2016 Annual Report EXPERIENCE
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ACCESS BUSINESS SL GREEN R EALTY CORP. CAPITA L SL GREEN IS INVESTED IN TOMORROW INVESTED DIVERSITY 2016 Annual Report EXPERIENCE At SL Green, we’re invested in every FUTURE aspect of New York City real estate, GROWTH but more importantly, we’re invested HEALTH in success. Our strategy has been forged I M PA C T on the streets of one of the world’s JOB S most competitive real estate markets. KNOWLEDGE And the acumen to spot opportunities L UXURY has been our avenue to success. MANAGE MENT NETWORK We start with the basics: where are the OPPORTUNITY people and what do they want? Then, P ORTFOLIO we apply our knowledge and experience QUALITY to identifying opportunities. We build, R ETURNS rebuild, and fnance the future of New York S TRENG TH City, a future that will see our investment in meeting people’s needs succeed. TENANTS UTILITY VAL UE W ORK SL GREEN REALTY CORP. 420 Lexington Avenue, New York, NY 10170 Y OU 212-594-2700 www.slgreen.com ZONING 42602_Text_r2.indd 1 4/28/17 10:43 AM YEARS FUNDS FROM OPERATIONS / FUNDS FROM LISTED SHARE GROWTH(1) OPERATIONS CORPORATE DIRECTORY TOTAL RETURN TO SHAREHOLDERS BOARD OF DIRECTORS REGISTRAR & TRANSFER AGENT (Includes reinvestment of dividends) Stephen L. Green Computershare (Based on $100 investment made $21.00 [IPO], diluted, in dollars) OWNER OF NYC Chairman of the Board Shareowner Services $1,200 COMMERCIAL P.O. Box 30170 Marc Holliday College Station, TX 77842-3170 Chief Executive Offcer $1,100 PROPERTY 866-230-9138 Andrew W. Mathias www.computershare.com/investor $1,000 President $900 John H. Alschuler, Jr. STOCK LISTING Lead Independent Director; $800 NYSE Symbol: President, HR&A Advisors Inc. SLG, SLG PrI $700 Edwin T. Burton, III ristieRetouching, | color management and printing dcc, by dccnyc.com h Professor of Economics, C INVESTOR RELATIONS $600 University of Virginia 420 Lexington Avenue LIQUIDITY Craig M. Hatkoff $500 New York, NY 10170 Co-founder, Tribeca Film Festival; Tel: 212-216-1654 $400 Chairman, Turtle Pond Publications, LLC E-mail: | Maps by Bryan John S. Levy [email protected] $300 ent r T Chairman, Private Investor www.slgreen.com $200 Betsy Atkins President and CEO, Baja LLC $100 ANNUAL MEETING DEC 98 99 00 01 02 03 0504 06 07 08 09 10 11 12 13 14 15 16 Lauren B. Dillard Thursday, June 1, 2017, Managing Director and 10:00 a.m. ET at SL GREEN REALTY GROUP S&P 500 NASDAQ INDEX DOW JONES INDUSTRIALS INDEX MSCI U.S. REIT INDEX Head of Investment Solutions, COMBINED Grand Hyatt New York SOURCE: S&P CAPITAL IQ The Carlyle Group 109 E 42nd Street (2) ecutive photography by Brad Brad by photography ecutive REVENUE x New York, NY 10017 E EXECUTIVE OFFICERS Marc Holliday EXECUTIVE OFFICES Chief Executive Offcer 420 Lexington Avenue Andrew W. Mathias New York, NY 10170 President Tel: 212-594-2700 Fax: 212-216-1785 Matthew J. DiLiberto www.slgreen.com Chief Financial Offcer Andrew S. Levine ENTERPRISE VALUE TOTAL SF Chief Legal Offcer, General Counsel COUNSEL Skadden, Arps, Slate, , ottony.com | Building photography by Ofer Wolberger | Meagher & Flom LLP O T T New York, NY AUDITORS Ernst & Young LLP PROPERTIES TRS SINCE IPO New York, NY Data as of 12/31/2016. (1) Full year 2016 FFO/share as compared to full year 2015 FFO/share. O by written and illustrated Designed, (2) For the twelve months ended 12/31/2016. ACCESS BUSINESS CAPITA L SL GREEN IS INVESTED IN TOMORROW DIVERSITY EXPERIENCE At SL Green, we’re invested in every FUTURE aspect of New York City real estate, GROWTH but more importantly, we’re invested HEALTH in success. Our strategy has been forged I M PA C T on the streets of one of the world’s JOB S most competitive real estate markets. KNOWLEDGE And the acumen to spot opportunities L UXURY has been our avenue to success. MANAGE MENT NETWORK We start with the basics: where are the OPPORTUNITY people and what do they want? Then, P ORTFOLIO we apply our knowledge and experience QUALITY to identifying opportunities. We build, R ETURNS rebuild, and fnance the future of New York S TRENG TH City, a future that will see our investment in meeting people’s needs succeed. TENANTS UTILITY VAL UE W ORK Y OU ZONING 42602_Text_r2.indd 1 4/28/17 10:43 AM TO OUR S H AREHOLDERS 2016 was another year of banner Over the years, SL Green has consistently outperformed the vast majority of its industry peers and many other comparable performance by SL Green on your behalf, American companies. A big part of the reason is our home, and we are already well on our way to New York City, which is where we have chosen to invest exclusively. New York is a powerful magnet attracting highly educated people meeting and exceeding many of our 2017 from around the country and around the globe who are seeking rewarding careers, superior lifestyle, proftable opportunities in objectives as we continue to build