Table of Contents

 

 

 

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, 2013

 

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.

(Exact name of registrant as specified in its charter)

 


 

Maryland

 

13-3956775

(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.  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). 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):

 

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o
(Do not check if a
smaller reporting company)

Smaller Reporting Company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

 

The number of shares outstanding of the registrant’s common stock, $0.01 par value, was 91,976,638 as of July 31, 2013.

 

 

 



Table of Contents

 

SL GREEN REALTY CORP.

 

INDEX

 

 

 

PAGE

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

 

 

 

 

 

Consolidated Balance Sheets as of June 30, 2013 (unaudited) and December 31, 2012

3

 

 

 

 

Consolidated Statements of Income for the three and six months ended June 30, 2013 and 2012 (unaudited)

 4

 

 

 

 

Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and 2012 (unaudited)

 5

 

 

 

 

Consolidated Statement of Equity for the six months ended June 30, 2013 (unaudited)

6

 

 

 

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012 (unaudited)

7

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

8

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

38

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

57

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

57

 

 

 

PART II.

OTHER INFORMATION

58

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

58

 

 

 

ITEM 1A.

RISK FACTORS

58

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

58

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

58

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

58

 

 

 

ITEM 5.

OTHER INFORMATION

58

 

 

 

ITEM 6.

EXHIBITS

59

 

 

 

SIGNATURES

60

 

2



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,
2013

 

December 31,
2012

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Commercial real estate properties, at cost:

 

 

 

 

 

Land and land interests

 

$

2,866,048

 

$

2,886,099

 

Building and improvements

 

7,393,930

 

7,389,766

 

Building leasehold and improvements

 

1,352,953

 

1,346,748

 

Properties under capital lease

 

50,332

 

40,340

 

 

 

11,663,263

 

11,662,953

 

Less: accumulated depreciation

 

(1,502,694

)

(1,393,323

)

 

 

10,160,569

 

10,269,630

 

Assets held for sale

 

207,665

 

4,901

 

Cash and cash equivalents

 

198,969

 

189,984

 

Restricted cash

 

130,483

 

136,071

 

Investment in marketable securities

 

26,266

 

21,429

 

Tenant and other receivables, net of allowance of $20,466 and $21,652 in 2013 and 2012, respectively

 

51,646

 

48,544

 

Related party receivables

 

6,845

 

7,531

 

Deferred rents receivable, net of allowance of $29,821 and $29,580 in 2013 and 2012, respectively

 

360,954

 

340,747

 

Debt and preferred equity investments, net of discounts and deferred origination fees of $27,107 and $22,341 and allowance of $7,000 both in 2013 and 2012, respectively

 

1,227,421

 

1,348,434

 

Investments in unconsolidated joint ventures

 

1,085,793

 

1,032,243

 

Deferred costs, net

 

246,058

 

261,145

 

Other assets

 

699,256

 

718,326

 

Total assets

 

$

14,401,925

 

$

14,378,985

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Mortgages and other loans payable

 

$

4,835,231

 

$

4,615,464

 

Revolving credit facility

 

40,000

 

70,000

 

Term loan and senior unsecured notes

 

1,735,205

 

1,734,956

 

Accrued interest payable and other liabilities

 

72,415

 

73,769

 

Accounts payable and accrued expenses

 

138,029

 

159,598

 

Deferred revenue

 

296,930

 

312,995

 

Capitalized lease obligations

 

47,240

 

37,518

 

Deferred land leases payable

 

19,948

 

20,897

 

Dividend and distributions payable

 

34,740

 

37,839

 

Security deposits

 

53,604

 

46,253

 

Liabilities related to assets held for sale

 

11,894

 

136

 

Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities

 

100,000

 

100,000

 

Total liabilities

 

7,385,236

 

7,209,425

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

Noncontrolling interest in the Operating Partnership

 

243,925

 

212,907

 

Series G preferred units, $25.00 liquidation preference, 1,902 issued and outstanding at both June 30, 2013 and December 31, 2012

 

47,550

 

47,550

 

Series H preferred units, $25.00 liquidation preference, 80 issued and outstanding at both June 30, 2013 and December 31, 2012

 

2,000

 

2,000

 

 

 

 

 

 

 

Equity

 

 

 

 

 

SL Green stockholders’ equity:

 

 

 

 

 

Series C Preferred stock, $0.01 par value, $25.00 liquidation preference, 7,700 issued and outstanding at December 31, 2012

 

 

180,340

 

Series I Preferred stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2013 and December 31, 2012

 

221,932

 

221,965

 

Common stock, $0.01 par value, 160,000 shares authorized and 95,376 and 94,896 issued and outstanding at June 30, 2013 and December 31, 2012, respectively (including 3,563 and 3,646 shares held in Treasury at June 30, 2013 and December 31, 2012, respectively)

 

955

 

950

 

Additional paid-in-capital

 

4,716,012

 

4,667,900

 

Treasury stock at cost

 

(316,768

)

(322,858

)

Accumulated other comprehensive loss

 

(18,622

)

(29,587

)

Retained earnings

 

1,631,287

 

1,701,092

 

Total SL Green stockholders’ equity

 

6,234,796

 

6,419,802

 

Noncontrolling interests in other partnerships

 

488,418

 

487,301

 

Total equity

 

6,723,214

 

6,907,103

 

Total liabilities and equity

 

$

14,401,925

 

$

14,378,985

 

 

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

 

3



Table of Contents

 

SL Green Realty Corp.

Consolidated Statements of Income

(unaudited, in thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Revenues

 

 

 

 

 

 

 

 

 

Rental revenue, net

 

$

273,307

 

$

263,838

 

$

539,755

 

$

520,595

 

Escalation and reimbursement

 

39,381

 

40,967

 

79,926

 

82,080

 

Investment and preferred equity income

 

46,731

 

33,448

 

99,439

 

59,786

 

Other income

 

5,726

 

6,282

 

11,493

 

16,659

 

Total revenues

 

365,145

 

344,535

 

730,613

 

679,120

 

Expenses

 

 

 

 

 

 

 

 

 

Operating expenses, including approximately $4,319 and $8,469 (2013) and $4,773 and $8,244 (2012) paid to related parties

 

69,432

 

67,434

 

141,630

 

139,319

 

Real estate taxes

 

52,710

 

52,256

 

106,114

 

103,453

 

Ground rent

 

8,649

 

8,890

 

19,640

 

17,696

 

Interest expense, net of interest income

 

83,276

 

82,159

 

164,447

 

162,130

 

Amortization of deferred financing costs

 

4,240

 

3,553

 

8,703

 

7,133

 

Depreciation and amortization

 

82,020

 

76,207

 

161,114

 

151,739

 

Loan loss and other investment reserves, net of recoveries

 

 

 

 

564

 

Transaction related costs

 

1,711

 

1,970

 

3,068

 

3,026

 

Marketing, general and administrative

 

21,514

 

20,721

 

42,582

 

40,917

 

Total expenses

 

323,552

 

313,190

 

647,298

 

625,977

 

Income from continuing operations before equity in net (loss) income from unconsolidated joint ventures, equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate, loss on sale of investment in marketable securities, purchase price fair value adjustment, depreciable real estate reserves, net of recoveries, and loss on early extinguishment of debt

