UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 1, 2007

SL GREEN REALTY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND
(STATE OF INCORPORATION)

1-13199

 

13-3956775

(COMMISSION FILE NUMBER)

 

(IRS EMPLOYER ID. NUMBER)

 

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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 




 

Item 2.01

Completion of Acquisition or Disposition of Assets

 

 

 

We previously disclosed our acquisition of Gramercy Capital Corp’s 45% equity interest in the joint venture that owns One Madison Avenue in Form 8-K/A filed on August 22, 2007. This Form 8-K/A was filed without the requisite financial information. Accordingly, we are filing this Form 8-K/A to include such information.

 

 

Item 9.01.

Financial Statements And Exhibits

 

(a)  and (b) Financial Statements Of Property Acquired And Pro Forma Financial Information

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

Pro Forma Condensed Consolidated Balance Sheet (Unaudited) as of June 30, 2007

F-2

 

 

Pro Forma Condensed Consolidated Income Statement (Unaudited) for the six months ended June 30, 2007

F-3

 

 

Pro Forma Condensed Consolidated Income Statement (Unaudited) for the year ended December 31, 2006.

F-4

 

 

Pro Forma Condensed Consolidated Income Statement (Unaudited) for the year ended December 31, 2005

F-5

 

 

Notes to Pro Forma Financial Information

F-6

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

Report of Independent Auditors

F-8

 

 

Revenues and Certain Expenses of 1 Madison Office Holdings LLC for the six months ended June 30, 2007 (unaudited) and the year ended December 31, 2006 and for the period April 12, 2005 (formation) through December 31, 2005

F-9

 

 

Notes to Financial Statements

F10

 

(c)           EXHIBITS

23.1. Consent of Ernst & Young LLP

2




 

SIGNATURES

                Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SL GREEN REALTY CORP.

 

 

 

By:

/s/ Gregory F. Hughes

 

 

Gregory F. Hughes

 

 

Chief Financial Officer

 

Date:  October 31, 2007

3




SL GREEN REALTY CORP.

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

On August 17, 2007, SL Green Realty Corp. (the “Company”) closed on the acquisition of Gramercy Capital Corp’s (“Gramercy”) 45% equity interest in the joint venture that owns One Madison Avenue in New York City (the “Property”).  The Company acquired Gramercy’s interest in the Property for approximately $147.9 million (and the assumption of Gramercy’s proportionate share of debt encumbering the Property of approximately $304.6 million).  The Company now owns 100% of the Property.

On August 1, 2007, an affiliate of the Company loaned approximately $146.7 million to GKK Capital LP. This loan was to be repaid with interest at an annual rate of 5.80% on the earlier of September 1, 2007 or the closing of the purchase by the Company from Gramercy of their 45% interest in One Madison Avenue.  The purchase of the 45% interest in One Madison Avenue closed on August 17, 2007 and the loan was repaid with interest on such date.

The Company owns approximately 25% of the outstanding common stock of Gramercy as well as 64.83 units of the Class B limited partner interest in Gramercy’s operating partnership.  Gramercy is managed by GKK Manager LLC, an affiliate of the Company.  Certain executive officers of the Company are also executive officers of Gramercy.  The amount of consideration paid for the Property was determined based on an appraisal of the Property and the transaction was approved by the independent directors of both Gramercy and the Company.

The pro forma condensed consolidated financial statements do not purport to represent what our financial position or results of operations would have been assuming the completion of this acquisition had occurred on April 12, 2005 and for the period indicated, nor do they purport to project our financial position or results of operations at any future date or for any future period. These pro forma condensed consolidated financial statements should be read in conjunction with our 2006 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007.

The joint venture acquired the Property on April 12, 2005.

F-1




 

SL GREEN REALTY CORP.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2007

(UNAUDITED)

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 

 

SL GREEN
REALTY CORP.

 

ONE MADISON
AVENUE

 


PRO FORMA

 

SL GREEN
 REALTY CORP.

