# SL GREEN REALTY CORP (SLG) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from SL GREEN REALTY CORP's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1040971/000104097125000010/slg-20241231.htm
Accession: 0001040971-25-000010
Filing date: 2025-02-18
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/SLG/
All MD&A years: /company/SLG/mda/
Previous year: /company/SLG/mda/fy2023/ (FY 2023)
Next year: /company/SLG/mda/fy2025/ (FY 2025)

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 ownership, management, operation, acquisition, development, redevelopment, repositioning and financing of commercial real estate properties, principally office properties, located in the New York metropolitan area, principally Manhattan. 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 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, 2023 compared to the year ended December 31, 2022 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, 2023, filed with the SEC on February 23, 2024, and is incorporated by reference into this Annual Report on Form 10-K.

Leasing and Operating

As of December 31, 2024, our same-store Manhattan office property occupancy inclusive of leases signed but not commenced, was 92.5% compared to 90.0% as of December 31, 2023. We signed office leases in Manhattan encompassing approximately 3.6 million square feet, of which approximately 2.3 million square feet represented office leases that replaced previously occupied space.

According to Cushman & Wakefield, 2024 leasing activity in Manhattan totaled approximately 23.4 million square feet. Of the total 2024 leasing activity in Manhattan, the Midtown submarket accounted for approximately 16.7 million square feet, or approximately 71.4%. Manhattan's overall office vacancy went from 22.8% as of December 31, 2023 to 23.3% as of December 31, 2024. Overall average asking rents in Manhattan decreased in 2024 by 0.8% from $73.33 per square foot as of December 31, 2023 to $72.73 per square foot as of December 31, 2024, while Manhattan Class A asking rents increased to $81.19 per square foot, up 0.3% from $80.98 as of December 31, 2023.

Acquisition and Disposition Activity

According to Cushman & Wakefield, overall Manhattan sales volume increased by 7.2% in 2024 to $14.8 billion as compared to $13.8 billion in 2023. In 2024, we continued to sell joint venture interests in quality assets as well as dispose of properties that were considered non-core or had a more limited growth trajectory, raising efficiently priced capital that was used primarily for debt reduction. During the year, we closed on the sales of all or a portion of our interests in 717 Fifth Avenue, 719 Seventh Avenue, 625 Madison Avenue, Palisades Premier Conference Center, One Vanderbilt Avenue, and the Giorgio Armani Residences at 760 Madison Avenue for total gross valuations of $6.4 billion, generating net proceeds to the Company of $500.7 million.

Debt and Preferred Equity

In 2023 and 2024, in our debt and preferred equity portfolio we continued to focus on underwriting financings for owners, acquirers or developers of properties in New York City as well as expanding our special servicing business. At the same time, some investments were repaid, the proceeds of which were utilized for debt repayment, and we converted one investment into equity ownership. Our 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. During 2024, our debt and preferred equity portfolio decreased as a result of the repayment of an investment with a carrying value of $64.6 million, offset by $21.6 million of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization. This does not include the origination of a $235.4 million preferred equity investment made by the Company and its joint venture partner, which is included in Investment in unconsolidated joint ventures in our consolidated balance sheet.

For descriptions of significant activities in 2024, refer to "Part I, Item 1. Business - Highlights from 2024."

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Critical Accounting Estimates

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 estimates 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 investments, 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 by allocating the purchase price, including transaction costs, at their respective fair values on the acquisition date.

We allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases.

The allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed involves subjectivity as the allocations are based on an analysis of the respective fair values. In determining the fair value of the real estate acquired, the Company will use a third-party valuation which primarily utilizes cash flow projections that apply, among other things, estimated revenue and expense growth rates, future market rents, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. We assess fair value of the acquired leases based on estimated cash flow projections that utilize appropriate discount rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. The determined and allocated fair values to the real estate acquired will affect the amount of depreciation and amortization we record over the respective estimated useful lives or term of the lease.

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 i) the lease transfers ownership of the asset at the end of the lease term, ii) the lease grants an option to purchase the asset that we are reasonably certain to exercise, iii) the lease term is for a major part of the remaining economic life of the asset, iv) the present value of the lease payments exceeds substantially all of the fair value of the asset, or v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. 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 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.

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Properties are individually evaluated for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. A consolidated 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 taking into account the appropriate capitalization rate in determining the future terminal value. 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 assess for impairment indicators based on factors such as, among other things, market conditions, occupancy rates, collections, and the overall operating performance of the asset. If indicators of impairment are present, we evaluate real estate investments for potential impairment primarily utilizing estimated fair value based on discounted future cash flows utilizing appropriate discount and capitalization rates, in addition to sales comparison approach, which utilizes comparable sales, listings and sales contracts.

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 Property 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. Determining control of the entities can be subjective in assessing which activities of the joint venture most significantly impact the economic performance and whether the rights of the joint venture partner are protective or participating. In making this determination, any new or amended joint venture agreement is assessed by the Company for the activities that most significantly impact the joint venture's economic performance based on the business purpose and design of the venture. We assess the rights that are conveyed to us in the agreement and evaluate whether we are provided with participating or protective rights over the activities that most significantly impact the entity's economic performance. We also assess the rights of our joint venture partner. Such participating rights include, among other things, the right to approve/amend the annual budget, leasing of the property to a significant tenant, and approval of tax returns and auditors. If our joint venture partner has substantive participating rights and we are determined not to be the primary beneficiary, we do not consolidate the entity.

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. Aside from charges noted in Note 6, "Investment in Unconsolidated Joint Ventures," we do not believe that the values of any of our equity investments were impaired as of December 31, 2024.

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.

