SLG-2015.06.30-10Q
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________

FORM 10-Q 
___________________________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2015
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to
Commission File Number: 1-13199 (SL Green Realty Corp.)
Commission File Number: 33-167793-02 (SL Green Operating Partnership, L.P.)
___________________________________________

SL GREEN REALTY CORP.
SL GREEN OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
___________________________________________
SL Green Realty Corp.
Maryland
 
13-3956775
SL Green Operating Partnership, L.P.
Delaware
 
13-3960938
 
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
420 Lexington Avenue, New York, New York 10170
(Address of principal executive offices) (Zip Code)
 
(212) 594-2700
(Registrant’s telephone number, including area code)
___________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
SL Green Realty Corp. YES x  NO o SL Green Operating Partnership, L.P. YES x  NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
SL Green Realty Corp. YES x  NO o SL Green Operating Partnership, L.P. YES x  NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
SL Green Realty Corp.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller Reporting Company o
 
 
(Do not check if a
smaller reporting company)
 
SL Green Operating Partnership, L.P.
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller Reporting Company o
 
 
(Do not check if a
smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
SL Green Realty Corp. YES o NO x SL Green Operating Partnership, L.P. YES o  NO x
The number of shares outstanding of SL Green Realty Corp.'s common stock, $0.01 par value, was 99,614,410 as of August 3, 2015. As of August 3, 2015, 1,005,426 common units of limited partnership interest of SL Green Operating Partnership, L.P. were held by non-affiliates. There is no established trading market for such units.
 




EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2015 of SL Green Realty Corp. and SL Green Operating Partnership, L.P. Unless stated otherwise or the context otherwise requires, references to "SL Green Realty Corp.," the "Company" or "SL Green" mean SL Green Realty Corp. and its consolidated subsidiaries; and references to "SL Green Operating Partnership, L.P.," the "Operating Partnership" or "SLGOP" mean SL Green Operating Partnership, L.P. and its consolidated subsidiaries. The terms "we," "our" and "us" mean the Company and all the entities owned or controlled by the Company, including the Operating Partnership.
The Company is a Maryland corporation which operates as a self-administered and self-managed real estate investment trust, or REIT, and is the sole managing general partner of the Operating Partnership. As a general partner of the Operating Partnership, the Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership.
The Company owns 96.22% of the outstanding general and limited partnership interest in the Operating Partnership. The Company also owns 9,200,000 Series I Preferred Units of the Operating Partnership. As of June 30, 2015, noncontrolling investors held, in aggregate, a 3.78% limited partnership interest in the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership.
The Company and the Operating Partnership are managed and operated as one entity. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.
Noncontrolling interests in the Operating Partnership, stockholders' equity of the Company and partners' capital of the Operating Partnership are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership not owned by the Company are accounted for as partners' capital in the Operating Partnership’s consolidated financial statements and as noncontrolling interests, within mezzanine equity, in the Company's consolidated financial statements.
We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:
Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
Combined reports eliminate duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Company and the Operating Partnership; and
Combined reports create time and cost efficiencies through the preparation of one combined report instead of two separate reports.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
consolidated financial statements;
the following notes to the consolidated financial statements:
Note 11, Noncontrolling Interests on the Company’s Consolidated Financial Statements;
Note 12, Stockholders' Equity of the Company;
Note 13, Partners' Capital of the Operating Partnership;
Note 15, Accumulated Other Comprehensive Loss of the Company;
Note 16, Accumulated Other Comprehensive Loss of the Operating Partnership.
This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership, respectively, in order to establish that the Chief Executive Officer and the Chief Financial Officer of the Company, in both their capacity as the principal executive officer and principal financial officer of the Company and the principal executive officer and principal financial officer of the general partner of the Operating Partnership, have made the requisite certifications and that the Company and the Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.



SL GREEN REALTY CORP. AND SL GREEN OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
 
 
FINANCIAL STATEMENTS OF SL GREEN REALTY CORP.
 
 
 
 
 
 
 
FINANCIAL STATEMENTS OF SL GREEN OPERATING PARTNERSHIP, L.P.
 