 

 

 

HISTORICAL

 

HISTORICAL

 

ADJUSTMENTS

 

PROFORMA

 

 

 

(A)

 

(B)

 

(C)

 

 

 

ASSETS:

 

 

 

 

 

 

 

 

 

Commercial real estate properties at cost:

 

 

 

 

 

 

 

 

 

Land and land interests

 

$

1,285,915

 

$

159,072

 

$

21,617

 

$

1,466,604

 

Buildings and improvements

 

5,082,758

 

638,853

 

51,983

 

5,773,594

 

Building leasehold and improvements

 

1,201,786

 

 

 

 

1,201,786

 

Property under capital lease

 

12,208

 

 

 

12,208

 

 

 

7,582,667

 

797,925

 

73,600

 

8,454,192

 

Less: accumulated depreciation

 

(324,756

)

(34,483

)

34,483

 

(324,756

)

 

 

7,257,911

 

763,442

 

108,083

 

8,129,436

 

Assets held for sale

 

21,040

 

 

 

 

21,040

 

Cash and cash equivalents

 

80,300

 

 

 

80,300

 

Restricted cash

 

131,247

 

 

 

131,247

 

Tenant and other receivables, net of allowance of $12,729

 

41,657

 

 

 

 

41,657

 

Related party receivables

 

10,943

 

 

 

10,943

 

Deferred rents receivable, net of allowance for tenant credit loss of $12,308

 

111,740

 

18,083

 

(8,138

)

121,685

 

Structured finance investments

 

661,720

 

 

 

661,720

 

Investments in unconsolidated joint ventures

 

839,087

 

 

(66,312

)

772,775

 

Deferred costs, net

 

113,885

 

13,674

 

(6,153

)

121,406

 

Other assets

 

182,815

 

7,252

 

 

190,067

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

9,452,345

 

$

802,451

 

$

27,480

 

$

10,282,276

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

Mortgage notes payable

 

$

2,173,460

 

$

678,440

 

$

 

$

2,851,900

 

Revolving credit facilities

 

587,000

 

 

147,010

 

734,010

 

Term loans and unsecured notes

 

1,792,914

 

 

 

 

1,792,914

 

Accrued interest payable and other liabilities

 

42,286

 

2,116

 

 

44,402

 

Accounts payable and accrued expenses

 

148,158

 

2,365

 

 

150,523

 

Deferred revenue/ gain

 

42,382

 

 

 

42,382

 

Capitalized lease obligation

 

16,466

 

 

 

16,466

 

Deferred land leases payable

 

16,829

 

 

 

16,829

 

Dividend and distributions payable

 

47,557

 

 

 

47,557

 

Security deposits

 

39,475

 

 

 

39,475

 

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

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

5,006,527

 

682,921

 

147,010

 

5,836,458

 

Commitments and Contingencies

 

 

 

 

 

 

 

Minority interest in Operating Partnership

 

77,429

 

 

 

 

 

77,429

 

Minority interest in other partnerships

 

592,449

 

 

 

592,449

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Series C preferred stock, $0.01 par value, $25.00 liquidation preference, 6,300 issued and outstanding at June 30, 2007

 

151,981

 

 

 

151,981

 

Series D preferred stock, $0.01 par value, $25.00 liquidation preference, 4,000 issued and outstanding at June 30, 2007

 

96,321

 

 

 

96,321

 

Common stock, $0.01 par value, 160,000 shares authorized, 59,923 issued and outstanding at June 30, 2007 (including 312 shares at June 30, 2007 held in Treasury)

 

598

 

 

 

598

 

Additional paid — in capital

 

2,905,765

 

119,530

 

(119,530

)

2,905,765

 

Treasury stock at cost

 

(40,368

)

 

 

(40,368

)

Accumulated other comprehensive income

 

9,287

 

 

 

 

9,287

 

Retained earnings

 

652,356

 

 

 

652,356

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

3,775,940

 

119,530

 

(119,530

)

3,775,940

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

9,452,345

 

$

802,451

 

$

27,480

 

$

10,282,276

 

 

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

F-2




SL GREEN REALTY CORP.

PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2007

(UNAUDITED)

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 

 

SL GREEN
REALTY CORP.
HISTORICAL

 

ONE MADISON
AVENUE
ACQUISITION

 

SL GREEN REALTY
CORP. PRO FORMA
ADJUSTMENTS

 

SL GREEN
REALTY CORP.
PRO FORMA

 

 

 

(A)

 

(B)

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

328,681

 

$

27,806

 

$

 

$

356,487

 

Escalation and reimbursement revenues

 

58,334

 

 

 

58,334

 

Preferred equity and investment income

 

49,152

 

 

 

49,152

 

Other income

 

113,089

 

38

 

 

113,127

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

549,256

 

27,844

 

 

577,100

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Operating expenses including $6,978 to affiliates

 

102,570

 

397

 

(89

)(C)

102,878

 

Real estate taxes

 

65,202

 

139

 

 

 

65,341

 

Ground rent

 

15,031

 

 

 

15,031

 

Interest

 

120,186

 

20,226

 

4,499

(D)

144,911

 

Amortization of deferred financing costs

 

12,543

 

513

 

(231

)(C)

12,825

 

Depreciation and amortization

 

81,981

 

 

9,048

(E)

91,029

 

Marketing, general and administrative

 

58,378

 

 

 

58,378

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

455,891

 

21,275

 

13,227

 

490,393

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before equity in  net income of unconsolidated joint ventures, and minority interest

 

93,365

 

6,569

 

(13,227

)

86,707

 

Equity in net income of unconsolidated joint ventures

 

21,413

 

 

769

(F)

22,182

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before minority interest

 

114,778

 

6,569

 

(12,458

)

108,889

 

Equity in net gain on sale of interest in unconsolidated joint venture

 

31,509

 

 

 

31,509

 

Minority interest in other partnerships

 

(8,578

)

 

 

(8,578

)

Minority interest in operating partnership

 

(5,360

)

 

239

(G)

(5,121

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

132,349

 

6,569

 

(12,219

)

126,699

 

Income from/ gain on sale of discontinued operations, net of minority interest

 

290,897

 

 

 

290,596

 

Net income (loss)

 

423,246

 

6,569

 

(12,219

)

417,596

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

(9,938

)

 

 

(9,938

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

 

$

413,308

 

$

6,569

 

$

(12,219

)

$

407,658

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE:(H)

 

 

 

 

 

 

 

 

 

Net income (loss) before income from discontinued operations

 

$

1.56

 

 

 

 

 

$

1.47

 

Income from/gain on sale of discontinued operations

 

4.99

 

 

 

 

 

4.99

 

Gain on sale of unconsolidated joint venture

 

0.54

 

 

 

 

 

0.54

 

Net income available to common stockholders

 

$

7.09

 

 

 

 

 

$

7.00

 

 

 

 

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE:(H)

 

 

 

 

 

 

 

 

 

Net income (loss) before income from discontinued operations

 

$

1.55

 

 

 

 

 

$

1.46

 

Income from/gain on sale of discontinued operations

 

4.88

 

 

 

 

 

4.88

 

Gain on sale of unconsolidated joint venture

 

0.50

 

 

 

 

 

0.50

 

Net income available to common stockholders

 

$

6.93

 

 

 

 

 

$

6.84

 

Dividends per common share

 

$

1.40

 

 

 

 

 

$

1.40

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

58,258

 

 

 

 

 

58,258

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares and  common share equivalents outstanding

 

62,215

 

 

 

 

 

62,215

 

 

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

F-3




SL GREEN REALTY CORP.

PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2006

(UNAUDITED)

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 

 

SL GREEN
REALTY CORP.
HISTORICAL

 

ONE MADISON
AVENUE
ACQUISITION

 

SL GREEN REALTY
CORP. PRO FORMA
ADJUSTMENTS

 

SL GREEN
REALTY CORP.
PRO FORMA

 

 

 

(A)

 

(B)

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

365,135

 

$

56,460

 

$

 

$

421,595

 

Escalation and reimbursement revenues

 

68,053

 

 

 

 

68,053

 

Preferred equity and investment income

 

61,982

 

 

 

61,982

 

Other income

 

57,107

 

121

 

 

57,228

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

552,277

 

56,581

 

 

608,858

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Operating expenses including $13,594 to affiliates

 

125,912

 

2,206

 

(177

)(C)

127,941

 

Real estate taxes

 

75,204

 

290

 

 

75,494

 

Ground rent

 

20,150

 

 

 

20,150

 

Interest

 

96,349

 

40,982

 

8,997

(D)

146,328

 

Amortization of deferred financing costs

 

4,425

 

1,028

 

(463

)(C)

4,990

 

Depreciation and amortization

 

75,085

 

 

18,076

(E)

93,161

 

Marketing, general and administrative

 

65,741

 

 

 

65,741

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

462,866

 

44,506

 

26,433

 

533,805

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before equity in net income from affiliates, equity in net income of unconsolidated joint ventures, gain on sale, minority interest, and discontinued operations

 

89,411

 

12,075

 

(26,433

)

75,053

 

Equity in net income of unconsolidated joint ventures

 

40,780

 

 

 

2,112

(F)

42,892

 

Equity in net gain on sale of interest in unconsolidated joint venture

 

3,451

 

 

 

3,451

 

Income (loss) before minority interest

 

133,642

 

12,075

 

(24,321

)

121,396

 

Minority interest in operating partnership

 

(5,906

)

 

772

(G)

(5,134

)

Minority interest in other partnerships

 

(5,210

)

 

 

(5,210

)

Income (loss) from continuing operations

 

122,526

 

12,075

 

(23,549

)

111,052

 

Income from discontinued operations, net of minority interest

 

4,217

 

 

 

4,217

 

Gain on sale of discontinued operations, net of minority interest

 

93,976

 

 

 

93,976

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

220,719

 

12,075

 

(23,549

)

209,245

 

Preferred stock dividends

 

(19,875

)

 

 

(19,875

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common shareholders

 

$

200,844

 

$

12,075

 

$

(23,549

)

$

189,370

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE:(H)

 

 

 

 

 

 

 

 

 

Net income (loss) before gain on sale, and income from discontinued operations

 

$

2.22

 

 

 

 

 

$

1.97

 

Income/gain from discontinued operations

 

2.20

 

 

 

 

 

2.20

 

Gain on sales of joint venture property/partial interest

 

0.08

 

 

 

 

 

0.08

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

4.50

 

 

 

 

 

$

4.25

 

 

 

 

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE:(H)

 

 

 

 

 

 

 

 

 

Net income (loss) before gain on sale, and income from discontinued operations

 

$

2.17

 

 

 

 

 

$

1.91

 

Income/gain from discontinued operations

 

2.14

 

 

 

 

 

2.14

 

Gain on sales of joint venture property/partial interest

 

0.07

 

 

 

 

 

0.07

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

4.38

 

 

 

 

 

$

4.12

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share

 

$

2.50

 

 

 

 

 

$

2.50

 

Basic weighted average common shares outstanding

 

44,593

 

 

 

 

 

44,593

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares and common share equivalents outstanding

 

48,495

 

 

 

 

 

48,495

 

 

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

F-4




 

SL GREEN REALTY CORP.

PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2005

(UNAUDITED)

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 

 

SL GREEN
REALTY CORP.
HISTORICAL

 

ONE MADISON
AVENUE
ACQUISITION

 

SL GREEN REALTY
CORP. PRO FORMA
ADJUSTMENTS

 

SL GREEN
REALTY CORP.
PRO FORMA

 

 

 

(A)

 

(B)

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

285,317

 

$

37,537

 

$

 

$

322,854

 

Escalation and reimbursement revenues

 

55,740

 

 

 

 

 

55,740

 

Preferred equity and investment income

 

44,989

 

 

 

44,989

 

Other income

 

