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SLG SL Green Operating Partnership

Filed: 25 Feb 21, 7:00pm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 10-K
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
    TRANSITION 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.Maryland13-3956775
SL Green Operating Partnership, L.P.Delaware13-3960938
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
420 Lexington Avenue, New York, NY 10170
(Address of principal executive offices—Zip Code)

(212) 594-2700
(Registrant's telephone number, including area code)
______________________________________________________________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
RegistrantTrading SymbolTitle of Each ClassName of Each Exchange on Which Registered
SL Green Realty Corp.SLGCommon Stock, $0.01 par valueNew York Stock Exchange
SL Green Realty Corp.SLG.PRI6.500% Series I Cumulative Redeemable Preferred Stock, $0.01 par valueNew York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 
SL Green Realty Corp.    Yes x    No o                SL Green Operating Partnership, L.P.    Yes o    No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. 
SL Green Realty Corp.    Yes o    No x                SL Green Operating Partnership, L.P.    Yes o    No x
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 every Interactive Data File required to be submitted 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 such files). 
SL Green Realty Corp.     Yes x    No o                SL Green Operating Partnership, L.P.    Yes x    No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 
SL Green Realty Corp.    o                    SL Green Operating Partnership, L.P.    o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
SL Green Realty Corp.
Large Accelerated FilerxAccelerated Filero
Non-Accelerated Filero
Smaller Reporting CompanyEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
SL Green Operating Partnership, L.P.
Large Accelerated FileroAccelerated Filero
Non-accelerated filerx
Smaller Reporting CompanyEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). 
SL Green Realty Corp.    Yes     No x                SL Green Operating Partnership, L.P.    Yes     No x
The aggregate market value of the common stock held by non-affiliates of SL Green Realty Corp. (65,281,426 shares) was $3.3 billion based on the quoted closing price on the New York Stock Exchange for such shares on June 30, 2020.
As of February 25, 2021, 69,350,829 shares of SL Green Realty Corp.'s common stock, par value $0.01 per share, were outstanding. As of February 25, 2021, 1,025,366 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.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the SL Green Realty Corp.'s Proxy Statement for its 2021 Annual Stockholders' Meeting to be filed within 120 days after the end of the Registrant's fiscal year are incorporated by reference into Part III of this Annual Report on Form 10-K.




EXPLANATORY NOTE

This report combines the annual reports on Form 10-K for the year ended December 31, 2020 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 real estate investment trust, 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.
As of December 31, 2020, the Company owns 68,508,127 of the outstanding general and limited partnership units of the Operating Partnership. The Company also owns 9,200,000 Series I Preferred Units of the Operating Partnership. As of December 31, 2020, noncontrolling investors held, in aggregate, 3,938,823 limited partnership units 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 as noncontrolling interests, within mezzanine equity, in the Company's and the Operating Partnership's consolidated financial statements.
We believe combining the annual reports on Form 10-K 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 Interests on the Company’s Consolidated Financial Statements;
Note 12, Stockholders' Equity of the Company; and
Note 13, Partners' Capital of the Operating Partnership;

This report also includes separate Part II, Item 5. Market for Registrants' Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities, and Item 9A. 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, or the Exchange Act.
On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December



15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed.
To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed.
All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K.




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




PART I

ITEM 1. BUSINESS

General
SL Green Realty Corp. is a self-managed real estate investment trust, or REIT, engaged in the acquisition, development, ownership, management and operation of commercial and residential real estate properties, principally office properties, located in the New York metropolitan area. We were formed in June, 1997 for the purpose of continuing the commercial real estate business of S.L. Green Properties, Inc., our predecessor entity. S.L. Green Properties, Inc., which was founded in 1980 by Stephen L. Green, who serves as a member and the chairman emeritus of the Company's board of directors, had been engaged in the business of owning, managing, leasing, and repositioning office properties in Manhattan, a borough of New York City.
As of December 31, 2020, we owned the following interests in properties in the New York metropolitan area, primarily in midtown Manhattan. Our investments located outside of Manhattan are referred to as the Suburban properties:
ConsolidatedUnconsolidatedTotal
LocationProperty TypeNumber of PropertiesApproximate Square FeetNumber of PropertiesApproximate Square FeetNumber of PropertiesApproximate Square Feet
Weighted Average Occupancy(1)
Commercial:
ManhattanOffice18 10,681,045 11 11,841,483 29 22,522,528 92.4 %
Retail44,189 301,996 13 346,185 94.2 %
Development/Redevelopment(1)1,095,418 2,927,782 11 4,023,200 N/A
30 11,820,652 23 15,071,261 53 26,891,913 92.5 %
SuburbanOffice862,800 — — 862,800 83.3 %
Total commercial properties37 12,683,452 23 15,071,261 60 27,754,713 92.1 %
Residential:
ManhattanResidential82,250 1,663,774 1,746,024 75.7 %
Total portfolio38 12,765,702 31 16,735,035 69 29,500,737 91.2 %
(1)The weighted average occupancy for commercial properties represents the total occupied square feet divided by total square footage at acquisition. The weighted average occupancy for residential properties represents the total occupied units divided by total available units.
As of December 31, 2020, we also managed two office buildings owned by third parties encompassing approximately 2.1 million square feet, and held debt and preferred equity investments with a book value of $1.1 billion, excluding $0.1 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item.
Our corporate offices are located in midtown Manhattan at 420 Lexington Avenue, New York, New York 10170. As of December 31, 2020, we employed 794 employees, 273 of whom were employed in our corporate offices. We can be contacted at (212) 594-2700. We maintain a website at www.slgreen.com. On our website, you can obtain, free of charge, a copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we file such material electronically with, or furnish it to, the Securities and Exchange Commission, or the SEC. We have also made available on our website our audit committee charter, compensation committee charter, nominating and corporate governance committee charter, code of business conduct and ethics and corporate governance principles. We do not intend for information contained on our website to be part of this annual report on Form 10-K. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Unless the context requires otherwise, all references to the "Company," "SL Green," "we," "our" and "us" in this annual report means SL Green Realty Corp., a Maryland corporation, and one or more of its subsidiaries, including the Operating Partnership, or, as the context may require, SL Green only or the Operating Partnership only, and "S.L. Green Properties" means S.L. Green Properties, Inc., a New York corporation, as well as the affiliated partnerships and other entities through which Stephen L. Green historically conducted commercial real estate activities.
Corporate Structure
In connection with the Company's initial public offering, or IPO, in August 1997, the Operating Partnership received a contribution of interests in real estate properties as well as a 95% economic, non-voting interest in the management, leasing and
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construction companies affiliated with S.L. Green Properties. We refer to these management, leasing and construction entities, which are owned by S.L. Green Management Corp, as the "Service Corporation." The Company is organized so as to qualify, and has elected to qualify as a REIT, under the Internal Revenue Code of 1986, as amended, or the Code.
Substantially all of our assets are held by, and all of our operations are conducted through, the Operating Partnership. We are the sole managing general partner of the Operating Partnership, and as of December 31, 2020, we owned 94.71% of its economic interests. All of the management and leasing operations with respect to our wholly-owned properties are conducted through SL Green Management LLC, or Management LLC. The Operating Partnership owns 100% of Management LLC.
In order to maintain the Company's qualification as a REIT while realizing income from management, leasing and construction contracts with third parties and joint venture properties, all of these service operations are conducted through the Service Corporation, a consolidated variable interest entity. We, through our Operating Partnership, receive substantially all of the cash flow from the Service Corporation's operations. All of the voting common stock of the Service Corporation is held by an entity owned and controlled by Stephen L. Green, who serves as a member and as the chairman emeritus of the Company's board of directors.
Business and Growth Strategies
SL Green is Manhattan's largest owner of office real estate and an investment-grade, S&P 500 company that is focused primarily on the acquisition, development, ownership, management, operation and value maximization of Manhattan commercial properties.
Our core business is the ownership of high quality commercial properties and our primary business objective is to maximize the total return to stockholders, through net income attributable to common stockholders and funds from operations, or FFO, and through asset value appreciation. The commercial real estate expertise resulting from owning, operating, investing, developing, redeveloping and lending on real estate in Manhattan for over 40 years has enabled us to invest in a collection of premier office properties, selected retail and multifamily residential assets, and high-quality debt and preferred equity investments.
We are led by a strong, experienced management team that provides a foundation of skills in all aspects of real estate, including acquisitions, dispositions, management, leasing, development, redevelopment, and financing. It is with this team that we have achieved a market leading position in our targeted submarkets.
We seek to enhance the value of our company by executing strategies that include the following:
Leasing and property management, which capitalizes on our extensive presence and knowledge of the marketplaces in which we operate;
Acquiring properties and employing our local market skills to reposition these assets to create incremental cash flow and capital appreciation;
Identifying properties well suited for development/redevelopment and maximizing the value of those properties through development/redevelopment or reconfiguration to match current workplace, retail and housing trends;
Investing in debt and preferred equity positions that generate consistently strong risk-adjusted returns, increase the breadth of our market insight, foster key market relationships and source potential future investment opportunities;
Executing dispositions through sales or joint ventures that harvest embedded equity which has been generated through management's value enhancing activities; and
Maintaining a prudently levered, liquid balance sheet with consistent access to diversified sources of property level and corporate capital.
Leasing and Property Management
We seek to capitalize on our management's extensive knowledge of Manhattan and the New York metropolitan area and the needs of our tenants through proactive leasing and management programs, which include: (i) use of in-depth market experience resulting from managing and leasing tens of millions of square feet of office, retail and residential space since the Company was founded; (ii) careful tenant management, which results in a high tenant retention rate, long average lease terms and a manageable lease expiration schedule; (iii) utilization of an extensive network of third-party brokers to supplement our in-house leasing team; (iv) use of comprehensive building management analysis and planning; and (v) a commitment to tenant satisfaction by understanding and appreciating our tenant's businesses and the environment in which they are operating, while providing high quality tenant services at competitive rental rates.
Property Acquisitions
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We acquire properties for long-term value appreciation and earnings growth. This strategy has resulted in capital gains that increase our investment capital base. In implementing this strategy, we continually evaluate potential acquisition opportunities. These opportunities may come from new properties as well as the acquisition of properties in which we already hold a joint venture interest or, from time to time, from our debt and preferred equity investments.
Through intimate knowledge of our markets we have developed an ability to source transactions with superior risk-adjusted returns by capturing off-market opportunities. In rising markets, we primarily seek to acquire strategic vacancies that provide the opportunity to take advantage of our exceptional leasing and repositioning capabilities to increase cash flow and property value. In stable or falling markets, we primarily target assets featuring credit tenancies with fully escalated in-place rents to provide cash flow stability near-term and the opportunity for increases over time.
We believe that we have many advantages over our competitors in acquiring core and non-core properties, both directly and through our joint venture program that includes a predominance of high quality institutional investors. Those advantages include: (i) senior management's long-tenured experience leading a full-service, fully-integrated real estate company focused, primarily, on the Manhattan market; (ii) the ability to offer tax-efficient structures to sellers through the exchange of ownership interests, including units in our Operating Partnership; and (iii) the ability to underwrite and close transactions on an expedited basis even when the transaction involves a complicated structure.
Property Dispositions
We continually evaluate our portfolio to identify those properties that are most likely to meet our long-term earnings and cash flow growth objectives and contribute to increasing portfolio value. Properties that no longer meet our objectives are evaluated for sale, or in certain cases, joint venture to release equity created through management's value enhancement programs or to take advantage of attractive market valuations.
We seek to efficiently deploy the capital proceeds generated from these dispositions into property acquisitions and debt and preferred equity investments that we expect will provide enhanced future capital gains and earnings growth opportunities. Management may also elect to utilize the capital proceeds from these dispositions to repurchase shares of our common stock, repay existing indebtedness of the Company or its subsidiaries, or increase cash liquidity.
Property Repositioning
Our extensive knowledge of the markets in which we operate and our ability to efficiently plan and execute capital projects provide the expertise to enhance returns by repositioning properties that are underperforming. Many of the properties we own or seek to acquire feature unique architectural design elements or other amenities and characteristics that can be appealing to tenants when fully exploited. Our strategic investment in these properties, combined with our active management and pro-active leasing, provide the opportunity to creatively meet market needs and generate favorable returns.
Development / Redevelopment
Our constant interactions with tenants and other market participants keep us abreast of innovations in workplace layout, store design and smart living. We leverage this information to identify properties primed for development or redevelopment to meet these demands and unlock value. The expertise and relationships that we have built from managing complex construction projects in New York City and its surrounding areas allow us to cost efficiently add new and renovated assets of the highest quality and desirability to our operating portfolio.
Debt and Preferred Equity Investments
We invest in well-collateralized debt and preferred equity investments in the markets in which we operate, primarily New York City, that generate attractive yields. See Note 5, "Debt and Preferred Equity Investments," in the accompanying consolidated financial statements. Knowledge of our markets and our leasing and asset management expertise provide underwriting capabilities that enable a highly educated assessment of risk and return. The benefits of this investment program, which has a carefully managed aggregate size, include the following:
Our typical investments provide high current returns at conservative exposure levels and, in certain cases, the potential for future capital gains. Our expertise and operating capabilities provide both insight and operating skills that mitigate risk.
In certain instances, these investments serve as a potential source of real estate acquisitions for us when a borrower seeks an efficient off-market transaction. Ownership knows that we are fully familiar with the asset through our existing investment, and that we can close more efficiently and quickly than others. Property owners may also provide us the opportunity to consider off-market transactions involving other properties because we have previously provided debt or preferred equity financing to them.
These investments are concentrated in Manhattan, which helps us gain market insight, awareness of upcoming investment opportunities and foster key relationships that may provide access to future investment opportunities.
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Capital Resources
Our objective is to maintain multiple sources of corporate and property level capital to obtain the most appropriate and lowest cost of capital. This objective is supported by:
Property operations that generally provide stable cash flows through market cycles, long average lease terms, high credit quality tenants and superior leasing, operating and asset management skills;
Concentration of our activities in a Manhattan market that is consistently attractive to property investors and lenders through market cycles relative to other markets;
Maintaining strong corporate liquidity and careful management of future debt maturities; and
Maintaining access to corporate capital markets through balanced financing and investment activities that result in strong balance sheet and cash flow metrics.
Manhattan Office Market Overview
Manhattan is the largest office market in the United States containing more rentable square feet than the next four largest central business district office markets combined. According to Cushman and Wakefield Research Services as of December 31, 2020, Manhattan has a total office inventory of approximately 404.7 million square feet, including approximately 248.6 million square feet in midtown. The properties in our portfolio are primarily concentrated in some of Manhattan's most prominent midtown locations.
While the near-term addition of new supply to the Manhattan office inventory is expected to be nominal relative to the size of the overall market, we view new supply as a positive to the Manhattan office market given the older vintage of the majority of Manhattan’s office inventory and the increasing desire of certain tenants to occupy new, high quality, efficient office space, which often isn’t available in older vintage properties.
According to Cushman and Wakefield Research Services the total volume of leases signed in Manhattan for the years ended December 31, 2020 and 2019 was 12.8 million and 34.7 million, respectively. Manhattan's diverse tenant base is exemplified by the following tables, which show the percentage of leasing volume attributable to each industry:
Percent of Manhattan Leasing Volume (1)
Industry20202019
Technology, Advertising, Media, and Information ("TAMI")32.9 %38.1 %
Financial Services29.9 %19.7 %
Legal Services11.4 %7.4 %
Real Estate8.5 %12.1 %
Professional Services6.6 %6.1 %
Retail/Wholesale5.1 %4.6 %
Health Services3.1 %4.8 %
Public Sector1.5 %3.9 %
Other1.0 %3.3 %
(1)Source: Cushman and Wakefield Research Services
General Terms of Leases in the Manhattan Markets
Leases entered into for space in Manhattan typically contain terms that may not be contained in leases in other U.S. office markets. The initial term of leases entered into for space in Manhattan is generally seven to fifteen years. Tenants leasing space in excess of 10,000 square feet for an initial term of 10 years or longer often will negotiate an option to extend the term of the lease for one or two renewal periods, typically for a term of five years each. The base rent during the initial term often will provide for agreed-upon periodic increases over the term of the lease. Base rent for renewal terms is most often based upon the then fair market rental value of the premises as of the commencement date of the applicable renewal term (generally determined by binding arbitration in the event the landlord and the tenant are unable to mutually agree upon the fair market value), though base rent for a renewal period may be set at 95% of the then fair market rent. Very infrequently, leases may contain termination options whereby a tenant can terminate the lease obligation before the lease expiration date upon payment of a penalty together with repayment of the unamortized portion of the landlord's transaction costs (e.g., brokerage commissions, free rent periods, tenant improvement allowances, etc.).
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In addition to base rent, a tenant will generally also pay its pro rata share of increases in real estate taxes and operating expenses for the building over a base year, which is typically the year during which the term of the lease commences, based upon the tenant's proportionate occupancy of the building. In some smaller leases (generally less than 10,000 square feet), in lieu of paying additional rent based upon increases in building operating expenses, base rent will be increased each year during the lease term by a set percentage on a compounding basis (though the tenant will still pay its pro rata share of increases in real estate taxes over a base year).
Tenants typically receive a free rent period following commencement of the lease term, which in some cases may coincide with the tenant's construction period.
The landlord most often supplies electricity either on a sub-metered basis at the landlord's cost plus a fixed percentage or on a rent inclusion basis (i.e., a fixed fee is added to the base 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, freight elevator service during business hours and base building cleaning typically are provided at no additional cost, but are included in the building's operating expenses. The tenant will typically pay additional rent only for services which exceed base building services or for services which are provided other than during normal business hours.
In a typical lease for a new tenant renting in excess of 10,000 square feet, the landlord will deliver the premises with existing improvements demolished. In such instances, the landlord will typically provide a tenant improvement allowance, which is a fixed sum that the landlord makes available to the tenant to reimburse the tenant for all or a portion of the tenant's initial construction of its premises. Such sum typically is payable as work progresses, upon submission by the tenant of invoices for the cost of construction and lien waivers. However, in certain leases (most often for relatively small amounts of space), the landlord will construct the premises for the tenant at a cost to the landlord not to exceed an agreed upon amount with the tenant paying any amount in excess of the agreed upon amount. In addition, landlords may rent space to a tenant that is "pre-built" (i.e., space that was constructed by the landlord in advance of lease signing and is ready to for the tenant to move in with the tenant selecting paint and carpet colors).
Occupancy
The following table sets forth the weighted average occupancy rates at our office properties based on space leased for properties owned by us as of December 31, 2020:
 Percent Occupied as of December 31,
Property20202019
Same-Store office properties - Manhattan (1)
93.4%96.2%
Manhattan office properties92.4%94.5%
Suburban office properties83.3%85.7%
Unconsolidated joint venture office properties95.1%93.9%
Portfolio (2)
91.2%94.3%
(1)All office properties located in Manhattan owned by us at January 1, 2019 and still owned by us in the same manner at December 31, 2020. Percent Occupied includes leases signed but not yet commenced.
(2)Excludes properties under development.
Rent Growth
We are constantly evaluating our schedule of future lease expirations to mitigate occupancy risk while maximizing net effective rents. We proactively manage future lease expirations based on our view of estimated current and future market conditions and asking rents. The following table sets forth our future lease expirations, excluding triple net leases, and management's estimates of market asking rents. Taking rents are typically lower than asking rents and may vary from building to building. There can be no assurances that our estimates of market rents are accurate or that market rents currently prevailing will not erode or outperform in the future.
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ANNUAL LEASE EXPIRATIONS - MANHATTAN OPERATING PROPERTIES
Consolidated PropertiesJoint Venture Properties
Year of Lease ExpirationNumber of Expiring Leases (2)Rentable Square Footage of Expiring LeasesPercentage of Total
Sq. Ft.
 Annualized Cash Rent of Expiring Leases Annualized Cash Rent Per Square Foot of Expiring Leases
$/psf (3)
Current Weighted Average Asking Rent
$/psf (4)
Number of Expiring Leases (2)Rentable Square Footage of Expiring LeasesPercentage of Total
Sq. Ft.
 Annualized Cash Rent of Expiring Leases Annualized Cash Rent Per Square Foot of Expiring Leases
$/psf (3)
Current Weighted Average Asking Rent $/psf (4)
Total 2020 (1)10 39,791 0.39 %$2,786,310$70.02 $68.01 22,736 0.20 %$2,051,481 $90.23 $69.09 
1st Quarter 202123 372,869 3.70 %$20,910,116$56.08 $60.31 13,810 0.12 %$1,198,263 $86.77 $74.12 
2nd Quarter 202131 264,490 2.62 %15,162,408 57.33 60.64 467,241 4.05 %36,691,298 78.53 80.96 
3rd Quarter 202120 160,132 1.59 %10,785,355 67.35 64.99 111,025 0.96 %8,984,768 80.93 77.35 
4th Quarter 202125 138,751 1.38 %10,037,892 72.34 64.47 145,878 1.27 %12,105,051 82.98 70.30 
Total 202099 936,242 9.29 %$56,895,771$60.77 $61.82 27 737,954 6.40 %$58,979,380 $79.92 $78.18 
202287 762,956 7.57 %$59,759,085$78.33$69.9332 903,789 7.84 %$84,918,914 $93.96 $88.19 
202364 824,360 8.18 %51,926,317 62.99 60.94 19 430,135 3.73 %38,986,617 90.64 75.50 
202446 355,038 3.52 %27,105,523 76.35 68.16 26 991,216 8.60 %107,848,342 108.80 80.45 
202555 636,787 6.32 %55,261,421 86.78 69.47 16 438,564 3.80 %38,120,962 86.92 77.61 
202645 966,125 9.59 %66,402,593 68.73 63.64 27 552,407 4.79 %54,855,563 99.30 93.73 
202736 608,649 6.04 %47,859,450 78.63 65.75 18 392,311 3.40 %35,584,379 90.70 84.05 
202834 613,768 6.09 %45,120,014 73.51 68.46 17 195,351 1.69 %21,333,861 109.21 91.35 
202917 397,372 3.94 %26,023,546 65.49 60.22 15 752,707 6.53 %52,033,180 69.13 74.76 
Thereafter80 3,936,378 39.07 %238,778,718 60.66 61.13 44 6,112,339 53.02 %412,603,032 67.50 77.58 
573 10,077,466 100.00 %$677,918,748$67.27 $63.58 246 11,529,509 100.00 %$907,315,711 $78.70 $79.65 
NOTE: Data excludes space currently occupied by SL Green's corporate offices
(1)Includes month to month holdover tenants that expired prior to December 31, 2020.
(2)Tenants may have multiple leases.
(3)Represents in place annualized rent allocated by year of expiration.
(4)Management's estimate of current average asking rents for currently occupied space as of December 31, 2020. Taking rents are typically lower than asking rents and may vary from property to property.

