515 square feet at 750 Third Avenue, for 16.0 years; and
  • New retail lease with 1Life Healthcare, Inc. d/b/a One Medical for 4,924 square feet at One Vanderbilt Avenue, for 15.0 years

Investment Activity

In December, the Company announced that its Board of Directors authorized a $500 million increase to the size of its share repurchase program, bringing the program to a total of $3.5 billion. To date, the Company has repurchased a total of 32.4 million shares of its common stock under the program and redeemed 1.1 million OP units.

In January, the Company closed on the sale of 712 Madison Avenue for a gross sales price of $43.0 million, pursuant to the exercise of a purchase option by the ground lessee of the property. The transaction generated net cash proceeds to the Company of $14.2 million.

In December, together with its joint venture partners, the Company closed on the sale of 410 Tenth Avenue, the 636,000-square-foot Manhattan office redevelopment anchored by Amazon and First Republic Bank, for gross consideration of $952.5 million. The transaction generated net cash proceeds to the Company, which owned 70.9% of the venture, of $206.5 million and the Company recognized a gain of $41.3 million. These amounts exclude the net cash proceeds that will be recognized upon the sale of a retained 5.0% interest, which will be held through completion of the property’s redevelopment.

In December, the Company closed on the sale of two retail condominiums in Williamsburg, Brooklyn, for a gross sales price of $32.0 million. The Company acquired the condominiums, which span a combined 52,000-square-feet, in 2010. The transaction generated net cash proceeds to the Company of $29.6 million and the Company recognized a gain of $12.6 million.

In December, the Company closed on the sale of its 60% interest in the leasehold at 30 East 40th street to its joint venture partner. The transaction generated net cash proceeds to the Company of $4.4 million.

In November, the Company closed on the sale of 1055 Washington Boulevard in Stamford, Connecticut for a sales price of $23.8 million. The transaction generated net cash proceeds to the Company of $22.4 million.

In October, the Company acquired 590 Fifth Avenue. The 103,244 square foot office building with ground floor retail is located on the revived lower Fifth Avenue corridor, between 47th and 48th Streets, steps from Saks Fifth Avenue & new retail flagships for Lululemon & Puma.

In October, the Company acquired a 36.27% interest in the retail Co-Op at 85 Fifth Avenue. The 12,946 space is located in the heart of Union Square in Manhattan on the corner of Fifth Avenue and 16th Street.

The properties at 590 Fifth Avenue and 85 Fifth Avenue previously served as collateral for debt and preferred equity investments and were acquired through negotiated transactions with the respective sponsors of each investment.

Debt and Preferred Equity Investment Activity

The carrying value of the Company’s DPE portfolio decreased to $1.11 billion at December 31, 2020. The portfolio is comprised of $1.08 billion of investments at a weighted average current yield of 6.8%, or 8.37% excluding the effect of $232.1 million of investments that are on non-accrual, that are classified in the debt and preferred equity line item on the balance sheet, and mortgage investments aggregating $0.03 billion at a weighted average current yield of 3.6% that are included in other balance sheet line items for accounting purposes.

During the fourth quarter, the Company generated $59.3 million of cash through the sale of one DPE position.

Financing Activity

In November, the Company, along with its joint venture partners, closed on a $1.25 billion construction facility for One Madison Avenue, the Company’s 1.4 million square foot, full block office redevelopment adjacent to Madison Square Park. The facility, which was led by Wells Fargo, TD Bank, Goldman Sachs, Bank of America, Deutsche Bank and Axos Bank, has a term of up to 6 years and bears interest at a floating interest rate of 3.35% over LIBOR, with the ability to reduce the spread to as low as 3.00% upon achieving certain pre-leasing and completion milestones.

In December, the Company, along with its joint venture partner, closed on the early refinancing of 100 Park Avenue. The new $360.0 million mortgage has a term of up to 5 years, as extended, bears interest at a floating rate of 2.25% over LIBOR and replaces the previous $353.1 million of indebtedness on the property that was scheduled to mature in February 2021.

In January, the Company entered into $800 million of fixed rate interest swaps against floating rate corporate debt. The swaps have terms of between one and two years with a weighted average interest rate of 0.1578%.

