UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20132014
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to
Commission File Number: 1-13199 (SL Green Realty Corp.)
Commission File Number: 33-167793-02 (SL Green Operating Partnership, L.P.)


SL GREEN REALTY CORP.
SL GREEN OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)

SL Green Realty Corp.Maryland 13-3956775
SL Green Operating Partnership, L.P.Delaware 13-3960938
 
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
420 Lexington Avenue, New York, New York 10170
(Address of principal executive offices) (Zip Code)
 
(212) 594-2700
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
SL Green Realty Corp. YES x  NO o SL Green Operating Partnership, L.P. YES x  NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
SL Green Realty Corp. YES x  NO o SL Green Operating Partnership, L.P. YES x  NO o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
SL Green Realty Corp.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller Reporting Company o
(Do not check if a
smaller reporting company)
Smaller Reporting Company o
SL Green Operating Partnership, L.P.
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller Reporting Company o
(Do not check if a
smaller reporting company)
Smaller Reporting Company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
SL Green Realty Corp. YES o NO x SL Green Operating Partnership, L.P. YES o  NO x
The number of shares outstanding of SL Green Realty Corp.'s common stock, $0.01 par value, was 92,260,23995,599,482 as of OctoberJuly 31, 2013.2014. As of OctoberJuly 31, 2013, 879,1832014, 876,199 common units of limited partnership interest of SL Green Operating Partnership, L.P. were held by non-affiliates. There is no established trading market for such units.
 



EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended SeptemberJune 30, 20132014 of SL Green Realty Corp. and SL Green Operating Partnership, L.P. Unless stated otherwise or the context otherwise requires, references to "SL Green Realty Corp.," the "Company" or "SL Green" mean SL Green Realty Corp. and its consolidated subsidiaries; and references to "SL Green Operating Partnership, L.P.," the "Operating Partnership" or "SLGOP" mean SL Green Operating Partnership, L.P. and its consolidated subsidiaries. The terms "we,'" "our" and "us" mean the Company and all the entities owned or controlled by the Company, including the Operating Partnership.

The Company is a Maryland corporation which operates as a self-administered and self-managed Maryland real estate investment trust, ("REIT")or REIT, and is the sole managing general partner of the Operating Partnership. As a general partner of the Operating Partnership, the Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership.

The Company owns 97.06%96.47% of the outstanding general and limited partnership interest in the Operating Partnership. The Company also owns 9,200,000 Series I Preferred units inUnits of the Operating Partnership. As of SeptemberJune 30, 2013,2014, noncontrolling investors held, in aggregate, a 2.94%3.53% limited partnership interest in the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership.

The Company and the Operating Partnership are managed and operated as one entity. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.

Noncontrolling interests in the Operating Partnership, stockholders' equity of the Company and partners' capital of the Operating Partnership are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership not owned by the Company are accounted for as partners' capital in the Operating Partnership’s consolidated financial statements and as noncontrolling interests, within mezzanine equity, in the Company's consolidated financial statements.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:

Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
Combined reports eliminate duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Company and the Operating Partnership; and
Combined reports create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

consolidated financial statements;
the following notes to the consolidated financial statements:
◦Note 11, Noncontrolling Interest on the Company’s Consolidated Financial Statements;
◦Note 12, Stockholders' Equity of the Company;
◦Note 13, Partners' Capital of the Operating Partnership;
◦Note 15, Accumulated Other Comprehensive Loss of the Company; and
◦Note 16, Accumulated Other Comprehensive Loss of the Operating Partnership.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership, respectively, in order to establish that the Chief Executive Officer and the Chief Financial Officer of the Company, in both their capacity as the principal executive officer and principal financial officer of the Company and the principal executive officer and principal financial officer of the general partner of the Operating Partnership, have made the requisite certifications and that the Company and the Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.


i(i)

SL GREEN REALTY CORP. AND SL GREEN OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS

PART I.PAGE
FINANCIAL INFORMATION 
PART I.
FINANCIAL INFORMATION
ITEMItem 1.
FINANCIAL STATEMENTS
 
 FINANCIAL STATEMENTS OF SL GREEN REALTY CORP. 
 
Consolidated Balance Sheets as of SeptemberJune 30, 20132014 (unaudited) and December 31, 20122013
15
 
Consolidated Statements of Income for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013 (unaudited)
27
 
Consolidated Statements of Comprehensive Income for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013 (unaudited)
39
 
Consolidated Statement of Equity for the ninesix months ended SeptemberJune 30, 20132014 (unaudited)
410
 
Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20132014 and 20122013 (unaudited)
511
 FINANCIAL STATEMENTS OF SL GREEN OPERATING PARTNERSHIP, L.P. 
 
Consolidated Balance Sheets as of SeptemberJune 30, 20132014 (unaudited) and December 31, 20122013
613
 
Consolidated Statements of Income for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013 (unaudited)
715
 
Consolidated Statements of Comprehensive Income for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013 (unaudited)
817
 
Consolidated Statement of Capital for the ninesix months ended SeptemberJune 30, 20132014 (unaudited)
918
 
Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20132014 and 20122013 (unaudited)
1019
 
Notes to Consolidated Financial Statements (unaudited)
1121
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
56
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
79
Item 4.
Controls and Procedures (SL Green Realty Corp. and SL Green Operating Partnership, L.P.)
79
PART IIOTHER INFORMATION
Item 1.
Legal Proceedings
81
Item 1A.
Risk Factors
81
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
81
Item 3.
Defaults Upon Senior Securities
81
Item 4.
Mine Safety Disclosures
81
Item 5.
Other Information
81
Item 6.
Exhibits
82
 
ITEM 2.Signatures
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
48
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
72
ITEM 4.
CONTROLS AND PROCEDURES
72
PART II.
OTHER INFORMATION
74
ITEM 1.
LEGAL PROCEEDINGS
74
ITEM 1A.
RISK FACTORS
74
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
74
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
74
ITEM 4.
MINE SAFETY DISCLOSURES
74
ITEM 5.
OTHER INFORMATION
74
ITEM 6.
EXHIBITS
75
SIGNATURES
7683

Table of Contents

PART I.FINANCIAL INFORMATION
ITEM 1.Financial Statements

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)
 June 30, 2014 December 31, 2013
 (unaudited)  
Assets   
Commercial real estate properties, at cost:   
Land and land interests$3,466,587
 $3,032,526
Building and improvements8,843,315
 7,884,663
Building leasehold and improvements1,390,004
 1,366,281
Properties under capital lease27,445
 50,310
 13,727,351
 12,333,780
Less: accumulated depreciation(1,769,428) (1,646,240)
 11,957,923
 10,687,540
Assets held for sale339,809
 —
Cash and cash equivalents308,103
 206,692
Restricted cash157,225
 142,051
Investment in marketable securities39,912
 32,049
Tenant and other receivables, net of allowance of $20,026 and $17,325 in 2014 and 2013, respectively51,844
 60,393
Related party receivables8,915
 8,530
Deferred rents receivable, net of allowance of $27,616 and $30,333 in 2014 and 2013, respectively354,388
 386,508
Debt and preferred equity investments, net of discounts and deferred origination fees of $14,633 and $18,593 in 2014 and 2013, respectively, and allowance of $1,000 in 20131,547,808
 1,304,839
Investments in unconsolidated joint ventures971,926
 1,113,218
Deferred costs, net300,043
 267,058
Other assets679,840
 750,123
Total assets$16,717,736
 $14,959,001
Liabilities   
Mortgages and other loans payable$5,939,176
 $4,860,578
Revolving credit facility—
 220,000
Term loan and senior unsecured notes2,127,206
 1,739,330
Accrued interest payable and other liabilities128,730
 114,622
Accounts payable and accrued expenses164,215
 145,889
Deferred revenue223,394
 263,261
Capitalized lease obligations20,635
 47,671
Deferred land leases payable1,044
 22,185
Dividend and distributions payable53,193
 52,255
Security deposits65,166
 61,308
Liabilities related to assets held for sale193,375
 —
Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities100,000
 100,000
Total liabilities9,016,134
 7,627,099
Commitments and contingencies—
 —
Noncontrolling interests in the Operating Partnership379,805
 265,476
Preferred Units49,550
 49,550

5
Table of Contents
SL Green Realty Corp.
Consolidated Balance Sheets (cont.)
(in thousands, except per share data)


  September 30,
2013		 December 31,
2012
  (Unaudited)  
Assets  
  
Commercial real estate properties, at cost:  
  
Land and land interests $2,868,833
 $2,886,099
Building and improvements 7,440,543
 7,389,766
Building leasehold and improvements 1,353,997
 1,346,748
Properties under capital lease 50,332
 40,340
  11,713,705
 11,662,953
Less: accumulated depreciation (1,574,002) (1,393,323)
  10,139,703
 10,269,630
Assets held for sale —
 4,901
Cash and cash equivalents 209,098
 189,984
Restricted cash 356,844
 136,071
Investment in marketable securities 32,863
 21,429
Tenant and other receivables, net of allowance of $22,383 and $21,652 in 2013 and 2012, respectively 51,354
 48,544
Related party receivables 7,800
 7,531
Deferred rents receivable, net of allowance of $29,508 and $29,580 in 2013 and 2012, respectively 374,615
 340,747
Debt and preferred equity investments, net of discounts and deferred origination fees of $26,466 and $22,341 in 2013 and 2012, and allowance of $4,000 and $7,000 in 2013 and 2012, respectively 1,315,551
 1,348,434
Investments in unconsolidated joint ventures 1,109,815
 1,032,243
Deferred costs, net 247,850
 261,145
Other assets 729,426
 718,326
Total assets $14,574,919
 $14,378,985
Liabilities  
  
Mortgages and other loans payable $4,641,758
 $4,615,464
Revolving credit facility 340,000
 70,000
Term loan and senior unsecured notes 1,737,869
 1,734,956
Accrued interest payable and other liabilities 69,359
 73,769
Accounts payable and accrued expenses 167,719
 159,598
Deferred revenue 293,393
 312,995
Capitalized lease obligations 47,492
 37,518
Deferred land leases payable 21,066
 20,897
Dividend and distributions payable 34,749
 37,839
Security deposits 54,824
 46,253
Liabilities related to assets held for sale —
 136
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities 100,000
 100,000
Total liabilities 7,508,229
 7,209,425
Commitments and contingencies —
 —
Noncontrolling interest in the Operating Partnership 248,046
 212,907
Series G Preferred Units, $25.00 liquidation preference, 1,902 issued and outstanding at both September 30, 2013 and December 31, 2012 47,550
 47,550
Series H Preferred Units, $25.00 liquidation preference, 80 issued and outstanding at both September 30, 2013 and December 31, 2012 2,000
 2,000
Equity  
  
SL Green stockholders’ equity:  
  
Series C Preferred Stock, $0.01 par value, $25.00 liquidation preference, 7,700 issued and outstanding at December 31, 2012 —
 180,340
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both September 30, 2013 and December 31, 2012 221,932
 221,965
Common stock, $0.01 par value, 160,000 shares authorized and 95,780 and 94,896 issued and outstanding at September 30, 2013 and December 31, 2012, respectively (including 3,566 and 3,646 shares held in Treasury at September 30, 2013 and December 31, 2012, respectively) 959
 950
Additional paid-in-capital 4,757,778
 4,667,900
Treasury stock at cost (316,989) (322,858)
Accumulated other comprehensive loss (19,249) (29,587)
Retained earnings 1,636,584
 1,701,092
Total SL Green stockholders’ equity 6,281,015
 6,419,802
Noncontrolling interests in other partnerships 488,079
 487,301
Total equity 6,769,094
 6,907,103
Total liabilities and equity $14,574,919
 $14,378,985
 June 30, 2014 December 31, 2013
 (unaudited)  
Equity   
SL Green stockholders' equity:   
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both June 30, 2014 and December 31, 2013221,932
 221,932
Common stock, $0.01 par value, 160,000 shares authorized and 99,188 and 98,563 issued and outstanding at June 30, 2014 and December 31, 2013, respectively (including 3,601 and 3,570 shares held in Treasury at June 30, 2014 and December 31, 2013, respectively)993
 986
Additional paid-in-capital5,085,965
 5,015,904
Treasury stock at cost(320,152) (317,356)
Accumulated other comprehensive loss(6,196) (15,211)
Retained earnings1,797,580
 1,619,150
Total SL Green stockholders' equity6,780,122
 6,525,405
Noncontrolling interests in other partnerships492,125
 491,471
Total equity7,272,247
 7,016,876
Total liabilities and equity$16,717,736
 $14,959,001
The accompanying notes are an integral part of these financial statements.

16
Table of Contents

SL Green Realty Corp.
Consolidated Statements of Income
(unaudited, in thousands, except per share data)
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended June 30, Six Months Ended June 30,
 2013 2012 2013 2012 2014 2013 2014 2013
Revenues  
  
  
  
        
Rental revenue, net $264,349
 $277,676
 $804,104
 $798,271
 $285,234
 $262,743
 $551,755
 $518,560
Escalation and reimbursement 45,091
 42,194
 125,018
 124,273
 39,529
 38,747
 79,912
 78,551
Investment and preferred equity income 44,448
 27,869
 143,887
 87,655
Investment income 39,714
 46,731
 93,798
 99,439
Other income 9,877
 9,272
 21,369
 25,931
 22,750
 5,723
 37,331
 11,015
Total revenues 363,765
 357,011
 1,094,378
 1,036,130
 387,227
 353,944
 762,796
 707,565
Expenses  
  
  
  
        
Operating expenses, including approximately $4,876 and $13,345 (2013) and $4,670 and $12,914 (2012) paid to related parties 77,272
 82,351
 218,901
 221,670
Operating expenses, including $4,450 and $7,861 (2014) and $3,953 and $7,842 (2013) of related party expenses 70,675
 68,611
 144,160
 139,780
Real estate taxes 55,511
 53,293
 161,625
 156,746
 53,267
 51,749
 108,583
 104,203
Ground rent 10,127
 8,874
 29,767
 26,570
 8,040
 7,930
 16,073
 16,058
Interest expense, net of interest income 82,973
 85,659
 247,420
 247,789
 78,611
 79,551
 156,330
 157,860
Amortization of deferred financing costs 4,331
 4,493
 13,034
 11,626
 5,500
 4,229
 9,357
 8,681
Depreciation and amortization 87,473
 81,827
 248,587
 233,566
 94,838
 81,577
 184,217
 160,200
Loan loss and other investment reserves, net of recoveries —
 —
 —
 564
Transaction related costs, net of recoveries (2,349) 1,372
 719
 4,398
 1,697
 1,706
 4,171
 3,085
Marketing, general and administrative 20,869
 20,551
 63,450
 61,469
 23,872
 21,514
 47,128
 42,582
Total expenses 336,207
 338,420
 983,503
 964,398
 336,500
 316,867
 670,019
 632,449
Income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate, gain (loss) on sale of investment in marketable securities, purchase price fair value adjustment and loss on early extinguishment of debt 27,558
 18,591
 110,875
 71,732
Equity in net income from unconsolidated joint ventures 2,939
 11,658
 4,251
 80,988
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate (354) (4,807) (3,937) 17,776
Gain (loss) on sale of investment in marketable securities —
 2,237
 (65) 2,237
Income from continuing operations before equity in net income (loss) from unconsolidated joint ventures, equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate, purchase price fair value adjustment, loss on sale of investment in marketable securities and loss on early extinguishment of debt 50,727
 37,077
 92,777
 75,116
Equity in net income (loss) from unconsolidated joint ventures 8,619
 (3,761) 14,748
 1,313
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 1,444
 (3,583) 106,084
 (3,583)
Purchase price fair value adjustment —
 —
 (2,305) —
 71,446
 (2,305) 71,446
 (2,305)
Loss on sale of investment in marketable securities —
 (8) —
 (65)
Loss on early extinguishment of debt —
 —
 (18,523) —
 (1,028) (10) (1,025) (18,523)
Income from continuing operations 30,143
 27,679
 90,296
 172,733
 131,208
 27,410
 284,030
 51,953
Net income from discontinued operations 1,406
 951
 1,725
 2,883
 4,389
 3,838
 8,178
 8,519
Gain on sale of discontinued operations 13,787
 —
 14,900
 6,627
 114,735
 —
 114,735
 1,113
Net income 45,336
 28,630
 106,921
 182,243
 250,332
 31,248
 406,943
 61,585
Net income attributable to noncontrolling interests:  
  
  
  
        
Noncontrolling interests in the Operating Partnership (1,110) (567) (1,909) (4,876) (8,645) (244) (13,374) (799)
Noncontrolling interests in other partnerships (2,901) (1,835) (8,806) (6,792) (1,843) (3,004) (3,333) (5,905)
Preferred unit distributions (562) (571) (1,692) (1,533)
Preferred units distribution (565) (565) (1,130) (1,130)
Net income attributable to SL Green 40,763
 25,657
 94,514
 169,042
 239,279
 27,435
 389,106
 53,751
Preferred stock redemption costs —
 (10,010) (12,160) (10,010) —
 (12,160) —
 (12,160)
Perpetual preferred stock dividends (3,738) (7,915) (18,144) (23,004) (3,738) (6,999) (7,475) (14,406)
Net income attributable to SL Green common stockholders $37,025
 $7,732
 $64,210
 $136,028
 $235,541
 $8,276
 $381,631
 $27,185
Amounts attributable to SL Green common stockholders:
  
  
  
  
        
Income from continuing operations $22,623
 $11,451
 $54,125
 $109,687
 $50,346
 $10,268
 $91,361
 $23,549
Purchase price fair value adjustment —
 —
 (2,239) —
 68,909
 (2,240) 69,027
 (2,239)
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate (344) (4,636) (3,825) 17,160
Net income from discontinued operations 1,365
 917
 1,676
 2,783
Gain on sale of discontinued operations 13,381
 —
 14,473
 6,398
Net income $37,025
 $7,732
 $64,210
 $136,028
Basic earnings per share:  
  
  
  
Income from continuing operations before discontinued operations $0.25
 $0.13
 $0.57
 $1.24
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate —
 (0.05) (0.04) 0.19
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 1,393
 (3,482) 102,492
 (3,481)
Net income from discontinued operations —
 0.01
 0.01
 0.03
 4,233
 3,730
 7,901
 8,275
Gain on sale of discontinued operations 0.15
 —
 0.16
 0.07
 110,660
 —
 110,850
 1,081
Net income attributable to SL Green common stockholders $0.40
 $0.09
 $0.70
 $1.53
 $235,541
 $8,276
 $381,631
 $27,185
Diluted earnings per share:  
  
  
  
Income from continuing operations before discontinued operations $0.25
 $0.13
 $0.56
 $1.23
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate —
 (0.05) (0.04) 0.19
Net income from discontinued operations —
 0.01
 0.02
 0.03
Gain on sale of discontinued operations 0.15
 —
 0.16
 0.07
Net income attributable to SL Green common stockholders $0.40
 $0.09
 $0.70
 $1.52
Dividends per share $0.33
 $0.25
 $0.99
 $0.75
Basic weighted average common shares outstanding 91,988
 90,241
 91,684
 88,929
Diluted weighted average common shares and common share equivalents outstanding 95,016
 93,891
 94,631
 92,485
        

7
Table of Contents
SL Green Realty Corp.
Consolidated Statements of Income (cont.)
(unaudited, in thousands, except per share data)


  Three Months Ended June 30, Six Months Ended June 30,
  2014 2013 2014 2013
Basic earnings per share:        
Income from continuing operations before gains (loss) on sale and discontinued operations $1.25
 $0.09
 $1.69
 $0.23
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 0.02
 (0.04) 1.08
 (0.03)
Net income from discontinued operations 0.04
 0.04
 0.08
 0.09
Gain on sale of discontinued operations 1.16
 —
 1.16
 0.01
Net income attributable to SL Green common stockholders $2.47
 $0.09
 $4.01
 $0.30
Diluted earnings per share:        
Income from continuing operations before gains (loss) on sale and discontinued operations $1.24
 $0.09
 $1.68
 $0.23
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 0.02
 (0.04) 1.07
 (0.03)
Net income from discontinued operations 0.05
 0.04
 0.08
 0.09
Gain on sale of discontinued operations 1.15
 —
 1.16
 0.01
Net income attributable to SL Green common stockholders $2.46
 $0.09
 $3.99
 $0.30
Dividends per share $0.50
 $0.33
 $1.00
 $0.66
Basic weighted average common shares outstanding 95,455
 91,660
 95,288
 91,530
Diluted weighted average common shares and common share equivalents outstanding 99,484
 94,536
 99,128
 94,452
The accompanying notes are an integral part of these financial statements.

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Table of Contents

SL Green Realty Corp.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)
  Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2013 2012 2013 2012
Net income $45,336
 $28,630
 $106,921
 $182,243
         
Other comprehensive (loss) income:  
  
  
  
Change in net unrealized (loss) gain on derivative instruments, including SL Green's share of joint venture net unrealized (loss) gain on derivative instruments (1,165) (102) 10,522
 (635)
Change in unrealized gain (loss) on marketable securities 513
 (825) 306
 (597)
Other comprehensive (loss) income (652) (927) 10,828
 (1,232)
         
Comprehensive income 44,684
 27,703
 117,749
 181,011
         
Net income attributable to noncontrolling interests (4,573) (2,973) (12,407) (13,201)
Other comprehensive loss (income) attributable to noncontrolling interests in the Operating Partnership 25
 59
 (490) 396
         
Comprehensive income attributable to SL Green common stockholders $40,136
 $24,789
 $104,852
 $168,206
  Three Months Ended June 30, Six Months Ended June 30,
  2014 2013 2014 2013
Net income $250,332
 $31,248
 $406,943
 $61,585
Other comprehensive income: 
 
    
Change in net unrealized gain on derivative instruments, including SL Green's share of joint venture net unrealized gain on derivative instruments 7,293
 9,799
 7,461
 11,687
Change in unrealized gain (loss) on marketable securities 1,659
 (1,848) 1,788
 (207)
Other comprehensive income 8,952
 7,951
 9,249
 11,480
Comprehensive income 259,284
 39,199
 416,192
 73,065
Net income attributable to noncontrolling interests (11,053) (3,813) (17,837) (7,834)
Other comprehensive income attributable to noncontrolling interests (276) (456) (234) (515)
Comprehensive income attributable to SL Green $247,955
 $34,930
 $398,121
 $64,716
The accompanying notes are an integral part of these financial statements.


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Table of Contents

SL Green Realty Corp.
Consolidated Statement of Equity
(unaudited, in thousands, except per share data)
SL Green Realty Corp. Stockholders     SL Green Realty Corp. Stockholders  
Series C
Preferred
Stock
 
Series I
Preferred
Stock
 Common Stock 
Additional
Paid-
In-Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
Noncontrolling
 Interests
     Common Stock            
 Shares 
Par
Value
 Total
Series I
Preferred
Stock
 Number of Shares 
Par
Value
 
Additional
Paid-In Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
Noncontrolling
Interests
 Total
Balance at December 31, 2012$180,340
 $221,965
 91,250
 $950
 $4,667,900
 $(322,858) $(29,587) $1,701,092
 $487,301
 $6,907,103
Balance at December 31, 2013 $221,932
 94,993
 $986
 $5,015,904
 $(317,356) $(15,211) $1,619,150
 $491,471
 $7,016,876
Net income 
  
  
  
  
  
  
 94,514
 8,806
 103,320
            
 389,106
 3,333
 392,439
Other comprehensive income 
  
  
  
  
  
 10,338
  
  
 10,338
           9,015
  
   9,015
Preferred dividends 
  
  
  
  
  
  
 (18,144)  
 (18,144)             (7,475)   (7,475)
DRIP proceeds 
  
  
  
 57
  
  
  
  
 57
   

 

 26
         26
Conversion of units of the Operating Partnership to common stock 
  
 224
 2
 17,285
  
  
  
  
 17,287
   233
 2
 23,064
         23,066
Reallocation of noncontrolling interest in the Operating Partnership 
  
  
  
  
  
  
 (38,452)  
 (38,452)             (107,925)   (107,925)
Deferred compensation plan    10
   655
 (221)       434
Deferred compensation plan and stock award, net   2
 —
 1,406
 (2,796)       (1,390)
Amortization of deferred compensation plan 
  
 

  
 19,702
  
  
  
  
 19,702
       17,069
         17,069
Redemption of preferred stock(180,340)  
  
  
  
  
  
 (12,160)  
 (192,500)
Preferred stock issuance costs 
 (33)  
  
  
  
  
  
  
 (33)
Issuance of common stock 
  
 462
 5
 41,786
  
  
  
  
 41,791
   82
 1
 8,749
         8,750
Sale of treasury stock 
  
 83
  
  
 6,090
  
  
  
 6,090
Proceeds from stock options exercised 
  
 185
 2
 10,393
  
  
  
  
 10,395
   277
 4
 19,747
         19,751
Contributions to consolidated joint venture 
  
  
  
  
  
  
  
 3,781
 3,781
Contributions to consolidated joint venture interest               1,673
 1,673
Cash distributions to noncontrolling interests 
  
  
  
  
  
  
  
 (11,809) (11,809)               (4,352) (4,352)
Cash distribution declared ($0.99 per common share, none of which represented a return of capital for federal income tax purposes) 
  
  
  
  
  
  
 (90,266)  
 (90,266)
Balance at September 30, 2013$—
 $221,932
 92,214
 $959
 $4,757,778
 $(316,989) $(19,249) $1,636,584
 $488,079
 $6,769,094
Cash distributions declared ($1.00 per common share, none of which represented a return of capital for federal income tax purposes)             (95,276)   (95,276)
Balance at June 30, 2014 $221,932
 95,587
 $993
 $5,085,965
 $(320,152) $(6,196) $1,797,580
 $492,125
 $7,272,247
The accompanying notes are an integral part of these financial statements.

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SL Green Realty Corp.
Consolidated Statements of Cash Flows
(unaudited, in thousands)thousands, except per share data)
 Six Months Ended June 30,
 2014 2013
Operating Activities   
Net income$406,943
 $61,585
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization194,029
 173,029
Equity in net income from unconsolidated joint ventures(14,748) (1,313)
Distributions of cumulative earnings from unconsolidated joint ventures14,645
 13,467
Equity in net (gain) loss on sale of interest in unconsolidated joint venture interest/real estate(106,084) 3,583
Purchase price fair value adjustment(71,446) 2,305
Depreciable real estate reserves—
 2,150
Gain on sale of discontinued operations(114,735) (1,113)
Loss on early extinguishment of debt1,025
 10,968
Deferred rents receivable(26,727) (29,452)
Other non-cash adjustments(11,162) (28,675)
Changes in operating assets and liabilities:   
Restricted cash—operations(4,850) 6,127
Tenant and other receivables5,890
 4,896
Related party receivables(853) 768
Deferred lease costs(10,688) (19,106)
Other assets(438) 4,075
Accounts payable, accrued expenses and other liabilities and security deposits12,973
 1,793
Deferred revenue and deferred land leases payable2,788
 4,601
Net cash provided by operating activities276,562
 209,688
Investing Activities   
Acquisitions of real estate property(208,614) (52,534)
Additions to land, buildings and improvements(134,249) (61,531)
Escrowed cash—capital improvements/acquisition deposits(38,227) (394)
Investments in unconsolidated joint ventures(170,532) (81,913)
Distributions in excess of cumulative earnings from unconsolidated joint ventures157,699
 11,117
Net proceeds from disposition of real estate/joint venture interest258,076
 5,852
Proceeds from sale of marketable securities3,555
 190
Purchase of marketable securities(10,025) (5,305)
Other investments20,594
 (12,994)
Origination of debt and preferred equity investments(256,730) (277,877)
Repayments or redemption of debt and preferred equity investments60,412
 432,667
Net cash used in investing activities(318,041) (42,722)
    

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Table of Contents
SL Green Realty Corp.
Consolidated Statements of Cash Flows (cont.)
(unaudited, in thousands, except per share data)

  Nine Months Ended 
 September 30,
  2013 2012
Operating Activities  
  
Net income $106,921
 $182,243
Adjustments to reconcile net income to net cash provided by operating activities:  
  
Depreciation and amortization 264,833
 249,950
Depreciable real estate reserves 2,150
 —
Equity in net income from unconsolidated joint ventures (4,251) (80,988)
Distributions of cumulative earnings from unconsolidated joint ventures 21,723
 84,182
Purchase price fair value adjustment 2,305
 —
Equity in net loss (gain) on sale of interest in unconsolidated joint venture/real estate 3,937
 (17,776)
Gain on sale of discontinued operations (14,900) (6,627)
Loan loss and other investment reserves, net of recoveries —
 564
Gain on sale of investments in marketable securities —
 (2,237)
Loss on early extinguishment of debt 10,968
 —
Deferred rents receivable (44,021) (50,910)
Other non-cash adjustments (31,808) (864)
Changes in operating assets and liabilities:  
  
Restricted cash — operations 1,254
 (12,557)
Tenant and other receivables (3,018) (8,500)
Related party receivables (187) (3,792)
Deferred lease costs (28,502) (37,885)
Other assets (23,316) (44,915)
Accounts payable, accrued expenses and other liabilities 23,635
 11,309
Deferred revenue and land leases payable 22,731
 8,997
Net cash provided by operating activities 310,454
 270,194
Investing Activities  
  
Acquisitions of real estate property (58,185) (405,318)
Additions to land, buildings and improvements (108,849) (107,425)
Escrowed cash — capital improvements/acquisition (246,682) (68,692)
Investments in unconsolidated joint ventures (120,130) (159,524)
Distributions in excess of cumulative earnings from unconsolidated joint ventures 19,795
 48,510
Net proceeds from disposition of real estate/joint venture interest 218,701
 70,367
Other investments (26,003) (28,911)
Debt and preferred equity and other investments, net of repayments/participations 78,888
 (172,411)
Net cash used in investing activities (242,465) (823,404)
Financing Activities  
  
Proceeds from mortgages and other loans payable 980,333
 1,113,500
Repayments of mortgages and other loans payable (1,027,201) (484,518)
Proceeds from credit facility and senior unsecured notes 844,000
 813,339
Repayments of credit facility and senior unsecured notes (578,970) (1,065,793)
Proceeds from stock options exercised and DRIP issuance 10,452
 112,447
Net proceeds from sale of common stock/preferred stock 41,758
 423,544
Redemption of preferred stock (192,500) (200,013)
Sale or purchase of treasury stock 6,089
 (11,197)
Distributions to noncontrolling interests in other partnerships (11,809) (15,622)
Contributions from noncontrolling interests in other partnerships 3,781
 19,181
Distributions to noncontrolling interests in the Operating Partnership (2,695) (2,385)
Dividends paid on common and preferred stock (113,192) (91,272)
Deferred loan costs and capitalized lease obligations (8,921) (33,830)
Net cash (used in) provided by financing activities (48,875) 577,381
Net increase in cash and cash equivalents 19,114
 24,171
Cash and cash equivalents at beginning of period 189,984
 138,192
Cash and cash equivalents at end of period $209,098
 $162,363
     
Supplemental Disclosure of Non-Cash Investing and Financing Activities:    
Issuance of common stock as deferred compensation $434
 $631
Issuance of units in the Operating Partnership 14,270
 40,542
Redemption of units in the Operating Partnership 17,287
 17,467
Derivative instruments at fair value 494
 375
Assignment of debt investment to joint venture —
 25,362
Mortgage assigned upon asset sale —
 59,099
Tenant improvements and capital expenditures payable 9,855
 10,056
Assumption of mortgage loans 84,642
 —
Fair value adjustment to noncontrolling interest in the Operating Partnership 38,452
 44,893
Accrued acquisition liabilities —
 4,372
Deferred leasing payable 2,849
 509
Capital leased asset 9,992
 —
Transfer to net assets held for sale —
 86,339
Transfer to liabilities related to net assets held for sale —
 62,792
Repayment of mezzanine loan —
 3,750
Redemption of Series E units —
 31,698
Repayment of financing receivable —
 28,195
Consolidation of real estate investment 90,934
 —
Investment in joint venture —
 5,135
 Six Months Ended June 30,
 2014 2013
Financing Activities   
Proceeds from mortgages and other loans payable1,601,603
 980,333
Repayments of mortgages and other loans payable(1,496,224) (833,728)
Proceeds from revolving credit facility, term loan and senior unsecured notes683,000
 370,000
Repayments of revolving credit facility, term loan and senior unsecured notes(520,690) (404,970)
Proceeds from stock options exercised and DRIP issuance19,777
 8,995
Net proceeds from sale of common stock8,750
 8,487
Net proceeds from sale of preferred stock—
 (9)
Redemption of preferred stock—
 (192,500)
Distributions to noncontrolling interests in other partnerships(4,352) (8,152)
Contributions from noncontrolling interests in other partnerships1,548
 3,364
Distributions to noncontrolling interests in the Operating Partnership(3,598) (1,775)
Dividends paid on common and preferred stock(102,943) (79,534)
Deferred loan costs and capitalized lease obligation(43,981) (8,492)
Net cash provided by (used in) financing activities142,890
 (157,981)
Net increase in cash and cash equivalents101,411
 8,985
Cash and cash equivalents at beginning of period206,692
 189,984
Cash and cash equivalents at end of period$308,103
 $198,969
    
Supplemental Disclosure of Non-Cash Investing and Financing Activities:   
Issuance of common stock as deferred compensation$1,406
 $—
Issuance of units in the Operating Partnership19,460
 12,675
Redemption of units in the Operating Partnership23,066
 17,287
Issuance of preferred units of limited partnership interest in the Operating Partnership4,000
 —
Fair value adjustment to noncontrolling interest in the Operating Partnership107,925
 36,091
Derivative instruments at fair value17,088
 479
Tenant improvements and capital expenditures payable7,192
 9,665
Capital leased asset—
 9,992
Transfer to net assets held for sale339,809
 207,665
Transfer to liabilities related to net assets held for sale193,375
 11,894
Transfer of financing receivable to debt investment19,675
 —
Deferred leasing payable659
 4,872
Consolidation of real estate1,316,591
 90,934
Assumption of mortgage loan—
 84,642
The accompanying notes are an integral part of these financial statements.

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SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)
  June 30, 2014 December 31, 2013
  (unaudited)  
Assets    
Commercial real estate properties, at cost:    
Land and land interests $3,466,587
 $3,032,526
Building and improvements 8,843,315
 7,884,663
Building leasehold and improvements 1,390,004
 1,366,281
Properties under capital lease 27,445
 50,310
  13,727,351
 12,333,780
Less: accumulated depreciation (1,769,428) (1,646,240)
  11,957,923
 10,687,540
Assets held for sale 339,809
 —
Cash and cash equivalents 308,103
 206,692
Restricted cash 157,225
 142,051
Investment in marketable securities 39,912
 32,049
Tenant and other receivables, net of allowance of $20,026 and $17,325 in 2014 and 2013, respectively 51,844
 60,393
Related party receivables 8,915
 8,530
Deferred rents receivable, net of allowance of $27,616 and $30,333 in 2014 and 2013, respectively 354,388
 386,508
Debt and preferred equity investments, net of discounts and deferred origination fees of $14,633 and $18,593 in 2014 and 2013, respectively, and allowance of $1,000 in 2013 1,547,808
 1,304,839
Investments in unconsolidated joint ventures 971,926
 1,113,218
Deferred costs, net 300,043
 267,058
Other assets 679,840
 750,123
Total assets $16,717,736
 $14,959,001
Liabilities    
Mortgages and other loans payable $5,939,176
 $4,860,578
Revolving credit facility —
 220,000
Term loan and senior unsecured notes 2,127,206
 1,739,330
Accrued interest payable and other liabilities 128,730
 114,622
Accounts payable and accrued expenses 164,215
 145,889
Deferred revenue 223,394
 263,261
Capitalized lease obligations 20,635
 47,671
Deferred land leases payable 1,044
 22,185
Dividend and distributions payable 53,193
 52,255
Security deposits 65,166
 61,308
Liabilities related to assets held for sale 193,375
 —
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities 100,000
 100,000
Total liabilities 9,016,134
 7,627,099
Commitments and contingencies —
 —
Preferred Units 49,550
 49,550

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Table of Contents
SL Green Operating Partnership, L.P.
Consolidated Balance Sheets (cont.)
(in thousands, except per share data)


  September 30,  
  2013		 December 31, 
 2012
  (Unaudited)  
Assets  
  
Commercial real estate properties, at cost:  
  
Land and land interests $2,868,833
 $2,886,099
Building and improvements 7,440,543
 7,389,766
Building leasehold and improvements 1,353,997
 1,346,748
Properties under capital lease 50,332
 40,340
  11,713,705
 11,662,953
Less: accumulated depreciation (1,574,002) (1,393,323)
  10,139,703
 10,269,630
Assets held for sale —
 4,901
Cash and cash equivalents 209,098
 189,984
Restricted cash 356,844
 136,071
Investment in marketable securities 32,863
 21,429
Tenant and other receivables, net of allowance of $22,383 and $21,652 in 2013 and 2012, respectively 51,354
 48,544
Related party receivables 7,800
 7,531
Deferred rents receivable, net of allowance of $29,508 and $29,580 in 2013 and 2012, respectively 374,615
 340,747
Debt and preferred equity investments, net of discounts and deferred origination fees of $26,466 and $22,341 and allowance of $4,000 and $7,000 in 2013 and 2012, respectively 1,315,551
 1,348,434
Investments in unconsolidated joint ventures 1,109,815
 1,032,243
Deferred costs, net 247,850
 261,145
Other assets 729,426
 718,326
Total assets $14,574,919
 $14,378,985
Liabilities  
  
Mortgages and other loans payable $4,641,758
 $4,615,464
Revolving credit facility 340,000
 70,000
Term loan and senior unsecured notes 1,737,869
 1,734,956
Accrued interest payable and other liabilities 69,359
 73,769
Accounts payable and accrued expenses 167,719
 159,598
Deferred revenue 293,393
 312,995
Capitalized lease obligations 47,492
 37,518
Deferred land leases payable 21,066
 20,897
Dividend and distributions payable 34,749
 37,839
Security deposits 54,824
 46,253
Liabilities related to assets held for sale —
 136
Junior subordinate deferrable interest debentures held by trusts that issued trust preferred securities 100,000
 100,000
Total liabilities 7,508,229
 7,209,425
Commitments and contingencies —
 —
Series G Preferred Units, $25.00 liquidation preference, 1,902 issued and outstanding at both September 30, 2013 and December 31, 2012 47,550
 47,550
Series H Preferred Units, $25.00 liquidation preference, 80 issued and outstanding at both September 30, 2013 and December 31, 2012 2,000
 2,000
Capital  
  
SLGOP partners’ capital:  
  
Series C Preferred Units, 7,700 issued and outstanding at December 31, 2012 —
 180,340
Series I Preferred Units, 9,200 issued and outstanding at both September 30, 2013 and December 31, 2012 221,932
 221,965
SL Green partners’ capital (950 and 940 general partner common units and 91,264 and 90,310 limited partner common units outstanding at September 30, 2013 and December 31, 2012, respectively) 6,259,229
 6,189,529
Limited partner interests in SLGOP (2,792 and 2,760 limited partner common units outstanding at September 30, 2013 and December 31, 2012, respectively 67,721
 71,524
Accumulated other comprehensive loss (19,821) (30,649)
Total SLGOP partners’ capital 6,529,061
 6,632,709
Noncontrolling interests in other partnerships 488,079
 487,301
Total capital 7,017,140
 7,120,010
Total liabilities and capital $14,574,919
 $14,378,985

  June 30, 2014 December 31, 2013
  (unaudited)  
Capital    
SLGOP partners' capital:    
Series I Preferred Units, $25.00 liquidation preference, 9,200 outstanding at both June 30, 2014 and December 31, 2013 221,932
 221,932
SL Green partners' capital 991 and 979 general partner common units and 94,596 and 94,014 limited partner common units outstanding at June 30, 2014 and December 31, 2013, respectively) 6,860,374
 6,506,747
Limited partner interests in SLGOP (3,500 and 2,902 limited partner common units outstanding at June 30, 2014 and December 31, 2013, respectively) 84,034
 77,864
Accumulated other comprehensive loss (6,413) (15,662)
Total SLGOP partners' capital 7,159,927
 6,790,881
Noncontrolling interests in other partnerships 492,125
 491,471
Total capital 7,652,052
 7,282,352
Total liabilities and capital $16,717,736
 $14,959,001
The accompanying notes are an integral part of these financial statements.