Industry Segments
The Company is a REIT that is engaged in the acquisition, development, ownership, management and operation of commercial and residential real estate properties, principally office properties, located in the New York metropolitan area and has two reportable segments: real estate and debt and preferred equity investments. Our industry segments are discussed in Note 21, "Segment Information," in the accompanying consolidated financial statements.
At December 31, 2020, our real estate portfolio was primarily located in one geographical market, the New York metropolitan area. The primary sources of revenue are generated from tenant rents, escalations and reimbursement revenue. Real estate property operating expenses consist primarily of cleaning, security, maintenance, utility costs, real estate taxes and, at certain properties, ground rent expense. As of December 31, 2020, one tenant in our office portfolio, ViacomCBS Inc., contributed 5.7% of our share of annualized cash rent. No other tenant contributed more than 5.0% of our share of annualized cash rent. No property contributed in excess of 10.0% of our consolidated total revenue for 2020.
At December 31, 2020, we held debt and preferred equity investments with a book value of $1.1 billion, excluding $0.1 billion of debt and preferred equity investments and other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line item. At December 31, 2020, the assets underlying our debt and preferred equity investments were located in the New York metropolitan area. The primary sources of revenue are generated from interest and fee income.
Human Capital
Our employees are our most important asset. As we navigated through the challenges of COVID-19, we implemented new employee programs and physical office space enhancements to keep employees healthy, safe, and focused. Through the commitment of our employees, we remained operational for all tenants, including the essential businesses that fill our buildings. As a result of strategic changes to our corporate headquarters, along with employee-focused programs guided by employee input, we were the first employer in New York City to be able to return 100% of its employees to the office.
We are dedicated to creating a diverse workplace where employees feel valued and accepted regardless of race, color, religion, national origin, gender, sexual orientation, age, disability, or veteran status. We have a dual-track performance management program, which includes both ongoing goal setting and annual performance reviews for all employees. Communication, teamwork, and collaboration are the fundamental attributes that are the foundation of our company culture. We promote the professional development of our employees by offering opportunities to participate in trainings and continuing
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education programs. We also offer a leading benefits package that includes extensive medical coverage, mental health and wellness services, paternal benefits, and financial resources.
Our compensation program is designed to incentivize employees by offering competitive compensation comprised of fixed and variable pay including base salaries and cash bonuses. Several of our employees also receive equity awards that are subject to vesting over a multi-year period based on continued service. We believe these equity awards serve as an additional retention tool for our employees. By cultivating a work culture that prioritizes our people through training, diversity, education, and volunteerism, we have been able to retain a long-tenured staff with 61% of current employees remaining on board for five years or more.
At December 31, 2020, we employed 794 employees, 273 of whom were employed in our corporate offices. There are currently six collective bargaining agreements which cover the union workforce that services substantially all of our properties.
Highlights from 2020
Our significant achievements from 2020 included:
Corporate
Declared a special dividend paid primarily in stock and authorized a reverse stock split to mitigate the dilutive impact of the special dividend with a ratio of 1.02918-for-1. These transactions were completed in January 2021. All share-related references and measurements in this report including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report.
Repurchased 8.5 million shares of our common stock under our share repurchase program at an average price of $58.90 per share and increased the size of our share repurchase program by $500 million to $3.5 billion. From program inception through December 31, 2020, we have repurchased a cumulative total of 31.5 million shares of our common stock under the program at an average price of $88.39 per share.
Leasing
Signed 125 Manhattan office leases covering approximately 1.2 million square feet. The mark-to-market on signed Manhattan office leases was 3.6% lower in 2020 than the previously fully escalated rents on the same spaces.
Reached 73% leased at One Vanderbilt Avenue as of January 2021 after signing new leases with Walker & Dunlop, LLC; Heidrick & Struggles, International; 1Life Healthcase, Inc. d/b/a One Medical; Hodges Ward Elliot; InTandem Capital Partners; Sagewind Capital LLC; and a financial services firm; as well as a lease expansion with Oak Hill Advisors.
Signed a lease renewal with Travelers Indeminity Company for 133,479 square feet at 485 Lexington Avenue.
Acquisitions
Closed on the acquisition of 707 Eleventh Avenue for a gross purchase price of $90.0 million.
Entered into a 99-year ground lease of 15 Beekman and completed the capitalization of a 100% pre-committed development for Pace University by entering into a partnership with a real estate fund managed by Meritz Alternative Investment Management, which holds an 80% interest in the joint venture, and closing on a $125.0 million construction facility. The Company retained a 20% interest in the joint venture and oversight of the development.
Took possession of 590 Fifth Avenue at a gross asset valuation of $107.2 million.This property previously served as collateral for a debt and preferred equity investment and was acquired through a negotiated transaction with the sponsor of the investment
Dispositions
Together with our partners, closed on the sale of 410 Tenth Avenue for gross consideration of $952.5 million.
Closed on the sale of two retail condominiums in Williamsburg, Brooklyn, for a gross sales price of $32.0 million.
Closed on the sale of 1055 Washington Boulevard in Stamford, Connecticut, for a gross sales price of $23.8 million.
Closed on the sale of 1010 Washington Boulevard in Stamford, Connecticut, for a gross sales price of $23.1 million.
Together with our partner, closed on the sale of 400 East 58th Street for a gross sales price of $62.0 million.
Closed on the sale of a 49.5% interest in One Madison Avenue to the National Pension Service of Korea and Hines Interest LP. These partners have committed aggregate equity to the project totaling no less than $492.2 million. The
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Company and Hines Interest LP will co-develop the $2.3 billion project, which will span 1.4 million rentable square feet upon completion.
Closed on the sale of the retail condominium at 609 Fifth Avenue for a gross sales price of $168.0 million.
Closed on the sale of 315 West 33rd Street, known as The Olivia, and an adjacent undeveloped parcel of land, for a sale price of $446.5 million. The transaction included a $100 million preferred equity investment by the Company.
Debt and Preferred Equity Investments
Originated and retained, or acquired, $0.6 billion in debt and preferred equity investments, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization, and recorded $1.0 billion of proceeds from sales, repayments and participations.
Finance
Together with our joint venture partners, closed on a new $1.25 billion construction facility for One Madison Avenue. The facility has a term of up to 6 years and bears interest at a floating rate of 3.35% over LIBOR, with the ability to reduce the spread to as low as 2.50% upon achieving certain pre-leasing and completion milestones.
Together with our joint venture partner, closed on the early refinancing of 100 Park Avenue. The new $360.0 million mortgage has a term of up to 5 years and bears interest at a floating rate of 2.25% over LIBOR.
Together with our partners, closed on a new $600.0 million construction facility for 410 Tenth Avenue, replacing the previous $465.0 million construction facility that was put in place in 2019. The Company and its partners subsequently closed on the sale of this property for gross consideration of $952.5 million.
Closed on a $510.0 million mortgage financing of 220 East 42nd Street, also known as the New Building. The new mortgage has a 3-year term, with two one-year extension options and bears interest at a floating rate of 2.75% per annum over LIBOR.
Together with our partner, closed on the refinancing of 10 East 53rd Street. The new $220.0 million mortgage replaces the previous $170.0 million mortgage, has a 5-year term, and bears interest at a floating rate of 1.35% over LIBOR.
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ITEM 1A.    RISK FACTORS
The COVID-19 pandemic and health and safety measures intended to reduce its spread could adversely affect our business, results of operations, and financial condition.
The COVID-19 pandemic has caused, and continues to cause, severe disruptions with wide ranging impacts to the global economy and everyday life. We expect that our business, results of operations, liquidity, cash flows, prospects, and our ability to achieve forward-looking targets and expectations could be materially and adversely affected for at least the duration of the COVID-19 pandemic and likely longer. This could also cause significant volatility in the trading prices of our securities. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration, severity and spread of the pandemic, health and safety actions taken to contain its spread and how quickly and to what extent normal economic and operating conditions can resume. Additionally, the COVID-19 pandemic could increase the magnitude of many of the other risks described in this Annual Report on Form 10-K and our other SEC filings and may have other adverse effects on our operations that we are not currently able to predict.
The scale and magnitude of adverse impacts could depend on, among other factors:
the financial condition of our tenants and their ability or willingness to pay rent in full on a timely basis;
the impact on rents and demand for office and retail space;
the extent to which work-from-home policies continue subsequent to the easing of pandemic-related restrictions;
the impact of new regulations or norms on physical space needs and expectations;
the financial condition of the borrowers and sponsors of our debt and preferred equity investments and their ability or willingness to make interest and principal payments;
the effectiveness of governmental measures aimed at slowing and containing the spread;
the effect of changes in laws and regulation;
the extent and terms associated with governmental relief programs;
the ability of debt and equity markets to function and provide liquidity; and
the ability to mitigate delays or cost increases associated with building materials or construction services necessary for development, redevelopment and tenant improvements
Declines in the demand for office space in the New York metropolitan area, and in particular midtown Manhattan, could adversely affect the value of our real estate portfolio and our results of operations and, consequently, our ability to service current debt and to pay dividends and distributions to security holders.
The majority of our property holdings are comprised of commercial office properties located in midtown Manhattan. Our property holdings also include some retail properties and multifamily residential properties. As a result of the concentration of our holdings, our business is dependent on the condition of the New York metropolitan area economy in general and the market for office space in midtown Manhattan in particular. Future weakness and uncertainty in the New York metropolitan area economy could materially reduce the value of our real estate portfolio and our rental revenues, and thus adversely affect our cash flow and our ability to service current debt and to pay dividends and distributions to security holders.
We may be unable to renew leases or relet space as leases expire.
If tenants decide not to renew their leases upon expiration, we may not be able to relet the space. Even if tenants do renew or we can relet the space, the terms of a renewal or new lease, taking into account among other things, the cost of improvements to the property and leasing commissions, may be less favorable than the terms in the expired leases. As of December 31, 2020, approximately 35.3% of the rentable square feet at our consolidated properties and approximately 30.6% of the rentable square feet at our unconsolidated joint venture properties are scheduled to expire by December 31, 2025. As of December 31, 2020, these leases had annualized escalated rent totaling $253.7 million and $330.9 million, respectively. In addition, changes in space utilization by tenants may cause us to incur substantial costs in renovating or redesigning the internal configuration of the relevant property in order to renew or relet space. If we are unable to promptly renew the leases or relet the space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations and pay dividends and distributions to security holders could be adversely affected.
We face significant competition for tenants.
The leasing of real estate is highly competitive. The principal competitive factors are rent, location, lease term, lease concessions, services provided and the nature and condition of the property to be leased. We directly compete with all owners, developers and operators of similar space in the areas in which our properties are located.
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Our commercial office properties are concentrated in highly developed areas of the New York metropolitan area. Manhattan is the largest office market in the United States. The number of competitive office properties in the New York metropolitan area, which may be newer or better located than our properties, could have a material adverse effect on our ability to lease office space at our properties, and on the effective rents we are able to charge.
The expiration of long term leases or operating sublease interests where we do not own a fee interest in the land could adversely affect our results of operations.
Our interests in certain properties are entirely or partially comprised of either long-term leasehold or operating sublease interests in the land and the improvements, rather than by ownership of fee interest in the land. As of December 31, 2020, the expiration dates of these long-term leases range from 2043 to 2119, including the effect of our unilateral extension rights at each of these properties. Pursuant to the leasehold arrangements, we, as tenant under the long-term leasehold or the operating sublease, perform the functions traditionally performed by landlords with respect to our subtenants. We are responsible for not only collecting rent from our subtenants, but also maintaining the property and paying expenses relating to the property. Annualized cash rents, including our share of joint venture annualized cash rents, from properties held through long-term leases or operating sublease interests at December 31, 2020 totaled $318.1 million, or 24.8%, of our share of total Portfolio annualized cash rent. Unless we purchase a fee interest in the underlying land or extend the terms of these leases prior to expiration, we will no longer operate these properties upon expiration of the leases, which could adversely affect our financial condition and results of operations. Rent payments under leasehold or operating sublease interests are adjusted, within the parameters of the contractual arrangements, at certain intervals. Rent adjustments may result in higher rents that could adversely affect our financial condition and results of operation.
We rely on five large properties for a significant portion of our revenue.
Five of our properties, 1185 Avenue of the Americas, 11 Madison Avenue, 420 Lexington Avenue, 1515 Broadway, and 220 East 42nd Street accounted for 35.1% of our Portfolio annualized cash rent, which includes our share of joint venture annualized cash rent, as of December 31, 2020.
Our revenue and cash available to service debt obligations and for distribution to our stockholders would be materially adversely affected if any of these properties were materially damaged or destroyed. Additionally, our revenue and cash available to service debt obligations and for distribution to our stockholders would be materially adversely affected if tenants at these properties fail to timely make rental payments due to adverse financial conditions or otherwise, default under their leases or file for bankruptcy or become insolvent.
Our results of operations rely on major tenants and insolvency or bankruptcy of these or other tenants could adversely affect our results of operations.
Giving effect to leases in effect as of December 31, 2020 for consolidated properties and unconsolidated joint venture properties, as of that date, our five largest tenants, based on annualized cash rent, accounted for 16.0% of our share of Portfolio annualized cash rent, with one tenant, Viacom CBS, Inc., accounting for 5.6% of our share of Portfolio annualized cash rent, respectively. Our business and results of operations would be adversely affected if any of our major tenants became insolvent, declared bankruptcy, or otherwise refused to pay rent in a timely fashion or at all. In addition, if business conditions in the industries in which our tenants are concentrated deteriorate, or economic volatility has a disproportionate impact on our tenants, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents across tenants in such industries, which could in turn have an adverse effect on our business and results of operations.
Construction is in progress at our development projects
The Company's development projects are subject to internal and external factors which may affect construction progress. Unforeseen matters could delay completion, result in increased costs or otherwise have a material effect on our results of operations. In addition, the extended time frame to complete these projects could cause them to be subject to shifts and trends in the real estate market which may not be consistent with our current business plans for the properties.
We are subject to risks that affect the retail environment.
While only 5.0% of our Portfolio annualized cash rent is generated by retail properties, principally in Manhattan, we are subject to risks that affect the retail environment generally, including the level of consumer spending and preferences, consumer confidence, electronic retail competition, levels of tourism in Manhattan, and governmental measures aimed at slowing the spread of COVID-19. These factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our retail properties, which could in turn have an adverse effect on our business and results of operations.
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We are subject to the risk of adverse changes in economic and geopolitical conditions in general and the commercial office markets in particular
Our business may be affected by volatility in the financial and credit markets and other market, economic, or political challenges experienced by the U.S. economy or the real estate industry as a whole, including changes in law and policy and uncertainty in connection with any such changes. Future periods of economic weakness or volatility could result in reduced access to credit and/or wider credit spreads. Economic or political uncertainty, including concern about growth and the stability of the markets generally and changes in the federal interest rates, may lead many lenders and institutional investors to reduce and, in some cases, cease to provide funding to borrowers, which could adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. Specifically, our business may be affected by the following conditions:
significant job losses or declining rates of job creation which may decrease demand for office space, causing market rental rates and property values to be negatively impacted;
our ability to borrow on terms and conditions that we find acceptable, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reducing our returns from both our existing operations and our acquisition and development activities and increasing our future interest expense; and
reduced values of our properties, which may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans.
Leasing office space to smaller and growth-oriented businesses could adversely affect our cash flow and results of operations.
Some of the tenants in our properties are smaller, growth-oriented businesses that may not have the financial strength of larger corporate tenants. Smaller companies generally experience a higher rate of failure than larger businesses. Growth-oriented firms may also seek other office space as they develop. Leasing office space to these companies could create a higher risk of tenant defaults, turnover and bankruptcies, which could adversely affect our cash flow and results of operations.
We may suffer adverse consequences if our revenues decline since our operating costs do not decline in proportion to our revenue.
We earn a significant portion of our income from renting our properties. Our operating costs, however, do not necessarily fluctuate in direct proportion to changes in our rental revenue. If revenues decline more than expenses, we may be forced to borrow to cover our costs, we may incur losses or we may not have cash available to service our debt and to pay dividends and distributions to security holders.
Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions.
We may acquire properties when we are presented with attractive opportunities. We may face competition for acquisition opportunities from other investors, particularly those investors who are willing to incur more leverage, and this competition may adversely affect us by subjecting us to the following risks:
an inability to acquire a desired property because of competition from other well-capitalized real estate investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors; and
an increase in the purchase price for such acquisition property.
If we are unable to successfully acquire additional properties, our ability to grow our business could be adversely affected.
We face risks associated with property acquisitions.
Our acquisition activities may not be successful if we are unable to meet required closing conditions or unable to finance acquisitions and developments of properties on favorable terms or at all. Additionally, we have less visibility into the future performance of acquired properties than properties that we have owned for a period of time, and therefore, recently acquired properties may not be as profitable as our existing portfolio.
Further, we may acquire properties subject to both known and unknown liabilities and without any recourse, or with only limited recourse to the seller. As a result, if a liability were asserted against us arising from our ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow. Unknown liabilities with respect to properties acquired might include:
claims by tenants, vendors or other persons arising from dealing with the former owners of the properties;
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liabilities incurred in the ordinary course of business;
claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties; and
liabilities for clean-up of undisclosed environmental contamination.
Limitations on our ability to sell or reduce the indebtedness on specific properties could adversely affect the value of our common stock.
In connection with past and future acquisitions of interests in properties, we have or may agree to restrictions on our ability to sell or refinance the acquired properties for certain periods. These limitations could result in us holding properties which we would otherwise sell, or prevent us from paying down or refinancing existing indebtedness, any of which may have adverse consequences on our business and result in a material adverse effect on our financial condition and results of operations.
Potential losses may not be covered by insurance.
We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR")) within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as the development of One Vanderbilt. Additionally, one of our captive insurance companies, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger. Belmont's retention is reinsured by our other captive insurance company, Ticonderoga Insurance Company ("Ticonderoga"). If Belmont or Ticonderoga are required to pay a claim under our insurance policies, we would ultimately record the loss to the extent of required payments. There is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont and Ticonderoga provide coverage solely on properties owned by the Company or its affiliates.
Furthermore, with respect to certain of our properties, including properties held by joint ventures or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss.
The occurrence of a terrorist attack may adversely affect the value of our properties and our ability to generate cash flow.
Our operations are primarily concentrated in the New York metropolitan area. In the aftermath of a terrorist attack or other acts of terrorism or war, tenants in the New York metropolitan area may choose to relocate their business to less populated, lower-profile areas of the United States that those tenants believe are not as likely to be targets of future terrorist activity. In addition, economic activity could decline as a result of terrorist attacks or other acts of terrorism or war, or the perceived threat of such acts. Each of these impacts could in turn trigger a decrease in the demand for space in the New York metropolitan area, which could increase vacancies in our properties and force us to lease our properties on less favorable terms. While under the Terrorism Risk Insurance Program Reauthorization Act of 2019, insurers must make terrorism insurance available under their property and casualty insurance policies, this legislation does not regulate the pricing of such insurance. The absence of affordable terrorism insurance coverage may adversely affect the general real estate lending market, lending volume and the market's overall liquidity and, in the event of an uninsured loss, we could lose all or a portion of our assets. Furthermore, we may also experience increased costs in relation to security equipment and personnel. As a result, the value of our properties and our results of operations could materially decline.
We face possible risks associated with the natural disasters and the effects of climate change.
We are subject to risks associated with natural disasters and the effects of climate change, which can include storms, hurricanes and flooding, any of which could have a material adverse effect on our properties, operations and business. To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity and rising sea-levels. Over time, these conditions could result in declining demand for office space in our buildings or the inability of us to operate the buildings at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy at our properties and requiring us to expend funds as we seek to repair and protect our properties against such risks. Climate change may have a material adverse effect on our properties, operations or business.
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We face potential conflicts of interest.
There are potential conflicts of interest between us and Stephen L. Green.
There is a potential conflict of interest relating to the disposition of certain property contributed to us by Stephen L. Green and affiliated entities in our initial public offering. Mr. Green serves as a member and as the chairman emeritus of our board of directors. If we sell a property in a transaction in which a taxable gain is recognized, for tax purposes the built-in gain would be allocated solely to him and not to us. As a result, Mr. Green has a conflict of interest if the sale of a property he contributed is in our best interest but not his.
In addition, Mr. Green's tax basis includes his share of debt, including mortgage indebtedness, owed by the Operating Partnership. If the Operating Partnership were to retire such debt, then he would experience a decrease in his share of liabilities, which, for tax purposes, would be treated as a distribution of cash to him. To the extent the deemed distribution of cash exceeded his tax basis, he would recognize gain. As a result, Mr. Green has a conflict of interest if the refinancing of indebtedness is in our best interest but not his.
Members of management may have a conflict of interest over whether to enforce terms of agreements with entities which Mr. Green, directly or indirectly, has an affiliation.
Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, who serves as a member and as the chairman emeritus of our board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. 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.
Our company and our tenants accounted for 15.01% of Alliance's 2020 estimated total revenue, based on information provided to us by Alliance. While we believe that the contracts pursuant to which these services are provided were the result of arm's length negotiations, there can be no assurance that the terms of such agreements, or dealings between the parties during the performance of such agreements, will be as favorable to us as those which could be obtained from unaffiliated third parties providing comparable services under similar circumstances.
RISKS RELATED TO OUR LIQUIDITY AND CAPITAL RESOURCES
Debt financing, financial covenants, degree of leverage, and increases in interest rates could adversely affect our economic performance.
Scheduled debt payments could adversely affect our results of operations.
Cash flow could be insufficient to meet the payments of principal and interest required under our current mortgages, our 2017 credit facility, our senior unsecured notes, our debentures and indebtedness outstanding at our joint venture properties. The total principal amount of our outstanding consolidated indebtedness was $5.0 billion as of December 31, 2020, consisting of $1.5 billion in unsecured bank term loans (or "Term Loan A" and "Term Loan B"), $1.3 billion under our senior unsecured notes, $0.1 billion of junior subordinated deferrable interest debentures, $2.0 billion of non-recourse mortgages and loans payable on certain of our properties and debt and preferred equity investments, $110.0 million drawn under our revolving credit facility, and $26.0 million of outstanding letters of credit. In addition, we could increase the amount of our outstanding consolidated indebtedness in the future, in part by borrowing under the revolving credit facility portion of our 2017 credit facility. As of December 31, 2020, the total principal amount of non-recourse indebtedness outstanding at the joint venture properties was $9.9 billion, of which our proportionate share was $4.7 billion. As of December 31, 2020, we had no recourse indebtedness outstanding at our unconsolidated joint venture properties.
If we are unable to make payments under our 2017 credit facility, all amounts due and owing at such time shall accrue interest at a per annum rate equal to 2% higher than the rate applicable immediately prior to the default. If we are unable to make payments under our senior unsecured notes, the principal and unpaid interest will become immediately payable. If a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose on the property, resulting in loss of income and asset value. Foreclosure on mortgaged properties or an inability to make payments under our 2017 credit facility or our senior unsecured notes could trigger defaults under the terms of our other financings, making such financings at risk of being declared immediately payable, and would have a negative impact on our financial condition and results of operations.
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We may not be able to refinance existing indebtedness, which may require substantial principal payments at maturity. $284.5 million of consolidated mortgage debt and $1.1 billion of unconsolidated joint venture debt is scheduled to mature in 2021 after giving effect to our as-of-right extension options and repayments and refinancing of consolidated and joint venture debt between December 31, 2020 and February 25, 2021 as discussed in the "Financial Statements and Supplementary Data" section. At the present time, we intend to repay, refinance, or exercise extension options on the debt associated with our properties on or prior to their respective maturity dates. At the time of refinancing, prevailing interest rates or other factors, such as the possible reluctance of lenders to make commercial real estate loans, may result in higher interest rates. Increased interest expense on the extended or refinanced debt would adversely affect cash flow and our ability to service debt obligations and pay dividends and distributions to security holders. If any principal payments due at maturity cannot be repaid, refinanced or extended, our cash flow will not be sufficient to repay maturing or accelerated debt.
Financial covenants could adversely affect our ability to conduct our business.
The mortgages and mezzanine loans on our properties generally contain customary negative covenants that limit our ability to further mortgage the properties, to enter into material leases without lender consent or materially modify existing leases, among other things. In addition, our 2017 credit facility and senior unsecured notes contain restrictions and requirements on our method of operations. Our 2017 credit facility and our unsecured notes also require us to maintain designated ratios, including but not limited to, total debt-to-assets, debt service coverage and unencumbered assets-to-unsecured debt. These restrictions could adversely affect operations (including reducing our flexibility and our ability to incur additional debt), our ability to pay debt obligations and our ability to pay dividends and distributions to security holders.