38,143

 

24

 

 

38,167

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

424,189

 

37,561

 

 

461,750

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Operating expenses including $10,119 to affiliates

 

99,465

 

1,158

 

(119

)(C)

100,504

 

Real estate taxes

 

58,036

 

188

 

 

58,224

 

Ground rent

 

19,250

 

 

 

19,250

 

Interest

 

77,353

 

27,938

 

6,373

(D)

111,664

 

Amortization of deferred financing costs

 

4,461

 

686

 

(309

)(C)

4,838

 

Depreciation and amortization

 

58,649

 

 

12,140

(E)

70,789

 

Marketing, general and administrative

 

44,215

 

 

 

44,215

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

361,429

 

29,970

 

18,085

 

409,484

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before equity in net income from affiliates, equity in net income of unconsolidated joint ventures, gain on sale, minority interest, and discontinued operations

 

62,760

 

7,591

 

(18,085

)

52,266

 

Equity in net income of unconsolidated joint ventures

 

49,349

 

 

1,660

(F)

51,009

 

Equity in net gain on sale of interest in unconsolidated joint venture

 

11,550

 

 

 

11,550

 

Income (loss) before minority interest

 

123,659

 

7,591

 

(16,425

)

114,825

 

Minority interest in operating partnership

 

(5,811

)

 

500

(G)

(5,311

)

Minority interest in other partnerships

 

(809

)

 

 

(809

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

117,039

 

7,591

 

(15,925

)

108,705

 

Income from discontinued operations, net of minority interest

 

6,505

 

 

 

6,505

 

Gain on sale of discontinued operations, net of minority interest

 

33,875

 

 

 

33,875

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

157,419

 

7,591

 

(15,925

)

149,085

 

Preferred stock dividends

 

(19,875

)

 

 

(19,875

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

 

$

137,544

 

$

7,591

 

$

(15,925

)

$

129,210

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE:(H)

 

 

 

 

 

 

 

 

 

Net income (loss) before gain on sale, and income from discontinued operations

 

$

2.04

 

 

 

 

 

$

1.84

 

Income/gains from discontinued operations

 

0.97

 

 

 

 

 

0.97

 

Gain on sales of joint venture property/partial interest

 

0.28

 

 

 

 

 

0.28

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

3.29

 

 

 

 

 

$

3.09

 

 

 

 

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE:(H)

 

 

 

 

 

 

 

 

 

Net income (loss) before gain on sale, and income from discontinued operations

 

$

2.01

 

 

 

 

 

$

1.82

 

Income/gains from discontinued operations

 

0.94

 

 

 

 

 

0.94

 

Gain on sales of joint venture property/partial interest

 

0.25

 

 

 

 

 

0.25

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

3.20

 

 

 

 

 

$

3.01

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share

 

$

2.22

 

 

 

 

 

$

2.22

 

Basic weighted average common shares outstanding

 

41,793

 

 

 

 

 

41,793

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares and common share equivalents outstanding

 

45,504

 

 

 

 

 

45,504

 

 

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

F-5




 

SL GREEN REALTY CORP.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 2007

(UNAUDITED AND IN THOUSANDS)

(A)

 

To reflect the unaudited condensed consolidated balance sheet of SL Green Realty Corp. at June 30, 2007 as reported on the Company’s Quarterly Report on Form 10-Q.

 

 

 

(B)

 

To reflect the unaudited condensed consolidated balance sheet of One Madison Office Holdings LLC, or One Madison Avenue, at June 30, 2007.

 

 

 

(C)

 

To reflect the purchase price allocation of the Company’s acquisition of the 45% joint venture interest in the property located at One Madison Avenue as of June 30, 2007 for approximately $452,500. An independent valuation was performed on this property. The Company intends to account for the acquisition in accordance with SFAS 141 and 142. The Company is currently in the process of analyzing the fair value of the in-place leases; and, consequently, no value has yet been assigned to the leases. Therefore, the purchase price allocation is preliminary and subject to change. The purchase was funded through the Company’s unsecured revolving credit facility, and the assumption of 45% of a $678,440 first mortgage.

