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SL GREEN REALTY CORP - Quarter Report: 2016 March (Form 10-Q)

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
OR
o
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.
Maryland
13-3956755
SL Green Operating Partnership, L.P.
Delaware
13-3960938
 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
420 Lexington Avenue, New York, NY 10170
(Address of principal executive offices—Zip Code)

(212) 594-2700
(Registrant's telephone number, including area code)
______________________________________________________________________

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
SL Green Realty Corp.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller Reporting Company o
 
 
 (Do not check if a
smaller reporting
company)
 
SL Green Operating Partnership, L.P.
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller Reporting Company o
 
 
(Do not check if a
smaller reporting company)
 
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 o    No x            SL Green Operating Partnership, L.P.    Yes o    No x
As of May 6, 2016, 100,236,718 shares of SL Green Realty Corp.'s common stock, par value $0.01 per share, were outstanding. As of May 6, 2016, 1,497,718 common units of limited partnership interest of SL Green Operating Partnership, L.P. were held by non-affiliates. There is no established trading market for such units.
 




EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2016 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 March 31, 2016, the Company owned 96.16% of the outstanding general and limited partnership interest in the Operating Partnership and noncontrolling investors held, in aggregate, a 3.84% limited partnership interest in the Operating Partnership. The Company also owns 9,200,000 Series I Preferred Units of the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership.
The Company and the Operating Partnership are managed and operated as one entity. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.
Noncontrolling interests in the Operating Partnership, stockholders' equity of the Company and partners' capital of the Operating Partnership are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership not owned by the Company are accounted for as partners' capital in the Operating Partnership’s consolidated financial statements and as noncontrolling interests, within mezzanine equity, in the Company's consolidated financial statements.
We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:
Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
Combined reports eliminate duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Company and the Operating Partnership; and
Combined reports create time and cost efficiencies through the preparation of one combined report instead of two separate reports.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
consolidated financial statements;
the following notes to the consolidated financial statements:
Note 11, Noncontrolling Interests on the Company’s Consolidated Financial Statements;
Note 12, Stockholders' Equity of the Company;
Note 13, Partners' Capital of the Operating Partnership;

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




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

PART I. FINANCIAL INFORMATION
 
 
FINANCIAL STATEMENTS OF SL GREEN REALTY CORP.
 
 
 
 
 
 
 
FINANCIAL STATEMENTS OF SL GREEN OPERATING PARTNERSHIP, L.P.
 
 
 
 
 
 
 
PART II.
OTHER INFORMATION
 
 


Table of Contents


PART I

ITEM 1.

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)
 
March 31, 2016
 
December 31, 2015
 
(unaudited)
 
 
Assets
 
 
 
Commercial real estate properties, at cost:
 
 
 
Land and land interests
$
4,115,982

 
$
4,779,159

Building and improvements
9,334,385

 
10,423,739

Building leasehold and improvements
1,431,238

 
1,431,259

Properties under capital lease
47,445

 
47,445

 
14,929,050

 
16,681,602

Less: accumulated depreciation
(2,100,109
)
 
(2,060,706
)
 
12,828,941

 
14,620,896

Assets held for sale
1,891,575

 
34,981

Cash and cash equivalents
316,205

 
255,399

Restricted cash
179,938

 
233,578

Investments in marketable securities
43,915

 
45,138

Tenant and other receivables, net of allowance of $17,829 and $17,618 in 2016 and 2015, respectively
55,441

 
63,491

Related party receivables
15,148

 
10,650

Deferred rents receivable, net of allowance of $23,088 and $21,730 in 2016 and 2015, respectively
428,334

 
498,776

Debt and preferred equity investments, net of discounts and deferred origination fees of $14,935 and $18,759 in 2016 and 2015, respectively
1,378,616

 
1,670,020

Investments in unconsolidated joint ventures
1,146,085

 
1,203,858

Deferred costs, net
246,503

 
239,920

Other assets
1,055,267

 
850,939

Total assets
$
19,585,968

 
$
19,727,646

Liabilities
 
 
 
Mortgages and other loans payable, net
$
5,585,171

 
$
6,881,920

Revolving credit facility, net
766,733

 
985,055

Term loan and senior unsecured notes, net
2,056,623

 
2,308,478

Accrued interest payable
36,941

 
42,406

Other liabilities
247,950

 
168,477

Accounts payable and accrued expenses
168,322

 
196,213

Deferred revenue
414,686

 
399,102

Capital lease obligations
41,554

 
41,360

Deferred land leases payable
2,010

 
1,783

Dividend and distributions payable
80,038

 
79,790

Security deposits
67,001

 
68,023

Liabilities related to assets held for sale
1,612,001

 
29,000

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
100,000

 
100,000

Total liabilities
11,179,030

 
11,301,607

Commitments and contingencies

 

Noncontrolling interests in Operating Partnership
407,046

 
424,206

Preferred units
304,869

 
282,516


4

Table of Contents

SL Green Realty Corp.
Consolidated Balance Sheets
(in thousands, except per share data)

 
March 31, 2016
 
December 31, 2015
 
(unaudited)
 
 
Equity
 
 
 
SL Green stockholders' equity:
 
 
 
Series I Preferred Stock, $0.01 par value, $25.00 liquidation preference, 9,200 issued and outstanding at both March 31, 2016 and December 31, 2015
221,932

 
221,932

Common stock, $0.01 par value, 160,000 shares authorized and 100,168 and 100,063 issued and outstanding at March 31, 2016 and December 31, 2015, respectively (including 87 shares held in treasury at March 31, 2016 and December 31, 2015)
1,002

 
1,001

Additional paid-in-capital
5,451,787

 
5,439,735

Treasury stock at cost
(10,000
)
 
(10,000
)
Accumulated other comprehensive loss
(17,222
)
 
(8,749
)
Retained earnings
1,620,669

 
1,643,546

Total SL Green stockholders' equity
7,268,168

 
7,287,465

Noncontrolling interests in other partnerships
426,855

 
431,852

Total equity
7,695,023

 
7,719,317

Total liabilities and equity
$
19,585,968

 
$
19,727,646



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

5

Table of Contents

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



 
 
Three Months Ended March 31,
 
 
2016
 
2015
Revenues
 
 
 
 
Rental revenue, net
 
$
345,607

 
$
303,329

Escalation and reimbursement
 
45,611

 
40,969

Investment income
 
54,737

 
42,069

Other income
 
9,489

 
9,932

Total revenues
 
455,444

 
396,299

Expenses
 
 
 
 
Operating expenses, including $3,462 in 2016 and $3,808 in 2015 of related party expenses
 
79,520

 
76,777

Real estate taxes
 
61,674

 
55,723

Ground rent
 
8,308

 
8,188

Interest expense, net of interest income
 
94,672

 
75,807

Amortization of deferred financing costs
 
7,932

 
6,615

Depreciation and amortization
 
179,308

 
108,337

Transaction related costs
 
1,279

 
1,143

Marketing, general and administrative
 
24,032

 
25,464

Total expenses
 
456,725

 
358,054

(Loss) income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate and loss on early extinguishment of debt
 
(1,281
)
 
38,245

Equity in net income from unconsolidated joint ventures
 
10,096

 
4,030

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
9,915

 

Gain on sale of real estate, net
 
13,773

 

Loss on early extinguishment of debt
 

 
(49
)
Income from continuing operations
 
32,503

 
42,226

Net income from discontinued operations
 

 
427

Gain on sale of discontinued operations
 

 
12,983

Net income
 
32,503

 
55,636

Net income attributable to noncontrolling interests:
 
 
 
 
Noncontrolling interests in the Operating Partnership
 
(922
)
 
(1,743
)
Noncontrolling interests in other partnerships
 
(1,974
)
 
(5,927
)
Preferred units distributions
 
(2,648
)
 
(951
)
Net income attributable to SL Green
 
26,959

 
47,015

Perpetual preferred stock dividends
 
(3,738
)
 
(3,738
)
Net income attributable to SL Green common stockholders
 
$
23,221

 
$
43,277

 
 
 
 
 

6

Table of Contents

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


 
 
Three Months Ended March 31,
 
 
2016
 
2015
Amounts attributable to SL Green common stockholders:
 
 
 
 
Income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
438

 
$
30,387

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
9,536

 

Net income from discontinued operations
 

 
410

Gain on sale of discontinued operations
 

 
12,480

Gain on sale of real estate
 
13,247

 

Net income attributable to SL Green common stockholders
 
$
23,221

 
$
43,277

Basic earnings per share:
 
 
 
 
Income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$

 
$
0.31

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.10

 

Net income from discontinued operations
 

 

Gain on sale of discontinued operations
 

 
0.13

Gain on sale of real estate
 
0.13

 

Net income attributable to SL Green common stockholders
 
$
0.23

 
$
0.44

Diluted earnings per share:
 
 
 
 
Income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$

 
$
0.31

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.10

 

Net income from discontinued operations
 

 

Gain on sale of discontinued operations
 

 
0.13

Gain on sale of real estate
 
0.13

 

Net income attributable to SL Green common stockholders
 
$
0.23

 
$
0.44

Dividends per share
 
$
0.72

 
$
0.60

Basic weighted average common shares outstanding
 
100,051

 
98,402

Diluted weighted average common shares and common share equivalents outstanding
 
104,259

 
103,019



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

7

Table of Contents


SL Green Realty Corp.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)

 
Three Months Ended March 31,
 
2016
 
2015
Net income
$
32,503

 
$
55,636

Other comprehensive income (loss):
 
 
 
Change in net unrealized (loss) gain on derivative instruments, including SL Green's share of joint venture net unrealized (loss) gain on derivative instruments
(7,572
)
 
(5,680
)
Change in unrealized (loss) gain on marketable securities
(1,223
)
 
650

Other comprehensive (loss) income
(8,795
)
 
(5,030
)
Comprehensive income
23,708

 
50,606

Net income attributable to noncontrolling interests and preferred units distributions
(5,544
)
 
(8,621
)
Other comprehensive income (loss) attributable to noncontrolling interests
322

 
200

Comprehensive income attributable to SL Green
$
18,486

 
$
42,185



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


8

Table of Contents

SL Green Realty Corp.
Consolidated Statement of Equity
(unaudited, in thousands, except per share data)


 
SL Green Realty Corp. Stockholders
 
 
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 


 
 
Series C
Preferred
Stock
 
Series I
Preferred
Stock
 
Shares
 
Par
Value
 
Additional
Paid-
In-Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2015
 
$

 
$
221,932

 
99,976

 
$
1,001

 
$
5,439,735

 
$
(10,000
)
 
$
(8,749
)
 
$
1,643,546

 
$
431,852

 
$
7,719,317

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26,959

 
1,974

 
28,933

Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
(8,473
)
 
 
 
 
 
(8,473
)
Preferred dividends
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3,738
)
 
 
 
(3,738
)
DRSPP proceeds
 
 
 
 
 
 
 
 
 
45

 
 
 
 
 
 
 
 
 
45

Conversion of units of the Operating Partnership to common stock
 
 
 
 
 
63

 
1

 
7,152

 
 
 
 
 
 
 
 
 
7,153

Reallocation of noncontrolling interest in the Operating Partnership
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25,867

 
 
 
25,867

Deferred compensation plan and stock award, net
 
 
 
 
 
25

 
 
 
(2,220
)
 
 
 
 
 
 
 
 
 
(2,220
)
Amortization of deferred compensation plan
 
 
 
 
 
 
 
 
 
5,864

 
 
 
 
 
 
 
 
 
5,864

Proceeds from stock options exercised
 
 
 
 
 
17

 
 
 
1,211

 
 
 
 
 
 
 
 
 
1,211

Contributions to consolidated joint venture interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
934

 
934

Cash distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,905
)
 
(7,905
)
Cash distributions declared ($0.72 per common share, none of which represented a return of capital for federal income tax purposes)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(71,965
)
 
 
 
(71,965
)
Balance at March 31, 2016
 
$

 
$
221,932

 
100,081

 
$
1,002

 
$
5,451,787

 
$
(10,000
)
 
$
(17,222
)
 
$
1,620,669

 
$
426,855

 
$
7,695,023



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

9

Table of Contents

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


 
 Three months ended March 31,
 
2016
 
2015
Operating Activities
 
 
 
Net income
$
32,503

 
$
55,636

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
187,240

 
114,955

Equity in net income from unconsolidated joint ventures
(10,096
)
 
(4,030
)
Distributions of cumulative earnings from unconsolidated joint ventures
8,891

 
15,489

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(9,915
)
 

Gain on sale of real estate
(13,773
)
 

Gain on sale of discontinued operations

 
(12,983
)
Loss on early extinguishment of debt

 
49

Deferred rents receivable
(652
)
 
(32,367
)
Other non-cash adjustments
(14,920
)
 
4,590

Changes in operating assets and liabilities:
 
 
 
Restricted cash—operations
(5,318
)
 
(1,652
)
Tenant and other receivables
7,829

 
7,096

Related party receivables
(4,503
)
 
(353
)
Deferred lease costs
(13,133
)
 
(11,017
)
Other assets
(46,736
)
 
(38,280
)
Accounts payable, accrued expenses and other liabilities and security deposits
(20,630
)
 
(20,230
)
Deferred revenue and land leases payable
17,303

 
14,056

Net cash provided by operating activities
114,090

 
90,959

Investing Activities
 
 
 
Acquisitions of real estate property
(37,728
)
 
(6,290
)
Additions to land, buildings and improvements
(62,500
)
 
(47,117
)
Escrowed cash—capital improvements/acquisition deposits/deferred purchase price
60,059

 
(3,084
)
Investments in unconsolidated joint ventures
(6,603
)
 
(83,772
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
95,004

 
45,546

Net proceeds from disposition of real estate/joint venture interest
139,594

 
485,540

Proceeds from sale of marketable securities

 
133

Purchases of marketable securities

 
(7,769
)
Other investments
(4,103
)
 
(5,424
)
Origination of debt and preferred equity investments
(117,119
)
 
(174,420
)
Repayments or redemption of debt and preferred equity investments
272,253

 
26,954

Net cash provided by investing activities
338,857

 
230,297


10

Table of Contents

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

 
 Three months ended March 31,
 
2016
 
2015
Financing Activities
 
 
 
Proceeds from mortgages and other loans payable
$
227,892

 
$

Repayments of mortgages and other loans payable
(127,695
)
 
(481,608
)
Proceeds from revolving credit facility and senior unsecured notes
520,000

 
665,000

Repayments of revolving credit facility and senior unsecured notes
(994,296
)
 
(530,000
)
Proceeds from stock options exercised and DRIP issuance
1,256

 
109,840

Proceeds from sale of common stock

 
120,597

Redemption of preferred stock
(440
)
 
(200
)
Distributions to noncontrolling interests in other partnerships
(7,905
)
 
(110,867
)
Contributions from noncontrolling interests in other partnerships
934

 

Distributions to noncontrolling interests in the Operating Partnership
(2,881
)
 
(2,349
)
Dividends paid on common and preferred stock
(78,103
)
 
(62,903
)
Other obligations related to mortgage loan participations
76,500

 
25,000

Deferred loan costs and capitalized lease obligation
(7,403
)
 
(4,405
)
Net cash used in financing activities
(392,141
)
 
(271,895
)
Net increase in cash and cash equivalents
60,806

 
49,361

Cash and cash equivalents at beginning of year
255,399

 
281,409

Cash and cash equivalents at end of period
$
316,205

 
$
330,770

 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
 
 
 
Issuance of common stock as deferred compensation
$
2,195

 
$
1,306

Issuance of units in the operating partnership
18,140

 
22,114

Redemption of units in the operating partnership
7,153

 
37,407

Derivative instruments at fair value
8,141

 
4,426

Exchange of debt investment for equity in joint venture
68,581

 
10,151

Transfer of restricted cash to operating cash and cash equivalents as a result of sale

 
21,578

Acquisition of subsidiary interest from noncontrolling interest

 
3,500

Issuance of preferred units relating to the real estate acquisition
22,750

 

Tenant improvements and capital expenditures payable
18,165

 
17,664

Fair value adjustment to noncontrolling interest in operating partnership
25,867

 
45,456

Transfer of assets to assets held for sale
1,891,575

 

Transfer of liabilities related to assets held for sale
1,612,001

 

Deferred leasing payable
1,699

 
2,372

Removal of fully depreciated commercial real estate properties
4,822

 

Issuance of preferred units (Stonehenge)

 
40,000

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

11

Table of Contents



SL Green Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data)

 
 
March 31, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
Assets
 
 
 
 
Commercial real estate properties, at cost:
 
 
 
 
Land and land interests
 
$
4,115,982

 
$
4,779,159

Building and improvements
 
9,334,385

 
10,423,739

Building leasehold and improvements
 
1,431,238

 
1,431,259

Property under capital lease
 
47,445

 
47,445

 
 
14,929,050

 
16,681,602

Less: accumulated depreciation
 
(2,100,109
)
 
(2,060,706
)
 
 
12,828,941

 
14,620,896

Assets held for sale
 
1,891,575

 
34,981

Cash and cash equivalents
 
316,205

 
255,399

Restricted cash
 
179,938

 
233,578

Investments in marketable securities
 
43,915

 
45,138

Tenant and other receivables, net of allowance of $17,829 and $17,618 in 2016 and 2015, respectively
 
55,441

 
63,491

Related party receivables
 
15,148

 
10,650

Deferred rents receivable, net of allowance of $23,088 and $21,730 in 2016 and 2015, respectively
 
428,334

 
498,776

Debt and preferred equity investments, net of discounts and deferred origination fees of $14,935 and $18,759 in 2016 and 2015, respectively
 
1,378,616

 
1,670,020

Investments in unconsolidated joint ventures
 
1,146,085

 
1,203,858

Deferred costs, net
 
246,503

 
239,920

Other assets
 
1,055,267

 
850,939

Total assets
 
$
19,585,968

 
$
19,727,646

Liabilities
 
 
 
 
Mortgages and other loans payable, net
 
$
5,585,171

 
$
6,881,920

Revolving credit facility, net
 
766,733

 
985,055

Term loan and senior unsecured notes, net
 
2,056,623

 
2,308,478

Accrued interest payable
 
36,941

 
42,406

Other liabilities
 
247,950

 
168,477

Accounts payable and accrued expenses
 
168,322

 
196,213

Deferred revenue
 
414,686

 
399,102

Capital lease obligations
 
41,554

 
41,360

Deferred land leases payable
 
2,010

 
1,783

Dividend and distributions payable
 
80,038

 
79,790

Security deposits
 
67,001

 
68,023

Liabilities related to assets held for sale
 
1,612,001

 
29,000

Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities
 
100,000

 
100,000

Total liabilities
 
11,179,030

 
11,301,607

Commitments and contingencies
 

 

Limited partner interests in SLGOP (4,001 and 3,746 limited partner common units outstanding at March 31, 2016 and December 31, 2015, respectively)
 
407,046

 
424,206

Preferred units
 
304,869

 
282,516


12


 
 
March 31, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
Capital
 
 
 
 
SLGOP partners' capital:
 
 
 
 
Series I Preferred Units, $25.00 liquidation preference, 9,200 issued and outstanding at both March 31, 2016 and December 31, 2015
 
221,932

 
221,932

SL Green partners' capital (1,041 and 1,035 general partner common units and 99,041 and 98,941 limited partner common units outstanding at March 31, 2016 and December 31, 2015, respectively)
 
7,063,458

 
7,074,282

Accumulated other comprehensive loss
 
(17,222
)
 
(8,749
)
Total SLGOP partners' capital
 
7,268,168

 
7,287,465

Noncontrolling interests in other partnerships
 
426,855

 
431,852

Total capital
 
7,695,023

 
7,719,317

Total liabilities and capital
 
$
19,585,968

 
$
19,727,646



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

13

Table of Contents

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



 
 
Three Months Ended March 31,
 
 
2016
 
2015
Revenues
 
 
 
 
Rental revenue, net
 
$
345,607

 
$
303,329

Escalation and reimbursement
 
45,611

 
40,969

Investment income
 
54,737

 
42,069

Other income
 
9,489

 
9,932

Total revenues
 
455,444

 
396,299

Expenses
 
 
 
 
Operating expenses, including $3,462 in 2016 and $3,808 in 2015 of related party expenses
 
79,520

 
76,777

Real estate taxes
 
61,674

 
55,723

Ground rent
 
8,308

 
8,188

Interest expense, net of interest income
 
94,672

 
75,807

Amortization of deferred financing costs
 
7,932

 
6,615

Depreciation and amortization
 
179,308

 
108,337

Transaction related costs
 
1,279

 
1,143

Marketing, general and administrative
 
24,032

 
25,464

Total expenses
 
456,725

 
358,054

(Loss) Income from continuing operations before equity in net income from unconsolidated joint ventures, equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate and loss on early extinguishment of debt
 
(1,281
)
 
38,245

Equity in net income from unconsolidated joint ventures
 
10,096

 
4,030

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
9,915

 

Gain on sale of real estate, net
 
13,773

 

Loss on early extinguishment of debt
 

 
(49
)
Income from continuing operations
 
32,503

 
42,226

Net income from discontinued operations
 

 
427

Gain on sale of discontinued operations
 

 
12,983

Net income
 
32,503

 
55,636

Net income attributable to noncontrolling interests in other partnerships
 
(1,974
)
 
(5,927
)
Preferred unit distributions
 
(2,648
)
 
(951
)
Net income attributable to SLGOP
 
27,881

 
48,758

Perpetual preferred unit distributions
 
(3,738
)
 
(3,738
)
Net income attributable to SLGOP common unitholders
 
$
24,143

 
$
45,020


14

Table of Contents

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


 
 
Three Months Ended March 31,
 
 
2016
 
2015
Amounts attributable to SLGOP common unitholders:
 
 
 
 
Income from continuing operations before purchase price fair value adjustment, gains on sale and discontinued operations
 
$
455

 
$
31,610

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
9,915

 

Net income from discontinued operations
 

 
427

Gain on sale of discontinued operations
 

 
12,983

Gain on sale of real estate
 
13,773

 

Net income attributable to SLGOP common unitholders
 
$
24,143

 
$
45,020

 
 
 
 
 
Basic earnings per unit:
 
 
 
 
Income from continuing operations before gains on sale and discontinued operations
 
$

 
$
0.31

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.10

 

Net income from discontinued operations
 

 

Gain on sale of discontinued operations
 

 
0.13

Gain on sale of real estate
 
0.13

 

Net income attributable to SLGOP common unitholders
 
$
0.23

 
$
0.44

Diluted earnings per unit:
 
 
 
 
Income from continuing operations before gains on sale and discontinued operations
 
$

 
$
0.31

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
0.10

 

Net income from discontinued operations
 

 

Gain on sale of discontinued operations
 

 
0.13

Gain on sale of real estate
 
0.13

 

Net income attributable to SLGOP common unitholders
 
$
0.23

 
$
0.44

Dividends per unit
 
0.72

 
$
0.60

Basic weighted average common units outstanding
 
104,025

 
102,366

Diluted weighted average common units and common unit equivalents outstanding
 
104,259

 
103,019



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


15

Table of Contents


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

 
 
Three Months Ended March 31,
 
 
2016
 
2015
Net income
 
$
32,503

 
$
55,636

Other comprehensive income (loss):
 
 
 
 
Change in net unrealized (loss) gain on derivative instruments, including SLGOP's share of joint venture net unrealized (loss) gain on derivative instruments
 
(7,572
)
 
(5,680
)
Change in unrealized (loss) gain on marketable securities
 
(1,223
)
 
650

Other comprehensive (loss) income
 
(8,795
)
 
(5,030
)
Comprehensive income
 
23,708

 
50,606

Net income attributable to noncontrolling interests
 
(1,974
)
 
(5,927
)
Other comprehensive income (loss) attributable noncontrolling interests
 
322

 
200

Comprehensive income attributable to SLGOP
 
$
22,056

 
$
44,879



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


16

Table of Contents

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



 
 
 
 
SL Green Operating Partnership Unitholders
 
 
 
 
 
 
 
 
 
 
Partners' Interest
 
 
 
 
 
 
 
 
Series C
Preferred
Units
 
Series I
Preferred
Units
 
Common
Units
 
Common
Unitholders
 
Accumulated
Other
Comprehensive (Loss) Income
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2015
 
$

 
$
221,932

 
99,976

 
$
7,074,282

 
$
(8,749
)
 
$
431,852

 
$
7,719,317

Net income
 
 
 
 
 
 

 
26,959

 
 

 
1,974

 
28,933

Other comprehensive (loss)
 
 
 
 
 
 
 
 
 
(8,473
)
 
 
 
(8,473
)
Preferred distributions
 
 
 
