Exhibit 99.2
11 MADISON AVENUE LLC
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet of SL Green Realty Corp. (the “Company”) as of June 30, 2015 and unaudited pro forma consolidated statements of operations of the Company for the year ended December 31, 2014 and the six months ended June 30, 2015 have been prepared as if the acquisition of 11 Madison Avenue had occurred on June 30, 2015 for the pro forma consolidated balance sheet and on January 1, 2014 for both pro forma consolidated statements of operations.
Such unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements of the Company, including the notes thereto, which were filed as part of the Company’s annual report on Form 10-K for the year ended December 31, 2014 and on Form 10-Q for the six months ended June 30, 2015. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations of the Company that would have occurred if the acquisition of the Property had been completed on the dates indicated, nor does it purport to represent the Company’s financial position or results of operations as of any future date or for any future period. The pro forma condensed consolidated balance sheet and statements of operations of the Company only include the acquisition of the Property, as that was the only significant property acquisition that was completed during the period. Management believes all material adjustments necessary to reflect the effect of this acquisition have been made to the unaudited pro forma financial information.
SL Green Realty Corp.
Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 2015
(unaudited, in thousands)
|
| June 30, 2015(1) |
| Pro Forma |
| Total |
| |||
|
|
|
|
|
|
|
| |||
Assets |
|
|
|
|
|
|
| |||
Commercial real estate properties, at cost: |
|
|
|
|
|
|
| |||
Land and land interests |
| $ | 3,756,488 |
| $ | 520,706 | (2)(3) | $ | 4,277,194 |
|
Building and improvements |
| 8,397,117 |
| 1,522,317 | (2)(3) | 9,919,434 |
| |||
Building leasehold and improvements |
| 1,424,822 |
| — |
| 1,424,822 |
| |||
Property under capital lease |
| 27,445 |
| — |
| 27,445 |
| |||
|
| 13,605,872 |
| 2,043,023 |
| 15,648,895 |
| |||
Less accumulated depreciation |
| (2,081,646 | ) | 10,094 |
| (2,071,552 | ) | |||
|
| 11,524,226 |
| 2,053,117 |
| 13,577,343 |
| |||
|
|
|
|
|
|
|
| |||
Assets held for sale |
| 420,569 |
| (420,569 | )(3) | — |
| |||
Cash and cash equivalents |
| 215,896 |
| 24,318 |
| 240,214 |
| |||
Restricted cash |
| 128,234 |
| 136,500 |
| 264,734 |
| |||
Investment in marketable securities |
| 46,251 |
| — |
| 46,251 |
| |||
Tenant and other receivables, net of allowance of $16,369 |
| 64,873 |
| — |
| 64,873 |
| |||
Related party receivables |
| 11,395 |
| — |
| 11,395 |
| |||
Deferred rents receivable, net of allowance of $23,656 |
| 433,999 |
| (78,278 | )(3) | 355,721 |
| |||
Debt and preferred equity investments, net of discounts and deferred origination fees of $18,867 |
| 1,685,234 |
| 29,000 |
| 1,714,234 |
| |||
Investments in unconsolidated joint ventures |
| 1,262,723 |
| (57,378 | )(3) | 1,205,345 |
| |||
Deferred costs, net |
| 328,838 |
| 14,255 | (4) | 343,093 |
| |||
Other assets |
| 1,144,720 |
| (178,104 | (3)(5) | 966,616 |
| |||
Total Assets |
| $ | 17,266,958 |
| $ | 1,522,861 |
| $ | 18,789,819 |