 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

SIX MONTHS ENDED JUNE 30, 2007

(UNAUDITED AND IN THOUSANDS)

(A)

 

To reflect the consolidated statement of income of SL Green Realty Corp. for the six month period ended June 30, 2007 as reported on the Company’s Quarterly Report on Form 10-Q.

 

 

 

(B)

 

To reflect the historical operations of One Madison Avenue for the six month period ended June 30, 2007.

 

 

 

(C)

 

To eliminate expenses not being assumed.

 

 

 

(D)

 

To record interest expense for the borrowing under the revolving credit facility ($147,010 at the interest rate of 6.12%).

 

 

 

(E)

 

To reflect straight-line depreciation for One Madison Avenue based on an estimated useful life of 40 years.

 

 

 

(F)

 

To eliminate the Company’s 55% equity interest in the net income of the joint venture.

 

 

 

(G)

 

To reflect the minority stockholders’ interest of 4.20% in the operating partnership.

 

 

 

(H)

 

Basic income per common share is calculated based on 58,258 weighted average common shares outstanding and diluted income per common share is calculated based on 62,215 weighted average common shares and common share equivalents outstanding.

 

F-6




 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

YEAR ENDED DECEMBER 31, 2006

(UNAUDITED AND IN THOUSANDS)

(A)

 

To reflect the consolidated statement of income of SL Green Realty Corp. for the year ended December 31, 2006 as reported on the Company’s Annual Report on Form 10-K.

 

 

 

(B)

 

To reflect the historical operations of One Madison Avenue for the year ended December 31, 2006.

 

 

 

(C)

 

To eliminate expenses not being assumed.

 

 

 

(D)

 

To record interest expense for the borrowing under the revolving credit facility ($147,010 at the interest rate of 6.12%).

 

 

 

(E)

 

To reflect straight-line depreciation for One Madison Avenue based on an estimated useful life of 40 years.

 

 

 

(F)

 

To eliminate the Company’s 55% equity interest in the net income of the joint venture.

 

 

 

(G)

 

To reflect the minority stockholders’ interest of 5.33% in the operating partnership.

 

 

 

(H)

 

Basic income per common share is calculated based on 44,593 weighted average common shares outstanding and diluted income per common share is calculated based on 48,495 weighted average common shares and common share equivalents outstanding.

 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

YEAR ENDED DECEMBER 31, 2005

(UNAUDITED AND IN THOUSANDS)

(A)

 

To reflect the consolidated statement of income of SL Green Realty Corp. for the year ended December 31, 2005 as reported on the Company’s Annual Report on Form 10-K.

 

 

 

(B)

 

To reflect the historical operations of One Madison Avenue for the period April 12, 2005 (formation) through December 31, 2005.

 

 

 

(C)

 

To eliminate expenses not being assumed.

 

 

 

(D)

 

To record interest expense for the borrowing under the revolving credit facility ($147,010 at the interest rate of 6.12%).

 

 

 

(E)

 

To reflect straight-line depreciation for One Madison Avenue based on an estimated useful life of 40 years.

 

 

 

(F)

 

To eliminate the Company’s 55% equity interest in the net income of the joint venture.

 

 

 

(G)

 

To reflect the minority stockholders’ interest of 5.64% in the operating partnership.

 

 

 

(H)

 

Basic income per common share is calculated based on 41,793 weighted average common shares outstanding and diluted income per common share is calculated based on 45,504 weighted average common shares and common share equivalents outstanding.

 

 

 

 

F-7




 

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of SL Green Realty Corp.

We have audited the accompanying statements of revenues and certain expenses of One Madison Office Holdings LLC (the “Partnership”) for the year ended December 31, 2006 and for the period from April 12, 2005 (formation) through December 31, 2005.  The statements of revenues and certain expenses are the responsibility of the Partnership’s management.  Our responsibility is to express an opinion on the statements of revenues and certain expenses based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statements of revenue and certain expenses are free of material misstatement.  We were not engaged to perform an audit of the Partnership’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements of revenues and certain expenses, assessing the accounting principals used and significant estimates made by management, and evaluating the overall statements of revenues and certain expenses presentation.  We believe that our audits provide a reasonable basis for our opinion.