Rising interest rates could adversely affect our cash flow.
Advances under our 2017 credit facility and certain property-level mortgage debt bear interest at a variable rate. Our consolidated variable rate borrowings totaled $1.8 billion at December 31, 2020. In addition, we could increase the amount of our outstanding variable rate debt in the future, in part by borrowing additional amounts under our 2017 credit facility. Borrowings under our revolving credit facility and term loans bore interest at the 30-day LIBOR, plus spreads of 100 basis points, 110 basis points, and 100 basis points, respectively, at December 31, 2020. As of December 31, 2020, borrowings under our term loans and junior subordinated deferrable interest debentures totaled $1.5 billion and $100.0 million, respectively. We may incur indebtedness in the future that also bears interest at a variable rate or may be required to refinance our debt at higher rates. At December 31, 2020, a hypothetical 100 basis point increase in interest rates across each of our variable interest rate instruments, including our variable rate debt and preferred equity investments which mitigate our exposure to interest rate changes, would increase our net annual interest costs by $14.0 million and would increase our share of joint venture annual interest costs by $20.6 million. Our joint ventures may also incur variable rate debt and face similar risks. Accordingly, increases in interest rates could adversely affect our results of operations and financial conditions and our ability to continue to pay dividends and distributions to security holders.
The planned phasing out of LIBOR after 2021 may affect our financial results.
The chief executive of the United Kingdom Financial Conduct Authority ("FCA"), which regulates LIBOR, has announced that the FCA intends to stop compelling banks to submit rates for the calculation of certain LIBOR after 2021. In November 2020, ICE Benchmark Administration, the administrator of LIBOR, with the support of the Federal Reserve Board and the FCA, announced plans to extend the publication of certain USD LIBOR settings until June 30, 2023. It is not possible to predict the effect of these changes or the establishment of alternative reference rates.
The Alternative Reference Rate Committee ("ARRC"), a committee convened by the Federal Reserve that includes major market participants, and on which the SEC staff and other regulators participate, has proposed an alternative rate, the Secured Overnight Financing Rate (“SOFR”), to replace U.S. Dollar LIBOR. Any changes announced by the FCA, ARRC, other regulators or any other successor governance or oversight body, or future changes adopted by such body, in the method pursuant to which U.S. Dollar LIBOR, SOFR, or any other alternative rates are determined may result in a sudden or prolonged increase or decrease in the reported LIBOR rates. If that were to occur, the levels of interest payments we incur and interest payments we receive may change. It is also uncertain whether SOFR or any other alternative rate will gain market acceptance. In addition, although certain of our LIBOR based obligations and investments provide for alternative methods of calculating the interest rate if LIBOR is not reported, uncertainty as to the extent and manner of future changes may result in interest rates and/or payments that are higher than, lower than or that do not otherwise correlate over time with the interest rates and/or payments that would have been made on our obligations if LIBOR rate was available in its current form. We may also need to renegotiate our LIBOR based obligations, which we may not be successful in doing on a timely basis or on terms acceptable to us.
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Failure to hedge effectively against interest rate changes may adversely affect results of operations.
The interest rate hedge instruments we use to manage some of our exposure to interest rate volatility involve risk and counterparties may fail to perform under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to interest rate changes and when existing interest rate hedges terminate, we may incur increased costs in putting in place further interest rate hedges. Failure to hedge effectively against interest rate changes may adversely affect our results of operations.
Increases in our leverage could adversely affect our stock price.
Our organizational documents do not contain any limitation on the amount of indebtedness we may incur. We consider many factors when making decisions regarding the incurrence of indebtedness, such as the purchase price of properties to be acquired with debt financing, the estimated market value of our properties and the ability of particular properties and our business as a whole to generate cash flow to cover expected debt service. Any changes that increase our leverage could be viewed negatively by investors. As a result, our stock price could decrease.
A downgrade in our credit ratings could materially adversely affect our business and financial condition.
Our credit rating and the credit ratings assigned to our debt securities and our preferred stock could change based upon, among other things, our results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and any rating could be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant such action. If any of the credit rating agencies that have rated our securities downgrades or lowers its credit rating, or if any credit rating agency indicates that it has placed any such rating on a “watch list” for a possible downgrading or lowering, or otherwise indicates that its outlook for that rating is negative, such action could have a material adverse effect on our costs and availability of funding, which could in turn have a material adverse effect on our financial condition, results of operations, cash flows, the trading price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to security holders.
Debt and preferred equity investments could cause us to incur expenses, which could adversely affect our results of operations.
We held first mortgages, mezzanine loans, junior participations and preferred equity interests with an aggregate net book value of $1.1 billion at December 31, 2020. Some of these instruments may have some recourse to their sponsors, while others are limited to the collateral securing the loan. In the event of a default under these obligations, we may have to take possession of the collateral securing these interests. Borrowers may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce their obligations to us. Declines in the value of the property may prevent us from realizing an amount equal to our investment upon foreclosure or realization even if we make substantial improvements or repairs to the underlying real estate in order to maximize such property's investment potential. In addition, we may invest in mortgage-backed securities and other marketable securities.
Our debt and preferred equity investments are carried at the net amounts expected to be collected. We maintain and regularly evaluate the need for reserves to protect against potential future credit losses. Our reserves reflect management's judgment of the probability and severity of losses and the value of the underlying collateral. We cannot be certain that our judgment will prove to be correct and that our reserves will be adequate over time to protect against future credit losses because of unanticipated adverse changes in the economy or events adversely affecting specific properties, assets, tenants, borrowers, industries in which our tenants and borrowers operate or markets in which our tenants and borrowers or their properties are located. The ultimate resolutions may differ from our expectation, and we could suffer losses which would have a material adverse effect on our financial performance, the market prices of our securities and our ability to pay dividends and distributions to security holders.
Joint investments could be adversely affected by our lack of sole decision-making authority and reliance upon a co-venturer's financial condition.
We co-invest with third parties through partnerships, joint ventures, co-tenancies or other structures, and by acquiring non-controlling interests in, or sharing responsibility for managing the affairs of, a property, partnership, joint venture, co-tenancy or other entity. Therefore, we may not be in a position to exercise sole decision-making authority regarding such property, partnership, joint venture or other entity. Investments in partnerships, joint ventures, or other entities may involve risks not present were a third party not involved, including the possibility that our partners, co-tenants or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally, our partners or co-venturers might at any time have economic or other business interests or goals which are competitive or inconsistent with our business interests or goals. These investments may also have the potential risk of impasses on decisions such as a sale, because neither we, nor the partner, co-tenant or co-venturer would have full control over the partnership or joint venture. In addition,
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we may in specific circumstances be liable for the actions of our third-party partners, co-tenants or co-venturers. As of December 31, 2020, we had an aggregate cost basis in joint ventures totaling $3.8 billion.
Certain of our joint venture agreements contain terms in favor of our partners that could have an adverse effect on the value of our investments in the joint ventures.
Each of our joint venture agreements has been individually negotiated with our partner in the joint venture and, in some cases, we have agreed to terms that are more favorable to our partner in the joint venture than to us. For example, our partner may be entitled to a specified portion of the profits of the joint venture before we are entitled to any portion of such profits. We may also enter into similar arrangements in the future.
We are dependent on external sources of capital.
We need a substantial amount of capital to operate and grow our business. This need is exacerbated by the distribution requirements imposed on us for SL Green to qualify as a REIT. We therefore rely on third-party sources of capital, which may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including the market's perception of our growth potential and our current and potential future earnings. In addition, we may raise money in the public equity and debt markets and our ability to do so will depend upon the general conditions prevailing in these markets. At any time, conditions may exist which effectively prevent us, or REITs in general, from accessing these markets. Moreover, additional equity offerings may result in substantial dilution of our stockholders' interests, and additional debt financing may substantially increase our leverage.
RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE
We depend on dividends and distributions from our direct and indirect subsidiaries.
Substantially all of our assets are held through subsidiaries of our Operating Partnership. Our Operating Partnership’s cash flow is dependent on cash distributions from its subsidiaries, and in turn, substantially all of our cash flow is dependent on cash distributions from our Operating Partnership. The creditors of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its equity holders.
Therefore, our Operating Partnership’s ability to make distributions to holders of its partnership units depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and then to make distributions to our Operating Partnership. Likewise, our ability to pay dividends to holders of common stock and preferred stock depends on our Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions payable to holders of preferred units and then to make distributions to us.
Furthermore, the holders of preferred partnership units of our Operating Partnership are entitled to receive preferred distributions before payment of distributions to holders of common units of our Operating Partnership, including us. Thus, our ability to pay cash dividends to our shareholders and satisfy our debt obligations depends on our Operating Partnership’s ability first to make distributions to holders of its preferred partnership units and then to holders of its common units, including us.
In addition, our participation in any distribution of the assets of any of our direct or indirect subsidiaries upon any liquidation, reorganization or insolvency is only after the claims of the creditors, including trade creditors and preferred security holders, are satisfied.
Our charter documents, debt instruments and applicable law may hinder any attempt to acquire us, which could discourage takeover attempts and prevent our stockholders from receiving a premium over the market price of our stock.
Provisions of our charter and bylaws could inhibit changes in control.
A change of control of our company could benefit stockholders by providing them with a premium over the then-prevailing market price of our stock. However, provisions contained in our charter and bylaws may delay or prevent a change in control of our company. These provisions, discussed more fully below, are:
Ownership limitations
Maryland takeover statutes that may prevent a change of control of our company; and
Contractual provisions that limit the assumption of certain of our debt
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We have a stock ownership limit.
To remain qualified as a REIT for federal income tax purposes, not more than 50% in value of our outstanding capital stock may be owned by five or fewer individuals at any time during the last half of any taxable year. For this purpose, stock may be "owned" directly, as well as indirectly under certain constructive ownership rules, including, for example, rules that attribute stock held by one shareholder to another shareholder. In part to avoid violating this rule regarding stock ownership limitations and maintain our REIT qualification, our charter prohibits direct or indirect ownership by any single stockholder of more than 9.0% in value or number of shares of our common stock. Limitations on the ownership of preferred stock may also be imposed by us.
Our board of directors has the discretion to raise or waive this limitation on ownership for any stockholder if deemed to be in our best interest. Our board of directors has granted such waivers from time to time. To obtain a waiver, a stockholder must present the board and our tax counsel with evidence that ownership in excess of this limit will not affect our present or future REIT status.
Absent any exemption or waiver, stock acquired or held in excess of the limit on ownership will be transferred to a trust for the exclusive benefit of a designated charitable beneficiary, and the stockholder's rights to distributions and to vote would terminate. The stockholder would be entitled to receive, from the proceeds of any subsequent sale of the shares transferred to the charitable trust, the lesser of: the price paid for the stock or, if the owner did not pay for the stock, the market price of the stock on the date of the event causing the stock to be transferred to the charitable trust; and the amount realized from the sale.
This limitation on ownership of stock could delay or prevent a change in control of our company.
Maryland takeover statutes may prevent a change of control of our company, which could depress our stock price.
Under the Maryland General Corporation Law, or the MGCL, "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:
any person who beneficially owns 10% or more of the voting power of the corporation's outstanding voting stock; or
an affiliate or associate of the corporation who, at any time within the two year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.
A person is not an interested stockholder under the statute if the board of directors approves in advance the transaction by which he otherwise would have become an interested stockholder.
After the five year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:
80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation, voting together as a single group; and
two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer, including potential acquisitions that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
In addition, the MGCL provides that holders of "control shares" of a Maryland corporation acquired in a "control share acquisition" will not have voting rights with respect to the control shares except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock owned by the acquiror, by officers of the corporation or by directors who are employees of the corporation. "Control shares" means voting shares of stock that, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power: (i) one-tenth or more but less than one-third; (ii) one-third or more but less than a majority; or (iii) a majority or more of all voting power. A "control share acquisition" means the acquisition of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares, subject to certain exceptions.
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We have opted out of these provisions of the MGCL, with respect to business combinations and control share acquisitions, by resolution of our board of directors and a provision in our bylaws, respectively. However, in the future, our board of directors may reverse its decision by resolution and elect to opt in to the MGCL's business combination provisions, or amend our bylaws and elect to opt in to the MGCL's control share provisions.
Additionally, other provisions of the MGCL permit our board of directors, without stockholder approval and regardless of what is provided in our charter or bylaws, to implement certain other takeover defenses, some of which have been implemented through provisions in our charter or bylaws unrelated to the provisions of the MGCL and others have not been implemented by our board of directors. Such takeover defenses, to the extent implemented now or in the future, may have the effect of inhibiting a third party from making us an acquisition proposal or of delaying, deferring or preventing a change in our control under circumstances that otherwise could provide our stockholders with an opportunity to realize a premium over the then-current market price.
Contractual provisions that limit the assumption of certain of our debt may prevent a change in control.
Certain of our consolidated debt is not assumable and may be subject to significant prepayment penalties. These limitations could deter a change in control of our company.
SL Green's failure to qualify as a REIT would be costly and would have a significant effect on the value of our securities.
We believe we have operated in a manner for SL Green to qualify as a REIT for federal income tax purposes and intend to continue to so operate. Many of the REIT compliance requirements, however, are highly technical and complex. The determination that SL Green is a REIT requires an analysis of factual matters and circumstances. These matters, some of which are not totally within our control, can affect SL Green's qualification as a REIT. For example, to qualify as a REIT, at least 95% of our gross income must come from designated sources that are listed in the REIT tax laws. We are also required to distribute to stockholders at least 90% of our REIT taxable income excluding capital gains. The fact that we hold our assets through the Operating Partnership and its subsidiaries further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize our REIT status. Furthermore, Congress and the Internal Revenue Service, or the IRS, might make changes to the tax laws and regulations that make it more difficult, or impossible, for us to remain qualified as a REIT.
If SL Green fails to qualify as a REIT, the funds available for distribution to our stockholders would be substantially reduced as we would not be allowed a deduction for dividends paid to our stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates and possibly increased state and local taxes.
Also, unless the IRS grants us relief under specific statutory provisions, SL Green would remain disqualified as a REIT for four years following the year in which SL Green first failed to qualify. If SL Green failed to qualify as a REIT, SL Green would have to pay significant income taxes and would therefore have less money available for investments, to service debt obligations or to pay dividends and distributions to security holders. This would have a significant adverse effect on the value of our securities. In addition, the REIT tax laws would no longer obligate us to make any distributions to stockholders. As a result of all these factors, if SL Green fails to qualify as a REIT, this could impair our ability to expand our business and raise capital.
We may in the future pay taxable dividends on our common stock in common stock and cash.
In order to qualify as a REIT, we are required to annually distribute to our stockholders at least 90% of our REIT taxable income, excluding net capital gains. In order to avoid taxation of our income, we are required to annually distribute to our stockholders all of our taxable income, including net capital gains. In order to satisfy these requirements, we may make distributions that are payable partly in cash and partly in shares of our common stock. If we pay such a dividend, taxable stockholders would be required to include the entire amount of the dividend, including the portion paid with shares of common stock, as income to the extent of our current and accumulated earnings and profits, and may be required to pay income taxes with respect to such dividends in excess of the cash dividends received.
RISKS RELATED TO LEGAL AND REGULATORY MATTERS
We may incur costs to comply with governmental laws and regulations.
We are subject to various federal, state and local environmental and health and safety laws that can impose liability on current and former property owners or operators for the clean-up of certain hazardous substances released on a property or of contamination at any facility (e.g., a landfill) to which we have sent hazardous substances for treatment or disposal, without regard to fault or whether the release or disposal was in compliance with law. Being held responsible for such a clean-up could result in significant cost to us and have a material adverse effect on our financial condition and results of operations.
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Our properties may be subject to risks relating to current or future laws, including laws benefiting disabled persons, such as the Americans with Disabilities Act, or ADA, and state or local zoning, construction or other regulations. Compliance with such laws may require significant property modifications in the future, which could be costly and non-compliance could result in fines being levied against us in the future. Such costs could have an adverse impact on our cash flows and ability to pay dividends to stockholders.
Compliance with changing or new regulations applicable to corporate governance and public disclosure may result in additional expenses, or affect our operations.
Changing or new laws, regulations and standards relating to corporate governance and public disclosure, including SEC regulations and NYSE rules, can create uncertainty for public companies. These changed or new laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity. As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our reputation may be harmed.
Our efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In particular, our continued efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal controls over financial reporting and our external auditors' audit of that assessment have required the commitment of significant financial and managerial resources. We expect these efforts to require the continued commitment of significant resources. Further, our directors, chief executive officer and chief financial officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers, which could harm our business.
Our property taxes could increase due to reassessment or property tax rate changes.
We are required to pay real property taxes or payments in lieu of taxes in respect of our properties and such taxes may increase as our properties are reassessed by taxing authorities or as property tax rates change. An increase in the assessed value of our properties or our property tax rates could adversely impact our financial condition, results of operations and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
GENERAL RISK FACTORS
The trading price of our common stock has been and may continue to be subject to wide fluctuations.
Between January 1, 2020 and December 31, 2020, the closing sale price of our common stock on the New York Stock Exchange, or the NYSE, ranged from $37.90 to $98.56 per share. Our stock price may fluctuate in response to a number of events and factors, such as those described elsewhere in this "Risk Factors" section. Equity issuances or buybacks by us or the perception that such issuances or buybacks may occur may also affect the market price of our common stock.
Future issuances of common stock, preferred stock and convertible debt could dilute existing stockholders' interests.
Our charter authorizes our board of directors to issue additional shares of common stock, preferred stock and convertible equity or debt without stockholder approval and without the requirement to offer rights of pre-emption to existing stockholders. Any such issuance could dilute our existing stockholders' interests. Also, any future series of preferred stock may have voting provisions that could delay or prevent a change of control of our company.
Changes in market conditions could adversely affect the market price of our common stock.
As with other publicly traded equity securities, the value of our common stock depends on various market conditions, which may change from time to time. In addition to the current economic environment and future volatility in the securities and credit markets, the following market conditions may affect the value of our common stock:
the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;
our financial performance; and
general stock and bond market conditions.
The market value of our common stock is based on a number of factors including, but not limited to, the market's perception of the current and future value of our assets, our growth potential and our current and potential future earnings and
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cash dividends. Consequently, our common stock may trade at prices that are higher or lower than our net asset value per share of common stock.
Changes to U.S. federal income tax laws could materially and adversely affect us and our stockholders.
U.S. federal income tax laws and the rules dealing with U.S. federal income taxation are continually under review by Congress, the IRS, and the U.S. Department of the Treasury. Any such changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets.
Loss of our key personnel could harm our operations and our stock price.
We are dependent on the efforts of Marc Holliday, our chairman and chief executive officer, and Andrew W. Mathias, our president. These officers have employment agreements which expire in January 2022 and December 2021, respectively. A loss of the services of either of these individuals could adversely affect our operations and could be negatively perceived by the market resulting in a decrease in our stock price.
Our business and operations would suffer in the event of system failures or cyber security attacks.
Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to a number of risks including energy blackouts, natural disasters, terrorism, war, telecommunication failures and cyber attacks and intrusions, such as computer viruses, malware, attachments to e-mails, intrusion and unauthorized access, including from persons inside our organization or from persons outside our organization with access to our systems. The risk of a security breach or disruption, particularly through cyber attacks and intrusions, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and instructions from around the world have increased. Our systems are critical to the operation of our business and any system failure, accident or security breach that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions. Although we make efforts to maintain the security and integrity of our systems and have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which may be confidential, proprietary and/or commercially sensitive in nature) and a loss of confidence in our security measures, which could harm our business.
Forward-looking statements may prove inaccurate.
See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Forward-looking Information," for additional disclosure regarding forward-looking statements.
ITEM 1B.    UNRESOLVED STAFF COMMENTS
As of December 31, 2020, we did not have any unresolved comments with the staff of the SEC.
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ITEM 2.    PROPERTIES
Our Portfolio
General
As of December 31, 2020, we owned or held interests in 18 consolidated commercial office buildings encompassing approximately 10.7 million rentable square feet and 11 unconsolidated commercial office buildings encompassing approximately 11.8 million rentable square feet located primarily in midtown Manhattan. Many of these buildings include some amount of retail space on the lower floors, as well as basement/storage space. As of December 31, 2020, our portfolio also included ownership interests in one consolidated property, encompassing 7 consolidated commercial office buildings encompassing approximately 0.9 million rentable square feet, which we refer to as our Suburban property. Some of these buildings also include a small amount of retail space on the lower floors, as well as basement/storage space.
As of December 31, 2020, we also owned investments in 13 prime retail properties encompassing approximately 0.3 million square feet, 11 buildings in differing stages of development or redevelopment encompassing approximately 4.0 million square feet, and 9 residential buildings encompassing 2,073 units (approximately 1.7 million square feet). In addition, we manage two office buildings owned by third parties encompassing approximately 2.1 million square feet and held debt and preferred equity investments with a book value of $1.1 billion excluding $0.1 billion of investments recorded in balance sheet line items other than the Debt and Preferred Equity Investments line item.
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The following tables set forth certain information with respect to each of the Manhattan and Suburban office, prime retail, residential, development and redevelopment properties in the portfolio as of December 31, 2020 (dollars in thousands):
Manhattan PropertiesYear Built/
Renovated
City/ TownApproximate
Rentable
Square
Feet
Percent
Occupied (1)
Annualized
Cash
Rent
(2)
Percent
of Portfolio
Annualized
Cash
Rent (3)
Number
of
Tenants
Annualized
Cash
Rent per
Leased
Square
Foot (4)
CONSOLIDATED OFFICE PROPERTIES
"Same Store"
100 Church Street1959/2010Downtown1,047,500 99.3%$50,221 4.4%19 $45.59 
110 East 42nd Street1921Grand Central215,400 88.911,911 1.026 60.09 
110 Greene Street1908/1920Soho223,600 89.315,459 1.458 83.04 
125 Park Avenue1923/2006Grand Central604,245 99.647,533 4.126 74.22 
220 East 42nd Street1929Grand Central1,135,000 94.167,262 5.932 59.68 
304 Park Avenue South1930Midtown South215,000 91.216,326 1.482.26 
420 Lexington Ave (Graybar)1927/1999Grand Central North1,188,000 90.586,204 7.5187 63.78 
461 Fifth Avenue (5)
1988Midtown200,000 86.216,575 1.413 92.26 
485 Lexington Avenue1956/2006Grand Central North921,000 89.557,357 5.029 71.29 
555 West 57th Street1971Midtown West941,000 99.949,106 4.348.53 
635 Sixth Avenue1902Midtown South104,000 100.010,644 0.9112.87 
641 Sixth Avenue1902Midtown South163,000 100.016,062 1.494.70 
711 Third Avenue (6)
1955Grand Central North524,000 89.133,411 2.920 63.82 
750 Third Avenue1958/2006Grand Central North780,000 66.934,266 3.023 62.85 
810 Seventh Avenue1970Times Square692,000 89.345,670 4.045 74.08 
1185 Avenue of the Americas1969Rockefeller Center1,062,000 79.878,908 7.012 90.87 
1350 Avenue of the Americas1966Rockefeller Center562,000 81.239,070 3.442 81.14 
Subtotal / Weighted Average10,577,745 89.7%675,985 59.0 %555 
"Non Same Store"
590 Fifth Avenue1987Midtown103,300 68.5%8,107 0.7%10$107.09 
Subtotal / Weighted Average103,300 68.5%8,107 0.7%10
Total / Weighted Average Manhattan Consolidated Office Properties10,681,045 89.5%$684,092 59.7%565
UNCONSOLIDATED OFFICE PROPERTIES
"Same Store"
10 East 53rd Street— 55.00%1972/2014Plaza District354,300 93.5%$31,901 1.5%37$88.91 
11 Madison Avenue—60.00%1929Park Avenue South2,314,000 95.7156,910 8.31071.85 
55 West 46th Street - Tower 46— 25.00%2009Midtown347,000 91.927,340 0.61693.61 
100 Park Avenue—50.00%1950/1980Grand Central South834,000 82.560,478 2.63582.69 
280 Park Avenue—50.00%1961Park Avenue1,219,158 92.0124,890 5.439104.59 
800 Third Avenue—60.50%1972/2006Grand Central North526,000 94.739,108 2.13874.11 
919 Third Avenue—51.00%1970Grand Central North1,454,000 100.0101,342 4.5767.72 
1515 Broadway— 56.87%1972Times Square1,750,000 99.9133,649 6.61171.91 
Worldwide Plaza— 24.35%1989/2013Westside2,048,725 96.6146,224 3.12473.97 
Added to Same Store in 2020
2 Herald Square—51.00%1909Herald Square369,000 95.8%$41,648 1.8%5$116.59 
Subtotal / Weighted Average11,216,183 95.5%$863,490 36.5%222
"Non Same Store"
885 Third Avenue—100.00% (7)
1986/2006Midtown / Plaza District625,300 88.5%$43,826 3.8%19$79.32 
Subtotal / Weighted Average625,300 88.5%$43,826 3.8%19
Total / Weighted Average Unconsolidated Office Properties11,841,483 95.1%$907,316 40.3%241$78.70 
Manhattan Office Grand Total / Weighted Average22,522,528 92.4%$1,591,408 100.0%806
Manhattan Office Grand Total—SLG share of Annualized Rent$1,147,499 100.0%
Manhattan Office Same Store Occupancy %—Combined21,793,928 92.7%
26