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Results of Operations

Comparison of the year ended December 31, 2024 to the year ended December 31, 2023

The following comparison for the year ended December 31, 2024, or 2024, to the year ended December 31, 2023, or 2023, makes reference to the effect of the following:

i.“Same-Store Properties,” which represents all operating properties owned by us at January 1, 2023 and still owned by us in the same manner as of December 31, 2024 (Same-Store Properties totaled 21 of our 27 consolidated operating buildings),

ii.“Acquisition Properties,” which represents all properties or interests in properties acquired in 2024 and 2023 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 2024 and 2023,

iv."Alternative Strategy Portfolio," which represents non-core assets, and

v.“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 Emerge Inc.

[[GREPCENT_TABLE]]
[["","","Same-Store","","Disposed","","Other","","Consolidated"],["(in millions)","","2024","","2023","","$ Change","","% Change","","2024","","2023","","2024","","2023","","2024","","2023","","$ Change","","% Change"],["Rental revenue","","$","563.4","","","$","549.6","","","$","13.8","","","2.5","%","","$","0.8","","","$","\u2014","","","$","41.8","","","$","133.7","","","$","606.0","","","$","683.3","","","$","(77.3)","","","(11.3)","%"],["SUMMIT Operator revenue","","\u2014","","","\u2014","","","\u2014","","","\u2014","%","","\u2014","","","\u2014","","","133.2","","","118.3","","","133.2","","","118.3","","","14.9","","","12.6","%"],["Investment income","","\u2014","","","\u2014","","","\u2014","","","\u2014","%","","\u2014","","","\u2014","","","24.4","","","34.7","","","24.4","","","34.7","","","(10.3)","","","(29.7)","%"],["Interest income from real estate loans held by consolidated securitization vehicles","","\u2014","","","\u2014","","","\u2014","","","\u2014","%","","\u2014","","","\u2014","","","19.0","","","\u2014","","","19.0","","","\u2014","","","19.0","","","100.0","%"],["Other income","","8.0","","","4.1","","","3.9","","","95.1","%","","\u2014","","","\u2014","","","95.7","","","73.3","","","103.7","","","77.4","","","26.3","","","34.0","%"],["Total revenues","","571.4","","","553.7","","","17.7","","","3.2","%","","0.8","","","\u2014","","","314.1","","","360.0","","","886.3","","","913.7","","","(27.4)","","","(3.0)","%"],["Property operating expenses","","328.0","","","277.0","","","51.0","","","18.4","%","","0.7","","","0.2","","","13.7","","","90.3","","","342.4","","","367.5","","","(25.1)","","","(6.8)","%"],["SUMMIT Operator expenses","","\u2014","","","\u2014","","","\u2014","","","\u2014","%","","\u2014","","","\u2014","","","111.7","","","101.2","","","111.7","","","101.2","","","10.5","","","10.4","%"],["SUMMIT Operator tax expense","","","","","","","","","","","","","","","","","","0.7","","","9.2","","","(8.5)","","","(92.4)","%"],["Transaction related costs","","\u2014","","","\u2014","","","\u2014","","","\u2014","%","","\u2014","","","\u2014","","","0.4","","","1.1","","","0.4","","","1.1","","","(0.7)","","","(63.6)","%"],["Marketing, general and administrative","","\u2014","","","\u2014","","","\u2014","","","\u2014","%","","\u2014","","","\u2014","","","85.2","","","111.4","","","85.2","","","111.4","","","(26.2)","","","(23.5)","%"],["","","328.0","","","277.0","","","51.0","","","18.4","%","","0.7","","","0.2","","","211.0","","","304.0","","","540.4","","","590.4","","","(50.0)","","","(8.5)","%"],["Other income (expenses):"],["Interest expense and amortization of deferred financing costs, net of interest income","","","","","","","","","","","","","","","","","","$","(153.8)","","","$","(145.0)","","","$","(8.8)","","","6.1","%"],["Interest expense on senior obligations of consolidated securitization vehicles","","","","","","","","","","","","","","","","","","(14.6)","","","\u2014","","","(14.6)","","","100.0","%"],["Depreciation and amortization","","","","","","","","","","","","","","","","","","(207.4)","","","(247.8)","","","40.4","","","(16.3)","%"],["Equity in net loss from unconsolidated joint ventures","","","","","","","","","","","","","","","","","","(179.7)","","","(76.5)","","","(103.2)","","","134.9","%"],["Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate","","","","","","","","","","","","","","","","","","208.1","","","(13.4)","","","221.5","","","(1,653.0)","%"],["Purchase price and other fair value adjustments","","","","","","","","","","","","","","","","","","89.0","","","(17.3)","","","106.3","","","(614.5)","%"],["Gain (loss) on sale of real estate, net","","","","","","","","","","","","","","","","","","3.0","","","(32.4)","","","35.4","","","(109.3)","%"],["Depreciable real estate reserves and impairments","","","","","","","","","","","","","","","","","","(104.1)","","","(382.4)","","","278.3","","","(72.8)","%"],["Gain (loss) on early extinguishment of debt","","","","","","","","","","","","","","","","","","43.8","","","(0.9)","","","44.7","","","(4,966.7)","%"],["Loan loss and other investment reserves, net of recoveries","","","","","","","","","","","","","","","","","","\u2014","","","(6.9)","","","6.9","","","(100.0)","%"],["Net income (loss)","","","","","","","","","","","","","","","","","","$","30.2","","","$","(599.3)","","","$","629.5","","","(105.0)","%"]]
[[/GREPCENT_TABLE]]

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Rental Revenue

Rental revenues decreased due primarily to the deconsolidation of 245 Park Avenue ($77.6 million) as a result of the sale of a joint venture interest during the second quarter of 2023 and increased vacancy at 555 West 57th Street ($10.7 million), 1350 Avenue of the Americas ($4.1 million) and 885 Third Avenue ($3.6 million). The decrease is partially offset by the consolidation of 10 East 53rd Street ($25.2 million) as a result of the agreement to acquire the partner's interest in the joint venture during the first quarter of 2024.