The accompanying statements of revenues and certain expenses was prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for inclusion in Form 8-K of SL Green Realty Corp. and is not intended to be a complete presentation of the revenues and expenses of the Partnership.

In our opinion, the statements of revenues and certain expenses referred to above present fairly, in all material respects, the revenues and certain expenses of the Partnership as described in Note 1 for the year ended December 31, 2006 and for the period from April 12, 2005 (formation) through December 31, 2005, in conformity with U.S. generally accepted accounting principals.

/s/ Ernst & Young LLP

 

 

 

 

Ernst & Young LLP

October 30, 2007

New York, New York

 

F-8




 

One Madison Office Holdings LLC

Statements of Revenues and Certain Expenses

 

 

Six Months
Ended June 30,
2007

 

For the Year
Ended
December 31,
2006

 

For the
Period from
April 12,
2005 (formation)
through
December
31, 2005

 

 

 

(Unaudited)

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Rental revenue

 

$

27,806

 

$

56,460

 

$

37,537

 

Investment and other income

 

38

 

121

 

24

 

Total Revenues

 

27,844

 

56,581

 

37,561

 

 

 

 

 

 

 

 

 

Certain Expenses:

 

 

 

 

 

 

 

Operating expenses

 

397

 

2,206

 

1,158

 

Real estate taxes

 

139

 

290

 

188

 

Interest

 

20,739

 

42,010

 

28,624

 

Total expenses

 

21,275

 

44,506

 

29,970

 

 

 

 

 

 

 

 

 

Revenues in excess of certain expenses

 

$

6,569

 

$

12,075

 

$

7,591

 

 

The accompanying notes are and integral part of these statements of revenues and certain expenses.

F-9




 

One Madison Office Holdings LLC

Notes to Statements of Revenues and Certain Expenses

December 31, 2006

(Dollars in Thousands)

1. Organization

One Madison Office Holdings LLC (the Company), a Delaware limited liability company, was formed on April 12, 2005 and will continue until December 31, 2044 unless terminated or dissolved sooner in accordance with the provisions of the limited liability company operating agreement. The Company was formed for the purpose of acquiring, redeveloping, managing and operating the property known as the South Building located at One Madison Avenue, New York, New York (the Property). The Property was acquired on April 29, 2005.

Effective with the Limited Liability Company Agreement, dated April 12, 2005, the members’ interests in the LLC are as follows:

SLG Madison Investment LLC (SL Green)

 

55%

GKK Madison Investment LLC (GKK)

 

45%

 

The Property is an approximately 1,177,000 square foot office building. SL Green acts as the managing member for the Company and is responsible for leasing and managing the Property (See Note 7).

SL Green, through an affiliate, owns a 25% interest in an affiliate of GKK. GKK Manager LLC, an affiliate of SL Green, is responsible for managing the operations of GKK.

On August 17, 2007, SL Green acquired GKK’s 45% interest in the Property.

2. Basis of Presentation and Significant Accounting Policies

Presented herein is the statement of revenues and certain expenses related to the operation of an office building located at One Madison Avenue (the “Property”) in Manhattan, New York.

The accompanying financial statements have been prepared with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate properties.  Accordingly, the financial statements exclude interest income of the aforementioned property.  Items excluded consist of mortgage prepayment penalties, mortgage transfer fee, depreciation and general and administrative expenses not directly related to the future operations.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, which are wholly-owned or controlled by the Company. All significant inter-company balances and transactions have been eliminated in consolidation.

