SL Green Realty Corp. Reports Third Quarter 2023 EPS of ($0.38) Per Share; and FFO of $1.27 Per Share

Financial and Operating Highlights

• Net loss attributable to common stockholders of $0.38 per share for the third quarter of 2023 as compared to net income of $0.11 per share for the same period in 2022.
• Reported funds from operations, or FFO, of $1.27 per share for the third quarter of 2023 as compared to $1.66 per share for the same period in 2022.
• Signed 50 Manhattan office leases covering 355,831 square feet in the third quarter of 2023 and 134 Manhattan office leases covering 1,271,262 square feet for the first nine months of 2023. The mark-to-market on signed Manhattan office leases was 3.8% lower for the third quarter and 0.4% lower for the first nine months of 2023 than the previous fully escalated rents on the same spaces.
• Same-store cash net operating income, or NOI, including the Company's share of same-store cash NOI from unconsolidated joint ventures, increased by 10.4% for the third quarter of 2023 and 6.4% for the first nine months of 2023 as compared to the same period in 2022, excluding lease termination income.
• Manhattan same-store office occupancy increased to 89.9% as of September 30, 2023 inclusive of leases signed but not yet commenced.

Investing Highlights

• Together with our joint venture partners, entered into an agreement to sell the equity interests in the condominium units at 21 East 66th Street for total consideration of $40.6 million. The sale is anticipated to close in the fourth quarter of 2023, subject to customary closing conditions.
• Received a Temporary Certificate of Occupancy ("TCO") for the 1.4 million square foot office tower at One Madison Avenue, which was completed three months ahead of schedule and significantly under budget. The Company received $577.4 million in cash, representing the final equity payment from its joint venture partners, which was triggered by the milestone.
• Following a UCC foreclosure, our previous mezzanine debt investments in the fee interest at 625 Madison Avenue were converted to a 90.43% ownership interest. The fee interest is subject to a $223.0 million mortgage, which matures in December 2026 and bears interest at a fixed rate of 6.05%.
  

Financing Highlights

• Together with our joint venture partner, closed on a 15-month extension of the $50.0 million mortgage at 719 Seventh Avenue to December 2024 with no change to the interest rate of 1.31% over Term SOFR.
• Together with our joint venture partner, closed on an 18-month extension of the $65.6 million mortgage at 115 Spring Street to March 2025. The modification also converted the floating rate of 3.40% over Term SOFR to a fixed rate of 5.50% for the term of the extension.
• To date in 2023, the Company has executed total debt refinancings, extensions or modifications of $3.2 billion and has reduced combined debt by $1.0 billion.

Earnings Guidance

• The Company is revising its 2023 earnings guidance ranges for the year ending December 31, 2023 to FFO per share of $5.05 to $5.35, and net loss per share of ($7.69) to ($7.39) to reflect $0.10 per share of severance expense and $0.17 per share of accelerated stock based compensation expense that will be recognized during the fourth quarter of 2023 related to the non-renewal of President Andrew Mathias's employment agreement.

NEW YORK, Oct. 18, 2023 (GLOBE NEWSWIRE) -- SL Green Realty Corp. (the "Company") (: SLG) today reported net loss attributable to common stockholders for the quarter ended September 30, 2023 of $24.0 million, or $0.38 per share, as compared to net income of $7.4 million, or $0.11 per share, for the same quarter in 2022.

The Company also reported a net loss attributable to common stockholders for the nine months ended September 30, 2023 of $423.9 million, or $6.63 per share, as compared to net loss of $28.7 million, or $0.47 per share, for the same period in 2022. Net loss attributable to common stockholders for the nine months ended September 30, 2023 included $340.4 million, or $4.94 per share, of net losses from the sale of real estate interests and non-cash fair value adjustments and was net of $197.8 million, or $2.87 per share, of depreciation and amortization. Net loss for the nine months ended September 30, 2022 included $68.6 million, or $0.99 per share, of net losses recognized from the sale of real estate interests and non-cash fair value adjustments and was net of $142.4 million, or $2.06 per share, of depreciation and amortization.