 

41,593

 

31,345

 

83,315

 

53,143

 

Equity in net (loss) income from unconsolidated joint ventures

 

(3,761

)

70,890

 

1,313

 

69,330

 

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

 

(3,583

)

9,534

 

(3,583

)

16,794

 

Loss on sale of investment in marketable securities

 

(8

)

 

(65

)

 

Purchase price fair value adjustment

 

(2,305

)

 

(2,305

)

 

Depreciable real estate reserves, net of recoveries

 

 

5,789

 

 

5,789

 

Loss on early extinguishment of debt

 

(10

)

 

(18,523

)

 

Income from continuing operations

 

31,926

 

117,558

 

60,152

 

145,056

 

Net (loss) income from discontinued operations

 

(678

)

899

 

320

 

1,931

 

Gain on sale of discontinued operations

 

 

 

1,113

 

6,627

 

Net income

 

31,248

 

118,457

 

61,585

 

153,614

 

Net income attributable to noncontrolling interests:

 

 

 

 

 

 

 

 

 

Noncontrolling interests in the Operating Partnership

 

(244

)

(3,421

)

(799

)

(4,309

)

Noncontrolling interests in other partnerships

 

(3,004

)

(3,887

)

(5,905

)

(4,958

)

Preferred unit distributions

 

(565

)

(565

)

(1,130

)

(962

)

Net income attributable to SL Green

 

27,435

 

110,584

 

53,751

 

143,385

 

Preferred stock redemption costs

 

(12,160

)

 

(12,160

)

 

Perpetual preferred stock dividends

 

(6,999

)

(7,544

)

(14,406

)

(15,089

)

Net income attributable to SL Green common stockholders

 

$

8,276

 

$

103,040

 

$

27,185

 

$

128,296

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to SL Green common stockholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

14,722

 

$

92,967

 

$

31,580

 

$

103,778

 

Purchase price fair value adjustment

 

(2,305

)

 

(2,305

)

 

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

 

(3,482

)

9,207

 

(3,482

)

16,244

 

Net (loss) income from discontinued operations

 

(659

)

866

 

311

 

1,864

 

Gain on sale of discontinued operations

 

 

 

1,081

 

6,410

 

Net income

 

$

8,276

 

$

103,040

 

$

27,185

 

$

128,296

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Net income from continuing operations before discontinued operations

 

$

0.14

 

$

1.04

 

$

0.32

 

$

1.18

 

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

 

(0.04

)

0.10

 

(0.03

)

0.18

 

Net (loss) income from discontinued operations

 

(0.01

)

0.01

 

 

0.02

 

Gain on sale of discontinued operations

 

 

 

0.01

 

0.07

 

Net income attributable to SL Green common stockholders

 

$

0.09

 

$

1.15

 

$

0.30

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Net income from continuing operations before discontinued operations

 

$

0.14

 

$

1.03

 

$

0.32

 

$

1.18

 

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

 

(0.04

)

0.10

 

(0.03

)

0.18

 

Net (loss) income from discontinued operations

 

(0.01

)

0.01

 

 

0.02

 

Gain on sale of discontinued operations

 

 

 

0.01

 

0.07

 

Net income attributable to SL Green common stockholders

 

$

0.09

 

$

1.14

 

$

0.30

 

$

1.45

 

Dividends per share

 

$

0.33

 

$

0.25

 

$

0.66

 

$

0.50

 

Basic weighted average common shares outstanding

 

91,660

 

89,789

 

91,530

 

88,265

 

Diluted weighted average common shares and common share equivalents outstanding

 

94,536

 

93,351

 

94,452

 

91,766

 

 

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

 

4



Table of Contents

 

SL Green Realty Corp.

Consolidated Statements of Comprehensive Income

(unaudited, in thousands)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

31,248

 

$

118,457

 

$

61,585

 

$

153,614

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on derivative instruments

 

181

 

(477

)

140

 

(623

)

Reclassification of net realized loss on derivatives designated as cashflow hedges into interest expense

 

470

 

466

 

938

 

926

 

SL Green’s share of joint venture net unrealized gain (loss) on derivative instruments

 

7,888

 

(6,388

)

8,109

 

(6,330

)

Reclassification of SL Green’s share of joint venture net realized loss on derivatives designated as cashflow hedges into equity in net income from unconsolidated joint ventures

 

1,260

 

2,751

 

2,500

 

5,494

 

Unrealized (loss) gain on marketable securities

 

(1,848

)

(542

)

(207

)

228

 

Other comprehensive income (loss)

 

7,951

 

(4,190

)

11,480

 

(305

)

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

39,199

 

114,267

 

73,065

 

153,309

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(3,813

)

(7,873

)

(7,834

)

(10,229

)

Other comprehensive (income) loss attributable to noncontrolling interests in the Operating Partnership

 

(456

)

153

 

(515

)

337

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to SL Green common stockholders

 

$

34,930

 

$

106,547

 

$

64,716

 

$

143,417

 

 

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

 

5



Table of Contents

 

SL Green Realty Corp.

Consolidated Statement of Equity

(unaudited, in thousands, except per share data)

 

 

 

SL Green Realty Corp. Stockholders

 

 

 

 

 

 

 

Series C

 

Series I

 

Common Stock

 

Additional

 

 

 

Accumulated
Other

 

 

 

 

 

 

 

 

 

Preferred
Stock

 

Preferred
Stock

 

Shares

 

Par
Value

 

Paid-
In-Capital

 

Treasury
Stock

 

Comprehensive
Income (Loss)

 

Retained
Earnings

 

Noncontrolling
Interests

 

Total

 

Balance at December 31, 2012

 

$

180,340

 

$

221,965

 

91,250

 

$

950

 

$

4,667,900

 

$

(322,858

)

$

(29,587

)

$

1,701,092

 

$

487,301

 

$

6,907,103

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53,751

 

5,905

 

59,656

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

10,965

 

 

 

 

 

10,965

 

Preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,406

)

 

 

(14,406

)

DRIP proceeds

 

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

26

 

Conversion of units of the Operating Partnership to common stock

 

 

 

 

 

224

 

2

 

17,285

 

 

 

 

 

 

 

 

 

17,287

 

Reallocation of noncontrolling interest in the Operating Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,091

)

 

 

(36,091

)

Amortization of deferred compensation plan

 

 

 

 

 

4

 

 

 

13,324

 

 

 

 

 

 

 

 

 

13,324

 

Redemption of preferred stock

 

(180,340

)

 

 

 

 

 

 

 

 

 

 

 

 

(12,160

)

 

 

(192,500

)

Preferred stock issuance costs

 

 

 

(33

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33

)

Issuance of common stock

 

 

 

 

 

95

 

1

 

8,510

 

 

 

 

 

 

 

 

 

8,511

 

Sale of treasury stock

 

 

 

 

 

83

 

 

 

 

 

6,090

 

 

 

 

 

 

 

6,090

 

Proceeds from stock options exercised

 

 

 

 

 

157

 

2

 

8,967

 

 

 

 

 

 

 

 

 

8,969

 

Contributions to consolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,364

 

3,364

 

Cash distributions to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,152

)

(8,152

)