Suburban PropertiesYear Built/
Renovated
City/ TownApproximate
Rentable
Square
Feet
Percent
Occupied (1)
Annualized
Cash
Rent
(2)
Percent
of Portfolio
Annualized
Cash
Rent (3)
Number
of
Tenants
Annualized
Cash
Rent per
Leased
Square
Foot (4)
CONSOLIDATED OFFICE PROPERTIES
"Same Store" Connecticut
Landmark Square1973-1984Stamford862,800 83.3%$21,221 100.0%111$35.26 
Connecticut Subtotal/Weighted Average862,800 83.3%$21,221 100.0%111
Total / Weighted Average Consolidated Office Properties862,800 83.3%$21,221 100.0%111
Suburban Grand Total / Weighted Average862,800 83.3%$21,221 111
Suburban Office Grand Total—SLG share of Annualized Rent$21,221 100.0%
Suburban Office Same Store Occupancy %—Combined862,800 83.3%

Year Built/
Renovated
City/ TownApproximate
Rentable
Square
Feet
Percent
Occupied (1)
Annualized
Cash
Rent
(2)
Percent of Portfolio
Annualized
Cash
Rent (3)
Number
of
Tenants
Annualized
Cash
Rent per
Leased
Square
Foot (4)
PRIME RETAIL
"Same Store" Prime Retail
11 West 34th Street—30.00%1920/2010Herald Square/Penn Station17,150 100.0%$3,199 1.5%1$286.93 
21 East 66th Street—32.28%1921Plaza District13,069 100.02,073 1.01630.83 
121 Greene Street—50.00%1887Soho7,131 100.01,787 1.42250.54 
650 Fifth Avenue— 50.00%1977-1978Plaza District69,214 100.035,511 27.91513.06 
717 Fifth Avenue—10.92%1958/2000Midtown/Plaza District119,550 100.055,474 9.56448.52 
719 Seventh Avenue—75.00%1927Times Square10,040 — — 
760 Madison Avenue1996/2012Plaza District21,124 100.017,029 26.71806.15 
1552-1560 Broadway—50.00%1926/2014Times Square57,718 88.329,711 23.33658.58 
Subtotal/Weighted Average314,996 94.7%$144,784 91.3%15
"Non Same Store" Prime Retail
85 Fifth Avenue—36.30%1901/1979Midtown South12,946 100.0%$3,885 2.2%1$300.10 
115 Spring Street—51.00%1900SoHo5,218 100.0$3,700 3.01709.04 
133 Greene Street1900SoHo6,425 48.6102 0.2132.70 
712 Madison Avenue1900/1980Plaza District6,600 100.02,140 3.31324.21 
Subtotal/Weighted Average31,189 89.4%$9,827 8.7%4
Total / Weighted Average Prime Retail Properties346,185 94.2%$154,611 100.0%19
DEVELOPMENT/REDEVELOPMENT
19-21 East 65th Street1928-1940Plaza District23,610 3.6%$32 0.1%1$40.22 
106 Spring Street1900Soho5,928 — — 
609 Fifth Avenue1925/1990Rockefeller Center138,563 100.011,224 33.6181.00 
625 Madison Avenue1956/2002Plaza District563,000 26.719,948 59.721126.28 
707 Eleventh Avenue1940Midtown West159,720 23.31,935 5.8152.05 
762 Madison Avenue1910Plaza District6,109 32.8268 0.81212.27 
One Vanderbilt—71.01% (8)
N/AGrand Central1,657,198 N/AN/AN/AN/A— 
185 Broadway (9)
N/ALower Manhattan198,488 N/AN/AN/AN/A— 
15 Beekman—20.00% (10)
N/ALower Manhattan221,884 N/AN/AN/AN/A
One Madison Avenue—50.50% (11)
N/AMidtown South1,048,700 N/AN/AN/AN/A— 
Total / Weighted Average Development/Redevelopment Properties4,023,200 36.7%$33,407 100.0%25
27

City/ TownUseable Sq. FeetTotal Units
Percent
Occupied (1)
Annualized Cash
Rent (2)
Average
Monthly Rent
Per Unit
RESIDENTIAL     
"Same Store" Residential
400 East 57th Street—41.00%Upper East Side290,482 263 66.2 9,753 $3,917 
1080 Amsterdam—92.50%Upper West Side82,250 97 35.4 2,090 4,299 
Stonehenge Portfolio445,934 538 72.0 18,352 3,680 
605 West 42nd Street—20.00%Midtown West927,358 1,175 87.1 45,225 3,291 
Subtotal/Weighted Average1,746,024 2,073 78.8 %$75,420 $3,470 
Total / Weighted Average Residential Properties1,746,024 2,073 95.7 %$75,420 $3,470 
(1)Excludes leases signed but not yet commenced as of December 31, 2020.
(2)Annualized Cash Rent represents the monthly contractual rent under existing leases as of December 31, 2020 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date.
(3)Includes our share of unconsolidated joint venture annualized cash rent.
(4)Annualized Cash Rent Per Leased Square Foot represents Annualized Cash Rent, as described in footnote (1) above, presented on a per leased square foot basis.
(5)The Company has an option to acquire the fee interest for a fixed price on a specific date.
(6)The Company owns 100% of the leasehold interest and 50% of the fee interest.
(7)The Company holds 100% of the preferred equity interest in the property and believes there is no value to the common equity.
(8)The 1.7 million square foot development project, for which we received a temporary certificate of occupancy in September 2020, has a total development budget, including land mark-up, of $3.3 billion. As of December 31, 2020, $539.7 billion of the budget remains to be spent, all of which is intended to be funded by the project’s construction facility.
(9)The 0.2 million square foot development project, which is anticipated to be completed in the third quarter of 2021, has a total budget of $306.3 million. As of December 31, 2020, $75.6 million of the budget remains to be spent, comprised of $9.1 million of equity and $66.5 million of financing available under the project's construction facility.
(10)The 0.2 million square foot development, which includes academic space and dormitory space and is 100% pre-leased to Pace University, has a total budget of $219.5 million. Delivery of the academic space is expected in the fourth quarter of 2022 and delivery of the dormitory space is expected in the third quarter of 2023. As of December 31, 2020, $170.0 million of the budget remains to be spent, comprised of $56.2 million of partners' equity and $113.8 million of financing available under the project's construction facility.
(11)The 1.1 million square foot redevelopment, which is anticipated to be completed in the fourth quarter of 2023, has a total budget of $2.3 billion. As of December 31, 2020, $1.7 billion of the budget remains to be spent, comprised of $0.4 billion of partners' equity and $1.3 billion of financing available under the project's construction facility.
Historical Occupancy
Historically, we have achieved consistently higher occupancy rates in our Manhattan portfolio as compared to the overall midtown Manhattan market, as shown over the last five years in the following table:

Occupancy Rate of
Manhattan Operating
Portfolio(1)
Occupancy Rate of
Class A
Office Properties
in the Midtown Manhattan
Markets(2)(3)
Occupancy Rate of
Class B
Office Properties
in the Midtown Manhattan
Markets(2)(3)
December 31, 202092.4 %85.0 %81.1 %
December 31, 201994.5 %88.8 %87.4 %
December 31, 201894.5 %91.1 %89.4 %
December 31, 201793.8 %90.5 %90.3 %
December 31, 201694.9 %90.0 %92.2 %
(1)Includes our consolidated and unconsolidated Manhattan office properties.
(2)Includes vacant space available for direct lease and sublease. Source: Cushman & Wakefield.
(3)The term "Class B" is generally used in the Manhattan office market to describe office properties that are more than 25 years old but that are in good physical condition, enjoy widespread acceptance by high-quality tenants and are situated in desirable locations in Manhattan. Class B office properties can be distinguished from Class A properties in that Class A properties are generally newer properties with higher finishes and frequently obtain the highest rental rates within their markets.
Lease Expirations
Leases in our Manhattan portfolio, as at many other Manhattan office properties, typically have an initial term of seven to fifteen years, compared to typical lease terms of five to ten years in other large U.S. office markets. For the five years ending December 31, 2025, the average annual lease expirations at our Manhattan consolidated and unconsolidated operating properties is expected to be approximately 0.7 million square feet and approximately 0.7 million square feet, respectively, representing an average annual expiration rate of approximately 7.1% and approximately 6.1%, respectively, per year (assuming no tenants exercise renewal or cancellation options and there are no tenant bankruptcies or other tenant defaults).
28

The following tables set forth a schedule of the annual lease expirations at our Manhattan consolidated and unconsolidated operating properties, respectively, with respect to leases in place as of December 31, 2020 for each of the next ten years and thereafter (assuming that no tenants exercise renewal or cancellation options and that there are no tenant bankruptcies or other tenant defaults):
Manhattan Consolidated
Operating Properties
Year of Lease Expiration
Number
of
Expiring
Leases (1)
Square
Footage
of
Expiring
Leases
Percentage
of
Total
Leased
Square
Feet
Annualized
Cash Rent
of
Expiring
Leases (2)
Percentage
of
Annualized
Cash Rent
of
Expiring
Leases
Annualized
Cash Rent
Per
Leased
Square
Foot of
Expiring
Leases (3)
2021(4)
109 976,033 9.7 %$59,682,081 8.8 %$61.15 
202287 762,956 7.6 %59,759,085 8.8 78.33 
202364 824,360 8.2 %51,926,317 7.7 62.99 
202446 355,038 3.5 %27,105,523 4.0 76.35 
202555 636,787 6.3 %55,261,421 8.2 86.78 
202645 966,125 9.6 %66,402,593 9.8 68.73 
202736 608,649 6.0 %47,859,450 7.1 78.63 
202834 613,768 6.1 %45,120,014 6.7 73.51 
202917 397,372 3.9 %26,023,546 3.8 65.49 
2030 & thereafter80 3,936,378 39.1 %238,778,719 35.1 60.66 
Total/weighted average573 10,077,466 100.0 %$677,918,749 100.0 %$67.27 
(1)Tenants may have multiple leases.
(2)Annualized Cash Rent of Expiring Leases represents the monthly contractual rent for December 2020 under existing leases as of December 31, 2020 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date.
(3)Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (2) above, presented on a per leased square foot basis.
(4)Includes approximately 39,791 square feet and annualized cash rent of $2.8 million occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2020.
Manhattan Unconsolidated
Operating Properties
Year of Lease Expiration
Number
of
Expiring
Leases(1)
Square
Footage
of
Expiring
Leases
Percentage
of
Total
Leased
Square
Feet
Annualized
Cash Rent
of
Expiring
Leases(2)
Percentage
of
Annualized
Cash Rent
of
Expiring
Leases
Annualized
Cash Rent
Per
Leased
Square
Foot of
Expiring
Leases(3)
2021(4)
32 760,690 6.6 %$61,030,861 6.7 %$80.23 
202232 903,789 7.8 84,918,914 9.4 93.96 
202319 430,135 3.7 38,986,617 4.3 90.64 
202426 991,216 8.6 107,848,342 11.9 108.80 
202516 438,564 3.8 38,120,962 4.2 86.92 
202627 552,407 4.8 54,855,563 6.0 99.30 
202718 392,311 3.4 35,584,379 3.9 90.70 
202817 195,351 1.7 21,333,861 2.4 109.21 
202915 752,707 6.5 52,033,180 5.7 69.13 
2030 & thereafter44 6,112,339 53.1 412,603,032 45.5 67.50 
Total/weighted average246 11,529,509 100.0 %$907,315,711 100.0 %$78.70 
(1)Tenants may have multiple leases.
(2)Annualized Cash Rent of Expiring Leases represents the monthly contractual rent for December 2020 under existing leases as of December 31, 2020 multiplied by 12. This amount reflects total rent before any rent abatements and includes expense reimbursements, which may be estimated as of such date.
(3)Annualized Cash Rent Per Leased Square Foot of Expiring Leases represents Annualized Cash Rent of Expiring Leases, as described in footnote (2) above, presented on a per leased square foot basis.
(4)Includes approximately 22,736 square feet and annualized cash rent of $0.0 million occupied by month-to-month holdover tenants whose leases expired prior to December 31, 2020.
29

Tenant Diversification
At December 31, 2020, our properties were leased to 961 tenants, which are engaged in a variety of businesses, including, but not limited to, professional services, financial services, media, apparel, business services and government/non-profit. The following table sets forth information regarding the leases with respect to the 30 largest tenants in our properties, which are not intended to be representative of our tenants as a whole, based on the amount of our share of annualized cash rent as of December 31, 2020:
Tenant NamePropertyLease Expiration  Total Rentable Square FeetAnnualized Cash RentSLG Share of Annualized Cash Rent ($)
% of SLG Share of Annualized Cash Rent (1)
Annualized Rent PSF
ViacomCBS Inc.1515 BroadwayJune 2031$1,569,327 $94,640 $53,944 4.2 %$60.31 
1515 BroadwayMarch 20289,106 1,964 1,119 0.1 %$215.68 
555 West 57th StreetDecember 2023338,527 17,151 17,151 1.3 %$50.66 
Worldwide PlazaJanuary 202732,598 2,267 552 — %$69.53 
$1,949,558 $116,022 $72,766 5.6 %$59.51 
Credit Suisse Securities (USA), Inc.11 Madison AvenueMay 2037$1,265,841 $80,109 $48,065 3.8 %$63.29 
Latham & Watkins LLP885 Third AvenueJune 2021$408,559 $32,269 $32,269 2.5 %$78.98 
Sony Corporation11 Madison AvenueJanuary 2031$578,791 $44,859 $26,915 2.1 %$77.50 
Debevoise & Plimpton, LLP919 Third AvenueJune 2022$577,438 $47,607 $24,280 1.9 %$82.45 
TD Bank US Holding Company1 Vanderbilt AvenueJuly 2041$185,465 $23,553 $16,723 1.3 %$127.00 
125 Park AvenueOctober 203051,707 3,371 3,371 0.3 %$65.19 
125 Park AvenueAugust 20306,234 2,537 2,537 0.2 %$406.91 
$243,406 $29,461 $22,631 1.8 %$121.04 
The City of New York100 Church StreetMarch 2034$510,007 $21,037 $21,037 1.6 %$41.25 
King & Spalding1185 Avenue of the AmericasOctober 2025$218,275 $20,888 $20,888 1.6 %$95.70 
Metro-North Commuter Railroad Company420 Lexington AvenueNovember 2034$344,873 $20,087 $20,087 1.6 %$58.25 
420 Lexington AvenueSeptember 20217,537 507 507 — %$67.23 
110 East 42nd StreetOctober 20211,840 126 126 — %$68.63 
$354,250 $20,720 $20,720 1.6 %$58.49 
Giorgio Armani Corporation760 Madison AvenueDecember 2024$21,124 $17,029 $17,029 1.3 %$806.15 
717 Fifth AvenueMarch 202346,940 25,056 2,731 0.2 %$533.78 
762 Madison AvenueDecember 20241,264 268 268 — %$212.27 
$69,328 $42,353 $20,028 1.6 %$610.90 
Advance Magazine Group, Fairchild Publications750 Third AvenueFebruary 2021$286,622 $15,355 $15,355 1.2 %$53.57 
485 Lexington AvenueFebruary 202152,573 3,685 3,685 0.3 %$70.10 
$339,195 $19,040 $19,040 1.5 %$56.13 
Visiting Nurse Service of New York220 East 42nd StreetSeptember 2048$308,115 $18,842 $18,842 1.5 %$61.15 
WME IMG, LLC304 Park AvenueApril 2028$174,069 $12,741 $12,741 1.0 %$73.19 
11 Madison AvenueSeptember 2030104,618 9,787 5,872 0.5 %$93.55 
$278,687 $22,528 $18,613 1.5 %$80.84 
Nike Retail Services, Inc.650 Fifth AvenueJanuary 2033$69,214 $35,511 $17,756 1.4 %$513.06 
Bloomberg L.P.919 Third AvenueFebruary 2029$557,208 $33,833 $17,255 1.3 %$60.72 
Cravath, Swaine & Moore LLPWorldwide PlazaAugust 2024$617,135 $67,822 $16,515 1.3 %$109.90 
National Hockey League1185 Avenue of the AmericasNovember 2022$148,217 $15,763 $15,763 1.2 %$106.35 
30

WeWork609 Fifth AvenueApril 2036$138,563 $11,224 $11,224 0.9 %$81.00 
2 Herald SqaureFebruary 2036153,061 8,842 4,509 0.4 %$57.77 
$291,624 $20,066 $15,733 1.2 %$68.81 
Amerada Hess Corp.1185 Avenue of the AmericasDecember 2027$167,169 $15,440 $15,440 1.2 %$92.36 
Omnicom Group, Inc., Cardinia Real Estate220 East 42nd StreetApril 2032$231,114 $14,944 $14,944 1.2 %$64.66 
Total$9,183,131 $719,112 $479,500 37.5 %$78.31 
(1)SLG Share of Annualized Cash Rent includes Manhattan, Suburban, Retail, Residential, and Development / Redevelopment properties.
Environmental Matters
Phase I environmental site assessments have been prepared on the properties in our portfolio, in order to assess existing environmental conditions. All of the Phase I assessments met the American Society for Testing and Materials (ASTM) Standard. Under the ASTM Standard, a Phase I environmental site assessment consists of a site visit, an historical record review, a review of regulatory agency data bases and records, and interviews with on-site personnel, with the purpose of identifying potential environmental concerns associated with real estate. These environmental site assessments did not reveal any known environmental liability that we believe will have a material adverse effect on our results of operations or financial condition.
ITEM 3.    LEGAL PROCEEDINGS
As of December 31, 2020, the Company and the Operating Partnership were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio which if adversely determined could have a material adverse impact on us.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
31

PART II
ITEM 5.    MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
SL GREEN REALTY CORP.
Our common stock trades on the New York Stock Exchange, or the NYSE, under the symbol "SLG." On February 25, 2021, the reported closing sale price per share of common stock on the NYSE was $67.46 and there were 392 holders of record of our common stock.
On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed.
To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed.
All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K.
SL GREEN OPERATING PARTNERSHIP, L.P.
At December 31, 2020, there were 3,938,823 units of limited partnership interest of the Operating Partnership outstanding and held by persons other than the Company, which received distributions per unit of the same amount and in the same manner as dividends per share were distributed to common stockholders.
There is no established public trading market for the common units of the Operating Partnership. On February 25, 2021, there were 54 holders of record and 73,517,930 common units outstanding, 69,350,829 of which were held by SL Green.
In order for SL Green to maintain its qualification as a REIT, it must make annual distributions to its stockholders of at least 90% of its taxable income (not including net capital gains). SL Green has adopted a policy of paying regular quarterly dividends on its common stock, and the Operating Partnership has adopted a policy of paying regular quarterly distributions to its common units in the same amount as dividends paid by SL Green. Cash distributions have been paid on the common stock of SL Green and the common units of the Operating Partnership since the initial public offering of SL Green. Distributions are declared at the discretion of the board of directors of SL Green and depend on actual and anticipated cash from operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors SL Green’s board of directors may consider relevant.
Each time SL Green issues shares of stock (other than in exchange for common units of limited partnership interest of the Operating Partnership, or OP Units, when such OP Units are presented for redemption), it contributes the proceeds of such issuance to the Operating Partnership in return for an equivalent number of units of limited partnership interest with rights and preferences analogous to the shares issued.
ISSUER PURCHASES OF EQUITY SECURITIES
In August 2016, our Board of Directors approved a share repurchase program under which we can buy up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion.
At December 31, 2020, repurchases executed under the program were as follows:
32

PeriodShares repurchasedAverage price paid per shareCumulative number of shares repurchased as part of the repurchase plan or programs
Year ended 20178,105,881$104.618,105,881
Year ended 20189,468,617$99.0317,574,498
Year ended 20194,465,857$86.0622,040,355
Year ended 2020 (1)
8,538,995$62.3930,579,350
(1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021.
SALE OF UNREGISTERED AND REGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES
During the year ended December 31, 2020, we issued 98,004 shares of our common stock to holders of units of limited partnership interest in the Operating Partnership upon the redemption of such units pursuant to the partnership agreement of the Operating Partnership. During the years ended December 31, 2019 and 2018, we issued 4,871 and 155,916 shares of our common stock, respectively, to holders of units of limited partnership interest in the Operating Partnership upon the redemption of such units pursuant to the partnership agreement of the Operating Partnership. The issuance of such shares was exempt from registration under the Securities Act, pursuant to the exemption contemplated by Section 4(a)(2) thereof for transactions not involving a public offering. The units were exchanged for an equal number of shares of our common stock.
The following table summarizes information, as of December 31, 2020, relating to our equity compensation plans pursuant to which shares of our common stock or other equity securities may be granted from time to time.
Number of securities
to be issued
upon exercise
of outstanding
options, warrants
and rights
Weighted
average
exercise
price of
outstanding
options,
warrants and
rights
Number of securities
remaining available
for future
issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
Plan category(a)(b)(c)
Equity compensation plans approved by security holders (1)
3,502,613 (2)$102.62 (3)3,309,300 (4)
Equity compensation plans not approved by security holders— — — 
Total3,502,613 $102.62 3,309,300 
(1)Includes our Fourth Amended and Restated 2005 Stock Option and Incentive Plan, Amended 1997 Stock Option and Incentive Plan, as amended, and 2008 Employee Stock Purchase Plan.
(2)Includes (i) 784,995 shares of common stock issuable upon the exercise of outstanding options (784,022 of which are vested and exercisable), (ii) 10,750 restricted stock units and 140,775 phantom stock units that may be settled in shares of common stock (140,775 of which are vested), (iii) 2,252,911 LTIP units that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to us for redemption and acquired by us for shares of our common stock (1,538,561 of which are vested).
(3)Because there is no exercise price associated with restricted stock units, phantom stock units or LTIP units, these awards are not included in the weighted-average exercise price calculation.
(4)Balance is after reserving for shares underlying outstanding restricted stock units, phantom stock units granted pursuant to our Non-Employee Directors' Deferral Program and LTIP Units. The number of securities remaining available consists of shares remaining available for issuance under our 2008 Employee Stock Purchase Plan and Third Amended and Restated 2005 Stock Option and Incentive Plan.