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Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Income
(unaudited, in thousands except per unit data)

amounts)
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended June 30, Six Months Ended June 30,
 2013 2012 2013 2012 2014 2013 2014 2013
Revenues  
  
  
  
        
Rental revenue, net $264,349
 $277,676
 $804,104
 $798,271
 $285,234
 $262,743
 $551,755
 $518,560
Escalation and reimbursement 45,091
 42,194
 125,018
 124,273
 39,529
 38,747
 79,912
 78,551
Investment and preferred equity income 44,448
 27,869
 143,887
 87,655
Investment income 39,714
 46,731
 93,798
 99,439
Other income 9,877
 9,272
 21,369
 25,931
 22,750
 5,723
 37,331
 11,015
Total revenues 363,765
 357,011
 1,094,378
 1,036,130
 387,227
 353,944
 762,796
 707,565
Expenses  
  
  
  
        
Operating expenses, including approximately $4,876 and $13,345 (2013) and $4,670 and $12,914 (2012) paid to related parties 77,272
 82,351
 218,901
 221,670
Operating expenses, including $4,450 and $7,861 (2014) and $3,953 and $7,842 (2013) of related party expenses 70,675
 68,611
 144,160
 139,780
Real estate taxes 55,511
 53,293
 161,625
 156,746
 53,267
 51,749
 108,583
 104,203
Ground rent 10,127
 8,874
 29,767
 26,570
 8,040
 7,930
 16,073
 16,058
Interest expense, net of interest income 82,973
 85,659
 247,420
 247,789
 78,611
 79,551
 156,330
 157,860
Amortization of deferred financing costs 4,331
 4,493
 13,034
 11,626
 5,500
 4,229
 9,357
 8,681
Depreciation and amortization 87,473
 81,827
 248,587
 233,566
 94,838
 81,577
 184,217
 160,200
Loan loss and other investment reserves, net of recoveries —
 —
 —
 564
Transaction related costs, net of recoveries (2,349) 1,372
 719
 4,398
 1,697
 1,706
 4,171
 3,085
Marketing, general and administrative 20,869
 20,551
 63,450
 61,469
 23,872
 21,514
 47,128
 42,582
Total expenses 336,207
 338,420
 983,503
 964,398
 336,500
 316,867
 670,019
 632,449
Income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate, gain (loss) on sale of investment in marketable securities, purchase price fair value adjustment and loss on early extinguishment of debt 27,558
 18,591
 110,875
 71,732
Equity in net income from unconsolidated joint ventures 2,939
 11,658
 4,251
 80,988
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate (354) (4,807) (3,937) 17,776
Gain (loss) on sale of investment in marketable securities —
 2,237
 (65) 2,237
Income from continuing operations before equity in net income (loss) from unconsolidated joint ventures, equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate, purchase price fair value adjustment, loss on sale of investment in marketable securities and loss on early extinguishment of debt 50,727
 37,077
 92,777
 75,116
Equity in net income (loss) from unconsolidated joint ventures 8,619
 (3,761) 14,748
 1,313
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 1,444
 (3,583) 106,084
 (3,583)
Purchase price fair value adjustment —
 —
 (2,305) —
 71,446
 (2,305) 71,446
 (2,305)
Loss on sale of investment in marketable securities —
 (8) —
 (65)
Loss on early extinguishment of debt —
 —
 (18,523) —
 (1,028) (10) (1,025) (18,523)
Income from continuing operations 30,143
 27,679
 90,296
 172,733
 131,208
 27,410
 284,030
 51,953
Net income from discontinued operations 1,406
 951
 1,725
 2,883
 4,389
 3,838
 8,178
 8,519
Gain on sale of discontinued operations 13,787
 —
 14,900
 6,627
 114,735
 —
 114,735
 1,113
Net income 45,336
 28,630
 106,921
 182,243
 250,332
 31,248
 406,943
 61,585
Net income attributable to noncontrolling interests in other partnerships (2,901) (1,835) (8,806) (6,792) (1,843) (3,004) (3,333) (5,905)
Preferred unit distributions (562) (571) (1,692) (1,533) (565) (565) (1,130) (1,130)
Net income attributable to SLGOP 41,873
 26,224
 96,423
 173,918
 247,924
 27,679
 402,480
 54,550
Preferred unit redemption costs —
 (10,010) (12,160) (10,010) —
 (12,160) —
 (12,160)
Perpetual preferred unit distributions (3,738) (7,915) (18,144) (23,004) (3,738) (6,999) (7,475) (14,406)
Net income attributable to SLGOP common unitholders $38,135
 $8,299
 $66,119
 $140,904
 $244,186
 $8,520
 $395,005
 $27,984
Amounts attributable to SLGOP common unitholders:  
  
  
  
        
Income from continuing operations $23,296
 $12,155
 $55,736
 $113,618
 $52,172
 $10,570
 $94,562
 $24,240
Purchase price fair value adjustment —
 —
 (2,305) —
 71,446
 (2,305) 71,446
 (2,305)
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate (354) (4,807) (3,937) 17,776
Net income from discontinued operations 1,406
 951
 1,725
 2,883
Gain on sale of discontinued operations 13,787
 —
 14,900
 6,627
Net income $38,135
 $8,299
 $66,119
 $140,904
Basic earnings per unit:  
  
  
  
Income from continuing operations before discontinued operations $0.25
 $0.13
 $0.57
 $1.24
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate —
 (0.05) (0.04) 0.19
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 1,444
 (3,583) 106,084
 (3,583)
Net income from discontinued operations —
 0.01
 0.01
 0.03
 4,389
 3,838
 8,178
 8,519
Gain on sale of discontinued operations 0.15
 —
 0.16
 0.07
 114,735
 —
 114,735
 1,113
Net income attributable to SLGOP common unitholders $0.40
 $0.09
 $0.70
 $1.53
 $244,186
 $8,520
 $395,005
 $27,984
Diluted earnings per unit:  
  
  
  
Income from continuing operations before discontinued operations $0.25
 $0.13
 $0.56
 $1.23
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate —
 (0.05) (0.04) 0.19
Net income from discontinued operations —
 0.01
 0.02
 0.03
Gain on sale of discontinued operations 0.15
 —
 0.16
 0.07
Net income attributable to SLGOP common unitholders $0.40
 $0.09
 $0.70
 $1.52
Dividends per unit $0.33
 $0.25
 $0.99
 $0.75
Basic weighted average common units outstanding 94,780
 93,561
 94,389
 92,117
Diluted weighted average common units and common unit equivalents outstanding 95,016
 93,891
 94,631
 92,485
        

15
Table of Contents
SL Green Operating Partnership, L.P.
Consolidated Statements of Income
(unaudited, in thousands except per unit amounts)


  Three Months Ended June 30, Six Months Ended June 30,
  2014 2013 2014 2013
Basic earnings per unit:        
Income from continuing operations before gains (loss) on sale and discontinued operations $1.25
 $0.09
 $1.69
 $0.23
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 0.02
 (0.04) 1.08
 (0.03)
Net income from discontinued operations 0.04
 0.04
 0.08
 0.09
Gain on sale of discontinued operations 1.16
 —
 1.16
 0.01
Net income attributable to SLGOP common unitholders $2.47
 $0.09
 $4.01
 $0.30
Diluted earnings per unit:        
Income from continuing operations before gains (loss) on sale and discontinued operations $1.24
 $0.09
 $1.68
 $0.23
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 0.02
 (0.04) 1.07
 (0.03)
Net income from discontinued operations 0.05
 0.04
 0.08
 0.09
Gain on sale of discontinued operations 1.15
 —
 1.16
 0.01
Net income attributable to SLGOP common unitholders $2.46
 $0.09
 $3.99
 $0.30
Dividends per unit $0.50
 $0.33
 $1.00
 $0.66
Basic weighted average common units outstanding 98,970
 94,312
 98,627
 94,224
Diluted weighted average common units and common unit equivalents outstanding 99,484
 94,536
 99,128
 94,452
The accompanying notes are an integral part of these financial statements.


716
Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)

 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended June 30, Six Months Ended June 30,
 2013 2012 2013 2012 2014 2013 2014
2013
Net income $45,336
 $28,630
 $106,921
 $182,243
 $250,332
 $31,248
 $406,943
 $61,585
        
Other comprehensive (loss) income:  
  
  
  
Change in net unrealized (loss) gain on derivative instruments, including SL Green's share of joint venture net unrealized (loss) gain on derivative instruments (1,165) (102) 10,522
 (635)
Other comprehensive income:        
Change in net unrealized gain on derivative instruments, including SLGOP's share of joint venture net unrealized gain on derivative instruments 7,293
 9,799
 7,461
 11,687
Change in unrealized gain (loss) on marketable securities 513
 (825) 306
 (597) 1,659
 (1,848) 1,788
 (207)
Other comprehensive (loss) income (652) (927) 10,828
 (1,232)
        
Other comprehensive income 8,952
 7,951
 9,249
 11,480
Comprehensive income 44,684
 27,703
 117,749
 181,011
 259,284
 39,199
 416,192
 73,065
        
Net income attributable to noncontrolling interests in other partnerships (2,901) (1,835) (8,806) (6,792)
        
Net income attributable to noncontrolling interests (1,843) (3,004) (3,333) (5,905)
Comprehensive income attributable to SLGOP $41,783
 $25,868
 $108,943
 $174,219
 $257,441
 $36,195
 $412,859
 $67,160
The accompanying notes are an integral part of these financial statements.


817
Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statement of Capital
(unaudited, in thousands, except per unit data)

  SL Green Operating Partnership Unitholders    
  Series C Preferred Units Series I Preferred Units General Partner Limited Partners 
Accumulated
Other Comprehensive
Income 
(Loss)
    
    
Common
Units
 
Common
Unitholders
 
Common
Units
 
Common
Unitholders
  
Noncontrolling
 Interests
 Total
Balance at December 31, 2012 $180,340
 $221,965
 91,250
 $6,189,529
 2,760
 $71,524
 $(30,649) $487,301
 $7,120,010
Net income 6,932
 11,212
  
 76,370
  
 1,909
  
 8,806
 105,229
Other comprehensive income  
  
  
  
  
  
 10,828
  
 10,828
Preferred distributions (6,932) (11,212)  
  
  
  
  
  
 (18,144)
DRIP proceeds  
  
  
 57
  
  
  
  
 57
Conversion of units  
  
 224
 17,287
 (224) (17,287)  
  
 —
Issuance of units  
  
  
  
 256
 14,270
  
  
 14,270
Deferred compensation plan     10
 434
         434
Amortization of deferred compensation plan  
  
 

 19,702
  
  
  
  
 19,702
Redemption of preferred units (180,340)  
  
 (12,160)  
  
  
  
 (192,500)
Preferred units issuance costs  
 (33)  
  
  
  
  
  
 (33)
Contributions - net proceeds from common stock offering  
  
 462
 41,791
  
  
  
  
 41,791
Contributions - treasury shares  
  
 83
 6,090
  
  
  
  
 6,090
Contributions - proceeds from stock options exercised  
  
 185
 10,395
  
  
  
  
 10,395
Contributions to consolidated joint venture  
  
  
  
  
  
  
 3,781
 3,781
Distributions to noncontrolling interests  
  
  
  
  
  
  
 (11,809) (11,809)
Cash distribution declared ($0.99 per common unit, none of which represented a return of capital for federal income tax purposes)  
  
  
 (90,266)  
 (2,695)  
  
 (92,961)
Balance at September 30, 2013 $—
 $221,932
 92,214
 $6,259,229
 2,792
 $67,721
 $(19,821) $488,079
 $7,017,140

  SL Green Operating Partnership Unitholders    
    General Partner Limited Partners      
  
Series I
Preferred
Units
 
Common
Units
 
Common
Unitholders
 
Common
Units
 
Common
Unitholders
 Accumulated
Other
Comprehensive
Income (Loss)		 
Noncontrolling
Interests
 Total
Balance at December 31, 2013 $221,932
 94,993
 $6,506,747
 2,902
 $77,864
 $(15,662) $491,471
 7,282,352
Net income 7,475
  
 381,631
  
 13,374
  
 3,333
 405,813
Other comprehensive income  
  
  
  
  
 9,249
  
 9,249
Preferred distributions (7,475)  
  
  
  
  
  
 (7,475)
Issuance of common units  
  
  
 833
 19,460
  
  
 19,460
DRIP proceeds  
 —
 26
  
  
  
  
 26
Redemption of units  
 233
 23,066
 (235) (23,066)  
  
 —
Deferred compensation plan and stock award, net  
 2
 (1,390) 

  
  
  
 (1,390)
Amortization of deferred compensation plan  
  
 17,069
  
  
  
  
 17,069
Contribution to consolidated joint venture interest  
  
  
  
  
  
 1,673
 1,673
Contributions—net proceeds from common stock offering  
 82
 8,750
  
  
  
  
 8,750
Contributions—proceeds from stock options exercised  
 277
 19,751
  
  
  
  
 19,751
Cash distributions to noncontrolling interests  
  
  
  
  
  
 (4,352) (4,352)
Cash distribution declared ($1.00 per common unit, none of which represented a return of capital for federal income tax purposes)  
  
 (95,276)  
 (3,598)  
  
 (98,874)
Balance at June 30, 2014 $221,932
 95,587
 $6,860,374
 3,500
 $84,034
 $(6,413) $492,125
 $7,652,052
The accompanying notes are an integral part of these financial statements.


918
Table of Contents

SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)
  Six Months Ended June 30,
  2014 2013
Operating Activities    
Net income $406,943
 $61,585
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 194,029
 173,029
Equity in net income from unconsolidated joint ventures (14,748) (1,313)
Distributions of cumulative earnings from unconsolidated joint ventures 14,645
 13,467
Equity in net (gain) loss on sale of interest in unconsolidated joint venture interest/real estate (106,084) 3,583
Purchase price fair value adjustment (71,446) 2,305
Depreciable real estate reserves —
 2,150
Gain on sale of discontinued operations (114,735) (1,113)
Loss on early extinguishment of debt 1,025
 10,968
Deferred rents receivable (26,727) (29,452)
Other non-cash adjustments (11,162) (28,675)
Changes in operating assets and liabilities:    
Restricted cash—operations (4,850) 6,127
Tenant and other receivables 5,890
 4,896
Related party receivables (853) 768
Deferred lease costs (10,688) (19,106)
Other assets (438) 4,075
Accounts payable, accrued expenses and other liabilities and security deposits 12,973
 1,793
Deferred revenue and deferred land leases payable 2,788
 4,601
Net cash provided by operating activities 276,562
 209,688
Investing Activities    
Acquisitions of real estate property (208,614) (52,534)
Additions to land, buildings and improvements (134,249) (61,531)
Escrowed cash—capital improvements/acquisition deposits (38,227) (394)
Investments in unconsolidated joint ventures (170,532) (81,913)
Distributions in excess of cumulative earnings from unconsolidated joint ventures 157,699
 11,117
Net proceeds from disposition of real estate/joint venture interest 258,076
 5,852
Proceeds from sale of marketable securities 3,555
 190
Purchase of marketable securities (10,025) (5,305)
Other investments 20,594
 (12,994)
Origination of debt and preferred equity investments (256,730) (277,877)
Repayments or redemption of debt and preferred equity investments 60,412
 432,667
Net cash used in investing activities (318,041) (42,722)
     

19
Table of Contents
SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows (cont.)
(unaudited, in thousands)


  Nine Months Ended 
 September 30,
  2013 2012
Operating Activities  
  
Net income $106,921
 $182,243
Adjustments to reconcile net income to net cash provided by operating activities:  
  
Depreciation and amortization 264,833
 249,950
Depreciable real estate reserves 2,150
 —
Equity in net income from unconsolidated joint ventures (4,251) (80,988)
Distributions of cumulative earnings from unconsolidated joint ventures 21,723
 84,182
Purchase price fair value adjustment 2,305
 —
Equity in net loss (gain) on sale of interest in unconsolidated joint venture/real estate 3,937
 (17,776)
Gain on sale of discontinued operations (14,900) (6,627)
Loan loss and other investment reserves, net of recoveries —
 564
Gain on sale of investments in marketable securities —
 (2,237)
Loss on early extinguishment of debt 10,968
 —
Deferred rents receivable (44,021) (50,910)
Other non-cash adjustments (31,808) (864)
Changes in operating assets and liabilities:  
  
Restricted cash — operations 1,254
 (12,557)
Tenant and other receivables (3,018) (8,500)
Related party receivables (187) (3,792)
Deferred lease costs (28,502) (37,885)
Other assets (23,316) (44,915)
Accounts payable, accrued expenses and other liabilities 23,635
 11,309
Deferred revenue and land leases payable 22,731
 8,997
Net cash provided by operating activities 310,454
 270,194
Investing Activities  
  
Acquisitions of real estate property (58,185) (405,318)
Additions to land, buildings and improvements (108,849) (107,425)
Escrowed cash — capital improvements/acquisition (246,682) (68,692)
Investments in unconsolidated joint ventures (120,130) (159,524)
Distributions in excess of cumulative earnings from unconsolidated joint ventures 19,795
 48,510
Net proceeds from disposition of real estate/joint venture interest 218,701
 70,367
Other investments (26,003) (28,911)
Debt and preferred equity and other investments, net of repayments/participations 78,888
 (172,411)
Net cash used in investing activities (242,465) (823,404)
Financing Activities  
  
Proceeds from mortgages and other loans payable 980,333
 1,113,500
Repayments of mortgages and other loans payable (1,027,201) (484,518)
Proceeds from credit facility and senior unsecured notes 844,000
 813,339
Repayments of credit facility and senior unsecured notes (578,970) (1,065,793)
Contributions of proceeds from stock options exercised and DRIP issuance 10,452
 112,447
Contributions of net proceeds from sale of common stock/preferred stock 41,758
 423,544
Redemption of preferred units (192,500) (200,013)
Sale or purchase of treasury stock 6,089
 (11,197)
Distributions to noncontrolling interests in other partnerships (11,809) (15,622)
Contributions from noncontrolling interests in other partnerships 3,781
 19,181
Distributions paid on common and preferred units (115,887) (93,657)
Deferred loan costs and capitalized lease obligations (8,921) (33,830)
Net cash (used in) provided by financing activities (48,875) 577,381
Net increase in cash and cash equivalents 19,114
 24,171
Cash and cash equivalents at beginning of period 189,984
 138,192
Cash and cash equivalents at end of period $209,098
 $162,363
     
Supplemental Disclosure of Non-Cash Investing and Financing Activities:    
Issuance of common stock as deferred compensation $434
 $631
Issuance of units in the Operating Partnership 14,270
 40,542
Redemption of units in the Operating Partnership 17,287
 17,467
Derivative instruments at fair value 494
 375
Assignment of debt investment to joint venture —
 25,362
Mortgage assigned upon asset sale —
 59,099
Tenant improvements and capital expenditures payable 9,855
 10,056
Assumption of mortgage loans 84,642
 —
Accrued acquisition liabilities —
 4,372
Deferred leasing payable 2,849
 509
Capital leased asset 9,992
 —
Transfer to net assets held for sale —
 86,339
Transfer to liabilities related to net assets held for sale —
 62,792
Repayment of mezzanine loan —
 3,750
Redemption of Series E units —
 31,698
Repayment of financing receivable —
 28,195
Consolidation of real estate investment 90,934
 —
Investment in joint venture —
 5,135

  Six Months Ended June 30,
  2014 2013
Financing Activities    
Proceeds from mortgages and other loans payable 1,601,603
 980,333
Repayments of mortgages and other loans payable (1,496,224) (833,728)
Proceeds from revolving credit facility, term loan and senior unsecured notes 683,000
 370,000
Repayments of revolving credit facility, term loan and senior unsecured notes (520,690) (404,970)
Contributions of proceeds from stock options exercised and DRIP issuance 19,777
 8,995
Contributions of net proceeds from sale of common stock 8,750
 8,487
Contributions of net proceeds from sale of preferred stock —
 (9)
Redemption of preferred stock —
 (192,500)
Distributions to noncontrolling interests in other partnerships (4,352) (8,152)
Contributions from noncontrolling interests in other partnerships 1,548
 3,364
Distributions paid on common and preferred units (106,541) (81,309)
Deferred loan costs and capitalized lease obligation (43,981) (8,492)
Net cash provided by (used in) financing activities 142,890
 (157,981)
Net increase in cash and cash equivalents 101,411
 8,985
Cash and cash equivalents at beginning of period 206,692
 189,984
Cash and cash equivalents at end of period $308,103
 $198,969
     
Supplemental Disclosure of Non-Cash Investing and Financing Activities:    
Issuance of common stock as deferred compensation $1,406
 $—
Issuance of units in the Operating Partnership 19,460
 12,675
Redemption of units in the Operating Partnership 23,066
 17,287
Issuance of preferred units of limited partnership interest in the Operating Partnership 4,000
 —
Derivative instruments at fair value 17,088
 479
Tenant improvements and capital expenditures payable 7,192
 9,665
Capital leased asset —
 9,992
Transfer to net assets held for sale 339,809
 207,665
Transfer to liabilities related to net assets held for sale 193,375
 11,894
Transfer of financing receivable to debt investment 19,675

—
Deferred leasing payable 659
 4,872
Consolidation of real estate 1,316,591
 90,934
Assumption of mortgage loan —
 84,642
The accompanying notes are an integral part of these financial statements.


1020
Table of Contents

SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
SeptemberJune 30, 20132014
(unaudited)

1. Organization and Basis of Presentation
SL Green Realty Corp., which is referred to as the Company or SL Green, a Maryland corporation, and SL Green Operating Partnership, L.P., which is referred to as SLGOP or the Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of combining the commercial real estate business of S.L. Green Properties, Inc. and its affiliated partnerships and entities. The Operating Partnership received a contribution of interest in the real estate properties, as well as 95% of the economic interest in the management, leasing and construction companies which are referred to as the Service Corporation, a consolidated variable interest entity. All of the management, leasing and construction services with respect to the properties that are wholly-owned by us are conducted through SL Green Management LLC which is 100% owned by the Operating Partnership. The Company has qualified, and expects to qualify in the current fiscal year, as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, and operates as a self-administered, self-managed REIT. A REIT is a legal entity that holds real estate interests and, through payments of dividends to stockholders, is permitted to minimize the payment of Federal income taxes at the corporate level. Unless the context requires otherwise, all references to “we,” “our”"we," "our" and “us”"us" means the Company and all entities owned or controlled by the Company, including the Operating Partnership.
Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership. The Company is the sole managing general partner of the Operating Partnership. As of SeptemberJune 30, 20132014, noncontrolling investors held, in the aggregate, a 2.94%3.53% limited partnership interest in the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership. See Note 11, “Noncontrolling"Noncontrolling Interests on the Company's Consolidated Financial Statements.”"
Reckson Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P., or ROP, are wholly-owned subsidiaries of the Operating Partnership.
As of SeptemberJune 30, 20132014, 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 New York Metropolitan area also include investments in Brooklyn, Long Island, Westchester County, Connecticut and Northern New Jersey, which are collectively known as the Suburban assets:properties:
 Consolidated Unconsolidated Total
Location Ownership 
Number of
Properties
 Square Feet 
Weighted Average
Occupancy(1)
 Type Number of Properties Square Feet Number of Properties Square Feet Number of Properties Square Feet 
Weighted Average Occupancy(1)
Commercial:Commercial:              
Manhattan Consolidated properties 26
 18,012,945
 93.8% Office 23
 18,429,045
 7
 3,476,115
 30
 21,905,160
 94.4%
 Retail 7
(2) 389,317
 8
 432,250
 15
 821,567
 93.2%
 Development/Redevelopment 11
 2,063,790
 4
 1,605,782
 15
 3,669,572
 44.2%
 Unconsolidated properties 9
 5,934,434
 96.2% Fee Interest 2
 961,400
 —
 —
 2
 961,400
 100.0%
       43
 21,843,552
 19
 5,514,147
 62
 27,357,699
 87.8%
Suburban Consolidated properties 26 4,087,400 79.1% Office 27
 4,365,400
 4
 1,222,100
 31
 5,587,500
 81.7%
 Unconsolidated properties 4 1,222,100 85.3% Retail 1
 52,000
 —
 —
 1
 52,000
 100.0%
   65
 29,256,879
 91.9% Development/Redevelopment 1
 85,000
 1
 65,641
 2
 150,641
 42.7%
 29
 4,502,400
 5
 1,287,741
 34
 5,790,141
 80.9%
Total commercial propertiesTotal commercial properties 72
 26,345,952
 24
 6,801,888
 96
 33,147,840
 86.6%
Residential:              
Manhattan Residential 2
(2) 653,337
 —
 —
 2
 653,337
 93.2%
Suburban Residential 1
 66,611
 —
 —
 1
 66,611
 84.4%
Total residential propertiesTotal residential properties 3
 719,948
 —
 —
 3
 719,948
 91.9%
Total portfolioTotal portfolio 75
 27,065,900
 24
 6,801,888
 99
 33,867,788
 86.7%

(1)The weighted average occupancy for commercial properties represents the total leasedoccupied square feet divided by total available rentable square feet.  The weighted average occupancy for residential properties represents the total occupied units divided by total available units.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


(2)
As of June 30, 2014, we owned a building that was comprised of 270,132 square feet of retail space and 222,855 square feet of residential space. For the purpose of this report, we have included the building as part of retail properties and have shown the square footage under its respective classifications.

As of SeptemberJune 30, 20132014, we also owned investments inmanaged a 16 retail properties encompassing approximately 621,300336,200 square feet, 13 development properties encompassing approximately 2,424,600 square feet, three residential properties encompassing 468 units (approximately 497,100 square feet), two land interests encompassing approximately 961,400 square feet and 28 west coastfoot office properties encompassing approximately 3,654,300 square feet.  In addition, we manage two office propertiesbuilding owned by a third parties and affiliated companies encompassing approximately 626,400 rentable square feet.party. As of SeptemberJune 30, 20132014, we also held debt and preferred equity investments with a book value of $1.31.5 billion.
Partnership Agreement
In accordance with the partnership agreement of the Operating Partnership, or the Operating Partnership Agreement, we allocatethe Operating Partnership allocates all distributions and profits and losses in proportion to the percentage of ownership interests of the respective partners. As the managing general partner of the Operating Partnership, we are required to take such reasonable efforts, as determined by us

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

in our sole discretion, to cause the Operating Partnership to distribute sufficient amounts to enable the payment of sufficient dividends by us to minimize any Federal income or excise tax at the Company level. Under the Operating Partnership Agreement, each limited partner has the right to redeem units of limited partnership interests for cash, or if we so elect, for shares of ourSL Green's common stock on a one-for-one-for-one basis.
Basis of Quarterly Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the financial position of the Company and the Operating Partnership at SeptemberJune 30, 20132014 and the results of operations for the periods presented have been included. The 2013 operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.2014. These financial statements should be read in conjunction with the financial statements and accompanying notes included in the Annual ReportsReport on Form 10-K for the year ended December 31, 20122013 of the Company and the Operating Partnership.
 
The consolidated balance sheets at December 31, 20122013 have been derived from the audited financial statements atas of that date but doesdo not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
2. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method or as debt and preferred equity investments. See Note 5, “Debt"Debt and Preferred Equity Investments”Investments" and Note 6, “Investments"Investments in Unconsolidated Joint Ventures.”" All significant intercompany balances and transactions have been eliminated.
We consolidate a variable interest entities,entity, or VIEs,VIE, in which we are considered the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity’sentity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Included in commercial real estate properties on our consolidated balance sheets as of SeptemberJune 30, 20132014 and December 31, 20122013 are approximately $600.1609.4 million and $607.4605.9 million, respectively, related to our consolidated VIEs. Included in mortgages and other loans payable on our consolidated balance sheets as of SeptemberJune 30, 20132014 and December 31, 20122013 are approximately $373.1365.8 million and $379.6370.9 million, respectively, related to our consolidated VIEs.
A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent.us. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheet and the presentation of net income was modified to present earnings and other comprehensive income attributed to controlling and noncontrolling interests.
We assess the accounting treatment for each joint venture and debt and preferred equity investment. This assessment includes a review of each joint venture or limited liability company agreement to determine which party has what rights and whether those rights are protective or participating. For all VIE’s,VIEs, we review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’sentity's economic performance. In situations where we and our partner approves,approve, among other things, the annual budget, receivesreceive a detailed monthly reporting package from us, meetsmeet on a quarterly basis

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


to review the results of the joint venture, reviewsreview and approvesapprove the joint venture’sventure's tax return before filing, and approvesapprove 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

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

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.
Investment in Commercial Real Estate Properties
On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be impaired or that their carrying value may not be recoverable. A property’sproperty's value is considered impaired if management’smanagement's estimate of the aggregate future cash flows (undiscounted and without interest charges for consolidated properties) to be generated by the property is 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. We also evaluate our real estate properties for potential impairment when a real estate property has been classified as held for sale. Real estate assets held for sale are valued at the lower of their carrying value or fair value less costs to sell. In June 2013, we recorded a $2.2 million impairment charge in connection with the sale of 300 Main Street in Stamford, Connecticut.
We assess our investments in unconsolidated joint ventures 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 investments for impairment based on the joint venture’s projected discounted cash flows. We do not believe that the values of any of our consolidated properties or equity investmentsproperties held for sale were impaired at either SeptemberJune 30, 2013 or December 31, 20122014.
When we acquire equity interests in an existing unconsolidated joint venture and gain control over the investment, we record the consolidated investment at fair value. The difference between the book value of our equity investment on the purchase date and our share of the fair value of the investment’s purchase price is recorded as a purchase price fair value adjustment in our consolidated statements of income. In April 2013, we recognized a purchase price fair value adjustment of $(2.3) million in connection with the consolidation of 16 Court Street, which was previously accounted for as an investment in unconsolidated joint venture.
We allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-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 years. We amortize the amount allocated to the above- and below-market leases over the remaining term of the associated lease, which generally range from one to 14 years, respectively.  The values of the above- and below-market leases are amortized and recordedrecord it as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income overincome. We amortize the remaining term ofamount allocated to the associated lease, which generally range from one to 14 years.  The valuevalues associated with in-place leases is amortized over the expected term of the associated lease, which generally ranges 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 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 marketbelow-market lease value into rental income over the renewal period.
We recognized a decrease approximatelyan increase of $6.2 million, $1.511.0 million, $6.2 million and $10.1 million in rental revenue for the three and six months ended SeptemberJune 30, 2013 for the amortization of aggregate above-market leases and reductions in lease origination costs in excess of below-market leases, which included approximately $6.8 million resulting from a write-off of above-market and in-place lease balances associated with a former tenant.  Excluding this non-recurring charge, we recognized an increase of approximately $5.3 million in rental revenue for the three months ended September 30, 2013 for the amortization of aggregate below-market leases in excess of above-market leases and reductions in lease origination costs. We recognized an increase of approximately $8.5 million, $2.6 million2014 and $7.4 million in rental revenue for the nine months ended September 30, 2013 and the three and nine months ended September 30, 2012, respectively, for the amortization of aggregate below-market leases in excess of above-market leases and reductionsa reduction in lease origination costs.Wecosts, resulting from the allocation of the purchase price of the applicable properties. We recognized a reduction in interest expense for the amortization of the above-market rate mortgages assumed of approximately$1.3 million, $1.32.8 million, $4.0$1.2 million, $1.3 million and $0.72.4 million for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of SeptemberJune 30, 20132014 and December 31, 20122013 (in thousands):

September 30,  
  2013		 December 31, 
 2012		June 30, 2014 December 31, 2013
Identified intangible assets (included in other assets): 
  
   
Gross amount$732,160
 $725,861
$702,189
 $746,704
Accumulated amortization(325,224) (263,107)(382,231) (343,339)
Net$406,936
 $462,754
$319,958
 $403,365
   
Identified intangible liabilities (included in deferred revenue): 
  
   
Gross amount$667,495
 $651,921
$676,075
 $671,380
Accumulated amortization(411,814) (357,225)(461,952) (429,138)
Net$255,681
 $294,696
$214,123
 $242,242
Fair Value Measurements
See Note 17, "Fair Value Measurements."

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


Investment in Marketable Securities
We invest in marketable securities. At the time of purchase, we are required to designate a security as held-to-maturity, available-for-sale, or trading depending on ability and intent. We do not have any securities designated as held-to-maturity or trading at this time. Securities available-for-sale are reported at fair value pursuant to ASC 820-10, with the net unrealized gains or losses reported as a component of accumulated other comprehensive income or loss.
Unrealized losses that are determined to be other-than-temporary are recognized in earnings up to their credit component.
The cost of bonds and marketable securities sold wasis determined using the specific identification method.

At SeptemberJune 30, 20132014 and December 31, 2012,2013, we held the following marketable securities (in thousands):
 September 30,  
  2013		 December 31, 
 2012
Level 1 – Equity marketable securities$3,109
 $2,202
Level 2 – Commercial mortgage-backed securities26,346
 15,575
Level 3 – Rake bonds3,408
 3,652
Total marketable securities available-for-sale$32,863
 $21,429
 June 30, 2014 December 31, 2013
Equity marketable securities$4,532
 $4,307
Commercial mortgage-backed securities35,380
 24,419
Rake bonds—
 3,323
Total marketable securities available-for-sale$39,912
 $32,049
Our equity marketable securities represent our investment in Gramercy Capital Corp., which was renamed Gramercy Property Trust Inc. (NYSE: GPT), or Gramercy, in April 2013.Gramercy. Marc Holliday, our chief executive officer, remains a board member of Gramercy. As we no longerdo not have any significant influence over Gramercy, we account for our investment as available-for-sale securities.

The cost basis of the Level 3commercial mortgage-backed securities was $32.6 million and $23.0 million at $3.6 millionJune 30, 2014 and $3.7 million at September 30, 2013 and December 31, 2012, respectively. There were no sales of Level 3 securities during the three and nine months ended September 30, 2013. The Level 32013. These securities mature at various times through 2030.2039. The cost basis of the rake bonds was $3.6 million at December 31, 2013.
Investments in Unconsolidated Joint Ventures
We assess our investments in unconsolidated joint ventures 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 investments for impairment based on the joint venture's projected discounted cash flows. We do not believe that the values of any of our equity investments were impaired at June 30, 2014.
We may originate loans for real estate acquisition, development and construction, or ADC arrangements, where we expect to receive some or all of the residual profit. When the risk and rewards of these ADC arrangements are essentially the same as an investor or joint venture partner, we account for these ADC arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these ADC arrangements consistent with our loan accounting for our debt and preferred equity investments.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the tenant takes possession or controls the physical use of the leased space. In order for the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner (the tenant is the owner) of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When management concludes that we are the

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

owner of tenant improvements for accounting purposes, management recordswe record 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, net 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 sheets is net of such allowance.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


In addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters’porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. 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.
We record a gain on sale of real estate when title is conveyed to the buyer, subject to the buyer’sbuyer's financial commitment being sufficient to provide economic substance to the sale and we have no substantial economic involvement with the buyer.
Interest income on debt and preferred equity investments is recognized overaccrued based on the lifeoutstanding principal amount and contractual terms of the investment using the effective interest methodinstruments 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.
Income recognition is generally suspended for 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 recognitionit 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.deemed collectible. 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’smanagement's determination that accrued interest and outstanding principal are ultimately 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.
Deferred originations fees and loan origination costs, if any, are recognized as a reduction to the interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cashflows through the expected maturity date of the related investment. If we purchase a 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. Anticipated exit fees, whose collection is expected, are also recognized over the term of the loan as an adjustment to yield.
Debt and preferred equity investments are placed on a non-accrual status 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 becomes doubtful. Interest income recognition on any non-accrual debt or preferred equity investment is resumed when such non-accrual debt or preferred equity investment 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.
We may syndicate a portion of the loans that we originate or sell these loans individually. When a transaction meets the criteria of sale accounting, we derecognize the loan sold and recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in investment income on the consolidated statement of income. Any fees received at the time of sale or syndication are recognized as part of investment income.
Reserve for Possible Credit Losses
The expense for possible credit losses in connection with 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 losses on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

Where impairment is indicated on an investment that is held to maturity, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value of the collateral. Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense. The write-off of the reserve balance is called a 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

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


investment, we will adjust our reserves accordingly.
We There were no loan reserves recorded no loan loss reserves during each of the three and ninesix months ended June 30, 2014 and September 30, 2013. During the three and nine months ended September 30, 2012, we recorded loan loss reserves of zero and $3.0 million, respectively, on investments being held to maturity and approximately zero and $2.4 million, respectively, in recoveries in connection with the sale of our investments. This is included in loan loss and other investment reserves, net of recoveries in the accompanying consolidated statements of income.
Debt and preferred equity investments held for sale are carried at the lower of cost or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the investment will be reclassified at its net carrying value to debt and preferred equity investments held to maturity. For these reclassified investments, the difference between the current carrying value and the expected cash to be collected at maturity will be accreted into income over the remaining term of the investment.
Income Taxes
SL Green is taxed as a REIT under Section 856(c) of the Code. As a REIT, SL Green generally is not subject to Federal income tax. To maintain its qualification as a REIT, SL Green must distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements. If SL Green fails to qualify as a REIT in any taxable year, we will be subject to Federal income tax on SL Green's taxable income at regular corporate rates. SL Green may also be subject to certain state, local and franchise taxes. Under certain circumstances, Federal income and excise taxes may be due on SL Green's undistributed taxable income.
The Operating Partnership is a partnership and, as a result, all income and losses of the partnership are allocated to the partners for inclusion in their respective income tax returns. The only provision for income taxes included in the accompanying consolidated financial statements of income relates to the Operating Partnership’s consolidated taxable REIT subsidiaries. WeThe Operating Partnership may also be subject to certain state, local and franchise taxes.