 
 
 
 
(3,738
)
 
 
 
 
 
(3,738
)
DRSPP proceeds

 
 
 
 
 
 
 
45

 
 
 
 
 
45

Conversion of common units
 
 
 
 
 
63

 
7,153

 
 
 
 
 
7,153

Reallocation of noncontrolling interests in the operating partnership
 
 
 
 
 
 
 
25,867

 
 
 
 
 
25,867

Deferred compensation plan and stock award, net
 
 
 
 
 
25

 
(2,220
)
 
 
 
 
 
(2,220
)
Amortization of deferred compensation plan
 
 
 
 
 
 
 
5,864

 
 
 
 
 
5,864

Contribution to consolidated joint venture interests
 
 
 
 
 
 
 
 
 
 
 
934

 
934

Contributions - proceeds from stock options exercised
 
 
 
 
 
17

 
1,211

 
 
 
 
 
1,211

Cash distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
(7,905
)
 
(7,905
)
Cash distributions declared ($0.72 per common unit, none of which represented a return of capital for federal income tax purposes)
 
 

 
 

 
 

 
(71,965
)
 
 

 
 
 
(71,965
)
Balance at March 31, 2016
 
$

 
$
221,932

 
100,081

 
$
7,063,458

 
$
(17,222
)
 
$
426,855

 
$
7,695,023

   

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


17

Table of Contents

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



 
Three Months Ended March 31,
 
2016
 
2015
Operating Activities
 
 
 
Net income
$
32,503

 
$
55,636

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
187,240

 
114,955

Equity in net income from unconsolidated joint ventures
(10,096
)
 
(4,030
)
Distributions of cumulative earnings from unconsolidated joint ventures
8,891

 
15,489

Equity in net gain on sale of interest in unconsolidated joint venture interest/real estate
(9,915
)
 

Gain on sale of real estate
(13,773
)
 

Gain on sale of discontinued operations

 
(12,983
)
Loss on early extinguishment of debt

 
49

Deferred rents receivable
(652
)
 
(32,367
)
Other non-cash adjustments
(14,920
)
 
4,590

Changes in operating assets and liabilities:
 
 
 
Restricted cash—operations
(5,318
)
 
(1,652
)
Tenant and other receivables
7,829

 
7,096

Related party receivables
(4,503
)
 
(353
)
Deferred lease costs
(13,133
)
 
(11,017
)
Other assets
(46,736
)
 
(38,280
)
Accounts payable, accrued expenses and other liabilities and security deposits
(20,630
)
 
(20,230
)
Deferred revenue and land leases payable
17,303

 
14,056

Net cash provided by operating activities
114,090

 
90,959

Investing Activities
 
 
 
Acquisitions of real estate property
(37,728
)
 
(6,290
)
Additions to land, buildings and improvements
(62,500
)
 
(47,117
)
Escrowed cash—capital improvements/acquisition deposits/deferred purchase price
60,059

 
(3,084
)
Investments in unconsolidated joint ventures
(6,603
)
 
(83,772
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
95,004

 
45,546

Net proceeds from disposition of real estate/joint venture interest
139,594

 
485,540

Proceeds from sale of marketable securities

 
133

Purchases of marketable securities

 
(7,769
)
Other investments
(4,103
)
 
(5,424
)
Origination of debt and preferred equity investments
(117,119
)
 
(174,420
)
Repayments or redemption of debt and preferred equity investments
272,253

 
26,954

Net cash provided by investing activities
338,857

 
230,297

 
 
 
 

18

Table of Contents

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


 
Three Months Ended March 31,
 
2016
 
2015
Financing Activities
 
 
 
Proceeds from mortgages and other loans payable
$
227,892

 
$

Repayments of mortgages and other loans payable
(127,695
)
 
(481,608
)
Proceeds from revolving credit facility, term loan and senior unsecured notes
520,000

 
665,000

Repayments of revolving credit facility, term loan and senior unsecured notes
(994,296
)
 
(530,000
)
Proceeds from stock options exercised and DRIP issuance
1,256

 
109,840

Net proceeds from sale of common stock

 
120,597

Redemption of preferred units
(440
)
 
(200
)
Distributions to noncontrolling interests in other partnerships
(7,905
)
 
(110,867
)
Contributions from noncontrolling interests in other partnerships
934

 

Distributions paid on common and preferred units
(80,984
)
 
(65,252
)
Other obligations related to mortgage loan participations
76,500

 
25,000

Deferred loan costs and capitalized lease obligation
(7,403
)
 
(4,405
)
Net cash used in financing activities
(392,141
)
 
(271,895
)
Net increase in cash and cash equivalents
60,806

 
49,361

Cash and cash equivalents at beginning of year
255,399

 
281,409

Cash and cash equivalents at end of period
$
316,205

 
$
330,770

 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
 
 
 
Issuance of common stock as deferred compensation
$
2,195

 
$
1,306

Issuance of units in the operating partnership
18,140

 
22,114

Redemption of units in the operating partnership
7,153

 
37,407

Derivative instruments at fair value
8,141

 
4,426

Exchange of debt investment for equity in joint venture
68,581

 
10,151

Transfer of restricted cash to operating cash and cash equivalents as a result of sale

 
21,578

Acquisition of subsidiary interest from noncontrolling interest

 
3,500

Issuance of preferred units relating to the real estate acquisition
22,750

 

Tenant improvements and capital expenditures payable
18,165

 
17,664

Fair value adjustment to noncontrolling interest in the operating partnership
25,867

 

Transfer of assets to assets held for sale
1,891,575

 

Transfer of liabilities related to assets held for sale
1,612,001

 

Deferred leasing payable
1,699

 
2,372

Removal of fully depreciated commercial real estate properties
4,822

 

Issuance of preferred units (Stonehenge)

 
40,000


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

19

Table of Contents


SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements
March 31, 2016


1. Organization and Basis of Presentation
SL Green Realty Corp., which is referred to as the Company or SL Green, a Maryland corporation, and SL Green Operating Partnership, L.P., which is referred to as SLGOP or the Operating Partnership, a Delaware limited partnership, were formed in June 1997 for the purpose of combining the commercial real estate business of S.L. Green Properties, Inc. and its affiliated partnerships and entities. The Operating Partnership received a contribution of interest in the real estate properties, as well as 95% of the economic interest in the management, leasing and construction companies which are referred to as the Service Corporation. All of the management, leasing and construction services that are provided to the properties that are wholly-owned by us and that are provided to certain joint ventures are conducted through SL Green Management LLC which is 100% owned by the Operating Partnership. The Company has qualified, and expects to qualify in the current fiscal year, as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, and operates as a self-administered, self-managed REIT. A REIT is a legal entity that holds real estate interests and, through payments of dividends to stockholders, is permitted to minimize the payment of Federal income taxes at the corporate level. Unless the context requires otherwise, all references to "we," "our" and "us" means the Company and all entities owned or controlled by the Company, including the Operating Partnership.
Substantially all of our assets are held by, and all of our operations are conducted through, the Operating Partnership. The Company is the sole managing general partner of the Operating Partnership. As of March 31, 2016, noncontrolling investors held, in the aggregate, a 3.84% limited partnership interest in the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership. The Operating Partnership is considered a variable interest entity, or VIE, in which we are the primary beneficiary. See Note 11, "Noncontrolling Interests on the Company's Consolidated Financial Statements."
Reckson Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P., or ROP, are wholly-owned subsidiaries of SL Green Realty Corp.
As of March 31, 2016, we owned the following interests in properties in the New York Metropolitan area, primarily in midtown Manhattan. Our investments in the New York Metropolitan area also include investments in Brooklyn, Long Island, Westchester County, Connecticut and New Jersey, which are collectively known as the Suburban properties:
 
 
 
 
Consolidated
 
Unconsolidated
 
Total
 
 
Location
 
Property
Type
 
Number of Properties
 
Approximate Square Feet (unaudited)
 
Number of Properties
 
Approximate Square Feet (unaudited)
 
Number of Properties
 
Approximate Square Feet (unaudited)
 
Weighted Average Occupancy(1) (unaudited)
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manhattan
 
Office
 
27

(2)
21,003,606

 
6

 
4,244,139

 
33

 
25,247,745

 
95.9
%
 
 
Retail
 
10

(3)
418,093

 
9

 
347,970

 
19

 
766,063

 
88.1
%
 
 
Development/Redevelopment
 
3

 
42,635

 
3

 
733,624

 
6

 
776,259

 
30.5
%
 
 
Fee Interest
 
1

 
176,530

 

 

 
1

 
176,530

 
100.0
%
 
 
 
 
41

 
21,640,864

 
18

 
5,325,733

 
59

 
26,966,597

 
93.8
%
Suburban
 
Office
 
26

 
4,235,300

 
2

 
640,000

 
28

 
4,875,300

 
81.7
%
 
 
Retail
 
1

 
52,000

 

 

 
1

 
52,000

 
100.0
%
 
 
Development/Redevelopment
 
1

 
1,000

 
1

 

 
2

 
1,000

 
100.0
%
 
 
 
 
28

 
4,288,300

 
3

 
640,000

 
31

 
4,928,300

 
81.9
%
Total commercial properties
 
69

 
25,929,164

 
21

 
5,965,733

 
90

 
31,894,897

 
92.0
%
Residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Manhattan
 
Residential
 
4

(3)
762,587

 
17

 
2,193,424

 
21

 
2,956,011

 
95.4
%
Suburban
 
Residential
 



 

 

 

 

 
%
Total residential properties
 
4

 
762,587

 
17

 
2,193,424

 
21

 
2,956,011

 
95.4
%
Total portfolio(3)
 
73

 
26,691,751

 
38

 
8,159,157

 
111

 
34,850,908

 
92.3
%
____________________________________________________________________
(1)
The weighted average occupancy for commercial properties represents the total occupied square feet divided by total acquisition square footage.  The weighted average occupancy for residential properties represents the total occupied units divided by total available units.
(2)
Includes the property at 388-390 Greenwich Street, which is classified as held for sale at March 31, 2016.

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

(3)
As of March 31, 2016, we owned a building that was comprised of approximately 270,132 square feet (unaudited) of retail space and approximately 222,855 square feet (unaudited) of residential space. For the purpose of this report, we have included the building in the retail properties count and have bifurcated the square footage into the retail and residential components.

As of March 31, 2016, we also managed an approximately 336,000 square foot (unaudited) office building owned by a third party and held debt and preferred equity investments with a book value of $1.7 billion including $0.3 billion of debt and preferred equity investments and other financing receivables that are included in other balance sheet line items.
Partnership Agreement
In accordance with the partnership agreement of the Operating Partnership, or the Operating Partnership Agreement, we allocate all distributions and profits and losses in proportion to the percentage of ownership interests of the respective partners. As the managing general partner of the Operating Partnership, we are required to take such reasonable efforts, as determined by us in our sole discretion, to cause the Operating Partnership to distribute sufficient amounts to enable the payment of sufficient dividends by us to minimize any Federal income or excise tax at the Company level. Under the Operating Partnership Agreement, each limited partner has the right to redeem units of limited partnership interests for cash, or if we so elect, shares of SL Green's common stock on a one-for-one basis.
Basis of Quarterly Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the financial position of the Company and the Operating Partnership at March 31, 2016 and the results of operations for the periods presented have been included. The operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These financial statements should be read in conjunction with the financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2015 of the Company and the Operating Partnership.
The consolidated balance sheets at December 31, 2015 have been derived from the audited financial statements as of that date but do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
2. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method or as debt and preferred equity investments. See Note 5, "Debt and Preferred Equity Investments" and Note 6, "Investments in Unconsolidated Joint Ventures." All significant intercompany balances and transactions have been eliminated.
We consolidate a variable interest entity, or VIE, in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Included in commercial real estate properties on our consolidated balance sheets as of March 31, 2016 and December 31, 2015 are $1.8 billion and $200.7 million, respectively, related to our consolidated VIEs. Included in mortgages and other loans payable on our consolidated balance sheets as of March 31, 2016 and December 31, 2015 are $673.9 million and $104.5 million, respectively, collateralized by the real estate assets of the related consolidated VIEs. As of March 31, 2016, assets held for sale and liabilities related to assets held for sale on the consolidated balance sheets did not include amounts related to consolidated VIEs.
A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to us. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheet and the presentation of net income is modified to present earnings and other comprehensive income attributed to controlling and noncontrolling interests.
We assess the accounting treatment for each joint venture and debt and preferred equity investment. This assessment includes a review of each joint venture or limited liability company agreement to determine which party has what rights and whether those rights are protective or participating. For all VIEs, we review such agreements in order to determine which party has the power to

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

direct the activities that most significantly impact the entity's economic performance. In situations where we and our partner approve, among other things, the annual budget, receive a detailed monthly reporting package, meet on a quarterly basis to review the results of the joint venture, review and approve the joint venture's tax return before filing, and approve all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power of the activities that most significantly impact the performance of the joint venture. Our joint venture agreements typically contain certain protective rights such as requiring partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan.
Investment in Commercial Real Estate Properties
On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be other than temporarily 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 and without interest charges for consolidated properties) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the calculated fair value of the property.
We also evaluate our real estate properties for potential impairment when a real estate property has been classified as held for sale. Real estate assets held for sale are valued at the lower of either their carrying value or fair value less costs to sell. We do not believe that there were any indicators of impairment at any of our consolidated properties at March 31, 2016.
We allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases. We depreciate the amount allocated to building (inclusive of tenant improvements) over their estimated useful lives, which generally range from three to 40 years. We amortize the amount allocated to the above- and below-market leases over the remaining term of the associated lease, which generally range from one to 14 years, and record it as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income. We amortize the amount allocated to the values associated with in-place leases over the expected term of the associated lease, which generally ranges from one to 14 years. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to be material, we amortize such below-market lease value into rental income over the renewal period.
We recognized $34.8 million and $14.3 million of rental revenue for the three months ended March 31, 2016 and 2015, respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase price of the applicable properties.We recognized as a reduction to interest expense the amortization of the above-market rate mortgages assumed of $0.6 million for both the three months ended March 31, 2016 and 2015.
The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of March 31, 2016 and December 31, 2015 (in thousands):
 
March 31, 2016
 
December 31, 2015
Identified intangible assets (included in other assets):
 
 
 
Gross amount
$
1,022,698

 
$
939,518

Accumulated amortization
(407,401
)
 
(403,747
)
Net(1)
$
615,297

 
$
535,771

Identified intangible liabilities (included in deferred revenue):
 
 
 
Gross amount
$
863,882

 
$
866,561

Accumulated amortization
(489,674
)
 
(486,928
)
Net(1)
$
374,208

 
$
379,633

____________________________________________________________________

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

(1)
As of March 31, 2016 and December 31, 2015, $242.8 million and $0.2 million, respectively and $149.9 million and $0.1 million, respectively, of net intangible assets and net intangible liabilities, were reclassified to assets held for sale and liabilities related to assets held for sale.
    
In February 2016, we closed on the sale of 885 Third Avenue but did not meet the criteria for sale accounting under the full accrual method in ASC 360-20, Property, Plant and Equipment - Real Estate Sales. As a result the property remains on our consolidated balance sheet until the criteria is met.

Fair Value Measurements
See Note 16, "Fair Value Measurements."
Investment in Marketable Securities
We designate a security as held-to-maturity, available-for-sale, or trading at acquisition. As of March 31, 2016, we did not have any securities designated as held-to-maturity or trading. We account for our available-for-sale securities at fair value pursuant to Accounting Standards Codification, or ASC, 820-10, with the net unrealized gains or losses reported as a component of accumulated other comprehensive income or loss. Any unrealized losses that are determined to be other-than-temporary are recognized in earnings up to their credit component.
The cost of bonds and marketable securities sold is determined using the specific identification method.
At March 31, 2016 and December 31, 2015, we held the following marketable securities (in thousands):
 
March 31, 2016
 
December 31, 2015
Equity marketable securities
$
4,132

 
$
4,704

Commercial mortgage-backed securities
39,783

 
40,434

Total marketable securities available-for-sale
$
43,915

 
$
45,138

The cost basis of the commercial mortgage-backed securities was $38.7 million at both March 31, 2016 and December 31, 2015. These securities mature at various times through 2049.
We did not sell any of our marketable securities during the three months ended March 31, 2016. During the three months ended March 31, 2015, we disposed of marketable securities for aggregate net proceeds of $0.1 million.
Investments in Unconsolidated Joint Ventures
We assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on the joint ventures' projected discounted cash flows. We do not believe that the values of any of our equity investments were impaired at March 31, 2016.
We may originate loans for real estate acquisition, development and construction, 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 our loan accounting for our debt and preferred equity investments.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the tenant takes possession or controls the physical use of the leased space. In order for the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner (the tenant is the owner) of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When management concludes that we are the 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

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

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. We establish, on a current basis, an allowance for future potential tenant credit losses, which may occur against this account. The balance reflected on the consolidated balance sheets is net of such allowance.
In addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year.
We record a gain on sale of real estate when title is conveyed to the buyer, subject to the buyer's financial commitment being sufficient to provide economic substance to the sale and provided that we have no substantial economic involvement with the buyer.
Interest income on debt and preferred equity investments is accrued based on the outstanding principal amount and 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 ultimately collectible, based on the underlying collateral and operations of the borrower. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt.
Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to the interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cashflows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. 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.
Debt and preferred equity investments are placed on a non-accrual status at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income recognition on any non-accrual debt or preferred equity investment is resumed when such non-accrual debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received.
We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we derecognize the loan sold and recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, 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.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

Reserve for Possible Credit Losses
The expense for possible credit losses in connection with debt and preferred equity investments is the charge to earnings to increase the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors considered include geographic trends, product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish a provision for possible credit loss on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.
Where impairment is indicated on an investment that is held to maturity, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value of the collateral. Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense. We continue to assess or adjust our estimates based on circumstances of a loan and the underlying collateral. If additional information reflects increased recovery of our investment, we will adjust our reserves accordingly. There were no loan reserves recorded during three months ended March 31, 2016 and 2015.
Debt and preferred equity investments held for sale are carried at the lower of cost or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the investment will be reclassified at its net carrying value to debt and preferred equity investments held to maturity. For these reclassified investments, the difference between the current carrying value and the expected cash to be collected at maturity will be accreted into income over the remaining term of the investment.
Income Taxes
SL Green is taxed as a REIT under Section 856(c) of the Code. As a REIT, SL Green generally is not subject to Federal income tax. To maintain its qualification as a REIT, SL Green must distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements. If SL Green fails to qualify as a REIT in any taxable year, SL Green will be subject to Federal income tax on SL Green's taxable income at regular corporate rates. SL Green may also be subject to certain state, local and franchise taxes. Under certain circumstances, Federal income and excise taxes may be due on SL Green's undistributed taxable income.
The Operating Partnership is a partnership and, as a result, all income and losses of the partnership are allocated to the partners for inclusion in their respective income tax returns. The only provision for income taxes included in the consolidated statements of operations relates to the Operating Partnership’s consolidated taxable REIT subsidiaries. The Operating Partnership may also be subject to certain state, local and franchise taxes.
Pursuant to amendments to the Code that became effective January 1, 2001, we have elected, and may elect in the future, to treat certain of our existing or newly created corporate subsidiaries as taxable REIT subsidiaries, or TRSs. In general, TRSs may perform non-customary services for the tenants of the Company, hold assets that we cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in Federal and state income tax liability for these entities.
During the three months ended March 31, 2016 and 2015, we recorded Federal, state and local tax provisions of $1.2 million and $0.3 million, respectively.
We follow a two-step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is more-likely-than-not to be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for derecognition of tax positions is prohibited.
Stock-Based Employee Compensation Plans
We have a stock-based employee compensation plan, described more fully in Note 14, "Share-based Compensation."
The Company's stock options are recorded at fair value at the time of issuance. Fair value of the stock options is determined using the Black-Scholes option pricing model. The Black-Scholes model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our plan has characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the employee stock options.
Compensation cost for stock options, if any, is recognized over the vesting period of the award. Our policy is to grant options with an exercise price equal to the quoted closing market price of the Company's common stock on the grant date. Awards of stock or restricted stock are expensed as compensation over the benefit period based on the fair value of the stock on the grant date.
For share-based awards with a performance or market measure, we recognize compensation cost over the requisite service period, using the accelerated attribution expense method. The requisite service period begins on the date the compensation committee of SL Green's board of directors authorizes the award, adopts any relevant performance measures and communicates the award to the employees. For programs with awards that vest based on the achievement of a performance condition or market condition, we determine whether it is probable that the performance condition will be met, and estimate compensation cost based on the fair value of the award at the applicable reporting date estimated using a binomial model or market quotes. For share-based awards for which there is no pre-established performance measure, we recognize compensation cost over the service vesting period, which represents the requisite service period, on a straight-line basis. In accordance with the provisions of our share-based incentive compensation plans, we accept the return of shares of the Company's common stock, at the current quoted market price, from certain key employees to satisfy minimum statutory tax-withholding requirements related to shares that vested during the period.
Awards can also be made in the form of a separate series of units of limited partnership interest in the Operating Partnership called long-term incentive plan units, or LTIP units. LTIP units, which can be granted either as free-standing awards or in tandem with other awards under our stock incentive plan, are valued by reference to the value of the Company's common stock at the time of grant, and are subject to such conditions and restrictions as the compensation committee of the Company's board of directors may determine, including continued employment or service, computation of financial metrics and/or achievement of pre-established performance goals and objectives.
Earnings per Share of the Company
The Company presents both basic and diluted earnings per share, or EPS. Basic EPS excludes dilution and is computed by dividing net income or loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Basic EPS includes participating securities, consisting of unvested restricted stock that receive nonforfeitable dividends similar to shares of common stock. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount. Diluted EPS also includes units of limited partnership interest. The dilutive effect of stock options is reflected in the weighted average diluted outstanding shares calculation by application of the treasury stock method. There is no dilutive effect for the exchangeable senior notes as the conversion premium will be paid in cash.
Earnings per Unit of the Operating Partnership
The Operating Partnership presents both basic and diluted earnings per unit, or EPU. Basic EPU excludes dilution and is computed by dividing net income or loss attributable to common unitholders by the weighted average number of common units outstanding during the period. Basic EPU includes participating securities, consisting of unvested restricted units that receive nonforfeitable dividends similar to shares of common units. Diluted EPU reflects the potential dilution that could occur if securities or other contracts to issue common units were exercised or converted into common units, where such exercise or conversion would result in a lower EPU amount. The dilutive effect of unit options is reflected in the weighted average diluted outstanding units calculation by application of the treasury stock method. There is no dilutive effect for the exchangeable senior notes as the conversion premium will be paid in cash.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, debt and preferred equity investments and accounts receivable. We place our cash investments in excess of insured amounts with high quality financial institutions. The collateral securing our debt and preferred equity investments is located in New York City. See Note 5, "Debt and Preferred Equity Investments." We perform ongoing credit evaluations of our tenants and require most tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the total value of a tenant's lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

with lost rent and the costs associated with re-tenanting a space. Although the properties in our real estate portfolio are primarily located in Manhattan, we also have properties located in Brooklyn, Long Island, Westchester County, Connecticut and New Jersey. The tenants located in our buildings operate in various industries. Other than three tenants, who account for 9.1% , 8.5% and 5.9%, no other tenant in our portfolio accounted for more than 5.0% of our share of annualized cash rent, including our share of joint venture annualized rent, at March 31, 2016. For the three months ended March 31, 2016, 9.7%, 9.1%, 8.3%, 7.0%, 6.6%, 5.7%, and 5.0% of our annualized cash rent for consolidated properties was attributable to 11 Madison Avenue, 1515 Broadway, 388 and 390 Greenwich Street, 919 Third Avenue, 1185 Avenue of the Americas, 420 Lexington Avenue and One Madison Avenue, respectively. Annualized cash rent for all other consolidated properties was below 5.0%.
Reclassification
Certain prior year balances have been reclassified to conform to our current year presentation.
Accounting Standards Updates
In March 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The guidance simplifies the accounting for share-based payment award transactions including: income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-07, Investments Equity Method and Joint Ventures (Topic 323). The guidance eliminates the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The guidance is effective for all entities for fiscal years beginning after 15 December 2016 and interim periods within those years. Early adoption is permitted in any interim or annual period. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. The guidance requires lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under the previous standard. The accounting applied by a lessor is largely unchanged from that applied under the previous standard. The Guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01 (ASU825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and to record changes in instruments-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. The guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods therein. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In April 2015, the FASB issued final guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability (ASU 2015-03). The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The Company adopted the guidance effective January 1, 2016. Accordingly, as of March 31, 2016 and December 31, 2015, $105.3 million and $130.3 million, respectively of deferred debt issuance cost, net of amortization are presented as a direct reduction within Mortgages and other loans payable, Revolving credit facility, Term loan and senior unsecured notes on the Company's consolidated balance sheets.
In February 2015, the FASB issued guidance that amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities (ASU 2015-02). Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. The Company adopted the guidance effective January 1, 2016. Under the revised guidance, certain entities, including the Operating Partnership, now qualify as variable interest entities while some of our entities originally classified as

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

variable interest entities no longer meet the criteria.  The change in designation did not have a material impact on our consolidated financial statements and did not change the consolidation conclusion on these entities.
In May 2014, the FASB issued a new comprehensive revenue recognition guidance which requires us to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services (ASU 2014-09). The guidance also requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. In March 2016 the FASB issued implementation guidance which clarifies principal versus agent considerations in reporting revenue gross versus net (ASU 2016-08). In April 2016, the FASB issued implementation guidance which clarifies the identification of performance obligations (ASU 2016-10). These ASUs are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. The new guidance can be applied either retrospectively to each prior reporting period presented, or as a cumulative-effect adjustment as of the date of adoption. The Company has not yet adopted this guidance and is currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.
3. Property Acquisitions
2016 Acquisitions
During the three months ended March 31, 2016, the property listed below was acquired from a third party. The following summarizes our preliminary allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of this acquisition (in thousands):
 
183 Broadway(1)
Acquisition Date
March 2016
Ownership Type
Fee Interest
Property Type
Retail/Residential
 
 
Purchase Price Allocation:
 
Land
$
26,640

Building and building leasehold
2,960

Above-market lease value

Acquired in-place leases

Other assets, net of other liabilities

Assets acquired
$
29,600

Mark-to-market assumed debt

Below-market lease value

Derivatives

Liabilities assumed

Purchase price
$
29,600

Net consideration funded by us at closing, excluding consideration financed by debt
$
29,600

Equity and/or debt investment held
$

Debt assumed
$

(1)
We are currently in the process of analyzing the purchase price allocation and, as such, we have not allocated any value to intangible assets such as above- and below-market lease or in-place leases.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

2015 Acquisitions
During the three months ended March 31, 2016, we finalized the purchase price allocations based on facts and circumstances that existed at the acquisition dates for the following 2015 acquisitions (in thousands):
 
 
11 Madison Avenue (1)
 
1640 Flatbush Avenue(1)
Acquisition Date
 
August 2015
 
March 2015
Ownership Type
 
Fee Interest
 
Fee Interest
Property Type
 
Office
 
Retail
 
 
 
 
 
Purchase Price Allocation:
 
 
 
 
Land
 
$
675,776

 
$
6,226

Building and building leasehold
 
1,553,602

 
501

Above-market lease value
 
19,764

 

Acquired in-place leases
 
366,949

 
146

Other assets, net of other liabilities
 

 

Assets acquired
 
2,616,091

 
6,873

Mark-to-market assumed debt
 

 

Below-market lease value
 
(187,732
)
 
(73
)
Derivatives
 

 

Liabilities assumed
 
(187,732
)
 
(73
)
Purchase price
 
$
2,428,359

 
$
6,800

Net consideration funded by us at closing, excluding consideration financed by debt
 
$

 
$

Equity and/or debt investment held
 
$

 
$

Debt assumed
 
$

 
$


(1)
Based on our preliminary analysis of the purchase price, we had allocated $849.9 million and $1.6 billion to land and building, respectively, at 11 Madison Avenue and $6.1 million and $0.7 million to land and building, respectively, at 1640 Flatbush Avenue. The impact to our consolidated statement of operations for the three months ended March 31, 2016 was $6.0 million in rental revenue for the amortization of aggregate below-market leases and $15.4 million of depreciation expense.

