SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:None PART I 1. Business 1.A Risk Factors 1.B Unresolved Staff Comments 2. Properties 3. Legal Proceedings 4. Mine Safety Disclosures PART II 5. Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities 6. Selected Financial Data 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 7A. Quantitative and Qualitative Disclosures about Market Risk 8. Financial Statements and Supplementary Data 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9A. Controls and Procedures 9B. Other Information PART III 10. Directors, Executive Officers and Corporate Governance 11. Executive Compensation 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 13. Certain Relationships and Related Transactions, and Director Independence 14. Principal Accounting Fees and Services PART IV 15. Exhibits, Financial Statements and Schedules York Metropolitan area also include investments in Westchester County and Connecticut, which are collectively known as the Suburban Manhattan Suburban Consolidated properties As of December 31, market overview. 2013. Publications and C.B.S. Broadcasting, Inc., accounting for approximately We face risks associated with property acquisitions. We rely on five large properties for a significant portion of our revenue. The Terrorism Risk Insurance Act, or TRIA, which was enacted in November 2002, was renewed on December 31, 2005 and again on December 31, 2007. Congress extended TRIA, now called TRIPRA (Terrorism Risk Insurance Program Reauthorization and Extension Act of 2007) until December 31, 2014. The law extends the federal Terrorism Insurance Program that requires insurance companies to offer terrorism coverage and provides for compensation for insured losses resulting from acts of certified terrorism, subject to the current program trigger of $100.0 million. There is no assurance that TRIPRA will be extended. Our debt instruments, consisting of a non-recourse mortgage note secured by one of our properties, mezzanine loans, ground leases, our 2012 credit facility, senior unsecured notes and other corporate obligations, contain customary covenants requiring us to maintain insurance. Although we believe that we currently maintain sufficient insurance coverage to satisfy these obligations, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. In such instances, there can be no assurance that the lenders or ground lessors under these instruments will not take the position that a total or partial exclusion from "all-risk" insurance coverage for losses due to terrorist acts is a breach of these debt and ground lease instruments allowing the lenders or ground lessors to declare an event of default and accelerate repayment of debt or recapture of ground lease positions. In addition, if lenders prevail in asserting that we are required to maintain full coverage for these risks it could result in substantially higher insurance premiums. Leasing office space to smaller and growth-oriented businesses could adversely affect our cash flow and results of operations. These restrictions could adversely affect We cannot be certain that our judgment will prove to be correct and that our reserves will be adequate over time to protect against future losses because of unanticipated adverse changes in the economy or events adversely affecting specific properties, assets, tenants, borrowers, industries in which our tenants and borrowers operate or markets in which our tenants and borrowers or their properties are located. chairman of SL Green's board of directors. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. SL Green, including us, and our tenants accounted for approximately and attention from feet. The following table sets forth certain information with respect to each of the consolidated Manhattan and Suburban office, retail and CONSOLIDATED PROPERTIES 810 Seventh Avenue(6) Times Square 919 Third Avenue(4)(6) Grand Central North 1185 Avenue of the Americas(5) Rockefeller Center 333 West 34th Street Penn Station 461 Fifth Avenue(5) Midtown 555 West 57th Street(6) Midtown West 750 Third Avenue Grand Central North 1350 Avenue of the Americas(6) Rockefeller Center 110 East 42nd Street Grand Central 609 Fifth Avenue Rockefeller Center 673 First Avenue(5)(6) Grand Central South 304 Park Avenue South Midtown South 641 Sixth Avenue Midtown South Total / Weighted Average Consolidated Properties(7) Suburban Properties CONSOLIDATED PROPERTIES 1100 King Street—1 International Drive Rye Brook, Westchester 1100 King Street—2 International Drive Rye Brook, Westchester 1100 King Street—3 International Drive Rye Brook, Westchester 1100 King Street—4 International Drive Rye Brook, Westchester 1100 King Street—5 International Drive Rye Brook, Westchester 1100 King Street—6 International Drive Rye Brook, Westchester 520 White Plains Road Tarrytown, Westchester 115-117 Stevens Avenue Valhalla, Westchester 100 Summit Lake Drive Valhalla, Westchester 200 Summit Lake Drive Valhalla, Westchester 500 Summit Lake Drive Valhalla, Westchester 140 Grand Street White Plains, Westchester 360 Hamilton Avenue White Plains, Westchester Westchester, NY Subtotal 680 Washington Boulevard(4) Stamford, Connecticut 750 Washington Boulevard(4) Stamford, Connecticut 1055 Washington Boulevard(5) Stamford, Connecticut 1010 Washington Boulevard Stamford, Connecticut Connecticut Subtotal Grand Total / Weighted Average Grand Total—ROP share of Annualized Cash Rent DEVELOPMENT 635 Sixth Avenue Midtown South December 31, 2012 December 31, 2011 December 31, 2010 December 31, 2009 December 31, 2008 December 31, 2012 December 31, 2011 December 31, 2010 December 31, 2009 December 31, 2008 Lease Expirations The following tables set forth a schedule of the annual lease expirations at our Manhattan consolidated properties, with respect to leases in place as of December 31, 2013(3) 2014 2015 2016 2017 2018 2019 2020 2021 2022 & thereafter Total/weighted average 2013(3) 2014 2015 2016 2017 2018 2019 2020 2021 2022 & thereafter Total/weighted average ten largest tenants in our portfolio, based on the amount of square footage leased by our tenants as of December 31, Debevoise & Plimpton, LLP 919 Third Avenue Advance Magazine Group, Fairchild Publications 750 Third Avenue C.B.S. Broadcasting, Inc. 555 West 57th St. Schulte, Roth & Zabel LLP 919 Third Avenue New York Presbyterian Hospital 673 First Avenue BMW of Manhattan 555 West 57th St. Verizon 1100 King Street Bldg 1 & 500 Summit Lake Drive Amerada Hess Corp. 1185 Avenue of the Americas The City University of New York—CUNY 555 West 57th Street Fuji Color Processing Inc. 200 Summit Lake Drive Total/ Weighted Average(3) Total revenues Operating expenses Real estate taxes Ground rent Interest expense, net of interest income Amortization of deferred finance costs Depreciation and amortization Loan loss reserves, net of recoveries Transaction related costs Marketing, general and administrative Total expenses Equity in net income from unconsolidated joint venture Equity in net gain on sale of interest in unconsolidated joint venture Depreciable real estate reserves (Loss) gain on early extinguishment of debt Income from continuing operations Discontinued operations Net income Net income attributable to noncontrolling interests Net income attributable to ROP common unitholder Commercial real estate, before accumulated depreciation Total assets Mortgage note and other loan payable, revolving credit facility and term loan and senior unsecured notes Total capital ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF Unless the context requires otherwise, all references to "we," "our," "us" and the "Company" means ROP and all entities owned or controlled by ROP. growth. 2013. 2015 or early 2016. Assets Transfer Manhattan Suburban Consolidated properties At December 31, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. 2013. results, known trends, and market/economic conditions that may affect the property. To the extent acquired leases contain fixed rate renewal options that are below market and determined to be material, we amortize such below market lease value into rental income over the renewal period. Derivative Instruments Rental revenue Escalation and reimbursement revenue Total Equity in net income of unconsolidated joint venture Investment and other income Total Operating expenses Real estate taxes Ground rent Total Interest expense, net of interest income Loan loss reserves, net of recoveries Depreciation and amortization expense Transaction related costs Marketing, general and administrative expense Total entry into a new $1.5 billion revolving credit facility in November 2011, which was later replaced with a $1.6 billion credit facility in November 2012, as well as the refinancing of 919 Third Avenue in June 2011. Rental revenue Escalation and reimbursement revenue Total Equity in net income of unconsolidated joint venture Investment and other income Total Operating expenses Real estate taxes Ground rent Total Interest expense, net of interest income Loan loss reserves, net of recoveries Depreciation and amortization expense Transaction related costs Marketing, general and administrative expense Total operating cash flow. Cash and cash equivalents were $39.7 million and $34.0 million Net cash provided by operating activities Net cash used in investing activities Net cash provided by (used in) financing activities Acquisitions of real estate Capital expenditures and capitalized interest Net proceeds from sale of joint venture interest Distributions from joint venture Debt and preferred equity and other investments Restricted cash—capital improvements Increase in net cash used in investing activities Repayments under our debt obligations Proceeds from debt obligations Contributions from common unitholder Distributions to common unitholder and noncontrolling interests Deferred loan costs Increase in cash provided by financing activities Senior Unsecured Notes August 13, 2004(2) March 31, 2006(2) August 5, 2011(3) March 16, 2010(3) November 15, 2012(3) June 27, 2005(4) ROP also provides a guaranty of the Operating Partnership's obligations under its 3.00% Exchangeable Senior Notes due 2017. Market Rate Risk Property mortgage and other loans payable Revolving credit facility Term loan and senior unsecured notes Capital leases Ground leases Estimated interest expense Total expect that these financing requirements will be met in a similar fashion. We believe that we will have sufficient resources to satisfy our capital needs during the next 12-month period. SL Green maintains "all-risk" property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism) within two property insurance portfolios and liability insurance. This includes the ROP assets. As of December 31, The Terrorism Risk Insurance Act, or TRIA, which was enacted in November 2002, was renewed on December 31, 2005 and again on December 31, 2007. Congress extended TRIA, now called TRIPRA (Terrorism Risk Insurance Program Reauthorization and Extension Act of 2007) until December 31, 2014. The law extends the federal Terrorism Insurance Program that requires insurance companies to offer terrorism coverage and provides for compensation for insured losses resulting from acts of certified terrorism, subject to the current program trigger of $100.0 million. There is no assurance that TRIPRA will be extended. Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to us), mezzanine loans, ground leases, our 2012 credit facility, senior unsecured notes and other corporate obligations, contain customary covenants requiring us to maintain insurance. Although we believe that we currently maintain sufficient insurance coverage to satisfy these obligations, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. In such instances, there can be no assurance that the lenders or ground lessors under these instruments will not take the position that a total or partial exclusion from "all-risk" insurance coverage for losses due to terrorist acts is a breach of these debt and ground lease instruments allowing the lenders or ground lessors to declare an event of default and accelerate repayment of debt or recapture of ground lease positions. In addition, if lenders prevail in asserting that we are required to maintain full coverage for these risks, it could result in substantially higher insurance premiums. 2013 2014 2015 2016 2017 Thereafter Total Fair Value The table below lists all of our derivative instruments, which are hedging variable rate debt and their related fair value as of December 31, Interest Rate Swap Total Consolidated Hedges RECKSON OPERATING PARTNERSHIP, L.P. Schedules Assets Commercial real estate properties, at cost: Land and land interests Building and improvements Building leasehold and improvements Property under capital lease Less: accumulated depreciation Cash and cash equivalents Restricted cash Tenant and other receivables, net of allowance of $7,308 and $4,667 in 2012 and 2011, respectively Deferred rents receivable, net of allowance of $16,501 and $15,942 in 2012 and 2011, respectively Debt and preferred equity investments, net of allowance of $8,125 in 2011 Investment in unconsolidated joint venture Deferred costs, net of accumulated amortization of $40,303 and $27,413 in 2012 and 2011, respectively Other assets Total assets Liabilities Mortgage note and other loans payable Revolving credit facility Term loan and senior unsecured notes Accrued interest payable and other liabilities Accounts payable and accrued expenses Deferred revenue Capitalized lease obligation Deferred land lease payable Security deposits Total liabilities Commitments and contingencies Capital General partner capital Limited partner capital Accumulated other comprehensive loss Total ROP partner's capital Noncontrolling interests in other partnerships Total capital Total liabilities and capital Revenues Rental revenue, net Escalation and reimbursement Investment and preferred equity income Other income Total revenues Expenses Operating expenses, including $15,573 (2012), $15,520 (2011) and $17,342 (2010) paid to related parties Real estate taxes Ground rent Interest expense, net of interest income Amortization of deferred financing costs Depreciation and amortization Loan loss reserves, net of recoveries Transaction related costs Marketing, general and administrative Total expenses Income from continuing operations before equity in net income from unconsolidated joint venture, equity in net income on sale of interest in unconsolidated joint venture, depreciable real estate reserves, loss on early extinguishment of debt and noncontrolling interests Equity in net income from unconsolidated joint venture Equity in net gain on sale of interest in unconsolidated joint venture Depreciable real estate reserves Loss on early extinguishment of debt Net income Net income attributable to noncontrolling interests in other partnerships Net income attributable to ROP common unitholder Other comprehensive income (loss) Unrealized gain (loss) on derivative instruments Comprehensive income attributable to ROP common unitholder Balance at December 31, 2009, As Adjusted Contributions Distributions Net income Balance at December 31, 2010, As Adjusted Contributions Distributions Net income Other comprehensive loss Balance at December 31, 2011, As Adjusted Contributions Distributions Net income Other comprehensive income Balance at December 31, 2012 Operating Activities Net income Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization Equity in net gain on sale of interest in unconsolidated joint venture Equity in net income from unconsolidated joint venture Distributions of cumulative earnings from unconsolidated joint venture Loss on early extinguishment of debt Loan loss reserves, net of recoveries Depreciable real estate reserves Deferred rents receivable Other non-cash adjustments Changes in operating assets and liabilities: Restricted cash—operations Tenant and other receivables Deferred lease costs Other assets Accounts payable, accrued expenses and other liabilities Deferred revenue and land lease payable Net cash provided by operating activities Investing Activities Acquisitions of real estate property Additions to land, buildings and improvements Restricted cash—capital improvements Distributions in excess of cumulative earnings from unconsolidated joint venture Net proceeds from disposition of joint venture interest Debt and preferred equity and other investments, net of repayments/participations Net cash used in investing activities Financing Activities Proceeds from mortgage note and other loans payable Repayments of mortgage note and other loans payable Proceeds from revolving credit facility and senior unsecured notes Repayments of revolving credit facility and senior unsecured notes Contributions from common unitholder Distributions to noncontrolling interests in other partnerships Distributions to common unitholder Deferred loan costs and capitalized lease obligation Net cash provided by (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental Cash Flow Disclosure Interest paid York Metropolitan area also include investments in Westchester County and Connecticut, which are collectively known as the Suburban Manhattan Suburban $369.4 million. reviews and approves the joint venture's tax return before filing, and approves all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power of the activities that most significantly impact the performance of our joint venture. Our joint venture agreements typically contain certain protective rights such as the requirement of partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan. See Note 4, "Property Dispositions." December 31, December 31, 2013, 2012 2011, respectively. Identified intangible assets (included in other assets): Gross amount Accumulated amortization Net Identified intangible liabilities (included in deferred revenue): Gross amount Accumulated amortization Net 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 net income (loss) and cash contributions and distributions. our unconsolidated joint venture for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investment for impairment based on the joint venture's projected discounted cash flows. During the years ended December 31, 2013 and 2012, we did not record any impairment charge on any of our investments in unconsolidated joint ventures. During the year ended December 31, 2011, we recorded a owner of tenant improvements for accounting purposes, Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year. collectible, based on the underlying collateral and operations of the borrower. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt. Earnings per Unit In the normal course of business, we are exposed to the effect of interest rate changes and limit these risks by following established risk management policies and procedures including the use of derivatives. To address exposure to interest rates, derivatives are used primarily to fix the rate on debt based on floating-rate indices and manage the cost of borrowing obligations. Concentrations of Credit Risk associated with lost rent and the costs associated with re-tenanting the space. Although the properties in our real estate portfolio are primarily located in Manhattan, we also have Suburban properties located in Westchester County and Connecticut. The tenants located in our buildings operate in various industries. Other than 2013 (continued) Land Building Above market lease value Acquired in-place leases Other assets, net of other liabilities Assets acquired Below market lease value Liabilities assumed Purchase price allocation Net consideration funded by us at closing Equity and/or debt investment held Debt assumed Preferred equity(1) Preferred equity Preferred equity(1)(2) Preferred equity(1) Debt investment(3) Loan loss reserve(3) December 31, At December 31, an entity that owns a retail property located in Manhattan. The underlying preferred equity investment bore interest at a rate of 8.75% per annum. We held 40.0% interest or $20.0 million initial investment in the joint venture. In 609 Partners, LLC(2) Other loan payable(3) 919 Third Avenue New York, NY(4) 609 Fifth Avenue(5) 673 First Avenue(6) 110 East 42nd Street(7) December 31, 2011 Revolving Credit Facility August 13, 2004(2) March 31, 2006(2) August 5, 2011(3) March 16, 2010(3) November 15, 2012(3) June 27, 2005(4) Consolidated Financial Statements (continued) investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the minimum amount of tangible net worth, a maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a maximum ratio of secured indebtedness to total asset value and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that SL Green will not during any time when a default is continuing, make distributions with respect to SL Green's common stock or other equity interests, except to enable SL Green to continue to qualify as a REIT for Federal income tax purposes. As of 2013 2014 2015 2016 2017 Thereafter Interest expense Interest income Interest expense, net Interest capitalized 2013 2014 2015 2016 2017 Thereafter to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. An affiliate of ours has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease agreements. We obtained insurance coverage through an insurance program administered by SL Green. In connection with this program we incurred insurance expense of approximately trustees adopted a rehabilitation plan consistent with this requirement. No surcharges have been paid to the Pension Plan as of Pension Plan Health Plan Other plans Total plan contributions 2013 2014 2015 2016 2017 Thereafter Total minimum lease payments Less amount representing interest Present value of net minimum lease payment Selected results of operations for the years ended Total revenues: Year ended December 31, 2012 Year ended December 31, 2011, As Adjusted Year ended December 31, 2010, As Adjusted Income from continuing operations: Year ended December 31, 2012 Year ended December 31, 2011, As Adjusted Year ended December 31, 2010, As Adjusted Total assets As of: December 31, 2012 December 31, 2011 Income from continuing operations Net loss from discontinued operations Net income Net income attributable to noncontrolling interests in other partnerships Net income attributable to ROP common unitholder Qualifying Non-qualifying Tenant improvements and capital expenditures payable Deferred leasing payable Change in fair value of hedge Transfer of treasury lock hedge Contributions from common unitholder Transfer of commercial real estate property, net Transfer of preferred equity investments Transfer of mortgage note and other loans payable Redemption of Series E units Total revenues Income from continuing operations before loss on extinguishment of debt, equity in net loss (gain) on sale of interest in unconsolidated joint venture, equity in net income from unconsolidated joint venture and noncontrolling interests Loss on extinguishment of debt Equity in net loss (gain) on sale of interest in unconsolidated joint venture Equity in net income from unconsolidated joint venture Net income Net income attributable to noncontrolling interests in other partnerships Net income attributable to ROP common unitholder Total revenues Income from continuing operations before depreciable real estate reserves, equity in net income from unconsolidated joint venture and noncontrolling interests Depreciable real estate reserves Equity in net income from unconsolidated joint venture Net income Net income attributable to noncontrolling interests in other partnerships Net income attributable to ROP common unitholder $383.0 million to $783.0 million, decreased the interest-rate margin applicable to the term loan facility and extended the maturity of the term loan facility to June 30, 2019. The new term loan facility bears interest at a spread over either base rate or LIBOR ranging from 95 basis points to 190 basis points based on the credit rating assigned to our senior unsecured long term indebtedness. At March 21, 2014, the applicable spread for loans under the term loan facility was 140 basis points. Year Ended December 31, 2012 Tenant and other receivables—allowance Deferred rent receivable—allowance Year Ended December 31, 2011, As Adjusted Tenant and other receivables—allowance Deferred rent receivable—allowance Year Ended December 31, 2010, As Adjusted Tenant and other receivables—allowance Deferred rent receivable—allowance 810 Seventh Avenue(1) 461 Fifth Avenue(1)(6) 750 Third Avenue(1)(6) 919 Third Avenue(1)(4) 333 West 34th Street(1)(6) 555 W. 57th Street(1)(6) 1185 Avenue of the Americas(1) 1350 Avenue of the Americas(1) 1100 King Street—1-7 International Drive(2) 520 White Plains Road(2) 115-117 Stevens Avenue(2) 100 Summit Lake Drive(2) 200 Summit Lake Drive(2) 500 Summit Lake Drive(2) 140 Grand Street(2) 360 Hamilton Avenue(2) 7 Landmark Square(3) 680 Washington Boulevard(3)(4) 750 Washington Boulevard(3)(4) 1010 Washington Boulevard(3)(6) 1055 Washington Boulevard(3) 400 Summit Lake Drive(2) 673 First Avenue(1)(6) 609 Fifth Avenue(1)(6) 110 East 42nd Street(1)(6) 304 Park Avenue(1) 635 Sixth Avenue(1) 641 Sixth Avenue(1) Other(5) The changes in real estate for the years ended December 31, 2013, 2012 Balance at beginning of year Acquisitions Improvements Retirements/disposals Balance at end of year The changes in accumulated depreciation, exclusive of amounts relating to equipment, autos, and furniture and fixtures, for the years ended Balance at beginning of year Depreciation for year Retirements/disposals Balance at end of year 2013. (a)(2) Financial Statement Schedules
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20122013
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to . (Do not check if a smaller reporting company) Smaller Reporting Companyo19, 2013,25, 2014, no common units of limited partnership of the Registrant were held by non-affiliates of the Registrant. There is no established trading market for such units.20132014 Annual Meeting of Stockholders to be filed within 120 days after the end of the Registrant's fiscal year are incorporated by reference into Part III of this Annual Report on Form 10-K. 1. 1A. 1B. 2 3 4 PART II 5 6 7 7A. 8 9 9A. 9B. PART III 10 11 12 13 14 PART IV 15 Reckson Operating Partnership, L.P.FORM 10-KTABLE OF CONTENTS10-K PART AND ITEM NO.