The following table presents a summary of the commenced leasing activity for the year ended December 31, 2024 in our Manhattan portfolio:

[[GREPCENT_TABLE]]
[["","Usable SF","","RentableSF(1)","","NewCashRent (perrentableSF) (2)","","Prev.EscalatedRent (perrentableSF) (3)","","TI/LC per rentable SF","","Free Rent (in months)","","Average Lease Term (in years)"],["Manhattan"],["Space available at beginning of the year","2,738,177"],["Space which became available during the year(4)"],["\u2022 Office","980,111"],["\u2022 Retail","89,082"],["\u2022 Storage","5,177"],["","1,074,370"],["Total space available","3,812,547"],["Leased space commenced during the year:"],["\u2022 Office(5)","1,078,894","","","1,132,979","","","$","94.54","","","$","100.13","","","$","110.78","","","11.2","","","11.0"],["\u2022 Retail","104,211","","","97,923","","","$","42.31","","","$","37.10","","","$","35.96","","","2.9","","","5.9"],["\u2022 Storage","1,140","","","1,096","","","$","15.47","","","$","15.00","","","$","\u2014","","","\u2014","","","1.4"],["Total leased space commenced","1,184,245","","","1,231,998","","","$","90.32","","","$","92.24","","","$","104.74","","","10.5","","","10.6"],["Total available space at end of year","2,628,302"],["Early renewals"],["\u2022 Office","1,488,717","","","1,533,979","","","$","85.98","","","$","74.99","","","$","84.62","","","10.5","","","9.6"],["\u2022 Retail","16,761","","","16,758","","","$","200.74","","","$","227.95","","","$","\u2014","","","\u2014","","","5.0"],["\u2022 Storage","536","","","557","","","$","46.22","","","$","39.91","","","$","\u2014","","","\u2014","","","4.6"],["Total early renewals","1,506,014","","","1,551,294","","","$","87.21","","","$","76.63","","","$","83.67","","","10.4","","","9.6"],["Total commenced leases, including replaced previous vacancy"],["\u2022 Office","","","2,666,958","","","$","89.62","","","$","81.30","","","$","95.73","","","10.8","","","10.2"],["\u2022 Retail","","","114,681","","","$","65.46","","","$","73.05","","","$","30.70","","","2.5","","","5.8"],["\u2022 Storage","","","1,653","","","$","25.83","","","$","23.95","","","$","\u2014","","","\u2014","","","2.5"],["Total commenced leases","","","2,783,292","","","$","88.59","","","$","80.92","","","$","93.00","","","10.4","","","10.0"]]
[[/GREPCENT_TABLE]]

(1)Represents the rentable square footage at the time the property was acquired.

(2)Annual initial base rent.

(3)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.

(4)Includes expiring space, relocating tenants and move-outs where tenants vacated. Excludes lease expirations where tenants held over.

(5)Average starting office rent excluding new tenants replacing vacancies was $95.92 per rentable square feet for 514,272 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $88.48 per rentable square feet for 2,048,251 rentable square feet.

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SUMMIT Operator revenue

SUMMIT Operator revenues were higher for the year ended December 31, 2024, compared to the same period in 2023 due primarily to increased attendance.

Investment Income

Investment income decreased due to a lower weighted average debt and preferred equity investment balance for the period ended December 31, 2024 as compared to the same period in 2023. For the years ended December 31, 2024 and 2023, the weighted average balance of our debt and preferred equity investment portfolio and the weighted average yield were $328.9 million and 6.9%, respectively, compared to $563.0 million and 6.2%, respectively.

Interest income from real estate loans held by consolidated securitization vehicles

During the year December 31, 2024, we acquired securities in CMBS securitization trusts that resulted in consolidation of the trusts on our financial statements. The amounts recorded include our interest income as well as the interest income associated with CMBS positions owned by third parties, which is offset by the amounts recorded in Interest expense on senior obligations of consolidated securitization vehicles. As a result, the net impact is limited to the interest income on the CMBS securities we own directly and not the consolidated interest income and interest expense. We did not hold any investments in CMBS securitization trusts that resulted in consolidation during the year ended December 31, 2023.

Other Income

Other income increased due primarily to fee income related to the sale of 625 Madison Avenue ($11.5 million) as well as higher management, leasing, and construction management fee income ($24.6 million) and an increase in special servicing income ($2.9 million). This increase was offset by a decrease in lease termination income ($6.4 million) and fee income related to the 49.9% interest sale of 245 Park Avenue ($4.7 million) and One Madison Avenue ($2.1 million) recognized during the year ended December 31, 2023.

Property Operating Expenses

Property operating expenses decreased due primarily to the deconsolidation of 245 Park Avenue in the second quarter of 2023 ($26.8 million) and decreases in variable expenses ($5.3 million) and real estate taxes ($3.3 million) at our Acquired properties. These decreases were partially offset by the consolidation of 10 East 53rd Street ($11.1 million) as a result of the agreement to acquire the partner's interest in the joint venture during the first quarter of 2024.

SUMMIT Operator expenses

SUMMIT Operator expenses were higher for the year ended December 31, 2024, compared to the same period in 2023 due to increased variable expenses, including percentage rent, as a result of increased attendance.

SUMMIT Operator tax expense

The decrease in SUMMIT Operator tax expense for the year ended December 31, 2024 as compared to the same period in 2023 was the result of an adjustment made in the third quarter of 2024 related to 2023 projected tax expense being more than 2023 actual tax expense.

Marketing, General and Administrative Expenses

Marketing, general and administrative expenses decreased to $85.2 million for the year ended December 31, 2024, compared to $111.4 million for the same period in 2023, due primarily to compensation expense related to the non-renewal of the Company's former President ($18.7 million) recorded in the fourth quarter of 2023.

