GlobeNewswire Inc | Apr 21, 2021 04:16PM EDT

April 21, 2021

Financial and Operating Highlights

-- Net income attributable to common stockholders of $(0.11) per share for the first quarter of 2021 as compared to $1.51 per share for the same period in 2020. Net income attributable to common stockholders for the first quarter of 2020 included $72.3million, or $0.90 per share, of net gains recognized from the sale of 315 West 33rd Street, also known as The Olivia, and $37.7million, or $0.47per share, of incremental income from Credit Suisse at One Madison Avenue. -- Funds from operations, or FFO, of $1.73 per share for the first quarter of 2021, including $10.5million, or $0.14 per share, of lease termination income, as compared to $2.08 per share for the same period in 2020. FFO for the first quarter of 2020 included $37.7million, or $0.47 per share, of incremental income from Credit Suisse at One Madison Avenue. -- To date in 2021, the Company has repurchased or redeemed a combined 1.5million shares of its common stock and units of its Operating Partnership, or OP units, under the previously announced $3.5 billion share repurchase plan,bringing total repurchases and redemptions to 34.1 million shares/units. -- Signed 21 Manhattan office leases covering 352,752 square feet in the first quarter of 2021. The mark-to-market on signed Manhattan office leases was 2.8% lower for the first quarter of 2021 than the previous fully escalated rents on the same spaces. -- Same-store cash net operating income, or NOI, including our share of same-store cash NOI from unconsolidated joint ventures, decreased by 1.4% for the first quarter of 2021 as compared to the same period in 2020, excluding lease termination income. -- Manhattan same-store office occupancy was 94.2% as of March31, 2021, inclusive of leases signed but not yet commenced.

Investing Highlights

-- Closed on the previously announced sale of its 25.0%interest in the commercial condominium units located at 55 West 46th Street, also known as "Tower 46", for a gross valuation of $275.0million. The transaction generated net cash proceeds to the Company of $20.9million. -- Entered into an agreement to sell its 20.0% interest in 605 West 42nd Street, also known as "Sky", for a gross asset valuation of $858.1million. The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions, and generate net cash proceeds to the Company of approximately $53.0million. -- Entered into an agreement to sell its interests in 400 East 57th Street for a gross asset valuation of $133.5million. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions, and generate net cash proceeds to the Company of approximately $18.0million.

Financing Highlights

-- Along with our joint venture partners, entered into $2.25billion of 10-year, fixed-rate forward starting swaps in anticipation of a refinancing of One Vanderbilt Avenue, which is anticipated to be in excess of the swapped amount. The swaps have a weighted average interest rate of 1.6114%.

ESG Highlights

-- Earned the WELL Health-Safety Rating across the Companys entire 23 million square foot core portfolio, including at One Vanderbilt Avenue. The WELL Health-Safety Rating is focused on operational policies, maintenance protocols, stakeholder engagement, and emergency plans to address a post-COVID-19 environment. -- Received a 2021 ENERGY STAR Partner of the Year Sustained Excellence Award, the highest level of U.S. Environmental Protection Agency (EPA) recognition, for the fourth consecutive year. Less than one percent of 16,000 U.S. Environmental Protection Agency (EPA) partners achieve the Sustained Excellence distinction.

Summary

NEW YORK, April 21, 2021 (GLOBE NEWSWIRE) -- SL Green Realty Corp. (the "Company") (NYSE: SLG) today reported a net loss attributable to common stockholders for the quarter ended March31, 2021 of $(7.5) million, or $(0.11) per share, as compared to net income of $114.8 million, or $1.51 per share, for the same quarter in 2020. Net income attributable to common stockholders for the first quarter of 2020 included $72.3million, or $0.90 per share, of net gains recognized from the sale of 315 West 33rd Street, also known as The Olivia, and $37.7million, or $0.47 per share, of incremental income from Credit Suisse at One Madison Avenue.

The Company reported FFO for the quarter ended March31, 2021 of $128.3 million, or $1.73 per share, inclusive of $10.5million, or $0.14 per share, of lease termination income, as compared to FFO for the same period in 2020 of $172.0 million, or $2.08 per share. FFO for the first quarter of 2020 included $37.7million, or $0.47 per share, of incremental income from Credit Suisse at One Madison Avenue.

All per share amounts are presented on a diluted basis.