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78 new 2012 credit facility, in which we, along with SL Green and the Operating Partnership are borrowers, SL Green transferred five properties, with total assets aggregating to $683.8 million at November 1, 2011 and transferred three additional properties with total assets aggregating to $320.2 million at December 31, 2012, to ROP. Under the Business Combinations guidance, these transfers were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary. As such, the assets and liabilities were transferred at their carrying value. These transfers are required to be recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The financial statements and financial information presented for all prior years has been retrospectively adjusted to furnish comparative information.2012,2013, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan, a borough of New York City. Our investments in the NewPART IITEM 1. BUSINESSassets:Location Ownership Square Feet Manhattan Consolidated properties 12 6,866,400 94.6 % Suburban Consolidated properties 17 2,785,500 79.1 % 29 9,651,900 90.2 % (1) The weighted average occupancy represents the total leased square feet divided by total available rentable square feet. Ownership Number of
Properties Square Feet Weighted
Average
Occupancy(1) Consolidated properties 13 7,201,400 96.0 %
17
2,785,500
79.5
% 30 9,986,900 91.4 % (1)The weighted average occupancy represents the total leased square feet divided by total available rentable square feet.2012,2013, our Manhattan properties were comprised of 10nine fee owned properties and three leasehold properties. We are responsible for not only collecting rent from subtenants, but also maintaining the property and paying expenses relating to the property. As of December 31, 2012,2013, our Suburban properties were comprised of 16 fee owned properties and one leasehold property. We refer to our Manhattan and Suburban office properties collectively as our Portfolio.2012,2013, we also own a mixed-use residential and commercial building encompassing approximately 493,000 square feet, a development property encompassing approximately 104,000 square feet as well as an inventory ofand four separate development parcels that aggregated approximately 81 acres of land in four separate parcels on which we can, based on estimates at land. As of December 31, 2012, develop approximately 1.1 million square feet of office space and in which we had invested approximately $67.1 million. As of December 31, 2012,2013, we also held preferred equity investments with a book value of $340.9 million.$369.4 million.2012,2013, our corporate staff consisted of approximately 273278 persons, including 170182 professionals experienced in allGreen'sGreen and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013 for a complete description of SL Green's business and growth strategies.
CompetitionTableContentsPART IITEM 1. BUSINESSCompetition The leasing of real estate is highly competitive, especially in theSL Green's Manhattan office market. We compete for tenants with landlords and developers of similar properties located in our markets primarily on the basis of location, rent charged, services provided, balance sheet strength and liquidity and the design and condition of our properties. Although currently no other publicly traded REIT has been formed primarily to acquire, own, reposition and manage Manhattan commercial office properties, we and SL Green may in the future compete with such other REITs. In addition, we face competition from other real estate companies including other REITs that currently invest in markets other than or in addition to Manhattan, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, individual investors and others that may have greater financial resources or access to capital than we do or that are willing to acquire properties in transactions which are more highly leveraged or with different financial attributes than we are willing to pursue.Green'sGreen and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013 for a complete description of SL Green's Manhattan office market overview.Green'sGreen and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013 for a complete description of SL Green's industry segments.Green'sGreen and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013 for a complete description of SL Green's employees.SL Green Realty Corp., our indirect parent company, for the year ended December 31, 2012. resulting from future weakness in the economic condition of such markets 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.2012,2013, approximately 3.22.7 million square feet, representing approximately 34.5%30.2% of the rentable square feet, are scheduled to expire by December 31, 20172018 at our consolidated properties. As of December 31, 2012,2013, these leases had annualized escalated rent totaling approximately $31.6$148.9 million. We also have leases with termination options beyond 2017.2018. If we are unable to promptly renew the leases or relet the space at similar rates, our cash flow and ability to service debt and make distributions to SL Green could be adversely affected.significantly adversely affect our results of operations. The average remaining term of these long-term leases as of December 31, 2012,2013, including our unilateral extension rights on each of the properties, is approximately 5150 years. Pursuant to the leasehold arrangement, we, as tenant under the operating sublease, perform the functions traditionally performed by landlords with respect to our subtenants. We are responsible for not only collecting rent from our subtenants, but also maintaining the property and paying expenses relating to the property. Our share of annualized cash rents of these properties at December 31, 20122013 totaled approximately $118.2$125.1 million, or 28.1%29.9%, of our share of total Portfolio annualized cash rent.20122013 for consolidated properties, as of that date, our five largest tenants, based on square footage leased, accounted for approximately 15.0%15.2% of our share of Portfolio annualized cash rent, with three tenants, Debevoise & Plimpton, LLP, Advance Magazine Group, FairchildITEM 1A. RISK FACTORS5.0%5.1%, 2.9% and 2.6% of our share of Portfolio annualized cash rent, respectively. If current conditions in the industries in which our tenants are concentrated deteriorate, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. Our business would be adversely affected if any of our major tenants became insolvent, declared bankruptcy, are put into receivership or otherwise refused to pay rent in a timely fashion or at all.whole, such as those experienced as a result of the economic downturn that began in the second half of 2007, which lead to a nationwide decline in demand for office and retail space due to bankruptcies, downsizing, layoffs and cost cutting.whole. Future periods of economic weakness could result in reduced access to credit and/or wider credit spreads. Economic uncertainty, including concern about the stability of the markets generally may lead many lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers, which could adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. Our business may also be adversely affected by local economic conditions, as substantially all of our revenues are derived from our properties located in the Northeast, particularly in Manhattan, Westchester County and Connecticut. Because our portfolio consists primarily of commercial office buildings (as compared to a more diversified real estate portfolio) located principally in Manhattan, if economic••••ITEM 1A. RISK FACTORS•even if enter into an acquisition agreement for a property, it is usually subjectmay be unable to customary conditions to closing;••••••recourse, with respect to unknown liabilities.recourse. As a result, if a liability were asserted against us arising from our ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow. Unknown liabilities with respect to properties acquired might include:••••canare willing to incur more leverage, and this competition may adversely affect us by subjecting us to the following risks:••ITEM 1A. RISK FACTORS2012,2013, five of our properties, 1185 Avenue of the Americas, 1350 Avenue of the Americas, 919 Third Avenue, 810 Seventh Avenue and 750 Third Avenue, accounted for approximately 56%58.0% of our Portfolio annualized cash rent, and 1185 Avenue of the Americas alone accounted for approximately 18%19.5% of our Portfolio annualized cash rent. Our revenue and cash available to service our debt and to make distributions to SL Green would be materially adversely affected if the ground lease for the 1185 Avenue of the Americas property were terminated for any reason or if any of these properties were materially damaged or destroyed. Additionally, our revenue and cash available to service debt and make distributions to SL Green would be materially adversely affected if tenants at these properties fail to timely make rental payments due to adverse financial conditions or otherwise, default under their leases or filingfile for bankruptcy.gets insuranceis insured through a program administered by SL Green. SL Green maintains "all-risk" property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism) within two property insurance portfolios and liability insurance. This includes ROP assets. As of December 31, 2012,2013, the first property portfolio maintains a blanket limit of $775.0$950.0 million per occurrence, including terrorism, for the majority of the New York City properties in our portfolio. The second portfolio maintains a limit of $750.0$700.0 million per occurrence, including terrorism, for some New York City properties and the majority of the Suburban properties. Both policies expire on December 31, 2013.2014. Each policy includes $100.0 million of flood coverage, with a lower sublimit for locations in high hazard flood zones. SL Green maintainmaintains liability policies which cover all our properties and provide limits of $201.0 million per occurrence and in the aggregate per location. The liability policies expire on October 31, 2013.2014. Additional coverage may be purchased on a stand-alone basis for certain assets.•Terrorism: Belmont acts as a direct property insurer with respect to a portion of our terrorism coverage for the New York City properties. Belmont has a terrorism coverage limit of $650.0 million in a layer in excess of $100.0 million. In addition, Belmont purchased reinsurance to reinsure the retained insurable risk not otherwise covered under Terrorism Risk Insurance Program Reauthorization and Extension Act of 2007, or TRIPRA, as detailed below.•NBCR: Belmont has acted as a direct insurer of NBCR and since December 31, 2011, has provided coverage up to $750 million on SL Green's entire property portfolio for certified acts of terrorism above aITEM 1A. RISK FACTORSprogram trigger of $100.0 million. Belmont is responsible for a small deductible and 15% of a loss, with the remaining 85% covered by the Federal government.•General Liability: For the period commencing October 31, 2010, Belmont insures a retention on the general liability insurance of $150,000 per occurrence and a $2.1 million annual aggregate stop loss limit. SL Green has secured excess insurance to protect against catastrophic liability losses above the $150,000 retention. Prior policy years carried a higher per occurrence deductible and/or higher aggregate stop loss. Belmont has retained a third party administrator to manage all claims within the retention and we anticipate that direct management of liability claims will improve loss experience and ultimately lower the cost of liability insurance in future years. In addition, SL Green has an umbrella liability policy of $200.0 million per occurrence and in the aggregate on a per location basis.•Environmental Liability: Belmont insures a deductible of $975,000 per occurrence in excess of $25,000 on a $25.0 million per occurrence and $30.0 million aggregate environmental liability policy covering the entire portfolio. We obtained insurance coverage through an insurance program administered by SL Green. $4.7$5.1 million $4.5, $4.6 million and $5.3$4.4 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively.For example, we own interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan. Our investments in the New York Metropolitan area also include investments in Westchester County and Connecticut. To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity such as those experienced in Hurricane Sandy in October 2012, and rising sea-levels. Over time, these conditions could result in declining demand for office space in our buildings or the inability of us to operate the buildings at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy and increasing the cost of snow removal at our properties. There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.ITEM 1A. RISK FACTORS ManyGrowth—orientedGrowth-oriented firms may also seek other office space as they develop. Leasing office space to these companies could create a higher risk of tenant defaults, turnover and bankruptcies, which could adversely affect our distributable cash flow and results of operations.$2.1$2.2 billion as of December 31, 2012,2013, consisting of approximately $470.0$620.0 million under our 2012 credit facility, which is inclusive of our $400.0 million term loan, $1.0 billion under our senior unsecured notes and convertible notes, and approximately $550.0 million of non-recourse mortgage note and other loans payable. In addition, we could increase the amount of our outstanding indebtedness in the future, in part by borrowing under our 2012 credit facility, which had $1.1$0.9 billion undrawn capacity as of December 31, 2012.2013. Our 2012 credit facility in aggregate matures in March 2018, which includes two six-month extension options on the $1.2 billion revolving credit facility component of the facility.No debt on our propertiesIn 2014, approximately $75.9 million of corporate indebtedness will mature in 2013.mature. At the present time, we intend to exercise extension options, repay or refinance the debt associated with our properties on or prior to their respective maturity dates. At the time of refinancing, prevailing interest rates or other factors, such as the possible reluctance of lenders to make commercial real estate loans may result in higher interest rates. Increased interest expense on the refinanced debt would adversely affect cash flow and our ability to service debt and make distributions to SL Green. If any principal payments due at maturity cannot be repaid, refinanced or extended, our cash flow will not be sufficient in all years to repay all maturing debt.newmaterial leases without lender consent or materially modify existing leases, and to discontinue insurance coverage, among other things. In addition, our 2012 credit facility and senior unsecured notes contain restrictions and requirements on our method of operations. Our 2012 credit facility and our senior unsecured notes also require us to maintain designated ratios, including but not limited to, total debt-to-assets, debt service coverage encumbered assets-to-assets and unencumbered assets-to-unsecured debt.ITEM 1A. RISK FACTORSour results of operations, as well as our ability to pay debt obligations and make distributions to SL Green.$440.0$620.0 million at December 31, 2012,2013 bear interest at a variable rate. In addition, we could increase the amount of our outstanding variable rate debt in the future, in part by borrowing under our 2012 credit facility, which consisted of a $1.2 billion revolving credit facility and $400.0 million term loan and had $1.1$0.9 billion available for draw as of December 31, 2012.2013. Borrowings under our revolving credit facility and term loan bore interest at the 30-day LIBOR, plus spreads of 145 basis points and 165 basis points, respectively, at December 31, 2012.2013. As of December 31, 2012, 2013,totaled $470.0 million and bore weighted average interest at 1.93%1.86%. We may incur indebtedness in the future that also bears interest at a variable rate or may be required to refinance our debt at higher rates. Accordingly, increases in interest rates could adversely affect our results of operations and financial conditions. At December 31, 2012,2013, a hypothetical 100 basis point increase in interest rates across each of our variable interest rate instrumentinstruments would increase our annual interest costs by approximately $4.4$5.9 million. Accordingly, increases in interest rates could adversely affect our ability to continue to service debt and make distributions to SL Green.$340.9$369.4 million at December 31, 2012.2013. Such investments may or may not be recourse obligations of the borrower and are not insured or guaranteed by governmental agencies or otherwise. In the event of a default under these obligations, we may have to take possession of the collateral securing these interests. Borrowers may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce their obligationobligations to us. Relatively high loan-to-value ratios and declinesDeclines in the value of the property may prevent us from realizing an amount equal to our investment upon foreclosure or realization even if we make substantial improvements or repairs to the underlying real estate in order to maximize such property's investment potential.financialthe need for reserves to protect against potential future losses. Our reserves reflect management's judgment of the probability and severity of losses and the value of the underlying collateral.ITEM 1A. RISK FACTORSIn 2012, we recorded $0.5 million in recoveries of loans previously reserved and no loan loss reserves and charge offs on preferred equity investments being held to maturity. If our reserves for credit losses prove inadequate, we could suffer losses which would have a material adverse effect on our financial performance and our ability to service debt and make distributions to SL Green.ITEM 1A. RISK FACTORS28.7%17.2% of Alliance's 20122013 estimated total revenue. The contracts pursuant to which these services are provided are not the result of arm's length negotiations and, therefore, there can be no assurance that the terms and conditions are not less favorable than those which could be obtained from third parties providing comparable services. In addition, to the extent that we choose to enforce our rights under any of these agreements, we may determine to pursue available remedies, such as actions for damages or injunctive relief, less vigorously than we otherwise might because of our desire to maintain our ongoing relationship with Gary Green.2012,2013, services were being provided by these entities to 12 of the properties owned by ROP.operationfinancing of commercial office, multifamily residential and retail real estate in the New York City Metropolitan area. For the most part, these restrictions apply to the executive both during his employment and for a period of time thereafter. Each executive is also prohibited from otherwise disrupting or interfering with our business through the solicitation of our employees or clients or otherwise. To the extent that SL Green chooses to enforce its rights under any of these agreements, SL Green may determine to pursue available remedies, such as actions for damages or injunctive relief, less vigorously than it otherwise might because of its desire to maintain an ongoing relationship with the individual involved. Additionally, the non-competition provisions of these agreements despite being limited in scope and duration, could be difficult to enforce, or may be subject to limited enforcement, should litigation arise over them in the future. Mr. Green also has interests in two properties in Manhattan, which are exempt from the non-competition provisions of his employment and non-competition agreement.ITEM 1A. RISK FACTORS20142016 and December 2013,2016, respectively. A loss of the services of either of these individuals could adversely affect our operations.regulationregulations applicable to corporate governance and public disclosure may result in additional expenses, affect our operations and affect our reputation. As a result, ourITEM 1A. RISK FACTORSrevenue—generatingrevenue-generating activities to compliance activities. In particular, our efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal controls over financial reporting have required the commitment of significant financial and managerial resources. We expect these efforts to require the continued commitment of significant resources. Further, our directors, president and treasurer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers, which could harm our business.Information"Information," for additional disclosure regarding forward-looking statements.2012,2013, we did not have any unresolved comments with the staff of the SEC.2012,2013, we owned or held interests in 1312 consolidated commercial office properties encompassing approximately 7.26.9 million rentable square feet, located primarily in midtown Manhattan. Certain of these properties include at least a small amount of retail space on the lower floors, as well as basement/storage space. As of December 31, 2012,2013, our portfolio also included ownership interests in 17 consolidated commercial office properties located in Westchester County and Connecticut, or the Suburban assets,commercial office properties, encompassing approximately 2.12.8 million rentable square feet and approximately 0.7 million rentable square feet, respectively.2012,2013, we also own a mixed-use residential and commercial building encompassing approximately 493,000 square feet, a development property encompassing approximately 104,000 square feet as well asand an inventory of four separate development parcels that aggregated approximately 81 acres of land in four separate parcels on which we can, based on estimates at land. As of December 31, 2012, develop approximately 1.1 million square feet of office space and in which we had invested approximately $67.1 million. As of December 31, 2012,2013, we also held preferred equity investments with a book value of $340.9 million.$369.4 million.ITEM 2. PROPERTIESretaildevelopment properties in the portfolio as of December 31, 2012: Year Built/
Renovated SubMarket Approximate
Rentable
Square Feet Percentage
of Portfolio
Rentable
Square
Feet (%) Percent
Leased (%) Annualized
