SL Green Realty Corp. (NYSE:SLG):
Financial and Operating
Highlights
- Net income attributable to common
stockholders of $0.52 per share for the first quarter as compared
to $1.12 per share for the same period in 2018. Net income
attributable to common stockholders for the first quarter of 2018
included a non-cash fair value adjustment of $49.3 million, or
$0.52 per share, related to the deconsolidation of 919 Third
Avenue.
- Funds from operations, or FFO, of
$1.68 per share for the first quarter, net of a non-cash charge of
$2.0 million, or $0.02 per share, related to the bankruptcy of
Diesel, a tenant at 625 Madison Avenue, as compared to $1.66 per
share for the same period in 2018.
- Same-store cash net operating
income, or NOI, including our share of same-store cash NOI from
unconsolidated joint ventures, increased 5.1% for the first quarter
excluding lease termination income and free rent given to Viacom at
1515 Broadway, as compared to same period in the prior
year.
- Signed 32 Manhattan office leases
covering 407,902 square feet in the first quarter. The
mark-to-market on signed Manhattan office leases was 4.5% higher
for the first quarter over the previous fully escalated rents on
the same spaces.
- Signed a new 28,024 square foot
lease with KPS Capital Partners, LP and, in April, signed a 14,276
square foot expansion with McDermott Will & Emery at One
Vanderbilt, bringing the property to 56.9% leased ahead of its
planned opening in August 2020.
- In April, signed First Republic Bank
to a 211,521 square foot, 15-year lease at 460 West 34th Street,
the 20-Story, 638,000 square foot, Class A office building located
directly across from Hudson Yards and Manhattan West along the full
block front of Tenth Avenue between 33rd and 34th Streets, which
will be undergoing a substantial redevelopment.
- In April, signed a 10.8 year renewal
for 56,239 square feet with Skadden, Arps, Slate, Meagher &
Flom LLP at 360 Hamilton Avenue in White Plains, NY.
- Manhattan same-store occupancy was
95.8% as of March 31, 2019, inclusive of leases signed but not
yet commenced.
Investing Highlights
- In 2019, the Company repurchased 0.4
million shares of common stock under the previously announced $2.5
billion share repurchase plan, at an average price of $86.07 per
share. To date, the Company has acquired 18.5 million shares of its
common stock and redeemed 0.4 million common units of its Operating
Partnership, or OP units, under the program at an average price of
$98.48 per share/unit.
- Together with our joint venture
partner, entered into an agreement to sell 521 Fifth Avenue for a
sale price of $381.0 million. The transaction is expected to
generate net cash proceeds to the Company of approximately $100.0
million and close in the second quarter.
- Took possession of the retail co-op
at 106 Spring Street in Soho. The 5,936 square foot retail space,
inclusive of 4,880 square feet on grade, is considered one of the
best available retail corners in Soho, at the intersection of
Spring Street and Mercer Street, and is surrounded by several newly
opened retail flagships including Nike, Alo Yoga, Birkenstock, and
Bang & Olufsen.
Financing Highlights
- Closed on a new $85.0 million
financing of the office portion of 609 Fifth Avenue. The new
mortgage has a 5-year term and bears interest at a floating rate of
2.40% over LIBOR.
Summary
SL Green Realty Corp. (the "Company") today reported net income
attributable to common stockholders for the quarter ended
March 31, 2019 of $43.8 million, or $0.52 per share, as
compared to net income attributable to common stockholders of
$101.8 million, or $1.12 per share, for the same quarter in 2018.
Net income attributable to common stockholders for the first
quarter of 2018 included a non-cash fair value adjustment of $49.3
million, or $0.52 per share, related to the deconsolidation of 919
Third Avenue.
The Company reported FFO for the quarter ended March 31,
2019 of $147.5 million, or $1.68 per share, net of a non-cash
charge of $2.0 million, or $0.02 per share, related to the
bankruptcy of Diesel, a tenant at 625 Madison Avenue, as compared
to FFO for the same period in 2018 of $157.7 million, or $1.66 per
share.
All per share amounts in this press release are presented on a
diluted basis.