 
 
 
 
 
 
PART II. OTHER INFORMATION
 
 


Table of Contents


PART I. FINANCIAL INFORMATION
ITEM 1.    Financial Statements

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)
 
June 30, 2015
 
December 31, 2014
 
(unaudited)
 
 
Assets
 
 
 
Commercial real estate properties, at cost:
 
 
 
Land and land interests
$
3,756,488

 
$
3,844,518

Building and improvements
8,397,117

 
8,778,593

Building leasehold and improvements
1,424,822

 
1,418,585

Property under capital lease
27,445

 
27,445

 
13,605,872

 
14,069,141

Less: accumulated depreciation
(2,081,646
)
 
(1,905,165
)
 
11,524,226

 
12,163,976

Assets held for sale
420,569

 
462,430

Cash and cash equivalents
215,896

 
281,409

Restricted cash
128,234

 
149,176

Investment in marketable securities
46,251

 
39,429

Tenant and other receivables, net of allowance of $16,369 and $18,068 in 2015 and 2014, respectively
64,873

 
57,369

Related party receivables
11,395

 
11,735

Deferred rents receivable, net of allowance of $23,656 and $27,411 in 2015 and 2014, respectively
433,999

 
374,944

Debt and preferred equity investments, net of discounts and deferred origination fees of $18,867 and $19,172 in 2015 and 2014, respectively
1,685,234

 
1,408,804

Investments in unconsolidated joint ventures
1,262,723

 
1,172,020

Deferred costs, net
328,838

 
327,962

Other assets
1,144,720

 
647,333

Total assets
$
17,266,958

 
$
17,096,587

Liabilities
 
 
 
Mortgages and other loans payable
$
5,287,934

 
$
5,586,709

Revolving credit facility
705,000

 
385,000

Term loan and senior unsecured notes
2,113,050

 
2,107,078

Accrued interest payable and other liabilities
161,188

 
137,634

Accounts payable and accrued expenses
147,028

 
173,246

Deferred revenue
337,571

 
187,148

Capital lease obligations
21,013

 
20,822

Deferred land leases payable
1,387

 
1,215

Dividend and distributions payable
66,026

 
64,393

Security deposits
67,985

 
66,614

Liabilities related to assets held for sale
178,252

 
266,873

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
100,000

 
100,000

Total liabilities
9,186,434

 
9,096,732

Commitments and contingencies

 

Noncontrolling interests in Operating Partnership
431,418

 
469,524

Preferred units
124,723

 
71,115


4

Table of Contents

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)

 
June 30, 2015
 
December 31, 2014
 
(unaudited)
 
 
Equity
 
 
 
SL Green stockholders' equity:
 
 
 
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2015 and December 31, 2014
221,932

 
221,932

Common stock, $0.01 par value, 160,000 shares authorized and 103,233 and 100,928 issued and outstanding at June 30, 2015 and December 31, 2014, respectively (including 3,643 and 3,603 shares held in Treasury at June 30, 2015 and December 31, 2014, respectively)
1,033

 
1,010

Additional paid-in-capital
5,570,746

 
5,289,479

Treasury stock at cost
(325,207
)
 
(320,471
)
Accumulated other comprehensive loss
(10,906
)
 
(6,980
)
Retained earnings
1,657,911

 
1,752,404

Total SL Green stockholders' equity
7,115,509

 
6,937,374

Noncontrolling interests in other partnerships
408,874

 
521,842

Total equity
7,524,383

 
7,459,216

Total liabilities and equity
$
17,266,958

 
$
17,096,587



The accompanying notes are an integral part of these financial statements.

5

Table of Contents

SL Green Realty Corp.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
 
Rental revenue, net
 
$
304,226

 
$
279,608

 
$
607,555

 
$
535,584

Escalation and reimbursement
 
41,407

 
38,576

 
82,376

 
76,383

Investment income
 
45,191

 
39,714

 
87,260

 
93,798

Other income
 
18,250

 
22,734

 
28,182

 
37,312

Total revenues
 
409,074

 
380,632

 
805,373

 
743,077

Expenses
 
 
 
 
 
 
 
 
Operating expenses, including $4,472 and $8,189 in 2015 and $4,567 and $8,080 in 2014 of related party expenses
 
70,114

 
69,098

 
146,891

 
139,010

Real estate taxes
 
56,286

 
51,804

 
112,009

 
104,154

Ground rent
 
8,086

 
8,040

 
16,274

 
16,073

Interest expense, net of interest income
 
75,746

 
77,870

 
151,553

 
154,048

Amortization of deferred financing costs
 
5,952

 
5,401

 
12,567

 
9,058

Depreciation and amortization
 
199,565

 
93,379

 
307,902

 
179,894

Transaction related costs
 
3,067

 
1,697

 
4,210

 
4,171

Marketing, general and administrative
 
23,200

 
23,872

 
48,664

 
47,128

Total expenses
 
442,016

 
331,161

 
800,070

 
653,536

(Loss) income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, purchase price fair value adjustment and loss on early extinguishment of debt
 
(32,942
)
 
49,471

 
5,303

 
89,541

Equity in net income from unconsolidated joint ventures
 
2,994

 
8,619

 
7,024

 
14,748

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
769

 
1,444

 
769

 
106,084

Purchase price fair value adjustment
 

 
71,446

 