Cash
Rent
($'s)(1) Percentage
of Portfolio
Annualized
Cash
Rent (%) Number
of
Tenants Annualized
Cash Rent Per
Leased
Square
Foot ($)(2) Annualized
Net Effective
Rent Per
Leased
Square Foot
($)(3)
1970
692,000
7
87.6
37,771,128
9
39
59.63
51.30 1970 1,454,000 15 96.9 86,011,788 10 13 61.01 46.35 1969 1,062,000 11 97.6 76,003,644 18 19 72.33 64.00 1960/2002 345,400 3 100.0 14,551,572 3 3 43.07 35.77 1988 200,000 2 99.4 15,953,568 4 14 77.86 65.46 1971 941,000 9 99.2 33,682,356 8 11 33.97 31.47 1958/2006 780,000 8 97.5 41,119,548 10 31 52.98 46.84 1966 562,000 6 97.0 36,075,624 9 38 63.64 53.25 1921 205,000 2 81.6 8,102,136 2 20 48.34 40.88 1925/1990 160,000 1 85.2 13,487,388 3 9 101.57 90.93 1928/1990 422,000 4 100.0 20,578,332 5 8 45.93 38.84 1930 215,000 2 95.8 10,433,676 2 17 53.80 53.44 1902 163,000 2 92.1 7,878,132 2 8 52.48 49.66 7,201,400 72 96.0 401,648,892 85 230 1983-1986 90,000 1 74.9 1,713,504 — 1 36.20 15.96 1983-1986 90,000 1 47.0 1,337,520 — 3 34.29 21.59 1983-1986 90,000 1 63.3 1,658,796 — 2 32.18 26.29 1983-1986 90,000 1 59.4 1,589,940 — 7 32.88 27.54 1983-1986 90,000 1 79.8 1,880,748 1 7 16.94 22.65 1983-1986 90,000 1 71.2 2,253,072 1 3 32.31 31.06 1979 180,000 2 72.5 3,671,304 1 8 28.93 22.16 1984 178,000 2 86.0 2,577,300 1 11 22.88 17.54 1988 250,000 2 70.7 4,065,456 1 10 23.00 18.74 1990 245,000 2 87.5 5,218,368 1 7 24.81 22.21 1986 228,000 2 76.9 3,982,824 1 6 24.62 21.75 1991 130,100 1 95.3 4,112,952 1 12 36.74 23.29 2000 384,000 4 94.3 13,288,356 3 16 36.72 29.73 2,135,100 21 47,350,140 11 93 1989 133,000 1 74.6 4,083,912 1 7 41.67 35.86 1989 192,000 2 93.6 7,332,120 1 9 41.61 32.94 1987 182,000 2 86.0 5,680,620 1 21 35.60 29.76 1988 143,400 2 60.9 2,801,568 1 17 34.34 25.34 650,400 7 19,898,220 4 54
Total / Weighted Average Consolidated Property(8)
2,785,500
28
79.5
67,248,360
15
147
9,986,900 100 91.4 468,897,252 100 377 421,157,620 1902 104,000 — — — — — — — SubMarket Percentage of Portfolio Rentable Square Feet Percent Occupied MANHATTAN PROPERTIES 110 East 42nd Street 1921 Grand Central 215,400 2 % 86.5 % $ 8,913,540 2 % 23 $ 50.49 461 Fifth Avenue(3) 1988 Midtown 200,000 2 99.4 % 16,529,484 4 14 $ 80.10 555 West 57th Street 1971 Midtown West 941,000 10 99.9 % 33,901,044 8 10 $ 33.88 609 Fifth Avenue 1925/1990 Rockefeller Center 160,000 2 77.8 % 14,042,124 3 11 $ 111.74 673 First Avenue(3) 1928/1990 Grand Central South 422,000 4 99.2 % 21,004,836 5 7 $ 47.24 750 Third Avenue 1958/2006 Grand Central North 780,000 8 95.8 % 41,437,956 10 28 $ 54.61 810 Seventh Avenue 1970 Times Square 692,000 7 92.0 % 40,023,768 10 41 $ 59.96 919 Third Avenue—51.00% 1970 Grand Central North 1,454,000 15 90.3 % 81,700,824 10 12 $ 62.07 1185 Avenue of the Americas(3) 1969 Rockefeller Center 1,062,000 11 95.2 % 81,445,404 19 18 $ 79.40 1350 Avenue of the Americas 1966 Rockefeller Center 562,000 6 99.5 % 37,538,424 9 35 $ 65.57 304 Park Avenue South 1930 Midtown South 215,000 2 98.8 % 11,923,104 3 15 $ 58.45 641 Sixth Avenue 1902 Midtown South 163,000 2 92.1 % 8,380,860 2 7 $ 55.27 Total / Weighted Average Manhattan Consolidated Properties 6,866,400 71 % 94.6 % $ 396,841,368 85 % 221 SUBURBAN PROPERTIES 1100 King Street—1 International Drive 1983-1986 Rye Brook, Westchester 90,000 1 % 74.8 % $ 1,748,604 0 % 2 $ 24.52 1100 King Street—2 International Drive 1983-1986 Rye Brook, Westchester 90,000 1 47.0 % 1,355,964 0 3 $ 32.06 1100 King Street—3 International Drive 1983-1986 Rye Brook, Westchester 90,000 1 57.2 % 1,705,944 0 3 $ 28.94 1100 King Street—4 International Drive 1983-1986 Rye Brook, Westchester 90,000 1 83.9 % 1,817,040 0 9 $ 23.97 1100 King Street—5 International Drive 1983-1986 Rye Brook, Westchester 90,000 1 82.6 % 1,801,620 1 9 $ 24.27 1100 King Street—6 International Drive 1983-1986 Rye Brook, Westchester 90,000 1 88.0 % 2,662,596 1 4 $ 31.49 520 White Plains Road 1979 Tarrytown, Westchester 180,000 2 57.8 % 2,854,680 1 8 $ 28.41 115-117 Stevens Avenue 1984 Valhalla, Westchester 178,000 2 73.4 % 2,682,720 1 10 $ 23.43 100 Summit Lake Drive 1988 Valhalla, Westchester 250,000 3 70.7 % 4,246,380 1 10 $ 24.03 200 Summit Lake Drive 1990 Valhalla, Westchester 245,000 3 80.2 % 4,535,136 1 8 $ 23.93 (1)Annualized Cash Rent represents the monthly contractual rent under existing leases as of December 31, 2012 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31, 2012 for the 12 months ending December 31, 2013 are approximately $4.9 million for our consolidated properties.(2)Annualized Cash Rent Per Leased Square Foot represents Annualized Cash Rent, as described in footnote (1) above, presented on a per leased square foot basis.(3)Annual Net Effective Rent Per Leased Square Foot represents (a) for leases in effect at the time an interest in the relevant property was first acquired by us, the remaining lease payments under the lease from the acquisition date divided by the number of months remaining under the lease multiplied by 12 and (b) for leases entered into after an interest in the relevant property was first acquired by us, all lease payments under the lease divided by the number of months in the lease multiplied by 12, and, in the case of both (a) and (b), minus tenant improvement costs and leasing commissions, if any, paid or payable by us and presented on a per leased square foot basis. Annual Net Effective Rent per Leased Square Foot includes future contractual increases in rental payments and therefore, in certain cases, may exceed Annualized Cash Rent per Leased Square Foot.(4)We hold a 51% interest in this property.(5)We hold a leasehold interest in this property.(6)Includes a parking garage.(7)Includes approximately 6.5 million square feet of rentable office space, 0.5 million square feet of rentable retail space and 0.2 million square feet of garage space.(8)Includes approximately 2.7 million square feet of rentable office space and 0.1 million square feet of rentable retail space.500 Summit Lake Drive 1986 Valhalla, Westchester 228,000 2 90.3 % 4,798,848 1 6 $ 24.80 140 Grand Street 1991 White Plains, Westchester 130,100 1 93.6 % 3,988,068 1 13 $ 36.35 360 Hamilton Avenue 2000 White Plains, Westchester 384,000 4 89.3 % 12,155,160 3 17 $ 34.11 Westchester, NY Subtotal 2,135,100 23 % $ 46,352,760 11 % 102 680 Washington—51.00% 1989 Stamford, Connecticut 133,000 1 % 77.7 % $ 4,353,144 1 9 $ 42.62 750 Washington Boulevard—51.00% 1989 Stamford, Connecticut 192,000 2 93.3 % 6,380,580 1 8 $ 40.52 1055 Washington Boulevard(3) 1987 Stamford, Connecticut 182,000 2 87.7 % 6,111,048 1 21 $ 36.10 1010 Washington Boulevard 1988 Stamford, Connecticut 143,400 1 65.3 % 3,028,464 1 19 $ 34.51 Connecticut Subtotal 650,400 6 % $ 19,873,236 4 % 57 Total / Weighted Average Suburban Consolidated Properties 2,785,500 29 % 79.1 % $ 66,225,996 15 % 159 Portfolio Grand Total / Weighted Average 9,651,900 100 % 90.2 % $ 463,067,364 100 % 380 Portfolio Grand Total—ROP share of Annualized Cash Rent $ 417,774,435 RETAIL AND DEVELOPMENT Retail 315 West 33rd Street - The Olivia 2000 Penn Station 270,132 100 % 100 % 14,779,822 — 10 $ 54.71 Total/Weighted Average Retail Properties 270,132 100 % 100 % $ 14,779,822 — 10 Development 635 Sixth Avenue 1902 Midtown South 104,000 100 % — — — — — Total/Weighted Average Development Properties 104,000 100 % — — — — Residential Properties SubMarket Usable Sq. Feet Total Units 315 West 33rd Street - The Olivia Penn Station 222,855 333 92.50 % $ 13,234,357 $ 3,772 ITEM 2. PROPERTIES(1) Annualized Cash Rent represents the monthly contractual rent under existing leases as of December 31, 2013 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31, 2013 for the 12 months ending December 31, 2014 are approximately $10.4 million for our consolidated properties. (2) Annualized Cash Rent Per Leased Square Foot represents Annualized Cash Rent, as described in footnote (1) above, presented on a per leased square foot basis. (3) We hold a leasehold interest in this property. December 31, 2013 92.5 % 88.3 % 89.1 % December 31, 2012 94.1 % 89.1 % 90.0 % December 31, 2011 92.5 % 89.7 % 91.3 % December 31, 2010 92.9 % 88.6 % 90.9 % December 31, 2009 95.0 % 86.8 % 90.3 % (1) Includes space for leases that were executed as of the relevant date in the wholly-owned and joint venture properties in Manhattan owned by SL Green as of that date. (2) Includes vacant space available for direct lease and sublease. Source: Cushman & Wakefield. (3) The term "Class B" is generally used in the Manhattan office market to describe office properties that are more than 25 years old but that are in good physical condition, enjoy widespread acceptance by high-quality tenants and are situated in desirable locations in Manhattan. Class B office properties can be distinguished from Class A properties in that Class A properties are generally newer properties with higher finishes and frequently obtain the highest rental rates within their markets. Percent of
Manhattan
Portfolio
Leased(1) Occupancy Rate of
Class A
Office Properties
in the midtown
Markets(2)(3) Occupancy Rate of
Class B
Office Properties
in the midtown
Markets(2)(3) 94.1 % 89.1 % 90.0 % 92.5 % 89.7 % 91.3 % 92.9 % 88.6 % 90.9 % 95.0 % 86.8 % 90.3 % 96.7 % 90.8 % 92.1 % (1)Includes space for leases that were executed as(2)Includes vacant space available for direct lease and sublease. Source: Cushman & Wakefield.(3)The term "Class B" is generally used in the Manhattan office market to describe office properties that are more than 25 years old but that are in good physical condition, enjoy widespread acceptance by high-quality tenants and are situated in desirable locations in Manhattan. Class B office properties can be distinguished from Class A properties in that Class A properties are generally newer properties with higher finishes and frequently obtain the highest rental rates within their markets. December 31, 2013 78.1 % 79.4 % 80.5 % 74.7 % December 31, 2012 79.2 % 78.5 % 80.7 % 73.7 % December 31, 2011 80.6 % 80.1 % 80.3 % 73.8 % December 31, 2010 80.0 % 80.3 % 84.3 % 77.6 % December 31, 2009 86.5 % 80.3 % 82.7 % 77.5 % (1) Includes space for leases that were executed as of the relevant date in the wholly-owned and joint venture properties owned by SL Green as of that date. (2) Includes vacant space available for direct lease and sublease. Source: Cushman & Wakefield. Percent of
Westchester
Portfolio
Leased(1) Occupancy Rate of
Class A
Office Properties
in the Westchester
Market(2) Percent of
Connecticut
Portfolio
Leased(1) Occupancy Rate of
Class A
Office Properties
in the Stamford CBD
Market(2) 79.2 % 78.5 % 80.7 % 73.7 % 80.6 % 80.1 % 80.3 % 73.8 % 80.0 % 80.3 % 84.3 % 77.6 % 86.5 % 80.3 % 82.7 % 77.5 % 88.9 % 81.7 % 84.9 % 84.5 % (1)Includes space for leases that were executed as of the relevant date in our wholly-owned and joint venture properties in Manhattan owned by us as of that date.(2)Includes vacant space available for direct lease and sublease. Source: Cushman & Wakefield.2017,2018, the average annual rollover at our Manhattan consolidated properties is expected to be approximately 0.40.3 million square feet representing an average annual expiration rate of 6.0%5.1% per year (assuming no tenants exercise renewal or cancellation options and there are no tenant bankruptcies or other tenant defaults).ITEM 2. PROPERTIES20122013 for each of the next ten years and thereafter (assuming that no tenants exercise renewal or cancellation options and that there no tenant bankruptcies or other tenant defaults): 24 285,686 4.3 % $ 16,366,476 $ 57.29 2015 28 181,998 2.7 10,605,837 $ 58.27 2016 35 573,301 8.6 36,007,224 $ 62.81 2017 24 302,003 4.5 20,402,740 $ 67.56 2018 18 366,857 5.5 33,804,036 $ 92.14 2019 12 226,246 3.4 14,407,433 $ 63.68 2020 19 655,657 9.9 43,314,048 $ 66.06 2021 20 1,687,545 25.4 96,790,017 $ 57.36 2022 16 555,882 8.4 29,600,928 $ 53.25 2023 & thereafter 36 1,815,325 27.3 95,542,629 $ 52.63 Total/weighted average 232 6,650,500 100.0 % $ 396,841,368 $ 59.67 (1) Annualized Cash Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2013 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31, 2013 for the 12 months ending December 31, 2014, are reductions of approximately $8.0 million for the properties. (2) Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (1) above, presented on a per leased square foot basis. (3) Includes 31,452 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2013. 26 168,780 7.8 % $ 5,686,200 $ 33.69 2015 20 191,588 8.9 6,318,180 $ 32.98 2016 32 363,996 16.8 12,634,512 $ 34.71 2017 11 60,763 2.8 1,783,560 $ 29.35 2018 21 165,285 7.6 5,249,844 $ 31.76 2019 16 462,274 21.4 12,417,960 $ 26.86 2020 9 248,272 11.5 7,714,992 $ 31.07 2021 10 181,225 8.4 4,621,277 $ 25.50 2022 4 38,274 1.8 1,183,812 $ 30.93 2023 & thereafter 14 284,179 13.0 8,615,659 $ 30.32 Total/weighted average 163 2,164,636 100.0 % $ 66,225,996 $ 30.59
Year of Lease Expiration Number
of
Expiring
Leases Square
Footage
of
Expiring
Leases Percentage
of
Total
Leased
Square
Feet (%) Annualized
Cash
Rent of
Expiring
Leases(1) Annualized
Cash
Rent Per
Leased
Square
Foot of
Expiring
Leases(2) 32 413,020 5.85 $ 24,617,973 $ 59.60 25 441,890 6.26 22,271,103 50.40 30 223,351 3.16 11,225,113 50.26 32 579,617 8.21 34,679,737 59.83 22 454,281 6.43 29,415,662 64.75 18 429,399 6.08 36,717,316 85.51 7 117,789 1.67 6,903,666 58.61 16 442,915 6.27 29,313,144 66.18 21 1,783,165 25.24 97,326,619 54.58 39 2,178,595 30.83 109,178,559 50.11 242 7,064,022 100.00 $ 401,648,892 $ 56.86 (1)Annualized Cash Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2012 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31, 2012(1) Annualized Cash Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2013 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31, 2013 for the 12 months ending December 31, 2014 are reductions of approximately $2.4 million for the suburban properties. (2) Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (1) above, presented on a per leased square foot basis. (3) Includes 3,483 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2013. are reductions of approximately $2.7 million for the properties.(2)Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (1) above, presented on a per leased square foot basis.(3)Includes 5,020 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2012. Leases in our Suburban portfolio, as at many other suburban office properties, typically have an initial term of five to ten years. For the five years ending December 31, 2017, the average annual rollover at our Suburban consolidated properties is expected to be approximately 0.2 million square feet, representing an average annual expiration rate of 9.9% per year (assuming no tenants exercise renewal or cancellation options and there are no tenant bankruptcies or other tenant defaults).ITEM 2. PROPERTIES The following tables set forth a schedule of the annual lease expirations at our Suburban consolidated properties with respect to leases in place as of December 31, 2012 for each of the next ten years and thereafter (assuming that no tenants exercise renewal or cancellation options and that there are no tenant bankruptcies or other tenant defaults):
Year of Lease Expiration Number
of
Expiring
Leases Square
Footage
of
Expiring
Leases Percentage
of
Total
Leased
Square
Feet (%) Annualized
Cash
Rent of
Expiring
Leases(1) Annualized
Cash
Rent Per
Leased
Square
Foot of
Expiring
Leases(2) 24 138,064 6.46 $ 4,998,552 $ 36.20 24 171,174 8.00 6,071,544 35.47 20 225,135 10.53 7,609,884 33.80 28 467,873 21.87 15,363,444 32.84 10 58,277 2.72 1,659,708 28.48 13 106,604 4.98 3,540,852 33.22 12 466,047 21.79 12,622,752 27.08 7 202,006 9.44 6,173,400 30.56 7 142,691 6.67 3,471,816 24.33 9 161,150 7.54 5,736,408 35.60 154 2,139,021 100.00 $ 67,248,360 $ 31.44 (1)Annualized Cash Rent of Expiring Leases represents the monthly contractual rent under existing leases as of December 31, 2012 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date. Total rent abatements for leases in effect as of December 31, 2012 for the 12 months ending December 31, 2013 are reductions of approximately $2.2 million for the suburban properties.(2)Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (1) above, presented on a per leased square foot basis.(3)Includes 39,535 square feet occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2012.Tenant Diversification At December 31, 2012, our portfolio was leased tooccupied by approximately 377380 tenants, which are engaged in a variety of businesses, including professional services, financial services, media, apparel, business services and government/non-profit. The following table sets forth information regarding the leases with respect to the 10ITEM 2. PROPERTIES2012:Tenant(1) Properties Debevoise & Plimpton, LLP 919 Third Avenue 96 619,353 6.4 % 5.1 % Advance Magazine Group, Fairchild Publications 750 Third Avenue 86 286,622 3.0 2.9 C.B.S. Broadcasting, Inc. 555 West 57th Street 120 283,798 2.9 2.6 Schulte, Roth & Zabel LLP 919 Third Avenue 90 263,186 2.7 2.0 New York Presbyterian Hospital 673 First Avenue 92 232,772 2.4 2.5 BMW of Manhattan 555 West 57th Street 103 227,782 2.4 1.4 Amerada Hess Corp. 1185 Avenue of the Americas 168 181,569 1.9 3.0 The City University of New York - CUNY 555 West 57th Street 204 180,460 1.9 1.6 News America Incorporated 1185 Avenue of the Americas 83 161,722 1.7 3.4 King & Spalding 1185 Avenue of the Americas 142 159,943 1.7 3.3 Total/ Weighted Average(3) 2,597,207 27.0 % 27.8 % (1) This list is not intended to be representative of our tenants as a whole. (2) Lease term from December 31, 2013 until the date of the last expiring lease for tenants with multiple leases. (3) Weighted average calculation based on total rentable square footage leased by each tenant. Properties Remaining
Lease
Term
in Months(2) Total
Leased
Square
Feet Percentage
of
Aggregate
Portfolio
Leased
Square
Feet (%) Percentage
of
Aggregate
Portfolio
Annualized
Cash
Rent (%) 108 619,353 6.2 5.0 98 286,622 2.9 2.9 132 282,385 2.8 2.6 102 263,186 2.6 2.0 104 232,772 2.3 2.6 115 227,782 2.3 1.4 84 184,523 1.8 1.1 180 181,569 1.8 2.9 216 180,460 1.8 1.6 78 165,880 1.7 1.2 2,624,532 26.2 % 23.3 % (1)This list is not intended to be representative(2)Lease term from December 31, 2012 until the date of the last expiring lease for tenants with multiple leases.(3)Weighted average calculation based on total rentable square footage leased by each tenant.2012,2013, we were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio other than routine litigation arising in the ordinary course of business or litigation that is adequately covered by insurance.19, 2013,25, 2014, there were two holders of our Class A common units, both of which are subsidiaries of SL Green. or 2010 that were not registered under the Securities Act of 1933, as amended.PART IINovember 2011, SL Green transferred five properties to ROP. In December 2012, SL Green transferred three additional properties to ROP. Underconnection with this Annual Report on Form 10-K, we are restating our historical audited consolidated financial statements as a result of the Business Combinations guidance, these were determined to be transferssale of businesses betweena property located at 333 West 34th, New York, New York. As a result, we have reported revenue and expenses from this property as discontinued operations for each period presented in our Annual Report on Form 10-K. These reclassifications had no effect on our reported net income.indirect parent companyprior period reclassification as discontinued operations of the property sold during 2013 and its wholly-owned subsidiary. As such, the assets and liabilities were transferred at their carrying value. These transfers are required to be recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The financial statements and financial information presented for all prior years has been retrospectively adjusted to furnish comparative information. On September 30, 2012, SL Green transferred $324.9 million of its preferred equity investments to ROP, one of which was subject to a secured $50.0 million loan. Under the Business Combinations guidance, these transfers were determined to be transfers of assets between the indirect parent company and its wholly-owned subsidiary. As such, the assets were transferred at their carrying value and accounted for prospectively from the date of transfer. Years Ended December 31, Years Ended December 31, 2012 2011 2010 2009 2008 2013 2012 2011 2010 2009 As Adjusted As Adjusted As Adjusted As Adjusted $ 528,809 $ 501,557 $ 490,135 $ 480,123 $ 482,960 $ 567,178 $ 513,176 $ 487,092 $ 480,664 $ 475,005 118,549 118,326 112,517 107,809 113,817 120,443 113,482 113,479 108,394 106,826 90,174 83,838 81,214 78,117 68,985 96,079 89,238 82,727 79,363 76,283 17,098 14,549 14,600 14,589 14,916 19,017 17,098 14,549 14,600 14,589 108,566 82,422 70,827 68,357 84,704 110,132 108,566 82,422 70,827 68,357 5,712 1,837 684 455 109 5,171 5,712 1,837 684 455 142,957 132,251 124,677 124,080 114,003 145,179 137,162 126,617 119,906 120,386 (472 ) (2,425 ) — 24,907 10,550 — (472 ) (2,425 ) — 24,907 1,943 243 24 — — 1,939 1,943 243 24 — 339 346 493 563 789 354 339 346 493 563 484,866 431,387 405,036 418,877 407,873 498,314 473,068 419,795 394,291 412,366 966 497 711 1,109 838 3,942 966 497 711 1,109 1,001 — — — — — 1,001 — — — — (5,789 ) — — — — — (5,789 ) — — (6,904 ) — (1,202 ) 3,519 16,569 (76 ) (6,904 ) — (1,202 ) 3,519 39,006 64,878 84,608 65,874 92,494 72,730 35,171 62,005 85,882 67,267 — — — (42 ) 1,418 18,000 3,835 2,873 (1,274 ) (1,435 ) 39,006 64,878 84,608 65,832 93,912 90,730 39,006 64,878 84,608 65,832 (6,013 ) (9,886 ) (13,682 ) (13,380 ) (16,687 ) (5,200 ) (6,013 ) (9,886 ) (13,682 ) (13,380 ) $ 32,993 $ 54,992 $ 70,926 $ 52,452 $ 77,225 $ 85,530 $ 32,993 $ 54,992 $ 70,926 $ 52,452 As of December 31, Balance Sheet Data (in thousands) 2013 2012 2011 2010 2009 Commercial real estate, before accumulated depreciation $ 5,662,981 $ 5,395,935 $ 5,048,410 $ 4,918,508 $ 4,873,816 Total assets 5,586,619 5,398,691 4,857,717 4,825,754 4,879,419 Mortgage note and other loan payable, revolving credit facility and term loan and senior unsecured notes 2,200,815 2,050,713 1,945,194 1,087,705 1,058,210 Total capital 3,108,443 3,039,508 2,601,834 3,398,551 3,431,178 PART IIITEM 6. SELECTED FINANCIAL DATA As of December 31, 2012 2011 2010 2009 2008 As Adjusted As Adjusted As Adjusted As Adjusted $ 5,395,935 $ 5,048,410 $ 4,918,508 $ 4,873,816 $ 4,818,243 5,398,562 4,856,398 4,824,806 4,878,545 5,017,096 2,050,713 1,945,194 1,087,705 1,058,210 1,377,959 