Interest Expense and Amortization of Deferred Financing Costs, Net of Interest Income

Interest expense and amortization of deferred financing costs, net of interest income, increased due primarily to a decrease in interest capitalization in connection with properties that are under development or redevelopment ($35.1 million), increased interest expense from the revolving credit facility ($11.2 million) due to a higher weighted average interest rate, and the consolidation of 10 East 53rd Street ($10.7 million) as a result of the agreement to acquire the partner's interest in the joint venture during the first quarter of 2024. These increases were offset by the deconsolidation of 245 Park Avenue in the second quarter of 2023 ($31.1 million), the repayment of unsecured corporate term loans ($10.1 million) in the third quarter of 2023, the discounted mortgage repayment at 690 Madison Avenue in the fourth quarter of 2024 ($4.3 million), and the sale of 719 Seventh in the second quarter of 2024 ($4.0 million). The weighted average consolidated debt balance outstanding was $3.7 billion for the year ended December 31, 2024 as compared to $4.6 billion for the year ended December 31, 2023. The consolidated weighted average interest rate was 5.17% for the year ended December 31, 2024 as compared to 4.71% for the year ended December 31, 2023.

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Interest expense on senior obligations of consolidated securitization vehicles

During the year December 31, 2024, we acquired securities in CMBS securitization trusts that resulted in consolidation of the trusts on our financial statements. The amounts include the interest expense associated with CMBS positions owned by third parties, which is an offset to the third party interest income recognized in Interest income from real estate loans held by consolidated securitization vehicles. As a result, the impact is limited to interest income on the CMBS securities we own directly and not the consolidated interest income and interest expense. We did not hold any investments in CMBS securitization trusts that resulted in consolidation during the year ended December 31, 2023.

Depreciation and Amortization

Depreciation and amortization decreased due primarily to the deconsolidation of 245 Park Avenue in the second quarter of 2023 ($48.5 million), partially offset by the consolidation of 10 East 53rd Street ($11.3 million) as a result of the agreement to acquire the partner's interest in the joint venture during the first quarter of 2024 for the year ended December 31, 2024.

Equity in net loss from unconsolidated joint ventures

Equity in net loss from unconsolidated joint ventures increased due primarily to impairments recognized during the year ended December 31, 2024 at 5 Times Square ($146.4 million), Worldwide Plaza ($72.6 million), 2 Herald Square ($20.4 million), 85 Fifth Avenue ($12.0 million) and 115 Spring Street ($11.7 million) during the year ended December 31, 2024. These impairments were partially offset by the $141.7 million and $30.7 million gains on discounted debt extinguishment at 2 Herald Square and 280 Park Avenue, respectively, during the year ended December 31, 2024. The year ended December 31, 2023 included $23.6 million of income recognized for holdover rent, interest and reimbursement of attorneys' fees collected following the completion of legal proceedings against a former tenant and its guarantor at 2 Herald Square.

Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate

During the year ended December 31, 2024, we recognized gains on the sale of an 11% interest in One Vanderbilt ($187.6 million) and our interest in 717 Fifth Avenue ($26.4 million), partially offset by a loss on the sale of our interest in 625 Madison Avenue ($7.2 million). During the year ended December 31, 2023, we recognized losses on the sales of our interests in 21 East 66th Street ($12.7 million) and 121 Greene Street ($0.3 million).

Purchase price and other fair value adjustments

During the year ended December 31, 2024, we recorded a $117.8 million positive fair value adjustment relating to the consolidation of 100 Park Avenue and a $19.6 million positive fair value adjustment for the secured borrowing related to the previous sale of an interest at One Madison Avenue. Additionally, we recorded a $5.5 million positive fair value adjustment related to derivatives that are not designated as hedges for accounting purposes. These positive adjustments were partially offset by a $55.7 million negative fair value adjustment relating to the consolidation of 10 East 53rd Street. During the year ended December 31, 2023, we recorded a $17.0 million negative fair value adjustment relating to the 50.1% interest we retained in 245 Park Avenue, which was deconsolidated when a 49.9% joint venture interest was sold, and a $10.4 million negative fair value adjustment related to derivatives that are not designated as hedges for accounting purposes. This was partially offset by a $10.2 million purchase price adjustment related to a previous transaction.

Gain (loss) on sale of real estate, net

During the year ended December 31, 2024, we recognized a gain on the sale of Palisades Conference Center ($7.3 million) and losses on the sales of 719 Seventh Avenue ($2.1 million) and the Giorgio Armani Residences at 760 Madison Avenue ($1.5 million). During the year ended December 31, 2023, we recognized a loss on the sale of a 49.9% joint venture interest in 245 Park Avenue ($32.8 million).

Depreciable Real Estate Reserves and Impairments

During the year ended December 31, 2024, we recognized depreciable real estate reserves and impairments at 719 Seventh Avenue ($46.3 million), 690 Madison Avenue ($34.3 million) and 760 Madison Avenue ($17.6 million), reflective of $15.1 million of capitalized interest for 760 Madison Avenue, to reduce the carrying value of our investments based on the sales contracts that the Company entered into for these properties. In addition, we recognized depreciable real estate reserves and impairments related to our investment in 625 Madison Avenue ($5.9 million), which remained under contract for sale as of March 31, 2024 prior to the sale closing in the second quarter of 2024. During the year ended December 31, 2023, we recognized depreciable real estate reserves and impairments related to our leasehold interest at 625 Madison Avenue ($272.6 million), which was under contract for sale as of December 31, 2023, 2 Herald Square ($101.7 million) and 1552-1560 Broadway ($8.0 million) following an assessment of the investments for recoverability.

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Gain (loss) on early extinguishment of debt

During the year ended December 31, 2024, we recognized a $26.0 million gain on discounted debt extinguishment at 690 Madison Avenue and a $17.8 million gain on discounted debt extinguishment at 719 Seventh Avenue.