Operating and Leasing Activity

For the quarter ended March31, 2021, the Company reported consolidated revenues and operating income of $226.1 million and $105.9 million, respectively, compared to $314.3 million and $162.8 million, respectively, for the same period in 2020.

To date, the Company has collected gross tenant billings, including rent and other billable expenses for the first quarter of 2021, as follows:

Office Retail Overall ^(1)1Q 2021 98.0% 85.0% 95.3% ^(1) Includes garage, suburban and residential properties

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures decreased by 1.4% for the first quarter of 2021, and decreased 1.4% excluding lease termination income, as compared to the same period in 2020.

During the first quarter of 2021, the Company signed 21 office leases in its Manhattan portfolio totaling 352,752 square feet. Thirteen leases comprising 187,326 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 $57.16 per rentable square foot, representing a 2.8% decrease 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 of 2021 was 5.8 years and average tenant concessions were 6.9 months of free rent with a tenant improvement allowance of $61.90 per rentable square foot.

Occupancy in the Company's Manhattan same-store office portfolio was 94.2% as of March31, 2021, inclusive of 96,653 square feet of leases signed but not yet commenced, as compared to 94.4% at the end of the previous quarter.

Significant leases that were signed in the first quarter included:

-- New lease with Beam Suntory for 99,556 square feet at 11 Madison Avenue, for 15.0 years; -- New lease with a financial service firm for 26,770 square feet at One Vanderbilt Avenue, for 15.0 years; -- New lease with Grand Central Office Suites, LLC for 19,647 square feet at 420 Lexington Avenue, for 16.3 years; -- New lease with Ellington Management Group, LLC for 19,587 square feet at 711 Third Avenue, for 5.0 years; and -- New lease with Walker & Dunlop, LLC for 16,614 square feet at One Vanderbilt Avenue, for 7.0 years.

Investment Activity

To date, the Company has repurchased a total of 32.8 million shares of its common stock and redeemed 1.3 million OP units for a combined total of $2.9billion under the previously announced $3.5 billion share repurchase program.

In February, the Company closed on the previously announced sale of its 25.0% interest in the commercial condominium units located at 55 West 46th Street, also known as "Tower 46", for a gross valuation of $275.0million, or $793 per square foot, to a Brookfield Asset Management real estate fund. The commercial condominium units consisted of office floors 2, 22-34, a retail store on 46th Street and the building's parking garage and fitness center. The transaction generated net cash proceeds to the Company of $20.9million.

In April, the Company entered into an agreement to sell its 20.0% interest in 605 West 42nd Street, also known as "Sky," for a gross asset valuation of $858.1million. The Company acquired its interest in Sky in 2016 as part of the origination of a mezzanine loan to The Moinian Group in 2014. The 71-story, 948,233 square foot luxury multifamily tower is 90.0% occupied, includes 295 affordable units of dedicated affordable housing and 68,000 square feet of retail space. The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions, and generate net cash proceeds to the Company of approximately $53.0million.

In April, the Company entered into an agreement to sell its interests in 400 East 57th Street for a gross asset valuation of $133.5million. The property includes 263 residential units and approximately 10,000 square feet of retail leased to essential service providers. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions, and generate net cash proceeds to the Company of approximately $18.0million.

Debt and Preferred Equity Investment Activity

The carrying value of the Companys DPE portfolio was $1.13 billion at March31, 2021. The portfolio is comprised of $1.10 billion of investments at a weighted average current yield of 6.9%, or 8.6% excluding the effect of $232.1million of investments that are on non-accrual, that are classified in the debt and preferred equity line item on the balance sheet, and mortgage investments aggregating $0.03 billion at a weighted average current yield of 3.6% that are included in other balance sheet line items for accounting purposes.

Financing Activity

During the first quarter of 2021, the Company, along with its joint venture partners, entered into $2.25billion of 10-year, fixed-rate forward starting swaps in anticipation of a refinancing of One Vanderbilt Avenue, which is anticipated to be in excess of the swapped amount. The swaps have a weighted average interest rate of 1.6114%.

ESG Achievements

In April, the Company announced that it earned the WELL Health-Safety Rating across its entire 23 million square foot core portfolio, including at One Vanderbilt Avenue, one month after SL Green moved its headquarters into the sky-line defining tower in the heart of East Midtown. The WELL Health-Safety Rating is an evidence-based rating verified through the International WELL Building Institute (IWBI) that focuses on operational policies, maintenance protocols, stakeholder engagement, and emergency plans to address a post-COVID-19 environment.