3,039,508 2,601,834 3,398,551 3,431,178 3,202,139 PART II2012,2013, and ROPwe took advantage of thethis strengthening market in improving occupancies and deploying capital in the borough of Manhattan to strategically position the Company for future growth as market conditions improve.2012.2013. SL Green's Manhattan office property occupancy on same-store properties based on leases signed increased to 93.8%96.6% from 93.0%95.1% in the prior year. During 2012,2013, SL Green signed office leases in Manhattan encompassing 3.75.2 million square feet, of which 3.04.3 million square feet represented office leases that replaced previously occupied space. SL Green's mark-to-market on these 3.04.3 million square feet of signed Manhattan office leases that replaced previously occupied space was 7.5%9.5% for 2012. The highlight of SL Green's leasing activity during 2012 was the signing of the largest non-sale leaseback office lease in Manhattan's history, a 1.6 million square foot lease with Viacom International, Inc. which represented the entirety of the office space at 1515 Broadway. In addition, SL Green completed the lease-up of 100 Church Street with the 485,000 square foot early renewal and expansion lease with the City of New York.20122013 totaled 23.225.7 million square feet, slightly below the ten-year average. Direct absorptionaverage but higher than 2012. Of the total 2013 leasing activity in Manhattan, exceeded 1.4the Midtown submarket accounted for approximately 16.0 million square feet, during the year, of which 0.2 million square feet was absorbed in Midtown Manhattan, the location of 82% of our in-service office properties (by square footage)or 62.3%. This leasing activity in 2012 occurred despite the headwinds caused in part by the presidential election, fiscal cliff, continued implementation of the provisions of the Dodd-Frank Act and Hurricane Sandy. These factors impacted the leasing markets resulting in the Midtown submarketMidtown's overall office vacancy increasingincreased from 9.6% at December 31, 2011 to 10.3% at December 31, 2012.2012 to 11.2% at December 31, 2013. However, no1.2 million square feet of new office space was added to the Midtown office inventory, with approximately 1.82.2 million square feet (0.5%(0.6% of the total 392.9395.3 million square foot Manhattan office inventory) currently under construction and scheduled to be placed in service by 2014.20122013 by 8.3%27.3% to $50.02$63.67 per square foot. Asking rents for direct space in Midtown increased during 20122013 by 3.0%2.6% to $68.77$70.54 per square foot and have increased by 8.8%10.5% since the recessionary trough in in the first quarter of 2010. Over the same period, net effective rents (which take into consideration leasing concessions) have increased by 26.4%21.5%.Outlook Several factors introduced into the market during the second half of 2012 have modestly reduced expectations for the recovery of jobs and demand for office space in 2013. Those factors include increased ordinary and capitalPART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSgains tax rates and additional cost cutting by the financial services sector. Despite these factors, we continue to see a solid leasing market and the potential for improving leasing fundamentals as we progress through the year. new 2012 credit facility, in which we, along with SL Green and the Operating Partnership are borrowers, SL Green transferred five properties, with total assets aggregating to $683.8 million at November 2011, and transferred three additional properties, with total assets aggregating to $320.2 million at December 31, 2012, to ROP. Under the Business Combinations guidance, these were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary. As such, the assets and liabilities were transferred at their carrying value. These transfers are required to be recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The consolidated financial statements and financial information presented for all prior years have been retrospectively adjusted to furnish comparative information.2012,2013, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan.Manhattan, a borough of New York City. Our investments in the New York MetroMetropolitan area also include investments in Westchester County and Connecticut, which are collectively known as the Suburban assets:commercial office properties:Location Ownership Square Feet Manhattan Consolidated properties 12 6,866,400 94.6 % Suburban Consolidated properties 17 2,785,500 79.1 % 29 9,651,900 90.2 % (1) The weighted average occupancy represents the total leased square feet divided by total available rentable square feet. Ownership Number of
Properties Square Feet Weighted
Average
Occupancy(1) Consolidated properties 13 7,201,400 96.0 %
17
2,785,500
79.5
% 30 9,986,900 91.4 % (1)The weighted average occupancy represents the total leased square feet divided by total available rentable square feet.2012,2013, we also own a mixed-use residential and commercial building encompassing approximately 493,000 square feet, a development property encompassing approximately 104,000 square feet as welland an inventory of development parcels that aggregated approximately 81 acres of land in four separate parcels on which we can, based on estimates at December 31, 2012,2013, develop approximately 1.1 million square feet of office space and in which we hadhave invested approximately $67.1 million.$67.2 million. As of December 31, 2012,2013, we also held preferred equity investments with a carryingbook value of $340.9 million.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSareis less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the calculated fair value of the property. In addition, we assess our investment in unconsolidated joint venture for impairment, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investment for impairment based on the joint venture's projected discounted cash flows. During 2011, we recorded a $5.8 million impairment charge in connection with the expected sale of our equity investment. This charge is included in depreciable real estate reserves in the consolidated statements of income and comprehensive income. See Note 6, "Investments in Unconsolidated Joint Venture." We do not believe that the valuevalues of any of our consolidated real estate properties waswere impaired at December 31, 2012 and 2011, respectively., below-, and at-marketbelow-market leases and origination costs associated with the in-place leases. We depreciate the amount allocated to building (inclusive of tenant improvements) and other intangible assets over their estimated useful lives, which generally range from three to 40 years and from one to 14 years, respectively. The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease, which generally range from one to 14 years. The valuevalues associated with in-place leases are amortized over the expected term of the associated lease, which generally range from one to 14 years. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operatingPART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSsheetsheets is net of such allowance. debt and preferred equity investments is recognized over the life of the investment using the effective interest method and recognized on the accrual basis. Fees received in connection with loan commitments are deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Anticipated exit fees, whose collection is expected, are also recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration. debt and preferred equity investments at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income and principal becomes doubtful. IncomeInterest income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. debt and preferred equity investments is the charge to earnings to increase the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors considered relate to geographic trends and product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish the provision for possible credit lossesloss on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.write-offwrite off of the reserve balance is called a charge-off.charge off. We continue to assess or adjust our estimates based on circumstances of a loan and the underlying collateral. If the additional information obtained reflects increased recovery of our investment, we will adjust our reserves accordingly. There were no additional loan reserves recorded during the year ended December 31, 2013. We recorded loan loss reserves of zero $0.7 million and zero in loan loss reserves or charge offs$0.7 million on investments held to maturity during the years ended December 31, 2012 2011 and 2010, respectively, on investments held to maturity.2011, respectively. We also recorded $0.5recoveries of $0.5 million $3.1 and $3.1 million and zero in recoveries during the years ended December 31, 2012 2011 and 2010,2011, respectively, in connection with the sale of our debt investments. This is included in loan loss reserves, net of recoveries inon the accompanying consolidated statements of income and comprehensive income.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(in thousands) 2013 2012 Rental revenue, net $ 443,535 $ 423,345 $ 20,190 4.8 % Escalation and reimbursement 75,814 74,496 1,318 1.8 % Investment income 43,226 9,497 33,729 355.2 % Other income 4,603 5,838 (1,235 ) (21.2 )% Total revenues $ 567,178 $ 513,176 $ 54,002 10.5 % Property operating expenses 235,539 219,818 15,721 7.2 % Loan loss reserves, net of recoveries — (472 ) 472 (100.0 )% Transaction related costs 1,939 1,943 (4 ) (0.2 )% Marketing, general and administrative 354 339 15 4.4 % 237,832 221,628 16,204 7.3 % Net operating income 329,346 291,548 37,798 13.0 % Interest expense, net of interest income (115,303 ) (114,278 ) (1,025 ) 0.9 % Depreciation and amortization (145,179 ) (137,162 ) (8,017 ) 5.8 % Equity in net gain on sale of interest in unconsolidated joint venture — 1,001 (1,001 ) (100.0 )% Equity in net income from unconsolidated joint venture 3,942 966 2,976 308.1 % Loss on early extinguishment of debt (76 ) (6,904 ) 6,828 (98.9 )% Income from continuing operations 72,730 35,171 37,559 106.8 % Net income from discontinued operations 4,244 3,835 409 10.7 % Gain on sale of discontinued operations 13,756 — 13,756 — % Net income $ 90,730 $ 39,006 $ 51,724 132.6 % ROP:ROP. Any assets sold are excluded from the income from continuing operations and from the following discussion. 2012 2011 $ Change % Change As Adjusted $ 437.0 $ 421.5 $ 15.5 3.7 % 76.5 72.9 3.6 4.9 $ 513.5 $ 494.4 $ 19.1 3.9 % (in thousands) 2012 2011 Rental revenue, net $ 423,345 $ 408,863 $ 14,482 3.5 % Escalation and reimbursement 74,496 71,044 3,452 4.9 % Investment income 9,497 3,077 6,420 208.6 % Other income 5,838 4,108 1,730 42.1 % Total revenues $ 513,176 $ 487,092 $ 26,084 5.4 % Property operating expenses 219,818 210,755 9,063 4.3 % Loan loss reserves, net of recoveries (472 ) (2,425 ) 1,953 (80.5 )% Transaction related costs 1,943 243 1,700 699.6 % Marketing, general and administrative 339 346 (7 ) (2.0 )% 221,628 208,919 12,709 6.1 % Net operating income 291,548 278,173 13,375 4.8 % Interest expense, net of interest income (114,278 ) (84,259 ) (30,019 ) 35.6 % Depreciation and amortization (137,162 ) (126,617 ) (10,545 ) 8.3 % Equity in net income from unconsolidated joint venture 966 497 469 94.4 % Equity in net gain on sale of interest in unconsolidated joint venture 1,001 — 1,001 — % Depreciable real estate reserves — (5,789 ) 5,789 (100.0 )% Loss on early extinguishment of debt (6,904 ) — (6,904 ) — % Income from continuing operations 35,171 62,005 (26,834 ) (43.3 )% Net income from discontinued operations 3,835 2,873 962 33.5 % Gain on sale of discontinued operations — — — — % Net income $ 39,006 $ 64,878 $ (25,872 ) (39.9 )% 42nd42nd Street in May 2011, which, in aggregate, contributedPART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS$11.7 $11.7 million and $1.4 million of the total increase in rental and escalation and reimbursement revenues, respectively. 2012 2011 $ Change % Change As Adjusted $ 1.0 $ 0.5 $ 0.5 100.0 % 15.3 7.2 8.1 112.5 $ 16.3 $ 7.7 $ 8.6 111.7 % The increase in equity in net income of unconsolidated joint venture was due to higher net income contribution during the period prior to the sale of One Court Square in July 2012. 2012 2011 $ Change % Change As Adjusted $ 118.5 $ 118.3 $ 0.2 0.2 % 90.2 83.8 6.4 7.6 17.1 14.5 2.6 17.9 $ 225.8 $ 216.6 $ 9.2 4.2 % 42nd42nd in May 2011, which had, in aggregate, $2.7 million in operating expenses and $2.0 million in real estate taxes during the year ended December 31, 2012. The increase in real estate taxes was primarily due to higher assessed values and higher tax rates. 2012 2011 $ Change % Change As Adjusted $ 114.3 $ 84.3 $ 30.0 35.6 % (0.5 ) (2.4 ) 1.9 79.2 143.0 132.3 10.7 8.1 1.9 0.2 1.7 850.0 0.3 0.3 — — $ 259.0 $ 214.7 $ 44.3 20.6 % PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The increase in depreciation and amortization expense was attributable to the depreciation on newly acquired properties including 304 Park Avenue South ($3.1 million) in June 2012, 635-641 Sixth Avenue ($2.6 million) in September 2012 and 110 East 42nd Street ($1.2 million) in May 2011 as well as an increase in capital expenditures at the properties in the ROP portfolio.Comparison of the year ended December 31, 2011 to the year ended December 31, 2010 The following section compares the results of operations for the year ended December 31, 2011 to the year ended December 31, 2010 for the 30 consolidated properties owned by ROP: 2011 2010 $ Change % Change As Adjusted As Adjusted $ 421.5 $ 406.2 $ 15.3 3.8 % 72.9 71.5 1.4 2.0 $ 494.4 $ 477.7 $ 16.7 3.5 % Occupancy for our Manhattan portfolio was 95.5% at December 31, 2011 compared to 93.3% at December 31, 2010. Occupancy for our Suburban portfolio was 80.7% at December 31, 2011 compared to 80.2% at December 31, 2010. At December 31, 2011, excluding the impact of the three properties transferred in December 2012, approximately 3.0% and 7.0% of the space leased at our consolidated Manhattan and Suburban properties, respectively, was expected to expire during 2012. We estimated that the current market rents on these expected 2012 lease expirations at our consolidated Manhattan and Suburban properties would be approximately 10.8% higher and 4.2% lower, respectively, than then existing in-place fully escalated rents. We estimated that the current market rents on all our consolidated Manhattan and Suburban properties were approximately 9.6% higher and 0.4% lower, respectively, than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years. The increase in rental revenues was also due to the transfer of 110 East 42nd Street to us by SL Green, which contributed $3.3 million and $0.4 million of the total increase in rental and escalation and reimbursement revenues, respectively. The property was acquired by SL Green in May 2011. 2011 2010 $ Change % Change As Adjusted As Adjusted $ 0.5 $ 0.7 $ (0.2 ) (28.6 )% 7.2 12.4 (5.2 ) (41.9 ) $ 7.7 $ 13.1 $ (5.4 ) (41.2 )% PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our joint venture at One Court Square was net leased to a single tenant until 2020. In April 2010, as part of a lease amendment, the tenant waived its rights to all of its cancellation options in return for a reduction in its rent. The decrease in investment and other income was primarily related to a reduction in lease buyout income ($4.3 million), investment income ($1.2 million), as well as the receipt of real estate and other tax refunds in 2010 ($1.9 million). This was partially offset by additional income we recognized in 2011 upon the sale of a debt investment ($3.1 million). 2011 2010 $ Change % Change As Adjusted As Adjusted $ 118.3 $ 112.5 $ 5.8 5.2 % 83.8 81.2 2.6 3.2 14.5 14.6 (0.1 ) (0.7 ) $ 216.6 $ 208.3 $ 8.3 4.0 % The increase in property operating expenses was primarily due to higher real estate taxes ($2.6 million), repairs and maintenance ($2.3 million), condominium fees ($1.2 million), payroll costs ($1.4 million), cleaning expenses ($0.8 million) and contract maintenance expenses ($0.5 million) which were partially offset by a decrease in insurance costs ($0.8 million). The increase in real estate taxes was primarily due to higher assessed values and higher tax rates. The increase in property operating expenses was also attributable to the transfer of 110 East 42nd Street to us by SL Green, which contributed increases in operating expenses and real estate taxes of $2.4 million and $0.9 million, respectively. The property was acquired by SL Green in May 2011. 2011 2010 $ Change % Change As Adjusted As Adjusted $ 84.3 $ 71.5 $ 12.8 17.9 % (2.4 ) — (2.4 ) (100.0 ) 132.3 124.7 7.6 6.1 0.2 — 0.2 100.0 0.3 0.5 (0.2 ) (40.0 ) $ 214.7 $ 196.7 $ 18.0 9.2 % The increase in interest expense, net of interest income, was primarily due to the issuance of $250.0 million aggregate principal amount of 5% notes in August 2011, refinancing of 919 Third Avenue in June 2011 and assumption of 110 East 42nd Street mortgage in May 2011 as a result of its acquisition. In addition, we, SL Green and the Operating Partnership entered into a new $1.5 billion revolving credit facility in November 2011, which had an interest rate of 150 basis points over the 30-day LIBOR at December 31, 2011. The decrease in loan loss reserves, net of recoveries, is due to the partial recovery of a reserve for $3.1 million upon the sale of a debt investment in February 2011 which was reduced by a $0.7 million reserve recorded in 2011. No loan loss reserves were recorded in 2010.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The increase in depreciation and amortization expense is attributable to the depreciation on 110 East 42nd Street ($1.4 million), which was acquired in May 2011 by SL Green, prior to its transfer to us, as well as an increase in capital expenditures at the properties in the ROP portfolio.Green'sGreen and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013 for a complete discussion of additional sources of liquidity available to us due to our indirect ownership by SL Green.debt andfor preferred equity investments will include:(1)Cash flow from operations;(2)Cash on hand;(3)Borrowings under our 2012 credit facility;(4)Other forms of secured or unsecured financing;(5)Net proceeds from divestitures of properties and redemptions, participations and dispositions of preferred equity investments; and(6)Proceeds from debt offerings by us.(1) Cash flow from operations; (2) Cash on hand; (3) Borrowings under our 2012 credit facility; (4) Other forms of secured or unsecured financing; (5) Net proceeds from divestitures of properties and redemptions, participations and dispositions of preferred equity investments; and (6) Proceeds from debt offerings by us. and operating escalations and recoveries from our tenants and the level of operating and other costs. Additionally, we believe that our debt and preferred equity investment program will continue to serve as a source of capital.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSand $26.6 million at 20122013 and 2011,2012, respectively, representing an increase of $7.4$5.7 million. The increase was a result of the following changes in cash flows (in thousands): Years ended December 31, 2012 2011 Increase
(Decrease) Years ended December 31, As Adjusted 2013 2012 $ 148,890 $ 136,364 $ 12,526 $ 135,959 $ 148,815 $ (12,856 ) $ (274,995 ) $ (26,549 ) $ (248,446 ) $ (257,585 ) $ (274,920 ) $ 17,335 $ 133,495 $ (107,619 ) $ 241,114 Net cash provided by financing activities $ 127,292 $ 133,495 $ (6,203 ) 2012,2013, our portfolio was 91.4%90.2% occupied. Following the transfer of $324.9 million ofOur preferred equity investments from SL Green to us in September 2012, these preferred investments will also provide a steady stream of operating cash flow to us.2012,2013, when compared to the year ended December 31, 2011,2012, we used cash primarily for the following investing activities (in thousands): $ (274,316 ) 8,373 44,297 (617 ) (31,916 ) 5,733 $ (248,446 ) Acquisitions of real estate $ (109,715 ) Capital expenditures and capitalized interest (32,345 ) Net proceeds from sale of real estate/joint venture interest 166,751 Distributions from unconsolidated joint ventures 19,774 Preferred equity and other investments (22,921 ) Restricted cash—capital improvements (4,209 ) Decrease in net cash used in investing activities $ 17,335 decreasedincreased from $51.4 million for the year ended December 31, 2011 compared to $43.1 million for the year ended December 31, 2012.2012 compared to $75.4 million for the year ended December 31, 2013. The increased capital expenditures relate primarily to increased costs incurred in connection with the redevelopment of properties and the build-out of space for tenants resulting from new leasing activity.asset sales.sale of real estate. During the year ended December 31, 2012,2013, when compared to the year ended December 31, 2011,2012, we used cash for the following financing activities (in thousands): $ (1,364,148 ) $ 657,264 651,937 (587,480 ) 1,232,886 75,821 (296,374 ) (159,652 ) 16,813 7,844 $ 241,114 Decrease in cash provided by financing activities $ (6,203 ) PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS$1.6$1.6 billion credit facility, or the 2012 credit facility, which refinanced, extended and upsized the previous 2011 revolving credit facility. The 2012 credit facility consists of a $1.2$1.2 billion revolving credit facility, or the revolving credit facility, and a $400.0$400.0 million term loan, or the term loan facility. The revolving credit facility matures in March 2017 and includes two six-monthsix-month extension options, subject to certain conditions and the payment of an extension fee of 10 basis points for each such extension. We also have an option, subject to customary conditions, without the consent of existing lenders, to increase the capacity under the revolving credit facility to $1.5$1.5 billion at any time prior to the maturity date for the revolving credit facility, by obtaining additional commitments from our current lenders and other financial institutions. The term loan facility matures on March 30, 2018.2012,2013, the applicable spread was 145 basis points for revolving credit facility and 165 basis points for the term loan facility. At December 31, 2013, the effective interest rate was 1.62% for the revolving credit facility and 2.00% for the term loan facility. We are required to pay quarterly in arrears a 15 to 35 basis point facility fee on the unused balance of thetotal commitments under the revolving credit facility.facility based on the credit rating assigned to our senior unsecured long term indebtedness. As of December 31, 2012,2013, the facility fee was 30 basis points. At December 31, 2012,2013, we had approximately $79.5$74.6 million of outstanding letters of credit, $70.0$220.0 million drawn under the revolving credit facility and $400.0$400.0 million outstanding under the term loan facility, with total undrawn capacity of $1.1 billionapproximately $905.4 million under the 2012 credit facility.oursSL Green's is an obligor under the 2012 credit facility.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS20122013 and 2011,2012, respectively, by scheduled maturity date (amounts in thousands):Issuance Maturity $ 75,898 $ 75,898 $ 75,898 5.88 % 5.88 % 10 August 15, 2014 255,308 255,206 255,165 6.00 % 6.00 % 10 March 31, 2016 250,000 249,681 249,620 5.00 % 5.00 % 7 August 15, 2018 250,000 250,000 250,000 7.75 % 7.75 % 10 March 15, 2020 200,000 200,000 200,000 4.50 % 4.50 % 10 December 1, 2022 7 7 7 4.00 % 4.00 % 20 June 15, 2025 $ 1,031,213 $ 1,030,792 $ 1,030,690 Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates. We, SL Green and the Operating Partnership are co-obligors. December 31,