Operating and Leasing
Activity
For the quarter ended March 31, 2019, the Company reported
consolidated revenues and operating income of $304.3 million and
$160.3 million, respectively, compared to $301.7 million and $168.3
million, respectively, for the same period in 2018.
Same-store cash NOI, including our share of same-store cash NOI
from unconsolidated joint ventures, decreased by 2.9% for the
quarter ended March 31, 2019, but increased by 5.1% excluding
lease termination income and free rent given to Viacom at 1515
Broadway.
During the first quarter, the Company signed 32 office leases in
its Manhattan portfolio totaling 407,902 square feet. Twenty-four
leases comprising 234,282 square feet, representing office leases
on space that had been occupied within the prior twelve months, are
considered replacement leases on which mark-to-market is
calculated. Those replacement leases had average starting rents of
$72.16 per rentable square foot, representing a 4.5% increase over
the previous fully escalated rents on the same office spaces. The
average lease term on the Manhattan office leases signed in the
first quarter was 11.7 years, or 12.2 years including the office
leases signed at One Vanderbilt, and average tenant concessions
were 3.7 months of free rent with a tenant improvement allowance of
$56.29 per rentable square foot.
Occupancy in the Company's Manhattan same-store portfolio was
95.8% as of March 31, 2019, inclusive of 364,834 square feet
of leases signed but not yet commenced, as compared 95.5% at
March 31, 2018.
During the first quarter, the Company signed 8 office leases in
its Suburban portfolio totaling 32,970 square feet. Seven leases
comprising 29,851 square feet, representing office leases on space
that had been occupied within the prior twelve months, are
considered replacement leases on which mark-to-market is
calculated. Those replacement leases had average starting rents of
$32.47 per rentable square foot, representing a 0.9% decrease over
the previous fully escalated rents on the same office
spaces. The average lease term on the Suburban office leases
signed in the first quarter was 3.8 years and average tenant
concessions were 3.2 months of free rent with a tenant improvement
allowance of $6.84 per rentable square foot.
Occupancy in the Company's Suburban same-store portfolio was
91.1% as of March 31, 2019, inclusive of 14,748 square feet of
leases signed but not yet commenced, as compared to 92.4% at
March 31, 2018.
Significant leases that were signed in the first quarter
included:
- New lease with Young Adult Institute,
Inc. for 75,353 square feet at 220 East 42nd Street, for 29.0
years;
- New lease with 1350 Office Suites LLC
for 49,921 square feet at 1350 Avenue of the Americas, for 10.0
years;
- Expansion with The Carlyle Group for
32,592 square feet at One Vanderbilt Avenue, for 15.8 years;
- New lease with KPS Capital Partners, LP
for 28,024 square feet at One Vanderbilt Avenue, for 15.0 years;
and
- New lease with Newmark & Company
Real Estate for 20,966 square feet at 110 East 42nd Street, for
12.3 years.
Marketing, general and administrative, or MG&A, expense for
the three months ended March 31, 2019 was $26.0 million, or
5.9% of total combined revenues, inclusive of $2.2 million of
additional expense related to the new accounting guidance for
leasing costs, which requires the Company to expense certain
internal costs that were previously capitalized.
Investment Activity
In 2019, the Company repurchased 0.4 million shares of common
stock under the previously announced $2.5 billion share repurchase
plan, at an average price of $86.07 per share. To date, the Company
has acquired 18.5 million shares of its common stock and redeemed
0.4 million common units of its Operating Partnership, or OP units,
under the program at an average price of $98.48 per share/unit,
allowing the Company to save approximately $64.4 million of common
dividends and distributions on an annualized basis.
In April, the Company took possession of the retail co-op at 106
Spring Street in Soho. The 5,936 square foot retail space,
inclusive of 4,880 square feet on grade, is considered one of the
best available retail corners in Soho, at the intersection of
Spring Street and Mercer Street, and is surrounded by several newly
opened retail flagships including Nike, Alo Yoga, Birkenstock, and
Bang & Olufsen. The property previously served as collateral
for a debt and preferred equity investment.
