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New words:
added, announced, ARRC, benchmark, bidder, body, clarification, Cloud, compelling, convened, correlate, disproportionate, Dollar, DPE, exceeded, exceeding, explain, FCA, Goodwill, Kingdom, Lake, Low, nonaccrual, OIS, Olivia, outdated, Overnight, prolonged, reconciliation, reconciling, Reserve, retention, scale, SOFR, software, stop, successor, sudden, sum, Summit, Ticonderoga, Vermont
Removed:
aggregating, alter, assistance, buy, buyer, CBD, central, comparative, consisted, DC, diligence, diversification, diversify, downgrade, downgrading, drawn, EBITDA, electric, excluded, existed, extinguishment, finalized, Grand, guaranty, involvement, jointly, lowering, NE, nonperforming, obligated, outlook, pledge, posted, preliminary, product, ratio, restriction, Restrictive, retrospectively, revolving, Room, Similarly, size, structure, substance, temporarily, transferred, undrawn, unencumbered, warrant, withdrawn
Financial report summary
?Risks
- Declines in the demand for office space in the New York metropolitan area, and in particular midtown Manhattan, could adversely affect the value of our real estate portfolio and our results of operations and, consequently, our ability to service current debt and make distributions to SL Green.
- We may be unable to renew leases or relet space as leases expire.
- We face significant competition for tenants.
- The expiration of long term leases or operating sublease interests where we do not own a fee interest in the land could adversely affect our results of operations.
- We rely on five large properties for a significant portion of our revenue.
- Our results of operations rely on major tenants and insolvency or bankruptcy of these or other tenants could adversely affect our results of operations.
- We are subject to risks that affect the retail environment.
- Adverse economic and geopolitical conditions in general and the commercial office markets in particular could have a material adverse effect on our results of operations and financial condition and, consequently, our ability to service debt obligations and make distributions to SL Green.
- Leasing office space to smaller and growth-oriented businesses could adversely affect our cash flow and results of operations.
- We may suffer adverse consequences if our revenues decline since our operating costs do not necessarily decline in proportion to our revenue.
- Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions.
- We face risks associated with property acquisitions.
- Potential losses may not be covered by insurance.
- The occurrence of a terrorist attack may adversely affect the value of our properties and our ability to generate cash flow.
- We face possible risks associated with natural disasters and the physical effects of climate change.
- Debt financing, financial covenants, degree of leverage, and increases in interest rates could adversely affect our economic performance.
- Scheduled debt payments could adversely affect our results of operations.
- Financial covenants could adversely affect our ability to conduct our business.
- Rising interest rates could adversely affect our cash flow.
- The potential phasing out of LIBOR after 2021 may affect our financial results.
- Failure to hedge effectively against interest rate changes may adversely affect results of operations.
- Increases in our leverage could adversely affect our cash flow.
- Debt and preferred equity investments could cause us to incur expenses, which could adversely affect our results of operations.
- Joint investments could be adversely affected by our lack of sole decision-making authority and reliance upon a co-venturer's financial condition.
- Certain of our joint venture agreements contain terms in favor of our partners that could have an adverse effect on the value of our investments in the joint ventures.
- We may incur costs to comply with governmental laws and regulations.
- Compliance with changing or new regulations applicable to corporate governance and public disclosure may result in additional expenses, or affect our operations.
- We are dependent on external sources of capital.
- Our property taxes could increase due to reassessment or property tax rate changes.
- We face potential conflicts of interest.
- Members of management may have a conflict of interest over whether to enforce terms of agreements with entities which Mr. Green, directly or indirectly, has an affiliation.
- SL Green's failure to qualify as a REIT would be costly and would have a significant effect on the value of our securities.
- Changes to U.S. federal income tax laws could materially and adversely affect us and the value of our securities.
- Loss of our key personnel could harm our operations and the value of our securities.
- Our business and operations would suffer in the event of system failures or cyber security attacks.
- Forward-looking statements may prove inaccurate.
Management Discussion
- Rental revenue decreased primarily as a result of the deconsolidation of 919 Third Avenue ($97.5 million) and the Disposed Properties ($29.9 million).
- Escalation and reimbursement revenue decreased primarily as a result of the deconsolidation of 919 Third Avenue ($20.7 million), partially offset by higher recoveries at our Same-Store Properties ($7.9 million).
- Investment income decreased primarily as a result of previously unrecognized income in the second quarter of 2017 net with 2018 income related to our preferred equity investment in 885 Third Avenue ($7.7 million), partially offset by a larger weighted average book balance and an increase in the LIBOR benchmark rate. For the twelve months ended December 31, 2018, the weighted average debt and preferred equity investment balance outstanding and weighted average yield were $2.0 billion and 9.0%, respectively. Excluding our investment in Two Herald Square which was put on non-accrual in August 2017, the weighted average debt and preferred equity investment balance outstanding and weighted average yield for the year ended December 31, 2017 were $1.9 billion and 9.3%, respectively. As of December 31, 2018, the debt and preferred equity investments had a weighted average term to maturity of 1.7 years excluding extension options.