 
71,446

Loss on early extinguishment of debt
 

 
(1,028
)
 
(49
)
 
(1,025
)
(Loss) income from continuing operations
 
(29,179
)
 
129,952

 
13,047

 
280,794

Net income from discontinued operations
 

 
5,645

 
427

 
11,414

Gain on sale of discontinued operations
 

 
114,735

 
12,983

 
114,735

Net (loss) income
 
(29,179
)
 
250,332

 
26,457

 
406,943

Net loss (income) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Noncontrolling interests in the Operating Partnership
 
1,577

 
(8,645
)
 
(166
)
 
(13,374
)
Noncontrolling interests in other partnerships
 
(6,626
)
 
(1,843
)
 
(12,553
)
 
(3,333
)
Preferred units distributions
 
(1,140
)
 
(565
)
 
(2,091
)
 
(1,130
)
Net (loss) income attributable to SL Green
 
(35,368
)
 
239,279

 
11,647

 
389,106

Perpetual preferred stock dividends
 
(3,738
)
 
(3,738
)
 
(7,476
)
 
(7,475
)
Net (loss) income attributable to SL Green common stockholders
 
$
(39,106
)
 
$
235,541

 
$
4,171

 
$
381,631

 
 
 
 
 
 
 
 
 

6

Table of Contents

SL Green Realty Corp.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Amounts attributable to SL Green common stockholders:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(39,846
)
 
$
49,134

 
$
(9,467
)
 
$
88,234

Purchase price fair value adjustment
 

 
68,909

 

 
69,027

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
740

 
1,393

 
740

 
102,492

Net income from discontinued operations
 

 
5,445

 
411

 
11,028

Gain on sale of discontinued operations
 

 
110,660

 
12,487

 
110,850

Net (loss) income attributable to SL Green common stockholders
 
$
(39,106
)
 
$
235,541

 
$
4,171

 
$
381,631

Basic earnings per share:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(0.40
)
 
$
0.52

 
$
(0.10
)
 
$
0.93

Purchase price fair value adjustment
 

 
0.72

 

 
0.72

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.01

 
0.02

 
0.01

 
1.08

Net income from discontinued operations
 

 
0.05

 

 
0.12

Gain on sale of discontinued operations
 

 
1.16

 
0.13

 
1.16

Net (loss) income attributable to SL Green common stockholders
 
$
(0.39
)
 
$
2.47

 
$
0.04

 
$
4.01

Diluted earnings per share:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(0.40
)
 
$
0.51

 
$
(0.10
)
 
$
0.92

Purchase price fair value adjustment
 

 
0.72

 

 
0.72

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.01

 
0.02

 
0.01

 
1.07

Net income from discontinued operations
 

 
0.06

 

 
0.12

Gain on sale of discontinued operations
 

 
1.15

 
0.13

 
1.16

Net (loss) income attributable to SL Green common stockholders
 
$
(0.39
)
 
$
2.46

 
$
0.04

 
$
3.99

Dividends per share
 
$
0.60

 
$
0.50

 
$
1.20

 
$
1.00

Basic weighted average common shares outstanding
 
99,579

 
95,455

 
98,994

 
95,288

Diluted weighted average common shares and common share equivalents outstanding
 
99,579

 
99,484

 
103,423

 
99,128



The accompanying notes are an integral part of these financial statements.

7

Table of Contents


SL Green Realty Corp.
Consolidated Statements of Comprehensive (Loss) Income
(unaudited, in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Net (loss) income
$
(29,179
)
 
$
250,332

 
$
26,457

 
$
406,943

Other comprehensive income (loss):
 
 
 
 
 
 
 
Change in net unrealized gain (loss) on derivative instruments, including SL Green's share of joint venture net unrealized gain (loss) on derivative instruments
2,250

 
7,293

 
(3,430
)
 
7,461

Change in unrealized gain on marketable securities
(1,304
)
 
1,659

 
(654
)
 
1,788

Other comprehensive income (loss)
946

 
8,952

 
(4,084
)
 
9,249

Comprehensive (loss) income
(28,233
)
 
259,284

 
22,373

 
416,192

Net loss attributable to noncontrolling interests and preferred units distributions
(6,189
)
 
(11,053
)
 
(14,810
)
 
(17,837
)
Other comprehensive (loss) income attributable to noncontrolling interests
(42
)
 
(276
)
 
158

 
(234
)
Comprehensive (loss) income attributable to SL Green
$
(34,464
)
 
$
247,955

 
$
7,721

 
$
398,121



The accompanying notes are an integral part of these financial statements.