In March, the Company, along with our joint venture partner
entered into an agreement to sell 521 Fifth Avenue for a sale price
of $381.0 million. The Company acquired the leasehold interest
in the 39-story, 460,000-square-foot, office building in March
2006, subsequently took ownership of the fee interest
in April 2011 and sold a joint venture interest in the
property to an institutional investment
partner in the fourth quarter of 2012. The
transaction is expected to generate net cash proceeds to the
Company of approximately $100.0 million and close in the second
quarter, subject to customary closing conditions.
Debt and Preferred Equity Investment
Activity
The carrying value of the Company’s debt and preferred equity
investment portfolio increased to $2.30 billion at March 31,
2019, including $2.27 billion of investments at a weighted average
current yield of 8.8% that are classified in the debt and preferred
equity line item on the balance sheet, and investments aggregating
$0.03 billion at a weighted average current yield of 6.6% that are
included in other balance sheet line items for accounting
purposes.
During the first quarter, the Company originated or acquired new
debt and preferred equity investments totaling $419.0 million, all
of which was retained and $398.7 million of which was funded. New
mortgage investments totaled $147.8 million, all of which was
retained and $132.7 million of which was funded, at a weighted
average current yield of 8.5%. New subordinate debt and preferred
equity investments totaled $271.2 million, all of which was
retained and $266.0 million of which was funded, at a weighted
average yield of 9.6%.
Financing Activity
In March, the Company closed on a new $85.0 million mortgage
financing of the office condominium at 609 Fifth Avenue. The new
mortgage has a 2-year term, with three one year extension options
and bears interest at a floating rate of 2.40% over LIBOR.
Dividends
In the first quarter of 2019, the Company declared quarterly
dividends on its outstanding common and preferred stock as
follows:
- $0.85 per share of common stock, which
was paid on April 15, 2019 to shareholders of record on the close
of business on March 29, 2019; and
- $0.40625 per share on the Company's
6.50% Series I Cumulative Redeemable Preferred Stock for the period
January 15, 2019 through and including April 14, 2019, which was
paid on April 15, 2019 to shareholders of record on the close of
business on March 29, 2019, and reflects the regular quarterly
dividend, which is the equivalent of an annualized dividend of
$1.625 per share.
Conference Call and Audio
Webcast
The Company's executive management team, led by Marc Holliday,
Chairman and Chief Executive Officer, will host a conference call
and audio webcast on Thursday, April 18, 2019 at 2:00 pm ET to
discuss the financial results.
The supplemental data will be available prior to the quarterly
conference call in the Investors section of the SL Green Realty
Corp. website at https://slgreen.com/ under “Financial
Reports.”
The live conference call will be webcast in listen-only mode in
the Investors section of the SL Green Realty Corp. website at
https://slgreen.com/ under “Presentations & Webcasts”. The
conference may also be accessed by dialing toll-free (877) 312-8765
or international (419) 386-0002, and using passcode 1975306.
A replay of the call will be available 7 days after the call by
dialing (855) 859-2056 using passcode 1975306. A webcast replay
will also be available in the Investors section of the SL Green
Realty Corp. website at https://slgreen.com/ under “Presentations
& Webcasts”.
Company Profile
SL Green Realty Corp., an S&P 500 company and New York
City's largest office landlord, is a fully integrated real estate
investment trust, or REIT, that is focused primarily on acquiring,
managing and maximizing value of Manhattan commercial properties.
As of March 31, 2019, SL Green held interests in 96 Manhattan
buildings totaling 46.4 million square feet. This included
ownership interests in 27.7 million square feet of Manhattan
buildings and 18.7 million square feet of buildings securing debt
and preferred equity investments. In addition, SL Green held
ownership interests in 7 suburban properties comprised of 15
suburban buildings totaling 2.3 million square feet in Brooklyn,
Westchester County, and Connecticut.
To be added to the Company's distribution list or to obtain the
latest news releases and other Company information, please visit
our website at www.slgreen.com or contact Investor Relations at
(212) 594-2700.
