SL Green Realty Corp. Reports Fourth Quarter FFO of $0.95 Per Share an

SL Green Realty Corp. Reports Fourth Quarter FFO of $0.95 Per Share and Full Year FFO of $3.77 Per Share

    Business Editors/Real Estate Writers

    NEW YORK--(BUSINESS WIRE)--Jan. 24, 2005--SL Green Realty Corp. (NYSE:SLG)

    Fourth Quarter and Full Year Highlights

--	Increased full year FFO to $3.77 per fully diluted share, an increase of 8.3% from prior year
--	Increased fourth quarter FFO to $0.95 per fully diluted share, a 6.7% increase over the same quarter in 2003
--	Increased quarterly dividend by 8% to $0.54 per fully diluted share
--	Completed acquisition of 625 Madison Avenue for $231.5 million, or $415 per square foot
--	Completed two sales during the fourth quarter:
--	1466 Broadway for $160 million, or $535 per square foot
--	17 Battery Place North for $70 million, or $167 per square foot
--	Realized gain on disposition of properties during the year of $2.73 per fully diluted share, including $2.14 per fully diluted share during the fourth quarter
--	Finished the year at 96.5% occupancy, excluding the recently acquired 625 Madison Avenue
--	Signed 293 office leases totaling 1.8 million square feet during 2004, including 73 office leases totaling 719,292 square feet during the fourth quarter
--	Recognized same store GAAP NOI growth of 2.7% for the year, including growth of 6.1% during the fourth quarter
--	Committed to invest an additional $22.0 million in Gramercy Capital Corp. (NYSE: GKK) during the fourth quarter

    Summary

    SL Green Realty Corp. (NYSE: SLG) today reported funds from operations available to common shareholders ("FFO") of $0.95 per fully diluted share for the fourth quarter ended December 31, 2004, a 6.7% increase over the same quarter in 2003. The Company also reported FFO of $3.77 per fully diluted share for the year ended December 31, 2004, an 8.3% increase from the prior year, which was $3.48 per fully diluted share.
    Net income available to common shareholders was $111.5 million for the fourth quarter and $193.2 million for the year ended December 31, 2004, an increase of $89.8 million and $102.8 million from the respective periods in 2003. Net income available to common shareholders also increased $91.2 million from the third quarter of 2004, primarily due to gains recognized on the sale of 1466 Broadway and 17 Battery Place North.

Three Months Ended Year Ended December 31, December 31, ----------------- ----------------- (In millions except per share) 2004 2003 2004 2003 ----------------- ----------------- Funds from operations available to common shareholders $42.6 $35.2 $162.4 $135.5

- per fully diluted share $0.95 $0.89 $3.77 $3.48

Net income available to common shareholders $111.5 $21.7 $193.2 $90.4

- per fully diluted share $2.64 $0.58 $4.75 $2.66

    Commenting on the Company's performance and outlook for 2005, Marc Holliday, President and Chief Executive Officer, said, "We have assembled a very high quality portfolio in New York City, the results of which are reflected in the Company's earnings. We have positioned ourselves for another year of industry-leading growth through the $780 million of new acquisitions made during 2004, $379 million of new structured finance investments, including the Company's investment in Gramercy, and through internal growth generated from our same store portfolio. We will continue to execute on our strategy of recycling capital to fund our growth and upgrade our portfolio."

    Operating and Leasing Activity

    Revenues and EBITDA of $349.0 million and $211.7 million increased $62.6 million (or 22%) and $55.8 million (or 36%), respectively, from the prior year, largely due to new acquisitions and structured finance investments made during 2003 and 2004. Same-store GAAP NOI increased 2.7% to $107.6 million during 2004, and increased 6.1% to $29.5 million during the fourth quarter. Average starting office rents of $32.11 per rentable square foot for the fourth quarter represented a 5.3% increase over the previous quarter and contributed to a 2.2% average increase for the year.
    1.9 million square feet, net of dispositions, were added to the portfolio during 2004, increasing total square feet under ownership and management from 15.1 million to 17.0 million square feet. Occupancy for the portfolio increased 70 basis points from 95.8% to 96.5%, when excluding the recently acquired 625 Madison Avenue. During 2004, the Company signed 293 office leases totaling 1.8 million square feet, versus 256 office leases and 1.6 million square feet in 2003.