|
|
|
|
|
|
|
|
| |||
Liabilities |
|
|
|
|
|
|
| |||
Mortgages and other loans payable |
| $ | 5,287,934 |
| 1,132,350 | (6) | 6,420,284 |
| ||
Revolving credit facility |
| 705,000 |
| 200,000 | (6) | 905,000 |
| |||
Term loan and senior unsecured notes |
| 2,113,050 |
| 100,000 | (6) | 2,213,050 |
| |||
Accrued interest payable and other liabilities |
| 161,188 |
| (6,004 | ) | 155,184 |
| |||
Accounts payable and accrued expenses |
| 147,028 |
| 38,500 |
| 185,528 |
| |||
Deferred revenue |
| 337,571 |
| (104 | ) | 337,467 |
| |||
Capital lease obligations |
| 21,013 |
| — |
| 21,013 |
| |||
Deferred land leases payable |
| 1,387 |
| — |
| 1,387 |
| |||
Dividend and distributions payable |
| 66,026 |
| — |
| 66,026 |
| |||
Security deposits |
| 67,985 |
| 243 |
| 68,228 |
| |||
Liabilities related to assets held for sale |
| 178,252 |
| (178,252 | )(3) | — |
| |||
Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities |
| 100,000 |
| — |
| 100,000 |
| |||
Total Liabilities |
| 9,186,434 |
| 1,286,733 |
| 10,473,167 |
| |||
|
|
|
|
|
|
|
| |||
Commitments and contingencies |
| — |
| — |
| — |
| |||
Noncontrolling interests in Operating Partnership |
| 431,418 |
| 9,029 |
| 440,447 |
| |||
Preferred units |
| 124,723 |
| — |
| 124,723 |
| |||
Equity |
|
|
|
|
|
|
| |||
SL Green Stockholders Equity: |
|
|
|
|
|
|
| |||
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding |
| 221,932 |
| — |
| 221,932 |
| |||
Common stock, $0.01 par value, 160,000 shares authorized and 103,233 issued and outstanding (including 3,643 shares held in Treasury) |
| 1,033 |
| — |
| 1,033 |
| |||
Additional paid-in-capital |
| 5,570,746 |
| — |
| 5,570,746 |
| |||
Treasury stock at cost |
| (325,207 | ) | — |
| (325,207 | ) | |||
Accumulated other comprehensive loss |
| (10,906 | ) | — |
| (10,906 | ) | |||
Retained earnings |
| 1,657,911 |
| 227,099 |
| 1,885,010 |
| |||
Total SL Green stockholders’ equity |
| 7,115,509 |
| 227,099 |
| 7,351,637 |
| |||
Noncontrolling interests in other partnerships |
| 408,874 |
| — |
| 408,874 |
| |||
Total Equity |
| 7,524,383 |
| 227,099 |
| 7,751,482 |
| |||
Total Liabilities and Equity |
| $ | 17,266,958 |
| $ | 1,522,861 |
| $ | 18,789,819 |
|
SL Green Realty Corp.
Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended June 30, 2015
(unaudited, in thousands, except per share data)
|
| June 30, 2015(7) |
| Pro Forma |
| Total |
| |||
Revenues |
|
|
|
|
|
|
| |||
Rental revenue, net |
| $ | 607,555 |
| $ | 7,350 | (8) | $ | 614,905 |
|
Escalation and reimbursement |
| 82,376 |
| 4,020 | (9) | 86,396 |
| |||
Investment income |
| 87,260 |
| 5,585 |
| 92,845 |
| |||
Other income |
| 28,182 |
| 357 | (9) | 28,539 |
| |||
Total revenues |
| 805,373 |
| 17,312 |
| 822,685 |
| |||
Expenses |
|
|
|
|
|
|
| |||
Operating expenses, including $8,189 of related party expenses |
| 146,891 |
| 2,919 | (9) | 149,810 |
| |||
Real estate taxes |
| 112,009 |
| 459 | (9) | 112,468 |
| |||
Ground rent |
| 16,274 |
| — |
| 16,274 |
| |||
Interest expense, net of interest income |
| 151,553 |
| 15,309 | (10) | 166,862 |
| |||
Amortization of deferred financing costs |
| 12,567 |
| 467 | (11) | 13,034 |
| |||
Depreciation and amortization |
| 307,902 |
| 12,230 | (12) | 320,132 |
| |||