Cash distribution declared ($0.66 per common share, none of which represented a return of capital for federal income tax purposes)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(60,899

)

 

 

(60,899

)

Balance at June 30, 2013

 

$

 

$

221,932

 

91,813

 

$

955

 

$

4,716,012

 

$

(316,768

)

$

(18,622

)

$

1,631,287

 

$

488,418

 

$

6,723,214

 

 

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

 

6



Table of Contents

 

SL Green Realty Corp.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2013

 

2012

 

Operating Activities

 

 

 

 

 

Net income

 

$

61,585

 

$

153,614

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

173,028

 

162,028

 

Depreciable real estate reserves, net of recoveries

 

2,150

 

(5,789

)

Equity in net income from unconsolidated joint ventures

 

(1,313

)

(69,330

)

Distributions of cumulative earnings from unconsolidated joint ventures

 

13,467

 

77,981

 

Purchase price fair value adjustment

 

2,305

 

 

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

 

3,583

 

(16,794

)

Gain on sale of discontinued operations

 

(1,113

)

(6,627

)

Loan loss and other investment reserves, net of recoveries

 

 

564

 

Loss on early extinguishment of debt

 

10,968

 

 

Deferred rents receivable

 

(29,452

)

(37,318

)

Other non-cash adjustments

 

(28,375

)

3,759

 

Changes in operating assets and liabilities:

 

 

 

 

 

Restricted cash — operations

 

6,127

 

(7,104

)

Tenant and other receivables

 

4,896

 

(5,006

)

Related party receivables

 

768

 

(3,792

)

Deferred lease costs

 

(19,106

)

(28,549

)

Other assets

 

4,075

 

(27,176

)

Accounts payable, accrued expenses and other liabilities

 

1,793

 

9,609

 

Deferred revenue and land leases payable

 

8,102

 

(2,135

)

Net cash provided by operating activities

 

213,488

 

197,935

 

Investing Activities

 

 

 

 

 

Acquisitions of real estate property

 

(52,534

)

(248,468

)

Additions to land, buildings and improvements

 

(61,531

)

(76,585

)

Escrowed cash — capital improvements/acquisition deposits

 

(394

)

(65,030

)

Investments in unconsolidated joint ventures

 

(81,913

)

(131,820

)

Distributions in excess of cumulative earnings from unconsolidated joint ventures

 

11,117

 

44,172

 

Net proceeds from disposition of real estate/joint venture interest

 

5,852

 

26,099

 

Other investments

 

(18,038

)

(31,206

)

Debt and preferred equity and other investments, net of repayments/participations

 

150,919

 

(75,209

)

Net cash used in investing activities

 

(46,522

)

(558,047

)

Financing Activities

 

 

 

 

 

Proceeds from mortgages and other loans payable

 

980,333

 

1,113,500

 

Repayments of mortgages and other loans payable

 

(833,728

)

(472,288

)

Proceeds from credit facility and senior unsecured notes

 

370,000

 

468,339

 

Repayments of credit facility and senior unsecured notes

 

(404,970

)

(840,793

)

Proceeds from stock options exercised and DRIP issuance

 

8,995

 

105,195

 

Net proceeds from sale of common stock/preferred stock

 

8,478

 

201,307

 

Redemption of preferred stock

 

(192,500

)

 

Purchases of treasury stock

 

 

(11,158

)

Distributions to noncontrolling interests in other partnerships

 

(8,152

)

(11,999

)

Contributions from noncontrolling interests in other partnerships

 

3,364

 

18,799

 

Distributions to noncontrolling interests in the Operating Partnership

 

(1,775

)

(1,561

)

Dividends paid on common and preferred stock

 

(79,534

)

(59,155

)

Deferred loan costs and capitalized lease obligations

 

(8,492

)

(31,467

)

Net cash (used in) provided by financing activities

 

(157,981

)

478,719

 

Net increase in cash and cash equivalents

 

8,985

 

118,607

 

Cash and cash equivalents at beginning of period

 

189,984

 

138,192

 

Cash and cash equivalents at end of period

 

$

198,969

 

$

256,799

 

 

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

 

7



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

1.  Organization and Basis of Presentation

 

SL Green Realty Corp., which is referred to as the Company or SL Green, a Maryland corporation, and SL Green Operating Partnership, L.P., which is referred to as SLGOP or the Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of combining the commercial real estate business of S.L. Green Properties, Inc. and its affiliated partnerships and entities.  The Operating Partnership received a contribution of interest in the real estate properties, as well as 95% of the economic interest in the management, leasing and construction companies, which are referred to as the Service Corporation, a consolidated variable interest entity.  All of the management, leasing and construction services with respect to the properties that are wholly-owned by us are conducted through SL Green Management LLC which is 100% owned by the Operating Partnership.  The Company has qualified, and expects to qualify in the current fiscal year, as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, and operates as a self-administered, self-managed REIT.  A REIT is a legal entity that holds real estate interests and, through payments of dividends to stockholders, is permitted to minimize the payment of Federal income taxes at the corporate level.  Unless the context requires otherwise, all references to “we,” “our” and “us” means the Company and all entities owned or controlled by the Company, including the Operating Partnership.

 

Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership.  The Company is the sole managing general partner of the Operating Partnership.  As of June 30, 2013, noncontrolling investors held, in the aggregate, a 2.95% limited partnership interest in the Operating Partnership.  We refer to these interests as the noncontrolling interests in the Operating Partnership.  See Note 13, “Noncontrolling Interests in Operating Partnership.”

 

Reckson Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P., or ROP, are wholly-owned subsidiaries of the Operating Partnership.

 

As of June 30, 2013, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan, a borough of New York City.  Our investments in the New York Metropolitan area also include investments in Brooklyn, Long Island, Westchester County, Connecticut and Northern New Jersey, which are collectively known as the Suburban assets:

 

Location

 

Ownership

 

Number of
Properties

 

Square Feet

 

Weighted Average
Occupancy(1)

 

Manhattan

 

Consolidated properties

 

27

 

18,347,945

 

93.9

%

 

 

Unconsolidated properties

 

9

 

5,934,434

 

95.1

%

 

 

 

 

 

 

 

 

 

 

Suburban

 

Consolidated properties

 

27

 

4,217,400

 

79.4

%

 

 

Unconsolidated properties

 

4

 

1,222,100

 

84.3

%

 

 

 

 

67

 

29,721,879

 

91.7

%

 


(1)         The weighted average occupancy represents the total leased square feet divided by total available rentable square feet.

 

As of June 30, 2013, we also owned investments in 14 stand-alone retail properties encompassing approximately 465,200 square feet, 15 development properties encompassing approximately 2,580,700 square feet, three residential properties encompassing 468 units (approximately 497,100 square feet), two land interests encompassing approximately 961,400 square feet and 30 west coast office properties encompassing approximately 4,066,900 square feet.  In addition, we manage two office properties owned by third parties and affiliated companies encompassing approximately 626,400 rentable square feet. As of June 30, 2013, we also held debt and preferred equity investments with a book value of $1.2 billion.