    Significant leasing activities during the fourth quarter included:

--	73 office leases totaling 719,000 square feet signed, representing an increase in the average size lease when compared to 91 office leases totaling 522,000 square feet signed during the third quarter.
--	Included in the 73 office leases were 22 office lease renewals totaling 432,000 square feet, representing the fourth quarter of consecutive growth in the number of office lease renewals.
--	10 retail leases totaling 54,000 square feet signed, bringing the total number of retail leases signed during 2004 to 22 leases totaling 139,000 square feet.
--	Renewal and expansion of the Visiting Nurse Service of New York for approximately 300,000 square feet at 1250 Broadway.
--	Renewal with Interep National Radio for approximately 59,000 square feet at 100 Park Avenue.

    Other significant leasing activities during the year included:

    -- Renewal and expansion of Viacom International, Inc. for
    approximately 137,000 square feet at 1515 Broadway.

    -- New lease with B&H Foto and Electronics Corp. for
    approximately 92,000 square feet at 440 Ninth Avenue.

    -- New lease with Commerce Bank, NA for approximately 60,000
    square feet at 317 Madison Avenue.

    -- New lease with New Plan Excel Realty Trust for approximately
    54,000 square feet at 420 Lexington Avenue.

    -- Renewal with CHF Industries, Inc. for approximately 53,000
    square feet at One Park Avenue.

    -- New lease with AEG Live NY, LLC for approximately 43,000
    square feet at 1515 Broadway.

    Real Estate Investment Activity

    The Company completed three acquisitions totaling $778.5 million and three dispositions totaling $468.9 million during 2004. Gains generated from these dispositions totaled approximately $112.4 million, net of minority interests. Sales proceeds were applied towards the acquisition of 750 Third Avenue, 485 Lexington Avenue and leasehold interests in 625 Madison Avenue; and were used to pay down corporate debt obligations throughout the year.

    Major real estate investment transactions completed during the fourth quarter included:

    -- Acquisition of the leasehold interest in 625 Madison Avenue
    for $231.5 million, or approximately $415 per square foot. The
    property is approximately 558,000 square feet and contains
    nearly 53,000 square feet of prime retail space.

    -- Sale of 1466 Broadway for $160.0 million, or approximately
    $535 per square foot. Proceeds from the sale were used to pay
    down corporate debt obligations and to fund the acquisition of
    750 Third Avenue. The Company recognized a gain on sale of
    approximately $73.2 million, substantially all of which was
    deferred through a reverse-1031 exchange with 750 Third
    Avenue.

    -- Sale of 17 Battery Place North for $70.0 million, or
    approximately $167 per square foot. Proceeds from the sale
    were used to pay down corporate debt obligations and to fund
    the acquisition of 750 Third Avenue. The Company recognized a
    gain on sale of approximately $22.5 million, substantially all
    of which was deferred through a reverse-1031 exchange with 750
    Third Avenue.

    Structured Finance Activity

    Structured finance investments totaled $350.0 million for the year ended December 31, 2004. This is a $131.0 million increase from December 31, 2003, representing the net of originations and accretion totaling $309.6 million, and redemptions totaling $178.6 million. The yield at December 31, 2004 was 10.25%.
    Structured finance transactions completed during the fourth quarter included:

    -- Investments in two separate structured finance investments for
    approximately $32.0 million secured by two office buildings
    located in New York City. The loans each mature in 59 months
    and bear interest at a blended fixed yield of 10.34% at
    December 31, 2004.

    Investment In Gramercy Capital Corp.

    The Company's investment in Gramercy Capital Corp. increased from $47.0 million to $69.0 million. This includes an additional investment of approximately $22 million committed to by the Company during the fourth quarter, which settled on January 3, 2005. Net fees earned from the management, outsourcing and servicing agreements between the Company and Gramercy Capital Corp. totaled $679,000 for the year and $104,000 for the fourth quarter ended December 31, 2004.