upon our commerce, outstanding educations and unforgettable tourism well-established business platform. Our experiences. For the past two decades, New York’s job market and population have grown in tandem, providing a solid base for confdence in the New York City market where sustained growth in a strong regional economy. This has been we operate, in the quality of our portfolio, especially true in Manhattan, the City’s primary economic engine. With unprecedented private sector job growth over the past and in the abilities of our entire team, has fve years driving demand for offce space, new buildings are never been higher. reshaping the skyline while existing properties are being modernized and repurposed, all to meet the growing and evolving needs of a diverse array of businesses, institutions and individuals. Because of New York’s status as a gateway location and global fnancial center, with its rich pool of human resources and dynamic economic landscape, many of the world’s largest institutional property investors look to Manhattan when seeking out the safest and most lucrative places to invest. The competition for proftable opportunities can be ferce. But, today, no organization is better positioned to compete in this market than SL Green — a homegrown company that is unsurpassed in attracting talent, capitalizing on investment opportunities, developing iconic properties and demonstrating leadership in environmental sustainability. We are New York City’s largest offce landlord by far. We are also a leading retail property investor with major presences in Manhattan’s primary shopping districts, including Times Square, Fifth Avenue, Madison Avenue and SoHo. To complement these portfolios, we have successfully established a multifamily investment platform that helps to diversify our investment portfolio while carefully avoiding the excesses and volatility of the luxury condominium market. And we are New York’s commercial real estate lender of choice, employing a focused, fexible strategy that enables us to meet borrowers’ various needs, while generating outsized returns and introducing us to future acquisition opportunities. We attract large and small offce tenants who are seeking space in New York’s highest quality, best-run buildings in the fnest locations. They often come to us frst, hoping that one of our limited number of available and well-located space offerings can match their needs. Likewise, over the past several years 420 LEXINGTON AVENUE we have landed some of the world’s most prestigious and innovative retailers who establish fagship stores in our high street 2 / SL GREEN REALTY CORP. 2016 ANNUAL REPORT 42602_Text_r2.indd 2 4/28/17 10:43 AM SEPTEMBER 2016: ONE VANDERBILT BREAKS GROUND MARC HOLLIDAY ANDREW W. MATHIAS STEPHEN L. GREEN Chief Executive Offcer President Chairman of the Board retail portfolio, most recently Nike, Nordstrom, LINE Friends, and Viacom. Other property investors, recognizing our superior market knowledge and our ability to close transactions effciently, regularly approach us to buy and sell properties and to form partnerships. And when we look to leverage returns with appropriate levels of fnancing, major lenders from all over the world come forward to do business with us. Likewise, we have gained a well-deserved reputation as a company that attracts, retains and promotes the industry’s brightest young professionals. It’s no accident that Crain’s New York Business has named fve SL Green people to its annual “40 under 40” list, including Brett Herschenfeld last month — the most for any employer in the real estate sector. Our young energetic workforce and minimal executive turnover sets an enviable standard for our industry. So, indeed, SL Green is a magnet for opportunity in the nation’s most attractive commercial location. Against this backdrop, our most diffcult challenge is achieving an appropriate stock market valuation that refects the true underlying value of our assets and our enterprise. This is not a new situation, nor one that is unique to SL Green. A number of REITs in various property sectors have share prices that trail their Net Asset Values in some cases by wide margins. In our case though, we have been able to illuminate the extreme dislocation between the Company’s stock price and our Net Asset Value, through voluminous sales and partial dispositions of properties at prices refective of true capitalization rates and market returns. The structural pricing underperformance of public REIT securities, and the illogical public pricing volatility of companies owning long-term stable investments, stands in stark contrast to the pricing stability and reliability of the private market. In that sector, direct investors in real estate have been enjoying strong recurring returns beneftting from a growing economy and prudent use of appropriate levels of long-term, low-cost fnancing.