Disclaimers
Non-GAAP Financial MeasuresDuring the quarterly
conference call, the Company may discuss non-GAAP financial
measures as defined by SEC Regulation G. In addition, the Company
has used non-GAAP financial measures in this press release. A
reconciliation of each non-GAAP financial measure and the
comparable GAAP financial measure can be found in this release and
in the Company’s Supplemental Package.
Forward-looking StatementsThis press release includes
certain statements that may be deemed to be "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 and are intended to be covered by the safe
harbor provisions thereof. All statements, other than statements of
historical facts, included in this press release that address
activities, events or developments that we expect, believe or
anticipate will or may occur in the future, are forward-looking
statements. These forward-looking statements are based on certain
assumptions and analyses made by us in light of our experience and
our perception of historical trends, current conditions, expected
future developments and other factors we believe are appropriate.
Forward-looking statements are not guarantees of future performance
and actual results or developments may differ materially, and we
caution you not to place undue reliance on such statements.
Forward-looking statements are generally identifiable by the use of
the words "may," "will," "should," "expect," "anticipate,"
"estimate," "believe," "intend," "project," "continue," or the
negative of these words, or other similar words or terms.
Forward-looking statements contained in this press release are
subject to a number of risks and uncertainties, many of which are
beyond our control, that may cause our actual results, performance
or achievements to be materially different from future results,
performance or achievements expressed or implied by forward-looking
statements made by us. Factors and risks to our business that could
cause actual results to differ from those contained in the
forward-looking statements are described in our filings with the
Securities and Exchange Commission. We undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of future events, new information or otherwise.
SL GREEN REALTY CORP. CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited and in thousands, except per
share data)
Three Months Ended March 31, 2019
2018 Revenues: Rental revenue, net
$
212,639 $ 215,369 Escalation and reimbursement
27,479 26,399 Investment income
50,031 45,290 Other
income
14,106 14,637 Total revenues
304,255 301,695
Expenses: Operating expenses,
including related party expenses $2,793 in 2019 and $3,834 in 2018
57,698 59,782 Real estate taxes
46,688 45,661
Operating lease rent
8,298 8,308 Interest expense, net of
interest income
50,525 47,916 Amortization of deferred
financing costs
2,742 3,537 Depreciation and amortization
68,343 69,388 Transaction related costs
55 162
Marketing, general and administrative
25,979 23,528
Total expenses
260,328 258,282
Equity in net (loss) income from unconsolidated joint ventures
(5,234 ) 4,036 Equity in net gain (loss) on sale of
interest in unconsolidated joint venture/real estate
17,166
(6,440 ) Purchase price and other fair value adjustment
(2,041 ) 49,293 (Loss) gain on sale of real estate,
net
(1,049 ) 23,521 Net income
52,769
113,823 Net income attributable to noncontrolling interests in the
Operating Partnership
(2,278 ) (5,272 ) Net income
attributable to noncontrolling interests in other partnerships
(237 ) (198 ) Preferred unit distributions
(2,724 ) (2,849 ) Net income attributable to SL Green
47,530 105,504 Perpetual preferred stock dividends
(3,738 ) (3,738 ) Net income attributable to SL Green
common stockholders
$ 43,792 $
101,766
Earnings Per Share (EPS) Net income
per share (Basic)
$
0.52
$ 1.12 Net income per share (Diluted)
$
0.52 $ 1.12
Funds From
Operations (FFO) FFO per share (Basic)
$
1.68 $ 1.66 FFO per share (Diluted)
$ 1.68 $ 1.66
Basic ownership
interest
Weighted average REIT common shares for net income per share
83,313 90,520 Weighted average partnership units held by
noncontrolling interests
4,333 4,683 Basic
weighted average shares and units outstanding
87,646
95,203
Diluted ownership
interest
Weighted average REIT common share and common share equivalents
83,477 90,573 Weighted average partnership units held by