Transaction related costs |
| 4,210 |
| (44 | ) | 4,166 |
| |||
Marketing, general and administrative |
| 48,664 |
| — |
| 48,664 |
| |||
Total expenses |
| 800,070 |
| 31,340 |
| 831,410 |
| |||
Income (loss) from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate and loss on early extinguishment of debt |
| 5,303 |
| (14,117 | ) | (8,814 | ) | |||
Equity in net income from unconsolidated joint ventures |
| 7,024 |
| 2,327 |
| 9,351 |
| |||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 769 |
| — |
| 769 |
| |||
Loss on early extinguishment of debt |
| (49 | ) | — |
| (49 | ) | |||
Income (loss) from continuing operations |
| 13,047 |
| (11,790 | ) | 1,257 |
| |||
Net income from discontinued operations |
| 427 |
| — |
| 427 |
| |||
Gain on sale of discontinued operations |
| 12,983 |
| — |
| 12,983 |
| |||
Net income (loss) |
| 26,457 |
| (11,790 | ) | 14,667 |
| |||
Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
| |||
Noncontrolling interests in the Operating Partnership |
| (166 | ) | 457 | (14) | 291 |
| |||
Noncontrolling interests in other partnerships |
| (12,553 | ) | — |
| (12,553 | ) | |||
Preferred units distributions |
| (2,091 | ) | — |
| (2,091 | ) | |||
Net income (loss) attributable to SL Green |
| 11,647 |
| (11,333 | ) | 314 |
| |||
Perpetual preferred stock dividends |
| (7,476 | ) | — |
| (7,476 | ) | |||
Net income (loss) attributable to SL Green common stockholders |
| $ | 4,171 |
| $ | (11,333 | ) | $ | (7,162 | ) |
Amounts attributable to SL Green common stockholders: |
|
|
|
|
|
|
| |||
Loss from continuing operations before gains on sale and discontinued operations |
| $ | (9,467 | ) | $ | (11,333 | ) | $ | (20,800 | ) |
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 740 |
| — |
| 740 |
| |||
Net income from discontinued operations |
| 411 |
| — |
| 411 |
| |||
Gain on sale of discontinued operations |
| 12,487 |
| — |
| 12,487 |
| |||
Net income (loss) attributable to SL Green common stockholders |
| $ | 4,171 |
| $ | (11,333 | ) | $ | (7,162 | ) |
Basic earnings per share: |
|
|
|
|
|
|
| |||
Loss from continuing operations before gains on sale and discontinued operations |
| $ | (0.10 | ) | $ | (0.11 | ) | $ | (0.21 | ) |
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 0.01 |
| — |
| 0.01 |
| |||
Net income from discontinued operations |
| — |
| — |
| — |
| |||
Gain on sale of discontinued operations |
| 0.13 |
| — |
| 0.13 |
| |||
Net income (loss) attributable to SL Green common stockholders |
| $ | 0.04 |
| $ | (0.11 | ) | $ | (0.07 | ) |
Diluted earnings per share: |
|
|
|
|
|
|
| |||
Loss from continuing operations before gains on sale and discontinued operations |
| $ | (0.10 | ) | $ | (0.11 | ) | $ | (0.21 | ) |
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 0.01 |
| — |
| 0.01 |
| |||
Net income from discontinued operations |
| — |
| — |
| — |
| |||
Gain on sale of discontinued operations |
| 0.13 |
| — |
| 0.13 |
| |||
Net income (loss) attributable to SL Green common stockholders |
| $ | 0.04 |
| $ | (0.11 | ) | $ | (0.07 | ) |
Basic weighted average common shares outstanding |
| 98,994 |
|
|
| 98,994 |
| |||
Diluted weighted average common shares and common share equivalents outstanding |
| 103,423 |
|
|
| 103,423 |
| |||
SL Green Realty Corp.