4. Properties Held for Sale and Property Dispositions
Properties Held for Sale
During the three months ended March 31, 2016 we determined that the held for sale criteria was met for 388-390 Greenwich Street. In April 2016, we entered into an agreement to accelerate the sale of our property at 388-390 Greenwich Street for $2.0 billion, net of $242.5 million of unfunded tenant concessions, pursuant to the purchase option that was exercised on the property in January 2016. The closing, which was previously scheduled for December 2017, is now scheduled for June 2016, subject to customary closing conditions.
Property Dispositions
The following table summarizes the properties sold during the three months ended March 31, 2016:
Property
 
Disposition Date
 
Property Type
 
Approximate Square Feet
 
Sales Price(1)
(in millions)
 
Gain on Sale(2)
(in millions)
248-252 Bedford Avenue
 
February 2016
 
Residential
 
66,611

 
$
55.0

 
$
13.8

885 Third Avenue (3)
 
February 2016
 
Land
 
607,000

 
453.0

 

____________________________________________________________________
(1)
Sales price represents the actual sales price for a property or the gross asset valuation for interests in a property.
(2)
The gain on sale for 248-252 Bedford Avenue is net of $1.3 million in employee compensation awards accrued in connection with the realization of the investment gain as a bonus to certain employees that were instrumental in realizing the gain on sale. Additionally, amounts do not include adjustments for

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

expenses recorded in subsequent periods.
(3)
In February 2016, we closed on the sale of 885 Third Avenue. The sale did not meet the criteria for sale accounting and as a result the property remains on our consolidated balance sheet until the criteria is met. An estimated loss relating to the sale of $6.6 million was recorded in December 2015.

Discontinued Operations
The Company adopted ASU 2014-08 effective January 1, 2015 which raised the threshold for disposals to qualify as discontinued operations to dispositions which represent a strategic shift in an entity’s operations. The guidance was applied prospectively for new disposals. As a result, the results of operations for 388 Greenwich Street which was classified as held for sale at March 31, 2016 is included in continuing operations for the three months ended March 31, 2016. No properties were held for sale at March 31, 2015. Discontinued operations for the three months ended March 31, 2015 included the results of operations of 180 Maiden Lane, which was held for sale at December 31, 2014 and sold in January 2015, as follows (in thousands):
 
 
March 31, 2015
Revenues
 
 
Rental revenue
 
$
236

Escalation and reimbursement revenues
 
(127
)
Other income
 

Total revenues
 
109

Operating expenses
 
(631
)
Real estate taxes
 
250

Ground rent
 

Transaction related costs
 
(49
)
Depreciable real estate reserves
 

Interest expense, net of interest income
 
109

Amortization of deferred financing costs
 
3

Depreciation and amortization
 

Total expenses
 
(318
)
Net income from discontinued operations
 
$
427

5. Debt and Preferred Equity Investments
During the three months ended March 31, 2016 and 2015, our debt and preferred equity investments, net of discounts and deferred origination fees, increased $128.8 million and $166.9 million, respectively, due to originations, purchases, advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization. We recorded repayments, participations and sales of $420.2 million and $27.0 million during the three months ended March 31, 2016 and 2015, respectively, which offset the increases in debt and preferred equity investments.
Certain debt investments that were participated out but for which the transfer did not meet the conditions for sale accounting are included in other assets and other liabilities on the consolidated balance sheets.
Debt Investments
As of March 31, 2016 and December 31, 2015 we held the following debt investments with an aggregate weighted average current yield of 10.47% at March 31, 2016 (in thousands):
Loan Type
 
March 31, 2016
Future Funding
Obligations
 
March 31, 2016
Senior
Financing
 
March 31, 2016
Carrying Value (1)
 
December 31, 2015
Carrying Value (1)
 
Initial
Maturity
Date
Fixed Rate Investments:
 
 
 
 
 
 
 
 
 
 
Mezzanine Loan(2a)
 
$

 
$
115,000

 
$
12,917

 
$
24,916

 
July 2016
Mezzanine Loan
 

 
165,000

 
72,174

 
72,102

 
November 2016

30

Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

Loan Type
 
March 31, 2016
Future Funding
Obligations
 
March 31, 2016
Senior
Financing
 
March 31, 2016
Carrying Value (1)
 
December 31, 2015
Carrying Value (1)
 
Initial
Maturity
Date
Jr. Mortgage Participation/Mezzanine Loan
 

 
1,109,000

 
185,266

 
104,661

 
March 2017
Mezzanine Loan(2b)
 

 
502,100

 
41,137

 
41,115

 
June 2017
Mezzanine Loan
 

 
539,000

 
49,715

 
49,691

 
July 2018
Mortgage Loan(3)
 

 

 
26,275

 
26,262

 
February 2019
Mortgage Loan
 

 

 
480

 
513

 
August 2019
Mezzanine Loan
 

 
15,000

 
3,500

 
3,500

 
September 2021
Mezzanine Loan(2c)
 

 
89,527

 
19,937

 
19,936

 
November 2023
Mezzanine Loan
 

 
95,000

 
30,000

 
30,000

 
January 2025
Jr. Mortgage Participation(4)
 

 

 

 
49,000

 
 
Other(4)(5)
 

 

 

 
23,510

 
 
Other(4)(5)
 

 

 

 
66,183

 
 
Total fixed rate
 
$

 
$
2,629,627

 
$
441,401

 
$
511,389

 
 
Floating Rate Investments:
 
 
 
 
 
 
 
 
 
 
Mortgage/Mezzanine Loan(6)
 
4,693

 

 
100,837

 
94,901

 
April 2016
Mezzanine Loan(2d)
 

 
160,000

 
22,639

 
22,625

 
June 2016
Mezzanine Loan(7)
 

 
745,215

 
74,311

 
74,700

 
September 2016
Mezzanine Loan
 

 
360,000

 
99,662

 
99,530

 
November 2016
Mezzanine Loan
 
10,003

 
136,384

 
51,217

 
49,751

 
December 2016
Mezzanine Loan
 
281

 
39,201

 
13,745

 
13,731

 
December 2016
Mortgage/Mezzanine Loan(2e)
 
47,001

 

 
133,395

 
134,264

 
January 2017
Mezzanine Loan
 
1,127

 
118,949

 
28,754

 
28,551

 
January 2017
Mezzanine Loan(2f)(8)
 

 
40,000

 
15,132

 
68,977

 
June 2017
Mortgage/Mezzanine Loan
 

 

 
22,896

 
22,877

 
July 2017
Mortgage/Mezzanine Loan
 

 

 
16,915

 
16,901

 
September 2017
Senior Mortgage
 
4,394

 

 
19,416

 
19,282

 
October 2017
Mezzanine Loan
 

 
60,000

 
14,916

 
14,904

 
November 2017
Mezzanine Loan(2g)
 

 
85,000

 
14,944

 
29,505

 
December 2017
Mezzanine Loan(2h)
 

 
65,000

 
14,483

 
28,563

 
December 2017
Mortgage/Mezzanine Loan(2i)
 
795

 

 
14,968

 
14,942

 
December 2017
Jr. Participation
 

 
40,000

 
19,862

 
19,846

 
April 2018
Mezzanine Loan
 

 
175,000

 
34,752

 
34,725

 
April 2018
Jr. Participation/Mezzanine
Loan(2j)
 

 
55,000

 
10,506

 
20,510

 
July 2018
Mortgage/Mezzanine Loan(9)
 
523

 
20,523

 
10,806

 
31,210

 
August 2018
Mezzanine Loan
 

 
33,000

 
26,794

 
26,777

 
December 2018
Mezzanine Loan
 
5,267

 
156,383

 
53,953

 
52,774

 
December 2018
Mezzanine Loan
 
26,204

 
217,202

 
52,336

 
49,625

 
December 2018
Mezzanine Loan
 

 
16,383

 
5,340

 

 
January 2019
Mezzanine Loan
 

 
38,000

 
21,855

 
21,845

 
March 2019
Mezzanine Loan(10)
 

 

 

 
66,398

 
 
Mortgage/Mezzanine Loan(4)
 

 

 

 
18,395

 
 
Jr. Mortgage Participation/
Mezzanine Loan(11)
 

 

 

 
40,346

 
 
Total floating rate
 
$
100,288

 
$
2,561,240

 
$
894,434

 
$
1,116,455

 
 
Total
 
$
100,288

 
$
5,190,867

 
$
1,335,835

 
$
1,627,844

 
 

31

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

____________________________________________________________________
(1)
Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.
(2)
Carrying value is net of the following amount that was participated out, which is included in other assets and other liabilities on the consolidated balance sheets as a result of the transfer not meeting the conditions for sale accounting: (a) $12.0 million, (b) $41.3 million, (c) $5.0 million, (d) $7.4 million, (e) $36.3 million, (f) $14.5 million, (g) $14.6 million, (h) $14.1 million, (i) $5.1 million and (j) $10.0 million.
(3)
In September 2014, we acquired a $26.4 million mortgage loan at a $0.2 million discount and a $5.7 million junior mortgage participation at a $5.7 million discount. The junior mortgage participation was a nonperforming loan at acquisition and is currently on non-accrual status.
(4)
These loans were repaid in March 2016.
(5)
These loans were collateralized by defeasance securities.
(6)
In, April 2016, the maturity date was extended to October 2016.
(7)
In March 2016, the maturity date was extended to September 2016.
(8)
In March 2016, the mortgage was sold.
(9)
In January 2016, the loans were modified. In March 2016, the mortgage was sold.
(10)
In March 2016, we contributed the loan for a joint venture interest which is now accounted for under the equity method of accounting. It is included in unconsolidated joint ventures on the combined balance sheets.
(11)
These loans were repaid in February 2016.


Preferred Equity Investments
As of March 31, 2016 and December 31, 2015, we held the following preferred equity investments with an aggregate weighted average current yield of 7.79% at March 31, 2016 (in thousands):
Type
 
March 31, 2016
Future Funding
Obligations
 
March 31, 2016
Senior
Financing
 
March 31, 2016
Carrying Value (1)
 
December 31, 2015
Carrying Value
(1)
 
Initial
Mandatory
Redemption
Preferred equity
 
$

 
$
71,486

 
$
9,971

 
$
9,967

 
March 2018
Preferred equity
 
5,003

 
59,966

 
32,810

 
32,209

 
November 2018
 
 
$
5,003

 
$
131,452

 
$
42,781

 
$
42,176

 
 
____________________________________________________________________
(1)
Carrying value is net of deferred origination fees.

At March 31, 2016 and December 31, 2015, all debt and preferred equity investments were performing in accordance with the terms of the relevant investments, with the exception of a junior mortgage participation acquired in September 2014, which has a carrying value of zero.
We have determined that we have one portfolio segment of financing receivables at March 31, 2016 and 2015 comprising commercial real estate which is primarily recorded in debt and preferred equity investments. Included in other assets is an additional amount of financing receivables totaling $116.1 million and $122.3 million at March 31, 2016 and 2015, respectively. No financing receivables were 90 days past due at March 31, 2016.
6. Investments in Unconsolidated Joint Ventures
We have investments in several real estate joint ventures with various partners. As of March 31, 2016, 650 Fifth Avenue, 33 Beekman, 800 Third Avenue, 21 East 66th Street, and certain properties within Stonehenge Portfolio were VIEs in which we are not the primary beneficiary. Our net equity investment in these VIEs was $181.3 million as of March 31, 2016. As of December 31, 2015, 650 Fifth Avenue and 33 Beekman were VIEs in which we were not the primary beneficiary. Our net equity investment in these VIEs was $39.7 million as of December 31, 2015. Our maximum loss is limited to the amount of our equity investment in these VIEs. All other investments below are voting interest entities. As we do not control the joint ventures listed below, we account for them under the equity method of accounting.

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

The table below provides general information on each of our joint ventures as of March 31, 2016:
Property
Partner
Ownership
Interest
Economic
Interest
Approximate Square Feet
Acquisition Date
Acquisition
Price(1)
(in thousands)
100 Park Avenue
Prudential Real Estate Investors
49.90%
49.90%
834,000

January 2000
$
95,800

717 Fifth Avenue
Jeff Sutton/Private Investor
10.92%
10.92%
119,500

September 2006
251,900

800 Third Avenue
Private Investors
60.52%
60.52%
526,000

December 2006
285,000

1745 Broadway
Ivanhoe Cambridge, Inc.
56.88%
56.88%
674,000

April 2007
520,000

Jericho Plaza(2)
Onyx Equities/Private Investor
11.67%
11.67%
640,000

April 2007
210,000

11 West 34th Street
Private Investor/
Jeff Sutton
30.00%
30.00%
17,150

December 2010
10,800

3 Columbus Circle(3)
The Moinian Group
48.90%
48.90%
741,500

January 2011
500,000

280 Park Avenue
Vornado Realty Trust
50.00%
50.00%
1,219,158

March 2011
400,000

1552-1560 Broadway(4)
Jeff Sutton
50.00%
50.00%
35,897

August 2011
136,550

724 Fifth Avenue
Jeff Sutton
50.00%
50.00%
65,040

January 2012
223,000

10 East 53rd Street
Canadian Pension Plan Investment Board
55.00%
55.00%
354,300

February 2012
252,500

33 Beekman(5)
Harel Insurance and Finance/TNG 33 LLC
45.90%
45.90%
163,500

August 2012
31,000

521 Fifth Avenue
Plaza Global
Real Estate Partners LP
50.50%
50.50%
460,000

November 2012
315,000

21 East 66th Street(6)
Private Investors
32.28%
32.28%
16,736

December 2012
75,000

650 Fifth Avenue(7)
Jeff Sutton
50.00%
50.00%
32,324

November 2013

121 Greene Street
Jeff Sutton
50.00%
50.00%
7,131

September 2014
27,400

175-225 Third Street Brooklyn, New York
KCLW 3rd Street LLC/LIVWRK LLC
95.00%
95.00%

October 2014
74,600

55 West 46th Street
Prudential Real Estate Investors
25.00%
25.00%
347,000

November 2014
295,000

Stonehenge Portfolio
Various
Various
Various
2,046,733

Various
36,668

131-137 Spring Street
Invesco Real Estate
20.00%
20.00%
68,342

August 2015
277,750

76 11th Avenue(8)
Oxford/Vornado
33.33%
36.58%
764,000

March 2016
138,240

____________________________________________________________________
(1)
Acquisition price represents the actual or implied gross purchase price for the joint venture, which is not adjusted for subsequent acquisitions of additional interests.
(2)
Our ownership percentage was reduced in the first quarter of 2016, from 77.78% to 11.67%, upon completion of the restructuring of the joint venture.
(3)
As a result of the sale of a condominium interest in September 2012, Young & Rubicam, Inc., or Y&R, owns floors three through eight at the property. Because the joint venture has an option to repurchase these floors, the gain associated with this sale was deferred.
(4)
The purchase price represents only the purchase of the 1552 Broadway interest which comprised approximately 13,045 square feet. The joint venture also owns a long-term leasehold interest in the retail space and certain other spaces at 1560 Broadway, which is adjacent to 1552 Broadway.
(5)
The redevelopment project was substantially complete during the second quarter of 2015 and was conveyed to Pace University during the third quarter of 2015. In October 2015, we entered into an agreement to sell the property for $196.0 million. The transaction is expected to be completed in the first half of 2016, subject to customary closing conditions.
(6)
We hold a 32.28% interest in three retail and two residential units at the property and a 16.14% interest in three residential units at the property.
(7)
The joint venture owns a long-term leasehold interest in the retail space at 650 Fifth Avenue. In connection with the ground lease obligation, SLG provided a performance guaranty and our joint venture partner executed a contribution agreement to reflect its pro rata obligation. In the event the property is converted into a condominium unit and the landlord elects the purchase option, the joint venture shall be obligated to acquire the unit at the then fair value.
(8)
The joint venture owns two mezzanine notes secured by interests in the entity that owns 76 11th Avenue. The difference between our ownership interest and our economic interest results from our right to 50% of the total exit fee while each of our partners is entitled to receive 25% of the total exit fee.




33

Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

Acquisition, Development and Construction Arrangements
Based on the characteristics of the following arrangements, which are similar to those of an investment, combined with the expected residual profit of not greater than 50%, we have accounted for these debt and preferred equity investments under the equity method. As of March 31, 2016 and December 31, 2015, the carrying value for acquisition, development and construction arrangements were as follows (in thousands):
Loan Type
 
March 31, 2016
 
December 31, 2015
 
Initial Maturity Date
Mezzanine loan and preferred equity
 
$
100,000

 
$
99,936

 
March 2017
Mezzanine loan(1)
 
45,774

 
45,942

 
February 2022
 
 
$
145,774

 
$
145,878

 
 
____________________________________________________________________
(1)
We have an option to convert our loan to an equity interest subject to certain conditions. We have determined that our option to convert the loan to equity is not a derivative financial instrument pursuant to GAAP.

Sale of Joint Venture Interest or Property
The following table summarizes the investments in unconsolidated joint ventures sold during the three months ended March 31, 2016:
Property
 
Ownership Percentage
 
Disposition Date
 
Type of Sale
 
Gross Asset Valuation
(in thousands)(1)
 
Gain
on Sale
(in thousands)(2)
1 Jericho Plaza (3)
 
66.11%
 
February 2016
 
Office
 
$
95,200

 
$
3,300

7 Renaissance Square
 
50.00%
 
March 2016
 
Office
 
$
20,700

 
$
4,200

EOP Denver
 
4.79%
 
March 2016
 
Office
 
$
180,700

 
$
2,800

____________________________________________________________
(1)
Represents implied gross valuation for the joint venture or sales price of the property.
(2)
Represents the Company's share of the gain. The gain on sale is net of $0.5 million employee compensation awards accrued in connection with the realization of these investment gains as a bonus to certain employees that were instrumental in realizing the gains on sale.
(3)
Our ownership percentage was reduced in the first quarter of 2016, from 77.78% to 11.67%, upon completion of the restructuring of the joint venture.

Mortgages and Other Loans Payable
We generally finance our joint ventures with non-recourse debt. However, in certain cases we have provided guarantees or master leases for tenant space. These guarantees and master leases terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. The first mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at March 31, 2016 and December 31, 2015, respectively, are as follows (amounts in thousands):
Property
 
Maturity Date
 
Interest
Rate(1)
 
March 31, 2016
 
December 31, 2015
Fixed Rate Debt:
 
 
 
 
 
 
 
 
280 Park Avenue
 
June 2016
 
6.57
%
 
$
691,048

 
$
692,963

1745 Broadway
 
January 2017
 
5.68
%
 
340,000

 
340,000

521 Fifth Avenue
 
November 2019
 
3.73
%
 
170,000

 
170,000

717 Fifth Avenue(2)
 
July 2022
 
4.45
%
 
300,000

 
300,000

21 East 66th Street
 
April 2023
 
3.60
%
 
12,000

 
12,000

717 Fifth Avenue(2)
 
July 2024
 
9.00
%
 
328,704

 
325,704

3 Columbus Circle
 
March 2025
 
3.61
%
 
350,000

 
350,000

800 Third Avenue
 
February 2026
 
3.17
%
 
177,000

 
20,910

Stonehenge Portfolio(3)
 
Various
 
4.20
%
 
421,351

 
430,627

7 Renaissance Square
 
 
 
 
 

 
2,927

Total fixed rate debt
 
 
 
 
 
$
2,790,103

 
$
2,645,131


34

Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

Property
 
Maturity Date
 
Interest
Rate(1)
 
March 31, 2016
 
December 31, 2015
 
 
 
 
 
 
 
 
 
Floating Rate Debt:
 
 
 
 
 
 
 
 
1552 Broadway(4)
 
April 2016
 
4.58
%
 
190,410

 
190,409

Other loan payable
 
June 2016
 
1.32
%
 
30,000

 
30,000

650 Fifth Avenue(5)
 
October 2016
 
3.92
%
 
65,000

 
65,000

175-225 Third Street
 
December 2016
 
4.50
%
 
40,000

 
40,000

10 East 53rd Street
 
February 2017
 
2.92
%
 
125,000

 
125,000

724 Fifth Avenue
 
April 2017
 
2.84
%
 
275,000

 
275,000

33 Beekman(6)
 
August 2017
 
3.17
%
 
73,457

 
73,518

55 West 46th Street(7)
 
October 2017
 
2.72
%
 
151,536

 
150,000

Stonehenge Portfolio
 
December 2017
 
3.50
%
 
10,500

 
10,500

Jericho Plaza(8)
 
March 2018
 
5.28
%
 
75,000

 
163,750

121 Greene Street
 
November 2019
 
1.92
%
 
15,000

 
15,000

11 West 34th Street
 
January 2021
 
1.88
%
 
23,000

 
23,000

100 Park Avenue
 
February 2021
 
2.18
%
 
360,000

 
360,000

131-137 Spring Street
 
August 2020
 
1.97
%
 
141,000

 
141,000

21 East 66th Street
 
June 2033
 
3.00
%
 
1,785

 
1,805

Total floating rate debt
 
 
 
 
 
$
1,576,688

 
$
1,663,982

Total joint venture mortgages and other loans payable
 
 
 
$
4,366,791

 
$
4,309,113

Deferred financing costs, net
 
 
 
 
 
(47,136
)
 
(42,565
)
Total joint venture mortgages and other loans payable, net
 
 
 
$
4,319,655

 
$
4,266,548

____________________________________________________________________
(1)
Effective weighted average interest rate for the three months ended March 31, 2016, taking into account interest rate hedges in effect during the period.
(2)
These loans are comprised of a $300.0 million fixed rate mortgage loan and $290.0 million mezzanine loan. The mezzanine loan is subject to accretion based on the difference between contractual interest rate and contractual pay rate.
(3)
Amount is comprised of $13.3 million, $55.3 million, $34.9 million, $140.9 million, and $177.0 million in fixed-rate mortgages that mature in July 2016, June 2017, November 2017, August 2019, and June 2024, respectively. In April 2016, the maturity date on $13.3 million due to mature in July 2016, was extended to October 2016.
(4)
These loans are comprised of a $150.0 million mortgage loan and a $41.5 million mezzanine loan. As of March 31, 2016, $0.6 million of the mortgage loan and $0.5 million of the mezzanine loan was unfunded.
(5)
This loan has a committed amount of $97.0 million, of which $32.0 million was unfunded as of March 31, 2016.
(6)
This loan has a committed amount of $75.0 million, of which $18.4 million is recourse to us. Our partner has indemnified us for its pro rata share of the recourse guarantee. A portion of the guarantee terminates upon the joint venture reaching certain milestones. We believe it is unlikely that we will be required to perform under this guarantee. This property is currently under contract, and the sale is expected to be completed in the first half of 2016.
(7)
This loan has a committed amount of $190.0 million, of which $38.5 million was unfunded as of March 31, 2016.
(8)
We hold an11.67% non-controlling interest in the joint venture and the property secures a two year $100.0 million loan, of which $75.0 million is currently outstanding.