 

Partnership Agreement

 

In accordance with the partnership agreement of the Operating Partnership, or the Operating Partnership agreement, we allocate all distributions and profits and losses in proportion to the percentage ownership interests of the respective partners.  As the managing general partner of the Operating Partnership, we are required to take such reasonable efforts, as determined by us in our sole discretion, to cause the Operating Partnership to distribute sufficient amounts to enable the payment of sufficient dividends by us to minimize any Federal income or excise tax at the Company level. Under the Operating Partnership agreement, each limited partner has the right to redeem units of limited partnership interests for cash, or if we so elect, for shares of our common stock on a one-for-one basis.

 

Basis of Quarterly Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally

 

8



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the financial position of the Company at June 30, 2013 and the results of operations for the periods presented have been included.  The 2013 operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.  These financial statements should be read in conjunction with the financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2012.

 

The balance sheet at December 31, 2012 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

 

2.  Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method or as debt and preferred equity investments.  See Note 5, “Debt and Preferred Equity Investments” and Note 6, “Investments in Unconsolidated Joint Ventures.”  All significant intercompany balances and transactions have been eliminated.

 

We consolidate variable interest entities, or VIEs, in which we are considered the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Included in commercial real estate properties on our consolidated balance sheets as of June 30, 2013 and December 31, 2012 are approximately $599.3 million and $607.4 million, respectively, related to our consolidated VIEs. Included in mortgages and other loans payable on our consolidated balance sheets as of June 30, 2013 and December 31, 2012 are approximately $375.3 million and $379.6 million, respectively, related to our consolidated VIEs.

 

A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent.  Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheet and the presentation of net income was modified to present earnings and other comprehensive income attributed to controlling and noncontrolling interests.

 

We assess the accounting treatment for each joint venture and debt and preferred equity investment.  This assessment includes a review of each joint venture or limited liability company agreement to determine which party has what rights and whether those rights are protective or participating.  For all VIE’s, we review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance.  In situations where we and our partner approves, among other things, the annual budget, receives a detailed monthly reporting package from us, meets on a quarterly basis to review the results of the joint venture, reviews and approves the joint venture’s tax return before filing, and approves all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power of the activities that most significantly impact the performance of our joint venture.  Our joint venture agreements typically contain certain protective rights such as the requirement of partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan.

 

Investment in Commercial Real Estate Properties

 

On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be impaired or that their carrying value may not be recoverable.  A property’s value is considered impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges for consolidated properties) to be generated by the property is less than the carrying value of the property.  To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the calculated fair value of the property. In June 2013, we recorded a $2.2 million impairment charge in connection with the expected sale of 300 Main Street in Stamford, Connecticut, which is accounted for as held for sale as of June 30, 2013.

 

We assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value.  We evaluate our equity investments for

 

9



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

impairment based on the joint venture’s projected discounted cash flows. We do not believe that the values of any of our consolidated properties or equity investments were impaired at either June 30, 2013 or December 31, 2012.

 

When we acquire equity interests in an existing unconsolidated joint venture and gain control over the investment, we record the consolidated investment at fair value. The difference between the book value of our equity investment on the purchase date and our share of the fair value of the investment’s purchase price is recorded as a purchase price fair value adjustment in our consolidated statements of income. In April 2013, we recognized a purchase price fair value adjustment of $(2.3) million in connection with the consolidation of 16 Court Street, which was previously accounted for as an investment in unconsolidated joint venture.

 

We allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases.  We depreciate the amount allocated to building (inclusive of tenant improvements) and other intangible assets over their estimated useful lives, which generally range from three to 40 years and from one to 14 years, respectively.  The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease, which generally range from one to 14 years.  The value associated with in-place leases is amortized over the expected term of the associated lease, which generally ranges from one to 14 years.  If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off.  The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date).  We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.  Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. To the extent acquired leases contain fixed rate renewal options that are below market and determined to be material, we amortize such below market lease value into rental income over the renewal period.

 

We recognized an increase of approximately $6.2 million, $10.1 million, $2.8 million and $4.8 million in rental revenue for the three and six months ended June 30, 2013 and 2012, respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase price of the applicable properties.  We recognized an increase/(reduction) in interest expense for the amortization of the above-market rate mortgages assumed of approximately $(1.3) million, $(2.6) million, $1.6 million and $0.6 million for the three and six months ended June 30, 2013 and 2012, respectively.

 

The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of June 30, 2013 and December 31, 2012 (in thousands):

 

 

 

June 30,
2013

 

December 31,
2012

 

Identified intangible assets (included in other assets):

 

 

 

 

 

Gross amount

 

$

732,160

 

$

725,861

 

Accumulated amortization

 

(296,573

)

(263,107

)

Net

 

$

435,587

 

$

462,754

 

 

 

 

 

 

 

Identified intangible liabilities (included in deferred revenue):

 

 

 

 

 

Gross amount

 

$

667,495

 

$

651,921

 

Accumulated amortization

 

(391,631

)

(357,225

)

Net

 

$

275,864

 

$

294,696

 

 

Fair Value Measurements

 

Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

 

We determined the fair value of our current investments in marketable securities using Level 1, Level 2 and Level 3 inputs.

 

10



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

The estimated fair values of tangible and intangible assets and liabilities recorded in connection with business combinations are based on Level 3 inputs. We estimate fair values based on cash flow projections utilizing appropriate discount and/or capitalization rates and available market information.

 

We determine impairment in real estate investments and debt and preferred equity investments, including intangibles, utilizing cash flow projections that apply estimated revenue and expense growth rates, discount rates and capitalization rates, which are classified as Level 3 inputs.

 

We use the following methods and assumptions in estimating fair value disclosures for financial instruments.

 

·                  Cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses:  The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses reported in our consolidated balance sheets approximates fair value due to the short term nature of these instruments.

·                  Debt and preferred equity investments:  The fair value of debt and preferred equity investments is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings. See “Reserve for Possible Credit Losses” below regarding valuation allowances for loan losses.

·                  Derivative instruments: The fair value of derivative instruments is based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well-recognized financial principles and reasonable estimates about relevant future market conditions.

·                  Mortgage and other loans payable and other debt:  The fair value of borrowings is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by us.

 

The methodologies used for measuring fair value have been categorized into three broad levels as follows:

 

Level 1 – Quoted prices in active markets for identical instruments.

 

Level 2 – Valuations based principally on other observable market parameters, including

 

·         Quoted prices in active markets for similar instruments,

·         Quoted prices in less active or inactive markets for identical or similar instruments,

·                            Other observable inputs (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates), and

·         Market corroborated inputs (derived principally from or corroborated by observable market data).

 

Level 3 – Valuations based significantly on unobservable inputs.

 

·                            Valuations based on third-party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable as Level 2 valuations.

·                            Valuations based on internal models with significant unobservable inputs.

 

These levels form a hierarchy. We follow this hierarchy for our assets and liabilities measured at fair value on a recurring and nonrecurring basis. The classifications are based on the lowest level of input that is significant to the fair value measurement.

 

Investment in Marketable Securities

 

We invest in marketable securities. At the time of purchase, we are required to designate a security as held-to-maturity, available-for-sale, or trading depending on ability and intent. We do not have any securities designated as held-to-maturity or trading at this time. Securities available-for-sale are reported at fair value pursuant to ASC 820-10, with the net unrealized gains or losses reported as a component of accumulated other comprehensive loss.  Unrealized losses that are determined to be other-than-temporary are recognized in earnings up to their credit component. Included in accumulated other comprehensive loss at June 30, 2013 and December 31, 2012 is approximately $3.1 million and $3.3 million, respectively, in net unrealized gains related to marketable securities.