Pursuant to amendments to the Code that became effective January 1, 2001, we have elected, and may elect in the future, to treat certain of our existing or newly created corporate subsidiaries as taxable REIT subsidiaries, or a TRS.TRSs. In general, our TRSsa TRS may perform non-customary services for ourthe tenants of the Company, hold assets that we cannot hold directly and generally may engage in any real estate or non-real estate related business. OurThe TRSs generate income, resulting in Federal and state income tax liability for these entities.
During the three and ninesix months ended June 30, 2014 and September 30, 2013, we recorded a Federal, state and local tax provisionsprovision of $2.1 million, $2.1 million and $6.05.0 million, respectively. During the three$2.3 million and nine months ended September 30, 2012, we recorded Federal, state and local tax provisions of zero and less than $0.1$3.9 million,, respectively.
We follow a two-step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is more-likely-than-not to be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for derecognition of tax positions is prohibited.
Stock-Based Employee Compensation Plans
We have a stock-based employee compensation plan, described more fully in Note 14, “Share-based"Share-based Compensation.”"


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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

OurThe Company's stock options are recorded at fair value at the time of issuance. Fair value of the stock options is determined using the Black-Scholes option-pricingoption pricing model. The Black-Scholes model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our plan has characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of ourthe employee stock options.
Compensation cost for stock options, if any, is recognized ratably over the vesting period of the award. Our policy is to grant options with an exercise price equal to the quoted closing market price of ourthe Company's common stock on the grant date. Awards of stock or restricted stock are expensed as compensation over the benefit period based on the fair value of the stock on the grant date.
For share-based awards with a performance or market measure, we recognize compensation cost over the requisite service period, using the accelerated attribution expense method. The requisite service period begins on the date the compensation committee of ourSL Green's board of directors authorizes the award, adopts any relevant performance measures and communicates the award to the employees. For programs with performance measures, the total estimated compensation cost is based on the fair

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


value of the award at the applicable reporting date estimated using a binomial model. For share-based awards for which there is no pre-established performance measure, we recognize compensation cost over the service vesting period, which represents the requisite service period, on a straight-line basis. In accordance with the provisions of our share-based incentive compensation plans, we accept the return of shares of Companythe Company's common stock, at the current quoted market price, from certain key employees to satisfy minimum statutory tax-withholding requirements related to shares that vested during the period.
Awards can also be made in the form of a separate series of units of limited partnership interest in the Operating Partnership called long-term incentive plan units, or LTIP Units.units. LTIP Units,units, which can be granted either as free-standing awards or in tandem with other awards under our stock incentive plan, are valued by reference to the value of the Company's common stock at the time of grant, and are subject to such conditions and restrictions as the compensation committee of the Company's board of directors may determine, including continued employment or service, computation of financial metrics and/or achievement of pre-established performance goals and objectives.
Earnings per Share of the Company
The Company presents both basic and diluted earnings per share, or EPS. Basic EPS excludes dilution and is computed by dividing net income attributable to common stockholders by the weighted average number of common stockshares outstanding during the period. Basic EPS includes participating securities, consisting of unvested restricted stock that receive nonforfeitable dividends similar to shares of common stock. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount. Diluted EPS also includes units of limited partnership interest. The dilutive effect of stock options is reflected in the weighted average diluted outstanding shares calculation by application of the treasury stock method. There is no dilutive effect for the exchangeable senior debenturesnotes as the conversion premium will be paid in cash.
Earnings per Unit of the Operating Partnership
The Operating Partnership presents both basic and diluted earnings per unit, or EPU.  Basic EPU excludes dilution and is computed by dividing net income attributable to common unitholders by the weighted average number of common units outstanding during the period. Basic EPU includes participating securities, consisting of unvested restricted units that receive nonforfeitable dividends similar to shares of common units. Diluted EPU reflects the potential dilution that could occur if securities or other contracts to issue common units were exercised or converted into common units, where such exercise or conversion would result in a lower EPU amount. The dilutive effect of unit options is reflected in the weighted average diluted outstanding units calculation by application of the treasury stock method. There is no dilutive effect for the exchangeable senior notes as the conversion premium will be paid in cash.


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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, debt and preferred equity investments and accounts receivable. We place our cash investments in excess of insured amounts with high quality financial institutions. The collateral securing our debt and preferred equity investments is primarily located in the New York Metropolitan area.City. See Note 5, “Debt"Debt and Preferred Equity 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’stenant's lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting thea space. Although the properties in our real estate portfolio are primarily located in Manhattan, we also have Suburban properties located in Brooklyn, Long Island, Westchester County, Connecticut and Northern New Jersey and the west coast.Jersey. The tenants located in our buildings operate in various industries. Other than three tenants who account for approximately 7.3%11.2%, 6.5%7.3% and 6.0%5.7% of our share of annualized cash rent, respectively, no other tenant in our portfolio accounted for more than 2.0% of our annualized cash rent, including our share of joint venture annualized cash rent, for the three months ended June 30, 2014. For the three months ended June 30, 2014, September 30, 2013. Approximately 10%9.7%, 7%9.6% and 6%7.3% of our annualized cash rent for consolidated properties for the three months ended September 30, 2013was attributable to 1515 Broadway, 388-390 Greenwich Street and 1185 Avenue of the Americas, and One Madison Avenue, respectively. In addition, one debt andof our preferred equity investmentinvestments accounted for more than 10%13.3% of the income earned on debt and preferred equity investments during the three months ended SeptemberJune 30, 2013.2014.

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ReclassificationSL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


Reclassification
Certain prior year balances have been reclassified to conform to our current year presentation primarily in order to eliminate discontinued operations from income from continuing operations and to reclassify deferred origination fees from deferred income tooperations. In April 2014, we reclassified one of our debt and preferred equity investments.
investments to investments in unconsolidated joint ventures as a result of meeting the criteria of a real estate investment under the accounting guidance for ADC arrangements.
Accounting Standards Updates
In February 2013,June 2014, the Financial Accounting Standards Board, or the FASB, issued final guidance that requires repurchase-to-maturity transactions to be accounted for as secured borrowings as if the transferor retains effective control, even though the transferred financial assets are not returned to the transferor at settlement and also eliminates existing guidance for repurchase financings (Accounting Standards Update, or ASU, No. 2014-11). New disclosures are required for (1) certain transactions accounted for as secured borrowings and (2) transfers accounted for as sales when the transferor also retains substantially all of the exposure to the economic return on the presentation and disclosure of reclassification adjustments out of accumulated other comprehensive income, or AOCI. The standard requires an entity to present information about significant items reclassified out of AOCI by component either ontransferred financial assets throughout the faceterm of the statement where net incometransaction. The guidance is effective for the first interim or annual period beginning after December 15, 2014, except for the disclosures related to transactions accounted for as secured borrowings, which are effective for periods beginning after March 15, 2015. Early adoption of this guidance is prohibited. The Company will adopt this standard beginning in the first quarter of 2015. The adoption of this guidance is not anticipated to have a material impact on our consolidated financial statements.
In May 2014, the FASB issued a new comprehensive revenue recognition guidance which requires us to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services (ASU No. 2014-09). The guidance also requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The guidance is effective for annual and interim periods beginning after December 15, 2016 and early adoption is not permitted. The new guidance can be applied either retrospectively to each prior reporting period presented, or as a separate disclosure incumulative-effect adjustment as of the notesdate of adoption. The Company is currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.
In April 2014, the FASB issued new guidance on reporting discontinued operations which raises the threshold for disposals to qualify as discontinued operations (ASU No. 2014-08). The guidance becamealso allows us to have a significant continuing involvement and continuing cash flows with the discontinued operations. Additionally, the guidance requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. The guidance is effective for calendar year-endyear public companies beginning in the first quarter of 20132015 and itsis to be applied on a prospective basis for new disposals. Early adoption didof this guidance is permitted. The Company will adopt this standard beginning in the first quarter of 2015. The adoption of this guidance will change the presentation of discontinued operations but will not have a material impact on our consolidated financial statements.
3. Property Acquisitions
In April 2013,May 2014, we acquired interests from our joint venture partner, City Investment Fund, or CIF,Ivanhoe Cambridge, Inc.'s 49.65% economic interest in 16 Court388-390 Greenwich Street, for $4.0 million. We have consolidated thethereby consolidating full ownership of the 318,0002.4 million square foot building.property. The transaction valued the consolidated interests at $1.585 billion. This valuation was based on a negotiated sales agreement which took into consideration the recent extension of the existing triple net lease. Simultaneous with the closing, we refinanced the existing $1.1 billion mortgage with a four-year $1.5 billion mortgage, which bears interest at $96.2175 basis points over LIBOR. We also assumed the existing derivative instruments, which swapped $504.0 million, inclusive of the $84.7 millionmortgage encumbering the property.to fixed rate. We recognized a purchase price fair value adjustment of $(2.3)$71.4 million upon the closing of this transaction. This property, which we initially acquired in JulyDecember 2007, was previously accounted for as an investment in unconsolidated joint ventures. 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-assets.
In November 2013, we acquired a 492,987 square foot mixed-use residential and commercial property located at 315 West 33rd Street, New York, New York for $386.8 million. Based on our preliminary analysis of the purchase price, we had allocated $116.0 million and $270.8 million to land and building, respectively. During the three months ended March 31, 2014, we finalized the purchase price allocation based on third party appraisal and additional facts and circumstances that existed at the acquisition date and reclassified $33.2 million and $7.8 million to values for above-market and in-place leases and below-market lease or in-place leases.
In March 2013, we, along with Magnum Real Estate Group, acquired 84 residential apartment units, consistingleases, respectively. These adjustments did not have a material impact to our consolidated statement of 72 apartment units and 12 townhouses, located at 248-252 Bedford Avenue, Williamsburg, Brooklynincome for $54.9 million. Simultaneous with the closing, the joint venture closed on a five-year $22.0 million mortgage loan which carries a floating rate of interest of 225 basis points over LIBOR. The property is above a commercial property already owned by us. We hold a 90% controlling interest in this joint venture.
six months ended June 30, 2014.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


Pro Forma
The following table summarizes, on an unaudited pro forma basis, the results of operations of 388-390 Greenwich Street, which are included in the consolidated statement of income, and our allocationconsolidated results of operations for the purchase pricethree and six months ended June 30, 2014 and 2013 as though the acquisition of our joint venture partner's interest in 388-390 Greenwich Street was completed on January 1, 2013. The supplemental pro forma data is not necessarily indicative of what the assets acquired and liabilities assumed uponactual results of operations would have been assuming the closingtransactions had been completed as set forth above, nor do they purport to represent our results of this acquisition (in thousands):operations for future periods.
 
248-252
Bedford
Avenue
Land$10,865
Building and building leasehold44,035
Above market lease value—
Acquired in-place leases—
Other assets, net of other liabilities—
Assets acquired54,900
  
Fair value adjustment to mortgage note payable—
Below market lease value—
Liabilities assumed—
  
Purchase price allocation$54,900
  
Net consideration funded by us at closing, excluding consideration financed by debt$21,782
Equity and/or debt investment held$—
Debt assumed$—
  Three Months Ended June 30, Six Months Ended June 30,
(In thousands, except per share amounts) 2014 2013 2014 2013
Actual revenues since acquisition $14,897
   $14,897
  
Actual net income since acquisition 76,844
   76,844
  
Pro forma revenues 400,812
 381,397
 804,863
 762,471
Pro forma income from continuing operations 61,930
 27,437
 218,835
 127,081
Pro forma basic earnings per share 1.77
 0.09
 3.34
 1.09
Pro forma diluted earnings per share 1.76
 0.09
 3.33
 1.09
Pro forma basic earnings per unit 1.77
 0.09
 3.34
 1.09
Pro forma diluted earnings per unit 1.76
 0.09
 3.33
 1.09

(1)The pro forma income from continuing operations for the three and six months ended June 30, 2014 and 2013 includes the effect of the new financing necessary to complete the acquisition and the preliminary allocation of purchase price in connection with the changes in depreciation and amortization. In addition, the pro forma income from continuing operations for the six months ended June 30, 2013 was adjusted to include the purchase price fair value adjustment, as though the acquisition was completed on January 1, 2013. The pro forma income from continuing operations for the three and six months ended June 30, 2014 excludes this purchase price fair value adjustment.

4. PropertyProperties Held for Sale and Dispositions
In June 2014, we entered into a contract to sell our leased fee interest in 2 Herald Square for $365.0 million. This transaction is expected to close during the fourth quarter of 2014, subject to the satisfaction of customary closing conditions.
In September 2013,April 2014, we entered into a contract to sell our fee interest and development rights in 985-987 Third Avenue for $68.7 million. The sale is being made in conjunction with the sale of an adjacent parcel, which we do not own. This transaction closed in July 2014.
In May 2014, we sold the property located at 300 Main Street, Stamford, Connecticutour leasehold interest in 673 First Avenue for $13.5$145.0 million. We recorded a $2.2 million impairment charge in the second quarter of 2013.

In August 2013, we sold the property located at 333 West 34th, New York, New York for $220.3 million. We and recognized a gain of $13.8 millionon the sale. The $211.0 million net proceeds from the sale of this property are temporarily being held at a qualified intermediary, at our direction, for the purpose of facilitating a Section 1031 Like-Kind Exchange, and, as such, are included in restricted cash on the consolidated balance sheets at September 30, 2013.
In February 2013, we, along with our joint venture partner, sold our property located at 44 West 55th Street for $6.3 million. We recognized a gain of $1.1 million on the sale.
$117.8 million.
Discontinued operations included the results of operations of real estate assets under contract or sold prior to SeptemberJune 30, 20132014. This included 300 Main Street,2 Herald Square and 985-987 Third Avenue, which was sold in September 2013, 333 West 34th Street, which was sold in August 2013, 44 West 55th Street, which was sold in February 2013 and 292 Madisonwere both held for sale at June 30, 2014, 673 First Avenue, which was sold in May 2014, and 44 West 55th Street, 333 West 34th Street and 300 Main Street, which were sold in February, 2012.August, and September of 2013, respectively.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


The following table summarizes net income from discontinued operations for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively (in thousands):
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012 2014 2013 2014 2013
Revenues 
  
  
  
        
Rental revenue$1,696
 $5,446
 $10,656
 $13,872
 $8,366
 $15,494
 $19,000
 $30,155
Escalation and reimbursement revenues683
 611
 1,292
 1,778
 258
 789
 1,080
 1,985
Other income (loss)1
 (376) 8
 (376)
Other income 2
 2
 2
 485
Total revenues2,380
 5,681
 11,956
 15,274
 8,626
 16,285
 20,082
 32,625
Operating expenses660
 2,065
 3,643
 4,930
 291
 2,362
 1,179
 4,832
Real estate taxes187
 302
 765
 916
 383
 1,245
 1,402
 2,489
Ground rent 805
 719
 3,001
 3,582
Interest expense, net of interest income130
 696
 461
 1,627
 2,707
 3,892
 5,827
 6,918
Amortization of deferred financing costs 11
 11
 22
 22
Depreciable real estate reserves—
 —
 2,150
 —
 —
 2,150
 —
 2,150
Transaction related costs(3) 65
 —
 160
Depreciation and amortization—
 1,602
 3,212
 4,758
 —
 2,060
 433
 4,126
Transaction related costs, net of recoveries 40

8

40

(13)
Total expenses974
 4,730
 10,231
 12,391
 4,237
 12,447
 11,904
 24,106
Net income from discontinued operations$1,406
 $951
 $1,725
 $2,883
 $4,389
 $3,838
 $8,178
 $8,519
5. Debt and Preferred Equity Investments
During the ninesix months ended SeptemberJune 30, 20132014 and 20122013, our debt and preferred equity investments, (netnet of discounts and deferred origination fees)fees, increased approximately $497.4303.4 million and $374.0298.8 million, respectively, due to originations, purchases, accretion of reserves, and discounts and paid-in-kind interest. We recorded repayments, participations and sales of approximately $530.260.4 million and $288.3 million, respectively, and loan loss reserves of zero and $3.0419.8 million during the ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, which offset the increases in debt and preferred equity investments.
Debt Investments
As of SeptemberJune 30, 20132014 and December 31, 2012,2013, we held the following debt investments with an aggregate weighted average current yield of approximately 11.3%10.69% at SeptemberJune 30, 20132014 (in thousands):

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


Loan
Type
 
September 30,
2013
Senior
Financing
 
September 30,
2013
Carrying Value,
Net of Discounts
and Deferred
Origination Fees
 
December 31,
2012
Carrying Value,
Net of Discounts
and Deferred
Origination Fees
 
Initial
Maturity
Date
 June 30, 2014
Funding Obligations		 June 30, 2014
Senior Financing		 
June 30, 2014 Carrying Value(1)
 
December 31, 2013 Carrying Value(1)
 Initial
Maturity
Date
Other Loan $398,500
 $14,837
 $—
 March 2015
Fixed Rate Investments:          
Jr. Mortgage Participation $—
 $398,500
 $11,893
 $11,856
 March 2015
Jr. Mortgage Participation/Mezzanine Loan —
 205,000
 69,480
 68,319
 February 2016
Jr. Mortgage Participation/Mezzanine Loan —
 165,159
 45,137
 44,742
 May 2016
Mezzanine Loan —
 177,000
 14,519
 15,012
 May 2016
Jr. Mortgage Participation

 —
 133,000
 49,000
 49,000
 June 2016
Mezzanine Loan —
 165,000
 71,430
 71,312
 November 2016
Jr. Mortgage Participation/Mezzanine Loan(2)
 —
 1,109,000
 95,329
 26,884
 March 2017
Other(2)
 —
 —
 65,578
 54,099
 March 2017
Mezzanine Loan(3)
 19,725
 521,750
 21,267
 20,954
 June 2017
Mortgage Loan —
 —
 696
 —
 August 2019
Mezzanine Loan —
 15,000
 3,500
 3,500
 September 2021
Mezzanine Loan(4)
 —
 90,000
 19,928
 19,926
 November 2023
Total fixed rate $19,725
 $2,979,409
 $467,757
 $385,604
  
Floating Rate Investments:         
Jr. Mortgage Participation/Mezzanine Loan(5)
 —
 330,000
 131,987
 131,724
 July 2014
Mezzanine Loan(6)
 —
 180,000
 59,974
 59,892
 August 2014
Jr. Mortgage Participation(7)
 —
 57,750
 10,875
 10,873
 August 2014
Mezzanine Loan(8)
 —
 481,309
 19,487
 —
 September 2014
Mezzanine Loan 9,794
 93,279
 40,125
 38,549
 October 2014
Jr. Mortgage Participation(9)
 —
 84,000
 24,959
 24,046
 February 2015
Mezzanine Loan 205,000
 67,740
 66,307
 February 2016
 22,817
 50,000
 22,002
 —
 April 2015
Mortgage/Mezzanine Loan 167,355
 44,549
 44,013
 May 2016
 —
 —
 108,981
 —
 June 2015
Mezzanine Loan 177,000
 15,226
 15,906
 May 2016
 —
 110,000
 49,354
 49,110
 September 2015
Junior Participation 133,000
 49,000
 49,000
 June 2016
Mezzanine Loan 165,000
 71,254
 70,967
 November 2016
 9,215
 107,157
 40,662
 27,662
 December 2015
Mortgage/Mezzanine Loan(1) 1,109,000
 78,268
 115,804
 March 2017
Other Loan 15,000
 3,500
 3,500
 September 2021
Mortgage(2) —
 —
 218,068
 —
Total fixed rate $2,369,855
 $344,374
 $583,565
  
Mortgage Loan —
 29,912
 —
 December 2013
Junior Participation(3) 57,750
 10,869
 10,869
 February 2014
Junior Participation(4) 80,932
 23,953
 —
 February 2014
Mezzanine Loan —
 775,000
 73,326
 72,823
 March 2016
Mezzanine Loan(10)
 —
 160,000
 22,549
 22,526
 June 2016
Mezzanine Loan —
 115,000
 24,907
 25,590
 July 2016
Mezzanine Loan 10,584
 168,485
 26,655
 25,725
 November 2016
Mezzanine Loan 333
 33,833
 11,816
 11,798
 December 2016
Jr. Mortgage Participation/Mezzanine Loan —
 55,000
 20,544
 20,553
 July 2018
Mortgage/Mezzanine Loan 330,000
 131,595
 131,231
 July 2014
 —
 —
 17,923
 —
 February 2019
Mezzanine Loan(5) 62,500
 37,394
 37,288
 July 2014
Mezzanine Loan 180,000
 59,852
 59,739
 August 2014
 —
 38,000
 21,789
 —
 March 2019
Mortgage —
 14,855
 14,745
 September 2014
Mezzanine Loan(6) 87,374
 37,365
 34,444
 October 2014
Mortgage/Mezzanine Loan(7) —
 53,258
 47,253
 February 2015
Mezzanine Loan 110,000
 48,991
 —
 September 2015
Mezzanine Loan(8) 92,711
 27,772
 55,336
 December 2015
Mezzanine Loan 775,000
 72,585
 —
 March 2016
Mezzanine Loan(9) 160,000
 22,515
 7,624
 June 2016
Mezzanine Loan 87,300
 25,580
 34,761
 July 2016
Mortgage/Mezzanine Loan 72,000
 20,558
 —
 July 2018
Mortgage Loan(11)
 —
 —
 —
 30,000
 
Total floating rate $2,095,567
 $617,054
 $433,290
  
 $52,743
 $2,838,813
 $727,915
 $550,871
  
Total 4,465,422
 961,428
 1,016,855
  
 $72,468
 $5,818,222
 1,195,672
 936,475
 
Loan loss reserve(10) 

 (4,000) (7,000)  
 

 $957,428
 $1,009,855
  
Loan loss reserve     —
 (1,000) 
Total   

 $1,195,672
 $935,475
  

(1)
Interest is added to the principal balance for this accrual only loan. In January 2013, we sold 50% of the mezzanine loan for $57.8 million and recognized additional income of $12.9 million, which is included in investment and preferred equity income on the consolidated statements of income. The unaccrued interest during the period in which the loan was on non-accrual status is being accreted as of January 2013.

(2)
In connection with the repayment of the loan in May 2013, we recognized additional income of $6.4 million, which is included in investment and preferred equity income on our consolidated statements of income.
(3)
In June 2013, the loan was extended to February 2014, subject to an additional four-month extension option.
(4)
As of September 30, 2013, we were committed to fund an additional $0.9 million in connection with this loan.
(5)
As a result of the transfer not meeting the conditions for sale accounting, the $5.0 million portion of the outstanding loan that was participated out has been recorded in other liabilities in the accompanying consolidated balance sheets.
(6)
As of September 30, 2013, we were committed to fund an additional $12.3 million in connection with this loan.
(7)
As of September 30, 2013, we were committed to fund an additional $5.2 million in connection with this loan.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


(1)Carrying value is net of discounts, original issue discounts and deferred origination fees.
(2)During the three months ended March 31, 2014, we recognized $10.1 million of previously unaccrued interest income as deemed collectible as a result of the subsequent sale of the property, which closed in June 2014. In connection with the sale of the underlying property, our existing $66.7 million mezzanine loan was defeased and is now shown separately, as it is collateralized by defeasance securities. The buyer assumed our $30.0 million participating interest on the mortgage and we acquired a $67.3 million participating interest on the mezzanine loan.
(3)Carrying value is net of $41.3 million that was participated out, which is included in other assets and other liabilities on the consolidated balance sheets as a result of the transfer not meeting the conditions for sale accounting.
(4)Carrying value is net of $5.0 million that was participated out, which is included in other assets and other liabilities on the consolidated balance sheets as a result of the transfer not meeting the conditions for sale accounting.
(5)This loan was repaid in July 2014.
(6)This loan was repaid in August 2014.
(7)In June 2014, the loan maturity date was extended to August 2014 and $10.8 million has been repaid.
(8)
We funded $56.3 million at origination. In June 2013, we sold 50%This loan was previously included in other assets on the consolidated balance sheets. Following the sale of our interest in the $85.0 million mezzanine loan. As of September 30, 2013, we were committedpartnership that is the borrower, the loan was reclassified to fund an additional $13.6 million in connection with our share of this loan.
debt and preferred equity investments.
(9)
As part of the refinancing of the related senior mortgage in June 2013, we originated a $30.0 million mezzanine loan and our previous investment in the amount of $15.0 million, including the $7.4 million participated interest, was repaid in full. Following the refinancing, we entered into a loan participation agreement in the amount of $7.4 million on this $30.0 million mezzanine loan. Due to our continued involvement withIn March 2014, the loan the portion that was participated out has been recorded in other assets and other liabilities in the accompanying consolidated balance sheets.
extended to February 2015.
(10)Loan loss reserves are specifically allocated to investments. Our reserves reflect management's judgmentCarrying value is net of $7.4 million that was participated out, which is included in other assets and other liabilities on the consolidated balance sheets as a result of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct or that reserves will be adequate over time to protect against potential future losses.transfer not meeting the conditions for sale accounting.
(11)This loan was repaid in May 2014.

Preferred Equity Investments
As of SeptemberJune 30, 20132014 and December 31, 2012,2013, we held the following preferred equity investments with an aggregate weighted average current yield of approximately 10.9%9.75% at SeptemberJune 30, 20132014 (in thousands):
Type June 30, 2014
Senior Financing		 June 30, 2014
Carrying Value (1)		 December 31, 2013
Carrying Value (1)		 
Initial
Mandatory
Redemption
Preferred equity(2)
 $525,000
 $119,197
 $115,198
 July 2015
Preferred equity(2)
 926,260
 222,992
 218,330
 July 2016
Preferred equity 70,000
 9,947
 9,940
 November 2017
Preferred equity(3)
 —
 —
 25,896
 
  $1,521,260
 $352,136
 $369,364
  
Type 
September 30,
2013
 Senior
 Financing
 
September 30,
2013
Carrying
Value, Net of
Discounts
and Deferred
Origination
Fees
 
December 31,
2012
Carrying
Value, Net of
Discounts
and Deferred
Origination
Fees
 
Initial
 Mandatory
Redemption
Preferred equity $70,000
 $9,937
 $9,927
 October 2014
Preferred equity(1)(2)  525,000
 107,723
 99,768
 July 2015
Preferred equity(1)(3) 55,986
 24,426
 18,925
 April 2016
Preferred equity(1) 926,260
 216,037
 209,959
 July 2016
  $1,577,246
 $358,123
 $338,579
  
_________________________________ 

(1)Carrying value is net of discounts and deferred origination fees.
(2)The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.
(2)(3)The reserve previously taken against this loan is being accreted up to the face amount through the maturity date. In June 2013, the redemption dateThis preferred equity investment was extended from July 2014 to July 2015.redeemed in April 2014.
(3)
As of September 30, 2013, we were committed to fund an additional $1.4 million on this loan.
The following table is a rollforward of our total loan loss reserves at SeptemberJune 30, 20132014 and December 31, 20122013 (in thousands):
September 30,  
  2013		 December 31, 
 2012		June 30, 2014 December 31, 2013
Balance at beginning of year$7,000
 $50,175
$1,000
 $7,000
Expensed—
 3,000
—
 —
Recoveries—
 (2,436)—
 —
Charge-offs and reclassifications(3,000) (43,739)(1,000) (6,000)
Balance at end of period$4,000
 $7,000
$—
 $1,000
At SeptemberJune 30, 20132014 and December 31, 2012,2013, all debt and preferred equity investments other than as noted above, were performing in accordance with the terms of the loan agreements.
We have determined that we have one portfolio segment of financing receivables at SeptemberJune 30, 20132014 and December 31, 2012,2013 comprising commercial real estate which is primarily recorded in debt and preferred equity investments. Included in other assets is an additional amount of financing receivables totaling approximately $145.8134.9 million and $172.8 million at SeptemberJune 30, 20132014 and December 31, 2013, respectively. No financing receivables were 90 days past due at June 30, 2014.

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Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


$121.3 million at December 31, 2012. No financing receivables were 90 days past due or on non-accrual status at September 30, 2013.
The following table presents impaired loans, which may include non-accrual loans, as of September 30, 2013 and December 31, 2012, respectively (in thousands):
 September 30, 2013 December 31, 2012
 
Unpaid Principal
Balance
 
Recorded
Investment
 
Allowance
Allocated
 
Unpaid
Principal
Balance
 
Recorded
Investment
 
Allowance
Allocated
With no related allowance recorded: 
  
  
  
  
  
Commercial real estate$—
 $—
 $—
 $—
 $—
 $—
With an allowance recorded: 
  
  
  
  
  
Commercial real estate10,750
 10,750
 4,000
 10,750
 10,750
 7,000
            
Total$10,750
 $10,750
 $4,000
 $10,750
 $10,750
 $7,000
The following table presents the average recorded investment in impaired loans, which may include non-accrual loans and the related investment and preferred equity income recognized during the three and nine months ended September 30, 2013 and 2012, respectively (in thousands):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013 2012 2013 2012
Average recorded investment in impaired loans$10,890
 $40,304
 $10,877
 $63,391
        
Investment and preferred equity income recognized3,316
 (298) 3,804
 3,480
On an ongoing basis, we monitor the credit quality of our financing receivables based on payment activity. We assess credit quality indicators based on the underlying collateral.
6. Investments in Unconsolidated Joint Ventures
We have investments in several real estate joint ventures with various partners, including Ivanhoe Cambridge, Inc., formerly SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, or SITQ, Canada Pension Plan Investment Board, or CPPIB, Prudential Real Estate Investors, or Prudential, Onyx Equities, or Onyx, The Witkoff Group, or Witkoff, Credit Suisse Securities (USA) LLC, or Credit Suisse, Jeff Sutton, or Sutton, Harel Insurance and Finance, or Harel, Louis Cappelli, or Cappelli, The Moinian Group, or Moinian, Vornado Realty Trust (NYSE: VNO), or Vornado, Blackstone Real Estate Partners VII, or Blackstone, Plaza Global Real Estate Partners LP, or Plaza, Angelo Gordon Real Estate Inc.Lehman Bros., or AG, as well as private investors. All the investments below are voting interest entities, except for 650 Fifth Avenue, 33 Beekman, 3 Columbus Circle and 180/182 Broadway which are VIEs in which we are not the primary beneficiary.beneficiary as of June 30, 2014 and December 31, 2013. Prior to the acquisition of our joint venture partner's interest in May 2014, 388-390 Greenwich was also a VIE. Our net equity investment in these threeVIEs was $185.2 million and $310.7 million at $136.7 millionJune 30, 2014 and $117.7 million at September 30, 2013 and December 31, 2012,2013, respectively. As we do not control the joint ventures listed below, we account for them under the equity method of accounting.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

The table below provides general information on each of our joint ventures as of SeptemberJune 30, 20132014 (amounts in thousands):
Property Partner 
Ownership
 Interest
 
Economic
 Interest
 
Square
 Feet
 Acquired 
Acquisition
 Price(1)
Partner 
Ownership
Interest
 
Economic
Interest
 
Square
Feet
 Acquisition Date 
Acquisition
Price(1)
100 Park Avenue Prudential 49.90% 49.90% 834
 January 2000 $95,800
Prudential 49.90% 49.90% 834
 January 2000 $95,800
21 West 34th Street Sutton 50.00% 50.00% 30
 July 2005 22,400
1604-1610 Broadway(2) Onyx 70.00% 70.00% 30
 November 2005 4,400
27-29 West 34th Street Sutton 50.00% 50.00% 41
 January 2006 30,000
717 Fifth Avenue Sutton/Private Investor 10.92% 10.92% 120
 September 2006 251,900
Sutton/Private Investor 10.92% 10.92% 120
 September 2006 251,900
800 Third Avenue Private Investors 42.95% 42.95% 526
 December 2006 285,000
Private Investors 42.95% 42.95% 526
 December 2006 285,000
1745 Broadway Witkoff/SITQ/Lehman Bros. 32.26% 32.26% 674
 April 2007 520,000
Witkoff/SITQ/Lehman Bros. 32.26% 32.26% 674
 April 2007 520,000
1 and 2 Jericho Plaza Onyx/Credit Suisse 20.26% 20.26% 640
 April 2007 210,000
Onyx/Credit Suisse 20.26% 20.26% 640
 April 2007 210,000
The Meadows Onyx 50.00% 50.00% 582
 September 2007 111,500
Onyx 50.00% 50.00% 582
 September 2007 111,500
388 and 390 Greenwich Street(3) SITQ 50.60% 50.60% 2,600
 December 2007 1,575,000
180/182 Broadway(4) Harel/Sutton 25.50% 25.50% 71
 February 2008 43,600
180/182 Broadway(2)
Harel/Sutton 25.50% 25.50% 71
 February 2008 43,600
600 Lexington Avenue CPPIB 55.00% 55.00% 304
 May 2010 193,000
CPPIB 55.00% 55.00% 304
 May 2010 193,000
11 West 34th Street Private Investor/Sutton 30.00% 30.00% 17
 December 2010 10,800
Private Investor/Sutton 30.00% 30.00% 17
 December 2010 10,800
7 Renaissance Cappelli 50.00% 50.00% 37
 December 2010 4,000
Cappelli 50.00% 50.00% 37
 December 2010 4,000
3 Columbus Circle(5) Moinian 48.90% 48.90% 769
 January 2011 500,000
3 Columbus Circle(3)
Moinian 48.90% 48.90% 769
 January 2011 500,000
280 Park Avenue Vornado 50.00% 49.50% 1,237
 March 2011 400,000
Vornado 50.00% 49.50% 1,237
 March 2011 400,000
1552-1560 Broadway(6) Sutton 50.00% 50.00% 49
 August 2011 136,550
747 Madison Avenue Harel/Sutton 33.33% 33.33% 10
 September 2011 66,250
1552-1560 Broadway(4)
Sutton 50.00% 50.00% 49
 August 2011 136,550
724 Fifth Avenue Sutton 50.00% 50.00% 65
 January 2012 223,000
Sutton 50.00% 50.00% 65
 January 2012 223,000
10 East 53rd Street CPPIB 55.00% 55.00% 390
 February 2012 252,500
CPPIB 55.00% 55.00% 390
 February 2012 252,500
33 Beekman(7) Harel/Private Investor 45.90% 45.90% 145
 August 2012 31,000
West Coast office portfolio(8) Blackstone 42.02% 43.74% 4,067
 September 2012 880,103
521 Fifth Avenue(9) Plaza 50.50% 50.50% 460
 November 2012 315,000
21 East 66th Street(10) Private Investors 32.28% 32.28% 17
 December 2012 75,000
33 Beekman(5)
Harel/Naftali 45.90% 45.90% 145
 August 2012 31,000
521 Fifth AvenuePlaza 50.50% 50.50% 460
 November 2012 315,000
21 East 66th Street(6)
Private Investors 32.28% 32.28% 17
 December 2012 75,000
315 West 36th Street Private Investors 35.50% 35.50% 148
 December 2012 45,000
Private Investors 35.50% 35.50% 148
 December 2012 45,000
Herald Center(11) AG 40.00% 40.00% 365
 January 2013 50,000
650 Fifth Avenue(7)
Sutton 50.00% 50.00% 32
 November 2013 —

(1)Acquisition price represents the actual or implied gross purchase price for the joint venture.
(2)In March 2013, Sutton conveyed his interest in thisJune 2014, the joint venture entered into a contract to sell the property for $222.5 million. This transaction is expected to us.close during the third quarter of 2014, subject to satisfaction of customary closing conditions.
(3)The property is subject to a triple-net lease arrangement with a single tenant, which expires in 2020.
(4)In June 2013, the joint venture completed its redevelopment project and has conveyed a 30-year ground lease condominium interest in the building to Pace University, or Pace, its primary tenant.
(5)
We had an obligation to fund an additional $47.5 million to the joint venture which has been fully funded as of June 30, 2013. As a result of the sale of a condominium interest in September 2012, Young & Rubicam, Inc., or Y&R, owns a portion of the property, generally floors three through eight referred to as Y&R units. AsBecause the joint venture has an option to repurchase the Y&R units, nothe gain associated with this sale was recognized on this transaction.
deferred.
(6)(4)
In connection with this acquisition,The purchase price pertained only to the purchase of the 1552 Broadway interest which comprised 13,045 square feet. The joint venture also acquiredowns a long-term leasehold interest in the retail space and certain other spaces at 1560 Broadway, which is adjacent to 1552 Broadway. The purchase price relates only to the purchase of the 1552 Broadway interest which comprises 13,045 square feet. In 2012, we,

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

along with Sutton, acquired the property at 155 West 46th Street, which is adjacent to 1552 and 1560 Broadway, and sold it to the fee owner of 1560 Broadway.
(7)(5)
The joint venture acquired theowns a fee interest in the property and will develop an approximately 30 story building for student housing. Upon completion of the development, the joint venture will convey a long-term ground lease condominium interest in the building to Pace.
(8)(6)
Prior to the recapitalization in September 2012, the Company held $26.7 million in mezzanine and preferred equity positions in the entity that owned the portfolio. Following the recapitalization, Blackstone became the majority owner of the joint venture, with Equity Office Properties, a Blackstone affiliate, being responsible for the portfolio’s management and leasing. In February 2013, we acquired Gramercy’s 10.73% interest in the joint venture and simultaneously sold 20.78% of the newly acquired interest to Square Mile Capital Management LLC or Square Mile. During the nine months ended September 30, 2013, we acquired Square Mile’s 6.00% interest in the joint venture and the joint venture sold three of the properties for an aggregate of $224.3 million, on which we recognized a gain of approximately $2.1 million. The proceeds from the sale of these properties were used primarily to repay $194.5 million of the mortgage and $20.5 million of the mezzanine loan.
(9)
Following the sale of our 49.5% partnership interest in 521 Fifth Avenue, we deconsolidated the entity effective November 30, 2012 and have accounted for our investment under the equity method.
(10)
We hold a 32.28% interest in three retail and two residential units at the property and a 16.14% interest in four residential units at the property.
(11)
The joint venture acquired a preferred equity interest in an entity that holds the interest in a mixed commercial use property located in Manhattan. The preferred equity bears interest at a rate of 8.75% per annum and matures in June 2016.


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Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


(7)The joint venture owns a long-term leasehold interest in the retail space at 650 Fifth Avenue. In connection with the ground lease obligation, SLG provided a performance guaranty and Sutton executed a contribution agreement to reflect its pro rata obligation. In the event the property is converted into a condominium unit and the landlord elects the purchase option, the joint venture shall be obligated to acquire the unit at the then fair value.