    Financing and Capital Activity

    During 2004, the Company raised more than $1.2 billion of capital through private and public debt and equity markets: $235.0 million through the issuance of preferred and common stock, $635.5 million through an increase in secured and unsecured debt, $107.7 million through joint venture equity and $256.4 million through net sales proceeds.
    The Company increased capacity of corporate debt obligations by $125 million to $425 million, and lowered the overall cost of borrowing by 25 to 35 basis points from the prior year. The Company decreased floating rate debt from 31% to 24% of total combined debt through refinancings and further reduced floating interest rate exposure by entering into step-swap agreements throughout the year. The weighted average interest rate at December 31, 2004 was approximately 5.52%. Additionally, the Company extended maturities of certain corporate debt obligations. As of December 31, 2004, the Company had $329 million of available capacity and a debt-to-market capitalization of 37.3% on a combined basis, representing a decrease from 47.9% at prior year-end.

    Dividends

    During the fourth quarter, the Company increased dividends on common shares from $2.00 to $2.16 per fully diluted share, representing an 8% increase on an annualized basis. Based on today's closing price of $55.16 per share, the annualized dividend yield for a common share is 3.9%.

    Dividends declared during the fourth quarter were:

    -- $0.54 per common share, an increase of $0.04 per common share.
    Dividends were paid on January 14, 2005 to shareholders of
    record on the close of business on December 31, 2004.

    -- $0.4766 and $0.4922 per fully diluted share on the Company's
    Series C and D Preferred Stock, respectively, for the period
    October 15, 2004 through and including January 14, 2005.
    Dividends were paid on January 14, 2005 to shareholders of
    record on the close of business on December 31, 2004.
    Distributions reflect regular quarterly distributions, which
    are the equivalent of an annualized distribution of $1.90625
    and $1.96875, respectively.

    Commenting on the Company's capital markets activity, Gregory Hughes, Chief Financial Officer, said, "Our focus continues to be maintaining a strong balance sheet and reducing our cost of capital. We raised $1.2 billion this year from multiple sources, and are continually seeking new and more efficient capital sources. We continue to benefit from internally generated cash flow which is our cheapest source of capital."

    Conference Call and Audio Webcast

    The Company's executive management team, led by Marc Holliday, will host a conference call and audio webcast on Tuesday, January 25, 2005 at 2:00 p.m. EST to discuss fourth quarter and full year financial results. The conference call may be accessed by dialing (800) 810-0924 Domestic or (913) 981-4900 International. No pass code is required. The live conference will be simultaneously broadcast in a listen-only mode on the Company's website at www.slgreen.com.
    A replay of the call will be available through January 31, 2005 by dialing (888) 203-1112 Domestic or (719) 457-0820 International, using pass code 370468.

    Supplemental Information

    The Supplemental Package outlining fourth quarter and full year 2004 financial results will be available prior to the quarterly conference call on the Company's website.

    Company Profile

    SL Green Realty Corp. is a self-administered and self-managed real estate investment trust, or REIT, that predominantly acquires, owns, repositions and manages a portfolio of Manhattan office properties. As of December 31, 2004, the Company owns 28 properties totaling 17.0 million square feet. The Company is the only publicly held REIT that specializes exclusively in this niche.
    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 212-216-1601.

    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 (net income) can be found on pages 7 and 9 of this release and in the Company's Supplemental Package.

    Forward-looking Information

    This press release contains forward-looking information based upon the Company's current best judgment and expectations. Actual results could vary from those presented herein. The risks and uncertainties associated with forward-looking information in this release include the strength of the commercial office real estate markets in New York, competitive market conditions, unanticipated administrative costs, timing of leasing income, general and local economic conditions, interest rates, capital market conditions, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, and other factors, which are beyond the Company's control. We undertake no obligation to publicly update or revise any of the forward-looking information. For further information, please refer to the Company's filing with the Securities and Exchange Commission.