 

The cost of bonds and marketable securities sold was determined using the specific identification method.

 

11



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

At June 30, 2013 and December 31, 2012, we held the following marketable securities (in thousands):

 

 

 

June 30,

 

December 31,

 

 

 

2013

 

2012

 

Level 1 – Equity marketable securities

 

$

3,371

 

$

2,202

 

Level 2 – Commercial mortgage-backed securities

 

19,406

 

15,575

 

Level 3 – Rake bonds

 

3,489

 

3,652

 

Total marketable securities available-for-sale

 

$

26,266

 

$

21,429

 

 

The cost basis of the Level 3 securities was $3.7 million at both June 30, 2013 and December 31, 2012, respectively. There were no sales of Level 3 securities during the three and six months ended June 30, 2013. The Level 3 securities mature at various times through 2030.

 

Revenue Recognition

 

Rental revenue is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the tenant takes possession or controls the physical use of the leased space. In order for the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner (the tenant is the owner) of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When management concludes that we are the owner of tenant improvements for accounting purposes, management records amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, management records amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, management records our contribution towards those improvements as a lease incentive, which is included in deferred leasing costs on our consolidated balance sheets and amortized as a reduction to rental revenue on a straight-line basis over the term of the lease.  The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents receivable on the accompanying consolidated balance sheets.  We establish, on a current basis, an allowance for future potential tenant credit losses, which may occur against this account.  The balance reflected on the consolidated balance sheet is net of such allowance.

 

In addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters’ wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year.

 

We record a gain on sale of real estate when title is conveyed to the buyer, subject to the buyer’s financial commitment being sufficient to provide economic substance to the sale and we have no substantial economic involvement with the buyer.

 

Interest income on debt and preferred equity investments is recognized over the life of the investment using the effective interest method and recognized on the accrual basis.  Fees received in connection with loan commitments are deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield.  Anticipated exit fees, whose collection is expected, are also recognized over the term of the loan as an adjustment to yield.  Fees on commitments that expire unused are recognized at expiration.

 

Income recognition is generally suspended for debt and preferred equity investments at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income and principal becomes doubtful.  Interest income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received. Several of the debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management’s determination that accrued interest and outstanding principal are ultimately

 

12



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

collectible, based on the underlying collateral and operations of the borrower. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt.

 

If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount.

 

Reserve for Possible Credit Losses

 

The expense for possible credit losses in connection with debt and preferred equity investments is the charge to earnings to increase the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality.  Other factors considered relate to geographic trends and product diversification, the size of the portfolio and current economic conditions.  Based upon these factors, we establish the provision for possible credit losses on each individual investment.  When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.

 

Where impairment is indicated on an investment that is held to maturity, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value of the collateral.  Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense.  The write-off of the reserve balance is called a charge off.  We recorded no loan loss reserves during the three and six months ended June 30, 2013. During the three and six months ended June 30, 2012, we recorded loan loss reserves of zero and $3.0 million, respectively, on investments being held to maturity and approximately zero and $2.4 million, respectively, in recoveries in connection with the sale of our investments. This is included in loan loss and other investment reserves, net of recoveries in the accompanying consolidated statements of income.

 

Debt and preferred equity investments held for sale are carried at the lower of cost or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale.  In such situations, the investment will be reclassified at its net carrying value to debt and preferred equity investments held to maturity.  For these reclassified investments, the difference between the current carrying value and the expected cash to be collected at maturity will be accreted into income over the remaining term of the investment.

 

Income Taxes

 

We are taxed as a REIT under Section 856(c) of the Code. As a REIT, we generally are not subject to Federal income tax.  To maintain our qualification as a REIT, we must distribute at least 90% of our REIT taxable income to our stockholders and meet certain other requirements.  If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income tax on our taxable income at regular corporate rates.  We may also be subject to certain state, local and franchise taxes.  Under certain circumstances, Federal income and excise taxes may be due on our undistributed taxable income.

 

Pursuant to amendments to the Code that became effective January 1, 2001, we have elected, and may in the future, elect to treat certain of our existing or newly created corporate subsidiaries as taxable REIT subsidiaries, or a TRS. In general, our TRSs may perform non-customary services for our tenants, hold assets that we cannot hold directly and generally may engage in any real estate or non-real estate related business.  Our TRSs generate income, resulting in Federal and state income tax liability for these entities.

 

During the three and six months ended June 30, 2013, we recorded Federal, state and local tax provisions of $2.3 million and $3.9 million, respectively, and made estimated tax payments of zero and $0.1 million, respectively. During the three and six months ended June 30, 2012, we recorded Federal, state and local tax provisions of $0.1 million and less than $0.1 million, respectively. We made no estimated payments during the three and six months ended June 30, 2012.

 

We follow a two-step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is more-likely-than-not to be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for derecognition of tax positions is prohibited.

 

Stock-Based Employee Compensation Plans

 

We have a stock-based employee compensation plan, described more fully in Note 12, “Stockholders’ Equity.”

 

13



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

Our stock options are recorded at fair value at the time of issuance. Fair value of the stock options is determined using the Black-Scholes option-pricing model. The Black-Scholes model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable.  In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility.  Because our plan has characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our employee stock options.

 

Compensation cost for stock options, if any, is recognized ratably over the vesting period of the award.  Our policy is to grant options with an exercise price equal to the quoted closing market price of our common stock on the grant date.  Awards of stock or restricted stock are expensed as compensation over the benefit period based on the fair value of the stock on the grant date.

 

For share-based awards with a performance or market measure, we recognize compensation cost over the requisite service period, using the accelerated attribution expense method. The requisite service period begins on the date the compensation committee of our board of directors authorizes the award, adopts any relevant performance measures and communicates the award to the employees. For programs with performance measures, the total estimated compensation cost is based on the fair value of the award at the applicable reporting date estimated using a binomial model. For share-based awards for which there is no pre-established performance measure, we recognize compensation cost over the service vesting period, which represents the requisite service period, on a straight-line basis. In accordance with the provisions of our share-based incentive compensation plans, we accept the return of shares of our Company common stock, at the current quoted market price, from certain key employee to satisfy minimum statutory tax-withholding requirements related to shares that vested during the period.

 

Awards can also be made in the form of a separate series of units of limited partnership interest in the Operating Partnership called long-term incentive plan units, or LTIP Units. LTIP Units, which can be granted either as free-standing awards or in tandem with other awards under our stock incentive plan, are valued by reference to the value of our common stock at the time of grant, and are subject to such conditions and restrictions as the compensation committee of our board of directors may determine, including continued employment or service, computation of financial metrics and/or achievement of pre-established performance goals and objectives.