F-10




 

One Madison Office Holdings LLC

Notes to Statements of Revenues and Certain Expenses

December 31, 2006

(Dollars in Thousands)

2. Basis of Presentation and Significant Accounting Policies (continued)

Revenue Recognition

Rental revenue is recognized 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 in the accompanying consolidated balance sheets. The Company establishes, on a current basis, a reserve for future potential losses, which may occur against deferred rents receivable as well as tenant receivables. The balances reflected in the accompanying consolidated balance sheets are net of such allowance.

Income Taxes

The taxable income or loss of the Company is reported in the income tax returns of the Members and, accordingly, no tax provision is recognized in the accompanying consolidated financial statements.

Use of Estimates

The preparation of the consolidated 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 consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

3. Mortgage Note Payable

Simultaneous with the acquisition of the Property, the Company closed on a $690,000 first mortgage, which bears interest at a fixed rate of 5.909% per annum. Payments of principal and interest are required monthly in accordance with an amortization schedule. Scheduled principal payments will reduce the outstanding balance to $404,531 on May 11, 2020 (the Maturity Date), at which time the entire unpaid principal and all accrued interest will be due and payable.

As of December 31, 2006, principal payments for each of the next five years, and the aggregate thereafter are as follows:

2007

 

$

9,904

 

2008

 

10,399

 

2009

 

11,154

 

2010

 

11,841

 

2011

 

13,337

 

Thereafter

 

626,739

 

 

 

$

683,374

 

 

F-11




 

One Madison Office Holdings LLC

Notes to Statements of Revenues and Certain Expenses

December 31, 2006

(Dollars in Thousands)

4. Rental Income

The Company triple net leases 89% of the Property to Credit Suisse Securities (USA), LLC (CS). Under the terms of the lease, which expires December 31, 2020, CS pays all expenses for the Property and is reimbursed by the Company for the portion of the Property which is not subject to the triple net lease. Approximate future minimum rents to be received over the next five years and thereafter for non-cancelable operating leases in effect at December 31, 2006 are as follows:

2007

 

$

51,846

 

2008

 

52,043

 

2009

 

52,075

 

2010

 

52,081

 

2011

 

52,846

 

Thereafter

 

533,088

 

 

 

$

793,979

 

 

5. Related Party Transactions

Pursuant to the Property Management and Leasing Agreement, SL Green Management Corp., an affiliate of SL Green, is responsible for the (a) management and leasing (itself or through a wholly-owned subsidiary) of the Property and (b) day-to-day corporate management of the Company and its subsidiaries.

This agreement will continue for one year and then automatically renew for successive one-year terms until terminated. SL Green Management Corp. is entitled to a management fee equal to $176.5 per annum. SL Green Management Corp. is also entitled to certain leasing fees ranging between 1.5% and 5% of the fixed annual rent and construction fees of equal to 5% of the cost of the work as set forth in the Leasing and Management Agreement. SL Green Leasing LLC, a wholly-owned subsidiary of SL Green Management Corp., is the leasing agent for the Property.

For the year ended December 31, 2006 and for the period from April 12, 2005 (formation) through December 31, 2005, SL Green Management Corp. earned $21 and $21 in leasing commissions and $177 and $118, respectively, in management fees.

Pursuant to the Development Rights Option Agreement (the Option Agreement) entered into between the Company and One Madison Residential Fee LLC (the Developer), the Developer has the option to acquire Base Excess Development Rights and the fee interest to the Airspace, both as defined in the Option Agreement, for an option purchase price equal to the price factor multiplied by the floor area of purchased rights. Price factor shall mean (i) $100 if the option closing occurs on or before April 29, 2010; (b) $200 if the option closing occurs on or before April 29, 2015; and (c) $300 if the option closing occurs after April 29, 2015 and on or before April 29, 2020, the expiration date.

An affiliate of SL Green is a member of the Developer.

F-12




 

One Madison Office Holdings LLC

Notes to Statements of Revenues and Certain Expenses

December 31, 2006

(Dollars in Thousands)

6. Interim Unaudited Financial Information

The statement of revenues and certain expenses for the six months ended June 30, 2007 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the statements of revenues and certain expenses for this interim period has been included.  The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year.

 

F-13