2012
Unpaid
Principal
Balance December 31,
2012
Accreted
Balance December 31,
2011
Accreted
Balance Coupon
Rate(1) Effective
Rate Term
(in Years) Maturity $ 75,898 $ 75,898 $ 98,578 5.88 % 5.88 % 10 August 15, 2014 255,308 255,165 274,804 6.00 % 6.02 % 10 March 31, 2016 250,000 249,620 249,565 5.00 % 5.03 % 7 August 15, 2018 250,000 250,000 250,000 7.75 % 7.75 % 10 March 15, 2020 200,000 200,000 — 4.50 % 4.50 % 10 December 1, 2022 7 7 657 4.00 % 4.00 % 20 June 15, 2025 $ 1,031,213 $ 1,030,690 $ 873,604 (1)Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.(2)On December 27, 2012, we repurchased $42.4 million aggregate principal amount of these notes, consisting of $22.7 million of the 5.875% Notes and $19.7 million of the 6.0% Notes, for a total consideration of $46.4 million and realized a net loss on early extinguishment of debt of approximately $3.8 million.(3)We, SL Green and the Operating Partnership are co-obligors.(4)Exchangeable senior debentures which are currently callable at par. In addition, the debentures can be put to us, at the option of the holder at par plus accrued and unpaid interest, on June 15, 2015 and 2020 and upon the occurrence of certain change of control transactions. As a result of the Merger, the adjusted exchange rate for the debentures is 7.7461 shares of SL Green's common stock per $1,000 of principal amount of debentures and the adjusted reference dividend for the debentures is $1.3491. During the year ended December 31, 2012, we repurchased $650,000 of these bonds at par.20122013 and 2011,2012, we were in compliance with all such covenants.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSfloatingvariable rate borrowing arrangements. Wedebt. Our exposure to interest rate changes are managed through either the use of interest rate derivative instruments to manage exposure to interestand/or through our variable rate changes.preferred equity investments. A hypothetical 100 basis point increase in interest rates along the entire interest rate curve for 20122013 would increase our annual interest cost, net of interest income from variable rate preferred equity investments, by approximately $4.4$5.8 million.allmost derivatives on the balance sheet at fair value. Derivatives that are not hedges must beare adjusted to fair value through income. If a derivative is considered a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized immediately in earnings.borebears interest at fixed rates, and therefore the fair value of these instruments is affected by changes in the market interest rates. The interest rate on our variable rate debt as of December 31, 20122013 was based on LIBOR plus a spread ranging from 145 basis points to 165 basis points. Combined(based on interest rates in effect), and our obligations under our capital lease and ground leases, as of December 31, 20112013 are as follows (in thousands): 2013 2014 2015 2016 2017 Thereafter Total 2014 2015 2016 2017 2018 Thereafter Total $ — $ 23 $ — $ 4,116 $ 7,056 $ 538,828 $ 550,023 $ 23 $ — $ 3,566 $ 7,411 $ 7,799 $ 531,224 $ 550,023 — — — — — 70,000 70,000 — — — 220,000 — — 220,000 — 75,898 7 255,165 — 1,099,620 1,430,690 75,898 7 255,308 — 650,000 450,000 1,431,213 1,555 1,555 1,593 1,707 1,707 40,644 48,761 Capital lease 2,147 2,218 2,361 2,361 2,361 296,941 308,389 17,274 17,274 17,500 17,954 17,954 1,231,425 1,319,381 15,127 15,282 15,592 15,592 15,592 916,531 993,716 99,383 97,153 94,923 87,138 79,173 237,874 695,644 100,613 99,696 96,100 93,840 73,799 168,926 632,974 $ 118,212 $ 191,903 $ 114,023 $ 366,080 $ 105,890 $ 3,218,391 $ 4,114,499 $ 193,808 $ 117,203 $ 372,927 $ 339,204 $ 749,551 $ 2,363,622 $ 4,136,315 "Debt"Preferred Equity Investments and Preferred EquityOther Investments," in the accompanying consolidated financial statements.2013,2014, we expect to incur capital expenditures consisting of approximately $61.0$38.5 million of capitalrecurring expenditures and $24.7 million of development expenditures, which are net of loan reserves, (includingPART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSandor additional debt issuances.Alliance paid the affiliate approximately $3.4Approximately $3.0 million $2.3, $3.4 million and $1.8$2.4 million for the years ended December 31, 2013, 2012 2011 and 2010, respectively.2011, respectively, was earned by our affiliate from this profit participation. We paid Alliancerecorded expenses of approximately $5.3$6.0 million $4.7, $5.3 million and $6.0$4.7 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively, for these services (excluding services provided directly to tenants).$7.0$7.4 million $6.3, $6.7 million and $6.0$6.0 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively.Insurance2012,2013, the first property portfolio maintains a blanket limit of $775.0$950.0 million per occurrence, including terrorism, for the majority of the New York City properties in our portfolio. The second property portfolio maintains a limit of $750.0.0$700.0 million per occurrence, including terrorism, for some New York City properties and the majority of the Suburban properties. Both policies expire on December 31, 2013.2014. Each policy includes $100.0 million of flood coverage with a lower sublimit for locations in high hazard flood zones. SL Green maintainmaintains liability policies which cover all our properties and provide limits of $201.0 million per occurrence and in the aggregate per location. The liability policies expire on October 31, 2013.2014. Additional coverage may be purchased on a stand-alone basis for certain assets.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS•Terrorism: Belmont acts as a direct property insurer with respect to a portion of our terrorism coverage for the New York City properties. Belmont has a terrorism coverage limit of $650 million in a layer in excess of $100 million. In addition, Belmont purchased reinsurance to reinsure the retained insurable risk not otherwise covered under Terrorism Risk Insurance Program Reauthorization and Extension Act of 2007, or TRIPRA, as detailed below.•NBCR: Belmont has acted as a direct insurer of NBCR and since December 31, 2011, has provided coverage up to $750 million on SL Green's entire property portfolio for certified acts of terrorism above a program trigger of $100.0 million. Belmont is responsible for a small deductible and 15% of a loss, with the remaining 85% covered by the Federal government.•General Liability: For the period commencing October 31, 2010, Belmont insures a retention on the general liability insurance of $150,000 per occurrence and a $2.1 million annual aggregate stop loss limit. SL Green has secured excess insurance to protect against catastrophic liability losses above the $150,000 retention. Prior policy years carried a higher per occurrence deductible and/or higher aggregate stop loss. Belmont has retained a third party administrator to manage all claims within the retention and we anticipate that direct management of liability claims will improve loss experience and ultimately lower the cost of liability insurance in future years. In addition, SL Green has an umbrella liability policy of $200.0 million per occurrence and in the aggregate on a per location basis.•Environmental Liability: Belmont insures a deductible of $975,000 per occurrence in excess of $25,000 on a $25 million per occurrence and $30 million aggregate environmental liability policy covering the entire portfolio.$4.7$5.1 million $4.5, $4.6 million and $5.3$4.4 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively.PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONStheour office leases provide for separate real estate tax and operating expense escalations as well as operating expense recoveries based on increases in the Consumer Price Index or other measures such as porters' wage. In addition, many of the leases provide for fixed base rent increases. We believe that inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above.Policies—AccountingPolicies-Accounting Standards Updates" in the accompanying consolidated financial statements.•••••••PART IIITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS•••our•••••Green'sGreen and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013 contain additional factors that could adversely affect our business and financial performance. Moreover, ROP operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on ROP's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.PART IIRisk"Risk," for additional information regarding our exposure to interest rate fluctuations.related weighted-average interest rates by expected maturity date, including as-of-right extension options, as of December 31, 20122013 (amounts in thousands): Long-Term Debt Preferred Equity Investments(1) Date Amount 2014 $ 75,921 5.67 % $ — 1.81 % $ — — % 2015 7 5.66 — 2.12 115,198 14.86 2016 258,874 5.79 — 3.11 244,226 9.20 2017 7,411 5.96 220,000 4.27 9,940 8.86 2018 287,799 6.05 370,000 4.84 — — Thereafter 981,225 5.34 — — — — Total $ 1,611,237 5.66 % $ 590,000 2.83 % $ 369,364 10.95 % Fair Value $ 1,714,721 $ 607,865 Long-Term Debt Preferred Equity Investments(1) Fixed
Rate Average
Interest
Rate Variable
Rate Average
Interest
Rate Amount Weighted
Yield $ — 5.67 % $ — 1.84 % $ — — % 75,921 5.67 — 1.84 311,749 10.3 7 5.68 — 1.84 — — 259,281 5.66 — 1.84 19,136 10.9 7,056 5.65 — 1.84 10,000 8.6 1,268,448 5.24 440,000 1.84 — — $ 1,610,713 5.43 % $ 440,000 1.84 % $ 340,885 10.3 % $ 1,776,057 $ 435,205 (1)Our debt and preferred equity investments had an estimated fair value ranging between $300.0 million and $400.0 million at December 31, 2012.20122013 (amounts in thousands): Asset Hedged Benchmark
Rate Notional
Value Strike
Rate Effective
Date Expiration
Date Fair Value Revolving credit facility LIBOR 30,000 2.295 % 7/2010 6/2016 $ (1,881 ) $ (1,881 ) Asset Hedged Fair Value Interest Rate Swap 2012 credit facility LIBOR 30,000 2.295 % July 2010 June 2016 $ 1,293 PART II 44 45 46 47 48 49 73 7420122013 and 2011,2012, and the related consolidated statements of income, and comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2012.2013. Our audits also included the financial statement schedules listed in the Index at Item 15(a)(2). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.20122013 and 2011,2012, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012,2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Note 1, the consolidated financial statements for all prior years have been retrospectively adjusted to reflect the transfer of three properties in December 2012 to the Company from the Company's indirect parent, SL Green Realty Corp. /s/ Ernst & Young LLP 19, 201325, 2014Amounts in thousands) December 31,
2012 December 31,
2011 As Adjusted December 31, 2013 December 31, 2012 $ 954,731 $ 829,914 $ 1,034,052 $ 954,731 3,646,736 3,424,028 3,823,803 3,646,736 782,260 782,260 782,260 782,260 12,208 12,208 22,866 12,208 5,662,981 5,395,935 5,395,935 5,048,410 (742,659 ) (613,543 ) (849,331 ) (742,659 ) 4,653,276 4,434,867 4,813,650 4,653,276 34,035 26,645 39,701 34,035 21,074 23,491 25,457 21,074 13,147 13,003 150,535 132,846 340,885 600 — 41,913 91,400 89,426 Tenant and other receivables, net of allowance of $4,005 and $4,873 in 2013 and 2012, respectively 16,316 15,582 Deferred rents receivable, net of allowance of $15,199 and $16,501 in 2013 and 2012, respectively 159,485 150,535 Preferred equity and other investments, net of discounts and deferred origination fees of $1,772 and $2,217 in 2013 and 2012, respectively 369,364 338,579 Deferred costs, net of accumulated amortization of $52,396 and $40,303 in 2013 and 2012, respectively 87,703 91,400 94,210 93,607 74,943 94,210 $ 5,398,562 $ 4,856,398 $ 5,586,619 $ 5,398,691 $ 550,023 $ 721,590 $ 550,023 $ 550,023 70,000 350,000 220,000 70,000 1,430,690 873,604 1,430,792 1,430,690 25,366 18,254 27,479 27,801 50,692 43,130 39,782 50,692 176,120 194,850 138,995 173,814 17,186 17,112 27,223 17,186 20,566 18,396 Deferred land leases payable 21,621 20,566 18,411 17,628 22,261 18,411 2,359,054 2,254,564 2,478,176 2,359,183 — — — — 2,686,766 2,242,844 2,761,645 2,686,766 — — — — (4,925 ) (5,117 ) (3,981 ) (4,925 ) 2,681,841 2,237,727 2,757,664 2,681,841 357,667 364,107 350,779 357,667 3,039,508 2,601,834 3,108,443 3,039,508 $ 5,398,562 $ 4,856,398 $ 5,586,619 $ 5,398,691 and Comprehensive IncomeAmounts in thousands) Years Ended December 31, 2012 2011 2010 Years Ended December 31, As Adjusted As Adjusted 2013 2012 2011 $ 436,965 $ 421,475 $ 406,237 $ 443,535 $ 423,345 $ 408,863 76,509 72,892 71,504 75,814 74,496 71,044 9,497 3,077 1,231 Investment income 43,226 9,497 3,077 5,838 4,113 11,163 4,603 5,838 4,108 528,809 501,557 490,135 567,178 513,176 487,092 118,549 118,326 112,517 Operating expenses, including $18,312 (2013), $16,479 (2012) and $15,038 (2011) of related party expenses 120,443 113,482 113,479 90,174 83,838 81,214 96,079 89,238 82,727 17,098 14,549 14,600 19,017 17,098 14,549 108,566 82,422 70,827 110,132 108,566 82,422 5,712 1,837 684 5,171 5,712 1,837 142,957 132,251 124,677 145,179 137,162 126,617 (472 ) (2,425 ) — — (472 ) (2,425 ) 1,943 243 24 1,939 1,943 243 339 346 493 354 339 346 484,866 431,387 405,036 498,314 473,068 419,795 43,943 70,170 85,099 966 497 711 Income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture, depreciable real estate reserves and loss on early extinguishment of debt 68,864 40,108 67,297 Equity in net income from unconsolidated joint ventures 3,942 966 497 1,001 — — — 1,001 — — (5,789 ) — — — (5,789 ) (6,904 ) — (1,202 ) (76 ) (6,904 ) — Income from continuing operations 72,730 35,171 62,005 Net income from discontinued operations 4,244 3,835 2,873 Gain on sale of discontinued operations 13,756 — — 39,006 64,878 84,608 90,730 39,006 64,878 (6,013 ) (9,886 ) (13,682 ) (5,200 ) (6,013 ) (9,886 ) $ 32,993 $ 54,992 $ 70,926 $ 85,530 $ 32,993 $ 54,992 192 (5,117 ) — $ 33,185 $ 49,875 $ 70,926 Amounts attributable to ROP common unitholder: Income from continuing operations $ 67,530 $ 29,158 $ 52,119 Discontinued operations 18,000 3,835 2,873 Net income attributable to ROP common unitholder $ 85,530 $ 32,993 $ 54,992 Capital
Comprehensive IncomeAmounts in thousands) General
Partners'
Capital
Class A
Common
Units Noncontrolling
Interests
In Other
Partnerships Accumulated
Other
Comprehensive
Loss Total
Capital $ 2,934,380 $ 496,798 $ — $ 3,431,178 824,028 — — 824,028 (928,185 ) (13,078 ) — (941,263 ) 70,926 13,682 — 84,608 2,901,149 497,402 — 3,398,551 823,171 — — 823,171 (1,536,468 ) (143,181 ) — (1,679,649 ) 54,992 9,886 — 64,878 — — (5,117 ) (5,117 ) 2,242,844 364,107 (5,117 ) 2,601,834 2,374,499 — 2,374,499 (1,963,570 ) (12,453 ) — (1,976,023 ) 32,993 6,013 — 39,006 — — 192 192 $ 2,686,766 $ 357,667 $ (4,925 ) $ 3,039,508 Years Ended December 31, 2013 2012 2011 Net income attributable to ROP common unitholder $ 85,530 $ 32,993 $ 54,992 Other comprehensive income (loss): Change in net unrealized gain (loss) on derivative instruments 944 192 (5,117 ) Comprehensive income attributable to ROP common unitholder $ 86,474 $ 33,185 $ 49,875 Cash Flows
CapitalAmounts in thousands) Years Ended December 31, 2012 2011 2010 As Adjusted As Adjusted $ 39,006 $ 64,878 $ 84,608 148,669 134,088 125,361 (1,001 ) — — (966 ) (497 ) (711 ) 444 497 711 6,904 — 1,202 (472 ) (2,425 ) — — 5,789 — (18,821 ) (27,020 ) (27,683 ) (20,519 ) (20,487 ) (23,416 ) (1,787 ) (3,300 ) (704 ) (2,945 ) (993 ) (758 ) (9,235 ) (13,306 ) (15,109 ) (826 ) (2,773 ) 107 7,884 3,086 (37 ) 2,555 (1,173 ) (5,561 ) 148,890 136,364 138,010 (277,060 ) (2,744 ) — (43,072 ) (51,445 ) (50,077 ) 4,204 (1,529 ) 4,319 152 769 2,842 44,297 — — (3,516 ) 28,400 1,300 (274,995 ) (26,549 ) (41,616 ) — 500,000 — (192,980 ) (222,293 ) (16,172 ) 1,751,480 599,543 250,000 (1,478,284 ) (84,823 ) (205,859 ) 2,037,115 804,229 824,028 (12,453 ) (143,181 ) (13,078 ) (1,963,570 ) (1,536,468 ) (928,185 ) (7,813 ) (24,626 ) (4,709 ) 133,495 (107,619 ) (93,975 ) 7,390 2,196 2,419 26,645 24,449 22,030 $ 34,035 $ 26,645 $ 24,449 $ 107,902 $ 78,693 $ 69,458 Limited Partner's Capital Balance at December 31, 2010 $ 2,901,149 $ — $ 497,402 $ — $ 3,398,551 Contributions 823,171 — — — 823,171 Distributions (1,536,468 ) — (143,181 ) — (1,679,649 ) Net income 54,992 — 9,886 — 64,878 Other comprehensive loss — — — (5,117 ) (5,117 ) Balance at December 31, 2011 2,242,844 — 364,107 (5,117 ) 2,601,834 Contributions 2,374,499 — — — 2,374,499 Distributions (1,963,570 ) — (12,453 ) — (1,976,023 ) Net income 32,993 — 6,013 — 39,006 Other comprehensive income — — — 192 192 Balance at December 31, 2012 2,686,766 — 357,667 (4,925 ) 3,039,508 Contributions 2,112,936 — — — 2,112,936 Distributions (2,123,587 ) — (12,088 ) — (2,135,675 ) Net income 85,530 — 5,200 — 90,730 Other comprehensive income — — — 944 944 Balance at December 31, 2013 $ 2,761,645 $ — $ 350,779 $ (3,981 ) $ 3,108,443 Years Ended December 31, 2013 2012 2011 Operating Activities Net income $ 90,730 $ 39,006 $ 64,878 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 153,337 148,669 134,088 Equity in net gain on sale of interest in unconsolidated joint venture — (1,001 ) — Equity in net income from unconsolidated joint venture (3,942 ) (966 ) (497 ) Distributions of cumulative earnings from unconsolidated joint venture 3,942 444 497 Loss on early extinguishment of debt 76 6,904 — Loan loss reserves, net of recoveries — (472 ) (2,425 ) Depreciable real estate reserves — — 5,789 Gain on sale of discontinued operations (13,756 ) — — Deferred rents receivable (16,442 ) (18,821 ) (27,020 ) Other non-cash adjustments (46,581 ) (20,867 ) (20,487 ) Changes in operating assets and liabilities: Restricted cash—operations (4,378 ) (1,787 ) (3,300 ) Tenant and other receivables 64 (2,945 ) (993 ) Deferred lease costs (18,476 ) (9,235 ) (13,306 ) Other assets (3,664 ) (826 ) (2,773 ) Accounts payable, accrued expenses and other liabilities (8,974 ) 7,884 3,086 Deferred revenue and land leases payable 4,023 2,828 (1,173 ) Net cash provided by operating activities 135,959 148,815 136,364 Investing Activities Acquisitions of real estate property (386,775 ) (277,060 ) (2,744 ) Additions to land, buildings and improvements (75,417 ) (43,072 ) (51,445 ) Restricted cash—capital improvements (5 ) 4,204 (1,529 ) Distributions in excess of cumulative earnings from unconsolidated joint venture 19,926 152 769 Net proceeds from disposition of real estate/joint venture interest 211,048 44,297 — Debt and preferred equity and other investments, net of repayments (26,362 ) (3,441 ) 28,400 Net cash used in investing activities (257,585 ) (274,920 ) (26,549 ) Financing Activities Proceeds from mortgage note and other loans payable — — 500,000 Repayments of mortgage note and other loans payable — (192,980 ) (222,293 ) Proceeds from credit facility and senior unsecured notes 1,164,000 1,751,480 599,543 Repayments of credit facility and senior unsecured notes (1,014,000 ) (1,478,284 ) (84,823 ) Contributions from common unitholder 2,112,936 2,037,115 804,229 Distributions to noncontrolling interests in other partnerships (12,088 ) (12,453 ) (143,181 ) Distributions to common unitholder (2,123,587 ) (1,963,570 ) (1,536,468 ) Deferred loan costs and capitalized lease obligation 31 (7,813 ) (24,626 ) Net cash provided by (used in) financing activities 127,292 133,495 (107,619 ) Net increase in cash and cash equivalents 5,666 7,390 2,196 Cash and cash equivalents at beginning of year 34,035 26,645 24,449 Cash and cash equivalents at end of year $ 39,701 $ 34,035 $ 26,645 Supplemental Cash Flow Disclosure Interest paid $ 109,229 $ 107,902 $ 78,693 Supplemental Disclosure of Non-Cash Investing and Financing Activities: Tenant improvements and capital expenditures payable $ 2,981 $ 619 $ 2,646 Deferred leasing payable 1,589 1,332 1,813 Capital leased asset 10,657 — — Change in fair value of hedge 588 165 1,716 Transfer of treasury lock hedge — — 3,591 Contributions from common unitholder — 33,090 — Transfer of commercial real estate property, net — — 77,667 Transfer of preferred equity investments — 324,858 15,697 Transfer of mortgage note and other loans payable — 50,023 65,000 Redemption of Series E units of limited partnership interest of the Operating Partnership — 31,698 — 20122013 new 2012 credit facility, in which we, along with SL Green and the Operating Partnership are borrowers, SL Green transferred five properties, with total assets aggregating to $683.8$683.8 million at November 1, 2011 and transferred three additional properties with total assets aggregating to $320.2$320.2 million at December 31, 2012, to ROP. Under the Business Combinations guidance, these were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary. As such, the assets and liabilities were transferred at their carrying value. These transfers are required to be recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The consolidated financial statements and financial information presented for all prior years have been retrospectively adjusted to furnish comparative information.$324.9$324.9 million of its preferred equity investments to ROP, one of which was subject to a secured $50.0$50.0 million loan. Under the Business Combinations guidance, these transfers were determined to be transfers of assets between the indirect parent company and its wholly-owned subsidiary. As such, the assets were transferred at their carrying value and accounted for prospectively from the date of transfer.2012,2013, we owned the following interests in commercial office properties in the New York Metropolitan area, primarily in midtown Manhattan, a borough of New York City. Our investments in the NewReckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20121. Organization and Basis of Presentation (Continued)assets:Location Ownership Square Feet (unaudited) Manhattan Consolidated properties 12 6,866,400 94.6 % Suburban Consolidated properties 17 2,785,500 79.1 % 29 9,651,900 90.2 % Ownership Number of