In May 2014, we sold our 33.33% partnership interest in the joint venture which owns 100% interest as tenant-in-common in 30 East 65th Street Corporation and the related proprietary lease of five cooperative apartment units in the property located at 747 Madison Avenue at an implied gross valuation of $160.0 million, inclusive of the $33.1 million mortgage encumbering the property. We recognized a promote of $10.3 million and originated a $30.0 million preferred equity investment. Given our continuing involvement as a preferred equity holder, we deferred the gain on sale of $13.1 million as we did not meet the requisites of a sale under the full accrual method. We, along with our joint venture partners, retained one apartment unit at this property.
In March 2014, we sold our 43.74% economic ownership interest in the joint venture which holds the West Coast Office portfolio at an implied gross valuation of $756.0 million, inclusive of the $526.3 million mortgage encumbering the property. We recognized a gain of $85.5 million on the sale of our investment.
In March 2014, we closed on the origination of a $100.0 million acquisition and equity participating financing consisting of a $60.0 million mezzanine loan and a $40.0 million preferred equity, which are both due to mature in March 2016, subject to three one-year extension options and a two-year option for the last extension. These loans, which were previously accounted for as debt and preferred equity investments, were reclassified to investments in unconsolidated joint ventures as a result of meeting the criteria of a real estate investment under the guidance for ADC arrangements. We have accounted for this wholly-owned investment under the equity method of accounting.
In January 2014, we sold our 49.90% partnership interest in the joint venture which holds 21-25 West 34th Street at an implied gross valuation of $114.9 million, inclusive of the $100.0 million mortgage encumbering the property. We recognized a gain of $20.9 million on the sale of our investment. We, along with our joint venture partner, retained 91,311 square feet of development rights at this property.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


We generally finance our joint ventures with non-recourse debt. However, in certain cases we have provided guarantees or master leases for tenant space. These guarantees and master leases terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. The first mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at SeptemberJune 30, 20132014 and December 31, 2012,2013, respectively, wereare as follows (amounts in thousands):
Property Maturity Date 
Interest
Rate(1)
 September 30,  
  2013		 December 31, 
 2012		 Maturity Date 
Interest
Rate(1)
 June 30, 2014 December 31, 2013
100 Park Avenue September 2014
 6.64% $210,427
 $212,287
Fixed Rate Debt:        
7 Renaissance February 2015
 10.00% 1,276
 856
 December 2015
 10.00% $1,461
 $1,276
11 West 34th Street January 2016
 4.82% 17,279
 17,491
 January 2016
 4.82% 17,056
 17,205
280 Park Avenue June 2016
 6.57% 708,525
 710,000
 June 2016
 6.57% 703,520
 706,886
21 West 34th Street December 2016
 5.76% 100,000
 100,000
1745 Broadway January 2017
 5.68% 340,000
 340,000
 January 2017
 5.68% 340,000
 340,000
1 and 2 Jericho Plaza May 2017
 5.65% 163,750
 163,750
 May 2017
 5.65% 163,750
 163,750
800 Third Avenue August 2017
 6.00% 20,910
 20,910
 August 2017
 6.00% 20,910
 20,910
388 and 390 Greenwich Street(2) December 2017
 3.20% 996,082
 996,082
315 West 36th Street December 2017
 3.16% 25,000
 25,000
 December 2017
 3.16% 25,000
 25,000
717 Fifth Avenue July 2022
 4.45% 300,000
 300,000
21 East 66th Street(3) April 2023
 3.60% 12,000
 12,000
717 Fifth Avenue June 2024
 9.00% 301,520
 294,509
1604-1610 Broadway(4) —
 5.66% 27,000
 27,000
717 Fifth Avenue(2)
 July 2022
 4.45% 300,000
 300,000
21 East 66th Street April 2023
 3.60% 12,000
 12,000
717 Fifth Avenue(2)
 July 2024
 9.00% 309,074
 304,000
388 and 390 Greenwich Street(3)
 —
 —
 —
 996,082
100 Park Avenue(4)
 —
 —
 —
 209,786
21 West 34th Street(5)
 —
 —
 —
 100,000
1604-1610 Broadway(6)
 —
 —
 —
 27,000
Total fixed rate debt  
  
 $3,223,769
 $3,219,885
     $1,892,771
 $3,223,895
180/182 Broadway(5) December 2013
 2.94% 89,868
 71,524
West Coast office portfolio(6) September 2014
 3.93% 526,290
 745,025
747 Madison Avenue October 2014
 2.96% 33,125
 33,125
Floating Rate Debt:        
180/182 Broadway December 2014
 2.91% 89,551
 89,893
The Meadows(7) September 2015
 7.75% 58,212
 57,000
 September 2015
 7.75% 67,350
 67,350
3 Columbus Circle(8)(7) April 2016
 2.37% 241,264
 247,253
 April 2016
 2.33% 235,129
 239,233
1552 Broadway(9)(8) April 2016
 3.47% 143,430
 113,869
 April 2016
 4.16% 175,904
 158,690
Other loan payable June 2016
 1.09% 30,000
 30,000
 June 2016
 1.06% 30,000
 30,000
724 Fifth Avenue January 2017
 2.54% 120,000
 120,000
10 East 53rd Street February 2017
 2.69% 125,000
 125,000
 February 2017
 2.66% 125,000
 125,000
33 Beekman(10) August 2017
 2.94% 18,362
 18,362
724 Fifth Avenue(9)
 April 2017
 2.58% 275,000
 120,000
33 Beekman(10)
 August 2017
 2.91% 34,141
 18,362
600 Lexington Avenue October 2017
 2.27% 121,570
 124,384
 October 2017
 2.23% 118,689
 120,616
388 and 390 Greenwich Street(2) December 2017
 1.18% 142,297
 142,297
27-29 West 34th Street(11) May 2018
 2.09% 53,038
 53,375
521 Fifth Avenue November 2019
 2.39% 170,000
 170,000
 November 2019
 2.36% 170,000
 170,000
21 East 66th Street
 June 2033
 2.88% 1,978
 2,033
16 Court Street(12)  
  
 —
 84,916
100 Park Avenue(4)
 February 2021
 1.91% 360,000
 —
21 East 66th Street June 2033
 2.88% 1,921
 1,959
388 and 390 Greenwich Street(3)
 —
 —
 —
 142,297
747 Madison Avenue —
 —
 —
 33,125
West Coast Office portfolio(11)
 —
 —
 —
 526,290
Total floating rate debt  
  
 $1,874,434
 $2,138,163
     $1,682,685
 $1,842,815
Total joint venture mortgages and other loans payable  
  
 $5,098,203
 $5,358,048
Total joint venture mortgages and other loans payable   $3,575,456
 $5,066,710

(1)
Effective weighted average interest rate for the three months ended SeptemberJune 30, 2013,2014, taking into account interest rate hedges in effect during the period.
(2)
These loans are comprised of a $576.0$300.0 million fixed rate mortgage loan and a $562.4$290.0 million mezzanine loan. The mezzanine loan bothis subject to accretion based on the difference between contractual interest rate and contractual pay rate.
(3)In May 2014, we acquired the interest of which are fixed rate loans, except for $72.0 million ofour joint venture thereby consolidating the entity. Simultaneous with the acquisition, we refinanced the mortgage and $70.3 millionrealized a net loss on early extinguishment of the mezzanine loan which aredebt of $2.4 million.

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Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


floating.  Up to $200.0 million of the mezzanine loan, secured indirectly by these properties, is recourse to us.  We believe it is unlikely that we will be required to perform under this guarantee.
(3)(4)In April 2013, this loan was refinanced at parFebruary 2014, the joint venture replaced the previous fixed rate mortgage with a $360.0 million, seven-year floating rate, mortgage and its maturity was extended to April 2023.realized a net loss on early extinguishment of $3.2 million.
(4)(5)In January 2014, we sold our interest in the joint venture, inclusive of our share of the joint venture debt.
(6)This loan went intowas in default insince November 2009 due to the non-payment of debt service.
(5)
This loan has a committed amount of $90.0 million.
(6)
As a result of the sale of two of its properties, In January 2014, the joint venture paid down $194.5relinquished its ground lease position to the lender. During the six months ended June 30, 2014, we also recognized $7.7 million of its mortgage and $20.5 millionincentive income, which is included in other income on the consolidated statements of its mezzanine loan.
income.
(7)
As of September 30, 2013, $1.8 million of the existing loan remained unfunded.
(8)
This loan has a committed amount of $260.0 million. The joint venture has the ability to increase the mortgage by $40.0$40.0 million based on meeting certain performance hurdles. In connection with this obligation, we executed a master lease agreement and our joint venture partner executed a contribution agreement to reflect its pro rata obligation under the master lease. The lien on the mortgage and the master lease excludes the condominium interest owned by Y&R. See Note 53 of prior table.
(9)(8)
In April 2013, we refinanced the previous $119.6 million mortgage with a $200.0 millionthree-year loan construction financing facilityThese loans are comprised of a $170.0$150.0 million mortgage loan and a $30.0$41.5 million mezzanine loan. The facility has loan and are subject to twoone-year one-year extension options. As of SeptemberJune 30, 20132014, $44.2$8.4 million of the mortgage loan and $12.4$7.2 million of the mezzanine loan remained unfunded.
(9)In April 2014, the joint venture refinanced the previous mortgage with a $235.0 million mortgage and a $40.0 million mezzanine loan and realized a net loss on early extinguishment of debt of $1.2 million. These new floating rate loans mature in April 2017.
(10)
This loan has a committed amount of $75.0$75.0 million,, which is recourse to us. Our partner has indemnified us for its pro rata share of the recourse guarantee. A portion of the guarantee terminates upon the joint venture reaching certain milestones. We believe it is unlikely that we will be required to perform under this guarantee.
(11)In May 2013, this loan was refinanced and its maturity was extended to May 2018.
(12)In April 2013,March 2014, we acquired interests fromsold our interest in the joint venture, partner, CIF, and have consolidatedinclusive of our share in the entity due to our controlling interest.joint venture debt.
We act as the operating partner and day-to-day manager for all our unconsolidated joint ventures, except for 800 Third Avenue, 1 and 2 Jericho Plaza, 280 Park Avenue, 3 Columbus Circle West Coast portfolio and The Meadows. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to our joint ventures. We earned approximately $3.5$4.8 million,, $7.5 $11.2 million,, $2.5 $1.4 million and $6.2$4.0 million from these services for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively. In addition, we have the ability to earn incentive fees based on the ultimate financial performance of certain of the joint venture properties.

The combined balance sheets for the unconsolidated joint ventures, at SeptemberJune 30, 20132014 and December 31, 2012,2013, are as follows (in thousands):
September 30,  
  2013		 December 31, 
 2012		June 30, 2014 December 31, 2013
Assets 
  
   
Commercial real estate property, net$6,566,636
 $6,910,991
$4,925,422
 $6,846,021
Other assets937,469
 728,113
749,571
 827,282
Total assets$7,504,105
 $7,639,104
$5,674,993
 $7,673,303
   
Liabilities and members’ equity 
  
Liabilities and members' equity   
Mortgages and other loans payable$5,098,203
 $5,358,048
$3,575,456
 $5,066,710
Other liabilities378,752
 406,929
485,753
 596,960
Members’ equity2,027,150
 1,874,127
Total liabilities and members’ equity$7,504,105
 $7,639,104
Company’s net investment in unconsolidated joint ventures$1,109,815
 $1,032,243
Members' equity1,613,784
 2,009,633
Total liabilities and members' equity$5,674,993
 $7,673,303
Company's investments in unconsolidated joint ventures$971,926
 $1,113,218

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


The combined statements of income for the unconsolidated joint ventures, forfrom acquisition date through the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, are as follows (in thousands):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013
2012 2013
2012
Total revenues$156,571
 $120,121
 $462,776
 $364,587
Operating expenses29,211
 17,984
 86,027
 50,957
Ground rent657
 657
 1,972
 2,317
Real estate taxes19,105
 12,008
 53,368
 37,865
Interest expense, net of interest income56,169
 55,058
 169,137
 160,528
Amortization of deferred financing costs2,869
 2,338
 12,454
 7,009
Depreciation and amortization49,402
 35,242
 144,552
 107,749
Transaction related costs—
 934
 —
 1,292
Total expenses157,413
 124,221
 467,510
 367,717
Gain on early extinguishment of debt—
 21,421
 —
 21,421
Net (loss) income$(842) $17,321
 $(4,734) $18,291
Company’s equity in net income of unconsolidated joint ventures$2,939
 $11,658
 $4,251
 $80,988
Equity in net income of unconsolidated joint ventures for the nine months ended September 30, 2012 includes $67.9 million of additional income recognized in June 2012 as a result of the distribution of refinancing proceeds from the recapitalization of 717 Fifth Avenue and $10.8 million of additional income recognized in August 2012 as a result of the repayment of the Meadows' previous mortgage at a discount.
 Three Months Ended June 30, Six Months Ended June 30,
 2014 2013 2014 2013
Total revenues$130,495
 $154,974
 $291,633
 $306,205
Operating expenses18,362
 28,205
 45,045
 56,816
Ground rent2,632
 658
 4,657
 1,315
Real estate taxes15,406
 16,958
 32,342
 34,263
Interest expense, net of interest income44,728
 56,561
 97,064
 112,968
Amortization of deferred financing costs2,026
 5,302
 6,659
 9,585
Transaction related costs, net of recoveries(207) —
 64
 —
Depreciation and amortization33,858
 52,539
 79,462
 95,150
Total expenses116,805
 160,223
 265,293
 310,097
Loss on early extinguishment of debt(3,546) —
 (6,743) —
Net income (loss) before gain on sale$10,144
 $(5,249) $19,597
 $(3,892)
Company's equity in net income (loss) from unconsolidated joint ventures$8,619
 $(3,761) $14,748
 $1,313
7. Deferred Costs
Deferred costs at SeptemberJune 30, 20132014 and December 31, 20122013 consisted of the following (in thousands):
 September 30,  
  2013		 December 31, 
 2012
Deferred financing$149,888
 $152,596
Deferred leasing304,135
 285,931
 454,023
 438,527
Less accumulated amortization(206,173) (177,382)
Deferred costs, net$247,850
 $261,145

8. Mortgages and Other Loans Payable

The first mortgages and other loans payable collateralized by the respective properties and assignment of leases at September 30, 2013 and December 31, 2012, respectively, were as follows (amounts in thousands):
 June 30, 2014 December 31, 2013
Deferred leasing$331,716
 $326,379
Deferred financing201,148
 157,088
 532,864
 483,467
Less accumulated amortization(232,821) (216,409)
Deferred costs, net$300,043
 $267,058

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


8. Mortgages and Other Loans Payable
Property 
Maturity
Date
 
Interest
Rate(1)
 September 30,  
  2013		 December 31, 
 2012
609 Partners, LLC(2) July 2014
 5.00% $23
 $23
125 Park Avenue October 2014
 5.75% 146,250
 146,250
711 Third Avenue June 2015
 4.99% 120,000
 120,000
625 Madison Avenue November 2015
 7.27% 122,178
 125,603
500 West Putnam January 2016
 5.52% 23,665
 24,060
420 Lexington Avenue September 2016
 7.15% 183,443
 184,992
Landmark Square December 2016
 4.00% 83,309
 84,486
485 Lexington Avenue February 2017
 5.61% 450,000
 450,000
120 West 45th Street February 2017
 6.12% 170,000
 170,000
762 Madison Avenue February 2017
 3.75% 8,252
 8,371
2 Herald Square April 2017
 5.36% 191,250
 191,250
885 Third Avenue July 2017
 6.26% 267,650
 267,650
Other loan payable(3) September 2019
 8.00% 50,000
 50,000
One Madison Avenue May 2020
 5.91% 592,560
 607,678
100 Church July 2022
 4.68% 230,000
 230,000
919 Third Avenue(4) June 2023
 5.12% 500,000
 500,000
400 East 57th Street February 2024
 4.13% 70,000
 70,000
400 East 58th Street February 2024
 4.13% 30,000
 30,000
1515 Broadway(5) March 2025
 3.93% 900,000
 —
300 Main Street(6) —
 —
 —
 11,500
220 East 42nd Street —
 —
 —
 185,906
Total fixed rate debt  
  
 $4,138,580
 $3,457,769
16 Court Street(7) October 2013
 2.69% 84,354
 —
Master repurchase(8) November 2013
 3.19% 131,966
 116,667
180 Maiden Lane(9) November 2016
 2.38% 264,858
 271,215
248-252 Bedford Avenue March 2018
 2.44% 22,000
 —
1515 Broadway(5) —
 —
 —
 769,813
Total floating rate debt  
  
 $503,178
 $1,157,695
Total mortgages and other loans payable  
  
 $4,641,758
 $4,615,464
The first mortgages and other loans payable collateralized by the respective properties and assignment of leases at June 30, 2014 and December 31, 2013 were as follows (amounts in thousands):
Property 
Maturity
Date
 
Interest
Rate(1)
 June 30, 2014 December 31, 2013
Fixed Rate Debt:        
125 Park Avenue October 2014
 5.75% $146,250
 $146,250
711 Third Avenue June 2015
 4.99% 120,000
 120,000
625 Madison Avenue November 2015
 7.27% 117,892
 120,830
500 West Putnam Avenue January 2016
 5.52% 23,253
 23,529
420 Lexington Avenue September 2016
 7.15% 181,612
 182,641
Landmark Square December 2016
 4.00% 82,097
 82,909
485 Lexington Avenue February 2017
 5.61% 450,000
 450,000
120 West 45th Street February 2017
 6.12% 170,000
 170,000
762 Madison Avenue February 2017
 3.75% 8,128
 8,211
2 Herald Square(2)
 April 2017
 5.36% 191,250
 191,250
885 Third Avenue July 2017
 6.26% 267,650
 267,650
388-390 Greenwich Street(3)
 June 2018
 3.80% 504,000
 —
Other loan payable(4)
 September 2019
 8.00% 50,000
 50,000
One Madison Avenue May 2020
 5.91% 576,653
 587,336
100 Church July 2022
 4.68% 230,000
 230,000
919 Third Avenue(5)
 June 2023
 5.12% 500,000
 500,000
400 East 57th Street February 2024
 4.13% 69,503
 70,000
400 East 58th Street February 2024
 4.13% 29,787
 30,000
1515 Broadway March 2025
 3.93% 900,000
 900,000
Series J Preferred Units(6)
 April 2051
 3.75% 4,000
 —
609 Partners, LLC(7)
 —
 —
 —
 23
Total fixed rate debt     $4,622,075
 $4,130,629
Floating Rate Debt:        
Master repurchase agreement(8)
 December 2014
 3.37% —
 91,000
180 Maiden Lane(9)
 November 2016
 2.34% 258,351
 262,706
388-390 Greenwich Street(3)
 June 2018
 1.91% 946,000
 —
248-252 Bedford Avenue(10)
 June 2019
 2.16% 29,000
 22,000
220 East 42nd Street October 2020
 1.76% 275,000
 275,000
16 Court Street(11)
 0
 0
 —
 79,243
Total floating rate debt     $1,508,351
 $729,949
Total mortgages and other loans payable     $6,130,426
 $4,860,578
_________________________________ 
(1)
Effective weighted average interest rate for the three months ended SeptemberJune 30, 2013,2014, taking into account interest rate hedges in effect during the period.
(2)
As part of an acquisition,This property is held for sale at June 30, 2014 and the Operating Partnership issued 63.9related $191.3 million units of its 5.0% Series E preferred units, or the Series E units, with a liquidation preference of $1.00 per unit. As of September 30, 2013, 63.8 million Series E units had been redeemed.
mortgage is included in liabilities related to assets held for sale.
(3)Simultaneous with the acquisition of our joint venture partner interest, we refinanced the $1.1 billion floating rate mortgage with a $1.5 billion seven-year floating rate mortgage, and have consolidated the property.
(4)This loan is secured by a portion of a preferred equity investment.
(4)(5)
We own a 51.0% controlling interest in the joint venture that is the borrower on this loan. This loan is non-recourse to us.
(5)
In February 2013, we refinanced the previous $775.0 million mortgage with a new $900.0 million12-year mortgage and realized a net loss on early extinguishment of debt of approximately $18.5 million, including a prepayment penalty of $7.6 million.
(6)The property was sold in September 2013.
(7)In April 2013, we acquired interests from our joint venture partner, CIF, and have consolidated the entity due to our controlling interest. In October 2013, the maturity date of the loan was extended to December 2013.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


(6)In connection with the subsequent acquisition of a commercial real estate property, the Operating Partnership issued $4.0 million or 4,000 3.75% Series J Preferred Units of limited partnership interest, of the Series J Preferred Units, with a mandatory liquidation preference of $1,000.00 per unit. The Series J Preferred Units can be redeemed in cash by the Operating Partnership on the earlier of (i) the date of the sale of the property or (ii) April 30, 2051 or at the option of the unitholders as further prescribed in the related agreement.
(7)In April 2014, the remaining 22,658 Series E Preferred Units of the Operating Partnership were canceled.
(8)
The Master Repurchase Agreement, or MRA, has a maximum facility capacity of $175.0 million, under which we agreed to sell certain debt investments in exchange for cash with a simultaneous agreement to repurchase the same debt investments at a certain date or on demand. In September 2013, the maturity of this MRA was extended to November 2013 subject to a 10 months extension option. This MRA bears interest based on 1-month LIBOR plus 300 basis points through September 2013 and a floating rate of interest of 350 basis points over 1-month LIBOR through the extended maturity date.
$300.0 million.
(9)In connection with this consolidated joint venture obligation, we executed a master lease agreement. Our partner has executed a contribution agreement to reflect its 50.1%pro rata share of the obligation under the master lease.
(10)In June 2014, we replaced the previous floating rate mortgage with a $29.0 million, five-year floating rate mortgage and incurred a net loss on early extinguishment of debt of $0.5 million.
(11)In April 2014, we repaid the loan and incurred a loss on early extinguishment of debt of $0.5 million.

At September 30, 2013 and December 31, 2012, theThe gross book value of the properties and debt and preferred equity investments collateralizing the mortgages and other loans payable was approximately$9.5 billion and $8.0 billion at $8.0 billionJune 30, 2014 and $7.6 billion,December 31, 2013, respectively.

9. Corporate Indebtedness
2012 Credit Facility
In November 2012,March 2014, we entered into a $1.6an amendment to the $1.6 billion credit facility entered into by the Company in November 2012, or the 2012 credit facility, which, refinanced,among other things, increased the term loan portion of the 2012 credit facility by $383.0 million to $783.0 million, decreased the interest-rate margin applicable to the term loan facility by 25 basis points and extended and upsized the previous 2011 revolving credit facility.maturity of the term loan portion of the facility from March 30, 2018 to June 30, 2019. The 2012 credit facility, as amended, consists of a $1.2$1.2 billion revolving credit facility, or the revolving credit facility, and a $400.0$783.0 million term loan facility, or the term loan facility. The revolving credit facility matures in March 2017 and includes twosix-month six-month as-of-right 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.
The 2012 credit facility bears interest at a spread over LIBOR ranging from (i) 100 basis points to 175 basis points for loans under the revolving credit facility and (ii) 11595 basis points to 200190 basis points for loans under the term loan facility, in each case based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. At SeptemberJune 30, 20132014, the applicable spread was 145 basis points for the revolving credit facility and 165140 basis points for the term loan facility. At SeptemberJune 30, 2013,2014, the effective interest rate was 1.64%1.61% for the revolving credit facility and 2.00%1.64% 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 the senior unsecured long term indebtedness of ROP. As of SeptemberJune 30, 20132014, the facility fee was 30 basis points. At SeptemberJune 30, 20132014, we had approximately $79.1$116.3 million of outstanding letters of credit $340.0and $783.0 million borrowings under the revolving credit facility and $400.0 million outstanding under the term loan facility, with total undrawn capacity of $1.1 billion under the revolving credit facility.$0.9 billion under
In connection with the amendment of the 2012 credit facility, we incurred debt origination and other loan costs of $2.8 million. We evaluated the modification pursuant to ASC 470 and determined that the terms of the amendment were not substantially different from the terms of the previous 2012 credit facility.
As a result, these deferred costs and the unamortized balance of the costs previously incurred are amortized through the extended maturity date of the term loan facility.
The Company, ROP and the Operating Partnership and ROP are all borrowers jointly and severally obligated under the 2012 credit facility. NoNone of our other subsidiary of ours is an obligorsubsidiaries are obligors under the 2012 credit facility.
The 2012 credit facility includes certain restrictions and covenants (see Restrictive Covenants below).
Senior Unsecured Notes
The following table sets forth our senior unsecured notes and other related disclosures as of September 30, 2013 and December 31, 2012, respectively by scheduled maturity date (amounts in thousands):

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


Senior Unsecured Notes
The following table sets forth our senior unsecured notes and other related disclosures as of June 30, 2014 and December 31, 2013 by scheduled maturity date (amounts in thousands):
Issuance 
September 30,
2013
Unpaid
Principal
Balance
 
September 30,
2013
Accreted
Balance
 
December 31, 2012
Accreted
Balance
 
Coupon
Rate(1)
 
Effective
Rate
 
Term
(in Years)
 Maturity Date June 30, 2014 Unpaid Principal Balance June 30, 2014 Accreted Balance December 31, 2013 Accreted Balance 
Coupon
Rate(1)
 
Effective
Rate
 
Term
(in Years)
 Maturity Date
August 13, 2004(3)(2) $75,898
 $75,898
 $75,898
 5.88% 5.88% 10 August 15, 2014 $75,898
 $75,898
 $75,898
 5.88% 5.88% 10 August 15, 2014
March 31, 2006(3)(2) 255,308
 255,194
 255,165
 6.00% 6.00% 10 March 31, 2016 255,308
 255,227
 255,206
 6.00% 6.00% 10 March 31, 2016
October 12, 2010(4)(3) 345,000
 295,151
 287,373
 3.00% 3.00% 7 October 15, 2017 345,000
 303,354
 297,837
 3.00% 3.00% 7 October 15, 2017
August 5, 2011(5)(4) 250,000
 249,666
 249,620
 5.00% 5.00% 7 August 15, 2018 250,000
 249,712
 249,681
 5.00% 5.00% 7 August 15, 2018
March 16, 2010(5)(4) 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
November 15, 2012(5)(4) 200,000
 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
June 27, 2005(6)(5) 7
 7
 7
 4.00% 4.00% 20 June 15, 2025 7
 7
 7
 4.00% 4.00% 20 June 15, 2025
March 26, 2007(7)(6) 11,953
 11,953
 16,893
 3.00% 3.00% 20 March 30, 2027 10,008
 10,008
 10,701
 3.00% 3.00% 20 March 30, 2027
 $1,388,166
 $1,337,869
 $1,334,956
  
  
     $1,386,221
 $1,344,206
 $1,339,330
     

(1)Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.
(2)Issued by ROP.
(3)
On December 27, 2012, we repurchased $42.4 million of 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.
(4)
In October 2010,Issued by the Operating Partnership issued $345.0 million of these exchangeable notes.Partnership. Interest on these exchangeable notes is payable semi-annually on April 15 and October 15. The notes had an initial exchange rate representing an exchange price that was set at a 30.0% premium to the last reported sale price of the Company'sSL Green's common stock on October 6, 2010, or $85.81. The initial exchange rate is subject to adjustment under certain circumstances. The current exchange rate is 11.7153 shares of ourSL Green's common stock per $1,000 principal amount of these notes. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of ourSL Green's common stock, if any, at our option. The notes are guaranteed by ROP. On the issuance date, $78.3 million of the debt balance was recorded in equity. As of SeptemberJune 30, 20132014, approximately $49.841.6 million remained to be amortized into the debt balance.
(5)(4)Issued by the Company, the Operating Partnership and ROP, as co-obligors.
(6)(5)
Exchangeable senior debentures which are currently callable at par. In addition, the debentures can be put to ROP, 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 acquisition of all outstanding shares of common stock of Reckson, or the Reckson Merger, the adjusted exchange rate for the debentures is 7.7461 shares of ourSL Green's common stock per $1,000$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.
(7)(6)
In March 2007,Issued by the Operating Partnership issued $750.0 million of these exchangeable notes.Partnership. Interest on these remaining exchangeable notes is payable semi-annually on March 30 and September 30. The notes have an initial exchange rate representing an exchange price that was set at a 25.0% premium to the last reported sale price of the Company's common stock on March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of the Company'sSL Green's common stock, if any, at our option. The notes are currently redeemable at the Operating Partnership’s option. The Operating Partnership may be required to repurchase the notes on March 30, 2017 and 2022, and upon the occurrence of certain designated events. On March 30, 2012, we repurchased $102.2 million of aggregate principal amount of the exchangeable notes pursuant to a mandatory offer to repurchase the notes. On the issuance date, $66.6 million was recorded in

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

equity and was fully amortized into the debt balance as of March 31, 2012. On January 2, 2013, we repurchased $4.9 million of aggregate principal amount of exchangeable notes at 99.6% of the principal amount.
Restrictive Covenants
The terms of the 2012 credit facility, as amended, and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of 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, we will not during any time when a default is continuing, make distributions with respect to common stock or other equity interests, except to enable usthe Company to continue to qualify as a REIT for Federal income tax purposes. As of SeptemberJune 30, 2013 and December 31, 20122014, we were in compliance with all such covenants.

40
Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


Junior Subordinate Deferrable Interest Debentures
In June 2005, the Company and the Operating Partnership issued $100.0$100.0 million in unsecured floating rate trust preferred securities through a newly formed trust, SL Green Capital Trust I, or the Trust, which is a wholly-owned subsidiary of the Operating Partnership. The proceeds from the security offering were transferred to the Operating Partnership as a loan. The securities mature in 2035 and bear interest at a fixed rate of 5.61% for the first ten years ending July 2015. Thereafter, the interest rate will float at three-month LIBOR plus 125 basis points. Interest payments may be deferred for a period of up to eight consecutive quarters if the Operating Partnership exercises its right to defer such payments. The Trust preferred securities are redeemable at the option of the Operating Partnership, in whole or in part, with no prepayment premium. We do not consolidate the Trust even though it is a variable interest entity as we are not the primary beneficiary. Because the Trust is not consolidated, we have recorded the debt on our consolidated balance sheetsheets and the related payments are classified as interest expense.
Principal Maturities
Combined aggregate principal maturities of mortgages and other loans payable, revolvingthe 2012 credit facility, trust preferred securities, term loan and senior unsecured notes and our share of joint venture debt as of SeptemberJune 30, 20132014, including as-of-right extension options, were as follows (in thousands):
 
Scheduled
Amortization
 
Principal
Repayments
  
Trust
Preferred
Securities
 
Term Loan and Senior
Unsecured
Notes
 Total 
Joint
Venture
Debt
Remaining 2014$23,163
 $146,250
  $—
 $75,898
 $245,311
 $27,651
201547,480
 229,537
  —
 7
 277,024
 44,260
201655,946
 514,311
  —
 255,308
 825,565
 561,736
201761,063
 1,086,579
(1) —
 355,008
 1,502,650
 442,584
201864,462
 —
  —
 250,000
 314,462
 28
Thereafter246,979
 3,654,656
  100,000
 1,233,000
 5,234,635
 353,580
 $499,093
 $5,631,333
(1) $100,000
 $2,169,221
 $8,399,647
 $1,429,839

(1)Principal repayments include the mortgage at 2 Herald Center, which is included in liabilities related to assets held for sale.
  
Scheduled
Amortization
 
Principal
Repayments
 
Revolving
Credit
Facility
 
Trust
Preferred
Securities
 
Term Loan
and Senior
Unsecured
Notes
 Total 
Joint
Venture
Debt
2013 $10,093
 $216,320
 $—
 $—
 $—
 $226,413
 $77,387
2014 43,808
 146,273
 —
 —
 75,898
 265,979
 324,001
2015 47,028
 229,537
 —
 —
 7
 276,572
 41,085
2016 55,689
 515,487
 —
 —
 255,308
 826,484
 597,456
2017 61,213
 1,086,579
 —
 —
 356,953
 1,504,745
 930,713
Thereafter 311,611
 1,918,121
 340,000
 100,000
 1,100,000
 3,769,732
 198,805
  $529,442
 $4,112,317
 $340,000
 $100,000
 $1,788,166
 $6,869,925
 $2,169,447

Consolidated interest expense, excluding capitalized interest, was comprised of the following (in thousands):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013 2012 2013 2012
Interest expense$83,536
 $86,045
 $248,905
 $248,986
Interest income(563) (386) (1,485) (1,197)
Interest expense, net$82,973
 $85,659
 $247,420
 $247,789
Interest capitalized$2,828
 $3,360
 $9,191
 $8,892

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

  Three Months Ended June 30, Six Months Ended June 30,
  2014 2013 2014 2013
Interest expense $79,163
 $80,009
 $157,414
 $158,758
Interest income (552) (458) (1,084) (898)
Interest expense, net $78,611
 $79,551
 $156,330
 $157,860
Interest capitalized $6,862
 $3,301
 $11,003
 $6,363
10. Related Party Transactions
Cleaning/ Security/ Messenger and Restoration Services
Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning, extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of ourSL 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. The Service Corporation 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. Alliance paidIncome earned from profit participation, which is included in other income on the Service Corporation approximately $0.8consolidated statements of income, was $1.0 million,, $2.7 $1.9 million,, $0.8 $0.9 million and $1.9 million for the three and six months ended June 30, 2014 and $2.4 million, for the three and nine months ended September 30, 2013 and 2012, respectively. We paid Alliance approximately also recorded expenses of $4.7 million, $8.2 million, $4.3

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


$4.8 million, $13.2 and $8.4 million, $4.7 million for the three and six months ended June 30, 2014 and $12.9 million for the three and nine months ended September 30, 2013 and 2012, respectively, for these services (excluding services provided directly to tenants).
Marketing Services
A-List Marketing, LLC, or A-List, provides marketing services to us. Ms. Deena Wolff, a sister of Mr. Marc Holliday, our chief executive officer, is the owner of A-List. The aggregate amount of fees we paid to A-ListWe recorded approximately $77,100, $94,900, $104,900 and $107,300 for the three and six months ended June 30, 2014 and 2013, respectively, for these marketing services was approximately services.$50,700, $158,000, $2,400 and $58,300 for the three and nine months ended September 30, 2013 and 2012, respectively.
Leases
Nancy Peck and Company leases 1,003 square feet of space at 420 Lexington Avenue under a lease that ends in August 2015. Nancy Peck and Company is owned by Nancy Peck, the wife of Stephen L. Green. The rent due pursuant to the lease was $35,516$35,516 per annum for year one increasing to $40,000$40,000 in year seven.

Management Fees
S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an interest. The aggregate amount ofWe received management fees paid to S.L. Green Management Corp. from such entity wasof approximately $105,000, $319,000, $93,000$111,600, $216,400, $95,500 and $213,700 for the three and six months ended June 30, 2014 and $292,000 for the three and nine months ended September 30, 2013 and 2012, respectively.
Other
Amounts due to/from related parties at SeptemberJune 30, 20132014 and December 31, 20122013 consisted of the following (in thousands):
September 30,  
  2013		 December 31, 
 2012		June 30, 2014 December 31, 2013
Due from joint ventures$2,128
 $511
$1,484
 $2,376
Other5,672
 7,020
7,431
 6,154
Related party receivables$7,800
 $7,531
$8,915
 $8,530
Due to a joint venture (included in Accounts payable and accrued expenses)$—
 $(8,401)
11. Noncontrolling Interests on the Company's Consolidated Financial Statements
Noncontrolling interests represent the common and preferred units of limited partnership interest in the Operating Partnership not held by the Company as well as third party equity interests in our other consolidated subsidiaries. Noncontrolling interests in the Operating Partnership are shown in the mezzanine equity while the noncontrolling interests in our other consolidated subsidiaries are shown in the equity section of the Company’s consolidated financial statements.


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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

Common Units of Limited Partnership Interest in the Operating Partnership

As of SeptemberJune 30, 20132014 and December 31, 2012,2013, the noncontrolling interest unit holders owned 2.94% (2,792,050 common units)3.53%, or 3,500,060 units, and 2.94% (2,759,758 common units)2.96%, or 2,902,317 units, of the Operating Partnership, respectively. At SeptemberJune 30, 20132014, 2,792,0503,500,060 shares of ourSL Green's common stock were reserved for issuance upon redemption of units of limited partnership interest of the Operating Partnership.
Noncontrolling interests in the Operating Partnership is recorded at the greater of its cost basis or fair market value based on the closing stock price of ourSL Green's common stock at the end of the reporting period.
Below is the rollforward analysis of the activity relating to the noncontrolling interests in the Operating Partnership as of June 30, 2014, and December 31, 2013 (in thousands):

Nine Months Ended 
 September 30, 2013		 
Year Ended
December 31, 
2012
June 30, 2014 December 31, 2013
Balance at beginning of period$212,907
 $195,030
$265,476
 $212,907
Distributions(2,695) (3,296)(3,598) (4,146)
Issuance of common units14,270
 42,239
19,460
 24,750
Redemption of common units(17,287) (87,513)(23,066) (17,287)
Net income1,909
 5,597
13,374
 3,023
Accumulated other comprehensive income (loss) allocation490
 (388)
Accumulated other comprehensive income allocation234
 611
Fair value adjustment38,452
 61,238
107,925
 45,618
Balance at end of period$248,046
 $212,907
$379,805
 $265,476

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


Preferred Units of Limited Partnership Interest in the Operating Partnership

The Operating Partnership has 1,902,0004.5% Series G preferred unitsPreferred Units of limited partnership interest, or the Series G preferred units,Preferred Units, with a liquidation preference of $25.00$25.00 per unit, which waswere issued in January 2012 as part ofin conjunction with an acquisition. The Series G preferredPreferred unitholders receive annual dividends of $1.125$1.125 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series G preferred unitsPreferred Units are convertible into a number of common units of limited partnership interest in the Operating Partnership equal to (i) the liquidation preference plus accumulated and unpaid distributions on the conversion date divided by (ii) $88.50.$88.50.  The common units of limited partnership interest in the Operating Partnership may be redeemed in exchange for ourSL Green's common stock on a 1-to-11-to-1 basis.  The Series G preferred unitsPreferred Units also provide the holder with the right to require the Operating Partnership to repurchase the Series G preferred unitsPreferred Units for cash before January 31, 2022.
The Operating Partnership has 80,0006.0% Series H preferred units,Preferred Units of limited partnership interest, or the Series H preferred units,Preferred Units, with a mandatory liquidation preference of $25.00$25.00 per unit, which waswere issued in November 2011 as part ofin conjunction with an acquisition. The Series H preferredPreferred unitholders receive annual dividends of $1.50$1.50 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series H preferred unitsPreferred Units can be redeemed at any time at par for cash at the Operating Partnership’s option or the option of the unitholder.
The Operating Partnership also has 22,658 units of its 5.00% Series E Preferred Units of limited partnership interest outstanding with a mandatory liquidation preference of $1.00 per unit which are included and further described in Note 8, “Mortgages and other loans payable.”

The Operating Partnership also has 60 units of its Series F Preferred Units outstanding with a mandatory liquidation preference of $1,000.00$1,000.00 per unit.