We act as the operating partner and day-to-day manager for all our joint ventures, except for 800 Third Avenue, Jericho Plaza, 280 Park Avenue, 3 Columbus Circle, 21 East 66th Street, 175-225 Third Street and the Stonehenge Portfolio. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to certain of our joint ventures. We earned $4.5 million and $2.8 million from these services for the three months ended March 31, 2016 and 2015, respectively. In addition, we have the ability to earn incentive fees based on the ultimate financial performance of certain of the joint venture properties.

35

Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

The combined balance sheets for the unconsolidated joint ventures, at March 31, 2016 and December 31, 2015 are as follows (in thousands):
 
March 31, 2016
 
December 31, 2015
Assets
 
 
 
Commercial real estate property, net
$
5,998,692

 
$
6,122,468

Debt and preferred equity investments, net
284,014

 
145,878

Other assets
673,317

 
715,840

Total assets
$
6,956,023

 
$
6,984,186

Liabilities and members' equity
 
 
 
Mortgages and other loans payable, net
$
4,319,655

 
$
4,266,548

Other liabilities
523,359

 
523,160

Members' equity
2,113,009

 
2,194,478

Total liabilities and members' equity
$
6,956,023

 
$
6,984,186

Company's investments in unconsolidated joint ventures
$
1,146,085

 
$
1,203,858

The combined statements of operations for the unconsolidated joint ventures, from acquisition date through the three months ended March 31, 2016 and 2015, are as follows (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Total revenues
$
162,512

 
$
128,916

Operating expenses
27,254

 
25,486

Ground rent
3,211

 
2,592

Real estate taxes
24,210

 
19,376

Interest expense, net of interest income
49,736

 
44,007

Amortization of deferred financing costs
3,236

 
3,010

Transaction related costs

 
8

Depreciation and amortization
37,851

 
32,984

Total expenses
145,498

 
127,463

Loss on early extinguishment of debt
(1,606
)
 
(833
)
Net income before gain on sale
$
15,408

 
$
620

Company's equity in net income from unconsolidated joint ventures
$
10,096

 
$
4,030

7. Deferred Costs
Deferred costs at March 31, 2016 and December 31, 2015 consisted of the following (in thousands):
 
March 31, 2016
 
December 31, 2015
Deferred leasing
$
431,033

 
$
415,406

Less: accumulated amortization
(184,530
)
 
(175,486
)
Deferred costs, net
$
246,503

 
$
239,920


36

Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

8. Mortgages and Other Loans Payable
The first mortgages and other loans payable collateralized by the respective properties and assignment of leases at March 31, 2016 and December 31, 2015, respectively, were as follows (amounts in thousands):
Property
 
Maturity
Date
 
Interest
Rate(1)
 
March 31, 2016
 
December 31, 2015
Fixed Rate Debt:
 
 
 
 
 
 
 
 
Landmark Square
 
December 2016
 
4.00
%
 
$
79,124

 
$
79,562

FHLB Facility (2)
 
Various
 
Various

 
205,000

 

485 Lexington Avenue
 
February 2017
 
5.61
%
 
450,000

 
450,000

762 Madison Avenue
 
February 2017
 
3.86
%
 
7,828

 
7,872

885 Third Avenue(3)
 
July 2017
 
6.26
%
 
267,650

 
267,650

1745 Broadway
 
June 2018
 
4.81
%
 
16,000

 
16,000

388-390 Greenwich Street(4)
 
June 2018
 
3.25
%
 
1,004,000

 
1,004,000

One Madison Avenue
 
May 2020
 
5.91
%
 
536,848

 
542,817

100 Church Street
 
July 2022
 
4.68
%
 
224,188

 
225,099

919 Third Avenue(5)
 
June 2023
 
5.12
%
 
500,000

 
500,000

400 East 57th Street
 
February 2024
 
4.13
%
 
67,323

 
67,644

400 East 58th Street
 
February 2024
 
4.13
%
 
28,852

 
28,990

420 Lexington Avenue
 
October 2024
 
3.99
%
 
300,000

 
300,000

1515 Broadway
 
March 2025
 
3.93
%
 
900,000

 
900,000

11 Madison Avenue
 
September 2025
 
3.84
%
 
1,400,000

 
1,400,000

Series J Preferred Units(6)
 
April 2051
 
3.75
%
 
4,000

 
4,000

500 West Putnam Avenue(7)
 
 
 


 

 
22,376

Total fixed rate debt
 
 
 
 
 
$
5,990,813

 
$
5,816,010

Floating Rate Debt:
 
 
 
 
 
 
 
 
Master Repurchase Agreement
 
June 2016
 
4.00
%
 
185,898

 
253,424

FHLB Facility(2)
 
Various
 
Various

 
45,750

 
45,750

600 Lexington Avenue
 
October 2017
 
2.56
%
 
111,822

 
112,795

187 Broadway & 5-7 Dey Street
 
October 2017
 
3.05
%
 
40,000

 
40,000

719 Seventh Avenue
 
February 2018
 
3.49
%
 
22,892

 

388-390 Greenwich Street(4)
 
June 2018
 
2.16
%
 
446,000

 
446,000

1080 Amsterdam
 
November 2018
 
4.18
%
 
3,525

 
3,525

220 East 42nd Street
 
October 2020
 
2.02
%
 
275,000

 
275,000

248-252 Bedford Avenue(8)
 
 
 


 

 
29,000

Total floating rate debt
 
 
 
 
 
$
1,130,887

 
$
1,205,494

Total fixed rate and floating rate debt
 
 
 
 
 
$
7,121,700

 
$
7,021,504

Mortgages reclassed to liabilities related to assets held for sale(4)(8)
 
 
 
 
 
(1,450,000
)
 
(29,000
)
Total mortgages and other loans payable
 
 
 
 
 
$
5,671,700

 
$
6,992,504

Deferred financing costs, net of amortization
 
 
 
 
 
(86,529
)
 
$
(110,584
)
Total mortgages and other loans payable, net
 
 
 
 
 
$
5,585,171

 
$
6,881,920

____________________________________________________________________
(1)
Effective weighted average interest rate for the quarter ended March 31, 2016, taking into account interest rate hedges in effect during the period.
(2)
The FHLB Facility is comprised of two fixed rate advances of $105.0 million and $100.0 million that both mature in January 2017 and four variable rate advances of $1.0 million, $15.8 million, $5.0 million and $24.0 million that mature in April 2016, April 2016, June 2016 and December 2016, respectively. The weighted average interest rates on these advances range from 0.69% to 1.03%. The $1.0 million, and $15.8 million advances were repaid in April 2016.
(3)
In February 2016, we closed on the sale of 885 Third Avenue. The sale did not meet the criteria for sale accounting and as a result the property remains on our consolidated balance sheet until the criteria is met.
(4)
This property was held for sale at March 31, 2016 and the related mortgage, net of deferred financing costs, net of amortization of $24.5 million, is included in liabilities related to assets held for sale.

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

(5)
We own a 51.0% controlling interest in the consolidated joint venture that is the borrower on this loan.
(6)
In connection with the acquisition of a commercial real estate property, the Operating Partnership issued $4.0 million3.75% Series J Preferred Units of limited partnership interest, or the Series J Preferred Units, with a mandatory liquidation preference of $1,000.00 per unit. The Series J Preferred Units are accounted for as debt because they can be redeemed in cash by the Operating Partnership on the earlier of (i) the date of the sale of the property or (ii) April 30, 2051 or at the option of the unitholders as provided for in the related agreement.
(7)
In January 2016, the mortgage was repaid.
(8)
The property at 248-252 Bedford Avenue in Brooklyn, New York was sold in February 2016. All obligations related to the property accruing on and after closing were assumed by the purchaser. At December 31, 2015 this property was held for sale and the related mortgage, net of deferred financing, net of amortization costs of $0.9 million, was included in liabilities related to assets held for sale.

Federal Home Loan Bank of New York Facility
The Company’s wholly-owned subsidiary, Belmont Insurance Company, or Belmont, a New York licensed captive insurance company, is a member of the Federal Home Loan Bank of New York, or FHLBNY. As a member, Belmont may borrow funds from the FHLBNY in the form of secured advances. As of March 31, 2016, we had $250.8 million in outstanding secured advances with a weighted average borrowing rate of 0.88%.
On January 12, 2016, the Federal Housing Finance Agency, or FHFA, adopted a final regulation on Federal Home Loan Bank, or FHLB, membership. The rule excludes captive insurance entities from FHLB membership on a going-forward basis and provides termination rules for current captive insurance members. Unless the final rule is modified, Belmont's membership will terminate on February 19, 2017, at which point we would be required to repay all funds borrowed from the FHLBNY.
Master Repurchase Agreement
The Master Repurchase Agreement, as amended in December 2013, or MRA, provides us with the ability to sell certain debt investments with a simultaneous agreement to repurchase the same at a certain date or on demand. This MRA has a maximum facility capacity of $300.0 million and bears interest ranging from 250 and 325 basis points over 30-day LIBOR depending on the pledged collateral. In September 2015, we entered into an amendment to the MRA to extend the maturity to June 29, 2016. Further, since December 6, 2015 we have been required to pay monthly in arrears a 25 basis point fee on the excess of $150.0 million over the average daily balance during the period if the average daily balance is less than $150.0 million. 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 recollateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and access to additional liquidity through the 2012 credit facility, as defined below.
At March 31, 2016 and December 31, 2015, the gross book value of the properties and debt and preferred equity investments collateralizing the mortgages and other loans payable, not including assets held for sale, was approximately $8.9 billion and $10.8 billion, respectively.

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

9. Corporate Indebtedness
2012 Credit Facility
In July 2015, we entered into the third amendment to the credit facility that was originally entered into by the Company in November 2012, referred to as the 2012 credit facility, which increased our unsecured corporate facility by $500.0 million. The revolving credit facility was increased by $400.0 million to $1.6 billion and the term loan portion of the facility was increased by $100.0 million to $933.0 million.
In January 2015, we amended the 2012 credit facility by entering into a second amended and restated credit agreement, which decreased the interest-rate margin and facility fee applicable to the revolving credit facility by 20 basis points and five basis points, respectively, and extended the maturity date of the revolving credit facility to March 29, 2019 with an as-of-right extension through March 29, 2020.
In November 2014, we increased the term loan portion of the facility by $50.0 million to $833.0 million.
In March 2014, we entered into an amendment to the 2012 credit facility, which among other things, increased the term loan portion of the facility by $383.0 million to $783.0 million, decreased the interest-rate margin applicable to the term loan portion of the facility by 25 basis points and extended the maturity of the term loan portion of the facility from March 30, 2018 to June 30, 2019.
As of March 31, 2016, the 2012 credit facility, as amended, consisted of a $1.6 billion revolving credit facility and a $933.0 million term loan. We also have an option, subject to customary conditions, to increase the capacity under the revolving credit facility to $3.0 billion at any time prior to the maturity date for the revolving credit facility without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions.
As of March 31, 2016, the 2012 credit facility bore interest at a spread over LIBOR ranging from (i) 87.5 basis points to 155 basis points for loans under the revolving credit facility and (ii) 95 basis points to 190 basis points for loans under the term loan facility, in each case based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. At March 31, 2016, the applicable spread was 125 basis points for the revolving credit facility and 140 basis points for the term loan facility. At March 31, 2016, the effective interest rate was 1.68% for the revolving credit facility and 1.89% for the term loan facility. 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 ROP. As of March 31, 2016, the facility fee was 25 basis points. As of March 31, 2016, we had $74.3 million of outstanding letters of credit, $775.0 million drawn under the revolving credit facility and $933.0 million outstanding under the term loan facility, with total undrawn capacity of $750.7 million under the 2012 credit facility. At March 31, 2016 and December 31, 2015 the revolving credit facility had a carrying value of $766.7 million and $985.1 million, respectively, inclusive of net deferred financing costs. At March 31, 2016 and December 31, 2015, the term loan facility had a carrying value of $929.8 million and $929.5 million, respectively, inclusive of net deferred financing costs.
The Company, the Operating Partnership and ROP are all borrowers jointly and severally obligated under the 2012 credit facility. None of our other subsidiaries are obligors under the 2012 credit facility.
The 2012 credit facility includes certain restrictions and covenants (see Restrictive Covenants below).

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

Senior Unsecured Notes
The following table sets forth our senior unsecured notes and other related disclosures as of March 31, 2016 and December 31, 2015, respectively, by scheduled maturity date (dollars in thousands):
Issuance
 
March 31,
2016
Unpaid
Principal
Balance
 
March 31,
2016
Accreted
Balance
 
December 31,
2015
Accreted
Balance
 
Coupon
Rate(1)
 
Effective
Rate
 
Term
(in Years)
 
Maturity Date
October 12, 2010(2)
 
$
345,000

 
$
324,281

 
$
321,130

 
3.00
%
 
6.65
%
 
7
 
October 15, 2017
August 5, 2011(3)
 
250,000

 
249,827

 
249,810

 
5.00
%
 
5.03
%
 
7
 
August 15, 2018
March 16, 2010(3)
 
250,000

 
250,000

 
250,000

 
7.75
%
 
7.75
%
 
10
 
March 15, 2020
November 15, 2012(3)
 
200,000

 
200,000

 
200,000

 
4.50
%
 
4.50
%
 
10
 
December 1, 2022
December 17, 2015(3)
 
100,000

 
100,000

 
100,000

 
4.27
%
 
4.27
%
 
10
 
December 17, 2025
March 26, 2007(4)
 
10,008

 
10,008

 
10,008

 
3.00
%
 
3.00
%
 
20
 
March 30, 2027
March 31, 2006 (5)
 

 

 
255,296

 
 
 
 
 
 
 
 
 
 
$
1,155,008

 
$
1,134,116

 
$
1,386,244

 
 
 
 
 
 
 
 
Deferred financing costs, net
 
 
 
$
(7,257
)
 
$
(7,280
)
 
 
 
 
 
 
 
 
 
 
$
1,155,008

 
$
1,126,859

 
$
1,378,964

 
 
 
 
 
 
 
 
____________________________________________________________________
(1)
Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.
(2)
Issued by the Operating Partnership. Interest on these exchangeable notes is payable semi-annually on April 15 and October 15. The notes had an initial exchange rate representing an exchange price that was set at a 30.0% premium to the last reported sale price of SL Green's common stock on October 6, 2010, or $85.81. The initial exchange rate is subject to adjustment under certain circumstances. The current exchange rate is 12.4230 shares of SL Green's common stock per $1,000 principal amount of these notes. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of SL Green's common stock, if any, at our option. As a result of meeting specified events (as defined in the Indenture Agreement), these notes became exchangeable commencing January 1, 2016 and remained exchangeable through March 31, 2016. The notes are guaranteed by ROP. On the issuance date, $78.3 million of the debt balance was recorded in equity. As of March 31, 2016$20.7 million remained to be amortized into the debt balance.
(3)
Issued by the Company, the Operating Partnership and ROP, as co-obligors.
(4)
Issued by the Operating Partnership. Interest on these remaining exchangeable notes is payable semi-annually on March 30 and September 30. The notes have an initial exchange rate representing an exchange price that was set at a 25.0% premium to the last reported sale price of the Company's common stock on March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The current exchange rate is 5.7974 shares of SL Green's common stock per $1,000 principal amount of these notes. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of SL Green's common stock, if any, at our option. The notes are currently redeemable at the Operating Partnership’s option. The Operating Partnership may be required to repurchase the notes on March 30, 2017 and 2022, and upon the occurrence of certain designated events.
(5)
Issued by ROP, balance was repaid in March 2016.

Restrictive Covenants
The terms of the 2012 credit facility, as amended, and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the 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 March 31, 2016 and 2015, 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 fixed rate of 5.61% for the first ten years ending July 2015. Thereafter, the interest rate will float at 125 basis points over the three-month LIBOR. Interest payments may be deferred for a

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

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.
Principal Maturities
Combined aggregate principal maturities of mortgages and other loans payable, 2012 credit facility, trust preferred securities, senior unsecured notes and our share of joint venture debt as of March 31, 2016, including as-of-right extension options and put options, were as follows (in thousands):
 
Scheduled
Amortization
 
Principal
 
Revolving
Credit
Facility
 
Unsecured Term Loan
 
Trust
Preferred
Securities
 
Senior
Unsecured
Notes
 
Total
 
Joint
Venture
Debt
Remaining 2016
$
42,226

 
$
309,584

 
$

 
$

 
$

 
$

 
$
351,810

 
$
526,982

2017
63,643

 
1,076,548

 

 

 

 
355,008

 
1,495,199

 
591,284

2018
64,119

 
42,417

 

 

 

 
250,000

 
356,536

 
447

2019
70,255

 

 

 
933,000

 

 

 
1,003,255

 
104,687

2020
52,799

 
679,531

 
775,000

 

 

 
250,000

 
1,757,330

 
30,298

Thereafter
147,604

 
4,572,974

 

 

 
100,000

 
300,000

 
5,120,578

 
451,544

 
$
440,646

 
$
6,681,054

 
$
775,000

 
$
933,000

 
$
100,000

 
$
1,155,008

 
$
10,084,708

 
$
1,705,242


Consolidated interest expense, excluding capitalized interest, was comprised of the following (in thousands):
 
Three Months Ended March 31,
 
 
2016
 
2015
Interest expense
$
102,155

 
$
85,017

Interest capitalized
(6,618
)
 
(8,558
)
Interest income
(865
)
 
(652
)
Interest expense, net
$
94,672

 
$
75,807

10. Related Party Transactions
Cleaning/ Security/ Messenger and Restoration Services
Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning, extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. 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 profit participation, which is included in other income on the consolidated statements of operations, was $0.9 million and $1.0 million, for the three months ended March 31, 2016 and 2015, respectively. We also recorded expenses, inclusive of capitalized expenses, of $3.8 million and $4.0 million, for the three months ended March 31, 2016 and 2015, respectively, for these services (excluding services provided directly to tenants).

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

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 $0.1 million for both the three months ended March 31, 2016 and 2015.
Other
Amounts due from related parties at March 31, 2016 and December 31, 2015 consisted of the following (in thousands):
 
March 31, 2016
 
December 31, 2015
Due from joint ventures
$
2,005

 
$
1,334

Other
13,143

 
9,316

Related party receivables
$
15,148

 
$
10,650

11. Noncontrolling Interests on the Company's Consolidated Financial Statements
Noncontrolling interests represent the common and preferred units of limited partnership interest in the Operating Partnership not held by the Company as well as third party equity interests in our other consolidated subsidiaries. Noncontrolling interests in the Operating Partnership are shown in the mezzanine equity while the noncontrolling interests in our other consolidated subsidiaries are shown in the equity section of the Company’s consolidated financial statements.
Common Units of Limited Partnership Interest in the Operating Partnership
As of March 31, 2016 and December 31, 2015, the noncontrolling interest unit holders owned 3.84%, or 4,000,632 units, and 3.61%, or 3,745,766 units, of the Operating Partnership, respectively. At March 31, 2016, 4,000,632 shares of SL Green's common stock were reserved for issuance upon the redemption of units of limited partnership interest of the Operating Partnership.
Noncontrolling interests in the Operating Partnership is recorded at the greater of its cost basis or fair market value based on the closing stock price of SL Green's common stock at the end of the reporting period.
Below is the rollforward analysis of the activity relating to the noncontrolling interests in the Operating Partnership as of March 31, 2016 and December 31, 2015 (in thousands):
 
March 31, 2016
 
December 31, 2015
Balance at beginning of period
$
424,206

 
$
469,524

Distributions
(2,881
)
 
(9,710
)
Issuance of common units
18,140

 
30,506

Redemption of common units
(7,152
)
 
(55,697
)
Net income
922

 
10,565

Accumulated other comprehensive income allocation
(322
)
 
(67
)
Fair value adjustment
(25,867
)
 
(20,915
)
Balance at end of period
$
407,046

 
$
424,206

Preferred Units of Limited Partnership Interest in the Operating Partnership
The Operating Partnership has 1,902,000 4.50% Series G Preferred Units of limited partnership interest, or the Series G Preferred Units outstanding, with a liquidation preference of $25.00 per unit, which were issued in January 2012 in conjunction with an acquisition. The Series G Preferred unitholders receive annual dividends of $1.125 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series G Preferred Units are convertible into a number of common units of limited partnership interest in the Operating Partnership equal to (i) the liquidation preference plus accumulated and unpaid distributions on the conversion date divided by (ii) $88.50. The common units of limited partnership interest in the Operating Partnership may be redeemed in exchange for SL Green's common stock on a 1-to-1 basis. The Series G Preferred Units also provide the holder with the right to require the Operating Partnership to repurchase the Series G Preferred Units for cash before January 31, 2022.
The Operating Partnership has 60 Series F Preferred Units outstanding with a mandatory liquidation preference of $1,000.00 per unit.