SL GREEN REALTY CORP. STATEMENTS OF OPERATIONS-UNAUDITED (Amounts in thousands, except per share data)

Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Revenue: Rental revenue, net $68,343 $57,536 $244,886 $214,041 Escalations & reimbursement revenues 13,261 9,999 45,110 39,825 Preferred equity investment income 2,201 1,153 10,862 4,098 Investment income 6,220 8,708 28,232 17,988 Other income 5,466 3,528 19,898 10,467 ---------- ---------- ---------- ---------- Total revenues 95,491 80,924 348,988 286,419

Equity in net loss from affiliates --- --- --- (196) Equity in net income from unconsolidated joint ventures 12,021 4,007 44,037 14,871 Expenses: Operating expenses 21,183 19,497 86,015 73,796 Ground rent 4,688 3,766 16,179 13,562 Real estate taxes 13,974 11,149 48,890 40,656 Marketing, general and administrative 9,336 8,048 30,279 17,131 ---------- ---------- ---------- ---------- Total expenses 49,181 42,460 181,363 145,145 ---------- ---------- ---------- ----------

Earnings Before Interest, Depreciation and Amortization (EBITDA) 58,331 42,471 211,662 155,949 Interest Expense 17,065 12,683 62,710 45,493 Depreciation and amortization 15,091 11,108 52,149 42,136 ---------- ---------- ---------- ---------- Net income from Continuing Operations 26,175 18,680 96,803 68,320 ---------- ---------- ---------- ---------- Income from Discontinued Operations, net of minority interests 1,164 1,832 5,938 9,594 Gain on sale of Discontinued Operations, net of minority interests 90,199 --- 90,370 21,327 Equity in net gain on sale of unconsolidated joint ventures --- 3,087 22,012 3,087 Minority interests (1,044) (1,307) (5,693) (4,169) Preferred stock dividends and accretion (4,969) (625) (16,258) (7,712) ---------- ---------- ---------- ---------- Net income available to common shareholders $111,525 $21,667 $193,172 $90,447 ========== ========== ========== ========== Net income per share (Basic) $2.75 $0.60 $4.93 $2.80 Net income per share (Diluted) $2.64 $0.58 $4.75 $2.66 Funds From Operations (FFO) --------------------------- FFO per share (Basic) $0.99 $0.92 $3.92 $3.73 FFO per share (Diluted) $0.95 $0.89 $3.77 $3.48 FFO Calculation: --------------------------- Net income from continuing operations $26,175 $18,680 $96,803 $68,320 Add: --------------------------- Depreciation and amortization 15,091 11,108 52,149 42,136 FFO from Discontinued Operations 1,235 3,248 9,846 16,091 Joint venture FFO adjustment 6,115 3,680 23,817 13,982 Less: --------------------------- Preferred stock dividend on convertible preferred stock --- --- --- (6,693) Dividend on perpetual preferred stock (4,969) (625) (16,258) (625) Amortization of deferred financing costs and depreciation of non-real estate assets (1,069) (849) (3,980) (4,431) ---------- ---------- ---------- ---------- FFO before minority interests- BASIC 42,578 35,242 162,377 128,780 Add: Convertible preferred stock dividends --- --- --- 6,693 ---------- ---------- ---------- ---------- FFO before minority interests - DILUTED $42,578 $35,242 $162,377 $135,473 ========== ========== ========== ========== Basic ownership interest Weighted average REIT common shares for net income per share 40,661 35,957 39,171 32,265 Weighted average partnership units held by minority interests 2,471 2,306 2,302 2,305 ---------- ---------- ---------- ---------- Basic weighted average shares and units outstanding for FFO per share 43,132 38,263 41,473 34,750 ========== ========== ========== ========== Diluted ownership interest Weighted average REIT common share and common share equivalents 42,227 37,458 40,776 33,174 Weighted average partnership units held by minority interests 2,471 2,306 2,302 2,305 Common share equivalents for preferred stock --- --- --- 3,491 ---------- ---------- ---------- ---------- Diluted weighted average shares and units outstanding 44,698 39,764 43,078 38,970 ========== ========== ========== ==========

SL GREEN REALTY CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)

December 31, December 31, 2004 2003 ------------ ------------ Assets (Unaudited) Commercial real estate properties, at cost: Land and land interests $206,824 $168,032 Buildings and improvements 1,065,654 849,013 Building leasehold and improvements 471,418 317,178 Property under capital lease 12,208 12,208 ------------ ------------ 1,756,104 1,346,431 Less accumulated depreciation (176,238) (156,768) ------------ ------------ 1,579,866 1,189,663