33

ITEM 7.    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, 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 Company is a self-managed real estate investment trust, or REIT, engaged in the acquisition, development, ownership, management and operation of commercial and residential real estate properties, principally office properties, located in the New York metropolitan area. Unless the context requires otherwise, all references to "we," "our" and "us" means the Company and all entities owned or controlled by the Company, including the Operating Partnership.
The COVID-19 pandemic has caused, and continues to cause, severe disruptions with wide ranging impacts to the global economy and everyday life. We expect that our business, results of operations, liquidity, cash flows, prospects, and our ability to achieve forward-looking targets and expectations could be materially and adversely affected for at least the duration of the COVID-19 pandemic and likely longer. This could also cause significant volatility in the trading prices of our securities. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration, severity and spread of the pandemic, health and safety actions taken to contain its spread and how quickly and to what extent normal economic and operating conditions can resume. Additionally, the COVID-19 pandemic could increase the magnitude of many of the other risks described in this Annual Report on Form 10-K and our other SEC filings and may have other adverse effects on our operations that we are not currently able to predict.
The scale and magnitude of adverse impacts could depend on, among other factors:
the financial condition of our tenants and their ability or willingness to pay rent in full on a timely basis;
the impact on rents and demand for office and retail space;
the extent to which work-from-home policies continue subsequent to the easing of pandemic-related restrictions;
the impact of new regulations or norms on physical space needs and expectations;
the financial condition of the borrowers and sponsors of our debt and preferred equity investments and their ability or willingness to make interest and principal payments;
the effectiveness of governmental measures aimed at slowing and containing the spread;
the effect of changes in laws and regulation;
the extent and terms associated with governmental relief programs;
the ability of debt and equity markets to function and provide liquidity; and
the ability to mitigate delays or cost increases associated with building materials or construction services necessary for development, redevelopment and tenant improvements
The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements appearing in Item 8 of this Annual Report on Form 10-K. A discussion of our results of operations for the year ended December 31, 2019 compared to the year ended year ended December 31, 2018 is included in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020, and is incorporated by reference into this Annual Report on Form 10-K.
Leasing and Operating
At December 31, 2020, our same-store Manhattan office property occupancy inclusive of leases signed but not commenced, was 93.4% compared to 96.2% at December 31, 2019. We signed office leases in Manhattan encompassing approximately 1.2 million square feet, of which approximately 0.9 million square feet represented office leases that replaced previously occupied space. Our mark-to-market on the signed Manhattan office leases that replaced previously occupied space was (3.6)% for 2020.
According to Cushman & Wakefield, leasing activity in Manhattan in 2020 totaled approximately 12.8 million square feet. Of the total 2020 leasing activity in Manhattan, the Midtown submarket accounted for approximately 8.9 million square feet, or approximately 69.5%. Manhattan's overall office vacancy went from 11.1% at December 31, 2019 to 15.2% at December 31, 2020. Overall average asking rents in Manhattan decreased in 2020 by 0.3% from $73.41 per square foot at
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December 31, 2019 to $73.16 per square foot at December 31, 2020, while Manhattan Class A asking rents increased to $80.18 per square foot , up 0.5% from $79.82 at December 31, 2019.
Acquisition and Disposition Activity
Overall Manhattan sales volume decreased by 61.0% in 2020 to $13.0 billion as compared to $29.4 billion in 2019. However, we continued to take advantage of significant interest by both international and domestic institutions and individuals seeking ownership interests in Manhattan properties to sell assets, disposing of a significant volume of properties that were considered non-core or had a more limited growth trajectory, raising efficiently priced capital that was used primarily for share repurchases and debt reduction. During the year, we closed on the sales of all or a portion of our interests in 30 East 40th Street, 1055 Washington Boulevard, Williamsburg Terrace, 410 Tenth Avenue, 333 East 22nd Street, 400 East 58th Street, the retail condominium at 609 Fifth Avenue, and 315 West 33rd Street - "The Olivia" for total gross valuations of $1.7 billion.
Debt and Preferred Equity
In 2019 and 2020, in our debt and preferred equity portfolio we continued to focus on the origination of financings for owners, acquirers or developers of properties in New York City, while selectively selling certain investments, the proceeds of which were utilized to repurchase shares of common stock or for debt repayment. This investment strategy provides us with the opportunity to fill a need for additional debt financing, while achieving attractive risk adjusted returns to us on the investments and receiving a significant amount of additional information on the New York City real estate market. The typical investments made by us during 2019 and 2020 were to reputable owners or acquirers which have sizable equity subordinate to our last dollar of exposure. During 2020, our debt and preferred equity activities included purchases and originations, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization, of $0.6 billion, and sales, redemption and participations of $1.0 billion.
For descriptions of significant activities in 2020, refer to "Part I, Item 1. Business - Highlights from 2020."
Critical Accounting Policies
Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Investment in Commercial Real Estate Properties
Real estate properties are presented at cost less accumulated depreciation and amortization. Costs directly related to the development or redevelopment of properties are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.
We recognize the assets acquired, liabilities assumed (including contingencies) and any noncontrolling interests in an acquired entity at their respective fair values on the acquisition date.
The Company classifies those leases under which the Company is the lessee at lease commencement as finance or operating leases. Leases qualify as finance leases if the lease transfers ownership of the asset at the end of the lease term, the lease grants an option to purchase the asset that we are reasonably certain to exercise, the lease term is for a major part of the remaining economic life of the asset, or the present value of the lease payments exceeds substantially all of the fair value of the asset. Leases that do not qualify as finance leases are deemed to be operating leases. On the consolidated statements of operations, operating leases are expensed through operating lease rent while financing leases are expensed through amortization and interest expense.
We incur a variety of costs in the development and leasing of our properties. After the determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The costs of land and building under development include specifically identifiable costs. The capitalized costs include, but are not limited to, pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year after major
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construction activity ceases. We cease capitalization on the portions substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with the portions under construction.
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's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted) 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 fair value of the property as calculated in accordance with ASC 820.
We also evaluate our real estate properties for impairment when a 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 and depreciation expense is no longer recorded. See Note 4, "Properties Held for Sale and Dispositions."
Investments in Unconsolidated Joint Ventures
We account for our investments in unconsolidated joint ventures under the equity method of accounting in cases where we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are variable interest entities (each, a "VIE") and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. These investments are recorded initially at cost, as investments in unconsolidated joint ventures, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. Equity in net income (loss) from unconsolidated joint ventures is allocated based on our ownership or economic interest in each joint venture and includes adjustments related to basis differences in accounting for the investment. When a capital event (as defined in each joint venture agreement) such as a refinancing occurs, if return thresholds are met, future equity income will be allocated at our increased economic interest. We recognize incentive income from unconsolidated real estate joint ventures as income to the extent it is earned and not subject to a clawback feature. Distributions we receive from unconsolidated real estate joint ventures in excess of our basis in the investment are recorded as offsets to our investment balance if we remain liable for future obligations of the joint venture or may otherwise be committed to provide future additional financial support. We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans.
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 each joint ventures' actual and projected cash flows. We do not believe that the values of any of our equity investments were impaired at December 31, 2020.
We may originate loans for real estate acquisition, development and construction ("ADC loans") where we expect to receive some of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with the accounting for our debt and preferred equity investments.
Lease Classification
Lease classification for leases under which the Company is the lessor is evaluated at lease commencement and leases not classified as sales-type leases or direct financing leases are classified as operating leases. Leases qualify as sales-type leases if the contract includes either transfer of ownership clauses, certain purchase options, a lease term representing a major part of the economic life of the asset, or the present value of the lease payments and residual guarantees provided by the lessee exceeds substantially all of the fair value of the asset. Additionally, leasing an asset so specialized that it is not deemed to have any value to the Company at the end of the lease term may also result in classification as a sales-type lease. Leases qualify as direct financing leases when the present value of the lease payments and residual value guarantees provided by the lessee and unrelated third parties exceeds substantially all of the fair value of the asset and collection of the payments is probable.
Revenue Recognition
Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the leased space is available for its intended use by the lessee.
To determine whether the leased space is available for its intended use by the lessee, 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 of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space.
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When management concludes that we are the owner of tenant improvements for accounting purposes, we record amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, we 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, we record our contribution towards those improvements as a lease incentive, which is included in deferred 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 consolidated balance sheets.
In addition to base rent, our tenants also generally will pay variable rent which represents their pro rata share of increases in real estate taxes and certain operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in certain building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the 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.
Rental revenue is recognized if collectability is probable. If collectability of substantially all of the lease payments is assessed as not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current-period adjustment to rental revenue. A subsequent change in the assessment of collectability to probable may result in a current-period adjustment to rental revenue for any difference between the rental revenue that would have been recognized if collectability had always been assessed as probable and the rental revenue recognized to date.
We recognize lease concessions related to COVID-19, such as rent deferrals and abatements, in accordance with the Lease Modification Q&A issued by the FASB in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. When total cash flows resulting from the modified lease are not substantially similar to the cash flows in the original lease, we account for the concession agreement as a new lease.
The Company provides its tenants with certain customary services for lease contracts such as common area maintenance and general security. We have elected to combine the non-lease components with the lease components of our operating lease agreements and account for them as a single lease component in accordance with ASC 842.
We record a gain or loss on sale of real estate assets when we no longer hold a controlling financial interest in the entity holding the real estate, a contract exists with a third party and that third party has control of the assets acquired.
Investment income on debt and preferred equity investments is accrued based on the contractual terms of the instruments and when, in the opinion of management, it is deemed collectible. Some debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is collectible. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt.
Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to 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 cash flows 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. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield.
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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 is resumed on any non-accrual debt or preferred equity investment that is 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 consider an investment to be past due when amounts contractually due have not been paid.
We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we 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, original issue discounts, 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 operations. Any fees received at the time of sale or syndication are recognized as part of investment income.
Asset management fees are recognized on a straight-line basis over the term of the asset management agreement.
Debt and Preferred Equity Investments
Debt and preferred equity investments are presented at the net amount expected to be collected in accordance with ASC 326. An allowance for loan losses is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected through the expected maturity date of such investments. The expense for loan loss and other investment reserves is the charge to earnings to adjust the allowance for loan losses to the appropriate level. Amounts are written off from the allowance when we de-recognize the related investment either as a result of a sale of the investment or acquisition of equity interests in the collateral.
The Company evaluates the amount expected to be collected based on current market and economic conditions, historical loss information, and reasonable and supportable forecasts. The Company's assumptions are derived from both internal data and external data which may include, among others, governmental economic projections for the New York City Metropolitan area, public data on recent transactions and filings for securitized debt instruments. This information is aggregated by asset class and adjusted for duration. Based on these inputs, loans are evaluated at the individual asset level. In certain instances, we may also use a probability-weighted model that considers the likelihood of multiple outcomes and the amount expected to be collected for each outcome.
The evaluation of the possible credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor requires significant judgment, which include both asset level and market assumptions over the relevant time period.
In addition, quarterly, the Company assigns each loan a risk rating. Based on a 3-point scale, loans are rated “1” through “3,” from lower risk to higher risk, which ratings are defined as follows: 1 - Low Risk Assets - Low probability of loss, 2 - Watch List Assets - Higher potential for loss, 3 - High Risk Assets - Loss more likely than not. Loans with risk ratings of 2 or 3 are evaluated to determine whether the expected risk of loss is appropriately captured through the combination of our expectations of current conditions, historical loss information and supportable forecasts described above or whether risk characteristics specific to the loan warrant the use of a probability-weighted model.
Financing investments that are classified as held for sale are carried at the expected amount to be collected 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 expected amount to be collected.
Other financing receivables that are included in balance sheet line items other than the Debt and Preferred Equity Investments line are also measured at the net amount expected to the be collected.
Accrued interest receivable amounts related to these debt and preferred equity investment and other financing receivables are recorded at the net amount expected to be collected within Other assets in the consolidated balance sheets. Write offs of accrued interest receivables are recognized as an expense for loan loss and other investment reserves.
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Results of Operations
Comparison of the year ended December 31, 2020 to the year ended December 31, 2019
The following comparison for the year ended December 31, 2020, or 2020, to the year ended December 31, 2019, or 2019, makes reference to the effect of the following:

i.“Same-Store Properties,” which represents all operating properties owned by us at January 1, 2019 and still owned by us in the same manner at December 31, 2020 (Same-Store Properties totaled 28 of our 38 consolidated operating properties),
ii.“Acquisition Properties,” which represents all properties or interests in properties acquired in 2020 and 2019 and all non-Same-Store Properties, including properties that are under development or redevelopment,
iii."Disposed Properties" which represents all properties or interests in properties sold in 2020 and 2019, and
iv.“Other,” which represents properties where we sold an interest resulting in deconsolidation and corporate level items not allocable to specific properties, as well as the Service Corporation and eEmerge Inc.
 Same-StoreDisposedOtherConsolidated
(in millions)20202019$
Change
%
Change
202020192020201920202019$
Change
%
Change
Rental revenue$727.6 $756.9 $(29.3)(3.9)%$28.9 $95.5 $47.9 $131.2 $804.4 $983.6 $(179.2)(18.2)%
Investment income— — — — %— — 120.2 195.6 120.2 195.6 (75.4)(38.5)%
Other income33.4 9.4 24.0 255.3 %3.6 4.6 91.2 45.8 128.2 59.8 68.4 114.4 %
Total revenues761.0 766.3 (5.3)(0.7)%32.5 100.1 259.3 372.6 1,052.8 1,239.0 (186.2)(15.0)%
Property operating expenses335.9 352.7 (16.8)(4.8)%6.9 25.7 45.7 80.3 388.5 458.7 (70.2)(15.3)%
Transaction related costs— — — — %— — 0.5 0.7 0.5 0.7 (0.2)(28.6)%
Marketing, general and administrative— — — — %— — 91.8 100.9 91.8 100.9 (9.1)(9.0)%
335.9 352.7 (16.8)(4.8)%6.9 25.7 138.0 181.9 480.8 560.3 (79.5)(14.2)%
Other income (expenses):
Interest expense and amortization of deferred financing costs, net of interest income$(128.5)$(202.2)73.7 (36.4)%
Depreciation and amortization(313.7)(272.4)(41.3)15.2 %
Equity in net (loss) income from unconsolidated joint ventures(25.2)(34.5)9.3 (27.0)%
Equity in net gain on sale of interest in unconsolidated joint venture/real estate3.0 76.2 (73.2)(96.1)%
Purchase price and other fair value adjustment187.5 69.4 118.1 170.2 %
Gain (loss) on sale of real estate, net215.5 (16.7)232.2 (1,390.4)%
Depreciable real estate reserves and impairments(60.5)(7.0)(53.5)764.3 %
Loan loss and other investment reserves, net of recoveries(35.3)— (35.3)— %
Net income$414.8 $291.5 $123.3 42.3 %
Rental Revenue
    Rental revenues decreased primarily due to a) our Disposed Properties ($66.6 million), b) Credit Suisse vacating its space at One Madison Avenue in January 2020 pursuant to an agreement to terminate its lease early so the property can be redeveloped ($50.2 million), c) lower contribution from our Same-Store properties ($29.3 million) driven by i) lower expense escalation revenue resulting from lower operating expenses and ii) charge offs of billed tenant receivables and straight-line rent, and d) increased vacancy at 625 Madison Avenue, which is expected to be redeveloped ($26.1 million).
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The following table presents a summary of the commenced leasing activity for the year ended December 31, 2020 in our Manhattan portfolio:
 Usable
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       
Space available at beginning of the year1,306,757       
Sold vacancies(4,545)
Acquired vacancies42,800 
Property in redevelopment(10,695)
Space which became available during the year(3)
      