noncontrolling interests
4,333 4,683 Diluted
weighted average shares and units outstanding
87,810
95,256
SL GREEN REALTY CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
March 31, December 31, 2019 2018
Assets (Unaudited) Commercial real estate properties,
at cost: Land and land interests $ 1,775,006 $
1,774,899 Building and improvements 5,294,612 5,268,484 Building
leasehold and improvements 1,423,282 1,423,107 Right of use asset -
financing leases 47,445 47,445 Right of use asset - operating
leases 396,148 — 8,936,493 8,513,935 Less:
accumulated depreciation (2,154,075 ) (2,099,137 ) 6,782,418
6,414,798 Cash and cash equivalents 144,323 129,475 Restricted cash
151,388 149,638 Investment in marketable securities 29,406 28,638
Tenant and other receivables 47,829 41,589 Related party
receivables 29,458 28,033 Deferred rents receivable 337,099 335,985
Debt and preferred equity investments, net
of discounts and deferred origination fees of $21,584 and $22,379
and allowancesof $1,750 and $5,750 in 2019 and 2018,
respectively
2,272,241 2,099,393 Investments in unconsolidated joint ventures
3,055,368 3,019,020 Deferred costs, net 211,615 209,110 Other
assets 324,629 295,679
Total assets $
13,385,774 $ 12,751,358
Liabilities Mortgages and other loans payable $ 2,046,906 $
1,988,160 Revolving credit facility 790,000 500,000 Unsecured term
loan 1,500,000 1,500,000 Unsecured notes 1,503,534 1,503,758
Deferred financing costs, net (50,376 ) (50,218 ) Total debt, net
of deferred financing costs 5,790,064 5,441,700 Accrued interest
payable 28,930 23,154 Accounts payable and accrued expenses 111,899
147,061 Deferred revenue 102,598 94,453 Lease liability - financing
leases 43,823 43,616 Lease liability - operating leases 389,857
3,603 Dividend and distributions payable 80,047 80,430 Security
deposits 61,139 64,688 Junior subordinate deferrable interest
debentures held by trusts that issued trust preferred securities
100,000 100,000 Other liabilities 135,448 116,566
Total liabilities 6,843,805 6,115,271
Commitments and contingencies — — Noncontrolling interest in the
Operating Partnership 412,361 387,805 Preferred units 285,285
300,427
Equity Stockholders’ equity: Series I
Preferred Stock, $0.01 par value, $25.00 liquidation preference,
9,200 issued and outstanding at both March 31, 2019 and December
31, 2018 221,932 221,932
Common stock, $0.01 par value 160,000
shares authorized, 84,328 and 84,739 issued and outstanding at
March 31, 2019 and December 31, 2018,respectively (including 1,055
held in Treasury at both March 31, 2019 and December 31, 2018)
843 847 Additional paid-in capital 4,492,581 4,508,685 Treasury
stock at cost (124,049 ) (124,049 ) Accumulated other comprehensive
(loss) income (4,005 ) 15,108 Retained earnings 1,210,497
1,278,998 Total SL Green Realty Corp. stockholders’ equity
5,797,799 5,901,521 Noncontrolling interests in other partnerships
46,524 46,334 Total equity 5,844,323 5,947,855
Total liabilities and equity $
13,385,774 $ 12,751,358
SL GREEN REALTY CORP.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(unaudited and in thousands, except per
share data)
Three Months Ended March 31, Funds From
Operations (FFO) Reconciliation: 2019
2018 Net income attributable to SL Green common
stockholders $ 43,792 $ 101,766
Add:
Depreciation and amortization 68,343 69,388 Joint venture
depreciation and noncontrolling interest adjustments 47,625 48,006
Net income attributable to noncontrolling interests 2,515 5,470
Less: (Loss) gain on sale of real estate, net (1,049 )
23,521 Equity in net gain (loss) on sale of interest in
unconsolidated joint venture/real estate 17,166 (6,440 ) Purchase
price and other fair value adjustments (2,041 ) 49,293 Depreciation
on non-rental real estate assets 707 566
FFO
attributable to SL Green common stockholders $
147,492 $ 157,690
Three Months Ended March 31, Operating
income and Same-store NOI Reconciliation: 2019
2018 Net income $ 52,769 $
113,823 Equity in net (loss) gain on sale of interest in
unconsolidated joint venture/real estate (17,166 ) 6,440 Purchase
price and other fair value adjustments 2,041 (49,293 ) Loss (gain)
on sale of real estate, net 1,049 (23,521 ) Depreciation and
amortization 68,343 69,388 Interest expense, net of interest income
50,525 47,916 Amortization of deferred financing costs 2,742
3,537
Operating income 160,303 168,290