Cash and cash equivalents 35,795 38,546 Restricted cash 56,417 59,542 Tenant and other receivables, net of allowance of $8,921 and $7,533 in 2004 and 2003, respectively 15,248 14,533 Related party receivables 5,027 5,242 Deferred rents receivable, net of allowance of $6,541 and $7,017 in 2004 and 2003, respectively 61,302 63,131 Structured finance investments, net of discount of $1,895 and $44 in 2004 and 2003, respectively 350,027 218,989 Investments in unconsolidated joint ventures 557,089 590,064 Deferred costs, net 47,869 39,277 Other assets 43,241 42,854 ------------ ------------ Total assets $2,751,881 $2,261,841 ============ ============ Liabilities and Stockholders' Equity Mortgage notes payable $614,476 $515,871 Revolving credit facilities 110,900 236,000 Term loans 425,000 367,578 Derivative instruments at fair value 1,347 9,009 Accrued interest payable 4,494 3,500 Accounts payable and accrued expenses 72,298 43,835 Deferred revenue/gain 18,648 8,526 Capitalized lease obligations 16,442 16,168 Deferred land lease payable 15,723 15,166 Dividend and distributions payable 27,553 18,647 Security deposits 22,056 21,968 ------------ ------------ Total liabilities 1,328,937 1,256,268 Commitments and contingencies --- --- Minority interest in partially owned entities 509 510 Minority interest in operating partnership 74,555 54,281 Stockholders' Equity 7.625% Series C perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 6,300 issued and outstanding at December 31, 2004 and 2003, respectively 151,981 151,981 7.875% Series D perpetual preferred shares, $0.01 per value, $25.00 liquidation preference, 4,000 and none issued and outstanding at December 31, 2004 and 2003, respectively 96,321 --- Common stock, $0.01 par value 100,000 shares authorized, 40,876 and 36,016 issued and outstanding at December 31, 2004 and 2003, respectively 409 360 Additional paid - in capital 917,613 728,882 Deferred compensation plan (15,273) (8,446) Accumulated other comprehensive income (loss) 5,647 (961) Retained earnings 191,182 78,966 ------------ ------------ Total stockholders' equity 1,347,880 950,782 ------------ ------------ Total liabilities and stockholders' equity $2,751,881 $2,261,841 ============ ============

SL GREEN REALTY CORP. SELECTED OPERATING DATA-UNAUDITED

December 31, 2004 2003 -------- -------- Operating Data: (1) Net rentable area at end of period (in 000's) 17,000 15,072 Portfolio percentage leased at end of period 95.6% 95.8% Same-Store percentage leased at end of period 95.7% 95.1% Number of properties in operation 28 26

Office square feet leased during quarter (rentable) 719,292 664,716 Average mark-to-market percentage-office 5.3% 1.8% Average starting cash rent per rentable square foot- office $32.11 $31.27

(1) Includes wholly owned and joint venture properties.

SL GREEN REALTY CORP. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES* (Amounts in thousands)

Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Earnings before interest, depreciation and amortization (EBITDA): $58,331 $42,471 $211,662 $155,949 Add: -------------------------- Marketing, general & administrative expense 9,336 8,048 30,279 17,131 Operating income from discontinued operations 1,164 1,832 5,938 9,594 Depreciation adjustment for joint ventures 6,115 3,680 23,817 13,982 Less: -------------------------- Non-building revenue 17,630 13,558 69,737 34,787 ---------- ---------- ---------- ---------- GAAP net operating income (GAAP NOI) 57,316 42,473 201,959 161,869

Less: -------------------------- Operating income from discontinued operations (1,164) (1,832) (5,938) (9,594) Net income from joint ventures (12,021) (4,007) (44,037) (14,871) GAAP NOI from other properties/ affiliates (14,633) (8,800) (44,383) (32,630) ---------- ---------- ---------- ---------- 2004 Same-Store GAAP NOI $29,498 $27,834 $107,601 $104,774 ========== ========== ========== ==========

* See Table 1 for a reconciliation of FFO and EBITDA to net income.

--30--SS/ny*

CONTACT: SL Green Realty Corp. Gregory Hughes, 212-594-2700 Chief Financial Officer or Investor Relations: Michelle M. Le Roy, 212-594-2700

KEYWORD: NEW YORK INDUSTRY KEYWORD: BANKING REAL ESTATE BUILDING/CONSTRUCTION EARNINGS CONFERENCE CALLS SOURCE: SL Green Realty Corp.

Copyright Business Wire 2005