•       Office1,170,246       
•       Retail90,528       
•       Storage6,294       
 1,267,068       
Total space available2,601,385       
Leased space commenced during the year:       
•       Office(4)
777,511 835,150 $68.24 $65.37 $58.82 6.7 9.9
•       Retail104,800 104,164 $142.74 $107.30 $64.32 8.6 16.9
•       Storage1,339 1,249 $35.74 $37.41 $— 3.4 3.9
Total leased space commenced883,650 940,563 $76.44 $69.31 $59.35 6.9 10.7
Total available space at end of year1,717,735       
Early renewals      
•       Office499,520 513,010 $67.87 $71.03 $17.76 4.2 4.8
•       Retail105,563 40,238 $239.85 $211.64 $— 1.5 2.2
•       Storage15,833 7,070 $37.56 $37.01 $— 1.9 5.3 
Total early renewals620,916 560,318 $79.84 $80.70 $16.26 3.9 4.6
Total commenced leases, including replaced previous vacancy  
•       Office1,348,160 $68.10 $67.82 $43.20 5.8 8.0
•       Retail 144,402 $169.80 $145.19 $46.40 6.6 12.8
•       Storage 8,319 $37.28 $37.06 $— 2.1 5.1
Total commenced leases 1,500,881 $77.71 $74.20 $43.27 5.8 8.4
(1)Annual initial base rent.
(2)Escalated rent includes base rent plus all additional amounts paid by the tenant in the form of real estate taxes, operating expenses, porters wage or a consumer price index (CPI) adjustment.
(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 $66.50 per rentable square feet for 672,280 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $67.09 per rentable square feet for 1,185,290 rentable square feet.
Investment Income
Investment income decreased primarily as a result of a decrease in the weighted average balance and weighted average yield of our debt and preferred equity investment portfolio. For the years ended December 31, 2020 and 2019, the weighted average balance of our debt and preferred equity investment portfolio and the weighted average yield were $1.4 billion and 7.7%, respectively, compared to $2.1 billion and 8.8%, respectively. As of December 31, 2020, the debt and preferred equity investment portfolio had a weighted average term to maturity of 2.3 years excluding extension options.
Other Income
Other income increased primarily due a) to higher lease termination income in 2020 as compared with 2019 ($48.6 million), b) a settlement fee related to a previous real estate transaction ($20.2 million), and c) development fee income of ($7.3 million) in 2020, offset by d) a decrease in leasing commission income in 2020 as compared to 2019 ($7.0 million).
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Property Operating Expenses
Property operating expenses decreased primarily due to a) a reduction in variable operating expenses, such as utilities, cleaning, and security, at our Same-Store properties ($24.3 million) as a result of lower physical occupancy at the properties during the year related to COVID-19 and b) decreased operating expenses and real estate taxes at i) our Disposed properties ($18.8 million and $13.3 million, respectively) and ii) 625 Madison Avenue ($6.5 million and $10.3 million, respectively).
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses decreased to $91.8 million for the year ended December 31, 2020, compared to $100.9 million for the same period in 2019 due to reduced compensation expense.
Interest Expense and Amortization of Deferred Financing Costs, Net of Interest Income
Interest expense and amortization of deferred financing costs, net of interest income, decreased primarily as a result of a) a decrease in corporate interest expense due to lower LIBOR in 2020 ($21.7 million), b) the repayment of an issuance of senior unsecured notes in the first quarter of 2020 ($20.9 million), c) interest capitalization in connection with a property that is under development ($18.3 million) and d) the repayment of the Master Repurchase Agreement in the second quarter of 2020 ($10.3 million). The weighted average consolidated debt balance outstanding was $5.8 billion for the year ended December 31, 2020 as compared to $6.1 billion for the year ended December 31, 2019. The consolidated weighted average interest rate decreased to 3.06% for the year ended December 31, 2020 as compared to 4.00% for the year ended December 31, 2019 as a result of lower LIBOR.
Depreciation and Amortization
Depreciation and amortization increased primarily due to accelerated depreciation at One Madison Avenue related to the redevelopment of the property ($55.2 million), offset by decreased depreciation and amortization at our Disposed properties ($18.5 million).
Equity in net (loss) income from unconsolidated joint ventures
Equity in net loss from unconsolidated joint ventures decreased primarily as a result of increased contribution from 280 Park Avenue resulting from a) lower interest expense ($10.3 million) and b) a tax abatement benefit recognized in 2020 ($2.4 million).
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
During the year ended December 31, 2020, we recognized a gain on the sale of our joint venture interest in 333 East 22nd Street ($3.0 million). During the year ended December 31, 2019, we recognized gains on the sales of our joint venture interests in 521 Fifth Avenue ($57.4 million) and 131 Spring Street ($16.7 million).
Purchase price and other fair value adjustments
In December 2020, the Company admitted partners to the One Madison Avenue development project, which resulted in the Company no longer retaining a controlling interest in the entity, as defined in ASC 810, and the deconsolidation of our remaining 50.5% interest. We recorded our investment at fair value, which resulted in the recognition of a fair value adjustment of $187.5 million.
In August 2019, the Company sold a 49% interest in 115 Spring Street, which resulted in the deconsolidation of our remaining 51% interest. We recorded our investment at fair value which resulted in the recognition of a fair value adjustment of $3.8 million.
In May 2019, the Company closed on the acquisition of a majority and controlling interest in 410 Tenth Avenue. We recorded the assets acquired and liabilities assumed at fair value which resulted in the recognition of a fair value adjustment of $67.6 million million.
Gain (Loss) on Sale of Real Estate, Net
During the year ended December 31, 2020, we recognized gains on the sales of our interests in a) 315 West 33rd Street - "The Olivia" ($72.3 million), b) the retail condominium at 609 Fifth Avenue ($65.4 million), c) 410 Tenth Avenue ($56.4 million), d) 15 Beekman ($17.7 million), e) Williamsburg Terrace ($11.8 million) and f) 400 East 58th Street ($8.3 million), and a loss on sale related to our interest in 1055 Washington Boulevard in Stamford, Connecticut. During the year ended December 31, 2019, we recognized a loss on the sale of our interest in 562 Fifth Avenue ($26.6 million) and gains on the sales of our interests in a) 1640 Flatbush Avenue ($5.5 million), b) 115 Spring Street ($3.3 million), and c) the Suburban Properties ($1.8 million). The Suburban Properties consist of 360 Hamilton Avenue, 100 Summit Lake Drive, 200 Summit Lake Drive, and 500 Summit Lake Drive.
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Depreciable Real Estate Reserves and Impairments
During the year ended December 31, 2020, we recorded charges related to a) 106 Spring Street ($39.7 million), b) 133 Greene Street ($14.1 million), and c) 712 Madison Avenue ($6.6 million). During the year ended December 31, 2019, we recorded a charge related to 1010 Washington Boulevard in Stamford, Connecticut ($7.0 million).
Loan loss and other investment reserves, net of recoveries
During the year ended December 31, 2020, we recorded $12.3 million of losses related to certain debt and preferred equity investments that were sold and $23.0 million of loan loss and other investment reserves in conjunction with recording debt and preferred equity investments and other financing receivables at the net amount expected to be collected. There were no loan loss reserves for the year ended December 31, 2019.
Comparison of the year ended December 31, 2019 to the year ended December 31, 2018
For a comparison of the year ended December 31, 2019 to the year ended December 31, 2018, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 28, 2020.
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, acquisitions, development or redevelopment of properties, tenant improvements, leasing costs, share repurchases, dividends to shareholders, distributions to unitholders, repurchases or repayments of outstanding indebtedness and for debt and preferred equity investments will include:
(1)Cash flow from operations;
(2)Cash on hand;
(3)Net proceeds from divestitures of properties and redemptions, participations, dispositions and repayments of debt and preferred equity investments;
(4)Borrowings under the revolving credit facility;
(5)Other forms of secured or unsecured financing; and
(6)Proceeds from common or preferred equity or debt offerings by the Company or the Operating Partnership (including issuances of units of limited partnership interest in the Operating Partnership and Trust preferred securities).
Cash flow from operations is primarily dependent upon the collectability of rent, the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent, 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 operating cash flow.
As of the date of this filing, we have collected gross tenant billings for 2020 of 95.5% overall, including 97.9% from office tenants and 85.4% from retail tenants.
The combined aggregate principal maturities of our property mortgages and other loans payable, Federal Home Loan Bank of New York ("FHLB") facilities, corporate obligations and our share of joint venture debt, including as-of-right extension options, as of December 31, 2020 were as follows (in thousands):
20212022202320242025ThereafterTotal
Property mortgages and other loans$250,727 $264,202 $566,599 $278,034 $829 $580,969 $1,941,360 
FHLB facilities60,000 — — — — — 60,000 
Corporate obligations350,000 800,000 1,410,000 200,000 100,000 100,000 2,960,000 
Joint venture debt-our share1,085,279 540,947 491,066 617,010 1,385,256 552,813 4,672,371 
Total$1,746,006 $1,605,149 $2,467,665 $1,095,044 $1,486,085 $1,233,782 $9,633,731 
As of December 31, 2020, we had liquidity of $1.7 billion, comprised of $1.4 billion of availability under our revolving credit facility and $0.3 billion of consolidated cash on hand, inclusive of $28.6 million of marketable securities. This liquidity excludes $122.2 million representing our share of cash at unconsolidated joint venture properties. We may seek to divest of properties, interests in properties, debt and preferred equity investments or access private and public 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
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refinancing opportunities for secured and unsecured debt, will allow us to satisfy our debt obligations, as described above, upon maturity, if not before.
We 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 1. Financial Statements" and is not meant to be an all-inclusive discussion of the changes in our cash flows for the years presented below.
Cash, restricted cash, and cash equivalents were $372.8 million and $241.4 million at December 31, 2020 and 2019, respectively, representing a increase of $131.4 million. The increase was a result of the following changes in cash flows (in thousands):
Year Ended December 31,
20202019(Decrease)
Increase
Net cash provided by operating activities$554,236 $376,473 $177,763 
Net cash provided by investing activities$1,056,430 $114,494 $941,936 
Net cash used in financing activities$(1,479,301)$(528,650)$(950,651)
Our principal sources of operating cash flow are the properties in our consolidated and joint venture portfolios and our debt and preferred equity portfolio. These sources provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service, and fund dividend and distribution requirements. Our debt and preferred equity investments and joint venture investments also provide a steady stream of operating cash flow to us.
Cash is used in investing activities to fund acquisitions, development or 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 year ended December 31, 2020, when compared to the year ended December 31, 2019, we used cash primarily for the following investing activities (in thousands):
Acquisitions of real estate$175,745 
Capital expenditures and capitalized interest(205,154)
Escrow cash-capital improvements/acquisition deposits/deferred purchase price5,239 
Joint venture investments58,367 
Distributions from joint ventures45,552 
Proceeds from sales of real estate/partial interest in property904,080 
Debt and preferred equity and other investments(41,893)
Increase in net cash provided by investing activities$941,936 
Funds spent on capital expenditures, which are comprised of building and tenant improvements, increased from $253.0 million for the year ended December 31, 2019 to $458.1 million for the year ended December 31, 2020 due to increased costs incurred in connection with our development and redevelopment properties.
We generally fund our investment activity through the sale of real estate, the sale of debt and preferred equity investments, property-level financing, our credit facilities, senior unsecured notes, and construction loans. From time to time, the Company may issue common or preferred stock, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the year ended December 31, 2020, when compared to the year ended December 31, 2019, we used cash for the following financing activities (in thousands):
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Proceeds from our debt obligations$613,908 
Repayments of our debt obligations(1,261,752)
Net distribution to noncontrolling interests(80,675)
Other financing activities(49,978)
Proceeds from stock options exercised and DRSPP issuance672 
Repurchase of common stock(144,084)
Redemption of preferred stock(64,608)
Acquisition of subsidiary interest from noncontrolling interest24,309 
Dividends and distributions paid12,390 
Increase in net cash used in financing activities$(949,818)
Capitalization
Our authorized capital stock consists of 260,000,000 shares, $0.01 par value per share, consisting of 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, $0.01 par value per share. As of December 31, 2020, 68,508,127 shares of common stock and no shares of excess stock were issued and outstanding.
On December 4, 2020 our Board of Directors declared an ordinary dividend and a special dividend (together, "the Total Dividend"). The Total Dividend was paid on January 15, 2021 to shareholders of record at the close of business on December 15, 2020 ("the Record Date"). Shareholders had the opportunity to elect to receive the Total Dividend in the form of all cash or all stock, subject to proration if either option was oversubscribed.
To mitigate the dilutive impact of the common stock issued in the special dividend, the board of directors also authorized a reverse stock split, which was effective after markets closed on January 20, 2021. On January 8, 2021, a committee of the Board of Directors calculated the ratio for the reverse stock split of our issued and outstanding shares of common stock as 1.02918-for-1. After the issuance of the dividend and the completion of the reverse stock split, the number of shares of our common stock outstanding was equivalent to the number of total shares outstanding on the Record Date (not including any issuances or repurchases that occurred following the Record Date, as well as any fractional shares that would have been issued but for which cash-in-lieu was paid). However, on a relative basis, some individual shareholders may have more shares of SLG’s common stock, and some individual shareholders may have fewer shares of our common stock, depending on their individual elections to receive cash or stock and as a result of the cash option being oversubscribed.
All share-related references and measurements including the number of shares outstanding, share prices, number of shares repurchased, earnings per share, dividends per share, and share-based compensation awards, have been retroactively adjusted to reflect the reverse stock split for all periods presented in this Annual Report on Form 10-K.
Share Repurchase Program
In August 2016, our Board of Directors approved a share repurchase program under which we can repurchase up to $1.0 billion of shares of our common stock. The Board of Directors has since authorized five separate $500.0 million increases to the size of the share repurchase program in the fourth quarter of 2017, second quarter of 2018, fourth quarter of 2018, fourth quarter of 2019, and fourth quarter of 2020 bringing the total program size to $3.5 billion.
At December 31, 2020, repurchases executed under the program were as follows:
PeriodShares repurchasedAverage price paid per shareCumulative number of shares repurchased as part of the repurchase plan or programs
Year ended 20178,105,881$104.618,105,881
Year ended 20189,468,617$99.0317,574,498
Year ended 20194,465,857$86.0622,040,355
Year ended 2020 (1)
8,538,995$62.3930,579,350
(1) Includes 63,374 shares of common stock repurchased by the Company in December 2020 that were settled in January 2021.
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Dividend Reinvestment and Stock Purchase Plan ("DRSPP")
In February 2018, the Company filed a registration statement with the SEC for our dividend reinvestment and stock purchase plan, or DRSPP, which automatically became effective upon filing. The Company registered 3,500,000 shares of our common stock under the DRSPP. The DRSPP commenced on September 24, 2001.
The following table summarizes SL Green common stock issued, and proceeds received from dividend reinvestments and/or stock purchases under the DRSPP for the years ended December 31, 2020, 2019, and 2018, respectively (dollars in thousands):
Year Ended December 31,
202020192018
Shares of common stock issued16,676 3,757 1,359 
Dividend reinvestments/stock purchases under the DRSPP$1,006 $334 $136 
Fourth Amended and Restated 2005 Stock Option and Incentive Plan
The Fourth Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2016 and its stockholders in June 2016 at the Company's annual meeting of stockholders. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 27,030,000 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 December 31, 2020, 3.1 million 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.
Deferred Compensation Plan for Directors
Under our Non-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 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 generally will be settled in an equal number of shares of common stock upon the earlier of (i) the January 1 coincident with or the next following such director's termination of service from the Board of Directors 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 our common stock on the first business day of the respective quarter. Each participating non-employee director is also credited with dividend equivalents or phantom stock units based on the dividend rate for each quarter, which are either paid in cash currently or credited to the director’s account as additional phantom stock units.
During the year ended December 31, 2020, 20,753 phantom stock units and 8,417 shares of common stock were issued to our board of directors. We recorded compensation expense of $2.3 million during the year ended December 31, 2020 related to the Deferred Compensation Plan. As of December 31, 2020, there were 140,775 phantom stock units outstanding pursuant to our Non-Employee Director's Deferral Program.
Employee Stock Purchase Plan
In 2007, the Company's board of directors adopted the 2008 Employee Stock Purchase Plan, or ESPP, to encourage our employees to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Code, and has been adopted by the board to enable our eligible employees to purchase the 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 our stockholders at our 2008 annual meeting of stockholders. As of December 31, 2020, 156,780 shares of our common stock had been issued under the ESPP.
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Indebtedness
The table below summarizes our consolidated mortgages and other loans payable, 2017 credit facility, senior unsecured notes and trust preferred securities outstanding at December 31, 2020 and 2019, (amount in thousands).
December 31,
Debt Summary:20202019
Balance
Fixed rate$1,985,572$2,536,286
Variable rate—hedged1,150,0001,000,000
Total fixed rate3,135,5723,536,286
Total variable rate1,827,6772,018,434
Total debt$4,963,249$5,554,720
Debt, preferred equity, and other investments subject to variable rate345,877618,885
Net exposure to variable rate debt1,481,8001,399,549
Percent of Total Debt:
Fixed rate63.2 %63.7 %
Variable rate (1)
36.8 %36.3 %
Total100.0 %100.0 %
Effective Interest Rate for the Year:
Fixed rate3.65 %4.05 %
Variable rate2.30 %3.93 %
Effective interest rate2.91 %3.85 %
(1)    Inclusive of the mitigating effect of our debt, preferred equity, and other investments subject to variable rates, the percent of total debt of our net exposure to variable rate debt was 32.1% and 28.4% as of December 31, 2020 and December 31, 2019, respectively.
The variable rate debt shown above generally bears interest at an interest rate based on 30-day LIBOR (0.14% and 1.76% at December 31, 2020 and 2019, respectively). Our consolidated debt at December 31, 2020 had a weighted average term to maturity of 2.87 years.
Certain of our debt and equity investments and other investments, with carrying values of $0.3 billion at December 31, 2020 and $0.6 billion at December 31, 2019, are variable rate investments, which mitigates our exposure to interest rate changes on our unhedged variable rate debt. Inclusive of the mitigating effect of these investments, the net percent of our variable rate debt to total debt was 32.1% and 28.4%, respectively.
Mortgage Financing
As of December 31, 2020, our total mortgage debt (excluding our share of joint venture mortgage debt of $4.7 billion) consisted of $1.1 billion of fixed rate debt, including swapped variable rate debt, with an effective weighted average interest rate of 4.31% and $0.9 billion of variable rate debt with an effective weighted average interest rate of 2.77%.
Corporate Indebtedness
2017 Credit Facility
In November 2017, we entered into an amendment to the credit facility, referred to as the 2017 credit facility, that was originally entered into by the Company in November 2012, or the 2012 credit facility. As of December 31, 2020, the 2017 credit facility consisted of a $1.5 billion revolving credit facility, a $1.3 billion term loan (or "Term Loan A"), and a $200.0 million term loan (or "Term Loan B") with maturity dates of March 31, 2022, March 31, 2023, and November 21, 2024, respectively. The revolving credit facility has two six-month as-of-right extension options to March 31, 2023. We also have an option, subject to customary conditions, to increase the capacity of the credit facility to $4.5 billion at any time prior to the maturity dates for the revolving credit facility and term loans without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions.
As of December 31, 2020, the 2017 credit facility bore interest at a spread over 30-day LIBOR ranging from (i) 82.5 basis points to 155 basis points for loans under the revolving credit facility, (ii) 90 basis points to 175 basis points for loans under Term Loan A, and (iii) 85 basis points to 165 basis points for loans under Term Loan B, in each case based on the credit
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rating assigned to the senior unsecured long term indebtedness of the Company. In instances where there are either only two ratings available or where there are more than two and the difference between them is one rating category, the applicable rating shall be the highest rating. In instances where there are more than two ratings and the difference between the highest and the lowest is two or more rating categories, then the applicable rating used is the average of the highest two, rounded down if the average is not a recognized category.
At December 31, 2020, the applicable spread was 100 basis points for the revolving credit facility, 110 basis points for Term Loan A, and 100 basis points for Term Loan B. We are required to pay quarterly in arrears a 12.5 to 30 basis point facility fee on the total commitments under the revolving credit facility based on the credit rating assigned to the senior unsecured long term indebtedness of the Company. As of December 31, 2020, the facility fee was 20 basis points.
As of December 31, 2020, we had $26.0 million of outstanding letters of credit, $110.0 million drawn under the revolving credit facility and $1.5 billion outstanding under the term loan facilities, with total undrawn capacity of $1.4 billion under the 2017 credit facility. At December 31, 2020 and December 31, 2019, the revolving credit facility had a carrying value of $105.3 million and $234.0 million, respectively, net of deferred financing costs. At December 31, 2020 and December 31, 2019, the term loan facilities had a carrying value of $1.5 billion and $1.5 billion, respectively, net of deferred financing costs.
The Company and the Operating Partnership are borrowers jointly and severally obligated under the 2017 credit facility.
The 2017 credit facility includes certain restrictions and covenants (see Restrictive Covenants below).
Federal Home Loan Bank of New York ("FHLB") Facility
As of December 31, 2020, the Company’s wholly-owned subsidiary, Ticonderoga Insurance Company, or Ticonderoga, a Vermont licensed captive insurance company, was a member of the Federal Home Loan Bank of New York, or FHLBNY. As a member, Ticonderoga was able to borrow funds from the FHLBNY in the form of secured advances that bore interest at a floating rate. In February 2021, Ticonderoga's membership in FHLB New York was terminated and all advances were repaid. As of December 31, 2020, Ticonderoga had a total of $60.0 million in outstanding secured advances with an average spread of 21 basis points over 30-day LIBOR.
Master Repurchase Agreement
The Company entered into a Master Repurchase Agreement, or MRA, known as the 2017 MRA, which provides us with the ability to sell certain mortgage investments with a simultaneous agreement to repurchase the same at a certain date or on demand. We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facility permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to collateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity. As of December 31, 2020, there have been no margin calls on the 2017 MRA.
In April 2018, we increased the maximum facility capacity from $300.0 million to $400.0 million. The facility bears interest on a floating rate basis at a spread to 30-day LIBOR based on the pledged collateral and advance rate and is scheduled to mature in June 2021, with a one-year extension option. At December 31, 2020, the facility had no outstanding balance.

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Senior Unsecured Notes
The following table sets forth our senior unsecured notes and other related disclosures as of December 31, 2020 and 2019, respectively, by scheduled maturity date (dollars in thousands):
IssuanceDecember 31,
2020
Unpaid
Principal
Balance
December 31,
2020
Accreted
Balance
December 31,
2019
Accreted
Balance
Interest Rate (1)Initial Term
(in Years)
Maturity Date
August 7, 2018 (2)(3)
$350,000 $350,000 $350,000 1.52 %3August 2021
October 5, 2017 (2)
500,000 499,803 499,695 3.25 %5October 2022
November 15, 2012 (4)
300,000 302,086 303,142 4.50 %10December 2022
December 17, 2015 (5)
100,000 100,000 100,000 4.27 %10December 2025
March 16, 2010 (6)
  250,000 
$1,250,000 $1,251,889 $1,502,837 
Deferred financing costs, net(3,670)(5,990)
$1,250,000 $1,248,219 $1,496,847 
(1)Interest rate as of December 31, 2020, taking into account interest rate hedges in effect during the period.
(2)Issued by the Operating Partnership with the Company as the guarantor.
(3)The notes are subject to redemption at the Company's option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the notes, plus unpaid accrued interest thereon to the redemption date. In April 2020, the Company entered into $350.0 million of fixed rate interest swaps at a rate of 0.54375% through August 2021.
(4)In October 2017, the Company and the Operating Partnership as co-obligors issued an additional $100.0 million of 4.50% senior unsecured notes due December 2022. The notes were priced at 105.334% of par.
(5)Issued by the Company and the Operating Partnership as co-obligors.
(6)In March 2020, the notes were repaid.

Restrictive Covenants
The terms of the 2017 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, 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 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 the Company to continue to qualify as a REIT for Federal income tax purposes. As of December 31, 2020 and 2019, we were in compliance with all such covenants.
Junior Subordinated Deferrable Interest Debentures
In June 2005, the Company and the Operating Partnership issued $100.0 million in unsecured 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 securities mature in 2035 and bear interest at a floating rate of 125 basis points over the three-month LIBOR. 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 sheets and the related payments are classified as interest expense.
Interest Rate Risk
We are exposed to changes in interest rates primarily from our variable rate debt. Our exposure to interest rate fluctuations are managed through either the use of interest rate derivative instruments and/or through our variable rate debt and preferred equity investments. Based on the debt outstanding as of December 31, 2020, a hypothetical 100 basis point increase in the floating rate interest rate curve would increase our consolidated annual interest cost, net of interest income from variable rate debt and preferred equity investments, by $14.0 million and would increase our share of joint venture annual interest cost by $20.6 million. At December 31, 2020, 32.1% of our $1.1 billion debt and preferred equity portfolio is indexed to LIBOR.
We recognize most derivatives on the balance sheet at fair value. Derivatives that are not hedges are 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
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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 loss until the hedged item is recognized in earnings.
Our long-term debt of $3.1 billion bears interest at fixed rates, and therefore the fair value of these instruments is affected by changes in the market interest rates. Our variable rate debt and variable rate joint venture debt as of December 31, 2020 bore interest based on a spread of LIBOR plus 18 basis points to LIBOR plus 340 basis points.
Contractual Obligations
The combined aggregate principal maturities of mortgages and other loans payable, the 2017 credit facility, senior unsecured notes (net of discount), trust preferred securities, our share of joint venture debt, including as-of-right extension options and put options, estimated interest expense, and our obligations under our financing and operating leases, as of December 31, 2020 are as follows (in thousands):
20212022202320242025ThereafterTotal
Property mortgages and other loans$250,727 $264,202 $566,599 $278,034 $829 $580,969 $1,941,360 
MRA and FHLB facilities60,000 — — — — — 60,000 
Revolving credit facility— — 110,000 — — — 110,000 
Unsecured term loans— — 1,300,000 200,000 — — 1,500,000 
Senior unsecured notes350,000 800,000 — — 100,000 — 1,250,000 
Trust preferred securities— — — — — 100,000 100,000 
Financing leases32,527 3,523 3,570 3,641 3,810 260,550 307,621 
Operating leases28,534 26,228 23,921 23,939 24,026 504,360 631,008 
Estimated interest expense141,815 122,975 60,953 42,990 31,901 55,103 455,737 
Joint venture debt1,085,279 540,947 491,066 617,010 1,385,256 552,813 4,672,371 
Total$1,948,882 $1,757,875 $2,556,109 $1,165,614 $1,545,822 $2,053,795 $11,028,097 
Off-Balance Sheet Arrangements
We have off-balance sheet investments, including joint ventures and debt and preferred equity investments. These investments all have varying ownership structures. A majority 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 and Preferred Equity Investments" and Note 6, "Investments in Unconsolidated Joint Ventures" in the accompanying consolidated financial statements.
Capital Expenditures
We estimate that for the remainder of the year ending December 31, 2021, we expect to incur $88.0 million of recurring capital expenditures on existing consolidated properties and $192.2 million of development or redevelopment expenditures on existing consolidated properties, of which $65.5 million will be funded by construction financing facilities. We expect our share of capital expenditures at our joint venture properties will be $343.1 million, of which $248.1 million will be funded by construction financing facilities. We expect to fund these capital expenditures from operating cash flow, existing liquidity, and borrowings from construction financing facilities. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs.
Dividends/Distributions
We expect to pay dividends to our stockholders based on the distributions we receive from our Operating Partnership, which are generated by the collection of property revenues, net of operating expenses, and interest on our debt and preferred equity portfolio.
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.
Any dividend we pay may be in the form of cash, stock, or a combination thereof, subject to IRS limitations on the use of stock for dividends. Additionally, if our REIT taxable income in a particular year exceeds the amount of cash dividends we pay in that year, we may pay stock dividends in order to maintain our REIT status and avoid certain REIT-level taxes.
Based on our current annual dividend rate of $3.64 per share, we would pay $249.4 million in dividends to our common stockholders on an annual basis. Before we pay any dividend, whether for Federal income tax purposes or otherwise, which
49