8

Table of Contents


SL Green Realty Corp.
Consolidated Statement of Equity
(unaudited, in thousands, except per share data)
 
SL Green Realty Corp. Stockholders
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 


 
Series I
Preferred
Stock
 
Shares
 
Par
Value
 
Additional
Paid-
In-Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2014
 
$
221,932

 
97,325

 
$
1,010

 
$
5,289,479

 
$
(320,471
)
 
$
(6,980
)
 
$
1,752,404

 
$
521,842

 
$
7,459,216

Net income
 


 


 


 


 


 


 
11,647

 
12,553

 
24,200

Acquisition of subsidiary interest from noncontrolling interest
 
 
 
 
 
 
 
(9,566
)
 
 
 
 
 
 
 
(11,084
)
 
(20,650
)
Other comprehensive loss
 


 


 


 


 


 
(3,926
)
 


 


 
(3,926
)
Preferred dividends
 


 


 


 


 


 


 
(7,476
)
 


 
(7,476
)
DRSPP proceeds
 


 
775

 
8

 
99,497

 


 


 


 


 
99,505

Conversion of units of the Operating Partnership to common stock
 


 
321

 
3

 
37,989

 


 


 


 


 
37,992

Reallocation of noncontrolling interest in the Operating Partnership
 


 


 


 


 


 


 
20,670

 


 
20,670

Reallocation of capital account relating to sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(10,144
)
 
(10,144
)
Deferred compensation plan and stock award, net
 


 
27

 


 
1,638

 
(4,736
)
 


 


 


 
(3,098
)
Amortization of deferred compensation plan
 


 


 


 
14,920

 


 


 


 


 
14,920

Issuance of common stock
 


 
987

 
10

 
124,989

 


 


 


 


 
124,999

Proceeds from stock options exercised
 


 
155

 
2

 
11,800

 


 


 


 


 
11,802

Contributions to consolidated joint venture interests
 


 


 


 


 


 


 


 
8,655

 
8,655

Cash distributions to noncontrolling interests
 


 


 


 


 


 


 


 
(112,948
)
 
(112,948
)
Cash distributions declared ($1.20 per common share, none of which represented a return of capital for federal income tax purposes)
 


 


 


 


 


 


 
(119,334
)
 


 
(119,334
)
Balance at June 30, 2015
 
$
221,932

 
99,590

 
$
1,033

 
$
5,570,746

 
$
(325,207
)
 
$
(10,906
)
 
$
1,657,911

 
$
408,874

 
$
7,524,383



The accompanying notes are an integral part of these financial statements.

9

Table of Contents

SL Green Realty Corp.
Consolidated Statements of Cash Flows
(unaudited, in thousands)


 
Six Months Ended June 30,
 
2015
 
2014
Operating Activities
 
 
 
Net income
$
26,457

 
$
406,943

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
320,472

 
194,029

Equity in net income from unconsolidated joint ventures
(7,024
)
 
(14,748
)
Distributions of cumulative earnings from unconsolidated joint ventures
22,464

 
14,645

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(769
)
 
(106,084
)
Purchase price fair value adjustment

 
(71,446
)
Gain on sale of discontinued operations
(12,983
)
 
(114,735
)
Loss on early extinguishment of debt
49

 
1,025

Deferred rents receivable
(65,260
)
 
(26,727
)
Other non-cash adjustments
(3,592
)
 
(16,905
)
Changes in operating assets and liabilities:
 
 
 
Restricted cash—operations
(1,246
)
 
(4,850
)
Tenant and other receivables
(6,826
)
 
5,890

Related party receivables
340

 
(853
)
Deferred lease costs
(35,918
)
 
(10,688
)
Other assets
11,410

 
5,305

Accounts payable, accrued expenses and other liabilities and security deposits
(16,987
)
 
12,973

Deferred revenue and land leases payable
2,872

 
2,788

Net cash provided by operating activities
233,459

 
276,562

Investing Activities
 
 
 
Acquisitions of real estate property
(42,556
)
 
(208,614
)
Additions to land, buildings and improvements
(122,520
)
 
(134,249
)
Escrowed cash—capital improvements/acquisition deposits
(229,853
)
 
(38,227
)
Investments in unconsolidated joint ventures
(109,135
)
 
(170,532
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
49,059

 
157,699

Proceeds from disposition of real estate/joint venture interest
491,598

 
258,076

Proceeds from sale of marketable securities
295

 
3,555

Purchases of marketable securities
(7,769
)
 
(10,025
)
Other investments
(9,620
)
 
20,594

Origination of debt and preferred equity investments
(387,216
)
 