12. Stockholders’ Equity of the Company
Common Stock

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

Our authorized capital stock consists of 260,000,000 shares, $0.01 par value per share, consisting of which we have authorized the issuance of up to 160,000,000 shares of common stock, $0.01 par value per share, 75,000,000 shares of excess stock, at $0.01 par value per share, and 25,000,000 shares of preferred stock, par value $0.01 per share. As of SeptemberJune 30, 20132014, 92,214,39695,587,301 shares of common stock and no shares of excess stock were issued and outstanding.
At-The-Market Equity Offering Program

In July 2011, the Company, along with the Operating Partnership, entered into an “at-the-market”"at-the-market" equity offering program, or ATM Program, to sell an aggregate of $250.0$250.0 million of the Company'sSL Green's common stock. During the ninesix months ended SeptemberJune 30, 2013, the Company2014, we sold 462,27625,659 shares of itsour common stock throughout of the remaining balance of this ATM Program for aggregate grossnet proceeds of approximately $42.5 million ($41.8 million of net proceeds after related expenses).$2.8 million. The net proceeds from these offeringsthis offering were contributed to the Operating Partnership in exchange for 462,276 common25,659 units of limited partnership interest andof the Operating Partnership.
In June 2014, the Company, along with the Operating Partnership, entered into a new ATM Program to sell an aggregate of $300.0 million of SL Green's common stock. During the six months ended June 30, 2014, we sold 55,765 shares of our common stock for aggregate net proceeds of $6.1 million. The net proceeds from this offering were usedcontributed to repay debt, fund new investments andthe Operating Partnership in exchange for other corporate purposes.55,765 units of limited partnership interest of the Operating Partnership. As of SeptemberJune 30, 20132014, we had $2.8293.8 million remained available to issuefor issuance of common stock under the new ATM Program.
Perpetual Preferred Stock
We have 9,200,000 shares of our 6.50% Series I Cumulative Redeemable Preferred Stock, or the Series I Preferred Stock, outstanding with a mandatory liquidation preference of $25.00$25.00 per share. The Series I Preferred stockholders receive annual dividends of $1.625$1.625 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. We are entitled to redeem the Series I Preferred Stock at par for cash at our option on or after August 10, 2017. In August 2012, we received $221.9 million in netThe proceeds from thethis issuance of the Series I Preferred Stock which were recorded net of underwriters’ discount and issuance costs, and contributed the net proceeds to the Operating Partnership in exchange for of 9,200,000 units of its 6.50% Series I Cumulative Redeemable Preferred Units of limited partnership interest, or the Series I Preferred Units.
In June 2013, we redeemed the remaining 7,700,000 outstanding shares of our 7.625% Series C Cumulative Redeemable Preferred stock, or the Series C Preferred Stock at a redemption price of $25.00 per share plus $0.3495 in accumulated and unpaid dividends on such Preferred Stock through June 21, 2013. We recognized $12.2 million of costs to redeem the remaining Series C Preferred Stock. In September 2012, we had redeemed 4,000,000 shares of our 11,700,000 shares of Series C Preferred Stock, at a redemption price of $25.00 per share plus $0.3707 in accumulated and unpaid dividends on such Preferred Stock through September 24, 2012. We recognized $6.3 million of costs to redeem partially the Series C Preferred Stock. Simultaneously with each redemption, an equal number of 7.625% Series C Cumulative Redeemable Preferred Units of limited partnership interest of the Operating Partnership, or the Series C Preferred Units, were redeemed at the redemption price paid by us to the Series C Preferred stockholders. The Series C Preferred stockholders received annual dividends of $1.90625 per share paid on a quarterly basis and dividends were cumulative, subject to certain provisions.
In July 2012, we redeemed all 4,000,000 shares of our 7.875% Series D Cumulative Redeemable Preferred stock, or Series D Preferred Stock, at a redemption price of $25.00 per share plus $0.4922 in accumulated and unpaid dividends on such Preferred Stock through July 14, 2012 and recognized $3.7 million of costs to redeem the Series D Preferred Stock. Simultaneously with that redemption, an equal number of 7.875% Series D Cumulative Redeemable Preferred Units of limited partnership interest of the Operating Partnership, or the Series D Preferred Units, were redeemed at the redemption price paid by SL Green to the Series D Preferred stockholders. The Series D Preferred stockholders received annual dividends of $1.96875 per share paid on a quarterly basis and dividends were cumulative, subject to certain provisions.
Dividend Reinvestment and Stock Purchase Plan
In March 2012, the Company filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRIP, which automatically became effective upon filing. The Company registered 3,500,000 shares of itsSL Green's common stock under the DRIP. The DRIP commenced on September 24, 2001.
During the ninesix months ended SeptemberJune 30, 2013 and 2012,2014, the Company issued approximately 651 shares and 1.3 million272 shares of itsSL Green's common stock and received approximately $57,000 and $99.5 million26,000 of proceeds, respectively, from dividend reinvestments and/or stock purchases under the DRIP. DRIP shares may be issued at a discount to the market price.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)



Earnings per Share
EarningsSL Green's earnings per share for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013 is computed as follows (amounts in(in thousands):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013 2012 2013 2012
Numerator 
  
  
  
Basic Earnings: 
  
  
  
Income attributable to SL Green common stockholders$37,025
 $7,732
 $64,210
 $136,028
Effect of Dilutive Securities: 
  
  
  
Redemption of units to common shares1,110
 567
 1,909
 4,876
Stock options—
 —
 —
 —
Diluted Earnings: 
  
  
  
Income attributable to SL Green common stockholders$38,135
 $8,299
 $66,119
 $140,904
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013 2012 2013 2012
Denominator 
  
  
  
Basic Earnings: 
  
  
  
Weighted average common stock oustanding91,988
 90,241
 91,684
 88,929
Effect of Dilutive Securities: 
  
  
  
Redemption of units to common stock2,792
 3,320
 2,705
 3,188
3.00% exchangeable senior notes due 2017—
 —
 —
 —
3.00% exchangeable senior notes due 2027—
 —
 —
 —
4.00% exchangeable senior debentures due 2025—
 —
 —
 —
Stock-based compensation plans236
 330
 242
 368
Diluted weighted average common stock outstanding95,016
 93,891
 94,631
 92,485
  Three Months Ended June 30, Six Months Ended June 30,
Numerator 2014 2013 2014 2013
Basic Earnings:        
Income attributable to SL Green common stockholders $235,541
 $8,276
 $381,631
 $27,185
Effect of Dilutive Securities:        
Redemption of units to common shares 8,645
 244
 13,374
 799
Diluted Earnings:        
Income attributable to SL Green common stockholders $244,186
 $8,520
 $395,005
 $27,984
  Three Months Ended June 30, Six Months Ended June 30,
Denominator 2014 2013 2014 2013
Basic Shares:        
Weighted average common stock outstanding 95,455
 91,660
 95,288
 91,530
Effect of Dilutive Securities:        
Redemption of units to common shares 3,515
 2,652
 3,339
 2,694
Stock-based compensation plans 514
 224
 501
 228
Diluted weighted average common stock outstanding 99,484
 94,536
 99,128
 94,452
We haveSL Green has excluded approximately748,000, 703,702797,000, 922,239, 548,000894,000 and 613,000939,000 common stock equivalents from the diluted shares outstanding for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, as they were anti-dilutive.


13. Partners' Capital of the Operating Partnership

The Company is the sole general partner of the Operating Partnership and at SeptemberJune 30, 20132014 owned 92,214,39695,587,301 general and limited partnership interests in the Operating Partnership and 9,200,000 Series I Preferred Units. Partnership interests in the Operating Partnership are denominated as “common units of limited partnership interest” (also referred to as “OP Units”) or “preferred units of limited partnership interest” (also referred to as “Preferred Units”). All references to OP Units and Preferred Units outstanding exclude such units held by the Company. A holder of an OP Unit may present such OP Unit to the Operating Partnership for redemption at any time (subject to restrictions agreed upon at the issuance of OP Units to particular holders that may restrict such right for a period of time, generally one year from issuance). Upon presentation of an OP Unit for redemption, the Operating Partnership must redeem such OP Unit in exchange for the cash equal to the then value of a share of common stock of the Company, except that the Company may, at its election, in lieu of cash redemption, acquire such OP Unit for one share of common stock. Because the number of shares of common stock outstanding at all times equals the number of OP Units that the Company owns, one share of common stock is generally the economic equivalent of one OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of common stock. Each series of Preferred Units makes a distribution that is set in accordance with an amendment to the

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

partnership agreement of the Operating Partnership. Preferred Units may also be convertible into OP Units at the election of the holder thereof or the Company, subject to the terms of such Preferred Units.

Net income (loss) allocated to the preferred unitholders and common unitholders reflects their pro rata share of net income (loss) and distributions.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


Limited Partner Units

As of SeptemberJune 30, 2013,2014, limited partners other than SL Green owned approximately 2.94% (2,792,0503.53%, or 3,500,060, common units)units, of the Operating Partnership.

Preferred Units

Preferred units not owned by SL Green are further described in Note 11, “Noncontrolling Interests on the Company’s Consolidated Financial Statements - Preferred Units of Limited Partnership Interest in the Operating Partnership.”

Earnings per Unit

The Operating Partnership's earnings per unit for the three and six months ended June 30, 2014 and 2013 is computed as follows (in thousands):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013 2012 2013 2012
Numerator 
  
  
  
Basic Earnings: 
  
  
  
Income attributable to SLGOP common unitholders$38,135
 $8,299
 $66,119
 $140,904
Effect of Dilutive Securities: 
  
  
  
Stock options—
 —
 —
 —
Diluted Earnings: 
  
  
  
Income attributable to SLGOP common unitholders$38,135
 $8,299
 $66,119
 $140,904

  Three Months Ended June 30, Six Months Ended June 30,
Numerator 2014 2013 2014 2013
Basic and Diluted Earnings:        
Income attributable to SLGOP common unitholders $244,186
 $8,520
 $395,005
 $27,984
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
2013 2012 2013 2012 Three Months Ended June 30, Six Months Ended June 30,
Denominator 
  
  
  
 2014 2013 2014 2013
Basic Earnings: 
  
  
  
Basic units:        
Weighted average common units outstanding94,780
 93,561
 94,389
 92,117
 98,970
 94,312
 98,627
 94,224
Effect of Dilutive Securities: 
  
  
  
        
3.00% exchangeable senior notes due 2017—
 —
 —
 —
3.00% exchangeable senior notes due 2027—
 —
 —
 —
4.00% exchangeable senior debentures due 2025—
 —
 —
 —
Stock-based compensation plans236
 330
 242
 368
 514
 224
 501
 228
Diluted weighted average common units outstanding95,016
 93,891
 94,631
 92,485
 99,484
 94,536
 99,128
 94,452

We haveThe Operating Partnership excluded approximately 703,702748,000, 922,239797,000, 548,000894,000 and 613,000939,000 common unit equivalents from the diluted units outstanding for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, as they were anti-dilutive.


14. Share-based Compensation
We have a stock-based employee and director compensation plans. Our employees are compensated through the Operating Partnership. Under each plan, whenever the Company issues common or preferred stock, the Operating Partnership issues an equivalent number of units of limited partnership interest of a corresponding class to the Company.
Third Amended and Restated 2005 Stock Option and Incentive Plan

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

The Third Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2013 and its stockholders in June 2013 at the Company's annual meeting of stockholders. The 2005 Plan authorizes the issuance of stock options, stock appreciation rights, unrestricted and restricted stock, phantom shares, dividend equivalent rights and other equity-based awards. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 17,130,000 fungible units may be granted under the 2005 Plan. Currently, different types of awards count against the limit on the number of fungible units differently, with (1) full-value awards (i.e., those that deliver the full value of the award upon vesting, such as restricted stock) counting as 2.76 fungible units per share subject to such award (2) stock options, stock appreciation rights and other awards that do not deliver full value and expire five yearyears from the date of grant counting as 0.77 fungible units per share subject to such awards,award and (3) all other awards (e.g., ten-year stock options) counting as 1.0 fungible units per share subject to such award. Awards granted under the 2005 Plan prior to the approval of the second amendment and restatement in June 2010 and third amendment and restatement in June 2013 continue to count against the fungible unit limit based on the ratios that were in effect at the time such awards were granted, which may be different than the current ratios. As a result, depending on the types of awards issued, the 2005 Plan may result in the issuance of more or less than 17,130,000 shares. If a stock option or other award granted under the 2005 Plan expires or terminates, the common stock subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. Shares of the Company'sSL Green's common stock distributed under the 2005 Plan may be treasury shares or authorized but unissued shares. Currently, unless the 2005 Plan has been previously terminated by the Company's board of directors,

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


new awards may be granted under the 2005 Plan until June 13, 2023, which is the tenth anniversary of the date that the 2005 Plan was most recently approved by the Company's stockholders. As of SeptemberJune 30, 20132014, 5.8 million3,200,000 fungible units were available for issuance under the 2005 Plan after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non-Employee Directors’Directors' Deferral Program and LTIP Units, including, among others, outstanding LTIP Units issued under our 2011 Long-Term Outperformance Plan, which remain subject to performance-based vesting.
Options are granted under the plan at the fair market value on the date of grant and, subject to termination of employment, generally expire five or ten years from the date of grant, are not transferable other than on death, and generally vest in one to five years commencing one year from the date of grant.
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model based on historical information with the following weighted average assumptions for grants during the ninesix months ended SeptemberJune 30, 20132014 and the year ended December 31, 2012.2013.
September 30,  
  2013		 December 31, 2012June 30, 2014 December 31, 2013
Dividend yield1.95% 2.00%1.80% 1.92%
Expected life of option4.7 years
 3.7 years
3.7 years
 4.1 years
Risk-free interest rate0.78% 0.46%0.94% 0.96%
Expected stock price volatility35.59% 37.40%35.00% 36.12%
A summary of the status of ourthe Company's stock options as of SeptemberJune 30, 20132014 and December 31, 20122013 and changes during the ninesix months ended SeptemberJune 30, 20132014 and the year ended December 31, 20122013 are presented below:as follows:

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

September 30, 2013 December 31, 2012June 30, 2014 December 31, 2013
Options
Outstanding
 
Weighted
Average
Exercise
 Price
 
Options
Outstanding
 
Weighted
Average
Exercise
Price
Options
Outstanding
 
Weighted
Average
Exercise
Price
 
Options
Outstanding
 
Weighted
Average
Exercise
Price
Balance at beginning of year1,201,000
 $75.05
 1,277,200
 $63.37
1,765,034
 $83.24
 1,201,000
 $75.05
Granted246,000
 79.58
 361,331
 75.36
3,000
 98.58
 828,100
 87.23
Exercised(184,919) 51.62
 (382,612) 36.65
(277,145) 71.27
 (223,531) 53.93
Lapsed or canceled(33,202) 83.61
 (54,919) 72.99
Lapsed or cancelled(26,984) 83.81
 (40,535) 83.94
Balance at end of period1,228,879
 $79.25
 1,201,000
 $75.05
1,463,905
 $85.53
 1,765,034
 $83.24
       
Options exercisable at end of period506,903
 $87.48
 479,913
 $86.85
456,464
 $88.98
 461,458
 $89.38
Weighted average fair value of options granted during the period$4,999,225
  
 $6,602,967
  
$69,805
   $18,041,576
  

All options were granted within a price range ofwith strike prices ranging from $20.67 to $137.18. The remaining weighted average contractual life of the options outstanding was 4.264.40 years years and the remaining weighted average contractual life of the options exercisable was 3.863.76 years.
During the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, we recognized approximately$2.0 million, $2.24.1 million, $4.8$1.3 million, $1.0 million and $3.92.6 million of compensation expense, respectively, for these options. As of SeptemberJune 30, 20132014, there was approximately $8.915.8 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-averageweighted average period of three years. years.
Stock-based Compensation
Effective January 1, 1999, wethe Company implemented a deferred compensation plan, or the Deferred Plan, covering certain of our employees, including our executives.  Thewhere shares issued under the Deferred Plan were granted to certain employees, including our executives, and vesting will occur annually upon the completion of a service period or our meeting established financial performance criteria. Annual vesting occurs at rates ranging from 15% to 35% once performance criteria are reached.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


A summary of ourthe Company's restricted stock as of SeptemberJune 30, 20132014 and December 31, 20122013 and charges during the ninesix months ended SeptemberJune 30, 20132014 and the year ended December 31, 2012 is2013 are presented below:
September 30,  
  2013		 December 31, 
 2012		June 30, 2014 December 31, 2013
Balance at beginning of year2,804,901
 2,912,456
2,994,197
 2,804,901
Granted9,867
 92,729
—
 192,563
Cancelled(3,267) (200,284)(1,434) (3,267)
Balance at end of period2,811,501
 2,804,901
2,992,763
 2,994,197
Vested during the period6,634
 408,800
69,293
 21,074
Compensation expense recorded$4,421,551
 $6,930,381
$4,678,269
 $6,713,155
Weighted average fair value of restricted stock granted during the period$882,249
 $7,023,942
$—
 $17,386,949
The fair value of restricted stock that vested during the ninesix months ended SeptemberJune 30, 20132014 and the year ended December 31, 20122013 was $0.45.1 million and $22.41.6 million, respectively. As of SeptemberJune 30, 20132014, there was $8.514.2 million of total unrecognized compensation cost related to unvested restricted stock, which is expected to be recognized over a weighted-averageweighted average period of approximately 2.02.3 years years..
For the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, approximately$1.9 million, $0.9 million , $2.93.5 million, $0.9$1.0 million and $2.92.0 million, respectively, was capitalized to assets associated with compensation expense related to our long-term compensation plans, restricted stock and stock options.

39
TableWe granted LTIP units, which include bonus, time-based and performance based awards, with a fair value of Contents
$21.2 million, and $27.1 million as of June 30, 2014 and December 31, 2013, respectively. The grant date fair value of the LTIP unit awards was calculated in accordance with ASC 718. A third party consultant determined the fair value of the LTIP units to have a discount from SL Green Realty Corp.Green's common stock price. The discount was calculated by considering the inherent uncertainty that the LTIP units will reach parity with other common partnership units and SL Green Operating Partnership, L.P.
Notesthe illiquidity due to Consolidated Financial Statements
Septembertransfer restrictions. As of June 30, 2014, there was $6.7 million of total unrecognized compensation expense related to the time-based and performance based awards, which is expected to be recognized over a weighted average period of 1.1 years. During the three and six months ended June 30, 2014 and 2013
(unaudited)

, we recorded compensation expense related to bonus, time-based and performance based awards of $2.1 million, $10.3 million, $0.8 million and $1.6 million, respectively.
2010 Notional Unit Long-Term Compensation Plan
In December 2009, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Program, or the 2010 Long-Term Compensation Plan. The 2010 Long-Term Compensation Plan is a long-term incentive compensation plan pursuant to which award recipients could earn, in the aggregate, from approximately $15.0$15.0 million up to approximately $75.0$75.0 million of LTIP Units in the Operating Partnership based on ourthe Company's stock price appreciation over three years beginning on December 1, 2009; provided that, if maximum performance had been achieved, approximately $25.0$25.0 million of awards could be earned at any time after the beginning of the second year and an additional approximately $25.0$25.0 million of awards could be earned at any time after the beginning of the third year. In order to achieve maximum performance under the 2010 Long-Term Compensation Plan, ourthe Company's aggregate stock price appreciation during the performance period had to equal or exceed 50%. The compensation committee determined that maximum performance had been achieved at or shortly after the beginning of each of the second and third years of the performance period and for the full performance period and, accordingly, 366,815 LTIP Units, 385,583 LTIP Units and 327,416 LTIP Units were earned under the 2010 Long-Term Compensation Plan in December 2010, 2011 and 2012, respectively. Substantially in accordance with the original terms of the program, 50% of these LTIP Units vested on December 17, 2012 (accelerated from the original January 1, 2013 vesting date), 25% of these LTIP Units vested on December 11, 2013 (accelerated from the original January 1, 2014 vesting date) and the remainder is scheduled to vest ratably on January 1, 2014 and 2015 based on continued employment. In accordance with the terms of the 2010 Long-Term Compensation Plan, distributions were not paid on any LTIP Units until they were earned, at which time we paid all distributions that would have been paid on the earned LTIP Units since the beginning of the performance period.
The cost of the 2010 Long-Term Compensation Plan (approximately $31.7$31.7 million,, subject to forfeitures) will be amortized into earnings through the final vesting period. We recorded compensation expense of approximately$1.6 million, $0.91.9 million, $3.6$0.8 million, $3.3 million and $7.02.8 million during the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, related to the 2010 Long-Term Compensation Plan.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


2011 Outperformance Plan
In August 2011, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2011 Outperformance Plan, or the 2011 Outperformance Plan. Participants in the 2011 Outperformance Plan may earn, in the aggregate, up to $85$85.0 million of LTIP Units in the Operating Partnership based on our total return to stockholders for the three-yearthree-year period beginning September 1, 2011. Under the 2011 Outperformance Plan, participants will be entitled to share in a “performance pool”"performance pool" comprised of LTIP Units with a value equal to 10% of the amount, if any, by which our total return to stockholders during the three-year period exceeds a cumulative total return to stockholders of 25%, subject to the maximum of $85$85.0 million of LTIP Units; provided that if maximum performance has been achieved, approximately one-third of each award may be earned at any time after the beginning of the second year and an additional approximately one-third of each award may be earned at any time after the beginning of the third year. LTIP Units earned under the 2011 Outperformance Plan will be subject to continued vesting requirements, with 50% of any awards earned vesting on August 31, 2014 and the remaining 50% vesting on August 31, 2015, subject to continued employment with us through such dates. Participants will not be entitled to distributions with respect to LTIP Units granted under the 2011 Outperformance Plan unless and until they are earned. If LTIP Units are earned, each participant will also be entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period, with such distributions being paid in the form of additional LTIP Units. Thereafter, distributions will be paid currently with respect to all earned LTIP Units, whether vested or unvested.
In June 2014, the compensation committee determined that maximum performance had been achieved during the third year of the performance period and, accordingly, 560,908 LTIP Units, representing two-thirds of each award, were earned, subject to vesting, under the 2011 Outperformance Plan. The remaining one-third of each award will be earned based on performance through end of the performance period.
The cost of the 2011 Outperformance Plan (approximately $26.3$27.0 million,, subject to forfeitures) will be amortized into earnings through the final vesting period. We recorded compensation expense of approximately$4.3 million, $1.76.1 million, $6.2$1.7 million, $1.4 million and $4.04.5 million during the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, related to the 2011 Outperformance Plan.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

Deferred Stock Compensation Plan for Directors
Under our Independent Director’sNon-Employee Director's Deferral Program, which commenced July 2004, the Company's non-employee directors may elect to defer up to 100% of their annual retainer fee, chairman fees, meeting fees and meeting fees.annual stock grant. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The program provides that a director's phantom stock units are convertible intogenerally will be settled in an equal number of shares of common stock upon the earlier of (i) the January 1 coincident with or next following such directors’director's termination of service from the boardBoard of directorsDirectors or (ii) a change in control by us, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of ourSL Green's common stock on the applicable dividend record date forfirst business day of the respective quarter. Each participating non-employee director’s accountdirector is also credited for an equivalent amount ofwith dividend equivalents or phantom stock units based on the dividend rate for each quarter.
quarter, which are either paid in cash currently or credited to the director’s account as additional phantom stock units.
During the ninesix months ended June 30, 2014, September 30, 2013, 6,6925,974 phantom stock units were earned. As of SeptemberJune 30, 20132014, there were approximately 74,80579,499 phantom stock units outstanding.outstanding pursuant to our Non-Employee Director's Deferral Program.
Employee Stock Purchase Plan
On September 18, 2007, the Company's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to increase their efforts to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an “employee"employee stock purchase plan”plan" under Section 423 of the Code, and has been adopted by the board to enable our eligible employees to purchase ourthe Company's shares of common stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. The Company filed a registration statement on Form S-8 with the SEC with respect to the ESPP. The common stock is offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The ESPP was approved by the Company'sour stockholders at the Company'sour 2008 annual meeting of stockholders. As of SeptemberJune 30, 20132014, approximately 72,02676,727 shares of ourSL Green's common stock had been issued under the ESPP.

15. Accumulated Other Comprehensive Loss of the Company

The following tables set forth the changes in accumulated other comprehensive income (loss) by component:

 Nine Months Ended September 30, 2013
 Net unrealized loss on derivative instruments (1) SL Green’s share of joint venture net unrealized loss on derivative instruments (2) Unrealized gains and loss on marketable securities Total
Beginning balance$(16,834) $(16,063) $3,310
 $(29,587)
Other comprehensive (loss) income before reclassifications(121) 5,248
 317
 5,444
Amounts reclassified from accumulated other comprehensive income (loss)1,222
 3,672
 —
 4,894
Ending balance$(15,733) $(7,143) $3,627
 $(19,249)
___________________________
(1)Amount reclassified from accumulated other comprehensive income (loss) is included in interest expense in the respective consolidated statements of income. As of September 30, 2013 and December 31, 2012, the deferred net losses from these terminated hedges, which is included in accumulated other comprehensive loss relating to net unrealized gain on derivative instrument, was approximately $14.3 million and $15.0 million, respectively.
(2)Amount reclassified from accumulated other comprehensive income (loss) is included in equity in net income from unconsolidated joint ventures in the respective consolidated statements of income.



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Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


16.15. Accumulated Other Comprehensive Loss of the Operating Partnership

Company
The following tables set forth the changes in accumulated other comprehensive income (loss) by component:

component as of June 30, 2014:
 Net unrealized loss on derivative instruments (1) SL Green’s share of joint venture net unrealized income (loss) on derivative instruments (2) Unrealized gains and loss on marketable securities Total
Balance at December 31, 2013$(15,125) $(4,870) $4,784
 $(15,211)
Other comprehensive income (loss) before reclassifications(420) 4,068
 1,702
 5,350
Amounts reclassified from accumulated other comprehensive income1,898
 1,767
 —
 3,665
Balance at June 30, 2014$(13,647) $965
 $6,486
 $(6,196)
 Nine Months Ended September 30, 2013
 Net unrealized loss on derivative instruments (1) SLGOP’s share of joint venture net unrealized loss on derivative instruments (2) Unrealized gains and loss on marketable securities Total
Beginning balance$(17,438) $(16,640) $3,429
 $(30,649)
Other comprehensive (loss) income before reclassifications(20) 5,503
 306
 5,789
Amounts reclassified from accumulated other comprehensive income (loss)1,258
 3,781
 —
 5,039
Ending balance$(16,200) $(7,356) $3,735
 $(19,821)
___________________________
(1)
AmountAmounts reclassified from accumulated other comprehensive income (loss) isare included in interest expense in the respective consolidated statements of income. As of SeptemberJune 30, 20132014 and December 31, 2012,2013, the deferred net losses from these terminated hedges, which isare included in accumulated other comprehensive loss relating to net unrealized gainloss on derivative instrument, was approximatelywere $14.812.8 million and $15.513.8 million, respectively.
(2)
Amounts reclassified from accumulated other comprehensive income are included in equity in net income from unconsolidated joint ventures in the respective consolidated statements of income.

16. Accumulated Other Comprehensive Loss of the Operating Partnership
The following tables set forth the changes in accumulated other comprehensive income (loss) by component as of June 30, 2014:
 Net unrealized loss on derivative instruments (1) SLGOP’s share of joint venture net unrealized income (loss) on derivative instruments (2) Unrealized gains and loss on marketable securities Total
Balance at December 31, 2013$(15,573) $(5,015) $4,926
 $(15,662)
Other comprehensive (loss) income before reclassifications(516) 4,184
 1,788
 5,456
Amounts reclassified from accumulated other comprehensive income1,964
 1,829
 —
 3,793
Balance at June 30, 2014$(14,125) $998
 $6,714
 $(6,413)
___________________________
(1)
Amount reclassified from accumulated other comprehensive income (loss) isare included in interest expense in the respective consolidated statements of income. As of June 30, 2014 and December 31, 2013, the deferred net losses from these terminated hedges, which are included in accumulated other comprehensive loss relating to net unrealized loss on derivative instrument, were $13.2 million and $14.2 million, respectively.
(2)Amounts reclassified from accumulated other comprehensive income are included in equity in net income from unconsolidated joint ventures in the respective consolidated statements of income.

17. Fair Value Measurements
We are required to disclose the fair value information about our financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate fair value. FASB guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. We measure andand/or disclose the estimated fair value of 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

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


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.

The following tables set forth the assets and liabilities that we measure at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at SeptemberJune 30, 20132014 and December 31, 20122013, respectively (in thousands):

September 30, 2013June 30, 2014
Total Level 1 Level 2 Level 3Total Level 1 Level 2 Level 3
Assets:              
Marketable securities$32,863
 $3,109
 $26,346
 $3,408
$39,912
 $4,532
 $35,380
 $—
Liabilities:              
Interest rate swap agreements (included in accrued interest payable and other liabilities$1,465
 —
 $1,465
 —
Interest rate swap agreements (included in accrued interest payable and other liabilities)$18,454
 $—
 $18,454
 $—


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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

December 31, 2012December 31, 2013
Total Level 1 Level 2 Level 3Total Level 1 Level 2 Level 3
Assets:              
Marketable securities$21,429
 $2,202
 $15,575
 $3,652
$32,049
 $4,307
 $24,419
 $3,323
Liabilities:              
Interest rate swap agreements (included in accrued interest payable and other liabilities$1,959
 —
 $1,959
 —
Interest rate swap agreements (included in accrued interest payable and other liabilities)$1,329
 $—
 $1,329
 $—
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.

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, which are classified as Level 2 inputs.

The financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, debt and preferred equity investments, and mortgages and other loans payable and other secured and unsecured debt. The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses reported in our consolidated balance sheets approximates fair value due to the short term nature of these instruments. The fair value of debt and preferred equity investments, which 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 of 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.

The following table provides the carrying value and fair value of these financial instruments as of SeptemberJune 30, 20132014 and December 31, 20122013 (in thousands):

September 30, 2013 December 31, 2012
Carrying Value Fair Value Carrying Value Fair ValueJune 30, 2014 December 31, 2013
       Carrying Value Fair Value Carrying Value Fair Value
Debt and preferred equity investments$1,315,551
 (1)
 $1,348,434
 (1)
$1,547,808
 (1)
 $1,304,839
 (1)
              
Fixed rate debt$5,606,449
 $5,979,568
 $4,922,725
 $5,334,244
$6,096,280
 $6,533,273
 $5,599,960
 $5,886,980
Variable rate debt1,213,178
 1,235,108
 1,597,695
 1,557,494
2,261,352
 2,279,257
 1,319,948
 1,327,422
$6,819,627
 $7,214,676
 $6,520,420
 $6,891,738
$8,357,632
 $8,812,530
 $6,919,908
 $7,214,402


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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


(1)
Debt and preferred equity investments had an estimated fair value ranging between $1.3$1.5 billion and $1.41.7 billion billion at SeptemberJune 30, 20132014. At December 31, 2012, the2013, debt and preferred equity investments had an estimated fair value ranging between $1.3$1.3 billion and $1.4 billion.$1.4 billion.

Disclosure about fair value of financial instruments iswas based on pertinent information available to us as of SeptemberJune 30, 20132014. and December 31, 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.
18. Financial Instruments: Derivatives and Hedging
In the normal course of business, we use a variety of commonly used derivative instruments, such as interest rate swaps, caps, collar and floors, to manage, or hedge interest rate risk. We hedge our exposure to variability in future cash flows for forecasted

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

transactions in addition to anticipated future interest payments on existing debt. We recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges are 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 equity 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. Currently, all of our designated derivative instruments are effective hedging instruments.
The following table summarizes the notional and fair value of our consolidated derivative financial instruments at SeptemberJune 30, 20132014 based on Level 2 inputs.information pursuant to ASC 810-10. The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks (amounts in thousands):risks.

Notional
Value
 
Strike
Rate
 
Effective
Date
 
Expiration
Date
 Balance Sheet Location
Fair
Value
Notional
Value
(in thousands)
 
Strike
Rate
 
Effective
Date
 
Expiration
Date
 Balance Sheet Location 
Fair Value
(in thousands)
Interest Rate Cap$271,912
 6.000% November 2012 November 2013 Other Liabilities$—
$263,426
 6.000% November 2013 November 2015 Other Assets $4
Interest Rate Cap137,500
 4.000% October 2013 September 2015 Other Assets 3
Interest Rate Cap946,000
 4.750% May 2014 May 2016 Other Assets 36
Interest Rate Swap(1)
144,000
 2.236% December 2012 December 2017 Other Liabilities (5,859)
Interest Rate Swap(1)
72,000
 2.310% December 2012 December 2017 Other Liabilities (3,109)
Interest Rate Swap(1)
72,000
 2.310% December 2012 December 2017 Other Liabilities (3,109)
Interest Rate Swap(1)
57,600
 1.990% December 2012 December 2017 Other Liabilities (1,859)
Interest Rate Swap(1)
86,400
 1.948% December 2012 December 2017 Other Liabilities (2,664)
Interest Rate Swap(1)
72,000
 1.345% December 2012 December 2017 Other Liabilities (747)
Interest Rate Swap$30,000
 2.295% July 2010 June 2016 Other Liabilities(1,412)30,000
 2.295% July 2010 June 2016 Other Liabilities (1,078)
Interest Rate Swap$8,500
 0.740% February 2012 February 2015 Other Liabilities(53)8,500
 0.740% February 2012 February 2015 Other Liabilities (29)
    $(1,465)    $(18,411)
__________________________
(1)As a result of the acquisition and consolidation of 388-390 Greenwich Street, we have assumed these derivative instruments and have designated them as hedges.

Gains and losses on terminated hedges are included in the accumulated other comprehensive loss, and are recognized into earnings over the term of the related mortgage obligation. 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 $2.7$7.1 million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense and $5.0$0.8 million of the portion related to our share of joint venture accumulated other comprehensive loss will be reclassified into equity in net income (loss) from unconsolidated joint ventures within the next 12 months.

51

The following table presents the effect of our derivative financial instruments and our share of our joint ventures' derivative financial instruments that are designated and qualify as hedging instruments on the consolidated statements of income for the three months ended SeptemberJune 30, 20132014 and 20122013, respectively (in thousands):

 
Amount of Gain or (Loss)
Recognized in
Other Comprehensive
Loss
(Effective Portion)
 Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income 
Amount of Loss
 Reclassified from
Accumulated Other
Comprehensive Loss  into Income
(Effective Portion)
 Location of Gain (Loss) Recognized in Income on Derivative 
Amount of Gain or  (Loss) or
Recognized
into Income
(Ineffective Portion)
 
Amount of Gain or (Loss)
Recognized in
Other Comprehensive
Loss
(Effective Portion)
 Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income 
Amount of Loss
 Reclassified from
Accumulated Other
Comprehensive Loss  into Income
(Effective Portion)
 Location of Gain (Loss) Recognized in Income on Derivative 
Amount of Gain 
Recognized
into Income
(Ineffective Portion)
 Three Months Ended 
 September 30,		  Three Months Ended 
 September 30,		 Three Months Ended 
 September 30,		 Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30,
Derivative 2013 2012  2013 2012 2013 2012 2014 2013 2014 2013 2014 2013
Interest Rate Swaps/Caps $(160) $(278) Interest expense $320
 $468
 Interest expense $2
 $(1) $(465) $181
 Interest expense $1,272
 $470
 Interest expense $1
 $—
Share of unconsolidated joint ventures' derivative instruments (2,606) (3,074) Equity in net income (loss) from unconsolidated joint ventures 1,281
 2,782
 Equity in net income (loss) from unconsolidated joint ventures 5
 —
 5,930
 7,888
 Equity in net income from unconsolidated joint ventures 556
 1,260
 Equity in net income from unconsolidated joint ventures —
 5
 $(2,766) $(3,352) $1,601
 $3,250
 $7
 $(1) $5,465
 $8,069
 $1,828
 $1,730
 $1
 $5


44
Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2013
(unaudited)

The following table presents the effect of our derivative financial instruments and our share of our joint ventures' derivative financial instruments that are designated and qualify as hedging instruments on the consolidated statements of income for the ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively (in thousands):

 
Amount of Gain or (Loss)
Recognized in
Other Comprehensive
Loss
(Effective Portion)
 Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income 
Amount of Loss
Reclassified from
Accumulated Other
Comprehensive Loss  into Income
(Effective Portion)
 Location of Gain (Loss) Recognized in Income on Derivative 
Amount of Gain or  (Loss)
Recognized
in Income
(Ineffective Portion)
 
Amount of Gain or (Loss)
Recognized in
Other Comprehensive
Loss
(Effective Portion)
 Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income 
Amount of Loss
 Reclassified from
Accumulated Other
Comprehensive Loss  into Income
(Effective Portion)
 Location of Gain (Loss) Recognized in Income on Derivative 
Amount of Gain
Recognized
into Income
(Ineffective Portion)
 Nine Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30, Six Months Ended
June 30,		 Six Months Ended
June 30,		 Six Months Ended
June 30,
Derivative 2013 2012   2013 2012 2013 2012 2014 2013 2014 2013 2014 2013
Interest Rate Swaps/Caps $(20) $(901) Interest expense $1,258
 $1,394
 Interest expense $2
 $—
 $(516) $140
 Interest expense $1,964
 $938
 Interest expense $2
 $—
Share of unconsolidated joint ventures' derivative instruments 5,503
 (9,404) Equity in net income (loss) from unconsolidated joint ventures 3,781
 8,276
 Equity in net income (loss) from unconsolidated joint ventures —
 —
 4,184
 8,109
 Equity in net income from unconsolidated joint ventures 1,829
 2,500
 Equity in net income from unconsolidated joint ventures —
 5
 $5,483
 $(10,305) $5,039
 $9,670
 $2
 $—
 $3,668
 $8,249
 $3,793
 $3,438
 $2
 $5
 
19. Commitments and Contingencies
Legal Proceedings

We and the Operating Partnership are not presently involved in any material litigation nor, to our knowledge, is any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business. Management believes the costs, if any, incurred by us related to this litigation will not materially affect our financial position, operating results or liquidity.