would only be paid out of available cash to the extent permitted under the 2017 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
Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, who serves as a member and as the chairman emeritus of our board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. 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.
Income earned from the profit participation, which is included in other income on the consolidated statements of operations, was $1.4 million, $3.9 million and $3.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.
We also recorded expenses, inclusive of capitalized expenses, of $13.3 million, $18.8 million and $18.8 million the years ended December 31, 2020, 2019 and 2018, respectively, for these services (excluding services provided directly to tenants).
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. We received management fees from this entity of $0.6 million, $0.6 million and $0.6 million for the years ended December 31, 2020, 2019, and 2018 respectively.
One Vanderbilt Investment
In December 2016, we entered into agreements with entities owned and controlled by our Chairman and CEO, Marc Holliday, and our President, Andrew Mathias, pursuant to which they agreed to make an investment in our One Vanderbilt project at the appraised fair market value for the interests acquired. This investment entitles these entities to receive approximately 1.50% - 1.80% and 1.00% - 1.20%, respectively, of any profits realized by the Company from its One Vanderbilt project in excess of the Company’s capital contributions. The entities have no right to any return of capital. Accordingly, subject to previously disclosed repurchase rights, these interests will have no value and will not entitle these entities to any amounts (other than limited distributions to cover tax liabilities incurred) unless and until the Company has received distributions from the One Vanderbilt project in excess of the Company’s aggregate investment in the project. In the event that the Company does not realize a profit on its investment in the project (or would not realize a profit based on the value at the time the interests are repurchased), the entities owned and controlled by Messrs. Holliday and Mathias will lose the entire amount of their investment. The entities owned and controlled by Messrs. Holliday and Mathias paid $1.4 million and $1.0 million, respectively, which equal the fair market value of the interests acquired as of the date the investment agreements were entered into as determined by an independent third party appraisal that we obtained.
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Messrs. Holliday and Mathias cannot monetize their interests until after stabilization of the property (50% within three years after stabilization and 100% three years or more after stabilization). In addition, the agreement calls for us to repurchase these interests in the event of a sale of One Vanderbilt or a transactional change of control of the Company. We also have the right to repurchase these interests on the 7-year anniversary of the stabilization of the project or upon the occurrence of certain separation events prior to the stabilization of the project relating to each of Messrs. Holliday’s and Mathias’s continued service with us. The price paid upon monetization of the interests will equal the liquidation value of the interests at the time, with the value of One Vanderbilt being based on its sale price, if applicable, or fair market value as determined by an independent third party appraiser.
Insurance
We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR")), within three property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as the development of One Vanderbilt. Additionally, one of our captive insurance companies, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger. Belmont's retention is reinsured by our other captive insurance company, Ticonderoga Insurance Company ("Ticonderoga"). If Belmont or Ticonderoga are required to pay a claim under our insurance policies, we would ultimately record the loss to the extent of required payments. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont and Ticonderoga provide coverage solely on properties owned by the Company or its affiliates.
Furthermore, with respect to certain of our properties, including properties held by joint ventures or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss.
Funds from Operations
FFO is a widely recognized non-GAAP financial measure of REIT performance. The Company computes FFO in accordance with standards established by 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 the Company does. The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002, and subsequently amended in December 2018, defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from 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.
The Company presents FFO because it considers it an important supplemental measure of the Company’s operating performance and believes 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. The Company also uses FFO as one of several criteria to determine performance-based compensation for members of its 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 real estate related impairment charges, 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, and 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 the Company’s financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is it indicative of funds available to fund the Company’s cash needs, including our ability to make cash distributions.
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FFO for the years ended December 31, 2020, 2019, and 2018 are as follows (in thousands):
Year Ended December 31,
202020192018
Net income attributable to SL Green common stockholders$356,105 $255,484 $232,312 
Add:
Depreciation and amortization313,668 272,358 279,507 
Joint venture depreciation and noncontrolling interest adjustments205,869 192,426 187,147 
Net income attributable to noncontrolling interests34,956 10,142 12,210 
Less:
Equity in net gain on sale of interest in unconsolidated joint venture/real estate2,961 76,181 303,967 
Depreciable real estate reserves and impairments(60,454)(7,047)(227,543)
Gain (loss) on sale of real estate, net215,506 (16,749)(30,757)
Purchase price and other fair value adjustment187,522 69,389 57,385 
Depreciation on non-rental real estate assets2,338 2,935 2,404 
Funds from Operations attributable to SL Green common stockholders and unit holders$562,725 $605,701 $605,720 
Cash flows provided by operating activities$554,236 $376,473 $441,537 
Cash flows provided by investing activities$1,056,430 $114,494 $681,662 
Cash flows used in financing activities$(1,479,301)$(528,650)$(1,094,112)

Inflation
Substantially all of our office leases provide for separate real estate tax and operating expense escalations as well as operating expense recoveries based on increases in the Consumer Price Index or other measures such as porters' wage. In addition, many of the leases provide for fixed base rent increases. We believe that inflationary increases will 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 Accounting Policies - Accounting Standards Updates" in the accompanying consolidated financial statements.
Forward-Looking Information
This report includes certain statements that may be deemed to be "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 New York metropolitan area 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," or the negative of these words, or other similar words or terms.
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:
the effect of general economic, business and financial conditions, and their effect on the New York City real estate market in particular;
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the effect of the on-going COVID-19 pandemic and the duration of the impact it will have on our business and the industry as a whole;
dependence upon certain geographic markets;
risks of real estate acquisitions, dispositions, development and redevelopment, 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 or borrowers;
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;
our ability to maintain our status as a REIT;
risks of investing through joint venture structures, including the fulfillment by our partners of their financial obligations;
the threat of terrorist attacks;
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. Except to the extent required by law, 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 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Rate Risk" for additional information regarding our exposure to interest rate fluctuations.
The table below presents the principal cash flows based upon maturity dates of our debt obligations and debt and preferred equity investments and the weighted-average interest rates by expected maturity dates, including as-of-right extension options, as of December 31, 2020 (in thousands):
Long-Term Debt
Debt and Preferred
Equity Investments (1)
Fixed
Rate
Average
Interest
Rate
Variable
Rate
Average
Interest
Rate
AmountWeighted
Yield
2021$360,700 3.62 %$300,027 1.94 %$216,162 6.05 %
20221,006,552 3.59 %57,650 1.97 %398,053 10.33 %
2023806,599 3.95 %1,170,000 1.93 %245,092 1.74 %
2024278,034 4.26 %200,000 1.57 %6,890 — %
2025100,829 4.34 %— 2.09 %30,000 8.40 %
Thereafter580,969 4.35 %100,000 2.82 %180,345 6.95 %
Total$3,133,683 3.78 %$1,827,677 1.93 %$1,076,542 6.83 %
Fair Value$3,237,075 $1,822,740 
(1)Our debt and preferred equity investments had an estimated fair value ranging between $1.0 billion and $1.1 billion at December 31, 2020.
The table below presents the principal cash flows based upon maturity dates of our share of our joint venture debt obligations and the weighted-average interest rates by expected maturity dates as of December 31, 2020 (in thousands):
Long Term Debt
Fixed
Rate
Average
Interest
Rate
Variable
Rate
Average
Interest
Rate
2021$11,415 4.15 %$1,073,864 2.13 %
2022492,801 4.11 %48,146 2.19 %
2023271,080 3.94 %219,986 2.57 %
202416,994 3.88 %600,016 2.85 %
20251,261,997 3.88 %123,259 3.34 %
Thereafter442,675 3.98 %110,138 3.68 %
Total$2,496,962 4.02 %$2,175,409 2.43 %
Fair Value$2,570,780 $2,164,526  
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The table below lists our consolidated derivative instruments, which are hedging variable rate debt, and their related fair values as of December 31, 2020 (in thousands):
Asset
Hedged
Benchmark
Rate
Notional
Value
Strike
Rate
Effective
Date
Expiration
Date
Fair
Value
Interest Rate CapMortgageLIBOR$85,000 4.000 %March 2019March 2021$— 
Interest Rate SwapCredit FacilityLIBOR350,000 0.544 %April 2020August 2021(771)
Interest Rate SwapMortgageLIBOR111,869 3.500 %December 2020November 2021— 
Interest Rate CapMortgageLIBOR510,000 3.000 %June 2020December 2021— 
Interest Rate SwapMortgageLIBOR200,000 1.131 %July 2016July 2023(5,004)
Interest Rate SwapCredit FacilityLIBOR100,000 1.161 %July 2016July 2023(2,578)
Interest Rate CapCredit FacilityLIBOR600,000 4.000 %August 2020September 202328 
Interest Rate SwapCredit FacilityLIBOR150,000 2.696 %January 2019January 2024(11,344)
Interest Rate SwapCredit FacilityLIBOR150,000 2.721 %January 2019January 2026(17,714)
Interest Rate SwapCredit FacilityLIBOR200,000 2.740 %January 2019January 2026(23,806)
Total Consolidated Hedges$(61,189)
In addition to these derivative instruments, some of our joint venture loan agreements require the joint venture to purchase interest rate caps on its debt. All such interest rate caps represented an asset of $1.1 million in the aggregate at December 31, 2020. We also swapped certain floating rate debt at some of our joint ventures. These swaps represented a liability of $11.4 million in the aggregate at December 31, 2020.
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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Schedules

FINANCIAL STATEMENTS OF SL GREEN REALTY CORP.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Equity for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
FINANCIAL STATEMENTS OF SL GREEN OPERATING PARTNERSHIP, L.P.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Capital for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
Schedules
Schedule III- Real Estate and Accumulated Depreciation as of December 31, 2020
All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of SL Green Realty Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of SL Green Realty Corp. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and the related amendments.
Adoption of ASU No. 2016-13

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for the measurement of credit losses on financial instruments in 2020 due to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments.

Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
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Joint Venture Consolidation Assessment
Description of the MatterThe Company accounted for certain investments in real estate joint ventures under the equity method of accounting and consolidated certain other investments in real estate joint ventures. At December 31, 2020, the Company’s investments in unconsolidated joint ventures was $3.8 billion and noncontrolling interests in consolidated other partnerships was $26 million. As discussed in Note 2 to the consolidated financial statements, for each joint venture, the Company evaluated the rights provided to each party in the venture to assess the consolidation of the venture.
How We Addressed the Matter in Our Audit
Auditing management’s joint venture consolidation analyses was complex and highly judgmental due to the subjectivity in assessing which activities most significantly impact a joint venture’s economic performance based on the purpose and design of the entity over the duration of its expected life and assessing which party has rights to direct those activities. We tested the Company’s controls over the assessment of joint venture consolidation. For example, we tested controls over management's review of the consolidation analyses for newly formed ventures as well as controls over management's identification of reconsideration events which could trigger modified consolidation conclusions for existing ventures.

To test the Company’s consolidation assessment for real estate joint ventures, our procedures included, among others, reviewing new and amended joint venture agreements and discussing with management the nature of the rights conveyed to the Company through the joint venture agreements as well as the business purpose of the joint venture transactions. We reviewed management’s assessment of the activities that would most significantly impact the joint venture’s economic performance and evaluated whether the joint venture agreements provided participating or protective rights to the Company. We also evaluated transactions with the joint ventures for events which would require a reconsideration of previous consolidation conclusions.
Impairment of Commercial Real Estate Properties (Retail)
Description of the Matter
At December 31, 2020, the Company’s commercial real estate properties, at cost totaled approximately $5.4 billion. As described in Note 2 to the consolidated financial statements, real estate properties are periodically reviewed for impairment when circumstances indicate that the carrying value of a property may not be recoverable. For the year ended December 31, 2020, the Company recognized $60.5 million of depreciable real estate reserves and impairments.

Auditing the Company’s accounting for impairment of commercial real estate properties (retail) was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in the determination of estimated future cash flows expected to result from the property’s use and eventual disposition and the estimated fair value of the property. In particular, management’s assumptions and estimates included estimated revenue and expense growth rates, discount rates and capitalization rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s commercial real estate properties impairment process. This included testing of controls over management's review of the significant assumptions and data inputs utilized in the estimation of expected future cash flows and the determination of fair value.

To test the Company's accounting for impairment of commercial real estate properties, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above and the underlying data used by the Company in its impairment analyses. We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the holding period and other cash flow assumptions for the properties. In certain cases, we involved our valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical data and observable market-specific data. We also assessed management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in estimated future cash flows that would result from changes in the assumptions. In addition, we assessed information and events subsequent to the balance sheet date to corroborate certain of the key assumptions utilized by management.

58


 /s/ Ernst & Young LLP
We have served as the Company‘s auditor since 1997.
New York, New York
February 26, 2021
59


SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)
December 31, 2020December 31, 2019
Assets
Commercial real estate properties, at cost:
Land and land interests$1,315,832 $1,751,544 
Building and improvements4,168,193 5,154,990 
Building leasehold and improvements1,448,134 1,433,793 
Right of use asset - financing leases55,711 47,445 
Right of use asset - operating leases367,209 396,795 
7,355,079 8,784,567 
Less: accumulated depreciation(1,956,077)(2,060,560)
5,399,002 6,724,007 
Assets held for sale0 391,664 
Cash and cash equivalents266,059 166,070 
Restricted cash106,736 75,360 
Investments in marketable securities28,570 29,887 
Tenant and other receivables44,507 43,968 
Related party receivables34,657 21,121 
Deferred rents receivable302,791 283,011 
Debt and preferred equity investments, net of discounts and deferred origination fees of $11,232 and $14,562 and allowances of $13,213 and $1,750 in 2020 and 2019, respectively1,076,542 1,580,306 
Investments in unconsolidated joint ventures3,823,322 2,912,842 
Deferred costs, net177,168 205,283 
Other assets448,213 332,801 
Total assets (1)
$11,707,567 $12,766,320 
Liabilities
Mortgages and other loans payable, net$1,979,972 $2,183,253 
Revolving credit facility, net105,262 234,013 
Unsecured term loans, net1,495,275 1,494,024 
Unsecured notes, net1,248,219 1,496,847 
Accrued interest payable14,825 22,148 
Other liabilities302,798 177,080 
Accounts payable and accrued expenses151,309 166,905 
Deferred revenue118,572 114,052 
Lease liability - financing leases152,521 44,448 
Lease liability - operating leases339,458 381,671 
Dividend and distributions payable149,294 79,282 
Security deposits53,836 62,252 
Liabilities related to assets held for sale0 
Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities100,000 100,000 
Total liabilities (1)
6,211,341 6,555,975 
Commitments and contingencies00
Noncontrolling interests in Operating Partnership358,262 409,862 
Preferred units202,169 283,285 
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SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)
December 31, 2020December 31, 2019
Equity
SL Green stockholders' equity:
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both December 31, 2020 and 2019221,932 221,932 
Common stock, $0.01 par value, 160,000 shares authorized and 69,534 and 77,981 issued and outstanding at December 31, 2020 and 2019, respectively (including 1,026 and 1,026 shares held in treasury at December 31, 2020 and 2019, respectively)716 803 
Additional paid-in-capital3,862,949 4,286,395 
Treasury stock at cost(124,049)(124,049)
Accumulated other comprehensive loss(67,247)(28,485)
Retained earnings1,015,462 1,084,719 
Total SL Green stockholders' equity4,909,763 5,441,315 
Noncontrolling interests in other partnerships26,032 75,883 
Total equity4,935,795 5,517,198 
Total liabilities and equity$11,707,567 $12,766,320 
(1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $41.2 million and $205.2 million of land, $57.9 million and $481.9 million of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $37.8 million and $61.7 million of right of use assets, $10.3 million and $17.6 million of accumulated depreciation, $289.5 million and $169.5 million of other assets included in other line items, $94.0 million and $457.1 million of real estate debt, net, $0.7 million and $1.2 million of accrued interest payable, $29.9 million and $57.7 million of lease liabilities, and $56.6 million and $43.7 million of other liabilities included in other line items as of December 31, 2020 and December 31, 2019, respectively.


The accompanying notes are an integral part of these consolidated financial statements.
61


SL Green Realty Corp.
Consolidated Statements of Operations
(in thousands, except per share data)


Year Ended December 31,
202020192018
Revenues
Rental revenue, net$804,423 $983,557 $978,574 
Investment income120,163 195,590 201,492 
Other income128,158 59,848 47,326 
Total revenues1,052,744 1,238,995 1,227,392 
Expenses
Operating expenses, including $12,643 in 2020, $18,106 in 2019, $17,823 in 2018 of related party expenses183,200 234,676 229,347 
Real estate taxes176,315 190,764 186,351 
Operating lease rent29,043 33,188 32,965 
Interest expense, net of interest income116,679 190,521 208,669 
Amortization of deferred financing costs11,794 11,653 12,408 
Depreciation and amortization313,668 272,358 279,507 
Loan loss and other investment reserves, net of recoveries35,298 6,839 
Transaction related costs503 729 1,099 
Marketing, general and administrative91,826 100,875 92,631 
Total expenses958,326 1,034,764 1,049,816 
Equity in net (loss) income from unconsolidated joint ventures(25,195)(34,518)7,311 
Equity in net gain on sale of interest in unconsolidated joint venture/real estate2,961 76,181 303,967 
Purchase price and other fair value adjustment187,522 69,389 57,385 
Gain (loss) on sale of real estate, net215,506 (16,749)(30,757)
Depreciable real estate reserves and impairments(60,454)(7,047)(227,543)
Loss on early extinguishment of debt0 0 (17,083)
Net income414,758 291,487 270,856 
Net income attributable to noncontrolling interests:
Noncontrolling interests in the Operating Partnership(20,016)(13,301)(12,216)
Noncontrolling interests in other partnerships(14,940)3,159 
Preferred units distributions(8,747)(10,911)(11,384)
Net income attributable to SL Green371,055 270,434 247,262 
Perpetual preferred stock dividends(14,950)(14,950)(14,950)
Net income attributable to SL Green common stockholders$356,105 $255,484 $232,312 
Basic earnings per share:$4.88 $3.20 $2.75 
Diluted earnings per share:$4.87 $3.19 $2.75 
Basic weighted average common shares outstanding72,552 79,415 84,090 
Diluted weighted average common shares and common share equivalents outstanding77,243 84,234 89,071 


The accompanying notes are an integral part of these consolidated financial statements.
62

SL Green Realty Corp.
Consolidated Statements of Comprehensive Income
(in thousands)
Year Ended December 31,
202020192018
Net income$414,758 $291,487 $270,856 
Other comprehensive loss:
Decrease in unrealized value of derivative instruments, including SL Green's share of joint venture derivative instruments(39,743)(47,118)(3,622)
(Decrease) increase in unrealized value of marketable securities(1,318)1,249 60 
Other comprehensive loss(41,061)(45,869)(3,562)
Comprehensive income373,697 245,618 267,294 
Net income attributable to noncontrolling interests and preferred units distributions(43,703)(21,053)(23,594)
Other comprehensive loss attributable to noncontrolling interests2,299 2,276 66 
Comprehensive income attributable to SL Green$332,293 $226,841 $243,766 


The accompanying notes are an integral part of these consolidated financial statements.

63


                        SL Green Realty Corp.
Consolidated Statements of Equity
(in thousands, except per share data)
SL Green Realty Corp. Stockholders
Common Stock
Series I
Preferred
Stock
Shares (1)Par
Value
Additional
Paid-
In-Capital
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Noncontrolling
Interests
Total
Balance at December 31, 2017$221,932 90,172 $939 $4,968,338 $(124,049)$18,604 $1,139,329 $364,361 $6,589,454 
Cumulative adjustment upon adoption of ASC 610-20570,524 570,524 
Balance at January 1, 2018221,932 90,172 939 4,968,338 (124,049)18,604 1,709,853 364,361 7,159,978 
Net income (loss)247,262 (6)247,256 
Other comprehensive loss(3,496)(3,496)
Preferred dividends(14,950)(14,950)
DRSPP proceeds0136 136 
Conversion of units in the Operating Partnership to common stock155 16,301 16,303 
Reallocation of noncontrolling interest in the Operating Partnership34,236 34,236 
Deferred compensation plan and stock awards, net of forfeitures and tax withholdings145 17,483 017,484 
Repurchases of common stock(9,469)(98)(522,482)0(415,215)(937,795)
Proceeds from stock options exercised307 28,909 28,912 
Contributions to consolidated joint venture interests5,459 5,459 
Deconsolidation of partially owned entity(315,116)(315,116)
Distributions to noncontrolling interests(8,364)(8,364)
Cash distributions declared ($3.3834 per common share, none of which represented a return of capital for federal income tax purposes)(282,188)(282,188)
Balance at December 31, 2018221,932 81,311 847 4,508,685 (124,049)15,108 1,278,998 46,334 5,947,855 
Net income (loss)270,434 (3,159)267,275 
Acquisition of subsidiary interest from noncontrolling interest(569)(25,276)(25,845)
Other comprehensive loss(43,593)(43,593)
Preferred dividends(14,950)(14,950)
DRSPP proceeds0334 334 
Conversion of units in the Operating Partnership to common stock0471 471 
Reallocation of noncontrolling interest in the Operating Partnership(34,320)(34,320)
Deferred compensation plan and stock awards, net of forfeitures and tax withholdings102 25,761 25,763 
Repurchases of common stock(4,466)(46)(248,287)0(136,066)(384,399)
Contributions to consolidated joint venture interests58,462 58,462 
Distributions to noncontrolling interests(478)(478)
Cash distributions declared ($3.5352 per common share, none of which represented a return of capital for federal income tax purposes)(279,377)(279,377)
Balance at December 31, 2019221,932 76,956 803 4,286,395 (124,049)(28,485)1,084,719 75,883 5,517,198 
Cumulative adjustment upon adoption of ASC
326
(39,184)(39,184)
Balance at January 1, 2020221,932 76,956 803 4,286,395 (124,049)(28,485)1,045,535 75,883 5,478,014 
Net income371,055 14,940 385,995 
Acquisition of subsidiary interest from noncontrolling interest(3,123)1,587 (1,536)
Other comprehensive loss(38,762)(38,762)
Preferred dividends(14,950)(14,950)
DRSPP proceeds17 1,006 1,006 
Conversion of units in the Operating Partnership to common stock98 8,743 8,744 
Reallocation of noncontrolling interest in the Operating Partnership32,598 32,598 
64


                        SL Green Realty Corp.
Consolidated Statements of Equity
(in thousands, except per share data)
SL Green Realty Corp. Stockholders
Common Stock
Series I
Preferred
Stock
Shares (1)Par
Value
Additional
Paid-
In-Capital
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Noncontrolling
Interests
Total
Deferred compensation plan and stock awards, net of forfeitures and tax withholdings(34)25,271 25,271 
Repurchases of common stock(8,529)(88)(455,343)(76,831)(532,262)
Contributions to consolidated joint venture interests12,477 12,477 
Distributions to noncontrolling interests(78,855)(78,855)
Cash distributions declared ($4.7908 per common share, none of which represented a return of capital for federal income tax purposes)(341,945)(341,945)
Balance at December 31, 2020$221,932 68,508 $716 $3,862,949 $(124,049)$(67,247)$1,015,462 $26,032 $4,935,795 

(1)On January 21, 2021, we completed a reverse stock split whereby every 1.02918 SL Green common share was combined into 1 SL Green common share. We have retroactively adjusted the outstanding share counts, share activity, cash distributions declared, and earnings per share, as if the reverse split occurred on December 31, 2017.
The accompanying notes are an integral part of these consolidated financial statements.
65