 

Earnings per Share

 

We present both basic and diluted earnings per share, or EPS.  Basic EPS excludes dilution and is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period. Basic EPS includes participating securities, consisting of unvested restricted stock that receive nonforfeitable dividends similar to shares of common stock. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.  This also includes units of limited partnership interest. The dilutive effect of stock options is reflected in the weighted average diluted outstanding shares calculation by application of the treasury stock method. There is no dilutive effect for the exchangeable senior debentures as the conversion premium will be paid in cash.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Concentrations of Credit Risk

 

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, debt and preferred equity investments and accounts receivable.  We place our cash investments in excess of insured amounts with high quality financial institutions.  The collateral securing our debt and preferred equity investments is located in the New York Metropolitan area. See Note 5, “Debt and Preferred Equity Investments.”  We perform ongoing credit evaluations of our tenants and require most tenants to provide security deposits or letters of credit.  Though these security deposits and letters of credit are insufficient to meet the total value of a tenant’s lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space.  Although the properties in our real estate portfolio are primarily located in Manhattan, we also have Suburban properties located in Brooklyn, Long Island, Westchester County, Connecticut, Northern New Jersey and the west coast.  The tenants located in our buildings operate in various industries.  Other than three tenants who account for

 

14



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

approximately 6.0%, 6.4% and 7.1% of our share of annualized cash rent, no other tenant in our portfolio accounted for more than 1.9% of our annualized cash rent, including our share of joint venture annualized cash rent for the three months ended June 30, 2013. Approximately 9%, 6% and 6% of our annualized cash rent for consolidated properties for the three months ended June 30, 2013 was attributable to 1515 Broadway, 1185 Avenue of the Americas and One Madison Avenue, respectively.  In addition, two debt and preferred equity investments accounted for more than 10% of the income earned on debt and preferred equity investments during the three months ended June 30, 2013.

 

Reclassification

 

Certain prior year balances have been reclassified to conform to our current year presentation primarily in order to eliminate discontinued operations from income from continuing operations and to reclassify deferred origination fees from deferred income to debt and preferred equity investments.

 

Accounting Standards Updates

 

In February 2013, the FASB issued guidance on the presentation and disclosure of reclassification adjustments out of accumulated other comprehensive income, or AOCI. The standard requires an entity to present information about significant items reclassified out of AOCI by component either on the face of the statement where net income is presented or as a separate disclosure in the notes to financial statements. The guidance became effective for calendar year-end public companies beginning in the first quarter of 2013 and its adoption did not have a material impact on our consolidated financial statements.

 

3.  Property Acquisitions

 

2013 Acquisitions

 

In April 2013, we acquired interests from our joint venture partner, City Investment Fund, or CIF, in 16 Court Street for $4.0 million. We have consolidated the ownership of the 318,000 square foot building. The transaction valued the consolidated interest at $96.2 million, inclusive of the $84.7 mortgage encumbering the property. We recognized a purchase price fair value adjustment of $(2.3) million upon the closing of this transaction. This property, which we initially acquired in July 2007, was previously accounted for as an investment in unconsolidated joint ventures. We are currently in the process of analyzing the fair value of the investment. Therefore, the purchase price allocation is preliminary and subject to change.

 

In March 2013, we, along with Magnum Real Estate Group, acquired 84 residential apartment units, consisting of 72 apartment units and 12 townhouses, located at 248-252 Bedford Avenue, Williamsburg, Brooklyn for $54.9 million. Simultaneous with the closing, the joint venture closed on a five-year $22.0 million mortgage loan which carries a floating rate of interest of 225 basis points over LIBOR. The property sits on top of a commercial property already owned by us. We hold a 90% controlling interest in this joint venture.

 

2012 Acquisitions

 

In December 2012, we acquired a 68,000 square foot mixed use retail, office and residential building located at 131-137 Spring Street for $122.3 million.

 

In December 2012, we acquired the aggregate 42,000 square foot vacant retail buildings located at 985-987 Third Avenue for $18.0 million.

 

In October 2012, we, along with Stonehenge Partners, acquired a 99-year leasehold position covering an 82,250 square foot, 96 unit residential building located at 1080 Amsterdam Avenue which we plan to redevelop into luxury residential units.

 

In September 2012, we acquired the aggregate 267,000 square foot office buildings located at 635 and 641 Sixth Avenue for $173.0 million.

 

In June 2012, we acquired a 215,000 square foot office building located at 304 Park Avenue South for $135.0 million. The property was acquired with approximately $102.0 million in cash and $33.0 million in units of limited partnership interest of the Operating Partnership.

 

In October 2011, we formed a joint venture with Stonehenge Partners and, in January 2012, we acquired five retail and two multifamily properties in Manhattan for $193.1 million, inclusive of the issuance of $47.6 million aggregate liquidation preference of 4.5% Series G preferred units of limited partnership interest of the Operating Partnership. Simultaneous with the closing, we financed the multifamily component, which encompasses 385 units and 488,000 square feet, with an aggregate 12-year $100.0 million fixed

 

15



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

rate mortgage which bears interest at 4.125% and one of the retail properties financed with a five-year $8.5 million fixed rate mortgage which bears interest at 3.75%. We hold an 80% interest in this joint venture, which we consolidate as a VIE since we have been designated as the primary beneficiary.

 

The following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of these acquisitions (in thousands):

 

 

 

248-252
Bedford
Avenue

 

131-137
Spring
Street

 

635-641
Sixth
Avenue

 

304 Park
Avenue
South

 

Stonehenge
Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

$

$10,865

 

$

27,021

 

$

69,848

 

$

54,189

 

$

65,533

 

Building and building leasehold

 

44,035

 

105,342

 

104,474

 

75,619

 

128,457

 

Above market lease value

 

 

179

 

 

2,824

 

594

 

Acquired in-place leases

 

 

7,046

 

7,727

 

8,265

 

9,573

 

Other assets, net of other liabilities

 

 

 

 

 

2,190

 

Assets acquired

 

54,900

 

139,588

 

182,049

 

140,897

 

206,347

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value adjustment to mortgage note payable

 

 

 

 

 

 

Below market lease value

 

 

17,288

 

9,049

 

5,897

 

13,239

 

Liabilities assumed

 

 

17,288

 

9,049

 

5,897

 

13,239

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price allocation

 

$

54,900

 

$

122,300

 

$

173,000

 

$

135,000

 

$

193,108

 

 

 

 

 

 

 

 

 

 

 

 

 

Net consideration funded by us at closing, excluding consideration financed by debt

 

$

21,782

 

$

122,300

 

$

173,000

 

$

135,000

 

$

78,121

 

Equity and/or debt investment held

 

$

 

$

 

$

 

$

 

$

 

Debt assumed

 

$

 

$

 

$

 

$

 

$

 

 

4.  Property Dispositions and Assets Held for Sale

 

In June 2013, we entered into an agreement to sell the property located at 333 West 34th, New York, New York for $220.3 million. This transaction is expected to close during the third quarter of 2013.

 

In March 2013, we entered into an agreement to sell the property located at 300 Main Street, Stamford, Connecticut for $13.5 million. We recorded a $2.2 million impairment charge, in the second quarter of 2013, in connection with the expected sale of this property. This transaction is expected to close during the third quarter of 2013.

 

In February 2013, we, along with our joint venture partner, sold our property located at 44 West 55th Street for $6.3 million. We recognized a gain of $1.1 million on the sale.