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2014
(unaudited, in thousands, except per share data)
|
| December 31, |
| Pro Forma |
| Total |
| |||
Revenues |
|
|
|
|
|
|
| |||
Rental revenue, net |
| $ | 1,121,066 |
| $ | (1,651 | )(8) | $ | 1,119,415 |
|
Escalation and reimbursement |
| 164,376 |
| 10,829 | (9) | 175,205 |
| |||
Investment income |
| 178,815 |
| 11,109 |
| 189,924 |
| |||
Other income |
| 55,721 |
| 260 | (9) | 55,981 |
| |||
Total revenues |
| 1,519,978 |
| 20,547 |
| 1,540,525 |
| |||
Expenses |
|
|
|
|
|
|
| |||
Operating expenses, including $19,308 of related party expenses |
| 282,283 |
| 5,365 | (9) | 287,648 |
| |||
Real estate taxes |
| 217,843 |
| 466 | (9) | 218,309 |
| |||
Ground rent |
| 32,307 |
| — |
| 32,307 |
| |||
Interest expense, net of interest income |
| 317,400 |
| 37,187 | (10) | 354,587 |
| |||
Amortization of deferred financing costs |
| 22,377 |
| 933 | (11) | 23,310 |
| |||
Depreciation and amortization |
| 371,610 |
| 24,368 | (12) | 395,978 |
| |||
Transaction related costs |
| 8,707 |
| 3,068 | (13) | 11,775 |
| |||
Marketing, general and administrative |
| 92,488 |
| — |
| 92,488 |
| |||
Total expenses |
| 1,345,015 |
| 71,387 |
| 1,416,402 |
| |||
Income (loss) from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, purchase price fair value adjustment, gain on sale of investment in marketable securities and loss on early extinguishment of debt |
| 174,963 |
| (50,840 | ) | 124,123 |
| |||
Equity in net income from unconsolidated joint ventures |
| 26,537 |
| 3,813 |
| 30,350 |
| |||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 123,253 |
| 60,008 |
| 183,261 |
| |||
Purchase price fair value adjustment |
| 67,446 |
| — |
| 67,446 |
| |||
Gain on sale of investment in marketable securities |
| 3,895 |
| — |
| 3,895 |
| |||
Loss on early extinguishment of debt |
| (32,365 | ) | — |
| (32,365 | ) | |||
Income from continuing operations |
| 363,729 |
| 12,981 |
| 376,710 |
| |||
Net income from discontinued operations |
| 19,075 |
| — |
| 19,075 |
| |||
Gain on sale of discontinued operations |
| 163,059 |
| 161,618 |
| 324,677 |
| |||
Net income |
| $ | 545,863 |
| $ | 174,599 |
| $ | 720,462 |
|
Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
| |||
Noncontrolling interests in the Operating Partnership |
| (18,467 | ) | 6,180 | (14) | (12,287 | ) | |||
Noncontrolling interests in other partnerships |
| (6,590 | ) | — |
| (6,590 | ) | |||
Preferred units distributions |
| (2,750 | ) | — |
| (2,750 | ) | |||
Net income attributable to SL Green |
| 518,056 |
| 180,779 |
| 698,835 |
| |||
Perpetual preferred stock dividends |
| (14,952 | ) | — |
| (14,952 | ) | |||
Net income attributable to SL Green common stockholders |
| $ | 503,104 |
| $ | 180,779 |
| $ | 683,883 |
|
Amounts attributable to SL Green common stockholders: |
|
|
|
|
|
|
| |||
Income from continuing operations before gains on sale and discontinued operations |
| 143,466 |
| (45,363 | ) | 98,103 |
| |||
Purchase price fair value adjustment |
| 65,059 |
| — |
| 65,059 |
| |||
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 118,891 |
| 57,884 |
| 176,775 |
| |||
Net income from discontinued operations |
| 18,400 |
| — |
| 18,400 |
| |||
Gain on sale of discontinued operations |
| 157,288 |
| 155,898 |
| 313,186 |
| |||
Net income attributable to SL Green common stockholders |
| $ | 503,104 |
| $ | 168,418 |
| $ | 671,522 |
|
Basic earnings per share: |
|
|
|
|
|
|
| |||
Income from continuing operations before gains on sale and discontinued operations |