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

The Operating Partnership has authorized up to 700,000 3.50% Series K Preferred Units of limited partnership interest, or the Series K Preferred Units, with a liquidation preference of $25.00 per unit. In August 2014, the Company issued 563,954 Series K Preferred Units in conjunction with an acquisition. The Series K Preferred unitholders receive annual dividends of $0.875 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series K Preferred Units can be redeemed at any time, at the option of the unitholder, either for cash or are convertible into a number of common units of limited partnership interest in the Operating Partnership equal to (i) the liquidation preference plus accumulated and unpaid distributions on the conversion date divided by (ii) $134.67.
The Operating Partnership has authorized up to 500,000 4.00% Series L Preferred Units of limited partnership interest, or the Series L Preferred Units, with a liquidation preference of $25.00 per unit. In August 2014, the Company issued 378,634 Series L Preferred Units in conjunction with an acquisition. The Series L Preferred unitholders receive annual dividends of $1.00 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series L Preferred Units can be redeemed at any time at par for cash at the option of the unitholder.
The Operating Partnership has authorized up to 1,600,000 3.75% Series M Preferred Units of limited partnership interest, or the Series M Preferred Units, with a liquidation preference of $25.00 per unit. In February 2015, the Company issued 1,600,000 Series M Preferred Units in conjunction with the acquisition of ownership interests in and relating to certain residential and retail real estate properties. The Series M Preferred unitholders receive annual dividends of $0.9375 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series M Preferred Units can be redeemed at any time at par for cash at the option of the unitholder.
The Operating Partnership has authorized up to 552,303 3.00% Series N Preferred Units of limited partnership interest, or the Series N Preferred Units, with a liquidation preference of $25.00 per unit. In June 2015, the Company issued 552,303 Series N Preferred Units in conjunction with an acquisition. The Series N Preferred unitholders receive annual dividends of $0.75 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series N Preferred Units can be redeemed at any time at par for cash at the option of the unitholder.
The Operating Partnership has authorized an aggregate of one 6.25% Series O Preferred Unit of limited partnership interest, or the Series O Preferred Unit. In June 2015, the Company issued the Series O Preferred Unit in connection with an acquisition.
The Operating Partnership has authorized up to 200,000 4.00% Series P Preferred Units of limited partnership interest, or the Series P Preferred Units, with a liquidation preference of $25.00 per unit. In July 2015, the Company issued 200,000 Series P Preferred Units in conjunction with an acquisition. The Series P Preferred unitholders receive annual dividends of $1.00 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series P Preferred Units can be redeemed at any time at par for cash at the option of the unitholder.
The Operating Partnership has authorized up to 268,000 3.50% Series Q Preferred Units of limited partnership interest, or the Series Q Preferred Units, with a liquidation preference of $25.00 per unit. In July 2015, the Company issued 268,000 Series Q Preferred Units in conjunction with an acquisition. The Series Q Preferred unitholders receive annual dividends of $0.875 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series Q Preferred Units can be redeemed at any time, at the option of the unitholder, either for cash or are convertible into a number of common units of limited partnership interest in the Operating Partnership equal to (i) the liquidation preference plus accumulated and unpaid distributions on the conversion date divided by (ii) $148.95.
The Operating Partnership has authorized up to 400,000 3.50% Series R Preferred Units of limited partnership interest, or the Series R Preferred Units, with a liquidation preference of $25.00 per unit. In August 2015, the Company issued 400,000 Series R Preferred Units in conjunction with an acquisition. The Series R Preferred unitholders receive annual dividends of $0.875 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series R Preferred Units can be redeemed at any time, at the option of the unitholder, either for cash or are convertible into a number of common units of limited partnership interest in the Operating Partnership equal to (i) the liquidation preference plus accumulated and unpaid distributions on the conversion date divided by (ii) $154.89.
The Operating Partnership has authorized up to 1,077,280 4.00% Series S Preferred Units of limited partnership interest, or the Series S Preferred Units, with a liquidation preference of $25.00 per unit. In August 2015, the Company issued 1,077,280 Series S Preferred Units in conjunction with an acquisition. The Series S Preferred unitholders receive annual dividends of $1.00 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series S Preferred Units can be redeemed at any time at par for cash at the option of the unitholder.
The Operating Partnership has authorized up to 230,000 2.75% Series T Preferred Units of limited partnership interest, or the Series T Preferred Units, with a liquidation preference of $25.00 per unit. In March 2016, the Company issued 230,000 Series

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

T Preferred Units in conjunction with an acquisition. The Series T Preferred unitholders receive annual dividends of $0.6875 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series T Preferred Units can be redeemed at any time, at the option of the unitholder, either for cash or are convertible into a number of common units of limited partnership interest in the Operating Partnership equal to (i) the liquidation preference plus accumulated and unpaid distributions on the conversion date divided by (ii) $119.02.
The Operating Partnership has authorized up to 680,000 4.50% Series U Preferred Units of limited partnership interest, or the Series U Preferred Units, with a liquidation preference of $25.00 per unit. In March 2016, the Company issued 680,000 Series U Preferred Units in conjunction with an acquisition. The Series U Preferred unitholders initially receive annual dividends of $1.125 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The annual dividend is subject to reduction upon the occurence of certain circumstances set forth in the terms of the Series U Preferred Units. The minimum annual dividend is $0.75 per unit. The Series U Preferred Units can be redeemed at any time at par for cash at the option of the unitholder.
Through a consolidated subsidiary, we have authorized up to 109,161 3.5% Series A Preferred Units of limited partnership interest, or the Greene Series A Preferred Units, with a liquidation preference of $1,000.00 per unit. In August 2015, the Company issued 109,161 Greene Series A Preferred Units in conjunction with an acquisition. The Greene Series A Preferred unitholders receive annual dividends of $35.00 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Greene Series A Preferred Units can be redeemed at any time, at the option of the unitholder, either for cash or are convertible on a one-for-one basis, into the Series B Preferred Units of limited partnership interest, or the Greene Series B Preferred Units. The Greene Series B Preferred Units can be converted at any time, at the option of the unitholder, into a number of common stock equal to 6.71348 shares of common stock for each Greene Series B Preferred Unit. As of March 31, 2016, no Greene Series B Preferred Units have been issued.
Below is the rollforward analysis of the activity relating to the preferred units in the Operating Partnership as of March 31, 2016 and December 31, 2015 (in thousands):
 
March 31, 2016
 
December 31, 2015
Balance at beginning of period
$
282,516

 
$
71,115

Issuance of preferred units
22,793

 
211,601

Redemption of preferred units
(440
)
 
(200
)
Balance at end of period
$
304,869

 
$
282,516

12. Stockholders’ Equity of the Company
Common Stock
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, par value $0.01 per share. As of March 31, 2016, 100,081,448 shares of common stock and no shares of excess stock were issued and outstanding.
At-The-Market Equity Offering Program
In July 2011, the Company, along with the Operating Partnership, entered into an "at-the-market" equity offering program, or ATM Program, to sell an aggregate up to $250.0 million of SL Green's common stock. During the year ended December 31, 2014, we sold 25,659 shares of our common stock out of the remaining balance of the ATM Program for aggregate net proceeds of $2.8 million. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 25,659 units of limited partnership interest of the Operating Partnership.
In June 2014, the Company, along with the Operating Partnership, entered into an "at-the-market" equity offering program, or ATM Program, to sell an aggregate up to $300.0 million of SL Green's common stock. During the year ended December 31, 2014, we sold 1,626,999 shares of our common stock for aggregate net proceeds of $182.9 million. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 1,626,999 units of limited partnership interest of the Operating Partnership. During the three months ended March 31, 2015, we sold 895,956 shares of our common stock for aggregate net proceeds of $113.4 million comprising the remaining balance of this ATM Program. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 895,956 units of limited partnership interest of the Operating Partnership.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

In March 2015, the Company, along with the Operating Partnership, entered into a new ATM Program to sell an aggregate of $300.0 million of SL Green's common stock. During the year ended December 31, 2015, we sold 91,180 shares of our common stock for aggregate net proceeds of $12.0 million. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 91,180 units of limited partnership interest of the Operating Partnership.
Perpetual Preferred Stock
We have 9,200,000 shares of our 6.50% Series I Cumulative Redeemable Preferred Stock, or the Series I Preferred Stock, outstanding with a mandatory liquidation preference of $25.00 per share. The Series I Preferred stockholders receive annual dividends of $1.625 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. We are entitled to redeem the Series I Preferred Stock at par for cash at our option on or after August 10, 2017. In August 2012, we received $221.9 million in net proceeds from the issuance of the Series I Preferred Stock, which were recorded net of underwriters' discount and issuance costs, and contributed the net proceeds to the Operating Partnership in exchange for 9,200,000 units of 6.50% Series I Cumulative Redeemable Preferred Units of limited partnership interest, or the Series I Preferred Units.
Dividend Reinvestment and Stock Purchase Plan
In February 2015, 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 SL Green's common stock under the DRSPP. The DRSPP commenced on September 24, 2001.
Earnings per Share
SL Green's earnings per share for the three months ended March 31, 2016 and 2015 are computed as follows (in thousands):
 
Three Months Ended March 31,
Numerator
2016
 
2015
Basic Earnings:
 
 
 
Income attributable to SL Green common stockholders
$
23,221

 
$
43,277

Effect of Dilutive Securities:
 
 
 
Redemption of units to common shares
922

 
1,743

Diluted Earnings:
 
 
 
Income attributable to SL Green common stockholders
$
24,143

 
$
45,020

 
Three Months Ended March 31,
Denominator
2016
 
2015
Basic Shares:
 
 
 
Weighted average common stock outstanding
100,051

 
98,402

Effect of Dilutive Securities:
 
 
 
Operating Partnership units redeemable for common shares
3,974

 
3,964

Stock-based compensation plans
234

 
653

Diluted weighted average common stock outstanding
104,259

 
103,019

SL Green has excluded 1,349,019 and 203,975 common stock equivalents from the diluted shares outstanding for the three months ended March 31, 2016 and 2015, respectively, as they were anti-dilutive.
13. Partners' Capital of the Operating Partnership
The Company is the sole general partner of the Operating Partnership and at March 31, 2016 owned 100,081,448 general and limited partnership interests in the Operating Partnership and 9,200,000 Series I Preferred Units. Partnership interests in the Operating Partnership are denominated as “common units of limited partnership interest” (also referred to as “OP Units”) or “preferred units of limited partnership interest” (also referred to as “Preferred Units”). All references to OP Units and Preferred Units outstanding exclude such units held by the Company. A holder of an OP Unit may present such OP Unit to the Operating Partnership for redemption at any time (subject to restrictions agreed upon at the issuance of OP Units to particular holders that may restrict such right for a period of time, generally one year from issuance). Upon presentation of an OP Unit for redemption, the Operating Partnership must redeem such OP Unit in exchange for the cash equal to the then value of a share of common stock of the Company, except that the Company may, at its election, in lieu of cash redemption, acquire such OP Unit for one share of

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

common stock. Because the number of shares of common stock outstanding at all times equals the number of OP Units that the Company owns, one share of common stock is generally the economic equivalent of one OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of common stock. Each series of Preferred Units makes a distribution that is set in accordance with an amendment to the partnership agreement of the Operating Partnership. Preferred Units may also be convertible into OP Units at the election of the holder thereof or the Company, subject to the terms of such Preferred Units.
Net income (loss) allocated to the preferred unitholders and common unitholders reflects their pro rata share of net income (loss) and distributions.
Limited Partner Units
As of March 31, 2016, limited partners other than SL Green owned 3.84%, or 4,000,632 common units, of the Operating Partnership.
Preferred Units
Preferred units not owned by SL Green are further described in Note 11, “Noncontrolling Interests on the Company’s Consolidated Financial Statements - Preferred Units of Limited Partnership Interest in the Operating Partnership.”
Earnings per Unit
The Operating Partnership's earnings per unit for the three months ended March 31, 2016 and 2015, respectively are computed as follows (in thousands):
 
Three months ended March 31,
Numerator
2016
 
2015
Basic and Diluted Earnings:
 
 
 
Income attributable to SLGOP common unitholders
$
24,143

 
$
45,020

 
Three months ended March 31,
Denominator
2016
 
2015
Basic units:
 
 
 
Weighted average common units outstanding
104,025

 
102,366

Effect of Dilutive Securities:
 
 
 
Stock-based compensation plans
234

 
653

Diluted weighted average common units outstanding
104,259

 
103,019

The Operating Partnership has excluded 1,349,019 and 203,975 common unit equivalents from the diluted units outstanding for the three months ended March 31, 2016 and 2015, respectively, as they were anti-dilutive.
14. Share-based Compensation
We have stock-based employee and director compensation plans. Our employees are compensated through the Operating Partnership. Under each plan, whenever the Company issues common or preferred stock, the Operating Partnership issues an equivalent number of units of limited partnership interest of a corresponding class to the Company.
Third Amended and Restated 2005 Stock Option and Incentive Plan
The Third Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2013 and its stockholders in June 2013 at the Company's annual meeting of stockholders. The 2005 Plan authorizes the issuance of stock options, stock appreciation rights, unrestricted and restricted stock, phantom shares, dividend equivalent rights and other equity-based awards. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 17,130,000 fungible units may be granted under the 2005 Plan. Currently, different types of awards count against the limit on the number of fungible units differently, with (1) full-value awards (i.e., those that deliver the full value of the award upon vesting, such as restricted stock) counting as 2.76 fungible units per share subject to such award (2) stock options, stock appreciation rights and other awards that do not deliver full value and expire five years from the date of grant counting as 0.77 fungible units per share subject to such award and (3) all other awards (e.g., ten-year stock options) counting as 1.0 fungible units per share subject to such award. Awards granted under the 2005 Plan prior to the approval of the second amendment

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

and restatement in June 2010 and third amendment and restatement in June 2013 continue to count against the fungible unit limit based on the ratios that were in effect at the time such awards were granted, which may be different than the current ratios. As a result, depending on the types of awards issued, the 2005 Plan may result in the issuance of more or less than 17,130,000 shares. If a stock option or other award granted under the 2005 Plan expires or terminates, the common stock subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. Shares of SL Green's common stock distributed under the 2005 Plan may be treasury shares or authorized but unissued shares. Currently, unless the 2005 Plan has been previously terminated by the Company's board of directors, new awards may be granted under the 2005 Plan until June 13, 2023, which is the tenth anniversary of the date that the 2005 Plan was most recently approved by the Company's stockholders. As of March 31, 2016, 0.5 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, including, among others, outstanding LTIP Units issued under our 2011 Long-Term Outperformance Plan.
Options are granted under the plan at the fair market value on the date of grant and, subject to employment, generally expire five or ten years from the date of grant, are not transferable other than on death, and generally vest in one to five years commencing one year from the date of grant.
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model based on historical information with the following weighted average assumptions for grants during the three months ended March 31, 2016 and the year ended December 31, 2015.
 
March 31, 2016
 
December 31, 2015
Dividend yield
2.30
%
 
1.97
%
Expected life of option
3.5 years

 
3.6 years

Risk-free interest rate
1.27
%
 
1.43
%
Expected stock price volatility
31.00
%
 
32.34
%
A summary of the status of the Company's stock options as of March 31, 2016 and December 31, 2015, and changes during the three months ended March 31, 2016 and year ended December 31, 2015 are as follows:
 
March 31, 2016
 
December 31, 2015
 
Options Outstanding
 
Weighted Average
Exercise Price
 
Options Outstanding
 
Weighted Average
Exercise Price
Balance at beginning of period
$
1,595,007

 
$
95.52

 
$
1,462,726

 
$
87.98

Granted
4,500

 
94.75

 
389,836

 
112.54

Exercised
(17,250
)
 
72.41

 
(217,438
)
 
74.69

Lapsed or cancelled
(15,800
)
 
113.59

 
(40,117
)
 
98.61

Balance at end of period
$
1,566,457

 
$
95.59

 
$
1,595,007

 
$
95.52

Options exercisable at end of period
921,240

 
$
88.23

 
589,055

 
$
89.85

Weighted average fair value of options granted during the period
$
84,531

 
 

 
$
9,522,613

 
 

All options were granted with strike prices ranging from $20.67 to $137.18. The remaining weighted average contractual life of the options outstanding was 3.5 years and the remaining average contractual life of the options exercisable was 3.1 years.
During the three months ended March 31, 2016 and 2015, respectively, we recognized $2.0 million and $2.0 million of compensation expense, respectively, for these options. As of March 31, 2016, there was $12.6 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 3.0 years.
Stock-based Compensation
Effective January 1, 1999, the Company implemented a deferred compensation plan, or the Deferred Plan, where shares issued under the Deferred Plan were granted to certain employees, including our executives and vesting will occur annually upon the completion of a service period or our meeting established financial performance criteria. Annual vesting occurs at rates ranging from 15% to 35% once performance criteria are reached.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

A summary of the Company's restricted stock as of March 31, 2016 and December 31, 2015 and charges during the three months ended March 31, 2016 and the year ended December 31, 2015, are as follows:
 
March 31, 2016
 
December 31, 2015
Balance at beginning of period
3,137,881

 
3,000,979

Granted
1,000

 
143,053

Cancelled
(4,600
)
 
(6,151
)
Balance at end of period
3,134,281

 
3,137,881

Vested during the period
81,172

 
87,081

Compensation expense recorded
$
2,016,554

 
$
7,540,747

Weighted average fair value of restricted stock granted during the period
$
93,840

 
$
16,061,201

The fair value of restricted stock that vested during the three months ended March 31, 2016 and the year ended December 31, 2015 was $7.3 million and $7.4 million, respectively. As of March 31, 2016 there was $18.6 million of total unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 2.5 years.
For the three months ended March 31, 2016 and 2015, $1.5 million, and $1.6 million, respectively, was capitalized to assets associated with compensation expense related to our long-term compensation plans, restricted stock and stock options.
We have granted LTIP Units, which include bonus, time-based and performance based awards, with a fair value of $27.4 million and $25.4 million as of March 31, 2016 and December 31, 2015, respectively. The grant date fair value of the LTIP Unit awards was calculated in accordance with ASC 718. A third party consultant determined the fair value of the LTIP Units to have a discount from SL Green's common stock price. The discount was calculated by considering the inherent uncertainty that the LTIP Units will reach parity with other common partnership units and the illiquidity due to transfer restrictions. As of March 31, 2016, there was $11.2 million of total unrecognized compensation expense related to the time-based and performance based awards, which is expected to be recognized over a weighted average period of 1.4 years. During the three months ended March 31, 2016 and 2015, we recorded compensation expense related to bonus, time-based and performance based awards of $9.5 million and $13.2 million, respectively.
2010 Notional Unit Long-Term Compensation Plan
In December 2009, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Program, or the 2010 Long-Term Compensation Plan. The 2010 Long-Term Compensation Plan is a long-term incentive compensation plan pursuant to which award recipients could earn, in the aggregate, from $15.0 million up to $75.0 million of LTIP Units in the Operating Partnership based on the Company's stock price appreciation over three years beginning on December 1, 2009; provided that, if maximum performance had been achieved, $25.0 million of awards could be earned at any time after the beginning of the second year and an additional $25.0 million of awards could be earned at any time after the beginning of the third year. In order to achieve maximum performance under the 2010 Long-Term Compensation Plan, the Company's aggregate stock price appreciation during the performance period had to equal or exceed 50%. The compensation committee determined that maximum performance had been achieved at or shortly after the beginning of each of the second and third years of the performance period and for the full performance period and, accordingly, 385,583 LTIP Units, 327,416 LTIP Units and 327,416 LTIP Units were earned under the 2010 Long-Term Compensation Plan in December 2010, 2011 and 2012, respectively. Substantially in accordance with the original terms of the program, 50% of these LTIP Units vested on December 17, 2012 (accelerated from the original January 1, 2013 vesting date), 25% of these LTIP Units vested on December 11, 2013 (accelerated from the original January 1, 2014 vesting date) and the remainder vested on January 1, 2015 based on continued employment. In accordance with the terms of the 2010 Long-Term Compensation Plan, distributions were not paid on any LTIP Units until they were earned, at which time we paid all distributions that would have been paid on the earned LTIP Units since the beginning of the performance period.
The cost of the 2010 Long-Term Compensation Plan ($31.7 million, subject to forfeitures) was amortized into earnings through the final vesting period of January 1, 2015.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

2011 Outperformance Plan
In August 2011, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2011 Outperformance Plan, or the 2011 Outperformance Plan. Participants in the 2011 Outperformance Plan could earn, in the aggregate, up to $85.0 million of LTIP Units in the Operating Partnership based on our total return to stockholders for the three-year period beginning September 1, 2011. Under the 2011 Outperformance Plan, participants were entitled to share in a "performance pool" comprised of LTIP Units with a value equal to 10% of the amount by which our total return to stockholders during the three-year period exceeded a cumulative total return to stockholders of 25%, subject to the maximum of $85.0 million of LTIP Units; provided that if maximum performance was achieved, one-third of each award could be earned at any time after the beginning of the second year and an additional one-third of each award could be earned at any time after the beginning of the third year. LTIP Units earned under the 2011 Outperformance Plan are subject to continued vesting requirements, with 50% of any awards earned vested on August 31, 2014 and the remaining 50% vesting on August 31, 2015, subject to continued employment with us through such dates. Participants were not entitled to distributions with respect to LTIP Units granted under the 2011 Outperformance Plan unless and until they were earned. For LTIP Units that were earned, each participant was also entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period, with such distributions being paid in the form of additional LTIP Units. Thereafter, distributions are to be paid currently with respect to all earned LTIP Units, whether vested or unvested. In June 2014, the compensation committee determined that maximum performance had been achieved during the third year of the performance period and, accordingly, 560,908 LTIP Units, representing two-thirds of each award, were earned, subject to vesting, under the 2011 Outperformance Plan. In September 2014, the compensation committee determined that maximum performance had been achieved for the full three-year performance period and, accordingly, 280,454 LTIP units, representing the final third of each award, were earned, subject to vesting, under the 2011 Outperformance Plan.
The cost of the 2011 Outperformance Plan ($26.7 million, subject to forfeitures) was amortized into earnings through the final vesting period. We recorded no compensation expense during the three months ended March 31, 2016, and $0.7 million during the three months ended March 31, 2015 related to the 2011 Outperformance Plan.
2014 Outperformance Plan
In August 2014, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2014 Outperformance Plan, or the 2014 Outperformance Plan. Participants in the 2014 Outperformance Plan may earn, in the aggregate, up to 610,000 LTIP Units in our Operating Partnership based on our total return to stockholders for the three-year period beginning September 1, 2014. For each individual award, two-thirds of the LTIP Units may be earned based on the Company’s absolute total return to stockholders and one-third of the LTIP Units may be earned based on relative total return to stockholders compared to the constituents of the MSCI REIT Index. Awards earned based on absolute total return to stockholders will be determined independently of awards earned based on relative total return to stockholders. In the event the Company’s performance reaches either threshold before the end of the three-year performance period, a pro-rata portion of the maximum award may be earned. For each component, if the Company’s performance reaches the maximum threshold beginning with the 19th month of the performance period, participants will earn one-third of the maximum award that may be earned for that component. If the Company’s performance reaches the maximum threshold during the third year of the performance period for a component, participants will earn two-thirds (or an additional one-third) of the maximum award that may be earned for that component. LTIP Units earned under the 2014 Outperformance Plan will be subject to continued vesting requirements, with 50% of any awards earned vesting on August 31, 2017 and the remaining 50% vesting on August 31, 2018, subject to continued employment with us through such dates. Participants will not be entitled to distributions with respect to LTIP Units granted under the 2014 Outperformance Plan unless and until they are earned. If LTIP Units are earned, each participant will also be entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period, with such distributions being paid in the form of cash or additional LTIP Units. Thereafter, distributions will be paid currently with respect to all earned LTIP Units, whether vested or unvested.
The cost of the 2014 Outperformance Plan ($27.9 million, subject to forfeitures), based on the portion of the 2014 Outperformance Plan granted as of March 31, 2016, will be amortized into earnings through the final vesting period. We recorded compensation expense of $1.5 million and $1.4 million during the three months ended March 31, 2016 and 2015, respectively, related to the 2014 Outperformance Plan.
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

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

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 SL Green's 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 three months ended March 31, 2016, 6,319 phantom stock units were earned and 8,436 shares of common stock were issued to our board of directors. We recorded compensation expense of $1.6 million during the three months ended March 31, 2016 related to the Deferred Compensation Plan. As of March 31, 2016, there were 87,087 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 increase their efforts to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee 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 March 31, 2016, 89,148 shares of SL Green's common stock had been issued under the ESPP.
15. Accumulated Other Comprehensive Loss
The following tables set forth the changes in accumulated other comprehensive income (loss) by component as of March 31, 2016 (in thousands):
 
Net unrealized (loss) gain on derivative instruments(1)
 
SL Green’s share of joint venture net unrealized (loss) gain on derivative instruments(2)
 
Unrealized gain (loss) on marketable securities
 
Total
Balance at December 31, 2015
$
(10,160
)
 
$
(592
)
 
$
2,003

 
$
(8,749
)
Other comprehensive loss before reclassifications
(6,651
)
 
(2,658
)
 
(1,194
)
 
(10,503
)
Amounts reclassified from accumulated other comprehensive income
2,080

 
(50
)
 

 
2,030

Balance at March 31, 2016
$
(14,731
)
 
$
(3,300
)
 
$
809

 
$
(17,222
)
____________________________________________________________________
(1)
Amount reclassified from accumulated other comprehensive income (loss) is included in interest expense in the respective consolidated statements of operations. As of March 31, 2016 and December 31, 2015, the deferred net losses from these terminated hedges, which is included in accumulated other comprehensive loss relating to net unrealized loss on derivative instrument, was $9.2 million and $9.7 million, respectively.
(2)
Amount reclassified from accumulated other comprehensive income (loss) is included in equity in net income from unconsolidated joint ventures in the respective consolidated statements of operations.
16. Fair Value Measurements
We are required to disclose fair value information with regard to our financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value. The FASB guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. We measure and/or disclose the estimated fair value of financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date; Level 2 - inputs other than quoted prices included within Level 1, that are observable for the asset or

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Notes to Consolidated Financial Statements (cont.)
March 31, 2016

liability, either directly or indirectly; and Level 3 - unobservable inputs for the asset or liability that are used when little or no market data is available. We follow this hierarchy for our assets and liabilities measured at fair value on a recurring and nonrecurring basis. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. Our assessment of the significance of the particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The following tables set forth the assets and liabilities that we measure at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at March 31, 2016 and December 31, 2015 (in thousands):
 