Properties Square Feet Weighted Average
Occupancy(1) Consolidated properties 13 7,201,400 96.0 % Consolidated properties 17 2,785,500 79.5 % 30 9,986,900 91.4 % (1)(1) The weighted average occupancy represents the total leased square feet divided by total available rentable square feet. divided by total available rentable square feet. At December 31, 2012, we also own(unaudited), a development property encompassing approximately 104,000 square feet as well as(unaudited) and an inventory of four separate development parcels that aggregated approximately 81 acres (unaudited) of land in four separate parcels on which we can, based on estimates at land. As of December 31, 2012, develop approximately 1.1 million square feet of office space and in which we have invested approximately $67.1 million. As of December 31, 2012,2013, we also held preferred equity investments with a book value of $340.9 million.4, "Debt5, "Preferred Equity and Preferred Equity Investments" and Note 5, "Investments in Unconsolidated Joint Venture.Other Investments." ROP's investments in majority-owned and controlled real estate joint ventures are reflected in the accompanying financial statements on a consolidated basis with a reduction for the noncontrolling partners' interests. All significant intercompany balances and transactions have been eliminated.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued)Category Term Building (fee ownership) 40 years Building improvements shorter of remaining life of the building or useful life Building (leasehold interest) lesser of 40 years or remaining term of the lease Property under capital lease remaining lease term Furniture and fixtures four to seven years Tenant improvements shorter of remaining term of the lease or useful life $130.3$131.9 million $124.0, $125.1 million and $118.5$118.9 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively.In addition, we assess our investment in our unconsolidated joint venture for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investment for impairment based on the joint venture's projected discounted cash flows. During 2011, we recorded a $5.8 million impairment charge in connection with the expected sale of our equity investment. These charges are included in depreciable real estate reserves in the consolidated statements of income and comprehensive income. We do not believe that the values of any of our consolidated properties were impaired at December 31, 2012 and December 31, 2011, respectively.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)201220132. Significant Accounting Policies (Continued).and comprehensive income from the date of acquisition. FASB guidance requires the acquiring entity in a business combination to measureThe guidance also requires that acquisition- related transaction costs be expensed as incurred, acquired research and development value be capitalized and acquisition-related restructuring costs be capitalized only if they meet certain criteria. As such, weWe expense acquisition-related transaction costs as incurred, which are included in transaction related costs on our consolidated statements of income., below- and at-marketbelow-market leases and origination costs associated with the in-place leases. We depreciate the amount allocated to building (inclusive of tenant improvements) and other intangible assets over their estimated useful lives, which generally range from three to 40 years and from one to 14 years, respectively. The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease, which generally range from one to 14 years.years. The valuevalues associated with in-place leases isare amortized over the expected term of the associated lease, which generally range from one to 14 years.years. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. To the extent acquired leases contain fixed rate renewal options that are below market and determined to be material, we amortize such below market lease value into rental income over the renewal period.$20.2$21.4 million $22.5, $20.2 million and $22.4$22.5 million in rental revenue for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase price of the applicable properties. We recognized an increase (reduction) in interest expense for the amortization of above-market rate mortgages assumed of approximately $0.7$0.5 million $(1.2), $0.7 million and $(1.8)$(1.2) million for the years ended December 31, 2012, 2011 and 2010, respectively.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)2. Significant Accounting Policies (Continued) and 20122013 and 2011 (amounts in2012 (in thousands): December 31,
2012 December 31,
2011 December 31,
2013 December 31,
2012 $ 199,845 $ 181,028 $ 199,845 $ 199,845 (125,009 ) (104,441 ) (142,277 ) (125,009 ) $ 74,836 $ 76,587 $ 57,568 $ 74,836 $ 399,088 $ 384,141 $ 399,088 $ 399,088 (227,637 ) (190,995 ) (262,642 ) (227,637 ) $ 171,451 $ 193,146 $ 136,446 $ 171,451 revenue or depreciation expense)revenue), for each of the five succeeding years is as follows (amounts in(in thousands): $ 11,419 7,824 $ 7,461 6,362 6,225 6,314 6,279 6,290 6,320 2018 6,325 (amounts in(in thousands): $ 5,917 4,651 $ 4,574 3,982 3,950 2,832 2,832 2,010 2,010 2018 1,308 asin cases where we exercise significant influence, but do not control the entity and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are VIEs and where we are considered to be the primary beneficiary. In all the joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless the joint venture is determined to be a VIE and we are the primary beneficiary in a VIE, these participating rights preclude us from consolidating these non-VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity inReckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued)Any difference between the carrying amount of these investments on our balance sheet and the underlying equityEquity in net assets is amortized as an adjustment to equity in net income (loss) of unconsolidated joint ventures over the lesser of the joint venture term or 10 years. Equity income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in the joint venture. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. None of the joint venture debt is recourse to us. See Note 5, "Investment"Preferred Equity and Other Investments."Unconsolidated Joint Venture."Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued)management recordswe record the amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, management recordswe record amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, management recordswe record our contribution towards those improvements as a lease incentive, which is included in deferred leasing costs on our consolidated balance sheets and amortized as a reduction to rental revenue 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 on the accompanying consolidated balance sheets. We establish, on a current basis, an allowance for future potential tenant credit losses, which may occur against this account. The balance reflected on the consolidated balance sheetsheets is net of such allowance. debt and preferred equity investments is recognized over the life of the investment using the effective interest method and recognized on the accrual basis. Fees received in connection with loan commitments are deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Anticipated exit fees, whose collection is expected, are also recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration. debt and preferred equity investments at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income and principal becomes doubtful. Interest income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received. Several of the debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest and outstanding principal are ultimatelyReckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued) debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. debt and preferred equity investments is the charge to earnings to increase the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors considered relate to geographic trends and product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish the provision for possible credit loss on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired. $0.7 million and zero in loan loss reserves or charge offs$0.7 million on investments held to maturity during the years ended December 31, 2012 2011 and 2010, respectively, on investments held to maturity.2011, respectively. We also recorded $0.5recoveries of $0.5 million $3.1 and $3.1 million and zero in recoveries during the years ended December 31, 2012 2011 and 2010,2011, respectively, in connection with the sale of our debt investments. This is included in loan loss reserves, net of recoveries inon the accompanying consolidated statements of income and comprehensive income.leaseleases payable inon the accompanyingconsolidated balance sheets. accompanying consolidated financial statements since such taxes, if any, are the responsibility of the individual partners.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued) 2011 and 20102011 as there were no outstanding common units held by third parties at December 31, 2013, 2012 2011 and 2010.2011.aour comparable market conventional debt borrowing rate at the date of issuance. The difference between the principal amount and the fair value of the liability component is reported as a discount on the exchangeable debt that is accreted as additional interest expense from the issuance date through the contractual maturity date using the effective interest method. A portion of this additional interest expense ismay be capitalizedReckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued) Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy). The estimated fair values of tangible and intangible assets and liabilities recorded in connection with business combinations are based on Level 3 inputs. We estimate fair values based on cash flow projections utilizing appropriate discount and/or capitalization rates and available market information. We determine impairment in real estate investments and debt and preferred equity investments, including intangibles, utilizing cash flow projections that apply estimated revenue and expense growth rates, discount rates and capitalization rates, which are classified as Level 3 inputs. We determined the valuation allowance for loan losses based on Level 3 inputs. 4, "Debt and Preferred Equity Investments.9, "Fair Value Measurements." We use the following methods and assumptions in estimating fair value disclosures for financial instruments:•Cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, and other assets and liabilities: The carrying amount of cash and cash equivalents, restricted cash, accountsReckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued)receivable, accounts payable and accrued expenses, and other assets and liabilities reported in our consolidated balance sheets approximates fair value due to the short-term nature of these instruments.•Debt and preferred equity investments: The fair value of debt and preferred equity investments is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings. See "Reserve for Possible Credit Losses" below regarding valuation allowances for loan losses.•Derivative instruments: The fair value of derivative instruments is based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles and reasonable estimates about relevant future market conditions.•Mortgage payable and other debt: The fair value of borrowings is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by us. The methodologies used for measuring fair value have been categorized into three broad levels as follows:Level 1—Quoted prices in active markets for identical instruments.Level 2—Valuations based principally on other observable market parameters, including•Quoted prices in active markets for similar instruments,•Quoted prices in less active or inactive markets for identical or similar instruments,•Other observable inputs (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates), and•Market corroborated inputs (derived principally from or corroborated by observable market data).Level 3—Valuations based significantly on unobservable inputs.•Valuations based on third-party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable as Level 2 valuations.•Valuations based on internal models with significant unobservable inputs. These levels form a hierarchy. We follow this hierarchy for our assets and liabilities measured at fair value on a recurring and nonrecurring basis. The classifications are based on the lowest level of input that is significant to the fair value measurement.debt and preferred equity investments is located in the New York Metropolitan area. See Note 4, "Debt5, "Preferred Equity and Preferred EquityOther Investments." We perform ongoing credit evaluations of our tenants and require most tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the total value of a tenant's lease obligation, they are a measure of good faith and a source of funds to offset the economic costsReckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20122. Significant Accounting Policies (Continued)accountedaccount for approximately 5.0%5.1% and 3.2%3.4% of our share of annualized cash rent, respectively, no other tenant in the portfolio accounted for more than 2.9%3.3% of our annualized cash rent, including our share of joint venture annualized cash rent at December 31, 2012.2013. Approximately 18%19.5%, 10%10.0%, 10%9.9%, 9%9.6% and 9%9.0% of our annualized cash rent was attributable to 1185 Avenue of the Americas, 919 Third Avenue, 750 Third Avenue, 810 Seventh Avenue and 1350 Avenue of the Americas, respectively, for the year ended December 31, 2012.in substancein-substance real estate as a result of default on the subsidiary's nonrecourse debt, the reporting entity must apply the accounting guidance for sales of real estate to determine whether it should derecognize the in substance real estate. The reporting entity is precluded from derecognizing the real estate until legal ownership has been transferred to the lender to satisfy the debt. The guidance iswas effective for calendar year-end public and nonpublic companies in 2013 and is to be applied on a prospective basis. Early adoption of the guidance is permitted. Adoption of this guidance isdid not expected to have a material impact on our consolidated financial statements.iswas effective for calendar year-end public companies in 2013 beginning in the first quarter of 2013 and is to be applied on a prospective basis. Earlyits adoption of the guidance is permitted. Adoption of this guidance willdid not have a material impact on our consolidated financial statements.$173.0 million.$173.0 million.$135.0 million.$135.0 million. The property was acquired with approximately $102.0$102.0 million in cash and $33.0$33.0 million in units of limited partnership interest inof the Operating Partnership.OperatingOperation Partnership, L.P.(Continued)December 31, 20123. Property Acquisitions (Continued)2012 acquisitions (amounts in(in thousands): 315 West 33rd Street (1) Acquisition date November 2013 September 2012 June 2012 635 and
641 Sixth
Avenue 304 Park
Avenue
South $ 69,848 $ 54,189 $ 116,033 $ 69,848 $ 54,189 104,474 75,619 270,742 104,474 75,619 — 2,824 — — 2,824 7,727 8,265 — 7,727 8,265 �� — — — — — 182,049 140,897 386,775 182,049 140,897 9,049 5,897 — 9,049 5,897 9,049 5,897 — 9,049 5,897 $ 173,000 $ 135,000 $ 386,775 $ 173,000 $ 135,000 $ 173,000 $ 135,000 $ 386,775 $ 173,000 $ 135,000 $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — (1) We are currently in the process of analyzing the purchase price allocation and, as such, we have not allocated any value to intangible assets such as above- and below-market lease or in-place leases. Debt and Preferred Equity Investments AsProperty Dispositions Year Ended December 31, 2013 2012 2011 Revenues Rental revenue $ 9,671 $ 13,620 $ 12,612 Escalation and reimbursement revenues 1,220 2,013 1,853 Total revenues 10,891 15,633 14,465 Operating expenses 3,049 5,067 4,847 Real estate taxes 611 936 1,111 Depreciation and amortization 2,987 5,795 5,634 Total expenses 6,647 11,798 11,592 Net income from discontinued operations $ 4,244 $ 3,835 $ 2,873 debt and preferred equity investments, with an aggregate weighted average current yield of approximately 10.12%10.91% at December 31, 2012 (amounts in thousands): December 31,
2012 Senior Financing December 31,
2012 Carrying Value, Net of Discounts December 31,
2011 Carrying Value, Net of Discounts Initial
Mandatory
Redemption $ 480,000 $ 100,831 $ — July 2014 70,000 10,000 — October 2014 57,087 19,136 — April 2016 926,260 210,918 — July 2016 — — 8,725 — — — (8,125 ) — $ 1,533,347 $ 340,885 $ 600 (1)The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.(2)As of December 31, 2012, we are committed to fund an additional $6.5 million on this loan.(3)Loan loss reserves are specifically allocated to investments. Our reserves reflect management's judgment of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct and that reserves will be adequate over time to protect against potential future losses.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)20122013 (in thousands):Type December 31, 2013 Senior Financing December 31, 2013 Carrying Value (1) December 31, 2012 Carrying Value (1) Preferred equity $ 70,000 $ 9,940 $ 9,927 October 2014 525,000 115,198 99,768 July 2015 55,747 25,896 18,925 April 2016 926,260 218,330 209,959 July 2016 $ 1,577,007 $ 369,364 $ 338,579 (1) Balance is net of discounts and deferred origination fees. (2) In June 2013, the redemption date was extended from July 2014 to July 2015. (3) The difference between the pay and accrual rates is included as an addition to the principal balance outstanding. (4) 4. Debt and Preferred Equity Investments (Continued)20122013 and 2011,2012, all debt and preferred equity investments other than as noted above, were performing in accordance with the terms of the loan agreements.5. InvestmentUnconsolidated Joint VentureMay 2005,December 2013, the preferred equity investment was redeemed and its net proceeds were distributed to us and our joint venture partner.acquiredalso held a 1.4 million square foot, 50-story, Class A office tower30.0% interest in a joint venture that owned a property located at One Court Square, Long Island City, New York, for approximately $471.0 million, inclusive of transfer taxes and transactional costs. One Court Square is 100% leased to the seller, Citibank N.A., under a 15-year net lease. On November 30, 2005, we sold a 70% joint venture interest in One Court Square to certain institutional funds advised by JPMorgan Investment Management, or the JPM Investors, for approximately $329.7 million, including the assumption of $220.5 million of the property's mortgage debt. The operating agreement of the Court Square Joint Venture required approvals from members on certain decisions including annual budgets, sale of the property, refinancing of the property's mortgage debt and material renovations to the property. In addition, the members each had the right to recommend the sale of the property, subject to the terms of the mortgage debt, and to dissolve the Court Square Joint Venture. We also provided a detailed monthly reporting package to the JPM Investors. We had concluded that the JPM Investors had substantive participating rights in the ordinary course of the Court Square Joint Venture's business that result in shared power of the activities that most significantly impact the performance of the joint venture. We accounted for the Court Square Joint Venture under the equity method of accounting. In November 2011, we, along with our joint venture partner, reached an agreement to sell One Court Square to a private investor group for approximately $475.6 million.York. In November 2011, we recorded a $5.8$481.1$481.1 million, which included the assumption of $315.0$315.0 million of existing debt by the purchaser. We recognized a gain of $1.0$1.0 million on sale of this property.20122013 and 2011,2012, respectively, were as follows (amounts in thousands): Interest
Rate(1) Maturity Date December 31,
2012 December 31,