Dividends

In the fourth quarter of 2020, the Company declared:

  • Two monthly dividends on its outstanding common stock of $0.295 per share which were paid on November 16 and December 15, 2020, and one monthly dividend of $0.3033 per share which was paid on January 15, 2021. The increased dividend represents a 2.8% increase to the Company’s ordinary dividend equating to an annualized dividend of $3.64 per share of common stock;
  • A special dividend with a value of $1.6967 per share, which was paid on January 15, 2021. The special dividend was paid in the form of common stock of the Company. To mitigate the dilutive impact of the stock issued for the special dividend, the board of directors also authorized a reverse stock split, which was effective on January 20, 2021. The split ratio for the reverse stock split was 1.02918-for-1.
  • Quarterly dividends on its outstanding 6.50% Series I Cumulative Redeemable Preferred Stock of $0.40625 per share for the period October 15, 2020 through and including January 14, 2021, which was paid on January 15, 2021 and is the equivalent of an annualized dividend of $1.625 per share.

Conference Call and Audio Webcast

The Company’s executive management team, led by Marc Holliday, Chairman and Chief Executive Officer, will host a conference call and audio webcast on Thursday, January 28, 2021 at 2:00 pm ET to discuss the financial results.

The supplemental data will be available prior to the quarterly conference call in the Investors section of the SL Green Realty Corp. website at https://slgreen.com/ under “Financial Reports.”

The live conference call will be webcast in listen-only mode in the Investors section of the SL Green Realty Corp. website at https://slgreen.com/ under “Presentations & Webcasts”. The conference may also be accessed by dialing toll-free (877) 312-8765 or international (419) 386-0002, and using conference ID 6387248.

A replay of the call will be available for 7 days after the call by dialing (855) 859-2056 using conference ID 3497478. A webcast replay will also be available in the Investors section of the SL Green Realty Corp. website at https://slgreen.com/ under “Presentations & Webcasts”.

Company Profile

SL Green Realty Corp., an S&P 500 company and Manhattan’s largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of December 31, 2020, SL Green held interests in 88 buildings totaling 38.2 million square feet. This included ownership interests in 28.6 million square feet of Manhattan buildings and 8.7 million square feet securing debt and preferred equity investments.

To be added to the Company’s distribution list or to obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at [email protected]

Disclaimers

Non-GAAP Financial Measures

During the quarterly conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found in this release and in the Company’s Supplemental Package.

Forward-looking Statements

This press release includes certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, are forward-looking statements, including the statements herein under the section entitled “Guidance”. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,” or the negative of these words, or other similar words or terms.

Forward-looking statements contained in this press release are subject to a number of risks and uncertainties, many of which are beyond our control, that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by forward-looking statements made by us. Factors and risks to our business that could cause actual results to differ from those contained in the forward-looking statements include risks and uncertainties related to the on-going COVID-19 pandemic and the duration and impact it will have on our business and the industry as a whole and the other risks and uncertainties described in our filings with the Securities and Exchange Commission. Except to the extent required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

 

SL GREEN REALTY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

Revenues:

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

Rental revenue, net

$

165,243

 

 

$

218,495

 

 

$

708,383

 

 

$

863,061

 

Escalation and reimbursement

25,148

 

 

31,957

 

 

96,040

 

 

120,496

 

Investment income

18,699

 

 

42,423

 

 

120,163

 

 

195,590

 

Other income

25,808

 

 

15,207

 

 

128,158

 

 

59,848

 

Total revenues

234,898

 

 

308,082

 

 

1,052,744

 

 

1,238,995

 

Expenses:

 

 

 

 

 

 

 

Operating expenses, including related party expenses of $3,354 and $12,643 in 2020 and $4,531 and $18,106 in 2019

42,527

 

 

58,814

 

 

183,200

 

 

234,676

 

Real estate taxes

44,510

 

 

47,756

 

 

176,315

 

 

190,764

 

Operating lease rent

6,872

 

 

8,297

 

 

29,043

 

 

33,188

 

Interest expense, net of interest income

25,579

 

 

44,724

 

 

116,679

 

 

190,521

 

Amortization of deferred financing costs

3,482

 

 

3,087

 

 

11,794

 

 

11,653

 

Depreciation and amortization

56,932

 

 

64,090

 

 

313,668

 

 

272,358

 

Loan loss and other investment reserves, net of recoveries

8,280

 

 

 

 

35,298

 

 

 

Transaction related costs

20

 

 

369

 

 

503

 

 

729

 

Marketing, general and administrative

25,144

 

 

25,575

 

 

91,826

 

 

100,875

 

Total expenses

213,346

 