Loan loss and other investment reserves, net of recoveries

During the year ended December 31, 2024, we did not recognize any loan loss and other investment reserves. During the year ended December 31, 2023, we recorded $6.9 million of loan loss reserve on one debt and preferred equity investment.

Comparison of the year ended December 31, 2023 to the year ended December 31, 2022

For a comparison of the year ended December 31, 2023 to the year ended December 31, 2022, 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, 2023, which was filed with the SEC on February 23, 2024.

Liquidity and Capital Resources

We currently expect that the 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, 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.

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The combined aggregate principal maturities of mortgages and other loans payable, the 2021 credit facility, senior unsecured notes (net of discount), trust preferred securities, our share of joint venture debt, including as-of-right extension options, estimated interest expense, and our obligations under our financing and operating leases, as of December 31, 2024 are as follows (in thousands):

[[GREPCENT_TABLE]]
[["","2025","","2026","","2027","","2028","","2029","","Thereafter","","Total"],["Property mortgages and other loans","$","373,551","","","$","190,148","","","$","910,000","","","$","205,000","","","$","\u2014","","","$","272,325","","","$","1,951,024"],["Revolving credit facility","\u2014","","","\u2014","","","320,000","","","\u2014","","","\u2014","","","\u2014","","","320,000"],["Unsecured term loans","\u2014","","","100,000","","","1,050,000","","","\u2014","","","\u2014","","","\u2014","","","1,150,000"],["Senior unsecured notes","100,000","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","100,000"],["Trust preferred securities","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","100,000","","","100,000"],["Financing leases","3,228","","","3,276","","","3,325","","","3,375","","","3,426","","","193,368","","","209,998"],["Operating leases","53,595","","","53,734","","","53,746","","","54,211","","","54,443","","","1,154,422","","","1,424,151"],["Estimated interest expense","182,940","","","166,616","","","87,930","","","32,207","","","28,302","","","276,591","","","774,586"],["Company's share of joint venture debt","1,198,400","","","936,639","","","1,710,229","","","382,294","","","\u2014","","","1,800,300","","","6,027,862"],["Total","$","1,911,714","","","$","1,450,413","","","$","4,135,230","","","$","677,087","","","$","86,171","","","$","3,797,006","","","$","12,057,621"]]
[[/GREPCENT_TABLE]]

We estimate that for the year ending December 31, 2025, we expect to incur $114.7 million of leasing capital expenditures and $22.0 million of recurring capital expenditures on existing consolidated properties. In addition, we expect to incur $22.6 million of development or redevelopment expenditures on existing consolidated properties, of which $8.9 million will be funded by construction financing facilities or loan reserves. We expect our share of capital expenditures at our joint venture properties will be $134.1 million, of which $22.6 million will be funded by construction financing facilities or loan reserves. We expect to fund 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.

As of December 31, 2024, we had liquidity of $1.1 billion, comprised of $922.5 million of availability under our revolving credit facility and $201.6 million of consolidated cash on hand, inclusive of $17.3 million of available-for-sale marketable securities. This liquidity excludes $131.6 million representing our share of cash at unconsolidated joint venture properties. We may seek to divest of properties, interests in properties, or 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 refinancing opportunities for secured and unsecured debt, will allow us to satisfy our debt and other obligations, as described above, upon maturity, if not before.

We have investments in several real estate joint ventures with various partners who are generally considered to be financially stable. 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 $331.6 million and $335.5 million as of December 31, 2024 and 2023, respectively, representing a decrease of $3.9 million. The decrease was a result of the following changes in cash flows (in thousands):

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2024","","2023","","(Decrease) Increase"],["Net cash provided by operating activities","$","129,595","","","$","229,503","","","$","(99,908)"],["Net cash provided by investing activities","$","118,753","","","$","171,345","","","$","(52,592)"],["Net cash used in financing activities","$","(252,229)","","","$","(449,383)","","","$","197,154"]]
[[/GREPCENT_TABLE]]

Our principal sources of operating cash flow are the properties in our consolidated and joint venture portfolios, third party fees and our debt and preferred equity portfolio. These sources generate a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service, and fund dividend and distribution requirements.

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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, 2024, when compared to the year ended December 31, 2023, we used cash primarily for the following investing activities (in thousands):

[[GREPCENT_TABLE]]
[["Capital expenditures and capitalized interest","$","47,794"],["Acquisition deposits and deferred purchase price","(23,050)"],["Joint venture investments","(266,752)"],["Distributions from joint ventures","20,905"],["Proceeds from disposition of real estate/joint venture interest","171,414"],["Debt and preferred equity and other investments","(21,920)"],["Decrease in net cash provided by investing activities","$","(52,592)"]]
[[/GREPCENT_TABLE]]

Funds spent on capital expenditures, which are comprised of building and tenant improvements, decreased from $259.7 million for the year ended December 31, 2023 to $211.9 million for the year ended December 31, 2024 due to lower spending on development and redevelopment properties.

We generally fund our investment activity through the sale of real estate, the sale or repayment of debt and preferred equity investments, property-level financing, our corporate credit facilities, or construction loan facilities. From time to time, the Company may issue common or preferred stock or equity-linked securities, or the Operating Partnership may issue common or preferred units of limited partnership interest.

During the year ended December 31, 2024, when compared to the year ended December 31, 2023, we used cash for the following financing activities (in thousands):

[[GREPCENT_TABLE]]
[["Proceeds from our debt obligations","$","636,450"],["Repayments of our debt obligations","(725,151)"],["Net distribution to noncontrolling interests","(7,760)"],["Other financing activities","(158,974)"],["Proceeds from stock options exercised and DRSPP issuance","51,783"],["Proceeds from issuance of common stock","386,790"],["Redemption of preferred stock","9,197"],["Acquisition of subsidiary interest from noncontrolling interest","(7,289)"],["Dividends and distributions paid","12,108"],["Increase in net cash used in financing activities","$","197,154"]]
[[/GREPCENT_TABLE]]

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, 2024, 71,096,743 shares of common stock and no shares of excess stock were issued and outstanding.