(256,730
)
Repayments or redemption of debt and preferred equity investments
109,784

 
60,412

Net cash used in investing activities
(257,933
)
 
(318,041
)
 
 
 
 

10

Table of Contents

SL Green Realty Corp.
Consolidated Statements of Cash Flows
(unaudited, in thousands)

 
Six Months Ended June 30,
 
2015
 
2014
Financing Activities
 
 
 
Proceeds from mortgages and other loans payable
$
106,421

 
$
1,601,603

Repayments of mortgages and other loans payable
(489,138
)
 
(1,496,224
)
Proceeds from revolving credit facility and senior unsecured notes
1,055,000

 
683,000

Repayments of revolving credit facility and senior unsecured notes
(735,007
)
 
(520,690
)
Proceeds from stock options exercised and DRSSP issuance
111,307

 
19,777

Proceeds from sale of common stock
124,999

 
8,750

Redemption of preferred unit
(200
)
 

Distributions to noncontrolling interests in other partnerships
(111,715
)
 
(4,352
)
Contributions from noncontrolling interests in other partnerships
8,655

 
1,548

Distributions to noncontrolling interests in the Operating Partnership
(4,693
)
 
(3,598
)
Dividends paid on common and preferred stock
(127,310
)
 
(102,943
)
Other obligations related to mortgage loan participations
25,000

 

Deferred loan costs and capitalized lease obligation
(4,358
)
 
(43,981
)
Net cash (used in) provided by financing activities
(41,039
)
 
142,890

Net (decrease) increase in cash and cash equivalents
(65,513
)
 
101,411

Cash and cash equivalents at beginning of year
281,409

 
206,692

Cash and cash equivalents at end of period
$
215,896

 
$
308,103

 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
 
 
 
Issuance of common stock as deferred compensation
$
1,638

 
$
1,406

Issuance of units in the Operating Partnership
25,241

 
19,460

Redemption of units in the Operating Partnership
37,992

 
23,066

Derivative instruments at fair value
2,000

 
17,088

Exchange of debt investment for equity in joint venture
10,151

 

Transfer of restricted cash to operating cash and cash equivalents as a result of sale
21,578

 

Acquisition of subsidiary interest from noncontrolling interest
20,630

 

Tenant improvements and capital expenditures payable
17,661

 
7,192

Fair value adjustment to noncontrolling interest in the Operating Partnership
20,670

 
107,925

Transfer to net assets held for sale
420,569

 
339,809

Transfer to liabilities related to net assets held for sale
178,252

 
193,375

Transfer of financing receivable to debt investment

 
19,675

Deferred leasing payable
5,525

 
659

Consolidation of real estate

 
1,316,591

Issuance of preferred units
53,808

 
4,000



The accompanying notes are an integral part of these financial statements.

11

Table of Contents



SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)
 
 
June 30, 2015
 
December 31, 2014
 
 
(unaudited)
 
 
Assets
 
 
 
 
Commercial real estate properties, at cost:
 
 
 
 
Land and land interests
 
$
3,756,488

 
$
3,844,518

Building and improvements
 
8,397,117

 
8,778,593

Building leasehold and improvements
 
1,424,822

 
1,418,585

Property under capital lease
 
27,445

 
27,445

 
 
13,605,872

 
14,069,141

Less: accumulated depreciation
 
(2,081,646
)
 
(1,905,165
)
 
 
11,524,226

 
12,163,976

Assets held for sale
 
420,569

 
462,430

Cash and cash equivalents
 
215,896

 
281,409

Restricted cash
 
128,234

 
149,176

Investment in marketable securities
 
46,251

 
39,429

Tenant and other receivables, net of allowance of $16,369 and $18,068 in 2015 and 2014, respectively
 
64,873

 
57,369

Related party receivables
 
11,395

 
11,735

Deferred rents receivable, net of allowance of $23,656 and $27,411 in 2015 and 2014, respectively
 
433,999

 
374,944

Debt and preferred equity investments, net of discounts and deferred origination fees of $18,867 and $19,172 in 2015 and 2014, respectively
 
1,685,234

 
1,408,804

Investments in unconsolidated joint ventures
 
1,262,723

 
1,172,020

Deferred costs, net
 
328,838

 
327,962

Other assets
 
1,144,720

 
647,333

Total assets
 
$
17,266,958

 
$
17,096,587

Liabilities
 
 
 