Environmental Matters

Our management believes that the properties are in compliance in all material respects with applicable federal,Federal, state and local ordinances and regulations regarding environmental issues. Management is not aware of any environmental liability that it believes would have a materially adverse impact on our financial position, results of operations or cash flows. Management is unaware of any instances in which it would incur significant environmental cost if any of our properties were sold.
Capital and Ground Leases Arrangements

The following is a schedule of future minimum lease payments under capital leases and non-cancellable operating leases with initial terms in excess of one year as of September 30, 2013 (in thousands):
 Capital leases 
Non-cancellable
operating leases
2013 (3 months)$573
 $8,914
20142,293
 35,655
20152,364
 35,810
20162,543
 36,251
20172,653
 36,474
Thereafter356,544
 1,188,301
Total minimum lease payments366,970
 $1,341,405
Less amount representing interest(319,478)  
Present value of net minimum lease payments$47,492
  

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


Real Estate Purchase Commitment

Capital and Ground Leases Arrangements
In August 2013, we entered intoThe following is a contract to acquire a mixed-use residentialschedule of future minimum lease payments under capital leases and commercial property located at 315 West 33rd Street fornoncancellable operating leases with initial terms in excess of one year as of $386.0 millionJune 30, 2014. This transaction is expected to be completed in the fourth quarter of 2013, subject to customary closing conditions. (in thousands):
 Capital lease 
Non-cancellable
operating leases
Remaining 2014$73
 $15,351
2015145
 30,703
2016170
 30,824
2017291
 31,057
2018291
 31,057
Thereafter56,884
 766,187
Total minimum lease payments57,854
 $905,179
Less amount representing interest(37,219)  
Capitalized lease obligations$20,635
  

20. Segment Information
We areThe Company is a REIT engaged in owning, managing,all aspects of property ownership and management including investment, leasing, acquiringoperations, capital improvements, development, financing, construction and repositioning commercial propertiesmaintenance in the New York Metropolitan area and have two reportable segments, real estate and debt and preferred equity. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.
Our real estate portfolio is primarily located in the geographical markets of the New York Metropolitan area. The primary sources of revenue are generated from tenant rents, and escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, real estate taxes and ground rent expense (at certain applicable properties). See Note 5, “Debt"Debt and Preferred Equity Investments,”" for additional details on our debt and preferred equity investments.
Selected results of operations for the three and nine months ended September 30, 2013 and 2012, and selected asset information as of September 30, 2013 and December 31, 2012, regarding our operating segments are as follows (in thousands):
 
Real
Estate
Segment
 
Debt and
Preferred
Equity
Segment
 
Total
Company
Total revenues 
  
  
Three months ended: 
  
  
September 30, 2013$319,317
 $44,448
 $363,765
September 30, 2012329,142
 27,869
 357,011
      
Nine months ended: 
  
  
September 30, 2013$950,491
 $143,887
 $1,094,378
September 30, 2012948,475
 87,655
 1,036,130
      
Income (loss) from continuing operations before purchase price fair value adjustment and equity in net (loss) gain on sale of unconsolidated joint venture/real estate 
  
  
Three months ended: 
  
  
September 30, 2013$(5,885) $36,382
 $30,497
September 30, 201210,214
 22,272
 32,486
      
Nine months ended: 
  
  
September 30, 2013$(21,705) $118,243
 $96,538
September 30, 201284,757
 70,200
 154,957
      
Total assets 
  
  
As of: 
  
  
September 30, 2013$13,247,401
 $1,327,518
 $14,574,919
December 31, 201213,021,095
 1,357,890
 14,378,985

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
SeptemberJune 30, 20132014
(unaudited)


Selected results of operations for the three and six months ended June 30, 2014 and 2013, and selected asset information as of June 30, 2014 and December 31, 2013, regarding our operating segments are as follows (in thousands):
  
Real
Estate
Segment
 
Debt and Preferred
Equity
Segment
 
Total
Company
Total revenues      
Three months ended:      
June 30, 2014 $347,513
 $39,714
 $387,227
June 30, 2013 307,213
 46,731
 353,944
Six months ended:      
June 30, 2014 $668,998
 $93,798
 $762,796
June 30, 2013 608,126
 99,439
 707,565
Income (loss) from continuing operations before equity in net gain on sale of interest in unconsolidated joint venture/real estate      
Three months ended:      
June 30, 2014 $24,318
 $34,000
 $58,318
June 30, 2013 (4,742) 38,040
 33,298
Six months ended:      
June 30, 2014 $26,918
 $79,582
 $106,500
June 30, 2013 (23,548) 81,389
 57,841
Total assets      
As of:      
June 30, 2014 $15,155,384
 $1,562,352
 $16,717,736
December 31, 2013 13,641,727
 1,317,274
 14,959,001
Income from continuing operations represents total revenues less total expenses for the real estate segment and total investment income less allocated interest expense for the debt and preferred equity segment. Interest costs for the debt and preferred equity segment are imputed assuming 100% leverage at our MRA facility and 2012 credit facility borrowing cost as well as the interest under the MRA.cost. We also allocate loan loss reserves, net of recoveries, and transaction related costs to the debt and preferred equity segment. We do not allocate marketing, general and administrative expenses and transaction related costs (totaling approximately$23.9 million, $18.547.1 million, $64.2$21.5 million, $21.9 million and $65.942.6 million for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively) 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.


54
Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
June 30, 2014
(unaudited)


The table below reconciles income from continuing operations to net income for the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013 (in thousands):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013 2012 2013 2012
Income from continuing operations before purchase price fair value adjustment and equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate$30,497
 $32,486
 $96,538
 $154,957
Purchase price fair value adjustment—
 —
 (2,305) —
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate(354) (4,807) (3,937) 17,776
Income from continuing operations30,143
 27,679
 90,296
 172,733
Net income from discontinued operations1,406
 951
 1,725
 2,883
Gain on sale of discontinued operations13,787
 —
 14,900
 6,627
Net income$45,336
 $28,630
 $106,921
 $182,243
21.  Subsequent Events

In October 2013, we closed on a 7-year, $275.0 million mortgage financing of 220 East 42nd Street. The floating rate mortgage bears interest at 160 basis points over the 30-day LIBOR.

In November 2013, the Company completed an offering of 2,600,000 shares of its common stock, par value $0.01 per share, at a price of $95.94 per share. The Company received net proceeds of approximately $249.4 million, after deducting underwriting discounts (approximately $5.7 million). The Company also granted an option to the underwriter to purchase up to 390,000 additional shares of common stock at a price of $95.94 per share within 30 days from October 28, 2013.

  Three Months Ended June 30, Six Months Ended June 30,
  2014 2013 2014 2013
Income from continuing operations before purchase price fair value adjustment and equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate $58,318
 $33,298
 $106,500
 $57,841
Purchase price fair value adjustment 71,446
 (2,305) 71,446
 (2,305)
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate 1,444
 (3,583) 106,084
 (3,583)
Income from continuing operations 131,208
 27,410
 284,030
 51,953
Net income from discontinued operations 4,389
 3,838
 8,178
 8,519
Gain on sale of discontinued operations 114,735
 —
 114,735
 1,113
Net income $250,332
 $31,248
 $406,943
 $61,585

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Table of Contents

ITEM 2.MANAGEMENT’S
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
SL Green Realty Corp., which is referred to as SL Green or the Company, or SL Green, a Maryland corporation, and SL Green Operating Partnership, L.P., which is referred to as SLGOP or the Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of combining the commercial real estate business of S.L. Green Properties, Inc. and its affiliated partnerships and entities. The Operating Partnership receivedCompany is a contribution of interest in the real estate properties, as well as 95% of the economic interest in the management, leasing and construction companies, which are referred to as the Service Corporation, a consolidated variable interest entity.  All of the management, leasing and construction services with respect to the properties which are wholly-owned by us are conducted through SL Green Management LLC which is 100% owned by the Operating Partnership.  The Company has qualified, and expects to qualify in the current fiscal year, as aself-managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code,with in-house capabilities in property management, acquisitions, financing, development, construction and operates as a self-administered, self-managed REIT.  A REIT is a legal entity that holds real estate interests and, through payments of dividends to stockholders, is permitted to minimize the payment of Federal income taxes at the corporate level.leasing. Unless the context requires otherwise, all references to “we,” “our”"we," "our" and “us”"us" means the Company and all entities owned or controlled by the Company, including the Operating Partnership.
Reckson Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P., or ROP, are wholly-owned subsidiaries of the Operating Partnership.
The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements appearing in this Quarterly Report on Form 10-Q and in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2012.
2013.
As of SeptemberJune 30, 2013,2014, 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.Manhattan. Our investments in the New York Metropolitan area also include investments in Brooklyn, Long Island, Westchester County, Connecticut and Northern New Jersey, which are collectively known as the Suburban assets:properties:
 Consolidated Unconsolidated Total
Location Ownership 
Number of
Properties
 Square Feet 
Weighted Average
Occupancy(1)
 Type Number of Properties Square Feet Number of Properties Square Feet Number of Properties Square Feet 
Weighted Average Occupancy(1)
Commercial:              
Manhattan Consolidated properties 26
 18,012,945
 93.8% Office 23
 18,429,045
 7
 3,476,115
 30
 21,905,160
 94.4%
 Retail 7
(2) 389,317
 8
 432,250
 15
 821,567
 93.2%
 Development/Redevelopment 11
 2,063,790
 4
 1,605,782
 15
 3,669,572
 44.2%
 Unconsolidated properties 9
 5,934,434
 96.2% Fee Interest 2
 961,400
 —
 —
 2
 961,400
 100.0%
       43
 21,843,552
 19
 5,514,147
 62
 27,357,699
 87.8%
Suburban Consolidated properties 26
 4,087,400
 79.1% Office 27
 4,365,400
 4
 1,222,100
 31
 5,587,500
 81.7%
 Unconsolidated properties 4
 1,222,100
 85.3% Retail 1
 52,000
 —
 —
 1
 52,000
 100.0%
   65
 29,256,879
 91.9% Development/Redevelopment 1
 85,000
 1
 65,641
 2
 150,641
 42.7%
 29
 4,502,400
 5
 1,287,741
 34
 5,790,141
 80.9%
Total commercial propertiesTotal commercial properties 72
 26,345,952
 24
 6,801,888
 96
 33,147,840
 86.6%
Residential:              
Manhattan Residential 2
(2) 653,337
 —
 —
 2
 653,337
 93.2%
Suburban Residential 1
 66,611
 —
 —
 1
 66,611
 84.4%
Total residential propertiesTotal residential properties 3
 719,948
 —
 —
 3
 719,948
 91.9%
Total portfolioTotal portfolio 75
 27,065,900
 24
 6,801,888
 99
 33,867,788
 86.7%

(1)The weighted average occupancy for commercial properties represents the total leasedoccupied square feet divided by total available rentable square feet.  The weighted average occupancy for residential properties represents the total occupied units divided by total available units.
(2)
As of June 30, 2014, we owned a building that was comprised of 270,132 square feet of retail space and 222,855 square feet of residential space. For the purpose of this report, we have included the building as part of retail properties and have shown the square footage under its respective classifications.

As of SeptemberJune 30, 2013,2014, we also owned investments in 16 retail properties encompassing approximately 621,300managed a 336,200 square feet, 13 development properties encompassing approximately 2,424,600 square feet, three residential properties encompassing 468 units (approximately 497,100 square feet), two land interests encompassing approximately 961,400 square feet and 28 west coastfoot office properties encompassing approximately 3,654,300 square feet. In addition, we manage two office propertiesbuilding owned by a third parties and affiliated companies encompassing approximately 626,400 rentable square feet.party. As of SeptemberJune 30, 2013,2014, we also held debt and preferred equity investments with a book value of $1.31.5 billion.
Critical Accounting Policies
Refer to the 20122013 Annual ReportsReport on Form 10-K of the Company and the Operating Partnership for a discussion of our critical accounting policies, which include investment in commercial real estate properties, investment in unconsolidated joint ventures,

56

revenue recognition, allowance for doubtful accounts, reserve for possible credit losses and derivative instruments.  There have been no changes to these accounting policies during the ninesix months ended SeptemberJune 30, 2013.2014.


48
Table of Contents

Results of Operations

Comparison of the three months ended SeptemberJune 30, 20132014 to the three months ended SeptemberJune 30, 20122013
The following comparison for the three months ended June 30, 2014September, or 2014, to the three months ended June 30, 2013, or 2013,, to the three months ended September 30, 2012, or 2012, makes reference to the following:  (i) the effect of the “Same-Store Properties,” which represents all operating properties owned by us in the same manner at January 1, 20122013 and at SeptemberJune 30, 20132014 and totaled 4958 of our 5275 consolidated properties, representing approximately 84.4%80.6% of our share of annualized rental revenue,cash rent, (ii) the effect of the “Acquisitions,” which represents all properties or interests in properties acquired in 20132014 and 20122013 and all non-Same-Store Properties, including properties that are under development or deconsolidated during the period, and (iii) “Other,” which represents corporate level items not allocable to specific properties, as well as the Service Corporation and eEmerge Inc.  Assets classified asAny assets sold or held for sale are excluded from the income from continuing operations and from the following discussion.

 Same-Store Acquisition Other Consolidated Same-Store Acquisition Other Consolidated
(in millions) 2013 2012 
$
Change
 
%
Change
 2013 2012 2013 2012 2013 2012 
$
Change
 
%
Change
 2014 2013 
$
Change
 
%
Change
 2014 2013 2014 2013 2014 2013 
$
Change
 
%
Change
                                                
Rental revenue $246.3
 $247.2
 $(0.9) (0.4)% $17.6
 $15.4
 $0.5
 $15.1
 $264.4
 $277.7
 (13.3) (4.8)% $248.5
 $243.5
 $5.0
 2.1 % $36.5
 $20.0
 $0.2
 $(0.7) $285.2
 $262.8
 $22.4
 8.5 %
Escalation and reimbursement 43.2
 39.0
 4.2
 10.8 % 1.7
 1.4
 0.2
 1.8
 45.1
 42.2
 2.9
 6.9 % 35.8
 34.0
 1.8
 5.3 % 3.3
 4.5
 0.4
 0.2
 39.5
 38.7
 0.8
 2.1 %
Investment and preferred equity income —
 —
 —
 — % —
 —
 44.4
 27.9
 44.4
 27.9
 16.5
 59.1 %
Investment income —
 —
 —
 — % —
 —
 39.7
 46.7
 39.7
 46.7
 (7.0) (15.0)%
Other income 1.0

3.2
 (2.2) (68.8)% —
 0.1
 8.9
 5.9
 9.9
 9.2
 0.7
 7.6 % 0.8
 1.2
 (0.4) (33.3)% 0.2
 0.1
 21.8
 4.4
 22.8
 5.7
 17.1
 300.0 %
Total revenues 290.5
 289.4
 1.1
 0.4 % 19.3
 16.9
 54.0
 50.7
 363.8
 357.0
 6.8
 1.9 % 285.1
 278.7
 6.4
 2.3 % 40.0
 24.6
 62.1
 50.6
 387.2
 353.9
 33.3
 9.4 %
                                                
Property operating expenses 131.1

123.6
 7.5
 6.1 % 8.4
 8.8
 3.3
 12.1
 142.8
 144.5
 (1.7) (1.2)% 116.6
 112.9
 3.7
 3.3 % 11.7
 12.2
 3.6
 3.1
 131.9
 128.2
 3.7
 2.9 %
Transaction related costs, net of recoveries —
 0.1
 (0.1) (100.0)% 0.2
 0.8
 (2.5) 0.5
 (2.3) 1.4
 (3.7) (264.3)% —
 —
 —
 — % 0.5
 0.2
 1.2
 1.5
 1.7
 1.7
 —
 — %
Marketing, general and administrative —
 —
 —
 — % —
 —
 20.9
 20.6
 20.9
 20.6
 0.3
 1.5 % —
 —
 —
 — % —
 —
 23.9
 21.5
 23.9
 21.5
 2.4
 11.2 %
 131.1
 123.7
 7.4
 6.0 % 8.6
 9.6
 21.7
 33.2
 161.4
 166.5
 (5.1) (3.1)%
                        
Total expenses 116.6
 112.9
 3.7
 3.3 % 12.2
 12.4
 28.7
 26.1
 157.5
 151.4
 6.1
 4.0 %
Net operating income $159.4
 $165.7
 $(6.3) (3.8)% $10.7
 $7.3
 $32.3
 $17.5
 202.4
 190.5
 11.9
 6.2 % $168.5
 $165.8
 $2.7
 1.6 % $27.8
 $12.2
 $33.4
 $24.5
 229.7
 202.5
 27.2
 13.4 %
                        
Other income (expenses):                     

 

                        
Interest expense, net of interest income                 (87.3) (90.2) 2.9
 (3.2)%                 (84.1) (83.8) (0.3) 0.4 %
Depreciation and amortization                 (87.5) (81.8) (5.7) 7.0 %                 (94.8) (81.6) (13.2) 16.2 %
Equity in net income from unconsolidated joint ventures                 2.9
 11.7
 (8.8) (75.2)%
Equity in net loss on sale of interest in unconsolidated joint venture/real estate                 (0.4) (4.8) 4.4
 (91.7)%
Gain on sale of investment in marketable securities                 —
 2.2
 (2.2) (100.0)%
Equity in net income (loss) from unconsolidated joint ventures                 8.6
 (3.8) 12.4
 326.3 %
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate                 1.4
 (3.6) 5.0
 138.9 %
Purchase price fair value adjustment                 71.4
 (2.3) 73.7
 3,204.3 %
Loss on early extinguishment of debt                 (1.0) —
 (1.0) 100.0 %
Income from continuing operation                 30.1
 27.6
 2.5
 9.1 %                 131.2
 27.4
 103.8
 378.8 %
Net income from discontinued operations                 1.4
 1.0
 0.4
 40.0 %                 4.4
 3.8
 0.6
 15.8 %
Gain on sale of discontinued operations                 13.8
 —
 13.8
 100.0 %                 114.7
 —
 114.7
 100.0 %
Net income                 $45.3
 $28.6
 $16.7
 58.4 %                 $250.3
 $31.2
 $219.1
 702.2 %


57
Table of Contents

Rental, Escalation and Reimbursement Revenues

Occupancy in thefor our Same-Store consolidated office properties wasincreased to 91.1%90.9% at SeptemberJune 30, 20132014 as compared to 90.7%90.5% at SeptemberJune 30, 2012.2013. Occupancy for our Same-Store Manhattan consolidated office portfolio was 93.8%increased to 94.1% at SeptemberJune 30, 20132014 as compared to 93.1%93.8% at SeptemberJune 30, 2012.2013. Occupancy for our Suburban consolidated office portfolio was 79.1%increased to 79.6% at SeptemberJune 30, 20132014 as compared to 79.3%77.9% at SeptemberJune 30, 20122013..
Rental revenues depend on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space available from unscheduled lease terminations.


49
Table of Contents

The following table presents a summary of the leasing activity for the three months ended SeptemberJune 30, 20132014 in our Manhattan and Suburban portfolio:
Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Manhattan 
  
  
  
  
  
   
  
  
  
  
  
  
Vacancy at beginning of period1,400,204
  
  
  
  
  
  1,363,729
  
  
  
  
  
  
Space which became available during the quarter(3)   
  
  
  
  
  
Sold vacancies(3,653)            
Properties in redevelopment:(61,123)            
Space which became available during the period(3)           
  
  
  
  
  
  
• Office241,916
  
  
  
  
  
  157,512
  
  
  
  
  
  
• Retail600
  
  
  
  
  
  —
  
  
  
  
  
  
• Storage1,117
  
  
  
  
  
  279
  
  
  
  
  
  
243,633
  
  
  
  
  
  157,791
  
  
  
  
  
  
Total space available1,643,837
  
  
  
  
  
  1,456,744
  
  
  
  
  
  
Space leased during the quarter: 
  
  
  
  
  
  
Space leased during the period: 
  
  
  
  
  
  
• Office(4)294,120
 301,068
 $53.81
 $64.36
 $58.87
 6.0
 9.4221,908
 258,307
 $50.49
 $54.26
 $78.82
 7.0
 14.9
• Retail4,260
 4,260
 $145.13
 $101.18
 $23.51
 3.9
 8.2298
 392
 $91.84
 $122.13
 $21.31
 4.0
 10.3
• Storage1,811
 2,321
 $34.21
 $27.32
 $0.43
 0.4
 9.347
 97
 $25.00
 $28.26
 $4.94
 —
 5.1
Total space leased300,191
 307,649
 $54.93
 $65.93
 $57.94
 5.9
 9.4222,253
 258,796
 $50.55
 $54.42
 $78.70
 5.7
 14.9
                         
Total available space at end of period1,343,646
  
  
  
  
  
  
Total available space at end of the period1,234,491
  
  
  
  
  
  
                         
Early renewals 
  
  
  
  
  
   
  
  
  
  
  
  
• Office58,061
 63,924
 $56.68
 $53.15
 $14.14
 1.8
 5.655,992
 56,631
 $62.04
 $52.93
 $14.70
 1.2
 5.7
• Retail5,396
 5,587
 $339.23
 $303.44
 $67.60
 —
 10.011,517
 11,673
 $84.48
 $53.86
 $29.14
 0.40
 12.4
• Storage878
 1,030
 $23.93
 $21.53
 $—
 —
 3.0—
 —
 $—
 $—
 $—
 —
 —
Total early renewals64,335
 70,541
 $78.58
 $72.52
 $18.17
 1.7
 5.967,509
 68,304
 $65.87
 $53.09
 $17.16
 1.0
 6.8
                         
Total commenced leases, including replaced previous vacancy 
  
  
  
  
  
   
  
  
  
  
  
  
• Office 
 364,992
 $54.31
 $59.78
 $51.04
 5.2
 8.7 
 314,938
 $52.57
 $53.90
 $67.29
 6.0
 13.2
• Retail 
 9,847
 $255.26
 $215.94
 $48.53
 1.7
 9.2 
 12,065
 $84.72
 $56.08
 $28.88
 0.5
 12.3
• Storage 
 3,351
 $31.05
 $22.14
 $0.30
 0.3
 7.4 
 97
 $25.00
 $28.26
 $4.94
 —
 5.1
Total commenced leases 
 378,190
 $59.34
 $68.70
 $50.52
 5.1
 8.7 
 327,100
 $53.75
 $54.01
 $65.85
 5.7
 13.2

5058
Table of Contents

 
Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Suburban 
  
  
  
  
  
  
Vacancy at beginning of period1,146,726
  
  
  
  
  
  
Sold vacancies(24,059)            
Space which became available during the quarter(3) 
  
  
  
  
  
  
•       Office212,334
  
  
  
  
  
  
•       Storage1,366
  
  
  
  
  
  
 213,700
  
  
  
  
  
  
Total space available1,336,367
  
  
  
  
  
  
Space leased during the quarter: 
  
  
  
  
  
  
•       Office(5)214,662
 219,138
 $27.77
 $27.75
 $33.79
 5.1
 7.3
•       Storage200
 200
 $12.00
 $—
 $—
 —
 4.7
Total space leased214,862
 219,338
 $27.76
 $27.75
 $33.76
 5.1
 7.3
              
Total available space at end of period1,121,505
  
  
  
  
  
  
              
Early renewals 
  
  
  
  
  
  
•       Office11,136
 11,136
 $31.61
 $32.32
 $5.71
 2.2
 3.5
•       Storage—
 —
 $—
 $—
 $—
 —
 0
Total early renewals11,136
 11,136
 $31.61
 $32.32
 $5.71
 2.2
 3.5
Total commenced leases, including replaced previous vacancy 
  
  
  
  
  
  
•       Office 
 230,274
 $27.96
 $28.11
 $32.44
 5.0
 7.1
•       Storage 
 200
 $12.00
 $—
 $—
 —
 4.7
Total commenced leases 
 230,474
 $27.94
 $28.11
 $32.41
 5.0
 7.1
_________________________________
(1)Annual initial base rent.
(2)Escalated rent is calculated as total annual income less electric charges.
(3)Includes expiring space, relocating tenants and move-outs where tenants vacated. Excludes lease expirations where tenants held over.
(4)Average starting office rent excluding new tenants replacing vacancies was $56.85 per rentable square feet for 92,608 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $56.78 per rentable square feet for 156,532 rentable square feet.
(5)Average starting office rent excluding new tenants replacing vacancies was $27.80 per rentable square feet for 132,651 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $28.09 per rentable square feet for 143,787 rentable square feet.

At September 30, 2013, approximately 2.3% and 3.3% of the space leased at our consolidated Manhattan and Suburban properties, respectively, is expected to expire during the remainder of 2013. Based on our estimates, the current market asking rents on these expected 2013 lease expirations at our consolidated Manhattan and Suburban properties would be approximately 11.2% and 11.0% higher, respectively, than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Manhattan and Suburban properties were approximately 14.5% and 4.0% higher, respectively, than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years.
Rental revenue decreased primarily as a result of our reduced ownership and deconsolidation of the West Coast portfolio ($15.0 million). In late September 2012, we formed a joint venture for the recapitalization of the West Coast portfolio. Prior to the recapitalization, we consolidated the investment as a result of our 63.18% ownership interest and control over its activities. Following the recapitalization, our ownership interest was 27.63%. The change in ownership resulted in a change in the accounting from consolidating the investment to accounting for the joint venture under the equity method of accounting. As of September 30, 2013, we had a 43.74% effective ownership interest in the West Coast portfolio. For further details, see Note 6, "Investments in Unconsolidated Joint Ventures" in the notes to the consolidated financial statements.

Escalation and reimbursement revenue increased primarily as a result of higher real estate recoveries ($2.3 million) and operating expense escalations ($2.3 million) from the Same Store Properties. This increase was partially offset by the change in ownership interest and the accounting for the West Coast portfolio ($1.7 million) as discussed above.

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Table of Contents


Investment and Preferred Equity Income
Investment and preferred equity income increased primarily as a result of a higher average investment balance and weighted average yield in 2013. The weighted average investment balance and weighted average yield were $1.3 billion and 11.5%, respectively, for the three months ended September 30, 2013 compared to $1.1 billion and 9.6%, respectively, for the three months ended September 30, 2012. As of September 30, 2013, our debt and preferred equity investments had a weighted average term to maturity of approximately 2.2 years.

Other Income
Other income increased primarily as a result of an expense reimbursement ($4.2 million), partially offset by lower other income at the Same-Store Properties ($2.2 million) and a one-time acquisition fee earned in 2012 in connection with our investment in 33 Beekman ($1.3 million). The decrease in Same-Store Properties was primarily a result of lower lease buy-out income in 2013 ($1.2 million) and real estate tax refunds received in 2012 ($1.1 million).

Property Operating Expenses
Property operating expenses decreased primarily as a result of the change in ownership interest and accounting for the West Coast portfolio ($9.0 million) as discussed above. This decrease was partially offset by higher operating expenses at the Same-Store Properties ($7.5 million) mainly a result of higher real estate taxes ($3.9 million), ground rent ($1.3 million), repairs and maintenance ($1.0 million), payroll costs ($0.8 million), and insurance ($0.4 million), which were partially offset by lower utility expenses ($0.9 million). The increase in real estate taxes was primarily due to higher assessed value and higher tax rates.

Transaction Related Costs
Transaction related costs decreased primarily as a result of the reimbursement of expenses previously incurred.

Marketing, General and Administrative Expenses
Marketing, general and administrative expenses for the three months ended September 30, 2013 were $20.9 million, or 4.9% of total revenues including our share of joint venture revenue compared to $20.6 million, or 5.0% for the three months ended September 30, 2012.
Interest Expense, Net of Interest Income
Interest expense, net of interest income decreased primarily as a result of lower average consolidated debt balances outstanding during the period due to the repayment of debt balances at 220 East 42nd Street ($1.6 million), 609 Fifth Avenue ($1.3 million) and 110 East 42nd Street ($1.0 million) and the change in accounting for the West Coast portfolio ($5.2 million), as discussed above. This decrease was partially offset by our issuance of a $200.0 million aggregate principal amount of 4.5% senior notes due 2022 in November 2012 ($2.3 million), increased borrowings from our 2012 revolving credit facility ($2.0 million) and the Master Repurchase Agreement facility, or MRA, ($1.7 million), and the refinancing at 1515 Broadway ($1.5 million). The weighted average debt balance outstanding was $6.9 billion during the three months ended September 30, 2013 compared to $6.4 billion during the three months ended September 30, 2012. The weighted average interest rate decreased from 5.06% for the three months ended September 30, 2012 to 4.77% for the three months ended September 30, 2013.
Depreciation and Amortization
Depreciation and amortization expense increased mainly as a result of assets acquired subsequent to July 2012 ($3.1 million), the write-off of tenant improvements and in-place leases relating to a former tenant that filed for bankruptcy in August 2013 ($4.7 million) and the remaining increase primarily resulting from an increase in capital expenditures at the properties. This increase was partially offset by the change in the accounting in the West Coast portfolio ($3.4 million), as discussed above, and the sale of our interest in 521 Fifth Avenue in November 2012 ($1.8 million).
Equity in Net Income From Unconsolidated Joint Ventures
Equity in net income from unconsolidated joint ventures decreased primarily as a result of additional income in 2012 resulting from the repayment of outstanding debt at a discount for The Meadows ($10.8 million) and the net loss associated with the West Coast portfolio ($5.6 million) as a result of the change in ownership interest and accounting, as discussed above. This decrease was partially offset by higher net income contributions from 388-390 Greenwich Street ($3.6 million) primarily as a result of reducing the interest rate on its fixed rate loan from 5.2% to 3.2% beginning December 2012 via an interest rate swap and 724 Madison Avenue ($1.3 million), which renewed and modified the lease with its single tenant effective in July 2013. Occupancy at our joint venture properties was 94.3% at September 30, 2013 and 94.2% at September 30, 2012.  At September 30, 2013, less than 1.0% and approximately 10.3% of the space leased at our Manhattan and Suburban joint venture properties are expected to expire during the remainder of 2013. We estimate that current market asking rents on these expected 2013 lease expirations at our Manhattan and Suburban joint venture properties were approximately 5.3% and 3.1% lower, respectively, than the existing in-place fully escalated rents.

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Table of Contents

Equity in Net (Loss) Gain on Sale of Interest in Unconsolidated Joint Ventures
During the three months ended September 30, 2013, we recognized additional post closing costs related to the sale of 521 Fifth Avenue ($0.9 million), partially offset by additional income from the sale of two properties in the West Office Portfolio ($0.5 million). During the three months ended September 30, 2012, we recognized a loss from the sale of One Court Square ($4.8 million).

Discontinued Operations
Discontinued operations for the three months ended September 30, 2013 includes the gain on sale recognized for 333 West 34th Street ($13.8 million), which closed in August 2013 and the results of operations for 333 West 34th Street and 300 Main Street. Prior year's results of operations for these properties were reclassified to discontinued operations to conform with the current year presentation.


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Table of Contents

Comparison of the nine months ended September 30, 2013 to the nine months ended September 30, 2012
The following comparison for the nine months ended September 30, 2013, or 2013, to the nine months ended September 30, 2012, or 2012, makes reference to the following:  (i) the effect of the “Same-Store Properties,” which represents all operating properties owned by us in the same manner at January 1, 2012 and at September 30, 2013 and totaled 49 of our 52 consolidated properties, representing approximately 84.4% of our share of annualized cash rent, (ii) the effect of the “Acquisitions,” which represents all properties or interests in properties acquired in 2013 and 2012 and all non-Same-Store Properties, including properties deconsolidated during the period, and (iii) “Other,” which represents corporate level items not allocable to specific properties, as well as the Service Corporation and eEmerge Inc.  Assets classified as held for sale, are excluded from the following discussion.

  Same-Store Acquisition Other Consolidated
(in millions) 2013 2012 
$
Change
 
%
Change
 2013 2012 2013 2012 2013 2012 
$
Change
 
%
Change
                         
Rental revenue $757.2
 $743.5
 $13.7
 1.8 % $48.8
 $39.3
 $(1.9) $15.5
 $804.1
 $798.3
 $5.8
 0.7 %
Escalation and reimbursement 120.5
 118.4
 2.1
 1.8 % 4.0
 3.8
 0.5
 2.0
 125.0
 124.2
 0.8
 0.6 %
Investment and preferred equity income —
 —
 —
 — % —
 —
 143.9
 87.7
 143.9
 87.7
 56.2
 64.1 %
Other income 5.1

8.9
 (3.8) (42.7)% 0.1
 0.2
 16.2
 16.8
 21.4
 25.9
 (4.5) (17.4)%
Total revenues 882.8
 870.8
 12.0
 1.4 % 52.9
 43.3
 158.7
 122.0
 1,094.4
 1,036.1
 58.3
 5.6 %
                         
Property operating expenses 378.7

365.3
 13.4
 3.7 % 23.0
 22.9
 8.6
 16.8
 410.3
 405.0
 5.3
 1.3 %
Loan loss and other investment reserves, net of recoveries —
 —
 —
 — % —
 —
 —
 0.6
 —
 0.6
 (0.6) (100.0)%
Transaction related costs, net of recoveries —
 0.1
 (0.1) (100.0)% 0.8
 3.1
 (0.1) 1.1
 0.7
 4.3
 (3.6) (83.7)%
Marketing, general and administrative —
 —
 —
 — % —
 —
 63.5
 61.5
 63.5
 61.5
 2.0
 3.3 %
  378.7
 365.4
 13.3
 3.6 % 23.8
 26.0
 72.0
 80.0
 474.5
 471.4
 3.1
 0.7 %
                         
Net operating income $504.1
 $505.4
 $(1.3) (0.3)% $29.1
 $17.3
 $86.7
 $42.0
 619.9
 564.7
 55.2
 9.8 %
                         
Other income (expenses):                     

 

Interest expense, net of interest income                 (260.5) (259.4) (1.1) 0.4 %
Depreciation and amortization                 (248.6) (233.6) (15.0) 6.4 %
Equity in net income from unconsolidated joint ventures                 4.3
 81.0
 (76.7) (94.7)%
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate                 (3.9) 17.8
 (21.7) (121.9)%
(Loss) gain on sale of investment in marketable securities                 (0.1) 2.2
 (2.3) (104.5)%
Purchase price fair value adjustment                 (2.3) —
 (2.3) (100.0)%
Loss on early extinguishment of debt                 (18.5) —
 (18.5) (100.0)%
Income from continuing operation                 90.3
 172.7
 (82.4) (47.7)%
Net income from discontinued operations                 1.7
 2.9
 (1.2) (41.4)%
Gain on sale of discontinued operations                 14.9
 6.6
 8.3
 125.8 %
Net income                 $106.9
 $182.2
 $(75.3) (41.3)%

Rental, Escalation and Reimbursement Revenues
Occupancy in the Same-Store consolidated properties was 91.1% at September 30, 2013 compared to 90.7% at September 30, 2012. Occupancy for our Same-Store Manhattan consolidated portfolio was 93.8% at September 30, 2013 compared to 93.1% at September 30, 2012. Occupancy for our Suburban consolidated portfolio was 79.1% at September 30, 2013 compared to 79.3% at September 30, 2012.

Rental revenues depend on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space available from unscheduled lease terminations.

54
Table of Contents

The following table presents a summary of the leasing activity for the nine months ended September 30, 2013 in our Manhattan and Suburban portfolio:
 
Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Manhattan 
  
  
  
  
  
  
Vacancy at beginning of period1,438,147
  
  
  
  
  
  
Space which became available during the nine months ended(3) 
  
  
  
  
  
  
•       Office689,769
  
  
  
  
  
  
•       Retail23,611
  
  
  
  
  
  
•       Storage5,653
  
  
  
  
  
  
 719,033
  
  
  
  
  
  
Total space available2,157,180
  
  
  
  
  
  
Space leased during the nine months ended: 
  
  
  
  
  
  
•       Office(4)788,228
 842,699
 $51.73
 $59.48
 $48.01
 4.0
 7.4
•       Retail19,260
 22,181
 $97.75
 $82.60
 $56.25
 5.6
 18.1
•       Storage6,046
 8,571
 $23.23
 $25.32
 $0.12
 0.2
 7.4
Total space leased813,534
 873,451
 $52.62
 $60.60
 $47.75
 4.0
 7.7
              
Total available space at end of period1,343,646
  
  
  
  
  
  
              
Early renewals 
  
  
  
  
  
  
•       Office656,042
 699,406
 $58.50
 $52.73
 $22.69
 1.1
 5.8
•       Retail39,495
 44,062
 $157.58
 $115.49
 $21.76
 —
 6.1
•       Storage5,199
 6,150
 $26.42
 $24.33
 $3.86
 —
 6.4
Total early renewals700,736
 749,618
 $64.06
 $56.18
 $22.48
 1.0
 5.8
              
Total commenced leases, including replaced previous vacancy 
  
  
  
  
  
  
•       Office 
 1,542,105
 $54.80
 $55.08
 $36.52
 2.7
 6.7
•       Retail 
 66,243
 $137.55
 $104.48
 $33.31
 1.9
 10.2
•       Storage 
 14,721
 $24.56
 $24.57
 $1.68
 0.1
 7.0
Total commenced leases 
 1,623,069
 $57.90
 $57.71
 $36.08
 2.6
 6.8

55
Table of Contents

Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Suburban 
  
  
  
  
  
  
 
  
  
  
  
  
  
Vacancy at beginning of period1,106,957
  
  
  
  
  
  
1,151,477
  
  
  
  
  
  
Space which became available during the nine months ended(3) 
  
  
  
  
  
  
Space which became available during the period(3)   
  
  
  
  
  
• Office445,104
  
  
  
  
  
  
41,572
  
  
  
  
  
  
• Retail679
  
  
  
  
  
  
700
  
  
  
  
  
  
• Storage5,597
  
  
  
  
  
  
300
  
  
  
  
  
  
451,380
  
  
  
  
  
  
42,572
  
  
  
  
  
  
Total space available1,558,337
  
  
  
  
  
  
1,194,049
  
  
  
  
  
  
Space leased during the nine months ended: 
  
  
  
  
  
  
• Office408,343
 420,286
 $28.20
 $30.00
 $27.70
 3.6
 6.2
Space leased during the year: 
  
  
  
    
  
• Office(5)57,665
 59,066
 $30.85
 $33.55
 $37.77
 3.7
 7.0
• Retail679
 818
 $150.00
 $248.40
 $—
 5.0
 13.0
—
 —
 $—
 $—
 $—
 —
 —
• Storage3,751
 4,327
 $12.95
 $10.18
 $—
 —
 5.8
100
 115
 $15.00
 $13.04
 $—
 —
 3.0
Total space leased57,765
 59,181
 $30.82
 $33.46
 $37.70
 3.7
 7.0
412,773
 425,431
 $28.28
 $30.61
 $27.36
 3.6
 6.2
             
             
Total available space at end of period1,145,564
  
          
Total available space at end of the period1,136,284
  
          
                          
Early renewals 
  
           
  
          
• Office244,697
 246,116
 $31.17
 $33.18
 $23.88
 6.2
 8.5
11,656
 12,361
 $33.85
 $33.20
 $6.72
 1.8
 4.3
• Retail—
 —
 $—
 $—
 $—
 —
 —
—
 —
 $—
 $—
 $—
 —
 —
• Storage740
 940
 $12.00
 $11.00
 $—
 —
 9.8
—
 —
 $—
 $—
 $—
 —
 —
245,437
 247,056
 $31.10
 $33.09
 $23.79
 6.20
 8.5
Total early renewals11,656
 12,361
 $33.85
 $33.20
 $6.72
 1.8
 4.3
                          
Total commenced leases, including replaced previous vacancy 
  
  
  
  
  
  
 
  
  
  
  
  
  
• Office 
 666,402
 $29.30
 $31.76
 $26.29
 4.6
 7.0
 
 71,427
 $31.37
 $33.44
 $32.40
 3.4
 6.6
• Retail 
 818
 $150.00
 $248.40
 $—
 5.0
 13.0
 
 —
 $—
 $—
 $—
 —
 —
• Storage 
 5,267
 $12.78
 $10.39
 $—
 —
 6.5
 
 115
 $15.00
 $13.04
 $—
 —
 3.0
 
 672,487
 $29.32
 $31.97
 $26.05
 4.5
 7.0
Total commenced leases 
 71,542
 $31.35
 $33.38
 $32.34
 3.4
 6.5

(1)Annual initial base rent.
(2)Escalated rent is calculated as total annual income less electric charges.
(3)Includes expiring space, relocating tenants and move-outs where tenants vacated. Excludes lease expirations where tenants held over.
(4)Average starting office rent excluding new tenants replacing vacancies was $53.62$51.24 per rentable square feet for 373,283151,354 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $56.80$54.18 per rentable square feet for 1,072,689207,985 rentable square feet.
(5)Average starting office rent excluding new tenants replacing vacancies was $29.63$34.01 per rentable square feet for 199,17626,201 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $30.48$33.96 per rentable square feet for 445,29238,562 rentable square feet.
 