March 31, 2016
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Marketable securities
$
43,915

 
$
4,132

 
$
39,783

 
$

Interest rate cap and swap agreements (included in other assets)
$
6

 
$

 
$
6

 
$

Liabilities:
 
 
 
 
 
 
 
Interest rate cap and swap agreements (included in accrued interest payable and other liabilities)
$
2,600

 
$

 
$
2,600

 
$

Interest rate cap and swap agreements (included in liabilities related to assets held for sale)
$
12,077

 
$

 
$
12,077

 
$

 
December 31, 2015
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Marketable securities
$
45,138

 
$
4,704

 
$
40,434

 
$

Interest rate cap and swap agreements (included in other assets)
$
204

 
$

 
$
204

 
$

Liabilities:
 
 
 
 
 
 
 
Interest rate cap and swap agreements (included in accrued interest payable and other liabilities)
$
10,776

 
$

 
$
10,776

 
$

We determine other than temporary impairment in real estate investments and debt and preferred equity investments, including intangibles, utilizing cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, which are classified as Level 3 inputs.
The marketable securities classified as Level 1 were derived from quoted prices in active markets. The valuation technique used to measure the fair value of the marketable securities classified as Level 2 were valued based on quoted market prices or model driven valuations using the significant inputs derived from or corroborated by observable market data. Marketable securities in an unrealized loss position are not considered to be other than temporarily impaired. We do not intend to sell these securities and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases.
The fair value of derivative instruments is based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well-recognized financial principles and reasonable estimates about relevant future market conditions, which are classified as Level 2 inputs.
The financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, debt and preferred equity investments, mortgages and other loans payable and other secured and unsecured debt. The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses reported in our consolidated balance sheets approximates fair value due to the short term nature of these instruments. The fair value of debt and preferred equity investments, which is classified as Level 3, is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings. The fair value of borrowings, which is classified as Level 3, is estimated by discounting the contractual cash flows of each debt to their present value using adjusted market interest rates, which is provided by a third-party specialist.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

The following table provides the carrying value and fair value of these financial instruments as of March 31, 2016 and December 31, 2015 (in thousands):
 
March 31, 2016
 
December 31, 2015
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
 
 
 
 
 
 
 
 
Debt and preferred equity investments
$
1,378,616

 
(1) 
 
$
1,670,020

 
(1) 
 
 
 


 
 
 
 
Fixed rate debt (2)
$
7,154,930

 
$
7,507,340

 
$
7,232,254

 
$
7,591,388

Variable rate debt(2)
2,908,887

 
2,905,459

 
3,202,494

 
3,179,186

 
$
10,063,817

 
$
10,412,799

 
$
10,434,748

 
$
10,770,574

____________________________________________________________________
(1)
At March 31, 2016, debt and preferred equity investments had an estimated fair value ranging between $1.4 billion and $1.5 billion. At December 31, 2015, debt and preferred equity investments had an estimated fair value ranging between $1.7 billion and $1.8 billion.
(2)
Includes the $1.0 billion fixed rate mortgage and $446.0 million variable rate mortgage at 388-390 Greenwich Street that is included in liabilities related to assets held for sale on the consolidated balance sheet at March 31, 2016.
Disclosure about fair value of financial instruments was based on pertinent information available to us as of March 31, 2016 and December 31, 2015. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.
17. Financial Instruments: Derivatives and Hedging
In the normal course of business, we use a variety of commonly used derivative instruments, such as interest rate swaps, caps, collar and floors, to manage, or hedge interest rate risk. We hedge our exposure to variability in future cash flows for forecasted transactions in addition to anticipated future interest payments on existing debt. We recognize all derivatives on the balance sheets at fair value. Derivatives that are not hedges are adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedge asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Reported net income and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows. Currently, all of our designated derivative instruments are effective hedging instruments.
The following table summarizes the notional value at inception and fair value of our consolidated derivative financial instruments at March 31, 2016 based on Level 2 information. The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks (amounts in thousands).

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Table of Contents
SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

 
Notional
Value
 
Strike
Rate
 
Effective
Date
 
Expiration
Date
 
Balance Sheet Location
 
Fair
Value
Interest Rate Cap - Sold
$
504,000

 
4.750
%
 
May 2014
 
May 2016
 
Other Liabilities
 
$

Interest Rate Cap - Sold
500,000

 
4.750
%
 
November 2014
 
May 2016
 
Other Liabilities
 

Interest Rate Cap
117,392

 
6.000
%
 
October 2014
 
October 2016
 
Other Liabilities
 

Interest Rate Swap
200,000

 
0.938
%
 
October 2014
 
December 2017
 
Other Liabilities
 
(985
)
Interest Rate Swap
150,000

 
0.940
%
 
October 2014
 
December 2017
 
Other Liabilities
 
(743
)
Interest Rate Swap
150,000

 
0.940
%
 
October 2014
 
December 2017
 
Other Liabilities
 
(743
)
Interest Rate Swap
30,000

 
2.295
%
 
July 2010
 
June 2016
 
Other Liabilities
 
(109
)
Interest Rate Swap
14,409

 
0.500
%
 
January 2015
 
January 2017
 
Other Assets
 
5

Interest Rate Swap
8,018

 
0.852
%
 
February 2015
 
February 2017
 
Other Liabilities
 
(20
)
Interest Rate Cap
137,500

 
4.000
%
 
September 2015
 
September 2017
 
Other Assets
 
1

 
 
 
 
 
 
 
 
 
 
 
$
(2,594
)
Financial Instruments related to assets held for sale:
 
 
 
 
Interest Rate Cap
$
504,000

 
4.750
%
 
May 2014
 
May 2016
 
Other Liabilities
 
$

Interest Rate Cap
500,000

 
4.750
%
 
October 2014
 
May 2016
 
Other Liabilities
 

Interest Rate Cap
446,000

 
4.750
%
 
October 2014
 
May 2016
 
Other Liabilities
 

Interest Rate Swap
144,000

 
2.236
%
 
December 2012
 
December 2017
 
Other Liabilities
 
(3,902
)
Interest Rate Swap
86,400

 
1.948
%
 
December 2012
 
December 2017
 
Other Liabilities
 
(1,916
)
Interest Rate Swap
72,000

 
2.310
%
 
December 2012
 
December 2017
 
Other Liabilities
 
(2,042
)
Interest Rate Swap
72,000

 
1.345
%
 
December 2012
 
December 2017
 
Other Liabilities
 
(856
)
Interest Rate Swap
72,000

 
2.310
%
 
December 2012
 
December 2017
 
Other Liabilities
 
(2,042
)
Interest Rate Swap
57,600

 
1.990
%
 
December 2012
 
December 2017
 
Other Liabilities
 
(1,319
)
 
 
 
 
 
 
 
 
 
 
 
$
(12,077
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
(14,671
)
During the three months ended March 31, 2016 and 2015, we recorded a gain on the changes in the fair value of $37,000 and $1,000, respectively, which is included in interest expense on the consolidated statements of operations.
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of March 31, 2016, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $15.1 million. As of March 31, 2016, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $15.1 million at March 31, 2016.
Gains and losses on terminated hedges are included in accumulated other comprehensive loss, and are recognized into earnings over the term of the related mortgage obligation. Over time, the realized and unrealized gains and losses held in accumulated other comprehensive loss will be reclassified into earnings as an adjustment to interest expense in the same periods in which the hedged interest payments affect earnings. We estimate that $6.5 million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense and $1.7 million of the portion related to our share of joint venture accumulated other comprehensive loss will be reclassified into equity in net income from unconsolidated joint ventures within the next 12 months.

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

The following table presents the effect of our derivative financial instruments and our share of our joint ventures' derivative financial instruments that are designated and qualify as hedging instruments on the consolidated statements of operations for the three months ended March 31, 2016 and 2015, respectively (in thousands):
 
 
Amount of (Loss) Gain
Recognized in
Other Comprehensive
Loss
(Effective Portion)
 
Location of (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
 
Amount of Loss
 Reclassified from
Accumulated Other
Comprehensive Loss  into Income
(Effective Portion)
 
Location of (Loss) or Gain Recognized in Income on Derivative
 
Amount of (Loss) or Gain 
Recognized into Income
(Ineffective Portion)
 
 
Three months ended March 31
 
 
Three months ended March 31
 
 
Three months ended March 31
Derivative
 
2016
 
2015
 
 
2016
 
2015
 
 
2016
 
2015
Interest Rate Swaps/Caps
 
$
(6,919
)
 
$
(7,521
)
 
Interest expense
 
$
2,163

 
$
2,747

 
Interest expense
 
$
(39
)
 
$
(410
)
Share of unconsolidated joint ventures' derivative instruments
 
(2,765
)
 
(1,237
)
 
Equity in net income from unconsolidated joint ventures
 
351

 
331

 
Equity in net income from unconsolidated joint ventures
 
(436
)
 
(16
)
 
 
$
(9,684
)
 
$
(8,758
)
 
 
 
$
2,514

 
$
3,078

 
 
 
$
(475
)
 
$
(426
)

18. Commitments and Contingencies
Legal Proceedings
As of March 31, 2016, 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 other than routine litigation arising in the ordinary course of business or litigation that is adequately covered by insurance.
Environmental Matters
Our management believes that the properties are in compliance in all material respects with applicable Federal, state and local ordinances and regulations regarding environmental issues. Management is not aware of any environmental liability that it believes would have a materially adverse impact on our financial position, results of operations or cash flows. Management is unaware of any instances in which it would incur significant environmental cost if any of our properties were sold.
Capital and Ground Leases Arrangements
The following is a schedule of future minimum lease payments under capital leases and non-cancellable operating leases with initial terms in excess of one year as of March 31, 2016 (in thousands):
 
 
Capital lease
 
Non-cancellable
operating leases
Remaining 2016
 
$
1,705

 
$
23,142

2017
 
2,387

 
31,049

2018
 
2,387

 
31,049

2019
 
2,411

 
31,066

2020
 
2,620

 
31,436

Thereafter
 
825,483

 
764,352

Total minimum lease payments
 
836,993

 
$
912,094

Amount representing interest
 
(795,439
)
 
 
Capital lease obligations
 
$
41,554

 
 
19. Segment Information
The Company is a REIT engaged in all aspects of property ownership and management including investment, leasing operations, capital improvements, development and redevelopment, financing, construction and maintenance in the New York

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SL Green Realty Corp. and SL Green Operating Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
March 31, 2016

Metropolitan area and have two reportable segments, real estate and debt and preferred equity. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.
The primary sources of revenue are generated from tenant rents and escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, real estate taxes and ground rent expense (at certain applicable properties). See Note 5, "Debt and Preferred Equity Investments," for additional details on our debt and preferred equity investments.
Selected results of operations for the three months ended March 31, 2016 and 2015, and selected asset information as of March 31, 2016 and December 31, 2015, regarding our operating segments are as follows (in thousands):
 
 
Real Estate Segment
 
Debt and Preferred Equity Segment
 
Total Company
Total revenues
 
 
 
 
 
 
Three months ended:
 
 
 
 
 
 
March 31, 2016
 
$
400,707

 
$
54,737

 
$
455,444

March 31, 2015
 
354,230

 
42,069

 
396,299

Income from continuing operations before equity in net gain on sale of interest in unconsolidated joint venture/real estate and gain on sale of real estate
 
 
 
 
 
 
Three months ended:
 
 
 
 
 
 
March 31, 2016
 
$
(39,031
)
 
$
47,846

 
$
8,815

March 31, 2015
 
6,759

 
35,467

 
42,226

Total assets
 
 
 
 
 
 
As of:
 
 
 
 
 
 
March 31, 2016
 
$
18,195,830

 
$
1,390,138

 
$
19,585,968

December 31, 2015
 
18,045,370

 
1,682,276

 
19,727,646

Income from continuing operations represents total revenues less total expenses for the real estate segment and total investment income less allocated interest expense for the debt and preferred equity segment. Interest costs for the debt and preferred equity segment includes actual costs incurred for investments collateralizing the MRA. Interest is imputed on the remaining investments using our 2012 revolving credit facility and corporate borrowing cost. We also allocate loan loss reserves, net of recoveries, and transaction related costs to the debt and preferred equity segment. We do not allocate marketing, general and administrative expenses (totaling $24.0 million and $25.5 million for the three months ended March 31, 2016 and 2015, respectively) to the debt and preferred equity segment since we base performance on the individual segments prior to allocating marketing, general and administrative expenses. All other expenses, except interest, relate entirely to the real estate assets.
There were no transactions between the above two segments.
The table below reconciles income from continuing operations to net income for the three months ended March 31, 2016, and 2015 (in thousands):
 
 
Three months ended March 31,
 
 
2016
 
2015
Income from continuing operations before equity in net gain on sale of interest in unconsolidated joint venture/real estate and gain on sale of real estate
 
$
8,815

 
$
42,226

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
9,915

 

Gain on sale of real estate
 
13,773

 

Income from continuing operations
 
32,503

 
42,226

Net income from discontinued operations
 

 
427

Gain on sale of discontinued operations
 

 
12,983

Net income
 
$
32,503

 
$
55,636


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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
SL Green Realty Corp., which is referred to as SL Green or the Company, 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, with in-house capabilities in property management, acquisitions and dispositions, financing, development and redevelopment, construction and leasing. 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.
Reckson Associates Realty Corp., or Reckson, and Reckson Operating Partnership, L.P. or ROP, are wholly-owned subsidiaries of the SL Green Realty Corp.
The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements appearing in this Quarterly Report of this Form 10-Q and in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2015
As of March 31, 2016, we owned the following interests in commercial and residential properties in the New York Metropolitan area, primarily in midtown Manhattan. Our investments in the New York Metropolitan area also include investments in Brooklyn, Long Island, Westchester County, Connecticut and New Jersey, which are collectively known as the Suburban properties:
 
 
 
 
Consolidated
 
Unconsolidated
 
Total
 
 
Location
 
Type
 
Number of Properties
 
Approximate Square Feet
 
Number of Properties
 
Approximate Square Feet
 
Number of Properties
 
Approximate Square Feet
 
Weighted Average Occupancy(1)
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manhattan
 
Office
 
27

(2)
21,003,606

 
6

 
4,244,139

 
33

 
25,247,745

 
95.9
%
 
 
Retail
 
10

(3)
418,093

 
9

 
347,970

 
19

 
766,063

 
88.1
%
 
 
Development/Redevelopment
 
3

 
42,635

 
3

 
733,624

 
6

 
776,259

 
30.5
%
 
 
Fee Interest
 
1

 
176,530

 

 

 
1

 
176,530

 
100.0
%
 
 
 
 
41

 
21,640,864

 
18

 
5,325,733

 
59

 
26,966,597

 
93.8
%
Suburban
 
Office
 
26

 
4,235,300

 
2

 
640,000

 
28

 
4,875,300

 
81.7
%
 
 
Retail
 
1

 
52,000

 

 

 
1

 
52,000

 
100.0
%
 
 
Development/Redevelopment
 
1

 
1,000

 
1

 

 
2

 
1,000

 
100.0
%
 
 
 
 
28

 
4,288,300

 
3

 
640,000

 
31

 
4,928,300

 
81.9
%
Total commercial properties
 
69

 
25,929,164

 
21

 
5,965,733

 
90

 
31,894,897

 
92.0
%
Residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manhattan
 
Residential
 
4

(3)
762,587

 
17

 
2,193,424

 
21

 
2,956,011

 
95.4
%
Suburban
 
Residential
 

 

 

 

 

 

 
%
Total residential properties
 
4

 
762,587

 
17

 
2,193,424

 
21

 
2,956,011

 
95.4
%
Total portfolio(3)
 
73

 
26,691,751

 
38

 
8,159,157

 
111

 
34,850,908

 
92.3
%
(1)
The weighted average occupancy for commercial properties represents the total occupied square feet divided by total acquisition square footage.  The weighted average occupancy for residential properties represents the total occupied units divided by total available units.
(2)
Includes the property at 388-390 Greenwich Street, which is classified as held for sale at March 31, 2016.
(3)
As of March 31, 2016, we owned a building that was comprised of approximately 270,132 square feet (unaudited) of retail space and approximately 222,855 square feet (unaudited) of residential space. For the purpose of this report, we have included the building in the retail properties count and have bifurcated the square footage into the retail and residential components.

As of March 31, 2016, we also managed an approximately 336,000 square foot office building owned by a third party and held debt and preferred equity investments with a book value of $1.7 billion including $0.3 billion of debt and preferred equity and other financing receivables that are included in other balance sheet line items.


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Table of Contents




Critical Accounting Policies
Refer to the 2015 Annual Report on Form 10-K of the Company and the Operating Partnership for a discussion of our critical accounting policies, which include investment in commercial real estate properties, investment in unconsolidated joint ventures, revenue recognition, allowance for doubtful accounts, reserve for possible credit losses and derivative instruments. There have been no changes to these accounting policies during the three months ended March 31, 2016.


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Results of Operations
Comparison of the three months ended March 31,2016 to the three months ended March 31, 2015
The following comparison for the three months ended March 31, 2016, or 2016, to the three months ended March 31, 2015, or 2015, makes reference to the following:  (i) the effect of the “Same-Store Properties,” which represents all operating properties owned by us at January 1, 2015 and still owned by us in the same manner at March 31, 2016 (Same-Store Properties totaled 56 of our 73 consolidated operating properties, representing 70.3% of our share of annualized cash rent), (ii) the effect of the “Acquisition Properties,” which represents all properties or interests in properties acquired in 2016 and 2015 and all non-Same-Store Properties, including properties that are under development, redevelopment or deconsolidated during the period, and (iii) “Other,” which represents corporate level items not allocable to specific properties, as well as the Service Corporation and eEmerge Inc. Any assets sold or held for sale are excluded from the income from continuing operations and from the following discussion.

 
 
Same-Store
 
Acquisition
 
Other
 
Consolidated
(in millions)
 
2016
 
2015
 
$
Change
 
%
Change
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
$
Change
 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental revenue
 
$
258.4

 
$
243.8

 
$
14.6

 
6.0
%
 
$
82.5

 
$
41.1

 
$
4.7

 
$
18.4

 
$
345.6

 
$
303.3

 
$
42.3

 
13.9
 %
Escalation and reimbursement
 
40.7

 
39.0

 
1.7

 
4.4
%
 
4.5

 
0.2

 
0.4

 
1.8

 
45.6

 
41.0

 
4.6

 
11.2
 %
Investment income
 

 

 

 
%
 

 
0.1

 
54.7

 
41.9

 
54.7

 
42.0

 
12.7

 
30.2
 %
Other income
 
2.0

 
1.5

 
0.5

 
33.3
%
 
0.3

 
4.0

 
7.2

 
4.4

 
9.5

 
9.9

 
(0.4
)
 
(4.0
)%
Total revenues
 
301.1

 
284.3

 
16.8

 
5.9
%
 
87.3

 
45.4

 
67.0

 
66.5

 
455.4

 
396.2

 
59.2

 
14.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses
 
133.4

 
131.3

 
2.1

 
1.6
%
 
12.5

 
1.1

 
3.7

 
8.3

 
149.6

 
140.7

 
8.9

 
6.3
 %
Transaction related costs
 

 

 

 
%
 
0.6

 
0.7

 
0.6

 
0.4

 
1.2

 
1.1

 
0.1

 
9.1
 %
Marketing, general and administrative
 

 

 

 
%
 

 

 
24.0

 
25.5

 
24.0

 
25.5

 
(1.5
)
 
(5.9
)%
 
 
133.4

 
131.3

 
2.1

 
1.6
%
 
13.1

 
1.8

 
28.3

 
34.2

 
174.8

 
167.3

 
7.5

 
4.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
$
167.7

 
$
153.0

 
$
14.7

 
9.6
%
 
$
74.2

 
$
43.6

 
$
38.7

 
$
32.3

 
$
280.6

 
$
228.9

 
$
51.7

 
22.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expenses):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense and amortization of deferred financing costs, net of interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(102.6
)
 
(82.4
)
 
(20.2
)
 
24.5
 %
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(179.3
)
 
(108.3
)
 
(71.0
)
 
65.6
 %
Equity in net income from unconsolidated joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.1

 
4.0

 
6.1

 
152.5
 %
Equity in net gain on sale of interest in unconsolidated joint venture/real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.9

 

 
9.9

 
100.0
 %
Gain on sale of real estate, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13.8

 

 
13.8

 
100.0
 %
Income from continuing operation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.5

 
42.2

 
(9.7
)
 
(23.0
)%
Net income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
0.4

 
(0.4
)
 
(100.0
)%
Gain on sale of discontinued operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
13.0

 
(13.0
)
 
(100.0
)%
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
32.5

 
$
55.6

 
$
(23.1
)
 
(41.5
)%
 
Rental, Escalation and Reimbursement Revenues
Rental revenues increased primarily as a result of the properties acquired ($41.4 million), which included the acquisition of 11 Madison Avenue ($36.1 million), the consolidation of 600 Lexington Avenue ($5.0 million), and the acquisition of 110 Greene Street ($2.5 million), as well as increased revenue from our Same-Store Properties ($14.2 million) resulting from increased occupancy and rents. This increase was partially offset by the sale of 885 Third Avenue ($4.2 million) and 120 West 45th Street($5.9 million).