Equity in net (loss) income from unconsolidated joint
ventures 5,234 (4,036 ) Marketing, general and administrative
expense 25,979 23,528 Transaction related costs, net 55 162
Investment income (50,031 ) (45,290 ) Non-building revenue (9,144 )
(4,777 )
Net operating income (NOI) 132,396
137,877 Equity in net (loss) income from
unconsolidated joint ventures (5,234 ) 4,036 SLG share of
unconsolidated JV depreciation and amortization 48,128 47,619 SLG
share of unconsolidated JV interest expense, net of interest income
39,407 35,780 SLG share of unconsolidated JV amortization of
deferred financing costs 1,568 1,673 SLG share of unconsolidated JV
transaction related costs — — SLG share of unconsolidated JV
investment income (2,227 ) (3,086 ) SLG share of unconsolidated JV
non-building revenue (711 ) (1,000 )
NOI including SLG share of
unconsolidated JVs 213,327 222,899
NOI from other properties/affiliates (6,522 ) (18,494 )
Same-Store NOI 206,805 204,405
Ground lease straight-line adjustment 514 524 Joint Venture ground
lease straight-line adjustment 258 258 Straight-line and free rent
(76 ) (2,096 ) Amortization of acquired above and below-market
leases, net (946 ) (1,684 ) Joint Venture straight-line and free
rent (16,111 ) (6,032 ) Joint Venture amortization of acquired
above and below-market leases, net (4,396 ) (3,853 )
Same-store
cash NOI $ 186,048 $ 191,522
SL GREEN REALTY CORP.NON-GAAP
FINANCIAL MEASURES - DISCLOSURES
Funds from Operations
(FFO)
FFO is a widely recognized non-GAAP financial measure of REIT
performance. The Company computes FFO in accordance with standards
established by NAREIT, which may not be comparable to FFO reported
by other REITs that do not compute FFO in accordance with the
NAREIT definition, or that interpret the NAREIT definition
differently than the Company does. The revised White Paper on FFO
approved by the Board of Governors of NAREIT in April 2002, and
subsequently amended, defines FFO as net income (loss) (computed in
accordance with GAAP), excluding gains (or losses) from sales of
properties, and real estate related impairment charges, plus real
estate related depreciation and amortization and after adjustments
for unconsolidated partnerships and joint ventures.
The Company presents FFO because it considers it an important
supplemental measure of the Company’s operating performance and
believes that it is frequently used by securities analysts,
investors and other interested parties in the evaluation of REITs,
particularly those that own and operate commercial office
properties. The Company also uses FFO as one of several criteria to
determine performance-based bonuses for members of its senior
management. FFO is intended to exclude GAAP historical cost
depreciation and amortization of real estate and related assets,
which assumes that the value of real estate assets diminishes
ratably over time. Historically, however, real estate values have
risen or fallen with market conditions. Because FFO excludes
depreciation and amortization unique to real estate, gains and
losses from property dispositions, and real estate related
impairment charges, it provides a performance measure that, when
compared year over year, reflects the impact to operations from
trends in occupancy rates, rental rates, operating costs, and
interest costs, providing perspective not immediately apparent from
net income. FFO does not represent cash generated from operating
activities in accordance with GAAP and should not be considered as
an alternative to net income (determined in accordance with GAAP),
as an indication of the Company’s financial performance or to cash
flow from operating activities (determined in accordance with GAAP)
as a measure of the Company’s liquidity, nor is it indicative of
funds available to fund the Company’s cash needs, including our
ability to make cash distributions.
Funds Available for Distribution
(FAD)
FAD is a non-GAAP financial measure that is calculated as FFO
plus non-real estate depreciation, allowance for straight line
credit loss, adjustment for straight line operating lease rent,
non-cash deferred compensation, and a pro-rata adjustment for FAD
for SLG’s unconsolidated JV, less straight line rental income, free
rent net of amortization, second cycle tenant improvement and
leasing costs, and recurring building improvements.