At SeptemberJune 30, 2013, approximately 2.3%2014, 1.7% and 3.3%5.9% of the space leased at our consolidated Manhattan and Suburban operating properties, respectively, is expected to expire during the remainder of 2013.2014. Based on our estimates, the current market asking rents on these expected 20132014 lease expirations at our consolidated Manhattan and Suburbanoperating properties would be approximately 11.2% and 11.0%64.1% higher respectively, than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Manhattan and Suburbanoperating properties were approximately 14.5% and 4.0%19.2% higher respectively, than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years. Based on our estimates, the current market asking rents on these expected 2014 lease expirations at our consolidated Suburban operating properties would be approximately 2.0% lower than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Suburban operating properties were approximately 3.8% higher than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years.
In May 2014, we acquired our joint partner's interest in 388-390 Greenwich Street thereby assuming full ownership of this triple net lease property. Prior to May 2014, we had accounted for our investment in 388-390 Greenwich Street under the equity method of accounting. As a result of this acquisition, we have consolidated the results of operations of this property beginning in May 2014.

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Rental revenues increased primarily as a result of the consolidation of 388-390 Greenwich Street ($14.9 million), properties acquired in 2013 ($8.8 million) and an overall increase in occupancy at ourthe Same-Store propertiesProperties ($13.7 million) as discussed above and for properties acquired subsequent to May 2012 ($25.35.0 million). This increase was partially offset by our reduced ownership and deconsolidation of the West Coast portfoliolower revenues from development properties ($15.07.6 million). In late September 2012, we formed a joint venture for the recapitalization of the West Coast portfolio. Prior to the recapitalization, we consolidated the investment as a result of our 63.18% ownership interest and control over its activities. Following the recapitalization, our ownership interest was 27.63%. The change in ownership resulted in a change in the accounting from consolidating the investment to accounting for the joint venture under the equity method of accounting. As of September 30, 2013, we had a 43.74% effective ownership

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interest in the West Coast portfolio. For further details, see Note 6, "Investments in Unconsolidated Joint Ventures" in the notes to the consolidated financial statements.

Escalation and reimbursement revenue increased primarily as a result of the higher recoveries at the Same-StoreSame Store Properties ($2.11.8 million), partially offset by the change and properties acquired in ownership interest and accounting for the West Coast portfolio2013 ($1.71.2 million), as discussed above.. The increase in escalation and reimbursement revenue at the Same-Store Properties was mainlyprimarily a result of higher real estate recoveries ($3.6 million) and operating expense escalations ($1.21.5 million), partially offset by lower electric reimbursements and real estate tax recoveries ($2.70.6 million).

Investment and Preferred Equity Income
Investment and preferred equity income increased primarily as a result of additional income recognized sale of a 50% interesthigher investment balance in one investment ($12.9 million), additional income associated with2014, partially offset by the repayment of one investment ($6.4 million), and the remaining increase is primarily attributable to a higher average investment balance andof our debt investments in 2013, in which we recognized additional income of $6.4 million. The weighted average yield for the nine months ended September 30, 2013. The weighted averagedebt and preferred equity investment balance outstanding and weighted average yield were $1.3$1.4 billion and 13.5%10.6%, respectively, for the ninethree months ended SeptemberJune 30, 2013 as2014 compared to $1.0$1.3 billion and 9.7%, respectively, for11.0% during the ninethree months ended SeptemberJune 30, 2012.2013. As of SeptemberJune 30, 20132014, our debt and preferred equity investments had a weighted average term to maturity of approximately 1.8 years.2.2 years.

Other Income 
Other income decreasedincreased primarily as a result of lower othera promote income atearned in connection with the Same-Store Propertiessale of our joint venture interest in 747 Madison Avenue ($3.810.3 million), a one-time acquisition fee earned in 2012 in connection with the restructuring of one of our investment in 33 Beekmandebt investments ($1.35.7 million) and a one-time pre-development fee at 180 Broadwayhigher contribution from Service Corporation ($1.12.3 million) which was terminated in December 2012. This decrease was partially offset by an expense reimbursement ($4.2 million). The decrease in Same-Store Properties was primarily a result of lower lease buy-out income ($2.4 million) and real estate tax refunds received in 2012 ($1.6 million).

Property Operating Expenses
Property operating expenses increased primarily as a result of the properties acquired in 2013 ($4.1 million) and higher operating expenses at the Same-StoreSame Store Properties ($13.43.7 million), partially offset by the change in ownership interest and accounting for the West Coast portfoliolower operating expenses from development properties ($9.04.6 million), as discussed above.. The increase in property operating expenses at the Same-Store Properties was due mainly to higher real estate taxes ($6.01.4 million), ground rentutility costs ($3.21.0 million), and payroll costs ($2.20.9 million) and insurance ($1.2 million), partially offset by lower utility expenses ($1.7 million).

Transaction Related Costs
Transaction related costs decreased primarily as a result of a reimbursement of expenses previously incurred.

Marketing, General and Administrative Expenses
Marketing, general and administrative expenses for the ninethree months ended SeptemberJune 30, 20132014 were $63.5$23.9 million, or 4.9%5.4% of total revenues including our share of joint venture revenuerevenues and an annualized 50 basis points of total assets including our share of joint venture assets compared to $61.5$21.5 million, or 5.2%5.1% of total revenues including our share of joint venture revenues and an annualized 50 basis points of total assets including our share of joint venture assets for the ninethree months ended SeptemberJune 30, 2012.
2013.
Interest Expense, Net of Interest Income
Interest expense, net of interest income, increased primarily as a result of the issuance of a $200.0 million aggregate principal amount of 4.5% senior notes in November 2012new mortgage at 388-390 Greenwich Street ($6.9 million), increased borrowings from our MRA ($5.95.6 million) and an increased borrowing on the 2012 credit facility ($2.2 million) and the refinancing of 100 Church ($5.1 million) and 1515 Broadway ($4.41.1 million). This increase was partially offset by the repaymentthe capitalization of debt balances at 609 Fifth Avenueinterest relating to properties under development ($4.9 million), 110 East 42nd Street ($2.93.8 million) and the refinancing of 220 East 42nd Street ($1.7 million), the changeat a lower rate in accounting in the West Coast portfolio2013 ($5.2 million) as discussed above and the sale of our interest in 521 Fifth Avenue in November 2012 ($3.31.1 million). The weighted average debt balance outstanding increased from $6.4 billion during the nine months ended September 30, 2012 to $6.8 billion during the ninethree months ended SeptemberJune 30, 2013.2013 to $7.8 billion during the three months ended June 30, 2014. The weighted average interest rate decreased by 3.0% from 4.99%4.91% for the ninethree months ended SeptemberJune 30, 20122013 to 4.84%4.38% for the ninethree months ended SeptemberJune 30, 2013.
2014.
Depreciation and Amortization
Depreciation and amortization increased mainly as a result of assetsthe properties acquired subsequent to May 2012in 2013 ($9.45.9 million), the write-off of certain tenant improvements and value for in-place leases relating toassociated with a former tenant that filed for bankruptcy in August 2013 ($4.7 million) and the remaining increase primarily resulting from an increase capital expenditures at the properties. This increase was partially offset by change in accounting in the West Coast portfolio ($3.4 million), as discussed above, and the saleconsolidation of our interest in 521 Fifth Avenue in November 2012388-390 Greenwich ($5.63.3 million).

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Equity in Net Income Fromfrom Unconsolidated Joint Ventures
Equity in net income from unconsolidated joint ventures decreasedincreased primarily as a result of of additional incomenet loss recognized in 2012 due to the recapitalizationsecond quarter of 717 Fifth Avenue2013 from the West Coast Office portfolio ($67.95.3 million), which interests were sold in March 2014, a debt and preferred equity investment that was originated in the first quarter of 2014 ($2.6 million) which we have accounted for as a real estate investment rather than a debt and preferred equity investment, increased occupancy at 280 Broadway ($1.8 million) and 3 Columbus Circle ($1.1 million) and the repaymentrefinancing of outstanding debt100 Park Avenue at a discount for the Meadowslower rate ($10.80.9 million) and the net loss associated with the change in accounting in the West Coast portfolio ($16.0 million), as discussed above. The decrease. This increase was partially offset by higherlower net income contributions from 388-390 Greenwich Street ($10.93.3 million) primarily as a result of reducingour acquisition of the interest rate on its fixed rate loan from 5.2% to 3.2% beginning December 2012 via an interest rate swap.joint venture partner's interest. Occupancy at our joint ventureunconsolidated Manhattan office properties was 94.3%91.4% and 87.4% at SeptemberJune 30, 20132014 and 94.2%2013, respectively. Occupancy at Septemberour unconsolidated Suburban office properties was 89.3% and 84.3% at June 30, 2012.2014 and 2013, respectively. At SeptemberJune 30, 2013, less than 1.0%2014, 2.9% and approximately 10.3%18.9% of the space leased at our Manhattan and Suburban joint venture office properties, respectively, were expected to expire during the remainder of 2013.2014. We estimate that current market asking rents on these expected 20132014 lease expirations at our Manhattan and Suburban joint venture properties are approximately 5.3% lower47.5% higher and 3.1%4.9% lower, respectively, than then existing in-place fully escalated rents.

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Equity in Net (Loss) Gain on Sale of Interest in Unconsolidated Joint VenturesVentures/Real Estate
During the ninethree months ended SeptemberJune 30, 2014, we recognized a gain on sale associated with the sale of condominium units at 248 Bedford Avenue, Brooklyn ($1.4 million). During the three months ended June 30, 2013, we recognized additional post closing costs related to the sale of 521 Fifth Avenue ($2.81.9 million), partially offset by an additional income from the sale of threetwo properties included in the West Office PortfolioCoast portfolio ($2.11.5 million). During
Purchase price fair value adjustment
Purchase price fair value adjustment for the ninethree months ended SeptemberJune 30, 2012, we recognized gains on sale in connection with2014 and 2013 was attributable to the sale of the properties located at 141 Fifth Avenue ($7.3 million), 379 Broadway ($6.5 million), and One Court Square ($1.0 million). Additionally, we recognized a gain on sale from the saleacquisition of our remainingjoint venture partner interest at a property located at 717 Fifth Avenue ($3.0 million).

in 388-390 Greenwich Street and 16 Court Street, Brooklyn, respectively.
Loss on Early Extinguishment of Debt
Loss on early extinguishment of debt for the ninethree months ended SeptemberJune 30, 2013 relates2014 was attributable to the refinancing of 1515 Broadway.

the previous mortgage at 248-252 Bedford Avenue ($0.5 million) and the early repayment of the mortgage at 16 Court Street, Brooklyn ($0.5 million).
Discontinued Operations
Discontinued operations for the ninethree months ended June 30, 2014 includes the gain recognized on the sale of 673 First Avenue ($117.8 million) and the results of operations of 673 First Avenue, which was sold in April 2014,and 2 Herald Square and 985-987 Third Avenue, which were held for sale at June 30, 2014. Discontinued operations for the three months ended June 30, 2013 includes the results of operations for 673 First Avenue, 2 Herald Square, 985-987 Third Avenue, and 333 West 34th Street and 300 Main Street, which were sold in August and September 2013, respectively.

Comparison of the six months ended June 30, 2014 to the six months ended June 30, 2013
The following comparison for the six months ended June 30, 2014, or 2014, to the six months ended June 30, 2013, or 2013, makes reference to the following:  (i) the effect of the “Same-Store Properties,” which represents all operating properties owned by us in the same manner at January 1, 2013 and at June 30, 2014 and totaled 58 of our 75 consolidated properties, representing 80.6% of our share of annualized cash rent, (ii) the effect of the “Acquisitions,” which represents all properties or interests in properties acquired in 2014 and 2013 and all non-Same-Store Properties, including properties that are under development or deconsolidated during the period, and (iii) “Other,” which represents corporate level items not allocable to specific properties, as well as the Service Corporation and eEmerge Inc.  Any assets sold or held for sale are excluded from the income from continuing operations and from the following discussion.


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  Same-Store Acquisition Other Consolidated
(in millions) 2014 2013 
$
Change
 
%
Change
 2014 2013 2014 2013 2014 2013 
$
Change
 
%
Change
                         
Rental revenue $487.5
 $483.0
 $4.5
 0.9 % $64.2
 $38.0
 $0.1
 $(2.4) $551.8
 $518.6
 $33.2
 6.4 %
Escalation and reimbursement 70.9
 69.7
 1.2
 1.7 % 8.6
 8.6
 0.4
 0.3
 79.9
 78.6
 1.3
 1.7 %
Investment income —
 —
 —
 — % —
 —
 93.8
 99.4
 93.8
 99.4
 (5.6) (5.6)%
Other income 2.0
 3.4
 (1.4) (41.2)% 0.2
 0.3
 35.1
 7.3
 37.3
 11.0
 26.3
 239.1 %
Total revenues 560.4
 556.1
 4.3
 0.8 % 73.0
 46.9
 129.4
 104.6
 762.8
 707.6
 55.2
 7.8 %
                         
Property operating expenses 235.2
 231.1
 4.1
 1.8 % 28.1
 23.8
 5.5
 5.1
 268.8
 260.0
 8.8
 3.4 %
Transaction related costs, net of recoveries —
 —
 —
 — % 1.7
 0.6
 2.5
 2.5
 4.2
 3.1
 1.1
 35.5 %
Marketing, general and administrative —
 —
 —
 — % —
 —
 47.1
 42.6
 47.1
 42.6
 4.5
 10.6 %
Total expenses 235.2
 231.1
 4.1
 1.8 % 29.8
 24.4
 55.1
 50.2
 320.1
 305.7
 14.4
 4.7 %
Net operating income $325.2
 $325.0
 $0.2
 0.1 % $43.2
 $22.5
 $74.3
 $54.4
 442.7
 401.9
 40.8
 10.2 %
Other income (expenses):                        
Interest expense, net of interest income                 (165.7) (166.5) 0.8
 (0.5)%
Depreciation and amortization                 (184.2) (160.2) (24.0) 15.0 %
Equity in net income from unconsolidated joint ventures                 14.7
 1.3
 13.4
 1,030.8 %
Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate                 106.1
 (3.6) 109.7
 3,047.2 %
Purchase price fair value adjustment                 71.4
 (2.3) 73.7
 3,204.3 %
Loss on sale of investment in marketable securities                 —
 (0.1) 0.1
 (100.0)%
Loss on early extinguishment of debt                 (1.0) (18.5) 17.5
 (94.6)%
Income from continuing operation                 284.0
 52.0
 232.0
 446.2 %
Net income from discontinued operations                 8.2
 8.5
 (0.3) (3.5)%
Gain on sale of discontinued operations                 114.7
 1.1
 113.6
 10,327.3 %
Net income                 $406.9
 $61.6
 $345.3
 560.6 %

Rental, Escalation and Reimbursement Revenues

Occupancy in the Same-Store consolidated office properties increased to 90.9% at June 30, 2014 as compared to 90.5% at June 30, 2013. Occupancy for our Same-Store Manhattan consolidated office portfolio increased to 94.1% at June 30, 2014 as compared to 93.8% at June 30, 2013. Occupancy for our Suburban consolidated office portfolio increased to 79.6% at June 30, 2014 as compared to 77.9% at June 30, 2013.
Rental revenues depend on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space available from unscheduled lease terminations.

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The following table presents a summary of the leasing activity for the six months ended June 30, 2014 in our Manhattan and Suburban portfolio:
 
Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Manhattan 
  
  
  
  
  
  
Vacancy at beginning of period1,155,271
  
  
  
  
  
  
Sold vacancies(3,653)            
Properties under redevelopment(61,123)            
Properties out of redevelopment155,684
            
Space which became available during the period(3)           
  
  
  
  
  
  
•       Office531,511
  
  
  
  
  
  
•       Retail5,700
  
  
  
  
  
  
•       Storage1,369
  
  
  
  
  
  
 538,580
  
  
  
  
  
  
Total space available1,784,759
  
  
  
  
  
  
Space leased during the period: 
  
  
  
  
  
  
•       Office(4)531,671
 596,472
 $55.78
 $54.62
 $60.67
 4.6
 9.8
•       Retail18,550
 18,819
 $87.70
 $66.81
 $44.10
 4.9
 15.0
•       Storage47
 97
 $25.00
 $28.26
 $4.94
 —
 5.1
Total space leased550,268
 615,388
 $56.75
 $54.81
 $60.16
 4.6
 10.0
              
Total available space at end of the period1,234,491
  
  
  
  
  
  
              
Early renewals 
  
  
  
  
  
  
•       Office193,970
 211,111
 $63.18
 $53.08
 $13.28
 1.4
 5.0
•       Retail11,517
 11,673
 $84.48
 $53.86
 $29.14
 0.40
 12.4
•       Storage1,569
 1,539
 $31.78
 $26.61
 $0.99
 —
 4.6
Total early renewals207,056
 224,323
 $64.07
 $52.94
 $14.02
 1.3
 5.4
              
Total commenced leases, including replaced previous vacancy 
  
  
  
  
  
  
•       Office 
 807,583
 $57.71
 $54.06
 $48.28
 3.7
 8.6
•       Retail 
 30,492
 $86.47
 $58.24
 $38.37
 3.2
 14.0
•       Storage 
 1,636
 $31.37
 $26.71
 $1.22
 —
 4.6
Total commenced leases 
 839,711
 $58.71
 $54.11
 $47.83
 3.7
 8.8

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Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Suburban 
  
  
  
  
  
  
Vacancy at beginning of period1,069,848
  
  
  
  
  
  
Property out of redevelopment112,921
            
Space which became available during the period(3)   
  
  
  
  
  
•       Office133,601
  
  
  
  
  
  
•       Retail1,385
  
  
  
  
  
  
•       Storage650
  
  
  
  
  
  
 135,636
  
  
  
  
  
  
Total space available1,318,405
  
  
  
  
  
  
Space leased during the year: 
  
  
  
    
  
•       Office(5)181,871
 188,812
 $30.18
 $30.78
 $32.00
 3.7
 7.2
•       Retail—
 —
 $—
 $—
 $—
 —
 —
•       Storage250
 265
 $14.66
 $13.09
 $—
 —
 4.4
Total space leased182,121
 189,077
 $30.15
 $30.73
 $31.96
 3.7
 7.2
              
Total available space at end of the period1,136,284
  
          
              
Early renewals 
  
          
•       Office32,717
 35,814
 $33.42
 $31.90
 $12.15
 2.2
 5.8
•       Retail—
 —
 $—
 $—
 $—
 —
 —
•       Storage—
 —
 $—
 $—
 $—
 —
 —
Total early renewals32,717
 35,814
 $33.42
 $31.90
 $12.15
 2.20
 5.8
              
Total commenced leases, including replaced previous vacancy 
  
  
  
  
  
  
•       Office 
 224,626
 $30.69
 $31.09
 $28.84
 3.4
 7.0
•       Retail 
 —
 $—
 $—
 $—
 —
 —
•       Storage 
 265
 $14.66
 $13.09
 $—
 —
 4.4
Total commenced leases 
 224,891
 $30.67
 $31.05
 $28.80
 3.4
 7.0

(1)
Annual initial base rent.
(2)
Escalated rent is calculated as total annual income less electric charges.
(3)
Includes expiring space, relocating tenants and move-outs where tenants vacated. Excludes lease expirations where tenants held over.
(4)
Average starting office rent excluding new tenants replacing vacancies was $55.00 per rentable square feet for 365,338 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $58.00 per rentable square feet for 576,449 rentable square feet.
(5)
Average starting office rent excluding new tenants replacing vacancies was $31.16 per rentable square feet for 94,388 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $31.78 per rentable square feet for 130,302 rentable square feet.
At June 30, 2014, 1.7% and 5.9% of the space leased at our consolidated Manhattan and Suburban operating properties, respectively, is expected to expire during the remainder of 2014. Based on our estimates, the current market asking rents on these expected 2014 lease expirations at our consolidated Manhattan operating properties would be approximately 64.1% higher than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Manhattan operating properties were approximately 19.2% higher than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years. Based on our estimates, the current market asking rents on these expected 2014 lease expirations at our consolidated Suburban operating properties would be approximately 2.0% lower than the existing in-place fully escalated rents while the current market asking rents on all our consolidated Suburban operating properties were approximately 3.8% higher than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years.
In May 2014, we acquired our joint partner's interest in 388-390 Greenwich Street thereby assuming full ownership of this triple net lease property. Prior to May 2014, we had accounted for our investment in 388-390 Greenwich Street under the equity

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method of accounting. As a result of this acquisition, we have consolidated the results of operations of this property beginning in May 2014.
Rental revenues increased primarily as a result of the properties acquired in 2013 ($19.2 million), the consolidation of 388-390 Greenwich Street ($14.8 million) and an overall increase in occupancy at the Same Store Properties ($4.5 million).
Escalation and reimbursement revenue increased primarily as a result of the properties acquired in 2013 ($2.7 million) and higher recoveries at the Same Store Properties ($1.2 million), partially offset by lower recoveries from development properties ($2.5 million). The increase in escalation and reimbursement revenue at the Same-Store Properties was primarily a result of higher real estate tax recoveries ($1.5 million) and operating expense escalations ($1.1 million), partially offset by lower electric reimbursements ($1.4 million).
Investment Income
Investment income decreased primarily as a result of the sale of 50% of our interest in one of our debt investments in 2013 ($12.9 million) and the repayment of one of our debt investments, in which we recognized additional income in 2013 ($6.4 million), partially offset by a higher investment balance in 2014 and additional income recognized on a mezzanine investment for which the underlying property was sold in June 2014 ($10.1 million). The weighted average debt and preferred equity investment balance outstanding and weighted average yield were $1.4 billion and 10.7%, respectively, for the six months ended June 30, 2014 compared to $1.2 billion and 10.4%, respectively, for the six months ended June 30, 2013. As of June 30, 2014, our debt and preferred equity investments had a weighted average term to maturity of 1.8 years.
Other Income
Other income increased primarily as a result of a promote income earned in connection with the sale of our joint venture interest in 747 Madison Avenue ($10.3 million), incentive income received from a joint venture investment ($7.7 million), a one-time fee earned in connection with the restructuring of one of our debt investments ($5.7 million) and a higher contribution from Service Corporation ($6.2 million).
Property Operating Expenses
Property operating expenses increased primarily as a result of higher operating expenses for the properties acquired in 2013 ($9.8 million) and at the Same Store Properties ($4.1 million), partially offset by lower operating expenses from development properties ($5.3 million). The increase in property operating expenses at the Same-Store Properties was due mainly to higher real estate taxes ($2.1 million) and payroll costs ($1.7 million).
Transaction Related Costs
Transaction related costs increased primarily as a result of a higher volume of investment activity during the six months ended June 30, 2014.
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses for the six months ended June 30, 2014 were $47.1 million, or 5.3% of total revenues including our share of joint venture revenues and an annualized 50 basis points of total assets including our share of joint venture assets compared to $42.6 million, or 5.1% of total revenues including our share of joint venture revenues and an annualized 50 basis points of total assets including our share of joint venture assets for the six months ended June 30, 2013.
Interest Expense, Net of Interest Income
Interest expense, net of interest income, decreased primarily as a result of the capitalization of interest relating to properties under development ($5.4 million), the refinancing of 220 East 42nd Street at a lower rate ($2.0 million) and decreased borrowing on the MRA facility ($1.6 million), partially offset by a new mortgage at 388-390 Greenwich Street ($5.6 million) and an increased borrowing on the 2012 credit facility ($2.0 million). The weighted average debt balance outstanding increased from $6.8 billion during the six months ended June 30, 2013 to $7.5 billion during the six months ended June 30, 2014. The weighted average interest rate decreased from 4.90% for the six months ended June 30, 2013 to 4.49% for the six months ended June 30, 2014.
Depreciation and Amortization
Depreciation and amortization increased mainly as a result of the properties acquired in 2013 ($13.5 million), the write-off of certain tenant improvements and value for in-place leases associated with a former tenant ($3.4 million) and the consolidation of 388-390 Greenwich Street ($3.3 million).
Equity in Net Income from Unconsolidated Joint Ventures
Equity in net income from unconsolidated joint ventures increased primarily as a result of net loss recognized in the second quarter of 2013 from the West Coast Office portfolio ($8.1 million), which interests were sold in March 2014, a debt and preferred equity investment that was originated in the first quarter of 2014 ($2.6 million) which we have accounted for as a real estate

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investment rather than a debt and preferred equity investment, an early renewal of a retail tenant, net of the effect of a refinancing at 724 Fifth Avenue ($1.4 million), and the commencement of leases following the completion of the redevelopment project in June 2013 at 180 Broadway ($1.2 million). This increase was partially offset by lower net income from 388-390 Greenwich ($3.1 million) as a result of our acquisition of the joint venture partner's interest and the loss on extinguishment of debt partially offset by a lower interest rate associated with the refinancing of debt at 100 Park Avenue ($1.1 million). Occupancy at our unconsolidated Manhattan office properties was 91.4% and 87.4% at June 30, 2014 and 2013, respectively. Occupancy at our unconsolidated Suburban office properties was 89.3% and 84.3% at June 30, 2014 and 2013, respectively. At June 30, 2014, 2.9% and 18.9% of the space leased at our Manhattan and Suburban joint venture office properties, respectively, were expected to expire during the remainder of 2014. We estimate that current market asking rents on these expected 2014 lease expirations at our Manhattan and Suburban joint venture properties are approximately 47.5% higher and 4.9% lower, respectively, than then existing in-place fully escalated rents.
Equity in Net Gain on Sale of Interest in Unconsolidated Joint Ventures
During the six months ended June 30, 2014, we recognized gains on the sale of two properties included in the West Coast portfolio ($85.6 million), the sale of partnership interests in 21 West 34th Street ($20.9 million) and the sale of condominium units at 248 Bedford Avenue, Brooklyn ($1.6 million), partially offset by additional post closing costs related to the sale of our partnership interest in 27-29 West 34th Street ($1.9 million). During the six months ended June 30, 2013, we recognized additional post closing costs related to the sale of 521 Fifth Avenue ($1.9 million), partially offset by the sale of two properties included in the West Coast portfolio ($1.5 million).
Purchase price fair value adjustment
Purchase price fair value adjustment for the six months ended June 30, 2014 and 2013 was attributable to the acquisition of our joint venture partner's interest in 388-390 Greenwich Street and 16 Court Street, Brooklyn, respectively.
Loss on Early Extinguishment of Debt
Loss on early extinguishment of debt for the six months ended June 30, 2014 was attributable to the refinancing of the previous mortgage at 248-252 Bedford Avenue ($0.5 million) and early repayment of the mortgage at 16 Court Street, Brooklyn ($0.5 million). Loss on early extinguishment of debt for the six months ended June 30, 2013 was attributable to the refinancing of the mortgage at 1515 Broadway.
Discontinued Operations
Discontinued operations for the six months ended June 30, 2014 includes the gain recognized on the sale of 673 First Avenue ($117.8 million) and the results of operations of 673 First Avenue, which was sold in April 2014,and 2 Herald Square and 985-987 Third Avenue, which were held for sale at June 30, 2014. Discontinued operations for the six months ended June 30, 2013 includes the gain on sale recognized for 333 West 34th Street ($13.8 million), which closed in August 2013, and 44 West 55th Street ($1.1 million), which closedwas sold in February 2013, and the results of operations for 673 First Avenue, 2 Herald Square, 985-987 Third Avenue and 44 West 55th Street, 333 West 34th Street, 44 West 55th Street and 300 Main Street, which closed in September 2013. Included in the results of operations is an impairment charge of $2.2 million for 300 Main Street, which was recorded in the second quarter of 2013. Discontinued operations for the nine months ended September 30, 2012 included the gain on sale recognized for 292 Madison Avenue ($6.6 million), which waswere sold in February, 2012,August and the results of operations for 292 Madison Avenue, 333 West 34th Street, 44 West 55th Street and 300 Main Street.September 2013, respectively.

Reconciliation of Same-Store Operating Income to Net Operating Income
We present Same-Store net operating income, or Same-Store NOI, because we believe that these measures provide investors with useful information regarding the operating performance of properties that are comparable for the periods presented. For properties owned since January 1, 2012 and still owned in the same manner at the end of the current quarter, weWe determine Same-Store net operating income by subtracting Same-Store property operating expenses and ground rent from Same-Store rental revenues and tenant reimbursement revenues.other income. Our method of calculation may be different from methods used by other REITs, and, accordingly, may not be comparable to such other REITs. None of these measures is an alternative to net income (determined in accordance with GAAP) and Same-Store performance should not be considered an alternative to GAAP net income performance.
Same-Store NOI is determined as follows (amounts in millions):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2013 2012 2013 2012
Rental revenues$289.4
 $286.1
 $877.7
 $861.9
Other income1.0
 3.2
 5.1
 8.9
Total revenues290.4
 289.3
 882.8
 870.8
Property operating expenses131.1
 123.6
 378.7
 365.3
Operating income159.3
 165.7
 504.1
 505.5
Less: Non-building revenue0.2
 1.3
 1.8
 3.1
Same-Store NOI$159.1
 $164.4
 $502.3
 $502.4

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For properties owned since January 1, 2013 (excluding assets held for sale) and still owned and operated at June 30, 2014, Same-Store NOI decreased by $5.3 million, or 3.2%, from $164.4 million for the three months ended September 30, 2012 to $159.1 million for the nine months ended September 30, 2013.is determined as follows (in millions):
Same-Store NOI remained flat for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012.
  Three Months Ended June 30, Six Months Ended June 30,
  2014 2013 
$
Change
 
%
Change
 2014 2013 
$
Change
 
%
Change
Rental revenues, rent escalations, and reimbursement revenues $284.3
 $277.5
 $6.8
 2.45 % $558.4
 $552.7
 $5.7
 1.03 %
Other income 0.8
 1.2
 (0.4) (33.33)% 2.0
 3.4
 (1.4) (41.18)%
Total revenues 285.1
 278.7
 6.4
 2.30 % 560.4
 556.1
 4.3
 0.77 %
Property operating expenses 116.6
 112.9
 3.7
 3.28 % 235.2
 231.1
 4.1
 1.77 %
Operating income 168.5
 165.8
 2.7
 1.63 % 325.2
 325.0
 0.2
 0.06 %
Less: Non-building revenue 0.2
 0.7
 (0.5) (71.43)% 0.4
 1.5
 (1.1) (73.33)%
Same-Store NOI $168.3
 $165.1
 $3.2
 1.94 % $324.8
 $323.5
 $1.3
 0.40 %

Liquidity and Capital Resources
We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital and funds for acquisition and redevelopment of properties, tenant improvements, leasing costs, repurchases or repayments of outstanding indebtedness (which may include exchangeable debt) and for debt and 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 debt and preferred equity investments; and
(6)Proceeds from common or preferred equity or debt offerings by the Company, the Operating Partnership (including issuances of units of limited partnership interest in the Operating Partnership and Trust preferred securities) or ROP.
Cash flow from operations is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent, 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.operating cash flow.
The combined aggregate principal maturities of our property mortgages and other loans payable, corporate obligations and our share of joint venture debt, including as-of-right extension options, as of SeptemberJune 30, 20132014 are as follows (in thousands):
2013 2014 2015 2016 2017 Thereafter TotalRemaining 2014 2015 2016 2017 2018 Thereafter Total
Property mortgages and other loans(1)$94,447
 $190,081
 $276,565
 $571,176
 $1,147,792
 $2,229,732
 $4,509,793
$169,413
 $277,017
 $570,257
 $1,147,642
 $64,462
 $3,901,635
 $6,130,426
Corporate obligations131,966
 75,898
 7
 255,308
 356,953
 1,540,000
 2,360,132
75,898
 7
 255,308
 355,008
 250,000
 1,333,000
 2,269,221
Joint venture debt-our share77,387
 324,001
 41,085
 597,456
 930,713
 198,805
 2,169,447
27,651
 44,260
 561,736
 442,584
 28
 353,580
 1,429,839
Total$303,800
 $589,980
 $317,657
 $1,423,940
 $2,435,458
 $3,968,537
 $9,039,372
$272,962
 $321,284
 $1,387,301
 $1,945,234
 $314,490
 $5,588,215
 $9,829,486

(1)Includes the mortgage at 2 Herald Center, which is included in liabilities related to assets held for sale.

As of SeptemberJune 30, 2013,2014, we had approximately $242.0$348.0 million of consolidated cash on hand, inclusive of approximately $32.9$39.9 million of marketable securities. We expect to generate positive cash flow from operations for the foreseeable future. We may seek to access private and public

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debt and equity capital when the opportunity presents itself, although there is no guarantee that this capital will be made available to us at efficient levels or at all. Management believes that these sources of liquidity, if we are able to access them, along with potential refinancing opportunities for secured debt, will allow us to satisfy our debt obligations, as described above, upon maturity, if not before.
We also have investments in several real estate joint ventures with various partners who we consider to be financially stable and who have the ability to fund a capital call when needed. Most of our joint ventures are financed with non-recourse debt. We believe that property level cash flows along with unfunded committed indebtedness and proceeds from the refinancing of outstanding secured indebtedness will be sufficient to fund the capital needs of our joint venture properties.
Cash Flows
The following summary discussion of our cash flows is based on our consolidated statements of cash flows in “Item"Item 1. Financial Statements”Statements" and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

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Cash and cash equivalents were $209.1$308.1 million and $162.4$199.0 million at SeptemberJune 30, 20132014 and 2012,2013, respectively, representing a decreasean increase of $46.7 million.$109.1 million. The decreaseincrease was a result of the following changes in cash flows (in thousands):
Nine Months Ended September 30,Six Months Ended June 30,
2013 2012 
Increase
(Decrease)
2014 2013 
Increase
(Decrease)
Net cash provided by operating activities$310,454
 $270,194
 $40,260
$276,562
 $209,688
 $66,874
Net cash used in investing activities(242,465) (823,404) 580,939
$(318,041) $(42,722) $(275,319)
Net cash (used in) provided by financing activities(48,875) 577,381
 (626,256)
Net cash provided by (used in) financing activities$142,890
 $(157,981) $300,871
Our principal source of operating cash flow is related to the leasing and operating of the properties in our portfolio. Our properties provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service debt and fund quarterly dividend and distribution payment requirements. At SeptemberJune 30, 2013,2014, our Manhattan and Suburban consolidated office portfolio was 91.9% occupied.were 94.9% and 79.6% occupied, respectively. Our debt and preferred equity and joint venture investments also provide a steady stream of operating cash flow to us.
Cash is used in investing activities to fund acquisitions, redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings that meet our investment criteria. During the ninesix months ended SeptemberJune 30, 2013,2014, when compared to the ninesix months ended SeptemberJune 30, 2012,2013, we used cash primarily for the following investing activities (in thousands):
Acquisitions of real estate$347,133
$(156,080)
Capital expenditures and capitalized interest(1,424)(72,718)
Escrow cash-capital improvements/acquisition deposits(177,990)(37,833)
Joint venture investments39,394
(88,619)
Distributions from joint ventures(28,715)146,582
Proceeds from sales of real estate/partial interest in property148,334
252,224
Debt and preferred equity and other investments254,207
(318,875)
Decrease in net cash used in investing activities$580,939
Increase in net cash used by investing activities$(275,319)
Funds spent on capital expenditures, which compriseare comprised of building and tenant improvements, increased from $107.4$61.5 million for the ninesix months ended SeptemberJune 30, 20122013 to $108.8$134.2 million for the ninesix months ended SeptemberJune 30, 2013.2014. The increased capital expenditures relate primarily to increased costs incurred in connection with the redevelopment of properties and new leasing activity.

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We generally fund our investment activity through property-level financing, our 2012 credit facility, MRA facility, senior unsecured notes, convertible or exchangeable securities, construction loans, salessale of real estate and from time to time, the Company issues common or preferred stock, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the ninesix months ended SeptemberJune 30, 2013,2014 when compared to the ninesix months ended SeptemberJune 30, 2012,2013, we used cash for the following financing activities (in thousands):
Proceeds from our debt obligations$(102,506)$934,270
Repayments under our debt obligations(55,860)(778,216)
Noncontrolling interests, contributions in excess of distributions(11,897)161
Other financing activities(59,800)(24,707)
Proceeds from issuance of common stock and preferred stock(381,786)
Redemption of preferred stock7,513
192,500
Proceeds from issuance of common and preferred stock272
Dividends and distributions paid(21,920)(23,409)
Increase in net cash used in financing activities$(626,256)
Increase in net cash provided in financing activities$300,871
Capitalization

As of SeptemberJune 30, 2013, the Company2014, SL Green had 92,214,39695,587,301 shares of common stock, 2,792,0503,500,060 common units of limited partnership interest in the Operating Partnership held by persons other than the Company, and 9,200,000 shares of the

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Company'sSL Green's 6.50% Series I Cumulative Redeemable Preferred Stock, or the Series I Preferred Stock, outstanding. In addition, persons other than the Company'sCompany held Preferred Units of limited partnership interests in the Operating Partnership having an aggregate liquidation preferencespreference of $49.6 million were held by persons other than the Company.$53.6 million.
In June 2013, the Company redeemed the remaining 7,700,000 outstanding shares, or $200.0 million, of its 7.625% Series C Cumulative Redeemable Preferred Stock, or the Series C Preferred Stock, at a redemption price of $25.00 per share plus $0.3495 in accumulated and unpaid dividends on such Preferred Stock through June 21, 2013.  We recognized approximately $12.2 million of costs to redeem the remaining Series C Preferred Stock. In September 2012, the Company had redeemed 4,000,000 shares, $100.0 million, of our 11,700,000 shares of Series C Preferred Stock, at a redemption price of $25.00 per share plus $0.3707 in accumulated and unpaid dividends on such preferred stock through September 24, 2012. We recognized $6.3 million of costs to partially redeem the Series C Preferred Stock. Simultaneously with each redemption, the Operating Partnership redeemed an equal number of its Series C Preferred Units from the Company at a redemption price paid by the Company to the Series C preferred stockholders.
At-The-MarketAt-the-Market Offering Program

In July 2011, the Company, along with the Operating Partnership, entered into an “at-the-market”"at-the-market" equity offering program, or ATM Program, to sell an aggregate of $250.0 million of ourSL Green's common stock. During the ninesix months ended SeptemberJune 30, 2013,2014, we sold approximately 462,27625,659 shares of our common stock throughout of the remaining balance of this ATM Program for aggregate grossnet proceeds of approximately $42.5 million ($41.8 million of net proceeds after related expenses).$2.8 million. The net proceeds from these offeringsthis offering were contributed to the Operating Partnership in exchange for 462,276 common25,659 units of limited partnership interest andof the Operating Partnership.
In June 2014, the Company, along with the Operating Partnership, entered into a new ATM Program to sell an aggregate of $300.0 million of SL Green's common stock. During the six months ended June 30, 2014, we sold 55,765 shares of our common stock for aggregate net proceeds of $6.1 million. The net proceeds from this offering were usedcontributed to repay debt, fund new investments andthe Operating Partnership in exchange for other corporate purposes.55,765 units of limited partnership interest of the Operating Partnership. As of SeptemberJune 30, 20132014, we had $2.8293.8 million remained available to issue sharesfor issuance of common stock under the new ATM Program.