 
Mortgages and other loans payable
 
$
5,287,934

 
$
5,586,709

Revolving credit facility
 
705,000

 
385,000

Term loan and senior unsecured notes
 
2,113,050

 
2,107,078

Accrued interest payable and other liabilities
 
161,188

 
137,634

Accounts payable and accrued expenses
 
147,028

 
173,246

Deferred revenue
 
337,571

 
187,148

Capital lease obligations
 
21,013

 
20,822

Deferred land leases payable
 
1,387

 
1,215

Dividend and distributions payable
 
66,026

 
64,393

Security deposits
 
67,985

 
66,614

Liabilities related to assets held for sale
 
178,252

 
266,873

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
 
100,000

 
100,000

Total liabilities
 
9,186,434

 
9,096,732

Commitments and contingencies
 

 

Preferred units
 
124,723

 
71,115


12

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)

 
 
June 30, 2015
 
December 31, 2014
 
 
(unaudited)
 
 
Capital
 
 
 
 
SLGOP partners' capital:
 
 
 
 
Series I Preferred Units, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2015 and December 31, 2014
 
221,932

 
221,932

SL Green partners' capital (1,035 and 1,013 general partner common units and 98,555 and 96,312 limited partner common units outstanding at June 30, 2015 and December 31, 2014, respectively)
 
7,240,315

 
7,078,924

Limited partner interests in SLGOP (3,907 and 3,973 limited partner common units outstanding at June 30, 2015 and December 31, 2014, respectively)
 
96,020

 
113,298

Accumulated other comprehensive loss
 
(11,340
)
 
(7,256
)
Total SLGOP partners' capital
 
7,546,927

 
7,406,898

Noncontrolling interests in other partnerships
 
408,874

 
521,842

Total capital
 
7,955,801

 
7,928,740

Total liabilities and capital
 
$
17,266,958

 
$
17,096,587



The accompanying notes are an integral part of these financial statements.

13

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Operations
(unaudited, in thousands, except per unit data)



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
 
Rental revenue, net
 
$
304,226

 
$
279,608

 
$
607,555

 
$
535,584

Escalation and reimbursement
 
41,407

 
38,576

 
82,376

 
76,383

Investment income
 
45,191

 
39,714

 
87,260

 
93,798

Other income
 
18,250

 
22,734

 
28,182

 
37,312

Total revenues
 
409,074

 
380,632

 
805,373

 
743,077

Expenses
 
 
 
 
 
 
 
 
Operating expenses, including $4,472 and $8,189 in 2015 and $4,567 and $8,080 in 2014 of related party expenses
 
70,114

 
69,098

 
146,891

 
139,010

Real estate taxes
 
56,286

 
51,804

 
112,009

 
104,154

Ground rent
 
8,086

 
8,040

 
16,274

 
16,073

Interest expense, net of interest income
 
75,746

 
77,870

 
151,553

 
154,048

Amortization of deferred financing costs
 
5,952

 
5,401

 
12,567

 
9,058

Depreciation and amortization
 
199,565

 
93,379

 
307,902

 
179,894

Transaction related costs
 
3,067

 
1,697

 
4,210

 
4,171

Marketing, general and administrative
 
23,200

 
23,872

 
48,664

 
47,128

Total expenses
 
442,016

 
331,161

 
800,070

 
653,536

(Loss) income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, purchase price fair value adjustment and loss on early extinguishment of debt
 
(32,942
)
 
49,471

 
5,303

 
89,541

Equity in net income from unconsolidated joint ventures
 
2,994

 
8,619

 
7,024

 
14,748

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
769

 
1,444

 
769

 
106,084

Purchase price fair value adjustment
 

 
71,446

 

 
71,446

Loss on early extinguishment of debt
 

 
(1,028
)
 
(49
)
 
(1,025
)
(Loss) income from continuing operations
 
(29,179
)
 
129,952

 
13,047

 
280,794

Net income from discontinued operations
 

 
5,645

 
427

 
11,414

Gain on sale of discontinued operations
 

 
114,735

 
12,983

 
114,735

Net (loss) income
 
(29,179
)
 
250,332

 
26,457

 
406,943

Net income attributable to noncontrolling interests in other partnerships
 
(6,626
)
 
(1,843
)
 
(12,553
)
 
(3,333
)
Preferred unit distributions
 
(1,140
)
 
(565
)
 
(2,091
)
 
(1,130
)
Net (loss) income attributable to SLGOP
 
(36,945
)
 
247,924

 
11,813

 
402,480

Perpetual preferred unit distributions
 
(3,738
)
 
(3,738
)
 
(7,476
)
 
(7,475
)
Net (loss) income attributable to SLGOP common unitholders
 
$
(40,683
)
 
$
244,186

 
$
4,337

 
$
395,005

 
 
 
 
 
 
 
 
 

14

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Operations
(unaudited, in thousands, except per unit data)


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Amounts attributable to SLGOP common unitholders:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
(41,452
)
 