Achieving the WELL Health-Safety Rating across the entire core portfolio is a testament to the effectiveness of SL Greens response to the new operating conditions under COVID-19. The company is at the forefront of instituting new policies and initiatives to protect occupant health and to keep tenants and employees informed through a comprehensive COVID-19 plan called SL Green Forward. SL Green Forward is an extension of the companys best-in-class operating platform to promote a high degree of safety, cleanliness, and wellness for all building occupants.

In April, the Company announced that it has received a 2021 ENERGY STAR Partner of the Year Sustained Excellence Award for the fourth consecutive year. This award honors organizations across the United States that have implemented distinguished corporate energy management programs. Less than one percent of 16,000 U.S. Environmental Protection Agency (EPA) partners achieve the Sustained Excellence distinction.

The U.S. Department of Energy and EPA awarded SL Green this award, the highest level of EPA recognition, for its extensive tenant outreach on energy efficiency, educational programs and widespread promotion of ENERGY STAR tools and best practices. As a continued leader in this space, SL Green achieved ENERGY STAR labels for over 14 buildings covering 10.6 million square feet across its industry-leading portfolio in 2020.

Dividends

In the first quarter of 2021, the Company declared:

-- Three monthly dividends on its outstanding common stock of $0.3033 per share which were paid on February 15, March 15, and April 15, 2021, equating to an annualized dividend of $3.64 per share of common stock; and -- Quarterly dividends on its outstanding 6.50% Series I Cumulative Redeemable Preferred Stock of $0.40625 per share for the period January 15, 2021 through and including April 14, 2021, which was paid on April 15, 2021 and is the equivalent of an annualized dividend of $1.625 per share.

Conference Call and Audio Webcast

The Company's executive management team, led by Marc Holliday, Chairman and Chief Executive Officer, will host a conference call and audio webcast on Thursday, April 22, 2021 at 2:00 pm ET to discuss the financial results.

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

The live conference call will be webcast in listen-only mode in the Investors section of the SL Green Realty Corp. website at https://slgreen.com/ under Presentations & Webcasts. The conference may also be accessed by dialing toll-free (877) 312-8765 or international (419) 386-0002, and using conference ID 1787091.

A replay of the call will be available for 7 days after the call by dialing (855) 859-2056 using conference ID 1787091. 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., Manhattan's largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of March31, 2021, SL Green held interests in 84 buildings totaling 37.8 million square feet. This included ownership interests in 28.3 million square feet of Manhattan buildings and 8.7 million square feet securing debt and preferred equity investments.

To be added to the Company's distribution list or to obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at investor.relations@slgreen.com.

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 Companys Supplemental Package.

Forward-looking Statements

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

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



SL GREEN REALTY CORP.CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited and in thousands, except per share data) Three Months Ended March 31,Revenues: 2021 2020 Rental revenue, net $ 162,810 $ 195,463 Escalation and reimbursement 25,279 27,168 Investment income 19,273 38,533 Other income 18,740 53,139 Total revenues 226,102 314,303 Expenses: Operating expenses, including related party expenses 42,284 53,866 of $2,225 in 2021 and $3,749 in 2020Real estate taxes 45,411 46,622 Operating lease rent 6,739 7,367 Interest expense, net of interest income 23,388 37,494 Amortization of deferred financing costs 3,774 2,500 Depreciation and amortization 62,996 68,279 Loan loss and other investment reserves, net of ? 11,248 recoveriesTransaction related costs 22 65 Marketing, general and administrative 22,885 19,570 Total expenses 207,499 247,011 Equity in net loss from unconsolidated joint ventures (2,864 ) (12,814 )Equity in net loss on sale of interest in (12,629 ) ? unconsolidated joint venture/real estatePurchase price and other fair value adjustment 2,664 ? (Loss) gain on sale of real estate, net (1,388 ) 72,636 Depreciable real estate reserves (8,241 ) ? Net (loss) income (3,855 ) 127,114 Net loss (income) attributable to noncontrolling 476 (6,202 )interests in the Operating PartnershipNet loss attributable to noncontrolling interests in 1,499 293 other partnershipsPreferred unit distributions (1,846 ) (2,666 )Net (loss) income attributable to SL Green (3,726 ) 118,539 Perpetual preferred stock dividends (3,738 ) (3,738 )Net (loss) income attributable to SL Green common $ (7,464 ) $ 114,801 stockholdersEarnings Per Share (EPS) Net (loss) income per share (Basic)^ (1) $ (0.11 ) $ 1.51 Net (loss) income per share (Diluted) ^(1) $ (0.11 ) $ 1.51 Funds From Operations (FFO) FFO per share (Basic) ^(1) $ 1.75 $ 2.15 FFO per share (Diluted) ^(1) $ 1.73 $ 2.14 FFO per share (Pro forma)^ (2) $ 1.73 $ 2.08 Basic ownership interest Weighted average REIT common shares for net income 69,010 75,656 per shareWeighted average partnership units held by 4,148 4,220 noncontrolling interestsBasic weighted average shares and units outstanding ^ 73,158 79,876 (1) Diluted ownership interest Weighted average REIT common share and common share 69,922 76,132 equivalentsWeighted average partnership units held by 4,148 4,220 noncontrolling interestsDiluted weighted average shares and units outstanding 74,070 80,352 ^(1)Pro forma adjustment ^(2) ? 2,215 Pro forma diluted weighted average shares and units 74,070 82,567 outstanding^ (2)