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Escalation and reimbursement revenue increased primarily as a result of operating cost recoveries ($2.7 million) and real estate tax expense recoveries ($0.6 million) attributable to the acquisition of 11 Madison Avenue, and operating cost recoveries attributable to the consolidation of 600 Lexington Avenue ($0.7 million).
Occupancy in our Same-Store Manhattan consolidated office operating portfolio, excluding leases signed but not yet commenced, increased to 93.5% at March 31, 2016 as compared to 92.4% at March 31, 2015. Occupancy for our Same-Store Suburban consolidated office operating portfolio, excluding leases signed but not yet commenced, increased to 83.4% at March 31, 2015 as compared to 80.4% at March 31, 2015.
The following table presents a summary of the commenced leasing activity for the three months ended March 31, 2016 in our Manhattan and Suburban portfolio:
 
Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Manhattan
 

 
 

 
 

 
 

 
 

 
 

 
 

Space available at beginning of the period
1,395,967

 
 

 
 

 
 

 
 

 
 

 
 

Property no longer in redevelopment
235,629

 
 
 
 
 
 
 
 
 
 
 
 
Properties placed in service

 
 
 
 
 
 
 
 
 
 
 
 
Space which became available during the period(3)
 
 
 

 
 

 
 

 
 

 
 

 
 

•       Office
176,150

 
 

 
 

 
 

 
 

 
 

 
 

•       Retail
16,713

 
 

 
 

 
 

 
 

 
 

 
 

•       Storage
11,814

 
 

 
 

 
 

 
 

 
 

 
 

 
204,677

 
 

 
 

 
 

 
 

 
 

 
 

Total space available
1,836,273

 
 

 
 

 
 

 
 

 
 

 
 

Leased space commenced during the period:
 

 
 

 
 

 
 

 
 

 
 

 
 

•       Office(4)
722,982

 
740,649

 
$
72.56

 
$
49.45

 
$
69.20

 
9.8

 
13.1

•       Retail
51,245

 
61,789

 
$
173.30

 
$
99.08

 
$
62.96

 
7.0

 
19.6

•       Storage
22,019

 
17,122

 
$
36.47

 
$
24.28

 
$
69.47

 
16.8

 
13.9

Total leased space commenced
796,246

 
819,560

 
$
79.40

 
$
51.49

 
$
58.73

 
9.8

 
13.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total available space at end of period
1,040,027

 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Early renewals
 

 
 
 
 

 
 

 
 

 
 

 
 

•       Office
487,647

 
520,358

 
$
71.81

 
$
48.57

 
$
41.19

 
4.0

 
12.9

•       Retail
7,921

 
7,921

 
$
444.78

 
$
389.17

 
$
189.37

 
5.0

 
11.1

•       Storage
12,495

 
9,234

 
$
20.05

 
$
57.09

 
$

 

 
19.1

Total early renewals
508,063

 
537,513

 
$
76.42

 
$
53.73

 
$
42.67

 
4.1

 
13.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total commenced leases, including replaced previous vacancy
 

 
 

 
 
 
 
 
 
 
 
 
 
•       Office
 
 
1,261,007

 
$
72.25

 
$
48.71

 
$
57.64

 
7.5

 
13.0

•       Retail
 

 
69,710

 
$
204.14

 
$
278.32

 
$
77.33

 
6.8

 
18.6

•       Storage
 

 
26,356

 
$
30.72

 
$
59.92

 
$
45.13

 
10.9

 
15.7

Total commenced leases
 

 
1,357,073

 
$
78.22

 
$
53.37

 
$
58.41

 
7.5

 
13.3


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Useable
SF
 
Rentable
SF
 
New
Cash
Rent (per
rentable
SF) (1)
 
Prev.
Escalated
Rent (per
rentable
SF) (2)
 
TI/LC
per
rentable
SF
 
Free
Rent (in
months)
 
Average
Lease
Term (in
years)
Suburban
 

 
 

 
 

 
 

 
 

 
 

 
 

Space available at beginning of period
1,175,375

 
 

 
 

 
 

 
 

 
 

 
 

Sold vacancies
(7,134
)
 
 
 
 
 
 
 
 
 
 
 
 
Properties placed in service

 
 
 
 
 
 
 
 
 
 
 
 
Space which became available during the period(3)
 
 
 

 
 

 
 

 
 

 
 

 
 

•       Office
38,876

 
 

 
 

 
 

 
 

 
 

 
 

•       Retail
320

 
 

 
 

 
 

 
 

 
 

 
 

•       Storage

 
 

 
 

 
 

 
 

 
 

 
 

 
39,196

 
 

 
 

 
 

 
 

 
 

 
 

Total space available
1,207,437

 
 

 
 

 
 

 
 

 
 

 
 

Leased space commenced during the period:
 

 
 
 
 

 
 

 
 

 
 

 
 

•       Office(5)
179,854

 
181,887

 
$
29.81

 
$
32.66

 
$
45.41

 
7.8

 
9.4

•       Retail
320

 
320

 
$
25.00

 
$
25.00

 
$

 

 
5.0

•       Storage
1,140

 
2,017

 
$
13.23

 
$
10.00

 
$

 
6.0

 
7.2

Total leased space commenced
181,314

 
184,224

 
$
29.62

 
$
32.57

 
$
44.84

 
7.8

 
9.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total available space at end of the period
1,026,123

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Early renewals
 

 
 

 
 
 
 
 
 
 
 
 
 
•       Office
128,101

 
134,272

 
$
41.24

 
$
37.48

 
$
10.55

 
2.0

 
3.2

•       Retail

 

 
$

 
$

 
$

 

 

•       Storage
1,626

 
1,626

 
$
9.15

 
$
9.15

 
$

 

 
2.8

Total early renewals
129,727

 
135,898

 
$
40.86

 
$
37.14

 
$
10.42

 
2.0

 
3.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total commenced leases, including replaced previous vacancy
 

 
 

 
 

 
 

 
 

 
 

 
 
•       Office
 

 
316,159

 
$
34.67

 
$
35.84

 
$
30.61

 
5.4

 
6.7

•       Retail
 

 
320

 
$
25.00

 
$
25.00

 
$

 

 
5.0

•       Storage
 

 
3,643

 
$
11.41

 
$
9.24

 
$

 
3.3

 
5.2

Total commenced leases
 

 
320,122

 
$
34.39

 
$
35.59

 
$
30.23

 
5.3

 
6.7

____________________________________________________________________
(1)
Annual initial base rent.
(2)
Escalated rent is calculated as total annual income less electric charges.
(3)
Includes expiring space, relocating tenants and move-outs where tenants vacated. Excludes lease expirations where tenants held over.
(4)
Average starting office rent excluding new tenants replacing vacancies was $64.48 per rentable square feet for 96,670 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $70.66 per rentable square feet for 617,028 rentable square feet.
(5)
Average starting office rent excluding new tenants replacing vacancies was $30.74 per rentable square feet for 69,418 rentable square feet. Average starting office rent for office space (leased and early renewals, excluding new tenants replacing vacancies) was $37.66 per rentable square feet for 203,690 rentable square feet.
At March 31, 2016, 2.4% and 10.5% of the office space leased at our consolidated Manhattan and Suburban operating properties, respectively, is expected to expire during 2016. Based on our estimates at March 31, 2016, the current market asking rents on these expected 2016 lease expirations at our consolidated Manhattan operating properties are 18.5% higher than the existing in-place fully escalated rents while the current market asking rents on all of our consolidated Manhattan operating properties are 14.0% higher than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years. Based on our estimates at March 31, 2016, the current market asking rents on these expected 2016 lease expirations at our consolidated Suburban operating properties are 10.5% higher than the existing in-place fully escalated rents while the current market asking rents on all of our consolidated Suburban operating properties are 7.5% higher than the existing in-place fully escalated rents on leases that are scheduled to expire in all future years.

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Investment Income
Investment income increased primarily as a result of accelerated recognition of income on the early repayment of certain debt positions ($10.2 million). In addition, there was a higher average investment balance for the three months ended March 31, 2016. For the three months ended March 31, 2016, the weighted average debt and preferred equity investment balance outstanding and weighted average yield were $1.7 billion and 10.4%, respectively, compared to $1.5 billion and 10.4%, respectively, for the same period in 2014. This increase was partially offset by the redemption in June 2015 of a preferred equity investment that had previously been the largest investment in the portfolio ($3.4 million), as well as the repayment of numerous other debt positions between March 31, 2015 and March 31, 2016.
Other Income
Other income decreased primarily as a result of a fee received from a current tenant in the three months ended March 31, 2015 ($3.5 million), partially offset by a fee earned in connection with the transfer of ownership in the property securitized by a debt investment ($2.4 million), and higher contributions from Service Corporation ($0.6 million) during the three months ended March 31, 2016.
Property Operating Expenses
Property operating expenses increased primarily as a result of higher operating expenses at properties recently acquired ($11.7 million) primarily 11 Madison Avenue ($6.6 million), partially offset by a decrease from properties sold ($2.8 million).
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses for the three months ended March 31, 2016 were $24.0 million, or 4.6% of total combined revenues, including our share of joint venture revenues, and 45 basis points of total combined assets, including our share of joint venture assets compared to $25.5 million, or 5.6% of total revenues including our share of joint venture revenues, and 53 basis points of total assets including our share of joint venture assets for 2015.
Interest Expense and Amortization of Deferred Financing Costs, Net of Interest Income
Interest expense, net of interest income, increased primarily as a result of a new mortgage related to the acquisition of 11 Madison Avenue ($12.8 million) and increased borrowings on the 2012 credit facility ($3.0 million). These increases were partially offset by the repayment of the mortgage in connection with the sale of 120 West 45th Street ($2.6 million). The weighted average consolidated debt balance outstanding increased to $10.0 billion (including $1.5 billion debt associated with 388 Greenwich Street) for the three months ended March 31, 2016 from $8.3 billion for the three months ended March 31, 2015. The weighted average interest rate decreased to 3.79% for the three months ended March 31, 2016 from 3.94% for the three months ended March 31, 2015.
Depreciation and Amortization
Depreciation and amortization increased primarily as a result of the acquisition of 11 Madison in August 2015 ($35.5 million) and the accelerated depreciation expense related to 388-390 Greenwich Street ($34.3 million) as a result of the tenant exercising their option to purchase the property in December 2017. The closing, which was previously scheduled for December 2017, is now scheduled for June 2016, subject to customary closing conditions.
Equity in Net Income in Unconsolidated Joint Venture
Equity in net income from unconsolidated joint ventures increased primarily as a result of higher net income contributions from 1552-1560 Broadway ($3.5 million) as a result of the settlement in February 2016 of arbitration regarding a tenant's rent at the property.
Equity in Net Gain on Sale of Interest in Unconsolidated Joint Ventures/Real Estate
During the three months ended March 31, 2016, we recognized a gain on sale associated with the sale of our joint venture interests at 7 Renaissance Square ($4.2 million), 1 Jericho ($3.3 million) and EOP Denver ($2.8 million).
Gain on Sale of Real Estate
During the three months ended March 31, 2016, we recognized a gain on sale associated with the sale of the property at 248-252 Bedford Avenue in Brooklyn, New York ($13.8 million).
Discontinued Operations
Discontinued operations for the three months ended March 31, 2015 includes the gain recognized on the sale of 180 Maiden Lane ($13.0 million) and the related results of operations. The Company adopted ASU 2014-08 effective January 1, 2015 which raised the threshold for disposals to qualify as discontinued operations to dispositions which represent a strategic shift in an entity’s operations. The guidance was applied prospectively for new disposals. As a result, the results of operations for 388 Greenwich

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Table of Contents


Street which was classified as held for sale at March 31, 2016 is included in continuing operations for the three months ended March 31, 2016. No properties were held for sale at March 31, 2015. Discontinued operations for the three months ended March 31, 2015 included the results of operations of 180 Maiden Lane, which was held for sale at December 31, 2014 and sold in January 2015.
Reconciliation of Same-Store Operating Income to Net Operating Income
We present Same-Store net operating income, or Same-Store NOI, because we believe that this measure provides investors with useful information regarding the operating performance of properties that are comparable for the periods presented. We determine Same-Store net operating income by subtracting Same-Store property operating expenses and ground rent from Same-Store rental revenues and other income. Our method of calculation may be different from methods used by other REITs, and, accordingly, may not be comparable to such other REITs. None of these measures is an alternative to net income (determined in accordance with GAAP) and Same-Store performance should not be considered an alternative to GAAP net income performance.
For properties owned since January 1, 2015 and still owned and operated at March 31, 2016, Same-Store NOI is determined as follows (in millions):
 
 
Three Months Ended March 31,
 
 
2016
 
2015
 
$ Change
 
% Change
Rental revenues
 
$
299.1

 
$
282.8

 
$
16.3

 
5.8
 %
Other income
 
2.0

 
1.5

 
0.5

 
33.3
 %
Total revenues
 
301.1

 
284.3

 
16.8

 
5.9
 %
Property operating expenses
 
133.4

 
131.3

 
2.1

 
1.6
 %
Operating income
 
167.7

 
153.0

 
14.7

 
9.6
 %
Less: Non-building NOI
 
(0.4
)
 
(0.4
)
 

 
 %
Same-Store NOI
 
167.3

 
152.6

 
14.7

 
9.6
 %
Free rent (net of amortization)
 
(0.9
)
 
(2.2
)
 
1.3

 
(59.1
)%
Straight-line revenue & other adjustments
 
(8.3
)
 
(5.5
)
 
(2.8
)
 
50.9
 %
Rental Income - FAS 141
 
(3.7
)
 
(2.8
)
 
(0.9
)
 
32.1
 %
Ground lease straight-line adjustment
 
0.4

 
0.4

 

 
 %
Allowance for straight-line tenant credit loss
 
1.7

 
(0.9
)
 
2.6

 
(288.9
)%
Cash NOI
 
$
156.5

 
$
141.6

 
$
14.9

 
10.5
 %
 
Same-Store NOI increased by $14.7 million, or 9.6%, from $152.6 million for the three months ended March 31, 2015 to $167.3 million for the three months ended March 31, 2016. Same-Store Cash NOI increased by $14.9 million, or 10.5%, from $141.6 million for the three months ended March 31, 2015 to $156.5 million for the three months ended March 31, 2016.
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, repurchases or repayments of outstanding indebtedness (which may include exchangeable debt) and for debt and preferred equity investments will include:
(1)
Cash flow from operations;
(2)
Cash on hand;
(3)
Borrowings under the 2012 credit facility;
(4)
Other forms of secured or unsecured financing;
(5)
Net proceeds from divestitures of properties and redemptions, participations and dispositions of debt and preferred equity investments; and
(6)
Proceeds from common or preferred equity or debt offerings by the Company, the Operating Partnership (including issuances of units of limited partnership interest in the Operating Partnership and Trust preferred securities) or ROP.
Cash flow from operations is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent, 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 our property mortgages and other loans payable, corporate obligations and our share of joint venture debt, including as-of-right extension options, as of March 31, 2016 are as follows (in thousands):
 
Remaining 2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
Property mortgages and other loans
$
351,810

 
$
1,140,191

 
$
106,536

 
$
70,255

 
$
732,330

 
$
4,720,578

 
$
7,121,700

MRA and FHLB facilities

 

 

 

 

 

 

Corporate obligations

 
355,008

 
250,000

 
933,000

 
1,025,000

 
400,000

 
2,963,008

Joint venture debt-our share
526,982

 
591,284

 
447

 
104,687

 
30,298

 
451,544

 
1,705,242

Total
$
878,792

 
$
2,086,483

 
$
356,983

 
$
1,107,942

 
$
1,787,628

 
$
5,572,122

 
$
11,789,950


As of March 31, 2016, we had $360.1 million of consolidated cash on hand, inclusive of $43.9 million of marketable securities. We expect to generate positive cash flow from operations for the foreseeable future. We may seek to divest of properties or interests in properties 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 debt, will allow us to satisfy our debt obligations, as described above, upon maturity, if not before.
We also have investments in several real estate joint ventures with various partners who we consider to be financially stable and who have the ability to fund a capital call when needed. Most of our joint ventures are financed with non-recourse debt. We believe that property level cash flows along with unfunded committed indebtedness and proceeds from the refinancing of outstanding secured indebtedness will be sufficient to fund the capital needs of our joint venture properties.

Cash Flows
The following summary discussion of our cash flows is based on our consolidated statements of cash flows in "Item 1. Financial Statements" and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
Cash and cash equivalents were $316.2 million and $330.8 million at March 31, 2016 and 2015, respectively, representing a decrease of $14.6 million. The decrease was a result of the following changes in cash flows (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
 
Increase
(Decrease)
Net cash provided by operating activities
$
114,090

 
$
90,959

 
$
23,131

Net cash provided by investing activities
$
338,857

 
$
230,297

 
$
108,560

Net cash used in financing activities
$
(392,141
)
 
$
(271,895
)
 
$
(120,246
)
Our principal source of operating cash flow is related to the leasing and operating of the properties in our portfolio. Our properties provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund quarterly dividend and distribution requirements. Our debt and preferred equity and joint venture investments also provide a steady stream of operating cash flow to us.

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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 three months ended March 31, 2016, when compared to the three months ended March 31, 2015, we used cash primarily for the following investing activities (in thousands):
Acquisitions of real estate property
$
(31,438
)
Additions to land, buildings and improvements
(15,383
)
Escrowed cash—capital improvements/acquisition deposits/deferred purchase price
63,143

Investments in unconsolidated joint ventures
77,169

Distributions in excess of cumulative earnings from unconsolidated joint ventures
49,458

Net proceeds from disposition of real estate/joint venture interest
(345,946
)
Proceeds from sale of marketable securities
(133
)
Purchases of marketable securities
7,769

Other investments
1,321

Origination of debt and preferred equity investments
57,301

Repayments or redemption of debt and preferred equity investments
245,299

Increase in net cash provided by investing activities
$
108,560


Funds spent on capital expenditures, which comprise building and tenant improvements, decreased from $47.1 million for the three months ended March 31, 2015 to $62.5 million for the three months ended March 31, 2016. The 330,770,000 in capital expenditures relates primarily to increased costs incurred in connection with the redevelopment of properties.
We generally fund our investment activity through the sale of real estate, property-level financing, our 2012 credit facility, our MRA facility, senior unsecured notes, convertible or exchangeable securities, construction loans and from time to time, Company issued common or preferred stock, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the year ended March 31, 2016, when compared to the year ended March 31, 2015, we used cash for the following financing activities (in thousands):
Proceeds from mortgages and other loans payable
$
227,892

Repayments of mortgages and other loans payable
353,913

Proceeds from revolving credit facility and senior unsecured notes
(145,000
)
Repayments of revolving credit facility and senior unsecured notes
(464,296
)
Proceeds from stock options exercised and DRIP issuance
(108,584
)
Proceeds from sale of common stock
(120,597
)
Redemption of preferred stock
(240
)
Distributions to noncontrolling interests in other partnerships
102,962

Contributions from noncontrolling interests in other partnerships
934

Distributions to noncontrolling interests in the Operating Partnership
(532
)
Dividends paid on common and preferred stock
(15,200
)
Other obligations related to mortgage loan participations
51,500

Deferred loan costs and capitalized lease obligation
(2,998
)
Increase in net cash used in financing activities
$
(120,246
)
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, par value $0.01 per share. As of March 31, 2016, 100,081,448 shares of common stock and no shares of excess stock were issued and outstanding.

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As of March 31, 2016 SL Green had 9,200,000 shares of our 6.50% Series I Cumulative Redeemable Preferred Stock, or Series I Preferred Stock, outstanding. In addition, persons other than the Company held Preferred Units of limited partnership interests in the Operating Partnership having an aggregate liquidation preference of $304.9 million.
At-The-Market Equity Offering Program
In July 2011, the Company, along with the Operating Partnership, entered into an "at-the-market" equity offering program, or ATM Program, to sell an aggregate of $250.0 million of SL Green's common stock. During the year ended December 31, 2014, we sold 25,659 shares of our common stock out of the remaining balance of the ATM Program for aggregate net proceeds of $2.8 million. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 25.659 units of limited partnership interest of the Operating Partnership.
In June 2014, the Company, along with the Operating Partnership, entered into an "at-the-market" equity offering program, or ATM Program, to sell an aggregate of $300.0 million of SL Green's common stock. During the year ended December 31, 2014, we sold 1,626,999 shares of our common stock for aggregate net proceeds of $182.9 million. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 1,626,999 units of limited partnership interest of the Operating Partnership. During the three months ended March 31, 2015, we sold 895,956 shares of our common stock for aggregate net proceeds of $113.4 million comprising the remaining balance of this ATM Program. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 895,956 units of limited partnership interest of the Operating Partnership.
In March 2015, the Company, along with the Operating Partnership, entered into a new ATM Program to sell an aggregate of $300.0 million of SL Green's common stock. During the year ended December 31, 2015, we sold 91,180 shares of our common stock for aggregate net proceeds of $12.0 million. The net proceeds from these offerings were contributed to the Operating Partnership in exchange for 91,180 units of limited partnership interest of the Operating Partnership.
Dividend Reinvestment and Stock Purchase Plan
In February 2015, 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 SL Green's 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 three months ended March 31, 2016 and 2015, respectively (dollars in thousands):
 
Three months ended March 31,
 
2016
 
2015
Shares of common stock issued
453

 
775,161

Dividend reinvestments/stock purchases under the DRSPP
$
45

 
$
99,526

Third Amended and Restated 2005 Stock Option and Incentive Plan
The Third Amended and Restated 2005 Stock Option and Incentive Plan, or the 2005 Plan, was approved by the Company's board of directors in April 2013 and its stockholders in June 2013 at the Company's annual meeting of stockholders. Subject to adjustments upon certain corporate transactions or events, awards with respect to up to a maximum of 17,130,000 fungible units may be granted as options, restricted stock, phantom shares, dividend equivalent rights and other equity-based awards under the 2005 Plan. As of March 31, 2016, 0.5 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, including, among others, outstanding LTIP Units issued under our 2011 Long-Term Outperformance Plan.
2010 Notional Unit Long-Term Compensation Plan
In December 2009, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2010 Notional Unit Long-Term Compensation Program, or the 2010 Long-Term Compensation Plan. The 2010 Long-Term Compensation Plan is a long-term incentive compensation plan pursuant to which award recipients could earn, in the aggregate, from $15.0 million up to $75.0 million of LTIP Units in the Operating Partnership based on the Company's stock price appreciation over three years beginning on December 1, 2009; provided that, if maximum performance had been achieved, $25.0 million of awards could be earned at any time after the beginning of the second year and an additional $25.0 million of awards could be earned at any time after the beginning of the third year. In order to achieve maximum performance under the 2010 Long-Term Compensation Plan, the Company's aggregate stock price appreciation during the performance period had to equal or exceed 50%. The compensation committee determined that maximum performance had been achieved at or shortly after the beginning of each of the second and third years of the performance period and for the full performance period and, accordingly, 385,583 LTIP Units, 327,416 LTIP Units and 327,416 LTIP Units were earned under the 2010 Long-Term Compensation Plan in

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December 2010, 2011 and 2012, respectively. Substantially in accordance with the original terms of the program, 50% of these LTIP Units vested on December 17, 2012 (accelerated from the original January 1, 2013 vesting date), 25% of these LTIP Units vested on December 11, 2013 (accelerated from the original January 1, 2014 vesting date) and the remainder vested on January 1, 2015 based on continued employment. In accordance with the terms of the 2010 Long-Term Compensation Plan, distributions were not paid on any LTIP Units until they were earned, at which time we paid all distributions that would have been paid on the earned LTIP Units since the beginning of the performance period.
The cost of the 2010 Long-Term Compensation Plan ($31.7 million, subject to forfeitures) was amortized into earnings through the final vesting period of January 1, 2015.
2011 Outperformance Plan
In August 2011, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2011 Outperformance Plan, or the 2011 Outperformance Plan. Participants in the 2011 Outperformance Plan could earn, in the aggregate, up to $85.0 million of LTIP Units in the Operating Partnership based on our total return to stockholders for the three-year period beginning September 1, 2011. Under the 2011 Outperformance Plan, participants were entitled to share in a "performance pool" comprised of LTIP Units with a value equal to 10% of the amount by which our total return to stockholders during the three-year period exceeded a cumulative total return to stockholders of 25%, subject to the maximum of $85.0 million of LTIP Units; provided that if maximum performance was achieved, one-third of each award could be earned at any time after the beginning of the second year and an additional one-third of each award could be earned at any time after the beginning of the third year. LTIP Units earned under the 2011 Outperformance Plan are subject to continued vesting requirements, with 50% of any awards earned vested on August 31, 2014 and the remaining 50% vesting on August 31, 2015, subject to continued employment with us through such dates. Participants were not entitled to distributions with respect to LTIP Units granted under the 2011 Outperformance Plan unless and until they were earned. For LTIP Units that were earned, each participant was also entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period, with such distributions being paid in the form of additional LTIP Units. Thereafter, distributions are to be paid currently with respect to all earned LTIP Units, whether vested or unvested. In June 2014, the compensation committee determined that maximum performance had been achieved during the third year of the performance period and, accordingly, 560,908 LTIP Units, representing two-thirds of each award, were earned, subject to vesting, under the 2011 Outperformance Plan. In September 2014, the compensation committee determined that maximum performance had been achieved for the full three-year performance period and, accordingly, 280,454 LTIP units, representing the final third of each award, were earned, subject to vesting, under the 2011 Outperformance Plan.
The cost of the 2011 Outperformance Plan ($26.7 million, subject to forfeitures) was amortized into earnings through the final vesting period. We recorded compensation expense of $0 million and $0.7 million during the three months ended March 31, 2016 and 2015, respectively, related to the 2011 Outperformance Plan.
2014 Outperformance Plan
In August 2014, the compensation committee of the Company's board of directors approved the general terms of the SL Green Realty Corp. 2014 Outperformance Plan, or the 2014 Outperformance Plan. Participants in the 2014 Outperformance Plan may earn, in the aggregate, up to 610,000 LTIP Units in our Operating Partnership based on our total return to stockholders for the three-year period beginning September 1, 2014. For each individual award, two-thirds of the LTIP Units may be earned based on the Company’s absolute total return to stockholders and one-third of the LTIP Units may be earned based on relative total return to stockholders compared to the constituents of the MSCI REIT Index. Awards earned based on absolute total return to stockholders will be determined independently of awards earned based on relative total return to stockholders. In the event the Company’s performance reaches either threshold before the end of the three-year performance period, a pro-rata portion of the maximum award may be earned. For each component, if the Company’s performance reaches the maximum threshold beginning with the 19th month of the performance period, participants will earn one-third of the maximum award that may be earned for that component. If the Company’s performance reaches the maximum threshold during the third year of the performance period for a component, participants will earn two-thirds (or an additional one-third) of the maximum award that may be earned for that component. LTIP Units earned under the 2014 Outperformance Plan will be subject to continued vesting requirements, with 50% of any awards earned vesting on August 31, 2017 and the remaining 50% vesting on August 31, 2018, subject to continued employment with us through such dates. Participants will not be entitled to distributions with respect to LTIP Units granted under the 2014 Outperformance Plan unless and until they are earned. If LTIP Units are earned, each participant will also be entitled to the distributions that would have been paid had the number of earned LTIP Units been issued at the beginning of the performance period, with such distributions being paid in the form of cash or additional LTIP Units. Thereafter, distributions will be paid currently with respect to all earned LTIP Units, whether vested or unvested.
The cost of the 2014 Outperformance Plan ($27.9 million, subject to forfeitures), based on the portion of the 2014 Outperformance Plan granted as of March 31, 2016, will be amortized into earnings through the final vesting period. We recorded

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compensation expense of $1.5 million and $1.4 million during the three months ended March 31, 2016 and 2015, respectively, related to the 2014 Outperformance Plan.
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 SL Green's 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 three months ended March 31, 2016, 6,319 phantom stock units were earned and 8,436 shares of common stock were issued to our board of directors. We recorded compensation expense of $1.6 million during the three months ended March 31, 2016 related to the Deferred Compensation Plan. As of March 31, 2016, there were 87,087 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 increase their efforts to make our business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee 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 March 31, 2016, 89,148 shares of SL Green's common stock had been issued under the ESPP.
Market Capitalization
At March 31, 2016, borrowings under our mortgages and other loans payable, 2012 credit facility, senior unsecured notes, trust preferred securities and our share of joint venture debt represented 52% of our combined market capitalization of $22.1 billion (based on a common stock price of $96.88 per share, the closing price of SL Green's common stock on the NYSE on March 31, 2016). Market capitalization includes our consolidated debt, common and preferred stock and the conversion of all units of limited partnership interest in the Operating Partnership, and our share of joint venture debt.