$
50,916

 
$
(9,842
)
 
$
91,326

Purchase price fair value adjustment
 

 
71,446

 

 
71,446

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
769

 
1,444

 
769

 
106,084

Net income from discontinued operations
 

 
5,645

 
427

 
11,414

Gain on sale of discontinued operations
 

 
114,735

 
12,983

 
114,735

Net (loss) income attributable to SLGOP common unitholders
 
$
(40,683
)
 
$
244,186

 
$
4,337

 
$
395,005

 
 
 
 
 
 
 
 
 
Basic earnings per unit:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before gains on sale and discontinued operations
 
$
(0.40
)
 
$
0.52

 
$
(0.10
)
 
$
0.93

Purchase price fair value adjustment
 

 
0.72

 

 
0.72

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.01

 
0.02

 
0.01

 
1.08

Net income from discontinued operations
 

 
0.05

 

 
0.12

Gain on sale of discontinued operations
 

 
1.16

 
0.13

 
1.16

Net (loss) income attributable to SLGOP common unitholders
 
$
(0.39
)
 
$
2.47

 
$
0.04

 
$
4.01

Diluted earnings per unit:
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before gains on sale and discontinued operations
 
$
(0.40
)
 
$
0.51

 
$
(0.10
)
 
$
0.92

Purchase price fair value adjustment
 

 
0.72

 

 
0.72

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.01

 
0.02

 
0.01

 
1.07

Net income from discontinued operations
 

 
0.06

 

 
0.12

Gain on sale of discontinued operations
 

 
1.15

 
0.13

 
1.16

Net (loss) income attributable to SLGOP common unitholders
 
$
(0.39
)
 
$
2.46

 
$
0.04

 
$
3.99

Dividends per unit
 
$
0.60

 
$
0.50

 
$
1.20

 
$
1.00

Basic weighted average common units outstanding
 
103,487

 
98,970

 
102,930

 
98,627

Diluted weighted average common units and common unit equivalents outstanding
 
103,487

 
99,484

 
103,423

 
99,128



The accompanying notes are an integral part of these financial statements.


15

Table of Contents


SL Green Operating Partnership, L.P.
Consolidated Statements of Comprehensive (Loss) Income
(unaudited, in thousands)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Net (loss) income
 
$
(29,179
)
 
$
250,332

 
$
26,457

 
$
406,943

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Change in net unrealized gain (loss) on derivative instruments, including SLGOP's share of joint venture net unrealized gain (loss) on derivative instruments
 
2,250

 
7,293

 
(3,430
)
 
7,461

Change in unrealized gain on marketable securities
 
(1,304
)
 
1,659

 
(654
)
 
1,788

Other comprehensive income (loss)
 
946

 
8,952

 
(4,084
)
 
9,249

Comprehensive (loss) income
 
(28,233
)
 
259,284

 
22,373

 
416,192

Net income attributable to noncontrolling interests
 
(6,626
)
 
(1,843
)
 
(12,553
)
 
(3,333
)
Comprehensive (loss) income attributable to SLGOP
 
$
(34,859
)
 
$
257,441

 
$
9,820

 
$
412,859



The accompanying notes are an integral part of these financial statements.


16

Table of Contents


SL Green Operating Partnership, L.P.
Consolidated Statement of Capital
(unaudited, in thousands, except per unit data)
 
 
SL Green Operating Partnership Unitholders
 
 
 
 
 
 
 
 
General Partner
 
Limited Partners
 
 
 
 
 
 
 
 
Series I
Preferred
Units
 
Common
Units
 
Common
Unitholders
 
Common
Units
 
Common
Unitholders
 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2014
 
$
221,932

 
97,325

 
$
7,078,924

 
3,973

 
$
113,298

 
$
(7,256
)
 
$
521,842

 
$
7,928,740

Net income
 
7,476

 
 
 
4,171

 
 
 
166

 
 
 
12,553

 
24,366

Acquisition of subsidiary interest from noncontrolling interest
 
 
 
 
 
(9,566
)
 
 
 
 
 
 
 
(11,084
)
 
(20,650
)
Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
(4,084
)
 
 
 
(4,084
)
Preferred distributions
 
(7,476
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,476
)
Issuance of common units
 
 
 


 
 
 
255

 
25,241

 
 
 
 
 
25,241

DRSPP proceeds
 
 
 
775

 
99,505

 
 
 
 
 
 
 
 
 
99,505

Conversion of units of the Operating Partnership to common stock
 
 
 
321

 
37,992

 
(321
)
 
(37,992
)
 
 
 
 
 

Reallocation of capital account relating to sale
 
 
 
 
 