 

In February 2012, we sold our leased fee interest at 292 Madison Avenue for $85.0 million. We recognized a gain of $6.6 million on the sale.

 

Discontinued operations included the results of operations of real estate assets under contract or sold prior to June 30, 2013. This included 300 Main Street and 333 West 34th Street, which were held for sale at June 30, 2013, 44 West 55th Street, which was sold in February 2013 and 292 Madison Avenue, which was sold in February 2012.

 

The following table summarizes income from discontinued operations for the three and six months ended June 30, 2013 and 2012, respectively (in thousands).

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

4,930

 

$

3,853

 

$

8,960

 

$

8,425

 

Escalation and reimbursement revenues

 

155

 

618

 

609

 

1,167

 

Other income

 

 

 

7

 

 

Total revenues

 

5,085

 

4,471

 

9,576

 

9,592

 

Operating expenses

 

1,542

 

1,488

 

2,983

 

2,866

 

Real estate taxes

 

284

 

313

 

578

 

614

 

Interest expense, net of interest income

 

167

 

166

 

331

 

930

 

Depreciable real estate reserves

 

2,150

 

 

2,150

 

 

Transaction related costs

 

3

 

 

3

 

95

 

Depreciation and amortization

 

1,617

 

1,605

 

3,211

 

3,156

 

Total expenses

 

5,763

 

3,572

 

9,256

 

7,661

 

Net (loss) income from discontinued operations

 

$

(678

)

$

899

 

$

320

 

$

1,931

 

 

16



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

5.  Debt and Preferred Equity Investments

 

During the six months ended June 30, 2013 and 2012, our debt and preferred equity investments (net of discounts and deferred origination fees) increased approximately $298.8 million and $159.1 million, respectively, due to originations, purchases, accretion of discounts and paid-in-kind interest.  We recorded repayments, participations and sales of approximately $419.8 million and $159.8 million, respectively, and loan loss reserves of zero and $3.0 million during the six months ended June 30, 2013 and 2012, respectively, which offset the increases in debt and preferred equity investments.

 

Debt Investments

 

As of June 30, 2013 and December 31, 2012, we held the following debt investments with an aggregate weighted average current yield of approximately 11.2% at June 30, 2013 (in thousands):

 

Loan
Type

 

June 30,
2013
Senior
Financing

 

June 30,
2013
Carrying Value,
Net of Discounts
and Deferred
Origination Fees

 

December 31,
2012
Carrying Value,
Net of Discounts
and Deferred
Origination Fees

 

Initial
Maturity
Date

 

Other Loan

 

$

398,500

 

$

14,820

 

$

 

March 2015

 

Mezzanine Loan

 

205,000

 

67,170

 

66,307

 

February 2016

 

Mortgage/Mezzanine Loan

 

167,966

 

44,358

 

44,013

 

May 2016

 

Mezzanine Loan

 

177,000

 

15,436

 

15,906

 

May 2016

 

Junior Participation

 

133,000

 

49,000

 

49,000

 

June 2016

 

Mezzanine Loan

 

165,000

 

71,073

 

70,967

 

November 2016

 

Mortgage/Mezzanine Loan(1)

 

1,109,000

 

75,602

 

115,804

 

March 2017

 

Other Loan

 

15,000

 

3,500

 

3,500

 

September 2021

 

Mortgage(2)

 

 

 

218,068

 

 

Total fixed rate

 

$

2,370,466

 

$

340,959

 

$

583,565

 

 

 

Mezzanine Loan(3)

 

 

29,826

 

 

December 2013

 

Junior Participation(4)(13)

 

57,750

 

10,863

 

10,869

 

February 2014

 

Junior Participation(5)

 

78,200

 

23,057

 

 

February 2014

 

Mortgage/Mezzanine Loan(6)

 

330,000

 

131,470

 

131,231

 

July 2014

 

Mezzanine Loan(7)

 

62,500

 

37,359

 

37,288

 

July 2014

 

Mezzanine Loan

 

180,000

 

59,812

 

59,739

 

August 2014

 

Mortgage

 

 

14,817

 

14,745

 

September 2014

 

Mortgage/Mezzanine Loan(8)

 

 

51,227

 

47,253

 

February 2015

 

Mezzanine Loan(9)

 

92,711

 

27,734

 

55,336

 

December 2015

 

Mezzanine Loan(10)

 

775,000

 

72,358

 

 

March 2016

 

Mezzanine Loan(11)

 

160,000

 

22,503

 

7,624

 

June 2016

 

Mezzanine Loan

 

87,300

 

25,572

 

34,761

 

July 2016

 

Mezzanine Loan(12)

 

83,933

 

35,563

 

34,444

 

October 2016

 

Total floating rate

 

$

1,907,394

 

$

542,161

 

$

433,290

 

 

 

Total

 

4,277,860

 

883,120

 

1,016,855

 

 

 

Loan loss reserve(13)

 

 

(7,000

)

(7,000

)

 

 

 

 

$

4,277,860

 

$

876,120

 

$

1,009,855

 

 

 

 


(1)

 

Interest is added to the principal balance for this accrual only loan. In January 2013, we sold 50% of the mezzanine loan for $57.8 million and recognized additional income of $12.9 million, which is included in investment and preferred equity income on the

 

17



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

 

 

consolidated statements of income. The unaccrued interest during the period in which the loan was on non-accrual status is being accreted as of January 2013.

(2)

 

In November 2012, we acquired this non-performing loan with an original balance of $219.0 million, which accrued interest at its default rate. In connection with the repayment of the loan in May 2013, we recognized additional income of $6.4 million, which is included in investment and preferred equity income on our consolidated statements of income.

(3)

 

In February 2013, we entered into a loan participation agreement in the amount of $30.0 million on a $100.0 million mortgage. The note has two one-year extension options.

(4)

 

This loan matured in June 2013 and was extended to February 2014. The loan has an additional four-month extension option.

(5)

 

As of June 30, 2013, we were committed to fund an additional $1.7 million in connection with this loan.

(6)

 

As part of the restructuring and refinancing of the related senior mortgage in July 2012, our outstanding investment in the amount of $49.9 million was repaid in full at maturity and we also entered into a loan participation in the amount of $182.0 million on the $462.0 million outstanding senior mortgage which maturity was extended to July 2014. In September 2012, we sold $50.0 million of our interest in the senior mortgage to a third party.

(7)

 

In November 2012, we entered into a loan participation agreement in the amount of $5.0 million on a $37.5 million mortgage. As a result of the transfer not meeting the conditions for sale accounting, the portion that was participated out has been recorded in other liabilities in the accompanying consolidated balance sheets.

(8)

 

As of June 30, 2013, we were committed to fund an additional $7.1 million in connection with this loan.

(9)

 

We funded $56.3 million at origination. In June 2013, we sold 50% of our interest in the $85 million mezzanine loan. As of June 30, 2013, we were committed to fund an additional $13.6 million in connection with our share of this loan.

(10)

 

In March 2013, we originated a $150.0 million junior mezzanine loan and simultaneously sold one-half of our interest at par.