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Indebtedness
The table below summarizes our consolidated mortgages and other loans payable, 2012 credit facility, senior unsecured notes and trust preferred securities outstanding at March 31, 2016 and 2015, (amounts in thousands).
Debt Summary:
March 31, 2016
 
December 31, 2015
Balance
 
 
 
Fixed rate
$
6,113,101

 
$
6,190,382

Variable rate—hedged
1,041,829

 
1,041,872

Total fixed rate
7,154,930

 
7,232,254

Variable rate
1,798,213

 
2,023,719

Variable rate—supporting variable rate assets
1,110,674

 
1,178,775

Total variable rate
2,908,887

 
3,202,494

Total
$
10,063,817

 
$
10,434,748

Percent of Total Debt:
 
 
 
Fixed rate
71.1
%
 
69.3
%
Variable rate
28.9
%
 
30.7
%
Total
100.0
%
 
100.0
%
Effective Interest Rate for the Year:
 
 
 
Fixed rate
4.23
%
 
4.63
%
Variable rate
2.41
%
 
1.74
%
Effective interest rate
3.94
%
 
3.78
%

The variable rate debt shown above generally bears interest at an interest rate based on 30-day LIBOR (0.44% and 0.18% at March 31, 2016 and 2015, respectively). Our consolidated debt at March 31, 2016 had a weighted average term to maturity of 5.41 years.
Certain of our debt and equity investments and other investments, with a carrying value of $1.1 billion at March 31, 2016, are variable rate investments which mitigate our exposure to interest rate changes on our unhedged variable rate debt.
Mortgage Financing
As of March 31, 2016, our total mortgage debt (excluding our share of joint venture mortgage debt of $1.7 billion) consisted of $6.0 billion of fixed rate debt, including swapped variable rate debt, with an effective weighted average interest rate of 4.23% and $1.1 billion of variable rate debt with an effective weighted average interest rate of 2.41%.

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Corporate Indebtedness
2012 Credit Facility
In July 2015, we entered into the third amendment to the credit facility that was originally entered into by the Company in November 2012, referred to as the 2012 credit facility, which increased our unsecured corporate facility by $500.0 million. The revolving credit facility was increased by $400.0 million to $1.6 billion and the term loan portion of the facility was increased by $100.0 million to $933.0 million.
In January 2015, we amended the 2012 credit facility by entering into a second amended and restated credit agreement, which decreased the interest-rate margin and facility fee applicable to the revolving credit facility by 20 basis points and five basis points, respectively, and extended the maturity date of the revolving credit facility to March 29, 2019 with an as-of-right extension through March 29, 2020.
In November 2014, we increased the term loan portion of the facility by $50.0 million to $833.0 million.
In March 2014, we entered into an amendment to the 2012 credit facility, which among other things, increased the term loan portion of the facility by $383.0 million to $783.0 million, decreased the interest-rate margin applicable to the term loan portion of the facility by 25 basis points and extended the maturity of the term loan portion of the facility from March 30, 2018 to June 30, 2019.
As of March 31, 2016, the 2012 credit facility, as amended, consisted of a $1.6 billion revolving credit facility and a $933.0 million term loan. We also have an option, subject to customary conditions, to increase the capacity under the revolving credit facility to $3.0 billion at any time prior to the maturity date for the revolving credit facility without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions.
As of March 31, 2016, the 2012 credit facility bore interest at a spread over LIBOR ranging from (i) 87.5 basis points to 155 basis points for loans under the revolving credit facility and (ii) 95 basis points to 190 basis points for loans under the term loan facility, in each case based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. At March 31, 2016, the applicable spread was 125 basis points for revolving credit facility and 140 basis points for the term loan facility. At March 31, 2016, the effective interest rate was 1.68% for the revolving credit facility and 1.89% for the term loan facility. 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 ROP. As of March 31, 2016, the facility fee was 25 basis points. As of March 31, 2016, we had $74.3 million of outstanding letters of credit, $775.0 million drawn under the revolving credit facility and $933.0 million outstanding under the term loan facility, with total undrawn capacity of $750.7 million under the 2012 credit facility.
The Company, the Operating Partnership and ROP are all borrowers jointly and severally obligated under the 2012 credit facility. None of our other subsidiaries are obligors under the 2012 credit facility.
The 2012 credit facility includes certain restrictions and covenants (see Restrictive Covenants below).
Federal Home Loan Bank of New York Facility

During year ended March 31, 2016, the Company’s wholly-owned subsidiary, Belmont Insurance Company, or Belmont, a New York licensed captive insurance company, became a member of the Federal Home Loan Bank of New York, or FHLBNY. As a member, Belmont may borrow funds from the FHLBNY in the form of secured advances. As of March 31, 2016, we had $250.8 million in outstanding secured advances with a weighted average borrowing rate of 0.88%.

On January 12, 2016, the Federal Housing Finance Agency, or FHFA, adopted a final regulation on Federal Home Loan Bank, or FHLB, membership. The rule excludes captive insurance entities from FHLB membership on a going-forward basis and provides termination rules for current captive insurance members. Unless the final rule is modified, Belmont's membership will terminate on February 19, 2017, at which point we would be required to repay all funds borrowed from the FHLBNY.
Master Repurchase Agreement
The Master Repurchase Agreement, as amended in December 2013, or MRA, provides us with the ability to sell certain debt investments with a simultaneous agreement to repurchase the same at a certain date or on demand. This MRA has a maximum facility capacity of $300.0 million and bears interest ranging from 250 and 325 basis points over 30-day LIBOR depending on the pledged collateral. In September 2015 we entered into an amendment to the MRA to extend the maturity to June 29, 2016. Further, since December 6, 2015 we have been required to pay monthly in arrears a 25 basis point fee on the excess of $150.0 million over the average daily balance during the period if the average daily balance is less than $150.0 million. At March 31, 2016, we had $185.9 million outstanding under this MRA included in mortgages and other loans payable on the consolidated balance sheets.

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Senior Unsecured Notes
The following table sets forth our senior unsecured notes and other related disclosures as of March 31, 2016 and 2014, respectively, by scheduled maturity date (dollars in thousands):
Issuance
 
March 31,
2016
Unpaid
Principal
Balance
 
March 31,
2016
Accreted
Balance
 
December 31,
2015
Accreted
Balance
 
Coupon
Rate(1)
 
Effective
Rate
 
Term
(in Years)
 
Maturity Date
October 12, 2010(2)
 
$
345,000

 
$
324,281

 
$
321,130

 
3.00
%
 
6.65
%
 
7
 
October 15, 2017
August 5, 2011(3)
 
250,000

 
249,827

 
249,810

 
5.00
%
 
5.03
%
 
7
 
August 15, 2018
March 16, 2010(3)
 
250,000

 
250,000

 
250,000

 
7.75
%
 
7.75
%
 
10
 
March 15, 2020
November 15, 2012(3)
 
200,000

 
200,000

 
200,000

 
4.50
%
 
4.50
%
 
10
 
December 1, 2022
December 17, 2015(3)
 
100,000

 
100,000

 
100,000

 
4.27
%
 
4.27
%
 
10
 
December 17, 2025
March 26, 2007(4)
 
10,008

 
10,008

 
10,008

 
3.00
%
 
3.00
%
 
20
 
March 30, 2027
March 31, 2006 (5)
 

 

 
255,296

 
 
 
 
 
 
 
 
 
 
$
1,155,008

 
$
1,134,116

 
$
1,386,244

 
 
 
 
 
 
 
 
Deferred financing costs, net
 
 
 
$
(7,257
)
 
$
(7,280
)
 
 
 
 
 
 
 
 
 
 
$
1,155,008

 
$
1,126,859

 
$
1,378,964

 
 
 
 
 
 
 
 
____________________________________________________________________
(1)
Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.
(2)
Issued by the Operating Partnership. Interest on these exchangeable notes is payable semi-annually on April 15 and October 15. The notes had an initial exchange rate representing an exchange price that was set at a 30.0% premium to the last reported sale price of SL Green's common stock on October 6, 2010, or $85.81. The initial exchange rate is subject to adjustment under certain circumstances. The current exchange rate is 12.4230 shares of SL Green's common stock per $1,000 principal amount of these notes. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of SL Green's common stock, if any, at our option. As a result of meeting specified events (as defined in the Indenture Agreement), these notes became exchangeable commencing January 1, 2016 and will remain exchangeable through March 31, 2016. The notes are guaranteed by ROP. On the issuance date, $78.3 million of the debt balance was recorded in equity. As of March 31, 2016$20.7 million remained to be amortized into the debt balance.
(3)
Issued by the Company, the Operating Partnership and ROP, as co-obligors.
(4)
Issued by the Operating Partnership. Interest on these remaining exchangeable notes is payable semi-annually on March 30 and September 30. The notes have an initial exchange rate representing an exchange price that was set at a 25.0% premium to the last reported sale price of the Company's common stock on March 20, 2007, or $173.30. The initial exchange rate is subject to adjustment under certain circumstances. The current exchange rate is 5.7974 shares of SL Green's common stock per $1,000 principal amount of these notes. The notes are senior unsecured obligations of the Operating Partnership and are exchangeable upon the occurrence of specified events and during the period beginning on the twenty-second scheduled trading day prior to the maturity date and ending on the second business day prior to the maturity date, into cash or a combination of cash and shares of SL Green's common stock, if any, at our option. The notes are currently redeemable at the Operating Partnership’s option. The Operating Partnership may be required to repurchase the notes on March 30, 2017 and 2022, and upon the occurrence of certain designated events.
(5)
Issued by ROP, balance was repaid in March 2016.

Restrictive Covenants
The terms of the 2012 credit facility, as amended, and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, our ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the 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 March 31, 2016 and 2015, 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 fixed rate of 5.61% for the first ten years ending July 2015. Thereafter, the interest rate will float at 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

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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 changes are managed through the use of interest rate derivatives instruments and/or through our variable rate debt and preferred equity investments. A hypothetical 100 basis point increase in interest rates along the entire interest rate curve for 2016 would increase our annual interest cost, net of interest income from variable rate debt and preferred equity investments, by $17.3 million and would increase our share of joint venture annual interest cost by $6.6 million. At March 31, 2016 , 67.2% of our $ 1.4 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 derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in earnings.
Our long-term debt of $7.2 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 March 31, 2016 bore interest based on a spread of LIBOR plus 90 basis points to LIBOR plus 935 basis points.
Contractual Obligations
Refer to our 2015 Annual Report on Form 10-K for a discussion of our contractual obligations. There have been no material changes, outside the ordinary course of business, to these contractual obligations during the three months ended March 31, 2016.
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. Substantially all of our joint venture arrangements are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions of these joint venture arrangements. Our off-balance sheet arrangements are discussed in Note 5, "Debt 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 year ending December 31, 2016, we expect to incur $252.6 million of recurring capital expenditures and $177.9 million of development or redevelopment expenditures, net of loan reserves, (including tenant improvements and leasing commissions) on existing consolidated properties, and our share of capital expenditures at our joint venture properties, net of loan reserves, will be $46.1 million. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We expect to fund these capital expenditures with operating cash flow, existing liquidity, or incremental borrowings. We expect our capital needs over the next twelve months and thereafter will be met through a combination of cash on hand, net cash provided by operations, potential asset sales, borrowings or additional equity or debt issuances.
Dividends/Distributions
We expect to pay dividends to our stockholders based on the distributions we receive from our Operating Partnership primarily from property revenues net of operating expenses or, if necessary, from working capital.
To maintain our qualification as a REIT, we must pay annual dividends to our stockholders of at least 90% of our REIT taxable income, determined before taking into consideration the dividends paid deduction and net capital gains. We intend to continue to pay regular quarterly dividends to our stockholders. Based on our current annual dividend rate of $2.88 per share, we would pay $288.2 million in dividends to SL Green's common stockholders on an annual basis. Before we pay any dividend, whether for Federal income tax purposes or otherwise, which would only be paid out of available cash to the extent permitted under the 2012 credit facility and senior unsecured notes, we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable.
Related Party Transactions
Cleaning/ Security/ Messenger and Restoration Services
Through Alliance Building Services, or Alliance, First Quality Maintenance, L.P., or First Quality, provides cleaning, extermination and related services, Classic Security LLC provides security services, Bright Star Couriers LLC provides messenger services, and Onyx Restoration Works provides restoration services with respect to certain properties owned by us. Alliance is partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors. In addition, First Quality

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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 profit participation, which is included in other income on the consolidated statements of operations, was $0.9 million and $1.0 million, for the three months ended March 31, 2016 and 2015, respectively. We also recorded expenses of $3.8 million and $4.0 million, for the three months ended March 31, 2016 and 2015, 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 $0.1 million for both the three months ended March 31, 2016 and 2015.
Insurance
We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism) within three property insurance portfolios and liability insurance. The first property portfolio maintains a blanket limit of $950.0 million per occurrence, including terrorism, for the majority of the New York City properties in our portfolio and expires December 31, 2016. The second portfolio maintains a limit of $1.5 billion per occurrence, including terrorism, for several New York City properties and the majority of the Suburban properties and expires December 31, 2016. Each of these policies includes $100.0 million of flood coverage, with a lower sublimit for locations in high hazard flood zones. A third blanket property policy covers most of our residential assets and maintains a limit of $386.0 million per occurrence, including terrorism, for our residential properties and expires January 31, 2018. We maintain two liability policies which cover all our properties and provide limits of $201.0 million per occurrence and in the aggregate per location. The liability policies expire on October 31, 2016 and January 31, 2017 and cover our commercial and residential assets, respectively. Additional coverage may be purchased on a stand-alone basis for certain assets.
In October 2006, we formed a wholly-owned taxable REIT subsidiary, Belmont Insurance Company, or Belmont, to act as a captive insurance company and as one of the elements of our overall insurance program. Belmont is a subsidiary of ours. Belmont was formed in an effort to, among other reasons, stabilize to some extent the fluctuations of insurance market conditions. Belmont is licensed in New York to write Terrorism, NBCR (nuclear, biological, chemical, and radiological), General Liability, Environmental Liability and D&O coverage.
The Terrorism Risk Insurance Act, or TRIA, which was enacted in November 2002, was renewed December 31, 2005 and again on December 31, 2007. Congress extended TRIA, now called TRIPRA (Terrorism Risk Insurance Program Reauthorization and Extension Act of 2007) until December 31, 2014. TRIPRA was not renewed by Congress and expired on December 31, 2014. However, on January 12, 2015, TRIPRA was reauthorized until December 31, 2020 (Terrorism Insurance Program Reauthorization and Extension Act of 2015).The law extends the federal Terrorism Insurance Program that requires insurance companies to offer terrorism coverage and provides for compensation for insured losses resulting from acts of certified terrorism, subject to the current program trigger of $100.0 million, which will increase by $20 million per annum, commencing December 31, 2015. Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to us), mezzanine loans, ground leases, our 2012 credit facility, senior unsecured notes and other corporate obligations, contain customary covenants requiring us to maintain insurance. Although we believe that we currently maintain sufficient insurance coverage to satisfy these obligations, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. In such instances, there can be no assurance that the lenders or ground lessors under these instruments will not take the position that a total or partial exclusion from “all-risk” insurance coverage for losses due to terrorist acts is a breach of these debt and ground lease instruments allowing the lenders or ground lessors to declare an event of default and accelerate repayment of debt or recapture of ground lease positions. In addition, if lenders prevail in asserting that we are required to maintain full coverage for these risks, it could result in substantially higher insurance premiums.
We own Belmont and the accounts of Belmont are part of our consolidated financial statements. If Belmont experiences a loss and is required to pay under its insurance policy, we would ultimately record the loss to the extent of Belmont’s required payment. Therefore, insurance coverage provided by Belmont should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance.
We monitor all properties that are subject to triple net leases to ensure that tenants are providing adequate coverage.  Certain joint ventures may be covered under policies separate from our policies, at coverage limits which we deem to be adequate.  We continually monitor these policies.  Although we consider our insurance coverage to be appropriate, in the event of a major catastrophe, we may not have sufficient coverage to replace certain properties.

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Funds from Operations
Funds from Operations, or FFO, is a widely recognized measure of REIT performance. We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do. The revised White Paper on FFO approved by the Board of Governors of NAREIT in April 2002, and as subsequently amended, defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles, or GAAP), sales of properties and real estate related impairment charges, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, particularly those that own and operate commercial office properties.
We also use FFO as one of several criteria to determine performance-based bonuses for members of our senior management. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs, providing perspective not immediately apparent from net income. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.
FFO for the three months ended March 31, 2016 and 2015 are as follows (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Net income attributable to SL Green common stockholders
$
23,221

 
$
43,277

Add:
 
 
 
Depreciation and amortization
179,308

 
108,337

Discontinued operations depreciation adjustments

 

Joint venture depreciation and noncontrolling interest adjustments
10,514

 
8,622

Net income attributable to noncontrolling interests
2,896

 
7,670

Less:
 
 
 
Gain on sale of real estate and discontinued operations
13,773

 
12,983

Equity in net gain on sale of interest in unconsolidated joint venture/real estate
9,915

 

Purchase price fair value adjustment

 

Depreciable real estate reserves

 

Depreciation on non-rental real estate assets
496

 
525

Funds from Operations attributable to SL Green common stockholders and noncontrolling interests
$
191,755

 
$
154,398

Cash flows provided by operating activities
$
114,090

 
$
90,959

Cash flows used in investing activities
$
338,857

 
$
230,297

Cash flows provided by financing activities
$
(392,141
)
 
$
(271,895
)
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.

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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 Manhattan, Brooklyn, Westchester County, Connecticut, Long Island and New Jersey office markets, business strategies, expansion and growth of our operations and other similar matters, are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate.
Forward-looking statements are not guarantees of future performance and actual results or developments may differ materially, and we caution you not to place undue reliance on such statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," 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 certain geographic markets;
risks of real estate acquisitions, dispositions, developments 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;
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 its 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. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
For quantitative and qualitative disclosure about market risk, see Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operation - Market Risk" in this Quarterly Report on Form 10-Q for the three months ended March 31, 2016 for the Company and the Operating Partnership and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Rate Risk" in the Annual Report on Form 10-K for the year ended December 31, 2015 for the Company and the Operating Partnership. Our exposures to market risk have not changed materially since December 31, 2015.




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ITEM 4.    CONTROLS AND PROCEDURES
SL GREEN REALTY CORP.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e) of the Exchange Act. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in our periodic reports. Also, the Company has investments in certain unconsolidated entities. As the Company does not control these entities, its disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those the Company maintains with respect to its consolidated subsidiaries.
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation as of the end of the period covered by this report, the Company's Chief Executive Officer and Chief Financial Officer concluded that its disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgated thereunder.
Changes in Internal Control over Financial Reporting
There have been no significant changes in the Company's internal control over financial reporting during the quarter ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

SL GREEN OPERATING PARTNERSHIP, L.P.
Evaluation of Disclosure Controls and Procedures
The Operating Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Operating Partnership's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Operating Partnership's management, including the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e) of the Exchange Act. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Operating Partnership to disclose material information otherwise required to be set forth in the Operating Partnership's periodic reports. Also, the Operating Partnership has investments in certain unconsolidated entities. As the Operating Partnership does not control these entities, the Operating Partnership's disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those it maintains with respect to its consolidated subsidiaries.
As of the end of the period covered by this report, the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner, of the effectiveness of the design and operation of the Operating Partnership's disclosure controls and procedures. Based upon that evaluation as of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer of the Operating Partnership's general partner concluded that the Operating Partnership's disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to the Operating Partnership that would potentially be subject to disclosure under the Exchange Act and the rules and regulations promulgated thereunder.
Changes in Internal Control over Financial Reporting
There have been no significant changes in the Operating Partnership's internal control over financial reporting during the quarter ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.



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PART II
ITEM 1.    LEGAL PROCEEDINGS
As of March 31, 2016, 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 other than routine litigation arising in the ordinary course of business or litigation that is adequately covered by insurance.
ITEM 1A.    RISK FACTORS

As of March 31, 2016 there have been no material changes to the Risk Factors disclosed in "Part I. Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.


ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2016, we did not make any unregistered sales of equity securities. In April 2016, the Operating Partnership issued 537,874 units of limited partnership interest in connection with an acquisition. SL Green may satisfy redemption requests for the units issued in the transaction described above with shares of SL Green’s common stock, on a one-for- one basis, pursuant to the Operating Partnership agreement. The units were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.










ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.

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ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.

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ITEM 5.   OTHER INFORMATION
None.

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ITEM 6.   EXHIBITS
10.1

Fourth Amended and Restated Bylaws of SL Green Realty Corp., filed with the SEC on March 23, 2016.
10.2

Twenty-Third Amendment to the First Amended and Restated Agreement of Limited Partnership of SL Green Operating Partnership, L.P., filed with the SEC on March 28, 2016.
10.3

Twenty-Fourth Amendment to the First Amended and Restated Agreement of Limited Partnership of SL Green Operating Partnership, L.P., filed with the SEC on March 28, 2016.
31.1

Certification by the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2

Certification by the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.3

Certification by the Chief Executive Officer of the Company, the sole general partner of the Operating Partnership pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.4

Certification by the Chief Financial Officer of the Company, the sole general partner of the Operating Partnership pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1

Certification by the Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2

Certification by the Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.3

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

Certification by the Chief Financial Officer of the Company, the sole general partner of the Operating Partnership pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101.10

The following financial statements from SL Green Realty Corp. and SL Green Operating Partnership L.P.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2016, formatted in XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive Income (unaudited), (iv) Consolidated Statement of Equity (unaudited), (v) Consolidated Statement of Capital (unaudited) (vi) Consolidated Statements of Cash Flows (unaudited), and (vii) Notes to Consolidated Financial Statements (unaudited), detail tagged and filed herewith.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
 
 
SL GREEN REALTY CORP.
 
 
By:
 
 SL Green Realty Corp.
 
 
 
 
 
 
 
 
 
/s/ Matthew J. DiLiberto
Dated: May 9, 2016
 
By:
 
Matthew J. DiLiberto
 Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signatures
Title
Date
 
 
 
/s/ Stephen L. Green
Chairman of the Board of Directors of
SL Green, the sole general partner of
the Operating Partnership
May 9, 2016
Stephen L. Green
 
 
 
/s/ Marc Holliday
Chief Executive Officer and Director of
SL Green, the sole general partner of
the Operating Partnership (Principal Executive Officer)
May 9, 2016
Marc Holliday
 
 
 
/s/ Andrew W. Mathias
President and Director of SL Green, the sole general partner of the Operating Partnership
May 9, 2016
Andrew W. Mathias
 
 
 
/s/ Matthew J. DiLiberto
Chief Financial Officer of
SL Green, the sole general partner of
the Operating Partnership (Principal Financial and Accounting Officer)
May 9, 2016
Matthew J. DiLiberto
 
 
 
/s/ John H. Alschuler, Jr.
Director of SL Green, the sole general
partner of the Operating Partnership
May 9, 2016
John H. Alschuler, Jr.
 
 
 
/s/ Edwin T. Burton, III
Director of SL Green, the sole general
partner of the Operating Partnership
May 9, 2016
Edwin T. Burton, III
 
 
 
/s/ John S. Levy
Director of SL Green, the sole general
partner of the Operating Partnership
May 9, 2016
John S. Levy
 
 
 
/s/ Craig M. Hatkoff
Director of SL Green, the sole general
partner of the Operating Partnership
May 9, 2016
Craig M. Hatkoff
 
 
 
/s/ Betsy S. Atkins
Director of SL Green, the sole general
partner of the Operating Partnership
May 9, 2016
Betsy S. Atkins
SIGNATURES

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
 
 
SL GREEN OPERATING PARTNERSHIP, L.P.
 
 
 
 
 
 
 
By:
 
/s/ Matthew J. DiLiberto
Dated: May 9, 2016
 
 
 
Matthew J. DiLiberto
 Chief Financial Officer


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