| $ | 2.18 |
| $ | (0.47 | ) | $ | 1.71 |
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 1.24 |
| 0.60 |
| 1.84 |
| |||
Net income from discontinued operations |
| 0.19 |
| — |
| 0.19 |
| |||
Gain on sale of discontinued operations |
| 1.64 |
| 1.63 |
| 3.27 |
| |||
Net income attributable to SL Green common stockholders |
| $ | 5.25 |
| $ | 1.75 |
| $ | 7.00 |
|
Diluted earnings per share: |
|
|
|
|
|
|
| |||
Income from continuing operations before gains on sale and discontinued operations |
| $ | 2.17 |
| $ | (0.46 | ) | $ | 1.71 |
|
Equity in net gain on sale of interest in unconsolidated joint venture/real estate |
| 1.24 |
| 0.58 |
| 1.82 |
| |||
Net income from discontinued operations |
| 0.19 |
| — |
| 0.19 |
| |||
Gain on sale of discontinued operations |
| 1.63 |
| 1.56 |
| 3.19 |
| |||
Net income attributable to SL Green common stockholders |
| $ | 5.23 |
| $ | 1.69 |
| $ | 6.92 |
|
Basic weighted average common shares outstanding |
| 95,774 |
|
|
| 95,774 |
| |||
Diluted weighted average common shares and common share equivalents outstanding |
| 99,696 |
|
|
| 99,696 |
| |||
SL Green Realty Corp.
Notes to the Unaudited Pro Forma Consolidated Financial Statements
(1) Derived from the Company’s unaudited consolidated balance sheet as of June 30, 2015.
(2) Reflects the preliminary allocation of the $2.428 billion purchase price to land ($0.8 billion) and building ($1.6 billion).
(3) Reflects the sale of real estate assets for properties that have either closed subsequent to June 30, 2015 or the Company is currently under contract to sell, as if the sales closed on June 30, 2015 for the pro forma consolidated balance sheet and on January 1, 2014 for both pro forma consolidated statements of operations.
(4) Represents costs incurred to obtain the $1.4 billion mortgage financing.
(5) Includes a $180.0 million cash deposit held in escrow at June 30, 2015.
(6) Represents the incremental borrowings, including a $1.4 billion 10-year, interest only, fixed rate mortgage financing carrying a per annum stated interest rate of 3.838%, to finance the acquisition. Actual funding of the acquisition may be different than what is assumed herein are not indicative of actual results.
(7) Derived from the Company’s consolidated statement of operations for the year ended December 31, 2014 and the six months ended June 30, 2015 (unaudited).
(8) Includes the straight-line rent that would be recorded for the Property assuming the Company acquired the Property on January 1, 2014, based on the leases in-place at the time of acquisition.
(9) Represents the adjustment for the acquisition of the Property, based on historical operating results.
(10) Represents the pro forma estimate of the incremental interest expense associated with the pro forma borrowings. The pro forma interest expense estimate is calculated based on the applicable interest rates. Actual funding of the acquisition may be different than what is assumed herein.
(11) Represents the effect of recording the pro forma amortization associated with deferred financing costs incurred as a result of obtaining a $1.4 billion mortgage financing.
(12) Represents the effect of recording the pro forma depreciation based on the new preliminary purchase price allocation resulting from the acquisition.
(13) Represents costs incurred to acquire the Property.
(14) Represents the proportionate share of the net impact of the pro forma adjustments attributable to the common limited partnership unit holders.