(11)

 

In November 2011, we entered into a loan participation agreement in the amount of $7.4 million on a $15.0 million mortgage. As part of the refinancing of the related senior mortgage in June 2013, we originated a $30.0 million mezzanine loan and our outstanding investment in the amount of $15.0 million, including the participated interest, was repaid in full. Following the refinancing, we entered into a loan participation agreement in the amount of $7.4 million on this $30.0 million mezzanine loan. Due to our continued involvement with the loan, the portion that was participated out has been recorded in other assets and other liabilities in the accompanying consolidated balance sheets.

(12)

 

As of June 30, 2013, we were committed to fund an additional $14.1 million in connection with this loan.

(13)

 

Loan loss reserves are specifically allocated to investments. Our reserves reflect management’s judgment of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct or that reserves will be adequate over time to protect against potential future losses.

 

Preferred Equity Investments

 

As of June 30, 2013 and December 31, 2012, we held the following preferred equity investments, with an aggregate weighted average current yield of approximately 10.2% at June 30, 2013 (in thousands):

 

Type

 

June 30,
2013
Senior
Financing

 

June 30,
2013

Carrying
Value, Net of
Discounts
and Deferred
Origination
Fees

 

December 31,
2012

Carrying
Value, Net of
Discounts
and Deferred
Origination
Fees

 

Initial
Mandatory
Redemption

 

Preferred equity

 

$

70,000

 

$

9,934

 

$

9,927

 

October 2014

 

Preferred equity(1)(2) 

 

525,000

 

105,360

 

99,768

 

July 2015

 

Preferred equity(1)(3)

 

55,986

 

22,213

 

18,925

 

April 2016

 

Preferred equity(1)

 

926,260

 

213,794

 

209,959

 

July 2016

 

 

 

$

1,577,246

 

$

351,301

 

$

338,579

 

 

 

 


(1)         The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.

(2)         The reserve previously taken against this loan is being accreted up to the face amount through the maturity date. In June 2013, the redemption date was extended from July 2014 to July 2015.

(3)         As of June 30, 2013, we were committed to fund an additional $3.6 million on this loan.

 

The following table is a rollforward of our total loan loss reserves at June 30, 2013 and December 31, 2012 (in thousands):

 

 

 

June 30,
2013

 

December 31,
2012

 

Balance at beginning of year

 

$

7,000

 

$

50,175

 

Expensed

 

 

3,000

 

Recoveries

 

 

(2,436

)

Charge-offs and reclassifications

 

 

(43,739

)

Balance at end of period

 

$

7,000

 

$

7,000

 

 

18



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

At June 30, 2013 and December 31, 2012, all debt and preferred equity investments, other than as noted above, were performing in accordance with the terms of the loan agreements.

 

We have determined that we have one portfolio segment of financing receivables at June 30, 2013 and December 31, 2012 comprising commercial real estate, which is primarily recorded in debt and preferred equity investments. Included in other assets is an additional amount of financing receivables totaling approximately $141.7 million at June 30, 2013 and $121.3 million at December 31, 2012. No financing receivables were 90 days past due or on non-accrual status at June 30, 2013.

 

The following table presents impaired loans, which may include non-accrual loans, as of June 30, 2013 and December 31, 2012, respectively (in thousands):

 

 

 

June 30, 2013

 

December 31, 2012

 

 

 

Unpaid Principal
Balance

 

Recorded
Investment

 

Allowance
Allocated

 

Unpaid
Principal
Balance

 

Recorded
Investment

 

Allowance
Allocated

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

 

$

 

$

 

$

 

$

 

$

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

10,750

 

10,750

 

7,000

 

10,750

 

10,750

 

7,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

10,750

 

$

10,750

 

$

7,000

 

$

10,750

 

$

10,750

 

$

7,000

 

 

The following table presents the average recorded investment in impaired loans, which may include non-accrual loans and the related investment and preferred equity income recognized during the three and six months ended June 30, 2013 and 2012, respectively (in thousands):

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Average recorded investment in impaired loans

 

$

10,876

 

$

69,932

 

$

10,870

 

$

74,935

 

 

 

 

 

 

 

 

 

 

 

Investment and preferred equity income recognized

 

261

 

2,333

 

487

 

3,895

 

 

On an ongoing basis, we monitor the credit quality of our financing receivables based on payment activity. We assess credit quality indicators based on the underlying collateral.

 

6.  Investments in Unconsolidated Joint Ventures

 

We have investments in several real estate joint ventures with various partners, including SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, or SITQ, Canada Pension Plan Investment Board, or CPPIB, Prudential Real Estate Investors, or Prudential, Onyx Equities, or Onyx, The Witkoff Group, or Witkoff, Credit Suisse Securities (USA) LLC, or Credit Suisse, Jeff Sutton, or Sutton, Harel Insurance and Finance, or Harel, Louis Cappelli, or Cappelli, The Moinian Group, or Moinian, Vornado Realty Trust (NYSE: VNO), or Vornado, Blackstone Real Estate Partners VII, or Blackstone, Square Mile Capital Management LLC, or Square Mile, Plaza Global Real Estate Partners LP or Plaza, Angelo Gordon Real Estate Inc., or AG, as well as private investors. All the investments below are voting interest entities, except for 33 Beekman, 3 Columbus Circle and 180/182 Broadway which are VIEs in which we are not the primary beneficiary. Our net equity investment in these three VIEs was $133.4 million and $117.7 million at June 30, 2013 and December 31, 2012, respectively. As we do not control the joint ventures listed below, we account for them under the equity method of accounting.

 

19



Table of Contents

 

SL Green Realty Corp.

Notes to Consolidated Financial Statements

June 30, 2013

(unaudited)

 

The table below provides general information on each of our joint ventures as of June 30, 2013 (amounts in thousands):

 

Property

 

Partner

 

Ownership
Interest

 

Economic
Interest

 

Square
Feet

 

Acquired

 

Acquisition
Price($)(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Park Avenue

 

Prudential

 

49.90

%

49.90

%

834

 

02/00

 

95,800

 

21 West 34th Street

 

Sutton

 

50.00

%

50.00

%

30

 

07/05

 

22,400

 

1604-1610 Broadway(14)

 

Onyx

 

70.00

%

70.00

%

30

 

11/05

 

4,400

 

27-29 West 34th Street

 

Sutton

 

50.00

%

50.00

%

41

 

01/06

 

30,000

 

717 Fifth Avenue(2)

 

Sutton/Private Investor

 

10.92

%

10.92

%

120

 

09/06

 

251,900

 

800 Third Avenue

 

Private Investors

 

42.95

%

42.95

%

526

 

12/06

 

285,000

 

1745 Broadway

 

Witkoff/SITQ/Lehman Bros.

 

32.26

%

32.26

%

674

 

04/07

 

520,000

 

1 and 2 Jericho Plaza

 

Onyx/Credit Suisse

 

20.26

%

20.26

%

640

 

04/07

 

210,000

 

The Meadows(3)

 

Onyx

 

50.00

%

50.00

%

582

 

09/07

 

111,500

 

388 and 390 Greenwich Street(4)

 

SITQ

 

50.60

%

50.60

%

2,600

 

12/07

 

1,575,000

 

180/182 Broadway(5)

 

Harel/Sutton

 

25.50

%

25.50

%

71

 

02/08

 

43,600

 

600 Lexington Avenue

 

CPPIB

 

55.00

%

55.00

%