In November 2024, the Company completed an offering of 5,063,291 shares of its common stock, par value $0.01 per share, at a price of $79.00 per share. The Company received net proceeds of approximately $386.3 million, after deducting offering expenses. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 5,063,291 common units of limited partnership interest and were used to repay debt, fund new investments and for other corporate purposes.

Share Repurchase Program

Our Board of Directors approved a $3.5 billion share repurchase program under which we can buy shares of our common stock.

As of December 31, 2024, 36,107,719 shares have been repurchased under the program, excluding the redemption of OP units. We did not repurchase any shares under the program during the year ended December 31, 2024.

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Dividend Reinvestment and Stock Purchase Plan ("DRSPP")

In February 2024, the Company filed a new 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, 2024, 2023, and 2022, respectively (dollars in thousands):

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2024","","2023","","2022"],["Shares of common stock issued","728,352","","","17,180","","","10,839"],["Dividend reinvestments/stock purchases under the DRSPP","$","52,308","","","$","525","","","$","525"]]
[[/GREPCENT_TABLE]]

Fifth Amended and Restated 2005 Stock Option and Incentive Plan

The Fifth Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's Board of Directors in April 2022 and its stockholders in June 2022 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 32,210,000 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, 2024, 1.5 million fungible units were available for issuance under the 2005 Plan after reserving for shares underlying outstanding restricted stock units and 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, 2024, 15,945 phantom stock units and 25,590 shares of common stock were issued to our Board of Directors. We recorded compensation expense of $2.8 million during the year ended December 31, 2024, respectively, related to the Deferred Compensation Plan. As of December 31, 2024, there were 125,654 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 provide 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, 2024, 245,445 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, 2021 credit facility, 2022 term loan, senior unsecured notes and trust preferred securities outstanding as of December 31, 2024 and 2023, (amounts in thousands).

[[GREPCENT_TABLE]]
[["Debt Summary:","December 31, 2024","","December 31, 2023"],["Balance"],["Fixed rate","$","1,182,474","","$","1,117,386"],["Variable rate\u2014hedged","2,075,000","","2,120,000"],["Total fixed rate","3,257,474","","3,237,386"],["Total variable rate","363,550","","270,000"],["Total debt","$","3,621,024","","$","3,507,386"],["Debt, preferred equity, and other investments subject to variable rate","117,006","","168,745"],["Net exposure to variable rate debt","246,544","","101,255"],["Percent of Total Debt:"],["Fixed rate","90.0","%","","92.3","%"],["Variable rate (1)","10.0","%","","7.7","%"],["Total","100.0","%","","100.0","%"],["Effective Interest Rate for the Year:"],["Fixed rate","5.18","%","","4.68","%"],["Variable rate","5.17","%","","6.11","%"],["Effective interest rate","5.17","%","","4.71","%"]]
[[/GREPCENT_TABLE]]

(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 7.0% and 3.0% as of December 31, 2024 and December 31, 2023, respectively.

The variable rate debt shown above generally bears interest at an interest rate based on adjusted Term SOFR (4.33% and 5.35% as of December 31, 2024 and 2023, respectively). Our consolidated debt as of December 31, 2024 had a weighted average term to maturity of 2.80 years.

Certain of our debt and equity investments and other investments, with carrying values of $117.0 million as of December 31, 2024 and $168.7 million as of December 31, 2023, are variable rate investments which mitigate our exposure to interest rate changes on our unhedged variable rate debt. Inclusive of the mitigating effect of these investments, the net ratio of our consolidated variable rate debt to total debt was 7.0% and 3.0% as of December 31, 2024 and 2023, respectively.

Mortgage Financing

As of December 31, 2024, our total mortgage debt (excluding our share of joint venture mortgage debt of $6.0 billion) consisted of $1.6 billion of fixed rate debt, including swapped variable rate debt, with an effective weighted average interest rate of 5.80% and $0.4 billion of variable rate debt with an effective weighted average interest rate of 6.60%.

Corporate Indebtedness

2021 Credit Facility

In December 2021, we entered into an amended and restated credit facility, referred to as the 2021 credit facility, that was previously amended by the Company in November 2017, and was originally entered into by the Company in November 2012. As of December 31, 2024, the 2021 credit facility consisted of a $1.25 billion revolving credit facility, a $1.05 billion term loan (or "Term Loan A"), and a $200.0 million term loan (or "Term Loan B") with maturity dates of May 15, 2026, May 15, 2027, and November 21, 2024, respectively. In November 2024, Term Loan B was paid down to $100 million and the maturity date was extended to November 19, 2025, with two additional six-month as-of-right extension options. The revolving credit facility has two six-month as-of-right extension options to May 15, 2027. 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, 2024, the 2021 credit facility bore interest at a spread over adjusted Term SOFR plus 10 basis points with an interest period of one or three months, as we may elect, ranging from (i) 72.5 basis points to 140 basis points for loans under the revolving credit facility, (ii) 80 basis points to 160 basis points for loans under Term Loan A, and (iii) 85 basis points

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to 165 basis points for loans under Term Loan B, in each case based on the credit 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.

As of December 31, 2024, the applicable spread over adjusted Term SOFR plus 10 basis points for the 2021 credit facility was 140 basis points for the revolving credit facility, 160 basis points for Term Loan A, and 180 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, 2024, the facility fee was 30 basis points.