The Company reported FFO for the quarter ended September 30, 2023 of $87.7 million, or $1.27 per share, as compared to FFO for the same period in 2022 of $114.2 million, or $1.66 per share.

The Company also reported FFO for the nine months ended September 30, 2023 of $291.6 million, or $4.23 per share, as compared to FFO for the same period in 2022 of $358.8 million, or $5.18 per share. As previously reported, FFO for the nine months ended September 30, 2023 is net of $6.9 million, or $0.10 per share, of reserves on one debt and preferred equity investment and includes $4.7 million, or $0.07 per share, of fee income related to the interest sale of 245 Park Avenue. It is also net of $20.3 million, or $0.29 per share, representing the Company's net share of holdover rent, interest and reimbursement of attorneys' fees collected by the joint venture that owns 2 Herald Square from a former tenant, Victoria's Secret Stores LLC, and its guarantor, L Brands Inc., following the completion of legal proceedings against the tenant and guarantor.

All per share amounts are presented on a diluted basis.

Operating and Leasing Activity

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased by 12.1% for the third quarter of 2023, or 10.4% excluding lease termination income, as compared to the same period in 2022.

Same-store cash NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased by 5.2% for the nine months ended September 30, 2023, or 6.4% excluding lease termination income, as compared to the same period in 2022.

During the third quarter of 2023, the Company signed 50 office leases in its Manhattan office portfolio totaling 355,831 square feet. The average rent on the Manhattan office leases signed in the third quarter of 2023, excluding leases signed at One Vanderbilt, was $88.53 per rentable square foot with an average lease term of 6.3 years and average tenant concessions of 5.8 months of free rent with a tenant improvement allowance of $63.64 per rentable square foot. Thirty-five leases comprising 246,263 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 $87.35 per rentable square foot, representing a 3.8% decrease over the previous fully escalated rents on the same office spaces.

During the nine months ended September 30, 2023, the Company signed 134 office leases in its Manhattan office portfolio totaling 1,271,262 square feet. The average rent on the Manhattan office leases signed in 2023, excluding leases signed at One Vanderbilt and One Madison, was $79.98 per rentable square foot with an average lease term of 7.0 years and average tenant concessions of 6.6 months of free rent with a tenant improvement allowance of $61.64 per rentable square foot. Eighty leases comprising 923,196 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 $80.84 per rentable square foot, representing a 0.4% decrease over the previous fully escalated rents on the same office spaces.

Occupancy in the Company's Manhattan same-store office portfolio increased to 89.9% as of September 30, 2023, inclusive of 119,409 square feet of leases signed but not yet commenced, as compared to 89.8% at the end of the previous quarter.

Significant leasing activity in the third quarter includes:

• Expansion lease with Ares Management LLC for 36,316 square feet at 245 Park Avenue;
• Early renewal of 13,284 square feet and expansion by 18,629 square feet with TigerRisk Partners LLC at 1350 Avenue of the Americas;
• Early renewal of 13,884 square feet and expansion by 13,180 square feet with 101 Development Group LLC and Aurora Health Network, LLC at 885 Third Avenue;
• New lease with a New York based principal investment firm for 24,963 square feet at 450 Park Avenue;
• Early renewal with TAG Associates LLC for 22,437 square feet at 810 Seventh Avenue;
• Early renewal with Tishman Realty Partners, LLC for 20,626 square feet at 100 Park Avenue;
• Early renewal with Trian Fund Management, LP for 20,126 square feet at 280 Park Avenue; and
• New lease with Affiliates Risk Management Services for 11,300 square feet at 800 Third Avenue.

Investment Activity

In October, together with our joint venture partners, entered into an agreement to sell the equity interests in the condominium units at 21 East 66th Street for total consideration of $40.6 million. The sale is anticipated to close in the fourth quarter of 2023, subject to customary closing conditions.

In September, following a UCC foreclosure, the Company converted its previous mezzanine debt investments in the fee interest at 625 Madison Avenue to a 90.43% ownership interest. The fee interest is subject to a $223.0 million third-party mortgage, which matures in December 2026 and bears interest at a fixed rate of 6.05%.