(1) During the first quarter of 2021, the Company completed a reverse stock split to mitigate the dilutive impact of stock issued for a special dividend paid primarily in stock. The 2020 basic and diluted weighted average common shares outstanding have been retroactively adjusted to reflect the reverse stock split.(2) During the first quarter of 2021, the Company completed a reverse stock split to mitigate the dilutive impact of stock issued for a special dividend paid primarily in stock. GAAP requires the weighted average common shares outstanding to be adjusted retroactively for all periods presented to reflect the reverse stock split. To facilitate comparison between the periods presented, the Company calculated Pro forma diluted weighted average shares and units outstanding for the 2020 periods presented, which adjusts the share counts back to the originally-reported numbers.

SL GREEN REALTY CORP.CONSOLIDATED BALANCE SHEETS(in thousands, except per share data) March 31, December 31, 2021 2020Assets (Unaudited) Commercial real estate properties, at cost: Land and land interests $ 1,445,199 $ 1,315,832 Building and improvements 4,096,930 4,168,193 Building leasehold and improvements 1,730,418 1,448,134 Right of use asset - financing leases 55,711 55,711 Right of use asset - operating leases 502,316 367,209 7,830,574 7,355,079 Less: accumulated depreciation (2,004,945 ) (1,956,077 ) 5,825,629 5,399,002 Assets held for sale ? ? Cash and cash equivalents 304,999 266,059 Restricted cash 96,608 106,736 Investment in marketable securities 23,784 28,570 Tenant and other receivables 42,505 44,507 Related party receivables 34,310 34,657 Deferred rents receivable 304,420 302,791 Debt and preferred equity investments, net ofdiscounts and deferred origination fees of 1,097,202 1,076,542 $9,817 and $11,232 and allowances of $13,213and $13,213 in 2021 and 2020, respectivelyInvestments in unconsolidated joint ventures 3,698,701 3,823,322 Deferred costs, net 170,252 177,168 Other assets 445,635 448,213 Total assets $ 12,044,045 $ 11,707,567 Liabilities Mortgages and other loans payable $ 1,867,663 $ 2,001,361 Revolving credit facility 630,000 110,000 Unsecured term loan 1,500,000 1,500,000 Unsecured notes 1,251,647 1,251,888 Deferred financing costs, net (30,558 ) (34,521 )Total debt, net of deferred financing costs 5,218,752 4,828,728 Accrued interest payable 22,796 14,825 Accounts payable and accrued expenses 120,015 151,309 Deferred revenue 119,215 118,572 Lease liability - financing leases 152,622 152,521 Lease liability - operating leases 455,385 339,458 Dividend and distributions payable 24,924 149,294 Security deposits 54,181 53,836 Liabilities related to assets held for sale ? ? Junior subordinate deferrable interestdebentures held by trusts that issued trust 100,000 100,000 preferred securitiesOther liabilities 267,908 302,798 Total liabilities 6,535,798 6,211,341 Commitments and contingencies ? ? Noncontrolling interest in the Operating 374,124 358,262 PartnershipPreferred units 198,503 202,169 Equity Stockholders? equity: Series I Preferred Stock, $0.01 par value,$25.00 liquidation preference, 9,200 issued and 221,932 221,932 outstanding at both March 31, 2021 and December31, 2020Common stock, $0.01 par value 160,000 sharesauthorized, 70,380 and 69,534 issued andoutstanding at March 31, 2021 and December 31, 705 716 2020, respectively (including 1,026 held inTreasury at both March 31, 2021 and December31, 2020)Additional paid-in capital 3,913,258 3,862,949 Treasury stock at cost (124,049 ) (124,049 )Accumulated other comprehensive loss (18,897 ) (67,247 )Retained earnings 918,077 1,015,462 Total SL Green Realty Corp. stockholders? 4,911,026 4,909,763 equityNoncontrolling interests in other partnerships 24,594 26,032 Total equity 4,935,620 4,935,795 Total liabilities and equity $ 12,044,045 $ 11,707,567