FAD is not intended to represent cash flow for the period and is
not indicative of cash flow provided by operating activities as
determined in accordance with GAAP. FAD is presented solely as a
supplemental disclosure with respect to liquidity because the
Company believes it provides useful information regarding the
Company’s ability to fund its dividends. Because all companies do
not calculate FAD the same way, the presentation of FAD may not be
comparable to similarly titled measures of other companies. FAD
does not represent cash flow from operating, investing and finance
activities in accordance with GAAP and should not be considered as
an alternative to net income (determined in accordance with GAAP),
as an indication of the Company’s financial performance, as an
alternative to net cash flows from operating activities (determined
in accordance with GAAP), or as a measure of the Company’s
liquidity.
Earnings Before Interest, Taxes,
Depreciation and Amortization for Real Estate
(EBITDAre)
EBITDAre is a non-GAAP financial measure. The Company computes
EBITDAre in accordance with standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, which may
not be comparable to EBITDAre reported by other REITs that do not
compute EBITDAre in accordance with the NAREIT definition, or that
interpret the NAREIT definition differently than the Company does.
The White Paper on EBITDAre approved by the Board of Governors of
NAREIT in September 2017 defines EBITDAre as net income (loss)
(computed in accordance with Generally Accepted Accounting
Principles, or GAAP), plus interest expense, plus income tax
expense, plus depreciation and amortization, plus (minus) losses
and gains on the disposition of depreciated property, plus
impairment write-downs of depreciated property and investments in
unconsolidated joint ventures, plus adjustments to reflect the
entity's share of EBITDAre of unconsolidated joint ventures.
The Company presents EBITDAre because the Company believes that
EBITDAre, along with cash flow from operating activities, investing
activities and financing activities, provides investors with an
additional indicator of the Company’s ability to incur and service
debt. EBITDAre should not be considered as an alternative to net
income (determined in accordance with GAAP), as an indication of
the Company’s financial performance, as an alternative to net cash
flows from operating activities (determined in accordance with
GAAP), or as a measure of the Company’s liquidity.
Net Operating Income (NOI) and Cash
NOI
NOI is a non-GAAP financial measure that is calculated as
operating income before transaction related costs, gains/losses on
early extinguishment of debt, marketing general and administrative
expenses and non-real estate revenue. Cash NOI is also a non-GAAP
financial measure that is calculated by subtracting free rent (net
of amortization), straight-line rent, and amortization of acquired
above and below-market leases, net from NOI, while adding operating
lease straight-line adjustment and the allowance for straight-line
tenant credit loss.
The Company presents NOI and Cash NOI because the Company
believes that these measures, when taken together with the
corresponding GAAP financial measures and our reconciliations,
provide investors with meaningful information regarding the
operating performance of properties. When operating performance is
compared across multiple periods, the investor is provided with
information not immediately apparent from net income that is
determined in accordance with GAAP. NOI and Cash NOI provide
information on trends in the revenue generated and expenses
incurred in operating our properties, unaffected by the cost of
leverage, straight-line adjustments, depreciation, amortization,
and other net income components. The Company uses these metrics
internally as performance measures. None of these measures is an
alternative to net income (determined in accordance with GAAP) and
same-store performance should not be considered an alternative to
GAAP net income performance.
Coverage Ratios
The Company presents fixed charge and debt service coverage
ratios to provide a measure of the Company’s financial flexibility
to service current debt amortization, interest expense and
operating lease rent from current cash net operating income. These
coverage ratios represent a common measure of the Company’s ability
to service fixed cash payments; however, these ratios are not used
as an alternative to cash flow from operating, financing and
investing activities (determined in accordance with GAAP).
SLG-EARN
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version on businesswire.com: https://www.businesswire.com/news/home/20190417005924/en/
Matt DiLibertoChief Financial Officer(212) 594-2700
SL Green Realty (NYSE:SLG)
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