In September, the 1.4 million square foot office tower at One Madison Avenue secured its TCO, marking completion of the development three months ahead of schedule and significantly under budget. The milestone triggered cash payments to the Company totaling $577.4 million, representing the final equity payment from its joint venture partners. The cash was used to repay unsecured corporate debt.

Debt and Preferred Equity Investment Activity

The carrying value of the Company’s debt and preferred equity ("DPE") portfolio was $334.3 million at September 30, 2023, the lowest balance since the third quarter of 2004. The portfolio had a weighted average current yield of 8.2%, or 10.0% excluding the effect of a $50.0 million investment that is on non-accrual. During the third quarter, the Company did not originate or acquire any new investments.

In October, the Company closed on a $20.0 million upsize and three-year extension of an existing $39.1 million debt and preferred equity investment that was scheduled to mature in October 2023.

Financing Activity

In September, together with our joint venture partner, closed on a 15-month extension of the $50.0 million mortgage at 719 Seventh Avenue to December 2024 with no change to the interest rate of 1.31% over Term SOFR.

In August, together with our joint venture partner, closed on an 18-month extension of the $65.6 million mortgage at 115 Spring Street to March 2025. The modification also converted the floating rate of 3.40% over Term SOFR to a fixed rate of 5.50% for the term of the extension.

To date in 2023, the Company has executed total debt refinancings, extensions or modifications of $3.2 billion and has reduced combined debt by $1.0 billion.

Earnings Guidance

The Company is revising its earnings guidance ranges for the year ending December 31, 2023 to FFO per share of $5.05 to $5.35, and net loss per share of ($7.69) to ($7.39), as compared to the previous guidance ranges of FFO per share of $5.30 to $5.60 and net loss per share of ($1.27) to ($0.97) to reflect $0.10 per share of severance expense and $0.17 per share of accelerated stock based compensation expense that will be recognized in G&A during the fourth quarter of 2023 related to the non-renewal of President Andrew Mathias's employment agreement.

Dividends

In the third quarter of 2023, the Company declared:

• Three monthly ordinary dividends on its outstanding common stock of $0.2708 per share, which were paid in cash on August 15, September 15, and October 16, 2023, equating to an annualized dividend of $3.25 per share of common stock; and
• A quarterly dividend on its outstanding 6.50% Series I Cumulative Redeemable Preferred Stock of $0.40625 per share for the period July 15, 2023 through and including October 14, 2023, which was paid in cash on October 16, 2023 and is the equivalent of an annualized dividend of $1.625 per share.

Institutional Investor Conference

The Company will host its Annual Institutional Investor Conference on Monday, December 4, 2023 beginning at 9:00 AM ET. The event will be held in-person, by invitation only. The presentation will be available online via audio webcast, in listen only mode, and the accompanying presentation materials can be accessed in the Investors section of the SL Green Realty Corp. website at www.slgreen.com on the day of the conference. An audio replay of the presentation will be available in the Investors section of the SL Green Realty Corp. website following the conference.

For more information about the event, please email [email protected].

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, October 19, 2023, at 2:00 pm ET to discuss the financial results.

Supplemental data will be available prior to the quarterly conference call in the Investors section of the SL Green Realty Corp. website at www.slgreen.com under “Financial Reports.”

The live conference call will be webcast in listen-only mode and a replay will be available in the Investors section of the SL Green Realty Corp. website at www.slgreen.com under “Presentations & Webcasts.”

Research analysts who wish to participate in the conference call must first register at https://register.vevent.com/register/BIfd901834346948528ab14521fa32c598.

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 September 30, 2023, SL Green held interests in 59 buildings totaling 32.5 million square feet. This included ownership interests in 28.8 million square feet of Manhattan buildings and 2.8 million square feet securing debt and preferred equity investments.

To obtain the latest news releases and other Company information, please visit our website at www.slgreen.com or contact Investor Relations at [email protected].

Disclaimers

Non-GAAP Financial Measures
During 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 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. 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 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)