As of December 31, 2024, we had $7.5 million of outstanding letters of credit, $320.0 million drawn under the revolving credit facility and $1.15 billion of outstanding term loans, with total undrawn capacity of $922.5 million under the 2021 credit facility. As of December 31, 2024 and December 31, 2023, the revolving credit facility had a carrying value of $316.2 million and $554.8 million, respectively, net of deferred financing costs. As of December 31, 2024 and December 31, 2023, the term loans had a carrying value of $1.1 billion and $1.2 billion, respectively, net of deferred financing costs.

The Company and the Operating Partnership are borrowers jointly and severally obligated under the 2021 credit facility.

The 2021 credit facility includes certain restrictions and covenants (see Restrictive Covenants below).

CMBS Securities Repurchase Facility

In December 2024, the Company entered into a repurchase facility for CMBS securities (CMBS Repurchase Facility), which provides us with the ability to sell certain CMBS 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 facility 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 CMBS 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 investments, our ability to satisfy margin calls with cash or cash equivalents and our access to additional liquidity. As of December 31, 2024, there have been no margin calls on the CMBS Repurchase Facility. At December 31, 2024, the facility had an outstanding balance of $3.6 million.

Senior Unsecured Notes

The following table sets forth our senior unsecured notes and other related disclosures as of December 31, 2024 and 2023, respectively, by scheduled maturity date (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","December 31, 2024","","December 31, 2023"],["Issuance","","Unpaid Principal Balance","","Accreted Balance","","Accreted Balance","","","Interest Rate (1)","","Initial Term (in Years)","","Maturity Date"],["December 17, 2015 (2)","","$","100,000","","","$","100,000","","","$","100,000","","","","4.27","%","","10","","December 2025"],["","","$","100,000","","","$","100,000","","","$","100,000"],["Deferred financing costs, net","","\u2014","","","(103)","","","(205)"],["","","$","100,000","","","$","99,897","","","$","99,795"]]
[[/GREPCENT_TABLE]]

(1)Interest rate as of December 31, 2024.

(2)Issued by the Company and the Operating Partnership as co-obligors.

Restrictive Covenants

The terms of the 2021 credit facility and 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, 2024 and 2023, we were in compliance with all such covenants.

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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 26 basis points over the three-month Term SOFR. 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 the use of interest rate derivative instruments and through our variable rate debt and preferred equity investments. Based on the debt outstanding as of December 31, 2024, a hypothetical 100 basis point increase in the applicable floating interest rate curve would increase our consolidated annual interest cost, net of interest income from variable rate debt and preferred equity investments, by $2.3 million and would increase our share of joint venture annual interest cost by $1.9 million. As of December 31, 2024, $117.0 million, or 38.5%, of our $303.7 million debt and preferred equity portfolio was indexed to SOFR.

We recognize most derivatives on the balance sheet at fair value. Derivatives that are not hedges for accounting purposes are adjusted to fair value through income. If a derivative is considered a hedge for accounting purposes, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings.

Our consolidated long-term debt of $3.3 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, 2024 bore interest based on a spread to LIBOR of 145 basis points and Term SOFR of 175 basis points to 275 basis points.

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 over, but not control, 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.

Dividends/Distributions

We expect to pay dividends to our stockholders based on the distributions we receive from our Operating Partnership.

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.

Before we pay any cash dividend, whether for Federal income tax purposes or otherwise, which would only be paid out of available cash to the extent permitted under the 2021 credit facility and senior unsecured notes, we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable.

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Related Party Transactions

One Vanderbilt Avenue Investment

In December 2016, we entered into agreements with entities owned and controlled by our Chairman, Chief Executive Officer ("CEO") and Interim President, Marc Holliday, and our former President, Andrew Mathias, pursuant to which they agreed to make an investment in our One Vanderbilt project (inclusive of the property and SUMMIT One Vanderbilt) at the appraised fair market value for the interests acquired. This investment entitles these entities to receive a percentage of any profits realized by the Company from its One Vanderbilt project in excess of the Company's capital contributions, of approximately 1.27% and 0.85%, respectively, on account of the property and 1.92% and 1.28%, respectively, on account of SUMMIT One Vanderbilt. The entities had no right to any return of capital. Accordingly, subject to previously disclosed repurchase rights, these interests had no value and these entities were not entitled to any amounts (other than limited distributions to cover tax liabilities incurred) unless and until the Company received distributions from the One Vanderbilt project in excess of the Company's aggregate investment in the project. The entities owned and controlled by Messrs. Holliday and Mathias paid $1.4 million and $1.0 million, respectively, which equaled 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.

Messrs. Holliday and Mathias have the right to tender their interests in the project upon stabilization (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 seven-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 a tender of the interests will equal the liquidation value of the interests at the time, with the value based on the project's sale price, if applicable, or fair market value as determined by an independent third party appraiser. In 2022, stabilization of the property (excluding SUMMIT One Vanderbilt) was achieved. Therefore, Messrs. Holiday and Mathias exercised their rights to tender 50% of their interests in the property (excluding SUMMIT One Vanderbilt) in July 2022. In 2023, stabilization of SUMMIT One Vanderbilt was achieved.

As of December 31, 2024, Messrs. Holiday's and Mathias's remaining interests in the One Vanderbilt project are included in Preferred units and redeemable equity in the mezzanine equity section of the Company's consolidated financial statements.

One Vanderbilt Avenue Leases

In November 2018, we entered into a lease agreement with the One Vanderbilt Avenue joint venture covering certain floors at the property. In March 2021, the lease commenced and we relocated our corporate headquarters to the leased space. For the years ended December 31, 2024, 2023, and 2022 we recorded $3.0 million, $3.0 million, and $3.0 million respectively, of rent expense under the lease.