2011 5.00 % 7/2014 $ 23 $ 31,721 8.00 % 9/2019 50,000 — 5.12 % 6/2023 500,000 500,000 — — — 94,963 — — — 29,906 — — — 65,000 $ 550,023 $ 721,590 Property Maturity Date December 31, 2013 December 31, 2012 5.00 % July 2014 $ 23 $ 23 8.00 % September 2019 50,000 50,000 5.12 % June 2023 500,000 500,000 $ 550,023 $ 550,023 (1)Effective weighted average interest rate for the year ended December 31, 2012.(2)As part of an acquisition, the Operating Partnership issued 63.9 million units of its 5.0% Series E preferred units, or the Series E units, with a liquidation of $1.00 per unit. As of December 31, 2012, 63.8 million Series E units had been redeemed.(1) (2) (3) This loan is secured by a portion of a preferred equity investment. (4) Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)201220136. Mortgage Note and Other Loans Payable (Continued)(3)This loan is secured by a portion of a preferred equity investment.(4)We own a 51% controlling interest in the joint venture that is the borrower on this loan. This loan is non-recourse to us. In June 2011, our joint venture replaced the $219.6 million 6.87% mortgage that was due to mature in August 2011 with a $500.0 million mortgage.(5)In December 2012, we repaid the $93.3 million loan, which bore interest at a fixed of 5.85% per annum and was scheduled to mature in October 2013. We recognized a loss from early extinguishment of debt of approximately $3.1 million consisting mainly of prepayment penalty.(6)In November 2012, we repaid the $29.1 million mortgage loan, which bore interest at a fixed rate of 5.67% per annum and was scheduled to mature in February 2013. There was no prepayment penalty(7)Prior to transfer of this property to us, the Operating Partnership took control of this property in May 2011 and assumed the mortgage as part of the transaction. This loan consists of a $65.0 million A-tranche and an $18.1 million B-tranche which was owed to us. The B-tranche does not accrue interest and is due only under certain circumstances as described in the loan agreement. In December 2012, we repaid the $65.0 million mortgage loan, which bore interest at a fixed rate of 5.81% per annum and was scheduled to mature in July 2017. There was no prepayment penalty. At December 31, 2012,, the gross book value of the property and preferred equity investment collateralizing the mortgage note and other loans payable was approximately $1.3 billion.$1.6$1.6 billion credit facility, or the 2012 credit facility, which refinanced, extended and upsized the previous 2011 revolving credit facility. The 2012 credit facility consists of a $1.2$1.2 billion revolving credit facility, or the revolving credit facility, and a $400.0$400.0 million term loan, or the term loan facility. The revolving credit facility matures in March 2017 and includes two six-monthsix-month extension options, subject to certain conditions and the payment of an extension fee of 10 basis points for each such extension. We also have an option, subject to customary conditions, without the consent of existing lenders, to increase the capacity under the revolving credit facility to $1.5$1.5 billion at any time prior to the maturity date for the revolving credit facility, by obtaining additional commitments from our currentexisting lenders and other financial institutions. The term loan facility matures on March 30, 2018.2012,2013, the applicable spread was 145 basis points for revolving credit facility and 165 basis points for the term loan facility. At December 31, 2013, the effective interest rate was 1.62% for the revolving credit facility and 2.00% for the term loan facility. We are required to pay quarterly in arrears a 15 to 35 basis point facility fee on the unused balance of thetotal commitments under the revolving credit facility.facility based on the credit rating assigned to our senior unsecured long term indebtedness. As of December 31, 2012,2013, the facility fee was 30 basis points. At December 31, 2012,2013, we had approximately $79.5$74.6 million of outstanding letters of credit, $70.0$220.0 million drawn under the revolving credit facility and $400.0$400.0 million outstanding under the term loan facility, with total undrawn capacity of $1.1 billionapproximately $905.4 million under the 2012 credit facility.oursSL Green's is an obligor under the 2012 credit facility.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20127. Corporate Indebtedness (Continued)20122013 and 2011,2012, respectively, by scheduled maturity date (amounts in thousands): December 31,
2012
Unpaid
Principal
Balance December 31,
2012
Accreted
Balance December 31,
2011
Accreted
Balance Coupon
Rate(1) Effective
Rate Term
(in Years) Maturity December 31, 2013 Unpaid Principal Balance December 31, 2013 Accreted Balance December 31, 2012 Accreted Balance Maturity $ 75,898 $ 75,898 $ 98,578 5.88 % 5.88 % 10 August 15, 2014 $ 75,898 $ 75,898 $ 75,898 5.88 % 5.88 % 10 August 15, 2014 255,308 255,165 274,804 6.00 % 6.02 % 10 March 31, 2016 255,308 255,206 255,165 6.00 % 6.00 % 10 March 31, 2016 250,000 249,620 249,565 5.00 % 5.03 % 7 August 15, 2018 250,000 249,681 249,620 5.00 % 5.00 % 7 August 15, 2018 250,000 250,000 250,000 7.75 % 7.75 % 10 March 15, 2020 250,000 250,000 250,000 7.75 % 7.75 % 10 March 15, 2020 200,000 200,000 — 4.50 % 4.50 % 10 December 1, 2022 200,000 200,000 200,000 4.50 % 4.50 % 10 December 1, 2022 7 7 657 4.00 % 4.00 % 20 June 15, 2025 7 7 7 4.00 % 4.00 % 20 June 15, 2025 $ 1,031,213 $ 1,030,792 $ 1,030,690 $ 1,031,213 $ 1,030,690 $ 873,604 (1) Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates. (2) (1)Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.(2)On December 27, 2012, we repurchased $42.4 million aggregate principal amountand $19.7 million of the 6.0% Notes, for a total consideration of $46.4 million and realized a net loss on early extinguishment of debt of approximately $3.8 million.(3)We, SL Green and the Operating Partnership are co-obligors.(4)Exchangeable senior debentures which are currently callable at par. In addition, the debentures can be put to us, at the option of the holder at par plus accrued and unpaid interest, on June 15, 2015 and 2020 and upon the occurrence of certain change of control transactions. As a result of the Merger, the adjusted exchange rate for the debentures is 7.7461 shares of SL Green's common stock per $1,000 of principal amount of debentures and the adjusted reference dividend for the debentures is $1.3491. During the year ended December 31, 2012, we repurchased $650,000 of these bonds at par.(3) We, SL Green and the Operating Partnership are co-obligors. (4) Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 20127. Corporate Indebtedness (Continued)20122013 and 2011,2012, we were in compliance with all such covenants.2012revolving credit facility and term loan and senior unsecured notes as of December 31, 2012,2013, including as-of-right extension options, were as follows (amounts in(in thousands): Scheduled
Amortization Principal
Repayments Revolving
Credit
Facility Term loan
and Senior
Unsecured
Notes Total $ — $ — $ — $ — $ — Total — 23 — 75,898 75,921 $ — $ 23 $ — $ 75,898 $ 75,921 — — — 7 7 — — — 7 7 4,116 — — 255,165 259,281 3,566 — — 255,308 258,874 7,056 — — — 7,056 7,411 — 220,000 — 227,411 2018 7,799 — — 650,000 657,799 38,220 500,608 70,000 1,099,620 1,708,448 39,630 491,594 — 450,000 981,224 $ 58,406 $ 491,617 $ 220,000 $ 1,431,213 $ 2,201,236 $ 49,392 $ 500,631 $ 70,000 $ 1,430,690 $ 2,050,713 (amounts in(in thousands): Years Ended December 31, 2012 2011 2010 Years Ended December 31, As Adjusted As Adjusted 2013 2012 2011 $ 108,634 $ 82,516 $ 70,965 $ 110,190 $ 108,634 $ 82,516 (68 ) (94 ) (138 ) (58 ) (68 ) (94 ) $ 108,566 $ 82,422 $ 70,827 $ 110,132 $ 108,566 $ 82,422 $ — $ — $ — $ — $ — $ — of Financial Instruments The following disclosures of estimatedMeasurementswere determined by management, using available market information and appropriate valuation methodologies, as discussedabout our financial instruments, whether or not recognized in Note 2, "Significant Accounting Policies." Considerable judgmentthe consolidated balance sheets, for which it is necessarypracticable to interpret market data and develop estimatedestimate fair value. Accordingly,FASB guidance defines fair value as the estimates presented herein are not necessarily indicative ofprice that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the amounts we could realize on disposition of theOperatingOperation Partnership, L.P.(Continued)December 31, 20128. Fair Value of Financial Instruments (Continued)financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on(continued)amounts. Cashof financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consist of three broad levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date; Level 2 - inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 - unobservable inputs for the asset or liability that are used when little or no market data is available. We follow this hierarchy for our assets and liabilities measured at fair value on a recurring and nonrecurring basis. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of the particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.balances reasonably approximate theirand accrued expenses reported in our consolidated balance sheets approximates fair valuesvalue due to the short maturitiesterm nature of these items. Mortgage note and other loans payable and the senior unsecured notes had an estimatedinstruments. The fair value based on discounted cash flow models, based on Level 3 inputs, of approximately $1.8 billion, compared to the book value of the related fixed rate debt of approximately $1.6 billion at December 31, 2012. Our floating rate debt, inclusive of our 2012 credit facility, but excluding $30.0 million of which was swapped, had an estimated fair value based on discounted cash flow models, based on Level 3 inputs, of approximately $435.2 million, compared to the book value of related floating rate debt of approximately $440.0 million at December 31, 2012. Our preferred equity investments, had anwhich is classified as Level 3, is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings. The fair value ranging between $300.0 millionof borrowings, which is classified as Level 3, is estimated by discounting the contractual cash flows of each debt to their present value using adjusted market interest rates, which is provided by a third-party specialist.$400.0 million, compared to the bookfair value of related preferred equity investmentsthese financial instruments as of approximately $340.9 million at December 31, 2013 and 2012, based on Level 3 inputs.respectively (in thousands): December 31, 2013 December 31, 2012 Carrying Value Fair Value Carrying Value Fair Value Preferred equity investments $ 369,364 (1) $ 338,579 (1) Fixed rate debt $ 1,610,815 $ 1,714,721 $ 1,610,713 $ 1,776,057 Variable rate debt 590,000 607,865 440,000 435,205 $ 2,200,815 $ 2,322,586 $ 2,050,713 $ 2,211,262 (1) 2012.2013. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein. Balance Sheet Location Interest Rate Swap $ 30,000 2.295 % July 2010 June 2016 Other Liabilities $ 1,293 9.Over time, the realized and unrealized gains and losses held in accumulated other comprehensive loss will be reclassified into earnings as an adjustment to interest expense in the same periods in which the hedged interest payments affect earnings. We estimate that approximately $1.0 million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense within the next 12 months. Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Location of Gain (Loss) Recognized in Income on Derivative Derivative 2013 2012 2011 2013 2012 2011 2013 2012 2011 Interest Rate Swaps/Caps $ — $ (794 ) $ (5,924 ) Interest expense $ 944 $ 986 $ 807 Interest expense $ 3 $ 3 $ (16 ) 20132014 to 2030. The minimum rental amounts due under the leases are generally either subject to scheduled fixed increases or adjustments. The leases generally also require that the tenants reimburse us for increases in certain operating costs and real estate taxes above their base year costs. Approximate future minimum rents to be received over the next five years and thereafter for non-cancelable operating leases in effect at December 31, 20122013 for the consolidated properties, including consolidated joint venture properties, are as follows (amounts in(in thousands): Consolidated
Properties $ 415,979 400,077 $ 418,623 384,182 409,844 358,766 381,065 323,224 347,924 2018 323,224 1,510,576 1,280,624 $ 3,161,304 $ 3,392,804 10.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 201210. Related Party Transactions (Continued)Alliance paid the affiliate approximately $3.4Approximately $2.3, $3.4 million and $1.8$2.4 million for the years ended December 31, 2013, 2012 2011 and 2010, respectively.2011, respectively, was earned by our affiliate from profit participation. We paid Alliancerecorded expenses of approximately $5.3$6.0 million $4.7, $5.3 million and $6.0$4.7 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively, for these services (excluding services provided directly to tenants).$7.0$7.4 million $6.3, $6.7 million and $6.0$6.0 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively.Insurance$4.7$5.1 million $4.5, $4.6 million and $5.3$4.4 million for the years ended December 31, 2013, 2012 2011 and 2010,2011, respectively.11. Capital Since consummation of the Merger on January 25, 2007, the Operating Partnership has owned all the economic interests in ROP either by direct ownership or by indirect ownership through our general partner, which is its wholly-owned subsidiary. Intercompany transactions between SL Green and ROP are generally recorded as contributions and distributions.12.2012,2013, the actuary certified that for the plan years beginning July 1, 2011, July 1, 2012 and July 1, 2012,2013, respectively, the Pension Plan was in critical status under the Pension Protection Act of 2006. The Pension PlanReckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 201212. Benefit Plans (Continued)2012.2013. For the years ended December 31, 2013, 2012 2011 and 2010,2011, the Pension Plan received contributions from employers totaling $212.7$221.9 million $201.3, $212.7 million and $193.3$201.3 million, respectively.$1.95$1.95 million of employer contributions per quarter that would have been due to the Health Plan. Effective October 1, 2010, the diversion of contributions was discontinued. For the years ended December 31, 2013, 2012 2011 and 2010,2011, the Health Plan received contributions from employers totaling $893.3$923.5 million $843.2, $893.3 million and $770.8$843.2 million, respectively. 2011 and 20102011 are included in the table below (amounts in(in thousands): Years Ended December 31, Years Ended December 31, 2012 2011 2010 2013 2012 2011 As Adjusted As Adjusted $ 1,004 $ 975 $ 828 $ 1,084 $ 1,004 $ 975 3,165 2,933 2,650 3,346 3,165 2,933 2,431 2,465 2,260 2,477 2,431 2,465 $ 6,600 $ 6,373 $ 5,738 $ 6,907 $ 6,600 $ 6,373 13. The property located at 1185 Avenue of the Americas operates under a ground lease (approximately $6.9 million annually) with a term expiration of 2020 and with an option to renew for an additional 23 years. The property located at 461 Fifth Avenue operates under a ground lease (approximately $2.1 million annually) with a term expiration date of 2027 and with two options to renew for an additional 21 years each, followed by a third option for 15 years. We also have an option to purchase the ground lease for a fixed price on a specific date.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 201213. Commitments and Contingencies (Continued) The property located at 673 First Avenue, which was transferred to ROP at December 31, 2012, has been capitalized for financial statement purposes. Land was estimated to be approximately 70% of the fair market value of the property. The portion of the lease attributed to land was classified as an operating lease and the remainder as a capital lease. The initial lease term was 49 years with an option for an additional 25 years. In November 2012, the lease was extended to August 2087, an additional 50 years past its scheduled 2037 expiration date, with an effective date of September 2012. We continue to lease the property located at 673 First Avenue, which has been classified as a capital lease with a cost basis of $12.2 million and cumulative amortization of $6.3 million and $6.0 million at December 31, 2012 and 2011, respectively. The following is a schedule of future minimum lease payments under capital lease and non-cancellable operating leases with initial terms in excess of one year as of December 31, 2012 (amounts in thousands): Capital
lease Non-cancellable
operating leases $ 1,555 $ 17,274 1,555 17,274 1,593 17,500 1,707 17,954 1,707 17,954 40,644 1,231,425 48,761 $ 1,319,381 (31,575 ) $ 17,186 14. Environmental Matters 2014 $ 2,147 $ 15,127 2015 2,218 15,282 2016 2,361 15,592 2017 2,361 15,592 2018 2,361 15,592 Thereafter 296,941 916,531 Total minimum lease payments 308,389 $ 993,716 Less amount representing interest (281,166 ) Present value of net minimum lease payment $ 27,223 office properties in Manhattan, Westchester County and Connecticut and have two reportable segments, real estate and debt and preferred equity investments. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.4, "Debt5, "Preferred Equity and Preferred EquityOther Investments," for additional details on our debt and preferred equity investments.Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 201215. Segment Information (Continued) 2011 and 20102011 and selected asset information as of December 31, 20122013 and 2011,2012, regarding our operating segments are as follows (amounts in(in thousands): Real Estate
Segment Debt and
Preferred
Equity
Segment Total
Company $ 519,312 $ 9,497 $ 528,809 498,480 3,077 501,557 488,904 1,231 490,135 Years ended: December 31, 2013 $ 523,952 $ 43,226 $ 567,178 December 31, 2012 503,679 9,497 513,176 December 31, 2011 484,015 3,077 487,092 $ 30,646 $ 8,360 $ 39,006 59,438 5,440 64,878 83,707 901 84,608 Years ended: December 31, 2013 $ 32,612 $ 40,118 $ 72,730 December 31, 2012 26,799 8,372 35,171 December 31, 2011 56,565 5,440 62,005 December 31, 2013 $ 5,216,087 $ 370,532 $ 5,586,619 $ 5,057,563 $ 340,999 $ 5,398,562 5,059,998 338,693 5,398,691 4,855,798 600 4,856,398 debt and preferred equity segment. Interest costs for the debt and preferred equity segment are imputed assuming 100% leverage at our 2012 credit facility borrowing cost. We also allocate loan loss reserves, net of recoveries to the debt and preferred equity segment. We do not allocate marketing, general and administrative expenses and transaction related costs to the debt and preferred equity segment, since we base performance on the individual segments prior to allocating marketing, general and administrative expenses. All other expenses, except interest, relate entirely to the real estate assets. There were no transactions between the above two segments. The table below reconciles income from continuing operations to net income attributable to common unitholder for the years ended December 31, 2012, 2011 and 2010 (amounts in thousands): Years Ended December 31, 2012 2011 2010 As Adjusted As Adjusted $ 39,006 $ 64,878 $ 84,608 — — — 39,006 64,878 84,608 (6,013 ) (9,886 ) (13,682 ) $ 32,993 $ 54,992 $ 70,926 OperatingOperation Partnership, L.P.(Continued)December 31, 201216. Financial Instruments: Derivatives and Hedging We recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Reported net income and capital may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows. Accumulated other comprehensive loss at December 31, 2012 consists of approximately $3.1 million from the settlement of hedges, which are being amortized over the remaining term of the related senior unsecured notes. Currently, all of our designated derivative instruments are effective hedging instruments. Over time, the realized and unrealized gains and losses held in accumulated other comprehensive loss will be reclassified into earnings as an adjustment to interest expense in the same periods in which the hedged interest payments affect earnings. We estimate that approximately $0.4 million of the current balance held in accumulated other comprehensive loss will be reclassified into earnings within the next 12 months. The following table presents the effect of our derivative financial instruments on the consolidated statements of income and comprehensive income as of December 31, 2012, 2011 and 2010 (amounts in thousands): Amount of Loss
Recognized in
Other Comprehensive Loss
(Effective Portion)
For the Year Ended
December 31, Amount of Loss
Reclassified from
Accumulated Other
Comprehensive Loss into
Interest Expense
(Effective Portion)
For the Year Ended December 31, Amount of Loss
Recognized
in Interest Expense
(Ineffective Portion)
For the Year Ended
December 31, Derivative 2012 2011 2010 2012 2011 2010 2012 2011 2010 Interest Rate Swaps/Caps $ (794 ) $ (5,924 ) — $ (986 ) $ (807 ) — $ (3 ) $ (16 ) — Interest Rate Caps/Currency Hedges — — — — — — — — — 17. Supplemental Disclosure of Non-Cash Investing and Financing Activities The following table provides information on non-cash investing and financing activities (amounts in thousands): Years ended December 31, 2012 2011 $ 619 $ 2,646 1,332 1,813 192 1,716 — 3,591 33,090 — — 77,667 324,858 15,697 50,023 65,000 31,698 — Reckson Operating Partnership, L.P.Notes to Consolidated Financial Statements (Continued)December 31, 201218.16. Quarterly Financial Data (unaudited)20122013 and 2011,2012, which have been updated to reflect the properties transferred to us by SL Green as well as the reclassification of the properties sold or held during 2013 and 2012 as discontinued operations (see Note 4, "Property Dispositions"), are as follows (amounts in(in thousands): December 31 September 30 June 30 March 31 As Adjusted As Adjusted As Adjusted 2013 Quarter Ended December 31 September 30 June 30 March 31 $ 142,917 $ 131,584 $ 127,476 $ 126,832 $ 149,304 $ 140,173 $ 138,460 $ 139,241 $ 12,917 $ 11,282 $ 11,006 $ 8,738 Income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture and loss on extinguishment of debt $ 18,644 $ 14,510 $ 19,592 $ 16,118 Equity in net income from unconsolidated joint ventures 2,615 480 481 366 Equity in net gain on sale of interest in unconsolidated joint venture — — — — (6,904 ) — — — — — (10 ) (66 ) (10 ) (4,778 ) 5,789 — (3 ) 183 660 126 Net income from discontinued operations — 1,358 1,720 1,166 (Loss) gain on sale of discontinued operations (31 ) 13,787 — — 6,000 6,687 17,455 8,864 21,228 30,135 21,783 17,584 (1,385 ) (1,188 ) (2,067 ) (1,373 ) (689 ) (1,399 ) (1,599 ) (1,513 ) $ 4,615 $ 5,499 $ 15,388 $ 7,491 $ 20,539 $ 28,736 $ 20,184 $ 16,071 December 31 September 30 June 30 March 31 As Adjusted As Adjusted As Adjusted As Adjusted 2012 Quarter Ended December 31 September 30 June 30 March 31 $ 125,657 $ 123,289 $ 123,557 $ 129,054 $ 139,168 $ 127,686 $ 123,507 $ 122,815 $ 10,469 $ 11,520 $ 19,318 $ 28,863 (5,789 ) — — — 99 119 133 146 Income from continuing operations before equity in net (loss) income from unconsolidated joint ventures, equity in net (loss) gain on sale of interest in unconsolidated joint venture and loss on extinguishment of debt $ 12,134 $ 10,427 $ 9,970 $ 7,577 Equity in net (loss) income from unconsolidated joint ventures (3 ) 183 660 126 Equity in net (loss) gain on sale of interest in unconsolidated joint venture (10 ) (4,778 ) 5,789 — Loss on extinguishment of debt (6,904 ) — — — Net income from discontinued operations 783 855 1,036 1,161 Gain on sale of discontinued operations — — — — 4,779 11,639 19,451 29,009 6,000 6,687 17,455 8,864 (1,504 ) (1,653 ) (3,176 ) (3,553 ) (1,385 ) (1,188 ) (2,067 ) (1,373 ) $ 3,275 $ 9,986 $ 16,275 $ 25,456 $ 4,615 $ 5,499 $ 15,388 $ 7,491 2012
2013Dollars in thousands)Column A Column B Column C Column D Column E Column B Column C Column D Column E Balance at