 

252,712

 

 

958,326

 

 

1,034,764

 

 

 

 

 

 

 

 

 

Equity in net loss from unconsolidated joint ventures

(9,750)

 

 

(11,874)

 

 

(25,195)

 

 

(34,518)

 

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

2,961

 

 

 

 

2,961

 

 

76,181

 

Purchase price and other fair value adjustment

187,522

 

 

 

 

187,522

 

 

69,389

 

Gain (loss) on sale of real estate, net

51,882

 

 

(19,241)

 

 

215,506

 

 

(16,749)

 

Depreciable real estate reserves

(53,827)

 

 

 

 

(60,454)

 

 

(7,047)

 

Net income

200,340

 

 

24,255

 

 

414,758

 

 

291,487

 

Net income attributable to noncontrolling interests in the Operating Partnership

(9,943)

 

 

(995)

 

 

(20,016)

 

 

(13,301)

 

Net (income) loss attributable to noncontrolling interests in other partnerships

(13,795)

 

 

635

 

 

(14,940)

 

 

3,159

 

Preferred unit distributions

(1,864)

 

 

(2,726)

 

 

(8,747)

 

 

(10,911)

 

Net income attributable to SL Green

174,738

 

 

21,169

 

 

371,055

 

 

270,434

 

Perpetual preferred stock dividends

(3,737)

 

 

(3,737)

 

 

(14,950)

 

 

(14,950)

 

Net income attributable to SL Green common stockholders

$

171,001

 

 

$

17,432

 

 

$

356,105

 

 

$

255,484

 

Earnings Per Share (EPS)

 

 

 

 

 

 

 

Net income per share (Basic) (1)

$

2.43

 

 

$

0.22

 

 

$

4.88

 

 

$

3.20

 

Net income per share (Diluted) (1)

$

2.41

 

 

$

0.22

 

 

$

4.87

 

 

$

3.19

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

 

 

 

 

 

 

FFO per share (Basic) (1)

$

1.59

 

 

$

1.80

 

 

$

7.31

 

 

$

7.21

 

FFO per share (Diluted) (1)

$

1.59

 

 

$

1.80

 

 

$

7.29

 

 

$

7.19

 

FFO per share (Pro forma) (2)

$

1.56

 

 

$

1.75

 

 

$

7.11

 

 

$

7.00

 

 

 

 

 

 

 

 

 

Basic ownership interest

 

 

 

 

 

 

 

Weighted average REIT common shares for net income per share

70,278

 

 

77,629

 

 

72,773

 

 

79,782

 

Weighted average partnership units held by noncontrolling interests

4,016

 

 

4,250

 

 

4,096

 

 

4,275

 

Basic weighted average shares and units outstanding (1)

74,294

 

 

81,879

 

 

76,869

 

 

84,057

 

 

 

 

 

 

 

 

 

Diluted ownership interest

 

 

 

 

 

 

 

Weighted average REIT common share and common share equivalents

71,147

 

 

77,805

 

 

73,147

 

 

79,959

 

Weighted average partnership units held by noncontrolling interests

4,016

 

 

4,250

 

 

4,096

 

 

4,275

 

Diluted weighted average shares and units outstanding (1)

75,163

 

 

82,055

 

 

77,243

 

 

84,234

 

Pro forma adjustment (2)

1,411

 

 

2,265

 

 

1,874

 

 

2,328

 

Pro forma diluted weighted average shares and units outstanding (2)

76,574

 

 

84,320

 

 

79,117

 

 

86,562

 

(1) During the first quarter of 2021, the Company completed a reverse stock split to mitigate the dilutive impact of stock issued for a special dividend paid primarily in stock. The 2019 basic and diluted weighted average common shares outstanding have been restated to reflect the reverse stock split.

 

(2) During the first quarter of 2021, the Company completed a reverse stock split and a special dividend paid primarily in stock. GAAP requires the weighted average common shares outstanding to be adjusted retroactively for all periods presented to reflect the reverse stock split. However, GAAP requires shares issued pursuant to the special dividend be included in diluted weighted average common shares outstanding only from the date on which the special dividend was declared. To facilitate comparison between the periods presented, the Company calculated Pro forma diluted weighted average shares and units outstanding, which includes the shares issued pursuant to the special dividend from the beginning of the 2020 reporting periods.

Contacts

Matt DiLiberto

Chief Financial Officer

(212) 594-2700

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