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

Year Ended December 31,
 202020192018
Operating Activities
Net income$414,758 $291,487 $270,856 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization325,462 284,011 289,899 
Equity in net loss (income) from unconsolidated joint ventures25,195 34,518 (7,311)
Distributions of cumulative earnings from unconsolidated joint ventures679 864 10,277 
Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate(2,961)(76,181)(303,967)
Purchase price and other fair value adjustments(187,522)(69,389)(57,385)
Depreciable real estate reserves and impairments60,454 7,047 227,543 
(Gain) loss on sale of real estate, net(215,506)16,749 30,757 
Loan loss reserves and other investment reserves, net of recoveries35,298 6,839 
Loss on early extinguishment of debt0 17,083 
Deferred rents receivable(7,582)(13,941)(18,216)
Non-cash lease expense11,984 13,744 2,016 
Other non-cash adjustments15,178 271 2,932 
Changes in operating assets and liabilities:
Tenant and other receivables(17,074)(4,968)6,968 
Related party receivables1,451 7,802 (1,044)
Deferred lease costs(20,900)(70,938)(44,158)
Other assets(26,137)(18,630)(8,310)
Accounts payable, accrued expenses, other liabilities and security deposits132,171 (25,597)4,410 
Deferred revenue20,657 10,824 12,348 
Change in lease liability - operating leases(11,369)(11,200)
Net cash provided by operating activities554,236 376,473 441,537 
Investing Activities
Acquisitions of real estate property$(86,846)$(262,591)$(60,486)
Additions to land, buildings and improvements(458,140)(252,986)(254,460)
Acquisition deposits and deferred purchase price0 (5,239)
Investments in unconsolidated joint ventures(70,315)(128,682)(400,429)
Distributions in excess of cumulative earnings from unconsolidated joint ventures124,572 79,020 233,118 
Net proceeds from disposition of real estate/joint venture interest1,112,382 208,302 1,231,004 
Other investments32,479 (7,869)(38,912)
Origination of debt and preferred equity investments(360,953)(607,844)(731,216)
Repayments or redemption of debt and preferred equity investments763,251 1,092,383 703,043 
Net cash provided by investing activities1,056,430 114,494 681,662 
66


SL Green Realty Corp.
Consolidated Statements of Cash Flows
(in thousands, except per share data)
Year Ended December 31,
 202020192018
Financing Activities
Proceeds from mortgages and other loans payable$1,181,892 $752,984 $564,391 
Repayments of mortgages and other loans payable(1,186,828)(230,076)(868,842)
Proceeds from revolving credit facility and senior unsecured notes1,495,000 1,310,000 3,120,000 
Repayments of revolving credit facility and senior unsecured notes(1,875,000)(1,570,000)(2,560,000)
Payment of debt extinguishment costs0 (13,918)
Proceeds from stock options exercised and DRSPP issuance1,006 334 29,048 
Repurchase of common stock(528,483)(384,399)(979,541)
Redemption of preferred stock(82,750)(18,142)(1,208)
Redemption of OP units(27,342)(27,495)(33,972)
Distributions to noncontrolling interests in other partnerships(85,468)(478)(8,364)
Contributions from noncontrolling interests in other partnerships12,477 10,239 5,459 
Acquisition of subsidiary interest from noncontrolling interest(1,536)(25,845)
Distributions to noncontrolling interests in the Operating Partnership(12,652)(14,729)(15,000)
Dividends paid on common and preferred stock(293,996)(306,386)(313,230)
Other obligations related to loan participations0 16 
Tax withholdings related to restricted share awards(4,752)(3,495)(3,842)
Deferred loan costs(70,036)(21,162)(15,109)
Principal payments of on financing lease liabilities(833)0 
Net cash used in financing activities(1,479,301)(528,650)(1,094,112)
Net increase (decrease) in cash, cash equivalents, and restricted cash131,365 (37,683)29,087 
Cash, cash equivalents, and restricted cash at beginning of year241,430 279,113 250,026 
Cash, cash equivalents, and restricted cash at end of period$372,795 $241,430 $279,113 
Supplemental cash flow disclosures:
Interest paid$201,348 $248,684 $259,776 
Income taxes paid$2,296 $1,489 $1,418 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Conversion of units in the Operating Partnership$8,744 $471 $16,303 
Redemption of units in the Operating Partnership for a joint venture sale0 10,445 
Exchange of preferred equity investment for real estate or equity in joint venture119,497 
Exchange of debt investment for real estate or equity in joint venture122,796 34,498 298,956 
Issuance of preferred units relating to a real estate acquisition0 1,000 
Tenant improvements and capital expenditures payable1,665 6,056 
Fair value adjustment to noncontrolling interest in the Operating Partnership32,598 34,320 34,236 
Deconsolidation of a subsidiary854,437 395 298,404 
Deconsolidation of a subsidiary mortgage5,593 
Mortgages assumed in connection with sale of real estate250,000 
Seller financed purchases100,000 
Debt and preferred equity investments9,014 
Transfer of assets related to assets held for sale0 391,664 
Reversal of assets held for sale391,664 
Transfer of liabilities related to assets held for sale0 
Removal of fully depreciated commercial real estate properties66,169 19,577 124,249 
67


SL Green Realty Corp.
Consolidated Statements of Cash Flows
(in thousands, except per share data)
Year Ended December 31,
 202020192018
Contribution to consolidated joint venture by noncontrolling interest0 48,223 
Distributions to noncontrolling interests6,613 — — 
Share repurchase payable3,779 
Recognition of sales-type leases and related lease liabilities119,725 
Recognition of right of use assets and related lease liabilities61,990 389,120 
In December 2020, the Company declared a regular monthly distribution per share of $0.3122 and a special distribution per share of $1.7462 that was paid primarily in stock. These distributions were paid in January 2021. In December 2019 and 2018, the Company declared quarterly distributions per share of $0.9108 and $0.8748, respectively. These distributions were paid in January 2020 and 2019, respectively. These distribution amounts have been retroactively adjusted to reflect the reverse stock split that was effectuated in January 2021.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.
Year Ended
 202020192018
Cash and cash equivalents$266,059 $166,070 $129,475 
Restricted cash106,736 75,360 149,638 
Total cash, cash equivalents, and restricted cash$372,795 $241,430 $279,113 
The accompanying notes are an integral part of these consolidated financial statements.
68


Report of Independent Registered Public Accounting Firm
To the Partners of SL Green Operating Partnership, L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of SL Green Operating Partnership, L.P. (the Operating Partnership) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the Operating Partnership's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Operating Partnership changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and the related amendments.
Adoption of ASU No. 2016-13
As discussed in Note 2 to the consolidated financial statements, the Operating Partnership changed its method of accounting for the measurement of credit losses on financial instruments in 2020 due to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments.
Basis for Opinion
These financial statements are the responsibility of the Operating Partnership's management. Our responsibility is to express an opinion on the Operating Partnership's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

69

Joint Venture Consolidation Assessment
Description of the MatterThe Operating Partnership accounted for certain investments in real estate joint ventures under the equity method of accounting and consolidated certain other investments in real estate joint ventures. At December 31, 2020, the Operating Partnership’s investments in unconsolidated joint ventures was $3.8 billion and noncontrolling interests in consolidated other partnerships was $26 million. As discussed in Note 2 to the consolidated financial statements, for each joint venture, the Operating Partnership evaluated the rights provided to each party in the venture to assess the consolidation of the venture.
How We Addressed the Matter in Our Audit
Auditing management’s joint venture consolidation analyses was complex and highly judgmental due to the subjectivity in assessing which activities most significantly impact a joint venture’s economic performance based on the purpose and design of the entity over the duration of its expected life and assessing which party has rights to direct those activities. We tested the Operating Partnership’s controls over the assessment of joint venture consolidation. For example, we tested controls over management's review of the consolidation analyses for newly formed ventures as well as controls over management's identification of reconsideration events which could trigger modified consolidation conclusions for existing ventures.

To test the Operating Partnership’s consolidation assessment for real estate joint ventures, our procedures included, among others, reviewing new and amended joint venture agreements and discussing with management the nature of the rights conveyed to the Operating Partnership through the joint venture agreements as well as the business purpose of the joint venture transactions. We reviewed management’s assessment of the activities that would most significantly impact the joint venture’s economic performance and evaluated whether the joint venture agreements provided participating or protective rights to the Operating Partnership. We also evaluated transactions with the joint ventures for events which would require a reconsideration of previous consolidation conclusions.
Impairment of Commercial Real Estate Properties (Retail)
Description of the Matter
At December 31, 2020, the Operating Partnership’s commercial real estate properties, at cost totaled approximately $5.4 billion. As described in Note 2 to the consolidated financial statements, real estate properties are periodically reviewed for impairment when circumstances indicate that the carrying value of a property may not be recoverable. For the year ended December 31, 2020, the Operating Partnership recognized $60.5 million of depreciable real estate reserves and impairments.

Auditing the Operating Partnership’s accounting for impairment of commercial real estate properties (retail) was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in the determination of estimated future cash flows expected to result from the property’s use and eventual disposition and the estimated fair value of the property. In particular, management’s assumptions and estimates included estimated revenue and expense growth rates, discount rates and capitalization rates, which were sensitive to expectations about future operations, market or economic conditions, demand and competition.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s commercial real estate properties impairment process. This included testing of controls over management's review of the significant assumptions and data inputs utilized in the estimation of expected future cash flows and the determination of fair value.

To test the Operating Partnership's accounting for impairment of commercial real estate properties, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above and the underlying data used by the Operating Partnership in its impairment analyses. We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the holding period and other cash flow assumptions for the properties. In certain cases, we involved our valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical data and observable market-specific data. We also assessed management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in estimated future cash flows that would result from changes in the assumptions. In addition, we assessed information and events subsequent to the balance sheet date to corroborate certain of the key assumptions utilized by management.
70

/s/ Ernst & Young LLP
We have served as the Operating Partnership's auditor since 2010.
New York, New York
February 26, 2021
71


SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)
December 31, 2020December 31, 2019
Assets  
Commercial real estate properties, at cost:  
Land and land interests$1,315,832 $1,751,544 
Building and improvements4,168,193 5,154,990 
Building leasehold and improvements1,448,134 1,433,793 
Right of use asset - financing leases55,711 47,445 
Right of use asset - operating leases367,209 396,795 
7,355,079 8,784,567 
Less: accumulated depreciation(1,956,077)(2,060,560)
5,399,002 6,724,007 
Assets held for sale0 391,664 
Cash and cash equivalents266,059 166,070 
Restricted cash106,736 75,360 
Investments in marketable securities28,570 29,887 
Tenant and other receivables44,507 43,968 
Related party receivables34,657 21,121 
Deferred rents receivable302,791 283,011 
Debt and preferred equity investments, net of discounts and deferred origination fees of $11,232 and $14,562 and allowances of $13,213 and $1,750 in 2020 and 2019, respectively1,076,542 1,580,306 
Investments in unconsolidated joint ventures3,823,322 2,912,842 
Deferred costs, net177,168 205,283 
Other assets448,213 332,801 
Total assets (1)
$11,707,567 $12,766,320 
Liabilities  
Mortgages and other loans payable, net$1,979,972 $2,183,253 
Revolving credit facility, net105,262 234,013 
Unsecured term loans, net1,495,275 1,494,024 
Unsecured notes, net1,248,219 1,496,847 
Accrued interest payable14,825 22,148 
Other liabilities302,798 177,080 
Accounts payable and accrued expenses151,309 166,905 
Deferred revenue118,572 114,052 
Lease liability - financing leases152,521 44,448 
Lease liability - operating leases339,458 381,671 
Dividend and distributions payable149,294 79,282 
Security deposits53,836 62,252 
Liabilities related to assets held for sale0 
Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities100,000 100,000 
Total liabilities (1)
6,211,341 6,555,975 
Commitments and contingencies00
Limited partner interests in SLGOP (3,939 and 4,196 limited partner common units outstanding at December 31, 2020 and 2019, respectively)358,262 409,862 
Preferred units202,169 283,285 
72


SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)
December 31, 2020December 31, 2019
Capital  
SLGOP partners' capital:  
Series I Preferred Units, $25.00 liquidation preference, 9,200 issued and outstanding at both December 31, 2020 and 2019221,932 221,932 
SL Green partners' capital (724 and 812 general partner common units, and 67,784 and 76,145 limited partner common units outstanding at December 31, 2020 and 2019, respectively)4,755,078 5,247,868 
Accumulated other comprehensive loss(67,247)(28,485)
Total SLGOP partners' capital4,909,763 5,441,315 
Noncontrolling interests in other partnerships26,032 75,883 
Total capital4,935,795 5,517,198 
Total liabilities and capital$11,707,567 $12,766,320 
(1) The Operating Partnership's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $41.2 million and $205.2 million of land, $57.9 million and $481.9 million of building and improvements, $2.0 million and $2.0 million of building and leasehold improvements, $37.8 million and $61.7 million of right of use assets, $10.3 million and $17.6 million of accumulated depreciation, $289.5 million and $169.5 million of other assets included in other line items, $94.0 million and $457.1 million of real estate debt, net, $0.7 million and $1.2 million of accrued interest payable, $29.9 million and $57.7 million of lease liabilities, and $56.6 million and $43.7 million of other liabilities included in other line items as of December 31, 2020 and December 31, 2019, respectively.


The accompanying notes are an integral part of these consolidated financial statements.
73


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


 Year Ended December 31,
 202020192018
Revenues
Rental revenue, net$804,423 $983,557 $978,574 
Investment income120,163 195,590 201,492 
Other income128,158 59,848 47,326 
Total revenues1,052,744 1,238,995 1,227,392 
Expenses
Operating expenses, including $12,643 in 2020, $18,106 in 2019, $17,823 in 2018 of related party expenses183,200 234,676 229,347 
Real estate taxes176,315 190,764 186,351 
Operating lease rent29,043 33,188 32,965 
Interest expense, net of interest income116,679 190,521 208,669 
Amortization of deferred financing costs11,794 11,653 12,408 
Depreciation and amortization313,668 272,358 279,507 
Loan loss and other investment reserves, net of recoveries35,298 6,839 
Transaction related costs503 729 1,099 
Marketing, general and administrative91,826 100,875 92,631 
Total expenses958,326 1,034,764 1,049,816 
Equity in net (loss) income from unconsolidated joint ventures(25,195)(34,518)7,311 
Equity in net gain on sale of interest in unconsolidated joint venture/real estate2,961 76,181 303,967 
Purchase price and other fair value adjustment187,522 69,389 57,385 
Gain (loss) on sale of real estate, net215,506 (16,749)(30,757)
Depreciable real estate reserves and impairments(60,454)(7,047)(227,543)
Loss on early extinguishment of debt0 (17,083)
Net income414,758 291,487 270,856 
Net loss attributable to noncontrolling interests in other partnerships(14,940)3,159 
Preferred unit distributions(8,747)(10,911)(11,384)
Net income attributable to SLGOP391,071 283,735 259,478 
Perpetual preferred stock dividends(14,950)(14,950)(14,950)
Net income attributable to SLGOP common unitholders$376,121 $268,785 $244,528 
Basic earnings per unit:$4.88 $3.19 $2.75 
Diluted earnings per unit:$4.87 $3.19 $2.75 
Basic weighted average common units outstanding76,647 83,690 88,652 
Diluted weighted average common units and common unit equivalents outstanding77,243 84,234 89,071 


The accompanying notes are an integral part of these consolidated financial statements.

74

SL Green Operating Partnership, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
 Year Ended December 31,
 202020192018
Net income$414,758 $291,487 $270,856 
Other comprehensive loss:
(Decrease) increase in unrealized value of derivative instruments, including SLGOP's share of joint venture derivative instruments(39,743)(47,118)(3,622)
(Decrease) increase in unrealized value of marketable securities(1,318)1,249 60 
Other comprehensive loss(41,061)(45,869)(3,562)
Comprehensive income373,697 245,618 267,294 
Net loss attributable to noncontrolling interests(14,940)3,159 
Other comprehensive loss attributable to noncontrolling interests2,299 2,276 66 
Comprehensive income attributable to SLGOP$361,056 $251,053 $267,366 


The accompanying notes are an integral part of these consolidated financial statements.

75


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

 SL Green Operating Partnership Unitholders  
  Partners' Interest   
 Series I
Preferred
Units
Common
Units (1)
Common
Unitholders
Accumulated
Other
Comprehensive (Loss) Income
Noncontrolling
Interests
Total
Balance at December 31, 2017$221,932 90,172 $5,984,557 $18,604 $364,361 $6,589,454 
Cumulative adjustment upon adoption of ASC 610-20570,524 570,524 
Balance at January 1, 2018$221,932 90,172 $6,555,081 $18,604 $364,361 $7,159,978 
Net income (loss)247,262 (6)247,256 
Other comprehensive loss(3,496)(3,496)
Preferred dividends(14,950)(14,950)
DRSPP proceeds136 136 
Conversion of common units155 16,303 16,303 
Reallocation of noncontrolling interests in the operating partnership34,236 34,236 
Deferred compensation plan and stock awards, net of forfeitures and tax withholdings145 17,484 17,484 
Repurchases of common units(9,469)(937,795)(937,795)
Proceeds from stock options exercised307 $28,912 28,912 
Contributions to consolidated joint venture interests5,459 5,459 
Deconsolidation of partially owned entity(315,116)(315,116)
Distributions to noncontrolling interests(8,364)(8,364)
Cash distributions declared ($3.3834 per common unit, none of which represented a return of capital for federal income tax purposes)(282,188)(282,188)
Balance at December 31, 2018$221,932 81,311 $5,664,481 $15,108 $46,334 $5,947,855 
Net income (loss)270,434 (3,159)267,275 
Acquisition of subsidiary interest from noncontrolling interest(569)(25,276)(25,845)
Other comprehensive loss(43,593)(43,593)
Preferred dividends(14,950)(14,950)
DRSPP proceeds334 334 
Conversion of common units471 471 
Reallocation of noncontrolling interest in the Operating Partnership(34,320)(34,320)
Deferred compensation plan and stock awards, net of forfeitures and tax withholdings102 25,763 25,763 
Repurchases of common units(4,466)(384,399)(384,399)
Contributions to consolidated joint venture interests58,462 58,462 
Distributions to noncontrolling interests(478)(478)
Cash distributions declared ($3.5352 per common unit, none of which represented a return of capital for federal income tax purposes)(279,377)(279,377)
Balance at December 31, 2019$221,932 76,956 $5,247,868 $(28,485)$75,883 $5,517,198 
Cumulative adjustment upon adoption of ASC 326(39,184)(39,184)
Balance at January 1, 2020$221,932 76,956 $5,208,684 $(28,485)$75,883 $5,478,014 
Net income371,055 14,940 385,995 
Acquisition of subsidiary interest from noncontrolling interest(3,123)1,587 (1,536)
Other comprehensive loss(38,762)(38,762)
Preferred dividends(14,950)(14,950)
DRSPP proceeds17 1,006 1,006 
Conversion of common units98 8,744 8,744 
Reallocation of noncontrolling interest in the Operating Partnership32,598 32,598 
Deferred compensation plan and stock awards, net of forfeitures and tax withholdings(34)25,271 25,271 
Repurchases of common units(8,529)(532,262)(532,262)
Contributions to consolidated joint venture interests12,477 12,477 
Distributions to noncontrolling interests(78,855)(78,855)
Cash distributions declared ($4.7908 per common unit, none of which represented a return of capital for federal income tax purposes)(341,945)(341,945)
Balance at December 31, 2020$221,932 68,508 $4,755,078 $(67,247)$26,032 $4,935,795 

76


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

(1)On January 21, 2021, we completed a reverse stock split whereby every 1.02918 SL Green Operating Partnership common unit was combined into 1 SL Green Operating Partnership common unit. We have retroactively adjusted the outstanding unit counts, unit activity, cash distributions declared, and earnings per units, as if the reverse split occurred on December 31, 2017.
77


SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(in thousands)


 Year Ended December 31,
 202020192018
Operating Activities  
Net income$414,758 $291,487 $270,856 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization325,462 284,011 289,899 
Equity in net loss (income) from unconsolidated joint ventures25,195 34,518 (7,311)
Distributions of cumulative earnings from unconsolidated joint ventures679 864 10,277 
Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate(2,961)(76,181)(303,967)
Purchase price and other fair value adjustments(187,522)(69,389)(57,385)
Depreciable real estate reserves and impairments60,454 7,047 227,543 
(Gain) loss on sale of real estate, net(215,506)16,749 30,757 
Loan loss reserves and other investment reserves, net of recoveries35,298 6,839 
Loss on early extinguishment of debt0 17,083 
Deferred rents receivable(7,582)(13,941)(18,216)
Non-cash lease expense11,984 13,744 2,016 
Other non-cash adjustments15,178 271 2,932 
Changes in operating assets and liabilities:
Tenant and other receivables(17,074)(4,968)6,968 
Related party receivables1,451 7,802 (1,044)
Deferred lease costs(20,900)(70,938)(44,158)
Other assets(26,137)(18,630)(8,310)
Accounts payable, accrued expenses, other liabilities and security deposits132,171 (25,597)4,410 
Deferred revenue20,657 10,824 12,348 
Change in lease liability - operating leases(11,369)(11,200)
Net cash provided by operating activities554,236 376,473 441,537 
Investing Activities  
Acquisitions of real estate property$(86,846)$(262,591)$(60,486)
Additions to land, buildings and improvements(458,140)(252,986)(254,460)
Acquisition deposits and deferred purchase price0 (5,239)
Investments in unconsolidated joint ventures(70,315)(128,682)(400,429)
Distributions in excess of cumulative earnings from unconsolidated joint ventures124,572 79,020 233,118 
Net proceeds from disposition of real estate/joint venture interest1,112,382 208,302 1,231,004 
Other investments32,479 (7,869)(38,912)
Origination of debt and preferred equity investments(360,953)(607,844)(731,216)
Repayments or redemption of debt and preferred equity investments763,251 1,092,383 703,043 
Net cash provided by investing activities1,056,430 114,494 681,662 
78


SL Green Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(in thousands)

 Year Ended December 31,
 202020192018
Financing Activities  
Proceeds from mortgages and other loans payable$1,181,892 $752,984 $564,391 
Repayments of mortgages and other loans payable(1,186,828)(230,076)(868,842)
Proceeds from revolving credit facility and senior unsecured notes1,495,000 1,310,000 3,120,000 
Repayments of revolving credit facility and senior unsecured notes(1,875,000)(1,570,000)(2,560,000)
Payment of debt extinguishment costs0 (13,918)
Proceeds from stock options exercised and DRSPP issuance1,006 334 29,048 
Repurchase of common units(528,483)(384,399)(979,541)
Redemption of preferred units(82,750)(18,142)(1,208)
Redemption of OP units(27,342)(27,495)(33,972)
Distributions to noncontrolling interests in other partnerships(85,468)(478)(8,364)
Contributions from noncontrolling interests in other partnerships12,477 10,239 5,459 
Acquisition of subsidiary interest from noncontrolling interest(1,536)(25,845)
Distributions paid on common and preferred units(306,648)(321,115)(328,230)
Other obligations related to mortgage loan participations0 16 
Tax withholdings related to restricted share awards(4,752)(3,495)(3,842)
Deferred loan costs(70,036)(21,162)(15,109)
Principal payments of on financing lease liabilities(833)
Net cash used in financing activities(1,479,301)(528,650)(1,094,112)
Net increase (decrease) in cash, cash equivalents, and restricted cash131,365 (37,683)29,087 
Cash, cash equivalents, and restricted cash at beginning of year241,430 279,113 250,026 
Cash, cash equivalents, and restricted cash at end of period$372,795 $241,430 $279,113 
Supplemental cash flow disclosures:   
Interest paid$201,348 $248,684 $259,776 
Income taxes paid$2,296 $1,489 $1,418