Beginning of
Year Additions
Charged Against
Operations Uncollectible
Accounts
Written-off Balance at
End of Year Year Ended December 31, 2013 Tenant and other receivables—allowance $ 4,873 (182 ) (686 ) $ 4,005 Deferred rent receivable—allowance 16,501 31 (1,333 ) 15,199 $ 4,667 2,805 (164 ) $ 7,308 $ 3,348 2,805 (1,280 ) $ 4,873 15,942 1,131 (572 ) 16,501 15,942 1,131 (572 ) 16,501 Year Ended December 31, 2011 $ 5,074 632 (1,039 ) $ 4,667 $ 4,126 632 (1,410 ) $ 3,348 13,002 3,290 (350 ) 15,942 13,002 3,290 (350 ) 15,942 $ 4,440 1,522 (888 ) $ 5,074 10,872 2,719 (589 ) 13,002 2012
2013Dollars in thousands)Column A Column B Column F Column G Column H Column I Description Encumbrances Land Land Land Total 810 Seventh Avenue(1) $ — $ 114,077 $ 476,386 $ — $ 44,614 $ 114,077 $ 521,000 $ 635,077 $ 98,988 1970 1/2007 Various 461 Fifth Avenue(1)(2) — — 62,695 — 8,003 — 70,698 70,698 19,807 1988 10/2003 Various 750 Third Avenue(1)(2) — 51,093 205,972 — 33,895 51,093 239,867 290,960 62,379 1958 7/2004 Various 919 Third Avenue(1)(3) 500,000 223,529 1,033,198 — 13,475 223,529 1,046,673 1,270,202 188,175 1970 1/2007 Various 555 W. 57th Street(1)(2) — 18,846 78,704 — 43,084 18,846 121,788 140,634 44,318 1971 1/1999 Various 1185 Avenue of the Americas(1) — — 728,213 — 32,402 — 760,615 760,615 152,278 1969 1/2007 Various 1350 Avenue of the Americas(1) — 91,038 380,744 — 26,376 91,038 407,120 498,158 78,379 1966 1/2007 Various 1100 King Street—1-7 International Drive(4) — 49,392 104,376 2,473 16,810 51,865 121,186 173,051 26,659 1983/1986 1/2007 Various 520 White Plains Road(4) — 6,324 26,096 — 4,352 6,324 30,448 36,772 6,573 1979 1/2007 Various 115-117 Stevens Avenue(4) — 5,933 23,826 — 5,891 5,933 29,717 35,650 6,825 1984 1/2007 Various 100 Summit Lake Drive(4) — 10,526 43,109 — 7,036 10,526 50,145 60,671 10,089 1988 1/2007 Various 200 Summit Lake Drive(4) — 11,183 47,906 — 6,222 11,183 54,128 65,311 10,388 1990 1/2007 Various 500 Summit Lake Drive(4) — 9,777 39,048 — 5,508 9,777 44,556 54,333 8,023 1986 1/2007 Various 140 Grand Street(4) — 6,865 28,264 — 4,048 6,865 32,312 39,177 6,608 1991 1/2007 Various 360 Hamilton Avenue(4) — 29,497 118,250 — 11,545 29,497 129,795 159,292 25,138 2000 1/2007 Various 7 Landmark Square(5) — 2,088 7,748 (367 ) (134 ) 1,721 7,614 9,335 403 2007 1/2007 Various 680 Washington Boulevard(3)(5) — 11,696 45,364 — 4,218 11,696 49,582 61,278 9,539 1989 1/2007 Various 750 Washington Boulevard(3)(5) — 16,916 68,849 — 4,854 16,916 73,703 90,619 14,140 1989 1/2007 Various 1010 Washington Boulevard(2)(5) — 7,747 30,423 — 3,667 7,747 34,090 41,837 6,507 1988 6/2007 Various 1055 Washington Boulevard(5) — 13,516 53,228 — 3,118 13,516 56,346 69,862 10,700 1987 1/2007 Various 400 Summit Lake Drive(4) — 38,889 — 285 1 39,174 1 39,175 1 - 1/2007 Various 673 First Avenue(1)(2) — — 35,727 — 23,464 — 59,191 59,191 20,019 1928 8/1997 Various 609 Fifth Avenue(1)(2) — 36,677 145,954 — 7,230 36,677 153,184 189,861 28,481 1925 6/2006 Various 110 East 42nd Street(1)(2) — 34,000 46,411 — 10,194 34,000 56,605 90,605 6,345 1921 5/2011 Various 304 Park Avenue(1) — 54,189 75,619 300 4,198 54,489 79,817 134,306 4,726 1930 6/2012 Various 635 Sixth Avenue(1) — 24,180 37,158 163 18,071 24,343 55,229 79,572 — 1902 9/2012 Various 641 Sixth Avenue(1) — 45,668 67,316 308 768 45,976 68,084 114,060 2,922 1902 9/2012 Various 315 West 33rd Street(1) 116,033 270,742 — — 116,033 270,742 386,775 921 2000-2001 11/2013 Various Other(6) — 1,128 — 83 4,693 1,211 4,693 5,904 — Various $ 500,000 $ 1,030,807 $ 4,281,326 $ 3,245 $ 347,603 $ 1,034,052 $ 4,628,929 $ 5,662,981 $ 849,331 Column A Column B Column C
Initial Cost Column D
Cost Capitalized
Subsequent
To Acquisition Column E
Gross Amount at Which Carried at
Close of Period Column F Column G Column H Column I Encumbrances Land Building &
Improvements Land Building &
Improvements Land Building &
Improvements Total Accumulated
Depreciation Date of
Construction Date
Acquired Life on Which
Depreciation is
Computed $ — $ 114,077 $ 476,386 $ — $ 39,315 $ 114,077 $ 515,701 $ 629,778 $ 83,226 1970 1/2007 Various — — 62,695 — 6,738 — 69,433 69,433 17,444 1988 10/2003 Various — 51,093 205,972 — 30,120 51,093 236,092 287,185 54,689 1958 7/2004 Various 500,000 223,529 1,033,198 — 8,084 223,529 1,041,282 1,264,811 160,004 1970 1/2007 Various — 36,711 146,880 — 22,507 36,711 169,387 206,098 24,308 1954 6/2007 Various — 18,846 78,704 — 37,612 18,846 116,316 135,162 40,143 1971 1/1999 Various — — 728,213 — 30,143 — 758,356 758,356 129,505 1969 1/2007 Various — 91,038 380,744 — 22,694 91,038 403,438 494,476 66,036 1966 1/2007 Various — 49,392 104,376 2,473 8,795 51,865 113,171 165,036 21,597 1983/1986 1/2007 Various — 6,324 26,096 — 2,593 6,324 28,689 35,013 5,545 1979 1/2007 Various — 5,933 23,826 — 5,177 5,933 29,003 34,936 5,703 1984 1/2007 Various — 10,526 43,109 — 6,762 10,526 49,871 60,397 8,464 1988 1/2007 Various — 11,183 47,906 — 3,263 11,183 51,169 62,352 8,847 1990 1/2007 Various — 9,777 39,048 — 4,183 9,777 43,231 53,008 6,701 1986 1/2007 Various — 6,865 28,264 — 3,557 6,865 31,821 38,686 5,503 1991 1/2007 Various — 29,497 118,250 — 10,549 29,497 128,799 158,296 21,318 2000 1/2007 Various — 2,088 7,748 (367 ) (153 ) 1,721 7,595 9,316 209 2007 1/2007 Various — 11,696 45,364 — 4,031 11,696 49,395 61,091 8,040 1989 1/2007 Various — 16,916 68,849 — 3,995 16,916 72,844 89,760 11,962 1989 1/2007 Various — 7,747 30,423 — 3,354 7,747 33,777 41,524 5,447 1988 6/2007 Various — 13,516 53,228 — 2,524 13,516 55,752 69,268 9,008 1987 1/2007 Various — 38,889 — 285 1 39,174 1 39,175 — — 1/2007 Various — — 35,727 — 12,008 — 47,735 47,735 18,538 1928 8/1997 Various — 36,677 145,954 — 4,640 36,677 150,594 187,271 24,420 1925 6/2006 Various — 34,000 46,411 — 4,214 34,000 50,625 84,625 3,424 1921 5/2011 Various — 54,189 75,619 300 1,109 54,489 76,728 131,217 1,715 1930 6/2012 Various — 24,179 37,158 164 803 24,343 37,961 62,304 234 1902 9/2012 Various — 45,668 67,316 308 430 45,976 67,746 113,722 629 1902 9/2012 Various — 1,128 — 84 4,692 1,212 4,692 5,904 — — — Various $ 500,000 $ 951,484 $ 4,157,464 $ 3,247 $ 283,740 $ 954,731 $ 4,441,204 $ 5,395,935 $ 742,659 (1) Property located in New York, New York. (2) Properties that were transferred in. (3) We own a 51% interest in this property. (4) Property located in Westchester County, New York. (5) Property located in Connecticut. (6) Other includes tenant improvements, capitalized interest and corporate improvements. (1)Property located in New York, New York.(2)Property located in Westchester County, New York.(3)Property located in Connecticut.(4)We own a 51% interest in this property.(5)Other includes tenant improvements, capitalized interest and corporate improvements.(6)Properties that were transferred in. 2011 and 20102011, respectively, are as follows: 2012 2011 2010 As Adjusted As Adjusted 2013 2012 2011 $ 5,048,410 $ 4,918,508 $ 4,873,816 $ 5,395,935 $ 5,048,410 $ 4,918,508 306,280 80,411 — 386,775 306,280 80,411 42,467 54,065 44,891 89,055 42,467 54,065 (1,222 ) (4,574 ) (199 ) (208,784 ) (1,222 ) (4,574 ) $ 5,395,935 $ 5,048,410 $ 4,918,508 $ 5,662,981 $ 5,395,935 $ 5,048,410 20122013 was approximately $3.1$3.9 billion.Reckson Operating Partnership, L.P.Schedule III—Real Estate And Accumulated Depreciation (Continued)December 31, 2012(Dollars in thousands) 2011 and 20102011, respectively, are as follows: 2012 2011 2010 As Adjusted As Adjusted 2013 2012 2011 $ 613,543 $ 493,557 $ 375,228 $ 742,659 $ 613,543 $ 493,557 130,333 124,010 118,500 131,940 125,063 118,881 (1,217 ) (4,024 ) (171 ) (25,268 ) 4,053 1,105 $ 742,659 $ 613,543 $ 493,557 $ 849,331 $ 742,659 $ 613,543 20122013 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) (COSO). Based on that evaluation, we concluded that our internal control over financial reporting was effective as of December 31, 2012.20122013 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting. None.20132014 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act, on or prior to April 30, 2013,2014, for the information required by Items 10, 11, 12 and 13 with respect to SL Green and which is incorporated herein by reference.20122013 and 20112012 were as follows:20122013 and 20112012 and for the reviews of the financial statements included in ROP's Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 20122013 and 20112012 were approximately $230,000 and $217,000 for each year, respectively.$164,000$118,000 and $37,000$164,000 for the years ended December 31, 2013 and 2012, and 2011, respectively.and 2011, respectively.fiscal years ended December 31, 20122013 and 2011.2012.20122013 for filing with the SEC.RECKSON OPERATING PARTNERSHIP, L.P. ••••PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES Incorporated by Reference Incorporated by Reference Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed
Herewith Exhibit Description Form File No. Exhibit 3.1 Amended and Restated Agreement of Limited Partnership of ROP S-11 333-1280 10.1 2/12/96 Amended and Restated Agreement of Limited Partnership of ROP S-11 333-1280 10.1 2/12/1996
3.2
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series A Preferred Units of Limited Partnership Interest
8-K
1-13762
10.1
3/1/99
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series A Preferred Units of Limited Partnership Interest 8-K 1-13762 10.1 3/1/1999
3.3
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series B Preferred Units of Limited Partnership Interest
8-K
1-13762
10.2
3/1/99
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series B Preferred Units of Limited Partnership Interest 8-K 1-13762 10.2 3/1/1999
3.4
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series C Preferred Units of Limited Partnership Interest
8-K
1-13762
10.3
3/1/99
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series C Preferred Units of Limited Partnership Interest 8-K 1-13762 10.3 3/1/1999
3.5
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series D Preferred Units of Limited Partnership Interest
8-K
1-13762
10.4
3/1/99
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series D Preferred Units of Limited Partnership Interest 8-K 1-13762 10.4 3/1/1999
3.6
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series B Common Units of Limited Partnership Interest
10-K
1-13762
10.6
3/17/00
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series B Common Units of Limited Partnership Interest 10-K 1-13762 10.6 3/17/2000
3.7
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series E Preferred Partnership Units of Limited Partnership Interest
10-K
1-13762
10.7
3/17/00
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing Series E Preferred Partnership Units of Limited Partnership Interest 10-K 1-13762 10.7 3/17/2000
3.8
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing the Series F Junior Participating Preferred Partnership Units
10-K
1-13762
10.8
3/22/01
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing the Series F Junior Participating Preferred Partnership Units 10-K 1-13762 10.8 3/22/2001
3.9
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing the Series C Common Units of Limited Partnership Interest
10-Q
1-13762
10.4
8/14/03
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing the Series C Common Units of Limited Partnership Interest 10-Q 1-13762 10.4 8/14/2003
3.10
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing LTIP Units of Limited Partnership Interest
8-K
1-13762
10.4
12/29/04
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing LTIP Units of Limited Partnership Interest 8-K 1-13762 10.4 12/29/2004
3.11
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing 2005 LTIP Units of Limited Partnership Interest
10-K
1-13762
10.11
3/10/06
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing 2005 LTIP Units of Limited Partnership Interest 10-K 1-13762 10.11 3/10/2006
3.12
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing 2006 LTIP Units of Limited Partnership Interest
10-Q
033-84580
3.1
5/15/06
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP Establishing 2006 LTIP Units of Limited Partnership Interest 10-Q 033-84580 3.1 5/15/2006
3.13
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP relating to the succession as a general partner of WAGP
10-K
033-84580
3.12
3/31/08
Supplement to the Amended and Restated Agreement of Limited Partnership of ROP relating to the succession as a general partner of WAGP 10-K 033-84580 3.12 3/31/2008 PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES Incorporated by Reference Incorporated by Reference Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed
Herewith Exhibit Description Form File No. Exhibit 4.1 Indenture, dated as of March 26, 1999, among ROP, as Issuer, RARC, as Guarantor, and The Bank of New York, as Trustee 8-K 1-13762 4.3 3/26/99 Indenture, dated as of March 26, 1999, among ROP, as Issuer, RARC, as Guarantor, and The Bank of New York, as Trustee 8-K 1-13762 4.3 3/26/1999
4.2
First Supplemental Indenture, dated as of January 25, 2007, by and among ROP, RARC, The Bank of New York and SL Green
8-K
1-13762
10.1
1/30/07
First Supplemental Indenture, dated as of January 25, 2007, by and among ROP, RARC, The Bank of New York and SL Green 8-K 1-13762 10.1 1/30/2007
4.3
Form of 5.875% Notes due 2014
8-K
033-84580
4.1
8/12/04
Form of 5.875% Notes due 2014 8-K 033-84580 4.1 8/12/2004
4.4
Form of 4.00% Exchangeable Senior Debentures due 2025
8-K
1-13762
4.1
6/27/05
Form of 4.00% Exchangeable Senior Debentures due 2025 8-K 1-13762 4.1 6/27/2005
4.5
Form of 6.0% Notes due 2016
8-K
1-13762
4.1
3/31/06
Form of 6.0% Notes due 2016 8-K 1-13762 4.1 3/31/2006
4.6
Indenture, dated as of March 16, 2010, among ROP, as Issuer, SL Green and the operating partnership, as Co-Obligors, and The Bank of New York Mellon, as Trustee
8-K
033-84580
4.1
3/17/10
Indenture, dated as of March 16, 2010, among ROP, as Issuer, SL Green and the Operating Partnership, as Co-Obligors, and The Bank of New York Mellon, as Trustee 8-K 033-84580 4.1 3/17/2010
4.7
Form of 7.75% Senior Note due 2020 of ROP, SL Green and the operating partnership
8-K
033-84580
4.2
3/17/10
Form of 7.75% Senior Note due 2020 of ROP, SL Green and the Operating Partnership 8-K 033-84580 4.2 3/17/2010
4.8
Indenture, dated as of October 12, 2010, by and among the operating partnership, as Issuer, ROP, as Guarantor, SL Green and The Bank of New York Mellon, as Trustee
8-K
033-84580
4.1
10/14/10
Indenture, dated as of October 12, 2010, by and among the Operating Partnership, as Issuer, ROP, as Guarantor, SL Green and The Bank of New York Mellon, as Trustee 8-K 033-84580 4.1 10/14/2010
4.9
Form of 3.00% Exchangeable Senior Notes due 2017 of the operating partnership
8-K
033-84580
4.2
10/14/10
Form of 3.00% Exchangeable Senior Notes due 2017 of the Operating Partnership 8-K 033-84580 4.2 10/14/2010
4.10
Indenture, dated as of August 5, 2011, among SL Green, the operating partnership and ROP, as Co-Obligors, and The Bank of New York Mellon, as Trustee
8-K
033-84580
4.1
08/05/11
Indenture, dated as of August 5, 2011, among SL Green, the Operating Partnership and ROP, as Co-Obligors, and The Bank of New York Mellon, as Trustee 8-K 033-84580 4.1 8/5/2011
4.11
First Supplemental Indenture, dated as of August 5, 2011, among SL Green, the operating partnership and ROP, as Co-Obligors, and The Bank of New York Mellon, as Trustee
8-K
033-84580
4.2
08/05/11
First Supplemental Indenture, dated as of August 5, 2011, among SL Green, the Operating Partnership and ROP, as Co-Obligors, and The Bank of New York Mellon, as Trustee 8-K 033-84580 4.2 8/5/2011
4.12
Form of 5.00% Senior Note due 2018 of SL Green, the operating partnership and ROP
8-K
033-84580
4.3
08/05/11
Form of 5.00% Senior Note due 2018 of SL Green, the Operating Partnership and ROP 8-K 033-84580 4.3 8/5/2011
4.13
Second Supplemental Indenture, dated as of November 15, 2012, among SL Green, the operating partnership and ROP, as Co-Obligors, and The Bank of New York Mellon, as Trustee
8-K
033-84580
4.1
11/15/12
Second Supplemental Indenture, dated as of November 15, 2012, among SL Green, the Operating Partnership and ROP, as Co-Obligors, and The Bank of New York Mellon, as Trustee 8-K 033-84580 4.1 11/15/2012
4.14
Form of 4.50% Senior Note due 2022 of SL Green, the operating partnership and ROP
8-K
033-84580
4.2
11/15/12
Form of 4.50% Senior Note due 2022 of SL Green, the Operating Partnership and ROP 8-K 033-84580 4.2 11/15/2012 PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES Incorporated by Reference Incorporated by Reference Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed
Herewith Exhibit Description Form File No. Exhibit 10.1 Amended and Restated Credit Agreement, dated as of November 16, 2012, by and among SL Green, the operating partnership and ROP, as Borrowers, each of the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, with Wells Fargo Securities, LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc., as the Lead Arrangers, Wells Fargo Securities, LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities, Inc., as the Joint Bookrunners, JPMorgan Chase Bank, N.A., as Syndication Agent, and Deutsche Bank Securities Inc., Bank of America, N.A. and Citigroup Global Markets Inc. as the Documentation Agents and the other agents party thereto 8-K 033-84580 10.1 11/21/12 Amended and Restated Credit Agreement, dated as of November 16, 2012, by and among SL Green, the Operating Partnership and ROP, as Borrowers, each of the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, with Wells Fargo Securities, LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc., as the Lead Arrangers, Wells Fargo Securities, LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities, Inc., as the Joint Bookrunners, JPMorgan Chase Bank, N.A., as Syndication Agent, and Deutsche Bank Securities Inc., Bank of America, N.A. and Citigroup Global Markets Inc. as the Documentation Agents and the other agents party thereto 8-K 033-84580 10.1 11/21/2012
10.2
Amended and Restated Employment Agreement, dated as of December 18, 2009, between SL Green and Marc Holliday*
8-K
1-13199
10.1
12/24/09
First Amendment to Amended and Restated Credit Agreement, dated as of March 21, 2014, by and among SL Green Realty Corp., SL Green Operating Partnership, L.P. and Reckson Operating Partnership, L.P., as Borrowers, each of the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, with Wells Fargo Securities, LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc., as the Lead Arrangers, Wells Fargo Securities, LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities, Inc., as the Joint Bookrunners, JPMorgan Chase Bank, N.A., as Syndication Agent, and U.S. Bank National Association, Deutsche Bank Securities Inc., Bank of America, N.A. and Citigroup Global Markets Inc. as the Documentation Agents and the other agents party thereto 8-K 033-84580 10.1 3/24/2014
10.3
Employment Agreement, dated as of November 4, 2010, by and between SL Green and James Mead*
8-K
1-13199
10.1
11/10/10
Amended and Restated Employment and Non-competition Agreement, dated as of September 12, 2013, between SL Green and Marc Holliday* 8-K 1-13199 10.1 9/12/2013
10.4
Amended and Restated Employment and Non-competition Agreement, dated as of December 23, 2010, between SL Green and Andrew Levine*
8-K
1-13199
10.3
12/29/10
Employment and Non-competition Agreement, dated as of October 28, 2013, by and between SL Green and James Mead* 8-K 1-13199 10.1 10/28/2013
10.5
Registration Rights Agreement, dated as of October 12, 2010, by and among the operating partnership, ROP, SL Green and Citigroup Global Markets Inc.
8-K
1-13762
10.1
10/14/10
Amended and Restated Employment and Non-competition Agreement, dated as of June 27, 2013, between SL Green and Andrew Levine* 8-K 1-13199 10.3 7/3/2013 10.6 Registration Rights Agreement, dated as of October 12, 2010, by and among the operating partnership, ROP, SL Green and Citigroup Global Markets Inc. 8-K 1-13762 10.1 10/14/2010
12.1
Ratio of Earnings to Combined Fixed Charges
X Ratio of Earnings to Combined Fixed Charges X
21.1
Statement of Subsidiaries
X Statement of Subsidiaries X
23.1
Consent of Independent Registered Public Accounting Firm
X Consent of Independent Registered Public Accounting Firm X
31.1
Certification of Marc Holliday President of Wyoming Acquisition GP LLC, the sole general partner of Registrant, pursuant to Rule 13a—14(a) or Rule 15(d)—14(a)
X
31.2
Certification of James Mead, Treasurer of Wyoming Acquisition GP LLC, the sole general partner of Registrant, pursuant to Rule 13a—14(a) or Rule 15(d)—14(a)
XPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULESIncorporated by Reference Exhibit Description Form File No. Exhibit 31.1 DateFiledCertification of Marc Holliday President of Wyoming Acquisition GP LLC, the sole general partner of Registrant, pursuant to Rule 13a—14(a) or Rule 15(d)—14(a) X 31.2 HerewithCertification of James Mead, Treasurer of Wyoming Acquisition GP LLC, the sole general partner of Registrant, pursuant to Rule 13a—14(a) or Rule 15(d)—14(a) X 32.1 Certification of Marc Holliday, President of Wyoming Acquisition GP LLC, the sole general partner of Registrant, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code X 32.2 X32.2
Certification of James Mead, Treasurer of Wyoming Acquisition GP LLC, the sole general partner of Registrant, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
X
101.1The following financial statements from ROP's Annual Report on Form 10-K for the year ended December 31, 2012,2013, formatted in XBRL: (i) Consolidated Balance Sheets as of December 31, 20122013 and 2011,2012, (ii) Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011, and 2010, (iii)(iv) Consolidated Statements of Capital for the years ended December 31, 2013, 2012 and 2011, and 2010, (iv)(v) Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011, and 2010, and (v)(vi) Notes to Consolidated Financial Statements, detailed tagged**tagged
X*Management contracts to be filed as an exhibit to this Form 10-K pursuant to Item 15(b).**In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.* Management contracts to be filed as an exhibit to this Form 10-K pursuant to Item 15(b). 19, 2013.25, 2014. RECKSON OPERATING PARTNERSHIP, L.P.
BY: WYOMING ACQUISITION GP LLC
By:
/s/ JAMES MEADTreasurer19, 2013.25, 2014.Signature Title
Title/s/ MARC HOLLIDAY Marc Holliday
Marc Holliday/s/ JAMES MEAD James Mead
James Mead/s/ ANDREW S. LEVINE Andrew S. Levine
Director of WAGP, the sole general partner of the RegistrantAndrew S. Levine