Additionally, in June 2021, we, through a consolidated subsidiary, entered into a lease agreement with the One Vanderbilt Avenue joint venture for SUMMIT One Vanderbilt, which commenced operations in October 2021. For the year ended December 31, 2024, we recorded $41.4 million of rent expense under the lease, including percentage rent, of which $27.7 million was recognized as income as a component of Equity in net income (loss) from unconsolidated joint ventures in our consolidated statements of operations. For the year ended December 31, 2023, we recorded $38.9 million of rent expense under the lease, including percentage rent, of which $26.2 million was recognized as income as a component of Equity in net income (loss) from unconsolidated joint ventures in our consolidated statements of operations. For the year ended December 31, 2022, we recorded $33.0 million of rent expense under the lease, including percentage rent, of which $22.8 million was recognized as income as a component of Equity in net income (loss) from unconsolidated joint ventures in our consolidated statements of operations. See Note 20, "Commitments and Contingencies."

719 Seventh Avenue

In April 2024, the Company entered into an arrangement to sell the property at 719 Seventh Avenue for $30.5 million to a special purpose entity ("SPE"), of which our former President and current director, Andrew Mathias, is a partner. No amounts from the transaction will be payable to Mr. Mathias. Mr. Mathias is initially expected to own up to 40% of the equity of the SPE, representing an investment by Mr. Mathias of up to approximately $7.0 million in the acquisition of the property. The transaction closed during the second quarter of 2024. See Note 4, "Properties Held for Sale and Property Dispositions."

760 Madison Avenue Condominium Unit

In July 2024, the Company entered into an agreement to sell one of the condominium units located at 760 Madison Avenue to an entity owned by a trust of which the beneficiaries are the family members of our Chairman, CEO and Interim President, Marc Holliday, for $8.4 million. The transaction is expected to close in the first quarter of 2025.

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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 two property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as development projects. Additionally, one of our captive insurance companies, Belmont Insurance Company ("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, 2024, 2023, and 2022 are as follows (in thousands):

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2024","","2023","","2022"],["Net income (loss) attributable to SL Green common stockholders","$","7,060","","","$","(579,509)","","","$","(93,024)"],["Add:"],["Depreciation and amortization","207,443","","","247,810","","","216,167"],["Joint venture depreciation and noncontrolling interest adjustments","287,671","","","284,284","","","252,893"],["Net loss attributable to noncontrolling interests","(431)","","","(42,033)","","","(4,672)"],["Less:"],["Equity in net gain (loss) on sale of interest in unconsolidated joint venture/real estate","208,144","","","(13,368)","","","(131)"],["Purchase price and other fair value adjustments","83,430","","","(6,813)","","","\u2014"],["Gain (loss) on sale of real estate, net","3,025","","","(32,370)","","","(84,485)"],["Depreciable real estate reserves and impairments","(104,071)","","","(382,374)","","","(6,313)"],["Depreciable real estate reserves in unconsolidated joint venture","(263,190)","","","\u2014","","","\u2014"],["Depreciation on non-rental real estate assets","4,583","","","4,136","","","3,466"],["Funds from Operations attributable to SL Green common stockholders and unit holders","$","569,822","","","$","341,341","","","$","458,827"]]
[[/GREPCENT_TABLE]]

Seasonality

Our business at SUMMIT is subject to tourism trends and weather conditions, resulting in seasonal fluctuation. In 2024 and 2023, approximately 16.0% to 19.0% of our annual SUMMIT revenue was realized in the first quarter, 26.0% to 26.0% was realized in the second quarter, 28.0% to 29.0% was realized in the third quarter, and 27.0% to 29.0% was realized in the fourth quarter. We do not consider any other components of our business to be subject to material seasonal fluctuations.

Climate Change

Climate regulation in New York City is among the most stringent and requires building owners to comply with ambitious emissions limits. New York City enacted Local Law 97 (LL97) in 2019 under the Climate Mobilization Act, setting carbon caps for large buildings starting in 2024 as part of a broader commitment to reducing greenhouse gas emissions by 40% by 2030, and by 80% by 2050. We expect to be compliant in the first compliance period through 2029, with no material financial impact on our portfolio.

While SL Green's portfolio has not been substantially affected by climate-related events to New York City real estate, such as Hurricane Sandy in 2012, we have continued to develop our approach to physical climate risk assessment, management, and mitigation in order to manage and minimize the impacts of future events. In 2023, the Company released its second TCFD report, which expanded the physical and transition risks and opportunities and progress related to TCFD disclosure originally released in 2021. This report, along with the Company's current ESG Report, is available under "Reports & Resources" in the "Sustainability" section on our website. The Company has approved near-term Scope 1 and Scope 2 science-based emissions reduction targets with the SBTi. Our goal is to reduce emissions for our operationally controlled portfolio to align it with the 1.5 degree Celsius climate scenario.

We consider the successful management and mitigation of climate-related risks across our portfolio as an opportunity to raise the financial value of our buildings and pass on these benefits to our stakeholders, tenants, and investors. We believe our investments over the last 20 years in energy efficiency improvements and greenhouse gas emissions reductions have minimized the impact of climate legislation on our portfolio and our active development pipeline sets the standard for sustainable new construction and responsible community engagement. We leverage years of operational excellence to incorporate innovative design and technological solutions. We also utilize recommendations from our portfolio-wide New York State Energy Research and Development Authority ("NYSERDA") emissions reduction study to help lower emissions from tenant spaces and base building operations. Together, these measures are expected to minimize our vulnerability to the physical risks of climate change, as well as transition risks covering policy and legal, market, technology, and reputational factors.

Accounting Standards Updates

The Accounting Standards Updates are discussed in Note 2, "Significant Accounting Policies Accounting Standards Updates" in the accompanying consolidated financial statements.

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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, occupancy, 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;

•dependence upon the New York City real estate market;

•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 debt and equity capital for our operational needs and investment strategy;

•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;

•risks related to our asset management business, including our ability to identify suitable investments, manage actual and potential conflicts of interest and comply with regulations on our asset management subsidiary under the Investment Advisers Act of 1940; 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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