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: 2021 2020 Net (loss) income attributable to SL Green common $ (7,464 ) $ 114,801 stockholdersAdd: Depreciation and amortization 62,996 68,279 Joint venture depreciation and noncontrolling interest 55,702 56,318 adjustmentsNet (loss) income attributable to noncontrolling (1,975 ) 5,909 interestsLess: (Loss) gain on sale of real estate, net (1,388 ) 72,636 Equity in net loss on sale of interest in (12,629 ) ? unconsolidated joint venture/real estatePurchase price and other fair value adjustments 2,664 ? Depreciable real estate reserves (8,241 ) ? Depreciation on non-rental real estate assets 527 650 FFO attributable to SL Green common stockholders and $ 128,326 $ 172,021 unit holders

Three Months Ended March 31,Operating income and Same-store NOI Reconciliation: 2021 2020 Net (loss) income $ (3,855 ) $ 127,114 Equity in net loss on sale of interest in 12,629 ? unconsolidated joint venture/real estatePurchase price and other fair value adjustments (2,664 ) ? Loss (gain) on sale of real estate, net 1,388 (72,636 )Depreciable real estate reserves 8,241 ? Depreciation and amortization 62,996 68,279 Interest expense, net of interest income 23,388 37,494 Amortization of deferred financing costs 3,774 2,500 Operating income 105,897 162,751 Equity in net loss from unconsolidated joint ventures 2,864 12,814 Marketing, general and administrative expense 22,885 19,570 Transaction related costs, net 22 65 Investment income (19,273 ) (38,533 )Loan loss and other investment reserves, net of ? 11,248 recoveriesNon-building revenue (192 ) (7,268 )Net operating income (NOI) 112,203 160,647 Equity in net loss from unconsolidated joint ventures (2,864 ) (12,814 )SLG share of unconsolidated JV depreciation and 55,275 45,874 amortizationSLG share of unconsolidated JV interest expense, net of 33,427 35,777 interest incomeSLG share of unconsolidated JV amortization of deferred 2,885 1,687 financing costsSLG share of unconsolidated JV loss on early ? ? extinguishment of debtSLG share of unconsolidated JV investment income (296 ) (307 )SLG share of unconsolidated JV non-building revenue (2,425 ) (1,215 )NOI including SLG share of unconsolidated JVs 198,205 229,649 NOI from other properties/affiliates (32,326 ) (62,747 )Same-Store NOI 165,879 166,902 Ground lease straight-line adjustment 245 288 Joint Venture ground lease straight-line adjustment 232 342 Straight-line and free rent (3,202 ) (2,818 )Amortization of acquired above and below-market leases, (241 ) (1,716 )netJoint Venture straight-line and free rent (7,356 ) (5,781 )Joint Venture amortization of acquired above and (4,303 ) (3,821 )below-market leases, netSame-store cash NOI $ 151,254 $ 153,396

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 Companys 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 Companys financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Companys liquidity, nor is it indicative of funds available to fund the Companys cash needs, including the Company's 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 pro-rata adjustments from the Company's unconsolidated JVs, 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 Companys 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 Companys financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Companys 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 Companys 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 Companys financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Companys 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 the amortization of acquired above and below-market leases 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 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 the Company's 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 Companys 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 Companys 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

Matt DiLibertoChief Financial Officer(212) 594-2700