 
 
 
 
 
 
 
 
(10,144
)
 
(10,144
)
Deferred compensation plan and stock award, net
 
 
 
27

 
(3,098
)
 
 
 
 
 
 
 
 
 
(3,098
)
Amortization of deferred compensation plan
 
 
 
 
 
14,920

 
 
 
 
 
 
 
 
 
14,920

Contribution to consolidated joint venture interest
 
 
 
 
 
 
 
 
 
 
 
 
 
8,655

 
8,655

Contributions - net proceeds from common stock offering
 
 
 
987

 
124,999

 
 
 
 
 
 
 
 
 
124,999

Contributions - proceeds from stock options exercised
 
 
 
155

 
11,802

 
 
 
 
 
 
 
 
 
11,802

Cash distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
(112,948
)
 
(112,948
)
Cash distributions declared ($1.20 per common unit, none of which represented a return of capital for federal income tax purposes)
 
 
 
 
 
(119,334
)
 
 
 
(4,693
)
 
 
 
 
 
(124,027
)
Balance at June 30, 2015
 
$
221,932

 
99,590

 
$
7,240,315

 
3,907

 
$
96,020

 
$
(11,340
)
 
$
408,874

 
$
7,955,801

   

The accompanying notes are an integral part of these financial statements.


17

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)



 
Six Months Ended June 30,
 
2015
 
2014
Operating Activities
 
 
 
Net income
$
26,457

 
$
406,943

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
320,472

 
194,029

Equity in net income from unconsolidated joint ventures
(7,024
)
 
(14,748
)
Distributions of cumulative earnings from unconsolidated joint ventures
22,464

 
14,645

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(769
)
 
(106,084
)
Purchase price fair value adjustment

 
(71,446
)
Gain on sale of discontinued operations
(12,983
)
 
(114,735
)
Loss on early extinguishment of debt
49

 
1,025

Deferred rents receivable
(65,260
)
 
(26,727
)
Other non-cash adjustments
(3,592
)
 
(16,905
)
Changes in operating assets and liabilities:
 
 
 
Restricted cash—operations
(1,246
)
 
(4,850
)
Tenant and other receivables
(6,826
)
 
5,890

Related party receivables
340

 
(853
)
Deferred lease costs
(35,918
)
 
(10,688
)
Other assets
11,410

 
5,305

Accounts payable, accrued expenses and other liabilities and security deposits
(16,987
)
 
12,973

Deferred revenue and land leases payable
2,872

 
2,788

Net cash provided by operating activities
233,459

 
276,562

Investing Activities
 
 
 
Acquisitions of real estate property
(42,556
)
 
(208,614
)
Additions to land, buildings and improvements
(122,520
)
 
(134,249
)
Escrowed cash—capital improvements/acquisition deposits
(229,853
)
 
(38,227
)
Investments in unconsolidated joint ventures
(109,135
)
 
(170,532
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
49,059

 
157,699

Proceeds from disposition of real estate/joint venture interest
491,598

 
258,076

Proceeds from sale of marketable securities
295

 
3,555

Purchases of marketable securities
(7,769
)
 
(10,025
)
Other investments
(9,620
)
 
20,594

Origination of debt and preferred equity investments
(387,216
)
 
(256,730
)
Repayments or redemption of debt and preferred equity investments
109,784

 
60,412

Net cash used in investing activities
(257,933
)
 
(318,041
)
 
 
 
 

18

Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)


 
Six Months Ended June 30,
 
2015
 
2014
Financing Activities
 
 
 
Proceeds from mortgages and other loans payable
$
106,421

 
$
1,601,603

Repayments of mortgages and other loans payable
(489,138
)
 
(1,496,224
)
Proceeds from revolving credit facility, term loan and senior unsecured notes
1,055,000

 
683,000

Repayments of revolving credit facility, term loan and senior unsecured notes
(735,007
)
 
(520,690
)
Proceeds from stock options exercised and DRSSP issuance
111,307

 
19,777

Proceeds from sale of common stock
124,999

 
8,750

Redemption of preferred units
(200
)
 

Distributions to noncontrolling interests in other partnerships
(111,715
)
 
(4,352
)
Contributions from noncontrolling interests in other partnerships
8,655

 
1,548

Distributions paid on common and preferred units
(132,003
)
 
(106,541
)
Other obligations related to mortgage loan participations
25,000

 

Deferred loan costs and capitalized lease obligation
(4,358
)
 
(43,981
)
Net cash (used in) provided by financing activities
(41,039
)
 
142,890

Net (decrease) increase in cash and cash equivalents
(65,513
)
 
101,411

Cash and cash equivalents at beginning of year
281,409