Dividend Reinvestment and Stock Purchase Plan
In March 2012, the Company filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRIP, which automatically became effective upon filing. The Company registered 3,500,000 shares of itsSL Green's common stock under the DRIP. The DRIP commenced on September 24, 2001.
During the ninesix months ended SeptemberJune 30, 2013 and 2012,2014, the Company issued approximately 651 shares and 1.3 million272 shares of itsSL Green's common stock and received approximately $57,000 and $99.5 million26,000 of net proceeds, respectively, from dividend reinvestments and/or stock purchases under the DRIP. DRIP shares may be issued at a discount to the market price.
Third Amended and Restated 2005 Stock Option and Incentive Plan
The Third Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2013 and its stockholders in June 2013 at the Company's annual meeting of the stockholders. Subject to adjustments upon certain corporate transactions or events, up to a maximum of 17,130,000 fungible units may be granted as options, restricted stock, phantom shares, dividend equivalent rights and other equity-based awards under the 2005 Plan.  As of SeptemberJune 30, 20132014, 5.8 million3,200,000 fungible units were available for issuance under the 2005 Plan after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non-Employee Directors’ Deferral Program and LTIP Units, including, among others, outstanding LTIP Units issued under our 2011 Long-Term Outperformance Plan, which remain subject to performance-based vesting.

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2010 Notional Unit Long-Term Compensation Plan
In December 2009, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Program, or the 2010 Long-Term Compensation Plan. The 2010 Long-Term Compensation Plan is a long-term incentive compensation plan pursuant to which award recipients could earn, in the aggregate, from approximately $15$15.0 million up to approximately $75$75.0 million of LTIP Units in the Operating Partnership based on ourthe Company's stock price appreciation over three years beginning on December 1, 2009; provided that, if maximum performance had been achieved, approximately $25$25.0 million of awards could be earned at any time after the beginning of the second year and an additional approximately $25$25.0 million of awards could be earned at any time after the beginning of the third year. In order to achieve maximum performance under the 2010 Long-Term Compensation Plan, ourthe Company's aggregate stock price appreciation during the performance period had to equal or exceed 50%. The compensation committee determined that the maximum performance had been achieved at or shortly after the beginning of each of the second and third years of the performance period and for the full performance period and, accordingly, 366,815 LTIP Units, 385,583 LTIP Units and 327,416 LTIP Units were earned under the 2010 Long-Term Compensation Plan in December 2010, 2011 and 2012, respectively.

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Substantially in accordance with the original terms of the program, 50% of these LTIP Units vested on December 17, 2012 (accelerated from the original January 1, 2013 vesting date), 25% of these LTIP Units vested December 11, 2013 (accelerated from the original January 1, 2014 vesting date) and the remainder is scheduled to vest ratably on January 1, 2014 and 2015 based on continued employment. In accordance with the terms of the 2010 Long-Term Compensation Plan, distributions were not paid on any LTIP Units until they were earned, at which time we paid all distributions that would have been paid on the earned LTIP Units since the beginning of the performance period.
The cost of the 2010 Long-Term Compensation Plan (approximately $31.7 million, subject to forfeitures) will be amortized into earnings through the final vesting period. We recorded compensation expense of approximately$1.6 million, $0.91.9 million, $3.6$0.8 million, $3.3 million and $7.02.8 million during the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, related to the 2010 Long-Term Compensation Plan.
2011 Outperformance Plan
In August 2011, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2011 Outperformance Plan, or the 2011 Outperformance Plan. Participants in the 2011 Outperformance Plan may earn, in the aggregate, up to $85$85.0 million of LTIP Units in the Operating Partnership based on our total return to stockholders for the three-year period beginning September 1, 2011. Under the 2011 Outperformance Plan, participants will be entitled to share in a “performance pool”"performance pool" comprised of LTIP Units with a value equal to 10% of the amount, if any, by which our total return to stockholders during the three-year period exceeds a cumulative total return to stockholders of 25%, subject to the maximum of $85$85.0 million of LTIP Units; provided that if maximum performance has been achieved, approximately one-third of each award may be earned at any time after the beginning of the second year and an additional approximately one-third of each award may be earned at any time after the beginning of the third year. LTIP Units earned under the 2011 Outperformance Plan will be subject to continued vesting requirements, with 50% of any awards earned vesting on August 31, 2014 and the remaining 50% vesting on August 31, 2015, subject to continued employment with us through such dates. Participants will not be entitled to distributions with respect to LTIP Units granted under the 2011 Outperformance Plan unless and until they are earned. If LTIP Units are earned, each participant will also be entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period, with such distributions being paid in the form of additional LTIP Units. Thereafter, distributions will be paid currently with respect to all earned LTIP Units, whether vested or unvested.
In June 2014, the compensation committee determined that maximum performance had been achieved during the third year of the performance period and, accordingly, 560,908 LTIP Units, representing two-thirds of each award, were earned, subject to vesting, under the 2011 Outperformance Plan. The remaining one-third of each award will be earned based on performance through the end of the performance period.
The cost of the 2011 Outperformance Plan (approximately $26.3$27.0 million, subject to forfeitures) will be amortized into earnings through the final vesting period. We recorded compensation expense of approximately$4.3 million, $1.76.1 million, $6.2$1.7 million, $1.4 million and $4.04.5 million during the three and ninesix months ended SeptemberJune 30, 20132014 and 20122013, respectively, related to the 2011 Outperformance Plan.

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Deferred Stock Compensation Plan for Directors
Under our Independent Director’sNon-Employee Directors' Deferral Program, which commenced July 2004, the Company's non-employee directors may elect to defer up to 100% of their annual retainer fee, chairman fees, meeting fees and meeting fees.annual stock grant. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The program provides that a director's phantom stock units are convertible intogenerally will be settled in an equal number of shares of common stock upon the earlier of (i) the January 1 coincident with or next following such directors’director's termination of service from the boardBoard of directorsDirectors or (ii) a change in control by us, as defined by the program. Phantom stock units are credited to each non-employee director quarterly using the closing price of ourSL Green's common stock on the applicable dividend record date forfirst business day of the respective quarter. Each participating non-employee director’s accountdirector is also credited for an equivalent amount ofwith dividend equivalents or phantom stock units based on the dividend rate for each quarter.
quarter, which are either paid in cash currently or credited to the director’s account as additional phantom stock units.
During the ninesix months ended June 30, 2014, September 30, 2013, 6,6925,974 phantom stock units were earned. As of SeptemberJune 30, 20132014, there were approximately 74,80579,499 phantom stock units outstanding.outstanding pursuant to our Non-Employee Director's Deferral Program.

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Employee Stock Purchase Plan
On September 18, 2007, the Company's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to increase their efforts to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an “employee"employee stock purchase plan”plan" under Section 423 of the Code, and has been adopted by the board to enable our eligible employees to purchase ourthe Company's shares of common stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 500,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. The Company filed a registration statement on Form S-8 with the SEC with respect to the ESPP. The common stock is offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period. The ESPP was approved by the Company'sour stockholders at the Company'sour 2008 annual meeting of stockholders. As of SeptemberJune 30, 20132014, approximately 72,02676,727 shares of ourSL Green's common stock had been issued under the ESPP.
Market Capitalization
At SeptemberJune 30, 20132014, borrowings under our mortgages and other loans payable, our 2012 credit facility, senior unsecured notes, and Trusttrust preferred securities and our share of joint venture debt represented 50.8%46.8% of our combined market capitalization of approximately $17.7$20.9 billion (based on a common stock price of $88.84$109.41 per share, the closing price of the Company'sSL Green's common stock on the New York Stock ExchangeNYSE on SeptemberJune 30, 20132014). Market capitalization includes our consolidated debt, common and preferred stock and the conversion of all units of limited partnership interest in the Operating Partnership, and our share of joint venture debt.

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Indebtedness
The table below summarizes our consolidated mortgages and other loans payable, our 2012 credit facility, senior unsecured notes and trust preferred securities outstanding at SeptemberJune 30, 20132014 and December 31, 2012,2013, respectively (amounts in thousands):.
June 30, 2014 December 31, 2013
Debt Summary: September 30, 2013 December 31, 2012   
Balance  
  
   
Fixed rate $5,568,197
 $4,884,354
Variable rate — hedged 38,252
 38,371
Fixed rate(1)
$5,554,152
 $5,561,749
Variable rate—hedged542,128
 38,211
Total fixed rate 5,606,449
 4,922,725
6,096,280
 5,599,960
Variable rate 601,019
 1,150,762
1,538,297
 774,301
Variable rate—supporting variable rate assets 612,159
 446,933
723,055
 545,647
Total variable rate 1,213,178
 1,597,695
2,261,352
 1,319,948
Total $6,819,627
 $6,520,420
$8,357,632
 $6,919,908
    
Percent of Total Debt:
  
  
   
Total fixed rate 82.2% 75.5%72.9% 80.9%
Variable rate 17.8% 24.5%27.1% 19.1%
Total 100.0% 100.0%100.0% 100.0%
    
Effective Interest Rate for the period:  
  
Effective Interest Rate for the Period:   
Fixed rate 5.32% 5.78%5.22% 5.33%
Variable rate 2.21% 2.89%2.01% 2.39%
Effective interest rate 4.77% 5.08%4.49% 4.81%

(1)Includes the mortgage at 2 Herald Center, which is included in liabilities related to assets held for sale.

The variable rate debt shown above generally bears interest at an interest rate based on 30-day LIBOR ((0.16% and 0.17% at 0.18%June 30, 2014 and 0.21% at September 30,December 31, 2013, and 2012, respectively). Our consolidated debt at SeptemberJune 30, 20132014 had a weighted average term to maturity of approximately 6.055.4 years.

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Certain of our debt and preferred equity investments, with a face amount of approximately $612.2723.1 million at SeptemberJune 30, 20132014, are variable rate investments which mitigate our exposure to interest rate changes on our unhedged variable rate debt at September 30, 2013.debt.
Mortgage Financing
As of SeptemberJune 30, 20132014, our total mortgage debt (excluding our share of joint venture mortgage debt of approximately $2.21.4 billion) consisted of approximately $4.14.6 billion of fixed rate debt, including hedgedswapped variable rate debt, with an effective weighted average interest rate of approximately 5.3%5.12% and approximately $0.51.5 billion of variable rate debt with an effective weighted average interest rate of approximately 2.7%1.96%.
Corporate Indebtedness
2012 Credit Facility
In November 2012,March 2014, we entered into aan amendment to the $1.6 billion credit facility, entered into by the Company in November 2012, or the 2012 credit facility, which, refinanced,among other things, increased the term loan portion of the 2012 credit facility by $383.0 million to $783.0 million, decreased the interest-rate margin applicable to the term loan facility by 25 basis points and extended and upsized the previous 2011 revolving credit facility.maturity of the term loan portion of the facility from March 30, 2018 to June 30, 2019. The 2012 credit facility, as amended, consists of a $1.2 billion revolving credit facility, or the revolving credit facility, and a $400.0$783.0 million term loan facility, or the term loan facility. The revolving credit facility matures in March 2017 and includes two six-month as-of-right 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 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.
The 2012 credit facility bears interest at a spread over LIBOR ranging from (i) 100 basis points to 175 basis points for loans under the revolving credit facility and (ii) 11595 basis points to 200190 basis points for loans under the term loan facility, in each case based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. At SeptemberJune 30, 20132014, the applicable spread

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was 145 basis points for revolving credit facility and 165140 basis points for the term loan facility. At SeptemberJune 30, 2013,2014, the effective interest rate was 1.64%1.61% for the revolving credit facility and 2.00%1.64% 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 the senior unsecured long term indebtedness of ROP. As of SeptemberJune 30, 20132014, the facility fee was 30 basis points. At SeptemberJune 30, 20132014, we had approximately $79.1$116.3 million of outstanding letters of credit $340.0and $783.0 million borrowings under the revolving credit facility and $400.0 million outstanding under the term loan facility, with total undrawn capacity of $1.1 billion under the revolving credit facility.$0.9 billion under
In connection with the amendment of the 2012 credit facility, we incurred debt origination and other loan costs of $2.8 million. We evaluated the modification pursuant to ASC 470 and determined that the terms of the amendment were not substantially different from the terms of the previous 2012 credit facility.
As a result, these deferred costs and the unamortized balance of the costs previously incurred are amortized through the extended maturity date of the term loan facility.
The Company, ROP and the Operating Partnership and ROP are all borrowers jointly and severally obligated under the 2012 credit facility. NoNone of our other subsidiary of ours is an obligorsubsidiaries are obligors under the 2012 credit facility.
The 2012 credit facility includes certain restrictions and covenants (see Restrictive Covenants below).
Master Repurchase Agreement
The Master Repurchase Agreement, as amended in December 2013, or MRA, has a maximum facility capacity of $175.0 million, under which we agreedprovides us an ability to sell certain debt investments in exchange for cash with a simultaneous agreement to repurchase the same debt investments at a certain date or on demand. In September 2013, the maturity of this MRA was extended to November 2013 subject to a ten month extension option. This MRA has a maximum facility capacity of $300.0 million and bears interest based on 1-month LIBOR plus 300 basis points through September 2013ranging from 250 and a floating rate of interest of 350325 basis points over 1-monthone-month LIBOR throughdepending on the extended maturity date. At Septemberpledged collateral. As of June 30, 2013,2014, we had approximately $132.0have $300.0 million outstanding undrawn capacity under this facility, which is included in mortgages and other loans payable.the MRA.


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Senior Unsecured Notes
The following table sets forth our senior unsecured notes and other related disclosures as of SeptemberJune 30, 20132014 and December 31, 2012, respectively2013 by scheduled maturity date (amounts in thousands):

Issuance 
September 30,
2013
Unpaid
Principal
Balance
 
September 30,
2013
Accreted
Balance
 
December 31, 2012
Accreted
Balance
 
Coupon
Rate(1)
 
Effective
Rate
 
Term
(in Years)
 Maturity June 30, 2014 Unpaid Principal Balance June 30, 2014 Accreted Balance December 31, 2013 Accreted Balance 
Coupon
Rate(1)
 
Effective
Rate
 
Term
(in Years)
 Maturity Date
August 13, 2004(3)(2) $75,898
 $75,898
 $75,898
 5.88% 5.88% 10 August 15, 2014 $75,898
 $75,898
 $75,898
 5.88% 5.88% 10 August 15, 2014
March 31, 2006(3)(2) 255,308
 255,194
 255,165
 6.00% 6.00% 10 March 31, 2016 255,308
 255,227
 255,206
 6.00% 6.00% 10 March 31, 2016
October 12, 2010(4)(3) 345,000
 295,151
 287,373
 3.00% 3.00% 7 October 15, 2017 345,000
 303,354
 297,837
 3.00% 3.00% 7 October 15, 2017
August 5, 2011(5)(4) 250,000
 249,666
 249,620
 5.00% 5.00% 7 August 15, 2018 250,000
 249,712
 249,681
 5.00% 5.00% 7 August 15, 2018
March 16, 2010(5)(4) 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
November 15, 2012(5)(4) 200,000
 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
June 27, 2005(6)(5) 7
 7
 7
 4.00% 4.00% 20 June 15, 2025 7
 7
 7
 4.00% 4.00% 20 June 15, 2025
March 26, 2007(7)(6) 11,953
 11,953
 16,893
 3.00% 3.00% 20 March 30, 2027 10,008
 10,008
 10,701
 3.00% 3.00% 20 March 30, 2027
 $1,388,166
 $1,337,869
 $1,334,956
  
  
     $1,386,221
 $1,344,206
 $1,339,330
     

(1)Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.
(2)Issued by ROP.
(3)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.
(4)
In October 2010,Issued by the Operating Partnership issued $345.0 million of these exchangeable notes.Partnership. Interest on these exchangeable notes is payable semi-annually on April 15 and October 15. The notes had an initial exchange rate representing an exchange price that was set at a 30.0% premium to the last reported sale price of the Company'sSL Green's common stock on October 6, 2010, or $85.81.$85.81. The initial exchange rate is subject to adjustment under certain circumstances. The current exchange rate is 11.7153 shares of ourSL Green's common stock per $1,000 principal amount of these notes. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of the Company'sSL Green's common stock, if any, at our option. The notes are guaranteed by ROP. On the issuance date, $78.3$78.3 million of the debt balance was recorded in equity. As of SeptemberJune 30, 20132014, approximately $49.841.6 million remained to be amortized into the debt balance.
(5)(4)Issued by the Company, the Operating Partnership and ROP, as co-obligors.
(6)(5)
Exchangeable senior debentures which are currently callable at par. In addition, the debentures can be put to ROP, 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 acquisition of all outstanding shares of common stock of Reckson, or the Reckson Merger, the adjusted exchange rate for the debentures is 7.7461 shares of the Company'sSL Green's common stock per $1,000$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.$1.3491.
(7)(6)In March 2007,Issued by the Operating Partnership issued $750.0 million of these exchangeable notes.Partnership. Interest on these remaining exchangeable notes is payable semi-annually on March 30 and September 30. The notes have an initial exchange rate representing an exchange price that was set at a 25.0% premium to the last reported sale price of the Company's common stock on March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of the Company's common stock, if any, at our option. The notes are currently redeemable at the Operating Partnership’s option. The Operating Partnership may be required to repurchase the notes on March 30, 2017 and 2022, and upon the occurrence of certain designated events. On March 30, 2012, we repurchased $102.2 million of aggregate principal amount of the exchangeable notes pursuant to a mandatory

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offerstock on March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of SL Green's common stock, if any, at our option. The notes are currently redeemable at the Operating Partnership’s option. The Operating Partnership may be required to repurchase the notes. Onnotes on March 30, 2017 and 2022, and upon the issuance date, $66.6 million was recorded in equityoccurrence of certain designated events.
Junior Subordinate Deferrable Interest Debentures
In June 2005, the Company and was fully amortized into the debt balance as of March 31, 2012. On January 2, 2013, we repurchased $4.9Operating Partnership issued $100.0 million of aggregate principal amountTrust Preferred Securities, which are reflected on the consolidated balance sheet as Junior Subordinate Deferrable Interest Debentures. The $100.0 million of exchangeable notesjunior subordinate deferrable interest debentures have a 30-year term ending July 2035. They bear interest at 99.6%a fixed rate of 5.61% for the first 10 years ending July 2015. Thereafter, the interest rate will float at three-month LIBOR plus 125 basis points. The Trust Preferred Securities are redeemable at the option of the principal amount.Operating Partnership, in whole or in part, with no prepayment premium.

Restrictive Covenants
The terms of the 2012 credit facility and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends (as discussed below), make certain types of 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 we will not during any time when a default is continuing, make distributions with respect to common stock or other equity interests, except to enable usthe Company to continue to qualify as a REIT for Federal income tax purposes. As of SeptemberJune 30, 2013 and December 31, 20122014, we were in compliance with all such covenants.
Junior Subordinate Deferrable Interest Debentures
In June 2005, the Company and the Operating Partnership issued $100.0 million of Trust Preferred Securities, which are reflected on the balance sheet as Junior Subordinate Deferrable Interest Debentures. The proceeds were used to repay our revolving credit facility.  The $100.0 million of junior subordinate deferrable interest debentures have a 30-year term ending July 2035.  They bear interest at a fixed rate of 5.61% for the first 10 years ending July 2015. Thereafter, the rate will float at three month LIBOR plus 1.25%. The securities are redeemable at par.
Market Rate Risk
We are exposed to changes in interest rates primarily from our variable rate debt. Our exposure to interest rate changes are managed through either the use of interest rate derivative instruments and/or through our variable rate debt and preferred equity investments. A hypothetical 100 basis point increase in interest rates along the entire interest rate curve for 20132014 would increase our annual interest cost, net of interest income from variable rate debt and preferred equity investments, by approximately $5.8$14.9 million and would increase our share of joint venture annual interest cost by approximately $8.6 million, respectively.
$8.0 million.
We recognize most 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’sderivative's change in fair value is immediately recognized in earnings.
Approximately $5.6We have $6.1 billion of ourfixed-rate long-term debt, bears 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 and variable rate joint venture debt as of SeptemberJune 30, 20132014 was based on LIBOR plus a spread of LIBOR plus ranging from 90 basis points to LIBOR plus 950935 basis points.
Contractual Obligations
Refer to our 20122013 Annual Report on Form 10-K for a discussion of our contractual obligations. There have been no material changes, outside the ordinary course of business, to these contractual obligations during the ninesix months ended SeptemberJune 30, 20132014.
Off-Balance Sheet Arrangements
We have a number of off-balance sheet investments, including joint ventures and debt and preferred equity investments. These investments all have varying ownership structures. Substantially all of our joint venture arrangements are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions of these joint venture arrangements. Our off-balance sheet arrangements are discussed in Note 5, “Debt"Debt and Preferred Equity Investments”Investments" and Note 6, “Investments"Investments in Unconsolidated Joint Ventures”Ventures" in the accompanying consolidated financial statements.

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Capital Expenditures
We estimate that for the threesix months ending December 31, 20132014, we expect to incur approximately $91.1174.7 million of our share of recurring capital expenditures and $76.5 million of development expenditures, which are net of loan reserves, (including tenant improvements and leasing commissions) on existing consolidated properties, and we estimate that our share of capital expenditures at our joint venture properties, net of loan reserves, will be approximately $31.466.1 million. We expect to fund these capital expenditures with operating cash flow, additional property level mortgage financings and cash on hand. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We 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

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the next 12-month period. Thereafter, we expect our capital needs will be met through a combination of cash on hand, net cash provided by operations, borrowings, potential asset sales or additional equity or debt issuances.
Dividends
Dividends/Distributions
We expect to pay dividends to our stockholders based on the distributions we receive from theour Operating Partnership primarily from property revenues net of operating expenses or, if necessary, from working capital or borrowings.
To maintain our qualification as a REIT, we must pay annual dividends to our stockholders of at least 90% of our REIT taxable income, determined before taking into consideration the dividends paid deduction and net capital gains. We intend to continue to pay regular quarterly dividends to our stockholders. Based on our current annual dividend rate of $2.00$2.00 per share, we would pay approximately $184.5$191.2 million in dividends to ourSL Green's common stockholders on an annual basis. Before we pay any dividend, whether for Federal income tax purposes or otherwise, which would only be paid out of available cash to the extent permitted under our 2012 credit facility and senior unsecured notes, we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable.
Related Party Transactions
Cleaning/ Security/ Messenger and Restoration Services
Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning, extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of ourSL 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. The Service Corporation 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. Alliance paidIncome earned from profit participation, which is included in other income on the Service Corporation approximately $0.8consolidated statements of income, was $1.0 million,, $2.7 $1.9 million,, $0.8 0.9 million and $1.9 million for the three and six months ended June 30, 2014 and $2.4 million for the three and nine months ended September 30, 2013 and 2012, respectively. We paid Alliance approximately $4.8also recorded expenses of $4.7 million,, $13.2 $8.2 million,, $4.7 $4.3 million and $8.4 million for the three and six months ended June 30, 2014 and $12.9 million for the three and nine months ended September 30, 2013 and 2012, respectively, for these services (excluding services provided directly to tenants).
Marketing Services
A-List Marketing, LLC, or A-List, provides marketing services to us. Ms. Deena Wolff, a sister of Mr. Marc Holliday, our chief executive officer, is the owner of A-List. The aggregate amount of fees we paid to A-ListWe recorded approximately $77,100, $94,900, $104,900 and $107,300 for the three and six months ended June 30, 2014 and 2013, respectively, for these marketing services was approximately $50,700, $158,000, $2,400 and $58,300 for the three and nine months ended September 30, 2013 and 2012, respectively.services.
Leases
Nancy Peck and Company leases 1,003 square feet of space at 420 Lexington Avenue under a lease that ends in August 2015. Nancy Peck and Company is owned by Nancy Peck, the wife of Stephen L. Green. The rent due pursuant to the lease was $35,516 per annum for year one increasing to $40,000 in year seven.
Management Fees
S.L. Green Management Corp., a consolidated entity, receives property management fees from an entity in which Stephen L. Green owns an interest. The aggregate amount ofWe received management fees paid to S.L. Green Management Corp. from such entity was

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approximately $105,000, $319,000, $93,000$111,600, $216,400, $95,500 and $213,700 for the three and six months ended June 30, 2014 and $292,000 for the three and nine months ended September 30, 2013 and 2012, respectively.
Insurance
We maintain “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. As of SeptemberJune 30, 2013,2014, the first property portfolio maintains a blanket limit of $950.0 million per occurrence, including terrorism, for the majority of the New York City properties in our portfolio.portfolio and expires December 31, 2014. The second portfolio maintains a limit of $700.0 million per occurrence, including terrorism, for some New York City properties and the majority of the Suburban properties.  Both policies expire onproperties and expires December 31, 2013.2015. Each policy includes $100.0 million of flood coverage, with a lower sublimit for locations in high hazard flood zones. We maintain 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, 2014. Additional coverage may be purchased on a stand-alone basis for certain assets.
In October 2006, we formed a wholly-owned taxable REIT subsidiary, Belmont Insurance Company, or Belmont, to act as a captive insurance company and be one of the elements of our overall insurance program. Belmont is a subsidiary of ours. Belmont was formed in an effort to, among other reasons, stabilize to some extent the fluctuations of insurance market conditions. Belmont

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is licensed in New York to write Terrorism, NBCR (nuclear, biological, chemical, and radiological), General Liability, Environmental Liability, Flood and D&O coverage.
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 $850.0 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 coverage and since December 31, 2011, has provided coverage up to $750.0 million on our 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. We have 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, we have 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 our entire portfolio.
Flood: For the period commencing December 31, 2012, Belmont insures a portion of the high hazard flood deductible on the New York City portfolio. Belmont insurance reduces the average deductible from $3.0 million to $1.0 million.

Employment Practices Liability: As of September 16, 2013, Belmont insures a retention of $150,000 per occurrence in excess of $100,000 on a $10 million per occurrence and $10 million annual aggregate employment practices liability policy.
Errors and Omissions (Professional Liability): As of October 19, 2013, Belmont insures a retention of $225,000 per occurrence in excess of $25,000 on a $10.0 million per occurrence and $10.0 million annual aggregate employment practices liability policy.
As long as we own Belmont, we are responsible for its liquidity and capital resources, and the accounts of Belmont are part of our consolidated financial statements. If we experience a loss and Belmont is required to pay under its insurance policy, we would ultimately record the loss to the extent of Belmont’s required payment. Therefore, insurance coverage provided by Belmont should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance.
The Terrorism Risk Insurance Act, or TRIA, which was enacted in November 2002, was renewed December 31, 2005 and again on December 31, 2007. Congress extended TRIA, now called TRIPRA (Terrorism Risk Insurance Program Reauthorization and

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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.
We own Belmont and the accounts of Belmont are part of our consolidated financial statements. If Belmont experiences a loss and is required to pay under its insurance policy, we would ultimately record the loss to the extent of Belmont’s required payment. Therefore, insurance coverage provided by Belmont should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance.
We monitor all properties that are subject to triple net leases to ensure that tenants are providing adequate coverage.  Certain joint ventures may be covered under policies separate from our policies, at coverage limits, which we deem to be adequate.  We continually monitor these policies.  Although we consider our insurance coverage to be appropriate, in the event of a major catastrophe, we may not have sufficient coverage to replace certain properties.
Funds Fromfrom Operations
Funds From Operations, or FFO, is a widely recognized measure of REIT performance. We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do. The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002, and as subsequently amended, defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles, or GAAP), excluding gains (or losses) from debt restructuring,restructurings, sales of properties and real estate related impairment charges, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, particularly those that own and operate commercial office properties.
We also use FFO as one of several criteria to determine performance-based bonuses for members of our senior management. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs, providing perspective not immediately apparent from net income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.


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FFO for the three and ninesix months ended June 30, 2014 and September 30, 2013 and 2012 isare as follows (amounts in(in thousands):
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012 2014 2013 2014 2013
Net income attributable to SL Green common stockholders$37,025
 $7,732
 $64,210
 $136,028
 $235,541
 $8,276
 $381,631
 $27,185
Add:               
Depreciation and amortization87,473
 81,827
 248,587
 233,566
 94,838
 81,577
 184,217
 160,200
Discontinued operations depreciation adjustments—
 1,602
 3,212
 4,758
 —
 2,060
 433
 4,126
Unconsolidated joint ventures depreciation and noncontrolling interest adjustments12,720
 6,669
 37,867
 22,176
 8,161
 17,620
 21,148
 25,148
Net income attributable to noncontrolling interests4,011
 2,402
 10,715
 11,668
 10,488
 3,248
 16,707
 6,704
Less:               
Gain on sale of discontinued operations13,787
 —
 14,900
 6,627
 114,735
 —
 114,735
 1,113
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate(354) (4,807) (3,937) 17,776
Equity in net gain (loss) on sale of joint venture property/interest 1,444
 (3,583) 106,084
 (3,583)
Purchase price fair value adjustment—
 —
 (2,305) —
 71,446
 (2,305) 71,446
 (2,305)
Depreciable real estate reserves, net of recoveries—
 —
 (2,150) —
 —
 (2,150) —
 (2,150)
Depreciation on non-rental real estate assets416
 220
 1,004
 697
Depreciation and amortization on non-rental real estate assets 503
 343
 1,017
 588
Funds from Operations$127,380
 $104,819
 $357,079
 $383,096
 $160,900
 $120,476
 $310,854
 $229,700
Net cash flows (used) provided by operating activities$96,966
 $72,259
 $310,454
 $270,194
Net cash flows provided by (used in) investing activities$(195,943) $(265,357) $(242,465) $(823,404)
Net cash flows provided by (used in) financing activities$109,106
 $98,662
 $(48,875) $577,381
Cash flows provided by operating activities $188,414
 $120,132
 $276,562
 $209,688
Cash flows (used in) provided by investing activities $(246,240) $126,354
 $(318,041) $(42,722)
Cash flows (used in) provided by financing activities $(81,233) $(267,621) $142,890
 $(157,981)
Inflation
Substantially all of theour 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’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.
Accounting Standards Updates
The Accounting Standards Updates are discussed in Note 2, “Significant"Significant Accounting Policies—AccountingPolicies-Accounting Standards Updates”Updates" in the accompanying consolidated financial statements.

Forward-Looking Information
This report includes certain statements that may be deemed to be “forward-looking statements”"forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions thereof. All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), development trends of the real estate industry and the Manhattan, Brooklyn, Westchester County, Connecticut, Long Island and Northern New Jersey office markets, business strategies, expansion and growth of our operations and other similar matters, are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate.
Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,”"may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms.

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Forward-looking statements contained in this report are subject to a number of risks and uncertainties that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by forward-looking statements made by us. These risks and uncertainties include:

77

the effect of general economic, business and financial conditions, and their effect on the New York metropolitan real estate market in particular;
dependence upon certain geographic markets;
risks of real estate acquisitions, dispositions and developments, including the cost of construction delays and cost overruns;
risks relating to debt and preferred equity investments;
availability and creditworthiness of prospective tenants and borrowers;
bankruptcy or insolvency of a major tenant or a significant number of smaller tenants;
adverse changes in the real estate markets, including reduced demand for office space, increasing vacancy, and increasing availability of sublease space;
availability of capital (debt and equity);
unanticipated increases in financing and other costs, including a rise in interest rates;
our ability to comply with financial covenants in our debt instruments;
the Company'sour ability to maintain its status as a REIT;
risks of investing through joint venture structures, including the fulfillment by our partners of their financial obligations;
the continuing threat of terrorist attacks, in particular in the New York Metropolitan area and on our tenants;
our ability to obtain adequate insurance coverage at a reasonable cost and the potential for losses in excess of our insurance coverage, including as a result of environmental contamination; and,
legislative, regulatory and/or safety requirements adversely affecting REITs and the real estate business including costs of compliance with the Americans with Disabilities Act, the Fair Housing Act and other similar laws and regulations.
Other factors and risks to our business, many of which are beyond our control, are described in other sections of this report and in our other filings with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.


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ITEM 3.
ITEM 3.    Quantitative and Qualitative Disclosure About Market Risk
For quantitative and qualitative disclosuresdisclosure about market risk, see Item 7A, “Quantitative2, "Management's Discussion and Qualitative Disclosures AboutAnalysis of Financial Condition and Results of Operation - Market Risk,”Rate Risk" in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2014 for the Company and the Operating Partnership and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Rate Risk" in the Annual ReportsReport on Form 10-K for the year ended December 31, 20122013 for the Company and the Operating Partnership. Our exposures to market risk have not changed materially since December 31, 2012.
2013.
ITEM 4.Controls and Procedures
ITEM 4.    CONTROLS AND PROCEDURES
SL GREEN REALTY CORP.

Evaluation of Disclosure Controls and Procedures
The Company maintainmaintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in itsour Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’sSEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure"disclosure controls and procedures”procedures" in Rule 13a-15(e) of the Exchange Act. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company'sour periodic reports. Also, the Company has investments in certain unconsolidated entities. As the Company does not control these entities, its disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those the Company maintains with respect to its consolidated subsidiaries.
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including itsour Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation as of the end of the period covered by this report, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company'sits disclosure controls and procedures were effective to give reasonable assuranceassurances to the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgated thereunder.
Changes in Internal Control over Financial Reporting
There have been no significant changes in the Company's internal control over financial reporting during the three monthsquarter ended SeptemberJune 30, 2013,2014 that have materially affected, or are reasonably likely to materially affect, ourits internal control over financial reporting.

SL GREEN OPERATING PARTNERSHIP, L.P.

Evaluation of Disclosure Controls and Procedures

The Operating Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Operating Partnership’s reports under thePartnership's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Operating Partnership's management, including the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e) of the Exchange Act. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Operating Partnership to disclose material information otherwise required to be set forth in the Operating Partnership's periodic reports. Also, the Operating Partnership has investments in certain unconsolidated entities. As the Operating Partnership does not control these entities, itsthe Operating Partnership's disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those the Operating Partnershipit maintains with respect to its consolidated subsidiaries.

As of the end of the period covered by this report, the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner, of the effectiveness of the design and operation of the Operating PartnershipsPartnership's disclosure controls and procedures. Based upon that evaluation as of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner concluded that the Operating Partnership's disclosure controls and procedures were effective to give reasonable assuranceassurances to the timely collection, evaluation and disclosure of

72

information relating to the Operating Partnership that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgated thereunder.

79

Changes in Internal Control over Financial Reporting

There have been no significant changes in the Operating Partnership’sPartnership's internal control over financial reporting during the three monthsquarter ended SeptemberJune 30, 2013,2014 that have materially affected, or are reasonably likely to materialmaterially affect, its internal control over financial reporting.



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PART II
OTHER INFORMATION
ITEM 1.
ITEM 1.    LEGAL PROCEEDINGS
As of SeptemberJune 30, 2013,2014, neither the Company nor the Operating Partnership were involved in any material litigation nor, to management’smanagement'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.
ITEM 1A.
ITEM 1A.    RISK FACTORS
There have been no material changes to the risk factors disclosed in “Item"Part I. Item 1A. Part I. Risk Factors”Factors" in the 20122013 Annual ReportsReport on Form 10-K of the Company and the Operating Partnership.
ITEM 2.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
None.
ITEM 3.
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None
None.
ITEM 4.
ITEM 4.    MINE SAFETY DISCLOSURES
Not Applicable
Applicable.
ITEM 5.
ITEM 5.    OTHER INFORMATION
NoneNone.

7481

ITEM 6.
ITEM 6.    EXHIBITS
(a)        Exhibits:
10.13.1Articles of Restatement of the Operating Partnership, dated June 11, 2014, filed herewith.
3.2Third Amended and Restated Bylaws of the Company, dated June 11, 2014, filed herewith.
3.3 
Thirteenth Amendment to the First Amended and Restated Employment and Noncompetition Agreement of Limited Partnership of the Operating Partnership, dated as of September 12, 2013, by and between the Company and Marc Holliday,April 2, 2014, incorporated by reference to the Company’sCompany's Form 8-K, dated September 12, 2013,April 4, 2014, filed with the SEC on September 12, 2013.*April 4, 2014.

10.23.4 
Deferred CompensationFourteenth Amendment to the First Amended and Restated Agreement (2013),of Limited Partnership of the Operating Partnership, dated as of September 12, 2013, by and between the Company and Marc Holliday,July 1, 2014, incorporated by reference to the Company’sCompany's Form 8-K, dated September 12, 2013,July 2, 2014, filed with the SEC on September 12, 2013.*July 2, 2014.

10.33.5 
EmploymentFifteenth Amendment to the First Amended and NoncompetitionRestated Agreement of Limited Partnership of the Operating Partnership, dated as of October 28, 2013, by and between the Company and James Mead,July 1, 2014, incorporated by reference to the Company’sCompany's Form 8-K, dated October 28, 2013,July 2, 2014, filed with the SEC on October 28, 2013.*July 2, 2014.

31.1 Certification by the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2 Certification by the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.3 
Certification by the Chief Executive Officer of the Company, the sole general partner of the Operating Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.4 Certification by the Chief Financial Officer of the Company, the sole general partner of the Operating Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1 Certification by the Chief Executive Officer of the Company pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2 Certification by the Chief Financial Officer of the Company pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.3 
Certification by the Chief Executive Officer of the Company, the sole general partner of the Operating Partnership, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.


32.4 
Certification by the Chief Financial Officer of the Company, the sole general partner of the Operating Partnership, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101.1 The following financial statements from SL Green Realty Corp. and SL Green Operating Partnership L.P.’s Quarterly Report on Form 10-Q for the three months ended SeptemberJune 30, 2013,2014, formatted in XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Income (unaudited), (iii) Consolidated Statements of Comprehensive Income (unaudited), (iv) Consolidated Statement of Equity (unaudited), (v) Consolidated Statement of Capital (unaudited) (vi) Consolidated Statements of Cash Flows (unaudited), and (vii) Notes to Consolidated Financial Statements (unaudited), detail tagged and filed herewith.

*Management contracts or compensatory plans or arrangements required to be filed as an exhibit to this Form 10-Q.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  SL GREEN REALTY CORP.
     
  By: /s/ James Mead
Date: August 11, 2014   
James Mead
Chief Financial Officer
Date:November 7, 2013


SIGNATURES



83

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  SL GREEN OPERATING PARTNERSHIP, L.P.
  By: SL Green Realty Corp., its general partner
     
  By: /s/ James Mead
Date: August 11, 2014 By: 
James Mead
Chief Financial Officer
Date:November 7, 2013



84